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U.S. v. Alcan Aluminum Corp.

filed: May 14, 1992; As Corrected May 18, 1992.

UNITED STATES OF AMERICA
v.
ALCAN ALUMINUM CORP.; BASF CORP.; BEAZER MATERIALS AND SERVICES, INC.; BORG-WARNER CORP.; CARRIER CORP.; CHEMICAL LEAMAN TANK LINES, INC.; CHEMICAL MANAGEMENT, INC.; CHRYSLER MOTORS CORP.; DANA CORP.; DART INDUSTRIES, INC.; EXXON CORP.; FORD MOTOR COMPANY; GOULDS PUMPS, INC.; HITCHCOCK GAS ENGINE COMPANY, INC.; INGERSOLL-RAND; NEAPCO, INC.; ROME STRIP STEEL CO., INC.; THE STANLEY WORKS, INC.; TRW, INC.; UNITED TECHNOLOGIES CHEMICAL MANAGEMENT, INC. COUNTER-CLAIMANT, CHEMICAL MANAGEMENT, INC. CROSS-CLAIMANT V. UNITED STATES OF AMERICA COUNTER-DEFENDANT, ALCAN ALUMINUM CORP.; BASF CORP.; BEAZER MATERIALS AND SERVICES, INC.; BORG-WARNER CORP.; CARRIER CORP.; CHEMICAL LEAMAN TANK LINES, INC.; CHRYSLER MOTORS CORP.; DANA CORP.; DART INDUSTRIES, INC.; EXXON CORP.; FORD MOTOR COMPANY; GOULDS PUMPS, INC.; HITCHCOCK GAS ENGINE COMPANY, INC.; INGERSOLL-RAND; NEAPCO, INC.; ROME STRIP STEEL CO., INC.; THE STANLEY WORKS, INC.; TRW, INC.; UNITED TECHNOLOGIES; CROSS-DEFENDANTS, NEAPCO, INC.; COUNTER-CLAIMANT, NEAPCO, INC.; CROSS-CLAIMANT V. UNITED STATES OF AMERICA COUNTER-DEFENDANT, ALCAN ALUMINUM CORP.; BASF CORP.; BEAZER MATERIALS AND SERVICES, INC.; BORG-WARNER CORP.; CARRIER CORP.; CHEMICAL LEAMAN TANK LINES, INC.; CHEMICAL MANAGEMENT, INC.; CHRYSLER MOTORS CORP.; DANA CORP.; DART INDUSTRIES, INC.; EXXON CORP.; FORD MOTOR COMPANY; GOULDS PUMPS, INC.; HITCHCOCK GAS ENGINE COMPANY, INC.; INGERSOLL-RAND; ROME STRIP STEEL CO.; INC.; THE STANLEY WORKS, INC.; TRW, INC.; UNITED TECHNOLOGIES CROSS-DEFENDANTS, ALCAN ALUMINUM CORPORATION APPELLANT



On Appeal from the United States District Court for the Middle District of Pennsylvania. (D.C. Civil No. 89-1657)

Before: Greenberg and Scirica, Circuit Judges, and Debevoise, District Judge*fn*

Author: Greenberg

Opinion OF THE COURT

GREENBERG, Circuit Judge.

This matter is before the court on appeal by Alcan Aluminum Corporation ("Alcan") from a summary judgment entered in favor of the United States (the "Government") for response costs incurred by the Government in cleaning the Susquehanna River.

On November 24, 1989, the Government filed a complaint in the United States District Court for the Middle District of Pennsylvania under section 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9607(a) ("CERCLA") against 20 defendants, including Alcan, for the recovery of clean-up costs it incurred in response to a release of hazardous substances into the Susquehanna River. On October 11, 1990, the Government moved for summary judgment against Alcan, the only non-settling defendant, and on November 13, 1990, Alcan cross-moved for summary judgment.

The district court, after receiving a report and recommendation from a magistrate Judge, issued a memorandum and order granting the Government's motion for the reasons set forth in United States v. Alcan Aluminum Corp., 755 F. Supp. 531 (N.D.N.Y. 1991) (hereinafter called " Alcan New York "), another CERCLA case involving the release of hazardous substances generated by Alcan but at a different location. Accordingly, on May 8, 1991, the court entered judgment against Alcan in the amount of $473,790.18, which was the difference between the full response costs the Government had incurred in cleaning the Susquehanna River and the amount the Government had recovered from the settling defendants.

For reasons that follow, even though we largely agree with the district court's interpretation of the relevant provisions of CERCLA, we will vacate the judgment of May 8, 1991, and will remand the case for further factual development concerning the scope of Alcan's liability.

I.

