not acting like a private party because "no private party is obligated to perform such remedial operations under CERCLA").
Further, Defendants' reliance on Dart Industries and New Castle County is also misplaced. Neither case specifically addressed sovereign immunity. Rather, both cases applied established CERCLA liability standards to their individual fact situations and concluded that the state was not an operator of a facility, nor had it arranged for the disposal of waste. Dart Indus., 847 F.2d at 144 ("DHEC is not and never has been an owner or operator of the site in question."); New Castle County, 727 F. Supp. at 864-75. The threshold issue of sovereign immunity was simply not discussed.
The Third Circuit's thorough analysis in FMC Corporation underscores the weakness of Defendants' argument. Like the present case, FMC Corporation involved the activities of the WPB and other agencies relating to procurement and production of goods for the war effort. FMC Corp., 29 F.3d at 835.
In determining that no per se rule shields the government from liability for its regulatory activities, the court first parsed the text of CERCLA. Initially, it noted that the plain language of section 9620(a)(1) "does not state that regulatory activities cannot form the basis of liability." FMC Corp., 29 F.3d at 840. See also Iron Mountain Mines, 881 F. Supp. at 1442 ("CERCLA does not incorporate such an immunity by its plain language and the court declines to create such an exemption where Congress has not done so and in the face of clear statutory language subjecting government entities to liability."). Second, section 9607 lists three exclusive defenses to liability under CERCLA, none of which is a regulatory activities defense. FMC Corp., 29 F.3d at 841. Finally, the statute provides a special immunity for state or local governments conducting clean up activities during an environmental emergency. Id. The court construed this provision as evidence that Congress intended to exempt the government from CERCLA liability for only this special category of regulatory activity, but not for all regulatory activities. Id.
The second basis for the court's broad reading of the sovereign immunity provision was public policy. The court noted that CERCLA is a remedial statute which should be construed liberally to effectuate its goals of making those responsible for environmental damage bear the costs of cleaning it up. Id. at 840 (citations omitted). Other courts have similarly construed CERCLA's purpose. See e.g., Foster v. United States, 922 F. Supp. 642 (D.D.C. 1996); United States v. Alcan Aluminum Corp., 990 F.2d 711 (2d Cir. 1993); United States v. Aceto Agric. Chems. Corp., 872 F.2d 1373 (8th Cir. 1989); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 805 F.2d 1074 (1st Cir. 1986). The court found that a regulatory exception to the waiver of sovereign immunity would be inconsistent with CERCLA's remedial purpose. FMC Corp., 29 F.3d at 840.
This Court finds the Third Circuit's analysis persuasive. There may be circumstances under which government regulation of a particular industry or company is so pervasive and focused that the company is, effectively, a "subsidiary" of the government. In such a situation, the government should not be able to hide behind the shield of sovereign immunity simply because its activities may be characterized as regulatory. Such a finding is in accord with the Supreme Court's discussion of the scope of the CERCLA sovereign immunity waiver in Union Gas, supra, 491 U.S. at 10 (CERCLA language is "an unequivocal expression of the Federal Government's waiver of its own sovereign immunity, since we cannot imagine any other plausible explanation for this unequivocal language.") (citations and internal quotations omitted).
The Court's reading of the text of CERCLA and its legislative history supports the view that Congress has fully abrogated the federal government's immunity, except as specifically provided for in the statute.
As initially enacted, CERCLA contained a general waiver of the federal government's sovereign immunity under the broad heading of "Liability," but did not specify the scope of that waiver. Comprehensive Environmental Response, Compensation, and Liability Act of 1980, Pub. L. No. 96-510, 94 Stat. 2767, 2781 (1980) (codified at 42 U.S.C. § 9607(g) (1976 & Supp. V. 1980)). In 1986, Congress passed amendments to CERCLA. Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613 (1986) ("SARA"). These Amendments were designed, in part, to bring federal facilities into compliance with CERCLA. See, e.g., S. Rep. No. 99-11, at 61 (1985) (purpose of amendment is to "improve Federal agency accountability . . . with respect to hazardous waste sited on Federally-owned or controlled facilities or property"); H.R. Rep. No. 99-253, at 54 (1985) (bill will "insure the cleanup of waste sites owned by the Federal government").
During the passing of SARA, Congress rearranged CERCLA. In this process, the general waiver of the federal government's sovereign immunity, initially codified at 42 U.S.C. § 9607(g), was moved to a new section entitled "Federal Facilities." Id. § 9620. Current Section 9607(g) indicates that "provisions relating to Federal agencies" are set forth at Section 9620. Id. § 9607(g). Despite having the narrow title "Federal Facilities," the section actually covers the general applicability of CERCLA to the entire federal government, and provides:
Each department, agency, and instrumentality of the United States (including the executive, legislative, and judicial branches of government) shall be subject to, and comply with, this chapter in the same manner and to the same extent, both procedurally and substantively, as any nongovernmental entity, including liability under section 9607 of this title.
