United States v. Nicolet, Inc.

No. 85-3060 (E.D. Pa. March 19, 1987)

On reconsideration, the court holds that defendant's counterclaims in a cost recovery action brought by the United States under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) are barred by the discretionary function exception to the Federal Tort Claims Act (FTCA). The court first holds that defendant's counterclaim in which it seeks recoupment of response costs may proceed to the extent it constitutes a compulsory counterclaim. The court then holds that the FTCA's discretionary function exception bars defendant's tort counterclaims arising from its allegations that the government issued an order under CERCLA §§ 104(a) and 106(a) and entered defendant's property without permission to conduct a cleanup of two asbestos-containing waste piles although defendant was ready to perform the cleanup. The court holds that defendant's counterclaim alleging that the United States deprived it of its property without due process, if considered a tort claim, is barred by the discretionary function exception. If this counterclaim does not sound in tort, the court would not have jurisdiction under the Tucker Act, since defendant seeks over $10,000. The court holds that defendant's trespass and negligence counterclaims are also barred by the discretionary function exception. The government's actions in selecting a site for the national priorities list and choosing the appropriate cleanup methods are the type of conduct Congress intended to shield from tort liability. The government's conduct involved not only scientific evaluation, which has been held to be nondiscretionary, but also policy determinations at the planning level.

[The court's earlier decision on this issue appears at 17 ELR 21085. A subsequent decision in the case appears at 17 ELR 21091.

Counsel are listed at 17 ELR 21085.

[17 ELR 21088]

Broderick, J.:

Memorandum

This is an action brought by the United States pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), against Nicolet, Inc. to recover approximately $700,920.96 expended by the United States Environmental Protection Agency ("EPA") in removal and response costs associated with two large asbestos-containing waste piles known as the "Locust Street Pile" and the "Plant Pile" on Nicolet's property in Ambler, Pennsylvania. The complaint also seeks a declaratory judgment pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, declaring that Nicolet should be held liable for any future costs incurred by the United States in covering asbestos at the site. Nicolet answered the complaint and filed a sixcount [17 ELR 21089] counterclaim against the United States. The United States filed a motion to dismiss the counterclaim pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). By Memorandum and Order of December 31, 1986, the Court dismissed Counts I and V of the counterclaim. The Courtalso dismissed all but that portion of Count III of the counterclaim which sought recoupment. The United States has filed a motion for reconsideration of this Court's Order denying the motion to dismiss Counts II, IV and VI of the counterclaim and the recoupment portion of Count III. For the reasons that follow, the United States' motion will be granted, in that Counts II, IV and VI of the counterclaim will be dismissed. The recoupment portion of Count III, however, will not be dismissed.

In its December 31, 1986 Memorandum, the Court determined that the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2674 ("FTCA"), provided the only jurisdictional basis for Counts II, IV and VI of the counterclaim. In its motion for reconsideration, the government has briefed for the first time the issue that jurisdiction over Counts II, IV and VI is barred by the discretionary function exception to the FTCA. The Court agrees that Counts II, IV and VI of the counterclaim are barred by the discretionary function exception and will dismiss those counts.

In connection with Count III, in its Memorandum of December 31, 1986, the Court determined that that portion of Count III setting forth a claim for recoupment against the United States could proceed. The Court has reconsidered the motion to dismiss in connection with Count III and has determined that the government has presented no reason why the Court should change its ruling. Therefore, the Order of December 31, 1986 will remain in full force and effect in connection with Count III.

The basis for the government's contention that Counts II, IV and VI of the counterclaim should be dismissed is that these three counts are barred by section 2680(a) which excepts from the FTCA waiver of sovereign immunity any claims based upon the performance of a discretionary function or duty on the part of a federal agency or employee of the government. This contention raises the issue as to whether this Court has jurisdiction over the subject matter. The government's motion is, therefore, a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). Gibson v. United States, 457 F.2d 1391, 1392 n.1 (3d Cir. 1972). There are two types of challenges to subject matter jurisdiction which may be made pursuant to Rule 12(b)(1). As Judge Hunter points out in Mortensen v. First Federal Savings and Loan Association, 549 F.2d 884 (3d Cir. 1977):

[W]e must emphasize a crucial distinction, often overlooked, between 12(b)(1) motions that attack the complaint on its face and 12(b)(1) motions that attack the existence of subject matter jurisdiction in fact, quite apart from any pleadings. The facial attack does offer . . . safeguards to the plaintiff: the court must consider the allegations of the complaint as true. The factual attack, however, differs greatly, [T]he trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. . . . Moreover, the plaintiff will have the burden of proof that jurisdiction does in fact exist.

