Axel Johnson, Inc. v. Carroll Carolina Oil Co.

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
AXEL JOHNSON, INCORPORATED,
Plaintiff-Appellant,
v.
CARROLL CAROLINA OIL COMPANY,
INCORPORATED; LINDA A. CARROLL,
Defendants-Appellees,
No. 99-1041
and
CHARLES S. LANIER, Trustee; PACE
OIL COMPANY, INCORPORATED,
Defendants.
UNITED STATES OF AMERICA,
Amicus Curiae.
Appeal from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
W. Earl Britt, Senior District Judge.
(CA-96-130-7-BR)
Argued: June 8, 1999
Decided: September 14, 1999
Before MURNAGHAN, LUTTIG, and MOTZ, Circuit Judges.
_________________________________________________________________
Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Murnaghan and Judge Luttig joined.
_________________________________________________________________
COUNSEL
ARGUED: Kenneth Berlin, Sr., SKADDEN, ARPS, SLATE,
MEAGHER & FLOM, L.L.P., Washington, D.C., for Appellant. Mat-
thew Patrick McGuire, HUNTON & WILLIAMS, Raleigh, North
Carolina, for Appellees. Ronald Mark Spritzer, Appellate Section,
Environment and Natural Resources Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Amicus
Curiae. ON BRIEF: Don J. Frost, Jr., SKADDEN, ARPS, SLATE,
MEAGHER & FLOM, L.L.P., Washington, D.C., for Appellant.
Craig A. Bromby, HUNTON & WILLIAMS, Raleigh, North Caro-
lina, for Appellees. Lois J. Schiffer, Assistant Attorney General, Rob-
ert L. Klarquist, Lori Jonas, R. Justin Smith, Appellate Section,
Environment and Natural Resources Division, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C.; Joseph Freedman,
Office of the General Counsel, UNITED STATES ENVIRONMEN-
TAL PROTECTION AGENCY, Washington, D.C., for Amicus
Curiae.
_________________________________________________________________
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
This appeal concerns the cleanup of lead and other hazardous sub-
stances at the Old ATC Refinery Site pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act (CER-
CLA), 42 U.S.C.A. §§ 9601-9675 (West 1995). Axel Johnson, Incor-
porated, a former owner and operator of the Refinery property,
incurred and expects to incur substantial expenses in connection with
the cleanup. Seeking relief from these expenses, Axel brought this
cost recovery and contribution action against Carroll Carolina Oil
Company, Incorporated (CCO), the current owner of the property, and
Linda A. Carroll, who sold the property to CCO. We affirm the dis-
trict court's grant of summary judgment to Carroll and CCO on
Axel's cost recovery claims because we agree with the district court
that Axel, as a potentially responsible person under CERCLA, cannot
assert such claims. We do not address the district court's rulings on
the contribution claims because they have been rendered moot by the
2
entry of a consent decree resolving the liability of Carroll and CCO
to the United States.
I.
Axel or its predecessors in interest operated the Refinery property,
which is located in Wilmington, North Carolina on the banks of the
Cape Fear River, from 1972 through 1984. During most of this
twelve-year period, Axel leased the property from Pace Oil Co. under
a contract providing that Axel bore responsibility for maintenance of
the property, including disposal of any hazardous waste generated
there. (Although it is occasionally awkward, we use"property" rather
than "site" as shorthand for the Old ATC Refinery Site because "site"
appears in CERCLA's definition of "facility," an important term in
this case.)
Axel operated the property as a petroleum refinery from 1972 to
1981, and as a petroleum bulk storage facility from 1981 to 1984. The
property covers thirteen acres and contains approximately fifteen stor-
age tanks, an extensive network of pipelines connecting the tanks, and
several other structures used in Axel's operations. During the first
three years that it operated the property, from 1972 to 1975, Axel pro-
duced leaded gasoline there by blending tetraethyl lead with gasoline.
Lead is a hazardous substance subject to cleanup under CERCLA. Id.
§ 9601(14)(D); 33 U.S.C.A. § 1317(a)(1) (West 1986); 40 C.F.R.
