United States v. Occidental Chem Corp. ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
12-28-1999
United States v. Occidental Chem Corp.
Precedential or Non-Precedential:
Docket 99-3084
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Filed December 28, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 99-3084
UNITED STATES OF AMERICA
Appellant
v.
OCCIDENTAL CHEMICAL CORPORATION
On Appeal From the United States District Court
For the Middle District of Pennsylvania
(D.C. Civil Action No. 98-cv-00686)
District Judge: Honorable Malcolm Muir
Argued July 27, 1999
BEFORE: SCIRICA and STAPLETON, Circuit Judges,
and SHAPIRO, District Judge*
(Opinion Filed: December 28, 1999)
David C. Shilton
John T. Stahr (Argued)
United States Department of Justice
P.O. Box 23795
L'Enfant Plaza Station
Washington, D.C. 20026
_________________________________________________________________
* Honorable Norma L. Shapiro, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
Ira M. Gottlieb
United States Environmental
Protection Agency
1650 Arch Street
Philadelphia, PA 19103
Attorneys for Appellant
Larry D. Silver (Argued)
Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, PA 19103-7396
and
Michael A. James
Associate General Counsel
Occidental Chemical Corporation
5005 LBJ Freeway
Dallas, TX 75244
Attorneys for Appellee
OPINION OF THE COURT
STAPLETON, Circuit Judge:
After settling with Ruetgers-Nease Chemical Company
("Ruetgers"), the EPA issued a "unilateral administrative
order," pursuant to S 106 of the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. S 9606, requiring Occidental
Chemical Corporation ("Occidental") to assist in the
financing and implementation of remedial response actions
at the Centre County Kepone Superfund site. The District
Court granted Occidental's motion to dismiss, concluding
that Ruetgers' commitment to clean up the site and
reimburse the Superfund for past response costs precluded
the EPA from obtaining any relief from Occidental. We will
reverse the judgment of the District Court and remand the
case for further proceedings.
I.
This case arises from the EPA's efforts to compel
potentially responsible parties ("PRPs") under CERCLA to
2
conduct a cleanup at the Centre County Kepone Superfund
Site in State College, Pennsylvania. Two PRPs are relevant
to this appeal: Ruetgers, the site owner, whom EPA alleges
is liable under S 107(a)(1) of CERCLA, and Occidental,
whom EPA alleges is liable under S 107(a)(3) for "arranging
for the disposal" of hazardous substances at the site. 42
U.S.C. S 9607(a)(1) and (3).1 Since 1958, Ruetgers and its
predecessor, Nease Chemical Company ("Nease"), have
owned the Centre County Kepone site and have
manufactured a variety of chemicals there. During a period
in 1973 and 1974, Occidental's predecessor, Hooker
Chemical Company ("Hooker"), contracted with Nease for
the manufacture of a pesticide. Under their agreement,
Hooker provided Nease with the raw materials and the
formula for manufacturing the pesticide and paid Nease to
manufacture the product, which involved the generation
and disposal of hazardous substances on the site.
In 1983, the Centre County Kepone site was listed on the
National Priorities List, and in 1988, EPA entered into an
administrative order with Ruetgers, who agreed to perform
a remedial investigation/feasibility study, which was
completed in 1992. In 1995, after dividing the remediation
into two "operable units," EPA signed a "record of decision,"
announcing the selected remedial action for thefirst
operable unit ("OU-1").2
_________________________________________________________________
1. The "arranger" theory of liability wasfirst recognized in United States
v. Aceto Agricultural Chemicals Corp., 872 F.2d 1373 (8th Cir. 1989)
(where A accepts a hazardous substance that is owned by B, and
incorporates it into a commercial product for B's benefit and at B's
direction, and hazardous substances are disposed of in the process, B
has "arranged for the disposal of hazardous substances" under
S 107(a)(3)). We considered the viability of the Aceto theory in FMC Corp.
v. United States Dept. of Commerce, 29 F.3d 833 (3d Cir. 1994) (en banc),
but we neither accepted nor rejected it as a basis for liability. See id.
at
846 ("[t]he court is equally divided on this point"). The validity of the
Aceto theory is not currently before us.
