FMC Corp. v. U.S. Department of Commerce

No. 92-1945 (3d Cir. November 26, 1993)

The court affirms a district court decision that the U.S. Department of Commerce is liable under § 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as an "operator" and "arranger" for contamination at a facility that it directed to produce high tenacity rayon during World War II. The court first rejects the government's argument that sovereign immunity bars the plaintiff's claims because regulatory activities are per se outside the scope of CERCLA liability. Courts should consider both regulatory and nonregulatory activities as bases for liability and the government should be immune only for regulatory activities that have no analogue to conduct of a private business. Further, exempting the government from liability based solely on the regulatory nature of its activities would contravene CERCLA § 107(b), which lists the only three defenses to § 107 liability available to any person, including the government. These enumerated defenses do not include a regulatory exception.

The court holds that the government is an operator of the facility, because its conduct was similar to that of a private, commercial party. The government regulated in furtherance of its commercial goals, exerting considerable day-to-day control over the facility. The facility would not have been making high tenacity rayon if not for the government. Through regulations, on-site inspectors, and the possibility of seizure, the government maintained a significant degree of de facto day-to-day control over the production process. Government officials built or had built and controlled plants supplying raw materials to the facility, arranged for an increased labor force, and supervised employee conduct. Also, the government controlled product marketing and price. The court holds that the government is liable as an arranger, because it produced the facility's raw materials, or arranged for their production; it owned the work in progress and its final product; and it was aware that the process inherently caused hazardous waste.

[Prior opinions is this litigation are published at 20 ELR 21403 and 22 ELR 20796. Pleadings in this litigation are published at ELR PEND. LIT. 66256.]

Counsel for Appellee
Neil G. Epstein
Hangley, Connolly, Epstein, Chicco, Foxman & Ewing
1515 Market St., 9th Fl., Philadelphia PA 19102
(215) 851-8400

Counsel for Appellants
Vicki L. Plaut
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Greenberg, J. (before Sloviter and Mansmann, JJ.):

[24 ELR 20207]

I. FACTUAL AND PROCEDURAL BACKGROUND:

The United States and the United States Department of Commerce appeal from a final judgment entered on September 17, 1992, by the United States District Court for the Eastern District of Pennsylvania. The court held the United States jointly and severally liable, as an "owner," "operator" and "arranger," for response costs for which the plaintiff FMC Corporation is or will be responsible under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") to clean up hazardous waste created at an industrial facility during World War II which FMC later acquired. The final judgment was entered in accordance with the district court's opinion of February 19, 1993, reported as FMC Corp. v. United States Dep't of Commerce, 786 F. Supp. 471 (E.D. Pa. 1992). FMC brought this action because the Environmental Protection Agency ("EPA") sought to recover the response costs from it. FMC seeks contribution, claiming that the United States also is liable because the War Production Board (WPB), which later was subsumed within the Department of Commerce, owned parts of the facility, operated the facility during World War II, and arranged for the disposal of the wastes created. The government now has settled the claim against the United States as an "owner" but it contends that its other conduct was regulatory activity from which the United States is protected from liability by its sovereign immunity. It further contends that, in any event, it was neither an "operator" nor "arranger" within CERCLA. We will affirm.

A. Statutory Background

Section 104 of CERCLA empowers the government to use money from the "superfund" to clean up hazardous waste sites. 42 U.S.C. § 9604(a). Section 107(a)(1)-(4) provides that any "person" who is the "owner" or "operator" of a facility at the time of disposal of a hazardous substance, or who "arranged" for such disposal, is liable for the response costs, i.e., the costs of removal and other remedial action incurred by the United States. 42 U.S.C. § 9607(a)(1)-(4). Liability for the costs incurred is strict. United States v. Alcan Aluminum Corp., 964 F.2d 253, 259 (3d Cir. 1992). Section 101(21) defines "person" to include the "United States Government." 42 U.S.C. § 9601(21). As amended by the Superfund Amendments and Reauthorization Act of 1986, Pub. L. 99-499, § 120, 100 Stat. 1613, 1666 (1986), section 120(a)(1) of CERCLA waives the federal government's sovereign immunity as follows:

Each department, agency, and instrumentality of the United States (including the executive, legislative and judicial branches of government) shall be subject to, and comply with this chapter in the same manner and to the same extent, both procedurally and substantively, as any nongovernmental entity, including liability under section 9607 of this title.

42 U.S.C. § 9620(a)(1) (emphasis added). Persons assessed by the United States with response costs under CERCLA may "seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title [CERCLA section 107(a)], during or following any civil action under section 9606 of this title or under section 9607(a) of this title." 42 U.S.C. § 9613(f)(1).

B. Factual Background

The facility is located in Front Royal, Virginia, and was owned by American Viscose from 1937 until 1963, when FMC purchased it. In 1940, American Viscose constructed a plant on the Front Royal site and began manufacturing textile rayon. Before World War II, the machines at the facility were not set up to produce high tenacity rayon. However, after Pearl Harbor, the government determined that it needed increased production of high tenacity rayon to manufacture war-related products, including airplane and truck tires. Inasmuch as the demand anticipated for high tenacity rayon greatly exceeded the projected supply, the WPB commissioned American Viscose to convert its plant to make high tenacity rayon and American Viscose did so.

There is no question that, at least by current standards, environmental controls were lax at the facility. Thus, not surprisingly, inspections in 1982 revealed carbon disulfide, a chemical used in manufacturing high tenacity rayon, in the ground water in the vicinity of the plant. As a consequence, the EPA began cleanup operations and notified FMC of its potential liability. In 1990, FMC filed this suit against the Department of Commerce under section 113(f) of CERCLA, 42 U.S.C. § 9613(f), and the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02. FMC's complaint alleged that, as a result of the government's activities during World War II, the United States became jointly liable with FMC as an "owner" and "operator" of the facility, and as an "arranger for disposal" of hazardous wastes there. FMC claimed that the government became involved so pervasively in the facility that it effectively operated the plant along with American Viscose and, accordingly, should share in the response costs.

The government filed a motion to dismiss, arguing that the United States could not be shown to have been an operator or an arranger for disposal within the meaning of CERCLA. Inasmuch as its activities regarding the facility were regulatory. The district court rejected the government's position, holding that the United States is [24 ELR 20208] liable, regardless of the nature of its activities, whenever the government's "involvement or control become[s] so pervasive or significant as to warrant the imposition of CERCLA liability."

