Waging war with CERCLA: divisibility for the sovereign.
I. INTRODUCTION II. CERCLA LIABILITY III. SOVEREIGN IMMUNITY A. Origin of Sovereign Immunity B. Evolution of Sovereign Immunity in United States Environmental Law C. CERCLA's Waiver of Sovereign Immunity IV. CERCLA'S LIABILITY FRAMEWORK AND THE UNITED STATES SUPREME COURT A. United States v. Bestfoods B. Burlington Northern & Santa Fe Ry. v. United States V. STRICT LIABILITY A. Strict Liability for Ultrahazardous Activities B. Evolution of Strict Liability for Ultrahazardous Activities under CERCLA VI. CERCLA LIABILITY DURING WAR VII. DIVISIBILITY AND THE COSTS OR WAR VIII. Conclusion
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. [section] [section] 9601-9675, was enacted in 1980 to address mounting environmental concerns from industrial pollution. (1) CERCLA's goal is to "promote the 'timely cleanup of hazardous waste sites' and to ensure that the costs of such cleanup efforts were borne by those responsible for the contamination." (2) The United States Supreme Court remarked, "As its name implies, CERCLA is a comprehensive statute that grants the President broad power to command government agencies and private parties to clean up hazardous waste sites." (3) CERCLA liability can attach to a Federal Government entity in accordance with [section]9607 which defines classes of liability and [section] 9620 which contains a waiver of sovereign immunity.
Under this liability scheme and sovereign immunity waiver, the difficult issues of how to reconcile CERCLA's liability provisions with the demands of waging war arise. For example, CERCLA can be retroactively applied, meaning the Federal Government can be, and has been, on the hook for past wartime production that created hazardous waste disposal sites. Moreover, under the strict liability provisions of CERCLA, the Federal Government may be found jointly and severally liable for the entire costs of CERCLA cleanup efforts at a contaminated hazardous waste site which was used to produce needed materials to support American efforts in World War II. (4) Such an outcome does not comply with the intent of CERCLA. This article explores the possibility of alternative outcomes for future wartime production CERCLA cases through an application of the doctrine of sovereign immunity, evolving common law principles related to strict liability and ultrahazardous activities, and the recent United States Supreme Court decisions in Burlington and Bestfoods. (5) An analysis of CERCLA's history and evolving refinement through the judicial system support the conclusions (a) that joint and several liability should not be applied to a federal entity in the context of wartime production, and (b) that any liability should be divisible in accordance with Burlington.
II. CERCLA LIABILITY
Under CERCLA, responsibility for cleanup costs is thrust upon "covered persons," (6) also known as "potentially responsible parties" or "PRPs." (7) There are four categories of PRPs. (8) Included in these categories are owners and operators of qualifying facilities, as well as transporters and arrangers of qualifying hazardous substances. (9) Once a party is "identified as a PRP, it may be compelled to clean up a contaminated area or reimburse the Government for its past and future response costs." (10)
Identification as a PRP brings the weight of CERCLA to bear against a party in the form of, often times significant, financial liability. PRPs are liable under CERCLA for:
(A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan;
(B) any other necessary costs or response incurred by any other person consistent with the national contingency plan;
(C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release; and
(D) the costs of any health assessment or health effects sturdy carried out under section 9604(i) of [CERCLA], (11)
In effect, CERCLA provides the Federal Government a mechanism to "take action against current problems created by past improper disposal practices" of hazardous waste by placing cleanup costs on PRPs. (12) In the event a PRP is not identified or a hazardous waste site is abandoned, the President is authorized to take appropriate response and remedial actions through the Hazardous Substance Response Trust Fund, or "Superfund." (13) Regardless of whether a PRP is identified, the President, through the EPA, is able to respond quickly to releases or threatened releases of hazardous waste with the Superfund. (14) If a PRP is identified, "[t]he government then acquires the right, subject to a lien on the affected property, to seek reimbursement from PRPs for costs incurred for cleanup, oversight, administration, legal removal, and resource restoration. The reimbursed money is used to replenish the Superfund." (15) This is CERCLA broken down to its most basic components.
Identifying liable parties under CERCLA sets the stage for one of the most litigated issues in environmental law. Courts have been left to interpret the statutory categories of liability for owners, operators, transporters, and arrangers. Liability under 42 U.S.C. [section] 9607 is tied to "covered persons." CERCLA defines the term "person" to include, "an individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, United States Government, State, municipality, commission, political subdivision of a State, or any interstate body." (16) Most notable here is the inclusion of the United States Government as a "person" (17) under this statute and thus an eligible "covered person" (18) under CERCLA's liability provisions. Congress went a step further and explicitly applied liability provisions under CERCLA to the Federal Government:
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. (19)
This provision serves as a waiver of sovereign immunity for liability purposes under CERCLA. Pursuant to this waiver, agencies of the Federal Government may therefore be PRPs under CERCLA as owners, operators, transporters, or arrangers of hazardous wastes.
III. SOVEREIGN IMMUNITY
A. Origin of Sovereign Immunity
The doctrine of sovereign immunity traces its roots back to common law and the "underlying theory the 'King can do no wrong."' (20) The United States Supreme Court has held, "[i]t is elementary that 'the United States, as sovereign, is immune from suit save as it consents to be sued ... and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit.'" (21) Therefore, absent an express waiver of sovereign immunity, the government is not liable for damages in any suit in federal court. (22)
Dean Harold J. Krent, in his article Reconceptualizing Sovereign Immunity, explains sovereign immunity "derives not from the infallibility of the state but from a desire to maintain a proper balance among branches of the Federal Government, and from a proper commitment to majoritarian rule." (23) Thus, the "fundamental principle underlying the doctrine of sovereign immunity is the recognized need to allow the executive branch to make crucial policy decisions unhampered by concerns over its potential liability to individual citizens." (24) Professor Gregory C. Sisk's succinct description states the doctrine of sovereign immunity strips from the courts the ability to apply traditional negligence or strict liability analyses to policy decisions of the legislative and executive branches. (25) The doctrine of sovereign immunity prevents the judiciary from essentially standing in the shoes of the other branches of government. (26) Sovereign immunity has evolved in U.S. law and policy as a tool to support separation of powers and ultimately leads to the practical application that "Congress and the executive branch can be sued only if Congress permits." (27)
The Supreme Court sovereign immunity waiver test, as outlined in Department of Energy v. Ohio, 503 U.S. 607, 615 (1992), requires: (1) a presumption that Congress is familiar that any waiver of sovereign immunity must be unequivocal (28); (2) waivers have to be "construed strictly in favor of the sovereign;" (29) and, (3) waivers of sovereign immunity must not be broadened beyond the meaning of the statutory text. (30) The express and unequivocal waiver of sovereign immunity may not be taken from legislative history; rather, "the unequivocal expression of elimination of sovereign immunity that we insist upon is an expression in statutory text." (31)
B. Evolution of Sovereign Immunity in United States Environmental Law
The role of sovereign immunity in evolving federal environmental laws of the last half century has developed out of tragedy. No environmental case can highlight the impact and ramifications of federal sovereign immunity quite like the Texas City Disaster of 1947. (32) In this catastrophe, fertilizer explosions killed more than 560 people, injured another 3,000, destroyed the town of Texas City, Texas, and the resulting explosion's Shockwave shattered windows forty miles away in the city of Houston, Texas. (33) This tragedy originated from the storage of thousands of tons of ammonium nitrate fertilizer aboard two steamships. (34)
On April 15, 1947, thousands of bags of ammonium nitrate fertilizer were loaded onto the French steamship S.S. Grandcamp, which was docked at Texas City, Texas. (35) The next morning, smoke was observed coming from the hull of the ship. (36) A fire started in one of the holds containing fertilizer, so the ship's captain, in accordance with standard maritime practices, ordered the hatches closed. (37) Within an hour, 880-tons of fertilizer in the fourth hold exploded and subsequently detonated the fertilizer in the second hold of the ship. (38) The fire from the Grandcamp's explosion quickly spread across the Texas City docks toward the sulphur and ammonium nitrate cargo of the S.S. High Flyer. (39) Tugs attempted to tow the S.S. High Flyer out to sea before its cargo ignited. (40) Just after midnight on April 17, the cargo of the High Flyer exploded. (41)
Dalehite originated as the first ever class-action lawsuit against the United States, as a claim under the Federal Tort Claims Act (FTCA), which includes a waiver of sovereign immunity. (42) A decedent's estate claimed negligence against federal officials involved in the production of the Fertilizer Grade Ammonium Nitrate (FGAN), the compound that ignited and caused the initial fire aboard the S.S. Grandcamp. (43) The FGAN that literally ignited the Texas City disaster had been produced to fulfill the United States' post-World War II obligations as an "occupying power" to "deal with the problem of feeding the populations of Germany, Japan, and Korea." (44) Since the shipment of foodstuffs to these countries was not practical, the U.S. created a plan to ship supplies these countries could use to revitalize agriculture efforts abroad. (45) As Sisk explains, '"the primary ingredient in the only fertilizer that could be produced in sufficient quantities was ammonium nitrate, which had also been used in explosives during the war." (46) To meet this hefty demand, the government employed the use of decommissioned ordinance plants and updated them to produce fertilizer, vice ordinance. (47) This ultimately led to the production of 2850-plus tons of FGAN that had been loaded aboard the Grandcamp and High Flyer. (48)
In the District Court for the Southern District of Texas, the plaintiff prevailed and his estate was awarded $75,000 in damages. (49) On appeal to the Court of Appeals for the Fifth Circuit, the court unanimously reversed, and the Supreme Court granted certiorari. (50) There, the majority opinion's analysis explained:
The legislative history indicates that while Congress desired to waive the Government's immunity from actions for injuries to person and property occasioned by the tortious conduct of its agents acting within their scope of business, it was not contemplated that the Government should be subject to liability arising from acts of a governmental nature or function. (51)
The majority reviewed the legislative history for the FTCA, finding that Congress intended an exception to the waiver of sovereign immunity where "no negligence on the part of any Government agent is shown, and the only ground for suit is the contention that the same conduct by a private individual would be tortious.... " (52) The majority then affirmed the Fifth Circuit's decision and held the government could not be liable because this discretionary function exception precluded liability. (53)
For purposes of this analysis under CERCLA, the dissent in Dalehite is just as important to consider. Justice Jackson began the dissent by remarking "This was a man-made disaster; it was in no sense an 'act of God.' ... The disaster was caused by forces set in motion by the Government, completely controlled or controllable by it." (54) Borrowing from Judge Cardozo's The Growth of Law, (55) Justice Jackson opined, "Some theory of liability, some philosophy of the end to be served by tightening or enlarging the circle of rights and remedies, is at the root of any decision in novel situations when analogies are equivocal and precedents are silent." (56) The dissent continued by stating tort law for negligence is premised on sanctions for a departure in the "degree of care suitable to the conditions of contemporary society and appropriate to the circumstances of the case." (57) Justice Jackson opined the availability of a civil law remedy "is one of the law's most effective inducements to the watchfulness and prudence necessary to avoid calamity from hazardous operations in the midst of an unshielded populace." (58) However, the dissent warned, when the Federal Government is brought to court as a civil defendant, there is the fear that government action for the "public interest" can "clothe official carelessness," and prevent a legal remedy for the aggrieved plaintiff. (59) Applied to the facts in Dalehite, the dissent explained, "our fear that the Court's adoption of the Government's view in this case may [begin] an unfortunate trend toward relaxation of private as well as official responsibility in making, vending or transporting inherently dangerous products." (60)
