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Summer 1999
Vol. 17, No. 4, Summer 1999, Issue 56
Cite this publication as 17 Mich Env L J,
No 4, p (1999) The text of the Journal is also at the
Environmental Law Section's page at www.michbar.org. The views expressed in
the Michigan Environmental Law Journal are those of the authors
and do not necessarily reflect the position of the State Bar of Michigan, the
Environmental Law Section, or any governmental body. The publication in the Journal
of articles, committee reports and letters do not constitute an
endorsement of opinions or legal conclusions which may be expressed. The Journal
is published with the understanding that the Environmental Law Section is
not engaged in rendering legal or professional services. Readers are invited to submit articles, comments
or opinions to the editors. Publication and editing are at the discretion of
the editors. Because of time constraints, galleys or proofs are not forwarded
to the authors. The Journal is published three times per
year, to inform members of Section activities and other matters of interest to
environmental lawyers. Subscription is without charge to members and law
student members of the Environmental Law Section. Subscription price is $40.00
(U.S.) per year for non-members. Single issues, as available, may be purchased
for $14.00 per issue. To subscribe or purchase single issues please remit
funds directly to: State Bar of Michigan, Michigan Environmental Law
Journal, Michael Franck Building, 306 Townsend Street, Lansing, Michigan
48933-2083. Copyright =A9 1999 by the Environmental Law Section of the State
Bar of Michigan. All rights reserved. Table of ContentsArticles: State of the Law:Recent
Developments in Environmental Law
Judicial
Developments
Federal Developments
Comprehensive Environmental Response, Compensation,
and Liability Act Resource Conservation and Recovery Act State Developments
State LegislationAdministrative RulemakingsCommittee Reports:
STATE OF THE LAW 1999Recent
Developments in Environmental Law
By: Joseph M. Polito, Esq.
INTRODUCTION
The following summarizes selected Michigan environmental
judicial decisions from May 1998 through May 1999, and statutory and regulatory
developments from June 1998 through June 1999. While not encompassing every
environmental decision, statute, or rule during these periods, the intent
was to include those developments having significant import to environmental
law practitioners. JUDICIAL DEVELOPMENTS
Federal Developments
Atwood v Wayne Co, No 98-71777 (ED Mich,
Sept 14, 1998). Plaintiffs, residents of Wayne County, Michigan
("County"), sued the County and Carol Browner, Administrator of the United
States Environmental Protection Agency ("EPA"), challenging the authority
of the County to implement and enforce the National Emission Standards
for Hazardous Air Pollutants ("NESHAP") for asbestos ("Asbestos NESHAP").
This action was one of a series of lawsuits brought by the plaintiffs to
block the implosion of the J.L. Hudson Building in Detroit, Michigan. The
plaintiffs claimed that EPA had improperly delegated authority to implement
and enforce the Asbestos NESHAP to the County and sought orders to compel
Browner to comply with the Clean Air Act, 42 USC 7401 et seq. ("CAA"),
and to enjoin the County from entering the J.L. Hudson Building for any
purposes connected with the Asbestos NESHAP. The County moved for summary judgment, arguing
that EPA had properly delegated authority to implement and enforce the
Asbestos NESHAP to the State of Michigan, not to the County, and that the
County acted as an agent of the State of Michigan pursuant to a "work contract"
between the County and the State of Michigan. The court found that EPA has delegated authority to implement the Asbestos NESHAP to the State of Michigan, not to the County, and that the County, acting pursuant to the work contract and state procedures and regulations, served as an agent of the State to implement the Asbestos NESHAP in Wayne County. The court found that the plaintiffs had presented no authority to support their argument that the State of Michigan could not contract with the County to implement the Asbestos NESHAP in Wayne County on behalf of the State. Therefore, the court granted the County's motion for summary judgment. Moreover, because the claims against the County had been dismissed, the court found that there was no basis for relief against Browner and, therefore, the court granted Browner's motion to dismiss the plaintiffs' complaint.
Clean Water Act
National Mining Ass'n v Army Corps of Eng'rs,
330 US App DC 329; 145 F3d 1399 (1998). Section 404 of the CWA authorizes the United
States Army Corps of Engineers ("COE") to issue permits for the discharge
of dredged or fill material into navigable waters at specified disposal
sites. Excavation activities that involved the removal of material from
waters, such as landclearing, ditching, and channelization, were not regulated
under Section 404 until passage of the "Tulloch Rule." As part of a settlement
agreement in North Carolina Wildlife Fed'n v Tulloch, No
C90-713-CIV-5-BO (ED NC, 1992), EPA and the COE agreed to revise the term
"discharge of dredged material" to include small-volume incidental fallback.
The effect of the Tulloch Rule was that a Section 404 permit was required
for mechanized landclearing, ditching, channelization, or other excavation,
and the focus turned to the environmental effect of the activity, rather
than on the size of the discharge. The rule created a rebuttable presumption
that an activity is regulated under Section 404 and shifted the burden
to the regulated party to show, prior to commencing the project, that the
federal government does not have jurisdiction over the activity. In order
to do this, the party must prove that the activity associated with the
discharge has only de minimis environmental effects. The plaintiffs
in this case, various trade associations whose members engage in dredging
and excavation, challenged the Tulloch Rule on four grounds: (1) it was
inconsistent with the language and intent of the Clean Water Act, 33 USC
1251 et seq. ("CWA"); (2) it violated the Administrative Procedures
Act, 5 USC 551 et seq. ("APA"), because it exempted navigational
dredging and excluded landclearing from a grandfather clause; (3) it violated
plaintiffs' due process rights because it was vague and shifted the burden
to regulated parties to show that their activities were not covered; and
(4) it was promulgated in violation of the APA's procedural requirements.
The United States District Court for the District of Columbia granted the
plaintiffs' motion for summary judgment and entered an injunction prohibiting
the COE and EPA from enforcing the regulation anywhere in the United States.
The district court subsequently issued a stay of its injunction, however,
allowing the COE to enforce the rule. On appeal, the defendants argued that wetland
soil, sediment, debris, or other material in the waters of the United States
undergo a "legal metamorphosis" during the dredging process, becoming a
"pollutant" under the CWA. If a portion of the material being dredged then
falls back into the water, argued the defendants, there has been an addition
of a pollutant to the waters of the United States. The Court of Appeals
for the District of Columbia Circuit disagreed, holding that "[b]ecause
incidental fallback represents a net withdrawal, not an addition, of material,
it cannot be a discharge." The court continued, "we fail to see how there
can be an addition of dredged material when there is no addition of material." The defendants also pointed to some specific
exemptions contained in CWA Section 404(f) to support their position that
fallback could reasonably be considered "discharge": "the discharge of
dredged or fill material . . . is not prohibited . . . or otherwise subject
to regulation" when the discharge results from "normal farming, silviculture,
and ranching activities such as plowing, seeding, cultivating, [or] minor
drainage . . . and maintenance of drainage ditches." 33 USC 1344(f)(1).
The defendants argued that the use of the term "discharge of dredged or
fill material" to describe the consequences of the protected activities
reflected a congressional belief that fallback is a form of discharge.
The court again rejected the defendants' argument, however, noting that
some of the named activities may produce fallback, but they may also produce
actual discharges (additions of pollutants), so that Section 404(f) "accomplishes
a useful purpose simply by exempting them insofar as they produce the latter."
Other exemptions seem "just as unlikely to produce fallback as actual discharge,
so we are reluctant to draw any inference other than that Congress emphatically
did not want the law to impede these bucolic pursuits." The court continued that it was not holding
that the COE may not legally regulate some forms of redeposit under its
Section 404 authority, only that by asserting jurisdiction over any redeposit,
including incidental fallback, the Tulloch Rule "outruns the [COE's] statutory
authority." Although the defendants cited opinions from other circuits
in support of their position that redeposit may be regulated under Section
404, the court noted that all of the decisions predated the Tulloch Rule
and, therefore, none of them addressed the fallback issue directly. In
fact, held the court, none of them contained any language suggesting that
regulation of fallback would be appropriate. On the remaining question of remedy, the defendants
challenged the district court's nationwide injunction, arguing that: (1)
the plaintiffs were not entitled to an injunction because they presented
no record evidence, and the district court made no explicit findings, as
to the elements necessary for injunctive relief; and (2) that even if the
plaintiffs were entitled to an injunction, the district court erred by
granting nationwide relief to the plaintiffs and non-parties alike. On
the first argument, the court held that the district court was well within
its broad discretion in finding that the complaint placed the agencies
on notice that appellees sought both declaratory and injunctive relief
and the district court was not required to make express findings as to
the elements necessary for a permanent injunction. The court also rejected
the defendants' second argument, holding that "when a reviewing court determines
that agency regulations are unlawful, the ordinary result is that the rules
are vacated -- not that their application to the individual petitioners
is proscribed." The court of appeals, therefore, affirmed the district
court's judgment. Following the court of appeals' ruling, the
COE instructed its district offices to continue to enforce the Tulloch
Rule as it had since the district court's earlier order granting a stay
of the injunction. On July 9, 1998, after the appeals court became aware
of the COE instruction, it issued an order vacating the portion of the
district court's opinion staying the prohibition of enforcement of the
Tulloch Rule.
United States v Muskegon Co, 33 F Supp 2d 614
(WD Mich, 1998).
