24 ELR 21125 | Environmental Law Reporter | copyright © 1994 | All rights reserved
Atlantic Richfield Co. v. BlosenskiNos. 92-2059; 93-1976 (847 F. Supp. 1261, 38 ERC 1786) (E.D. Pa. March 7, 1994)
The court holds that an individual who operated a waste hauling business and currently owns the landfill to which his business hauled waste is liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) as an owner, operator, and transporter for response costs incurred in cleaning up the landfill. The court first notes that the parties do not dispute that plaintiffs incurred response costs in cleaning up the site. The court also notes that the cleanup's consistency with the national contingency plan is not at issue at this phase of the litigation. The court holds that the site is a facility, that there was a release of hazardous substances, and that plaintiffs have incurred response costs in cleaning up the site. The court next holds that the current site owner is liable as an owner under CERCLA § 107(a)(1) and that as an admitted owner and operator of the site during the time that hazardous wastes were dumped there, he is liable under CERCLA § 107(a)(2). The court also holds that he is liable as a transporter, because a truck driver he hired testified to transporting wastes to the site at his direction. The driver also testified that these wastes included paint that spilled on the ground, and data safety sheets indicate that the paints included xylene, toluene, and lead, which are all hazardous substances under CERCLA. The court, however, denies summary judgment motions as to the liability of the site owner's wife. The parties do not dispute that she did not, and does not, own the site. As to operator liability, the evidence of her management and/or control of the site is mixed. As to her possible liability as a transporter, conflicting inferences can be made from the undisputed facts, and her role in the waste hauling business is disputed insofar as her "joint venture" liability is concerned.
The court next turns to summary judgment motions on the liability of an alleged co-owner of the contaminated site. The court holds that to be an "owner" under CERCLA, the alleged site co-owner must have manifested some intent to own the property. His control, or even knowledge, of what went on at the site is irrelevant. The court denies the summary judgment motions because the parties presented the court with evidence to support two different versions of the events surrounding the purchase and ownership of the parcel at issue, and the differences are material. The court next holds that two corporations the current site owner formed as part of an attempt to restructure his business are liable as his alter egos. The court holds that applying a federal common-law rule on piercing the corporate veil is appropriate because the need for a uniform federal rule is great, application of state law could frustrate the objectives of CERCLA, and there is no reason to believe that application of a uniform federal law would disrupt commercial relationships. Applying the veil-piercing rule adopted by the Third Circuit in United States v. Pisani, 646 F.2d 83 (1981), the court holds that the two corporations are the site owner's alter egos because he was their sole stockholder or the dominant of two stockholders; the transition from sole proprietorship to corporate operation did not involve any changes in the business; the same employees, the same customers, and the same or similar business names existed before and after the incorporation; and the corporations did not observe corporate formalities. Also, the site owner and his wife were the only officers of the corporations, the corporations were formed with little or no capitalization, and no assets were transferred from the site owner to the corporations. The court holds that Pennsylvania's two-year limitations period for suit against dissolved corporations does not protect the corporations, because the corporations were never properly dissolved. The court further holds that a corporation controlling assets traceable to the current site owner's business is an indispensable party to the litigation and denies the corporation's motion for summary judgment.
Finally, the court holds that a corporation that purchased all the assets of the site owner's business is liable as a successor. The corporation knew of the site owner's potential CERCLA liability at the time it purchased the assets of the site owner's business; therefore, it is appropriate to apply the substantial continuity test to determine successor liability. Applying the test, the court holds that all the test's hallmarks are present: The same employees, supervisory personnel, and production facilities were used before and after the sale; the same "product" — waste hauling — was produced using essentially the same assets with continuity of business operations; and the successor business continued to use the current site owner's name and held itself out to the public, through advertising and other means, as a continuation of the previous enterprise.
Counsel for Plaintiffs
James J. Rohn, Karen M. Scheller
Conrad, O'Brien, Gellman & Rohn
1515 Market St., 17th Fl., Philadelphia PA 19102
Counsel for Defendants
James A. Cunningham
43 High St., Pottstown PA 17108
[24 ELR 21125]
GILES, District Judge.
The above captioned actions, which have been consolidated for trial, are brought pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq., to determine and allocate responsibility for the clean-up of hazardous wastes from a landfill in Chester County, Pennsylvania. The trial has been trifurcated, with Phase I concerned solely with the liability of certain defendantsfor response costs associated with the clean-up. See Order of October 29, 1993.1
Plaintiffs in both actions have moved for summary judgment against certain defendants as to Phase I liability. In United States, et al. v. Blosenski, et al., Civil Action No. 93-1976 ("the U.S. action"), The United States and the Commonwealth move for summary judgment as to Phase I liability against Alexander M. Barry ("Barry"), Joseph M. Blosenski, Jr. ("Blosenski"), Blosenski Liquidating Company, a/k/a Blosenski Disposal Company, Inc. ("BDC"), B.T. Liquidating Corp., a/k/a Blosenski Trucking Corporation ("BTC"), and Eastern Waste Industries, Inc. ("EWI"). In Atlantic Richfield, et al. v. Blosenski, et al., Civil Action No. 92-2059, ("the ARCO action"), plaintiffs also move for summary judgment against the above-named defendants, all of whom are also defendants in the ARCO action. In addition, they seek summary judgment against Ada Blosenski and Suburban Sanitation Corporation ("SSC").2 Finally, some of the defendants have crossmoved for summary judgment. For the reasons stated below, plaintiffs' motions for summary judgment will be granted as to defendants Blosenski, BDC, BTC, and EWI. The motions will be denied as to defendants Barry, Ada Blosenski, and SSC. Defendants' cross-motions will be denied.
I. SUMMARY JUDGMENT STANDARD
Summary judgment will be entered if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). It is [24 ELR 21126] the moving party which must "demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). Once the moving party makes such a showing, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The nonmoving party must satisfy this burden through the introduction of testimony "as would be admissible in evidence," id., such as an affidavit or deposition testimony. Fed.R.Civ.P. 56(c). If, however, the moving party ultimately persuades the court that there are no genuine issues of material fact, then the court must decide whether the law dictates an outcome in favor of the moving party. If so, the motion for summary judgment must be granted.3
In response to growing concern about the dangers posed by hazardous waste sites, Congress enacted CERCLA. CERCLA is intended "to force polluters to pay for costs associated with remedying their pollution." United States v. Alcan Aluminum Corp., 964 F.2d 252, 259-60 (3d Cir.1992). CERCLA grants the President of the United States broad authority to provide for the cleanup of sites contaminated by hazardous substances. Most of this authority has been delegated to EPA. See Alcan, 964 F.2d at 258. CERCLA is a remedial statute that should be construed liberally to effectuate its goals. Alcan, 964 F.2d at 258.
CERCLA authorizes the United States to use "Superfund" monies to clean up a site, and then recover those response costs from the parties responsible for the pollution. See 42 U.S.C. § 9607, 9611-12. Parties other than the United States who have incurred clean-up response costs can also recover those costs under CERCLA. Plaintiffs in each of these consolidated actions seek to recover response costs from defendants.
III. UNDISPUTED FACTUAL BACKGROUND
Blosenski began his waste hauling business with a single trash collection route in the late 1960s. Over the next few years, his trash collection and hauling business, which he operated as a sole proprietorship, gradually expanded. See Jt. Exh. B at 52-54, 60-61 (Blosenski deposition). In 1971 he purchased an eight-acre dump in Chester County, Pennsylvania. See Blosenski's Memorandum of Law Contra to ARCO and U.S. Summary Judgment Motions (docketed at # 238 in the ARCO action, hereinafter referred to as "Blosenski Mem.") at 2 (admitting ownership); Jt. Exhibits 37, 38, 39 (deeds). Shortly after he purchased the eight-acre property, he began to use it in conjunction with his waste hauling business, hauling waste to the property for disposal, and allowing others to dispose waste there. See Blosenski Mem. at 2 (admitting that between 1971 and May 3, 1979 Blosenski "transported certain substances" to the Site); Jt. Exh. B at 54 (Blosenski deposition); Jt. Exh. C at 24-25 (same); Jt. Exh. D at 140 (same). In 1972, Blosenski purchased approximately five acres of land adjacent to the eight-acre tract. See Jt. Exh. 39 (deed).4 The EPA has identified these combined tracts as a "Superfund" site ("the Site"). See Jt. Exh. 50 at PIII.A.1 (EPA Administrative Order for Remedial Action, Phase II). Blosenski owned and operated the Site as a landfill, and continued to transport waste to the Site until at least May 3, 1979. See Blosenski Mem. at 2 (admitting that between 1971 and May 3, 1979 Blosenski "transported certain substances" to the Site).
Shortly after he began using the Site, Blosenski was cited by the Pennsylvania Department of Environmental Resources ("PaD-ER") for operating a permitless landfill. See Jt. Exh. 46. In early 1972, he signed a consent decree with PaDER, requiring him to make certain improvements at the Site to prevent leachate from wastes dumped there from migrating to neighboring properties. See Jt. Exh. 46; Jt. Exh. 106 (1972 Consent Decree in Commonwealth v. Blosenski, C.A. 2404). Blosenski continued to operate the site throughout the 1970s. During that time he was repeatedly cited by PaDER for violations, found in contempt, and fined. See generally Jt. Exh. 46.
By 1982, EPA was actively investigating the Site, which was placed on the National Priorities List ("NPL"), see 42 U.S.C. § 9605, in September of 1983. See Jt. Exh. 50; Jt. Exh. 65 at 19 (Techlaw Report). When the Site was placed on the NPL, EPA began a Remedial Investigation/Feasibility Study ("RI/FS"), pursuant 42 U.S.C. § 9604, which was completed in February 1986. The study reported numerous hazardous substances in Site soils, sediments and ground water. See U.S. Exh. 1, Table 7-1 at pages 7-7 through 7-15. In September of 1986, EPA issued its Record of Decision selecting a four-phase remedial plan for the Site. See Jt. Exh. 49.