Placing the dissent's concerns in perspective, Justice Jackson emphasized the need to consider the "basic criteria" that must be employed by the judiciary in deciding questions of liability:
This is a day of synthetic living, when to an ever-increasing extent our population is dependent upon mass producers for its food and drink, its cures and complexions, its apparel and gadgets. These no longer are natural or simple products but complex ones whose composition and qualities are often secret. Such a dependent society must exact greater care than in more simple days and must require from manufacturers or producers increased integrity and caution as the only protection of its safety and well-being. (61)
Adding to this consideration, the dissent focused on the fact that the disaster could not have occurred "from any prudently operated government project, and that injury so sudden and sweeping should not lit where it has fallen." (62) In effect, expediency cannot be realized at the cost of prudent safety considerations. (63) Justice Jackson went on to opine that a private corporation would undoubtedly be found liable under this fact pattern, and the FTCA creates the same liability for the Government with its waiver of sovereign immunity. (64) Finally, the dissent explained, "The Government's negligence here was not in policy decisions of a regulatory or governmental nature, but involved actions akin to those of a private manufacturer, contractor, or shipper." (65) For these reasons, the dissenting justices would have found the government liable under the FTCA. (66)
The majority and dissent in Dalehite analyzed key concepts of sovereign immunity and liability that were captured in the statutory text of CERCLA nearly forty years later. (67) Unlike the majority's holding, there is no discretionary exception that would preclude Federal Government liability in the CERCLA context. Justice Jackson's characterization of government action in his dissent "akin to those of a private manufacturer, contractor, or shipper," summarizes classes of liability for PRPs under what would become [section] 9607 of CERCLA. (68) The impact that sovereign immunity played in this case was seemingly captured in later environmental statutes that waive sovereign immunity. For example, CERCLA [section] 9620 waives sovereign immunity for Federal facilities, which, if retroactively applied to the Texas City Disaster, arguably would have resulted in a holding in-line with Justice Jackson's dissenting opinion. Additionally, whether intentional or not, Congress' creation of liable parties under [section] 9607 mirrors Justice Jackson's language in the dissent that would have found the government liable in the Texas City Disaster. (69) For all intents and purposes, a waiver of sovereign immunity in environmental statutes is the legislatively chosen mechanism relied upon to prevent another Texas City disaster, Love Canal, or Valley of the Drums. (70)
Given a similar fact pattern, private industry would have easily been saddled with liability for negligence had they filled the shoes of the Federal Government. (71) Private industry is always going to make an economically driven calculus, balancing costs and benefits of its actions, even with regards to engagement in ultrahazardous activities. (72) Government on the other hand, is not solely driven by economics or fiscal considerations. Sisk argues, "When policy considerations underlie what might appear to be parallel government conduct ... countervailing factors of efficiency and risk are weighed not in the pursuit of commercial profit but to consider which course best advances the common good." (73) This reasoning may too narrowly paint government priorities but does offer a helpful distinction from the private sector. Taking this vein of argument one step further, the government acts and decides from the perspective of politically viable options, vice economic advantage. (74) A waiver of sovereign immunity acts to nullify the distinction between a private entity driven by economic advantage and a federal agency attempting to pursue the best interest of the common good. With these considerations in mind, this article will now explore CERCLA's waiver of sovereign immunity under [section] 9620 and the case law precedents that have developed this provision of the statute in the context of operations and production of materials for war.
C. CERCLA's Waiver of Sovereign Immunity
The sovereign immunity waiver under [section] 9620 of CERCLA has been challenged at various levels of the federal judiciary. Most notably, the Supreme Court and various federal circuit courts of appeal have established the guiding principles that [section] 9620 is to be analyzed under. To frame an analysis of CERCLA's waiver of sovereign immunity in the context of war production, opinions from the Ninth Circuit, Third Circuit and D.C. Circuit Courts of Appeal are prudent to consider, below. (75)
In United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002), the U.S. government and the State of California brought suit in the United States District Court for the Central District of California against appellant oil companies to recover environmental cleanup costs at a Superfund site used to produce aviation fuel during World War II. (76) The appellants counterclaimed and alleged the Federal Government was a PRP and that sovereign immunity was waived under [section] 9620. (77) The district court determined that both the appellants and Federal Government were PRPs and that the Federal Government had waived sovereign immunity under 42 U.S.C. [section] 9620(a)(1).78 The District Court also held that "100% of the cleanup costs for all the waste ... should be allocated to the United States, and 0% to the Oil Companies, under [CERCLA's PRP contribution provision]." (79) On appeal, the Ninth Circuit upheld the waiver of sovereign immunity determination, agreeing that 42 U.S.C. [section] 9620(a)(1), as determined by the Supreme Court, is "an unambiguous waiver of sovereign immunity of the United States." (80) Relying on the Supreme Court's rationale in Pennsylvania v. Union Gas Co., 491 U.S. 1. 105 (1989), the Ninth Circuit Court of Appeals found state liability provisions under 42 U.S.C. [section] 9607(d)(2) were analogous to the language of 42 U.S.C. [section] 9620(a)(1) for the Federal Government. (81) To clarify this analogy, the Ninth Circuit then quoted Union Gas:
It can be no coincidence that in describing the potential liability of the States in [[section] 9607(d)(2)], Congress chose language mirroring that of [[section] 9620(a)(1)], In choosing this mirroring language in [[section] 9607(d) (2)], therefore, Congress must have intended to override the States' immunity from suit, just as it waived the Federal Government's immunity in [[section] 9620 (a)(1)]. (82) (emphasis added).
The Ninth Circuit also stated that, even though Union Gas was overruled by Seminole Tribe v. Florida., 517 U.S. 44 (1996), its conclusion as to Congressionally legislated waivers of State immunity was stated as, '"[the Seminole Tribe] does nothing to cast doubt on the correctness of the Court's understanding of the meaning of [section]9620(a) (l)." (83)
In Shell Oil, the Federal Government argued the sovereign immunity waiver under [section]9620(a)(l) is '"limited to cases in which [the Federal Government] has undertaken 'nongovernmental' activities." (84) This argument was two-fold. (85) First, the government argued that the heading for [section]9620 titled "Federal facilities" demonstrated the intent of Congress "to waive sovereign immunity only with respect to federally-owned facilities." (86) Second, the government claimed [section]9620's language "in the same manner and to the same extent ... as any nongovernmental entity" tailors a waiver of sovereign immunity only to "those situations in which the government acts as a 'nongovernmental entity." (87) The Ninth Circuit rejected this argument and held "CERCLA's waiver of sovereign immunity is coextensive with the scope of liability imposed by 42 U.S.C. [section]9607." (88) The Ninth Circuit also recognized this holding aligned them with both the D.C. Circuit and the Third Circuit. (89)
FMC Corp. v. U.S. Department of Commerce involved a U.S. Department of Commerce (DOC) appeal to the Third Circuit Court of Appeals. The United States District Court for the Eastern District of Pennsylvania held the Federal Government liable as an owner, operator and arranger under CERCLA for response costs at an industrial facility which produced rayon during World War II. (90) FMC Corporation (FMC) purchased the facility decades after the war had ended and had no relation to American Viscose, the company that owned and operated the plant during World War II. (91) After the EPA sought to recover CERCLA response costs from FMC, FMC brought suit against DOC for contribution based on their claim "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." (92)
In a motion for summary judgment to the district court, the government "argued that it had not waived sovereign immunity under CERCLA for purely regulatory activities...." (93) Then, on appeal to the Third Circuit, the government claimed there is not a waiver of sovereign immunity under CERCLA for "claims arising from its wartime regulatory activities...." (94) To support this argument, the Federal Government "contends that CERCLA's waiver, although express, is not limited and that [the court] must construe it narrowly." (95) Additionally, the government claimed [section] 9620 "does not apply to federal regulatory actions that a non-governmental entity cannot undertake." (96) Next, the government turned to prior Third Circuit cases where the Federal Government undertook action to cleanup hazardous waste sites. (97) This analogy enabled the government to argue the waiver of sovereign immunity "does not extend to situations in which the EPA has undertaken response or remedial actions at a hazardous waste site." (98) In sum, "the government contends these cases establish a per se rule that regulatory activities cannot constitute the basis for CERCLA liability, because only a government can regulate." (99)
The Third Circuit rejected this argument outright. (100) First, the plain text of [section] 9620(a)(1), Congress did not create an exception to the waiver for "regulatory activities." (101) Taking this a step further, the Court remarked that "when the government engages in activities that would make a private party liable if the private party engaged in those types of activities, then the government is also liable." (102) The Third Circuit then supported its position by drawing on the Supreme Court's interpretation of the FTCA's sovereign immunity waiver in Indian Towing Co. v. United States, 350 U.S. 61, 76 (1955). There, the Supreme Court held sovereign immunity could be waived for activities private parties could not perform as '"all Government activity is inescapably 'uniquely governmental' in that it is performed by the Government." (103)
Next, the Third Circuit explained how its interpretation of [section] 9620(a)(1) "comports with the rest of CERCLA." (104) First, the Court noted that "the 'regulatory' exception suggested by the government would be inconsistent "with CERCLA's broad remedial purposes, most importantly its essential purpose of making those responsible for problems caused by disposal of chemical poisons bear the costs and responsibility for remedying the harmful conditions they created.'" (105) The Court reasoned that similar to a third-party entity, the Federal Government should "internalize the full costs ... [that hazardous] substances impose on society and on the environment." (106) Thus, if the government created the mess, they were responsible for cleaning it up. Second, the Third Circuit highlighted the inclusion by Congress of only three specific defenses to CERCLA liability under [section] 9607, which do not include a "regulatory exception." (107) The statutory defenses to [section] 9607, found in [section] 9607(b), include "an act of God, an act of war," and third, what amounts to a negligence third party claim by the defendant. (108) Last, the appellate court relied on the Congressional "creation of an exception for cleanup activities by state and local governments" to demonstrate the intent of the legislature not to "protect a government from liability simply because it acts in a regulatory capacity." (109) Thus, the Court reasoned that the only extra protection a government receives under CERCLA is for response measures taken in accordance with [section] 9607(d)(2). (110)
Finally, the Third Circuit addressed DOC's argument that the sovereign immunity waiver of [section] 9620(a)(1) only applied to "federal facilities." (111) Like the Ninth Circuit in Shell Oil, the Third Circuit also rejected this argument. (112) First, the court stated that [section] 9620(a)(1) is not limited to federal facilities but applies to the entire "Federal Government." (113) Next, the Court observed "even though Congress added section 120 dealing with 'Federal Facilities' to CERCLA in 1986, Congress waived sovereign immunity in the original version of CERCLA in 1980 in language not materially different from the amended language in 1986." Third, Congress' subjection of [section] 9607 liability to government agencies under [section] 9620(a)(1) when the sovereign immunity waiver was transferred from [section] 9607 to [section] 9620(a)(1), proves "Congress did not expressly limit the scope of the waiver." (114) In sum, the Third Circuit commented, "we think it is quite clear that the transfer of the waiver of sovereign immunity provision was nothing more than a logical reordering of the waiver provision accompanying the enactment of section 120." (115) Similar to Shell Oil, the holding by the Third Circuit in FMC Corp. found the Federal Government liable for CERCLA cleanup costs under [section] 9607.
