FLEET FACTORS CORP., PETITIONER V. THE UNITED STATES OF AMERICA

   No. 90-504

   In The Supreme Court Of The United States

   October Term, 1990

   On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Eleventh Circuit

   Brief For The United States In Opposition

            TABLE OF CONTENTS
   Question Presented
   Opinions below
   Jurisdiction
   Statement
   Argument
   Conclusion

                            OPINIONS BELOW

   The opinion of the court of appeals (Pet. App. 1a-20a) is reported
at 901 F.2d 1550.  The opinion of the district court (Pet. App.
21a-34a) is reported at 724 F. Supp. 955.

                             JURISDICTION

   The judgment of the court of appeals (Pet. App. 35a-36a) was
entered on May 23, 1990, and a petition for rehearing was denied on
July 17, 1990 (Pet. App. 37a-38a).  The petition for a writ of
certiorari was filed on September 21, 1990.  The jurisdiction of this
Court is invoked under 28 U.S.C. 1254(1).

                          QUESTION PRESENTED

   The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (CERCLA) requires the owner or operator of a
facility to compensate the government for the government's expenses in
responding to a release or threatened release of hazardous substances.
 Section 107, 42 U.S.C. 9607.  CERCLA exempts from the definition of
an "owner or operator" a person who "without participating in the
management" of a facility holds indicia of ownership to protect his
security interest in the facility.  Section 101(20)(A), 42 U.S.C.
9601(20)(A).  In this case, the government sought response costs from
petitioner, a secured lender, and the district court denied motions
for summary judgment on the ground that there were genuine issues of
material fact as to petitioner's participation in the management of
the facility.

   The question presented is whether the court of appeals erred in
affirming the district court's order denying petitioner's motion for
summary judgment.

                               STATEMENT

   1. The Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) of 1980, 42 U.S.C. 9601 et seq., enlarged the
Environmental Protection Agency's (EPA's) authority to deal
effectively with the release of hazardous substances into the
environment.  Under Section 104(a)(1) of CERCLA, 42 U.S.C. 9604(a)(1),
EPA may take direct "response" actions to abate any actual or
threatened release of any hazardous substance.  42 U.S.C. 9604(a)(1).
In order to pay for federal response actions, Congress has established
the Hazardous Substance Superfund.  See 26 U.S.C. 9507.  CERCLA also
provides that the federal government may bring cost recovery actions
pursuant to Section 107(a)(4)(A), 42 U.S.C. 9607(a)(4)(A), to
replenish the fund when EPA has expended money in performing response
actions.

   To recover response costs under Section 107 of CERCLA, the
government must establish four elements:  (1) the defendant falls
within one or more of the classes of liable persons described in
Section 107(a);  (2) the site is a "facility" as defined in Section
101(9);  (3) a "release" or "threatened release" of a "hazardous
substance" has occurred or is occurring;  and (4) the release or
threatened release has caused the United States to incur "response
costs." 42 U.S.C. 9607(a).  See, e.g., United States v. South Carolina
Recycling & Disposal, Inc., 653 F. Supp. 984, 991-992 (D.S.C. 1984),
aff'd sub nom. United States v. Monsanto Co., 858 F.2d 160 (4th Cir.
1988), cert. denied, 490 U.S. 1106 (1989).  /1/ Only the first of
these four elements is at issue in this petition and the underlying
appeal.

   Section 107(a) establishes four broad classes of liable persons:
(1) the owners and operators of hazardous substance facilities and
sites;  (2) those persons who owned or operated a facility at the time
hazardous substances were disposed of at that facility;  (3) those
persons who arranged for disposal or treatment of the hazardous
substances;  and (4) those persons who transported the hazardous
substances and selected the disposal facility.  42 U.S.C.
9607(a)(1)-(4).

   In establishing broad liability for owners of hazardous substance
facilities under Section 107(a)(1) and (2), Congress recognized the
need to protect those persons who would otherwise be liable because of
their ownership interest in a facility, but who held indicia of
ownership merely to protect security interests.  Accordingly it
enacted the "secured creditor exemption" of Section 101(20)(A), which
excludes from the definition of an owner or operator

      * * * a person who, without participating in the management of a
      vessel or facility, holds indicia of ownership primarily to
      protect his security interest in the vessel or facility.