2. "OU-1 consists of contaminated ground water, surface water, soils,
and sediments on the Site, as well as soil/sediment sampling of the 15-
acre former spray field area and riparian areas of nearby Spring Creek.
OU-2 will address soils and sediments from the sprayfield, Spring
Creek, and a second nearby creek." App. 12-13 (Complaint P 24).
3
Pursuant to S 122(e), 42 U.S.C. S 9622(e), EPA served
both Ruetgers and Occidental with "special notice letters,"
which set forth EPA's basis for their liability and invited a
good faith offer of settlement. Following receipt of the letter,
Ruetgers began negotiating with EPA regarding the
remedial work for OU-1. In 1996, EPA entered into a
Consent Decree with Ruetgers in which Ruetgers agreed to
perform the remedial work for OU-1 and to pay $293,895 in
past response costs in settlement of its liability with respect
to OU-1.
EPA's efforts to negotiate with Occidental, however, were
unsuccessful. When negotiations with Occidental failed,
EPA, finding that the Centre County Kepone Site presented
an imminent and substantial endangerment, issued a
unilateral administrative order ("UAO"), pursuant to S 106
of CERCLA, 42 U.S.C. S 9606, requiring that Occidental
jointly implement the OU-1 remedy with Ruetgers.
Specifically, the Order stated that Occidental is subject "to
the same terms and conditions set forth in the Ruetgers
Consent Decree with respect to financing and implementing
the response actions" at the Centre County Kepone site.
App. 136. It further provided:
[Occidental's] obligations under this Order may be
fulfilled by jointly fulfilling with [Ruetgers] the
obligations under the . . . proposed Consent Decree,
Civil Action No. 4: CV-96-2128. To the extent that any
portion of the Work is undertaken by [Ruetgers],
[Occidental] is not excused from performing under the
present Order and is severally liable for all obligations
set forth herein and for ensuring that the Work be
completed in a manner consistent with the NCP,
CERCLA and all applicable federal, state and local
laws.
App. 151.
Under S 106(a), if EPA finds an "imminent and
substantial endangerment to the public health or welfare or
the environment," it is authorized to "issue such orders as
may be necessary to protect public health and welfare and
the environment." 42 U.S.C. S 9606(a). If the ordered party
fails to comply with the order "without sufficient cause,"
4
CERCLA provides for severe penalties -- i.e., up to $25,000
per day of noncompliance, see id. S 106(b)(1), plus treble
damages, see id. S 9607(c)(3). CERCLA provides, however,
that, if the ordered party is not liable, or demonstrates that
the ordered action was arbitrary and capricious, it may
obtain reimbursement of costs expended in compliance with
the order, plus interest. See id. SS 9606(b)(2)(A)-(E). In
addition, under S 106(b)(1), an ordered party may avoid the
imposition of fines or penalties if it has "sufficient cause"
for its refusal to comply with the order.3
In this case, Occidental informed EPA it would not
comply with the S 106 order, and EPA filed this action in
District Court to enforce its order. EPA's Complaint seeks
(1) an injunction ordering Occidental to comply with the
order; (2) certain past costs not recovered from Ruetgers; (3)
civil penalties; (4) punitive damages; and (5) a declaratory
judgment of liability for future costs incurred at the site.
Occidental moved to dismiss the Complaint under
Federal Rules of Civil Procedure 12(b)(6). Occidental argued
that EPA has already obtained "complete relief" from the
Ruetgers Consent Decree and, therefore, is precluded from
pursuing Occidental for the same relief. To find otherwise,
Occidental argues, would permit EPA to obtain a double
recovery, which is impermissible both under CERCLA and
common law. The District Court agreed and dismissed
EPA's Complaint. The District Court then denied a
subsequent motion for partial reconsideration. EPA now
appeals. We exercise plenary review of a grant of a motion
to dismiss, accepting all allegations in the Complaint as
true and drawing all reasonable inferences in the light most
favorable to the plaintiff. See Weiner v. Quaker Oats Co.,
129 F.3d 310, 315 (3d Cir. 1997).
II.
CERCLA provides a complex statutory scheme for the
cleanup of the nation's hazardous waste sites. Although
EPA has several alternative strategies for achieving the
_________________________________________________________________
3. The issue of whether Occidental has sufficient cause not to comply
with EPA's UAO is not currently before us.
