18 ELR 21272 -- United States v. Moore

United States v. Moore

No. 87-101-NN (E.D. Va. March 10, 1988)

The court holds that the Comprehensive Environmental Response, Compensation, and Liability Act's (CERCLA's) statute of limitations does not apply retroactively to response costs incurred prior to its enactment in October 1986, and an individual owner of a hazardous waste site who took no part in the facility's operation is a covered person under CERCLA § 107(a). The court first holds that a dissolved Virginia corporation may be sued for acts committed prior to its dissolution, pursuant to Virginia law. The court then holds that an individual owner of a hazardous waste site who took no part in the property's operation is liable under CERCLA § 107(a). Although CERCLA § 107(a)(1) refers to "owner and operator," §§ 107(a)(2) and 101(20)(A) use the disjunctive "or." Moreover, the trend in the case law has been to hold that ownership alone of a facility is sufficient to create liability under § 107(a)(1). The court holds that CERCLA § 112(a) does not apply to government actions for response costs. Section 112(a) by its very terms applies to claims brought under § 111(a) and not to actions brought by the government under §§ 104 and 107 against responsible parties for costs already incurred. Finally, the court rules that the statute of limitations in CERCLA § 113(g) enacted in 1986 does not apply to actions involving response costs incurred prior to its enactment. Retroactive application of statutes, particularly where retroactive operation of a statute of limitation would bar government rights, is generally disfavored. Although the federal courts have uniformly held that CERCLA applies retroactively to preenactment acts, retroactive application of § 113(g) would thwart Congress' intent to hold responsible parties liable for environmental hazards. The statute itself states only that the 1986 amendments shall take effect upon enactment, and thus Congress must have intended that the general rule against retroactivity would apply. The legislative history behind the 1986 amendments indicates only that Congress intended to bar stale claims, which is the goal of any statute of limitations. A Supreme Court decision holding that courts should apply the law in effect at the time of decision does not control this case, since legislative direction and the policy behind CERCLA support the rejection of retroactive application.

Counsel for Plaintiff
Michael McIntyre
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-5508

Joseph F. Schive
U.S. Environmental Protection Agency
401 M St. SW, Washington DC 20460
(202) 382-3068

Allyn Stern
Office of Region Counsel
U.S. Environmental Protection Agency
841 Chestnut St., Philadelphia PA 19107
(215) 597-7906

John F. Kane, Ass't U.S. Attorney
600 Granby St., Rm. 409, Norfolk VA 23510
(804) 441-6331

Counsel for Defendants
Lawrence J. Lipka
133 28th St., Newport News VA 23607
(804) 247-3631

Wayne Lustig, Richard N. Shapiro
Pennbrook One Bldg., 5th Fl., Virginia Beach VA 23462
(804) 499-8971

[18 ELR 21272]

MacKenzie, J.:

Memorandum Order

The United States commenced this action on behalf of the Environmental Protection Agency ("EPA") and the Defense Logistics Agency ("DLA") of the U.S. Department of Defense ("DOD") pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601-9675, and the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901-6991i. The suit seeks recovery of "response costs" incurred by plaintiff in order to abate the release of hazardous substances at the "Pembroke Avenue site," a declaratory judgment for future costs, injunctive relief, and civil penalties. Finally, DOD seeks contribution.

Four motions are presently before the Court and ready for decision. First, defendant Moor-Fite Corporation, by special appearance, moves to quash service of process on the ground that it is a dissolved corporation. Second, Bonnie Moore moves for summary judgment and/or judgment on the pleadings, asserting that she is not a proper defendant under 42 U.S.C. § 9607(a). Third, Gerald Moore and Bonnie Moore seek judgment in their favor on the ground that plaintiff failed to make a "demand" or "claim" pursuant to 42 U.S.C. § 9612(a). Finally, Gerald Moore and Bonnie Moore seek dismissal of this action on the ground that it is barred by the statute of limitations contained in the newly enacted 42 U.S.C. § 9613(g). Each of these motions will be addressed in turn.