In East Bay Mun. Util. Dist. v. U.S. Department of Commerce, a California municipality, the "District," was developing a reservoir system when hazardous wastes were identified at an abandoned mine and CERCLA actions were initiated. (116) The hazardous materials were traced back to mining operations during World War II. (117) The District claimed Federal Government intervention under the theories of "owner" and "arranger" liability for "a variety of measures [the U.S. government] employed during and shortly after World War II, all aimed at assuring the production of zinc, a critical ingredient in armaments." (118) These "measures" included government purchase agreements at above market prices, a loan to cover the costs of reopening the mine, and the implementation of regulations that ensured ample workers were available to mine zinc. (119)
Again, the U.S. government grounded its defense on the argument that [section] 9620(a)(l)'s waiver of sovereign immunity does not apply to regulatory activities. (120) Specifically, the government claimed sovereign immunity was intact for "uniquely and inherently sovereign" activities like those "imposing ... price and labor regulations." (121) The D.C. Circuit was unconvinced and opined "CERCLA's strong tendency to focus on the substance of the government's (or any entity's) activities, rather than their form, cuts against the government's view." (122) Then, just like the Third Circuit, the D.C. Court of Appeals drew on an analogy to the FTCA and quoted Indian Towing, (123) remarking it was, "hard to think of any governmental activity on the 'operational level,' (124) ... which is 'uniquely governmental,' in the sense that its kind has not at one time or another been, or could not conceivably be, privately performed." (125) Taking this reasoning a step further, the D.C. Circuit remarked, "The converse is also true--it is hard to imagine any act that might lead to a finding of government 'operator' liability that could not be re-characterized at a higher level of abstraction as a uniquely governmental activity." (126)
Then, the Court drew out an additional distinction within the text of CERCLA on this point. The court explained, "[section] 9607(d)(1) of the Act confers a defense on 'all persons' for costs or damages as a result of actions taken or omitted in the course of rendering care, assistance, or advice in accordance with the National Contingency Plan,' but does 'not preclude liability for costs or damages as a result or negligence." (127) The Court further reasoned, "As it appears that such activities are primarily or exclusively governmental, creation of the defense suggests a congressional assumption that immunization of specific purely governmental activities required a specific provision." (128) Lastly, the Court concludes this point by explaining, "CERCLA abrogates state and local government immunity in terms virtually identical to the waiver of federal immunity ... so the exclusion of liability for emergency remediation efforts seems to imply a background assumption that the waiver would otherwise extend to such a typical governmental activity." (129)
The D.C. Circuit concluded their sovereign immunity waiver analysis by invoking the Supreme Court's holding in Union Gas where state liability was "unequivocal" and "unqualified" as enacted under [section] 9601(20)(D), which indicates "the statute's most authoritative reader may not be inclined to view the [sovereign immunity] waiver as hedged by unwritten exceptions." (130) Although the D.C. Circuit's sovereign immunity analysis cut against the Federal Government, the court ultimately held the Federal Government's actions with regard to the Penn Mine did not invoke liability as an owner or arranger under [section] 9607. (131)
Shell Oil, FMC Corp., and East Bay, frame the dialogue for an analysis of CERCLA's wavier of sovereign immunity as applied to war-time production. These three circuits have agreed that regulatory activity is not an end-around for the government to avoid liability under [section] 9607. Additionally, these cases appear to stand for the proposition that war-time production does not provide a higher burden for a plaintiff to overcome in proving to the courts the government is a PRP under [section] 9607. Rather, these appellate courts, as the D.C. Circuit remarked, "focus on the substance of the government's activities, rather than their form...." (132)
IV. CERCLA'S LIABILITY FRAMEWORK AND THE UNITED STATES SUPREME COURT
To fully address Federal Government liability under CERCLA for war-time production, the Supreme Court decisions of United States v. Bestfoods and Burlington Northern & Santa Fe Ry. v. United States must be incorporated into the analysis. These two cases help define the scope of CERCLA liability under [section] 9607.
A. United States v. Bestfoods
The Supreme Court addressed [section] 9607's operator and owner liability in-depth in the case of Bestfoods. There, the issue before the Court was "whether a parent corporation that actively participated in, and exercised control over, the operations of a subsidiary may, without more, be held liable as an operator of a polluting facility owned or operated by the subsidiary." (133) In the late 1970s, the Michigan Department of Natural Resources discovered "land littered with thousands of leaking and even exploding drums of waste, and the soil and water saturated with noxious chemicals" at a shutdown chemical manufacturing plant near Muskegon, Michigan. (134) The plant had first manufactured chemicals under the ownership of the Ott Chemical Company ("Ott I") in 1957. In 1965, CPC International, Inc. created a subsidiary company, also named Ott Chemical Company ("Ott II"), which maintained its manufacturing output, and continued to pollute the land. (135) Of significance is the fact that "CPC kept the managers of Ott I, including its founder, president, and principal shareholder, Arnold Ott, on board as officers of Ott II. Arnold Ott and several other Ott II officers and directors were also given positions at CPC, and they performed duties for both corporations." (136) Then, in 1972, the plant was sold to Story Chemical Company, who continued operations until they declared bankruptcy in 1977. (137)
Through the efforts of the Michigan Department of Natural Resources, the Muskegon plant was purchased by Aerojet-General Corporation. (138) Aerojet created a California subsidiary, Cordova Chemical Company (Cordova/California) to purchase the business. (139) Then, to purchase the property, Cordova/California cre ated a Michigan subsidiary, Cordova Chemical Company of Michigan (Cordova/ Michigan), which continued in the chemical manufacture business at the site until 1986. (140)
In 1981, the EPA established a remediation plan for the site that "called for expenditures well into the tens of millions of dollars." (141) In 1989, the Federal Government initiated litigation to recover response and remediation costs from CPC, Aerojet, Cordova/California, Cordova/Michigan, and Arnold Ott. (142) At trial, the district court was tasked with determining owner and operator liability under [section] 9607(a)(2) for CPC and Aerojet. (143) The district court held "operator liability may attach to a parent corporation both directly, when the parent itself operates the facility, and indirectly, when the corporate veil can be pierced under state law." (144) To explain this holding, the district court stated:
[A] parent corporation is directly liable under section 107(a)(2) as an operator only when it has exerted power or influence over its subsidiary by actively participating in and exercising control over the subsidiary's business during a period of disposal of hazardous waste. A parent's actual participation in and control over a subsidiary's functions and decision-making creates 'operator' liability under CERCLA; a parent's mere oversight of a subsidiary's business in a manner appropriate and consistent with the investment relationship between a parent and its wholly owned subsidiary does not. (145)
The district court then found both CPC and Aerojet liable as operators under [section] 9607(a)(2). (146) This holding was reversed by the Sixth Circuit Court of Appeals. (147) The Sixth Circuit applied Michigan corporate law and determined the corporate veil had not been pierced because both "the parent and subsidiary corporations maintained separate personalities, and the parents did not utilize the subsidiary corporate form to perpetrate fraud or subvert justice." (148)
To examine this issue, the Supreme Court first turned to corporate law. Justice Souter remarked, in writing the majority opinion, "It is a general principle of corporate law deeply 'ingrained in our economic and legal systems' that a parent corporation (so-called because of control through ownership of another corporation's stock) is not liable for the acts of its subsidiaries." (149) This principle can be read into CERCLA as well because "nothing in CERCLA purports to reject this bedrock principle, and against this venerable common-law backdrop, the congressional silence is audible. (150) The Court acknowledged that the corporate veil could only be pierced when "the corporate form would otherwise be misused to accomplish certain wrongful purposes, most notably fraud, on the shareholder's behalf." (151) Justice Souter then explained that common law principles will not be ignored unless a statute expressly touches on "the question addressed by common law." (152) To that extent, the Supreme Court upheld the Sixth Circuit's ruling that a parent corporation could only be liable under [section] 9607 for a subsidiary's actions when the corporate veil was pierced. (153) However, [section] 9607(a)(2) addresses both ownership and operation, and the Sixth Circuit failed to analyze CPC and Aerojet's actions in operating facilities owned by their subsidiaries. (154) It is this distinction that may be brought to bear in any analysis of a federal entity under [section] 9607(a)(2). Although the Federal Government may not "own" facilities in cases dealing with wartime production, courts have found the government may qualify as an "operator" under [section] 9607(a)(2).
The Supreme Court next stated, "The fact that a corporate subsidiary happens to own a polluting facility operated by its parent does nothing, then, to displace the rule that the parent 'corporation is [itself] responsible for the wrongs committed by its agents in the course of its business." (155) The Court then distinguished between the law of piercing the corporate veil and that statutory text of [section] 9607. (156) "[W]hereas the rules of veil-piercing limit derivative liability for the actions of another corporation, CERCLA's 'operator' provision is concerned primarily with direct liability for one's own actions." (157) The majority relied on the "plain language of the statute" to find liability for any "person who operates a polluting facility." (158) This principle applies, regardless of the "covered person's" status, a parent corporation, subsidiary, or as the Court explained "even a saboteur who sneaks into the facility at night to discharge its poisons out of malice." (159) Direct liability as an operator trumps any protections under state corporate law. (160) Again, this analysis can apply to a federal entity: status as a federal agency would not negate liability under CERCLA.
Applying the "ordinary or natural meaning" to the statutory text, the Court then defined "operator" as "simply someone who directs the workings of, manages, or conducts the affairs of a facility." (161) Justice Souter provided greater clarity through application of this definition by remarking "an operator must manage, direct, or conduct operations specifically, related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations." (162) The Supreme Court noted the Sixth Circuit's error was "limiting direct liability under the statute to a parent's sole or joint venture operation, so as to eliminate any possible finding that CPC is liable as an operator on the facts of this case." (163) The focus of the Supreme Court was on whether CPC operated the Muskegon plant, and is not restricted to just whether the parent corporation, CPC, operates the subsidiary, which has day-to-day control over the plant. (164) Therefore, analysis of direct operator liability under [section] 9607(a)(2) requires the focus to remain on the parent corporation's relationship to the plant itself and not the subsidiary corporation. (165) The district court failed to draw this distinction and attempted to hold CPC directly liable simply based on the extent to which officers of the parent corporation were involved with the subsidiary. (166) Such a conclusion contradicts a basic principle of corporate law in which "control thru ownership ... does not fuse the corporations, even when the directors are common to each." (167)
Last, the Supreme Court examined whether "an agent of the parent with no hat to wear but the parent's hat might manage or direct activities at the facility." (168) The Court prefaced analysis of this issue by explaining, "... the acts of direct operation that give rise to parental liability must necessarily be distinguished from the interference that stems from the normal relationship between parent and subsidiary." (169) Direct operator liability under [section] 9607(a)(2) would only be invoked if the "actions directed to the facility by an agent of the parent alone are eccentric under accepted norms or parental oversight of a subsidiary's facility." (170) Ultimately, the Supreme Court remanded this issue for the lower court to develop more facts in determining whether the conduct of a parent corporation's agent opened the door to operator liability. The focus of Bestfoods was on the actions of a party with the operation of a facility. Status and organizational hierarchy are irrelevant as CERCLA only looks to the facts in determining whether a parties actions rise to the level of control that would amount to an "operator" under [section] 9607(a)(2).
