Court: District Court, S.D. Texas; June 4, 2015; Federal District Court
The memorandum outlines the environmental consequences stemming from wartime production during World War II and the Korean War, specifically regarding hazardous waste generated at refineries operated by ExxonMobil’s predecessors in Baytown, Texas, and Baton Rouge, Louisiana. This case centers on the liability for cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), with Exxon seeking to hold the federal government accountable for expenses incurred in remediation efforts, totaling approximately $41 million for Baytown and $30 million for Baton Rouge.
The court must determine if the federal government or Exxon, which retained operational control over waste management, bears responsibility for the environmental harm resulting from the government contracts for fuel production. Both Exxon and the government filed motions for partial summary judgment on key liability issues. The court granted and denied aspects of these motions, concluding that while Exxon operated the refineries, the federal government did not, and thus joint and several liability does not apply. The court also ruled that it is premature to adopt Exxon’s proposed method for apportioning fault or to grant declaratory relief regarding future costs, allowing Exxon the opportunity to request the court's approval of its apportionment method in Phase II of the litigation. A glossary of acronyms used throughout the opinion is provided for clarity.
CERCLA, enacted in 1980, addresses environmental and health risks from industrial pollution by promoting the cleanup of hazardous waste sites and ensuring that responsible parties bear the associated costs. The Act, amended by SARA in 1986, outlines various cleanup mechanisms, including federal abatement and enforcement actions under Sections 104 and 106. Section 107(a)(4) establishes liability for “covered persons” or potentially responsible parties (PRPs), who may be held accountable for government-incurred response costs as well as costs incurred by others.
Section 107(a) identifies four PRP categories: current and past facility owners/operators, those who arranged for hazardous substance disposal, and certain transporters. PRPs are liable for all cleanup costs consistent with the national contingency plan unless a statutory defense applies. CERCLA provides limited defenses against liability under Section 107(a).
Section 113, introduced by SARA, allows any person to seek contribution from other liable parties during or after civil actions under Sections 106 or 107(a). Courts can allocate response costs among liable parties based on equitable factors. A PRP that resolves its liability through an approved settlement is immune from contribution claims regarding those matters, but may seek contribution from nonsettling PRPs.
Under Section 107(a), plaintiffs can recover 100% of response costs from all liable parties, including settled ones. However, Section 113's contribution rights are more limited, with a three-year statute of limitations for certain claims, and plaintiffs can only recover costs exceeding their equitable share without claiming against settled parties. Both federal and state governments can sue PRPs for response costs and may also be liable themselves.
Avgas, or aviation gasoline, was developed in the early 1930s by U.S. petroleum refiners, enabling the production of high-octane fuel, essential for military aircraft during World War II and the Korean War. By 1935, refiners could produce mass quantities of 100-octane fuel, which significantly enhanced the performance of high-compression engines used by the military. Notably, British Minister Geoffrey Lloyd asserted that 100-octane fuel was crucial for winning the Battle of Britain. The production of avgas involved blending petroleum distillates with chemical additives, primarily alkylate, which constituted 25-40% of the fuel's weight. The alkylation process required large amounts of sulfuric acid, with 90% of the acid used in this process during the war. The production of avgas increased dramatically, from 40,000 barrels per day in December 1941 to 636,000 barrels per day by 1944, correlating with a five-fold increase in sulfuric acid consumption. This surge in production led to significant quantities of spent alkylation acid, which could either be reprocessed or disposed of. Recognizing the importance of avgas for the war effort, President Roosevelt established multiple agencies, including the War Production Board (WPB), to oversee its production and ensure prioritization amid wartime needs. The WPB implemented a system to manage the allocation and production of scarce goods, thereby limiting nonessential production.
The President, through Executive Order No. 9024, granted the War Production Board (WPB) extensive authority over purchasing, contracting, and construction, centralizing petroleum-related activities under the Petroleum Administration for War (PAW). The PAW made critical policy decisions on facility construction, raw material allocation, avgas pricing, and profit limitations, possessing the power to issue production orders to refineries. Testimony indicated that no construction could occur without PAW's approval due to its control over raw material certification. The WPB and PAW had the authority to compel oil companies to produce specified goods and could seize refineries for non-compliance, as exemplified by the seizure of Exxon’s refinery in Texas, which continued operation under the company’s management.
Federal agencies primarily relied on contractual agreements with oil companies to secure avgas production, utilizing long-term contracts and low-cost loans to facilitate the establishment of avgas plants. The Planned Blending Program was introduced to enhance avgas production by enabling governmental assistance in the exchange and blending of avgas components among refineries, promoting cooperation and alleviating antitrust concerns. This program allowed for detailed government directives regarding blending, aimed at maximizing overall production despite potential reductions in individual refinery yields. The refineries functioned collectively as a national entity under this program, although direct control over the production of avgas components or waste disposal was not established. Additionally, the Aviation Gas Reimbursement Plan (AGRP) mitigated financial risks for oil companies, allowing recovery of unforeseen costs incurred during long-term avgas supply contracts.
During World War II, oil companies maintained private ownership of production facilities and managed their refinery operations while entering profitable contracts with the federal government for the sale of aviation gasoline (avgas). Despite profitability, these companies raised grievances regarding contract terms, specifically concerning profit limitations and government renegotiation clauses. They aimed to retain the right to challenge the constitutionality of the statute that allowed these renegotiations. The Supreme Court noted that both the government and private industry faced challenges in establishing fair compensation for wartime contracts, which included methods such as cost-plus contracts, price ceilings, and excess profits taxes. A statement from George L. Parkhurst of Standard Oil highlighted the lack of choice in contracting due to government pressure, which included the threat of seizing refineries. The government also prioritized synthetic rubber production after losing access to natural rubber sources post-Pearl Harbor, designating it as critical and establishing the U.S. Rubber Reserve Company to aid in this effort. The U.S. Defense Plant Corporation facilitated the construction of synthetic rubber and avgas-component plants, negotiating contracts worth $7.2 billion for 2,300 projects. Unlike avgas refineries, these plants were government-owned. Following the war, the Supreme Court reflected on the government's approach, noting the preference for private operation of production facilities while also promoting a broad distribution of contracts to stimulate individual initiative in production efforts.
In 1950, in response to the Korean War, Congress enacted the Defense Production Act (DPA), granting President Truman significant authority to prioritize national security production and requisition industrial resources. Following this, on September 9, 1950, Truman established the National Production Authority (NPA) and the Petroleum Administration for Defense (PAD) through Executive Order 10161. The PAD, modeled after the previous Petroleum Administration for War, was empowered to direct private companies to ensure adequate oil production, although it chose not to exercise its authority to seize plants during the Korean War.
