Opinion ID: 482542
Heading Depth: 2
Heading Rank: 2

Heading: Application of CERCLA to Pre-1980 Costs

Text: 26 Related to the question of CERCLA's application to pre-1980 acts is the question whether the government can recover response costs incurred prior to CERCLA's effective date. This issue is raised by the government's cross-appeal. The district court held that the government could not recover its pre-enactment response costs. NEPACCO, 579 F.Supp. at 841-43. The government argues on cross-appeal that the district court erred in denying the government recovery of its pre-CERCLA response costs. The government argues a close examination of the statutory language and scheme, legislative history and legislative purpose supports retroactive liability for pre-enactment response costs. 27 The district court concluded that because of the magnitude of the potential liability for pre-enactment response costs, it is difficult to believe that if Congress had intended to make the defendants liable for pre-CERCLA expenses, it would not have said so explicitly and clearly in the statutory language, committee reports or floor debates. Id. at 843; accord United States v. Wade, 20 Env't Rep. Cases (BNA) 1849, 1850-51 (E.D.Pa.1984). The district court found that CERCLA itself did not clearly specify whether pre-enactment response costs were recoverable because the statutory language 'all costs ... incurred' [in CERCLA Sec. 107(a),] 42 U.S.C. Sec. 9607(a), is susceptible to varying interpretations, either all costs incurred regardless of when incurred or all costs incurred from the date of enactment. Id. 579 F.Supp. at 842. The district court noted that [t]he [NCP] makes no provision for the recovery of pre-CERCLA response costs, id., citing 40 C.F.R. Part 300 (1983), and that the time limitations placed in sections 104(c)(3), 107(f) and 111(d)(1) [,42 U.S.C. Secs. 9607(c)(3), (f), 9611(d),] could equally indicate that these are the only provisions in which pre-CERCLA costs may be recoverable. Id. The district court also found the legislative history unpersuasive because recovery of pre-CERCLA response costs was not discussed at all in the House, id. at 843 n. 21, and the only references to authority to recover pre-CERCLA response costs in the Senate, Sec. 4(a)(2) and Sec. 4(n) of S. 1480, were deleted and not enacted. Id. at 843. 28 After the present case was decided, this issue was exhaustively examined and resolved in favor of recovery of pre-CERCLA response costs in United States v. Shell Oil Co., 605 F.Supp. at 1072-79. We find the analysis in United States v. Shell Oil Co. to be convincing. Accord Mayor of Boonton v. Drew Chemical Corp., 621 F.Supp. 663, 668-69 (D.N.J.1985); United States v. Ward, 618 F.Supp. 884, 989-99 (E.D.N.C.1985). 29 In United States v. Shell Oil Co. the federal government sued under CERCLA Secs. 104, 107, 42 U.S.C. Secs. 9604, 9607, to recover the costs it had incurred and will incur in cleaning up the heavily contaminated Rocky Mountain Arsenal located outside of Denver, Colorado. The Rocky Mountain Arsenal has been owned by the United States since 1942 and was used by the United States Department of the Army for manufacturing and handling various chemicals and munitions. In addition, since 1947, Shell Oil and its predecessors had leased part of the Arsenal for the manufacture of pesticides, herbicides and other chemicals. The Army's wastes and all or some of Shell's wastes were disposed of through waste disposal systems built and operated by the Army. The waste disposal systems repeatedly failed and released the commingled wastes into the environment, severely contaminating the Arsenal and threatening the surrounding environment. In 1975 the Army began to clean up the Arsenal. By December 1, 1983, before CERCLA was enacted, the Army had incurred about $48 million in response costs and, by January 1984, had proposed four alternative cleanup programs, with estimated future response costs ranging from $210 million to $1.8 billion, and recommended the program estimated to cost $360 million. Shell argued, among other things, that CERCLA did not authorize recovery of the Army's pre-enactment response costs. 30 The Shell Oil court disagreed and held CERCLA authorized recovery of pre-enactment response costs. 605 F.Supp at 1079. First, the Shell Oil court agreed with the district court in the present case that congressional intent to either impose or withhold liability for response costs incurred before CERCLA cannot be divined from the verb tenses in [CERCLA] Sec. 107(a) [,42 U.S.C. Sec. 9607(a) ]. Id. at 1073. The Shell Oil court examined the grammatical structure of CERCLA Sec. 107(a), 42 U.S.C. Sec. 9607(a), and concluded that each party's argument cancelled the other out. Id., citing Ohio ex rel. Brown v. Georgeoff, 562 F.Supp. at 1309-10. Shell had argued that use of the imperative 'shall' ... indicate[d] [that Congress] intended prospective operation of the liability provision. 