42 U.S.C. 9601(20)(A).  As Representative Harsha (who introduced the
secured creditor amendment) explained, "This change was necessary
because the original definition (of owner) inadvertently subjected
those who hold title to a vessel or facility, but do not participate
in the management or operation and are not otherwise affiliated with
the person leasing or operating the vessel or facility, to the
liability provisions of the bill." See House Debate on H.R. 85, 96th
Cong., 1st Sess. (1979) (Sept. 18, 1980), reprinted in 2 Staff of
Senate Comm. on Environment and Public Works, 97th Cong., 2d Sess., A
Legislative History of the CERCLA 889, 945 (Comm. Print 1983)
(hereinafter Leg. Hist.).  /2/

   2. The United States filed a Section 107 cost recovery action
against potentially responsible parties, including petitioner Fleet
Factors Corporation, to recover the costs EPA had incurred in cleaning
up, and preventing further release of, hazardous substances at the
Swainsboro Print Works (SPW) in Emanuel County, Georgia.  SPW is an
inactive, bankrupt cloth printing facility located near public water
wells and private residences.  EPA spent approximately $375,000 in a
two-stage cleanup of hazardous substances at the site, including vats
of sodium cyanide, storage tanks of caustic soda, approximately 700
rusty, leaky 55-gallons drums of dyes and chemicals, and 44 truckloads
of friable asbestos.  Pet. App. 2a-3a, 25a.

   After extensive discovery, the United States and petitioner filed
cross-motions for summary judgment.  In its motion, the United States
primarily argued that petitioner was liable under Section 107(a)(2) as
either an owner or operator of the SPW facility at the time hazardous
substances were disposed of at that facility.  /3/ The government
based its claim on extensive evidence of petitioner's involvement in
SPW's affairs before and after SPW ceased printing operations in
February 1981, and on petitioner's control of the defunct facility
during the three years that followed.  See Pet. App. 17a-18a, 27a-29a.
 Petitioner invoked the CERCLA Section 101(20)(A) "secured creditor"
exemption from owner liability.  Petitioner contended that it was
merely a secured creditor holding indicia of ownership whose
involvement in SPW's affairs did not constitute participation in
management.  See Pet. App. 9a-10a, 22a, 28a.

   The district court denied the United States' and petitioner's
motions for summary judgment.  Pet. App. 33a.  The court first
summarized the undisputed facts in this case, which showed among other
things that:  (1) petitioner held a security interest in SPW's
facility, equipment and inventory;  and (2) when SPW filed for
bankruptcy protection and ceased operations, petitioner foreclosed on
its security interest in some of the SPW's equipment and inventory,
and contracted with others to sell and remove those items.  Id. at
23a-24a.  The court stated that there was a "genuine dispute" as to
the actions of petitioner's agents in handling and disposing of
hazardous substances at the site.  Id. at 24a-25a.

   The court concluded that petitioner was not a present owner of the
SPW facility (Pet. App. 27a;  see note 3, supra), and turned to the
question whether petitioner qualified for the secured creditor
exemption.  The court stated:

      I interpret the phrases "participating in the management of a .
      . . facility" and "primarily to protect his security interest,"
      to permit secured creditors to provide financial assistance and
      general, and even isolated instances of specific, management
      advice to its debtors without risking CERCLA liability if the
      secured creditor does not participate in the day-to-day
      management of the business or facility either before or after
      the business ceases operation.

Id. at 28a.  The court concluded that petitioner did not participate
in the management of SPW prior to the time petitioner's agents entered
the facility to sell and remove equipment.  Id. at 29a.  It concluded,
however, that petitioner's and its agents' subsequent activities
raised genuine issues of material fact as to whether petitioner was
entitled to the secured creditor exemption, which precluded entry of
summary judgment for either party.  Id. at 29a-30a.

   3. On interlocutory appeal pursuant to 28 U.S.C. 1292(b), the court
of appeals affirmed the district court's denial of petitioner's motion
for summary judgment and remanded the case for further proceedings.
Pet. App. 1a-20a.  The court of appeals specifically agreed with the
district court "that the facts alleged by the government with respect
to Fleet's involvement after Baldwin (petitioner's agent) entered the
facility were sufficient to preclude the granting of summary judgment"
as to petitioner's entitlement to the secured creditor exemption.  Id.
at 12a-13a.  See also id. at 17a, 19a-20a.  /4/

   Although the court of appeals affirmed the district court's denial
of petitioner's motion for summary judgment, it also indicated that a
secured creditor could participate in the management of the facility,
for purposes of CERCLA Section 101(20)(A), even if it did not become
involved in day-to-day management of the business.  The court stated
that

      a secured creditor will be liable if its involvement with the
      management of the facility is sufficiently broad to support the
      inference that it could affect hazardous waste disposal
      decisions if it so chose.

