United States v. Bell Petroleum Services, Inc.

No. MO-88-CA-05 (W.D. Tex. September 20, 1989)

The court holds that former operators of the Texas Chromium I Site are liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) § 107 for the government's response costs for the chromium contamination of an aquifer having potential residential use. The court holds that the site is a "facility" under CERCLA, and relies on a Fifth Circuit decision, Tanglewood East Homeowners v. Charles-Thomas, Inc., 18 ELR 21348, to find that mere ownership is enough to impose CERCLA liability. The court holds that CERCLA does not require proof that defendants caused contamination of the aquifer when they dumped chromium wastes on the surface, since the mere ownership of the site establishes liability. To treat the soil and groundwater contamination as two separate facilities would impose a causation requirement for the chromium plume emanating from the site. The court concludes that the government proved that a disposal of a toxic substance has taken place, that the government incurred response costs, and that defendants are liable as former site operators.

[A previous decision in this litigation is published at 20 ELR 20533. A subsequent decision appears to 20 ELR 21120.]

Counsel for Plaintiff
Thomas Bartman, Barbara Finnamore, Craig Johnson, Harry Kelso, Peter Mounsey
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Winstanley Luke, Ass't U.S. Attorney
Federal Bldg., 727 E. Durango Blvd., San Antonio TX 78206
(512) 229-6500

Counsel for Defendant
Walter Batla, Kevin Beiter, Thomas Countryman, Eugene Labay
Cox & Smith
2000 NBC Bank Plaza, 112 E. Pecan St., San Antonio TX 78205
(512) 226-8395

Scott Deathrage, James Harris
Thompson & Knight
3300 First City Ctr., 1700 Pacific Ave., Dallas TX 75201
(214) 969-1700

Michael Morgan
Morgan, Ward & Leeton
306 W. Wall, Ste. 500, P.O. Box 1271, Midland TX 79702
(915) 683-0803

Bunton, J.

[20 ELR 21117]

Memorandum Opinion on Motion for Summary Judgment

BEFORE THIS COURT is the Motion of the Government for Summary Judgment as to Liability under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (" CERCLA"), 29 U.S.C. §§ 9601 et seq. Timely responses were received by the targeted Defendants: John Leigh, Bell Petroleum Services, Inc. ("Bell"), and Chromalloy American Corporation and Sequa Corporation (jointly referred to as "Sequa"). Having reviewed the arguments of the parties and the relevant authorities, the Court is of the opinion that the Government's Motion should be granted in part and denied in part.

Background

This suit originated in the United States Bankruptcy Court as a bankruptcy petition styled In re Bell Petroleum Services, Inc. The Government filed as a creditor and Bell objected to its alleged liability for response costs incurred by the Government at the Chromium I Site (the "Site"), Odessa, Texas. A joint Motion for Withdrawal of Bankruptcy Reference was signed by Judge Glen Ayers in June of 1988. In December of 1988, this Court granted the Government's Motion to bring into the action all of the Potentially Responsible Parties.

The controversy at bar involves the initial response of the State of Texas to citizen complaints of discolored water around the Site in Odessa, Texas. The State commissioned studies of the area and determined that the Trinity Aquifer which flows underneath the 24-block Site was a potential source of contamination.

In September of 1984, the Environmental Protection Agency (the "EPA") authorized a response action at the Site pursuant to its authority under § 104(c) of CERCLA, 42 U.S.C. § 9604(c). On the same date, EPA entered into a cooperative agreement with the State of Texas whereby the State was to undertake forward planning at the Site and to perform a remedial investigation, a feasibility study and remedial design work for the Site. EPA would then reimburse the State for these costs.

The remedial investigation revealed that the disposal of chromium waste at 4318 Brazos Street had severely contaminated the Trinity Aquifer, which provides water to residences and [20 ELR 21118] businesses beyond the Odessa City Limits, with chromium. The contaminants now extend north and northwest from 4318 Brazos Street because of the flow of the ground water in the area. Chromium is a "hazardous substance" as that term is defined in CERCLA. 42 U.S.C. § 9601(14).

EPA, as required by CERCLA, maintained a position of oversight, but still participated in planning the State's studies and remedial design of the alternate water system at the Site. EPA then reviewed these activities and memorialized them in reaching its Record of Decision which approved the State selected alternate water system response. Finally, as per the agreement, EPA reimbursed the State's costs by a letter of credit with the State of Texas on August 27, 1987. Section 107 of CERCLA, 42 U.S.C. § 9607 authorizes EPA to seek reimbursement of these payments from persons responsible for contamination at the site.

On December 1, 1988 and with permission of the Court, the Government filed a Complaint against, among others, Bell, Sequa and Leigh based on § 107 of CERCLA.