The Baytown, Texas, and Baton Rouge, Louisiana, refineries, owned by Exxon’s predecessors, were key sites for producing aviation gasoline (avgas) and synthetic rubber during wartime. Humble Oil and Refining Company operated the Baytown refinery, while the Baton Rouge refinery was controlled by Standard Oil Company of Louisiana. Both companies invested in new technologies in the 1930s to enhance production capabilities, leading to contracts with the Defense Supplies Corporation (DSC) during World War II for the supply of 100-octane avgas.
Three significant avgas supply contracts were signed: one between the DSC and Standard Oil Company of New Jersey, and two others involving Humble and Standard LA directly supplying the federal government. These contracts included profit limitations to curb war profiteering but still allowed the companies to generate profits. Both companies received over $120 million in tax-amortization certificates during World War II and the Korean War and continued to pay dividends to their investors throughout these periods.
The avgas contracts did not grant the U.S. government authority over personnel decisions at the Baytown or Baton Rouge refineries. The contracts mandated that companies provide inspection certificates regarding product quality and quantity, unless waived by the government, which then conducted inspections upon delivery. The government neither operated equipment nor supervised daily operations or made labor decisions at the refineries. However, under the Planned Blending Program, the federal government controlled the types and amounts of crude oil and raw materials sent to these refineries, treating them as part of a larger national refinery system.
Exxon claimed that the government exerted control over production levels and processes through recommendations and directives. For example, Recommendation 8 instructed the refineries to cease using certain blending components except for specific aviation gasoline production. Another directive outlined plans for production and resource allocation to maximize avgas output. A testimony from Louis Goldsmith, a high-ranking PAW official, indicated that the government mandated production types and quantities. A 1943 PAW report emphasized maximizing output from refining units.
Additionally, PAW communicated government production expectations through telegrams, which often required rapid adjustments to meet changing wartime demands, creating frustration among refiners. The government argued that the avgas contracts did not give it decision-making powers and that it merely agreed to purchase 100-octane avgas. An expert witness for the government contended that telegrams served to encourage production rather than direct management decisions.
Beginning in the early 1940s, the federal government acquired land near refineries to establish production plants for synthetic rubber, avgas components, toluene, and other wartime materials. Many of these plants, referred to as 'Plancors,' were owned by the government until the mid-1950s, with Exxon’s predecessors responsible for their design, construction, and operation under government contracts. The government regularly inspected these facilities and provided essential raw materials.
At the Baytown site, there were four Plancors: three focused on synthetic rubber production and one on avgas components. The government purchased land for these plants from Humble Oil in 1942 and 1943. The Hydrocodimer Plancor, located within the Baytown refinery, utilized the refinery's waste processing facilities. Humble was contracted to build the plants and manage subcontractors for design and specifications. The contracts stipulated production levels and pricing, allowing Humble to withhold performance if the government unilaterally altered prices. Disputes could be submitted to arbitration.
The Baytown Plancors generated various byproducts and waste, including oil slop and rubber polymer, some of which were sent to the refinery for avgas production, while others were disposed of in Scott’s Bay. In 1946, the government sold the Hydrocodimer Plancor to Humble, with the remaining Plancors sold after the Korean War. Additionally, the government relied on the Baytown Ordnance Works, which produced over 40% of the nation's toluene and was constructed under a contract with Humble, who provided all necessary design and engineering services. The Ordnance Works included various facilities, including military barracks and tanks.
The Ordnance Works produced hazardous waste, including spent-acid sludge and acidic wastewater, with some spent-alumina catalyst disposed of at nearby dumps. Although the Works' infrastructure was mainly outside the Baytown refinery, there were exchanges of byproducts and shared waste-processing facilities, including a waste-drainage ditch leading to the Houston Ship Channel. The government transferred ownership of the Ordnance Works property to Humble in 1945 and sold it back in 1946. Following World War II, the Ordnance Works ceased operations.
At the Baton Rouge site, the government owned six Plancors, four for synthetic rubber production and two for avgas components. The land was purchased from Standard LA in the early 1940s, with Standard constructing the plants and managing subcontractors. Contracts specified production levels and pricing, allowing Standard to withhold performance if the government unilaterally changed prices. The government agreed to cover disposal costs for all waste generated.
Byproducts from the Plancors included various chemical wastes, with some sent to the Baton Rouge refinery for avgas production and others disposed of in landfills and burn pits. The Butadiene Plancor utilized the refinery’s waste-processing facilities to treat wastewater before discharge into Callaghan’s Bayou, while other Plancors discharged wastewater into the Monte Sano Bayou.
Post-World War II, some Baton Rouge Plancors were sold to Exxon’s predecessors, with the government retaining ownership of others until the end of the Korean War. The increase in production at both the Baytown and Baton Rouge sites resulted in greater hazardous waste, which was routed into nearby waterways, reflecting a prioritization of wartime production over environmental concerns.
The government acknowledged that personnel could not be reassigned from urgent tasks to focus on waste prevention and treatment, nor could construction materials be allocated for these purposes. It did not directly manage waste disposal for avgas-production, Ordnance Works, or Plancors contracts, which lacked specific waste disposal guidelines. The government did not instruct Humble or Standard LA on waste disposal methods. However, under the Plancors contracts, the government was responsible for waste-disposal costs. Additionally, the government controlled the allocation of materials necessary for more environmentally friendly waste disposal. During the war, the Petroleum Administration for War (PAW) required approval for new construction that used controlled materials, such as steel and copper.
In April 1943, the War Production Board (WPB) implemented the Controlled Materials Plan to allocate crucial materials for the war effort. A report from the U.S. Engineer Office in August 1944 indicated that the Baton Rouge refinery was violating the River and Harbor Act due to excessive waste disposal into the Mississippi River. The Engineer Office recommended the approval of a Master Separator to mitigate this pollution. Although Standard LA had considered a Master Separator prior to the war, it ultimately opted to build a silt remover during the conflict, as it required fewer critical materials. The government approved this request. After restrictions on materials were lifted in 1945, Standard LA delayed construction of the Master Separator until the 1950s. In 1953, the U.S. Public Health Service conducted an evaluation of the Baton Rouge refinery’s operations and waste management.
An investigation led to a report titled “A Study of Liquid Wastes From a Gulf Coast Petroleum Refinery,” which outlined the refinery's waste-disposal process, identified contaminants in its effluent, and suggested waste control methods. After World War II, Exxon and its predecessors managed the Baytown and Baton Rouge refineries. In 1995, Exxon settled with Texas to clean up hazardous waste at Baytown, claiming to have spent $41.7 million on remediation, with ongoing groundwater remediation and future costs anticipated. Similarly, Exxon reported over $30.5 million spent voluntarily on cleanup at Baton Rouge and is currently conducting remediation and monitoring as required by Louisiana's environmental authorities.
