Petition for Writ of Certiorari — R. W. Meyer, Inc. v. United States

Supreme Court brief1990

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ELRED

re 16 Be

sOgEPH F. SPANIOL, JR.

JOSE CLERK

No.

IN THE

as —

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1989

R.W. MEYER, INC., Petitioner,

VW.

UNITED STATES OF AMERICA, Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

WILLIAM S. FARR

Counsel of Record

Suite 400, Ledyard Bldg.

125 Ottawa Ave., N.W.

Grand Rapids, MI 49503

(616) 459-3355

JON D. VANDER PLOEG

200 Calder Plaza Bldg.

Grand Rapids, MI 49503

Counsel for Petitioner

QUESTION PRESENTED FOR REVIEW

In this action arising under

the Comprehensive Environmental

Response Compensation and Liability Act

of 1980 (CERCLA), as amended by the

Superfund Amendments and

Reauthorization Act of 1986 (SARA), 42

U.S.C. § 9601, et seg, is the

Environmental Protection Agency

entitled to recover, by the authority

of the statute, its "indirect costs"

necessary to operate the Superfund

Program, which are not attributable to

agency’s efforts at any particular

site?

No.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1989

R.W. MEYER, INC.’ , Petitioner,

V «

UNITED STATES OF AMERICA, Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

The petitioner, R.W. Meyer,

Inc., respectfully prays that a writ of

certiorari issue to review the judgment

and opinion of the United States Court

of Appeals for the Sixth Circuit

entered in this proceeding on November

20, 1989.

R.W.Meyer, Inc. is not affiliated

with any parent or subsidiary

companies.

THE PARTIES TO THIS PROCEEDING

The parties to the proceeding

in the District Court for the Western

District of Michigan are:

United States of America,

Plaintiff

Northernaire Plating Company,

Defendant

Willard S. Garwood,

Defendant

R.W. Meyer, Inc.,

Defendant

The parties to the proceeding

in the Sixth Circuit Court of Appeals

are:

United States of America,

Plaintiff-Appellee

R.W. Meyer, Inc.,

Defendant -Appellant

TABLE OF CONTENTS

TABLE OF AUTHORITIES

PAGE NO.

OFFICIAL AND UNOFFICIAL REPORTS ;

OF THE OPINIONS BELOW .... 3

THE GROUNDS ON WHICH THE JURISDICTION

OF THIS COURT IS INVOKED 5

STATUTORY PROVISION INVOLVED 6

STATEMENT OF THE CASE 7

The Nature Of This Case 7

The Course Of The

Proceedings . 10

Statement Of Facts Relevant

To The Issues Presented For

ee « < «Eve ll

is The applicable statutes

and regulations 11

b. EPA’s motion for

summary judgment for

the assessment of costs 14

Cc. Defendant’s response

and submission of

evidence in opposition

to the motion 20

d. The decisions of the

District Court and the

Court of Appeals

ARGUMENT

THE COURT OF APPEALS

HAS DECIDED AN

IMPORTANT QUESTION OF

FEDERAL LAW WHICH HAS

NOT BEEN, BUT SHOULD

BE, SETTLED BY THIS

COURT.

CONCLUSION

TABLE OF AUTHORITIES

PAGE NO.

Cia. Petrolera Caribe, Inc. v Arco

Carribbean, Inc.,

754 F.2d 404 (lst. Cir. 1985) ... 25

Kansas Gas & Electric Co. v Brock,

780 F.2d 1505 (10th Cir. 1985) 2 25

National Freight, Inc. v Larson,

760 F.2d 499 (3rd Cir. 1985) ... 25

United States v Conservation Chemical

Company, 619 F. Supp. 162, 186 (W.D.

i> See a & ee | ee eee ee 35

United States v Lamp,

606 F.Supp. 193 (W.D. Tex. 1985) . ao

United States v Northeastern

Pharmaceutical & Chemical Co.,

579 F. Supp. 823, 850-852 (W.D. Mo.

See <6 & 6 6 kk tee ele re ae ee

United States v Ottati & Goss,

694 F. Supp. 977 (D.N.H. 1988) ss

United States v Slade,

447 F. Supp. 638 (E.D. Tex. 1978) . 32

United States v South Carolina

Recycling and Disposal, Inc.,

653 F.Supp. 984 (D.S.C. 1985) ... 33

1980 U.S. Code Cong. & Admin.

News, p. 3296 [House Conference Rpt.