Pet. App. 14a.  The court further stated that, in any event, under the
government's allegations, petitioner's "involvement in the financial
management of the facility was pervasive, if not complete." Id. at
17a-18a.  Indeed, the court explained that the government's
allegations, if proven, would permit the district court to find not
only that petitioner was an "owner" that is ineligible for the
"secured creditor" exemption, but also -- as an alternative basis of
liability -- that petitioner's extensive involvement in SPW's
management qualified petitioner as an "operator" of SPW.  Id. at 10a
n.6, 18a-19a.  /5/ The court of appeals accordingly remanded the case
to the district court to resolve the disputed issues of fact.  Id. at
20a.

                               ARGUMENT

   This case is in an interlocutory posture.  Indeed, as the court of
appeals suggested, it may be resolved on remand without reaching the
question presented in the petition for a writ of certiorari.  The
court of appeals' decision raises a narrow issue of statutory
construction and does not conflict with any decision of this Court or
another court of appeals.  Petitioner and its amici essentially seek
an advisory opinion from this Court on a matter that is not ripe for
this Court's review and, moreover, may be affected by developing
legislative and administrative action.

   1. The court of appeals affirmed the district court's denial of
motions for summary judgment and remanded the case for further
proceedings.  Under this Court's established practice, review of this
interlocutory ruling is inappropriate.  See, e.g., Brotherhood of
Locomotive Firemen v. Bangor & A. R.R., 389 U.S. 327, 328 (1967) (per
curiam) ("(B)ecause the Court of Appeals remanded the case, it is not
yet ripe for review by this Court.");  Hamilton-Brown Shoe Co. v. Wolf
Bros. & Co., 240 U.S. 251, 258 (1916) ("The decree that was sought to
be reviewed by certiorari at complainant's instance was not a final
one, a fact that of itself alone furnished sufficient ground for the
denial of the application.").

   Indeed, it would be particularly inappropriate for this Court to
grant interlocutory review in this case.  As the court of appeals
recognized, petitioner based its motion for summary judgment on the
contention that petitioner, as a matter of law, had not
"participat(ed) in the management" of SPW (CERCLA Section 101(20)(A),
42 U.S.C. 9601(20)(A)).  The court of appeals and the district court
both concluded that petitioner had failed to establish the absence of
a genuine factual dispute as to whether petitioner had participated in
the management of SPW.  See Pet. App. 4a, 17a-19a, 25a-26a, 28a-30a.
This Court does not normally review concurrent findings of fact by two
lower courts.  E.g., Goodman v. Lukens Steel Co., 482 U.S. 656, 665
(1987).  This Court should be even more reluctant to interfere with
ongoing proceedings by conducting an interlocutory review of
concurrent determinations by two lower courts that a genuine factual
dispute exists.

   Petitioner, at bottom, is simply displeased with the court of
appeals' description of the reach of the secured creditor exemption,
stating that the court of appeals' decision "makes it extremely
difficult for financial institutions to determine how they can protect
their secured loans without incurring massive liability." Pet. 5.
Petitioner contends (ibid.) that "it is important for this Court to
clarify the reach of the CERCLA liability scheme" because "financial
institutions have been relying" on the language in other cases, such
as United States v. Mirabile, 15 Envtl. L. Rep. (Envtl. L. Inst.)
20,994 (E.D. Pa. Sept. 4, 1985).  "This Court, however, reviews
judgment, not statements in opinions." Black v. Cutter Laboratories,
351 U.S. 292, 297 (1956).  Moreover, petitioner's preferred language
would not produce a different result in this case.  The district court
applied the standard set forth in Mirabile and nevertheless denied
petitioner's motion for summary judgment.  Pet. App. 28a.

   Beyond these formidable problems, this Court's interpretation of
the secured creditor exemption would be purely advisory at this
juncture.  As the court of appeals observed and petitioner "virtually
conceded" (Pet. App. 18a-19a & n.15), the government's factual
allegations, if proven, "would pass the threshold for operator
liability under section 9607(a)(2)." Thus, the court of appeals'
interpretation of the secured creditor exemption, insofar as it is
challenged by petitioner, may prove to be immaterial in determining
petitioner's liability.  Indeed, the government opposed petitioner's
request for interlocutory appeal on the ground, among others, that on
the present record the court of appeals could not dispositively
resolve the question of secured creditor liability in this case.  See
Memorandum of the United States in Opposition to Petitioner Fleet
Factors Corporation's Application to Permit Interlocutory Appeal (Jan.
10, 1989).  It would obviously be inappropriate for this Court to
undertake to address the subject in the absence of a concrete factual
setting.