In March 2010, Exxon sued the United States in Virginia for CERCLA liability related to Baytown cleanup costs, but the case was transferred to Texas. Exxon subsequently filed a related suit concerning Baton Rouge. The U.S. counterclaimed under CERCLA’s contribution provision for both sites. The cases are being coordinated, with the court bifurcating pretrial proceedings into liability and cost phases. As of June 14, 2013, both parties completed Phase 1 discovery and filed for partial summary judgment, with Exxon seeking to hold the U.S. jointly and severally liable for cleanup costs as a prior operator of both refineries and seeking contribution for its past and future costs.
Exxon requests an equitable distribution of responsibility for both incurred and future cleanup costs through a "production-based approach." Meanwhile, the United States seeks summary judgment, asserting that it did not operate the refineries during two wartime periods, claiming that Exxon's predecessors managed both refineries and associated plants. The United States also opposes Exxon's motion for summary judgment regarding the operation of these plants and argues that future cost allocations are too speculative. The court will evaluate these motions based on evidentiary records and the standard for summary judgment under Federal Rule of Civil Procedure 56. Summary judgment is warranted if the moving party demonstrates no genuine dispute of material fact and entitlement to judgment as a matter of law. The movant is responsible for indicating record portions that show a lack of material fact disputes. If the nonmoving party carries the burden of proof at trial, the movant can fulfill its initial burden by highlighting the absence of supporting evidence for the nonmoving party's claims. The nonmoving party must provide specific evidence to counter the motion and cannot rely solely on allegations or minimal evidence. The court will consider all reasonable inferences favoring the nonmoving party and must assess each summary judgment motion independently when both parties file such motions.
Failure to adequately support or address assertions of fact can lead the court to consider those facts undisputed under Rule 56 of the Federal Rules of Civil Procedure. The parties’ cross-motions involve several liability issues, categorized as follows: (1) whether the contribution provision of CERCLA, 42 U.S.C. § 9613(f)(3)(B), serves as the sole mechanism for Exxon to recover cleanup costs for the Baytown site and the timeliness of such a claim; (2) the potential liability of the United States as a prior operator of the refineries and chemical plants; and (3) Exxon’s entitlement to joint and several liability or an equitable allocation of costs.
Exxon disputes the need to file a CERCLA claim as a contribution action under § 9613(f)(3)(B), which could affect the timeliness of its claim. In 1995, Exxon entered into two administrative consent orders with the State of Texas concerning the Baytown site. The United States contends these agreements qualify as administrative settlements under § 9613(f)(3)(B), restricting Exxon from recovering costs incurred under those settlements under § 107. Conversely, Exxon maintains that the agreements pertain solely to state-law violations and thus are not administrative settlements under CERCLA, allowing for potential recovery under § 107 for costs voluntarily incurred between 1986 and 1995, or for costs post-agreement that fall outside its scope.
The court concludes that (1) § 9613(f) serves as the exclusive remedy for a potentially responsible party (PRP) seeking to recover cleanup costs following an administrative settlement; (2) Exxon’s agreements with Texas qualify as administrative settlements under § 9613(f); (3) Exxon cannot use § 107(a) to recover voluntarily incurred costs prior to the state agreement or outside its scope; and (4) Exxon’s contribution claim under § 9613(f)(3)(B) is timely for summary judgment purposes. Additionally, the amendment to CERCLA in 1986 established a clear contribution right for PRPs, allowing them to seek contribution from non-settling parties after resolving their liability through administrative or judicial settlements.
In 2007, the Supreme Court clarified that potentially responsible parties (PRPs) can seek cost recovery under Section 107 of CERCLA if they have incurred cleanup costs (United States v. Atlantic Research Corp.). The Court distinguished between the rights under Sections 107(a) and 113(f), noting that these sections provide different remedies based on the procedural context. A PRP that satisfies a settlement or judgment may pursue contribution under Section 113(f), but cannot recover under 107(a) for costs reimbursed to another party. The Court acknowledged that costs incurred under a consent decree present a complex scenario, where the recoverability under either section remains unresolved. It was established that voluntarily incurred costs are recoverable only under Section 107(a)(4)(B), while reimbursement costs are recoverable only under Section 113(f). The government contended that under Section 113(f)(3)(B), a PRP like Exxon, which incurred expenses through administrative settlements, has an exclusive remedy. The text and structure of CERCLA, alongside judicial interpretations since Atlantic Research, support this assertion. Section 113(f) includes provisions for equitable allocation of costs and protection against contribution actions for settled parties. Additionally, the statute of limitations for contribution actions under Section 113 is shorter than that for cost-recovery actions under Section 107(a). If PRPs could choose either section indiscriminately, the specific limitations and provisions of Section 113 would be rendered ineffective. Courts are guided to interpret statutes in a way that ensures all provisions have meaningful impact, reflecting Congress's intent in amendments.
Allowing a qualifying contribution plaintiff to proceed under § 9607(a) would effectively nullify the SARA amendment and undermine the Congressional requirements for contribution claims outlined in § 9613. The text, structure, and legislative history indicate that § 113(f) serves as the exclusive remedy for potentially responsible parties (PRPs) incurring cleanup costs from administrative settlements. Every appellate court that has addressed this issue since the Supreme Court's decision in Atlantic Research has reached this conclusion.
While a strict interpretation of "necessary costs of response" in § 107(a) might imply that parties complying with enforcement actions could sue under that section, courts, including those in the Sixth and Eleventh Circuits, restrict plaintiffs to § 113 contribution actions when available. Specifically, if PRPs incur costs in response to an administrative settlement, they must proceed under § 113(f). Cases such as Hobart Corp. and Solutia, Inc. have upheld the dismissal of § 107 claims from PRPs bound by consent decrees for cleanup obligations.
Furthermore, PRPs entering consent decrees with the EPA are confined to seeking contribution under § 113(f). The cases cited by Exxon, Bernstein and W.R. Grace, do not support a different outcome, as they allowed cost-recovery actions under § 107(a) based on a distinct reasoning. The courts in those cases determined that the agreements in question did not qualify as "administrative settlements" under § 113(f)(3)(B), thus precluding the option of bringing a § 113(f)(3)(B) contribution action. The consensus among the circuits is clear: plaintiffs are restricted to contribution remedies when such remedies are available.
The Second Circuit in W.R. Grace determined that a consent order did not resolve liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and was not an administrative settlement under section 113(f)(3)(B). The court clarified that the consent order did not address CERCLA claims that could be initiated by the federal government. The key aspect of section 107(a) is whether a party undertook remedial actions without administrative or judicial action, allowing the plaintiff-PRP to seek cleanup costs under 107(a) despite entering a non-qualifying agreement with the state.