Standard on Motion for Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure provides for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that the moving party is entitled to a judgment as a matter of law." Rule 56(e) provides:

When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial.

Thus, the focus of this Court is upon disputes over material facts; facts that might affect the outcome of the lawsuit under the governing substantive law will preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 2509-10, 91 L. Ed. 2d 202 (1986); Phillips Oil Co. v. OKC Corp., 812 F.2d 265, 272 (5th Cir. 1987), cert. denied, U.S. , 108 S.Ct.152, 98 L. Ed. 2d 107 (1987), and the cases cited therein.

The Supreme Court's 1986 trilogy of summary judgment cases clarified the test for granting summary judgment. In Anderson v. Liberty Lobby, the Court stated that the trial court must consider the substantive burden of proof imposed on the party making the claim. In the case before this Court, the Government has the burden with respect to its claims; the Defendants have the burden with respect to certain defenses they raise. The Court in Anderson v. Liberty Lobby defined "material" as involving a "dispute over facts which may affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby requires this Court to substantively evaluate the evidence offered by the moving and nonmoving parties to determine whether the evidence raises a "material" fact question which is "genuine."

In a second case, the Supreme Court reiterated that where the party moving for summary judgment has established prima facie that there is no genuine issue as to any material fact, the non-moving party must then come forward with "specific facts" showing a genuine issue for trial. It msut be "more than simply . . . that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 477 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). A third Case, Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986), held that where the moving party shows that the opposing party is unable to produce evidence in support of its case, summary judgment is appropriate. In Celotex Corp., it was not necessary for motion for summary judgment to be supported by affidavits or other material specifically negating the nonmoving party's claim so long as the District Court was satisfied that there was an absence of evidence to support it. At that point the burden shifted to the nonmoving party to produce evidence in support of its claims; if it did not produce any, summary judgment was required.

This Court has demonstrated its willingness to allow nonmoving parties their day in court in borderline cases where under governing law or reasonable extensions of existing law, the hearing of some testimony would be helpful to understand the proper application of the law. Such is the case in the suit sub judice. Although some issues are ripe for summary judgment, others have been brought to the Court's attention which are purely factual in nature and warrant admission of evidence. Accordingly, the Court shall grant the Government's Motion in part and deny the Motion in part.

Discussion

CERCLA was designed to pull together the various and sundry Federal hazardous substance cleanup and compensation laws into some semblance of organization. The statute is aimed at the cleanup of leaking, inactive or abandoned sites and at emergency responses to spills. Under CERCLA, the Government generally undertakes pollution abatement of a contaminated site and the polluters pay for such abatement through tax and reimbursement liability. See: F. Anderson, D. Mandelker, and A. Tarlock, Environmental Protection: Law and Policy (1984).

The Government filed the action sub judice under § 107 of CERCLA, 42 U.S.C. § 9607, which provision allows the Government to respond immediately to reports of contamination and to later sue those parties allegedly responsible for the pollution. Section 107 thus warrants the Court's close scrutiny in determining whether summary judgment is viable. Liability for response costs under this Section is prefaced upon the government's proof of [the] following factors: (1) a facility; (2) from which a release or threatened release of a hazardous substance takes place; (3) causing response costs to be incurred by the Government; and (4) the defendants fall within at least one of the four classes of responsible persons described in § 9607(a) of CERCLA. United States v. Aceto Agricultural Chemicals Corp., 872 F.2d 1373 [19 ELR 21038] (8th Cir. 1989). The court shall take up each of these elements seriatim.

Under CERCLA, the term "facility" is defined in pertinent part as "(A) any building, structure, installation, equipment, pipe or pipeline, well, pit, pond, lagoon, impoundment, ditch, . . . storage container, . . . or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise came to be located . . . ." 42 U.S.C. § 9601(9). Courts generally have found that the term " facility" should be construed broadly to include "virtually any place at which hazardous wastes have been dumped or otherwise disposed of." United States v. Northeastern Pharmaceutical & Chemical Co., Inc., 810 F.2d 726 [17 ELR 20603] (8th Cir. 1986), cert. denied, U.S. , 108 S. Ct. 146, 98 L. Ed. 2d 102 (1987) [citing: United States v. Ward, 618 F. Supp. 884 ]16 ELR 20127[ (E.D.N.C. 1985); United States v. Conservation Chemical Co., 619 F. Supp. 162 ]16 ELR 20193[ (W.D. Mo. 1985); New York v. General Electric Co., 592 F. Supp. 291, 296 ]14 ELR 20719[ (N.D.N.Y. 1984); United States v. Metate Asbestos Corp., 584 F. Supp. 1143,1148 ]14 ELR 20433[ (D. Ariz. 1984)]. The Odessa I Site is composed of a [sic] 24-blocks of real estate upon which buildings have been constructed. It is not disputed that Leigh, Bell and Sequa allowed chromate waste water to be dumped on the surface soil of the Site. This Court finds that the Odessa I Site falls within the definition of a "facility" for purposes of CERCLA.

