USA v. OLIN CORPORATION, 107 F.3d 1506 (11th Cir. 1997)

USA, acting at request of the Administrator of the United States Environmental Protection Agency (EPA), Plaintiff-Appellant, v. OLIN CORPORATION, Defendant-Appellee.

No. 96-6645.United States Court of Appeals, Eleventh Circuit.
Decided March 25, 1997.

Page 1507

J. Don Foster, U.S. Attorney, Mobile, AL, Robert A. Kaplan, Environmental Enforcement Section, Environment Natural Resources Division, U.S. Department of Justice and Robert R. Homiak, John A. Bryson, U.S. Department of Justice, Washington, DC, Lois Schiffer, Asst. Atty. Gen., Washington, DC, for plaintiff-appellant.

Michael W. Steinberg, Alex S. Karlin, Washington, DC, for defendant-appellee.

George Clemon Freeman, Jr., Hunton Williams, Richmond, VA, for amicus curiae Alabama Great Southern R. Co. et al.

Page 1508

Appeal from the United States District Court for the Southern District of Alabama. (No. 95-0526-BH-S),

William Brevard Hand, District Judge.

Before ANDERSON, Circuit Judge, KRAVITCH and HENDERSON, Senior Circuit Judges.

KRAVITCH, Senior Circuit Judge:

[1] Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) to counteract the environmental threats associated with hazardous waste disposal. In this case, the district court dismissed the government’s complaint brought under CERCLA against Olin Corporation (“Olin”). It ruled that: (1) the Constitution prohibits enforcement of CERCLA against a party if the environmental effects of that party’s conduct remain limited to its own property; and (2) CERCLA’s cleanup liability provisions apply prospectively only. The government appeals and we reverse.

I.
[2] Olin has operated a chemical manufacturing facility in McIntosh, Alabama since 1951. Until 1982, the plant produced mercury- and chlorine-based commercial chemicals that contaminated significant segments of Olin’s property. This appeal involves one such portion of the site, called Operable Unit # 1 (“OU-1”). Groundwater and soil pollution at OU-1 make it unfit for future residential use. Nevertheless, contamination from OU-1 presently remains localized to Olin’s site because the company regulates groundwater flow beneath its property.[1]

II.
[3] The government brought a civil action in the district court, seeking a cleanup order against Olin and reimbursement for response costs, pursuant to sections 106(a) and 107 of CERCLA.[2] After negotiations, the parties agreed to a consent decree that called for Olin to pay all costs associated with remediation of OU-1. The proposal resolved Olin’s liability for contamination at OU-1 caused by disposal activities before and after CERCLA’s effective date of December 11, 1980, see 42 U.S.C. §(s) 9652(a).

[4] When the parties presented the consent decree to the district court, it sua sponte ordered them to address the impact of the Supreme Court’s decision in United States v. Lopez, ___ U.S. ___, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995) (invalidating Gun-Free School Zones Act under the Commerce Clause), on the legality of their proposal. Olin complied with that order by answering the original complaint. It asserted that the Lopez Court’s construction of the Commerce

Page 1509

Clause precluded constitutional application of CERCLA in this case. In addition, Olin contended that CERCLA was not intended to impose liability for conduct predating the statute’s enactment. The district court agreed with Olin on both counts, denied the motion to enter the consent decree and dismissed the government’s complaint.

III.
[5] We review de novo the constitutional challenge to CERCLA and the purely legal question of whether the statute’s cleanup liability provisions apply retroactively. See generally Heuer v. United States Secretary of State, 20 F.3d 424, 426 (11th Cir.), cert. denied, ___ U.S. ___, 115 S.Ct. 573, 130 L.Ed.2d 490 (1994).

A.
[6] The district court found that the enforcement of CERCLA against Olin violated the Commerce Clause as interpreted by the Supreme Court in Lopez. The Lopez Court held that the Commerce Clause empowers Congress to regulate: (1) channels of interstate commerce; (2) instrumentalities of and persons or things in interstate commerce; and (3) intrastate activities that substantially affect interstate commerce. See Lopez, ___ U.S. at ___ — ___, 115 S.Ct. at 1629-30. This case, like Lopez, concerns the third category.