I. Motion by Moor-Fite

Effective September 1, 1985, Moor-Fite Corporation, a Virginia corporation, was automatically dissolved pursuant to Va. Code § 13.1-752. This dissolution, however, does not render Moor-Fite incapable of being sued for acts allegedly committed in June 1983. TThe capacity of a corporation to sue or be sued is determined by its law of incorporation. Fed. R. Civ. P. 17(b); United States v. Northeastern Pharm. & Chem. Co., 810 F.2d 726, 746 [17 ELR 20603] (8th Cir. 1986), cert. denied, 108 S. Ct. 146 (1987). Virginia Code § 13.1-755 expressly provides that a defunct corporation may be sued for liability incurred prior to the termination of its corporate existence. Since Moor-Fite can be sued as before, it can also be served with process as before. See Richmond Union P.R. Co. v. New York Seabeach Ry. Co., 95 Va. 386, 28 S.E. 573, 574 (1897). Therefore, service in this case upon Gerald Moore, as president of Moor-Fite, was proper.

Accordingly, Moor-Fite's motion to quash service of process is DENIED.

II. Bonnie Moore As a "Covered Person" Under 42 U.S.C. § 9607(a)

Bonnie Moore seeks dismissal of the complaint against her on the ground that she is not a "covered person" under 42 U.S.C. § 9607(a). She does not dispute the fact that she was an owner, with her husband Gerald Moore, of the Pembroke Avenue site in June 1983. Rather, she argues for dismissal on the ground that, apart from ownership, she took no part in the operation of the property in question. This argument ignores the plain language of the pertinent statute.

Section 9607(a) delineates four classes of persons who are strictly liable for response costs under CERCLA. Although § 9607(a)(1) speaks in terms of "the owner and operator of a vessel or a facility" (emphasis added),^[*] § 9607(a)(2) is framed in the disjunctive:

any peson who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of.

(Emphasis added.) Thus, under § 9607(a)(2), Bonnie Moore may be held liable as one who owned the Pembroke Avenue site in June 1983, regardless of whether she participated in the operation of the facility. Section 9601(20)(A), the definitional section, is further support for this reading of the statute. There, "owner or operator" is defined as "any person owning or operating such facility" (emphasis added). We must give a common sense reading to these unambiguous provisions.

Bonnie Moore's argument that the last sentence of § 9601(20)(A) exempts her is likewise without merit. Bonnie Moore is not a mere mortgagee, holding ownership primarily to protect a security interest in the property. See United States v. Maryland Bank & Trust Co., 632 F. Supp. 573, 579 [16 ELR 20557] (D. Md. 1986). Consequently, we need not decide whether the 1986 amendments to § 9601(20)(A), which omit the provision relied upon by Bonnie Moore, apply to this case.

Finally, at this juncture in the proceedings, an issue of fact still [18 ELR 21273] exists concerning whether Bonnie Moore was also an "operator" of the facility in question.

Accordingly, Bonnie Moore's motion for summary judgment or for judgment on the pleadings is DENIED.

III. Claim Requirement of § 9612(a)

Gerald Moore and Bonnie Moore contend that plaintiff, the United States, has failed to meet a jurisdictional prerequisite to the maintenance of this action and that, because of this failure, the action should be dismissed. Defendants rely upon 42 U.S.C. § 9612(a), entitled "Claims against the Fund for response costs."

By the very terms of § 9612(a), it applies to the assertion of claims "against the Fund pursuant to section 9611(a). . . ." In turn, § 9611 speaks of "claims" only in instances not involving the Government. The United States brought this action pursuant to §§ 9604 and 9607 to recover response costs already incurred. It is not seeking monies from the Superfund, but rather seeks recovery from responsible parties for costs incurred pursuant to its authority under § 9604 to abate the threatened release of hazardous substances.

We agree with the greater weight of authority, and the holdings of the three circuits to have addressed this issue, that § 9607 is independent of §§ 9611 and 9612 and that, therefore, § 9612(a) does not apply to suits brought by the Government for reimbursement of response costs. Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1077-82 [17 ELR 20223] (1st Cir. 1986); Walls v. Waste Resource Corp., 823 F.2d 977, 981 [17 ELR 20954] (6th Cir. 1987); State of Idaho v. Howmet Turbine Component Co., 814 F.2d 1376, 1379-80 [17 ELR 20659] (9th Cir. 1987). See also, e.g., United States v. Carolina Transformer Co., 650 F. Supp. 157, 159 (E.D.N.C. 1987); United States v. Dickerson, 640 F. Supp. 448, 452 [16 ELR 20970] (D. Md. 1986).