5
statute's objective, each ultimately involves "forc[ing]
polluters to pay for costs associated with remedying their
pollution." United States v. Alcan Aluminum Corp., 964 F.2d
252, 257-58 (3d Cir. 1992). In FMC Corp. v. Dept. of
Commerce, 29 F.3d 833, 843 (3d Cir. 1994), this Court
noted "CERCLA's broad remedial purposes" and cited as
"most important[ ]" CERCLA's "essential purpose of making
those responsible for problems caused by the disposal of
chemical poisons bear the costs and responsibility for
remedying the harmful conditions they created."
To this end, CERCLA provides EPA with a variety of tools
for achieving the efficient and cost-effective cleanup of the
nation's hazardous waste sites. First, under S 104(a) EPA
itself can conduct the remedial work at a site, using the
Superfund, and then sue the potentially responsible parties
under S 107 to recover its costs. EPA may sue one or all of
the PRPs involved at a given site, as each PRP is jointly and
severally liable for all response costs that are"not
inconsistent with the national contingency plan." 42 U.S.C.
S 9607(a)(4)(A). Second, under S 106(a), if EPA determines
there is an "imminent and substantial endangerment to the
public health or welfare," it may order PRPs to undertake
the remedial work in the first instance, either by obtaining
injunctive relief in a District Court or by issuing such
administrative orders "as may be necessary to protect
public health and welfare and the environment." 42 U.S.C.
S 9606(a).
Finally, S 122 of CERCLA expressly provides that
"whenever practicable and in the public interest . . . [EPA]
shall act to facilitate agreements . . . in order to expedite
effective remedial actions and minimize litigation." 42
U.S.C. S 9622(a). It is through S 122 that PRPs may agree,
as opposed to being ordered under S 106(a), to do the
remedial work at a site in the first instance. While EPA has
the discretion to decide which PRPs to pursue for
performance of the remedy or recovery of its past costs, and
thus is authorized to pursue fewer than all PRPs at a given
site, the statute expressly permits PRPs to sue other liable
parties for contribution. See 42 U.S.C.S 9613(f)(1).
Some settlements between PRPs and EPA, like the
Ruetgers Consent Decree, involve agreements to do work,
6
while others are "cash out" settlements in which a party
pays a portion of the past, or future, response costs in
exchange for a release from liability. See id. SS 9622(g), (h).
In either case, settlements with the United States under
CERCLA typically include a covenant not to sue and
contribution protection for matters addressed in the
settlement. See id. SS 9622(f), (h)(4); 9613(f)(2). In exchange,
the government typically retains "settlement re-openers" for
remedy failure, unforeseen conditions, and other
contingencies.
III.
Section 122 of CERCLA authorizes the EPA to enter into
a settlement agreement requiring one or more PRPs to
conduct a cleanup and goes on to provide that the
agreement "shall be entered in the appropriate district
court as a consent decree." 42 U.S.C. SS 9622(a), (d)(1)(A).
Subsection (c)(2) of S 122 expressly provides that entering
into such a settlement shall not preclude the EPA from
taking action under S 106 against any PRP who is not a
party to the settlement or from suing such a PRP under any
provision of the Act:
If an agreement has been entered into under this
section, [EPA] may take any action under section 106
of this title against any person who is not a party to
the agreement, once the period for submitting a
proposal under subsection (e)(2)(B) of this section[i.e.,
a 60-day negotiation period following the issuance
"special notice" letters which call for the PRPs'
submission of "good faith offers"] has expired. Nothing
in this section shall be construed to affect . . .
(B) The authority of [EPA] to maintain an ac tion
under this chapter against any person who is not a
party to the agreement.
42 U.S.C. S 9622(c)(2).4 As we have noted, S 106 authorizes
_________________________________________________________________
4. Subsection (c)(2)(A) provides that nothing inS 122 shall affect "the
liability of any person under sections 106 and 107 .. . with respect to
any costs or damages which are not included in the agreement." This
7
the EPA to enter administrative orders and to bring suits,
like the instant one, to enforce such orders. Section
122(c)(2)(B) would, thus, appear to provide express
authority for the EPA's suit against Occidental. Occidental,
however, would have us seize on a provision from
CERCLA's contribution section as limiting the EPA's
authority to sue non-settling PRPs under S 122(c)(2)(B).