mS. Gereenr : «6 «2 © 6 6 «Se be eee 27

OFFICIAL AND UNOFFICIAL REPORTS

OF THE OPINIONS BELOW

The official and unofficial

reports of the decision of the United

States District Court for the Western

District of Michigan are United States

of America v Northernaire Plating Co.,

Willard S. Garwood and R.W. Meyer,

Inc., 685 F. Supp. 1410; 28 ERC 1500;

18 Envt’l L. Rep. 21,338.

The official and unofficial

reports of the decision of the United

States Court of Appeals for the Sixth

Circuit are United States of America v

R.W. Meyer, Inc., 889 F.2d 1497; 30 ERC

1553; 58 U.S.L.W. 2333.

THE GROUNDS ON WHICH THE JURISDICTION

OF THIS COURT IS INVOKED

1. The judgment sought to be

reviewed is that of the United States

Court of Appeals for the Sixth Circuit,

which was decided and filed on November

20, 1989.

2. This petition for certiorari is

filed within 90 days of November 20,

1989.

3. Jurisdiction to review the

judgment by writ of certiorari is

conferred upon this Court by 28 U.S.C.

§ 1254(1).

4. No motion for rehearing was

filed in the Court of Appeals, nor has

there been any order granting an

extension of time within which to the

file the petition for writ of

certiorari.

STATUTORY PROVISION INVOLVED

The statutory provision

involved is the Comprehensive

Environmental Response Compensation and

Liability Act of 1980 (CERCLA), as

amended by the Superfund Amendments and

Reauthorization Act of 1986 (SARA), 42

U.S.C. § 9601, et seg. The specific

portions of the statute that are

relevant to the issue presented are set

forth at pages 6 through 9 of the

opinion of the Sixth Circuit Court of

Appeals included in the appendix to

this petition.

STATEMENT OF THE CASE

z. The Nature Of This Case.

This action was brought by the

United States under Section 107(a) of

the Comprehensive Environmental

Response Compensation and Liability Act

of 1980, 42 U.S.C. § 9601, et seq,

(CERCLA). The United States seeks to

recover its costs of an "immediate

removal action." The purpose of the

immediate removal action was to

eliminate drums of hazardous wastes and

to clean up some surface contamination

from a site in Cadillac, Michigan. The

immediate removal action was commenced

by the Environmental Protection Agency

on July 15, 1983, and was completed on

August 3, 1983.

The action was brought against

defendants Willard Garwood, _

Northernaire Plating Company, and R.W.

Meyer, Inc. seeking joint and several

liability for the claimed removal

costs. Northernaire had carried on an

electroplating business at the site

from 1971 to 1981. Northernaire had

leased the site from its owner, Meyer.

Willard Garwood was the president of

Northernaire.

Plaintiff initially filed a

motion for partial summary judgment on

the question of liability. That motion

was granted in April 1987, and the

defendants were heid to be jointly and

verally liable for recoverable costs

incurred in the removal action. Later,

plaintiff filed a motion for summary

Judgment by which it sought to

establish the nature and amount of

those recoverable costs. The District

Court granted that motion. and it

entered an order awarding $268,818.25,

together with a finding that defendants

would also be liable for "prejudgment

interest." The parties subsequently

filed a stipulation regarding the

computation of the prejudgment

interest, and the District Court

entered an order pursuant to the

stipulation for additional liability in

the amount of $74,004.97.

This appeal is taken from the

orders granting summary judgment to the

plaintiff on the question of costs.

Meyer contends that certain of those

costs, particularly the government’s

"indirect costs" are not recoverable

under CERCLA, as a matter of law, as

they are not properly attributable to

this removal action.

Zs The Course Of The Proceedings.

Plaintiff’s complaint was filed

in the District Court on September 25,

1984. Meyer, Garwood, and Northernaire

all defended, and various cross-claims

and third-party claims were filed

during the course of the proceedings.