FACTS AND PROCEDURAL HISTORY

Virtually all of the facts in this case to the extent developed at this point are undisputed. The Butler Tunnel Site (the "Site") is listed on the National Priorities List established by the Environmental Protection Agency ("EPA") under section 105 of CERCLA, 42 U.S.C. § 9605. See 52 Fed. Reg. 27,620 (July 22, 1987). The Site includes a network of approximately five square miles of deep underground mines and related tunnels, caverns, pools and waterways bordering the east bank of the Susquehanna River in Pittston, Pennsylvania. The mine workings at the Site are drained by the Butler Tunnel (the "Tunnel"), a 7500 foot tunnel which feeds directly into the Susquehanna River.

The mines are accessible from the surface by numerous air shafts or boreholes. One borehole (the "Borehole") is located on the premises of Hi-Way Auto Service, an automobile fuel and repair station situated above the Tunnel. The Borehole leads directly into the mine workings at the Site.

In the late 1970's, the owner of Hi-Way Auto Service permitted various liquid waste transport companies, including those owned and controlled by Russell Mahler (the "Mahler Companies"), to deposit oily liquid wastes containing hazardous substances into the Borehole.*fn1 The Mahler Companies collected the liquid wastes from numerous industrial facilities located in the northeastern United States and, in total, disposed of approximately 2,000,000 gallons of oily wastes containing hazardous substances through the Borehole.*fn2 Apparently, it was contemplated that the waste would remain at the Site indefinitely.

Alcan is an Ohio corporation which manufactures aluminum sheet and plate products in Oswego, New York. From 1965 through at least 1989, Alcan's manufacturing process involved the hot-rolling of aluminum ingots. To keep the rolls cool and lubricated during the hot-rolling process, Alcan circulated an emulsion through the rolls, consisting of 95% deionized water and 5% mineral oil. At the end of the hot-rolling process, Alcan removed the used emulsion and replaced it with unused emulsion.

During the rolling process, fragments of the aluminum ingots, which also contained copper, chromium, cadmium, lead and zinc, hazardous substances under CERCLA, broke off into the emulsion. In an effort to remove those fragments, Alcan then filtered the used emulsion prior to disposing of it, but the filtering process was imperfect and hence some fragments remained. According to Alcan, however, the level of these compounds in the post-filtered, used emulsion was "far below the EP toxic or TCLP toxic levels and, indeed, orders of magnitude below ambient or naturally occurring background levels. Moreover, the trace quantities of metal compounds in the emulsion [were] immobile. . . ." Appellant's Br. at 4. The Government does not specifically challenge Alcan's assertion that the used emulsion contained only low levels of these metallic compounds, as it contends that this fact is irrelevant to Alcan's liability under CERCLA.

From mid-1978 to late 1979, Alcan contracted with the Mahler Companies to dispose of at least 2,300,950 gallons of used emulsion from its Oswego, New York, facility. During that period, the Mahler Companies disposed of approximately 32,500-37,500 gallons (or five 6500-7500 gallon loads) of Alcan's liquid waste through the Borehole into the Site.*fn3

In September 1985, approximately 100,000 gallons of water contaminated with hazardous substances were released from the Site into the Susquehanna River. It appears that this discharge was composed of the wastes deposited into the Borehole in the late 1970's. Between September 28, 1985, and January 7, 1987, EPA incurred significant response costs due to the release and the threatened release of hazardous substances from the Site. According to the Government, EPA's response actions included "containing an oily material on the river through the use of absorbent booms; immediately removing and disposing of 161,000 pounds (over 80 tons) of oil and chemical-soaked debris and soil, monitoring, sampling and analysis of air and water, and conducting hydrogeologic studies." Government's Br. at 10-11.

On December 27, 1985, EPA issued written information requests to potentially responsible parties ("PRPs"),*fn4 including Alcan, concerning their responsibility for the presence of hazardous substances at the Site. In May and June of 1986, EPA issued letters to the PRPs informing them of their potential liability under CERCLA. Those letters invited the PRPs to conduct a remedial investigation/feasibility study and to enter into an agreement with EPA for the issuance of an administrative order governing the study. Several PRPs conducted these negotiations with EPA in an attempt to settle their liability for removal costs incurred by the Government, but Alcan did not participate in this process.

In November 1989, the Government filed a complaint against 20 defendants, including Alcan, for the recovery of costs incurred as a result of the release of hazardous wastes from the Site into the Susquehanna River. In response, 17 of the 20 defendants executed a consent decree, reimbursing the Government for certain removal costs, and the district court entered that decree on January 17, 1990. On June 8, 1990, two of the three remaining defendants entered into a second consent decree with the Government, which the district court approved on July 25, 1990.