Muskegon County ("County") had been sued by the
United States concerning alleged violations of the County's discharge limits
contained in its National Pollutant Discharge Elimination System ("NPDES")
permit for its publicly-owned wastewater treatment works ("POTW"). Several
local governments, which had helped fund the County's sewer system ("Municipal
Users"), intervened as plaintiffs in the lawsuit. The Municipal Users alleged,
among other things, that the County had violated its NPDES permit by failing
to enforce its Industrial Pretreatment Program. In response to these allegations,
several industrial users of the sewer system ("Industrial Users") intervened
as defendants in the lawsuit. All of the Municipal Users and some of the
larger Industrial Users had entered into service agreements with the County
regarding the use of the sewer system. These service agreements established
"uniform concentration limits" ("UCL") on discharges to the sewer system
and contained clauses stating that the purpose of the sewer system was
"to provide the maximum possible service to each Contractee and person
served by the System." Although not all of the Industrial Users had direct
contractual relationships with the County, a Michigan Circuit Court had
held in a related lawsuit that those industrial users without individual
agreements had "identical contract rights . . . as third party beneficiaries
of the municipal agreements." In order to settle the Municipal Users' claims
in the federal litigation, the County and the Municipal Users negotiated
a consent judgment that required the County to adopt a new sewer use ordinance
with discharge limits that were more stringent than the UCLs established
in the service agreements. In addition, the consent judgment required the
County to amend each of the existing service agreements to incorporate
the new ordinance. This requirement extended to all service agreements,
including the service agreements between the County and the Industrial
Users who were not parties to the consent judgment. The Industrial Users argued that the court
should not approve the consent judgment because it would unfairly interfere
with their contractual rights under the service agreements. The court,
however, disagreed. First, the court held that the Industrial Users could
not claim any third-party beneficiary rights under the Municipal Users'
service agreements. The court noted that each service agreement contained
a "reservation of rights" clause, which allowed the County to adopt a new
sewer use ordinance in order to comply with applicable law, and a clause
that allowed the County to terminate the service agreement upon two years
notice. Based on these provisions, the court held that the Industrial Users
did not have any vested interest in the UCLs fixed in the Municipal Users'
service agreements. With respect to the Industrial Users that had entered
into individual service agreements with the County, the court held that
the consent judgment would not materially interfere with those agreements=2E
First, the court noted that the County had provided each Industrial User
with the required notice that their individual agreements would be terminated
effective January 1, 2000. Thus, the court concluded that even if the consent
judgment interfered with the Industrial Users' contract rights, such interference
would be small due to the short duration of the agreements' remaining terms.
Further, the court held that the County had a right to amend its ordinance
to impose more stringent discharge limits under the terms of the existing
service agreements in any case. Accordingly, because the court also held that
the consent judgment served the public interest by resolving a dispute
without further litigation, and served the goals of the CWA, the court
approved the entry of the consent judgment between the Municipal Users
and the County.
Wetlands
Charfoos & Co v Secretary of the Army
Corps of Eng'rs, No 97-CV-74206-DT (ED Mich, Apr 3, 1998). Charfoos and Company ("Charfoos") owned a
57-acre parcel of land in Harrison Township, Michigan, that contained approximately
43 acres of wetlands. The site was approximately 900 feet from Lake St.
Clair and 150 feet from the Clinton River Cut-Off Canal. In 1997, the Michigan
Department of Environmental Quality ("MDEQ") issued a permit authorizing
Charfoos to fill the wetlands and develop the parcel. The Army Corps of
Engineers ("COE") subsequently notified Charfoos that it needed a federal
fill permit prior to developing the site. Charfoos filed suit, seeking
a declaration that the COE lacked jurisdiction over the site. Charfoos
argued that the COE's jurisdiction under the CWA is limited to navigable
waters and adjacent wetlands, and that the wetlands on the site were not
adjacent to navigable waters. The COE argued in response that the court
had no jurisdiction to consider this challenge to the COE's jurisdiction
over the wetland area because there had not yet been any final agency action. The court first noted that Section 404 of
the CWA authorizes the Secretary of the Army to issue permits for the discharge
of dredged or fill materials. Under CWA Section 404(g), EPA may delegate
this authority to a state. In 1984, EPA delegated wetlands permitting authority
under CWA Section 404 to Michigan under a Memorandum of Agreement ("MOA")=2E
Under CWA Section 404(g)(1), the delegation did not cover "waters which
are presently used, or are susceptible to use in their natural condition
or by reasonable improvement as a means to transport interstate or foreign
commerce shoreward to their ordinary high water mark, including . . . wetlands
adjacent thereto." The court did not address whether the COE
jurisdiction actually extended to the wetlands on the site under the delegation
exception provided in CWA Section 404(g)(1). Rather, it agreed with the
COE that the court did not have jurisdiction to consider the question.
First, the court held that it lacked jurisdiction under the CWA to review
pre-enforcement actions by the COE. The court stated, therefore, that determinations
by the COE that it has jurisdiction over wetlands cannot be reviewed except
in the context of an enforcement action or a final permit decision. The court also rejected Charfoos' argument
that it was a "third party beneficiary" and, therefore, had contractual
rights under the MOA. The court held that it lacked jurisdiction over a
claim for declaratory relief or specific performance against the United
States based on a breach of contract theory because such an action must
be brought in the United States Court of Claims and that, in any event,
Charfoos' claim remained, in essence, an impermissible pre-enforcement
challenge to the COE. Finally, the court disposed of Charfoos' claim
that, under applicable United States Supreme Court precedent, the court
may review an agency's assertion of jurisdiction where the agency has acted
"in excess of its delegated powers and contrary to a specific [statutory]
prohibition." The court held that, before a court may step in, the agency's
action must be "manifestly outside of its delineated authority." In this
case, the COE maintained that the Clinton River Cut-Off Canal, to which
the wetlands were allegedly "adjacent," is at or below Lake St. Clair's
or the Clinton River's ordinary high water mark, and therefore falls within
its jurisdiction. "Given the close proximity of the wetlands in question
to the Clinton River Cut-Off Canal and Lake St. Clair," the court stated
that it "cannot conclude that the [COE] is acting manifestly outside its
jurisdiction." Accordingly, the court granted the COE's motion to dismiss
for lack of subject matter jurisdiction. Michigan Peat v EPA, 7 F Supp 2d
896 (ED Mich, 1998) and No 98-1595 (CA 6, Apr 28, 1999). Bay-Houston Towing Company's Michigan Peat
Division ("Michigan Peat") owns or controls two non-contiguous parcels
of wetlands in Minden Township, Michigan. Michigan Peat had continuously
mined peat from a part of "Minden North" since 1958. Peat mining involves
removing the peat moss by clearing surface vegetation and allowing the
peat moss to dry in the sun. The process involves the discharge of fill
material into wetlands and is, therefore, regulated under Section 404 of
the CWA. Although Michigan has been delegated authority to administer its
own permitting program for the discharge of dredged or fill material into
wetlands, if EPA objects to a permit issuance decision, the State is barred
from issuing the permit. If the State cannot resolve EPA's objections,
the authority to enforce Section 404 of the CWA reverts to the COE. In 1991, MDEQ's predecessor agency, the Michigan
Department of Natural Resources ("MDNR"), informed Michigan Peat that it
needed a permit to continue to mine peat. Michigan Peat filed the application
and also sought to expand its peat mining activities to "Minden South."
Michigan Peat withdrew this application so that it could prepare a comprehensive
environmental assessment, however, and filed a second application in 1994=2E
After reviewing the assessment, EPA formally objected to the issuance of
any permit. In 1995, MDNR found that the Minden Bog was a rare and irreplaceable
wetland ecosystem with significant ecological and scientific value and
proposed a permit that would allow peat mining of less acreage, shorter
duration, and more minimized environmental impact than that requested by
Michigan Peat. The permit proposed by MDNR: (1) acknowledged that 749 acres
of Minden North were mined prior to 1980 and, therefore, neither the state
nor federal governments had Section 404 jurisdiction; (2) classified 202
acres of Minden North as eligible for an "after-the-fact" permit because
mining had occurred there prior to the effective date of the CWA; and (3)
denied authority to mine peat on the remaining 1049 acres of Minden North
and the entire South Minden parcel. EPA withdrew its objections and MDNR
issued the permit. Because Michigan Peat did not agree with all the terms
of the permit, however, Michigan Peat did not sign the permit and it did
not take effect. Michigan Peat filed an administrative appeal opposing
the conditions imposed by the "after-the-fact" permit and filed a regulatory
takings claim against the State in the Michigan Court of Claims. Following transfer of authority from MDNR
to MDEQ, MDEQ sought EPA's approval to settle the takings claim but EPA
rejected the proposal. In 1997, MDEQ issued a "state-only" permit stating
that due to EPA's continued objections, the State was precluded from authorizing
the project under CWA Section 404 and permitting authority was, therefore,
transferred from MDEQ to the COE. Michigan Peat subsequently sued the State
and federal authorities to enjoin them from exercising oversight or enforcement
authority over Michigan Peat's attempts to mine peat. The United States District Court for the Eastern
District of Michigan considered motions to dismiss by the State and federal
agencies. EPA argued that the court was without jurisdiction because there
was no final agency action ripe for judicial review. MDEQ argued that the
Eleventh Amendment bars a suit against the State without its consent and
that Michigan Peat failed to state a claim upon which relief could be granted.
