583 F.Supp.3d 981
E.D. Mich.2021Background
- Plaintiffs are six Valero affiliates who sued the United States under CERCLA §107/§113 seeking contribution/declaratory relief for cleanup costs at 12 petroleum refineries where contamination dates to WWII-era operations.
- During WWII the federal Petroleum Administration for War (PAW) centralized control over refinery production: directing which products to make, yields, prices, purchasers, allocations of crude, frequent inspections, on-site representatives, equipment approvals, and other operational directives.
- Plaintiffs allege the Government thereby “operated” the 12 refineries (8 in District 2, 2 in District 5, and 2 in District 3) and partially owned the Houston/Eastern facility (Plancor 911).
- The Government argued (inter alia) that contractual/voluntary relationships and wartime context limited or precluded operator/owner liability and relied on narrower readings of Bestfoods (e.g., Exxon).
- The court applied a Bestfoods-based, totality-of-the-circumstances operator inquiry (finding FMC indicia persuasive), held the Government was an operator of all 12 facilities (summary judgment for Plaintiffs on that point), but held the Government was not a prior owner of the entire Eastern facility — it owned only Plancor 911; the expert-objection was rendered moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Government was an "operator" of the 12 refineries under CERCLA §107(a)(2) | PAW exercised management/direction over production, yields, prices, purchasers, inspections and on-site control that affected pollution-producing operations | PAW’s involvement arose from voluntary wartime contracts, procurement, or regulation and did not amount to the specific direction of pollution-related operations required for operator liability | Court: Applying Bestfoods and the totality of circumstances (and FMC indicia), Government was an operator of all 12 facilities to some extent (Plaintiffs' motion granted in part) |
| Proper legal standard for government operator liability (Bestfoods vs FMC/Exxon) | Bestfoods + FMC (actual/substantial control and FMC’s leading indicia) govern; operator inquiry is fact-intensive and broad | Govt urged a narrow Bestfoods reading (as applied in Exxon) that requires a direct nexus to waste/disposal decisions and downplays defense-contract monopsony/context | Court: Adopted Bestfoods totality approach and found FMC indicia consistent; rejected Exxon’s narrower reading as inapplicable here |
| Whether the Government was a prior "owner" of the entire Eastern (Houston) facility under §107(a)(2) | Plaintiffs: Eastern should be treated as a single CERCLA facility and Government ownership of Plancor 911 makes it a prior owner of the facility | Government: it held title only to Plancor 911 and leased other portions (Plancor 1534); ownership under state law controls | Court: Government is not owner of entire Eastern; as a matter of Texas property law it owned only Plancor 911 (Govt’s motion granted on owner issue) |
| Admissibility of two Plaintiffs’ expert reports (Gravel, Lerman) | Plaintiffs relied on extensive documentary record; expert reports proffered for damages/analysis | Government objected on hearsay grounds under FRE 801–802 | Court: Did not consider those reports on summary judgment and overruled objection as moot |
Key Cases Cited
- United States v. Bestfoods, 524 U.S. 51 (1998) (operator is one who manages, directs, or conducts operations specifically related to pollution; totality-of-circumstances inquiry)
- FMC Corp. v. United States Dep't of Commerce, 29 F.3d 833 (3d Cir. 1994) (government regulatory/contractual control can equate to operator liability; leading indicia: product, production level, price, purchaser)
- United States v. Twp. of Brighton, 153 F.3d 307 (6th Cir. 1998) (government operator liability requires actual control; Bestfoods standard applies in government context)
- United States v. Twp. of Brighton, 282 F.3d 915 (6th Cir. 2002) (clarifying Brighton standards and applying Bestfoods totality approach)
- PPG Indus., Inc. v. United States, 957 F.3d 395 (3d Cir. 2020) (Bestfoods and FMC compatible; focus on operations related to pollution)
- United States v. Sterling Centrecorp Inc., 977 F.3d 750 (9th Cir. 2020) (operator liability requires direction, management, or control over polluting activities)
- Exxon Mobil Corp. v. United States, 108 F. Supp. 3d 486 (S.D. Tex. 2015) (interpreted Bestfoods narrowly; Government not an operator in that case)
- Burlington N. & Santa Fe Ry. v. United States, 556 U.S. 599 (2009) (division of harm/divisibility principles in CERCLA allocation)
- United States v. Atlantic Research Corp., 551 U.S. 128 (2007) (broad view of PRP definitions and remedial scope under CERCLA)