Voluntary Purchasing Groups, Inc. v. Reilly

• Decision Date: 27 November 1989
• Docket Number: No. 89-1002,89-1002
• Citation: 889 F.2d 1380
• Parties: , 58 USLW 2463, 20 Envtl. L. Rep. 20,267 VOLUNTARY PURCHASING GROUPS, INC., Plaintiff-Appellee, v. William K. REILLY, Administrator, United States Environmental Protection Agency, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1380

889 F.2d 1380

30 ERC 1705, 58 USLW 2463, 20 Envtl.

L. Rep. 20,267

VOLUNTARY PURCHASING GROUPS, INC., Plaintiff-Appellee, v. William K. REILLY, Administrator, United States Environmental Protection Agency, et al Defendants-Appellants.

No. 89-1002.

United States Court of Appeals Fifth Circuit.

Nov. 27, 1989.

Michael P. Healy, Anne S. Almy, Attys., Appellate Section, Land & Natural Resources Div., Washington, D.C., for defendants-appellants.

Stephen L. Tatum, Ralph H. Duggins, T. Lynn Stuck, Jeff P. Prostok, Cantey & Hanger, Ft. Worth, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before KING, GARWOOD, and DAVIS, Circuit Judges.

KING, Circuit Judge:

Defendants-appellants, the Environmental Protection Agency and the Administrator and Regional Administrator of that agency (collectively, the EPA), appeal the district court's refusal to dismiss the suit of the plaintiff-appellee, Voluntary Purchasing Groups, Inc. (VPG), seeking a declaratory judgment that it is not liable for the EPA's response actions in connection with a site cleaned up by the EPA. Finding that the district court lacks subject matter jurisdiction, we reverse and direct the district court to dismiss VPG's suit.

I. FACTS AND PROCEDURAL BACKGROUND

From 1969 until 1981, 3502 Rogerdale Road ¹ (the Rogerdale Road site) in Houston, Texas was used to process pesticides and herbicides. A number of hazardous substances, including phenols, toluene, sulfuric acid, elemental arsenic, several arsenic compounds, methyl chloride, cyclohexanone, betanapthylamine, and triethanolamine, were "processed" and stored in tanks and drums at this site. Since 1983, the Rogerdale Road site has been listed on the National Priorities List (NPL) of sites. ²

In September 1981, because of flood conditions, a release ³ or the substantial threat of release of hazardous substances prompted the EPA to undertake an emergency response action ⁴ at the Rogerdale Road site. The EPA removed all contaminated soil, drums and tanks containing hazardous substances, drained the ponds on the site, and conducted a remedial investigation to determine, among other things, the existence and extent of releases. The EPA also installed a clay cap at the site and improved the dike system. In total, as of September 1987, the EPA's emergency removal action used about $2,000,000 of Superfund money.

VPG, operating as a farmers' co-op making lawn, garden, and farm chemicals, is one of the parties identified by the EPA as potentially responsible for the Rogerdale Road site. In 1981--under EPA supervision--VPG removed certain equipment owned by it from the Rogerdale Road site. On or about August 1, 1984, the EPA sent VPG a letter relating the occurrences at the Rogerdale Road site and indicating that VPG might be held a responsible party. This letter contained specific language indicating that it was not a final determination of legal liability. A similar letter, indicating that remedial alternatives for the Rogerdale Road site were being considered, was received by VPG in January 1987. Both of these letters contained language urging the recipient voluntarily to perform work to abate releases.

On January 25, 1988, the EPA sent VPG and nine other parties that it had identified as potentially responsible for the Rogerdale Road site (potentially responsible parties or PRPs) letters indicating that the emergency response action in connection with the Rogerdale Road site had been completed. Each entity receiving this letter was informed that it was one of the parties the EPA believed to be liable for costs in relation to the cleanup performed by the EPA. The EPA's letter to VPG alleged that VPG "either arranged for disposal or treatment of hazardous substances at the facility, own or operate the facility, or owned or operated the facility at the time of disposal of hazardous substances." The letter further demanded payment--from either VPG alone or in conjunction with other PRPs--for expended Superfund money. In addition, the letter stated that VPG would be liable in the event that future remedial actions took place. The letter closed by stating that if no response was received by February 24, 1988, the EPA would "assume that you [VPG, in this case] decline to reimburse the Fund for site expenditures and we may pursue civil litigation against you."