B. Burlington Northern & Santa Fe Ry. v. United States
In 2009, the U.S. Supreme Court returned to the issue of CERCLA liability under [section] 9607 in the case of Burlington Northern & Santa Fe Ry. v. United States. (171) This time, the Court took on the issues of "arranger" liability under [section] 9607(a)(3) and divisibility of harm among PRPs. (172) Both issues are key to an analysis of federal agency liability for war-time production. Executive agency action can be invasive to the point that a federal entity could be found by the courts to be an "arranger" under [section] 9607(a)(3). Additionally, federal PRPs should seek to mitigate their liability by sharing the cost of remediation through apportionment. Burlington speaks to both these issues.
Beginning in 1960, Brown and Bryant, Inc. (B&B) commenced operations of "an agricultural chemical distribution business." (173) B&B would purchase chemicals and pesticides from third party suppliers, such as Shell Oil Company (Shell), and then use the products on customers' farms. (174) Initially, B&B started its business on a 3.8-acre plot of land located in Arvin, California. (175) Then, in 1975, B&B "expanded operations onto an adjacent .9-acre parcel of land owned jointly by the Atchison, Topeka & Santa Fe Railway Company and the Southern Pacific Transportation Company (now known respectively as the Burlington Northern and Santa Fe Railway Company and Union Pacific Railway Company)." (176)
B&B maintained an inventory of "the herbicide Dinoseb, sold by Dow Chemicals, and the pesticides D-D and Nemagon, both sold by Shell" during operations of its business. (177) The chemical "Dinoseb was stored in 55-gallon drums and 5-gallon containers on a concrete slab outside B&B's warehouse." (178) The pesticide Nemagon was kept in "30-gallon drums and 5-gallon containers inside the warehouse." (179) Initially, D-D was stored in 55-gallon drums. (180) Then, in the mid-1960s, "Shell began requiring its distributors to maintain bulk storage facilities for D-D. (181) Due to its high corrosive characteristics, "bulk storage of D-D led to numerous tank failures and spills as the chemical rusted trains and eroded valves." (182) The district court determined B&B took "stewardship" of "D-D as soon as the common carrier entered the Arvin facility." (183) Whenever B&B moved D-D on its property, "leaks and spills" were common. (184)
The Arvin facility was "graded toward a sump and drainage pond" and "neither the sump nor the drainage pond was lined until 1979, allowing waste water and chemical runoff from the facility to seep into the ground water below." (185) B&B was described as a "sloppy operator ... [o]ver the course of B&B's 28 years of operation, delivery spills, equipment failures, and the rinsing of tanks and trucks allowed Nemagon, D-D, and Dinoseb to seep into the soil and upper levels of ground water of the Arvin facility." (186) The Court noted "of particular concern was a plume of contaminated ground water located under the facility that threatened to leach into an adjacent supply of potential drinking water." (187)
Shell began implementing various D-D precautionary measures in the late 1970s after spills of the chemical became a regular occurrence with its distributors. (188) First, "Shell provided distributors with detailed safety manuals and instituted a voluntary discount program for distributors that made improvements in their bulk handling and safety facilities." (189) Second, Shell required inspections and implemented a self-certification process to ensure continuity of safety measures among its distributors. (190) Despite these measures, B&B continued to have a number of spills and accidents with the hazardous materials it handled. (191) In 1989, B&B was bankrupt and the Arvin facility was placed on the National Priority List. (192)
In response to an EPA administrative order, the Railroads spent over $3 million to remediate environmental issues at the Arvin site. (193) After the Railroads brought suit against B&B to recover some of the remediation costs, the California Department of Toxic Substances Control (DTSC) and the EPA brought two recovery actions against Shell and the Railroads. All claims were consolidated and the District Court determined that both Shell and the Railroads were PRPs. (194) The Railroads were found to be a PRP due to their ownership of a portion of the Arvin facility. (195) Shell was a PRP as an arranger under [section] 9607(a)(3) for its sale and delivery of D-D. (196) The court, however, did not impose full liability on Shell and the Railroads, but instead "concluded the harm was divisible and therefore capable of apportionment." (197)
On appeal to the Ninth Circuit Court of Appeals, the holding explained that even though Shell was not a "traditional" arranger, Shell was still a PRP "under a broader category of arranger liability if the disposal of hazardous wastes was a foreseeable byproduct of, but not the purpose of, the transaction giving rise to arranger liability." (198) The Ninth Circuit expounded on this holding:
Shell arranged for delivery of the substances to the site of its subcontractors; was aware of, and to some degree dictated, the transfer of arrangements; knew that some leakage was likely in the transfer process; and provided advice and supervision concerning safe transfer and storage. Disposal of a hazardous substance was thus a necessary part of the sale and delivery process. (199)
The Ninth Circuit also reversed the District Court's finding of apportionment and determined Shell and the Railroads were jointly and severally liable for all response costs incurred by DTSC and the EPA. (200)
The Supreme Court granted certiorari to determine whether Shell did in fact qualify as an arranger under [section] 9607(a)(3) and whether response costs could be attributable to the Railroads and Shell. (201) On the issue of arranger liability for Shell, the Court found that the language of the statute and legislative intent did not clearly define the term "arranger," and therefore the Court would use its common meaning. (202) Using the common meaning of "arranger" the Supreme Court explained, "In order to qualify as an arranger, Shell must have entered into the sale of D-D with the intention that at least a portion of the product be disposed of during the transfer process by one or more of the methods described in [the Solid Waste Disposal Act's definition of arranger (42 U.S.C. [section] 6903(3))]." (203) With this definition, the Court concluded that the evidence did not support "an inference that Shell intended such spills to occur," and that "Shell's mere knowledge that spills and leaks continued to occur is insufficient grounds for concluding that Shell 'arranged for' the disposal of D-D within the meaning of [section] 9607(a)(3)." (204)
Next, the Court turned to the issue of divisibility. Since Shell was absolved of liability under [section] 9607(a)(3), only liability for the Railroads was addressed by Justice Stevens' majority opinion. (205) Relying on the "seminal opinion" on the issue of apportionment under CERCLA of United States v. Chem-Dyne Corp., (206) the majority agreed that although CERCLA created a "strict liability standard," joint and several liability was not required. (207) As Chem-Dyne identified, "Congress intended the scope of liability to be determined from traditional and evolving principles of common law." (208) Then, relying on [section] 433 A of the Restatement (Second) of Torts, courts are able to apportion the harm when "there is a reasonable basis for determining the contribution of each cause to a single harm." (209) The majority then looked back at the factors considered by the District Court in its apportionment analysis, which included, "percentages of land area, time of ownership, and types of hazardous products," and reversed the Ninth Circuit's holding of joint and several liability, thereby reinstating apportionment to the Railroads of 9% of the total costs of remediation. (210)
In sum, Bestfoods defined operator liability under [section] 9607(a)(2) and Burlington created a test to identify whether a party qualified as an "arranger" under [section] 9607(a)(3) and established that even though CERCLA does provide for joint and several liability, divisibility among PRPs and apportionment of costs is permissible under [section] 9607. For federal facilities, this establishes a framework to analyze liability under [section] 9607 and a starting point to forming an argument supporting cost apportionment among PRPs.
V. STRICT LIABILITY
A. Strict Liability for Ultrahazardous Activities
The doctrine of strict liability for ultrahazardous activities traces its roots to the notorious English case of Rylands v. Fletcher. (211) There, a landowner sought to create a water reservoir on his property. (212) Unbeknownst to the landowner, the contractor built the reservoir on land that contained abandoned underground mine shafts. (213) When the reservoir was filled with water, the mine shafts below were flooded, which in turn flooded an adjacent landowner's coal mining operation. (214)
At trial, the defendant landowners prevailed and were not found negligent because they had no knowledge of the abandoned mining operation. (215) However, on appeal. Justice Blackburn explained how the defendants were liable under the principle of strict liability. (216) This legal principle was ultimately adopted in the Restatement of Torts, Section 519.
Section 519 of the Restatement provides "[O]ne who carries on an ultrahazardous activity is liable to another whose person, land or chattels the actor should recognize as likely to be harmed by the unpreventable miscarriage of the activity for harm resulting thereto from that which makes the activity ultrahazardous, although the utmost care is exercised to prevent the harm." (217) An activity is "ultrahazardous" if it, "necessarily involves a risk of serious harm to the person, land or chattels of others which cannot be eliminated by the exercise of the utmost care, and is not a matter of common usage." (218)
In 1965, Dean William Prosser, as the Reporter for the Restatement (Second) of Torts, changed the strict liability test of "ultrahazardous activities" to "abnormally dangerous activities." (219) The Restatement (Second) of Torts, [section] 519 explains, "One who carries on an abnormally dangerous activity is subject to liability for harm to the person, land or chattels of another resulting from the activity, although he has exercised the utmost care to prevent the harm." (220) Additionally, Dean Prosser edited [section] 520 and provided additional factors to consider in determining whether an activity was ultrahazardous or abnormally dangerous: (221)
(A) existence of a high degree of risk of some harm to the person, land or chattels of others;
(B) likelihood that the harm that results from it will be great;
(C) inability to eliminate the risk by the exercise of reasonable care;
(D) extent to which the activity is not a matter of common usage;
(E) inappropriateness of the activity to the place where it is carried on; and,
(F) extent to which its value to the community is outweighed by its dangerous attributes. (222)
As MacAyeal points out, the judiciary has "come to conceptualize strict liability in terms of the placement or use by the defendant of an 'instrumentality' that is likely to escape and cause damage." (223) The courts, in applying strict liability, do not focus on the personal acts of the defendant, but rather the instrumentality, or how the instrumentality is used in a given activity. (224) This concept is fundamental to how strict liability is applied to ultrahazardous activities under the common law. (225)
Case law is filled with examples of strict liability applied to ultrahazardous activities. The courts have held particular instrumentalities, such as the disposal, transportation, and storage of hazardous substances, are essentially per se ultrahazardous activities that require the application of strict liability. (226) MacAyeal explains that each of these cases contains the same basic concept:
[T]he defendant has placed on property or used an object that can easily escape control or cause damage. If the instrumentality does in fact escape control, the defendant is liable for all types of damages that make the instrumentality or activity abnormally hazardous. The defendant is held liable based on a relationship to the instrumentality such as being the owner, operator, or user. (227)
This illustrates the correlation between common law strict liability and CERCLA [section] 9607 for owner, operator, and arranger liability.