Meyer cross-claimed against

Northernaire and Garwood, alleging

their liability to Meyer, to the extent

Meyer may be liable to the plaintiff.

Northernaire and Garwood filed cross-

claims against Meyer.

Each of the defendants also

filed third-party complaints against

the City of Cadillac, Michigan. The

City of Cadillac filed a fourth-party

complaint against Meyer.

All of these claims have been

decided by the District Court on

motions for summary judgment. Final

judgment was entered in favor of the

plaintiff against the original

defendants, resulting in this appeal.

The City of Cadillac was dismissed, and

that was not appealed.

4. Statement Of Facts Relevant To

The Issues Presented For

Review.

a. The applicable statutes

and regulations.

Plaintiff’s request for cost

recovery is sought under the authority

of § 9607 of CERCLA (42 U.S.C. § 9607).

That section provides that a defendant

may be liable for "all costs of

removal." Removal is defined in §

9601(23) as follows:

(23) “remove" or "removal" means

the clean-up or removal of

reieased hazardous substances

from the environment, such

actions as may be necessary taken

in the event of the threat of

reiease of hazardous substances

into the environment, such

actions as may be necessary to

monitor, assess, and evaluate the

release or threat of release of

hazardous substances, the

disposal of removed materials, or

the taking of such other actions

as may be necessary to prevent,

minimize or mitigate damage to

the public health or welfare or

to the environment, which may

otherwise result from a release

or threat of release. The term

includes, in addition, without

being limited to, security

fencing or other measures to

limit access, provision of

alternative water supplies,

temporary evacuation and housing

of threatened individuals not

otherwise provided for, action

taken under section 9604(b) of

this title, and any emergency

assistance which may be provided

under the Disaster Relief Act of

1974 [42 U.S.C.A. Section 5121,

et seq.].

The activities authorized by §

9604 (b) anclude:

..such planning, legal, fiscal,

economic, engineering,

architectural, and other studies

or investigations as [the

President] may deem necessary or

appropriate to plan and direct

response actions, to recover the

costs thereof, and to enforce the

provisions of this chapter.

The term "remedy" or "remedial

action” is defined in § 9601(24) to

mean:

...those actions consistent with

permanent remedy taken instead of

Or in addition to removal actions

in the event of a release or

threatened release of a hazardous

substance into the environment,

to prevent or minimize the

release of hazardous substances

so that they do not migrate to

cause substantial danger to

present or future public health

or welfare or to the environment.

The term includes, but is not

limited to, such actions at the

location of the release as

storage, confinement, perimeter

protection using dikes, trenches,

or ditches, clay cover,

neutralization, cleanup of

released hazardous substances or

contaminated materials, recycling

or reuse, diversion, destruction,

segregation of reactive wastes,

dredging or excavations, repair

or replacement of leaking

containers, collection of

leachate and runoff, onsite

treatment or incineration,

provision of alternative water

supplies, and any monitoring

reasonably required to assure

that such actions protect the

public health and welfare and the

environment. The term includes

the costs of relocation of

residents and businesses and

community facilities where the

President determines that, alone

Or in combination with other

measures, such relocation is more

cost-effective than and

environmentally preferable to the

transportation, storage,

treatment, destruction, or secure

disposition offsite of hazardous

substances, or may otherwise be

necessary to protect the public

health or welfare....

b. EPA’s motion for summary

judgment for the

assessment of costs.

Plaintiff’s motion for summary

judgment on costs set forth several

affidavits alleged to establish its

costs incurred for the immediate

removal action at the Northernaire

Plaintiff initially submitted

four affidavits with its motion. The

first of the affidavits was that of EPA

employee, Willimina Pipkin. She said

that she was a Program Analyst in the

Guidance and Oversight Branch of the

Superfund Enforcement Division in the

Office of Waste Programs Enforcement

(OWPE). Ms. Pipkin’s affidavit stated

that she compiled and reviewed cost

documentation for the immediate removal

action at the Northernaire site. Thus,

her affidavit purported to put forth a

complete summary of costs for the

Northernaire site.

The second affidavit was that

of EPA accountant, Richard Hackley. He

sought to verify, and attached to his

affidavit, a computer report that he

had prepared and supplied to Ms.