In a subsequent motion for partial summary judgment, the government argued that it had not waived sovereign immunity under CERCLA for purely regulatory activities and that, in any event, its activities at the site did not rise to the level of ownership or operation necessary for the imposition of liability under the statute. The district court denied the motion, holding that there were disputed issues of material fact as to the owner and operator issues, concerning the extent of the government's activities at the plant. In March 1991, the district court held a four-day non-jury trial on the liability issues.

In an opinion issued February 20, 1992, the district court held the government liable on all three theories articulated by FMC: as an owner, operator, and arranger. See FMC Corp. v. United States Dep't of Commerce, 786 F. Supp. 471. The liability period for each of these categories varied, and no period was identified specifically for "arranger" liability, but all fell between January 1942 and March 1948.

The four-day trial consisted largely of the introduction of documents as most persons with knowledge of the activities during the war had died. But depositions of living witnesses also were introduced, and there was some oral testimony at the trial. Based on these materials, the district court made extensive findings of fact, many if not most of which are not in dispute and which we only need summarize.

The facility is a 440-acre site and includes a manufacturing plant and 23 waste disposal basins and landfill areas. The plant was owned and operated by American Viscose from 1940 to 1963, by FMC from 1963 to 1976, and by Avtex Fibers from 1976 to 1989. American Viscose is now out of business and Avtex is in bankruptcy reorganization. Id.

In January 1942, an executive order established the WPB. The WPB was empowered to issue directives to industry in connection with war procurement and production, including directives with respect to purchasing, contracting, specification, construction, requisitioning, plant expansion, conversion and financing. In 1942, the WPB's powers were expanded to include the seizure and operation of non-complying industries. Id. at 474-75.

At the outset of the war, the United States lost 90% of its erude rubber supply because the Japanese occupied parts of Asia from which rubber previously had been obtained. Consequently, this country turned to synthetic substitutes, like high tenacity rayon, to strengthen and lengthen the life of heavy duty truck and aircraft tires, thus reducing natural rubber consumption. The WPB designated high tenacity rayon as "one of the most critical [products] in the entire production program." Id. at 474-75. The WPB required American Viscose to convert the Front Royal facility to enable it to produce high tenacity rayon and the facility became one of few plants in the entire country manufacturing that product. The WPB's requirement that American Viscose convert the facility and expand its capacity to produce high tenacity rayon diverted it from producing regular textile rayon. Id. at 477.

The government considered facilities which produced high tenacity rayon to be "war plants" subject to its maximum control. The Director of the Textile, Clothing and Leather Division of the WPB, the division directly responsible for high tenacity rayon, regarded the American Viscose facility to a considerable extent to be a government project directly related to the war effort. Inasmuch as the facility was engaged in a program critical to the success of the war effort, if American Viscose did not comply with the government's production requirements, the government would have seized the facility. Indeed, during the war the government took over numerous plants which failed to meet production requirements, including a plant producing high tenacity rayon owned by American Enka Corporation. Id. at 475-76.

To implement the required plant conversion and expansion, the government through the Defense Plant Corporation ("DPC") leased government-owned equipment and machinery for use at the facility, including 50 spinning machines, an acid spin bath system, piping for the spinning machines and spin bath system, slashing equipment, and waste trucks. But the government did not allow American Viscose to install the leased equipment. Instead the government contracted with Rust Engineering Company to design and install the DPC-owned equipment at the facility, and the government paid Rust for this work. Under its contract with Rust, the government had substantial control over and participation in the work related to the DPC equipment. For example, all plans, specifications, and drawings had to be submitted to the DPC for approval; Rust had to obtain prior DPC approval for the purchase of supplies; DPC had the right to promulgate rules governing all operations at the work site and to require the removal from work of any Rust employee; and DPC was to be represented on-site by a government representative, who had the right to direct Rust. The government collected rent from American Viscose on the machinery through 1947, and owned the machinery until March 1948. Id. at 478.

The five principal components of high tenacity rayon, sulfuric acid, carbon bisulfide, wood pulp, chemical cotton liners, and zinc, were quite scarce during the war. To assure American Viscose an adequate supply of sulfuric acid, the government built and retained ownership of a sulfuric acid plant adjacent to the facility. The plant was connected to the facility through a pipeline and virtually its entire output was delivered to the facility via the pipeline. To satisfy the facility's need for carbon bisulfide, the governmenthad Stauffer Chemical Company build a new plant in the Front Royal area to produce 26.4 million pounds of carbon bisulfide per year. American Viscose was required to use the raw materials that it obtained from the government or through the use of a government priority rating system for the specific purpose authorized by the government. As a result of its involvement with the supply and control of the basic raw materials necessary for high tenacity rayon production, the government determined the operating level of each rayon manufacturer. Id. at 479-80.

In October 1942, the WPB ascertained that the labor supply in the Front Royal area would be inadequate to meet future needs at the facility. Consequently, the government obtained draft deferments for personnel at the facility, directed workers in other industries to come to the plant, and provided housing for the additional workers. The government also participated in managing and supervising the workers. The government sent its personnel to investigate and resolve problems involving worker productivity, to cut down on absenteeism, and to resolve labor disputes. In May 1944, the WPB appointed a full-time representative to reside at Front Royal to address problems at the facility concerning manpower, housing, community services, and other related matters. Moreover, although the government did not hire the employees, it was obligated to reimburse American Viscose for the salaries of certain employees under a lease between DPC and American Viscose. Id. at 480-81.

After production began, the government placed a representative on-site with the authority to promulgate rules governing all operations at the site and with the right to remove workers who were incompetent or guilty of misconduct. Through continuous informal contacts and communications, the government was involved directly and substantially with the facility's production activities and management decisions. Id. The government controlled the supply and price of American Viscose's raw materials as well as the amount of production and the price for the product. Therefore, inasmuch as the facility was doing only government work, the government significantly influenced the profit that American Viscose could make at the facility. Id. at 483.

The government was aware that generation of hazardous waste was inherent in the production process because its [24 ELR 20209] personnel present at the facility witnessed a large amount of highly visible waste disposal activity. Wastes were placed in large unlined basins located on site and, as waste basins were filled, new ones were dug. Portions of the sulfuric acid utilized in the production process that could not be reclaimed or treated at the facility were deposited in the on-site waste basins as were carbon bisulfide and zinc-contaminated wastes. From 1942 through 1945, at least 65,500 cubic yards of viscose waste were placed in the on-site basins. The disposal basins were visible and any person visiting the facility easily could see these basins.