With that connection in mind, it is also important to distinguish between strict liability for criminal or civil offenses and strict liability for ultrahazardous activity. (228) As MacAyeal explains, the main goal of strict liability in the criminal and civil context is to prevent specific conduct, whereas the focus of strict liability in the ultrahazardous activity context is to "compensate plaintiffs injured by lawful conduct." (229) This presents a unique dynamic between the risks posed by the ultrahazardous activity and the value of the activity to society. (230) Justice Stewart articulated this relationship in his dissent opinion to Laird v. Nelms:
The law ... imposes liability for harm caused by certain narrowly limited kinds of activities even though those activities are not prohibited and even though the actor may have exercised the utmost care. Such conduct is 'tortious' not because the actor is necessarily blameworthy, but because society has made a judgment that while the conduct is so socially valuable that it should not be prohibited, it nevertheless carries such a high risk of harm to others, even in the absence of negligence, that one who engages in it should make good any harm caused to others thereby. (231)
By placing the burden of costs on the actor, the public at large will not be forced to pay for injuries resulting from ultrahazardous activities, and "the true costs of the activity will be distributed among those who benefit from the activity." (232) From a causation perspective, any injury that results from an ultrahazardous activity will attach liability to a defendant if the evidence demonstrates the defendant exercised ownership or control over the ultrahazardous activity. (233)
B. Evolution of Strict Liability for Ultrahazardous Activities under CERCLA
The doctrine of strict liability for ultrahazardous activity was first incorporated into the text of the Clean Water Act. (234) Under the Clean Water Act, the terms '"vessel" (235) and "facility" (236) are defined as instrumentalities to which strict liability attaches. (237) Per the Clean Water Act, owners and operators of these two instrumentalities were strictly liable for any resulting cleanup costs associated with these instrumentalities. (238) Invoking the common law doctrine created in Rylands v. Fletcher, MacAyeal explains, "the Clean Water Act focused on the harm caused by the instrumentality, not on the particular conduct of the owners and operators linked to the instrumentality." (239) Congress then incorporated the doctrine of strict liability into CERCLA. (240)
The incorporation of common law strict liability principles into CERCLA was much broader than what Congress had done in the Clean Water Act. (241) CERCLA, like the Clean Water Act, included the instrumentalities of vessels (242) and facilities (243) and added "geographic areas where hazardous substances had been deposited." (244) Additionally, CERCLA included transporters (245) and generators (246) of hazardous substances. (247) Broadening the incorporation of common law strict liability even further, CERCLA also expressly made liability retroactive for owners, operators, arrangers and transporters of qualifying ultrahazardous instrumentalities. (248)
MacAyeal posits that the unambiguous inclusion of common law strict liability into CERCLA demonstrates the legislative intent for courts to "consider the paradigm of strict liability for ultrahazardous activity to resolve questions of individual causation under CERCLA. (249) This conclusion is supported considering the historical context of environmental disasters in the 1970s that precipitated the passage of CERCLA into law. (250) A string of high profile oil spills and incidents at abandoned toxic waste sites incentivized Congress to pursue legislation to fund these cleanups. (251) Congress incorporated Superfund mechanisms in other environmental statutes but never to an all-encompassing extent like CERCLA. (252) Ultimately, the environmental catastrophes at Love Canal and Valley of the Drums served as the catalyst for Congress to pass a more encompassing strict liability-based statute to fund cleanups of environmental hazardous waste sites. (253)
Congressional rationale for applying strict liability to ultrahazardous activities in CERCLA is best explained in a legislative history report for Senate Bill 1480. (254) The report explains that strict liability for an environmental superfund statute is an appropriate standard in equity and ensures the cleanup costs are placed on the parties who create the ultrahazardous risks. (255) This legislative report further states, "The most desirable system of loss distribution is one in which the prices of goods accurately reflect their full costs to society." (256) To implement this system in a statute, Congress must place the cost of injury from ultrahazardous activities on the entities responsible for the activity, and, the responsible entity in turn should calculate the potential cost of injury into its business costs needed to fund the ultrahazardous activity. (257) This application of strict liability would spread the costs of injury "over a greater population and over a larger time period," and enable responsible parties to push the price of potential injury into costs for the consumer. (258) Congress' reliance on strict liability for ultrahazardous activities led to the creation of [section] 9607 liability provisions under CERCLA. (259)
VI. CERCLA LIABILITY DURING WAR
Taken together, Shell Oil, FMC Corp., and East Bay demonstrate a consensus, at least at the U.S. Court of Appeals level, that [section] 9620(a)(1) applies to all Federal Government entities, is not precluded by only "regulatory" or purely "governmental" activities, and demonstrates the intent of Congress to hold federal entities liable under [section] 9607 like any other "covered person." (260) These cases also present the difficult issue of how to reconcile CERCLA's liability provisions with the demands of waging war. As Katzman explains, the Federal Government "historically exercised pervasive regulatory control over countless aspects of American economic, political, and social life," while prosecuting a war. (261) It is this governmental regulation that led to increased production of needed war resources, "such as rubber, steel, aluminum, and rayon," but also led to the creation of "massive quantities of industrial waste, hazardous to both the human health and the environment." (262) These wartime production needs that created hazardous waste disposal sites now must be addressed under the retroactively applied CERCLA.
Under [section] 9607, liability classes are broadly defined and such a reading squares with congressional intent and key principle inherent to CERCLA, that the polluter pays. (263) This "polluter pays principle" has been used by the judiciary in assessing CERCLA liability. (264) Interestingly, this principle which is so widely cited by the courts presents a paradox. CERCLA was intended to place the costs of hazardous waste cleanup onto the responsible parties so that society at large would not bear such costs. (265) By waiving sovereign immunity under [section] 9620 and then qualifying the Federal Government as a PRP under [section] 9607 for wartime regulatory actions, the costs of hazardous waste cleanup will still be shouldered by the American taxpayer. (266) This paradox places a significant financial burden on the American public since the Federal Government has continually exercised increased control over various industries in the United States during wartime. (267) Yet, this "public cost-sharing approach" is exactly what Congress rejected when enacting CERCLA. (268)
In Shell Oil, FMC Corp., and East Bay, the courts determined that "Government regulatory control.. .was a least an ingredient precipitating the contamination at these sites." (269) Katzman posits a reexamination of factors the courts have considered in assessing the government's CERCLA liability at war production facilities may lead to a different conclusion. (270) First, Katzman argues that privately held facilities were not coerced into increased production of war materials, which led to increased amounts of hazardous wastes. (271) Instead, he explains, "strong evidence supports the notion that federal wartime contracts and requirements, far from burdening privately run facilities, were seen as a government carrot, guaranteeing manufacturers a lucrative market for their products." (272)
Next, Katzman relies on "a baseline assumption in American law," which stands for the proposition "that when the Federal Government acts in a policymaking capacity, it is immune from liability for damages." (273) If Congress sought to overrule this presumption in CERCLA, Katzman argues, it would have done so explicitly. (274) This line of argument is supported by the cases in which the federal courts have held [section] 9620's waiver of sovereign immunity is not absolute. (275) An absolute waiver of sovereign immunity would attach government liability under [section] 9607 to any governmental action taken with respect to a privately run facility during war. (276) In United States v. Nordic Village (277) the Supreme Court emphasized the "rule of strict construction" which, as Katzman explains, "if language is susceptible to more than one reading--as section 120 appears to be--it is not 'unambiguous' and thus does not quality as an effective waiver of sovereign immunity." (278) Relying on this rule and the federal courts that have "proffered a limited waiver theory" under [section] 9620. (279) Katzman concludes by proposing that waivers of sovereign immunity under CERCLA must be narrowly construed, especially when applied to policymaking determinations by the government. (280)
The third prong of Katzman's analysis is grounded in the legislative history of [section] 9620. (281) Compared to prior environmental statutes that waived sovereign immunity, CERCLA was clearly intended to mirror those statutes. (282) The sovereign immunity waiver in each of these environmental statutes ensured that federal facilities and operations by federal entities would be held to the same standards as private entities. (283) However, Katzman is adamant, "[t]here is no indication that these provisions were meant to waive sovereign immunity in situations where the government takes regulatory action against private facilities (as the blanket waiver theory holds)." (284) To support this, the legislative history for CERCLA contains Senator Robert Stafford's proclamation that [section] 9620 was "designed to institute fundamental reforms of the Federal facilities cleanup effort ... to assure that the cleanup effort at Federal facilities is both adequate and consistent with parallel efforts at privately owned or operated sites." (285) Examining [section] 9620 with this lens demonstrates a stark contrast from a blanket waiver of sovereign immunity. Senator Stafford's remarks focus on federal facility operations and not Federal Government action at privately owned facilities. This view would square with one of the government's arguments in Shell Oil and FMC Corp. that [section] 9620's heading of "Federal Facilities" demonstrated legislative intent to apply a waiver of sovereign immunity to federally-owned facilities only. (286)
Focusing in on governmental regulation during war production, and using the WPB in FMC Corp. as an example, Katzman states, "The issuance of priority orders, allocation of scarce raw materials, the imposition of taxes, price controls and labor restrictions all represent governmental conduct that no private entity was 'obligated to perform.' Nor, for that matter, were nongovernmental entities capable of performing such regulatory deeds." (287) These sovereign actions are distinct and foreign to the actions of a private entity, and thus require that any analysis under [section] 9620 differentiate "between the government as regulator and the government 'as a business' for the purposes of sovereign immunity accords...." (288) Such an interpretation under CERCLA would mesh with the "fundamental principle underlying the doctrine of sovereign immunity" which shields executive policy determinations from the threat of individual citizen suit. (289) This "fundamental principle" is best applied on the context of wartime decision-making. (290) Katzman fully illustrates this proposition by articulating, "Perhaps nowhere is this need to insulate governmental decision-making more compelling that in the wartime context, where Executive Branch policy choices directly affect the defense of the nation." (291) If government regulatory decisions over private industry during wartime are not excluded from the waiver of sovereign immunity under [section] 9620, the United States could be faced with "undesirable, even absurd consequences." (292) Such an interpretation of [section] 9620 could stifle national defense regulatory and policy-driven action by the Federal Government. (293) Therefore, since [section] 9620 does not expressly apply to regulatory actions of government, courts should apply this fundamental policy of sovereign immunity to exclude "policy-laden decision-making" under CERCLA. (294) Applying [section] 9607 liability to government regulatory action could ultimately "deter actions that society values." (295)
Last, Katzman explains, "waiving sovereign immunity when the government acts to regulate a facility would be incongruous with the liability framework of CERCLA." (296) One of the key legislative considerations when drafting CERCLA was the fact that under the retroactive applicability of the statute, certain private parties, who would be PRPs, would be "insolvent or otherwise unavailable for suit" by the time liability under [section] 9607 attached. (297) To counter this possibility, Congress incorporated joint and several liability into CERCLA. (298) The net result is that solvent PRPs can be responsible for all cleanup costs at a given CERCLA site. (299) This result also places the Federal Government in the unfair position of being "the ultimate [deep pocket]" that will always be available for suit and would never be insolvent as a PRP. (300) Thus, as Katzman concludes, "the practical consequence of holding the government liable for purely regulatory acts would be to expose the United States as a prime target for CERCLA cost-shifting, providing private industry with a new key to unlock the coffers of the federal treasury." Katzman's position illustrates the paradox of CERCLA that has evolved in case law where the government is identified as a PRP for regulatory action, then the American taxpayer will be left to foot the bill of a CERCLA cleanup. (301)
VII. DIVISIBILITY AND THE COSTS OF WAR
The paradox created by the judicial application of CERCLA's liability scheme to the government's regulatory decision-making while prosecuting a war requires a new approach. Applying joint and several liability to the Federal Government in this context causes the end result that CERCLA was created to prevent, which is forcing the American public to shoulder the costs of cleanup efforts at hazardous waste sites. The Supreme Court's analysis of PRP divisibility in Burlington offers the following framework for a new approach to Federal Government liability under CERCLA during war.