Id. at 891. Since the parties have presented no affidavits, depositions or other factual material for the Court to consider in connection with the government's 12(b)(1) motion, the motion is in effect a facial attack on the allegations in the counterclaim. This Court must, therefore, determine whether it has jurisdiction based on the allegations set forth in the counterclaim. Furthermore, as pointed out in Mortensen, the allegations in the counterclaim must be considered by the Court as true in determining the 12(b)(1) motion. It is also clear that Nicolet, as the counterclaiming defendant, has the burden of proving that jurisdiction exists, because once the existence of subject matter jurisdiction is challenged, the burden rests on the party asserting jurisdiction. 2A Moore's Federal Practice P12.07[2.-1] at 12-46. As heretofore pointed out, in its December 31, 1986 Memorandum, the Court determined that the FTCA provides the only jurisdictional basis for Counts II, IV and VI of the counterclaim.

The following summary sets forth the relevant allegations forming the basis for Counts II, IV and VI of Nicolet's counterclaim. Nicolet alleges that Nicolet filed a complaint against Thomas Eichler, former Regional Administrator of the Environmental Protection Agency Region III in 1984, and that subsequent thereto, the parties engaged in settlement discussions. Nicolet submitted a Stipulation to the EPA in connection with two piles of material on Nicolet's property and the EPA rejected the Stipulation. Nicolet's complaint was dismissed in its entirety on March 26, 1984. Nicolet contends that on March 14, 1984, the United States issued an order under sections 9604(a) and 9606(a) of CERCLA and entered Nicolet's property without Nicolet's permission, sometime after March 26, 1984. The EPA proceeded to do work on the two piles of material on Nicolet's property. Nicolet further asserts that it was committed to take the action requested by the government, but that the government refused to permit Nicolet to do the work. Finally, Nicolet contends that the government's action was "arbitrary and capricious, done with ill will, spite, bad motive and for political purposes and was in violation of the provisions of CERCLA and the National Contingency Plan." As a result, Nicolet claims that it incurred unnecessary and wasteful costs, expenses and fees.

In Count II, Nicolet alleges:

The actions of the United States deprived Nicolet of its property without due process of law and in violation of the statutes and constitution of the United States.

Nicolet seeks damages in excess of $10,000 in connection with Count II. If Count II is considered as alleging a tort claim, waiver of sovereign immunity must be found in the FTCA. However, as heretofore pointed out, if this claim comes within the discretionary function exception provided in section 2680(a), there is no waiver of sovereign immunity and the Court is without jurisdiction. As hereinafter discussed, the government conduct challenged in Count II involves an exercise of discretion and Count II must therefore be dismissed.

In its Memorandum of December 31, 1986, this Court stated that the Tucker Act, 28 U.S.C. §§ 1346(a) and 1491(a), places jurisdiction in the Claims Court for cases found upon the Constitution, Acts of Congress and express or implied contracts with the government not sounding in tort, in civil actions where the claim exceeds $10,000. Where the claim does not exceed $10,000, jurisdiction also lies in the United States District Court. The Tucker Act is a jurisdictional statute only, and does not create any substantive right enforceable against the United States for money damages. United States v. Mitchell, 445 U.S. 535, 100 S. Ct. 1349,reh'g denied, 446 U.S. 992 (1980). Since Count II seeks damages in excess of $10,000, even if this Court had determined that the government had waived its sovereign immunity, this Court would not have jurisdiction under the Tucker Act.

In Count IV, Nicolet alleges:

The actions of the United States constitute an unlawful trespass upon Nicolet's property for which claim is hereby made for damages.

Nicolet seeks damages in excess of $10,000 in Count IV. Count IV clearly sounds in tort. This Court will, therefore, determine whether the allegations in Count IV come within the waiver of sovereign immunity of the FTCA. However, as hereinafter pointed out, the government conduct challenged by Nicolet in Count IV is protected from tort liability by the discretionary function exception in the FTCA and Count IV will likewise be dismissed.

In Count IV, Nicolet alleges:

For the reasons discussed [in paragraphs 1-24 of its counterclaim] plaintiff's actions were negligent.

Nicolet seeks damages in excess of $10,000 in Count VI. In addition to the allegations heretofore summarized, Nicolet also alleges that the government action was negligent: requiring Nicolet to perform response and remedial action that was not necessary; by refusing to allow Nicolet to perform response and remedial action at its premises; and by unreasonably interfering with Nicolet's business and property. As hereinafter pointed out, the government conduct challenged by Nicolet in Count VI is protected from tort liability by the discretionary function exception in the FTCA, and Count VI will also be dismissed.

