PPG Industries Inc v. United States ( 2020 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
No. 19-1165
______
PPG INDUSTRIES INC.,
Appellant
v.
UNITED STATES OF AMERICA; UNITED STATES
DEPARTMENT OF COMMERCE;
SECRETARY UNITED STATES DEPARTMENT OF
COMMERCE;
UNITED STATES DEPARTMENT OF DEFENSE
______
On Appeal from the United States District Court
for the District of New Jersey
(D. C. No. 2-12-cv-03526)
District Judge: Honorable John M. Vazquez
______
Argued December 9, 2019
Before: RESTREPO, ROTH and FISHER, Circuit Judges.
(Filed: May 4, 2020)
Adam G. Husik
Joseph F. Lagrotteria [ARGUED]
K&L Gates
One Newark Center, 10th Floor
Newark, NJ 07102
Joseph M. Rainsbury, I
Miles & Stockbridge
919 East Main Street
Suite 1100
Richmond, VA 23219
Counsel for Appellant
Jeffrey Bossert Clark, Assistant Attorney General
Allen M. Brabender [ARGUED]
United States Department of Justice
Environment & Natural Resources Division
P.O. Box 7415
Washington, DC 20044
Counsel for Appellees
______
OPINION OF THE COURT
______
2
FISHER, Circuit Judge.
This case raises the question of whether the
Government’s involvement at a chromite ore processing plant
during World War I and World War II made it an “operator”
under § 107(a)(2) of the Comprehensive Environmental
Response, Compensation, and Liability Act (“CERCLA”), 42
U.S.C. § 9607, and thus liable to PPG Industries, Inc. for the
cleanup costs associated with the waste. The District Court
concluded that the Government was not subject to operator
liability because its actions in relation to the plant were
consistent with general wartime influence over an industry and
did not extend to control over the plant’s pollution-related
activities. Accordingly, the District Court denied PPG’s
motion for summary judgment and granted the Government’s.
We will affirm.
I. Background
Because the key question in this case is whether the
Government exercised the requisite control over pollution-
related operations at PPG’s property at the time hazardous
substances were released, we review in detail the facts
regarding the Government’s historic management and
direction of the relevant industry (chromium chemicals).
A. Chromium Chemicals Production and Waste Disposal at
the Site
Beginning around 1915, Natural Products Refining
Corporation (“NPRC”) operated a chemical plant in Jersey
City, New Jersey, at which it turned chromite ore into
chromium chemicals (primarily sodium bichromate) used for
dyeing cloth and tanning leather. The manufacturing process
generated hazardous chemical waste in various forms,
including large amounts of “mud” or “sludge.” Most of the
waste was stockpiled outdoors, “uncovered and exposed to the
3
elements.” J.A. 225. Consequently, hazardous substances
eventually seeped into the soil and groundwater.
B. Government Regulation of Chromium Chemicals During
WWI and WWII
During both World Wars, the Government regulated the
production of chromium chemicals like the ones NPRC
manufactured in Jersey City. Much of the historical record
surrounding the Government’s involvement with chromium
processing at the site during WWI has been lost to time.
Therefore, the bulk of the record concerns the Government’s
actions during WWII. 1 At that time, the chromium chemicals
industry in the United States consisted of five producers,
including NPRC, and six plants, including the site at issue here.
During World War II, the Government designated chromium
chemicals as “critical” war materials—products manufactured
for direct military use—and implemented several controls.
1. Price Controls
The Government issued various orders designed to
conserve chromium and direct its distribution. For example,
the War Production Board controlled the price of raw
materials, the quantities of chromite ore that processors such
as NPRC could buy, to whom they could sell, how much they
could sell, and which of their purchase orders had priority.
These orders did not, however, direct how the ores were to be
processed, how the chromium chemicals were to be made, or
how chromium waste was to be handled.
1
PPG argues “[i]t is highly likely” that during WWI,
the Government provided similar direction to what it provided
in WWII. Appellant’s Br. 48. However, “there are no surviving
records.” Id.4
2. Labor Controls
Labor shortages in the chromium chemicals industry
were particularly severe during WWII because of low wages
and poor working conditions. Alarmed that such shortages
would affect the war effort, various federal agencies worked to
address the problem. These efforts ranged from studying ways
to improve working conditions, to authorizing wage increases
for workers, to calling in the Army to seize plants where
workers were on strike. There is, however, no evidence that the
Government ever seized NPRC’s plant.