605 F.Supp. at 1073. The government had argued, however, that all the other verbs in [CERCLA] Sec. 107(a) [, 42 U.S.C. Sec. 9607(a),] including 'costs ... incurred,' [were] in the past tense (with the exception of 'accepts').... [and thus should] be interpreted to include pre-enactment events. Id. 31 The Shell Oil court did not address the NCP's failure to provide for recovery of pre-CERCLA response costs. The Shell Oil court, however, considered and rejected the related argument that the requirement in CERCLA Sec. 107(a), 42 U.S.C. Sec. 9607(a), that recoverable costs were those costs not inconsistent with the [NCP] indicated Congress' intent that liability for costs was prospective only. The Shell Oil court concluded the [t]he consistency requirement addresses the nature of the response action for which costs can be recovered, not the timing of the action. Id. at 1074. The Shell Oil court also refused to interpret the effective date provision, CERCLA Sec. 302(a), 42 U.S.C. Sec. 9652(a), to limit liability to pre-enactment response costs. Id. at 1075. 32 Because CERCLA Secs. 107(c)(3), 107(f) and 111(d), 42 U.S.C. Secs. 9607(c)(3), (f), 9611(d), contain express time limitations, the absence of any time limitations in CERCLA Sec. 107(a), 42 U.S.C. Sec. 9607(a), arguably supports only prospective liability for response costs. CERCLA Sec. 107(c)(3), 42 U.S.C. Sec. 9607(c)(3), provides a state with a credit against its share of future maintenance costs for its documented cleanup costs expended after January 1, 1978, and before December 11, 1980, for CERCLA Sec. 111, 42 U.S.C. Sec. 9611, actions. This provision specifies the funding relationship between the federal government and individual states for future maintenance costs and does not address whether the government can recover pre-CERCLA response costs from responsible parties. 33 CERCLA Sec. 107(a)(4)(A)-(C), 42 U.S.C. Sec. 9607(a)(4)(A)-(C), sets forth three types of liability: (A) response costs incurred by the United States or a state that are not inconsistent with the NCP, (B) any other necessary response costs incurred by any other person that are consistent with the NCP, and (C) natural resource damages. By separately considering the place of each type of liability in the statutory scheme, we can discern Congressional intent with respect to recovery of pre-enactment response costs. CERCLA Secs. 107(f), 111(d)(1), 42 U.S.C. Secs. 9607(f), 9611(d)(1), preclude recovery of natural resource damages and claims for such damages against the Superfund if the release of hazardous substances and the resulting natural resource injury occurred wholly before CERCLA's enactment. The Shell Oil court noted the provisions authorizing recovery of response costs by the government, CERCLA Sec. 107(a)(4)(A), 42 U.S.C. Sec. 9607(a)(4)(A), and by any other person, CERCLA Sec. 107(a)(4)(B), 42 U.S.C. Sec. 9607(a)(4)(B), do not contain time limitations and decided [i]n order to give meaning to these [time limitation] provisions [in CERCLA Secs. 107(f), 111(d)(1), 42 U.S.C. Secs. 9607(f), 9611(d)(1) ], one must assume that liability for other damages--costs of removal or remedial action incurred by the United States or a State (Sec. 107(a)(4)(A)), and other necessary response costs incurred by any other person (Sec. 107(a)(4)(B))--is not so limited. 605 F.Supp. at 1076. Thus, the Shell Oil court concluded Congress implicitly authorized retroactive application of sections 107(a)(4)(A) and (B) by affirmatively limiting retroactive application of the third category of liability, damages to natural resources, section 107(a)(4)(C). Id. Cf. United States v. Conservation Chemical Co., 619 F.Supp. at 213 (three year statute of limitations in CERCLA Sec. 112(d), 42 U.S.C. Sec. 9612(d), applies only to claims against the Superfund and for natural resource damages), citing United States v. Mottolo, 605 F.Supp. 898, 901-10 (D.N.H.1985). 34 As further explained by the Shell Oil court, 35 [t]here is good reason to preclude use of CERCLA monies and liability for cleanup of sites where both the release and the damages occurred wholly before enactment. The sites excluded under 107(f) and 111(d) are stable sites, that is, the environment, though damaged, will not deteriorate further.... Congress apparently decided to utilize the limited resources of the fund created by CERCLA to clean up the thousands of sites ... which are not stable. CERCLA's goal is to clean up these sites before further damage occurs. 