The opinion of the court was delivered by: MCCLURE
arises out of efforts to recoup environmental contamination cleanup costs incurred in connection with a site owned by plaintiff Andritz Sprout-Bauer, Inc. (Andritz)
which is located in Muncy Borough and Muncy Creek Township, Lycoming County, Pennsylvania (the Muncy site). Andritz initially sought to recover cleanup costs incurred at the Muncy site from defendants Beazer East, Inc. (Beazer)
and Bridon-American Corp. (Bridon). All claims asserted against Beazer have been settled. Only the claims asserted against Bridon remain in the case.
Notice of violation issued
On or about March 29, 1989, the Pennsylvania Department of Environmental Resources (now known as the Pennsylvania Department of Environmental Protection or PaDEP) issued a "Notice of Violation" (NOV) for the Muncy site. PaDEP charged Andritz with violating Pennsylvania environmental law, and ordered it to perform cleanup operations at the site, including the removal and disposition of contaminated soil and restoration of groundwater quality.
The NOV listed violations observed at or near portions of the premises designated Building 70 and directed, inter alia : that operations be conducted "to remove and properly dispose of all contaminated soils and restore groundwater quality to background conditions if pollution is found" in the area of suspected contamination. (Second amended complaint, PP 20)
Issuance of the notice prompted an inspection for the presence of suspected contaminants.
In approximately March of 1990, contaminants above background levels were discovered in the vicinity of Building 70. This discovery prompted PaDEP to require further investigation to determine whether the contaminants found on-site had leached into the groundwater supply.
In a memorandum issued on or about November 20, 1990, PaDEP directed, inter alia, that remediation activities be conducted in the vicinity of Building 70. Andritz began groundwater remediation and sampling activities in or about December, 1990 and off-site migration investigation activities in or about May, 1991. These activities continued through 1991 and 1992. (Second amended complaint, PP 20-22)
Operations conducted and materials used at the Muncy site
The Muncy site consists of two non-contiguous parcels of land, designated Plants 1 and 2. Beazer owned Plant 1 from March 1, 1975 through August 4, 1986. Beazer acquired Plant 2 from Bridon in January, 1979. Beazer sold both plants to SWM Corp. on August 4, 1986. Andritz purchased the site on December 17, 1990. (Second amended complaint, PP 11-19)
During the period Bridon owned Plant 2 (January, 1975 to January, 1979), it operated a wire rope manufacturing operation at the site. Prior to Bridon's acquisition of Plant 2, it was owned by Jones & Laughlin, which also operated a wire rope manufacturing business at the Muncy site.
Andritz alleges that in connection with these operations, both Jones & Laughlin, and later, Bridon, owned and used underground storage tanks (USTs) adjacent to Buildings 201 and 204. It alleges that both corporations used chemical solvents and other classes of substances classified as "hazardous substances" under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601(14), and as hazardous and waste substances,
governed by Pennsylvania environmental statutes, in connection with the wire rope manufacturing operations. (Second amended complaint, PP 44-45)
Andritz alleges that Beazer and its predecessor-in-interest, Sprout, Waldron & Company, Inc. (Sprout, Waldron) used the Muncy site for various industrial and manufacturing operations including the production of equipment for grain, pulp and paper mills, fabrication of sheet metal and dies, foundry operations, and research activities, which caused hazardous substances to be deposited and left at the site, substances which Andritz is now being required to remediate. (Second amended complaint, PP 11-19)
Andritz alleges, upon information and belief, that Beazer used the Muncy site 1) to operate a die cell facility, located in Building 70; 2) to operate foundry operations located in Building 89; 3) to maintain used USTs adjacent to Buildings 74, 70, 81, 71, 66 and at Plant 2; 3) to maintain a drum storage area adjacent to Building 97 and Building 102; 4) to maintain one or more oil drip or collection pits adjacent to Building 70; and 5) to maintain waste accumulation piles at or adjacent to building 89, all of which were responsible for depositing wastes and hazardous substances at the site. The substances deposited by these activities and uses allegedly include: "acetone, chloroethane, 1,1-dichlorethane...toluene, 1,1,1-trichloroethane and xylene" as well as various petroleum hydrocarbons and or mineral oils. (Second amended complaint, P 35)
Remediation and cleanup efforts and claims asserted
Andritz has submitted proposals for remediation measures to PaDEP to eliminate the hazards identified on-site. Cleanup efforts have begun and are still underway. (Second amended complaint, PP 23-25) Thus far, Andritz has incurred $ 6 million in investigation and cleanup costs. (Second amended complaint, PP 30-31).
