Court Opinion

ID: 2970931
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:25:23.462621+00
Date Added: 2024-06-11T11:43:32.780191
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            Pursuant to Sixth Circuit Rule 206           2        United States v. Consolidation                 No. 02-3308
   ELECTRONIC CITATION: 2003 FED App. 0346P (6th Cir.)            Coal Co., et al.
               File Name: 03a0346p.06
                                                             Before: DAUGHTREY and GILMAN, Circuit Judges;
                                                                       CALDWELL, District Judge.*
UNITED STATES COURT OF APPEALS
                                                                               _________________
             FOR THE SIXTH CIRCUIT
               _________________                                                     COUNSEL

UNITED STATES OF AMERICA , X                             ARGUED: Neil G. Epstein, ECKERT, SEAMANS,
                     Plaintiff, -                        CHERIN & MELLOTT, Philadelphia, Pennsylvania, for
                                -                        Appellant. Daniel M. Darragh, BUCHANAN INGERSOLL
          v.                                             PROFESSIONAL CORPORATION, Pitts burgh ,
                                -     No. 02-3308
                                -                        Pennsylvania, for Appellees. ON BRIEF: Neil G. Epstein,
CONSOLIDATION COAL CO .;         >                       Carol L. Press, ECKERT, SEAMANS, CHERIN &
                                ,
TRIANGLE WIRE & CABLE ,                                  MELLOTT, Philadelphia, Pennsylvania, Richard S.
                                -
INC.,                                                    Wiedman, ECKERT, SEAMANS, CHERIN & MELLOTT,
                                -
                  Third-Party -                          Pittsburgh, Pennsylvania, for Appellant. Daniel M. Darragh,
                                                         B U C H A N A N I N G E R S O LL P R O F E S S I O N AL
         Plaintiffs-Appellees, -                         CORPORATION, Pittsburgh, Pennsylvania, Joseph D.
                                -                        Lonardo, VORYS, SATER, SEYMOUR & PEASE,
                                -
NEVILLE CHEMICAL CO .,                                   Washington, D.C., for Appellees.
                                -
                  Third-Party -
        Defendant-Appellant. N                                                 _________________
                                                                                   OPINION
      Appeal from the United States District Court                             _________________
     for the Southern District of Ohio at Columbus.
      Nos. 94-00785; 94-00248—George C. Smith,             MARTHA CRAIG DAUGHTREY, Circuit Judge. Third-
                     District Judge.                     party defendant Neville Chemical Company appeals a district
                                                         court decision holding it liable for a portion of the past and
                Argued: July 30, 2003                    future costs of cleanup at the Buckeye Reclamation Landfill
                                                         in Belmont County, Ohio. The landfill has been on the
       Decided and Filed: September 26, 2003             National Priorities List as a Superfund site since 1983. Third-
                                                         party plaintiffs Consolidation Coal Company (referred to
                                                         throughout the record as Consol) and Triangle Wire & Cable,

                                                              *
                                                              The Honorable Karen Caldwell, United States District Judge for the
                                                         Eastern District of Kentucky, sitting by designation.

                           1
No. 02-3308              United States v. Consolidation       3    4    United States v. Consolidation               No. 02-3308
                                        Coal Co., et al.                Coal Co., et al.