Pipkin. Ms. Pipkin’s and Mr. Hackley’s

affidavits both include a figure they

attribute to the Northernaire site

referred to as "indirect cost." The

amount reported is $53,397.00. Mr.

Hackley states, with regard to these

indirect costs, that they,

"...represent the costs necessary to

operate the Superfund program but which

cannot be attributed directly to

specific cites."

Plaintiff also supplied the

affidavit of William Cooke, a cost

accountant with the Superfund

Accounting Branch of the Financial

Management Division of EPA. Mr. Cooke

stated that he had been involved with

the process of establishing EPA’s

indirect costs rates for the Superfund

program. He explained, in general

terms, what is meant by "indirect

costs" and how they are calculated. He

stated:

The indirect costs of the

Superfund program are those costs

which are necessary to the

operation of the program and

support of site clean-up efforts,

but which cannot be directly

identified to the efforts of any

one site. In lay terms, the

indirect costs represent overhead

costs, and include such things as

rent and utilities for site and

non-site staff office space;

payroll and benefits for program

managers, clerical support and

other administrative support

staff; and pay earned by on-scene

coordinators while on leave, or

performing tasks not directly

associated with a particular

site....

He also stated:

The indirect cost allocation

procedure requires a

determination of the total

administrative overhead costs for

Agency for each fiscal year.

Based on a model developed by the

accounting firm of Ernst and

Whinney, the overhead costs of

Headquarters are allocated to

each region. This Headquarters

allocation is added to the

regional overhead costs to get a

regional indirect costs pool.

The indirect cost rate for each

region is then determined by

dividing this total pool of

indirect costs for each region by

the Superfund program hours

incurred in each region.

x**

Once the indirect cost rate for

each region is determined for

each fiscal year, the indirect

costs can be allocated to

specific Superfund sites. The

indirect costs for a specific

Superfund site are determined by

applying the indirect cost rate

for the region to hours charged

to the site by regional program

division personnel.

...The indirect cost rates for FY

1983 and FY 1984 are final rates

that were reviewed and approved

by the Office of Inspector

General. The rates for fiscal

years 1985 through 1987 are

provisional rates only as the

rates are under review by the

Office of Inspector General. [It

is an acceptable accounting

practice to apply the rate for

the previous fiscal year, until

such time as a final rate is

determined.

Plaintiff’s offerings also

included an affidavit from Department

of Justice employee, Philip Stiness.

tests

Mr. Stiness sought to establish costs

of the Department of Justice, relating

to the Northernaire site, in the amount

of $35,473.28.

Plaintiff also submitted two

more affidavits subsequent to its

filing of the motion, but before the

District Court decided the motion. One

of those was another affidavit of

Richard Hackley. In this statement he

changed some of the calculations he had

included in his earlier affidavit.

While he had previously claimed that

indirect costs attributable to the

Northernaire site totaled $53,397.00,

he now stated that the indirect cost

was $52,978.50. That change, he said,

was due to the finalized rates that

were established for fiscal years, 1985

and 1986. He also changed the figure

for costs attributable to Regional

personnel, because he, "...discovered

several minor corrections needed to be

made in order to make the summary

completely accurate." No further

explanation of those corrections was

given.

Sc. Defendant’s response and

submission of evidence in

opposition to the motion.

Meyer opposed the motion, and

submitted numerous attachments to its

brief. These were documents obtained

from plaintiff which Meyer argued were

inconsistent with the statements set

forth in plaintiff’s affidavits

supporting its motion.

Meyer took the position that

there were numerous issues of fact

precluding summary judgment on the

question of costs. Meyer also took the

position that indirect costs, not

directly attributable to the

Northernaire site, and prejudgment

interest, are not recoverable under

CERCLA as a matter of law. Meyer also

claimed that plaintiff’s failure to

abide by requirements for competitive

bidding precluded its claim, and that

plaintiff’s claimed costs were

inconsistent with the National

Contingency Plan.

d. The decisions of the

District Court and the

Court of Appeals.

The District Court held in

favor of Plaintiff, and granted summary

judgment awarding the costs requested,

with the exception of $993.00 expense

of a title search. The court held that

no material questions of fact existed

that would preclude summary judgment,

and that indirect costs and prejudgment

interest were recoverable under CERCLA

and in this case.