In its second amended complaint, Andritz asserts claims under the following federal and state laws to recover past and future costs incurred in connection with the Muncy site: 1) sections 107(a) and 113(f)(1) of CERCLA, 42 U.S.C. §§ 9607 and 9613 (Counts I and II, respectively); 2) section 7002(a)(1)(B) of the Resource Conservation and Recovery Act (RCRA) for injunctive relief, reimbursement and or contribution, 42 U.S.C. § 6972(a)(1)(B) (Count III); 3) sections 9001-9003 of RCRA, 42 U.S.C. §§ 6991a, 6991b and 6991c, for alleged liability as continuing owners of USTs at the Muncy site last used on or before November 8, 1984 and, therefore, for statutory purposes, still owned by Beazer, and for declaratory relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, declaring Beazer "solely and entirely liable for all future costs necessary to respond to and abate the release and threatened release of substances from or occasioned by the USTs owned and operated by Beazer...at the Site that were discontinued from use prior to November 8, 1984.", (Count IV); 4) sections 507, 701 and 702, among others, of the Pennsylvania Hazardous Sites Cleanup Act (PaHSCA), Pa. Stat. Ann. tit. 35 §§ 6020.101-602.1305 (Count V); 5) section 1311, among others, of the Pennsylvania Storage Tank and Spill Prevention Act, (PaSTSPA), Pa. Stat. Ann. tit. 35 §§ 6021.101-6021.2104 (Count VI); 6) the Pennsylvania Clean Streams Law (PaCSL), Pa. Stat. Ann. tit. 35 §§ 691.1- 691.1001 (Count VII); 7) a Pennsylvania common law claim for negligence per se based on the alleged violation of the PaCSL and PaSTSPA (Count VIII); 8) a claim in strict liability asserted under Pennsylvania common law based on the alleged storage of hazardous substances on Beazer property (Count IX); 9) a claim for contribution under the Pennsylvania Uniform Contribution Among Tort-feasors Act (PaUCTA), 42 Pa. Cons. Stat. Ann. §§ 8321-8327 (Count X); 10) a claim for contribution and indemnity (Count XI); 11) a claim for restitution (Count XII); and 12) a claim for declaratory judgment asserted under 28 U.S.C. §§ 2201 and 2202 on the grounds that Beazer, as the alleged "corporate" and "legal" successor in interest to Sprout, Waldron should be liable for "any and all responsibility of...[Sprout, Waldron] for all costs which plaintiff has incurred and may incur in responding to the release or threatened release of hazardous substances and other materials at, on or near the Site." (Count XIII).
There are before the court for disposition four motions for summary judgment: one by Andritz (record document no. 137) and three by Bridon (record document nos. 141, 143 and 145).
Summary judgment standard
Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c)
...The plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is 'entitled to judgment as a matter of law' because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.
Celotex v. Catrett, 477 U.S. 317, 323-24, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).
The moving party bears the initial responsibility of stating the basis for its motions and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact. He or she can discharge that burden by "showing...that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 323 and 325.
Issues of fact are "'genuine' only if a reasonable jury, considering the evidence presented, could find for the non-moving party." Childers v. Joseph, 842 F.2d 689, 693-94 (3d Cir. 1988), citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Material facts are those which will affect the outcome of the trial under governing law. Anderson, 477 U.S. at 248. In determining whether an issue of material fact exists, the court must consider all evidence in the light most favorable to the non-moving party. White v. Westinghouse Electric Company, 862 F.2d 56, 59 (3d Cir. 1988).