[7] Lopez did not alter the constitutional standard for federal statutes regulating intrastate activities. See id. at ___ — ___, 115 S.Ct. at 1628-30 (documenting consistency of Court’s Commerce Clause jurisprudence since 1942); 1637 (Kennedy, J., concurring) (“Stare decisis operates with great force in counseling us not to call in question the essential principles now in place respecting the congressional power to regulate transactions of a commercial nature.”). Simply stated, “the proper test requires an analysis of whether the regulated activity `substantially affects’ interstate commerce.” Id. at ___, 115 S.Ct. at 1630. Congress can maintain the constitutionality of its statutes under this standard by including in each a “jurisdictional element which would ensure, through case-by-case inquiry, that the [regulated activity] in question affects interstate commerce.” Id. at ___, 115 S.Ct. at 1631.[3] In addition, Congress, or a committee thereof, can make legislative findings indicating that a statute regulates activities with a substantial effect on interstate commerce. See id. If Congress does so, a court may not override these findings unless they lack a rational basis. See Cheffer v. Reno, 55 F.3d 1517, 1520-21 (11th Cir. 1995) (upholding Freedom of Access to Clinic Entrances Act because legislative findings were “plausible and provided rational basis for concluding that the Access Act regulates activity which `substantially affects’ interstate commerce”). [8] When Congress fails to ensure a statute’s compliance with the Commerce Clause, however, courts must determine independently whether the statute regulates “activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affect interstate commerce.” Lopez, ___ U.S. at ___, 115 S.Ct. at 1631. This determination turns on whether the statute constitutes “an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated.” Id. A court’s focus, thus, cannot be excessively narrow; if the statute regulates a “class of activities . . . and that class is within the reach of the federal power, the courts have no power `to excise, as trivial, individual instances’ of the class.” Perez v. United States, 402 U.S. 146, 154, 91 S.Ct. 1357, 1361-62, 28 L.Ed.2d 686 (1971) (quoting Maryland v. Wirtz, 392 U.S. 183, 193, 88 S.Ct. 2017, 2022, 20 L.Ed.2d 1020 (1968), overruled on other grounds, Nat’l League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), overruled

Page 1510

by Garcia v. San Antonio, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985)). See also Lopez, ___ U.S. at ___, 115 S.Ct. at 1629 (“`[W]here a general regulatory statute bears a substantial relation to commerce, the de minimis character of individual instances arising under that statute is of no consequence.'” (emphasis omitted) (quoting Wirtz, 392 U.S. at 197
n. 27, 88 S.Ct. at 2024 n. 27)).

[9] The district court’s Commerce Clause analysis conflicts with the foregoing standard in two main respects. First, the district court indicated that under Lopez a statute must regulate economic activity directly to satisfy the Commerce Clause. See Olin Corp., 927 F. Supp. at 1532. Actually, as noted above, Lopez reiterates that a statute will pass constitutional muster if it regulates an activity, whatever its nature, “that arise[s] out of or [is] connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce.” See Lopez, ___ U.S. at ___, 115 S.Ct. at 1631.[4]
The district court also concluded that Lopez requires every statute enacted pursuant to Congress’s Commerce Clause authority to contain a jurisdictional element. See Olin Corp., 927 F. Supp. at 1532. In fact, the Lopez Court recognized that a statute without a jurisdictional element still would stand under the Commerce Clause, if the law satisfied the substantial effects test. See Lopez, ___ U.S. at ___ — ___, 115 S.Ct. at 1632-34.[5] [10] Our evaluation of CERCLA under the foregoing framework leads us to reject Olin’s constitutional challenge. Specifically, we conclude that although Congress did not include in CERCLA either legislative findings[6] or a jurisdictional element, the statute remains valid as applied in this case because it regulates a class of activities that substantially affects interstate commerce. The proper analysis first requires identification of the “class of activities” involved in the case.[7] The class always “could be defined so narrowly as to cover only those activities that do not have a substantial impact on interstate commerce.” Proyect v. United States, 101 F.3d 11, 14 (2d Cir. 1996) (ruling that class of activities covered by drug control law was not “cultivation and personal consumption of marijuana,” but rather “manufacture of controlled substances”). The government contends this suit involves regulation of releases of hazardous substances generally; Olin objects to this broad classification. In our view, the disposal of hazardous waste at the site of production, or “on-site,” constitutes the narrowest, possible class.[8] [11] In light of this understanding, we must assess whether onsite waste disposal substantially affects interstate commerce. Because the legislative history of CERCLA documents how the unregulated management of hazardous substances, even strictly within individual states, significantly impacts interstate commerce, we conclude the statute can be applied constitutionally under the circumstances of this case.