Section 113(f)(3)(A) provides:
If the United States or a State has obtained less than
complete relief from a person who has resolved its
liability to the United States or a State in an
administrative or judicially approved settlement, the
United States or the State may bring an action against
any person who has not so resolved its liability.
42 U.S.C. S 9613(f)(3)(A) (emphasis added).
Occidental argues that the Consent Decree affords EPA
complete relief and, therefore, that EPA is barred from
ordering Occidental to assist in the OU-1 remedy with
respect to both past response costs and remedial work. The
District Court agreed and held that allowing EPA to order
Occidental to assist in paying for and performing the
cleanup of OU-1 would give the EPA a double recovery in
contravention of both CERCLA and the common law.
The Government does not dispute that S 113(f)(3) permits
it to pursue non-settlors only where the relief it has
obtained in settlements with others is "less than complete."
Indeed, the Government agrees that it is permitted"but one
satisfaction" of a claim and that, once a claim is "satisfied,"
all other joint tortfeasors are released. The Government
insists, however, that merely signing the Ruetgers Consent
Decree, in which Ruetgers agreed to perform work in the
future, does not constitute "satisfaction" of its claim and,
thus, does not mean the Government has "obtained"
_________________________________________________________________
provision is not addressed specifically to the rights of non-settling
parties. It is intended to "make clear" that S 122 does not affect the
liability of settling or non-settling parties "for matters not covered by
the
agreement." H.R. Rep. No. 99-253(V), at 61 (1985), reprinted in 1986
U.S.C.C.A.N. 3124, 3184.
8
complete relief. Quite the contrary, the Government argues
that it has obtained complete relief only when "the
endangerment providing the basis for EPA's S 106(a)
authority has been abated." Brief for Appellant at 16.
As a matter of textual analysis, it is possible to read
S 113(f)(3)(A) in isolation as terminating the government's
right to sue when it has secured a legally enforceable right
to complete relief against one PRP. Nevertheless, we believe
that the government's reading of that section is not only
permissible from the standpoint of textual analysis,5 but
also fits more comfortably in the statutory scheme and its
common law background. Moreover, to the extent there is
an ambiguity, we conclude that we are bound to defer to
the EPA's reasonable understanding of the statute.
IV.
It seems to us not only that S 122 provides express
authority for the actions the EPA has taken with respect to
Occidental, but also that its principal purpose is to make
sure the authority to issue administrative orders and
enforce them is preserved in situations like this where a
settlement agreement has been entered with another PRP.6
Subsection 113(f)(3)(A) has a different purpose, one not
directly related to the issue before us. Section 113(f) is
_________________________________________________________________
5. Contrary to Occidental's suggestion, the clause "in an administrative
or judicially approved settlement" does not modify "complete relief."
Rather, it modifies "a person who has resolved its liability."
Accordingly,
the text of S 113(f)(3)(A) does not expressly answer whether "complete
relief " refers to a legally enforceable right to such relief or to a
satisfaction of that right.
6. We reject Occidental's suggestion that S 122(c)(2) authorizes only the
issuance of administrative orders following a settlement with one PRP
and not suits to enforce such orders. First, S 122(c)(2) incorporates
without reservation "any action under section 106," and S 106(a)
authorizes suits to enforce administrative orders. Second, S 122(c)(2)(B)
expressly preserves the right of the government to sue other PRPs.
Finally, we feel confident that Congress did not intend to authorize
administrative orders against a person who was not a party to a
settlement and, at the same time, deny the EPA the authority to enforce
those orders in court.
9
entitled "Contribution." Subsection (1) of that section
recognizes the right of PRPs who have settled or been found
liable to seek contribution from other PRPs. Subsection (2)
next stipulates the effect that a settlement between the EPA
and a PRP will have on rights of contribution. It is in this
context that one finds subsection (3), entitled "Persons not
a party to settlement." The purpose of subsection (3)(A),
which we have quoted above, is to make clear that the right
of contribution possessed by a PRP, who has settled with
the EPA, against other PRPs does not preclude the EPA
from suing other PRPs.
