UNITED STATES FIDELITY & GUARANTY COMPANY, PETITIONER V. UNITED
STATES OF AMERICA

   No. 87-1803

   In the Supreme Court of the United States

   October Term, 1987

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Third 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-16a) is reported
at 837 F.2d 116.  The opinion of the district court (Pet. App.
18a-48a) is reported at 638 F. Supp. 1068.

                             JURISDICTION

   The judgment of the court of appeals was entered on January 15,
1988.  The petition for a writ of certiorari was filed on April 14,
1988.  The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).

                               STATEMENT

                          QUESTION PRESENTED

   Whether the discretionary function exception to the Federal Tort
Claims Act, 28 U.S.C. 2680(a), bars petitioner's claim that an
on-scene coordinator of the Environmental Protection Agency (EPA), who
was in charge of the clean-up of a hazardous waste site designated for
an "immediate removal action" under the Comprehensive Environmental
Response, Compensation, and Liability Act, acted negligently in
directing a private contractor to proceed, notwithstanding adverse
wind conditions, with the clean-up of a substance posing a major
threat of fire, explosion, and release of pollutants into the air.

   1. Petitioner is an insurer seeking indemnity or contribution from
EPA based on the alleged negligence of EPA's on-scene coordinator in
allowing a clean-up operation to proceed notwithstanding unfavorable
wind conditions (Pet. App. 3a, 5a).  The clean-up took place at a site
designated for an "immediate removal action" under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. (&
Supp. III) 9601 et seq. (CERCLA) (Pet. App. 3a).  EPA typically
directs such immediate action only if it determines that a response is
necessary within hours or days in order to prevent significant harm to
the public health or to the environment.  In this case, EPA determined
that the site posed an imminent threat of fire and explosion, as well
as a threat of public contact with hazardous chemicals (id. at 3a).
The EPA's on-scene coordinator, who directed the clean-up, hired
petitioner's insuree, OH Materials, an expert in toxic waste abatement
and containment, to perform the various tasks required for the
clean-up (id. at 3a-4a).

   One of the most serious hazards at the site was an old railroad
tank car resting on raised concrete pedestals.  The tank contained
oleum, a solution of sulfur trioxide in concentrated sulfuric acid,
which is extremely reactive with a wide range of compounds and
sensitive to moisture.  At the commencement of the removal action, the
oleum tank was venting directly into the atmosphere and posed a major
threat of fire, explosion and release of pollutants. Pet. App. 4a.

   OH Materials suggested that the tank be removed from its pedestals
and transferred to a remote location or, alternatively, placed on the
ground at the rear of the site prior to neutralization and removal of
the oleum.  The on-scene coordinator rejected these recommendations
after considering the potential risks from moving the tank.  OH
Materials then suggested neutralizing the oleum in the tank by slowly
draining all of the liquid oleum from the tank through the bottom
valve into a container of water and allowing the oleum to react with
the water in a controlled fashion.  The remaining sludge inside the
tank would then be neutralized by slowly adding water to the tank.
Following the completion of the chemical reaction, the neutralized
sludge would be drained.  The on-scene coordinator approved this plan.
 Pet. App. 4a.

   While OH Materials was performing this work, drainage stopped
because the valve had become clogged with sludge.  To clear the valve,
OH Materials employees inserted rods through the manway at the top of
the tank.  Following the insertion of the rods, a steam explosion
occurred in the oleum tank.  A large cloud of sulfur trioxide and
sulfuric acid excaped out of the manway.  Blown by south-southwest
winds, the acid cloud migrated into the nearby town of Lock Haven,
where it caused property damage to over 500 motor vehicles, an
airplane, and several buildings.  /1/ Pet. App. 5a.

   2. Petitioner paid the claims arising from the incident (Pet. App.
5a).  It then filed suit under the Federal Tort Claims Act seeking
recovery for its losses (id. at 5a-6a).  The district court found
that, while the chemical release would have occurred regardless of the
wind conditions, "much less" property damage would have resulted if
the wind had been blowing away from Lock Haven (id. at 39a).  The
court held the United States liable for 60% of the damages caused by
the chemical release based on EPA's failure to order the contractor to
cease operations when wind conditions were not favorable (id. at
41a-42a, 48a).  The court held that the contractor was also liable
since, as "an expert in cleaning up hazardous wastes, (it) knew or
should have known of the importance of paying attention to wind
conditions and should at least have raised this point with the EPA"
(id. at 44a).  The district court found, however, that the United
States had the greater share of the liability because "EPA retained
the ultimate power to make decisions regarding the cleanup operations"
(ibid.).