The Sixth Circuit Court of

Appeals affirmed the decision of the

District Court. It held, as had the

District Court, that plaintiff was

entitled to recover indirect costs

under the authority of CERCLA.

ARGUMENT

THE COURT OF APPEALS HAS DECIDED

AN IMPORTANT QUESTION OF FEDERAL

LAW WHICH HAS NOT BEEN, BUT

SHOULD BE, SETTLED BY THIS COURT.

Plaintiff has been awarded what

it termed "EPA indirect costs." As

defined by the affidavit of Richard

Hackley, these are costs necessary to

operate the Superfund program "...but

which cannot be attributed directly to

specific sites." As explained by the

Cooke affidavit, these indirect costs,

generally, are EPA overhead expenses,

including, among other things, rent and

payroll expense not related to the

specific site. It is Meyer’s position

that recovery of these indirect costs

is not authorized by CERCLA, either

pursuant to the statutory language or

by any caselaw interpreting that

language.

The statute does provide,

without question, for the recovery of

any direct costs of removal, but the

and

term "removal," as defined in 42 U.S.C.

9601(23), refers specifically to

actions taken at a specific site. It

does not refer to any costs indirectly

incurred to operate the Superfund

program in general.

The District Court and the

Court of Appeals have held that proper

interpretation of the statute permits

the recovery of indirect costs. The

starting point for statutory

interpretation, however, should be the

statute itself. Where, as here, the

language is clear and unambiguous, and

there is no clearly expressed

legislative intention to the contrary,

there is neither need nor cause to look

elsewhere.

In CERCLA, as amended by the

Superfund Amendments & Reauthorization

Act of 1986 (SARA), Congress provided

lengthy and detailed definitions of the

statutory terms it used. Those terms,

as defined and used, are plain,

unequivocal and unambiguous. The

enactment speaks for itself, and the

language must therefore be regarded as

conclusive. See, National Freight,

Inc. v Larson, 760 F.2d 499 (3rd Cir.

1985); Cia. Petrolera Caribe, Inc. v

Arco Carribbean, Inc., 754 F.2d 404

(lst. Cir. 1985); United States v Lamp,

606 F.Supp. 193 (W.D. Tex. 1985); and

Kansas Gas & Electric Co. v Brock, 780

F.2d 1508S (10th Cir. 1965).

42 U.S.C. § 9607 (a)

unambiguously imposes liability for

"all costs of [the] removal action

incurred by the United States...not

inconsistent with the national

contingency plan." Section 9601 (25)

defines "respond" or "response" to mean

a removal action, and "removal action"

includes enforcement activities related

to the removal action. Section

9601(23) then defines, in extended

detail, the terms "remove" and "removal

action." In that section, the terms

expressly relate to cleanup and removal

activities taken at the hazardous waste

sites.

The definition of "removal

action" includes actions taken under

Section 9604(b), that is, action to

investigate, monitor, survey or test a

site to identify the existence, extent

and source of a release, and planning

necessary to plan and direct a response

to the release and recover the costs of

that response action. This reference

is not to ongoing EPA indirect costs of

the Superfund program which are totally

unrelated nor attributable to a given

site removal action. See, 1980 U.S.

Code Cong. & Admin. News, p. 3296

[House Conference Rpt. No. 99-962],

where instead of a House amendment of

Section 9607(a) to clarify that all

costs incurred by the United States

under Section 9604(b) are recoverable

costs, the conference substitute

deleted that reference to Section

9604(b) costs "since such costs are

defined as costs of response in current

law."

The statute, as amended,

clearly says what it says and means

nothing else -- The costs of a removal

action and enforcement activities

related to that action are recoverable.

Indirect costs of operating the

Superfund program generally, not

related nor attributable to a given

site removal action, fall outside the

express language of the statute and

are, therefore, not recoverable.

An exhaustive search of the

legislative history of SARA, 1980 U.S.

Code Cong. & Adm. News, p. 2838,

supports this reading and conclusion.

All relevant comments emphasize that

the costs recoverable are the costs of

site cleanups and the costs of

enforcement activities related to those

cleanups. There is nothing in the

voluminous legislative history to

support the plaintiff’s assertion that

indirect costs of operating the

Superfund program in general, unrelated

to a given site removal action, are

recoverable under CERCLA.