Accordingly, defendants Moores' motion to dismiss for failure to comply with 42 U.S.C. § 9612 is DENIED.

IV. Statute of Limitations of § 9613(g)

Prior to the 1986 amendments, CERCLA did not contain a specific statute of limitations applicable to actions by the United States for reimbursement of response costs. Signed into law on October 17, 1986, 42 U.S.C. § 9613(g) provides for either a three-year or six-year limitations period for actions such as the instant one. The sole issue is whether this new statute of limitations applies retroactively to actions involving response costs incurred prior to its enactment. We conclude below that it does not.

We apply the time-honored principle that statutes, as opposed to judicial decisions, operate prospectively only unless legislative intent unequivocally appears to the contrary. E.g., United States v. Security Industrial Bank, 459 U.S. 70, 79 (1982); Greene v. United States, 376 U.S. 149, 160 (1964); Miller v. United States, 294 U.S. 435, 439 (1935); Saunders v. H.K. Porter Co., 643 F. Supp. 198, 205 (E.D. Va. 1986). Additionally, statutes of limitations sought to be applied to bar rights of the Government must be strictly construed in favor of the Government. Badaracco v. Commissioner, 464 U.S. 386, 391 (1984); E.I. DuPont de Nemours & Co. v. Davis, 264 U.S. 456, 462 (1924).

Using this presumption against theretroactive operation of statutes, the Supreme Court has refused to retroactively apply several Congressional Acts. Security Industrial Bank, 459 U.S. 70 (11 U.S.C. § 522(f)(2)); Davis, 264 U.S. 456 (Interstate Commerce Act); Claridge Apts. Co. v. Commissioner, 323 U.S. 141, 164 (1944) (Chandler Act). More importantly, several federal statutes of limitations have not been accorded retroactive effect. United States v. St. Louis, S.F. & T. Ry. Co., 270 U.S. 1 (1926) (Transportation Act amendments); Fullerton-Krueger Lumber Co. v. Northern Pacific Ry. Co., 266 U.S. 435 (1925) (same); e.g., Fordham v. Belcher Towing Co., 710 F.2d 709 (11th Cir. 1983) (General Maritime Law); James v. Home Construction Co., 621 F.2d 727 (5th Cir. 1980) (Truth-in-Lending Act). See also Union Pacific R.R. Co. v. Laramie Stock Yards Co., 231 U.S. 190 (1913) (Land Grant Act, which permit application of state statutes of limitations). Similarly, several federal courts have rejected the retroactive application of state statutes of limitations. Kotval v. Gridley, 698 F.2d 344 (8th Cir. 1983); Doran v. Compton, 645 F.2d 440 (5th Cir. 1981). Although the Supreme Court in United States v. Lindsey, 346 U.S. 568 (1954), retroactively applied the Commodity Credit Corporation Act statute of limitations, it did not announce a different rule of construction from the above. Instead, Lindsey is based solely upon the Court's finding of legislative intent for retrospective application.

Thus, our analysis begins and ends with Congressional intent. Initially we note that CERCLA is a remedial statute and, as such, must be liberally interpreted in order to effectuate its purposes. E.g., United States v. Mottolo, 605 F. Supp. 898, 902 [15 ELR 20444] (D.N.H. 1985). Indeed, this observation has led the federal courts to uniformly hold that CERCLA applies retroactively to preenactment acts. E.g., United States v. Northeastern Pharm. & Chem. Co., 810 F.2d 726, 733 [17 ELR 20603] (8th Cir. 1986); United States v. Ward, 618 F. Supp. 884, 898 [16 ELR 20127] (E.D.N.C. 1985). Contrary to defendants' contention, it is consistent with Congressional intent to apply CERCLA to pre-enactment acts but not to apply § 9613(g) retroactively. Indeed, retrospective application of § 9613(g) would subvert Congress' intent to hold responsible parties liable for environmental hazards.