In addition, at various points the Government suggested
making changes to the workweek schedule at production
facilities. For example, although NPRC initially operated on a
six-day workweek to avoid paying overtime rates, in early
1944, a representative from the Army Service Forces suggested
that “an effort be made to provide 7-day operation.” JA663.
From then on, NPRC operated the site seven days a week.
3. Production Controls and Subsidies
By early 1944, the United States faced a growing
shortage of chromium chemicals. Concerned about the impact
of the shortage on the war effort, the Chemicals Bureau of the
War Production Board convened a committee that included
various government entities and industry representatives,
including NPRC’s president. The committee considered three
proposals to bolster production: (1) run the same ore fewer
times through the manufacturing process, which would result
in a higher output of sodium bichromate since each successive
run of the same ore yields less material for producing sodium
bichromate; (2) use higher-grade, but more expensive, Russian
ore; and (3) expand plant capacity.
Before the war, NPRC had applied for a patent to
protect the process proposed in the first option. Running the
5
same ore through the manufacturing process fewer times was
quicker than the traditional process, but also more wasteful,
because it left chromium in the waste sludge that would have
otherwise been extracted in the additional runs. NPRC reported
that it probably could increase production “by wasteful use of
chromite ore . . . but the ore losses w[ould] have to be
subsidized.” J.A. 492. To address this concern, the
Government Metals Reserve considered buying the waste
sludge at a price high enough to compensate manufacturers for
their uneconomic use of ore. On April 6, 1944, the Chemicals
Bureau officially recommended that producers—including
NPRC—switch to the quicker, more wasteful process. A few
days later, however, the Metals Reserve formally rejected the
sludge purchasing plan as falling outside its “sphere of
activities.” J.A. 513. NPRC implemented the process anyway,
but there is no evidence that Metals Reserve, or any other
federal entity, ever purchased waste sludge from NPRC.
NPRC rejected the second option, using more expensive
Russian ore with a higher chromium content. Although the
Government subsidized the purchase of Russian ore, NPRC
stated: “We have no high grade ore on hand at the present time,
nor do we anticipate the purchase of any unless we are
compelled to do so on account of a shortage of low grade ore.”
J.A. 522. While there is evidence that other chromium
chemical manufacturers took this subsidy, there is no evidence
that NPRC ever did.
The chromium chemicals manufacturers opposed the
third option—expanding plant capacity—because they did not
want new competition. Instead, the companies, including
NPRC, attempted to expand production at existing plants.
NPRC applied for a project to expand production, which the
War Production Board approved and secured funding for. A
6
few months later, however, NPRC decided against the
expansion.
C. PPG’s Purchase and Cleanup of the Site
PPG purchased the site from NPRC in 1954 and
processed chromium chemicals there until 1963. PPG used
essentially the same processes as NPRC had, including
stockpiling the waste outdoors. Since 1990, PPG has spent
$367 million (by its own estimate) to remediate the site, as well
as other areas contaminated by the waste produced there. 2
In 2012, PPG sued the Government under § 107(a) of
CERCLA, seeking recovery and contribution for costs
associated with past and future cleanup efforts. In 2018, after
over four years of discovery, PPG and the Government brought
cross-motions for summary judgment. The District Court
granted the Government’s motion, reasoning that the
Government was not liable to PPG as an operator under §
107(a) of CERCLA. PPG appeals.
II. Jurisdiction and Standard of Review
The District Court had jurisdiction under 28 U.S.C. §
1331. We have jurisdiction to review the District Court’s final
order under 28 U.S.C. § 1291. We exercise plenary review
over a district court’s grant or denial of a motion for summary
judgment. Pa. Dep’t of Envtl. Prot. v. Trainer Custom Chem.,
2
For example, chromium waste was taken to other
locations in the county for purposes such as “the backfilling of
demolition sites, preparation for building foundations,
construction of tank berms, roadway construction, [and] the
filling of wetlands.” J.A. 105–06 (quoting Administrative
Consent Order between PPG and the New Jersey Department
of Environmental Protection).
7
LLC, 906 F.3d 85, 91 n.7 (3d Cir. 2018). “Summary judgment
is proper ‘if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment
as a matter of law.’” Thomas v. Cumberland Cty., 749 F.3d
217, 222 (3d Cir. 2014) (quoting Fed. R. Civ. P. 56(a)). We
apply the same standard as the District Court and must draw all
justifiable inferences in the non-moving party’s favor. Id.III. Analysis
PPG argues that the District Court erred in two ways:
first, in applying the wrong legal standard for past operator
liability under § 107(a)(2) of CERCLA, and, second, in
concluding that the Government was not a past operator of the
site. We first clarify the legal standard that should be applied
and then determine whether the Government is subject to
operator liability under that standard.