Inc., brought an action under § 113 of the Comprehensive           Neville Chemical’s share was calculated to be 4.78%. Third,
Environmental Response, Compensation, and Liability Act of         the landfill contains municipal waste, between 755,000 and
1980, as amended by the Superfund Amendments and                   955,000 tons of which were disposed of at the landfill from
Reauthorization Act of 1986 (CERCLA), 42 U.S.C. §§ 9601            1970 to 1991. All three types of waste contain hazardous
et seq., seeking a declaration of liability and equitable          substances and contribute to the current need for cleanup.
allocation of response costs to Neville Chemical. Although
the chemical company stipulated that it had deposited                After investigation by the Ohio Environmental Protection
472,000 gallons of wastewater sludge from its Pennsylvania         Agency (OEPA) and the United States Environmental
treatment plant in the landfill between December 1978 and          Protection Agency (USEPA), the USEPA placed the landfill
February 1979, Neville Chemical claims that the district court     on the list of Superfund sites in September 1983. In
was unreasonable in imposing any of the cleanup costs on it        December 1984, the USEPA notified a number of companies
because the wastewater caused no harm. The district court          that it considered them potentially responsible parties (PRPs)
found Neville Chemical liable under CERCLA and                     and requested that the companies conduct a remedial
determined its equitable share of past and future response         investigation and feasibility study. Neville Chemical declined
costs for cleanup of the landfill to be 6%. See United States      to participate, but the other companies worked with the
v. Consolidation Coal Co., 184 F. Supp. 2d 723, 752 (S.D.          USEPA to develop an administrative consent order that
Ohio 2002).                                                        required a remedial investigation and feasibility study, as well
                                                                   as an endangerment assessment. After evaluating the results
   For the reasons set out below, we affirm the district court’s   of the remedial investigation and feasibility study, the
decision as to liability and equitable share based on the          USEPA selected construction of a solid waste landfill cap as
reasoning in the district court opinion. However, as to the        the appropriate remedy, at a cost of $48 million to $52
district court’s calculation of prejudgment interest, awarded      million. When the USEPA notified non-participating PRPs
to Consol and Triangle Wire under 42 U.S.C. § 9607(a), we          of their potential liability, a number of them began to
find it necessary to remand the case for further proceedings.      participate in the remediation process that resulted in a second
                                                                   administrative consent order. Neville Chemical again
  I. FACTUAL AND PROCEDURAL BACKGROUND                             declined to participate.
  The record indicates that three different kinds of waste were      In 1994, Consol filed a complaint for declaratory judgment,
deposited at the Buckeye Reclamation Landfill over the last        in part to determine liability and allocation of costs under
seven decades. First, the landfill contains “gob,” material left   CERCLA, and the United States filed a complaint for the
over from coal mining operations in the area from 1934 to          recovery of costs. The cases were consolidated and realigned
1954 and composed of coal, rock, clay, and other geological        so that the sole plaintiff in both cases was the United States.
materials. The “gob” was left on the property before the area      Ten of the defendant PRPs filed a third-party complaint for
was a landfill. Second, the landfill contains industrial waste,    contribution against 64 third-party defendants, including
which was disposed of primarily in a small area known as the       Neville Chemical. During this time, the USEPA and the
“waste pit.” The parties have stipulated the weight, type, and     cooperating PRPs, including Consol and Triangle Wire,
relative amount of the 45,000 tons of industrial waste that        continued to negotiate modifications to the remediation plan.
various entities deposited at the landfill from 1972 to 1980.
No. 02-3308              United States v. Consolidation       5    6      United States v. Consolidation            No. 02-3308
                                        Coal Co., et al.                  Coal Co., et al.