Exxon’s Agreed Orders with the Texas Commission on Environmental Quality (TCEQ) from March and July of 1995 were identified as administrative settlements under section 113(f)(3)(B). The first Agreed Order stated that Exxon and TCEQ settled all matters in controversy related to remediation at the Baytown site and required Exxon to carry out various remediation actions, including identifying and containing hydrocarbon plumes, submitting a groundwater quality assessment plan, and implementing a monitoring program. If Exxon withdrew from the Order, TCEQ could refer the matter to the Texas Attorney General for enforcement, and Exxon could still face criminal liability for noncompliance. Exxon has claimed to have conducted extensive investigatory and remediation activities at the Baytown site and reported over $41.7 million in incurred response costs, with ongoing expenditures expected.
Exxon, in its memorandum supporting a motion for partial summary judgment, initially argued that its Agreed Orders with Texas fell under the contribution provision of Section 113(f)(3) of CERCLA. However, faced with the possibility that this remedy is exclusive and may be time-barred, Exxon now contends that these Orders do not qualify as administrative settlements under Section 113(f)(2). The court aligns with Exxon’s original argument, asserting that Section 113(f)(3)(B) applies if Exxon has resolved its liability to a state for response actions or associated costs in an administrative settlement, without specifying the type of liability that must be resolved.
The court highlights that Congress did not restrict Section 113(f)(3)(B) solely to settlements resolving CERCLA liability, as "response action" encompasses a wide array of remedial activities beyond CERCLA. It cites case law where courts have recognized costs from compliance with the Resource Conservation and Recovery Act (RCRA) as recoverable under CERCLA. The document notes that Congress intended CERCLA to operate cumulatively with RCRA, not merely as an alternative, and emphasizes that prior rulings support the recoverability of RCRA compliance costs in CERCLA actions.
Exxon refers to the Trinity Industries case, which clarified that Section 113(f)(3)(B) does not necessitate a specific resolution of CERCLA liability, suggesting that the language in some administrative settlements implying a resolution of CERCLA liability is not essential to establish a resolution of liability for a response action. Other courts have similarly concurred with this interpretation, affirming that such explicit declarations are not mandatory.
Niagara Mohawk Power Corp. v. Chevron U.S.A. Inc. establishes that Section 113(f)(3)(B) of the CERCLA statute allows for contribution claims without requiring a determination of CERCLA liability. The case ASARCO LLC v. Atlantic Richfield Co. aligns with this interpretation, affirming that liability for some or all response actions can be assessed under this provision. Exxon’s administrative settlements with the Texas Commission on Environmental Quality (TCEQ), encapsulated in Agreed Orders, were deemed to fall under Section 113(f)(3)(B), fully addressing its potential civil liability for cleanup at the Baytown site, except for one potential federal criminal claim. Although the Agreed Orders did not specifically mention CERCLA, they resolved various liability types, and Exxon's compliance costs under the Resource Conservation and Recovery Act (RCRA) are acknowledged as “response costs” within CERCLA’s administrative settlement framework.
In contrast, Exxon’s reliance on the case Differential Development v. Harkrider Distributing Co. is misplaced. In Differential, the agreement was voluntary, allowing for withdrawal at any time and did not resolve any claims, contrasting with Exxon's situation. Exxon asserts a right to recover costs incurred at the Baytown site before and after the Agreed Orders under Section 107(a), arguing that some costs were not covered by the Orders. Exxon cites past district court decisions supporting the notion that potentially recoverable costs can exist outside of administrative orders, particularly under consent decrees.
Refusal to dismiss a potentially responsible party's (PRP) claim under Section 107(a) for costs incurred before an administrative order was upheld, allowing PRPs to assert both a 107(a) cost-recovery claim for voluntary response costs and a Section 113(f) contribution claim for compelled response costs. The court highlighted that the distinction between voluntary and involuntary costs is not determinative; instead, the focus is on the PRP's procedural circumstances. The case of Atlantic Resources emphasized that both 107(a) and 113(f) provide complementary remedies for parties in different procedural situations. A review of case law indicated that no cases treated the voluntary/compelled cost distinction as decisive. CERCLA's inquiry is whether response costs align with the national contingency plan, not their voluntary or involuntary nature.
In Exxon’s case regarding the Baytown Site, the court found Exxon’s Section 113(f)(3)(B) contribution claim to be timely, rejecting the government's argument that it was time-barred under the three-year statute of limitations in Section 113(g)(3). Exxon contended that this limitation does not apply to initial contribution actions arising from administrative settlements with a state. The court concurred, noting that the statutory language and Fifth Circuit case law indicate that the time limits specified in Section 113(g) do not apply to state settlements. Section 113(g) outlines different limitation periods for CERCLA actions, distinguishing between cost-recovery actions under Section 107(a) and contribution claims under Section 113(g)(3). The court noted that none of the triggering events for Section 113(g)(3) directly relate to settlements with a state, leading Exxon to argue that there may be no statute of limitations applicable.
A six-year statute of limitations applies to the claim in question, as it does not fall under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) statute. The Fifth Circuit in Geraghty v. Miller determined that the six-year statute of limitations in CERCLA section 113(g)(2) is applicable to initial contribution actions, rejecting Exxon’s argument that no statute of limitations should apply. The court recognized three potential approaches to the issue and chose the second approach, which affirms the use of the six-year statute.
However, the government argues against the applicability of Geraghty in light of two subsequent Supreme Court cases, Cooper Industries v. Aviall Services and United States v. Atlantic Research. In Aviall, the Supreme Court ruled that contribution actions under section 113(f)(1) can only be initiated during or after a civil action under sections 106 or 107 of CERCLA, impacting the understanding of the statute of limitations. Atlantic Research clarified that a potentially responsible party (PRP) that settles or pays a judgment cannot opt for the longer six-year statute for cost-recovery actions when a shorter three-year statute applies for contribution claims.
The government contends that these decisions necessitate a three-year statute of limitations for administrative settlements, citing Hobart Corp. v. Waste Management, which held that section 113(g)(3) governs the statute of limitations for all contribution actions related to administrative settlements, thus rendering Geraghty obsolete. Other cases, such as Niagara Mohawk Power Corp. v. Chevron and Chitayat v. Vanderbilt Associates, support this view, confirming that claims under section 107 have a six-year limitation, while those under section 113 are subject to a three-year limitation.
In the absence of the Geraghty ruling, the court would likely have aligned with the government's position regarding the applicable statute of limitations for contribution actions. However, the Supreme Court's decisions cited do not specify that the three-year limitations period under § 113(g)(3) applies to such actions related to administrative settlements with a state. Until a definitive ruling from the Supreme Court or the Fifth Circuit contradicts the applicability of the six-year limitations period under § 113(g)(2), the court is bound by Geraghty, which governs Exxon’s initial contribution action for costs incurred at the Baytown site.
The excerpt also discusses the criteria for interlocutory appeals, emphasizing that a “controlling question of law” with substantial grounds for differing opinions might justify such an appeal to accelerate litigation outcomes. The court references prior cases illustrating when interlocutory appeals were deemed appropriate due to significant legal questions that could affect the case's resolution.