§ 401.15 (1999) (lead and compounds); 42 U.S.C.A. § 9602(a); 40
C.F.R. § 302.4 (1999) (tetraethyl lead and other substances identified
as lead).
Axel buried wastes from its operations at various locations
throughout the property, including at least three places where the EPA
subsequently found elevated levels of lead in the soil. The EPA has
also discovered that some of the piping that runs throughout the prop-
erty is lead-contaminated. There is no evidence in the record of any
subsequent party using or processing lead at the property.
When Axel ceased operations and left the property in 1984, it emp-
tied some of the aboveground storage tanks that it had used in both
its refinery and storage operations at the property. Any material
remaining in the other tanks was either sold to the new operator of the
3
property or subsequently transferred to another Axel-controlled facil-
ity. Axel strongly relies on the testimony of a former employee stating
that Axel "stripped" some of the tanks prior to its departure, but that
same employee swore in a declaration and testified when deposed that
Axel did not clean any of the tanks before it left the property, explain-
ing that "[s]tripping a tank is removing all useable product" while
"[c]leaning a tank is once all of the liquid has been removed or all that
can be removed from it, then a crew goes in and physically water
washes the tank, scrubs it, scrapes it" (emphasis added). This
employee also testified that Axel did not clean the pipelines before
severing its ties with the property.
After Axel ceased operations in 1984, Republic Refining Company
operated the property as a refinery and storage facility for thirteen
months, from January 1985 to February 1986. Pace sold the property
in February 1986 to Tracmark Inc. in return for a $6.5 million note,
secured by a deed of trust on the property. City Gas & Transmission
purchased the property from Tracmark in July 1987 by assuming the
note. City Gas did not resume refinery or bulk storage operations,
although it did perform other operations at the property until 1991.
City Gas ultimately defaulted on the note; neither it nor Tracmark
ever made any payments on the note to Pace. In the summer of 1994,
Carroll acquired the note from Pace. Carroll foreclosed on the prop-
erty in April 1996 and purchased it herself at the foreclosure sale. On
April 24, 1996, Carroll sold the property to CCO, a company that she
created and operated. Neither Carroll nor CCO have performed any
operations at the property.
Beginning in 1991, the United States Coast Guard discovered spills
and deposits of petroleum products, sludge, and other materials at the
property. By 1995 the EPA had determined that the tanks, pipelines,
and soils at various locations on the property were contaminated with
hazardous substances, and had begun taking emergency action to
remove such substances. In July 1996, Axel entered into an "adminis-
trative order by consent with EPA," refusing to acknowledge liability
but agreeing to pay for and perform certain removal work at the prop-
erty. In March 1997, the EPA found Axel's cleanup efforts deficient
and accordingly took over the cleanup work.
Axel filed this action against Carroll, CCO, and the property trustee
in August 1996. Axel claims that it has spent $1 million and will
4
spend an additional $1-2 million in cleaning up the property; it main-
tains that it is entitled to recover its cleanup costs from Carroll and
CCO pursuant to CERCLA § 107, 42 U.S.C.A.§ 9607(a)(1), and that
it has a right to contribution from Carroll and CCO pursuant to CER-
CLA § 113, id. § 9613.
The parties filed cross motions for summary judgment. The district
court granted summary judgment to CCO on Axel's cost recovery
claim under § 107 based on a determination that Axel is a potentially
responsible person and the rule that potentially responsible persons
cannot bring § 107 actions. The court granted summary judgment to
CCO on Axel's contribution claim under § 113 because it found that
CCO had adequately established the "third-party" defense provided
by CERCLA § 107(b)(3), id. § 9607(b)(3). Finally, the court granted
summary judgment to Carroll on both the § 107 claim and the § 113
claim on the theory that Carroll fell within CERCLA's "lender liabil-
ity exemption." See id. § 9601(20)(E)(i). Axel appeals.
II.
Section 107(a) of CERCLA permits the United States and private
parties to recover the costs of cleaning up hazardous wastes from cer-
tain defined types of person. See 42 U.S.C.A. § 9607(a) (West 1995).