Inasmuch as the generation of waste was inherent in the production of high tenacity rayon, an increase in production automatically increased waste. This is significant because governmental pressure to maximize production overtaxed the machinery and equipment at the facility, thereby increasing the amount of material scrapped for disposition in the waste basins. Moreover, the government rejected material that did not adhere strictly to the production specifications, thereby further increasing the amount of waste. In addition, wastes were generated and disposed of by the government-owned equipment that was installed at the facility. Id. at 483-84.

The district court concluded that the government was an owner and operator of the facility and an arranger of waste. These conclusions clearly were predicated on the district court's findings, which can be summarized as follows:

(1) the government required American Viscose to stop making regular rayon and start producing high tenacity rayon;

(2) the government mandated the amount and specifications of the rayon produced and the selling price;

(3) the government owned the equipment used to make the high tenacity rayon and owned a plant used to make raw materials;

(4) the government supervised the production process through the enactment of specifications and the placement of on-site supervisors and inspectors; it supervised the workers; and it had the power to fire workers or seize the plant if its orders were not followed; and

(5) the government knew that waste was inherent in the production process; it was aware of the methods for disposal of the waste; and it provided the equipment for the waste disposal.

After making its factual findings and conclusions of law, the district court ordered the case to trial to determine the allocation of liability between FMC and the government. However, the parties settled the allocation issues, subject to the government's appeal of the ruling holding it liable as an operator and arranger. Under the settlement agreement, the government conceded its liability as an owner with respect to its property at the facility and accepted an allocation of 8% of the cleanup costs. But if we uphold the government's liability as an operator and arranger, its total liability under the settlement agreement will be increased to 26% of the cleanup costs. On September 17, 1992, in accordance with the parties' agreements and its opinion issued on February 20, 1992, the district court entered final judgment.

II. JURISDICTION AND STANDARD OF REVIEW:

The Government filed a timely notice of appeal on November 11, 1992. We have jurisdiction pursuant to 28 U.S.C. § 1291. The district court had subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and 42 U.S.C. §§ 9613(b) and 9613(f). We may set aside the district court's findings of fact only if they are clearly erroneous. Levendos v. Stern Entertainment, Inc., 909 F.2d 747, 749 (3d Cir. 1990). Our standard of review with respect to alleged error in applying the law to the facts, however, is plenary. Id.

III. DISCUSSION:

A. Sovereign Immunity

The government's first argument is that it did not waive its sovereign immunity under CERCLA for claims arising from its wartime regulatory activities even though CERCLA section 120(a)(1) provides that "[e]ach department, agency, and instrumentality of the United States . . . shall be subject to, and comply with, this chapter in the same manner and to the same extent . . . as any nongovernmental entity." 42 U.S.C. § 9620(a)(1). This argument starts from the well-settled principle that the federal government is immune from suit "save as it consents to be sued." United States v. Testan, 424 U.S. 392, 399, 96 S. Ct. 948, 953 (1976). Furthermore, such consent "cannot be implied but must be unequivocally expressed," id., 96 S. Ct. 953-54, and waivers of sovereign immunity must be construed narrowly in favor of the government. United States v. Idaho, 113 S. Ct. 1893, 1896 (1993); United States v. Nordic Village Inc., 112 S. Ct. 1011, 1015 (1992). Accordingly, the government reminds us that CERCLA's waiver, although express, is not unlimited and that we must construe it narrowly. Based on a series of cases involving suits brought by the owners of waste sites against the EPA for its activities in taking over these sites for cleaning, the government argues that the CERCLA waiver does not apply to federal regulatory actions that a non-governmental entity cannot undertake. Thus, it argues that because most of the WPB's activities impacting on the facility were regulatory we must discount them in our analysis of the government's possible liability. In the government's view, its remaining non-regulatory activities did not constitute enough involvement with American Viscose to impose CERCLA liability on the government.

In re Paoli R. Yard PCB Litig., 790 F. Supp. 94, 95-96 (E.D. Pa. 1992), is an example of the type of case on which the goverment relies. There, the EPA took over a waste site to clean it of contamination. In so doing, the EPA allegedly caused the further release of hazardous waste. Based on this release, the site's owner sued the EPA for contribution and indemnification for response costs. The owner argued that the EPA became an operator under CERCLA when it conducted the cleanup activities at the site. The district court dismissed the complaint, holding that the United States does not subject itself to liability as an operator when it is engaged in cleanup activities at a hazardous waste site. Rather, the United States "would be liable under section 107(a) of CERCLA if it was acting in a manner other than in its regulatory capacity." 790 F. Supp. at 97.

Similarly, in another case where an owner alleged that when the EPA took over the waste site to initiate a cleanup it became an "owner or operator" within the meaning of CERCLA, a district court held that the waiver of sovereign immunity under CERCLA is limited. United States v. Atlas Minerals and Chems., Inc., 797 F. Supp. 411, 420 (E.D. Pa. 1992). "[T]he waiver contained in [CERCLA section 120(a)(1)] only applies to situations in which the government has acted as a business," and "does not extend to situations in which the EPA has undertaken response or remedial actions at a hazardous waste site." This is because

when the EPA undertakes such actions, it is not acting like a private party; it is acting to ameliorate a dangerous situation that, but for the prior actions of the generators and transporters of the hazardous waste, would not exist.

797 F. Supp. at 421. See also Reading Co. v. City of Philadelphia, 155 B.R. 890, 897 (E.D. Pa. 1993) (indicating that the "government, unlike private parties, has a regulatory and response duty to assume a clean-up role. Therefore, inasmuch as a government, unlike private entities, must act to remedy environmental crises, a government cannot, in such circumstances, be considered an owner, operator or arranger for CERCLA purposes").

