United States v. Township of Brighton

DISSENTING IN PART, CONCURRING IN PART

DOWD, District Judge,

dissenting in part and concurring in part.

For the following reasons, I respectfully dissent in part and concur in part. I find the fact findings made by the district court in this ease insufficient to provide a basis for determining which part of the fifteen-acre property comprises the “facility” for CERC-LA purposes. Notwithstanding this fact, I would enter final judgment for the Township on the grounds that under the found facts, Brighton Township’s actions were insufficient to render it liable as an “operator.” I also dissent from the scope of the majority’s remand, which improperly directs the district court to adopt “findings” of the appellate court. However, given the fact that there are two votes for holding the entire property *332 a “facility,” and two votes for a remand on “operator” liability, and in order to provide some sense of finality to this case, I concur with Judge Boggs on the issue of “divisibility.” Finally, if the district court should conclude that the Township is liable, I concur that an award of prejudgment interest would be proper.

I. The Definition of “Facility”

Initially, I disagree with the majority’s holding that the Township dump is included in the definition of “facility” under CERCLA. The majority notes that this question of how broadly or narrowly to define “facility” is a matter of first impression in this Circuit. The opinion then cites case law for the proposition that the key issue in this definition is the determination of “where the hazardous substances were ‘deposited, stored, disposed of, ... or [have] otherwise come to be located.’ ” Northwestern Mutual Life v. Atlantic Research Corp., 847 F.Supp. 389, 395-96 (E.D.Va.1994). However, the majority continues, there is a limitation: “an area that cannot be reasonably or naturally divided into multiple parts or functional units should be defined as a single ‘facility,’ even if contains parts that are non-contaminated.”

With this brief explanation of the law, the majority then makes the conclusion that the entire property is the “facility:” “[i]n this case, even though township residents generally left their refuse in the southwest corner, it appears that the entire property was operated together as a dump.” The majority thus rejects the argument that the Township dump was not included in the part of the property on which the hazardous waste was found. This conclusion is based on a number of “facts” listed by the majority as critical to this decision:

..Collett often moved trash from one part of the property to another as part of his salvage operation, so that hazardous materials found in the rest of the facility might have originated in the township dump. Household appliances, the sort of object that residents discarded in the southwest corner, were moved out of the corner and across an access road, and placed in large piles. Furthermore, there was testimony that some township residents disposed of appliances in the northern part of the site, as well as testimony that barrels filled with local household trash were burned and buried with the help of a township contractor (though it is not clear if these burials were in the southwest corner, the “hot zone,” or neither).

I cannot join the majority in holding that these facts support a decision that the entire property is the “facility” for the reason that these facts were never found by the district court judge. As a reviewing court, we cannot examine the underlying testimony and draw from it factual inferences that were not made by the district court. Fed.R.Civ.P. 52(a); see also Cordovan Associates, Inc., v. Dayton Rubber Co., 290 F.2d 858 (6th Cir.1961). We must, therefore, restrict our review to the facts found by the district court, and if they are insufficient, then we must remand the case for appropriate and complete findings. Fed.R.Civ.P. 52(a); see also Traylor v. United States, 396 F.2d 837 (6th Cir.1968).

In this case, the district court, in his oral opinion rendered at the conclusion of a three-day bench trial, did not address the issue of the boundary of the Township dump, nor did the district court make any findings concerning whether the property had any natural dividers, or whether particular pieces of trash were moved from one part of the property to another. In fact, the language used by the district court reveals its imprecise fact findings with regard to how much of the property actually constituted the Township dump: “From approximately 1960 to 1973, the relevant time period, a part of the property was used as a disposal area by Brighton Township residents.” (Tr., Joint Appendix [“JA”] at 256)(emphasis added). The court never identified which “part of the property” was included, nor did it ever identify that area as the area in which the hazardous substances were found, or suggest that trash was moved from one part of the property to another as a matter of course.

In conclusion, I find that there are insufficient findings of fact on which to hold that the property was not naturally divided into separate corners, and similarly no findings of *333 fact on which to conclude that the entire fifteen-acre property should be included in the definition of the “facility.” For this reason, I dissent from the majority’s holding that the entire 15-acre property is a “facility.” Nonetheless, in view of the fact that I would enter judgment for the Township on the grounds that it was not an operator, I would not remand this issue of “facility.”