Those who fall within one of the categories described by the statute
are known as "potentially responsible persons," and are strictly liable
for cleanup costs subject only to the statute's limited defenses. See
Pneumo Abex Corp. v. High Point, Thomasville & Denton R.R., 142
F.3d 769, 774 (4th Cir.), cert. denied, 119 S. Ct. 407 (1998);
Westfarm Assocs. Ltd. Partnership v. Washington Suburban Sanitary
Comm'n, 66 F.3d 669, 677 (4th Cir. 1995); Nurad, Inc. v. William E.
Hooper & Sons Co., 966 F.2d 837, 841 (4th Cir. 1992); United States
v. Monsanto Co., 858 F.2d 160, 167 (4th Cir. 1988). Potentially
responsible persons are usually subject to joint and several liability,
Pneumo Abex, 142 F.3d at 776, although in some circumstances they
can seek division of damages, Monsanto, 858 F.2d at 171-72, or con-
tribution according to principles of equitable allocation, 42 U.S.C.A.
§ 9613(f); Nurad, 966 F.2d at 841.
Current owners and operators of a contaminated facility generally
qualify as potentially responsible persons under§ 107. See 42
5
U.S.C.A. § 9607(a)(1). Axel argues that both Carroll and CCO fall
within this category and that it therefore can assert a cost recovery
action against them. The district court rejected Axel's claim because
it concluded that Axel was a potentially responsible person, and that
Axel therefore fell within the rule prohibiting potentially responsible
persons from bringing § 107 actions and restricting them instead to
actions for contribution under § 113. See, e.g., Pneumo Abex, 142
F.3d at 776 (noting that apportionment of damages on remand must
be made in accordance with § 113 rather than§ 107 because poten-
tially responsible persons "must seek contribution under" § 113).
Not satisfied with the contribution remedy, Axel attempts to estab-
lish its entitlement to bring a § 107 cost recovery action in two ways.
First, Axel suggests that it should not be considered liable under
§ 107 because most of the substances requiring cleanup were not, it
maintains, deposited at the property during the period when it con-
ducted operations there. Second, Axel argues that there is an excep-
tion to the rule that potentially responsible persons cannot bring § 107
actions for "innocent" parties, and that it is covered by that exception.
We consider each argument in turn.
A.
Axel's suggestion that it should not be considered a potentially
responsible person relies upon its contention that"[a]s a former
owner/operator of the Site, Axel can only be held liable under CER-
CLA if at the time of its Site ownership or operation the hazardous
substances subject to the CERCLA cleanup . . . were``disposed' of at
the ``facility' from which they are subsequently released or threatened
to be released." Brief of Appellant at 14. Axel cites no authority sup-
porting this proposition, and there is none. Indeed, this argument is
inconsistent with the plain meaning of the statute.
In addition to making current owners or operators liable for
cleanup costs, § 107 subjects former owners or operators, such as
Axel, to liability in certain circumstances. 42 U.S.C.A. § 9607(a). The
statute specifically provides that "any person who at the time of dis-
posal of any hazardous substance owned or operated any facility at
which such hazardous substances were disposed of, . . . from which
there is a release, or a threatened release which causes the incurrence
6
of response costs, of a hazardous substance, shall be liable for . . . all
costs of removal or remedial action incurred" by the government and
"any other necessary costs of response incurred by any other person
consistent with the national contingency plan." Id. (emphasis added).
Thus a party is potentially responsible for cleanup costs if (1) it
owned or operated a facility at a time when "any" hazardous sub-
stances were disposed of at the facility, and (2) there is "a" release or
threatened release of hazardous substances from the facility and that
release or threatened release results in the incurrence of response
costs. Id. There is no statutory requirement that in order for an owner
or operator to be held liable for cleanup costs, the hazardous sub-
stances that cause the incurrence of those costs must be the same haz-
ardous substances that were deposited at the facility when the party
owned or operated it. Rather, under § 107 a former owner or operator
can be held liable for response costs caused by hazardous substances
that were deposited at the facility at times when it did not own or
operate the facility, so long as some hazardous substances were
deposited at the facility during the period when the party did own or
operate it and the other requirements of the statute are met. See
United States v. Alcan Aluminum Corp., 964 F.2d 252, 264 (3d Cir.