The government reads these cases to establish that regulatory activities are per se outside the scope of CERCLA liability, because only a government is a regulator. However, we think the distinction the government is trying to draw between regulatory and non-regulatory activities misreads CERCLA and the case law. In the first place, section 120(a)(1) does not state that regulatory activities cannot form the basis of liability. Rather, it states that the government is liable in the same manner and to the same [24 ELR 20210] extent as any non-governmental agency. Considering that much government activity is regulatory, section 120(a)(1) leads us to conclude that courts should consider both regulatory and non-regulatory activities as bases for liability and that the government should be immune only for regulatory activities that have no analogue to conduct of a private business. This conclusion is consistent with our approach to statutory construction in general and CERCLA in particular, which is to read plain language to mean what it says. Alcan Aluminum, 964 F.2d at 260. Thus, where the government enacts regulations that do not have an environmental remedial purpose but instead are intended to further its commercial undertakings, it can be held liable under CERCLA. Similarly, if the government designs and constructs a landfill to run as a business it can be subject to section 120(a)(1) liability. See, e.g., United States v. Stringfellow, 1990 U.S. Dist. LEXIS 19001, 20 Envtl. L. Rep. 20,656 (C.D. Cal. Jan. 8, 1990) (concerning the State of California's management of a landfill).

Examination of the cases relied on by the government reveals that they support this analysis. Most of the EPA cleanup cases do not state that the government is immune from liability for regulatory activities. Rather, they ascertain the purpose of the regulatory activities. It is only when the courts determine that the regulatory activities have no commercial purpose that they do not supply a basis for liability. Thus, the Atlas Minerals court held the government immune not merely because it was acting in a regulatory capacity, but because it was responding to a danger to which a private party would not have responded. While it is true that in a broad sense the entire war effort was a response to a danger, we think that CERCLA should not be understood as providing for an immunity when the response is to problems removed from the site. If we held otherwise we would emasculate section 120(a) (1) as governmental activity in general is taken in response to problems facing society.

Our reading of section 120(a)(1) comports with the rest of the statute. First of all, the government's contention is inconsistent with our previous recognition that "CERCLA is a remedial statute which should be construed liberally to effectuate its goals." Alcan Aluminum, 964 F.2d at 258. Furthermore, to exempt the government from liability based solely on the regulatory nature of its activities would contravene CERCLA section 107(b), 42 U.S.C. § 9607(b), which lists the only three defenses to section 107 liability available to any person, including the government. See Alcan Aluminum, 964 F.2d at 265. These enumerated defenses do not include the "regulatory" exception which the government seeks to create and on which it relies. Furthermore, our approach is consistent with our recent opinion in United States v. Rohm and Haas Co., 2 F.3d 1265, 1276 (3d Cir. 1993), in which we were unwilling to read "removal" in CERCLA section 101(23) to include governmental oversight of private remedial actions, in part because we found "it highly significant that Congress omitted any mention of oversight . . . in the definition of removal." Just as we would not read undesignated conduct into the definition of "removal," we will not read the broad regulatory exception advanced by the government into section 107(b) or section 120(a)(1).

It is also significant that although CERCLA permits the imposition of liability on states and local governments for cleanup costs, section 107(d)(2) expressly immunizes them from liability for actions "taken in response to an emergency created by the release or threatened release of a hazardous substance generated by or from a facility owned by another person." 42 U.S.C. § 9607(d)(2). The fact that Congress created an exception for cleanup activities by state and local governments implies that these activities are unique. Accordingly, it is not the fact that a government acts in a regulatory capacity that protects it from liability. Rather, it is protected because it is responding to an environmental emergency. We also believe that Congress would have intended to treat state and local governments similarly as the federal government. Thus, it stands to reason that inasmuch as state and local governments are immune from CERCLA liability for the consequences of cleanup activities in particular, rather than from the consequences of regulatory conduct in general, we should apply this same distinction in a case involving the federal government, at least when, as here, the regulatory activities are in furtherance of the government's commercial dealings.

In practice, the "regulatory" exception suggested by the government would "undermine Congress' intent to ensure that those who benefit financially from a commercial activity should internalize the health and environmental costs of that activity into the costs of doing business." United States v. Azrael, 765 F. Supp. 1239, 1245 (D. Md. 1991) (citations omitted). If the United States, even as a regulator, acts in a commercial capacity, it should be held responsible for cleanup costs as any private business would be.

We recognize that the regulation of the rayon industry served a purpose which in a broad sense only the government could pursue, the defense of this country. Nevertheless, for Congress' waiver to be given reasonable scope, courts should not look at the ultimate goal of the government regulation, but instead should examine the short term goals of the regulation and the regulation's immediate effect and characteristics which in this case were commercial. Therefore, it is not surprising that courts have imposed CERCLA liability on the federal government based on activities indirectly arising from military conduct. United States v. Allied Corp., 1990 U.S. Dist. Lexis 20061, at *7-9 (N.D. Cal. Apr. 26, 1990) (United States Navy found liable under CERCLA because it authorized demolition which caused release of hazardous substances).

Accordingly, we hold that the relevant question under CERCLA is not whether the federal government was acting in a regulatory capacity, but whether its activities, however characterized, are sufficient to impose liability on the government as an owner, operator, or arranger. Hence, we consider both the government's regulatory and non-regulatory activities with respect to the American Viscose facility during the war and determine whether these activities taken in toto were of the type commonly associated with being an operator or arranger under CERCLA and are the type of activities in which private parties could engage. Therefore, the analysis used to determine operator and arranger liability subsumes the analysis used to determine if sovereign immunity applies. If the government engaged in the type of activity that normally would cause a private party to be liable as an operator or arranger, then sovereign immunity does not apply.

B. Operator Liability

The definition of "operator" in CERCLA gives little guidance to the courts in determining if a particular person or entity is liable as an operator. The statute circularly defines "operator" as "any person . . . operating such facility." 42 U.S.C. § 9601(20)(A)(ii). Several cases have attempted to give substance to liability as an operator and in general have construed "operator" broadly to encompass all who profit from the facility and at the same time have a degree of day-to-day control over the management of the facility. For example, in United States v. New Castle County, 727 F. Supp. 854, 869 (D. Del. 1989), the district court listed the following factors as being relevant: whether the person or entity controlled the finances of the facility; managed the employees of the facility; managed the daily business operations of the facility; was responsible for the maintenance of environmental control at the facility; and conferred or received any commercial or economic benefit from the facility, other than the payment or receipt of taxes. Another court in deciding whether a parent could be liable as an operator along with the subsidiary, stated that courts should consider: whether the parent has the power to direct the activities of persons who control mechanisms causing the pollution; whether and to what extent the parent controls the subsidiary's marketing; whether the parent can execute contracts on behalf of the subsidiary; and whether [24 ELR 20211] the parent controls hiring, supervision, transfer and similar aspects of employment of the subsidiary. Colorado v. Idarado Mining Co., 1987 U.S. Dist. LEXIS 14254, 18 Envtl. L. Rep. 20,578 (D. Colo. Apr. 29, 1987).¹

Similar factors have been applied by courts in considering a state or local government's liability as an operator under CERCLA. New Castle County, 727 F. Supp. at 864-70. For example, in United States v. Stringfellow, supra, a special master concluded that California was liable under CERCLA as an operator and owner of a landfill. The special master noted that the state chose the location for the landfill, designed and constructed the site, hired, directed and supervised the employees with day-to-day operational responsibility for the site, and set the responsibilities for these employees.

