ELR Citation: ELR 20791
No(s). CV 91-0589-RJK (C.D. Cal. Jan 16, 1992)

The court grants in part, and denies in part, the United States' and California's motions to strike the affirmative defenses pled by several defendant oil companies and other defendants in a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) cost recovery action, and holds that the defendants' CERCLA §107(b) "act of war" defense presents a mixed question of fact and law and is inappropriate for dismissal. Defendants contend that the alleged CERCLA violations resulted from their manufacture of high-octane aviation fuel pursuant to contracts with the federal government during World War II. Defendants further argue that the federal government exercised extensive control over the operations and production of the fuel during the war, and issued a permit for the disposal of the acid waste associated with the manufacture of the fuel. In total, the oil company defendants raised 31 defenses, and the other defendants have raised 14 defenses. Also before the court are plaintiffs' motion to trifurcate the litigation into a liability phase, a cost-determination phase, and a resolution of counterclaims and cross-claims phase.

The court first notes that for purposes of CERCLA §107(a), only the enumerated defenses of an act of God, an act of war, and a third-party act or omission will be recognized. The court grants the governments' motion to strike the defendants' defense asserting that the governments' complaint fails to state a claim on which relief can be granted. The governments' complaint alleges all the requisite elements of liability under §107 and depicts the circumstances at issue. The court next holds that because defendants' "act of war" defense includes questions of law and fact, and falls within one of the enumerated defenses of CERCLA, it is inappropriate to dismiss under Federal Rule of Civil Procedure 12(f). The court also denies the plaintiffs' motion to strike defendants' defense that the release of wastes, if any, was caused solely by the acts or omissions of third parties. Defendants have properly pled the defense, since they have alleged that they did not have a relationship with the third party who "solely" caused the release.

The court strikes defense motions alleging no imminent and substantial endangerment, the governments' failure to mitigate and be cost-effective, causal responsibility, laches, estoppel, waiver, unclean hands, state licensure, contributory negligence, comparative fault, and government contractor protection. First, imminent and substantial endangerment is a prerequisite only for injunctive actions filed under CERCLA §106(a), making that defense illogical and improper to a §107 claim. As to the defendants' defense that the governments failed to mitigate, §107 does not require a plaintiff to mitigate damages, and except with reference to the national contingency plan (NCP), §107 does not require cost effectiveness by a plaintiff. As to defendants' causation defenses, CERCLA imposes strict liability without regard to causation. As to defendants' equitable defenses, the court notes that it cannot envision clearer language than CERCLA's for eliminating the possibility of any defenses other than those enumerated, which necessarily restricts the court's equitable jurisdiction. The remaining asserted defenses are likewise not accepted defenses, or do not fit within interpretations of the accepted defenses.

Turning to the remaining affirmative defense motions, the court refuses to strike those motions alleging the governments' failure to comply with the NCP, a bar to recovering pre-1980 costs, due process violations, an impermissible taking, no right to costs not yet incurred, releases were federally permitted, joint and several liability, impairment of contract rights, entitlement to setoff and recoupment, and a state law bar to recovery. Since defendants' allegation that the costs incurred by plaintiffs have not been approved under and are inconsistent with the NCP, the defense attacks a necessary element of a §107 claim, making it inappropriate to strike that defense. Next, although case law exists holding that retroactive application of CERCLA does not violate due process because imposing liability is a legitimate legislative purpose, since the defense attacks the constitutionality of CERCLA and the 9th Circuit has not decided the issue, dismissal of the defense is inappropriate. Similarly, the taking defense attacks CERCLA's constitutionality and must survive. As to the defense that future response costs are not permitted, the court notes that §113(g)(2) allows entry of declaratory judgment of §107(a) liability. As to the federal permit defense, the court declines to strike the defense, but requests that the defendants allege with greater specificity what portion of the damages are covered by the federal permit. Because imposition of joint and several liability under §107 involves a question of law, striking the defense is premature. Although defendants' contract impairment defense as to the federal government is stricken because the Contract Clause of the U.S. Constitution does not apply to federal law, the uncertain applicability to certain state laws requires the defense as to the state government to continue. While issues of setoffs and recoupment are perhaps inappropriate as affirmative defenses, dismissal is inappropriate because the issues will be addressed after liability has been determined. Finally, the court refuses to strike the state bar to recovery defense, since it is unclear whether California is circumventing the state law restrictions by proceeding in this case pursuant to CERCLA only.

Finally, the court denies plaintiffs' motion to divide the trial into three phases because the common issue to all parties involved is the defendants' liability under §107, and any recoupment, setoff, or contribution thereafter.

Counsel for Plaintiffs
Timothy R. Patterson
Attorney General's Office
110 W. 8th St., Ste. 700, P.O. Box 85266, San Diego CA 92186
(619) 237-7788

Counsel for Defendants
Peter R. Taft
Munger, Tolles & Olson
355 S. Grand St., 34th Fl., Los Angeles CA 90071
(213) 683-9100