1992) (statute does not on its face require § 107 plaintiff "to prove
that the generator's hazardous substances themselves caused the
release or caused the incurrence of response costs; rather, it requires
the plaintiff to prove that the release or threatened release caused the
incurrence of response costs, and that the defendant is a generator of
hazardous substances at the facility"); see also, e.g., United States v.
Alcan Aluminum Corp., 990 F.2d 711, 721 (2d Cir. 1993) (CERCLA
plaintiff is "not required . . . [to] show that a specific defendant's
waste caused incurrence of clean-up costs" in order to impose liability
on defendant under § 107); Amoco Oil Co. v. Borden, Inc., 889 F.2d
664, 670 n.8 (5th Cir. 1989) ("in cases involving multiple sources of
contamination, a plaintiff need not prove a specific causal link
between costs incurred and an individual generator's waste" to estab-
lish § 107 liability).
The definition of "facility," which, as we shall see, is critical to
Axel's principal argument, does nothing to alter this understanding of
§ 107(a). In pertinent part, CERCLA defines facility to include "any
site or area where a hazardous substance has been deposited." 42
7
U.S.C.A. § 9601(9). Plugging that definition into § 107(a), CERCLA
provides in effect that any person who owned or operated a "site or
area where a hazardous substance has been deposited" at a time when
"any hazardous substances . . . were disposed of" at that "site or area"
is liable for response costs incurred due to the release or threatened
release of "a hazardous substance" from the"site or area." Id.
§§ 9607(a), 9601(9). Again, CERCLA does not make a party liable
for response costs only when the hazardous substances giving rise to
those costs are the same as those that were deposited at the facility
when the party owned or operated it.
Axel's suggested interpretation of the statute conflicts not only
with its plain meaning but also with the firmly-established view of
§ 107(a) as a strict liability statute. See, e.g., Nurad, 966 F.2d at 841;
Monsanto, 858 F.2d at 167. Axel implies that this view of the statute
will yield inequitable results. Any inequity arising from the statute's
strict liability scheme is, however, mitigated by the availability of
contribution actions and division of damages. See United States v.
Township of Brighton, 153 F.3d 307, 313 (6th Cir. 1998); Monsanto,
858 F.2d at 171-72.
Thus, we reject Axel's contention that it can only be held liable for
cleanup costs incurred due to substances deposited at the property
during its tenure. Axel is a person potentially responsible for cleanup
costs under § 107.
B.
Axel principally argues that even if it is a potentially responsible
person, it should be allowed to bring a § 107 action because it is an
"innocent" party with respect to a portion of the site. We find this
argument to be unpersuasive too.
Every circuit that has addressed the question, including this one,
has held that parties such as Axel who are potentially responsible for
cleanup costs under § 107 cannot bring § 107 cost recovery actions;
rather, such parties "must seek contribution" under § 113. Pneumo
Abex, 142 F.3d at 776; see Centerior Serv. Co. v. Acme Scrap Iron
& Metal Corp., 153 F.3d 344, 356 (6th Cir. 1998); Sun Co. v.
Browning-Ferris, Inc., 124 F.3d 1187, 1190-91 (10th Cir. 1997), cert.
8
denied, 118 S. Ct. 1045 (1998); Pinal Creek Group v. Newmont Min-
ing Corp., 118 F.3d 1298, 1301 (9th Cir. 1997), cert. denied, 118
S. Ct. 2340 (1998); New Castle County v. Halliburton NUS Corp.,
111 F.3d 1116, 1120 (3d Cir. 1997); Redwing Carriers, Inc. v. Sara-
land Apartments, 94 F.3d 1489, 1496 (11th Cir. 1996); United Techs.
Corp. v. Browning-Ferris Indus., Inc., 33 F.3d 96, 101-03 (1st Cir.
1994).
The central difference between a cost recovery action under § 107
and a contribution action under § 113 is that in a § 107 action, a party
can impose joint and several liability for all its cleanup costs upon the
defendant. A potentially responsible person within the meaning of
§ 107 is, however, presumptively liable for some portion of those
costs, and therefore the only recovery it could properly seek would be
partial recovery. A claim for partial recovery of CERCLA costs will
generally be indistinguishable from claim for contribution, and thus
courts have held that as a general rule any claim for damages made
by a potentially responsible person -- even a claim ostensibly made
under § 107 -- is considered a contribution claim under § 113. See
Pneumo Abex, 142 F.3d at 776; Pinal Creek , 118 F.3d at 1301; New
Castle, 111 F.3d at 1122; Redwing Carriers , 94 F.3d at 1496. Axel
does not suggest that we should reject this well-established rule, and
circuit precedent does not permit us to do so.