Ultimately, the court decides against certifying an interlocutory appeal on the statute of limitations issue, as it would only advance the termination of litigation in one of the related cases, and both cases share overlapping evidence and testimony. It concludes that § 113(f) serves as Exxon’s exclusive remedy for recovering cleanup costs at the Baytown site, asserting that the claim is timely under current Fifth Circuit law. The court is set to determine whether the United States qualifies as an operator of the refineries and plants at both the Baytown and Baton Rouge locations, acknowledging Exxon's liability as both a former and current owner.
The parties agree on the liability of the United States as a prior owner of the plants at both the Baytown and Baton Rouge sites and acknowledge Exxon’s liability as both a former and current operator of the refineries and plants. Disputes arise regarding whether the refineries and plants constitute a single “facility” under CERCLA and whether the federal government operated these refineries during World War II and the Korean War. Exxon seeks summary judgment asserting that the government did operate the refineries and plants, while the government seeks summary judgment asserting it did not operate the refineries. The court concludes that: 1) the refineries and plants at each site are sufficiently integrated to be considered a single “facility”; 2) the government was not an “operator” of the refineries at either site; and 3) the government, alongside Exxon, operated the plants at both sites.
Both parties agree that the oil refineries and chemical plants are classified as “facilities” under CERCLA, but they dispute whether they are part of a single “facility.” If they are deemed one facility, the government’s admission of liability as a prior owner of the plants would extend liability to the refineries. Exxon argues for a unified facility designation, while the government warns against broad interpretations of CERCLA that may expand liability. The government concedes that one Baytown plant, the Hydrocodimer Plancor, is properly included in the Baytown site facility, while arguing that the other plants at Baytown and all plants at Baton Rouge should be classified as separate facilities due to their independent operations, differing waste disposal processes, and treatment as distinct entities by state regulators. The concept of a “facility” is crucial for Exxon’s claims under CERCLA, which defines “facility” broadly to support the statute's remedial purpose.
A facility under CERCLA is broadly defined to include any building, structure, equipment, or site where hazardous substances are deposited or located, as outlined in 42 U.S.C. 9601(9). Courts have interpreted this definition expansively, emphasizing the need for context-specific applications to uphold CERCLA's goals of efficient hazardous waste cleanup and assigning cleanup costs to responsible parties. For instance, the Baytown site and the Baytown Ordnance Works were deemed part of the same facility due to their operational integration, despite the Ordnance Works being on federally owned land outside the refinery boundary. The government acknowledges that these sites shared waste disposal processes and were located within the refinery's operational area. Legal precedents indicate that ownership boundaries should not artificially separate facilities, as demonstrated by cases rejecting attempts to define facilities based solely on property lines. The close operational relationship between the refinery and the Ordnance Works supports their classification as a single facility under CERCLA, reinforcing that the definition of hazardous substances extends beyond mere waste materials.
A broad range of substances designated as hazardous under CERCLA is identified. While the Ordnance Works’ lesser involvement in waste disposal compared to the refinery may influence fault apportionment, it does not affect liability. The remaining plants, located outside refinery boundaries and operating different waste disposal processes, present a more complex issue. For instance, waste from the Baytown rubber plants was managed through separate systems, discharging upstream of refinery outfalls, while similar systems were present at the Baton Rouge site, directing waste away from the refinery. The release of hazardous substances poses risks that transcend the boundaries of responsible parties, with wastes from both sites contaminating larger water bodies.
The court asserts that, under CERCLA, the entire site, encompassing both refineries and plants, constitutes a single “facility” for liability purposes due to their interconnected operations supporting the war effort. Exxon acknowledges its liability as both prior and current operator, while the U.S. admits prior ownership liability, making both parties responsible for remediation costs. The court plans to evaluate how to allocate these costs fairly, considering the distinct roles of the refineries and plants. Although liability has been stipulated, the court will use the Supreme Court’s definition of operator liability as a guideline for determining equitable responsibility among the parties.
CERCLA defines an “operator” as any person “operating” a facility, with liability for remediation costs contingent upon managing or directing operations specifically related to pollution, including hazardous waste leakage, disposal, and environmental compliance. The Supreme Court in United States v. Bestfoods clarified that an operator must have a direct nexus to the hazardous waste at the facility. Courts evaluate operator status by considering the totality of the circumstances surrounding a contractor's involvement. Exxon asserts that the "indicia of control" test from FMC Corp. v. U.S. Dep’t of Commerce applies, arguing that the U.S. government exercised "substantial control" over its refineries and plants. Despite acknowledging that FMC predates Bestfoods, Exxon cites various cases applying FMC's principles post-Bestfoods. The government counters that FMC’s relevance is questionable, noting that FMC's operator-liability framework was built on the “actual control” test, which Bestfoods criticized as overly broad. Instead, Bestfoods established a narrower standard, emphasizing the need for operators to specifically manage operations related to pollution.
The objection to the actual control test stems from its conflation of direct and indirect liability, focusing on the relationship between parent and subsidiary rather than direct interactions with hazardous waste management. Lower courts have indicated that the Federal-Mogul Corporation (FMC) test is ineffective following the Supreme Court's Bestfoods decision, which emphasizes specific control over hazardous waste disposal processes. Notably, the Third Circuit's application of FMC does not align with Bestfoods, as seen in various cases including Miami-Dade County and Lockheed Martin Corp., where courts found that the United States' regulatory role did not equate to operational control over environmental compliance or waste disposal.
Under the Bestfoods standard, the government was deemed not to have operated the Baytown or Baton Rouge refineries, despite having regulatory authority during wartime. Exxon contends that the government's extensive regulation signifies a directive role in refinery operations, citing the Brighton case. In Brighton, a township was held liable as an operator for its involvement in managing a dump site, particularly after being mandated by state authorities to improve waste management practices. The township's appeal against this liability highlighted its claim of insufficient control to qualify as an operator under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
The Sixth Circuit recognized the Supreme Court's recent clarification of "operator" status in Bestfoods but deemed that the corporate-form cases did not apply to the current situation involving government actions. The court sought to define "operator liability" distinct from corporate contexts, focusing on two scenarios: (1) when a government entity exercises its police power to mitigate public health risks from a dump, and (2) when government "regulations" function merely as oversight rather than direct management. The panel concluded that mere regulation does not create liability; actual operation or management does.
Applying this framework, the panel found insufficient evidence to determine whether Brighton Township was an operator of the facility, vacating the district court's ruling and remanding for further proceedings. The dissent argued that the Bestfoods standard should uniformly apply to both corporate and government entities, asserting that the Township's actions did not meet the threshold for operator liability. Under the Bestfoods standard, liability requires direct management or conduct related to waste disposal and compliance, rather than general influence.
