Opinion ID: 1036612
Heading Depth: 2
Heading Rank: 2

Heading: PRP Liability

Text: The District Court did not err in finding that the Litgo Appellants were liable as current operators under CERCLA. An operator is “someone who directs the workings of, manages, or conducts the affairs of a facility.” United States v. Bestfoods, 524 U.S. 51, 66 (1998).5 For that role to subject 5 The Litgo Property is undisputedly a “facility” for CERCLA purposes. See 42 U.S.C. § 9601(9) (“facility” includes “any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located”). 21 someone to CERCLA liability, the operator must “manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations.” Id. at 66–67. Here, the District Court found that the Litgo Appellants were actively involved in activities related to the contamination on the Litgo Property: not only did the Litgo Appellants have the actual authority to make decisions about compliance with environmental regulations, they hired environmental consultants to conduct tests and remediation operations on the Litgo Property, and they oversaw that work. Relying on United States v. Bestfoods, the Litgo Appellants argue that they should not be held liable as current operators because they have only managed remedial activities on the site. That is, they argue, they have not engaged in any operations that caused further contamination, so they have not been involved in “operations specifically related to pollution,” id. at 66. This interpretation reads Bestfoods far too narrowly, and is contrary to CERCLA’s liability scheme. Under CERCLA, current operators—like all other classes of PRPs—are held strictly liable for all releases that occur at a facility. See Burlington N., 556 U.S. at 608 (citing 42 U.S.C. § 9607(a)). The statute does not require a showing that the operator was directly responsible for the release of a hazardous substance for PRP liability to attach. See 42 U.S.C. § 9607(a) (PRP liability attaches when a current “owner [or] operator of . . . a facility . . . from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance.” (emphasis added)); Alcan Aluminum Corp., 964 F.2d at 264–66. Indeed, in the case of a current operator, as opposed to a past 22 operator, the plaintiff is not even required to show that the party was an operator when an active “disposal” of hazardous waste occurred. Compare 42 U.S.C. § 9607(a)(1) (PRP status applies to “the owner and operator of a vessel or a facility”), with 42 U.S.C. § 9607(a)(2) (PRP status applies to “any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of” (emphasis added)). The plaintiff need only show that the party engaged in operations related to pollution and that a “release” of hazardous substances occurred, a requirement that can be met by showing that there was a passive migration of waste. See United States v. CDMG Realty Co., 96 F.3d 706, 715 (3d Cir. 1996) (citing 42 U.S.C. § 9601(22)); see also id. at 714 (“disposal,” by contrast, requires more than passive migration of contaminants). A determination that current operators cannot be held liable unless they have actually engaged in polluting activities would require us to disregard the distinction between past and present operators set out in the statute. See id. at 715 (explaining that Congress must have intended for current owners and operators and past owners and operators to be liable under different circumstances, as it distinguished between the two in the definition of PRP). It would also add a causation requirement that is not found in the text.6 The 6 Nor does this requirement have strong support in case law. The Litgo Appellants cite to Universal Paragon Corp. v. Ingersoll-Rand Co., 2007 WL 518828, at  (N.D. Cal. Feb. 13, 2007), in which a district court refused to impose operator liability when the party “had no involvement in the contaminating activities.” Litgo Br. 32. But there, the district 23 Supreme Court has recognized that, under CERCLA’s broad liability scheme, “even parties not responsible for contamination may fall within the broad definitions of PRP,” Atl. Research Corp., 551 U.S. at 136 (citing 42 U.S.C. § 9607(a)(1)), and, contrary to the Litgo Appellants’ suggestion, the Supreme Court’s decision in Bestfoods does not create an exception for “innocent” operators. Bestfoods addresses when a parent company can be held directly responsible for the activities of its subsidiary as an “operator.” In defining “operator,” the Supreme Court employed broad, passive language: an operator is one who is involved in operations “having to do with the leakage or court appears to conflate the requirements for being a current owner with the requirements for being a past owner, so the opinion is not especially persuasive. The Litgo Appellants also cite to Bob’s Beverage, Inc. v. ACME, Inc., a district court case asserting that “a person must affirmatively act to cause a release of hazardous waste to become an operator.” 