I. Andritz' Motion for Partial Summary Judgment
Plaintiff moves for summary judgment in its favor on: 1) Count I of the amended complaint which asserts a claim under CERCLA section 107, 42 U.S.C. § 9607; 2) Count II of the amended complaint, which asserts a claim for contribution for cleanup costs incurred at the Muncy site under CERCLA section 113, 42 U.S.C. § 9613; and 3) Count V of the amended complaint, which asserts a claim for cleanup costs under the Pennsylvania Hazardous Sites Cleanup Act (PaHSCA), Pa. Stat. Ann. tit. 35 §§ 6020.101-1305.
For the reasons which follow, the motion will be denied as to all counts on which judgment is sought.
Count I of plaintiff's amended complaint asserts a claim under CERCLA section 107, 42 U.S.C. § 9607, for monetary damages sought as reimbursement for past and future cleanup costs. Andritz moves for summary judgment on Count I on the ground that there is no genuine issue of material fact with respect to any of the four elements necessary to establish liability on the part of Bridon under CERCLA section 107.
To establish liability under section 107 of CERCLA, a plaintiff must prove that: 1) a hazardous substance was disposed of at a "facility"; 2) there has been a "release" or a "threatened release" of a hazardous substance from the facility into the environment; 3) the release or threatened release has required or will require the expenditure of "response costs"; and 4) the defendant falls within one of four categories of responsible persons. 42 U.S.C. § 9607(a). See also: United States v. CDMG Realty Co., 96 F.3d 706, 711-12 (3d Cir. 1996). If these four requirements are met, liability attaches to the responsible party regardless of motive or intent. Stearns & Foster Bedding v. Franklin Holding Corp., 947 F. Supp. 790 (D.N.J. 1996). See also: United States v. Alcan Aluminum Corp., 964 F.2d 252, 259 (3d Cir.), reh'g and reh'g in banc denied, 964 F.2d 271 (3d Cir. 1992) ("CERCLA imposes strict liability on responsible parties.") and Gould, Inc. v. A & M Battery and Tire Service (Gould II) 950 F. Supp. 653 (M.D.Pa. 1997) (Conaboy, J.).
We disagree with Andritz' premise that all elements necessary for a finding of section 107 liability have been established. We find, on the basis of the record before us that: 1) it has not been established as a matter of law that Andritz has a right to recover under CERCLA section 107, since Third Circuit precedent precludes recovery under section 107 by "potentially responsible parties" (PRP's) and Andritz has not established as a matter of law that it is not a potentially responsible party; and 2) genuine issues of material fact preclude a finding that during its four-year term of ownership, Bridon deposited or otherwise left on the premises hazardous substances. With respect to Andritz' request for a declaratory judgment, we find that it is not entitled to a ruling declaring Bridon the successor corporation to the now defunct Jones and Laughlin Steel Company (J&L)
for purposes of CERCLA liability.
Recovery under CERCLA section 107 unavailable to potentially responsible parties
Third Circuit precedent does not allow recovery under CERCLA section 107 by a party which is itself a potentially responsible party under CERCLA. New Castle County v. Halliburton NUS Corp., 111 F.3d 1116, 1119 (3d Cir. 1997). Only an "innocent party" who has incurred cleanup costs may bring a section 107 action. "An action by a potentially responsible person is by necessity a section 113 action for contribution." Id. at 1120.
Several features distinguish a section 107 action from a section 113 action. Under section 107, liability is joint and several, and no equitable defenses apply. See: Aluminum Company of America v. Beazer East, Inc., (Alcoa Beazer) 124 F.3d 551, 562-63 (3d Cir. 1997). Only the four defenses enumerated in section 107(b) can negate liability.
Under section 113, liability is several only, and the defendant can assert equitable grounds as a basis for diminishing or eliminating its alleged share of cleanup costs.
In apportioning cleanup costs, the court may consider such equitable factors as it deems relevant to the determination. Further, potential section 113 liability accrues only after a party has been compelled to pay more than its fair share of cleanup costs. Stearns & Foster, 947 F. Supp. at 798. Where both parties are 'non-innocent' responsible persons, the courts have held overwhelmingly that any action to reapportion costs between the parties is an action for contribution, not an action for indemnification. In Re: Tutu Wells Contamination Litigation, 994 F. Supp. 638, 663 (D.V.I. Feb. 18, 1998).