The court accepted EPA's argument, holding that EPA's only actions in the
matter, commenting upon and objecting to any proposed permit and issuing
a compliance order to Michigan Peat, did not constitute reviewable actions
and, therefore, the court was without subject matter jurisdiction. The
court also accepted MDEQ's argument, finding that there was nothing in
the record to indicate that the State had waived its Eleventh Amendment
immunity. Michigan Peat merely alleged that MDEQ adhered to federal law
in the Section 404 permitting process. The court, therefore, granted the
defendants' motions to dismiss. Michigan Peat appealed. In an opinion issued April 28, 1999, the Sixth
Circuit Court of Appeals first held that EPA's actions were final actions
and were, therefore, reviewable. The court noted that EPA had voiced its
objections throughout the application process but ultimately withdrew them
and agreed to the proposed permit that MDEQ sent to Michigan Peat in 1995=2E
Although the permit specifically stated that it was not final or valid
until signed and accepted by Michigan Peat and returned to MDEQ, "the logical
conclusion is that the EPA's action was final. Statutorily, there was nothing
left for the EPA to do once it signed off on the proposed permit." In addition,
if Michigan Peat had signed the permit, it would have waived its appellate
remedies. The Sixth Circuit held that the district court had erred, then,
in dismissing Michigan Peat's action against the federal government. The Sixth Circuit next held, however, that
the district court had not erred in dismissing Michigan Peat's action against
the state because the Eleventh Amendment protects Michigan and MDEQ from
Michigan Peat's claims. Congress has not abrogated Michigan's immunity
and Michigan has not waived such immunity: "The fact that Michigan volunteered
to involve itself in the Section 404 program does not constitute consent
to be sued in federal court." The Sixth Circuit, then, affirmed in part
and reversed in part the district court's ruling and remanded for further
proceedings. United States v Bay-Houston Towing Co,
33 F Supp 2d 596 (ED Mich, 1999). The United States brought the instant suit
alleging that Michigan Peat was conducting the following activities in
violation of the CWA: (1) discharging pollutants via peat bog drainage
water through six separate ditch outfalls into the Black River Drain without
an NPDES permit under Section 402 of the CWA; (2) discharging dredged or
fill material into wetlands without a permit under Section 404 of the CWA;
and (3) violating the EPA administrative compliance order issued under
Section 309(a) of the CWA. The government sought an injunction requiring
Michigan Peat to immediately cease further discharges of pollutants into
the Black River Drain, cease further discharges of dredged or fill material
into the wetlands on the Minden Site, submit a wetland restoration plan
to EPA for its approval, and restore the wetlands in accordance with the
plan following its approval by EPA. The government also sought civil penalties
of not more than $25,000 per day for each violation. On July 24, 1998,
MDEQ issued an NPDES permit to Michigan Peat authorizing the discharge
of peat bog drainage water into the Black River through three outfalls.
Michigan Peat then sought summary judgment as to Counts 1 and 2. With respect to Count 1, Michigan Peat argued
that Count 1 is moot because the permit issued by MDEQ authorizes the discharge
of peat bog drainage water into the Black River. While it conceded that
a permit had been issued, the government argued that the claim is not moot
because the injunctive relief it sought would require Michigan Peat to
"reduce the number of outfalls that discharge pollutants to the Black River
and comply with other requirements contained in the permit." Count 1 asked
the court to require Michigan Peat to "immediately cease further discharges
of pollutants into the Black River Drain, except in compliance with [the
NPDES permit issued by MDEQ]." The court rejected Michigan Peat's request
for summary judgment, holding that the allegation was sufficient to require
the court to review Michigan Peat's compliance with the permit. The court
stated, however, that it could not "issue an anticipatory injunction in
the event that Michigan Peat may violate the permit. The claim under Count
1 is limited to specified violations of the permit identified by the government
within 60 days of this Memorandum and Order." As to Count 2, the government pointed to the
following activities of Michigan Peat as being regulated by the CWA: (1)
the use of mechanized landclearing equipment to move dredged peat, clay
and vegetation to the side of the ditch in the course of excavating and
maintaining drainage ditches; (2) the use of that equipment to spread the
excavated peat from the side of the ditch onto the bog for future harvest;
(3) the use of that equipment to disc the wetland fields, to push peat
across the field, and to pile peat into temporary harvest windrows; and
(4) the creation of haul roads and use of large vegetation to create the
foundation for temporary harvest windrows. Section 404 of the CWA authorizes the COE
to issue permits for the discharge of dredged or fill material into the
navigable waters at specified disposal sites. Excavation activities that
involved the removal of material from waters, such as landclearing, ditching,
and channelization, were not regulated under Section 404 until passage
of the "Tulloch Rule." As part of a settlement agreement in North Carolina
Wildlife Fed'n v Tulloch, No C90-713-CIV-5-BO (ED NC, 1992),
EPA and the COE agreed to revise the term "discharge of dredged material"
to include small-volume incidental fallback. The effect of the Tulloch
Rule was that a Section 404 permit was required for mechanized landclearing,
ditching, channelization, or other excavation, and the focus was on the
environmental effect of the activity, rather than on the size of the discharge. Michigan Peat relied on the decision in National
Mining, supra, to argue that the activities pointed to by the
government do not constitute regulated "discharges" and, even if the activities
exceeded the scope of protected activity in National Mining, they
are similarly incidental to removal because material is only temporarily
deposited into the bog as one of several stages in its ultimate removal. The court held that the instant case "has
nothing to do with the Tulloch Rule because the activities identified by
the government are very different from incidental fallback. Unlike incidental
fallback, these activities involve purposeful relocation. . . . [Michigan
Peat] removes materials from the bog and, after a varying period of time,
deliberately redeposits the materials in other locations within the bog
at varying distances." The court further pointed out that Michigan Peat's
activities constituted "sidecasting" (placing removed soil in a wetland
but at some distance from the point of removal) which, as National Mining
stated, has always been subject to Section 404 regulation. In addition,
spreading the sidecasted bog material from the side of the ditch into the
bog for future harvest also involves relocating the bog materials for a
period of time varying from a few hours to a few days and, like sidecasting,
can also constitute "addition." Discing also entails, albeit in a more
limited manner, deliberately displacing bog materials. The court held,
then, that the facts were sufficient to raise a triable issue as to whether
discing and the other activities identified by the government constitute
regulated "discharges" under the CWA. The court next reviewed whether Michigan Peat's
activities may be categorized as "discharges" when the bog material is
only temporarily displaced into other areas of the bog before being removed
from the bog. Michigan Peat argued that the roads it constructed in the
Minden Bog were created solely for the purpose of moving mining equipment
for the company's peat harvesting operations and pointed to the CWA provision
that the discharge of dredged or fill material for "the purpose of construction
or maintenance of . . . temporary roads for moving equipment . . . is not
prohibited or otherwise subject to regulation." 33 USC 1344(f)(1)(E). The
court held, though, that whether the roads are temporary is a question
of fact. The last road was built in 1985 but none of the roads has been
abandoned to date. Michigan Peat also sought summary judgment
as to the question of whether it has discharged "fill material," which
is defined as "any material used for the primary purpose of replacing an
aquatic area with dry land or of changing the bottom elevation of a waterbody."
33 CFR. 323.2(e) and 33 CFR 232.2. The court held that, contrary to Michigan
Peat's argument, Michigan Peat's use of indigenous bog vegetation and clays
to create haul roads and windrow foundations could constitute the discharge
of "fill materials" under the CWA. The court, therefore, denied Michigan
Peat's summary judgment motion. Insurance
Aetna Casualty & Surety Co v Dow Chem
Co, 10 F Supp 2d 771 (ED Mich, 1998) and 10 F Supp 2d 800 (ED Mich,
1998). Dow Chemical Company and Dow Corning, Inc.
(collectively, "Dow") have been pursued by numerous third-parties and governmental
entities arguing that Dow is responsible for alleged environmental contamination
at certain industrial sites. Dow sought indemnity from 48 of Dow's insurance
carriers (collectively, "Insurance Carriers") under a series of comprehensive
general liability ("CGL") policies it purchased between 1944 and 1985,
including excess policies it first purchased in 1955. One of the Insurance
Carriers filed a declaratory judgment action against Dow and the other
Insurance Carriers requesting that the court determine the rights and liabilities
of the parties. In the interest of resolving the dispute efficiently, the
parties agreed to focus on just 10 sites: Brookhurst; Cliffs-Dow; Daffron
& Pinion; Harris/Farley Street; Hartley & Hartley; Midland, Texas;
Monahans, Texas; Petro Processors, Inc. ("PPI"); Silresim; and Conalco
(collectively, "Final Sites"). The court first considered the Insurance Carriers'
arguments that Dow could not show that the "sudden and accidental" exception
to the pollution exclusions contained in some of their policies applied.
Dow argued that the Insurance Carriers were not entitled to summary judgment
regarding seven of the Final Sites because there were genuine issues of
material fact as to whether some of the damage at those sites was the result
of sudden and accidental events. The court ruled that, to survive the motion
for summary judgment, Dow must show, for each site, a factual basis that:
(1) there was a discrete, identifiable, isolated discharge or release that
can be separated from the historical, ongoing, gradual discharges or releases
of pollution or contaminants that occurred in the normal course of operation;
(2) each of those discrete discharges can be considered "sudden and accidental;"
and (3) some of the relevant damage at a particular site arguably may be
traced to those discrete "sudden and accidental" discharges. The court
granted the Insurance Carriers' motions for summary judgment with regard
to several sites for which Dow had not met its burden of proving there
had been "sudden and accidental" discharges and denied the motions with
respect to several sites for which Dow had established a genuine issue
of material fact as to whether there had been a "sudden and accidental"
discharge within the relevant insurance policy periods. On the second motion, one Insurance Carrier
argued that its accident-based insurance policies did not require it to
provide indemnification coverage of Dow's claims at the Cliffs-Dow site
because Michigan law defines "accident" to afford coverage only where property
damage is caused by sudden, unintended, and unexpected events or actions.