As the Court in Burlington explained, joint and several liability is not required under CERCLA. (302) Apportionment of cost can be judicially determined. Using Chem-Dyne as an example, a court can rely on '"traditional and evolving principles of common law" (303) and Restatement (Second) of Torts [section] 433 A to support divisibility in cases involving a government PRP who acted in a regulatory capacity during the prosecution of war. Both legal and policy considerations support such a conclusion.
At the forefront of this proposition are the roles of the legislature and the executive branch as defined by the U.S. Constitution. Under Article I of the Constitution, Congress is expressly given the power to declare war and fund the military. (304) The President, under Article II, is identified as the Commander in Chief, which empowers the President to prosecute wars. (305) Currently, the use of joint and several liability in CERCLA case precedent could, and has, placed the burden of congressionally supported and Presidentially executed wartime prosecution measures back onto the American taxpayer. In one respect, the United States citizenry is liable in tort for its government's exercise of constitutionally granted powers in the defense of our nation. From a policy perspective, this raises the question of whether, and if so to what extent, national security actions and decisions in the wartime context should be insulated from suit.
The employment of retroactive joint and several liability under CERCLA for facilities tied to war production has the overwhelming likelihood of placing the cost of cleanup solely on the Federal Government. As exemplified by FMC Corp., it is all too common that PRPs in existence at the time that liability under [section] 9607 would attach no longer exist or are solvent when contamination at a site is identified decades, or sometimes more than half a century, later. Thus, the only PRP always available for suit is the United States government. Judicially apportioned costs for the Federal Government would mitigate the extent to which the American taxpayer would be on the hook for cleanup at these wartime production sites. In theory this practice would yield an equitable result for the American public and not overburden society with extravagant costs borne from private industry wartime production. In reality, the issue would then become what party is responsible for the remainder of the cleanup costs that were not apportioned to the Federal Government. The default, absent other PRPs, would require the EPA to use the Superfund for remaining cleanup efforts, similar to EPA's use of the Superfund to cover orphan shares. Such a result could eventually overburden the Superfund and require congressional action to ensure CERCLA's Superfund maintains an adequate balance.
Turning back to FMC Corp., the Third Circuit's holding rejected the government's argument that regulatory actions should be exempt from CERCLA. (306) The Third Circuit held that liability should attach to governmental activity if it would attach to a private party for the same conduct. (307) Additionally, the Third Circuit explained that the federal government, like private industry, should internalize the costs of remediation under CERCLA when engaged in ultrahazardous activities. (308)
Using the Third Circuit's analysis, application of divisibility to cases stemming from wartime production, when the government is a PRP, would not free the federal government from liability. Divisibility would only mitigate the government's overall liability. Second, use of divisibility in these cases would still require the federal government to internalize costs associated with CERCLA cleanups, like any other PRP, while also preventing private industry from potentially escaping liability altogether. Lastly, the application of divisibility in these cases does not require a regulatory exception be read into the statute. Rather, Burlington, common law, and legislative intent offer divisibility in the wartime production context as a judicially enforceable measure.
In the context of sovereign immunity, using divisibility to lower the ceiling of the government's potential liability under [section] 9607 enables the executive to make crucial wartime policy decisions free from concerns of unforeseen penalties and costs that may later result under CERCLA. (309) Even though Congress incorporates a waiver of sovereign immunity under [section] 9620 of CERCLA, there is no evidence to suggest that Congress' intent with CERCLA was to in anyway inhibit executive actions associated with the national defense in prosecuting war. The application of divisibility and apportionment still results in liability for the sovereign and thereby avoids a Texas City Disaster outcome where the federal government escaped liability. The federal government would not escape all liability but would also not be liable for all costs of CERCLA cleanup efforts under joint and several liability.
From a policy and equity perspective, denying private industry the argument the Federal Government should be jointly and severally liable for the full costs of any CERCLA cleanup at war production facilities recognizes the increased business and profits enjoyed by private industry in fulfilling wartime contracts. For future wartime government and private industry contracts, judicial use of divisibility would ensure consideration of future CERCLA-related costs would be factored into such agreements. Drawing from Sisk's analysis, limiting the liability of government parties in the wartime context also recognizes a key distinction between government and private industry namely, private industry is always focused on commercial profit, whereas the government acts, or should act, for the common good. (310)
CERCLA's waiver of sovereign immunity under [section] 9620 has evolved in case law to be all but absolute, holding the federal government to the same standards as private industry. Superfund sites created from wartime production facilities pose a unique challenge to the judiciary in applying the liability provisions of CERCLA. As case law has repeatedly explained, there is no defense under CERCLA for regulatory actions by the federal government. As a result, the judiciary has applied joint and several liability which can have the effect of finding the government completely liable under [section] 9607 for CERCLA-related cleanup costs at wartime production facilities that were owned and operated by private industry. This result may burden the American taxpayer with the additional costs tied to cleanup at previous wartime production sites, often from wars fought decades in the past.
To mitigate this result and meet the intent of CERCLA, courts should apply case law precedent from Bestfoods and Burlington. Bestfoods defined operator liability under [section] 9607(a)(2) and requires direct operator control to find CERCLA liability. (311) In any suit alleging the government as a PRP involving a wartime production facility or waste area, demonstrating operator liability under Bestfoods will require proof that some government agent or party exercised direct control over operations at a facility. Bestfoods made clear that organizational hierarchy or status are irrelevant to an analysis of whether a party is an operator for purposes of [section] 9607. This rule acts to create a more difficult burden for a private party to meet when alleging the government acted as an actual operator of a facility for purposes of [section] 9607(a)(2) liability.
Burlington analyzed arranger liability under [section] 9607(a)(3) and provided guideposts for applying divisibility among PRPs. The Supreme Court explained that arranger liability only attached in cases where a party demonstrated an intent to dispose of a hazardous substance as defined by CERCLA. (312) Additionally, the Court held that mere knowledge of a party that spills of a hazardous substance are occurring does not attach arranger liability to that party absent a demonstrated intent for disposal of the hazardous substance. (313) Taken together, these cases provide the first step in analyzing a federal entity's potential liability under CERCLA. First, the federal entity must have exercised enough control at a Superfund site to qualify as a PRP under [section] 9607. Where a federal entity does not exercise the level of control necessary to qualify it as a PRP under [section] 9607, then the analysis ends there. If the courts determine that a federal entity is a PRP, then divisibility should be applied.
Burlington outlined when divisibility is appropriate under CERCLA. First, the majority opinion explained that although CERCLA applied a strict liability standard, joint and several liability was not required for every dispute that arose under [section] 9607 among PRPs. (314) Rather, [section] 433A of the Restatement (Second) of Torts (315) can be employed and courts may apportion the harm when "there is a reasonable basis for determining the contribution of each cause to a single harm." (316) To meet the intent of CERCLA, divisibility and apportionment of costs should be applied by the courts specifically in cases where the government is alleged as a PRP for performing wartime-related regulatory functions. The use of divisibility applied to the government also meets the intent of common law strict liability for ultrahazardous activities, by avoiding the result that the public at-large, the American taxpayer, will be stuck with full liability under [section] 9607.
Although federal regulatory conduct has been rejected as a defense under CERCLA in Shell Oil and FMC Corp., the application of divisibility will not seek to avoid government liability altogether but rather ensures the government will only be liable for the portion of any harm the courts determine based on the facts of the case. Such an outcome satisfies the intent of CERCLA and advances beneficial legal and policy considerations for the American public at large.
(1) Burlington N. & Santa Fe Ry. v. United States, 556 U.S. 599, 602 (2009); United States v. Bestfoods, 524 U.S. 51, 55 (1998).
(2) CTS Corp. v. Waldburger, 134 S.Ct. 2175, 2180 (2014); Burlington, 556 U.S. at 602 (quoting Consol. Edison Co. of N.Y. v. UGI Utils., Inc., 423 F.3d 90, 94 (2d Cir. 2005)); see also Meghrig v. KFC W., 516 U.S. 479, 483 (1996); Dedham Water Co. v. Cumberland Farms Dairy, 805 F.2d 1074, 1081 (1st Cir. 1986).
(3) Bestfoods, 524 U.S. at 55 (quoting Key Tronic Corp. v. United States, 511 U.S. 809, 814 (1994)).
(4) See United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002).
(5) See Burlington, 556 U.S. at 602; Bestfoods, 524 U.S. at 55.
(6) 42 U.S.C. [section] 9607(2016).
(7) Burlington, 556 U.S. at 608.
(8) 42 U.S.C. [section] 9607(a).
(9) Id. ("(1) the owner and operator of a vessel or facility, (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of, (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment ... and, (4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities....").
(10) Burlington, 556 U.S. at 609; Cooper Indus, v. Aviall Servs., 543 U.S. 157, 161 (2004).
(11) 42 U.S.C. [section] 9607(a)(4).
(12) Steven Ferrey, The Toxic Time Bomb: Municipal liability for the Cleanup of Hazardous Haste, 57 Geo. Wash. L. Rev. 197, 222 (1988).
(13) Id. at 223; 42 U.S.C. [section] 9604(a) (2016).
(14) Ferry, supra note 12, at 224; 42 U.S.C. [section] 9604(a).
(15) Ferry, supra note 12, at 224; 42 U.S.C. [section] 9612(c)(3) (2016).
(16) 42 U.S.C. [section] 9601(21) (2016).
(18) 42 U.S.C. [section] 9607.
(19) 42 U.S.C. [section] 9620(a)(1) (2016).
(20) Harold J. Krent, Reconceptualizing Sovereign Immunity, 45 Vand. L. Rev. 1529, 1530 (1992).
(21) United States v. Mitchell, 445 U.S. 535, 538 (1980) (quoting United States v. Sherwood, 312 U.S. 584, 586 (1941)); see also Ruckelhaus v. Sierra Club, 463 U.S. 680, 685 (1983); United States v. King, 395 U.S. 1, 4 (1969).
(22) Van S. Katzman, The Waste of War: Government CERCLA Liability at World War It Facilities, 79 Va. L. Rev. 1191, 1203 (1993).
(23) Krent, supra note 20, at 1530.
(24) Katzman, supra note 22, at 1213.
(25) Gregory C. Sisk, The Inevitability of Federal Sovereign Immunity, 55 Vill. L. Rev. 899, 900 (2010).