"Innocent party" status is a rare phenomenon. As the United States District Court observed in Stearns & Foster, private parties who qualify to file a CERCLA section 107 action will be "few and far between." The only private parties who would clearly qualify for that status would be those who can legitimately claim one of the complete defenses to liability set forth in section 107(b) or someone with no legal responsibility for conditions on the property, such as, e.g., a neighboring landowner who acts out of concern that the contamination will spread to his or her property. Few others can escape CERCLA's comprehensive strict liability scheme. 947 F. Supp. at 801.
Contrary to Andritz' assertions, it is not immediately clear that it can claim a right to proceed at all under section 107. Andritz can proceed on its section 107 claim only if it can claim "innocent party" status, that is, entitlement to full reimbursement from Bridon on the basis that it bears no responsibility for any hazardous substance currently found on that portion of the site formerly owned by Bridon.
It is not clear that Andritz is entirely blameless for the alleged presence of contaminants at the site. Bridon points to facts of record which support an inference that Andritz has contributed to the presence of hazardous substances at the site during its term of ownership. Among other evidence, Bridon offers the testimony of Stephen D. Webster on this point. Webster inspected the site on behalf of the PaDEP on several occasions. In describing violations which he found in or about March, 1989, Webster stated:
A. ...I had looked at the drum storage area and had mentioned that there was need of containment in the drum storage area. And I think that was mentioned again in this notice....
Yes, it was noted that the hazardous waste drum storage area did not meet requirements of a particular section, and I believe that I had noted that previously...
Q. And the purpose of those inspections generally was?
A. To verify compliance with the Solid Waste regulations.
Webster deposition at pp. 27-37 (exhibit 16). Webster's testimony leaves some doubt as to whether he found and documented sloppy environmental containment practices by Andritz responsible or potentially responsible for the release of hazardous substances at the Muncy site. The excerpts from Webster's deposition referenced by Bridon discuss only findings relating to the handling of petroleum products, which are excluded from CERCLA coverage. For that reason, Webster's testimony alone is not persuasive in linking Andritz' handling of hazardous substances to the need for remedial measures.
Bridon also points to findings of culpability in the Notice of Violation issued by PaDEP in 1989 (Exhibit 17) and to similar findings in the report prepared by Compliance Services, Inc. (Compliance) in October, 1989 as the Compliance Audit Environmental Site Survey. Both reports refer to unsound environmental practices committed by Andritz which have or possibly have contributed to the presence of contaminants at Plant No. 2.
By way of example, the Environmental Site Survey prepared by Compliance describes conditions found at Building 202 in the Plate Room as follows:
Plate grinding is performed in both a wet and dry process in building 202. Aqueous coolant is used in the wet process and is recycled through a system located at the southern end of the building. Approximately 300 tons or 700 drums/year of solids are collected by a dragout line from the recycling operation. This material is currently stored outside the building along the southern fence. There is a stockpile of over 500 drums stored in a sloppy manner and spilling on to the dirt...Soil discoloration is evident...Delays in disposal of this material have been caused by lab analyses indicating the presence of Nickel in undesirable quantities. Nickel in the form of soluble salts poses a risk to groundwater.
(Compliance Site Survey, record document no. 230, exhibit 18 at p. 32).
In summarizing the findings, Compliance undercut, to some extent, the impression that Andritz' practices at Plant No. 2 contributed to the release of hazardous substances. Compliance stated:
Many of the chemicals used at the facility are not classified as hazardous materials, i.e. cutting oils, lubricants, coolants, non-combustible machine and crankcase oils, commercial aqueous cleaning chemicals, etc.
(Compliance Site Survey, record document no. 230, exhibit 18 at p. 36).
Compliance did not, however, exonerate Andritz from practices consistent with CERCLA liability. It went on to state that:
Consumption and usage of hazardous materials is greatest in the foundry, where significant volumes of flammable resins and corrosive catalysts are used. These chemicals are supplied by bulk tanker, bulk cube-containers, drums, and 5 gallon pails. The foundry uses significant drum quantities of Acetone based adhesives, 1,1,1,-Tricholorethane, and Isopropanol.