Because the relevant policies did not define the term "accident," the court
deferred to the Michigan Supreme Court's definition of that term: "an undesigned
contingency, a casualty, a happening by chance, something out of the usual
course of things, unusual, fortuitous, not anticipated, and not naturally
to be expected." The court held that Michigan law did not support
the Insurance Carrier's argument that intentional acts that cause unintended
and unexpected property damage cannot be construed as "accidents." Dow
had shown that it did not expect or intend to cause the property damage
at the Cliffs-Dow site. Therefore, the court denied the Insurance Carrier's
motion for summary judgment on the issue. In the second opinion, issued on June 8, 1998,
the court considered summary judgment motions by several of the Insurance
Carriers who argued that Dow's notice of "occurrences," "claims," or "suits"
was untimely and caused them prejudice, thus precluding indemnification
under the policies. The court ruled that the Insurance Carriers must show:
(1) that Dow's notices to the Insurance Carriers of occurrences, claims,
and suits were untimely; and (2) the Insurance Carriers suffered actual
prejudice as a result of Dow's delay in providing notice of occurrences,
claims and suits. The court interpreted Michigan law such that notice was
timely under Dow's typical CGL policies if it was provided within a "reasonable
time, dependent upon the facts and circumstances of the case." Dow argued that its decisions as to when to
provide notice to the Insurance Carriers regarding third-party suits were
reasonable because: (1) it reasonably concluded that it could select which
of its Insurance Carriers it would notify and reasonably concluded that
the selected primary insurer would then seek contribution from the other
Insurance Carriers if it so desired; and (2) its notice decisions regarding
governmental agency environmental actions were reasonable because it gave
notice to the Insurance Carriers once it determined that the legal uncertainties
and coverage questions were sufficiently settled and coverage was available
and because the Insurance Carriers' routine and repeated coverage denials
led Dow to reasonably conclude that notice to the Insurance Carriers would
be futile prior to the time it finally did provide notice. The court held,
however, that Dow failed to point to any policy language or case law to
support its argument that notice provided to one insurer suffices as notice
to all other insurers and precludes those other insurers from successfully
asserting a late notice defense. The court also ruled that Dow likewise
failed to cite to any Michigan case law interpreting the relevant notice
language in the insurance policies as permitting the insured to unilaterally
decide whether and when coverage is available and to unilaterally decide
which of its insurers it will notify simply because those decisions may
be "reasonable" under the circumstances. On the issue of whether the Insurance Carriers
have suffered actual prejudice as a result of Dow's delay in providing
notice of occurrences, claims, and suits, the court noted that an insurer
has been prejudiced "where the delay `materially' impairs an insurer's
ability to contest its liability to an insured or the liability of the
insured to a third party." The court rejected the Insurance Carriers' argument
that Michigan courts presume the insurer has been prejudiced simply by
observing the length of the delay in providing notice. The court held that
an insurer's "bald assertion that witnesses have died, documents have been
lost or destroyed, or opportunities have been lost is insufficient to show
actual prejudice." Instead, the insurer must show that its interests were
actually prejudiced, not just speculate that its interests were prejudiced. The court stated that to determine whether
an Insurance Carrier was prejudiced by delay, the court must consider whether
the delay has materially impaired the Insurance Carrier's ability to: (1)
investigate liability and damage issues so as to protect its interests;
(2) evaluate, negotiate, defend, or settle a claim or suit; (3) pursue
claims against third parties; (4) contest the liability of the insured
to a third party; and (5) contest its liability to the insured. The court
applied the foregoing principles in reviewing the circumstances of the
notice provided to each Insurance Carrier for each of the sites and granted
or denied each Insurance Carrier's motion for summary judgment based on
the particular facts and circumstances. Comprehensive Environmental Response,
Compensation and Liability Act Carter-Jones Lumber Co v Dixie Dist Co,
166 F3d 840 (CA 6, 1999). Carter-Jones Lumber Company ("Carter-Jones")
owned property in Columbus, Ohio ("Site"), which became contaminated by
polychlorinated biphenyls ("PCBs") released from transformers stored on
the property by Top Dollar Liquidators ("Top Dollar"), the lessee of the
Property. Dixie Distributing Co. ("Dixie") purchased ten transformers containing
PCBs in 1985, and Harry Denune ("Denune"), Dixie's president, chief executive
officer, and only shareholder, apparently negotiated the purchase. In 1986,
Dixie sold three of the transformers, and in June, 1987, Dixie sold the
seven remaining transformers to Top Dollar. Top Dollar then moved four
of them to the Site. In July 1988, a citizen notified the Ohio
Environmental Protection Agency ("OEPA") that transformers were being scrapped
at the Site, and that oil was leaking onto the ground. OEPA inspected the
Site and discovered the four PCB-containing transformers, two of which
showed evidence of leakage. One transformer had been damaged by an employee
who opened a valve on it. In May 1989, Denune moved the trailer containing
the four transformers from the Site to another property that he owned.
OEPA then ordered Denune to clean up the Site. Carter-Jones entered into a Consent Order
with OEPA to clean up the Site and ultimately incurred more than $3 million
in cleanup costs. Carter-Jones then sued Dixie and Denune under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 USC 9601 et
seq. ("CERCLA"), to force them to contribute to pay the cleanup costs=2E
The United States District Court for the Southern District of Ohio found
Dixie to be liable for 50 percent of Carter-Jones' costs, and Denune liable
for 30 percent. The court initially found Dixie and Denune to be jointly
and severally liable, but following a motion for reconsideration, amended
its order to hold each of them severally liable only. Dixie and Denune
appealed the judgment and Carter-Jones cross-appealed the decision of the
court holding Dixie and Denune only severally liable. Under CERCLA, any person who has arranged
for disposal of hazardous substances is liable for response costs if that
person intended to enter into a transaction that included an arrangement
for disposal of hazardous substances. On appeal, the Sixth Circuit stated
that "the most probative evidence of intent will be objective evidence
of what actually happened rather than evidence describing the subjective
state of mind of the actor." The Sixth Circuit held that whether a party
"arranged for disposal" is a question of fact, not law, and may be reversed
on appeal only if the finding of the district court was clearly erroneous=2E
The Sixth Circuit held that the district court's finding of fact that Dixie
and Denune intended to arrange for disposal was not clearly erroneous because
there was evidence on the record supporting that finding. "The result of
the many transactions was that the transformers were indeed being scrapped
rather than reused. Arguably shady practices were used by defendants and
those with whom they dealt. The district court's inference that defendants
intended the arrangement for disposal cannot be overturned on the evidence
in this case under a clearly erroneous standard." The Sixth Circuit next turned to whether Dixie
and Denune were protected by the third party defense under CERCLA, which
requires proof that the cleanup costs at issue were for a release of hazardous
substances caused solely by acts or omissions of a third party, rather
than the defendant. To maintain a third party defense, there can be no
contractual relationship between the third party and the defendant, either
direct or indirect. In this case, however, "[b]ecause the third party alleged
to have been the sole cause of the release was the employee of Top Dollar,
the person with whom Dixie was said to have arranged for disposal, the
third party defense is unavailable." The Sixth Circuit stated that the
third party defense would not apply even if the actions of Top Dollar's
employee "were intentional and criminal," as long as they were "not unforeseeable." Dixie and Denune also argued that their right
to due process of law was violated by CERCLA because it provides no definite
standard to guide a court in allocating responsibility for cleanup costs
in a contribution action. Under CERCLA, a court may allocate responsibility
for cleanup costs among liable parties "using such equitable factors as
the court determines are appropriate." The Sixth Circuit rejected this
argument, holding that CERCLA is not unconstitutionally vague because federal
courts have traditionally had the power to fashion any remedy deemed necessary
and appropriate to do justice in a particular case. In addition, Denune argued that the trial
court erred in holding him personally liable. The Sixth Circuit apparently
considered it unclear whether the trial court had based Denune's personal
liability on the fact that he had personally participated in making arrangements
for disposal, or on the fact that he had held positions as president, CEO,
and sole shareholder of Dixie. The Sixth Circuit noted that if the trial
court had based its decision on a finding of fact that Denune had personally
participated in making arrangements for disposal, that holding would be
reversible only for clear error. In contrast, if the trial court had held
that Denune was liable solely because of the corporate positions he held,
then that would be a conclusion of law subject to a much stricter review
on appeal. Because the trial court appeared to have relied at least in
part on Denune's corporate positions, the Sixth Circuit reviewed the issue
of Denune's personal liability de novo. Considering the issue of Denune's personal
liability as an arranger, the Sixth Circuit relied on a recent United States
Supreme Court case holding that a parent corporation that exercised control
over the operations of a subsidiary may not, without more, be held liable
as an operator of a polluting facility owned or operated by the subsidiary
unless the corporate veil is pierced. The Sixth Circuit noted that the
Supreme Court additionally held that "a corporate parent that actively
participated in, and exercised control over the operations of the facility
itself may be held directly liable in its own right as an operator of the
facility." The court held, then, that Denune could "be liable as an arranger
for disposal due to his status as the sole shareholder of Dixie
if Ohio law would allow the piercing of the corporate veil, and he [could]
also be held liable in his own right due to his intimate participation
in the arrangement for disposal." (Emphasis added). The court noted
that under Ohio law, a corporate officer can be held personally liable
for a tort committed while acting within the scope of his employment. The
Sixth Circuit held that the district court's findings of fact satisfied
the Bestfoods requirement that an officer be actively involved
in the arrangements for disposal before individual liability may be imposed
and, therefore, Denune was properly held individually liable. The court then considered whether the district
court had erred by allocating separate shares to Denune and Dixie and holding
that each was responsible only for its own share, rather than jointly and
severally liable for both shares. Carter-Jones argued that this issue should
be decided as a matter of federal law on the grounds that CERCLA grants
authority to the district court to impose joint and several liability on
contribution defendants. The Sixth Circuit, however, refused to provide
an answer based on federal law, because it felt that it would be more appropriate
to consider whether the Ohio law of corporations would resolve this issue=2E
The Sixth Circuit concluded that "unrelated defendants are to be made severally
liable only, rather than jointly and severally liable, in an action for
contribution under CERCLA," relying on its decision in Centerior Service
Co v Acme Scrap Iron & Metal Corp, 153 F3d 344, 356 (CA
6, 1998). The court, however, held that CERCLA should not be presumed to
alter state law governing the liability of corporations and their officers
and owners. Under Ohio corporate law, both a corporation and an officer
are liable for the wrongful acts of an officer in the performance of his
corporate duties. It was therefore appropriate to assign joint and several
liability to Dixie and Denune for Denune's share of the response costs,
based on Denune's actions as an officer of Dixie. The court was
not so quick to conclude that joint and several liability is appropriate
for a corporate shareholder. The Sixth Circuit concluded, "[i]f
the corporate veil may be pierced under Ohio law to reach Denune as the
sole shareholder, then he will be jointly and severally liable for Dixie's
share of the response costs." Because the district court did not address
the issue of veil piercing and the Sixth Circuit did not have enough evidence
to make a determination on the issue, the Sixth Circuit remanded to the
district court for consideration of the issue. Kalamazoo River Study Group v Rockwell
Int'l, No 1:95-CV-838 (WD Mich, Dec 7, 1998) and 171 F3d 1065 (CA
6, 1999). In 1990, MDNR found that a three-mile portion
of Portage Creek, ending at the Kalamazoo River and a 35-mile portion of
the Kalamazoo River ("Site") were heavily contaminated with PCBs. MDNR
also determined that three paper companies were responsible for the contamination
HM Holdings, Inc., Georgia-Pacific Corporation and Simpson Plainwell Paper
Company. These three companies joined with a fourth paper company, James
River Company, to form an unincorporated association, the Kalamazoo River
Study Group ("KRSG"), and voluntarily agreed to conduct an investigation
into contamination at the Site. In 1989, Benteler Industries ("Benteler")
had purchased a manufacturing facility located north of Morrow Lake, which
is an impoundment on the Kalamazoo River. A 3,200-foot drainage ditch is
located on Benteler's property that runs toward Morrow Lake. When Benteler
bought the property, it discovered PCB contamination throughout the property.