The FTCA effects a waiver by the United States of its sovereign immunity by permitting suits for compensatory damage for injury to person or property resulting from the conduct of a government employee acting within the scope of his employment. Smith v. Johns-Manville Corp., 795 F.2d 301, 306 (3d Cir. 1986). The discretionary [17 ELR 21090] function exception, however, provides that the FTCA does not apply to:

Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government whether or not the discretion involved be abused.

28 U.S.C. § 2680(a). Where the discretionary function exception applies, the Court lacks subject matter jurisdiction over the claim. Dalehite v. United States, 346 U.S. 15, 18, 24, 73 S. Ct. 956, 959, 962 (1953); Gibson, supra, 457 F.2d at 1392 n.1.

The United States Supreme Court in United States v. S. A. Empresa de Viacao Aerae Rio Grandense ("Varig Airlines"), 467 U.S. 797, 104 S. Ct. 2755 (1984), noted that in determining whether the discretionary function exception applies the Court must consider whether the government employees' acts are the type of conduct that Congress intended to shield from tort liability through the exception. Varig Airlines, 467 U.S. at 813-14, 104 S. Ct. at 2765; Smith, 795 F.2d at 307. As the United States Supreme Court explained in its first decision concerning the discretionary function exception, Dalehite v. United States, 346 U.S. 15, 73 S. Ct. 956 (1953), the exception shields from tort liability

The discretion of the executive or the administrator to act according to one's judgment of the best course. . . . It also includes determinations made by executives or administrators in establishing plans, specifications or schedules of operations. Where there is room for policy judgment and decision there is discretion.

Id. at 34-36, 73 S. Ct. at 967-68 (footnote omitted). The purpose of the exception is "to prevent judicial 'second-guessing' of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an act in tort." Varig Airlines, 467 U.S. at 814, 104 S. Ct. at 2765. Where Congress enacts legislation for a particular purpose, and entrusts the management and administration of the legislative mandate to an agency's discretion, the discretionary function applies. Smith, 795 F.2d at 307-08. Whether the government acted in a negligent manner is not relevant to the determination as to whether the discretionary function exception applies. Dalehite, 346 U.S. at 33, 73 S. Ct. at 966; Pennbank v. United States, 779 F.2d 175, 179 [16 ELR 20353] (3d Cir. 1985).

Congress enacted CERCLA in 1980 to give the Environmental Protection Agency ("EPA") the authority to conduct cleanup actions in response to environmental hazards. CERCLA authorizes the government to undertake actions for the containment, cleanup and removal of hazardous wastes. 42 U.S.C. § 9604, CERCLA established the Hazardous Substances Response Fund ("Superfund"), which is used to reimburse the government for the costs incurred in containment, cleanup and removal actions. 42 U.S.C. § 9631.

A National Contingency Plan ("NCP") prepared by EPA pursuant to 42 U.S.C. § 9605, establishes procedures and standards for response actions. The NCP specifies "procedures, techniques, materials, equipment, and methods to be employed in identifying, removing, or remedying releases of hazardous substances." 42 U.S.C. § 9605. Section 9605 also directs the EPA to compile a list of at least 400 of the highest priority facilities known as the "top priority among known response targets." 42 U.S.C. § 9605(8)(B). After placing a site on the list, the EPA evaluates and analyzes the site to determine the extent, nature and source of the contamination, to provide data to identify the most appropriate response, and to determine if a responsible party can be identified. More detailed site inspections follow. Superfund: Litigation and Cleanup, Frank and Atkeson, (BNA 1985) at 11. On finding that some type of response action is required, the EPA may issue an administrative order directing a responsible party to implement removal or remedial action, apply for an injunction compelling the responsible party to clean up or abate the release, 42 U.S.C. § 9606, or perform the work itself and sue the responsible party for reimbursement, 42 U.S.C. §§ 9604, 9607. Lone Pine Steering Committee v. United States Environmental Protection Agency, 777 F.2d 882, 886 [16 ELR 20009] (3d Cir. 1985), cert. denied, 106 S. Ct. 1970 (1986). Here, the EPA chose the option of performing the work itself and suing for reimbursement.

If the EPA decides to perform the work itself, it must choose the necessary remedial action and construct a remedy for the particular site. Superfund: Litigation and Cleanup, supra, at 20. CERCLA does not set an environmental standard with which the EPA is to make this determination. Rather, CERCLA provides that remedial measures selected in governmental cleanups financed by Superfund be "practicable in accordance with the national contingency plan and which provide for that cost-effective response which provides a balance between the need for protection of public health and welfare and the environment at the facility . . ., and the availability of amounts From the fund . . ." 42 U.S.C. § 9604(c)(4). The response costs the government may recover in connection with cleaning up a site must be "not inconsistent" with the national contingency plan. 42 U.S.C. § 9607(4)(A). The EPA must determine, therefore, within the guidelines of CERCLA, which sites to place on the priority list, what response or remedial actions are necessary in light of the public welfare and the needs of the environment and which methods should be utilized in dealing with the contamination. In short, once the EPA has determined that a particular site is one that requires cleanup under CERCLA, the EPA must determine how to clean up the site and carry out the clean up.

