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March 7, 1988

Quaker State Corporation
United States Coast Guard; Admiral Paul A. Yost, Jr., Commandant, United States Coast Guard

The opinion of the court was delivered by: WEBER


 On July, 2 1985, the Coast Guard and Environmental Protection Agency (EPA) observed a sheen on the surface of the water on Pine Run in McKean County, PA. Nearby they discovered an abandoned and refilled waste water containment pit with evidence of petroleum residues. Over the following year the Government executed a cleanup operation which entailed the excavation and removal of 115 truckloads of material. The cost of the operation totalled $ 430,000.00 and the Coast Guard demanded payment of those costs, plus interest and penalties, from Quaker State.

 Quaker State filed this declaratory judgment action seeking to determine the single discrete issue of whether it was an "owner or operator" of the site within the meaning of the Clean Water Act, 33 U.S.C. § 1321(f), as charged by the Government. The Coast Guard asserted a counterclaim, seeking to establish strict liability under § 1321(f). Subsequently, the Government sought leave to amend its counterclaim to assert an alternative basis for liability under § 1321(g).

 We scheduled trial solely for a determination of whether Quaker State was an "owner or operator" within the meaning of the Act. Quaker State then filed a motion for summary judgment arguing that the Act by its terms defined "owner or operator" as of the time of discovery of the spill. Because Quaker State's lease expired in 1975 and operations ceased in 1978, Quaker State contends it could not be an "owner or operator" in 1985 when the spill was discovered.

 Therefore, for the Government to prevail on the strict liability claim under § 1321(f) we must accept the Government's interpretation of "owner or operator", and we must conclude that the initial discharge occurred while Quaker State was still on site. If we reject either premise, then Quaker State is not strictly liable under § 1321(f), though it may ultimately be liable on another provision of the Act or otherwise.

 We reserved ruling on the statutory interpretation issue concerning the timing element in the definition of "owner or operator" and proceeded to trial on the factual question of when the discharge first occurred. We also considered a tardily advanced argument that Quaker State had paid taxes on the subject site through 1985, thereby evidencing some ownership interest at the time of discovery of the spill. Our findings of fact and conclusions of law are contained below:


 On July 2, 1985, Commander Patrick of the U.S. Coast Guard took a break from his worries and waded up Pine Creek in the Allegheny National Forest, absorbing the subtle pleasures of a summer day in the woods. As he waded upstream he noticed a silvery sheen on the surface of the water. Closer inspection revealed black deposits on stones in the stream which, when disturbed, generated a rainbow sheen on the water, characteristic of oil contamination.

 Oil in streams in Northwestern Pennsylvania is not uncommon, and not always unnatural. Natural seepage from subterranean oil deposits has leaked into these streams for hundreds of years. Indians skimmed oil from the surface of streams for religious and medicinal purposes. The sheen of oil on the water first attracted the embryonic oil industry in the 19th Century and the natural contamination of streams still occurs today.

 However, the last century has added manmade sources of stream contamination. Neglected or abandoned wells, pipelines, drilling sites, and waste containment pits have created myriad opportunities for the discharge of oil into Pennsylvania's streams. The occurrence of such discharges in the Allegheny National Forest prompted increased Governmental activity in the area in 1985 and culminated in the creation of an inter-agency task force in August of that year.

 As administrator of the Government's clean up fund, Commander Patrick came to the Allegheny National Forest on July 2, 1985. After inspecting several cleanup operations already underway in the area, Commander Patrick began his leisurely walk up Pine Run. Now he followed the silver sheen upstream about 50 yards. There he found an encrusted stripe of semi-solidified oil on the bank of the stream. Clambering up the steep bank he stepped into a clearing.

 The Commander stood in a flat, oval meadow. Vegetation grew in clumps and the ground was spongy underfoot. A short distance from the crest of the stream bank he found an area where an oily substance lay on the surface of the ground. Within an hour the EPA and a private contractor, in the area on other cleanups, were on site.

 The meadow was in fact the site of a covered, abandoned containment pit. In the production of oil in this region, water is commonly pumped into the underground oil field, forcing the oil and water out of the well heads. The oil and water mixture pumped from the ground is then placed in separation tanks where the oil floats to the surface. The waste water at the bottom of the tank is then drained into a containment pit. A certain amount of oil and sludge drains with the water into the pit. This residue generally is absorbed into the underlying soil and strata.

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