As a result, in 1993, Benteler began cleaning up the PCB contamination
pursuant to a remedial action work plan approved by MDNR. All clean up
activities were completed by October 1993 and on October 16, 1996, MDNR
issued Benteler a clean closure letter. Although the members of KRSG had not admitted
liability or been held legally liable for the contamination at the Site,
they had incurred substantial costs in connection with the RI/FS, and would
incur additional costs in connection with the cleanup of the Site. Accordingly,
KRSG filed suit in December 1995 in the United States District Court for
the Western District of Michigan, against several businesses, including
Benteler, Eaton Corporation ("Eaton"), and Rockwell International ("Rockwell"),
under CERCLA, Part 201 of the Michigan Natural Resources and Environmental
Protection Act, MCL 324.20101 et seq. ("NREPA"), and common law
theories, seeking to recover its investigation and cleanup costs. In particular,
KRSG alleged that Benteler's facility discharged oil-containing wastewater,
stormwater and cooling water through the plant's drainage pipes and into
the drainage ditch on Benteler's property. According to KRSG, the discharged
water transported PCB-contaminated soil and sediment from the drainage
ditch and released it into Morrow Lake, then to the Kalamazoo River and
downstream to the Site. The PCBs found at the Site were of the trademark
name "Aroclor," which included four different, specific types: Aroclors
1242, 1248, 1254 and 1260. The court stated that the evidence of contributions
of PCBs to the Site by the KRSG members was sufficient to determine their
responsibility and to impose the costs of clean-up activities on them.
The members of KRSG did not contest their liability as principal sources
for Aroclor 1242 contamination, but argued that Eaton and Rockwell were
responsible for the Aroclor 1254 contamination and sought contribution
from Eaton and Rockwell for contamination associated with this type of
PCB. For Eaton, the court found that, although
Eaton had discharged oils into the ground and sewers, there was no evidence
that these oils had contained PCBs, and thus no evidence that Eaton had
contributed to the PCB contamination in the River. The court stated that
"[g]iven the evidence that Eaton was discharging large quantities of cutting
and quench oils into the sewer lines which were discharged into the [R]iver,
if those oils contained PCBs, those PCBs should be present in the ditch
and the [R]iver." The court, therefore, entered judgment in favor of Eaton. As to Rockwell, the court held that KRSG had
introduced evidence that Rockwell used PCB-containing oils in its industrial
processes. Over the years, Rockwell's various oil waste storage facilities
had released so much PCB-containing oil into the River that its banks were
saturated with oil, and the River itself developed an oily sheen on its
surface. Numerous studies showed that PCBs, including Aroclor 1254, were
discovered in every area on the Rockwell site where oils had been handled=2E
The court found that Rockwell's discharges of oils containing PCBs were
"neither minor nor insignificant." The court stated that "the evidence
is sufficient to enable the Court to conclude that PCBs were regular ingredients
of the Rockwell plant's process oils, and that they were released to the
River in measurable or detectable quantities." Accordingly, the court held
that Rockwell was liable for the release of PCBs to the Site. Therefore,
the court held that the members of KRSG were entitled to contribution from
Rockwell to pay for cleaning up the Site. Benteler moved for summary judgment, arguing
that KRSG could not prove that Benteler had contributed PCBs to the Site.
In support of its motion, Benteler presented evidence that the PCBs found
in the ditch were confined to the area of the ditch nearest its facility
approximately 600 feet from the headwall. Benteler's evidence included
the remedial action work plan approved by MDNR that limited Benteler's
cleanup activities to the PCB contamination in the first 600 feet of the
ditch. MDNR did not require Benteler to clean up the remaining 2,600 feet
of the ditch because test results indicated that there were either no PCBs
detected or no PCBs detected in excess of Michigan's most stringent cleanup
criteria. In addition, Benteler pointed out that soil samples were taken
in 1996 further along the drainage ditch at 1,500, 2,000, 2,500, and 2,700
feet from the headwall at the facility which showed non-detectable levels
of PCBs. In addition, Benteler offered hydrogeological evidence that the
drainage ditch did not have enough water to carry material to the Kalamazoo
River. Benteler's experts contended that, due to volume of the water and
permeability of the soil in this area, any water discharged into the drainage
ditch would soak into the ground prior to reaching Morrow Lake, even with
rainfall calculated at twice normal levels. In opposition to Benteler's
motion, KRSG relied largely on the testimony of its own hydrogeologist,
who criticized the assumptions of Benteler's hydrogeological evidence.
KRSG's expert opined that "[a] logical interpretation of the facts leads
to the conclusion that the ditch has discharged water and PCBs to the Kalamazoo
River" and, therefore, PCBs from Benteler's facility are within the borders
of the Site. The district court granted Benteler's motion,
finding that KRSG's expert's conclusion was unreliable and KRSG appealed.
On appeal, KRSG argued that its expert's affidavit creates a "classic `battle
of the experts' concerning whether PCBs from Benteler's property contributed
to PCB contamination at the Site" and, therefore, the district court erred
in ruling in favor of Benteler. The appeals court agreed with KRSG that
credibility determination, the weighing of evidence, and the drawing of
legitimate inferences are issues for the jury to decide, not the district
court judge. The appeals court also found, however, that the district court
did not "choose sides" to resolve a battle of the experts. Rather, the
appeals court stated, the district court focused on the factual underpinnings
of KRSG's expert's conclusions. The appeals court noted that, in reviewing
expert testimony, a court may look beyond the conclusions of the experts
to determine whether the expert testimony rests on a reliable foundation.
Here, when the district court did so, it found that KRSG's expert's conclusions
were based on "speculation, conjecture and possibility" and that "the inadequate
factual basis makes Dr. Brown's affidavit scientifically unreliable." The
appeals court stated that "the scientific evidence that provides the basis
for [KRSG's expert's] opinion on causation is not sufficient to allow a
jury to find that it is more probable than not that Benteler caused PCB
contamination at the Site." In addition, the appeals court found that
KRSG's opposition was based primarily on a critique of Benteler's expert's
method of calculating the volume of water discharged into the ditch. Specifically,
KRSG argued that there was sufficient water flow to carry PCBs through
the entire 3,200-foot length of the ditch and into Morrow Lake. The appeals
court stated that KRSG "fail[ed] to produce any affirmative evidence that
this increased amount of water is sufficient to carry PCBs down the ditch
and into the lake," and failed to explain why there were no significant
levels of PCBs in the ditch. Also, because it was undisputed that there
was a 1,700-foot gap where no PCBs had been detected, the appeals court
further stated that "the evidence presented leaves a `gap' that is simply
too wide to allow a jury to speculate on the ultimate issue of causation."