Although invited to do so by the court, Neville Chemical once      is clearly erroneous where, although there is evidence to
again declined to participate.                                     support that finding, ‘the reviewing court on the entire
                                                                   evidence is left with the definite and firm conviction that a
  As a result of the negotiations, the USEPA modified its          mistake has been committed.’” Id., quoting United States v.
decision as to the chosen remediation for the site. The cost of    United States Gypsum Co., 333 U.S. 364, 395 (1948).
the revised plan was estimated at $25 million, about one-half
of the cost of the original plan. In March 1998, the court                               III. ANALYSIS
entered a consent decree between the United States and the
cooperating PRPs providing for performance of the selected             A. Liability and Equitable Allocation
remediation at the landfill site. Consol, acting individually
and on behalf of a number of other cooperating PRPs, and              The district court found that Neville Chemical was liable as
Triangle Wire continued to pursue their third-party action         a responsible party after articulating the purpose of CERCLA,
against Neville, seeking contribution under CERCLA’s § 113.        i.e., facilitating prompt cleanup of hazardous waste sites
                                                                   financed by those responsible for the hazardous waste, and
  After a long and detailed analysis, the district court           based on the relevant statutory sections governing liability,
ultimately ruled for Consol and Triangle Wire, determining         §§ 107(a) and 113 (f)(1), 42 U.S.C. §§ 9607(a) and
that Neville Chemical was responsible for 6% of the past and       9613(f)(1). Under those provisions, a party is liable in a
future response cost of the Buckeye Reclamation Landfill.          contribution claim under § 113(f)(1) if it was liable or
Neville appeals both the finding of liability and the allocation   potentially liable under § 107(a). The court found Neville
of a 6% equitable share.                                           Chemical liable to Consol and Triangle Wire under the § 113
                                                                   claim because all four elements necessary for § 107(a)
              II. STANDARD OF REVIEW                               liability were met: (1) the Buckeye Reclamation Landfill is a
                                                                   “facility” within the meaning of CERCLA; (2) a release of
   A district court’s allocation of response costs in a CERCLA     hazardous substance occurred there; (3) the release caused
contribution will not be set aside in the absence of a finding     Consol and Triangle Wire to incur response costs; and
that the district court abused its discretion. See United States   (4) Neville Chemical falls into one of the four categories of
v. R.W. Meyer, Inc., 932 F.2d 568, 573 (6th Cir. 1991). “An        PRPs listed in § 107(a). See Kalamazoo River Study Group
abuse of discretion is found where we are left with                v. Menasha Corp., 228 F.3d 648, 653 (6th Cir. 2000). The
the‘definite and firm conviction that the trial court committed    district court did not abuse its discretion in finding Neville
a clear error of judgment.’” Kalamazoo River Study Group v.        Chemical liable and, in fact, nowhere in its briefs does the
Rockwell Int’l Corp., 274 F.3d 1043, 1047 (6th Cir. 2001)          chemical company contest the district court’s conclusion of
(quoting Logan v. Dayton Hudson Corp., 865 F.2d 789, 790           law that it meets all four elements of liability articulated in
(6th Cir. 1989).                                                   Kalamazoo River Study Group and §107(a).
   In addition, we set aside factual findings underlying the         The district court next recognized the broad discretion it
district court’s allocation of response costs only if such         had in making CERCLA contribution allocations using “such
findings are clearly erroneous. Kalamazoo River Study Group        equitable factors as the court determines are appropriate.” 42
v. Rockwell Int’l Corp., 274 F.3d at 1047. “A factual finding      U.S.C. § 9613(f)(1). It discussed commonly used equitable
No. 02-3308                   United States v. Consolidation              7    8    United States v. Consolidation              No. 02-3308
                                             Coal Co., et al.                       Coal Co., et al.