In 1985, while EPA was actively investigating the Site, Blosenski attempted to restructure his business, which had previously been run as a sole proprietorship. In 1985, the Blosenski waste hauling business was incorporated into three corporations: Blosenski Disposal Co., Inc. ("BDC"); Blosenski Trucking Corporation ("BTC"); and Suburban Sanitation Corp. ("SSC") (collectively, "the Blosenski Corporations"). U.S. Exh. 9 (certificates from Secretary of Commonwealth); Jt. Exh. B at 85-86, 109 (Blosenski deposition).
In 1986, representatives of Eastern Waste Industries, Inc. ("EWI") began to discuss with Blosenski the possibility of purchasing the Blosenski Corporations' assets. EWI Exh. G (Speake deposition); EWI Exh. H (Vorel deposition). An asset purchase agreement was entered into on January 1, 1987 between EWI and the Blosenski Corporations and their shareholders. EWI purchased the assets for over $ 4.5 million. Jt. Exh. 11. There was no purchase of stock and EWI did not issue shares of its stock to the Blosenski Corporations or any of their shareholders as part of the asset purchase. EWI Exh. K at P11 (Sinclair Affidavit).
In order to recover their response costs, plaintiffs must show that for each defendant against whom they seek recovery:
1) the defendant falls into one of [the] categories of "covered persons," 42 U.S.C. §§ 9607(a)(1)-(4); 2) there has been a release or a threatened release of a hazardous substance from a facility, 42 U.S.C. § 9607(a)(4); 3) this release or threatened release has caused the plaintiff to incur response costs; 4) the plaintiffs response costs are necessary and consistent with the [National Contingency Plan ("NCP"), see 42 U.S.C. § 9605], 42 U.S.C. § 9607(a)(4)(B).
Lansford-Coaldale Joint Water Authority v. Tonolli Corp., 4 F.3d 1209, 1219 (3d Cir. 1993). CERCLA imposes strict liability upon responsible parties. Alcan, 964 F.2d at 259.
It is undisputed that the moving plaintiffs have incurred response costs in a clean-up at the Site. Therefore, the third prong of the above-described standard is not at issue in this case. While the consistency of the expended costs with the National Contingency Plan is an issue ultimately to be resolved in this litigation, it is not at issue in Phase I. Therefore, resolution of these motions for summary judgment depends only upon the first two prongs. Thus, plaintiffs must show that: (a) the Site is a CERCLA facility at which there was a release or threatened release of hazardous substances; and (b) each defendant is a covered person responsible for clean-up costs at the Site.
[24 ELR 21127]
A. Release or Threatened Release of Hazardous Substances at the Site
Plaintiffs must prove that the Site is a CERCLA "facility," and that there was a release or threatened release of hazardous substances at the Site. CERCLA defines a "facility" to include "any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located." 42 U.S.C. § 9601(9)(B); see also, 42 U.S.C. § 9601(14) (defining "hazardous substance"); New York v. Shore Realty Corp., 759 F.2d 1032, 1043 n. 15 (2d Cir.1985) ("facility" is defined broadly to include any property where a hazardous substance is present). A "release" of hazardous substances at a facility includes "any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers or other closed receptacles containing any substance or pollutant or contaminant)." 42 U.S.C. § 9601(22).
Plaintiffs have presented considerable evidence that hazardous materials were disposed of and found at the Site, and that there was a release of those hazardous materials. In particular, many opened and deteriorating drums containing hazardous substances were found at the site. See U.S. Ex. 3 (Harper Affidavit); U.S. Exh. 1 (RI Report) at § 6.4, Table 7-1 (listing hazardous substances found at the Site); U.S. Exh. 2 (Phase II Drum Removal Close Out Report) at pp. 2-4 through 2-9, Table 1. Blosenski argues that there are "flaws and contradictions" in the evidence presented by the moving parties which create a genuine issue of material fact as to the presence of hazardous materials at the Site. Blosenski also claims that certain documents in the EPA administrative record cast doubt on the contention that hazardous substances were at the Site.5
Blosenski's arguments and the evidence he presents establish, at most, that there were certain locations at the Site where no hazardous substances were found, or that there is some uncertainty about the exact level of contamination at the Site. They do not cast doubt on the conclusion that hazardous substances were disposed of and werereleased at the Site. Therefore, the court finds as a matter of law that the Site is a facility and that there was a release of hazardous substances at the Site. It is undisputed that the moving plaintiffs have incurred response costs in its effort to clean up the Site. Therefore, the only issue possibly remaining for the Phase I trial is whether each Phase I defendant is responsible for those costs as a "covered person" under CERCLA.
B. Covered Persons
"Covered persons" against whom response costs can be recovered include:
(1) the owner and operator of . . . a facility,
(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of, . . . and,
(4) any person who accepts or accepted any hazardous substance for transport to disposal or treatment facilities or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance. . . .
42 U.S.C. § 9607(a)(1), (2), (4). Defendants who are described by subsection (1) or (2) are commonly known as "owners" or "operators," while those who are responsible under subsection (4) are known as "transporters."6
1. Joseph M. Blosenski, Jr.
Plaintiffs have moved for summary judgment against Joseph M. Blosenski, Jr. ("Blosenski") as to owner/operator and transporter liability. Because the court finds that the undisputed facts require judgment as a matter of law that Blosenski is liable as an owner/operator of the Site and as a transporter of hazardous materials to the Site, plaintiffs' motions will be granted.
a. Owner/operator liability
Given the court's finding that the Site is a facility and that there has been a release of hazardous substances at the Site, the uncontested facts compel a finding that Blosenski is liable as an owner/operator of the Site.7 It is uncontested that Blosenski is the current owner of the Site, and has been an owner of the Site since May 26, 1971. Blosenski also admits that he operated the Site from 1971 until May 3, 1979. See Blosenski Mem. at 2 (admitting ownership); Jt. Exhibits 37, 38, 39 (deeds). Because Blosenski is the current owner of the Site, the court finds as a matter of law that he is liable as a current owner under 42 U.S.C. § 9607(a)(1). Artesian Water Co. v. Government of New Castle County, 659 F. Supp. 1269, 1280 (D.Del.1987), aff'd, 851 F.2d 643 (3d Cir. 1988). In addition, as an admitted owner and operator of the Site during the time that hazardous wastes were dumped there, Blosenski is liable as a matter of law under 42 U.S.C. § 9607(a)(2). See Shore Realty, 759 F.2d at 1044.
b. Transporter liability
Plaintiffs argue that Blosenski is also liable as a "transporter." See 42 U.S.C. § 9607(a)(4). To establish transporter liability, plaintiffs must show that Blosenski transported hazardous substances to the Site and that the Site was selected by Blosenski. Id.
Blosenski admits that between 1971 and May 3, 1979 he "transported certain substances" to the Site. Blosenski Mem. at 2. However, he denies that any of those substances were "hazardous" as defined by CERCLA. Plaintiffs, however, have submitted evidence that Blosenski transported hazardous materials to the Site during this period. Because Blosenski has failed to present evidence which would create a genuine issue of material fact as to his transporter liability, the court finds as a matter of law that Blosenski is liable as a transporter.
The unrebutted evidence submitted by plaintiffs consists of the deposition testimony of a truck driver hired by Blosenski to transport waste to the Site, together with evidence from various generators of hazardous waste as to the types of waste transported by Blosenski to the Site from their plants and factories.
Kenneth R. Hoffman was a truck driver hired by Blosenski to haul wastes from a variety of industrial and commercial customers to the Site. Jt. Exh. 52 at 9-18; Jt. Exh. A at 12. In his deposition, Hoffman testified that Blosenski was his immediate supervisor during the time that he worked for him. Jt. Exh. 52 at 12. Hoffman described the wastes hauled from specific customers and testified that those wastes were transported to the Site and disposed of there at Blosenski's direction. Hoffman provided this information with respect to: The Budd Company, see Jt. Exh. 52 at 41-48; Chubb National Foam, see Jt. Exh. 52 at 20-25; Diamond Shamrock Chemical Company, see Jt. Exh. 52 at 48-54, 58-63, 121, 134-37, 146; The Sartomer Company, see Jt. Exh. 52 at 35-41; and other potentially responsible parties, see Jt. Exh. 52 at 27-35, 139-143, 146.
Hoffman testified that he transported wastes to the Site, at Blosenski's direction, from the Budd Company's Trailer Division in Eagle, Pennsylvania. These wastes included fifty-five gallon drums with paint in them. [24 ELR 21128] He testified that these drums of paint sometimes came open, spilling the contents, when they were dumped at the Site. Evidence produced by Budd during discovery indicates that, at the Budd facility from which Hoffman transported waste, Budd used various paints in fifty-five gallon drums. Material Data Safety Sheets ("MS/DS sheets")8 provided by Budd indicate that the ingredients of all the paints used by Budd at its Eagle location included xylene, toluene and lead. U.S. Exh. 3 at P9 (attaching supporting documentation). Xylene, toluene and lead are all hazardous substances as defined by CERCLA. See 42 U.S.C. § 9601(14); 40 C.F.R. Part 302.4 (1987).9
Hoffman also testified that he transported wastes to the Site, at Blosenski's direction, from a Chubb National Foam plant in West Chester, Pennsylvania. The material transported to the Site from Chubb included a "brownish black" "cake material" with a "rank" odor that became a "sludge" when it got wet. Jt. Exh. 52 at 20-25. Information submitted to the EPA by Chubb indicates that the waste material generated at its West Chester plant and hauled by Blosenski was a "filter cake" containing phenol at 93.5 parts per million and zinc at 1,903 parts per million. U.S. Exh. 3 at P9 (attaching supporting documentation). Phenol and zinc are both hazardous substances as defined by CERCLA. See 42 U.S.C. § 9601(14); 40 C.F.R. Part 302.4 (1987).