(26) Id. at 903.
(27) Krent, supra note 20, at 1535.
(28) McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 496 (1991); United States v. Mitchell, 445 U.S. 535,538 (1980).
(29) McMahon v. United States, 342 U.S. 25, 27 (1951).
(30) Ruckelhaus v. Sierra Club, 463 U.S. 680, 685 (1983); E. Transp. Co. v. United States, 272 U.S. 675,686 (1927).
(31) Lane v. Pena, 518 U.S. 187, 192 (1996).
(32) Dalehite v. United States, 346 U.S. 15 (1953); Sisk, supra note 25, at 912-13; see also Hugh W. Stephens, The Texas City Disaster, 1947 3 (1997).
(33) Dalehite, 346 U.S. at 15; Sisk, supra note 25, at 912-13; see also Stephens, supra note 32.
(34) Dalehite, 346 U.S. at 15; Sisk, supra note 25, at 912-13; see also Stephens, supra note 32.
(35) Dalehite, 346 U.S. at 47.
(36) Id. at 48.
(37) Id. at 23 n.7 ("The Grandcamp exploded about an hour after the fire was noticed. Meanwhile the captain of the ship had ordered all personnel off and the hatches closed. Steam was introduced into the holds. All admit that this is normal fire-fighting procedures aboard ships, but that it was less than effective in this case because of the oxidizing properties of the Fertilizer Grade Ammonium Nitrate.").
(38) Id. at 48.
(42) Sisk, supra note 25, at 914; see also Federal Tort Claims Act, 28 U.S.C. [section] 1346(b)(1) (2006).
(43) Dalehite, 346 U.S. at 18. Dalehite was the test case for the remaining 300 suits pending against the U.S. government, all stemming from the Texas City disaster.
(44) Id. at 19.
(45) Sisk, supra note 25, at 911.
(48) Dalehite, 346 U.S. at 22.
(49) Id at 17.
(51) Id. at 27-28.
(52) Id. at 30 n.21 ("[S]ection 402 specifies the claims which would not be covered by the bill.... The first subsection of section 402 exempts from the bill claims based upon the performance or nonperformance of discretionary functions or duties on the part of a Federal agency or Government employee, whether or not the discretion involved be abused, and claims based upon the act or omission of a Government employee exercising due care in the execution of a statute or regulation, whether or not valid. This is a highly important exception, intended to preclude any possibility that the bill might be construed to authorize suit for damages against the Government growing out of an authorized activity, such as flood-control or irrigation project, where no negligence on the part of any Government agent is shown, and the only ground for suit is the contention that the same conduct by a private individual would be tortious, or that the statute or regulation authorizing the project was invalid....").
(53) Id. at 42 ("In short, the alleged 'negligence' does not subject the Government to liability. The decisions held culpable were all responsibly made at a planning rather than operational level and involved considerations more or less important to the practicability of the Government's fertilizer program.").
(54) Id. at 48.
(55) Id. at 49, Jackson, J., dissenting.
(59) Id. at 50.
(61) Id. at 51.
(62) Id. at 54.
(63) Sisk, supra note 25, at 916. Despite the reliance upon governmental policy by the majority, Justice Jackson's dissent "argued forcefully that the case involved nothing more than the kind of 'conflict between safety and expediency' that is at the heart of every claim that an actor failed to exercise due care."
(64) Dalehite, 346 U.S. at 57.
(65) Id. at 60.
(67) 42 U.S.C. [section] [section] 9607, 9620 (2016).
(68) Dalehite, 346 U.S. at 57.
(69) See Id. at 60 ("But many acts of government officials deal only with the housekeeping side of federal activities. The Government, as landowner, as manufacturer, as shipper, as warehouseman, as shipowner and operator, is carrying on activities indistinguishable from those performed by private persons. In this area, there is not good reason to stretch legislative text to immunize the Government or its officers from responsibility for their acts, if done without appropriate care for the safety of others.").
(70) James R. MacAyeal, The Comprehensive Environmental Response, Compensation, and Liability Act: The Correct Paradigm of Strict Liability and the Problem of Individual Causation, 18 UCLA J. Envtl. L. & Pol'y 217, 254-55 n.194 (2000, 2001), ("Love Canal was an area where chemical companies dumped more than 21,000 tons of hazardous waste. The area was later developed for residential use. The government relocated over 700 families and destroyed or boarded up the homes.... The Valley of the Drums was a seven acre site near Louisville, Kentucky where EPA discovered 17,000 abandoned drums, six thousand of which were leaking toxic substances....").
(71) See Sisk, supra note 25, at 916 (arguing that courts would not hesitate to apply "basic standard of negligence" (or even an absolute standard of strict liability) on a private entity for what occurred in Dalehite).
(75) See United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002); FMC Corp. v. U.S. Dep't of Commerce, 29 F.3d 833, 842 (3d Cir. 1994); E. Bay Mun. Util. Dist. v. U.S. Dep't of Commerce, 142 F.3d 479, 482 (D.C. Cir. 1998).
(76) Shell Oil, 294 F.3d at 1048. This case involved three iterations, each tackling the issue of arranger liability for the parties, in the Central District California, Shell I (1993), Shell II (1995), and Shell III (1998), before heading to the Ninth Circuit Court of Appeals in 2001.
(80) Id. at 1052.
(82) Id. (quoting Pennsylvania v. Union Gas Co., 491 U.S. 1, 105 (1989)).
(88) Id. at 1053.
(89) Id., see also FMC Corp. v. U.S. Dep't of Commerce, 29 F.3d 833, 842 (3d Cir. 1994); E. Bay Mun. Util. Dist. v. U.S. Dep't of Commerce, 142 F.3d 479, 482 (D.C. Cir. 1998).
(90) FMC Corp., 29 F.3d at 834.
(92) Id. at 835.
(93) Id. at 836.
(94) Id. at 838-39.
(95) Id. at 839.
(98) Id. (quoting United States v. Atlas Minerals & Chems, Inc., 797 F. Supp. 411, 420 (E.D. Pa. 1992)).
(100) Id. at 840.
(103) Id. (quoting Indian Towing Co. v. United States., 350 U.S. 61, 67 (1955)).
(105) Id. at 840 (quoting Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209, 1221 (3d Cir. 1993)).
(106) Id. (quoting United States v. Atlas Minerals & Chems., Inc., 797 F. Supp. 411, 413 n.l (E.D. Pa. 1992)).
(108) 42 U.S.C. [section] 9607(b) (2016).
(109) FMC Corp., 29 F.3d at 841.
(111) Id. at 842.
(116) E. Bay Mun. Util. Dist. v. U.S. Dep't of Commerce, 142 F.3d 479, 480 (D.C. Cir. 1998).
(118) Id. at 480-81.
(121) Id. at 481.
(122) Id. at 482-83.
(123) Indian Towing Co. v. United States, 350 U.S. 61, 67 (1955).
(124) See E. Bay, 142 F.3d at 483 ("The term 'operational' is used by the Court here in contradistinction to activities excluded from liability by the 'discretionary function' exception to the FTCA's waiver.").
(125) Id. (quoting Indian Towing Co. v. United States., 350 U.S. 61, 68 (1955)).
(129) Id. at 484.
(131) Id. at 487.
(132) Dalehite, 346 U.S. at 49.
(133) United States v. Bestfoods, 524 U.S. 51, 55 (1998).
(134) Id. at 56.
(136) Id. at 56-57.
(137) Id. at 57.
(142) Id. at 58.
(145) Id. at 58-59.
(146) Id. at 59.
(148) Id. at 60.
(149) Id. at 61 (quoting Douglas & Shanks, Insulation from Liability Through Subsidiary Corporations, 39 Yale L. J. 193 (1929)).
(150) Bestfoods, 524 U.S. at 62.
(152) Id. at 63.
(153) Id. at 63-64.
(154) Id. at 64.
(155) Id. at 65 (quoting Mine Workers v. Coronado Coal Co., 259 U.S. 344, 395 (1922)).
(157) Id.; see Sidney S. Arst Co. v. Pipefitters Welfare Ed. Fund, 25 F.3d 417, 420 (7th Cir. 1994) ("[T]he direct, personal liability provided by CERCLA is distinct from the derivative liability that results from piercing the corporate veil.").
(158) Bestfoods, 524 U.S. at 65.
(161) Id. at 66.
(162) Id. at 66-67.
(163) Id. at 67.
(164) Id. at 68.
(166) Id. at 69.
(167) Id. (quoting Kingston Dry Dock Co. v. Lake Champlain Transp. Co., 31 F.2d 265, 267 (2d Cir. 1929)); see also American Protein Corp. v. AB Volvo, 844 F.2d 56, 57 (2d Cir. 1988) ("[I]t is entirely appropriate for directors of a parent corporation to serve as directors of its subsidiary, and that fact alone may not serve to expose the parent corporation to liability for its subsidiary's acts.").
(168) Bestfoods, 524 U.S. at 71.
(170) Id. at 72.
(171) Burlington N. & Santa Fe Ry. v. United States, 556 U.S. 599, 602 (2009); Bestfoods, 524 U.S. at 55 (1998).
(172) Burlington. 556 U.S. at 608.
(177) Id. at 603.
(186) Id. at 604.
(187) Id. n.3 ("The ground water at the Arvin site is divided into three zones. The A-zone is located 60-80 feet below the ground. It has been tested and found to have high levels of contamination. The B-zone is located 150 feet below ground. Although the B-zone is not currently used as a source of drinking water, it has the potential to serve as such a source. No contamination has yet been found in that zone. The C-zone is an acquifer located 200 feet below ground. It is the sole current source of drinking water and, thus far, has suffered no contamination from the Arvin site."); United States v. Bestfoods, 524 U.S. 51, 55 (1998).
(188) Burlington, 556 U.S. at 604.
(192) Id. at 605.
(197) Id. at 606.
(198) Id. at 606-07.
(199) Id. at 607.
(200) Id. at 608.
(202) Id. at 610-11.
(203) Id. at 612.
(204) Id. at 613.
(206) United States v. Chem-Dyne Corp., 572 F. Supp 802 (S.D. Ohio 1983).
(207) Burlington, 556 U.S. at 613.
(208) Id. (quoting Chem-Dyne, 572 F. Supp at 808).
(209) Burlington, 556 U.S. at 614 (quoting Restatement (Second) of Torts [section] 433A(l)(b) (19631964)).
(210) Id. at 617-19.
(211) Rylands v. Fletcher, (1868) 3 L.R.E. & I. App. 330 (H.L.); see also Clark-Aiken Co. v. Cromwell-Wright Co., 323 N.E.2d 876 (1975).
(212) Clark-Aiken, 323 N.E.2d at 878.
(215) Id.; see also MacAyeal, supra note 70 (explaining "Under English law at the time the owners could not be held vicariously liable for the acts of their contractors.").