factors, including the six so-called “Gore factors” considered                 of culpability, and two of the “Gore factors,” the amount of
by Congress in enacting the law and the four “critical factors”                waste and cooperation with the government, after carefully
identified by Judge Torre in United States v. Davis, 31 F.                     explaining why other factors were not helpful in deciding this
Supp.2d 45, 63 (D.R.I. 1998), aff’d, 261 F.3d 1 (1st Cir.                      particular case.
2001).1 Neither of these lists is intended to be exhaustive or
exclusive, and “in any given case, a court may consider                           The court determined the equitable allocation across the
several factors, a few factors, or only one determining factor                 four groups in the following way. First, the court assigned
. . . depending on the totality of the circumstances presented                 the industrial generators and transporters, including Neville
to the court.” See Environmental Trans. Sys., Inc. v. ENSCO,                   Chemical, an equitable share of 60% of past and future costs,
Inc., 969 F.2d 503, 509 (7th Cir. 1992).                                       finding they were the most culpable. Their culpability arose
                                                                               from the fact that they knew or should have known, of the
   Although both Consol and Neville Chemical argued that                       hazardous substances present in their waste, yet they disposed
the district court had to determine only Neville Chemical’s                    of their waste without seeking the permission required by the
equitable share, and not the share of any other PRP, the                       Belmont County Board of Commissioners. Second, the court
district court rejected that argument, reasoning that a fair and               assigned the owners and operators of the landfill a 25%
equitable allocation could only be achieved by comparing                       equitable share of the response costs based on their lesser
Neville’s role as a PRP to other PRPs. The district court then                 culpability, but also on their irresponsibility in not doing
divided the PRPs into four categories: generators and                          more to prevent the disposal of industrial wastes. Third, the
transporters of industrial waste; owners and operators of the                  court assigned Consol as generator of the “gob” a 10%
landfill; Consol as the generator of the gob; and generators                   equitable share, finding that Consol had knowledge that it
and transporters of the municipal solid waste. In allocating                   contained hazardous substances, but recognizing at the same
response costs, the district court focused primarily on the                    time that the material was deposited at the site between 1934
second “critical factor” from Davis, the PRP’s varying levels                  and 1952, at a time when there was nothing to prohibit such
                                                                               disposal. Finally, the court assigned the generators and
                                                                               transporters of municipal solid waste a 5% equitable share,
    1
      See, e.g., Centerior Serv. Co. v. Acme Scrap Iron & Metal Corp.,
                                                                               because the group had little or no knowledge that the waste
153 F.3d 344 , 354 (6th C ir. 1998) ((stating that “§ 113 's equitable         contained hazardous substances and because they were
allocation provision allows the court to allocate costs equitably among        required to dispose of the waste at the landfill by rule of the
PRPs considering the so-called ‘G ore F actors’”); United States v.            Belmont County Board of Commissioners.
Hercu les, Inc., 247 F.3d 706, 718 (8th Cir. 200 1) (recognizing tha t in
making an equitable allocation of liability, “courts generally take into         Within the 60% equitable share assigned to the industrial
account the so-called ‘G ore factors’”); United States v. Colorado &
Eastern R.R. Co., 50 F.3d 1 53 0, 15 36 n. 5 (10 th Cir. 1995 ). See also
                                                                               generators and transporters, the court used percentage weight
Robert P. Dahlquist, Ma king Se nse of Su perfund Alloca tion De cisions:      of the waste as a fair and equitable way of determining
The Rough Justice of Negotiated and Litigated Allocations, 31 Envtl. L.        individual shares. The parties stipulated that Neville
Rep. 110 98, 1 109 9 (2001 ) (“The G ore factors are mo st relevant in         Chemical was responsible for 4.78% of the industrial waste
acad emic and theoretical analysis of the wa y Superfund liabilities sho uld   by percentage weight. The court rounded Neville’s 4.78%
be allocated. But in the real world Judge Torre’s list of four critical
factors often provides the basis upon which Superfund allocations are
                                                                               share up to 5% based on the fact that Neville did not seek
made.”).                                                                       prior written approval of the Belmont County Board of
No. 02-3308             United States v. Consolidation      9    10   United States v. Consolidation              No. 02-3308
                                       Coal Co., et al.               Coal Co., et al.

Commissioners, as the county regulations required it to do.      based on conditions similar to those that existed in the waste
Triangle Wire is the only industrial generator which did seek    pit.
prior approval, and the court found that this fact made that
company marginally less culpable than its percentage weight         Neville Chemical also argues that the district court abused
would reflect. By rounding up Neville Chemical’s individual      its direction in allocating 60% of the response costs to the
share and decreasing Triangle Wire’s share, the district court   industrial generators and 5% that share to Neville Chemical.
adjusted for Neville Chemical’s violation of applicable local    Finally, the company argues that the district court abused its
regulation and Triangle Wire’s compliance. Thus, at this         discretion in doubling Neville Chemical’s share from 3% to
point in the court’s analysis, Neville Chemical had an           6%. However, all these arguments boil down to a
individual share of 5% of 60%, or 3%, of the past and future     disagreement with the particular equitable factors the district
response costs.                                                  court chose to use and how the court applied them. After an
                                                                 independent review, we conclude that nothing in Neville’s
  The court considered one additional equitable factor in its    arguments leads us to a “definite and firm conviction that the
analysis: cooperation with the government. The court             trial court committed a clear error of judgment.” Kalamazoo
concluded that Neville Chemical did not cooperate with the       River Study Group v. Rockwell Int’l Corp., 274 F.3d at 1047.
OEPA or the USEPA and that it did not participate in any
efforts of the other PRPs to work with the government to           B. Prejudgment Interest
investigate the site, design a remedy, abide by the remedy. In
sum, the district court found that “Neville did not                 We do, however, conclude that the district court failed to
meaningfully cooperate in any phase of the CERCLA process        comply with a statutory requirement in awarding prejudgment
in this case, although it was given ample opportunity to do      interest to Consol and Triangle Wire. The court calculated
so.” Because of this “persistent, pervasive, and unjustified”    the award at $298,750, based on past response costs
lack of cooperation when Neville Chemical knew or should         beginning in 1986, which is apparently when such costs were
have known that its sludge had been deposited at the site, the   first incurred at the site.
court doubled the company’s share of response costs from 3%
to 6%. The court also noted that because the cooperating            An award of prejudgment interest is provided for in
PRPs had negotiated a remedy that was half the cost of the       CERCLA § 107(a), 42 U.S.C. § 9607(a), and is mandatory.
originally approved remedy, doubling Neville Chemical’s          See United States v. Township of Brighton, 153 F.3d 307, 321
individual share would avoid the possibility of a windfall to    (6th Cir. 1998) (finding prejudgment interest is mandatary in
that company, based on the successful efforts of the             a § 107 action); Allied Signal, Inc. v. Amcast Int’l Corp., 177
cooperating PRPs to find a less costly solution.                 F. Supp. 2d 7813, 757-58 (S.D. Ohio 2001) (reasoning that
                                                                 prejudgment interest must be awarded to a party seeking
  Neville Chemical argues on appeal that the district court      contribution under § 113(f) in the same manner that it would
abused its discretion in this allocation of chemical costs,      be awarded to a party bringing a cost recovery action under
given the opinion of Neville Chemical’s expert that the          § 107(a), because an action under § 113(f) is governed by the
company’s waste caused no harm. However, the district court      requirements of § 107(a)). The statute specifies exactly when
found the opinion of the expert unreliable because it was not    it begins to accrue, that being “the later of (i) the date
                                                                 payment of a specified amount is demanded in writing, or
No. 02-3308              United States v. Consolidation       11    12   United States v. Consolidation               No. 02-3308
                                        Coal Co., et al.                 Coal Co., et al.