36 At the opposite end of the spectrum from the stable sites excluded under 107(f) and 111(d) are those sites ... where the danger to the public health and welfare and to the environment was so imminent that the United States proceeded with cleanup without a special fund of money for that purpose and without assurance that it would be repaid by the persons responsible for the contamination. It was sites containing this magnitude of public danger that prompted Congress to enact CERCLA. 37 Construing section 107(a) to preclude recovery of pre-enactment response costs would carve out an exception to the general retroactive scheme of the statute for those most severe situations where ... the government's response commenced prior to the enactment of the statute.... Congress could [not] have intended to protect the public fisc by imposing liability on the responsible parties, yet except the sites where response had already commenced because the situations were the most imminently threatening. Such an interpretation would penalize the government for prompt response and provide an undeserved windfall to the parties who had created, then abandoned, some of the most egregious sites. 38 605 F.Supp. at 1076-77. 39 The Shell Oil court then reviewed the legislative history of CERCLA, including the treatment of Sec. 4(a)(2) and Sec. 4(n) of S. 1480, and concluded it supported imposing liability for pre-enactment response costs. Id. at 1077-79. The legislative history of CERCLA is very difficult to follow, in part because 40 [t]wo different bills proceeded through the House and the Senate. The Senate made certain last minute amendments to its bill, (S. 1480, 96th Cong., 2d Sess. 1980), most notably the removal of provisions imposing liability for personal injury caused by hazardous waste disposal. The House then struck the language in its bill, H.R. 7020, 96th Cong., 2d Sess. (1980), and substituted the language of the Senate bill. H.R. 7020, as amended, was eventually enacted. The bill retained the House file number, apparently because of a requirement that appropriations measures originate in the House. 41 United States v. Reilly Tar & Chemical Corp., 546 F.Supp. at 1111. As explained by the Shell Oil court, 42 [t]he liability provisions of CERCLA were derived largely from the original Senate bill, S. 1480. S. 1480 contained a liability provision for both costs of removal (Sec. 4(a)(1)) and for natural resources, property and personal injury damages (Sec. 4(a)(2)). During discussions of S. 1480 in the Senate Committee on Environment and Public Works, concern was expressed about retroactive application of the bill.... Senator Domenici introduced a new Sec. 4(n) which limited recovery for pre-enactment damages recoverable under Sec. 4(a)(2).... 43 Significantly, Sec. 4(n)(1) did not apply to Sec. 4(a)(1) which provided liability for response costs. The Senate report [at 37] emphasized the limited scope of Sec. 4(n): ... Costs of removal (cleanup and containment) are not affected by this provision, nor are any damages associated with continuing releases. 44 605 F.Supp. at 1077-78. As noted by the district court in the present case, both Sec. 4(a)(2) and Sec. 4(n) were deleted from the enacted bill. 579 F.Supp. at 843. We agree with the Shell Oil court, however, that the deletion of these subsections in fact indicates Congress intended to permit recovery of pre-CERCLA response costs because 45 [t]he time limitations on damages added by Sec. 4(n) of S. 1840 were maintained in the final version of CERCLA as the Secs. 107(f) and 111(d) limitations on recovery of natural resources damages. The remaining time limitations of Sec. 4(n) were deleted only because the substantive liability provisions for property and personal injury damages [in Sec. 4(a)(2) ] were deleted from the statute. Thus, the scheme of Sec. 4(n) in limiting recovery for pre-enactment damages, but not response costs, was maintained in the final statute. The legislative history of Sec. 4(n), including the comments emphasizing that recovery of removal costs is not to be limited by retroactivity concerns, therefore applies to the statute as passed. 46 605 F.Supp. at 1079 (emphasis added). 47 In summary, we hold the district court erred in finding that CERCLA does not authorize recovery of pre-enactment response costs. That part of the district court judgment holding that pre-enactment response costs cannot be recovered is reversed.