In this context, we think it highly unlikely that the initial
clause of S 113(f)(3)(A), so heavily relied upon by Occidental
-- "[i]f the United States or a State has obtained complete
relief " -- was intended to limit the otherwise unqualified,
express authority to sue non-settling PRPs conferred by
SS 106 and 122(c)(2). It seems far more reasonable to read
that clause as recognition of the obvious fact that if the
cleanup has been fully accomplished and paid for, the
government is entitled to no further relief.7
This latter reading of the disputed clause is consistent
with the prohibition against double recovery found in the
common law. The Restatement of Judgments provides that
a "judgment against one person liable for a loss does not
terminate a claim that the injured party may have against
another person who may be liable therefor." Restatement
(Second) of Judgments S 49 (1982). The Commentary then
explains that "[d]ouble recovery is foreclosed by the rule
that only one satisfaction may be obtained for a loss that is
the subject of two or more judgments." Id. S 49 cmt. a.
Indeed, we recently affirmed that under Pennsylvania law,
which follows the common law rule, "[t]he ``one satisfaction'
rule bars a subsequent suit against another tortfeasor only
where the prior proceedings can reasonably be construed to
have resulted in full satisfaction of the plaintiff's claim."
Greenleaf v. Garlock, Inc., 174 F.3d 352, 357 (3d Cir. 1999)
_________________________________________________________________
7. The legislative history identified by Occidental suggests to us no more
than that Congress intended there to be no double recovery by the
government, an intention that is satisfactorily accommodated by the
EPA's reading of S 113(f)(3).
10
(quoting Frank v. Volkswagenwerk, A.G., 522 F.2d 321, 326
(3d Cir. 1975)). EPA's argument that it has not obtained
"complete relief " until the endangerment has been abated
-- i.e., its claim has been fully "satisfied" -- is, thus,
consistent not only with CERCLA's language and objectives
but also with the common law.
Support for the EPA's reading of S 113(f)(3)(A) can be
found in other CERCLA provisions as well. Section 122(f)(3)
provides that a covenant not to sue for liability as to future
costs at a site shall not even take effect until EPA certifies
"that the remedial action has been completed." 42 U.S.C.
S 9622(f)(3). Similarly, S 122(f)(5) states that any covenant
not to sue "shall be subject to satisfactory performance" by
the settlor. If, as Occidental insists, S 113(f)(3)(A) terminated
the EPA's authority to sue a PRP whenever it entered a
settlement agreement with another PRP, the statute would
favor non-settling parties by shielding them fromS 106
actions prior to completion of the work and abatement of
the endangerment while denying such protection to the
settling party.
Moreover, we believe the EPA's understanding makes
sense as a practical matter. The existence of a settlement
(often imposing on the settlor a multi-year, multi-million
dollar obligation) does not guarantee that the settlor will
successfully complete all the promised work. It would
overlook this simple fact to suggest, as Occidental does
here, that although all PRPs are jointly and severally liable
for the cleanup, once a single PRP settles, EPA is foreclosed
from pursuing any other PRP under S 106, despite its
finding that a imminent and substantial endangerment
exists. Occidental's proposed reading of S 113(f)(3)(A) would
reward recalcitrant parties, thereby discouraging
settlements. Cf. B.F. Goodrich v. Betkoski, 99 F.3d 505, 527
(2d Cir. 1996) (the "usual federal policy encouraging
settlements is even stronger in the CERCLA context"); 42
U.S.C. S 9622(a) ("whenever practicable and in the public
interest . . . [EPA] shall act to facilitate agreements . . . in
order to expedite effective remedial actions and minimize
litigation"). By bringing more parties into the cleanup effort,
EPA protects itself against the risk that any one party may
become unable or unwilling to perform the remedy as EPA
11
instructs. Thus, by issuing administrative orders to non-
settling PRPs under S 106, EPA fulfills CERCLA's objectives
of promoting fairness at multi-party sites, increasing the
likelihood of settlements, and accelerating the statute's
ultimate goal -- site cleanup.
Finally, we note that Occidental does not contest that
EPA may enter separate consent decrees with multiple
parties requiring joint implementation. Nor does it argue
that the EPA may not issue separate Section 106 orders to
multiple parties requiring joint implementation. Yet,
Occidental has suggested no persuasive reason why
Congress might have wished to authorize these strategies
and, at the same time, deny the EPA authority to do what
it did here -- propose to two PRPs that they jointly
implement a cleanup, settle with the one that is willing to
settle, and order the non-settling PRP to assist.8
V.
