ELR Citation: ELR 20207
No(s). 92-1945 (3d Cir. Nov 26, 1993)

The court affirms a district court decision that the U.S. Department of Commerce is liable under §107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as an "operator" and "arranger" for contamination at a facility that it directed to produce high-tenacity rayon during World War II. The court first rejects the government's argument that sovereign immunity bars the plaintiff's claims because regulatory activities are per se outside the scope of CERCLA liability. Courts should consider both regulatory and nonregulatory activities as bases for liability and the government should be immune only for regulatory activities that have no analogue to conduct of a private business. Further, exempting the government from liability based solely on the regulatory nature of its activities would contravene CERCLA §107(b), which lists the only three defenses to §107 liability available to any person, including the government. These enumerated defenses do not include a regulatory exception.

The court holds that the government is an operator of the facility, because its conduct was similar to that of a private, commercial party. The government regulated in furtherance of its commercial goals, exerting considerable day-to-day control over the facility. The facility would not have been making high-tenacity rayon if not for the government. Through regulations, on-site inspectors, and the possibility of seizure, the government maintained a significant degree of de facto day-to-day control over the production process. Government officials built or had built and controlled plants supplying raw materials to the facility, arranged for an increased labor force, and supervised employee conduct. Also, the government controlled product marketing and price. The court holds that the government is liable as an arranger, because it produced the facility's raw materials, or arranged for their production; it owned the work in progress and its final product; and it was aware that the process inherently caused hazardous waste.

[Prior opinions is this litigation are published at 20 ELR 21403 and 22 ELR 20796. Pleadings in this litigation are published at ELR PEND. LIT. 66256.]

Counsel for Appellee
Neil G. Epstein
Hangley, Connolly, Epstein, Chicco, Foxman & Ewing
1515 Market St., 9th Fl., Philadelphia PA 19102
(215) 851-8400

Counsel for Appellants
Vicki L. Plaut
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Greenberg, J. (before Sloviter and Mansmann, JJ.):