   The district court rejected the government's contention that the
discretionary function exception (28 U.S.C. 2680(a)) barred
petitioner's claim.  The court held (Pet. App. 33a-34a) that, while
the United States had discretion to ignore the dangerous site
altogether, "once it chose to clean up the hazardous wastes there, its
decisions regarding the procedures to be followed were not off the
nature and quality that Congress intended to shield from tort
liability." "The United States," the court stated (id. at 34a), "must
be held accountable for the acts of its workers who carry out tasks on
an operational level." The district court concluded (ibid.) that in
this instance "(t)he On Scene Coordinator's role in the cleanup
operation was such that his conduct is not excluded from a claim
brought pursuant to the Federal Tort Claims Act."

   3. The court of appeals reversed, holding that petitioner's claim
was barred by the discretionary function exception.  Relying on this
Court's decisions in United States v. S.A. Empresa de Viacao Aerea Rio
Grandense (Varig Airlines), 467 U.S. 797 (1984), and Dalehite v.
United States, 346 U.S. 15 (1953), the court noted (Pet. App. 10a)
that "the dichotomy between planning level and operation level" relied
upon by the district court "does not resolve the question of whether a
governmental act is discretionary within the meaning of the exception.
 The proper focus is on " 'the nature of the conduct, rather than the
status of the actor' " (id. at 11a (quoting Varig Airlines, 467 U.S.
at 813)).  "Acts at the operational level," the court explained
(ibid.), "may be discretionary if planning level orders anticipate
decisions at lower levels that leave room for policy judgment and
decision."

   Execution of (the hazardous waste clean-up) program and
accomplishment of its objective," the court noted (Pet. App. 12a),
"necessarily require the setting of priorities in light of the risks
presented at various sites and the finite resources available to
address the problem." EPA classified the site in question here for
"immediate removal action," thus indicating that "significant risks
would attend a delay in cleanup" (ibid.).  The on-scene coordinator,
charged with the responsibility of directing the project, "faced the
problem of when to schedule the neutralization of an oleum tank that
was venting directly into the atmosphere and posed a major threat of
fire, explosion, and release of pollutants into the air" (id. at 13a).
 The court of appeals recognized that the coordinator's decision had
to reflect "not only the available resources and the other hazards to
be neutralized on the site, but most importantly, a balancing of the
risks of proceeding with the neutralization on the day chosen against
the risks of further delay" (ibid).

   The court of appeals stressed (Pet. App. 14a) that "(t)here was no
applicable constitutional provision, statute, or regulation requiring
the On Scene Coordinator to undertake removal actions only on days
with favorable wind conditions." The authority delegated to the
on-scene coordinator, the court stated (id. at 13a), "left room for,
and indeed required, the exercise of policy judgment based upon the
resources available and the relative risks to the public health and
safety from alternative actions." The court of appeals accordingly
concluded (id. at 14a) that the district court erred when it sought
"to second-guess the On Scene Coordinator's decision."

                               ARGUMENT

   1. The court of appeals' conclusion follows necessarily from this
Court's decision in Dalehite v. United States, supra.  In Dalehite,
the Court applied the discretionary function exception to a fertilizer
procurement and shipping program undertaken by the government in an
effort to increase food production in occupied territories following
the Second World War.  The plaintiffs in Dalehite argued that the
implementation of the program was negligent in a number of respects,
thereby causing the explosion of a shipment of fertilizer.  This Court
concluded (346 U.S. at 35-36), however, that the discretionary
function exception "included more than the initiation of programs and
activities.  It also includes determinations made by executives or
administrators in establishing plans, specifications or schedules of
operations.  Where there is room for policy judgment and decision
there is discretion." Thus, the Court held that the exception not only
barred claims that the government was negligent in adopting the
program as a whole but also claims that the government was negligent
in various phases of manufacturing, packaging, labeling and shipping
the product and in failing to warn those handling the fertilizer of
its dangerous nature.

