18 ELR 21297 -- United States v. General Dynamics Corp.

United States v. General Dynamics Corp.

No. CA4-87-312-K (N.D. Tex. June 9, 1988)

The court holds that civil penalties may be assessed and injunctive relief issued under the Clean Air Act against a government contractor that operates an aircraft plant owned by the Air Force. The court first holds that it has subject matter jurisdiction, even though the government is suing the defendant over conduct at the government's [18 ELR 21298] property. The Clean Air Act did not divest the United States of the right to sue for injunctive relief in air pollution cases affecting its property, and in this case the Air Force has made funds available to the defendant to correct the violations, but the defendant has declined to use them. The court next holds that the defendant is not immune under the Defense Production Act (DPA). The DPA contains no suggestion that its immunity provision is intended to extend to the Clean Air Act, and the two acts must be read so as to make them both effective so far as possible; since the Clean Air Act requires compliance by federal agencies, it would be inconsistent to hold that a federal contractor is exempt from the same mandate. The DPA immunity is limited to claims based on contracts with third parties that a defense contractor must breach to fulfill its federal defense contract.

Counsel for Plaintiff
Henry Habicht, Ass't Attorney General; Linda C. Anderson
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-5266

Counsel for Defendant
Michael Lowenberg
Aikin, Gump, Strauss, Hauer & Feld
4100 First City Center, 1700 Pacific Ave., Dallas TX 75201-4618
(214) 969-2731

[18 ELR 21298]

Belew, J.:

Order

Pending before the court is the Motion to Dismiss of Defendant, General Dynamics ("GD"), pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, to which the Government has responded. The Court, having reviewed the numerous pleadings in this case, as well as the applicable law comes to the conclusion that GD's motion to dismiss should be denied.

I. Facts

This is an action for permanent injunctive relief as well as civil penalties for alleged violations of the Clean Air Act, 42 U.S.C. §§ 7401-7642, specifically 42 U.S.C. § 7413(b), brought by the Department of Justice on behalf of the Environmental Protection Agency ("EPA"). The requested relief stems from alleged emissions of volatile organic compounds ("VOCs") from the material coating operations at the federally owned facility known as Air Force Plant No. 4 ("Plant No. 4"), which is operated by GD in Fort Worth, Texas.^[1]

The Clean Air Act requires the EPA to set certain national air quality standards for pollutants that are harmful to the public. See generally, 42 U.S.C. § 7409 for the national primary and secondary ambient air quality standards. Each state is required to adopt and submit to the EPA its own plan, known as a state implementation plan or "SIP," which specifies the methods the state will employ to attain the specified standards. See 42 U.S.C. § 7410(a)(1).^[2] Texas' SIPs have been approved by the EPA and are published in the Federal Register pursuant to 42 U.S.C. § 7410(h).^[3]

The Complaint alleges that the coatings used by GD in the manufacture of the F-16 at Plant No. 4 are subject to the VOC emission limits established by the Texas Air Control Board ("TACB"). Pursuant to these VOC emission limits, on June 3, 1985, the TACB issued a notice of violation stating that GD's coating operations at Plant No. 4 were in violation of TACB Regulation V, Rules 115.191(9)^[4] and 115.194(d).^[5]

On July 11, 1985, the EPA issued its own notice of violation, citing the same above listed state regulations.

Subsequently, the TACB issued a second notice of violation on October 1, 1985, citing the earlier mentioned state regulations.

On January 17, 1986, the TACB adopted and entered Agreed Order No. 86-5 which resolved the claims pertaining to the operations at Plant No. 4.

On February 24, 1987, the EPA issued a second notice of violation, citing GD for violating the TACB VOC emission limits. Specifically, the Complaint alleges that GD violated these VOC emission limits by using a non-complying coating process on three coating lines after December 31, 1982, and that GD continued to use these non-complying coatings more than thirty days after the EPA issued its first notice of violation to GD on July 11, 1985. See United States Complaint, PP14, 20-22, 26, 27, 31-33. As a result of this second notice of violation, an Air Force representative contacted the EPA to set up a technical review committee ("TRC"), which included representatives of GD, the EPA, TACB, and the Air Force, to explore possible methods of resolving the violations cited by the EPA.

After the initial meeting of the TRC in April 1987, the EPA asked GD to provide a concrete commitment to settle the violations raised in the EPA's first notice of violation in July 1985 as well as those raised in the second notice of February 1987.

On April 29, 1987, GD responded to the EPA's request by letter which stated that while the Air Force had made $ 2.3 million available to GD to install VOC emission controls, GD had decided not to install the emission controls. Rather, GD was awaiting a decision by the Air Force on GD's request to construct a new facility. Specifically, GD stated:

We [GD] do not believe the expenditure of significant funds on the existing facility is a prudent business decision since a large portion of the 2.3 million will be spent on emission control facilities that cannot be relocated to the new chemical processing facility.