Plaintiff argued in the lower

court that EPA’s interpretation of the

statute should be given great weight.

That is not true here. As aptly stated

in National Freight, Inc., supra, at

505:

It is true that the

interpretation of the agency

charged with the implementation

of a statute is generally

accorded substantial

deference....The question before

this court, however, is a matter

of pure statutory construction.

In such a case, agency expertise

is not controlling; the question

is one which the courts are

relatively more able to

answer.... (citations omitted).

With the exception of the

decision of the court below in this

case, no case law interpreting CERCLA

has authorized recovery of the indirect

costs sought by the plaintiff. One

District Court decision, as shall be

discussed below, has expressly rejected

the government’s claim for indirect

costs. Administrative costs related to

a removal action are, indeed,

recoverable. Those would include

payroll costs and travel expenses of

the EPA personnel directly involved

with the Northernaire site removal

action, and those of the Justice

Department attorneys involved this cost

recovery action.

Moreover, plaintiff would be

correct to assert a claim to recover

related administrative costs, as that

right is recognized in reported cases.

No other reported case, however, has

recognized an EPA right to recover

"indirect" administrative or other

costs of operating the Superfund

program generally, which are unrelated

to a given site removal action.

Plaintiff, in the court below,

placed reliance on United States v

Northeastern Pharmaceutical & Chemical

Co., 579 F. Supp. 823, 850-852 (W.D.

Mo. 1984) (hereinafter cited as

"NEPACCO"). There, the court found

defendants liable for all costs

incurred by plaintiff, including

salaries and expenses, associated with

activities such as monitoring,

assessing and evaluating the release of

contaminants and the taking of actions

to minimize resulting damage at "at the

Denney Farm site." In so holding, the

court was referring to nothing more nor

less than direct, site specific

response costs. In support, the court,

in footnote 33, referred to United

States v Slade, 447 F. Supp. 638 (E.D.

Tex. 1978). There, in an action to

recover costs of oil spill cleanup

under the Federal Water Pollution

Control Act, the court construed

"actual costs incurred," as used in

that statute, to include salaries and

expenses of the agency’s employee. The

Salaries and expenses recoverable

amounted to $583.54, being "accumulated

personnel and material costs"

attributable to the two Coast Guard

investigators who personally

investigated the oil spill and obtained

oil samples from the river and

defendants’ barges to send to the EPA.

Those were clearly direct, related

administrative costs of responding to

the oil spill. Thus, the NEPACCO

decision does not lend support to the

proposition that administrative costs,

unrelated to a specific response

action, are recoverable.

Plaintiff also relied, in the

lower court, upon United States v South

Carolina Recycling and Disposal, Inc.,

653 F.Supp. 984 (D.S.C. 1985)

(hereinafter referred to as "SCRDI").

That court also did not, however,

authorize recovery of indirect costs.

The administrative and other costs held

recoverable by that court were those

costs associated with the cleanup and

the cost recovery litigation. The

Court made no finding that

administrative costs, unrelated to the

specific site removal action were

recoverable.

In United States v Ottati &

Goss, 694 F. Supp. 977 (D.N.H. 1988),

the court specifically held that

indirect costs claimed by the

government were not recoverable under

CERCLA. The court said, simply:

$336,842.00 are indirect costs

which include expenses for rent,

utilities, supplies, clerical

staff and other overhead

expenses. These costs necessary

to operate the Superfund program

cannot be attributed directly to

the O & G/GLGC sites, and are

therefore disallowed." Ottati &

Goss, supra, 995.

In NEPACCO, supra, 850, the

court summarized the response costs the

government may recover:

With regard to the government’s

response costs incurred, these

activities would include:

(a) Investigations, monitoring

and testing to identify the

extent of danger to the

public health or welfare or

the environment.

(b) Investigations, monitoring

and testing to identify the

extent of the release or

threatened release of

hazardous substances.

of a response action.

(d) Recovery of the costs

associated with the above

actions, and to enforce the

provisions of CERCLA,

including the costs incurred

for the staffs of the EPA

and the Department of

Justice.