Thus, the appeals court affirmed the district court's grant of summary
judgment in favor of Benteler. Centerior Serv Co v Acme Scrap Iron &
Metal Corp, 153 F3d 344 (CA 6, 1998). In October 1990, EPA issued a unilateral administrative
order ("UAO") under CERCLA to Centerior Service Company ("Centerior") and
two other companies ordering them to perform an emergency removal action
at the Huth Oil Services ("Huth") site near Toledo, Ohio. This site had
become contaminated with PCBs as a result of waste oil reclamation activities
conducted by Huth from 1938 until 1990. Centerior and the two other UAO
respondents spent approximately $9.5 million complying with the UAO. In
August 1994, Centerior and the two other UAO respondents then filed a complaint
in federal district court against more than 125 defendants, including several
federal agencies, which had allegedly disposed of waste oil at the site.
The complaint asked the court to allow the plaintiffs to recover all their
cleanup costs from the defendants under Section107(a) of CERCLA, and to
hold the defendants jointly and severally liable. On September 13, 1996, the district court,
in response to motions filed by several defendants, ruled that the plaintiffs
were not entitled to maintain a CERCLA Section 107 joint and several liability
action and could maintain only an action for contribution under Section
113(f)(1) of CERCLA. The court also stated that it would construe the complaint
as asserting a contribution claim, rather than a cost recovery claim, and
certified the issue for interlocutory appeal to the Sixth Circuit. The Sixth Circuit affirmed the district court's
ruling. "We find that parties who themselves are [potentially responsible
parties ("PRPs")], potentially liable under CERCLA and compelled to initiate
a hazardous waste site cleanup, may not bring an action for joint and several
cost recovery, but are limited to actions for contribution governed by
the mechanisms set forth in CERCLA §113(f)." The Sixth Circuit noted
that the five courts of appeals that have directly addressed the issue
have all ruled that a party that is liable under CERCLA may not assert
a cost recovery claim seeking joint and several liability under CERCLA
Section 107(a). The Sixth Circuit also noted that the Fifth, Eighth, and
Eleventh Circuits have also supported this view, although they have not
directly ruled on the issue. The court stated that it would treat these
decisions as "persuasive background." The plaintiffs argued that their claim was
not a contribution claim because no judgment had been entered against them
determining that they were liable and they had not entered into a settlement
with EPA that might be construed as a tacit admission of liability. The
Sixth Circuit rejected this argument because under common law there is
no requirement that a party must be determined to be liable before it may
seek contribution; instead, it is enough "that a plaintiff act under some
compulsion or legal obligation to an injured party when he or she discharged
the payment. [Citations omitted.] A [UAO] requiring cleanup in the face
of penalties or fines clearly satisfies such a requirement." The court
also noted that the plaintiffs had taken no affirmative steps to contest
their liability, which they could have done by seeking reimbursement of
their cleanup costs from EPA under CERCLA Section 106(b)(2). The court
stated that "we expressly leave open the question of whether volunteers,
or parties who are truly innocent, may seek joint and several cost recovery,"
following the lead of the First and Seventh Circuits. The court rejected the plaintiffs' policy
argument that PRPs should be entitled to assert cost recovery claims for
joint and several liability against other liable parties, as an incentive
to perform cleanups. The court observed that the plaintiffs had not voluntarily
agreed to do the cleanup under an Administrative Order on Consent ("AOC"),
but instead had been issued a UAO. The court noted that even if the plaintiffs
had been more cooperative with EPA and entered into an AOC, CERCLA provides
other incentives for cooperative parties, including the fact that a court
may consider a party's cooperation with the government as an equitable
factor in allocating costs among all liable parties. The court stated:
"Under such a framework, plaintiffs need not worry about getting stuck
with so called `orphan shares.'" The court rejected the plaintiffs' argument
that PRPs who perform work under a UAO must be able to assert cost recovery
claims because CERCLA Section 113(g)(3), which establishes a statute of
limitations for contribution actions, does not specify the date on which
the limitations period begins to run for costs incurred under a UAO. The
court found that it was not necessary to rule on the statute of limitations
issue, because none had been presented to it; nonetheless, the court observed
that there are ways to deal with the bad drafting in the CERCLA statute
of limitations provision, and noted that the Tenth Circuit, in Sun Co
v Browning-Ferris Indus, 124 F3d 1187 (CA 10, 1997), had done so by
applying CERCLA Section 113(g)(2), which applies to initial actions for
recovery of costs. United States v Brighton Twp,
153 F3d 307 (CA 6, 1998). From 1960 until 1973, the Township of Brighton
("Township") contracted with Vaughan Collett, and his son Jack (collectively,
"Collett"), to allow Township residents to dispose of waste on three acres
in the southwest corner of Collett's property in exchange for a monthly
fee paid by the Township. Collett also accepted waste from other commercial,
industrial, and non-resident sources until 1967, when the Township negotiated
a new contract with Collett that provided for the exclusive use of the
dump by Township residents. The contracts between Collett and the Township
required that the dump "meet specifications of and be under the supervision
of the [Township's] Board of Appeals." Further, the Township Board often
made special appropriations for the dump, such as bulldozing and other
maintenance activities, when Collett failed to perform those activities
to the Township's satisfaction. The Township also took responsibility for
correcting conditions at the dump when it came under the scrutiny of state
regulators. The Township eventually paid for the final closure of the dump
in 1973 under increasing pressure from state officials to bring the dump
into compliance with applicable solid waste regulations. In 1989, an inspection team from EPA discovered
a cluster of 200 deteriorating drums on the parcel that had released hazardous
substances to the surrounding soil and groundwater. After spending over
$490,000 to clean up the dump, the United States sued Collett and the Township
to recover those costs under Section 107 of CERCLA. The United States District
Court for the Eastern District of Michigan held that the Township's level
of participation in the dump made it an "operator" of the facility, as
that term is defined under CERCLA. In addition, the court held that there
was no basis for dividing responsibility for the contamination between
the Township and Collett and, therefore, imposed joint and several liability
on the Township for the entire amount of the cleanup costs. The Township appealed the trial court's ruling
on three grounds. First, the Township argued that the 3-acre portion of
the parcel used by Township residents was separate from the "facility"
where the leaking drums were found. Second, the Township argued that, even
if the entire parcel constituted a single "facility," the Township did
not exercise sufficient control over the facility to incur liability as
an "operator." Third, the Township argued that, even if it was liable for
some amount of harm, the harm and the associated cleanup costs were divisible
among the Township and Collett. On the Township's first argument, the Sixth
Circuit upheld the trial court's ruling that the entire 15-acre parcel
constituted a single facility for purposes of imposing CERCLA liability.
The Sixth Circuit noted that "an area that cannot be reasonably or naturally
divided into multiple parts or functional units should be defined as a
single `facility' even if it contains parts that are non-contaminated."
The court held that, although there were no drums discovered in the southwest
portion of the parcel where Township residents generally left their waste,
there was no reasonable way to divide Collett's parcel into multiple parts.
Evidence presented at trial indicated that Collett often moved waste from
one part of the property to another for salvaging purposes so that it was
impossible to identify the source of the hazardous substances found at
any particular location on the site. Moreover, other testimony indicated
that some residents disposed of appliances in the northern part of the
parcel. The court concluded that "Collett used the entire property as a
dump, and so it is appropriately classified as a single facility." On the Township's second argument concerning
its status as an "operator" of the dump, the Sixth Circuit held that, in
order to be liable as an "operator" under CERCLA, the Township must have
exercised "actual control" over the activities at the dump as opposed to
merely possessing an "ability to control" the dump through regulation.
"[M]ere regulation does not suffice to render a government entity liable,
but actual operation (or `macromanagement') does," the court stated. The
Sixth Circuit listed the following factors that a trial court should weigh
to determine whether a government entity has exercised actual control over
a facility: "the government's expertise and knowledge of the environmental
dangers posed by hazardous waste, establishment and design of the facility,
participation in the opening and closing of the facility, hiring or supervising
employees involved in activities related to pollution, determination of
the facility's operational plan, monitoring of and control over hazardous
waste disposal, and public declarations of responsibility over the facility
and/or its hazardous waste disposal." The Sixth Circuit held that the trial
court had not developed sufficient facts to determine whether the Township
was an "operator" of the dump and remanded the case back to the trial court
to consider these factors, "as well as any other factors indicative of
actual control" over the dump. Regarding the Township's third basis for appeal,
the divisibility of cleanup costs, the Township argued that if it was
liable as an operator of the dump, it should only be liable for the
3-acre portion where Township residents disposed of waste or, alternatively,
it should only be liable to the extent Township residents contributed to
the disposal of the leaking drums. The trial court had held the Township
failed to demonstrate that there "was a reasonable basis to conclude that
the harm [was] divisible and whether the harm [was] capable of being divided."