On May 7, 1987, the Government filed the present lawsuit seeking civil penalties and injunctive relief under 42 U.S.C. § 7413(b) of the Clean Air Act for emissions of VOCs from the material coating operations of GD at Plant No. 4.

On July 28, 1987, GD filed the present Motion to Dismiss for lack of subject matter jurisdiction.

II. Analysis

GD argues that this Court lacks subject matter jurisdiction on the ground that:

plaintiff's Complaint is in essence an interagency dispute between the . . . EPA and the United States Air Force in which the United States seeks judicial relief against operations at its own federal facility. The plaintiff has failed to satisfy the "Case" or "controversies" requirement of Article III of the United States Constitution because a party may not seek judicial relief against itself. Accordingly, the plaintiff's Complaint should be dismissed.

Defendant's Motion to Dismiss, July 28, 1987, pg. 1, P1.

GD also argues that the separation of powers doctrine^[6] as well as the doctrine of primary jurisdiction^[7] also deny this Court subject matter jurisdiction over this matter. However, in reviewing these contentions, the Court finds that they are merely variations of a single premise, namely that since the Air Force owns Plant No. 4, and has certain contractual rights regarding their right to control the activities at that Plant No. 4, that the Government is suing itself [18 ELR 21299] since the controversy here is between the EPA and the Air Force and not GD.

GD's second argument is that the Defense Production Act of 1950 ("DPA"), 50 U.S.C. App. §§ 2061-2169, immunizes defense contractors with "rated order" contracts,^[8] such as GD, from liability under the Clean Air Act. GD Memorandum in Support of Defendant's Motion to Dismiss, July 28, 1987, pgs. 36-40.

The Court shall address these arguments in order.

A. Lack of Subject Matter Jurisdiction

It is undisputed that the Air Force owns Plant No. 4. Further, it is undisputed that while GD operates the Plant, they are subject to certain specified restrictions as to the maintenance or modification of the Plant. See Memorandum in Support of Defendant's Motion to Dismiss, July 28, 1987, pg. 3-4. GD argues that due to these specified contractual rights to control GD's activities at the Plant that the only "legally cognizable controversy here is between EPA [sic] and the Air Force," Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss, February 5, 1988, pg. 2. As a result, GD urges that there is no real case or controversy since the Government, the EPA here, is allegedly seeking the requested relief concerning an Air Force owned facility, which is in direct contravention of Article III's case or controversy requirement.

While this argument seems very appealing, the Court directs counsel for GD to United States v. Atlantic-Richfield Co., 478 F. Supp. 1215 [10 ELR 20089] (D.C. Mont. 1979) which held that under the Clean Air Act "Congress did not divest the United States of the right to sue for injunctive relief in air pollution cases affecting its property." Id. at 1218 (emphasis added) [Ed. note: no emphasis in original]. In the present case, GD argues that "[t]he contract and regulations governing [GD's] maintenance of Air Force Plant No. 4 prevent [GD] from modifying the equipment or facility without prior authorization from the Air Force." Memorandum in Support of Defendant's Motion to Dismiss, July 28, 1987, pg. 13. While this is undoubtedly the case, GD has failed to mention that the Air Force appropriated $ 2.3 million dollars for the purpose of installing VOC emission controls on the coating process. See Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss, February 5, 1988, pg. 13. In its letter of April 29, 1988, it was GD who elected not to install the equipment, thereby resulting in this suit being filed against them and not the Air Force. Thus,since the Government can sue for injunctive relief in air pollution cases involving its property, Plant No. 4 herein, see Atlantic-Richfield, supra, this lawsuit is properly before this Court.

B. Immunity under the DPA

GD argues that the DPA grants immunity to defense contractors for any liability that might arise as a result of favoring a given defense contract over other contractual obligations the contractor might have entered into. Specifically, GD argues that the DPA provides that "[n]o person shall be held liable for damages or penalties for any act or failure to act resulting directly or indirectly from compliance with a rule, regulation or order issued pursuant to this act," 50 U.S.C. App. § 2157. GD goes on to state "Congress clearly intended the immunity language to apply regardless of the nature of the damage claims or penalties," Memorandum in Support of Defendant's Motion to Dismiss, July 28, 1987, pg. 38. While the cases cited by GD, Eastern Airlines, Inc. v. McDonnell-Douglas Corp., 532 F.2d 957 (5th Cir. 1976) and United States ex rel. Caldwell Foundry & Mach. Co. v. Texas Constr. Co., 224 F.2d 289 (5th Cir.), cert. denied, 350 U.S. 895 (1955), do involve contractor immunity, neither of these cases supports the broad interpretation of the DPA that GD espouses. There is no language in the DPA which exempts defense contractors from liability under the Clean Air Act, nor is there any reference to such an intent in the legislative history of the DPA. Further, while it is undisputed that the contracts involved in the present case are "rated order" contracts, this Court is extremely reluctant to adopt an interpretation of the DPA that it "precludes any relief against [GD] under the Clean Air Act so long as [GD] is acting in compliance with its contracts with the Air Force." Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss, February 5, 1988, pg. 41.