Defendant Sequa would have the Court read the term "facility" so as to carve out each Defendant's possessory period as a separate facility, thereby necessitating the need for proof by the Government of each Defendant's contribution to the chromium pollution of the Trinity Aquifer. Defendant Bell (and Defendant Leigh by adoption) seeks to persuade the Court that the term "facility" should be read to divide what the Government has designated as the Odessa I Site into separate sites or facilities: the surface soil, the defined chromium plume in the ground water site, and at least two other separately defined areas of chromium contamination in the aquifer.¹

Turning first to Sequa's argument, the Fifth Circuit has effectively read culpability out of the CERCLA statute when it found CERCLA to encompass not only past owners who contaminate their surroundings, but also current owners of adulterated sites. Tanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1572 [18 ELR 21348] (5th Cir. 1988) [citing: New York v. Shore Realty Corp., 759 F.2d 1032 ]15 ELR 20358[ (2d Cir. 1985)]. In the Tanglewood case, the owners of the contaminated site were a developer, a lending institution, construction companies and real estate agents and agencies. The prior owner, a wood treatment facility, actually caused the accumulation of the toxic waste at the site; the present owners merely filled in and graded the creosote pools left behind and began residential development. The court did not [20 ELR 21119] read CERCLA to exclude owners of property previously contaminated by others. Instead, the court found that § 9607(a)(1) "applies [and imposes strict liability] on the current owners of adulterated sites." Tanglewood, at 1572. A discussion of whether each of the Defendants falls within one of the four classes of responsible persons is taken up below.

As to the separation of each Defendant's proportional liability, this Court, by written Order, trifurcated the proceeding at bar into liability, recoverability and indemnity phases for purposes of organizing the veritable monster before it. Since it is not disputed that each of the Defendants contributed to the pollution of the soil at the Chromium I Site, the Court finds that adjudicating the issues before it as they regard a single facility and separating out the issue of the relative culpabiity of any one Defendant for adjudication in Phase III of the cause preferable to [the] proposal made [by] Sequa.

Bell argues that the Government must prove the Defendants caused response costs to be incurred in the aquifer, since there is evidence tending to disaprove that chromium in the soil filtered down into the aquifer. CERCLA does not include an explicit causation requirement, and in fact Congress specifically rejected such a requirement.² Further, as earlier discussed, the Tanglewood Court held that mere ownership of the site is enough to impose liability. Here, however, the Defendants argue and produce evidence to the effect that whether or not they caused the chromium to be released onto the soil, there is no link between the chromium in the soil and that in the ground water. Several courts have found that soil and ground water should not be equated into a single site, but divided and analyzed as two different sites. See, e.g.: Artesian Water Co. v. New Castle County, 659 F. Supp. 1269 [18 ELR 20785] (D. Del. 1987), aff'd, 851 F.2d 643 [18 ELR 21012] (3d Cir. 1988); Dedham Water Co. v. Cumberland Farms, Inc., 689 F. Supp. 1223 [19 ELR 20487] (D. Mass. 1988).

In light of the Tanglewood decision, however, this Court is of the opinion that to treat the site as two separate facilities is to impose a causation requirement for the chromium plume emanating from the Odessa I Site where none is required. It is hornbook law that, save for sale of mineral rights separately from the surface, ownership of land encompasses the depths beneath the soil. King v. Hester, 200 F.2d 807 (5th Cir. 1952).³ To hold otherwise would open the door for division of surface and air facilities, which position was clearly not contemplated by the Fifth Circuit. In Tanglewood, the Fifth Circuit took the definition of "disposal" from the Solid Waste Disposal Act and applied it to CERCLA cases. That definition reads:

The term "disposal" means the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.

42 U.S.C. § 6903(3). By definition, then, the placing of a hazardous substance on the soil which may enter the air or ground water constitutes a disposal or release for which the Government is entitled to recover response costs.

The multiple facilities issue is obviously one of first impression for this Circuit since the Tanglewood case dealt with surface pollution alone with no allegation of seepage into the groundwater. Further, the Tanglewood court was dealing with an interlocutory appeal on a denial of the Defendants' Motion to Dismiss, hardly a direct finding on merits of the case. In the interests of fairness to the parties, the Court is of the opinion that proof of a causal link between the chromate waste water and the Trinity Aquifer should be allowed so that the Court might make an alternative fact finding should the issue come before the Fifth Circuit. The burden of proving causation shall remain with the Government.