In the final paragraph of its opinion, the District Court
adopted a related alternative ground for its ultimate
conclusion, one based on S 106(a) rather thanS 113(f)(3)(A).
Because the EPA, in its view, had received "complete relief "
by entering the Ruetgers settlement, the District Court held
that the S 106 order directed to Occidental was not
"necessary to protect public health and welfare and the
environment" as required by S 106(a). Reading S 106(a) as a
whole,9 it seems clear that the question of whether an order
_________________________________________________________________
8. Occidental does point out that it is in a different position than it
would have been had two S 106 orders been entered. Under S 113(f)(2),
a PRP that has settled is not "liable for claims for contribution
regarding
matters addressed in the settlement" and the amount paid by the
settling party only "reduces the potential liability of the other[ ]"
PRPs. As
a result, Occidental posits that if it should wind up paying for "more
than its fair share" of the costs of the cleanup, it would not be able to
obtain contribution from Ruetgers. While this is true, it is the result of
a deliberate policy choice made by Congress in order to encourage
settlements. As explained in B.F. Goodrich v. Betkoski, 99 F.3d 505, 527
(2d Cir. 1996), the intended effect of S 113(f)(2) is that "non-settling
defendants may bear disproportionate liability for their acts."
9. Section 106(a) provides in its entirety:
12
may be necessary to protect public health, welfare, and the
environment goes to the status of the contamination at the
site, not to who is, or who is not, obligated to address it.
See 42 U.S.C. S 9606(a) ("[the President] may require the
Attorney General of the United States to secure such relief
as may be necessary to abate such danger or threat").
Accordingly, we do not find a limitation on the unqualified,
express authority conferred by S 122 latent in the
"necessary" requirement of S 106(a). Here, the EPA's Order
appropriately documented the presence of hazardous
substances at the site and their likelihood of endangering
public health, thereby satisfying the "necessity"
requirement of S 106(a).
VI.
Even if we were not fully persuaded that this suit is
authorized by S 122(c)(2), however, we would not be at
liberty to reject the EPA's position. Section 113(f)(3)(A), at
most, creates an ambiguity and, where ambiguity exists, we
are constrained to defer to the interpretation of the agency
that has been charged with administering the statute. We
recently summarized the standard of review as follows:
When reviewing an agency's construction of a statute,
if the intent of Congress is clear, then we must give
effect to that intent. If the statute is silent or
_________________________________________________________________
In addition to any other action taken by a State or local
government,
when the President determines that there may be an imminent and
substantial endangerment to the public health or welfare or the
environment because of an actual or threatened release of a
hazardous substance from a facility, he may require the Attorney
General of the United States to secure such relief as may be
necessary to abate such danger or threat, and the district court of
the United States in the district in which the threat occurs shall
have jurisdiction to grant such relief as the public interest and
the
equities of the case may require. The President may also, after
notice to the affected State, take other action under this section
including, but not limited to, issuing such orders as may be
necessary to protect public health and welfare and the environment.
42 U.S.C. S 9606(a).
13
ambiguous with respect to a specific issue, then a
deference standard applies, and the question for the
court becomes whether the agency's answer is based
on a reasonable construction of the statute.
Connecticut Gen. Life Ins. Co. v. Comm'r, 177 F.3d 136, 143
(3d Cir. 1999) (quoting Sekula v. FDIC, 39 F.3d 448, 451-52
(3d Cir.1994)).
The Supreme Court caselaw teaches that we must defer
to agency interpretations that are supported by
"regulations, rulings, or administrative practice." Bowen v.