The dissent highlighted that Brighton's governmental entity made significant operational contributions, including maintenance and remediation of the dump, which was not mirrored by the federal government's involvement in the current case. The federal government's role was limited to contractual relationships during wartime, which courts have consistently ruled are insufficient for establishing operator liability. Direct and specific involvement in waste disposal is necessary for such liability, and merely entering into contracts does not equate to operator status.
The court determined that the government was not liable as an operator for contamination resulting from its World War II contracts for aircraft parts, as it did not manage or conduct daily operations at the facilities despite regulating raw material distribution and performing quality-control inspections. The government acted as an "interested consumer" in contracts with suppliers, including Exxon’s predecessors, which granted significant bargaining power. Both Standard Oil and Humble Oil had contracts that allowed for negotiation of prices and specifications, with Standard not obligated to deliver products until an agreement was reached. Humble maintained the ability to continue selling avgas to existing customers, including military and commercial airports. Although profits were capped at 6%, both companies consistently earned profits comparable to pre-war industry averages and were able to pay dividends during and after the war, receiving substantial tax-amortization certificates. Exxon claimed that the threat of refinery seizure coerced its predecessors into compliance, but the government never seized or threatened to seize the Baytown or Baton Rouge refineries, and evidence suggested that Exxon’s predecessors willingly supported defense needs. The court noted that the mere threat of seizure does not establish liability if it was never enacted and found that Exxon’s unsupported claims regarding coercion and dissatisfaction with contract terms were insufficient to contest summary judgment.
Evidence presented does not transform a consensual relationship into one of coercion. Exxon references a 1943 letter from George Parkhurst of Standard to George H. Hill, Jr. discussing oil companies' reluctance to sign contracts that waived their rights under the renegotiation statute, which allowed government renegotiation of excessive wartime profits. The letter was general, did not mention Standard LA or Humble specifically, and indicated that companies were generally willing to accept contractual clauses if they were contingent on the statute’s constitutionality.
The government’s authority to control private entities for wartime supply does not meet the Bestfoods standard, which requires a direct connection between government actions and operational decisions regarding waste management and environmental compliance. Prior cases, such as Coeur D’Alene Tribe v. Asarco, demonstrated that merely entering into government contracts does not establish the government as an operator responsible for environmental issues.
Evidence shows that no government officials managed the day-to-day operations of the refineries, which were run by personnel from Humble and Standard LA. Contracts did not define the management of waste disposal, and there is no indication of federal personnel overseeing refinery operations. Previous rulings support the finding that the government bears no operator liability, as it did not engage in daily management or direct operations.
The United States defendants did not oversee the daily operations at an aircraft-manufacturing plant, which is central to Exxon’s argument regarding government inspections at refineries. Exxon contends that these inspections imply government operation of the facilities. However, courts have consistently rejected similar claims, citing cases such as Miami-Dade County, where the court found no liability for the federal government as a past operator since government employees' roles focused solely on enforcing contract terms and product quality rather than operational management. In cases involving inspections for compliance with safety regulations, such as United States v. Vertac Chemical Corp. and Litgo, the courts determined that federal inspections alone did not establish operator liability under CERCLA.
Evidence indicates that a government inspector at the Baton Rouge refinery was tasked with monitoring product quality and coordinating shipping, with no involvement in day-to-day management or waste disposal. The government did not hire or fire refinery employees and had no contractual authority over personnel decisions. Citing Lockheed Martin Corp. v. United States, the presence of government oversight did not equate to control over hazardous waste disposal. Furthermore, Exxon’s assertion that wartime control over the labor market gives rise to operator liability is unsupported, as established case law requires more direct involvement in operational management than general labor regulation.
Federal regulation of labor mobility and work hours does not equate to direct managerial or supervisory control over a facility's workforce. There is no evidence that the government designed, specified, or provided equipment for the refineries; Exxon’s predecessors were responsible for designing and constructing their own processes and equipment. The Baytown and Baton Rouge refineries had existing infrastructures capable of producing war products and were valuable to the war effort in their current state. Exxon argues for judicial consideration of unique wartime factors affecting CERCLA liabilities, referencing several cases. However, even if FMC is still relevant following Bestfoods, this case lacks the pervasive government control present in FMC and similar World War II cases. The Shell case, which dealt with arranger liability, concluded that the government was not liable for hazardous waste disposal despite its involvement during the war. Cadillac Fairview did not address operator liability in a refinery context but focused on equitable cost allocation for waste remediation, with significant government oversight. In contrast, the government's role here was not similar; it lacked unrestricted control and direct participation in waste disposal decisions. Bestfoods, rather than FMC, governs the situation. Exxon's claim that federal material rationing limited waste disposal capabilities is countered by evidence that the government rejected requests to allocate materials for waste disposal projects. Specifically, a 1944 request to build an acid-sludge burning facility at the Baytown refinery was denied, as it was deemed unnecessary given the approval for other construction and overhauling projects.
In 1931, Standard LA considered building a new master separator at its Baton Rouge refinery but did not proceed. Subsequent studies in 1939 revealed inadequate waste-disposal facilities leading to oil escaping into the river, prompting plans for changes. Significant action only occurred after a major oil spill in 1944, after which the United States Army Corps of Engineers determined that the refinery's waste disposal practices violated the River and Harbor Act. The Corps warned that further investigations would require evidence of corrective actions, or they would escalate the matter to the U.S. District Attorney.
In July 1944, Standard LA sought permission from the PAW to use scarce wartime materials for both a master separator and a silt-treating system. They prioritized the silt-treating system, arguing it could be implemented more quickly and effectively address pollution with a lower investment. The PAW approved the silt-treatment unit, completed in September 1945, but denied the master separator project due to material constraints related to higher-priority wartime efforts. Although restrictions on materials were lifted in 1945, Standard LA did not commence operation of the master separator until October 1952.
The government's involvement was limited to resource allocation and did not extend to directing or managing Standard LA's waste-disposal operations. Relevant legal precedents suggest that mere issuance of permits or allocation decisions do not establish operator liability unless there is clear evidence of direct management or control over the waste-disposal processes at the facility.
Evidence indicating the Corps' awareness of pollution potential at the Baton Rouge refinery does not establish the United States' liability as an operator under CERCLA. Previous case law, including Coeur D’Alene Tribe and Lockheed Martin, asserts that mere knowledge of another's disposal practices is insufficient for operator or arranger liability. If the government's actions were deemed to create operator liability, it would result in broader liability for resource-allocation decisions made during World War II, which is prohibited by precedent. Exxon fails to substantiate its claims of liability with adequate legal support, and the evidence shows limited federal control over refinery operations, negating operator liability.
The court finds no evidence of U.S. involvement in environmental compliance at the refineries, nor any specific actions that would classify it as an operator under CERCLA. Exxon's arguments regarding the U.S. role during the Korean War are similarly unsubstantiated. Consequently, the court concludes that the U.S. did not operate the Baytown or Baton Rouge refineries during either World War II or the Korean War.