169 F. Supp. 2d 695, 721 (N.D. Ohio 1999). This requirement, as discussed above, is not found in CERCLA. Nor is it found in United States v. Township of Brighton, 153 F.3d 307 (6th Cir. 1998), the Sixth Circuit case on which Bob’s Beverage relies. Township of Brighton states only that an operator must be actively involved on the site in some way that relates to the pollution; it does not provide that the operator must have caused the release. See id. at 314–15. In any event, the Litgo Appellants did exercise actual control over pollution-related operations at the Litgo Property by taking affirmative actions: they conducted tests and hired contractors to perform remediation operations on the property. 24 disposal of hazardous waste,” Bestfoods, 524 U.S. at 66–67 (emphasis added), not one who is involved in operations “causing” or “leading to” the leakage or disposal of waste. Moreover, the Court expressly noted that operator liability may be imposed when a party is responsible for “decisions about compliance with environmental regulations,” id. at 67, a description which directly applies to the Litgo Appellants’ activities at the Property.7 This interpretation does not—as the Litgo Appellants suggest—lead to unfair consequences. Although CERCLA’s strict liability regime may subject “innocent” private parties to liability, see Atl. Research Corp., 551 U.S. at 136, innocent owners and operators do have some protection. After identifying PRPs, courts allocate response costs based on equitable factors. An operator who has participated in remediation without slowing or interfering with that process likely will not be assessed a large share of the remediation costs, if it is assessed any at all. See, e.g., Am. Color & Chem. Corp. v. Tenneco Polymers, Inc., 918 F. Supp. 945, 959–60 (D.S.C. 1995) (0% to current owner and operator); 7 The Litgo Appellants also cite to several district court cases suggesting that mere investigation into contamination will not, by itself, subject a party to current operator PRP liability. See City of Grass Valley v. Newmont Mining Corp., 2007 WL 4287603, at  & n.3 (E.D. Cal. Dec. 4, 2007); Spectrum Int’l Holdings, Inc. v. Universal Coops., Inc., 2006 WL 2033377, at , –6 (D. Minn. July 17, 2006). But the Litgo Appellants have been actively involved in remediation operations on the site, so we need not here decide whether purely investigative activities could subject a party to operator liability. 25 Alcan-Toyo Am., Inc. v. N. Ill. Gas Co., 881 F. Supp. 342, 346–47 (N.D. Ill. 1995) (10% to current owner). An operator who has delayed with remediation, however, may still receive a share of the remediation costs, see Bedford Affiliates v. Sills, 156 F.3d 416, 430 (2d Cir. 1998), abrogated on other grounds by W.R. Grace & Co.—Conn. v. Zotos Int’l, Inc., 559 F.3d 85, 90 (2d Cir. 2009), in accordance with CERCLA’s purpose of encouraging prompt cleanup, see Burlington N., 556 U.S. at 602.
The District Court did not err in finding that the United States Appellees are not “past owners” based on their involvement at the Columbia Aircraft manufacturing site; they are PRPs only because they arranged for the disposal of hazardous substances that may have eventually been released at the JANR warehouse. A party may be liable as a past owner when, “at the time of disposal of any hazardous substance,” it “owned or operated any facility at which such hazardous substances were disposed of.” 42 U.S.C. § 9607(a)(2). CERCLA defines “facility” broadly as: (A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located. 26 42 U.S.C. § 9601(9). The District Court found that there were only two relevant “facilities” at which hazardous substances had been disposed in this case—the Litgo Property (as a “site or area”), and the vapor degreasers used to clean the precision parts (as “equipment”). It found that the United States Appellees did not own either of those facilities. The Litgo Appellants raise two challenges to the District Court’s determination. First, they argue that the evidence shows that the government-owned equipment leased by Columbia Aircraft—which clearly falls within the definition of a “facility”—was cleaned using TCE, and this constitutes a disposal of hazardous waste. Second, they claim that the United States Appellees’ ownership of some of the equipment used in Columbia Aircraft’s manufacturing process is sufficient to subject them to ownership liability. The Litgo Appellants’ first challenge is meritless. The District Court found that the precision parts manufactured by Columbia Aircraft were degreased using TCE as a solvent, but it rejected the claim that TCE was used to clean the equipment used in the manufacturing process. The Litgo Appellants’ expert did testify that TCE was commonly used at the time to service electrical motors and other parts of machinery. This testimony, however, was focused on the