The second hurdle the Government must overcome to attain summary judgment is proof that a disposal or threatened disposal of a toxic substance has taken place. Again, it is undisputed that chromium was deposited on the soil by Leigh, Bell and Sequa and found in the aquifer, and, a causal connection being unnecessary, that alone is enough to hold Defendants liable for the Government's Response costs.

The third requirement is equally as easily met. It is not questioned that the Government incurred response costs in identifying the source and substance of contamination of the Trinity Aquifer. Defendant Bell argues that the pollution of the aquifer must be proven by the Government. In light of this Court's foregoing discussion, the Court is of the opinion that [the] Tanglewood opinion precludes such argument. Once a facility from which pollutants are released is identified, a causal connection between chrome in the soil and chrome in the aquaifer is not required.

The fourth and final requirement is proof that the defendants fall within at least one of the four classes of responsible persons described in § 9607(a). Suit against four classes of parties is authorized by CERCLA, the classes consisting of:

(1) The owner and operators of a facility at which there is a release or threatened release of hazardous substances; (2) the owners or operators of such a facility any time in the past when hazardous substances were disposed of; (3) any person who "arranged for" the treatment or disposal of a hazardous substance at the facility; and (4) the persons who transported hazardous substances to the facility.

Aceto Agricultural Chemicals, supra.

This Court finds the Fifth Circuit's treatment of current, nonculpable owners indicative of its broad reading of the CERCLA statute. Leigh, Bell and Sequa are all prior operators of the chromeplating facilities. The Tanglewood court, in a terse disposition of the liability of past owners, cited the definition of "disposal" from the Solid Waste Disposal Act, supra, and noted that the Appellant (a savings and loan institution) may have caused other releases of the toxic waste during landfill excavations and fillings. In light of the definition of disposal adopted by the Fifth Circuit in Tanglewood, this Court is of the opinion that the admitted release of a hazardous substance which "may enter the environment or be emitted into the air or discharged into any waters, including ground waters" meets the definition of a responsible person under CERCLA. 42 U.S.C. § 9603(3) (emphasis added).

Defendant Bell also argues that it meets one of three defenses allowed by CERCLA under § 9607(b). Since the Court is inclined to allow testimony on the issue of liability, testimony as to the § 9607(b) defenses is relevant and shall be allowed by the Court.

The divisibility of liability issue shall be taken up by the Court during Phase III of this cause.

As to the Government's Motion that this Court declare Judgment for the Government on the issue of future response costs, the Court shall reserve Judgment thereon until after the conclusion of the evidence at trial.

Finally, several Motions for Summary Judgment and to Strike Affirmative Defenses remain pending on this Court's docket which were filed prior to the Court's allowance of joinder of all potentially responsible parties and which bear directly on the issues presented by the Government's present Motion for Summary Judgment. Those Motions include (1) the Government's Motion for Summary Judgment filed on October 28, 1988; (2) the Government's Motion to Strike Affirmative Defenses Alleged by Bell filed on October 31, 1988; (3) Bell's Motion for Summary Judgment filed on October 31, 1988; and (4) the Government's Motion for Summary Judgment as to the consistency with the National Contingency Plan of the EPA's response actions. The Court shall dismiss each of the motions as moot. Accordingly,

IT IS ORDERED that the Government's Motion for Summary Judgment is hereby GRANTED. In the interests of fairness, however, the Court shall make a fact finding as to the issue of causation upon conclusion of the evidence.

IT IS FURTHER ORDERED that the four previously filed Motions for Summary Judgment and to Strike in the above-numbered cause are hereby DISMISSED AS MOOT.

1. The pollution before the Court is only that chromium plume in the Trinity Aquifer which emanates directly from underneath the 4318 Brazos Street site. The plumes found on other parts of the 24-block site are not in contention herein.

2. Whereas the early version of CERCLA as passed upon by the House imposed liability upon "any person who caused or contributed to the release or threatened release," H.R.7020, 96th Cong., 2d Sess. § 3701(a), 126 Cong. Rec. 26,779, reprinted in 2 Legislative History of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (Superfund) (hereinafter referred to as CERCLA Legislative History) 391-463 (Comm. Print 1983), the compromise version, approved by both the Senate and the House, imposed liability without reference to causation. 126 Cong. Rec. 31,981-2, reprinted in 1 CERCLA Legislative History, supra, at 821-24.

3. The question centers around the defined facility. Here, the facility is a tract of land. Taking into consideration CERCLA's imposition of liability upon owners or operators of a facility, the Court finds the bundle of rights associated with "ownership" analogous to the division of the facility issue.