Page 1511

[12] When the Senate considered S. 1480, a bill containing cleanup liability provisions later substantially incorporated into CERCLA,[9]
its Committee on Environment and Public Works (“the Committee”) took notice of many facts that show a nexus between all forms of improper waste disposal and interstate commerce. First, the Committee noted the growth of the chemical industry and the concomitant costs of handling its waste. See S.Rep. No. 96-848, 96th Cong., 2d Sess. 2 (1980), reprinted in 1 Legislative History of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 309 (1983) (“Legislative History”). It also cited a 1980 report by the Office of Technology Assessment which gauged agricultural losses from chemical contamination in six states at $283 million. Id. at 310.[10] The Committee reported that the commercial damages resulting from unregulated waste management were not attributable solely to interstate trafficking in hazardous materials for disposal, but also arose from accidents associated with purely intrastate, on-site disposal activities, such as improper waste storage in tanks, lagoons and chemical plants. Id. at 312. Thus, CERCLA reflects Congress’s recognition that both on-site and off-site disposal of hazardous waste threaten interstate commerce. [13] Olin notes that the record contains no evidence that its onsite disposal has caused off-site damage, much less harmed interstate commerce. This argument is analogous to, and as unpersuasive as, the drug possessor’s plea for an exemption from federal narcotics laws because his individual actions have no substantial effect upon interstate commerce. See Proyect, 101 F.3d at 14. Olin’s claim fails because, as the foregoing discussion documents, the regulation of intrastate, on-site waste disposal constitutes an appropriate element of Congress’s broader scheme to protect interstate commerce and industries thereof from pollution. See Lopez, ___ U.S. at ___, 115 S.Ct. at 1631. [14] Olin also objects to enforcement of CERCLA in this case because it contends its disposal activities are not economic in nature. As stated above, the Commerce Clause conditions congressional authority not upon the qualities of the regulated activity, but rather the degree to which that activity affects interstate commerce. See supra note 4 and related text. Further, to the extent a chemical plant can dispose of its waste on-site free of regulation, it would have a market advantage over chemical companies that lack on-site disposal options;[11] Olin’s actions, therefore, have an economic character. [15] For these reasons, we hold that, as applied in this case, CERCLA constitutes a permissible exercise of Congress’s authority under the Commerce Clause.

B.
[16] The district court also based its dismissal order on its conclusion that CERCLA’s response cost liability scheme applies only to disposals after the statute’s enactment. This ruling not only conflicts with this court’s recent description of CERCLA, but

Page 1512

also runs contrary to all other decisions on point. See Virginia Properties Inc. v. Home Ins. Co., 74 F.3d 1131, 1132 (11th Cir. 1996) (defining CERCLA as “a statutory scheme that retroactively imposed strict liability for pollution cleanup”); Olin Corp., 927 F. Supp. at 1507 n. 25 (recognizing that of the 22 federal courts “which have directly addressed the issue of CERCLA’s retroactivity, none have declined to apply CERCLA on retroactivity grounds”).[12] The district court, however, held that Landgraf v. USI Film Products, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994), “demolishes the interpretive premises on which prior cases had concluded that CERCLA is retroactive,” and that this court’s post-Landgraf statement in Virginia Properties constitutes irrelevant dicta. Olin Corp., 927 F. Supp. at 1508.[13]

[17] This court has recognized that Landgraf “provides the analytical framework for determining whether newly enacted statutory provisions are applicable to pending cases.” Hunter v. United States, 101 F.3d 1565, 1569 (11th Cir. 1996) (en banc) (applying certain sections of the Antiterrorism and Effective Death Penalty Act of 1996 to habeas corpus petitions pending on the Act’s effective date).[14] In Hunter, we observed that “[a] court’s first, and sometimes last, task under Landgraf analysis is `to determine whether Congress has expressly prescribed the statute’s proper reach.’ If Congress has done so, that is the end of the Landgraf analysis, and the court simply follows the evident intent of Congress.” Id. (quoting Landgraf, 511 U.S. at 280-81, 114 S.Ct. at 1505). Hunter, however, left open the question of whether “evidence of legislative intent, other than in an express statutory command” would satisfy Landgraf’s first prong. Id.[15] [18] Because CERCLA contains no explicit statutory command regarding retroactive application of its cleanup liability regime, this court must decide what, if any, further inquiry should occur. Although the Landgraf Court reaffirmed the presumption against retroactive application of statutes, it emphasized that courts must effectuate congressional intent regarding retroactivity. See Landgraf, 511 U.S. at 272-74, 114 S.Ct. at 1501
(stating that “constitutional impediments to retroactive civil legislation are now modest”). The Court ruled that its approach simply was designed to “assure that Congress itself has affirmatively considered the potential unfairness of retroactive application and determined that it is an acceptable price to pay for the countervailing benefits.” Id. As a result, we conclude that even absent

Page 1513

explicit statutory language mandating retroactivity, laws may be applied retroactively if courts are able to discern “clear congressional intent favoring such a result.” Id. at 280, 114 S.Ct. at 1505 (emphasis added).[16] Accordingly, we must review the language, structure and purpose of the statute, as well as its legislative history, to determine whether Congress made clear its intent to apply CERCLA’s remediation liability scheme to conduct pre-dating the statute’s enactment.