(ii) the date of the expenditure concerned.”         42 U.S.C.      Commercial Corp. v. Mosher Steel of Kansas, Inc., 100 F.3d
§ 9607(a).                                                          792, 801 (10th Cir. 1996); In re Bell Petroleum Servs., Inc.,
                                                                    3 F.3d 89, 908 (5th Cir. 1993), we cannot say that the
   Hence, as applied to this case, the statute requires that        complaint in this case satisfies the statutory prerequisite for
interest be calculated from the later of two dates: the date on     an award of prejudgment interest, because it is not sufficiently
which Neville Chemical’s payment of a specific amount was           specific.
demanded in writing or the date on which the expenditure
occurred. The district court appears to have calculated the           We therefore conclude that the district court erred as a
prejudgment interest based solely on when the expenditure           matter of law in calculating the amount of prejudgment
actually occurred, without regard to the statute’s directive that   interest owed by Neville Chemical without making a finding
it be based on the later occurring of the two dates. Although       regarding when the statutory prerequisites to prejudgment
Consol and Triangle Wire began incurring response costs in          interest were met. It follows that the calculation of
1986, there is no evidence, nor did the district court make a       prejudgment interest contained in the judgment cannot be
finding, as to when they made a written demand for a                sustained in the absence of a further determination under
specified sum from Neville Chemical.                                § 107(a).
   Consol and Triangle Wire argue that a letter written on                              IV. CONCLUSION
behalf of the Buckeye Reclamation Landfill Steering
Committee on February 21, 1986, constituted a written                  For the foregoing reasons, we AFFIRM the judgment of the
“demand letter.” However, to call this letter a “demand             district court as to Neville Chemical Company’s liability and
letter” for a specified sum is a clear mischaracterization of the   its individual share of past and future response costs, based on
document, because the letter simply invited Neville Chemical        our holding that the district court did not abuse its discretion
to join the group of cooperating PRPs to participate in the         in equitably allocating those costs.
investigation of the landfill and informed the chemical
company of the time and place of the group’s next meeting.            We further VACATE the award of prejudgment interest
The district court did not refer to this letter in awarding         and REMAND the case to the district court for a recalculation
prejudgment interest, and we decline to rely on it as a basis       of the prejudgment-interest award consistent with this
for the award.                                                      opinion.

   In the alternative, Consol argues that the third-party
complaint constitutes the written demand of a specified sum
because it alleged that the cost of the remedy was over $47
million. But this third-party complaint was brought against
59 third-party defendants, as well as various unidentified
parties, and did nothing to specify the amount being
demanded from each of the third-party defendants. Although
other circuits have found that a complaint can meet the
statutory written demand requirement, see Bancamerica