(216) MacAyeal, supra note 70, at 225 ("[T]he true rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes must keep it in at his peril, and if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape. He can excuse himself by showing that the escape was owing to the plaintiff's default; or perhaps that the escape was the consequence of vis major, or the act of God.... The general rule, as above stated seems on principle just. The person whose grass or corn is eaten down by the escaping of cattle of his neighbor, or whose mine is flooded by the water from his neighbor's reservoir, or whose cellar is invaded by the filth of his neighbor's privy, or whose habitation is made unhealthy by the fumes of noisome vapors of his neighbor's alkali works, is damnified [injured] without any fault of his own; and it seems but reasonable and just that the neighbor who has brought something on his own property which was not naturally there, harmless to others so long as it is confined to his own property, but which he knows to be mischievous if it gets on his neighbor's, should be obliged." (quoting Rylands, 3 L.R.E. & I. App. at 279)).
(217) Restatement of Torts [section] 519 (1934).
(218) Restatement of Torts [section] 520 (1934).
(219) Restatement (Second) of Torts [section] 519 (1965).
(221) MacAyeal, supra note 70, at 226.
(222) Restatement (Second) of Torts [section] 520 (1965).
(223) MacAyeal, supra note 70, at 226. See also Bolivar v. R&H Oil & Gas, 789 F. Supp. 1374, 1383 (S.D. Miss. 1991) (characterizing an oil well, blown out from reworking, as instrumentality that was abnormally dangerous); Inland Steel v. Pequignot, 608 N.E.2d 1378, 1385 (Ind. App. 1993) (noting that under Rylands, a person who chooses to use an abnormally dangerous instrumentality is strictly liable); Clark-Aiken Co. v. Cromwell-Wright Co., 323 N.E.2d 876, 885 n.17 (1975) (noting that strict liability for harm caused by escape of dangerous instrumentality has been law of Commonwealth since 1868); Toy v. Atlantic Gulf& Pac. Co., 4 A.2d 757, 765 (Md. 1939)
("The basic concept underlying the rule is that a person who elects to keep or bring upon his land something which exposes the adjacent land or its owner or occupant to an added danger should be obliged to prevent its doing damage. So, it follows that if the escape be of oil, gas, electricity, explosives, sewage or water artificially accumulated and stored and damage is done to an adjacent property, the occupier is within the rule.").
(224) MacAyeal, supra note 70, at 226.
(226) Id. at 228-31.
(227) Id. at 232.
(231) Id. at 232 (quoting Laird v. Nelms, 406 U.S. 797, 804-05 (1972)).
(232) Id. at 233 (Stewart, J., dissenting).
(233) Id. at 239; see also United States v. Tex-Tow Inc., 589 F.2d 1310, 1314-15 (7th Cir. 1978) ("Tex-Tow was engaged in the type of enterprise which will inevitably cause pollution and on which Congress has determined to shift the cost of pollution when the additional element of actual discharge is present."); Ind. Harbor Belt R.R. Co. v. Am. Cyanamid Co., 662 F. Supp. 635, 645 (N.D. Ill. 1987) ("One who engages in an abnormally dangerous activity is liable for all injury resulting from the activity, period, regardless of who was at fault.").
(234) MacAyeal, supra note 70, at 247; Clean Water Act, 33 U.S.C. [section] [section] 1251-1387 (1972).
(235) 33 U.S.C. [section] 1321(a)(3) (defining "vessel" as every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water other than a public vessel).
(236) 33 U.S.C. [section] 1321 (a)(10) (defining "onshore facility" as any facility (including, but not limited to, motor vehicles and rolling stock) of any kind located in, on, or under, any land within the United States other than submerged land); 33 U.S.C. [section] 1321 (a)(11) (defining "offshore facility" as any facility of any kind located in, on, or under, any of the navigable waters of the United States, and any facility of any kind which is subject to the jurisdiction of the United States and is located in, on, or under any other waters, other than a vessel or a public vessel).
(237) MacAyeal, supra note 70, at 247.
(242) 42 U.S.C. [section] 9601(28) (2016).
(243) 42 U.S.C. [section] 9601(9).
(244) MacAyeal, supra note 70, at 247.
(245) 42 U.S.C. [section] 9607(a)(3).
(246) 42 U.S.C. [section] 9607(a)(2).
(247) MacAyeal, supra note 70, at 247; 42 U.S.C. [section] 9601(14).
(248) MacAyeal, supra note 70, at 247; United States v. Ne. Phann. & Chem. Co., 810 F.2d 726, 73233 (8th Cir. 1986).
(249) MacAyeal, supra note 70, at 247.
(250) Id. at 254.
(251) Id. at 253.
(252) Id. at 254 ("Clean Water Act [section] 311 established a $35 million revolving fund for cleanup of releases of oil and designated hazardous substances into navigable waters and restoration of natural resources; Trans-Alaska Pipeline Authorization Act, 43 U.S.C. [section] 1651 (2000), established a $100 million fund for damages, cleanup costs, restoration of natural resources, and economic loss, resulting from spills of oil transported through the pipeline; The Outer Continental Shelf Amendments of 1978 amended the Outer Continental Shelf Lands Act, 43 U.S.C. [section] 1331 (1994), to establish a $200 million fund for damages, cleanup costs, property damage and loss of income and tax revenue, resulting from spills of oil produced on the Outer Continental Shelf; The Deep Water Port Act of 1974, 33 U.S.C. [section] 1502 (1994), established a $100 million fund for damages resulting from oil pollution from vessels or facilities engaged in deepwater port operations.").
(253) Id. at 254-55.
(254) See id. at 269-75.
(258) Id. at 341.
(259) MacAyeal, supra note 70, at 277-78.
(260) 42 U.S.C. [section][section] 9601(21), 9607 (2016).
(261) Katzman, supra note 22, at 1191. See also David Novick et al., Wartime Production Controls (1949) (discussing the breadth of federal regulatory power exercised during first and second world wars).
(262) Katzman, supra note 22, at 1191-92.
(263) Id. at 1193 ("In one sense, expanding the liability circle appears consistent with the congressional intent that those who planted the seeds of pollution and reaped the profits of industrial activity bear the cost of cleanup.").
(264) Id. At 1193 n.25 ("CERCLA's combination of a tax on generators and strict liability for site remediation "places the costs of releases of hazardous wastes on the sector most responsible for pollution and which benefits most from chemical production, rather than on the victim or taxpayers," ... This is often referred to as the 'polluter pays' principle. Numerous courts have reaffirmed it as one of the guiding principles of the statute. See Kaiser Aluminum & Chem. Corp. v. Catellus Dey Corp., 976 F.2d 1338, 1340 (9th Cir. 1992); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074, 1081 (1st Cir. 1986); United States v. Azrael, 765 F. Supp. 1239, 1245 (D. Md. 1991); United States v. New Castle County, 727 F. Supp. 854, 866 (D. Del. 1989)").
(265) Katzman, supra note 22, at 1231-32.
(267) Id. at 1195 ("Given the Federal Government's control over much of the nation's industrial complex during World War II, the Korean War, the Vietnam War, and to a lesser extent, the Persian Gulf War, the number of waste sites for which the government may have to contribute to cleanup costs is potentially enormous.").
(268) Id. at 1230.
(269) Id at 1196.
(270) Id. at 1196.
(272) Id. ("American Viscose Corporation, the owner of the rayon manufacturing facility at issue in FMC Corp., increased its profits by 300% during the war despite governmental regulation ... citing documents revealing a profit increase at the Front Royal Facility from $339,148 in 1940 to $1,080,000 in 1944."); id. at 1196 n.39 ("The United States experienced an over 50% increase in GNP-after allowance for inflation--between 1939 and 1944.").
(273) Id. at 1196; see Krent, supra note 20, at 1532-33.
(274) Katzman, supra note 22, at 1196.
(275) Id. at 1204 n.97.
(276) Id. at 1205.
(277) United States v. Nordic Vill. Inc., 503 U.S. 30 (1992).
(278) Katzman, supra note 22, at 1205; FMC Corp. v. U.S. Dep't of Commerce, 29 F.3d 833, 840 (3d Cir. 1994).
(279) Katzman, supra note 22, at 1205.
(280) Id. at 1206.
(282) Id. ("It is readily apparent that Congress modeled the CERCLA sovereign immunity waiver after nearly identical waiver provisions in the Clean Water Act, the Clean Air Act, and the Resource Conservation and Recovery Act.").
(285) Id. at 1206-07, n. 112-13; FMC Corp. v. U.S. Dep't of Commerce, 29 F.3d 833, 842 (3d Cir. 1994).
(286) United States v. Shell Oil Co., 294 F.3d 1045, 1052 (9th Cir. 2002).
(287) Katzman, supra note 22, at 1212 n.153 (citing In re Paoli R.R. Yard PCB Litigation, 790 F. Supp. 94,97 (E.D. Pa. 1992)).
(288) Mat 1213.
(289) Id. at 1213 n.161.
(291) Id. at 1213 n. 163.
(292) Id. at 1214.
(293) Id.; Krent, supra note 20, at 1546.
(295) Id. at 1231.
(298) 42 U.S.C. [section] 9604 (2016).
(299) Katzman, supra note 22, at 1231-32.
(300) Id. at 1232.
(301) Id. at 1230-31.
(302) Burlington N. & Santa Fe Ry. v. United States, 556 U.S. 599, 614 (2009).
(303) Id. at 617-19.
(304) U.S. Const., art. I, [section] 8 ("The Congress shall have Power ... To declare war ... To raise and support armies....").
(305) U.S. Const., art. II, [section] 2 ("The President shall be Commander in Chief of the Army and Navy of the United States....").
(306) FMC Corp. v. U.S. Dep't of Commerce, 29 F.3d 833, 840 (3d Cir. 1994).
(308) FMC Corp., 29 F.3d at 840-42.
(309) Katzman, supra note 22, at 1213.
(310) Sisk, supra note 25, at 916 ("When policy considerations underlie what might appear to be parallel government conduct ... countervailing factors of efficiency and risk are weighed not in the pursuit of commercial profit but to consider which course best advances the common good.").
(311) Burlington N. & Santa Fe Ry. v. United States, 556 U.S. 599, 608 (2009).
(312) United States v. Chem-Dyne Corp., 572 F. Supp 802 (S.D. Ohio 1983).
(314) Burlington, 556 U.S. at 613.
(315) See Restatement (Second) of Torts, [section][section] 433A, 881 (1976) ("[W]hen two or more persons acting independently caus[e] a distinct or single harm for which there is a reasonable basis for division according to the contribution of each, each is subject to liability only for the portion of the total harm that he has himself caused.").
(316) Rylands v. Fletcher, (1868) 3 L.R.E. & 1. App. 330 (H.L.).
Major David L. Walker *
* Major David L. Walker, Judge Advocate, United States Air Force (LL.M., The George Washington University School of Law (2015); J.D., Mississippi College School of Law (2008); B.A. Campbell University (2005)) serves as Air Force Materiel Command Environmental Liaison Officer, Civil Litigation Division, Air Force Legal Operations Agency. He is a member of the Mississippi Bar. The views expressed are those only of the author and do not represent the official policy or position of the Department of the Air Force, the Department of Defense, or any other U.S. Government agency. II. CERCLA Liability
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|Author:||Walker, David L.|
|Publication:||Air Force Law Review|
|Date:||Jun 22, 2016|
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