A. Past Operator Liability Under § 107(a)(2) of
CERLCA
In 1980, Congress enacted CERCLA “in response to the
serious environmental and health risks posed by industrial
pollution.” United States v. Bestfoods, 524 U.S. 51, 55 (1998).
CERCLA aims “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.”
Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S.
599, 602 (2009) (quoting Consol. Edison Co. of N.Y., Inc. v.
UGI Utils., Inc., 423 F.3d 90, 94 (2d Cir. 2005)). Accordingly,
§ 113(f) of CERCLA authorizes government agencies or
private parties who undertake cleanup efforts at contaminated
sites to “seek contribution from any other person who is liable
or potentially liable” for the contamination. 42 U.S.C.
§ 9613(f)(1). Section 107(a) defines four classes of
“potentially responsible parties” who may be held strictly
8
liable for releases of hazardous substances that occurred at a
facility: (1) current owners and operators of the facility; (2)
persons who owned or operated the facility “at the time of
disposal of any hazardous substance”; (3) persons who
arranged for the disposal or treatment of the hazardous
substance; and (4) persons who transported the hazardous
substance. Id. § 9607(a); see also Burlington, 556 U.S. at 608–
09.
The sole issue here is whether the Government is a past
operator under the second category, that is, a “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 42 U.S.C. § 9607(a)(2) (emphasis added). Both
parties agree that the Government is a “person,” as defined in
§ 101(21), and that the site is a “facility,” under § 101(9). See
id. § 9601(9), (21). The parties disagree, however, about the
meaning of the word “operator” in § 107(a)(2). Given that the
statute defines that word only by tautology (“any person
owning or operating such facility,” id. § 9601(20)(A)(ii)), we
now turn to a discussion of that term.
This is not the first time that we have considered the
meaning of the term “operator” in the context of § 107(a)(2) of
CERCLA. We must look to prior decisions of our Court, as
well as the Supreme Court, to guide our analysis of this issue.
First, in FMC Corp. v. United States Department of
Commerce, 29 F.3d 833 (3d Cir. 1994) (en banc), we
considered a CERCLA claim by the owner of a rayon
manufacturing plant for contribution from the United States for
3
PPG does not allege that the United States owned the
site, or that any Government employees ever worked or were
stationed there.
9
the cleanup of an industrial facility. The manufacturer claimed
that the United States was liable as a past operator because it
“became involved so pervasively in the facility [during WWII]
that it effectively operated the plant along with [the owner at
the time].” Id. at 835. We applied the “actual control” test,
under which an entity is “liable for the environmental
violations of another [entity] if there is evidence that it
exercised ‘substantial control’ over the other [entity]. At a
minimum, substantial control requires ‘active involvement in
the activities’ of the other [entity].” Id. at 843 (quoting
Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d
1209, 1222 (3d Cir. 1993)). 4
We held that the government had “substantial control”
over the facility, had “active involvement in the activities
there,” and “exerted considerable day-to-day control over [the
owner of the facility].” Id. at 843–44 (internal quotation marks
omitted). Specifically,
The government determined what
product the facility would
manufacture, controlled the supply
and price of the facility’s raw
materials, in part by building or
causing plants to be built near the
facility for their production,
supplied equipment for use in the
4
We first adopted the “actual control” test in Lansford-
Coaldale, 4 F.3d at 1209. Although we acknowledged that
Lansford-Coaldale “arose in the context of related
corporations,” we determined that its “active control” test was
“nevertheless instructive” in determining whether the
government was a past operator. FMC, 29 F.3d at 843.
10
manufacturing process, acted to
ensure that the facility retained an
adequate labor force, participated
in the management and
supervision of the labor force, had
the authority to remove workers
who were incompetent or guilty of
misconduct, controlled the price of
the facility’s product, and
controlled who could purchase the
product.
Id. at 843. Furthermore, the government knew that “generation
of hazardous waste inhered in the production process because
its personnel present at the facility witnessed a large amount of
highly visible waste disposal activity,” and “wastes were
generated and disposed of by the government-owned
equipment that was installed at the facility.” Id. at 837–38.