use of TCE to degrease airplane parts. When asked whether TCE would have been used “on the equipment itself,” the expert responded only that it was a “possibility.” He also testified that other solvents, like acetone, could have been used instead of TCE. Thus, the District Court’s factual determination that there was no direct relationship between the government- 27 owned equipment and the TCE solvents was not clearly erroneous. The Litgo Appellants also claim that the United States Appellees were “owners” of a facility where TCE was disposed during the 1940s because they owned part of a “process installation”—that is, they owned machinery and equipment that was a necessary part of the manufacturing process. In particular, the United States Appellees owned some of the equipment that Columbia Aircraft used to manufacture precision parts, and Columbia Aircraft disposed of TCE when it degreased those parts later in the production process, using separate machinery (vapor degreasers). The Litgo Appellants, relying primarily on United States v. Saporito, 684 F. Supp. 2d 1043 (N.D. Ill. 2010),8 argue that this is enough to subject the United States Appellees to past owner liability. We disagree. 8 The Litgo Appellants also rely on American International Specialty Lines Insurance Co. v. United States, 2010 WL 2635768 (C.D. Cal. June 30, 2010), which states that there need not be evidence that any specific piece of equipment owned by the defendant was responsible for a specific release; “[i]t is enough that the components owned by the defendant were ‘a necessary part’ of the manufacturing process.” Id. at  (citing Saporito, 684 F. Supp. 2d at 1056). However, in American International Specialty Lines, some of the government-owned equipment was directly involved in the release of hazardous waste. For example, the government owned “grinders” that created perchlorate dust, one of the waste products at issue in the case. Id. at −9. These grinders were then cleaned with VOCs, including TCE. Id. 28 Under the Litgo Appellants’ view, if a party owns any equipment used at a manufacturing site, it can be held responsible for the disposal of hazardous waste that occurs at other pieces of equipment elsewhere at the site, as long as the two pieces of equipment are part of the same overarching “process.” This broad definition of facility finds no support in CERCLA. The term “process installation” is not used in CERCLA’s definition of “facility,” although “installation” is mentioned.9 Installation generally means “a thing installed, in particular: a large piece of equipment installed for use.” Concise Oxford American Dictionary 464 (2006); see also Random House Dictionary of the English Language 988 (2d ed. 1987) (defining installation as “something installed, as machinery or apparatus placed in position or connected for use”). It is a physical item: a piece of machinery or equipment that has been installed. This fits well with the other types of “facility” listed in the definition, all of which are physical. See Dole v. United Steelworkers of Am., 494 U.S. 26, 36 (1990) (“[W]ords grouped in a list should be given related meaning.”). The Litgo Appellants’ attempt to define “installation” more conceptually—as a process, potentially made up of various discrete pieces of machinery that may or may not be located near each other or used together—is not supported by the statutory language. 9 “Process installation,” as far as we can tell, is simply a phrase used by the Litgo Appellants’ counsel and expert during the expert’s testimony. See App. 2757. It does not appear in other cases, and the Litgo Appellants do not explain the term’s origin. 29 It may nevertheless be possible for two pieces of equipment to be sufficiently close in relation to each other that they should be considered components in a larger piece of machinery (which may, itself, be “equipment” or an “installation”). See, e.g., Saporito, 684 F. Supp. 2d at 1057 (determining that the party was liable based on ownership of necessary equipment in a plating line). Here, however, the District Court reasonably determined that no such relationship between the government-owned equipment and the vapor degreasers existed. There is no suggestion that the equipment owned by the United States Appellees was in any way attached to the vapor degreaser tanks that disposed of waste or used in close connection with them. The only relationship between the vapor degreasers and the United States Appellees’ equipment is that both were used by Columbia Aircraft to manufacture precision parts. They were not, however, used at the same stage of the production process. Accordingly, we will uphold the determination that there was insufficient evidence to connect the equipment owned by the United States Appellees to the disposal or release of hazardous substances, and that the United States Appellees thus were not past owners under CERCLA.