As the Government correctly points out:

fundamental principles of statutory construction dictate that one federal statute may not be interpreted to override another in the absence of an explicit legislative statement that such effect was intended, unless there is no rational construction of the two statutes that would avoid inconsistency between them.

Id. As the Supreme Court stated in Ruckelshaus v. Monsanto, 467 U.S. 986 [14 ELR 20539] (1983), where two statutes "are capable of co-existence, it is the duty of the courts, absent a clearly expressed congressional intentions to the contrary, to regard each as effective." Id. at 1018. See also Morton v. Mancari, 417 U.S. 535, 551 (1974); Brumley Estate v. Iowa Beef Processors, 704 F.2d 1352, 1360 (5th Cir. 1983), cert. denied, 465 U.S. 1028 (1984).

If this Court were to adopt the interpretation of the DPA that GD espouses, the DPA would allow defense contractors to violate the Clean Air Act with impunity, as long as the defense contractors were attempting to fulfill and comply with their respective government contracts. GD's interpretation of the DPA is supported by neither the legislative history of the DPA nor that of the Clean Air Act. Congress made the requirements of the Clean Air Act applicable to federal agencies as well as federal facilities. Section 7418(a) of the Clean Air Act requires that:

Each department, agency, and instrumentality of the executive, legislative and judicial branches of the Federal Government (1) having jurisdiction over any property or facility, or (2) engaged in any activity resulting, or which may result, in the discharge of air pollutants, and each officer, agent, or employee thereof, shall be subject to, and comply with, all Federal, State, interstate, and local requirements, administrative authority, and process and sanctions respecting control and abatement of air pollution in the same manner, and to the same extent as a nongovernmental entity.

42 U.S.C. § 7418(a). Since the Air Force is required to comply with the Clean Air Act, it would be inconsistent for this Court to hold that GD was exempt from the same mandates.

What the Eastern Airlines and Caldwell Foundry cases cited by GD do stand for is that the DPA was intended to cover claims based on contracts with third-parties that a given defense contractor had to breach in order to fulfill its respective federal defense contract. Any other interpretation of the DPA would not be a fair reading of the legislation as Congress intended.

III. Conclusion

Having found that the Government can seek injunctive relief for violations of the Clean Air Act on its property and that violations of the Clean Air Act under rated order defense contracts are not immunized by the DPA, this Court finds that it has little choice but to deny Defendant's motion to dismiss.

IT IS SO ORDERED.

1. While the Air Force is the owner of Plant No. 4, GD manufactures F-16 aircraft at this facility under several production contracts with the Air Force.

2. Section 7410(a)(1) states in pertinent part:

Each state shall, after reasonable notice and public hearings, adopt and submit to the Administrator, within nine months after the promulgation of a national primary ambient air quality standard . . . under 42 U.S.C. § 7409 for any air pollutant, a plan which provides for implementation, maintenance, and enforcement of such primary standard in each air quality control region within . . . such State. . . .

42 U.S.C. § 7410(a)(1).

3. Section 7410(h) states in pertinent part that:

(1) Not later than one year after August 7, 1977, and annually thereafter, the Administrator shall assemble and publish a comprehensive document for each State setting forth all requirements of the applicable implementation plan for such State and shall publish notice in the Federal Register of the availability of such documents. . . .

42 U.S.C. § 7410(h)(1).

4. TACB Rule 115.191(9), entitled "Miscellaneous metal parts and products coating," generally limits the VOC emissions from the coating process of various metal parts and products.

5. TACB Rule 115.194(d) provides that "affected persons within the counties listed" shall be in compliance with paragraphs (9) and (10) of TACB Rule 115.191 no later than December 31, 1982 and are to submit to the TACB a final control plan for compliance no later than December 31, 1980.

6. GD argues that since this is a dispute betweenthe owner of Plant No. 4, the Air Force, and the EPA the separation of powers doctrine prevents this Court from becoming involved in an intra-agency dispute.

7. This argument states that this Court should defer to the primary jurisdiction of executive branch mechanisms that are in place to resolve intra-agency disputes.

8. The DPA authorizes the President to issue rated order defense contracts that compel contractors to perform, despite other contractual obligations, in those areas which he deems necessary to national defense. 50 U.S.C. App. § 2071. A contractor with a rated order is subject to fines or imprisonment for failing to comply with a rated defense contract. 50 U.S.C. App. § 2073. The DPA is still in effect and has been extended until September 30, 1989. 50 U.S.C. § 2166 (West Supp. 1987).