In contrast, the Court of Appeals for the Fourth Circuit affirmed a district court finding that the South Carolina Department of Health and Environmental Control ("DHEC") was not an owner or operator of the abandoned Fort Lawn waste site. United States v. Dart Indus., Inc., 847 F.2d 144 (4th Cir. 1988). In Dart, the generators of the hazardous wastes alleged, in their third-party complaint, that DHEC was liable under CERCLA because it controlled the activities at the site pursuant to a South Carolina statute that gave it regulatory powers such as the power to approve and disapprove applications to store wastes at the site, to inspect the site, and to regulate the transportation of the wastes delivered to Fort Lawn. The court of appeals found that DHEC did not have operator status because there was no evidence that it directly managed the waste site's employees or finances or ran the day-to-day activities of the facility. Thus, DHEC did not engage in "hands on" activities contributing to the release of hazardous wastes. Similarly, in New Castle County, 727 F. Supp. 854, the district court declined to find the state liable as an operator of a landfill where it only periodically inspected the site and mandated the details of refuse soil compaction and construction, but did not manage the day-to-day operations of the landfill.

Applying this case law to the facts as found by the district court, which largely are not in dispute, we conclude that the government was an operator of the American Viscose plant. The government was not issuing regulations for the purpose of taking remedial action or directly protecting the environment, a uniquely governmental function. Rather, its conduct was similar to that of a private, commercial party. It was imposing conditions to ensure its "contractual" rights in purchasing a custom-made product. Its motivation to do so was to protect its position as a buyer by ensuring that the specifications for the product were met. In short the government regulated in furtherance of its commercial goals.

In so doing, the government exerted considerable day-to-day control over American Viscose. In the first place, American Viscose would not have been making high tenacity rayon if not for the government. To obtain the commercial product it needed, the government diverted American Viscose from its previous commercial endeavors. Second, although the government officials and employees personally did not take over the plant, if American Viscose had not followed the government's specifications, the government could have done so. Thus, it does not matter that the government physically did not occupy the facility, or employ all of its personnel. Through regulations, on-site inspectors, and the possibility of seizure, the government maintained a significant degree of de facto day-to-day control over the production process. Third, government officials built or had built and controlled plants supplying raw materials to American Viscose, arranged for an increased labor force, and supervised employee conduct. Fourth, the government controlled product marketing and price. Given this degree of control, and given the fact that the wastes would not have been created if not for the government's activities, the government is liable as an operator.

C. Arranger Liability

The government also argues that it is not liable under section 107(a)(3) of CERCLA, 42 U.S.C. § 9607(a)(3), as an arranger for the disposal or treatment of hazardous wastes. CERCLA provides that "any person who by contract, agreement, or otherwise arranged for disposal or treatment . . . of hazardous substances owned or possessed by . . . by another party" may be liable as a responsible party. 42 U.S.C. § 9607(a). It has been recognized that arranger liability may be imposed on a person or entity who (1) supplied raw materials to another and (2) owned or controlled the work done at the site, where (3) the generation of hazardous substances was inherent in the production process. If these three elements are present, then the person or entity may be held liable as an arranger even though the person or entity had no direct authority to dispose of or "arrange for" the ultimate disposal of hazardous substances.

This three-part test was articulated first in United States v. Aceto Agricultural Chems. Corp., 872 F.2d 1373, 1379-82 (8th Cir. 1989).² There, the Court of Appeals for the Eighth Circuit held that a defendant who hired another company to formulate a commercial grade pesticide would be liable as an arranger if it was established that the defendant owned the raw materials used to make the pesticide, owned both the work in progress and the final product and, in addition, knew that the generation of hazardous wastes was inherent in the formulation process. We have not yet considered whether to adopt the Aceto test, but other courts have followed it. See, e.g., Levin Metals Corp. v. Parr-Richmond Terminal Co., 781 F. Supp. 1452, 1453 (N.D. Cal. 1991); New Castle County, 727 F. Supp. at 873-74 (recognizing actual ownership or possession of hazardous substance not a prerequisite to imposing arranger liability; rather, need only show "some nexus or relationship between the person under attack and the actual owner or possessor of the hazardous substance"). Considering that we interpret CERCLA broadly to effectuate Congress' remedial objectives, we conclude that the Aceto test is a reasonable construction of the statute.

By applying Aceto, we conclude that the government clearly was an arranger. First, the government not only supplied certain of the main raw materials; it actually produced them or at least arranged for their production. The government indirectly supplied the other raw materials through the procurement process, which determined the allocation of certain supplies. Second, the government effectively owned the work in progress as well as the final product, inasmuch as American Viscose was making the high tenacity rayon solely for it and would not have been allowed to sell it to another party. In addition, as detailed above, the government controlled the process by which the product was made. Finally, the government was aware that the process inherently caused hazardous waste.³

IV. CONCLUSION:

We conclude with one final point. In its brief the government urges that its potential liability under the district court's opinion "is massive and far outpaces anything Congress could have imagined, much less intended" when it adopted section 120(a). Indeed it goes so far as to list 12 pending cases which it indicates "involve the same or similar issues to those presented in this [24 ELR 20212] appeal." By extension we do not doubt that the government will say the same thing with respect to this opinion. Nevertheless, while it may be true that application of the principles in this case by other courts could lead to the imposition of broad liability on the government, that circumstance cannot influence our result as we cannot amend CERCLA by judicial fiat. Rather, our approach must be the same as that of the Supreme Court when responding to an argument that the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., was being applied too broadly: "Yet this defect — if defect it is — is inherent in the statute as written, and its correction must lie with Congress." Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499, 105 S. Ct. 3275, 3286-87 (1985). Furthermore, we point out that at bottom our result simply places a cost of the war on the government, and thus on society as a whole, a result which does not seem untoward.