The above-described evidence that Blosenski transported hazardous substances to the Site from Budd's Eagle location and from Chubb's West Chester facility, if believed by the trier of fact, would command judgment as a matter of law that Blosenski is liable as a CERCLA transporter.10 Thus, if Blosenski is to avoid summary judgment against him as to transporter liability, he must produce evidence to create a genuine issue of material fact as to the hazardous nature of the materials transported by him to the Site from Budd and Chubb. He has failed to produce such evidence. Indeed, the evidence he has produced confirms the evidence presented by plaintiffs.
Blosenski has testified that he reviewed the specific portions of Hoffman's testimony as it related to both Budd and Chubb. Blosenski Exh. 17 at A-90. When asked, "Did you agree with [Hoffman's] testimony? Would you think that was correct?," Blosenski responded, "Within reason, yes." Id. Rather than presenting evidence that contradicts Hoffman's testimony, Blosenski's counsel attempts to make much of the fact that Blosenski testified that he only "kind of breezed through" Hoffman's deposition. See Memorandum of Blosenski, et al. contra to United States' Motion for Summary Judgment (docketed at # 124 in Civil Action No. 93-1976) at 19-21. Counsel would have the court conclude that Blosenski's expressed agreement with that testimony should therefore be ignored. However, counsel's argument is futile. While Blosenski did testify at one point that he "kind of breezed through" Hoffman's testimony, he later testified that he had specifically reviewed those portions of the testimony regarding Budd and Chubb, see Blosenski Exh. 17, precisely the portions of Hoffman's testimony upon which the court relies.
Even if Blosenski had completely failed to read Hoffman's deposition, he could not now overcome the evidence presented in that deposition without presenting affirmative evidence that calls into question the material portions of Hoffman's testimony. He has failed to do so. The specific disagreements with Hoffman's testimony raised by Blosenski in his deposition are immaterial.11 Therefore, the court finds that the portions of Hoffman's testimony upon which it has relied are unrebutted.
Similarly, Blosenski has presented no evidence contrary to plaintiffs' evidence that the waste materials described by Hoffman as hauled from Budd and Chubb to the Site contained hazardous materials. Instead, he raises several objections to the adequacy of plaintiffs' proof, all of which are without merit.
Plaintiffs' evidence that the materials from Budd and Chubb were hazardous is presented in documents attached to an Affidavit of James P. Harper. See U.S. Exh. 3. Blosenski complains that Harper was not previously identified as an expert upon which the United States would rely, and avers that Harper's statements are not supported by the submitted evidence.
Blosenski's objections to the Harper Affidavit are without merit. None of the information upon which the court relies depends upon Harper having any specialized knowledge or expertise. Paragraph 9 of Harper's affidavit, which presents the relevant evidence, is simply a compilation and summary of information contained in the supporting documents attached to the affidavit. The court has independently examined these supporting documents and bases its conclusions upon that independent examination.
Blosenski repeatedly criticizes plaintiffs' evidence by claiming that it fails to state the level of concentration of hazardous substances in the waste hauled to and present at the Site. In fact, however, the evidence described above as material to Blosenski's transporter liability does state concentration levels for the hazardous substances contained in the transported waste. At any rate, the exact concentration levels of hazardous substance are legally irrelevant, since the third [24 ELR 21129] circuit has held that liability for response costs under CERCLA does not depend on the presence of some minimum threshold level of hazardous substance. Alcan, 964 F.2d at 259-61.
2. Ada Blosenski
Plaintiffs in the ARCO action move for summary judgment against Ada Blosenski, Blosenski's wife.12 Ada Blosenski has cross-moved for summary judgment. Because there are disputed issues of material fact, both motions must be denied.
a. Operator liability
It is undisputed that Ada Blosenski did not and does not own the Site. Plaintiffs, however, contend that Ada Blosenski is liable because she was an operator of the Site at the time that hazardous waste was deposited there. See 42 U.S.C. § 9607(a)(2).
The third circuit has recently discussed the meaning of "operator" under CERCLA:
The definition of "operator" in CERCLA gives little guidance to the courts in determining if a particular person or entity is liable as an operator. The statute circularly defines "operator" as "any person . . . operating such facility." 42 U.S.C. § 9601(20)(A)(ii). Several cases have attempted to give substance to liability as an operator and in general have construed "operator" broadly to encompass all who profit from the facility and at the same time have a degree of day-to-day control over the management of the facility. For example, in United States v. New Castle County, 727 F. Supp. 854, 869 (D.Del. 1989), the district court listed the following factors as being relevant: whether the person or entity controlled the finances of the facility; managed the employees of the facility; managed the daily business operations of the facility; was responsible for the maintenance of environmental control at the facility; and conferred or received any commercial or economic benefit from the facility, other than the payment or receipt of taxes.
FMC Corp. v. United States Department of Commerce, 10 F.3d 987, 995 (3d Cir. 1993). See also, New Castle County, 727 F. Supp. at 869 (when applying the above-described factors, court should look at totality of the circumstances); Tonolli, 4 F.3d at 1220-22 (parent corporation is liable as an operator when it has "actual participation and control" over subsidiary's decision making).
The evidence of Ada Blosenski's management and/or control of the Site is mixed. She testified that she was not involved in the Blosenski waste hauling and disposal business until after the Site was closed. Ada Blosenski Exh. 1 at 5-6, Exh. 2 at 5-6. In particular, with respect to the landfill operation, she testified as follows: "I was really involved with raising the children at that time. I had nothing to do with any of the businesses, landfill or anything. I didn't even know that Joe had a landfill back then." Ada Blosenski Exh. 3, at 62. See also, id. at 60-61 (testifying that she had no knowledge of landfill's operation).
Plaintiffs, however, have presented evidence to the contrary. An equipment lease to which the Blosenski proprietorship was a party, and which was in existence prior to the Site's closure, lists the lessee as "Joseph Jr. & Ada Blosenski, Jointly & Individually DBA Blosenski Disposal Service." Jt. Exh. 78. Another such lease lists names the lessee as "Joe and Ada Blosenski ind./Blosenski Disposal." Jt. Exh. 77. Both of these leases are apparently signed by Ada Blosenski. Jt. Exh. 78. In their 1980 application to the Central and Western Chester County Industrial Development Authority, the Blosenski's write of "our" trash removal business. The application is signed by Joseph Blosenski on behalf of "Joseph M. Blosenski and Ada C. Blosenski." Jt. Exh. 79. Finally, in a mortgage application submitted by the Blosenskis in 1985, Ada Blosenski stated that she was an office manager in a sanitation business and had been so employed for twenty-four years. Jt. Exh. 76.
The court concludes that there is a genuine issue of material fact as to whether Ada Blosenski was an operator of the Site at the time that hazardous wastes were deposited there. Therefore, the cross-motions for summary judgment will be denied.
b. Transporter liability
Plaintiffs also argue that Ada Blosenski is liable as a transporter of hazardous wastes to the Site. See 42 U.S.C. § 9607(a)(4). The same considerations described above with respect to Ada Blosenski's alleged operator liability are germane to her possible liability as a transporter. In addition, the court must consider the testimony of Kenneth R. Hoffman, a truck driver hired by Blosenski to haul wastes from a variety of industrial and commercial customers to the Site. See supra Section IV(B)(1)(b) (discussing Blosenski's transporter liability).
Hoffman testified that Blosenski was his immediate supervisor during the time that he worked for him and that he transported hazardous wastes to the Site at Blosenski's direction. Conflicting inferences may be made from Hoffman's testimony. The court could infer that Blosenski was solely responsible for the choice of the Site as a destination for hazardous materials, which would imply that Ada Blosenski is not liable as a transporter. On the other hand, the court could infer that while Blosenski was solely responsible for directing Hoffman, Ada Blosenski played a role in the day-to-day decision-making that led to Blosenski's orders. Because conflicting inferences can be made from the undisputed facts, the cross-motions for summary judgment as to Ada Blosenski's transporter liability must be denied.
c. "Joint Venture" liability
Plaintiffs argue that Ada Blosenski is liable as a member of a joint venture with her husband in his trash business. Again, because the role of Ada Blosenski in the Blosenski trash business is disputed, the cross-motions for summary judgment as to Ada Blosenski's joint venture liability must be denied.
3. Alexander M. Barry
Plaintiffs have moved for summary judgment against Alexander M. Barry ("Barry"), claiming that he was a co-owner, along with Blosenski, of approximately five acres of the Site at the time hazardous wastes were dumped there. See 42 U.S.C. § 9607(a)(2). Barry has cross-moved for summary judgment, arguing that he never owned any part of the property, and that there is no evidence that there was a release or threatened release of hazardous substances on the part of the property he allegedly owned.