II. The “Actual Control” Standard

The majority concludes a remand is required to determine whether Brighton Township is an “operator” under CERCLA, using the “actual control” standard. While I agree with the adoption of the “actual control” standard for this Circuit, I disagree with both of my colleagues as to the elements of “actual control.” In fact, I would enter final judgment for the Township on the grounds that its conduct did not constitute actual control under the standard recently set forth by the United States Supreme Court in United States v. Bestfoods, — U.S. -, 118 S.Ct. 1876 , 141 L.Ed.2d 43 (1998).

In Bestfoods , as the majority states, the Supreme Court defined “operator,” as used in CERCLA, as follows:

[A]n operator is simply someone who directs the workings of, manages, or conducts the affairs of a facility. To sharpen the definition for purposes of CERCLA’s concern with environmental contamination, an operator must manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations.

Id. at 1887 . Subsequently, the Court made a more narrow holding concerning specific activities that would and would not be sufficient for operator liability:

“[Ajctivities that involve the facility but which are consistent with the parent’s investor status, such as monitoring of the subsidiary’s performance, supervision of the subsidiary’s finance and capital budget decisions, and articulation of general policies and procedures, should not give rise to direct liability.” [citation omitted]. The critical question is whether, in degree and detail, actions directed to the facility by an agent of the parent alone are eccentric under accepted norms of parental oversight of a subsidiary's facility.

Id. at 1889 . While Bestfoods specifically addressed the question of “operator” liability relating to the corporate form, and this ease involves the liability of a governmental entity, I find that the Bestfoods standard can and should be applied to the governmental entity situation. Therefore, I note my disagreement with my colleagues that a governmental entity should be held to a lower threshold level of control which would give rise to liability. Instead, I find that the Bestfoods standard should be applied to both the corporate form and the governmental entity situations. When this standard is applied to the instant case, I would hold that the found facts demonstrate that the Township’s actions were insufficient to render it liable as an “operator.”

As the case law demonstrates, the actual control standard applicable to a governmental entity is grounded in the notion that if an entity managed the day-to-day activities of a facility, then and only then should it be liable for the harm caused. See FMC Corp. v. United States Dep’t of Commerce, 29 F.3d 833, 844 (3d. Cir.1994) (en banc) (holding United States liable as “operator” due to exertion of “considerable day-to-day control” including maintaining significant degree of control over production process, building and controlling plants, supervising employee conduct, supplying machinery and controlling product marketing and price); see also U.S. v. Dart Indus., Inc., 847 F.2d 144 , 146 (4th Cir.1988) (holding government entity not “operator” where there was no evidence that it directly managed the waste site’s employees, finances or the day-to-day activities of the facility); United States v. New Castle County, 727 F.Supp. 854 (D.Del.1989) (holding state not liable as an operator where it only periodically inspected the site and merely mandated the details of refuse soil compaction and construction, but did not manage the day-to-day operations of the landfill). Therefore, the ease law demonstrates that the criteria for finding such a high level of control over day-to-day operations include hiring and *334 supervising the employees, and the control of the financial decisions of the facility. Although these cases were decided prior to the Bestfoods case, they are completely in line with Bestfoods’ holding that an operator must “direct[ ] the workings of, manage[ ], or conduct] the affairs of a facility.” Bestfoods , — U.S. at -, 118 S.Ct. at 1887 . In the instant case, however, the fact findings made by the district court are insufficient to hold the Township liable as an “operator.” 1

The district court made the following fact findings in this case:

During the relevant time period, the Township Board approved resolutions regarding the operation of the site.

In a Brighton Township Board Meeding [sic] held November 9, 1960, R. Beers, of the Brighton Township Board, presented the following resolution:

“Be it resolved that Vaughn Collett, of Collett Road, be granted a temporary permit to operate a dump for Brighton Township residents under the following conditions:

“1. Dump to meet specifications of and be under the supervision of the Board of Appeals.

“2. No garbage to be permitted.

“3. Township to pay $60.00 per month rental and $10.00 monthly toward maintenance from [sic] the General Fund.

“4. Township people to be admitted free of charge. But persons outside the Township may enter into private agreement regarding fees with Mr. Collett.

“5. Maintenance to be Mr. Collett’s responsibility.

“6. Roads to be in passable condition for autos.

“7. Mr. Collett to have salvage rights.”

On November 21st, 1973, Brighton Township Board Meeting, J Collett’s estimate or statement of work done to rehabilitate the old disposal site on Collett Road was reviewed and discussed, along with a letter from Jim Curtis, Township Engineer, regarding this subject.