Axel does attempt to escape the force of this rule, however, by
arguing that it qualifies as an "innocent party" with respect to some
of the contamination at the property and that it therefore can maintain
a cost recovery action despite its status as a potentially responsible
person. Only a few circuits have recognized an "innocent party"
exception of this kind, and all but one of those have done so in dicta,
rejecting the applicability of any exception on the facts before them.
See New Castle, 111 F.3d at 1124 (finding exception inapplicable);
Redwing, 94 F.3d at 1496 (same); Akzo Coatings, Inc. v. Aigner
Corp., 30 F.3d 761, 764 (7th Cir. 1994) (same); see also M & M
Realty Co. v. Eberton Terminal Corp., 977 F. Supp. 683, 687 (M.D.
Pa. 1997) (same); but see Rumpke of Indiana, Inc. v. Cummins Engine
Co., 107 F.3d 1235, 1238 (7th Cir. 1997).
Whether Congress intended or contemplated this kind of treatment
for "innocent" but "potentially responsible" parties is not at all clear.
9
Congress enacted CERCLA "to protect public health and the environ-
ment from inactive hazardous waste sites." Westfarm, 66 F.3d at 677;
see H.R. Rep. No. 96-1061, pt. 1, at 1, 17 (1980), reprinted in 1980
U.S.C.C.A.N. 6119, 6119. Because CERCLA is "a comprehensive
remedial statutory scheme, . . . courts must construe its provisions lib-
erally to avoid frustrating the legislature's purpose." Westfarm, 66
F.3d at 677. The rule that potentially responsible persons cannot sue
under § 107 protects the strict liability scheme created by the statute,
and thus any exceptions to that rule should be narrow ones. If an "in-
nocent party" exception is even possible, a question we need not
decide here, it would therefore seem prudent to limit its applicability
to those who can make out one of the defenses to liability that § 107
itself provides. See 42 U.S.C.A. § 9607(b)(3). We note that some of
the courts that recognize the possibility of an"innocent party" excep-
tion have defined it in precisely this way. See New Castle County, 111
F.3d at 1124 ("a potentially responsible person under section 107(a),
who is not entitled to any of the defenses enumerated under section
107(b), may not bring a section 107 action against another potentially
responsible person"); M & M Realty, 977 F. Supp. at 686 (same).
Axel has not even attempted to allege or prove its entitlement to any
statutory defense. Thus, Axel could not claim to be an innocent party
under the approach followed by the New Castle and M & M Realty
courts.
Axel nevertheless contends that because it is assertedly innocent
with respect to some of the contamination -- in particular, the con-
tamination in and around the storage tanks -- it should be allowed to
bring a § 107 action for the cleanup costs resulting from that contami-
nation. The few cases that have recognized the possibility of an "inno-
cent party" exception, however, have uniformly made the exception
applicable only when the plaintiff is truly innocent of any pollution.
See, e.g., Rumpke, 107 F.3d at 1238. In fact, in the one case where
a court found that a claimant merited the "innocent party" exception,
the claimant had alleged that it "did not pollute the site in any way."
Rumpke, 107 F.3d at 1241. Axel cannot be regarded as similarly inno-
cent.
Rather, the record evidence indisputably indicates that Axel bears
responsibility for at least some of the hazardous materials spilled at
the property. Indeed, as the district court held, the uncontroverted
10
record evidence shows that the major contaminant at the property is
lead and that the only owner or operator of the property to use lead
in its operations was Axel. We note that the most Axel does to refute
the damning evidence as to lead usage is to argue that later owners
of the property stored "pipeline interface" at the property during
1985-86, which "would have contained lead" at that time. Brief of
Appellant at 5-6. The parties engaged in extensive discovery and sub-
mitted deposition excerpts, affidavits, declarations, expert reports,
interrogatory responses, and countless documents in support of their
respective summary judgment motions (the joint appendix exceeds
1500 pages), yet Axel apparently produced absolutely nothing to sup-
port its claim that later owners or operators actually contaminated the
property with lead. Axel's failure to point to any evidence in this
extensive record to support the assertion that other parties did in fact
use lead speaks volumes.