The court finds as a matter of law that there was a release or threatened release on the parcel of the Site allegedly owned by Barry. However, because there exists a genuine issue of material fact as to Barry's ownership, the court will deny the cross-motions for summary judgment.
a. Release of hazardous wastes on the property allegedly owned by Barry
Despite Barry's assertion to the contrary, there is no genuine issue of material fact as to the release or threatened release of hazardous wastes on the part of the Site allegedly owned by him. The United States has presented considerable evidence, including maps indicating the precise location of drums excavated at the Site, showing that numerous drums and other containers were recovered on the five acres of the Site allegedly co-owned by Barry. Test data reveal that these drums were properly classified as containing hazardous wastes as defined by CERCLA, 42 U.S.C. § 9601(14). See U.S. Exh. 2 (Close Out Report) at § 2 and Appendix C. Because Barry has presented no contrary evidence, the court finds as a matter of law that there was a release or threatened release of hazardous substances on the part of the Site he allegedly owned. Thus, Barry's liability turns on the question of whether he owned the land.
[24 ELR 21130]
b. The meaning of "owner" under CERCLA
Plaintiffs have presented documentary and testimonial evidence indicating that Barry owned the five-acre parcel in question. It is undisputed that Barry, along with Blosenski, is named as the grantee on a deed to the relevant part of the Site. No signatures of grantors or grantees appear on the deed, which is dated August 10, 1972, and shows that the property was conveyed for $ 6,000. See Jt. Exh. 39. Blosenski testified that he and Barry bought the property together, and jointly paid to have it surveyed. According to Blosenski, they intended to use the site as a landfill and Barry subsequently lost interest in the land when it was denied a landfill permit. However, Barry never renounced his ownership of the land. Blosenski alone paid taxes on the land. In 1991, Barry executed a deed transferring his interest in the property to Blosenski for one dollar. Blosenski testified that Barry deeded the land to him in 1991 because Barry "figured [Blosenski] should own it" because he had always paid the taxes on it. See Jt. Exh. 40 (deed); ARCO's Opposition to Barry's Motion for Summary Judgment, Exhibits A & B (Blosenski depositions). Finally, plaintiffs present answers provided by Barry's attorney in response to a 1991 letter inquiry from EPA. In response to a request to identify "any and all business relationships between yourself [Barry] and Joseph M. Blosenski, Jr.," Jt. Exh. 41, Barry's attorney responded:
There have been three business relationships between Alexander M. Barry and Joseph M. Blosenski, Jr. . . . The third relationship involved a jointly owned property in West Caln Township. Alexander M. Barry and Joseph M. Blosenski purchased that property in 1972 and held onto it until March of 1991 when Alexander M. Barry transferred his interests in the property to Joseph M. Blosenski, Jr.
Jt. Exh. 42 at 2. See also, id. at 1 (referring to the five acre parcel that Barry "used to own").
Barry presents evidence to support a different version of the events surrounding the purchase and ownership of the five acres of land. According to Barry's deposition testimony, he and Blosenski discussed buying the five-acre plot together in approximately 1970 or 1971, for use as a woodlot. Barry, however, declined to go ahead with the purchase because he decided he could not afford it. Barry knew that Blosenski bought the land at approximately that time, but Barry was not involved in the purchase, and did not know that his name went on the deed. It was only in about 1990 or 1991; when Blosenski informed him, that Barry discovered his name was on the deed. Barry was "shocked to hear that." When he discovered that his name was on the deed, Barry quickly moved to correct what he saw as an error by conveying his putative interest in the land to Blosenski. He received no consideration for the transfer. See Barry's Motion for Summary Judgment, Exh. B (Barry deposition).13
If we accept the version of the facts presented by plaintiffs' evidence, Barry is liable as an owner of the landfill, even if he lost interest in the land shortly after the purchase, played no role in the decision to dump waste there, and exercised no control over the land. Mere ownership is enough. United States v. Monsanto Co., 858 F.2d 160, 169 (4th Cir.1988) (owners liable regardless of participation in disposal activities), cert. denied, 490 U.S. 1106, 109 S. Ct. 3156, 104 L. Ed. 2d 1019 (1989); United States v. A & N Cleaners and Launderers, 788 F.Supp., 1317, 1332 (S.D.N.Y. 1992) (mere ownership of property sufficient to impose liability, regardless of any control or lack of control). Indeed, since current owners of a CERCLA facility are liable even if they did not own the site at the time hazardous wastes were deposited there, see, 42 U.S.C. § 9607(a)(1), it would be anomalous to conclude that the owner of the site at the time the wastes were deposited is not liable unless he exercised control over the site.
Under Barry's version of events, however, the court cannot find that Barry was an owner. If, as Barry suggests, Blosenski put Barry's name on the deed without Barry's knowledge or consent, Barry continued to be ignorant of the fact that his name was on the deed, and Barry took action to correct what he saw as an error as soon as he found that his name was on the deed, it would be inequitable, even under CERCLA's strict liability regime, to hold Barry liable as an owner of the site.
The court finds that in order to be an "owner" under CERCLA, Barry must have manifested some intent to own the property. This intent could be evidenced, for example, by a contribution to the purchase price or by an agreement between Blosenski and Barry that they would be joint owners without Barry contributing to the purchase. Barry's intent to own the land could also be evidenced by his knowledge that Blosenski bought the land in both of their names, or that his name appeared on the deed, without taking any action to disavow the apparent joint ownership. In keeping with CERCLA's strict liability, see Alcan, 964 F.2d at 259, the intent required is merely an intent to own, not an intent that hazardous wastes be deposited on the land, or even an intent that the site be used as a landfill. Barry's control, or even knowledge, of what went on at the site is not relevant to this inquiry. Even if Barry intended that the site be bought as a woodlot, and never checked to see how the land was used, he would be liable if he had intended to own it.
Because the court is presented with evidence to support two different versions of the events surrounding the purchase and ownership of the five acre parcel, and the differences in the two versions are material, the cross motions for summary judgment must be denied.14
4. The Blosenski Corporations: Blosenski Disposal Co., Inc.; Blosenski Trucking Corp.; and Suburban Sanitation Corp.
In September of 1981, after the Site was closed, Blosenski registered his waste-hauling business with the Commonwealth under the fictitious name "Blosenski Disposal Service" (hereinafter "BDS"). See Jt. Exh. 108 (certificate of registration). In 1985, Blosenski attempted to restructure his waste hauling business by incorporating it under three corporations: Blosenski Disposal Co., Inc. ("BDC"); Blosenski Trucking Corporation ("BTC"); and Suburban Sanitation Corp. ("SSC"). See U.S. Exh. 9; Jt. Exh. B at 85, 109 (Blosenski deposition).15 Plaintiffs in the ARCO action have moved for summary judgment against all three of these corporations, while plaintiffs in the U.S. action have so moved against only BDC and BTC. Because the United States and the Commonwealth [24 ELR 21131] believe that triable issues of fact exist as to SSC's liability, the ARCO plaintiffs' motion for summary judgment will be denied as to SSC.
Because BDC and BTC were formed after the Site was closed, and have never owned or operated the Site, it is impossible for them to be directly liable under CERCLA as owners, operators, transporters, or generators. Instead, plaintiffs argue that BDC and BTC are vicariously liable as "alter egos" to Blosenski's sole proprietorship. The court agrees, and finds as a matter of law that the corporate veils of BDC and BTC must be pierced, and that they are liable as Blosenski's alter egos.16
a. Alter ego liability
The third circuit has approved the use of veil-piercing in CERCLA actions. See Tonolli, 4 F.3d at 1220 ("Under CERCLA, a corporation may be held liable as an owner for the actions of its subsidiary corporation in situations in which it is determined that piercing the corporate veil is warranted."). As an initial matter, the court must determine whether contours of alter ego liability in the CERCLA context are determined by federal or state law. We hold, as have other district courts in the third circuit, that a uniform federal common law rule of decision is appropriate. See Mobay Corp. v. Allied-Signal, Inc., 761 F. Supp. 345, 349-51 (D.N.J. 1991); United States v. Nicolet, Inc., 712 F. Supp. 1193, 1201-02 (E.D.Pa.1989). See also, Smith Land & Improvement Corp. v. Celotex Corp., 851 F.2d 86, 92 (3d Cir. 1988) (in resolving successor liability issues under CERCLA, district court on remand "must consider national uniformity"), cert. denied, 488 U.S. 1029, 109 S. Ct. 837, 102 L. Ed. 2d 969 (1989); United States v. Pisani, 646 F.2d 83, 85-89 (3d Cir. 1981) (fashioning federal common law of veil piercing in action to recover Medicare overpayments).
"[F]ederal law governs questions involving the rights of the United States arisingunder nationwide federal programs." United States v. Kimbell Foods, Inc., 440 U.S. 715, 726, 99 S. Ct. 1448, 1457, 59 L. Ed. 2d 711 (1979). Because the potential CERCLA liability of a responsible party's alter ego affects the rights of the federal government and falls within the interstices of the statute, the court has authority to develop a federal common law of veil piercing. See also Smith Land, 851 F.2d at 91 ("Congress expected the courts to develop a federal common law to supplement the statute.").
The decision that CERCLA alter ego liability is governed by federal law does "not inevitably require resort to uniform federal rules. . . . Whether to adopt state law or fashion a nationwide federal rule is a matter of judicial policy dependent upon a variety of considerations always relevant to the nature of the specific governmental interests and to the effects upon them of applying state law." Kimbell Foods, 440 U.S. at 727-28, 99 S. Ct. at 1458 (internal quotation marks and citations omitted, emphasis supplied); accord Clearfield Trust Co. v. United States, 318 U.S. 363, 366-67, 63 S. Ct. 573, 574-75, 87 L.Ed. 838 (1943) (federal courts should establish uniform federal rules of decision when a federal statute is silent as to choice of law and overriding federal interests exist); Pisani, 646 F.2d at 86. In deciding whether to develop a uniform federal rule, courts must consider: (1) whether national uniformity is needed; (2) whether a federal rule would disrupt commercial relations predicated on state law; and (3) whether application of state law would frustrate specific objectives of the federal statute. Kimbell Foods, 440 U.S. at 726-29, 99 S. Ct. at 1457-59.