   2. Even if this case were not interlocutory, it would not be ripe
for this Court's review.  The issue that petitioner wishes resolved is
a narrow question of statutory construction that does not conflict
with any decision of this Court or another court of appeals.
Petitioner and its amici concede that only one other court of appeals
-- the Ninth Circuit -- has thus far encountered the question.  See In
re Bergsoe Metal Corp., 910 F.2d 668 (1990).  They are plainly wrong
in asserting that there is a "tension" or "conflict" between the court
of appeals' decisions.  Pet. 6;  American Bankers Ass'n Br. 5 n.3;
American College of Real Estate Lawyers Br. 17;  Bank of Boston Br.
26-30.

   In Bergsoe, the shareholders of a bankrupt recycling company sued a
municipal corporation under CERCLA alleging that the municipal
corporation -- which had issued revenue bonds for the recycling
company -- was responsible, as an owner, for the cleanup of hazardous
wastes at the recycling site.  910 F.2d at 670.  The bankruptcy court
granted summary judgment in favor of the municipal corporation and the
district court affirmed.  Ibid.  The Ninth Circuit affirmed the
district court's decision, holding there was no genuine factual
dispute that the municipal corporation "holds indicia of ownership
primarily to protect its security interest and that it did not
participate in the management of the Bergsoe recycling plant." Id. at
673.  The Ninth Circuit acknowledged the standard that the Eleventh
Circuit proposed in this case for determining whether a secured
creditor has participated in the management of a facility.  Id. at
672.  The Ninth Circuit concluded, however, that it could "leave for
another day" the determination of the "precise parameters of
'participation'" that would render a secured creditor liable under
CERCLA.  Ibid.  The court explained:

      As did the Eleventh Circuit in Fleet Factors, we hold that a
      creditor must, as a threshold matter, exercise actual management
      authority before it can be held liable for action or inaction
      which results in the discharge of hazardous wastes.

Id. at 673 n.3.  Unlike the Eleventh Circuit in Fleet Factors, the
Ninth Circuit found no evidence that the secured creditor exercised
actual management authority.  It accordingly affirmed the entry of
summary judgment.  Id. at 673.

   Thus the reasoning of the Ninth Circuit is entirely consistent with
that of the Eleventh Circuit.  A secured creditor is entitled to
summary judgment if the creditor shows, beyond factual dispute, that
it did not participate in the management of the facility.  Petitioner
in this case, unlike the secured creditor in Bergsoe, simply failed to
establish the absence of a factual dispute.  /6/

   3. Petitioner and its amici also contend that the court of appeals'
decision has increased the prospect of lender liability and thereby
caused "potential harm to the nation's economy," "wreaked havoc upon
commerical practice," and "sent a shock wave throughout the country."
Pet. 7, 10-14;  American Bankers Ass'n Br. 5, 9;  American College of
Real Estate Lawyers Br. 3.  They offer no evidence to support their
concerns, which indeed are premised on an overly broad (and
unrealistic) reading of the Eleventh Circuit's standard.  See note 6,
supra.  Both the Ninth Circuit and the Eleventh Circuit interpreted
the secured creditor exemption in a manner that permits a lender to
"monitor() any aspect of a debtor's business" and "become involved in
occasional and discrete financial decisions relating to the protection
of its security interest." Pet. App. 15a;  see also 910 F.2d at
672-673.  Moreover, petitioner's objection to the use of inferences in
determining the scope of management participation (Pet. 9) is
misplaced.  The court found no need to rely on inferences in this
case.  See Pet. App. 18a n.13.  /7/

   The lending community's need for this Court's advice on the scope
of the secured creditor exemption is further diminished by the fact
that the government has rarely sought to hold lenders liable under
CERCLA and -- as demonstrated in this case -- has generally sought
such relief only where the lender's participation in the management of
the facility is extensive.  Moreover, to the extent that clarification
of the law is needed, other more appropriate fora are available.
Several bills were introduced during the 101st Congress that address
the issue of lender liability.  /8/ In addition, EPA has initiated an
effort to develop a rule that would provide guidance to commercial
lenders holding mortgage-type indicia of ownership.  /9/ Thus, even if
the issue petitioner presents were otherwise ripe for this Court's
examination, the Court might find it advisable to await the outcome of
the legislative and administrative proceedings.

                              CONCLUSION

   The petition for a writ of certiorari should be denied.

   Respectfully submitted.