Axel has thus failed to allege facts or produce evidence necessary
to show that it, like the plaintiff in Rumpke , "did nothing to contribute
to the presence of the hazardous substances." 107 F.3d at 1239. That
case thus provides no support for Axel's argument that it qualifies as
an "innocent party" who can assert a § 107 action. Furthermore, the
Akzo court, the first to suggest an "innocent party" exception,
expressly rejected the contention that a person assertedly responsible
for only part of the contamination at a property can bring a § 107
action with respect to the cleanup of the rest of the property. See 30
F.3d at 763-64. This is precisely the contention that Axel makes in the
instant case. The Seventh Circuit in Akzo found this argument to be
meritless, stating that "Akzo has experienced no injury of the kind
that would typically give rise to a direct claim under section 107(a)
-- it is not, for example, a landowner forced to clean up hazardous
materials that a third party spilled onto its property or that migrated
there from adjacent lands. Instead, Akzo itself is a party liable in
some measure for the contamination at the Fisher Calo site." Id. at
764. The same reasoning applies here. Axel, like Akzo, is not a land-
owner forced to clean up hazardous materials that migrated from
adjoining lands, but rather is admittedly "a party liable in some
measure for the contamination" at the property. Id. (emphasis added).
Akzo teaches that a party in these circumstances cannot bring a § 107
action.
11
Axel attempts to avoid its failure to fit within the"innocent party"
exception by arguing that each of the tanks and spill areas for which
it claims not to be responsible should be regarded as a separate "facil-
ity" under CERCLA. With respect to each of those separate "facili-
ties," Axel alleges it is innocent and therefore entitled to bring a § 107
action.
CERCLA defines facility broadly to include:
(A) any building, structure, installation, equipment, pipe or
pipeline (including any pipe into a sewer or publicly owned
treatment works), well, pit, pond, lagoon, impoundment,
ditch, landfill, storage container, motor vehicle, rolling
stock, or aircraft, or (B) any site or area where a hazardous
substance has been deposited, stored, disposed of, or placed,
or otherwise come to be located; but does not include any
consumer product in consumer use or any vessel.
42 U.S.C.A. § 9601(9).
This definition applies not only to traditional waste sites, see
Uniroyal Chem. Co. v. Deltech Corp., 160 F.3d 238, 245 (5th Cir.
1998), but also to "any ``area' in and around which hazardous sub-
stances have ``come to be located,'" United States v. Carolina Trans-
former Co., 978 F.2d 832, 836 (4th Cir. 1992); Nurad, 966 F.2d at
842-43. No court has held, however, that any area that could qualify
as a facility under the definition must be considered a separate facil-
ity. This position, which Axel's complaint adopts, would mean that
"each barrel in a landfill is a separate facility" -- a proposition that
a case upon which Axel itself relies has aptly described as "ridicu-
lous." Union Carbide Corp. v. Thiokol Corp. , 890 F. Supp. 1035,
1043 (S.D. Ga. 1994); see also Akzo Coatings, Inc. v. Aigner Corp.,
960 F. Supp. 1354, 1359 (N.D. Ind. 1996).
Nevertheless, Axel apparently advances such a theory. It cites as
authority Judge Boggs's statement (for himself alone), that "an area
that cannot be reasonably or naturally divided into multiple parts or
functional units should be defined as a single ``facility.'" Township of
Brighton, 153 F.3d at 313. From this, Axel argues that because the
Refinery property can be divided into separate functional units, each
12
such unit must or should be designated as a separate facility. That a
property could be divided in this way does not, however, mean that
it must be so divided for CERCLA purposes. It may well be true, as
Judge Boggs suggests, that in order for a property to be divided into
separate facilities, it must be reasonably or naturally divisible, but the
mere possibility of such division does not in itself require consider-
ation of the site's different parts as separate facilities or make consid-
eration of the property as a single facility impermissible.