   In this case, the government was engaged not as in Dalehite, in an
activity creating its own hazards, but rather, pursuant to a statutory
duty, in the inherently dangerous task of cleaning up enviornmental
hazards created by others.  Under CERCLA, EPA has been given broad
authority to contain and and eliminate hazardous wastes.  /2/ This
authority is not circumscribed in any significant way, and EPA clearly
has broad discretion to structure individual clean-up projects,
consistently with budgetary constraints, in accordance with its own
views of sound policy.  For each removal action, EPA appoints an
on-scene coordinator, with full responsibility to coordinate and
direct the federal removal efforts (Pet. App. 20a).  There are no
established guidelines or manuals that control the exercise of his
discretion;  instead, regulations require him to consider and balance
a number of factors in making clean-up decisions.  /3/

   In the present case, the on-scene coordinator decided to proceed
immediately with "the neutralization of an oleum tank that was venting
directly into the atmosphere and posed a major threat of fire,
explosion, and release of pollutants into the air (Pet. App. 13a)
rather than waiting for more favorable wind conditions.  That decision
involved a balancing of the risks of proceeding and the risks of
waiting as well as practical considerations concerning the feasibility
of the project as a whole.  The on-scene coordinator was required to
act, based on considerations of "social, economic, and political
policy" (Varig Airlines, 467 U.S. at 814), in accordance with his
"judgment of the best course" (Dalehite, 346 U.S. at 34).  If follows
that his decision was protected by the discretionary function
exception, and it is not within the province of the courts to
second-guess that decision (467 U.S. at 814;  346 U.S. at 41).

   2. Petitioner contends (Pet. 7-8) that there was no evidence that
the on-scene coordinator actually made a policy determination to
proceed with the neutralization of this particular hazard on the day
in question.  There is no requirement, however, that the policy
considerations underlying the "determinations made by executives or
administrators in establishing plans, specifications or schedules of
operations" (346 U.S. at 35-36) be articulated in advance by the
policy maker.  As the court of appeals properly concluded, the factors
and options here were clear and the on-scene coordinator made a
conscious decision to proceed in face of the risks.  In that decision
there was ample "room for policy judgment and decision" (id. at 36).
/4/ Indeed, it is unimaginable that the decision could have been
reached without such an exercise of decision-making judgment.

   The district court found that this chemical plant "was one of the
most hazardous sites the EPA has undertaken to clean up to this date
under the Act's program" (Pet. App. 21a).  The site contained more
than "3,000 drums, and various reactors and tanks, containing
hazardous chemicals" and many of these vessels were in "deteriorating
condition" (id. at 20a).  There also was ground water contamination,
filled-in lagoons of chemicals, and poor air quality in the area (id.
at 20a, 27a).  The oleum tank was "(one) of the most serious hazards"
(id. at 23a).  In addition, the on-scene coordinator had a budgetary
cap and a time limitation in which to complete the work (id. at 20a).

   As the court of appeals recognized, in deciding how to schedule the
clean-up operations, the on-scene coordinator was inevitably faced
with "balancing the risk of proceeding with the neutralization on the
day chosen against the risks of further delay" (Pet. App. 13a).  He
"necessarily took certain calculated risks, but those risks were
encountered for the advancement of a governmental purpose and pursuant
to (a) specific grant of authority" (Varig Airlines, 467 U.S. at 820).

   3. Petitioner contends (Pet. 12) that the discretionary function
exception can apply only to the government's initial decision to
embark on a project, not to decisions made in implementing the
project.  But that is plainly incorrect.  As this Court clearly stated
in Dalehite, 346 U.S. at 35-36, the discretionary function exception
"includes more than the initiation of programs and activities.  It
also includes determinations made by executives or administrators in
establishing plans, specifications or schedules of operations." See
also Varig Airlines, 467 U.S. at 811-813.