We will affirm the judgment of the district court of September 17, 1992.

1. On an appeal from a mandatory injunction issued on February 22, 1989, ordering the state's cleanup plan implemented, the parent challenged the earlier finding of the district court that it was an operator. However, the court of appeals decided the case without reaching this issue. Colorado v. Idarado Mining Co., 916 F.2d 1486, 1491 (10th Cir. 1990), cert. denied, 111 S. Ct. 1584 (1991).

2. The government itself draws the three-part test from its understanding of Aceto, and we agree with its formulation. See brief at 46.

3. According to another test, arranger liability may be imposed on a person or entity with the authority to control the handling and disposal of hazardous wastes. United States v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726, 743 (8th Cir. 1986), cert. denied, 484 U.S. 848, 108 S. Ct. 146 (1987). In view of our conclusion that the government is liable under the Aceto formulation, we have no need to consider this test.

SLOVITER, Chief Judge, dissenting:

I respectfully dissent from the majority's holding that the intense regulatory activity undertaken by the United States during World War II to ensure that U.S. industries would produce the war supplies necessary to mount the country's military operations subjects the United States to liability as an "operator" and "arranger" under CERCLA. Primarily, I believe that the United States has not waived its sovereign immunity for such activity, and that in any event the quantum and nature of its activities do not rise to the statutory "operator" and "arranger" levels.

It is of course well established that the government waives only so much of its sovereign immunity as it has chosen to waive in clear and express language. See United States v. Testan, 424 U.S. 392, 399 (1976). That CERCLA contains a waiver of some of the government's sovereign immunity is undisputed. See Pennsylvania v. Union Gas Co., 491 U.S. 1, 10 (1989).

The relevant provision, located significantly in the section entitled "Federal facilities," states:

Each department, agency, and instrumentality of the United States (including the executive, legislative, and judicial branches of government) shall be subject to, and comply with, this chapter in the same manner and to the same extent, both procedurally and substantively, as any nongovernmental entity, including liability under section 9607 of this title.

CERCLA § 120(a)(1), 42 U.S.C. § 9620(a)(1) (1988) (emphasis added). However, the existence of a waiver is only the beginning of the analysis. What is at issue here is the scope of the waiver, limited as it is to the extent of liability of a private party.

The government construes CERCLA's waiver of sovereign immunity as subjecting it to liability when it is acting or has acted like a "nongovernmental entity," such as by owning facilities, but not when it is conducting a sovereign's purely regulatory actions in connection with the operations of a private, for-profit entity. Thus, under the government's analysis, its operation of facilities such as a federal park or an army base or naval vessel would subject it to "operator" or "owner" liability under CERCLA but its regulation of private parks or other private facilities would not, even if that regulation may result in the discharge of hazardous waste. That is a reasonable construction of the statute, one that I find persuasive and that I believe we are bound to accept.

Although the majority first appears to eschew any non-liability under the statute for the United States' regulatory activity, see Majority Typescript Op. at 12 ("section 120(a)(1) does not state that regulatory activities cannot form the basis of liability"), the majority then agrees that the plain language of section 120(a)(1) does not include waiver of liability for "regulatory activities that have no analogue to conduct of a private business." Id. at 13. However, the majority eviscerates this concession by limiting the non-waived regulatory activities for which the government would not be liable to those taken with an "environmental remedial purpose" conducted at a specific site. Id. Thus, the majority ultimately restricts the regulatory activities for which the government has not waived its sovereign immunity to those "regulatory activities [that] have no commercial purpose." Id.

If the majority construed the government's "commercial" purpose in this context as the term "commercial" is generally understood, then we would not be far apart. I part company with the majority because it treats "the entire war effort," and "governmental activity in general . . . taken in response to problems facing society," as the United States' own "commercial undertakings" for which it can be liable under CERCLA. Id. at 13-14. To be sure, when the government undertakes to respond to society's problems through operation of its own facilities, for example a government hospital or institute of health, it is subject to "operator" liability under CERCLA, but such activity is qualitatively different from the government's actions in regulating the conduct of others.

In contrast, the only government regulatory activities that the majority recognizes as having no private analogues are environmental cleanups; with that limited exception, the government is fully subject to CERCLA. The majority takes this sweeping view because of its concern that any other approach would, as it says, emasculate the waiver.

I believe there is a more persuasive reading of the sovereign immunity waiver, one which has its root in the statute itself. The placement and title of the sovereign immunity waiver in section 120 entitled "Federal facilities" lends support to the proposition that the provision was intended only to ensure CERCLA liability for federally-owned facilities. See Van S. Katzman, Note, The Waste of War: Government CERCLA liability at World War II Facilities, 79 Va. L. Rev. 1191, 1206-07 (1993); cf.132 Cong. Rec. 28,413 (1986) (statement of Sen. Stafford) (suggesting that section 120 exists to deal with "two to three potentially hazardous sites at each of 473 military bases across the country" and "sites operated by the Department of Energy").¹

Reading the waiver in this manner does not "emasculate" it. Studies suggest that there are numerous government facilities dangerous enough to fall within the ambit of CERCLA, see Stan Millan, Federal Facilities and Environmental Compliance: Toward a Solution, 36 Loy. L. Rev. 319, 321-24 (1990) (discussing scope of problem), and Congress was certainly aware of this, see, e.g., H. R. Rep. No. 253(I), 99th Cong., 2d Sess. 58 (1985), reprinted in 1986 U.S.C.C.A.N. 2835, 2840; see also Review of Hazardous Waste Disposal Practices at Federal Facilities: Hearing Before a Subcomm. of the House Comm. on Government Operations, 98th Cong., 1st Sess. 1-3, 176-78, 215-17 (1983); Use of Federal Lands for the Treatment, Storage, or Disposal of Hazardous Wastes: Hearings Before the Subcomm. on Commerce, Transportation and Tourism of the House Comm. on Energy and Commerce, 98th Cong., 1st Sess. 10-11, 26-27 (1983).

In our recent opinion United States v. Rohm and Haas Co., 2 F.3d 1265, 1278 (3d Cir. 1993), we held that the [24 ELR 20213] government could not recover from private parties the cost of government oversight of the removal and remedial activity performed and paid for by a private party. We recognized the incomparability between government and private action, and were unwilling to read CERCLA as treating government cleanups and private cleanups as equivalent actions for purposes of recovery of costs. See id. at 1277-78. We noted that it was "far more likely that Congress viewed EPA's overseeing of a private party's removal activities as qualitatively different from EPA's actually performing removal activities." Id. at 1277 (emphasis added).