Thus, we concluded, “[g]iven this degree of control, and given
the fact that the wastes would not have been created if not for
the government’s activities, the government [was] liable as an
operator.” Id. at 844.
Four years later, the Supreme Court addressed the
definitional question. In Bestfoods, the United States argued
that a parent corporation was a past operator for purposes of
CERCLA and therefore liable for the costs of cleaning up
industrial waste generated by its subsidiary’s chemical plant.
524 U.S. at 55. Bestfoods held that to determine whether to
impose direct CERCLA operator liability on a parent
corporation based on pollution from its subsidiary’s facility,
the question is not whether the parent operates the subsidiary,
but whether the parent operates the facility. Id. at 66–68. That
much was clear: “Under the plain language of the statute, any
11
person who operates a polluting facility is directly liable for the
costs of cleaning up the pollution.” Id. at 65 (emphasis added).
The more difficult question was determining “the
actions sufficient to constitute direct parental ‘operation.’” Id.
at 66. After noting the “uselessness” of CERCLA’s definition
of an operator, the Court sought to define the term by giving it
“its ‘ordinary or natural meaning.’” Id. at 66 (quoting Bailey v.
United States, 516 U.S. 137, 145 (1995)). It stated that “in the
organizational sense . . . intended by CERCLA, the word
ordinarily means ‘[t]o conduct the affairs of; manage: operate
a business’”—or, more specifically to CERCLA, a site or
facility. Id. (quoting American Heritage Dictionary 1268 (3d
ed. 1992)). Therefore, the Court continued, “[t]o sharpen the
definition for purposes of CERCLA’s concern with
environmental contamination, 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.” Id. at 66–67.
Thus, Bestfoods emphasized that the determination of
whether an entity is an operator for purposes of CERCLA
liability must be based on the relationship between the
potentially responsible party and the waste-producing facility
at issue. In doing so, Bestfoods rejected the lower court’s
application of the “actual control” test, which focused on the
relationship between the potentially responsible party and the
owner of the facility, rather than on the relationship between
the potentially responsible party and the facility. Id. at 67–68.
The Court reasoned that the actual control test improperly
combined “direct and indirect liability . . . by asking a question
about the relationship between the two corporations (an issue
going to indirect liability) instead of a question about the
parent’s interaction with the subsidiary’s facility (the source of
12
any direct liability).” Id. at 67 (emphasis added). The Court
ultimately remanded for the district court to assess, in the first
instance, the parent corporation’s involvement in the activities
of the subsidiary’s facility. 5 Id. at 72–73.
We subsequently applied the Bestfoods standard in a
case involving current operator liability under § 107(a)(1) of
CERCLA. Litgo N.J., Inc. v. Comm’r N.J. Dep’t of Envtl. Prot.,
725 F.3d 369 (3d Cir. 2013). There, a purchaser of a
contaminated site argued that it should not be held liable as a
current operator because it did not engage in any operations
that caused further contamination, and therefore was not
involved in “operations specifically related to pollution.” Id. at
381 (quoting Bestfoods, 524 U.S. at 66). We, however, rejected
that reading of Bestfoods as too narrow, explaining that:
In defining “operator,” the
Supreme Court employed broad,
passive language: an operator is
one who is involved in operations
“having to do with the leakage or
disposal of hazardous waste,” not
one who is involved in operations
“causing” or “leading to” the
5
Under the specific facts of Bestfoods, there was
evidence that an agent of the parent corporation “played a
conspicuous part in dealing with the toxic risks emanating from
the operation of the plant.” 524 U.S. at 72. Because of the work
of this agent, the parent corporation “became directly involved
in environmental and regulatory matters.” Id. Thus, the
Supreme Court found that the parent corporation’s “operation”
of the facility was an issue and remanded the case for further
proceedings. Id.13
leakage or disposal of waste.
Moreover, the Court expressly
noted that operator liability may be
imposed when a party is
responsible for “decisions about
compliance with environmental
regulations,” a description which
directly applies to the
[purchaser’s] activities at the
Property.
Id. at 382 (internal citations omitted). We concluded that the
purchaser was actively involved in activities related to the
contamination on the property: not only did it have the actual
authority “to make decisions about compliance with
environmental regulations, [it] hired environmental
consultants to conduct tests and remediation operations . . . and
. . . oversaw that work.” Id. at 381.