   There is admittedly some disharmony among the courts of appeals in
this general area.  Some decisions see a material distinction between
"policy" and "planning" activities, on the one hand, and "operational"
activities, on the other.  These decisions stress that negligent
implementation of discretionary policies and plans is not itself
discretionary and therefore not within the scope of the exception,
even where the alleged negligence stems from a decision concerning the
proper allocation of scarce resources.  See, e.g., U.S. Fire Ins. Co.
v. United States, 806 F.2d 1529 (11th Cir. 1986) (negligent placement
and maintenance of buoys by Coast Guard);  Aslakson V. United States,
790 F.2d 688 (8th Cir. 1986) (failure of power administration to
elevate power lines over lake);  Henderson v. United States, 784 F.2d
942 (9th Cir. 1986) (negligently exposed high voltage wires);  Alabama
Elec. Coop., Inc. v. United States, 769 F.2d 1523 (11th Cir. 1985)
(negligent design of dike by Army Corps of Engineers);  Drake Towing
Co. v. Meisner Marine Constr. Co., 765 F.2d 1060 (11th Cir. 1985)
(misplacement of buoys by Coast Guard);  Eklof Marine Corp. v. United
States, 762 F.2d 200 (2d Cir. 1985) (mismarking of channel by Coast
Guard);  SCNO Barge Lines, Inc. v. Sun Transp. Co., 775 F.2d 221 (8th
Cir. 1985) (misleading information in Coast Guard navigation reports).

   Other court of appeals decisions, by contrast, emphasize that
operational decisions may nonetheless be discretionary, and where they
are -- particularly where an agency concerned with resource allocation
decides to do so much, and not more, in addressing a general problem
or providing a product or service -- such decisions should not be
second-guessed in a tort suit.  See, e.g., Bowman v. United States,
820 F.2d 1393 (4th Cir. 1987) (failure to erect guardrail, place
warning signs or close Blue Ridge Parkway during inclement weather);
C.P. Chemical Co. v. United States, 810 F.2d 34 (2d Cir. 1987)
(decision of Consumer Product Safety Commission to ban insulation
manufactured by plaintiff under Consumer Product Safety Act rather
than using procedures of Federal Hazardous Substances Act);
Myslakowski v. United States, 806 F.2d 94 6th Cir. 1986) (sale of used
jeeps without warning of propensity to overturn in certain
situations), cert. denied, No. 86-1389 (Mar. 30, 1987);  Pierce v.
United States, 804 F.2d 101 (8th Cir. 1986) (challenge to review
process that led to allegedly wrongful termination of disability
benefits);  Heller v. United States, 803 F.2d 1558 (11th Cir. 1986)
(FAA's allegedly wrongful denial of medical certificate to pilot);
Smith v. Johns-Manville Corp., 795 F.2d 301 (3d Cir. 1986) (sale of
surplus asbestos "as is" without warnings or warranties);  Brown v.
United States, 790 F.2d 199 (1st Cir. 1986) (issuance of weather
forecast based on incomplete information due to failure to repair or
replace sporadically malfunctioning weather-reporting buoy), cert.
denied, 479 U.S. 1058 (1987);  Mitchell v. United States, 787 F.2d 466
(9th Cir. 1986) (decision not to mark power lines below 500 feet),
cert. denied, No. 87-301 (Oct. 5, 1987);  Lindsey v. United States,
778 F.2d 1143 (5th Cir. 1985) (consideration given to patent
application);  Ford v. American Motors Corp., 770 F.2d 465 (5th Cir.
1985) (sale of used jeeps without warning of propensity to overturn in
certain situations);  Spencer v. New Orleans Levee Bd., 737 F.2d 435
(5th Cir. 1984) (inaccurate weather forecast).

   There is no clear conflict among the circuits posed by the cases in
these two categories.  Indeed, all circuits with decisions in the
first category also have cases in the second category.  While we would
be prepared to argue that some of the above-cited cases were wrongly
decided, /5/ we do not believe that they pose the sort of stark
contrast of legal principle that weighs in favor of granting
certiorari.  As this Court has stressed (Varig Airlines, 467 U.S. at
813), "it is unnecessary -- and indeed impossible -- to define with
precision every contour of the discretionary function exception." The
cases in this area are highly fact-specific, and the differences
appear to be more of emphasis than of principle.

   More immediately, this case does not present an occasion to clarify
the tension among these court of appeals decisions.  The court of
appeals here made it very clear that the on-scene coordinator's
decision to proceed with the clean-up depended not merely on a
consideration of "the resources available" but also upon a balancing
of "the relative risks to the public health and safety from
alternative actions" (Pet. App. 13a).  The on-scene coordinator was
delegated considerable discretion to make this choice based on his
overall assessment of the situation.  Whatever merit the distinction
between policy determinations and operational decisions may have when
only the proper allocation of resources to accomplish a defined
objective is in question, that simplistic distinction is incapable of
capturing the "nature and quality" (Varig Airlines, 467 U.S. at 813)
of the on-scene coordinator's actions in this case.