The Sixth Circuit, however, held that the trial court applied the wrong
standard for determining divisibility. The "proper standards for divisibility
come from the Restatement (Second) of Torts, which seeks a reasonable basis
for determining the contribution of each cause to a single harm," the Sixth
Circuit stated. The Sixth Circuit further clarified that a court should
not consider fairness-based factors, such as the degree of care exercised
by a liable party or the degree of cooperation with government officials,
for purposes of determining divisibility. Such factors, the court held,
are appropriate in a lawsuit brought by one liable person seeking contribution
against another, but are not appropriate in a cost recovery action brought
by the government. The court distinguished the divisibility defense to
joint and several liability from the equitable allocation principles available
under CERCLA: "[t]he former is legal, the latter is equitable; the respective
tests used to execute them should reflect this distinction." Accordingly,
the Sixth Circuit remanded the matter back to the trial court to reconsider
the possible bases of dividing cost between the Township and Collett. G & H Landfill PRP Group v American
Premier Underwriters, Inc, No 96-CV-72947 (ED Mich, Feb 19, 1999). A PRP Group that is remediating the G&H
Landfill Site in Macomb County, Michigan, under a consent decree with EPA
and a parallel consent decree with the State of Michigan, sued United Railroad
Corporation ("URC") and a number of other parties, seeking contribution
for remediation costs. The PRP Group claimed that URC was liable under
both CERCLA and Part 201 because URC had owned a portion of the landfill
site ("Site") at a time when hazardous substances were disposed of at the
Site. The PRP Group claimed that URC was a successor-in-interest to Michigan
Central Railroad Company ("MCRR"), which in turn had owned a nine-acre
portion of the Site from 1955 through 1973. From approximately 1958 through
1967, MCRR had leased the nine acres to New York Central Railroad ("NYCRR"),
which used the property to transport liquid waste in tank cars for disposal
in a pit located elsewhere on the Site. URC asked the court to grant it summary judgment
based on three arguments. First, URC argued that it could not be held liable
under Part 201, because Part 201, unlike CERCLA, imposes liability on a
past owner or operator only if the owner or operator was "responsible for
an activity causing a release or threat of release." MCL 20126(1)(b). The
court agreed that under Part 201, "merely being a landlord, in the absence
of some other conduct which could render [URC] `responsible for an activity
causing a release or threat of release,' is an insufficient basis upon
which to incur liability under NREPA." The court interpreted the phrase
"responsible for an activity causing a release" narrowly, finding that
the Michigan legislature added this requirement so that past owners and
operators would be liable under Part 201 "only if they had a direct role
in the polluting activity." The court concluded that merely receiving rental
income was not a "direct role in the polluting activity" of the lessee
so as to render the owner liable under Part 201. The court concluded that
URC was not "responsible for an activity causing a release" at the G&H
Landfill, and, therefore, could not be held liable as a former owner under
Part 201. The court distinguished a decision by the
United States District Court for the Eastern District of California in
which that court had imposed CERCLA liability on a railroad that had leased
a rail facility to another party that used it to load and unload rail cars
containing agricultural chemicals. In that case, the California court had
held that the railroad lessor did not qualify for the third party defense
under CERCLA, and, therefore, was a liable owner under CERCLA. The court
held that the California case was not helpful in determining whether URC
should be held liable under Part 201 because it dealt with the third party
defense under CERCLA, rather than liability under Part 201, which offers
broader exemptions from liability than the CERCLA third party defense. URC's second argument was that it could not
be held liable as a past owner under CERCLA because the PRP Group had not
presented enough evidence of liability under CERCLA. The four elements
of liability under CERCLA are: (1) the polluted site in question is a "facility,"
as defined in CERCLA; (2) the defendant is a "covered person," as defined
in CERCLA; (3) there has been a release or threatened release of a hazardous
substance from the facility; and (4) the release or threatened release
caused the plaintiff to incur necessary response costs consistent with
EPA guidelines. The court rejected URC's argument, and held that there
was enough evidence concerning URC's ownership of the Site during the time
hazardous substances were disposed of, the release of those substances,
and the subsequent cleanup to allow the PRP Group to proceed with the trial
on the theory that URC was liable as an owner under CERCLA. Third, the court considered URC's argument
that it could not be held liable for contribution under CERCLA because
it was protected from such contribution suits under MCL 324.20129(6), which
provides, in relevant part, that "a person who is not liable under this
part, including a person who [performs an adequate baseline environmental
assessment] and who is otherwise in compliance with Section 20107(a) [due
care obligations], shall be considered to have resolved his/her liability
to the state in an administratively approved settlement under [CERCLA]
and shall by operation of law be granted contribution protection under
section 113(f)(2) of [CERCLA] . . . ." The Michigan legislature added this
provision in 1995 as a part of its effort to limit the environmental liability
of landowners who did not contribute to the contamination on their properties
in order to encourage the acquisition and redevelopment of contaminated
properties. Although the provision was probably intended primarily to benefit
new owners who perform baseline environmental assessments ("BEAs"), it
was drafted broadly enough to include past owners like URC who are not
liable under Part 201 because they are not "responsible for an activity
causing a release." The court held that considerations of "federal
supremacy and preemption" compelled it to hold that this provision of Michigan
law could not protect URC against contribution claims by the PRP Group
based on CERCLA. The court emphasized that Section 113(f)(1) of CERCLA
subjects any liable party, including owners (whether or not they are "responsible
for an activity causing a release") to contribution claims based on CERCLA.
The court reasoned that a state legislature should not be able to protect
a class of owners against contribution suits based on a federal statute.
The court reasoned that MCL 324.20129(6) "is in direct conflict with" CERCLA,
because it "undermines CERCLA's broad remedial purpose" by imposing a more
forgiving test of liability than CERCLA does, and by "extending CERCLA
contribution protection to entities that have not entered a settlement
with the United States or the State of Michigan." Therefore, the court
granted URC's motion for summary judgment on the Part 201 claim but denied
URC's motion on the CERCLA claims. Resource Conservation and Recovery Act United States v Kelley Technical Coatings,
Inc, 157 F3d 432 (CA 6, 1998). Kelley Technical Coatings, Inc. ("Kelley")
operates two paint manufacturing plants in Louisville, Kentucky. Arthur
Sumner ("Sumner") was Kelley's Vice President in charge of manufacturing
operations. Sumner's duties included overseeing the manufacturing process,
including the storage and disposal of hazardous waste. He was also responsible
for Kelley's compliance with environmental regulations. The Kentucky Department
of Environmental Protection discovered between 600 and 1000 drums located
behind one of Kelley's manufacturing plants during a July 1992 inspection=2E
The drums had been stored on-site for more than 90 days and at least some
of the drums were leaking. Before the inspection, Kelley employees had
poured contaminated rain water from the drums onto the ground, and had
spilled some of the paint residue in the drums on the ground while consolidating
the contents of various drums. A federal grand jury indicted Kelley and Sumner
on three separate counts: (1) conspiracy to store and dispose of hazardous
waste without a permit, (2) storage of hazardous waste without a permit,
and (3) disposal of hazardous waste without a permit. Kelley and Sumner
were acquitted on the conspiracy charges but were convicted on the remaining
charges. The court imposed a $225,000 fine on Kelley, and a $5,000 fine
and a prison term of 21 months on Sumner. On appeal, Kelley's and Sumner's primary argument
was that the district court had given improper instructions to the jury
concerning the kinds of knowledge which a defendant must have to support
a criminal conviction under the Resource Conservation and Recovery Act,
42 USC 6901 et seq. ("RCRA"). Kelley and Sumner had been charged
under Section 3008(d)(2)(A) of RCRA, which authorizes the imposition of
criminal penalties for anyone who "knowingly treats, stores, or disposes
of any hazardous waste identified or listed under this subchapter" either
"without a permit," or "in knowing violation of any material condition
or requirement of such permit." The trial court had instructed the jury
that it could find the defendants guilty only if it found that, among other
things, the defendants had "knowingly stored material" at the plant for
more than 90 days, and that the defendants "knew that the material was
waste and that it had the potential to be harmful to others or to the environment." The trial court gave a similar instruction
on the charge of knowing disposal. The trial court also instructed the
jury that the United States was not required to prove that the defendants
knew that the material was either a listed hazardous waste or a characteristic
hazardous waste, or that the defendants knew that they were required to
obtain a permit before storing or disposing of the material. Kelley and
Sumner argued on appeal that the trial court should have instructed the
jury that it could convict the defendants only if it determined that they
knew that the paint residues in the drums were regulated hazardous wastes,
and knew that they were legally required to obtain a permit. To prevail on this argument, Kelley and Sumner
had to persuade the Sixth Circuit to overrule or distinguish numerous cases
which hold that a criminal defendant can be convicted even if the defendant
does not know that his acts are illegal, including United States v Dean,
969 F2d 187 (CA 6, 1992). Kelley and Sumner argued that two United States
Supreme Court decisions decided after Dean undermined the reasoning
in Dean, but the appeals court rejected this argument. Kelley and
Sumner also argued that a recent decision by the Fifth Circuit in United
States v Ahmad, 101 F3d 386 (CA 5, 1996) was inconsistent with Dean.
In Ahmad, the Fifth Circuit had held that in a criminal prosecution
involving the CWA, the trial judge should have instructed the jury that
the government had to prove that the defendant knew that the substance
he discharged was a "pollutant." The Sixth Circuit held that neither the two
Supreme Court cases nor the Ahmad case had held that knowledge of
the law or knowledge of the regulatory requirements was an element of the
criminal offense, but had instead been decided on the basis of whether
the defendant had knowledge of facts, such as the fact that a firearm
was capable of firing automatically, the fact that the subject of a pornographic
picture was a minor, or the fact that the substance discharged into water
was a pollutant. The Sixth Circuit concluded that the instructions in this
case were proper because they required the government to prove that Kelley
and Sumner each had knowledge of the fact that Kelley was storing and disposing
of paint residues, knowledge that the paint residues were wastes, and knowledge
that the wastes had the potential to harm others or the environment. The
court concluded that it was not necessary for the government to prove that
either defendant had knowledge that the residues qualified as either a
listed waste or a characteristic waste under RCRA. The Sixth Circuit also rejected an argument
by Kelley and Sumner that they believed that the materials being stored
were not hazardous wastes, but were instead raw materials or offspecification
materials that they intended to reuse in the paint manufacturing process.