Id. § 9620(a)(1) (emphasis added). Although the waiver provision was moved from the general liability section, it nonetheless specifically indicates that liability is to be imposed fully on the government under section 9607, which sets forth the bases for CERCLA liability. Id. Section 9607(a), in turn, specifically indicates that liability is imposed "notwithstanding any other provision or rule of law, and subject only to the defenses set forth in . . . this section." Id. § 9607(a). None of the defenses set forth in Section 9607 is an immunity or regulatory defense.
Further, the legislative materials accompanying SARA do not evidence any Congressional intent to limit federal liability. According to the House Report accompanying SARA, "new" subsection 9620 would ensure that the federal government would be liable to the full extent as private parties under section 9607 and provided that CERCLA provisions would be "applicable with respect to facilities which are owned or operated by a department, agency or instrumentality of the United States in the same manner and to the same extent that they are applicable with respect to other facilities." H. Rep. No. 99-253, at 57. Thus, the intent of Congress in amending CERCLA was to expand the federal government's liability, not limit it. Accord, FMC Corp., 29 F.3d at 842.
For these reasons, the Court holds that sovereign immunity does not protect the federal government from liability for regulatory activities that cause environmental damage if the government otherwise meets the CERCLA liability standards. Thus, Defendants' argument that they cannot be held liable under principles of sovereign immunity is rejected.
B. Operator and Arranger Liability
Under CERCLA, there are four classes of responsible persons who may be held liable for the costs of cleaning up hazardous waste, two of which are relevant here. One class includes those persons who operated a facility at the time hazardous substances were disposed of. 42 U.S.C. § 9607(a)(2). Another class includes those persons who "by contract, agreement, or otherwise arranged for disposal or treatment . . . of hazardous substances owned or possessed by such person by any other party or entity, at any facility owned or operated by another party or entity and containing such hazardous substances." Id. § 9607(a)(3).
The statute itself gives little guidance as to when a responsible person is an operator or arranger. Consequently, the courts have developed their own standards for imposing such liability. Neither issue has been squarely addressed by this Circuit. Although the inquiry is intensely fact-based, courts have routinely decided the issues on summary judgment. See e.g., United States v. Vertac Chem. Corp., 841 F. Supp. 884 (E.D. Ark. 1993), aff'd, 46 F.3d 803 (8th Cir. 1995), cert. denied sub nom., Hercules, Inc. v. United States, 132 L. Ed. 2d 853, 115 S. Ct. 2609 (1995); Washington v. United States, 930 F. Supp. 474 (W.D. Wash. 1996); Maxus Energy Corp. v. United States, 898 F. Supp. 399 (N.D. Tex. 1995), aff'd without opinion, 95 F.3d 1148 (5th Cir. 1996).
1. Operator Liability
Plaintiff argues that, but for the government's wartime regulation, Penn Mine would not have been rehabilitated as an active zinc mine. Therefore, according to Plaintiff, the government's policies made it an operator of the mine. While Plaintiff's argument is not wholly without force, it gives too broad a reading to the CERCLA liability standards. No court has held that CERCLA's statutory operator test is a simple "but-for" one, and this Court finds no support for imposing such a standard in either the case law or the legislative history.
Courts have imposed operator liability under two alternative tests. First, operator liability may result from actual or substantial control over a facility, with active involvement in its activities. FMC Corp., 29 F.3d at 843. Accord Vertac Chem. Corp., 46 F.3d 803. Second, operator liability may attach if the party in question has the authority to control the operations of a facility or decisions involving the disposal of hazardous waste. Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 842 (4th Cir. 1992), cert. denied sub nom., Mumaw v. Nurad, Inc., 506 U.S. 940, 121 L. Ed. 2d 288, 113 S. Ct. 377, (1992).
Under either theory, Defendants' conduct does not meet the standard for CERCLA operator liability.
a. Actual or Substantial Control
Both the Third and Eighth Circuits, as well as several district courts, have adopted the "actual or substantial" control test, see FMC Corp., 29 F.3d 833; Vertac Chem. Corp., 46 F.3d 803. This inquiry is fact intensive and requires the court to look not at one factor, but to consider the totality of the circumstances. FMC Corp, 29 F.3d at 845; Vertac Chem. Corp., 46 F.3d at 808. FMC Corporation was the first case to impose liability on the federal government for activities similar to those at issue here and its rationale is instructive.
In FMC Corporation, the Third Circuit upheld the district court's decision, after trial, to attribute liability to the government. Applying the actual control test, the appellate court pointed to the following facts as establishing government liability:
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 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.