Regarding the Plancors and Ordnance Works, while the government acknowledges ownership of the chemical plants, it contests Exxon's claim of operator liability but does not seek a declaratory judgment. The U.S. is liable as a "covered person" for equitable cleanup costs, but the determination of whether it operated the plants is still in question. The government's oversight in synthetic-rubber plant operations and waste disposal grants it prior operator liability under Bestfoods, as it required government approval for significant operational decisions, including waste disposal and plant modifications.
A government official was permanently stationed at a Baytown plant, where he expressed frustration over plant employees' habitual rush to clock out at the end of shifts, leading to significant time loss. He urged the general contractor to rectify the situation or risk escalation to higher authorities. Unlike the inspector at another facility, this official had substantial oversight over daily operations and made direct decisions regarding waste disposal and environmental compliance. During World War II, the Army’s Ordnance Department acknowledged that spent alumna-catalyst waste was poorly managed, often disposed of in open dumps, and recognized delays in improving waste-processing facilities due to prioritization of immediate wartime objectives. Consequently, many facilities were designed to meet only minimum requirements. In 1946, the RuR began to address pollution concerns more seriously and hired an industrial waste-management expert to inspect and recommend improvements for synthetic-rubber plants. During this period, Humble required government approval for wastewater treatment installations and engaged with Texas environmental officials regarding pollution from the Baytown site. The government’s control over the Ordnance Works’ operations and waste disposal aligns with the Bestfoods operator standard.
The Ordnance Works was equipped with military barracks, a mess hall, air raid shelters, high-security fencing, and guard towers, resembling a U.S. Army base rather than a chemical plant. Full-time Army personnel, including a commanding officer and an infantry company, were stationed there, significantly influencing toluene production. Humble employees reported strict oversight from the Ordnance Department, which issued numerous operational directives and required extensive reporting on various operational metrics. Regular inspections by the Eighth Service Command also mandated monthly assessments of water supply and sewage facilities.
Regarding CERCLA operator liability, the court ruled that both Exxon and the United States operated the refineries and the Baytown Ordinance Works. The determination of each party’s liability will occur during the equitable allocation phase, as it hinges on their operational involvement in specific facility segments. Although the U.S. did not run the refineries, it acknowledged its operation of the Planeors and the Baytown Ordnance Works, leading Exxon to claim joint and several liability for costs incurred. Exxon's alternative request for a declaratory judgment seeks to hold the U.S. accountable for its share of costs.
The U.S. contends that joint and several liability is unsuitable in this context, citing case law that suggests such liability is not applicable when one liable party sues another under CERCLA. Exxon argues joint and several liability is the default standard in § 107(a) actions, with exceptions only if a party can show that its harm is distinct from others. The government counters with case references indicating that the nature of the lawsuit affects the liability standard, particularly distinguishing between cost recovery actions and contribution actions.
Liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) is several only in contribution actions, meaning the district court incorrectly imposed joint and several liability on Hess and Magellan. Elementis restricts joint and several liability for Exxon’s Baytown site costs, which cannot be recovered under Section 107(a), but does not address the Baton Rouge site costs. Section 107(a) does not require joint and several liability, as established in In re Bell Petroleum Services, where it was specified that such liability is not mandated under CERCLA. The Supreme Court in Atlantic Research assumed without deciding that Section 107(a) might allow for joint and several liability but clarified that liability scope is determined by common law principles. The government contends that common law should prevent Exxon from imposing joint liability on other parties. The court concludes that even if joint and several liability were applicable, the government’s counterclaim for contribution under Section 113(f) mitigates any inequitable distribution. Thus, the court opts for an equitable allocation of fault rather than joint and several liability, considering factors such as the parties' contribution to hazardous waste disposal, the amount and toxicity of the waste, their involvement and care in handling it, and their cooperation with authorities. Courts have discretion in determining which equitable factors to apply, often referencing the Gore factors and additional Torres factors for allocation methodology.
Cleanup cost allocation under CERCLA involves several critical factors: (1) the extent of a party's responsibility for the waste; (2) the party's level of culpability; (3) the benefits the party gained from waste disposal; and (4) the party's financial capacity to contribute to costs. Courts also consider additional factors including the parties' knowledge of contaminating activities, the value of these activities to national defense, indemnification agreements, financial benefits from remediation, and concerns about double recoveries or profits from contamination.
Exxon has proposed a “production-based approach” for fault allocation in Phase II of the case, which would use production volumes from facilities to estimate hazardous waste generation, emphasizing periods before improved waste management technologies were adopted, and attributing more fault to operators than owners. The United States opposes this methodology, suggesting that equitable allocation and its methodology should be decided after reviewing more evidence, including expert testimony. The court agrees with the United States, stating that deciding on allocation methods is premature and will be addressed in Phase II. Additionally, Exxon seeks a declaratory judgment affirming the United States' liability for future cleanup costs at both sites and its equitable share of those costs.
The United States seeks a declaratory judgment establishing liability only for unspecified future costs, postponing equitable allocation until those costs are incurred and facts are sufficiently established. The court affirms liability for past and future costs, referencing Section 113(g)(2) of CERCLA, which mandates a declaratory judgment on liability in cost-recovery actions. It emphasizes that while a declaratory judgment is necessary for Exxon’s Section 107(a) claims regarding past and future cleanup costs, it is not required for Exxon’s Section 113(f) contribution action, as the statute lacks explicit provisions for declaratory relief in such cases. However, the statute does not prohibit declaring liability in contribution actions, and courts have noted the importance of declaratory relief in facilitating prompt cost recovery and clarifying parties' liabilities before costs are incurred. Exxon has demonstrated that it has already spent significant amounts on cleanup ($41 million at Baytown and $31 million at Baton Rouge) and is likely to incur additional costs. The controversy is deemed sufficiently real to warrant a declaratory judgment on the United States’ liability, though the court must still evaluate the basis for a judgment on fault allocation for future costs, including those related to offshore cleanup efforts. The United States does not contest the incurred costs but questions the record's support for future cost allocation.
The court has determined that it is premature to allocate fault at this stage and therefore declines to issue a summary declaratory judgment regarding the United States' equitable share of future costs. A declaratory judgment on the allocation of costs may be considered in Phase II, provided the evidence is reliable and not speculative. In the current ruling, the court partially grants and partially denies Exxon's motions for summary judgment on Phase I liability and allocation, as well as the government’s motions on the same issues. A declaratory judgment is entered affirming the United States' liability for its equitable share of past and future cleanup costs at the Baytown and Baton Rouge sites, with the specifics of the cost allocation to be resolved in Phase II. The document includes a glossary of terms and references Exxon's historical predecessors at these sites for clarity. The court also outlines relevant federal regulations related to hazardous substance cleanups under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).