[19] We examine first CERCLA’s language. As noted above, the statute contains no explicit statement regarding retroactive application of its cleanup liability provisions. Olin mistakenly contends that CERCLA’s text therefore offers no insight into Congress’s intent on this subject. CERCLA imposes liability for response costs upon “owners and operators” of “any site or area where a hazardous substance has been deposited . . . .” 42 U.S.C. §(s) 9601(9)(B), 9607(a)(1). Its reach also extends to “any person who at the time of disposal of any hazardous substance owned or operated” such a facility. 42 U.S.C. §(s) 9607(a)(2) (emphasis added). Congress thus targeted both current and former owners and operators of contaminated sites. By imposing liability upon former owners and operators, Congress manifested a clear intent to reach conduct preceding CERCLA’s enactment. [20] Olin contends that by including this language Congress sought to reach only “future former owners and operators,” i.e. persons who would become former owners and operators after December 11, 1980, CERCLA’s effective date. It has pointed to nothing in the statute or its legislative history which supports this strained view. In fact, language elsewhere in CERCLA confirms that Congress intended that persons who were former owners and operators as of December 11, 1980, would bear the costs of cleaning up sites they formerly controlled. For example, section 103 provides that:

Within one hundred and eighty days after December 11, 1980, any person who owns or operates or who at the time of disposal owned or operated . . . a facility at which hazardous substances . . . are or have been stored, treated, or disposed of shall . . . notify the Administrator of the Environmental Protection Agency of the existence of such facility, specifying the amount and type of any hazardous substance to be found there, and any known, suspected, or likely releases of such substances from such facility.

[21] 42 U.S.C. §(s) 9603(c) (emphasis added). [22] Read reasonably, the foregoing subsection addresses conduct that occurred before CERCLA’s effective date. It expressly mandates that persons who were former owners and operators as of December 11, 1980, make the required notification regarding their pre-enactment conduct within six months, or forfeit “any defenses to liability set out in section [107] of this title. . . .” Id. If, as Olin asserts, these former owners and operators faced no liability under section 107, section 103 makes virtually no sense. We conclude the language of section 103 confirms that Congress believed its imposition of liability for cleanup upon former owners and operators in section 107(a) covered persons who were former owners and operators on December 11, 1980, as well as owners and operators who sold their interests after that date.[17] [23] An analysis of CERCLA’s purpose, as evinced by the statute’s structure and legislative

Page 1514

history, also supports the view that Congress intended the statute to impose retroactive liability for cleanup. Olin acknowledges that CERCLA was designed to deal with contamination that preceded the statute’s effective date of December 11, 1980. See Legislative History at 308-19 (Committee Report) (discussing concern for pre-enactment contamination, including inactive sites). It insists, however, that Congress intended for taxpayers in both industry and the general public to bear the response costs associated with these earlier disposal problems. This argument ignores the fact that “[a]n essential purpose of CERCLA is to place the ultimate responsibility for the clean up of hazardous waste on `those responsible for problems caused by the disposal of chemical poison.'” Redwing Carriers, Inc. v. Saraland Apts., 94 F.3d 1489, 1501 (11th Cir. 1996) (internal citations omitted).[18] Congress’s twin goals of cleaning up pollution that occurred prior to December 11, 1980, and of assigning responsibility to culpable parties can be achieved only through retroactive application of CERCLA’s response cost liability provisions; this fact provides additional evidence of clear congressional intent favoring retroactivity.[19]

[24] Further review of CERCLA’s legislative history confirms that Congress intended to impose retroactive liability for cleanup. The chief predecessor bill to CERCLA, S. 1480, contained no express statement regarding retroactivity. “Nonetheless, all those commenting on [it and the parallel House bill] expressed the belief that the bills would apply retroactively to those responsible for the releases in existing waste sites.” Ninth Avenue, 946 F. Supp. at 662. See Legislative History at 344 (Committee Report) (noting that S. 1480 contained a subsection limiting “how claims for certain damages occurring before the date of enactment will be handled,” but observing that “[c]osts of removal (cleanup and containment) are not affected by this provision”); 405 (statement of Administrator Costle) (“The legislation proposed would establish liability for costs expended by the government to clean up past disposal practices that today are threatening public health and the environment, and it does so without reference to prior standards.”). [25] Olin insists we should disregard this extensive legislative history because Congress passed a compromise bill. This argument fails because the cleanup liability provisions from S. 1480 were incorporated into CERCLA. See supra note 9 and related text. Moreover, careful scrutiny of the legislative record leading up to CERCLA’s passage reveals that the compromise never turned upon the statute’s imposition of retroactive liability for cleanup, but rather upon the redaction of the prior bill’s provisions on joint and several liability and personal injury. See, e.g., Legislative History at 681-91 (statement of Sen. Randolph); 691-96 (statement of Sen. Stafford).[20]

Page 1515

[26] For all these reasons, we find clear congressional intent favoring retroactive application of CERCLA’s cleanup liability provisions.

IV.
[27] Accordingly, the district court’s dismissal order is REVERSED. The case is REMANDED for further proceedings consistent with this opinion.