Though VPG did not contact the EPA about this letter, on February 24, 1988, it filed the instant suit in the Northern District of Texas seeking a declaratory judgment that it is not a responsible party under the CERCLA ⁵ for the Rogerdale Road site and that it is not liable for any costs associated with the cleanup of that site. ⁶ VPG alleged that it had leased certain equipment to the Crystal Chemical Company (Crystal) and that the lease had terminated with Crystal's bankruptcy in 1981--at which point VPG, under EPA supervision, removed its equipment. VPG further claimed that it had no hand in the operation of the Rogerdale Road premises, no supervisory, managerial, or financial connection with the corporation except that "VPG's income from rental of personal property was partly based on a percentage of profits received ... from sale of product produced in part, by use of, the leased equipment." Additionally, VPG asserted that it "neither generated nor disposed of hazardous waste nor knew that Crystal allegedly disposed of hazardous waste."

On April 1, 1988, the United States filed suit pursuant to sections 104 and 107 of CERCLA against seven of the ten entities identified as PRPs in the January 1988 letter--including VPG--in the Southern District of Texas ⁷ to recover past response costs and declare the defendants liable for future costs incurred in relation to abatement of release or threatened release of hazardous substances at the Rogerdale Road site. ⁸ In this action, the government alleges that VPG "owned the processing plant and equipment used by Crystal in the formulation of pesticides and herbicides...."

After receiving an extension of time to respond, on April 24, 1988, the EPA moved for dismissal of VPG's suit (pending in the Northern District of Texas) under Federal Rule of Civil Procedure 12(b)(1) of VPG's suit on the grounds that the district court lacked subject matter jurisdiction because VPG's suit sought "pre-enforcement review ... precluded by Congress and because the action challenged by the plaintiff [VPG] does not constitute final agency action subject to judicial review." In the alternative, the EPA requested that the case be transferred to the Southern District of Texas where it could be considered in conjunction with the United States' cost-recovery action in that district. On June 29, 1988, the District Court for the Northern District of Texas denied dismissal.

The EPA again applied for a transfer of jurisdiction and, on August 3, 1988, it was denied. On August 12, 1988, the EPA answered the VPG complaint and filed counterclaims under sections 104 and 107 of CERCLA against VPG--seeking reimbursement for past response costs and a declaration of VPG's liability for future response costs that may be incurred by the EPA in relation to the Rogerdale Road site. In its counterclaim, the EPA alleged that VPG "owned the processing plant and equipment used [at the Rogerdale Road site] in the formulation of pesticides and herbicides...." The EPA also claimed that VPG "was entitled to a portion of Crystal's profits and to a portion of the products manufactured at the Rogerdale Road site."

Relying on the pendency of the action in the Northern District, VPG moved to dismiss the United States' suit against it in the Southern District on August 17, 1988.

On September 1, 1988, the EPA filed a motion requesting the district court in the Northern District to amend its June 29, 1988 order refusing to dismiss this case and to certify it for interlocutory appeal under 28 U.S.C. Sec. 1292(b). On September 6, 1988, the EPA requested reconsideration of the denial of change of venue. The reconsideration of the change of venue was denied, but on November 4, 1988, the district court in the Northern District granted the section 1292(b) certification. Subsequently, on January 3, 1989, this court entered an order permitting EPA's interlocutory appeal.

A stay of all proceedings was issued by the district court in the Southern District in relation to the cost recovery action in that district on February 8, 1989 until completion of this appeal.

II. STANDARD OF REVIEW

The EPA moved to dismiss VPG's suit under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. We note that in this circuit it is well settled that:

The district court ... has the power to dismiss for lack of subject matter jurisdiction on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.

Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1981). In the case sub judice, the district court concluded that based on its review of the pleadings and law, the EPA's motion was "not well-taken and should be denied." As the district court made no findings of fact, we review its decision not to dismiss to determine "whether the district court's application of the law is correct...." Id.; State Sav. & Loan Ass'n of Lubbock v. Liberty Trust Co., 863 F.2d 423, 425 (5th Cir.1989) (this court engages in a de novo review of questions of law).

III. DISCUSSION

The EPA appeals the district court's refusal to dismiss VPG's suit for lack of subject matter jurisdiction. The EPA contends that the United States has not waived its sovereign immunity and, thus, cannot be sued in the instant case.

In its complaint, VPG relied on two sections of the United States Code...