"Release" encompasses various forms of environmental contamination, including spilling, leaking, discharging, or disposing of hazardous substances. Notably, it excludes: (A) workplace-related exposure claims against employers; (B) emissions from vehicle and vessel engines; (C) nuclear material releases governed by the Atomic Energy Act; and (D) standard fertilizer applications. The term "environment" includes navigable waters, groundwater, and ambient air under U.S. jurisdiction. "Disposal" refers to the improper placement of solid or hazardous waste in a manner that allows it to enter the environment. Under Section 120(a)(1) of CERCLA, the federal government waives sovereign immunity, making federal entities liable under the same conditions as private parties, as upheld in United States v. Shell Oil Co. The document notes that Humble Oil was not involved in managing the Copolymer Plancor, which was operated by General Tire from 1943 to 1955, and discusses the transfer of leases related to the Butadiene and Hydrogenation Plancors during the early 1950s.
Standard LA owned the land and buildings in question, while the government possessed part of the machinery and equipment. The Supreme Court has defined "contribution" under CERCLA in line with common-law, allowing a tortfeasor to recover from others responsible for the same tort after paying more than their fair share. The Fifth Circuit has not addressed this issue. Exxon argues that section 107(a) permits any person to initiate a cost-recovery action, including potentially a PRP involved in an administrative settlement. However, established statutory construction principles dictate that the specific provisions of section 113(f) take precedence over the broader language of section 107(a). Courts assume that Congress intends significant effects when amending statutes. The voluntary agreement in Differential Development was not deemed an administrative settlement partly due to the lack of CERCLA-specific language. Recent cases indicate a possible retreat by the Second Circuit from its previous stances regarding what constitutes a "response action" under CERCLA, suggesting that agreements lacking explicit CERCLA language may still qualify as "response actions" under broader interpretations.
A party's ability to pursue a contribution action under § 113(f)(1) is determined by its procedural circumstances rather than the nature of the alleged costs. Courts distinguish between 'compelled' and 'voluntary' cleanups, although this distinction is somewhat artificial since most cleanups occur under the threat of potential CERCLA liability. In a relevant case, a court dismissed a § 9607(a) cost recovery claim because a § 9613(f)(1) contribution claim was already available due to a prior EPA lawsuit. The principle is that § 107(a) is only applicable when § 113(f) is not an option. Exxon has indicated it spent only $200,000 on cleanup outside the settlement of the $45 million sought for the Baytown site. Judicial admissions in pleadings are binding, meaning Exxon's statements could limit its recovery under § 107(a). The government argues that Exxon's contribution claim is untimely under the six-year statute of limitations in § 113(g)(2), asserting it began in 1995 when administrative orders were entered and that Exxon did not file suit until 2010. However, the statute of limitations starts upon completion of the removal action or initiation of remedial construction, not the date of the administrative order. Additionally, agreements between the government and Exxon beginning in December 2003 tolled the statute of limitations. The court finds the limitations inquiry is fact-specific and rejects the government’s argument at this stage, allowing for the possibility of revisiting this defense with a more detailed showing in later litigation phases.
Exxon contended in its briefs that it was not an operator of its refineries or plants from 1941 to 1955. However, during oral arguments, Exxon acknowledged its operational role regarding both its and the government’s facilities for liability purposes under CERCLA. The court granted the government’s motion and denied Exxon's motion concerning these issues. While this ruling does not prevent attributing less fault to the government due to its lower culpability in waste generation, it emphasizes that fairness concerns regarding liability for the entire Commerce Site may only be relevant in future apportionment or contribution phases. The government maintains that the remaining plancors should be evaluated separately, as they were developed later and treated distinctly by subsequent owners and the State of Texas. The court referenced past decisions indicating that operator liability requires active involvement in contamination decisions, a standard that contrasts with earlier interpretations that considered mere authority as sufficient for liability. Several cases were cited to illustrate that without direct management or involvement in waste disposal, entities may not qualify as operators under CERCLA. The mention of companies objecting to statutory renegotiation clauses is included, but the court concurs with the government that it is not liable as a prior operator based on current legal standards.
In FMC, the government's involvement included supplying equipment, managing the labor force, controlling product pricing, and determining purchasers, which established liability under CERCLA due to substantial control over operations. In contrast, cases like Twp. of Brighton illustrate that federal liability arises only when involvement exceeds mere regulation. The key question is whether the government operated the facility or simply regulated it. In the current case, Brighton Township's non-regulatory actions differ from those in U.S. v. Dart and U.S. v. New Castle, where the U.S. was not liable for waste from manufacturing due to insufficient operational involvement. Additional cases support this, showing that even with regulatory oversight, lack of managerial control negates operator liability. Exxon claims its predecessor sought government approval for constructing a master separator during WWII, but evidence is limited, with no record of a 1943 request. Exxon argues that the government made several unilateral waste disposal decisions related to refinery improvements, including denials and approvals concerning waste processing facilities at Baytown and Baton Rouge.
Decisions regarding the use of materials for constructing a back-up acid-sludge burner at Baytown and a master separator at Baton Rouge are central to Exxon's claims. Exxon references five instances related to these projects. The government contests the qualifications of Exxon's expert witness, A.J. Gravel, arguing he lacks the necessary historical expertise to aid in understanding the WWII and Korean War contexts, but does not dispute his qualifications on non-historical matters. The government asserts that Gravel’s testimony does not affect the conclusion regarding the United States' operation of the refineries.
Additionally, the government claims Exxon's unsworn expert reports are inadmissible hearsay. However, subsequent sworn declarations by Exxon's experts rectify this issue, as established in relevant case law. Exxon seeks summary judgment asserting government liability as an "arranger" for waste disposal at the Baytown site, arguing the government funded and maintained ownership of hazardous materials processed there. The government concedes its status as a "covered person" but does not address Exxon's arguments regarding arranger liability, which remains undecided until Phase II, pending further clarification from a recent Fifth Circuit decision that defines arranger status.
Initially, Exxon contended it acted as the government's agent regarding the Plancors and Ordnance Works, but during oral arguments, it appeared to abandon this claim, acknowledging its operational role for liability purposes under its government contracts.
The court dismisses Exxon's arguments regarding agency, citing that CERCLA specifically exempts liability for acts of third parties who are not employees or agents of the defendant (42 U.S.C. 9607(b)(3)). The statute clearly establishes that any operator of a polluting facility is directly responsible for cleanup costs. Multiple parties may be liable as operators at various sites, including the Houston Ship Channel and the Mississippi River. Recent case law supports the notion that liability under CERCLA § 107(a) can be joint and several. The court rejected Exxon's claim that joint and several liability only applies when the plaintiff is an 'innocent party,' noting that introducing such a distinction would misinterpret the statute. The court also found that most liability aspects are not contested, as the U.S. acknowledged its prior ownership of the plants involved.