Georgetown Univ. Hosp., 488 U.S. 204, 212 (1988); see also
Bragdon v. Abbott, 524 U.S. 624, 642 (1998) ("the well-
reasoned views of the agencies implementing a statute
``constitute a body of expertise and informed judgment to
which courts . . . may properly resort for guidance")
(quoting Skidmore v. Swift & Co., 323 U.S. 134, 139-40
(1944)); Auer v. Robbins, 519 U.S. 452, 462 (1997)
(deferring to agency interpretation where there was"no
reason to suspect that the interpretation does not reflect
the agency's fair and considered judgment on the matter in
question"). We, thus, must defer not only to those
interpretations supported by notice-and-comment
rulemaking but also to interpretations that find support in
informal agency practice. In Cleary v. Waldman, 167 F.3d
801, 808 (3d Cir. 1999), we articulated the rule governing
deference to informal interpretations as follows: "[I]f an
agency has been granted administrative authority by
Congress for a statute, its interpretation -- despite arising
in an informal context -- will be given deference as long as
it is consistent with other agency pronouncements and
furthers the purposes of the Act."
As evidenced by the EPA's policy documents, it has long
been its practice under S 106 to issue administrative orders
to non-settling parties, even after a consent decree has
been reached with another PRP for the performance of the
remedial work at a site. In a 1996 Policy Memorandum, the
EPA spoke as follows on the issue:
Regional staff are required to prepare appropriate
documentation for decisions not to issue UAOs to late-
identified PRPs -- i.e., PRPs who are identified after
14
other PRPs assume the obligation to conduct the
response action. (Headquarters recently distributed
model UAO language requiring late-identified PRPs to
"participate and cooperate" with PRPs already
conducting the cleanup pursuant to either a settlement
agreement or an earlier UAO. It is similar to the
"coordinate and cooperate" language contained in
"parallel UAOs," . . . although those orders are for
already-identified PRPs who are recalcitrant and refuse
to joint other PRPs who are signing a consent decree.)
EPA Memorandum, Documentation of Reason(s) for Not
Issuing CERCLA S 106 UAOs to All Identified PRPs at 5
(Aug. 2, 1996) (emphasis added); see also Walter E.
Mugdan (EPA Deputy Regional Counsel), The Use of
CERCLA Section 106 Administrative Orders to Secure
Remedial Action, American Law Institute, C948 ALI-ABA
113 (1994) ("settlements, . . . coupled with subsequent
unilateral orders . . . against non-settlors, are ways for the
government to create an environment in which
volunteerism is promoted and a sense of fairness among
the volunteers is enhanced").10
EPA is clearly charged with administering CERCLA, and
the policy memoranda quoted above indicate that its
administrative practice is consistent with the interpretation
it has proffered here. Therefore, following the rule
announced in Cleary, we must defer to the EPA's
interpretation of S 113(f)(3)(A), provided it is based on a
reasonable construction of that provision and is consistent
with the purposes of CERCLA. See Cleary, 167 F.3d at 806
(deferring to agency's statutory construction as stated in
policy memoranda). For the reasons set forth in the
preceding section, we cannot characterize the EPA's
_________________________________________________________________
10. The policy discussed in this policy statement goes back at least to
1990. See, e.g., EPA Memorandum, Guidance on CERCLA Section 106(a)
Unilateral Administrative Orders (Mar. 7, 1990) (described in EPA
Memorandum of August, 1996) ("When a complete settlement agreement
is reached for conduct of the remedial action with fewer than all PRPs,
the Agency may agree to issue ``parallel' unilateral orders to the liable
non-settlors. Parallel unilateral orders direct the non-settlors to
coordinate and cooperate with the settlors' cleanup activities, as
described in the consent decree.").
15
interpretation as unreasonable. It follows that the District
Court's reading of the statute must be rejected.11
VII.
Applying the aforementioned legal precepts to the facts of
this case, we conclude that the District Court erred in
dismissing the EPA's Complaint. As far as the remedial
work is concerned, Occidental concedes that, although
Ruetgers has agreed to perform all of the work, it has not
yet done so. Therefore, EPA has "obtained less than
complete relief " and is expressly authorized by SS 106 and
122 to issue an administrative order to Occidental,
requiring that it jointly perform the necessary work.
With respect to the past response costs, the result is the
same. The District Court interpreted the Ruetgers Consent
Decree as reimbursing the United States for all past
response costs. Since the Ruetgers' commitment included
reimbursement of all of the EPA's past response cost, the
Court reasoned that it had obtained "complete relief" and
that any recovery of past response cost in this action would
constitute an impermissible double recovery. If the EPA in
fact incurred more past response costs than the
$293,985.10 mentioned in the Decree, its remedy was to
sue Ruetgers.