All of the Kimbell Foods factors indicate that a uniform federal veil piercing rule is appropriate in the CERCLA context. As one district court explained:
In attempting to eliminate the dangers of hazardous wastes, CERCLA presents a national solution to a nationwide problem. One can hardly imagine a federal program more demanding of national uniformity than environmental protection. . . . The need for a uniform federal rule is especially great for questions of piercing the corporate veil, since liability under the statute must not depend on the particular state in which a defendant happens to reside.
In re Acushnet River & New Bedford Harbor Proceedings Re Alleged PCB Pollution, 675 F. Supp. 22, 31 (D.Mass.1987); accord, Nicolet, 712 F. Supp. at 1201-02; Mobay, 761 F. Supp. at 350.
Application of state veil piercing laws, rather than a uniform federal law, could well frustrate the objectives of CERCLA since, in the absence of a uniform standard, states with laws more protective of parent corporations could serve as safe havens for polluters. As Congressman Florio, the House sponsor of CERCLA, noted, development of a uniform federal common law will "discourage business[es] dealing in hazardous substances from locating primarily in States with more lenient laws." Mobay, 761 F. Supp. at 350 (quoting 126 Cong.Rec. H11787 (daily ed. Dec. 3, 1980)). See generally, Note, Liability of Parent Corporations for Hazardous Waste Cleanup and Damages, 99 Harv.L.Rev. 986, 1001-03 (1986). See also, Smith Land, 851 F.2d at 92 (use of state law of successor liability could frustrate CERCLA's aims by allowing responsible party to arrange merger or consolidation under the laws of a state with an excessively narrow statute); Pisani, 646 F.2d at 87-89 (New Jersey veil piercing, requiring proof of fraud, would frustrate goals of Medicare).
There is no reason to believe that application of a uniform federal law would be disruptive of commercial relationships. As one commentator has pointed out, the principal economic effects of a rule imposing alter ego liability under CERCLA would be to discourage corporations from establishing undercapitalized subsidiaries to engage in hazardous waste disposal and to encourage parent corporations to oversee the hazardous waste disposal activities of their subsidiaries. Liability of Parent Corporations, 99 Harv.L.Rev. at 1000. This can hardly be characterized as "disruptive" of commercial relations.
For the above-described reasons, the court joins other district courts in this circuit in concluding that
the strong federal interest in uniform enforcement of environmental legislation set forth by Congress; the very real risk that the application of state laws would frustrate the objectives of the federal program; and the fact that a federal law would not disrupt commercial relations predicated on state law, warrants the development of a uniform federal rule applicable to alter ego claims under CERCLA.
Nicolet, 712 F. Supp. at 1202; accord Mobay, 761 F. Supp. at 350.
The third circuit has articulated a uniform federal rule for alter ego liability when, as here, an individual is alleged to be the alter ego of a corporation. See Pisani, 646 F.2d at 85-89 (adopting test of DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681 (4th Cir. 1976)). In Pisani, the court of appeals affirmed a district court decision holding a doctor personally liable for Medicare overpayments made to his solely owned corporation. We adopt the Pisani veil piercing analysis as the standard to be applied in the instant case.
As the fourth circuit explained in DeWitt Truck, in applying the alter ego doctrine, "courts are concerned with reality and not form, with how the corporation operated and the individual defendant's relationship to that operation." 540 F.2d at 685. Several factors are relevant in the court's determination of the reality beyond the form:
First is whether the corporation is grossly undercapitalized for its purposes. Other factors are . . . failure to observe corporate formalities, non-payment of dividends, the insolvency of the debtor corporation at the [24 ELR 21132] time, siphoning of funds of the corporation by the dominant stockholder, non-functioning of other officers or directors, absence of corporate records, and the fact that the corporation is merely a facade for the operations of the dominant stockholder or stockholders.
Pisani, 646 F.2d at 88 (quoting DeWitt Truck, 540 F.2d at 686-87) (internal quotation marks omitted); accord Acushnet, 675 F. Supp. at 33 (adopting similar factors in CERCLA case). In addition, the situation "must present an element of injustice or fundamental unfairness." Id. However, the presence of a number of these factors can be sufficient to show such unfairness. Id.
Applying the Pisani veil piercing test to the undisputed facts of the instant case, the court finds as a matter of law that the BDC and BTC ("the Blosenski Corporations") are liable as Blosenski's alter egos.
Blosenski was president of both BDC and BTC. His wife, Ada Blosenski, was secretary and treasurer of both corporations. Jt. Exhibits 19, 20, 113, 114. The evidence is somewhat inconclusive as to who held stock in the corporations. While BDC's corporation papers show Blosenski as sole shareholder, see Jt. Exhibits 59, 60, he testified that he was the largest, but not the sole, shareholder. Jt. Exh. B at 86-87. BTC's corporation papers also show Blosenski as sole shareholder. Jt. Exhibits 112, 114. However, in the "Unanimous Consent of Directors and Shareholders in Lieu of Special Meeting of Board of Directors and Special Meeting of Shareholders," resolving to sell BTC's assets to EWI, Blosenski and Ada Blosenski both signed as shareholders. Jt. Exh. 119. Ada Blosenski has testified that she was not aware that she was a shareholder, Jt. Exh. H at 18, while Blosenski testified that he was unsure if Ada Blosenski held stock in BDC or BTC. Jt. Exh. B at 114. While there appears to be an unresolved issue of fact as to who held stock in BDC and BTC, the court concludes that it is undisputed that Blosenski was either the sole stockholder in both corporations, or was the dominant of two stockholders.
Blosenski testified that the transition from operation as a sole proprietorship to operation under the corporate aegis did not involve any changes in the business. He has repeatedly testified that nothing changed with incorporation, that he remained in charge just as before incorporation, Jt. Exh. B at 87 (Blosenski deposition); U.S. Exh. II, Blosenski 11/30/93 Dep. at 38, 118, and that the transition was just "basically a name change." Jt. Exh. B at 86.17 BDC and BTC simply began doing the business that Blosenski had done as BDS, the fictitious name, before incorporation. Jt. Exh. B at 109-110. There were the same employees, the same customers and the same or similar business names prior to the incorporation and after the incorporation. Jt. Exh. A at 102.
Corporate formalities were not observed, and there was failure to distinguish between corporate and individual funds. Corporate books and records were not maintained. Jt. Exh. B at 87. In fact, Blosenski testified that the only corporate formality observed was the payment of corporate taxes. Id. Through an "informal arrangement," the corporations paid ongoing debts of the Blosenski proprietorship. U.S. Exh. Vol. II, Phillips Dep. at 290-91 and 345-46. The fact that neither Blosenski or Ada Blosenski was sure if Ada Blosenski was a stockholder is further indication of failure to adhere to, or even recognize, corporate formalities.
Blosenski and his wife comprised all the officers of the corporations. While Ada Blosenski, as Secretary, apparently signed some of the papers involved in selling the corporate assets to EWI, see Jt. Exh. 16 (Secretary's Certificate of resolution selling BDC's assets to EWI); Jt. Exh. 17 (same for BTC), she testified that she had no duties as an officer or director, Jt. Exh. H at 18. Thus, the corporations only officer other than Blosenski was essentially non-functioning.
The evidence shows that the corporations were formed with little or no capitalization. Corporate papers indicate that Blosenski was the sole stockholder in BDC and BTC, with stock at one dollar per share, and do not indicate that more than one share was actually purchased. Jt. Exhibits 59, 60, 112, 114. While BDC and BTC used trucks, containers, and other equipment belonging to Blosenski, no assets were transferred from Blosenski to the corporations. Jt. Exh. A at 101-02; U.S. Exh. Vol. II, Packtor Dep. at 106-07; Blosenski Mem. at 5.
When he was asked if he incorporated BDC and BTC in order to limit his personal liability, Blosenski testified: "I don't know if — I don't think that came into question on it. What was the difference? I mean, it was Blosenski regardless." Jt. Exh. B at 86. The court agrees that "it was Blosenski regardless" of the formal existence of the corporations. It is clear from the undisputed facts that BDC and BTC continued Blosenski's business, using assets that remained Blosenski's and operating under Blosenski's control. Thus, BDC and BTC were mere shells, acting as "a facade for the operations of the dominant stockholder," Blosenski. Pisani, 646 F.2d at 88. We conclude that BDC and BTC are liable as Blosenski's alter egos. To find otherwise would exalt form over reality, see DeWitt Truck, 540 F.2d at 685, and would allow the use of the corporate form to frustrate CERCLA's goal of ensuring that those responsible for problems caused by the disposal of hazardous waste bear the cost or remedying the harmful conditions. See Smith Land, 851 F.2d at 92.18
b. Defenses raised by BDC, BTC and SSC
BDC, BTC and SSC argue that a CERCLA action cannot be maintained against them because they were dissolved as corporations more than five years prior to the institution of this action, and therefore they lack the capacity to be sued under Pennsylvania law. The court rejects this argument because the undisputed evidence shows that these corporations were never properly dissolved.
Rule 17(b) of the Federal Rules of Civil Procedure provides: "The capacity of a corporation to sue or be sued shall be determined by the law under which it was organized." BDC, BTC, and SSC, each of which is a Pennsylvania corporation, claim that they ceased to transact business on or about January 30, 1987, and were dissolved on or about December 31, 1987. They further argue that, under Pennsylvania law, any action against a dissolved corporation must be brought within two years after the date of dissolution. See 15 Pa.S.A. § 2111(a) (1967); 15 Pa.C.S.A. § 1979(a) (1993 Pamphlet).19 Since these actions were filed more than five years afar the date BDC, BTC, and SSC claim they were dissolved, the corporations conclude that they lack the capacity to be sued.