1,1, 1-Trichloroethane appears to be the most commonly used cleaning and degreasing solvent in the facility. Drums of 1,1,1-TCA were identified in almost all of the buildings referenced in section 3.3.
Chemicals are stored in almost every building of the facility....
The absence of a central chemical product storage and distribution area is apparent. Management of chemicals in above ground and underground storage tanks...appears to be effective and straightforward throughout the facility. The management of chemicals in cube containers, drums, and other containers is often haphazard.
(Compliance Site Survey, record document no. 230, exhibit 18 at pp. 37-38) (Emphasis supplied.)
This and other evidence from which it can reasonably be inferred that Andritz is not an "entirely innocent party" precludes it from claiming at summary judgment stage eligibility under a section 107(b) absolute defense.
Even more compelling is Andritz' admission that the cleanup work it has undertaken has been done at the urging of PaDEP and under threat of legal action by state regulatory agencies. Other courts have found the presence of governmental threats or compulsion a strong indicator that a plaintiff seeking section 107 status bears some culpability for the contamination, and, therefore cannot claim section 107 status, being relegated instead to a contribution action under section 113. See, e.g., Transtech Industries, Inc. v. A & Z Septic Clean, 798 F. Supp. 1079 (D.N.J. 1992)(action undertaken under threat of government response is not voluntary, a factor in precluding the plaintiff from seeking recovery of the entire amount under CERCLA section 107), appeal dismissed, 5 F.3d 51 (3d Cir. 1993), cert. denied sub nom, Mayco Oil & Chemical Co. v. Transtech Indus., 512 U.S. 1213, 129 L. Ed. 2d 823, 114 S. Ct. 2692 (1994).
Andritz does not dispute that it is acting under threat of compulsion by PaDEP. In describing its reasons for initiating cleanup efforts, it states:
Because of...[the] NOV, Sprout-Bauer [Andritz] was required to, among other things, identify the extent of contamination in the area of the Muncy Facility and "perform clean-up activities to remove and properly dispose of all contaminated soils and restore groundwater quality to background conditions if pollution [was] found.".... Had Sprout-Bauer not properly responded to this NOV, PADER indicated that it would have considered taking stringent enforcement actions against Sprout-Bauer.
Record document no. 138 at p. 8. (Emphasis supplied.)
It is true that in many of the decisions which rule a section 107 claim unavailable to the plaintiff, cleanup efforts were instituted pursuant to a settlement agreement with a state or federal environmental agency. The fact that Andritz agreed to carry out the cleanup before legal action was filed and without the necessity of a formal settlement agreement does not change the fact that the cleanup was undertaken under threat of government compulsion. Compulsion, whether it comes about through formal settlement agreement or by mere threat of a lawsuit compelling a cleanup, is the key. That was the court's conclusion in Gould I. Summarizing the law on this issue, Judge Conaboy stated: "Where a responsible party initiates a site cleanup pursuant to governmental pressure, and then sues another responsible party to allocate the costs, the action falls under the provisions of § 113." 901 F. Supp. 906 at 913.
Even if Andritz' right to proceed as an "innocent party" under CERCLA section 107 were not at issue, other issues of material fact preclude a finding of liability against Bridon as a matter of law. Absent a finding that Bridon is responsible, as a successor corporation, for acts committed during the thirty-year tenure of J&L, an issue addressed below, liability attaches to Bridon as a former owner operator only if there is evidence that it deposited hazardous substances on the site. While there is such evidence, it is not unrebutted. Bridon has asserted facts which controvert the evidence offered by Andritz to prove that it is responsible for the presence of hazardous substances on the site. Such evidence precludes summary judgment in favor of Andritz on Count I.
Plaintiff's motion for judgment on Count II--CERCLA section 113 claim for contribution
Andritz argues that it is entitled to judgment in its favor as a matter of law on the contribution claim asserted under CERCLA section 113, 42 U.S.C. § 9613, in Count II of its amended complaint. Referencing CERCLA section 113, which provides: "Any person may seek contribution from any other person who is liable or potentially liable under [Section 107], during or following any civil action under...[Section 107(a)]," Andritz argues that it is entitled to partial summary judgment on its claim, since Bridon is a "person" for CERCLA purposes. That may well be true, but Andritz' argument ignores the other criteria which are prerequisites for recovery under CERCLA section 113, and which have not been established as a matter of law.