Of particular significance here, we stated in Rohm and Haas that the government's oversight "is intended to protect the public interest rather than the interests of those being overseen," and that therefore the government could not recover its administrative costs from the regulated parties without "a clear statement of congressional intent." Id. at 1273-74. A similar analysis is appropriate here in the converse of the Rohm and Haas situation, where we are considering the government's liability for payment rather than its ability to receive payment. Just as the government's oversight in Rohm and Haas was sui generis in the sense that it could not be performed by a private party, so also was the government's activity in wartime in mobilizing private industry to produce necessary supplies.

If there were any ambiguity about the scope of the government's sovereign immunity waiver, we would be obliged to apply the generally accepted principle that a waiver of sovereign immunity "must be strictly construed in favor of the United States, and not enlarged beyond what the language of the statute requires." United States v. Idaho, 113 S. Ct. 1893, 1896 (1993) (emphasis added) (quotation omitted). As Justice Scalia recently wrote for the Court:

The foregoing [interpretations] are assuredly not the only readings of [the provision], but they are plausible ones — which is enough to establish that a reading imposing monetary liability on the Government is not "unambiguous" and therefore should not be adopted. Contrary to respondent's suggestion, legislative history has no bearing on the ambiguity point. As in the Eleventh Amendment context, the "unequivocal expression" of elimination of sovereign immunity that we insist upon is an expression in statutory text. If clarity does not exist there, it cannot be supplied by a committee report.

United States v. Nordic Village, Inc., 112 S. Ct. 1011, 1016 (1992) (citation omitted).

This rule of strict construction applies even if the statute as a whole is remedial in nature. See Library of Congress v. Shaw, 478 U.S. 310, 318 (1986) (Title VII); Pennsylvania v. National Ass'n of Flood Insurers, 520 F.2d 11, 19-20 (3d Cir. 1975) (Federal Tort Claims Act); see also Harold J. Krent, Reconceptualizing Sovereign Immunity, 45 Vand. L. Rev. 1529, 1531 (1992) (Sovereign Immunity "plays a vital role in our system; it is not so much a barrier to individual rights as it is a structural protection for democratic rule.").

In this case, there is no compelling evidence demonstrating that when Congress enacted CERCLA in 1980 it unmistakably intended to hold the government financially liable for the environmental consequences of its mobilization of domestic industry to increase production of numerous scarce products and materials that were needed in the war effort. The government produced evidence that during World War II, executive agencies closely regulated dozens of industries across the economy at least to the same degree as here. Indeed, the district court's opinion is already being used as the basis for numerous suits against the government asserting claims for CERCLA contributions in a wide variety of industries arising from regulatory activity during World War II.

While it is not beyond Congress's power to do so, it is difficult to imagine that by the words of section 120 Congress intended to impose massive liability on the United States for the environmental consequences of this regulation, running into the hundreds of millions of dollars (estimated by the government to be between $ 26 and $ 78 million in this case alone), without some reference in the legislative history to its intent to do so. I therefore believe the district court should have granted the government's motion for summary judgment on the basis of sovereign immunity.

II.

Moreover, an examination of the relevant facts demonstrates that the activities referred to by the district court are insufficient to render the government an "operator" of the American Viscose facility. The majority's definition of "operators" for CERCLA purposes is unassailable: "operators" are persons who "profit from the facility and at the same time have a degree of day-to-day control over the management of the facility." Majority Typescript Op. at 16; see Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209, 1222 (3d Cir. 1993) (adopting the "'actual control' test" of operator liability which requires "involvement in the [company's] day-to-day operations and its policy-making decisions"). Even the district court recognized that "'nuts-and-bolts' management decisions [are] necessary for [operator] liability under CERCLA." FMC Corp. v. United States Dep't of Commerce, No. 90-1761, 1990 U.S. Dist. LEXIS 8902, at * 10 (E.D. Pa. Jul. 18, 1990).

The facts adduced by FMC do not evince any of the essential characteristics of "operation." The majority summarizes those facts as follows: (1) the government's "diver[sion of] American Viscose from its previous commercial endeavors;" (2) the maintenance by the government of "a significant degree of de facto day-to-day control over the production process" through "regulations, on-site inspectors, and the possibility of seizure" if American Viscose had not followed the government's specifications; (3) "government officials built or had built and controlled plants supplying raw materials to American Viscose, arranged for an increased labor force, and supervised employee conduct;" and (4) "the government controlled product marketing and price." Majority Typescript Op. at 18 (emphasis added). I will consider each in turn, because I believe that none of these factors individually nor all of them together sufficed to make the government an operator of the privately owned, privately financed, and for-private-profit plant.

The diversion of "American Viscose from its previous commercial endeavors" as part of the overall war effort can hardly, in and of itself, have rendered the government an operator of the plant. The War Production Board, the point agency during World War II, was authorized through Executive Orders to "'[f]ormulate and execute in the public interest all measures needful and appropriate in order . . . to increase, accelerate, and regulate the production and supply of materials . . . required for the national defense.'" See FMC Corp. v. United States Dep't of Commerce, 786 F. Supp. 471, 474 (E.D. Pa. 1992) (quoting Exec. Order No. 8629, 6 Fed. Reg. 191 (1941)) (citing Exec. Order No. 9040, 7 Fed. Reg. 527 (1942)). Its directives had the force of law. See id. at 475.

The principal focus was to coordinate procurement policy for goods and scarce materials vital to the war effort and to allocate resources to ensure their availability for fulfillment of government military contracts. This entailed a requirement that firms give military needs priority, but only if the government met regularly established prices and terms of sale. If a manufacturer declined to give the requested priority, the government had the power to take over the facility for "fair and just" compensation. If either the arrangement by which American Viscose produced high tenacity rayon for needed tires or the specification of the amount of material needed made the government an "operator," it would literally have "operated" a large portion of the country's heavy production facilities. Instead, for the most part it left them in private hands. The issuance of directives to American Viscose does not evidence the type of "nuts and bolts" direct management of the internal [24 ELR 20214] workings of the Facility necessary to achieve operator status. See United States v. Dart Indus., Inc., 847 F.2d 144, 146 (4th Cir. 1988).