In sum, consistent with FMC, the Bestfoods standard (1)
focuses on the relationship between the purported operator and
the facility at issue; and (2) further focuses on “operations
specifically related to pollution.” 524 U.S. at 66. Subsequently,
in Litgo, we maintained an appropriate focus on pollution-
related activities at the facility. Also in Litgo, we applied the
Bestfoods operator definition outside the parent-subsidiary
context.
Here, PPG argues that because Bestfoods did not
address whether and under what circumstances the government
can be held liable as an operator, we should follow the standard
outlined in FMC, where we held that the government was liable
as an operator because it “had ‘substantial control’ over the
facility and ‘active involvement in the activities’ there.”
Appellant’s Br. 44–45 (quoting FMC, 29 F.3d at 843). Indeed,
14
PPG alleges that “as in FMC, the Government [here] was an
operator of the [site] during WWII.” Appellant’s Br. 48. We
disagree.
While PPG is correct that Bestfoods did not address
when the government can be held liable as an operator, this
distinction is irrelevant. At no point, regardless of how the test
was formulated, has any court said that the test for determining
operator liability should be different depending on whether the
potentially responsible party is the government, a parent or
subsidiary, or some other type of corporation. See FMC, 29
F.3d at 843 (taking a test we originally applied to corporate
parties and applying it to the government) 6; Litgo, 725 F.3d at
382 (applying the Bestfoods operator definition to a
potentially-liable party outside of the parent-subsidiary
context). Thus, the Bestfoods operator definition is not limited
to the parent-subsidiary context and applies when the question
is whether the government can be held liable as an operator. 7
6
We explained that while the Lansford-Coaldale
“actual control” test “arose in the context of related
corporations, it is nevertheless instructive here.” FMC, 29 F.3d
at 843.
7
Bestfoods discusses the parent-subsidiary relationship
at length in order to emphasize that traditional parent
responsibility or indirect liability for subsidiary acts is
immaterial in the CERCLA context. The Court makes clear
that “the plain language” of CERCLA imposes direct liability
on an operator—“regardless of whether that person is the
facility’s owner, the owner’s parent corporation or business
partner, or even a saboteur who sneaks into the facility at night
to discharge its poisons out of malice . . . [T]he existence of the
parent-subsidiary relationship under state corporate law is
15
Alternatively, PPG argues that to the extent that we
conclude that Bestfoods is applicable, the Bestfoods definition
of operator does not mean that “operators” “are limited to
employees directly working with, or making low-level
decisions about, hazardous waste.” Appellant’s Br. 42. Rather,
PPG emphasizes, “[t]he statute obviously meant something
more than mere mechanical activation of pumps and valves,
and must be read to contemplate ‘operation’ as including the
direction over the facility’s activities.” Appellant’s Br. 42
(quoting Bestfoods, 524 U.S. at 71). Thus, PPG argues that the
term “operator” “encompasses persons having general control
over a facility.” Appellant’s Br. 42.
We disagree. Bestfoods clarified that operator liability
only extends to those who “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.” 524 U.S. at 66–67 (emphasis added). This means
that operator liability requires something more than general
control over an industry or facility—it requires some indicia of
control over the facility’s polluting activities. Thus, the
language the Supreme Court used in Bestfoods suggests that
operator liability requires something more than general
wartime control over an industry.
Rather, Bestfoods instructs that an operator must
exercise control over “operations having to do with the leakage
or disposal of hazardous waste or decisions about compliance
simply irrelevant to the issue of direct liability.” 524 U.S. at
65. The same holds true, perhaps even more strongly, in a case
like this, where there is no tangled parent-subsidiary
relationship.
16
with environmental regulations.” 524 U.S. at 66–67. Under
Bestfoods, then, to prevail on its claim that the Government
operated the site, PPG must show that the Government
exercised control over such operations.
We will now apply the Bestfoods standard for operator
liability.
B. The Government Is Not Subject to Operator Liability
Under CERCLA
Applying the Bestfoods definition of operator, we
conclude that the District Court did not err in concluding that
the Government never directly managed, directed, or
conducted NPRC’s operations specifically related to pollution.
1. The Government Did Not Control Operations Related to
Pollution
We agree with PPG that the Government was involved
in various aspects of production at NPRC’s plant during
WWII. For example, the Government controlled the price of
raw materials, the quantities of chromite ore that processors
such as NPRC could buy, to whom they could sell, how much
they could sell, and which of their purchase orders had priority.