As evidence that they were dissolved, BDC, BTC and SSC each present an "Out of Existence/Withdrawal Affidavit" dated December 22, 1987. See Blosenski Corporations' Motion to Dismiss the Complaint in Intervention (docketed at # 30 in the U.S. action), Exhibits A, B, C. Accompanying certifications of authenticity show that the [24 ELR 21133] out of existence affidavits were received by the Pennsylvania Bureau of Corporation Taxes on December 30, 1987. Id.20 However, "[m]erely filing an out of existence affidavit does not dissolve a corporation." Shechter v. Shechter, 366 Pa. 30, 40, 76 A.2d 753, 758 (1950). Indeed, each out of existence affidavit states on its face that "[t]he filing of this Affidavit does not affect the status of the Certificate of Incorporation/Authority of this corporation but does permit the Department of State to relinquish the use of the present name of the corporation to another corporation." Instead, there is a detailed statutory scheme for voluntary corporate dissolution. See 15 Pa.C.S.A. §§ 2101 et seq. (1967); 15 Pa.C.S.A. §§ 1971 et seq. (1993 Pamphlet). In particular, articles of dissolution must be filed with the Department of State. See 15 Pa.C.S.A. § 2105 (1967); 15 Pa.C.S.A. § 1977 (1993 Pamphlet).
Plaintiffs have submitted affidavits from the Secretary of the Commonwealth stating that each corporation "remains a subsisting corporation with the Department of State. No articles of dissolution have been received or filed with the Department of State." U.S. Exh. 9. BDC, BTC and SSC have not presented any contrary evidence showing that articles of dissolution were filed. We conclude that, as a matter of law, that BDC, BTC and SSC have not been dissolved under Pennsylvania law, and therefore the two year limitations period for filing suit against a dissolved corporation in Pennsylvania is not applicable.21
5. Cupola Industrial Centre, Inc.
Cupola Industrial Centre, Inc. ("CIC"), a defendant only in the ARCO action, has moved for summary judgment. CIC argues that, because it did not exist at the time the Site was in use, it cannot be liable as a responsible party under CERCLA. Therefore, CIC concludes that summary judgment should be granted in its favor. However, the theory of plaintiffs' case against CIC is not that it is liable under CERCLA. Instead, plaintiffs argue that CIC is an indispensable party to this litigation, see Fed.R.Civ.P. 19, because it controls assets that are traceable to Blosenski's waste hauling business and must now be made available to help defray the costs of cleanup. Because the court agrees that CIC is an indispensable party to this lawsuit, CIC's motion for summary judgment will be denied.
Plaintiffs have submitted evidence to support the following account of the creation and existence of CIC: Prior to the closure of the Site, Blosenski and Ada Blosenski applied to the Central and Western Chester County Industrial Development Authority ("the Authority") for financing for the "expansion" of their "rubbish removal and recycling business." Jt. Exh. 79. As a result of this application, the Blosenskis were approved for an installment sales agreement with the Authority to purchase the Cupola property, which contained improvements including a garage for which the Blosenskis received rent from tenant companies. The Blosenskis built a trash transfer facility on the property and used a portion of the existing garage for repair of containers belonging to BDS, the Blosenski proprietorship. BDS made the monthly payments on the mortgage for the Cupola property, and BDS reduced its tax liabilities by taking the depreciation on the improvements of the Cupola property on its federal tax returns, Jt. Exh. K at 84-86, 97-98. In 1987, the waste hauling assets of Blosenski and the Blosenski corporations, with the exception of the Cupola property, were sold to EWI. Shortly thereafter, the Blosenskis created CIC, Jt. Exh. 89, in which they are each fifty percent shareholders, Exh. 93 (CIC tax returns). They then transferred the Cupola property to CIC, which is the present owner of the property. The Cupola property has been valued at between $ 1.3 million and approximately $ 2 million. Jt. Exhibits 95, 118.
Thus, plaintiffs have submitted evidence that, if believed by the trier of fact, would show that the Cupola property was purchased by the Blosenskis with assets acquired from Blosenski's waste hauling business, and that the Blosenskis are still benefiting financially from the property through their joint shareholding in CIC. Because the Cupola property is an identifiable asset of the Blosenski waste hauling and disposal business, plaintiffs are entitled to seek recovery of this asset to help fund the cleanup of the Site. Denver v. Adolph Coors Co., 813 F. Supp. 1471 (D.Colo.1992). This is particularly true in the instant case, where the Cupola property is now under the control of CIC, in which the Blosenskis are the sole shareholders, rather than in the hands of an innocent party. Under such circumstances, to insulate the Cupola property from recovery would frustrate CERCLA's broad remedial goal of insuring that responsible parties bear the costs of clean-up. See, e.g., Smith Land, 851 F.2d at 91-92. Since the Cupola property is now owned by CIC, CIC is a necessary party to this lawsuit in order to accord "complete relief" among the parties. Fed.R.Civ.P. 19; see Adolph Coors, 813 F. Supp. at 1475 (finding that the entities controlling the assets of the dissolved responsible party should have been before the court, but not allowing joinder because it "would disrupt all time constraints" in the litigation).
6. Eastern Waste Industries
Plaintiffs argue that EWI is liable as a successor to the transporter business of BDC, BTC SSC (collectively, "the Blosenski corporations") and Blosenski's sole proprietorship, BDS, by virtue of EWI's purchase of all or substantially all of the assets of Blosenski's and his corporations' waste hauling business. See Jt. Exh. 11 (asset purchase agreement). The material facts are undisputed, with plaintiffs and EWI differing only in their choice of the proper legal standard to be applied in determining successor liability under CERCLA. Because the court agrees with plaintiffs that application of the "substantial continuity" test, as described by the fourth circuit in United States v. Carolina Transformer Co., 978 F.2d 832 (4th Cir.1992), is appropriate here, plaintiffs' motions for summary judgment will be granted, and EWI's motion will be denied.
a. CERCLA successor liability
"The national interest in the uniform enforcement of CERCLA and the same interest in preventing evasion by a responsible party by even legitimate resort to state law" commands that CERCLA successor liability be governed by a uniform federal rule of decision rather than by the laws of the individual states. Carolina Transformer, 978 F.2d at 837 (citing, Louisiana Pacific Corp. v. Asarco, Inc., 909 F.2d 1260, 1263 (9th Cir.1990); Smith Land, 851 F.2d at 92). Therefore, the court must fashion a rule of successor liability which is consistent with the broad remedial aims of CERCLA while still taking into account the traditional concerns of corporate law. See Smith Land, 851 F.2d at 91-92.
Under traditional and widely recognized rules of successor liability, an asset purchaser is not liable as a successor unless:
(1) the purchaser of assets expressly or impliedly agrees to assume obligations of the transferor; (2) the transaction amounts to a consolidation or de facto merger; (3) the purchasing corporation is merely a continuation of the [seller]; or (4) the transaction is fraudulently entered into to escape liability. . . .
15 Charles R.P. Keating & Gail O'Gradney, Fletcher Cyclopedia Corporations § 7122 at 231 (1990 rev. ed.); accord Philadelphia Electric Co. v. Hercules, Inc., 762 F.2d 303, 308-09 (3d Cir.) (reviewing Pennsylvania common law), cert. denied, 474 U.S. 980, 106 S. Ct. 384, 88 L. Ed. 2d 337 (1985); Carolina Transformer, 978 F.2d at 838.
Plaintiffs do not argue that EWI is liable under these traditional principles of successor liability. Instead, they ask the court to adopt a federal rule of decision for CERCLA successor liability that sweeps more broadly than the traditional rules. Specifically, they urge the court to adopt the "substantial continuity" or "continuity of enterprise" principles of successor liability that have been adopted by the fourth circuit court of appeals. See Carolina Transformer, supra.
In Carolina Transformer, the fourth circuit explained that
we must consider traditional and evolving principles of federal common law, which Congress has left to the courts to supply interstitially. We are reminded that since CERCLA is a remedial statute, its provisions should be construed broadly to avoid frustrating the legislative purpose.
978 F.2d at 837-38 (internal citations and quotation marks omitted). The court then formulated a rule of successor liability based upon "substantial continuity" or "continuity of enterprise" between the successor's and the predecessor's businesses.
Under the fourth circuit's "substantial continuity" approach to CERCLA successor liability, the following factors should be considered in deciding if an asset purchaser acquires the liabilities of the predecessor from which it purchased the assets: (1) retention of the same employees; (2) retention of the same supervisory personnel; (3) retention of the same production facilities and location; (4) production of the same products; (5) retention of the same name; (6) continuity of assets; (7) continuity of general business operations; and (8) whether the successor holds itself out as the continuation of the previous enterprise. Carolina Transformer, 978 F.2d at 838; accord United States v. Distler, 741 F. Supp. 637, 642-43 (W.D.Ky.1990); United States v. Western Processing Co., 751 F. Supp. 902, 905 (W.D.Wash.1990). See also United States v. Mexico Feed and Seed Co., 980 F.2d 478, 488-90 (8th Cir. 1992) (recognizing the exception but finding it inapplicable under the facts of the case); United States v. Atlas Minerals & Chems., 824 F. Supp. 445, 49-50 (E.D.Pa.1993) (same); City Environmental, Inc. v. United States Chem. Co., 814 F. Supp. 624, 635-39 (E.D.Mich. 1993) (same); Michael D. Green, Successors and CERCLA: The Imperfect Analogy to Products Liability and an Alternative Proposal, 87 Nw.U.L.Rev. 897 (1993) (noting "a modest trend" in the courts favoring the adoption of liberal successor liability for CERCLA actions).22
The third circuit has held that the doctrine of successor liability applies to CERCLA. See Smith Land. However, it has not decided if or when the substantial continuity test should be applied.23 The third circuit has, however, rejected the use of the substantial continuity test in the context of strict products liability, see Restatement (Second) of Torts § 402A, finding that it "is an unsound exception to the general rule" that an asset purchaser does not acquire the seller's liabilities. Polius v. Clark Equipment Co., 802 F.2d 75, 75 (3d Cir.1986).24 The court finds that the concerns that led to the court of appeals' disapproval of the substantial continuity test in products liability cases are not applicable in the CERCLA context. Instead, the substantial continuity test is consistent with CERCLA's broad remedial aims.