The majority's second factor, on its face, appears to bring the government closer to "operator" status than any of the majority's other factors. However, when the basis for the majority's conclusion that the government maintained "day-to-day control" is examined, it too falls short. Obviously, the mere "possibility of seizure" by the government of the plant could not make it an "operator" unless and until it exercised that power. Although the potential of seizure may have had an in terrorem effect by encouraging or coercing producers to comply with the government's requirements, the potential of seizure is not operation of the plant. The "regulations" referred to but not identified by the majority in reaching its "day-to-day operations" conclusion do not differ in character from those applicable to all industries producing essential products during that period. Finally, the "on-site inspector" referred to by the majority in this factor is duplicative of the similar references made in both the third and fourth factors and is best understood in those contexts.

In examining the third of the factors on which the majority relies to demonstrate day-to-day control, we must once again consider each of the components. The majority relies on the government's construction of a sulfuric acid plant which it owned but leased to General Chemical Company and its sponsorship of the construction of a carbon bisulfide plant by Stauffer Chemical Company, both of which provided raw materials needed by American Viscose in its production of high tenacity rayon. The government's actions facilitated the sale of these products to American Viscose by others. Although the sulfuric acid plant was adjacent to the American Viscose facility, the sulfuric acid plant was not the relevant "facility." It follows that the government's involvement in the sulfuric acid plant's construction and operation does not impact on whether the government operated the American Viscose plant.

Thus, the majority must rely on the presence of the government's "representative on-site with . . . the right to remove workers who were incompetent or guilty of misconduct," Majority Typescript Op. at 8 (citing FMC, 786 F. Supp. at 481-82 (Finding 129)), which it refers to in the summary as the government's "supervis[ion] of employee conduct." Majority Typescript Op. at 18. It is factually incorrect to give the impression that the government was supervising operating personnel at the American Viscose plant or had an input in the firing or retention of American Viscose's employees.²

To be sure, there was an on-site government representative who assisted American Viscose employees in an effort to reduce shortages of housing and community services, and who assisted American Viscose in minimizing labor strife and absenteeism, but that representative did not control the workers. Thus the majority has arrived at its conclusion of day-to-day operational control by the government based on unsupported or irrelevant snippets of findings by the district court.

The majority's fourth and final factor is the government control of "product marketing and price." Inasmuch as the plant was converted to high tenacity rayon for the war effort, it is not surprising that government regulations required that the product produced be sold to authorized companies, who in turn were also regulated in this regard. As for product marketing and price, control of price over almost all production during that period was effected through regulations and directives of the Office of Price Administration, and such regulation, while pervasive, is not the involvement in day-to-day management decisions to which the CERCLA operator inquiry speaks.

When examined, the totality of the government's procurement and allocation activities in the war effort simply did not constitute the type of "active[] and substantial[] participat[ion] in the corporation's management" necessary for liability as an "operator" under CERCLA. Lansford-Coaldale, 4 F.3d at 1222.

Nor do I agree that FMC has shown enough to impose liability on the government as an "arranger." Instead, I believe that the majority has misapplied the test for arranger liability from United States v. Aceto Agric. Chems. Corp., 872 F.2d 1373, 1379-82 (8th Cir. 1989). In Aceto, the court held that if defendants provided the active pesticide ingredients which they manufactured to a formulator who produced, for them, a commercial grade pesticide for sale, they could be liable for the waste that occurred at the formulator's facility. The Aceto facts are far different than those presented here, because the Aceto defendants owned the pesticide originally supplied, the work in process, and the commercial grade pesticide while it was in the possession of the formulator. See id. at 1379.

In contrast, here, although the government did make supplies available to American Viscose through the priority ranking system, see FMC, 786 F. Supp. at 480 (Findings 98-100, 104-107), American Viscose paid for those supplies and owned the ultimate product, the high tenacity rayon, which it then sold to authorized purchasers, presumably at an adequate profit. At least there is no evidence produced by FMC that American Viscose complained that the government was appropriating its property. Merely facilitating the availability of necessary raw products is not enough to make the government an "arranger" any more than the supply of sulfuric acid by General Chemical to American Viscose makes General Chemical an arranger. See, e.g., General Elec. Co. v. AAMCO Transmissions, Inc., 962 F.2d 281, 287 (2d Cir. 1992); United States v. Consolidated Rail Corp., 729 F. Supp. 1461, 1470-71 (D. Del. 1990).

The majority paints with too broad a brush when it states that the government "effectively owned the work in progress as well as the final product" because it was the customer. Majority Typescript Op. at 19. In fact, there is no finding that the government purchased the rayon from American Viscose, and it is more likely that it was sold to tire fabricators who may have ultimately sold the end product to the government. This chain is not the type of connection needed to make the government an arranger. Nor is there any basis on this record to find the government to have been an "arranger" under the most common application of that term, i.e., a person who arranges for the disposal or treatment of hazardous substances.

In short, I believe that both the "operator" and "arranger" liability conclusions reached by the district court and affirmed by the majority expand these terms beyond the intent and generally-accepted scope of the statute.

1. Neither of the statutory provisions relied upon by the majority supports its position that the CERCLA sovereign immunity waiver encompasses the government's regulatory activities. First, section 107(b), which lists three defenses to section 107 liability, is inapposite because the government is not claiming a regulatory defense. A defense would be relevant only if the government agreed to accept responsibility for such activity in the first place, and that of course is the issue here.

The other statutory provision referred to by the majority, section 107(d)(2), immunizes state and local governments from liability for certain cleanup activities of "a hazardous substance generated by or from a Facility owned by another person." This provision thus posits that the state and local governments would be otherwise liable. The failure to include the federal government in the provision suggests that Congress did not envision liability for the federal government comparable to that of state and local governments, and therefore it was unnecessary to include it in the section 107(d)(2) immunity.

2. The district court grouped a series of findings under the heading "Government On-Site Presence at the Facility." FMC, 786 F. Supp. at 481, which give the erroneous impression that government personnel were supervising plant operations. In fact, the government personnel referred to in those findings were merely supervising installation of the government-owned spinning wheels in the plant, for which the government has accepted ownership responsibility. Examination of the relevant documents makes clear that the references to "the project"or "on-site" are to the construction and installation of the spinning wheels. There is simply no evidence on the record that the government personnel supervised any American Viscose employee in connection with the production of rayon, and to the extent that any findings by the district court so suggest, they would be clearly erroneous.