Ultimately recognizing the untenability of the contention that any-
thing that could be designated as a separate facility must be so desig-
nated, Axel moderates its argument somewhat in its reply brief by
suggesting that all the tanks and associated spill areas for which it dis-
claims responsibility should be regarded as a single, distinct facility.
This might be a valid argument if the tanks and their associated spill
areas were the only contaminated parts of the property. See Nurad,
966 F.2d 842-43. But it is unambiguously clear from the record that
this is not the case -- rather, uncontroverted evidence indicates con-
tamination throughout the property. Axel itself acknowledges that in
addition to the tanks and their spill areas, the furnace refractory burial
area and two other areas "requir[e] soil investigation and cleanup."
Brief of Appellant at 16 n.13. Moreover, Axel's attempt to refute the
evidence of widespread contamination at the property by reference to
its own experts' report is singularly unsuccessful. According to Axel,
this report states that except for the soil at the furnace refractory
burial area, the soil at the property was contaminated not by hazard-
ous substances but by petroleum products that are exempted from the
CERCLA definition of hazardous substances. See 42 U.S.C.A.
§ 9601(14). In fact, the report acknowledges elevated levels of lead
in two other places on the property as well. Finally, Axel utterly fails
to controvert the record evidence of lead contamination in the pipe-
lines that run throughout the property.
These places containing uncontested contamination are, further-
more, scattered across the Refinery property. The pipelines, as noted,
run throughout the property, but are predominately located in the
northwest region where most of the contaminated tanks are situated.
The unpaved maintenance area is in the northeast region, the furnace
refractory burial area is in the southeast region, and the former sludge
pile and the other acknowledged area of contamination are in the
13
southwest region. The property as a whole is not notably large (thir-
teen acres), and Axel does not attempt to argue that these contami-
nated locations are too distant from each other to be regarded as parts
of a single pattern of contamination. Thus, even without considering
the tanks and spill areas for which Axel seeks to avoid responsibility,
the evidence shows that contamination is widespread throughout the
property.
Courts have uniformly refused to divide widely contaminated prop-
erties like the one at issue here into separate facilities in response to
a party's claim to be responsible for contamination in only certain
parts of the property. For example, the district court in Akzo faced an
argument, made by defendants who claimed to be liable for contami-
nation only in one area, that "because the Site can be divided into five
distinct geographic areas, each area is a distinct facility." 960 F. Supp.
at 1358. The court rejected this argument because there was "no dis-
pute that hazardous wastes have ``otherwise come to be located' in
several locations at the Site." Id. Similarly, in Northwestern Mutual
Life Insur. Co. v. Atlantic Research Corp. the court refused to accept
the same kind of argument, stating that "[w]hat matters for the pur-
poses of defining the scope of the facility is where the hazardous sub-
stances . . . ``[have] otherwise come to be located.' . . . And in this
regard, the uncontradicted record confirms that hazardous substances
exist . . . in all quadrants of the property." 847 F. Supp. 389, 395-96
(E.D. Va. 1994). The same is true in Axel's case.
Our opinion in Nurad does not suggest a different conclusion. That
case also involved contamination associated with storage tanks, and
we held there that "the only ``area' where hazardous substances have
``come to be located' is in and around the storage tanks, so the relevant
``facility' is properly confined to that area." 966 F.2d at 842-43. Here,
by contrast, hazardous substances are not located only in the storage
tanks and their associated spill areas; rather, they are located through-
out the property. Furthermore, our holding in Nurad was directed at
preventing parties other than those who had authority over a contami-
nated area from being subjected to CERCLA liability through irratio-
nally broad understandings of "facility." See id. at 843. Here it is
undisputed that Axel had authority over the entire property during a
period when hazardous substances were deposited there, and that haz-
ardous substances have "come to be located" throughout the property.
14
Nurad is therefore entirely consistent with the conclusion the entire
property here is appropriately considered a single CERCLA facility.