To recover on a claim for contribution, the plaintiff must establish the same four elements as a section 107 plaintiff. That is, he must prove that 1) hazardous substances were disposed of at a "facility"; 2) there has been a "release" or "threatened release" of hazardous substances from the facility into the environment; 3) the release or threatened release has required or will require the expenditure of "response costs"; and 4) the defendant falls within one of four categories of responsible parties. In Re Tutu Wells Litigation, 994 F. Supp. at 666, citing United States v. CDMG Realty, 96 F.3d 706, 712 (3d Cir. 1996) and 42 U.S.C. § 9607(a). See also: United States v. Alcan Aluminum Corp., (US Alcan) 964 F.2d 252, 258-59 (3d Cir. 1992).
Under CERCLA, four classes of persons may be held liable for contribution or response costs: 1) the current owner or operator of a facility, 42 U.S.C. § 9607(a)(1); 2) any person who owned or operated the facility "at the time of disposal" of a hazardous substance; 42 U.S.C. § 9607(a)(2); 3) any person who arranged for disposal or treatment, or arranged for transport for disposal or treatment of hazardous substances at the facility; and 42 U.S.C. § 9607(a)(3); and 4) any person who accepts or accepted hazardous substances for transport to sites selected by such person, 42 U.S.C. § 9607(a)(4). CDMG Realty, 96 F.3d at 713.
Andritz argues that Bridon falls within the second category, since it owned Plant No. 2 at a time when hazardous substances were disposed of at the site. In support of that theory, Andritz cites three or four principal pieces of evidence which it asserts prove that during its operation of the plant, Bridon employees disposed of hazardous substances at Plant No. 2. Bridon offers evidence refuting each of these alleged incidents and offers of proof. Bridon's assertions raise a genuine issue of material fact.
Andritz' motion for judgment on Count II will, therefore be denied.
Motion for declaratory judgment of successor liability
Andritz moves for a judgment declaring Bridon the successor corporation to J&L and as such, liable under CERCLA for the environmental harm alleged caused by J&L's activities at the site. Andritz focuses its argument in favor of successor liability on J&L's unavailability. That is not, by itself, justification for shifting one-hundred percent of J&L's share of the cleanup costs to Bridon. The argument Andritz makes has been made before and endorsed by the courts in situations in which if the "orphan's share" of cleanup costs were not transferred to another corporation, they would be borne by the government, and ultimately by the taxpayers. In choosing between those two entities, the courts have generally favored shifting the burden to other corporations, finding that alternative more equitable than requiring the taxpayers to pay for corporate malfeasance or misfeasance. In such cases, the courts have ruled that public policy dictates that the culpable party pay, and that it, and not the taxpayers, bear the costs of cleanup.
In Smith Land Improvement Corp. V. Celotex, 851 F.2d 86, 92 (3d Cir. 1988), cert. denied, 488 U.S. 1029, 102 L. Ed. 2d 969, 109 S. Ct. 837 (1989), the Third Circuit elaborated on the reasons for adopting a general policy to that effect, tying them to congressional intent underlying passage of CERCLA. The court stated:
Congressional intent supports the conclusion that, when choosing between the taxpayers or a successor corporation, the successor should bear the cost. Benefits from use of the pollutant as well as savings resulting from the failure to use non-hazardous disposal methods inured to the original corporation, its successors, and their respective stockholders and accrued only indirectly, if at all, to the general public.
The same considerations do not apply here. Here, the choice of who should suffer the loss stemming from the fact that J&L is not available to answer for costs allegedly stemming from its thirty-year operation of the Muncy site is between the current owner of the premises and the former owner, both of which are alleged to bear some responsibility for contaminants found at the site.
Here, the choice of who should bear the cost of answering for the actions of a now defunct corporation is not between the taxpayers and the business community, but rather between two corporations. For that reason, we are not persuaded that the same burden-shifting rationale applied in conflicts between the government and a corporation should apply here.