The Government then moved for summary judgment against Alcan, the only non-settling defendant, to collect the balance of its response costs. Alcan cross-moved for summary judgment, arguing that its emulsion did not constitute a "hazardous substance" as defined by CERCLA due to its below-ambient levels of copper, cadmium, chromium, lead and zinc, and further contending that its emulsion could not have caused the release or any response costs incurred by the Government.

On January 9, 1991, the district court referred this case to a magistrate Judge who recommended that the court grant the Government's motion for summary judgment for the reasons set forth by the United States District Court for the Northern District of New York in Alcan New York. On the basis of that recommendation, the district court granted the Government's motion for summary judgment on May 8, 1991. Accordingly, it held that Alcan was jointly and severally liable for the removal costs because Alcan's waste contained identifiable levels of hazardous substances and was present at the Site from which there was a release. By following Alcan New York, the court also concluded that Alcan's waste did not fall within the "petroleum exclusion" under 42 U.S.C. § 9601(14).

Alcan filed a timely notice of appeal on June 5, 1991, and we have jurisdiction to review the district court's final order pursuant to 28 U.S.C. § 1291. Our standard of review is plenary. Carlson v. Arnot-Ogden Memorial Hospital, 918 F.2d 411, 413 (3d Cir. 1990).

II.

Discussion

A. CERCLA FRAMEWORK:

In response to widespread concern over the improper disposal of hazardous wastes, Congress enacted CERCLA, a complex piece of legislation designed to force polluters to pay for costs associated with remedying their pollution. A Legislative History of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, Senate Committee of Environment and Public Works (" A Legislative History "), S. Doc. No. 97-14, 97th Cong., 2d Sess. 1983, Vol. I, p. 320 (one of the statute's principal goals is "assuring that those who caused chemical harm bear the costs of that harm. . . .") As numerous courts have observed, CERCLA is a remedial statute which should be construed liberally to effectuate its goals. See, e.g., B.F. Goodrich v. Murtha, 958 F.2d 1192 (2d Cir. 1992) ("In CERCLA Congress enacted a broad remedial statute designed to enhance the authority of the EPA to respond effectively and promptly to toxic pollutant spills that threaten[] the environment and human health."); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 889 F.2d 1146, 1150 (1st Cir. 1989) (CERCLA is a "broad response and reimbursement statute").*fn5

CERCLA, as amended by the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (Oct. 17, 1986), grants broad authority to the executive branch of the federal government to provide for the clean-up of hazardous substance sites. Specifically, section 104 authorizes the President to respond to a release or substantial threat of a release of hazardous substances into the environment by: (1) removing or arranging for the removal of hazardous substances; (2) providing for remedial action relating to such hazardous substances; and (3) taking any other response measure consistent with the National Contingency Plan that the President deems necessary to protect the public health or welfare or the environment. 42 U.S.C. § 9604(a). The President has delegated most of his authority under CERCLA to EPA.*fn6

CERCLA's bite lies in its requirement that responsible parties pay for actions undertaken pursuant to section 104. Under section 107, CERCLA liability is imposed where the plaintiff establishes the following four elements:

(1) the defendant falls within one of the four categories of "responsible parties";*fn7

(2) the hazardous substances are disposed at a "facility";*fn8

(3) there is a "release" or threatened release of hazardous substances from the facility into the environment;*fn9

(4) the release causes the incurrence of "response costs".*fn10

42 U.S.C. § 9607. See also B.F. Goodrich, slip op. at 8; United States v. Serafini, 750 F. Supp. 168, 170 (M.D. Pa. 1990); United States v. Wade, 577 F. Supp. 1326, 1333 (E.D. Pa. 1983).

Reimbursement for response costs can be obtained in a variety of ways. For example, the Government can clean the sites itself using monies in the Hazardous Substance Response Trust Fund established by section 221 of CERCLA, 42 U.S.C. § 9631 and now the Hazardous Substance Superfund or "Superfund" (see 26 U.S.C. § 9507); EPA can then seek reimbursement from responsible parties, as it has done in this case. In addition, section 106(a) permits EPA to request the Attorney General to "secure such relief as may be necessary to abate such danger or threat" by filing a civil action in federal district court. That section also permits EPA to issue administrative orders "as may be necessary to protect public health and welfare and the environment."

Finally, and of great significance in this case, CERCLA imposes strict liability on responsible parties. 42 U.S.C. § 9601(32).*fn11 See Dedham Water Co. v. Cumberland Farms Dairy, Inc., 889 F.2d at 1150; New York v. Shore Realty Corp., 759 F.2d 1032, 1042 (2d Cir. 1985) ("Congress intended that responsible parties be held strictly liable, even ...


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