Moreover, the Nurad holding also depended on the fact that
"[d]uring the relevant period . . . the site was subdivided and separate
portions of it were leased out to individual tenants," id. at 843,
whereas the case at hand presents no equivalent facts. Axel owned
portions of the Refinery property from 1971 to 1974, but the property
was never -- during Axel's ownership or later-- subdivided and
leased to different tenants. Furthermore, the entire Refinery property
was at all relevant times operated by a single party, and both the EPA
and Axel itself treated the entire property as a single facility for CER-
CLA remediation purposes in the consent decree that they signed. Cf.
New Castle Co., 111 F.3d at 1124 n.8 (party who, like Axel, signed
CERCLA consent decree but did not thereby admit CERCLA liability
was nonetheless "a potentially responsible person who ``resolved its
liability to the United States,'" and was therefore "required to use sec-
tion 113, and only section 113, to obtain an equitable redistribution
of liability among other potentially responsible persons"). Under these
circumstances, the property "cannot be reasonably or naturally
divided into multiple parts or functional units," and therefore --
according to the very principle that Axel urges upon us -- it "should
be defined as a single ``facility,' even [though] it contains parts that
are non-contaminated." Township of Brighton , 153 F.3d at 313.
This is not to say that every widely contaminated property must be
considered a single facility. But where, as here, the only arguments
in favor of designating multiple facilities are weak in themselves and
merely represent thinly-veiled attempts by a party to avoid responsi-
bility for contamination, designation of the property as a single facil-
ity is appropriate. Allowing such arguments to prevail would undercut
the strict liability scheme created in CERCLA by importing consider-
ations of actual liability or responsibility for contamination into the
analysis of whether a party should be held to fall within § 107(a) as
an initial matter. See Akzo, 960 F. Supp. at 1359. Such considerations
are appropriately addressed not in determining what constitutes the
facility in the case, but rather in deciding whether a party is entitled
to one of the defenses, whether the harm is divisible, and whether
contribution is available. See Township of Brighton, 153 F.3d at 313.
15
The district court therefore did not err in ruling that Axel is a
potentially responsible person that cannot bring a§ 107 action.
Although the district court only granted summary judgment on this
basis to CCO, Axel's inability to bring a § 107 claim pertains as well
to its § 107 claim against Carroll. We therefore need not reach the
question of whether, as the district court held, Carroll was entitled to
CERCLA's lender-liability exemption with respect to Axel's § 107
claim.
III.
Axel also asserted a claim for contribution against Carroll and
CCO under § 113 of CERCLA, 42 U.S.C.A. § 9613(f)(1). That claim
has, however, been rendered moot by the entry of a consent decree
signed by Carroll, CCO, and the EPA.
CERCLA provides that parties who have resolved their CERCLA
liability to the United States in judicially approved settlement agree-
ments shall not be liable for contribution "regarding matters addressed
in the settlement." Id. at 9613(f)(2). After this appeal was filed but
prior to oral argument, Carroll and CCO entered into such an agree-
ment with the United States in the form of a proposed consent decree.
Carroll and CCO then moved to hold this appeal in abeyance until the
district court had approved or rejected the agreement. In a supporting
memorandum, Carroll and CCO maintained that approval of the
agreement would moot Axel's contribution claims. Rather than
responding directly to this contention, Axel denied that the agreement
had any bearing on the appeal. Axel also stated in its opposition to
the motion that its response should not be construed as an admission
that the approved agreement would moot its contribution claims.
After we denied the motion to hold the appeal in abeyance and
heard oral argument, the District Court for the Eastern District of
North Carolina approved and entered the consent decree. On July 1,
1999, the United States notified us that the decree had been approved.
This notification, which was served on Axel, states that "[a]s the par-
ties have explained, the Consent Decree provides contribution protec-
tion to Linda Carroll and Carroll Carolina Corp. and will moot the
contribution claims of Axel Johnson, Inc., against those defendants."
16
Axel filed no objection or response to this notice. Accordingly, we
assume that Axel now concedes that its contribution claims are moot.
Because Axel's § 107 action was properly dismissed, the remaining
questions originally appealed -- Carroll's entitlement to the lender
liability exemption and CCO's entitlement to the third party defense
-- could only pertain to Axel's claim for contribution. Because that
claim is moot, we need not address those questions.
IV.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
17