   Petitioner is also mistaken in attempting (Pet. 13) to draw a
related distinction between regulatory functions -- which are within
the exception -- and non-regulatory or proprietary functions -- which
are not.  That distinction was expressly rejected in Varig Airlines.
The Court in Varig reaffirmed Dalehite, which applied the exception
outside a regulatory context, and quoted legislative history clearly
stating that "'administrative action not of a regulatory nature, such
as the expenditure of Federal funds, the execution of a Federal
project, and the like'" fall within the exception.  467 U.S. at
809-810, 811-813 (citations omitted).  "(T)he basic inquiry concerning
the application of the discretionary function exception," the Court
stressed, is simply whether the challenged acts involve "legislative
and administrative decisions grounded in social, economic, and
political policy" (Varig Airlines, 467 U.S. at 813-814).  The decision
how urgently to pursue and what risks to take in abating a severe and
immediate hazard to health and safety implicates numerous concerns of
"social, economic, and politcal policy." /6/

                              CONCLUSION

   The Petition for a writ of certiorari should be denied.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   JOHN R. BOLTON

      Assistant Attorney General

   JOHN F. CORDES

   PHYLLIS JACKSON PYLES

      Attorneys

   JUNE 1988

   /1/ Eight days prior to the mishap now in issue, another release of
toxic gas occurred in connection with the clean-up of the same tank.
Government liability for damages resulting from the earlier incident
is not in issue here since petitioner never appealed from the district
court's dismissal of this aspect of its claim.  Pet. App. 5a, 6a.

   /2/ The Act provides, in pertinent part (42 U.S.C. 9604 (a)(1)):

      Whenever (A) any hazardous substance is released or there is a
      substantial threat of such a release into the environment, or
      (B) there is a release or substantial threat of release into the
      environment of any pollutant or contaminant which may present an
      imminent and substantial danger to the public health or welfare,
      the President is authorized to act, consistent with the national
      contingency plan, to remove or arrange for the removal of, and
      provide for remedial action relating to such hazardous
      substance, pollutant, or contaminant at any time * * * or take
      any other response measure consistent with the national
      contingency plan which the President deems necessary to protect
      the public health or welfare or the environment * * *.

The authority to act under this provision has been expressly delegated
to EPA.  See Exec. Order No. 12,580, 52 Fed. Reg 2923 (1987);  Exec.
Order No. 12,316, 3 C.F.R. 168 (1981 Comp.).

   /3/ In fashioning an appropriate clean-up plan, the on-scene
coordinator must document and evaluate pertinent facts concerning the
discharge or release, such as its source and cause;  the existence of
potentially responsible parties;  the nature, amount, and location of
discharged or released materials;  the probable direction and time of
travel of discharged or released materials;  the pathways to human
exposure;  the potential impact on human health, welfare and safety;
the potential impact on natural resources and property which may be
affected;  priorities for protecting human health, welfare and the
environment;  and the cost of the operation. See 40 C.F.R.
300.33(b)(2).

   #FN4

   /4/ Alabama Elec. Coop., In. v. United States, 769 F.2d 1523 (11th
Cir. 1985), upon which petitioner relies (Pet. 8-9), is not to the
contrary.  In that case the court held that alleged negligence by the
Army Corps of Engineers in the design of a dike was not shielded by
the discretionary function exception absent some indication that the
design defect was the result of a policy decision.  Here, the court of
appeals properly concluded that the on-scene coordinator's decision to
proceed in the face of the known risks "required() the exercise of
policy judgment based upon the resources available and the relative
risks to the public health and safety from alternative actions" (Pet.
App. 13a (emphasis added)).

   /5/ In particular, Eklof, SCNO Barge, Drake Towing, and U.S. Fire
Ins. all seem to turn the Coast Guard into an insurer of safe
navigation.

   /6/ As the court of appeals expressly noted (Pet. App. 14a), there
was no allegation in this case that the on-scene coordinator violated
any EPA regulation governing removal actions.  Thus, this case does
not present any issue found in Berkovitz v. United States, cert.
granted, No. 87-498 (argued Apr. 19, 1988), and there is no reason to
hold this case for disposition in light of Berkovitz.