Furthermore, the Government worked to ameliorate severe
labor shortages in the chromium chemicals industry by
studying ways to improve working conditions, authorizing
wage increases for workers, and calling in the Army in
response to a labor strike—though there is no evidence that the
Government ever seized NPRC’s plant.
However, PPG has presented no evidence that the
Government specifically controlled operations related to
pollution. PPG has not offered any evidence to suggest that the
Government was involved with or responsible for the practice
of stockpiling the waste outdoors, which is what led to the
17
contamination. In fact, the evidence shows that this was
NPRC’s practice both before and after the World Wars. 8
PPG contends that, under the Bestfoods standard, there
was a “nexus” between the Government’s activities and
“waste-disposal matters” at the site because “[t]he overall
process . . . [,] with which the Government was familiar[,] was
inherently hazardous-waste-producing.” Appellant Br. 52. The
Government understood, PPG argues, that “[c]hrome-laden
mud was an inevitable byproduct. Groundwater contamination,
in turn, was an inevitable consequence of stockpiling the mud
outside at the Site. Thus, the Government’s pressuring [NPRC]
to ramp up production was . . . a Government directive to
produce more . . . waste.” Appellant’s Br. 52.
This argument fails. To the extent that PPG alleges that
the Government is liable because it was merely aware of
NPRC’s practice of stockpiling the waste outdoors, PPG
misstates the law: knowledge of a practice is not the same as
undertaking that practice for the purposes of operator liability
under CERCLA. For liability to attach, “an operator must
manage, direct, or conduct operations specifically related to
pollution.” Bestfoods, 524 U.S. 66. “[M]ere knowledge of
waste disposal activities, hazardous or otherwise, although a
prerequisite to ‘operator’ liability, does not, without more,
suffice to establish CERCLA ‘operator’ liability.” Lentz v.
Mason, 961 F. Supp. 709, 716 (D.N.J. 1997).
PPG further argues that there was a “nexus” between
the Government’s actions and waste disposal at the site
8
“During the period the chromate production facility
operated,” between about 1909 and 1963, “the majority [of
chromium waste] was stockpiled on the southeastern corner of
Site 114 and on the adjacent Site 137.” J.A. 230–31.
18
because the Government “directed” NPRC to switch to the
quicker, more wasteful manufacturing process. Appellant’s Br.
52. It reasons that, given the critical importance of chromium
for the war effort and the fact that the Government could have
seized the plant, the Government did more than just
recommend that NPRC make the switch. But there is no
evidence that the Government seized or threatened to seize the
NPRC plant. And the mere existence of seizure authority does
not support operator liability. See Exxon Mobil Corp. v. United
States, 108 F. Supp. 3d 486, 524 (S.D. Tex. 2015). In addition,
PPG has offered no evidence permitting an inference that the
Government “demanded,” as opposed to “recommended,” that
NPRC switch to the quicker, more wasteful manufacturing
process. J.A. 585–86 (“The Chemicals Bureau Requirements
Committee . . . recommends that . . . [a]rrangements be made
to increase production of sodium bichromate . . . by . . .
purchasing waste sludge from production operations to
eliminate reworking of ore . . . .”).
Finally, PPG argues that there was a “nexus” between
the Government’s activities and waste disposal at the site
because the Government provided NPRC with a sludge
subsidy. This argument rests on a shaky factual foundation. As
recounted above, NPRC told the Government that it could
increase production “by wasteful use of chromite ore . . . but
the ore losses w[ould] have to be subsidized,” J.A. 492; the
Metals Reserve considered subsidizing waste sludge to address
this concern; and the Chemicals Bureau officially
recommended that NPRC switch to the quicker, more wasteful
process. A few days later, however, the Metals Reserve
formally rejected the sludge purchase plan as falling outside its
“sphere of activities,” J.A. 123–24, and there is no evidence
that any federal entity ever purchased waste sludge from
NPRC.
19
PPG argues that there must have been a subsidy—
otherwise, when NPRC switched to the quicker process in
1944, it would have incurred losses, rather than what actually
happened, which is that it did better financially. PPG also
points to a 1949 Government memorandum directing the
destruction of Defense Supplies Corporation records related to
numerous topics, including “Sodium Bichromate Subsidy.”
These circumstantial arguments are insufficient to create a
genuine factual dispute in the face of evidence showing that the
sludge purchase plan was rejected.
In addition, while there is evidence that other chromium
chemical manufacturers participated in the Russian ore
subsidy, PPG presents no evidence that NPRC ever did.