The central concern of the Polius court was that, even for strict products liability, "the Restatement reaffirms the notion of a causal relationship between the defendant's acts and the plaintiffs injury — a concept that is fundamental to tort law." Id., 802 F.2d at 81. The court rejected the substantial continuity test because it "brush[es] aside this bedrock requirement and impose[s] liability on entities which in fact had no connection with the acts causing injury." Id.; see also id., 802 F.2d at 82 (rejecting the substantial continuity theory "because it proposes an illconsidered extension of liability to an entity having no causal relationship with the harm").
This concern with traditional tort principles of causation is not evident in CERCLA. As the second circuit court of appeals has explained, a causation requirement is at odds with the basic structure of CERCLA's definition of responsible parties. 42 U.S.C. § 9607(b) provides several affirmative defenses to CERCLA liability, "each of which carves out from liability an exception based on causation." Shore Realty, 759 F.2d at 1044. To incorporate a general causation requirement into CERCLA's liability provisions would thus "construe [the] statute in [a] way that makes some of its provisions surplusage." Id. Without a clear congressional command to make such a construction of the statute, the court will not do so. Id.
The lack of importance CERCLA places on causation is also evidenced by its legislative history.
Congress specifically rejected including a causation requirement in § 9607(a) [CERCLA's definition of responsible parties]. The early House version imposed liability only upon "any person who caused or contributed to the release or threatened release." . . . The compromise version, to which the House later agreed, . . . imposed [MISSING PAGES] [24 ELR 21159] tion6 and therefore the pit or production sludges at issue are subject to CERCLA liability as hazardous substances under other subsections of § 9601(14). Compare, Louisiana-Pacific Corp. v. Asarco, Inc., 6 F.3d 1332, 1338 (9th Cir.1993) (same re slag); and Eagle-Picher Indus., Inc. v. United States EPA, 759 F.2d 922 (D.C.Cir.1985) (same re mining wastes and fly ash);
(2) Based on the reports and affidavits of the opposing experts, the court finds that there are genuine issues of material fact as to whether the lead levels rendered the pit or production sludges "hazardous substances" whether through mixture and commingling or otherwise;
(3) As a matter of law, Louisiana Statewide Order 29B is not the only trigger for CERCLA liability in this case as "the scope of remedial action may be established by any 'legally applicable or relevant and appropriate . . . requirement'" . . . including "'any standard, requirement, criteria, or limitation under any Federal environmental law' or any more stringent 'State environmental or facility siting law.'" Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 671 (5th Cir. 1989), citing, § 9621(d)(2)(A).
While rejecting the argument that CERCLA liability attaches upon the release of any quantity of a hazardous substance because "adherence to that view would permit CERCLA's reach to exceed its statutory purposes by holding parties liable who have not posed any threat to the public or the environment," the Fifth Circuit has explained:
While not the exclusive means of justifying response costs, we hold that a plaintiff who has incurred response costs meets the liability requirement as a matter of law if it is shown that any release violates, or any threatened release is likely to violate, any applicable state or federal standard, including the most stringent.
Amoco Oil Co., 889 F.2d at 670-71.
(4) As a matter of law, substantial compliance, rather than strict compliance, with the National Contingency Plan ("NCP") is to be applied to Plaintiff's clean-up actions.7 The court adopts the analysis of the court in Con-Tech Sales Defined Benefit Trust v. Cockerham, 1991 WL 209791 (E.D.Pa.1991) which found that:
the substantial compliance standard [as set forth in the 1990 NCP] is meant to clarify the meaning of "consistent with the NCP," not to add a new provision. The "strict compliance" standard advocated by the defendants is a creation of the courts, not the EPA, and the agency has simply announced its disagreement with the courts' interpretation of section 107 of CERCLA and of the 1985 NCP.
(See Plaintiffs' Exhibit G, Cockerham, 1991 WL 209791 at *5). See also, Hatco Corp. v. W. R. Grace & Co., 801 F. Supp. 1309, 1332 (D.N.J.1992) (quoting same language); and NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898-99 (9th Cir. 1986) (consistency with 1985 NCP did not require strict compliance with its provisions).
(5) Whether the costs incurred by Plaintiffs were in substantial compliance with the NCP and whether the plaintiffs' cleanup was a removal or remedial action are hotly disputed by the parties. Thus these issues cannot be resolved on motion for summary judgment.
IT IS ORDERED that:
(1) All of Defendants' Motions for Summary Judgment be and are hereby GRANTED only to the extent that the court concludes as a matter of law that CERCLA imposes no liability for the recovery of costs incurred as a result of clean-up actions related to "contaminants or pollutants" (i.e., brine or salt water); and
(2) In all other respects, all of Defendants' Motions for Summary Judgment be and are hereby DENIED.
1. A number of issues remain for resolution beyond Phase I, including the liability of the remaining defendants, the amount of response costs the United States is entitled to recover, the potential liability of several defendants for penalties under 42 U.S.C. § 9606, and the allocation of costs between all liable parties.
2. Ada Blosenski is not named as a defendant in the U.S. action. While Suburban Sanitation Corporation is named as a defendant in the U.S. action, the United States and the Commonwealth have not moved for summary judgment against it. See Memorandum of the United States in Support of its Motion for Summary Judgment (docketed at # 120 in the U.S. action) at 29 n.12.
3. Contrary to the argument of defendant Blosenski, summary judgment "is no longer a disfavored procedural shortcut." Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1362 (3d Cir.1992). Instead, it is an "integral part of the Federal Rules as a whole, which are designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 325, 106 S. Ct. at 2555.
4. Defendant Barry's name also appears on the deed to the five-acre parcel. However, there is a factual dispute as to whether Barry was an owner of the property. See infra Section IV(B)(3)(b).
5. Further argument by Blosenski as to the presence of hazardous substances at the Site is material only to the question of whether Blosenski is liable as a "transporter." See infra Section IV(B)(1)(b).
6. Another type of covered person, commonly known as a "generator" is
any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility owned or operated by another party or entity and containing such hazardous substances.
42 U.S.C. § 9607(a)(3). Generator liability is not at issue in the Phase I trial.
7. Indeed, Blosenski's counsel conceded at oral argument that Blosenski is liable as an owner/operator if the court finds, as it has, that there was a release or threatened release of hazardous substances at the Site. "Tectyl," in fifty-five gallon drums. U.S. Exh. 3 at P9 (attaching supporting documentation). Numerous drums labeled "Tectyl" were recovered at the Site during the clean-up operation. See U.S. Exh. 4 (photographs of drums recovered at Site).
Tectyl is a "corrosion preventative coating for trailers, containers and container chassis." MS/DS sheets indicate that there are several different formulations of Tectyl. The MS/DS sheet for the formulation known as Tectyl 151A indicates that it contains 7% xylene by weight. The MS/DS sheets provided by Budd for all of the
8. MS/DS sheets "are documents generated by the original product manufacturer and provided to the product purchaser describing the hazardous content and nature of the product being sold." U.S. Exh. 3 (Harper Affidavit) at P8.
9. Hoffman also testified that he transported drums of "what they call Tech-top[,] . . . an undercoating that they used to put on the semi-trailers," from Budd's Eagle location to the Site. Jt. Exh. 52 at 41-48. Evidence obtained from Budd during discovery indicates that, a Budd's Eagle facility from which Hoffman transported waste, Budd used a rust preventative known as other Tectyl formulations it used show that they contain from 25% to 55%, by weight, a "stoddard type" solvent. Stoddard type solvents typically contain toluene, xylene and ethylbenzene in small quantities. Harper Affidavit, U.S. Exh. 3 at P9 (attaching supporting documentation). All of these ingredients are hazardous as defined by CERCLA. See 42 U.S.C. § 9601(14); 40 C.F.R. Part 302.4 (1987).
This evidence regarding Tectyl may provide an independent ground for finding that Blosenski is liable as a transporter, since it seems inescapable that the "Tech-top" referred to by Hoffman is Tectyl. However, because we find that the other evidence establishes transporter liability as a matter of law, the court need not decide if this evidence standing alone would create a burden under Rule 56 for Blosenski to produce evidence rebutting the conclusion that Tectyl and "Tech-top" are one and the same.
10. Hoffman also testified that he transported wastes to the Site, at Blosenski's direction, from a Diamond Shamrock facility in Delaware. These wastes included a brown sludge, a white powder, and pellets. Jt. Exh. 52 at 48-54, 58-63, 121, 134-37, 146. He further testified that he transported wastes, at Blosenski's direction, from a Sartomer facility in West Chester, Pennsylvania to the Site. These wastes included empty or nearly empty chemical bags, sometimes with a white cake or powder, and with an odor. Jt. Exh. 52 at 35-41. Plaintiffs have submitted evidence that purportedly establishes that the waste hauled from these locations was hazardous. Harper Affidavit, U.S. Exh. 3 at P9 (attaching supporting documentation). In light of our finding that Blosenski is liable as a transporter of hazardous wastes from Budd and Chubb, we need not decide if genuine issues of material fact exist as to the transport of hazardous wastes from other locations.