Congress has not expressly spoken on the issue presently before the Court. Section 9613 contains a standard effective date, and refers readers to the note following § 9601, which states that the amendments "shall take effect on the enactment of this Act [Oct. 17, 1986]." Special rules concerning the effective date of certain provisions are set forth by the Conference Committee. See 1986 U.S. Code Cong. & Admin. News at 3276-77. Since § 9613 is not addressed by these special rules, Congress must have intended that the general rule, applying statutes prospectively only, would govern. The absence of a savings clause is further support for this view. See Security Industrial Bank, 459 U.S. at 81; Kotval, 698 F.2d at 347 n. 5-6.

Defendants point to several sections of legislative history in support of their position that Congress intended retroactive application of § 9613(g). However, these discussions reveal only that Congress intended to bar stale claims, which is the intent of any statute of limitations. We have found no evidence that Congress intended to bar the Government's antecedent right to reimbursement. See James, 621 F.2d at 721. Significantly, the legislative history reveals that, due to inadequate resources and mismanagement, the EPA was unable to accomplish CERCLA's intended purposes. As such, by the 1986 amendments to CERCLA, Congress sought to ameliorate these problems and hence allocated more funds for CERCLA clean-ups. See H.R. Rep. No. 253(I), 99th Cong., 2d Sess. 54-55, reprinted in 1986 U.S. Code Cong. & Admin. News 2835, 2836-37. It is inconsistent with the accomplishment of these purposes to bar claims which have accrued prior to the enactment of § 9613(g).

Defendants further rely on Bradley v. School Board, 416 U.S. 696 (1974), wherein the Supreme Court stated the principle that courts should apply the law in effect at the time of decision unless legislative direction is to the contrary, or manifest injustice would result. Id. at 711. Bradley, however, is not controlling here because it involved the situation where a statute becomes law during the appeals process and, therefore, relied upon different precedent. See id. at 713 n. 17. See also State of Idaho v. Howmet Turbine Component Co., 814 F.2d 1376, 1379 (9th Cir. 1987).

Even assuming, arguendo, that Bradley controls, we find, as stated above, that legislative direction supports the rejection of retroactive application. Bradley stressed the strong policy concerns served by the retroactive application of a statute authorizing attorneys fees in school desegregation cases. Similarly, the policy behind the entire CERCLA scheme supports the denial of defendants' motion. Of course, policy concerns are relevant where a statute leaves a hiatus that must be filled. Unexcelled Chem. Corp. v. United States, 345 U.S. 59, 64 (1953). In this same vein, we find that the manifest injustice test of Bradley has been met. In short, we "struggle hard against [a] construction which will, by a retrospective operation, affect the rights of the parties." Bradley, 416 U.S. at 717, quoting United States v. Schooner Peggy, 1 Cranch. 103, 110(1801). See also Coe v. Secretary, 502 F.2d 1337, 1340 (4th Cir. 1974). Plaintiff had an accrued cause of action prior to § 9613(g), and the cut-off of that substantive right is precisely what courts should struggle hard against doing. See Friel v. Cessna Aircraft Co., 751 F.2d 1037, 1039 n. 4 (9th Cir. 1985).

Accordingly, we conclude that 42 U.S.C. § 9613(g) shall not be given retroactive effect. As defendants have sought dismissal solely on the ground of § 9613(g), we need not address whether an analogous statute of limitations, or the doctrine of laches, applies. Defendants' motion under 42 U.S.C. § 9613(g) is DENIED.

It is so ORDERED.

* Interestingly, it has been held that current ownership of a facility, without more, is sufficient to create liability under § 9607(a)(1), notwithstanding the "and." United States v. Maryland Bank & Trust Co., 632 F. Supp. 573, 577 [16 ELR 20557] (D.Md. 1986). See also State of New York v. Shore Realty Corp., 759 F.2d 1032, 1044 [15 ELR 20358] (2d Cir. 1985); United States v. Conservation Chem. Co., 619 F. Supp. 162, 190 [16 ELR 20193] (W.D. Mo. 1985); City of Philadelphia v. Stepan Chem. Co., 544 F. Supp. 1135, 1140 [12 ELR 20915] (E.D. Pa. 1982).