Although we have reservations about the District Court's
_________________________________________________________________
11. Contrary to Occidental's suggestion, we are not deferring to the EPA's
litigation position, but to policy memoranda consistent with that
position. The EPA's "position is in no sense a``post hoc rationalizatio[n]'
advanced by an agency seeking to defend past agency action against
attack." Auer, 519 U.S. at 912 (quoting Bowen, 488 U.S. at 212)
(deferring to agency's construction of a regulation even though that
"interpretation comes to us in the form of a legal brief "); see also
Molinary v. Powell Mountain Coal Co., 125 F.3d 231, 235 n.4 (4th Cir.
1997) ("the fact that the Secretary's interpretation of the statutory
language at issue comes to us in the form of a legal brief ``does not, in
the circumstances of this case, make it unworthy of deference' ") (quoting
Auer). Because we see "no reason to suspect that the [EPA's]
interpretation does not reflect the agency's fair and considered judgment
on the matter in question," we will defer to its interpretation. Auer, 519
U.S. at 462.
16
construction of the Consent Decree, we see no need to
construe it here. Whether or not the Consent Decree was
negotiated, as Occidental maintains, with the
understanding that the EPA's past response cost totaled
$293,985.10, any agreement on that score between the EPA
and Ruetgers clearly does not operate to the benefit of
Occidental. The complaint in this suit alleges that the EPA
has incurred past response costs of $491,637, and we are
required at this stage to credit that allegation. See Weiner
v. Quaker Oats Co., 129 F.3d 310, 315 (3d Cir. 1997). If
Occidental is shown to be a responsible party, it will be
jointly and severally liable for those costs. Even assuming
that it is entitled to a $293,985.10 credit for the past
response costs previously paid by Ruetgers, Occidental will
owe the balance.12
VIII.
In Count V of its Complaint, the EPA sought a
declaratory judgment, "holding Occidental liable in future
actions to recover further costs incurred at or in connection
with the site." The District Court dismissed the entire
Complaint without separately addressing this Count. The
EPA argues here that the District Court "erred in
dismissing Count V insofar as it requested a declaratory
judgment for future costs not just as to the first operable
unit, but as to the second operable unit." Brief for Appellant
at 30 (emphasis added.)
The District Court read the Complaint narrowly, explicitly
noting that "the present action against Occidental only
deals with Operable Unit One." Dist. Ct. op. at 4. The EPA
did not seek to clarify this alleged error in its motion for
reconsideration. Moreover, as Occidental argues, in Count
V of the Complaint, the EPA cites to S 122(g)(2), which sets
forth the statute of limitations for cost recovery actions
under S 107 and explicitly requires a trial court to enter a
_________________________________________________________________
12. While both sides agree that the EPA cannot receive a double
recovery, the parties have not briefed whether this principle should be
applied on the basis of discrete categories of response costs, the total
cleanup costs, or in some other manner. We accordingly express no
opinion on those issues.
17
declaratory judgment on liability for future response costs
if liability is found for past response costs. Thus, it is
understandable that the District Court, having erroneously
concluded that Occidental had no liability for EPA's
outstanding past costs associated with OU-1, dismissed the
S 122(g)(2) claim for a declaratory judgment as to future
costs associated with OU-1.
The case will be remanded for a determination of
Occidental's liability for future costs as to OU-1. With
respect to the future costs associated with OU-2, we agree
that the Complaint, read as a whole, did not give fair notice
of a claim for future response costs associated with OU-2.
The EPA points our attention to two statements made in its
brief in opposition to Occidental's motion to dismiss, but
those statements refer only to the scope of the Ruetgers
Consent Decree, not the scope of the declaratory judgment
claim against Occidental. There was simply nothing in the
pleadings or the record in the District Court that served to
alert the District Court to the claimed broader scope of
Count V. We hold, therefore, that any claim with respect to
OU-2 was not before the District Court and is not before us
now.13
IX.
The judgment of the District Court will be reversed, and
the case will be remanded to the District Court for further
proceedings consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
13. To the extent the EPA wishes to include a count seeking future costs
associated with OU-2, it is free to seek leave to amend its Complaint in
the District Court. See Fed. R. Civ. P. 15(a).
18