A motion was made by H. Davis, seconded by N. Haviland, that [the Board] pay the bill submitted by J. Collett in the amount of $4,214.00 upon completion of work to the satisfaction of the Livingston County Health Department, the Township engineer, and the Township supervisor.

Vaughn Collett and Jack Collett did maintain the daily operations of the dump, including setting hours of operation, directing residents where to dump various kinds of trash, deciding where and when to bury or burn refuse, and charging fees to non-Township residents seeking to dump there.

The Township did not exercise its control over the facility on a daily basis. However, there is sufficient evidence that the Township did maintain actual control over operations at the dump, as recorded by the Township at Board meetings.

(Tr., JA at 257-61).

These facts, as found by the district court judge, simply do not support a finding of actual control. The cases cited above make it clear that the actual control standard is grounded in the notion that if an entity managed the day-to-day activities of a facility, then it should be liable for the harm caused. The criteria for finding such a high level of control over day-to-day operations include hiring and supervising the employees, and the control of the financial decisions of the facility. FMC, supra, at 843. In the instant case, however, there are no facts to indicate that Brighton Township hired the employees of the dump, had the authority to supervise or fire them, or managed the finances of the dump.

In fact, the most that can be said is that Brighton Township maintained some regulatory control over the facility. Brighton Township granted Collett the permit to open the dump, and retained the authority to “supervise” the facility. (Tr., JA at 257). However, these regulatory powers alone cannot give rise to a finding of actual control in the *335 absence of evidence of day-to-day management. See Bestfoods, — U.S. at -, 118 S.Ct. at 1889 (in corporate form, “activities that involve the facility but which are consistent with the parent’s investor status, such as monitoring of the subsidiary’s performance, supervision of the subsidiary’s finance and capital budget decisions, and articulation of general policies and procedures, should not give rise to direct liability.” [citation omitted] ); see also Dart, supra, at 146 (“a series of regulatory actions” cannot serve as the basis for finding actual control existed).

Furthermore, the district court specifically found that the “daily operations” of the facility were managed by Collett. (Tr., JA at 260). “The Township did not exercise its control over the facility on a daily basis.” (Tr., JA at 261). Therefore, under the clear fact findings of the district court, the day-today operations were not handled by Brighton Township, and thus Brighton Township cannot be found liable under the actual control standard.

In conclusion, for the reasons set forth above, it is my belief that the facts here do not constitute actual control by Brighton Township because day-to-day management of the facility by the Township is simply not present. At most, Brighton Township had some authority over the facility, but did not exercise this authority. As this is insufficient to constitute actual control, I respectfully dissent.

Further, as noted at the beginning of my dissent, I also dissent from the scope of the majority’s remand. The majority states that although it is vacating and remanding the district court’s opinion on the Township’s status as an operator, the majority nonetheless “affirms” certain “findings by the district court regarding the release of hazardous substances.” These “findings” that the majority “affirms,” however are not restricted to the actual finding^ of fact made by the district court, but rather include some “findings” made by the majority after its own review of the testimony given at the three-day bench trial. I again note that the appellate court simply cannot engage in this sort of fact finding, but rather, must restrict its review to the fact findings made by the district court. Fed.R.Civ.P. 52(a); see also Cordovan Associates, Inc., v. Dayton Rubber Co., 290 F.2d 858 (6th Cir.1961). For this reason, I find the scope of the majority’s remand improper, and thus note my dissent from it as well.

III.“Divisibility”

As I discussed earlier, I disagree with the majority’s holding that the entire fifteen-acre property is the “facility.” Nonetheless, there are two votes for holding it the “facility.” Even though I disagree with that holding, and therefore would never reach the “flip side” issue of divisibility, and even though I am not in total agreement with either of my colleagues’ definitions of “divisibility,” in order to give the district court some guidance on the majority’s remand, I concur with Judge Boggs’ definition of “divisibility.”

IV.Prejudgment Interest

I also concur that if, on the remand directed by the majority, the Township is found to be liable as an operator, that the award of prejudgment interest would be proper.

V.Conclusion

In conclusion, for the reasons set forth above, I respectfully dissent from the majority on the issues of “facility,” liability as an “operator,” and the scope of the majority’s remand. Further, even though I would not reach either of these points, I concur with Judge Boggs’ definition of “divisibility,” and on the notion that prejudgment interest would be proper if the Township is found to be liable as an operator.

. I again note that, as a reviewing court, we must restrict our review to the facts found by the district court, and not make factual findings of our own. Cordovan Assoc., supra.