It is clear that the conduct involved in determining which sites to place on the priority list and choosing appropriate cleanup, containment and removal methods, is the type of conduct Congress intended to shield from tort liability. Although the legislation provides a "blueprint" for the EPA to follow in applying CERCLA, EPA employees must necessarily make policy determinations in establishing the plans, specifications and schedules pertaining to the implementation of CERCLA. Clearly, Congress entrusted the management of cleaning up hazardous waste sites to EPA discretion by setting forth guidelines within which the EPA must act, but leaving implementation of the program to the discretion of the EPA. See Smith, supra, 795 F.2d 301. Congress specified that the method of cleanup must be cost-effective and that the EPA must strike a balance between available funds, environmental needs and the public's health and welfare, determinations which necessarily involve discretion. See generally United States v. Outboard Marine Corp., 789 F.2d 497, 504 [16 ELR 20708] (7th Cir. 1986), cert. denied, 55 U.S.L.W. 3358 (U.S. Nov. 18, 1986) (No. 86-280) and United States v. Northeastern Pharmaceutical and Chemical Co., Inc., No. 84-1837, slip op. at 39-43 [17 ELR 20603] (8th Cir. Dec. 31, 1986). The government conduct challenged by Nicolet resulted from implementation of a statutory mandate to cleanup hazardous waste sites within flexible guidelines outlined in CERCLA. Congress gave the EPA authority to act and specified what it intended EPA to do pursuant to that authority, but left to the agency the discretion necessary to carry out those duties. See Pennbank, supra, 779 F.2d at 180. The government conduct challenged by Nicolet, is protected by the discretionary function exception set forth in section 2680(a).

Nicolet contends that the challenged conduct does not fall within the discretionary function exception because it involves scientific evaluation, which has been held to be non-discretionary. Griffin v. United States, 500 F.2d 1059 (3d Cir. 1974). However, it is clear that the conduct which the Court outlined above involves more than mere scientific evaluations by government employees and calls for policy determinations at the planning level. Furthermore, the Third Circuit has recently warned "our Griffin opinion must be read cautiously in light of the Supreme Court's Varig Airlines decision." Smith, 795 F.2d at 309. The Third Circuit in Smith distinguished Griffin and stated:

We need not decide here whether or not Griffin has survived Varig Airlines. We find that Griffin differs from the case before us in that there we were faced with the performance of a specific scientific evaluation in the execution of a regulation. The regulation, and not the scientific evaluation, involved policy determinations; for that reason, the court held that the scientific evaluation was not protected by the discretionary function exception. In the present appeal, however, we are faced with the formulation of a means to carry out a congressional directive. That formulation did involve policy determinations and it is, therefore, shielded by the discretionary function exception.

[17 ELR 21091]

Smith, 795 F.2d at 309 n.13. The determination in Griffin that the scientific evaluation did not involve a policy decision and was therefore not a discretionary function is inapplicable to the challenged conduct at issue in this action.

For all of the above reasons, Counts II, IV and VI of the counterclaim will be dismissed on the ground that the allegations set forth in Counts II, IV and VI of the counterclaim allege conduct by government employees which clearly comes within the discretionary function exception provided in section 2680(a) of the FTCA.

Order

AND NOW, this 19th day of March, 1987, upon consideration of the motion for reconsideration filed by the United States, for the reasons set forth in this Court's Memorandum of March 19, 1987,

IT IS ORDERED: This Court's Order of December 31, 1986 which provides:

(1) The United States' Motion to dismiss Counts I and V of the counterclaim filed by Nicolet against the United States is GRANTED and Counts I and V of the counterclaim are DISMISSED.

(2) The United States' motion to dismiss Counts II, IV and VI of the counterclaim filed by Nicolet against the United States is DENIED.

(3) The United States' motion to dismiss Count III of the counterclaim filed by Nicolet against the United States, insofar as Count III asserts a claim for recoupment against the United States, is DENIED.

IS VACATED.

IT IS FURTHER ORDERED:

(1) The United States' motion to dismiss Counts I, II, IV, V and VI of the counterclaim filed by Nicolet against the United States is GRANTED and Counts I, II, IV, V and VI of the counterclaim are DISMISSED.

(2) The United States' motion to dismiss Count III of the counterclaim filed by Nicolet against the United States, insofar as Count III asserts a claim for recoupment against the United States, is DENIED.