In deciding which of two corporations should be made to shoulder the burden of answering for an unavailable corporate polluter, there is no compelling reason to shift that burden from Andritz to Bridon as a matter of course. While, as we discuss below, it may constitute grounds for shifting a portion of J&L's liability to Bridon, J&L's unavailability is not, in and of itself, grounds for shifting liability for its entire "orphan share" to Bridon.
Successor liability of Bridon for acts of J&L
Andritz argues that through its acquisition of Plant 2 from J&L, Bridon became the successor corporation to J&L, rendering it liable for all removal and responses costs associated with hazardous substances deposited on the premises by J&L during its thirty-year term of ownership.
At common law, a purchaser of corporate assets is held liable for obligations or debts of the seller as a successor corporation only if one of the following four requirements is met: 1) the purchaser expressly or impliedly agreed to assume liabilities of the seller; 2) the purported sale of assets was, in fact, a "de facto merger" of the two companies; 3) the purchasing corporation is merely continuing the seller's business; or (4) the transaction is fraudulent and was structured for the purpose of evading legitimate debt or liabilities. Gould II, 950 F. Supp. at 656, citing United States v. Mexico Feed and Seed Co., Inc., 980 F.2d 478, 487 (8th Cir. 1992). CERCLA is silent on the question of successor liability, leading the courts to apply the common law rule of successor nonliability and four generally recognized exceptions to that rule. Alcoa Beazer, 124 F.3d at 564.
None of the four exceptions applies here: There was no express or implied agreement by Bridon to assume the liabilities of J&L concurrent with the purchase of the Plant No. 2. The transaction was a straightforward sale of assets, not a "de facto merger" of the two companies. As discussed briefly above, J&L continued to do business after the asset sale, and later merged with Republic Steel to form LTV.
Further, Bridon did not "merely continue" the business of J&L. "'The traditional rule with regard to the 'mere continuation' exception is that a corporation is not to be considered the continuation of a predecessor unless, after the transfer of assets, only one corporation remains, and there is an identity of stock, stockholders, and directors between the two corporations.'" Gould II, 950 F. Supp. at 656, citing United States v. Carolina Transformer, 978 F.2d 832, 838 (4th Cir. 1992).
There is no evidence, and we do not understand Andritz to be asserting, that Bridon is a successor to J&L under the "mere continuation" doctrine. The two corporations did not share the same stockholders, nor did stock ownership overlap. See, e.g., Gould II, 950 F. Supp. at 656. Rather, there is substantial evidence that Bridon incorporated Plant No. 2 into its manufacturing operations and marketed the wire rope manufactured at Muncy under its (Bridon's) name and using its signature markings (consisting of a blue strand incorporated into the length of wire rope).
Finally, the record is devoid of evidence that the asset transfer was a subterfuge structured for the purpose of allowing J&L to avoid legitimate debts or obligations. Nothing before us suggests that the transaction was not conducted at arms-length or was for any purpose other than the obvious one of conveying manufacturing equipment from seller to buyer. J&L was, in fact, a competitor in the manufacture and sale of wire rope--making it extremely unlikely that the two would combine forces for purposes of helping J&L avoid legitimate obligations.
In conclusion, we find no colorable basis for any assertion that the 1975 sale of the Muncy plant to Bridon falls within any of the four traditional exceptions to non-liability on the part of the transferee corporation.
Potential successor liability under Continuity of Enterprise Theory of Corporate Liability
Under CERCLA, standards for successor liability less rigorous than the traditional common law standard have evolved. Looking to the remedial purpose of CERCLA, i.e. to place the burdens of cleaning up hazardous substances on those who caused the problem due to the irresponsible handling of such materials, the courts have lessened the stringent burden of establishing successor liability under the common law standard by expanding the scope of the "mere continuation" exception.
Under this more expansive theory, christened the "continuing enterprise" theory, liability attaches under CERCLA to a purported purchaser which continues to operate the same business enterprise, essentially without interruption. Eight factors have been identified by the courts as indicating that the same enterprise continued under a different name or logo. They are:
1) retention of the same employees;
2) retention of the same supervisory personnel;
3) retention of the same production facilities in the same location;
4) retention of the same name;
5) production of the same ...