   KENNETH W. STARR

      Solicitor General

   RICHARD B. STEWART

      Assistant Attorney General

   ANNE S. ALMY

   JENNIFER A. HAVERKAMP

      Attorneys

   DECEMBER 1990

   /1/ It is well settled that responsible parties are strictly liable
under CERCLA.  E.g., Monsanto, 858 F.2d at 167;  Tanglewood East
Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1572 (5th Cir.
1988);  New York v. Shore Realty Corp., 759 F.2d 1032, 1042 (2d Cir.
1985).  In addition, they are jointly and severally liable when the
environmental harm is indivisible.  E.g., O'Neil v. Picillo, 883 F.2d
176, 178 (1st Cir. 1989), cert. denied, 110 S. Ct. 1115 (1990);
Monsanto, 858 F.2d at 171;  United States v. Chem-Dyne Corp., 572 F.
Supp. 802, 810-811 (S.D. Ohio 1983).

   /2/ The secured creditor exemption was first introduced into the
House version of CERCLA, H.R. 85, as an amendment to clarify the
definition of "owner" and remained part of that definition throughout
successive versions of the bill;  the definition of "operator" was an
entirely separate provision.  See H.R. 85, reprinted in 2 Leg. Hist.
1021-1022.  The Senate version, which provided a definition of "owner
or operator", lacked a secured creditor exemption.  S. 1480, 96th
Cong., 1st Sess. (1979) (as reported), reprinted in 1 Leg. Hist. 470.
The secured creditor exemption was adopted as part of the definition
of that term.

   /3/ The United States also asserted that petitioner could be held
liable as the current owner or operator of the SPW facility, 42 U.S.C.
9607(a)(1), under the definition set forth in 42 U.S.C.
9601(20)(A)(iii).  The district court and court of appeals rejected
that argument (Pet. App. 8a-9a, 27a), which is not at issue in this
petition.

   /4/ The court of appeals also concluded that there was a genuine
issue of fact as to whether petitioner participated in SPW's
management between the time SPW ceased printing operations and the
time petitioner contracted with an agent to auction SPW's equipment
and fixtures.  Pet. App. 17a-18a.  The court of appeals accordingly
determined that the district court "erred in construing the secured
creditor exemption to insulate Fleet from CERCLA liability for its
conduct prior to June 22, 1982." Id. at 19a-20a.

   /5/ The court noted that during oral argument, petitioner
"virtually conceded operator liability for its conduct with respect to
the facility" (Pet. App. 19a n.15).

   /6/ Petitioner and its amici attempt to create the impression of a
circuit conflict by arguing that the Eleventh Circuit's standard would
permit liability in the absence of actual management participation.
See Pet. 6, 9-10;  American Bankers Ass'n Br. 5 n.3;  Bank of Boston
Br. 27-28.  Whatever the scope of the Eleventh Circuit's standard, it
clearly requires -- as the Ninth Circuit expressly recognized, supra
-- actual participation in management.  See Pet. App. 14a ("(A)
secured creditor will be liable if its involvement with the management
of the facility is sufficiently broad to support the inference that it
could affect hazardous waste disposal decisions if it so chose."
(emphasis added)).  One cannot create a circuit conflict simply by
eliding the portion of a court's holding that indicates accord.  See
American College of Real Estate Lawyers Br. 17.

   /7/ Petitioner also contends (Pet. 11-13) that the court of
appeals' interpretation of a lender's potential liability under CERCLA
is inconsistent with the scope of a lender's liability in other legal
contexts.  Congress, however, enacted CERCLA to provide a
comprehensive federal system of liability appropriate to the problem
at hand.  Thus, other principles of lender liability are not
dispositive of a lender's potential liability under CERCLA.  In any
event, it is not clear that those other principles would absolve
petitioner in this case.  Petitioner also speculates that the court of
appeals' decision might "expose() lenders to substantial risk under
other doctrines of lender liability" (Pet. 13).  Petitioner does not
contend, however, that it faced conflicting obligations in this case.

   /8/ See, e.g., H.R. 4494, 101st Cong., 2d Sess. (1990), 136 Cong.
Rec. H1505 (daily ed. Apr. 4, 1990);  S. 2827, 101st Cong., 2d Sess.
(1990), 136 Cong. Rec. S9171 (daily ed. June 28, 1990).  We anticipate
that similar legislation will be introduced in the 102d Congress.

   /9/ See Prepared Statement of James M. Strock, EPA Assistant
Administrator for Enforcement, presented in Hearing on H.R. 4494
Before the House Subcomm. on Transportation and Hazardous Materials of
House Comm. on Energy and Commerce, 101st Cong., 2d Sess. (Aug. 2,
1990).  We have lodged copies of the prepared statement with the Clerk
of the Court.