Rather, NPRC stated that “[w]e have no high grade ore on hand
at the present time, nor do we anticipate the purchase of any
unless we are compelled to do so on account of a shortage of
lower grade ore.” J.A. 189.
Ultimately, PPG’s argument boils down to the
following: when faced with a Government directive to increase
output during a time of war, NPRC rose to the occasion, and
more production meant more waste, which makes the
Government liable as an operator. However, a closer
examination of the facts shows that NPRC did not have to
switch to the quicker, more wasteful process; it could have
chosen the Russian ore option to increase output, as other
chromium chemicals manufacturers did. Furthermore, the
dispositive question is: did the Government “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”? Bestfoods, 524 U.S. at 66–67. The
record clearly answers this question: the Government urged
NPRC and all chromium chemicals manufacturers to increase
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output, but it was NPRC that managed operations specifically
related to pollution. It was entirely NPRC’s decision, not the
Government’s, to continue the longstanding practice of
stockpiling the majority of the waste outside and uncovered,
letting it seep into the soil and groundwater. 9
Therefore, the District Court did not err when it found
that the Government never specifically managed or conducted
NPRC’s operations related to pollution. The District Court
correctly found that the Government’s actions in relation to
NPRC’s plant were consistent with general wartime influence
over an industry—not control over NPRC’s pollution-related
activities. In sum, the Government was not an “operator” under
§ 107(a)(2) of CERCLA.
2. FMC is Distinguishable
PPG emphasizes the factual similarities between this
case and FMC. However, the cases are not as similar as PPG
suggests. The government in FMC was involved not only in
operations at the facility in a general sense, it was specifically
involved with waste production and regulation. Although FMC
pre-dates Bestfoods, even under the Bestfoods standard, FMC
was correctly decided.
We agree with the District Court that there are at least
four significant factual differences between FMC and the
present case that demonstrate that while the government
operated the facility in FMC, the Government did not do so
here. In FMC, the government (1) built and retained ownership
of new facilities near the plant; (2) had a representative on site;
(3) ordered the facility to produce a different product; and (4)
supplied employees to install equipment. Indeed, in FMC, the
government effectively seized total control of the plant’s
9
It was PPG’s decision, as well, from 1954 to 1963.
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operations by requiring the manufacturer to convert its plant to
produce a different product and stepping in to help it achieve
this goal, which included involvement in waste disposal. For
example, not only did the government know that “generation
of hazardous waste inhered in the production process because
its personnel present at the facility witnessed a large amount of
highly visible waste disposal activity,” but “wastes were
generated and disposed of by the government-owned
equipment that was installed at the facility.” FMC, 29 F.3d at837–38.
This is distinguishable from the situation at the NPRC
plant, where NPRC freely produced chromium before and after
the World Wars, where there was no government
representative on site, and where the Government was much
less involved in labor decisions and not involved at all in waste
disposal decisions. Lastly, rather than being directed by the
Government to employ a specific method for increasing output,
NPRC itself chose the option that was the most convenient for
it. 10
In FMC, we concluded that the government “exerted
considerable day-to-day control” over the company that owned
the plant at the time. Id. at 845. We closed by holding: “Given
this degree of control, and given the fact that the wastes would
not have been created if not for the government’s activities, the
government is liable as an operator.” Id. at 844. Here, it cannot
10
The quicker, more wasteful process was more
“convenient” and less costly for NPRC because NPRC already
owned a patent for the “reworking of ore” process and a
conversion to this process could be implemented immediately
without the need for additional equipment or the purchase of
more expensive ore.
22
be said that the Government exercised the same kind of “day-
to-day” control. NPRC claims that it switched to the quicker,
more wasteful process at the Government’s insistence, but it
was the only chromium chemical manufacturer to choose this
method; the other manufacturers chose to participate in the
Russian ore subsidy when asked to increase output. And
perhaps most importantly, the waste would have been created
and disposed of in the same manner regardless of the
government’s activities, just as it was before and after the
World Wars. 11
In sum, the present case is distinguishable from FMC.
IV. Conclusion
For these reasons, we will affirm the denial of PPG’s
motion for summary judgment and grant of the Government’s
motion for summary judgment.
11
PPG may be correct that less waste would have been
created if not for the Government’s need to increase output for
the war effort. What is dispositive, though, is who made the
decisions about how to increase output and what was done with
any waste that was created.
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