11. Blosenski testified that some of Hoffman's dates and times "might have been off a little here and there." Blosenski Exh. 17 at A-90. However, he has not argued that any of these time and date discrepancies are in any way material. In addition, Blosenski disputed Hoffman's claim that sludge was transported from Diamond Shamrock to the Site. Id. at A-89. While this might create a disputed issue of fact as to the transport of the sludge, this dispute is not material, since the court finds that the Budd and Chubb evidence is sufficient to establish Blosenski's transporter liability.
12. Ada Blosenski is not a defendant in the U.S. action.
13. Plaintiffs argue that Barry's 1991 conveyance to Blosenski, by warranty deed, of his interest in the land serves as an admission that he owned the land up until that time. However, if the conveyance was for one dollar, as the deed indicates, his actions could also be interpreted as a good faith effort to correct a mistaken record. The court does not find the fact that the conveyance was by warranty deed, rather than quit-claim deed, to be determinative, though it may be relevant to the determination of whether Barry owned the land. See Summ.Pa.Jur.2d, Property § 9:4 (1992) ("Quitclaim deeds are used when a party wishes to sell or otherwise convey an interest he may think he has in land but does not wish to warrant his title."). Similarly, plaintiffs argue that the response from Barry's attorney to EPA's letter inquiry, see Jt. Exhibits 41 & 42, is an admission that Barry owned the land, and that Barry cannot create an issue of fact by introducing his deposition testimony to the contrary. The court finds that, while the letter may be relevant to the credibility of Barry's testimony, it does not estop him from presenting that testimony.
14. Trial as to Phase I issues was set for February 14, 1994. In order to avoid a delay in the trial, the court announced from the Bench, on February 14, 1994, the findings of this Memorandum and Order. The court further informed the parties that this written memorandum and order would follow as soon as possible. At the trial on February 14, the court found that Barry was an owner under the legal standard described in this Memorandum. See Order of February 15, 1994.
15. After the assets of BDC, BTC and SSC were sold to EWI in 1987, their names were changed to, respectively, Blosenski Liquidating Company, Inc., B. T. Liquidating Corporation, and Suburban Liquidating Corp., by articles of amendment filed on February 9, 1987. U.S. Exh. 9.
16. Plaintiffs also argue that the Blosenski corporations are liable under federal common law principles of successor liability. Because we find that the Blosenski corporations are liable under a veil piercing theory, we need not decide whether it is appropriate to apply successor liability.
17. See also Jt. Exh. 69 (letter from Blosenski's accountant) ("Blosenski Organization has been restructured from a proprietorship form of business to the corporation form of business. The basic ownership and management has not changed.").
18. The Blosenski Corporations argue that they cannot be held liable as Blosenski's alter egos because they did not exist at the time the Site was operating. Such a restrictive application of alter-ego liability would allow persons who are responsible for pollution to escape liability simply by restructuring at some later time, a result inconsistent with CERCLA's broad remedial scope.
19. Pennsylvania's business corporation law was extensively amended in 1989. In particular, §§ 2101 et seq. of the previous law were repealed and replaced by §§ 1971 et seq., effective October 1, 1989. The parties have assumed without discussion that the new version of the law is applicable, in spite of the fact that the attempted dissolution of the corporations occurred prior to the amendments. Fortunately, we need not address this question, since the differences in the old and new versions of the law are not material to our discussion. Instead, we will simply cite to both versions of the statute.
20. BDC's and BTC's out of existence affidavits are signed by Blosenski. SSC's is signed by Ada Blosenski.
21. Because we find that the corporations still exist under Pennsylvania law, we need not decide whether Pennsylvania's two year statute of limitations for bringing suit against dissolved corporations is preempted by CERCLA. See Denver v. Adolph Coors Co., 813 F. Supp. 1471 (D.Colo.1992) (CERCLA preempts state corporate dissolution laws); Note, Corporate Life after Death: CERCLA Preemption of State Corporate Dissolution Law, 88 Mich.L.Rev. 131 (1989).
22. The "substantial continuity" test shares many features with the traditional "de facto merger" exception to the general rule of asset purchaser non-liability. However, the substantial continuity test does away with the de facto merger doctrine's requirement that there be "a continuity of shareholders which results from the purchasing corporation paying for the acquired assets with shares of its own stock, this stock ultimately coming to be held by the shareholders of the seller corporation so that they become a constituent part of the purchasing corporation." Polius v. Clark Equipment Co., 802 F.2d 75, 85-86 (3d Cir.1986) (Mansmann, J., dissenting); see generally, Alfred R. Light, "Product Line" and "Continuity of Enterprise" Theories of Corporate Successor Liability Under CERCLA, 11 Miss.C.L.Rev. 63, at notes 57-73 and accompanying text (1990).
23. EWI argues that, in Smith Land, the third circuit "has clearly indicated that it is unwilling to expand the law beyond the traditional principles of successor liability." EWI's Motion Brief in Opposition to the Motions for Summary Judgment at 20. EWI bases this claim on language in Smith Land remanding the case to the district court for consideration in light of the "traditional concepts" of successor liability. 851 F.2d at 92. EWI, however, has taken this quote out of context and has, we believe, mischaracterized the third circuit's discussion of successor liability in Smith Land. In that case, the court of appeals held that a successor corporation that evolved through a series of statutory mergers and consolidations could be held liable under CERCLA based on its predecessors' acts. The court further stated:
When no statutory merger or consolidation occurs, but one corporation buys all the assets of another, the successor will not be saddled with the seller's liability except under certain conditions. See Polius, 802 F.2d at 77; Hercules, 762 F.2d at 308. The record here indicates that nothing other than statutory mergers or consolidations occurred; therefore the sale of assets or the de facto merger doctrines [footnote omitted] do not appear pertinent.
Smith Land, 851 F.2d at 91 (emphasis supplied). Thus, question of successor liability in the case of an asset purchase, and thus the validity of the substantial continuity approach, was not before the Smith Land court. Indeed, in a footnote to the above-quoted passage, at the location indicated in the text, the court notes without comment that the "EPA in a 1984 memorandum of its counsel has taken the position that a successor corporation is liable for the acts of its predecessor under a 'continuity of business operation approach.'" Smith Land, 851 F.2d at 91 n. 2 (citing EPA Memorandum, "Liability of Corporate Shareholders and Successor Corporations for Abandoned Sites under CERCLA," Courtney M. Price, Assistant Admin. for Enforcement and Compliance Monitoring (June 13, 1984)). This "continuity of business operation approach" advocated by the EPA and noted without comment by the court of appeals is precisely the "substantial continuity" test. See Finnaren & Halley Exh. X (EPA Memorandum); see generally Alfred R. Light, "Product Line" and "Continuity of Enterprise" Theories of Corporate Successor Liability Under CERCLA, 11 Miss.C.L.Rev. 63 (1990) (discussing the EPA Memorandum). See also Distler, 741 F. Supp. at 641 (Smith Land, while holding that the doctrine of successor liability applies to CERCLA, did not reach issue of which version of the doctrine should be applied).
24. The Polius court was applying Virgin Islands law. However, Virgin Islands law commands that when there is no governing statute, the courts should examine the common law, first as expressed in the Restatements, and then as generally understood and applied in the United States. Where the Restatement is silent and a split of authority exists, courts should select the "sounder rule." Id., 802 F.2d at 77 (citing Wells v. Rockefeller, 728 F.2d 209 (3d Cir.1984)). Thus, the third circuit in Polius was expounding what it found to be the "sounder rule" of successor liability.
6. CERCLA § 9601(14)(C) defines hazardous substance as:
(C) any hazardous waste having the characteristics identified under or listed pursuant to section 3001 of the Solid Waste Act [42 U.S.C.A. § 6921] (but not including any waste the regulation of which under the Solid Waste Disposal Act [42 U.S.C.A. § 6901 et seq.] has been suspended by Act of Congress). (emphasis added)
7. Under § 9607, a private party's clean-up actions must be "consistent with the national contingency plan" for purposes of CERCLA recovery actions.
The NCP, a series of regulations promulgated by the EPA at 40 C.F.R. 300.61 et seq., defines procedures and standards for waste site cleanups, and its purpose "is to give some consistency and cohesiveness to response planning and actions." H.R.Rep. No. 96-1016, Part I at 30, 96th Cong., 2d Sess., reprinted in 1980 U.S.Code Cong. & Admin. News 6119, 6133.
The NCP was first issued in response to the mandate of the Clean Water Act, 33 U.S.C. § 1321(c)(2). In 1982, it was amended pursuant to Congress' mandate to include issues raised by CERCLA. Additional revisions became final on November 20, 1985. 50 Fed.Reg. 47912 et seq. (1985).
The 1985 NCP was superseded by a newer NCP in 1990. In the Summary of the 1990 NCP, the EPA stated:
Today's revisions of the NCP are intended to implement regulatory changes necessitated by SARA, as well as to clarify existing NCP language and to reorganize the NCP to coincide more accurately with the sequence of response actions.
55 Fed.Reg. 8666, March 8, 1990 (emphasis added). One provision of the 1990 NCP provides:
A private party response action will be considered "consistent with the NCP" if the action, when evaluated as a whole, is in substantial compliance with the applicable requirements . . . and results in a CERCLA quality cleanup.
40 C.F.R. § 300.700(c)(3)(i) (1990), 55 Fed.Reg. 8858, March 8, 1990 (emphasis added).
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