The Sixth Circuit considered this argument only briefly, noting that the
jury had been instructed that the defendants had to know that the materials
were waste, and expressing the opinion that defendants "were not ignorant
about the hazardous nature of the materials they were handling." Davis v Sun Oil Co, 148 F3d 606 (CA 6,
1998). In 1985, Donald Davis purchased from Sun Oil
Company ("Sunoco") land in Ohio on which Sunoco had operated a gasoline
station. Prior to the sale, Sunoco informed Davis that it was removing
the four gasoline underground storage tanks ("USTs") on the property. After
the sale, Davis learned that Sunoco had apparently left the UST piping
in place when the tanks were removed. Sunoco and Davis subsequently entered
into a letter agreement under which Sunoco agreed to clean up the remaining
contamination on the property. When Sunoco failed to clean up the property
in accordance with the letter agreement, Davis sued Sunoco in Ohio state
court in May 1991, alleging nuisance, breach of contract and fraud. In
March 1995, the trial court adopted a referee's recommendation that Sunoco
be found liable for breach of contract and fraud and that Davis be awarded
specific performance of the letter agreement as well as compensatory and
punitive damages. In January 1996, the Ohio Court of Appeals affirmed the
decision of the trial court and further ordered Sunoco to complete the
cleanup of the property in an expedited manner. Prior to the state court decisions, in October
1993, Davis filed a RCRA citizen suit in the United States District Court
for the Southern District of Ohio alleging that Sunoco's actions had "contributed
to and caused the disposal of solid or hazardous waste on the property
which may present an imminent and substantial endangerment to health or
environment" in violation of RCRA. In July 1995, Sunoco moved for summary
judgment in the federal action, claiming that the doctrine of res judicata
prevented Davis from maintaining the federal suit. Sunoco argued that,
if Davis was successful in his RCRA citizens suit, Davis would not be entitled
to anything more than an order requiring Sunoco to take "necessary action"
to remediate the property, which is exactly the relief Davis had already
received from the state court. The district court granted Sunoco's motion
and Davis appealed. In determining whether the district court
properly applied the doctrine of res judicata to Davis' federal
claim, the Sixth Circuit reviewed the district court's reasoning on whether
the claim "might have been litigated" in the state court proceedings or
whether, instead, the federal courts enjoyed exclusive jurisdiction over
RCRA actions. The Sixth Circuit found that the citizen suit provision of
RCRA did not expressly provide exclusive jurisdiction to federal courts.
Although RCRA provides that citizen suits "shall be brought in district
court for the district in which the alleged violation occurred or the alleged
endangerment may occur," the court noted that the term "shall," as it is
used in the statute, does not divest the state courts of jurisdiction over
RCRA claims. Therefore, the Sixth Circuit held that, because Davis could
have brought a RCRA citizen suit claim in the state action, but failed
to do so, Davis' federal suit was barred by the doctrine of res judicata.
Accordingly, the Sixth Circuit affirmed the district court's entry of summary
judgment for Sunoco. Pape v Army Corps of Eng'rs, No 2:98-CV-78
(WD Mich, June 5, 1998). Dale K. Pape, Sr. had sued the COE under the
citizen suit provisions of RCRA, claiming that the COE had improperly disposed
of hazardous waste at a former military site near Raco, Michigan ("Raco
Site"), thus damaging "the wildlife in the area around the Raco Site and
the area's beauty." The United States District Court for the Western District
of Michigan dismissed Pape's lawsuit on the grounds that he did not have
"standing" to bring the suit because he had not suffered a concrete and
particularized injury caused by the COE's action. The court held that Pape
failed to satisfy this requirement for standing because his injury was
only hypothetical and conjectural. Pape claimed that he had been injured by the
COE's disposal activities because he regularly visited the "area around"
the Raco Site and had made plans to camp near the site in October of 1998,
and that those visits "have and will continue to be negatively affected,
as both the number of wildlife sightings and the beauty of the area have
diminished." Although the court recognized that "the desire to use or observe
an animal species, even for purely esthetic purposes," may confer standing,
the court held that Pape's claimed injury was too speculative. At the hearing,
Pape's attorney could not precisely identify the locations that Pape claimed
to have visited in the "area around" the Raco Site. In addition, the campground
that Pape intended to visit was over two miles from the site. The court
held that Pape's "vague expression of an intention to vacation at this
campground in October 1998, where he anticipates that the number of wildlife
sightings and scenic beauty may be diminished, does not suffice to establish
a concrete and particularized injury," which is necessary for standing.
Accordingly, the court dismissed Pape's lawsuit. Charter Twp of Van Buren v EPA, 10 F Supp
2d 766 (ED Mich, 1998). Under the federal Toxic Substances Control
Act, 15 USC 2601 et seq. ("TSCA"), EPA authorized Wayne Disposal,
Inc. ("WDI") to dispose of wastes containing PCBs in concentrations of
50 or more parts per million at WDI's landfill in the Township. The Township
then filed an action in the United States District Court for the Eastern
District of Michigan in 1997 challenging EPA's action. On April 14, 1997,
the court denied the Township's request for a preliminary injunction that
would have stayed EPA's approval for WDI to accept PCB-containing waste
while the parties litigated the case. In a final decision on the merits
issued on March 20, 1998, the court again rejected the Township's challenge
to the approval and noted that the Township was continuing to make several
arguments that the court had previously rejected in its ruling declining
to issue a preliminary injunction. These arguments were that EPA did not
consider data allegedly showing that the landfill site is located in a
groundwater recharge zone, that EPA relied on "state evidence" and that
the landfill's compliance record warranted denying the PCB approval. The
court had rejected these arguments in its April 1997 ruling, and held in
its March 1998 ruling that the Township had given the court no reason to
reconsider its rulings on those issues. The court also rejected the Township's argument
that EPA had improperly failed to consider the economic impact of its decision
to issue the PCB approval. The court observed that TSCA requires EPA to
consider "reasonably ascertainable economic consequences" in promulgating
rules, and said that EPA, in adhering to the TSCA rules, "presumably addresses
economic consequences." In addition, the court held that TSCA language
cited by the Township did not, contrary to the Township's position, require
that EPA perform a "distinct economic analysis" regarding the PCB approval.
Finally, the court found that the administrative record of EPA's decision
failed to support the Township's contention that EPA improperly failed
to consider public health effects before issuing the TSCA approval. The
court, therefore, dismissed the Township's case. Olin Corp v Yeargin, Inc, 146 F3d
398 (CA 6, 1998). Olin Corporation ("Olin") owns and operates
a chlorine manufacturing plant in Charleston, Tennessee, that utilizes
a mercury-cell electrochemical process. In 1997, Olin contracted with Yeargin
Corporation ("Yeargin") to conduct certain on-site construction and maintenance
services, including the replacement of a header pipe used in the plant's
manufacturing processes. Olin's contract with Yeargin provided that "[Yeargin]
agrees to protect, indemnify, and hold [Olin] harmless from any and all
loss, damage, liability, claims, demands, costs, or suits of any nature
whatsoever asserted by employees of [Yeargin] or third persons . . . for
property damage, personal injury or death, or otherwise in each case arising
out of, in connection with or incidental to Work performed under this Contract." During the replacement of the header pipe
by Yeargin employees, an undetermined amount of caustic soda and toxic
mercury spilled onto the floor and onto the clothes and skin of the Yeargin
employees. Afterwards, the Yeargin employees who were exposed to the mercury
did not clean or decontaminate their bodies, tools or equipment upon leaving
the Olin plant, thereby causing them to contaminate their motor vehicles
and homes, and expose their spouses to the mercury. As a result of the exposure to mercury, the
Yeargin employees and their spouses filed several lawsuits against Olin
in the United States District Court for the Eastern District of Tennessee,
seeking compensatory and punitive damages. The Yeargin employees alleged
that they became physically ill as a result of their exposure to mercury
and sought recovery under such theories as negligence, assault and battery,
strict liability, trespass and nuisance to real property, and loss of consortium.
The Yeargin employees also alleged that once they began to show symptoms
of mercury poison, Olin intentionally mislead them into believing they
suffered merely from the flu. The employees further claimed that Olin attempted
to conceal its misconduct by falsely reporting to them that testing of
the employees' homes did not reveal mercury contamination. To recover from
Olin's alleged misrepresentations, the Yeargin employees also asserted
against Olin claims of negligent misrepresentation, fraudulent misrepresentation,
intentional infliction of emotional distress, and outrageous conduct. On August 6, 1992, the trial court entered
an order holding that, because Olin was the statutory employer of the Yeargin
employees, their claims of negligence, assault and battery, strict liability,
and loss of consortium were barred by the exclusive remedy provision of
the Tennessee Workers' Compensation Act. Four months later, the trial court
dismissed the Yeargin employees' fraudulent misrepresentation claims on
the grounds that the employees had failed to provide sufficient evidence
to support their claims. Prior to trial, however, Olin settled the remaining
claims with the Yeargin employees and their spouses. In addition to the amount paid as a result
of the settlement with the Yeargin employees and their spouses, Olin incurred
attorneys fees, fines, civil penalties and other costs relating to: (1)
a complaint filed by the Tennessee Department of Labor with the State of
Tennessee Occupational Safety and Health Review Commission, alleging violations
of the state's Occupational Safety and Health Act ("OSHA"); (2) a claim
filed by EPA against Olin in the amount of $1,000,000, alleging violations
of the CAA; and (3) an administrative order filed by EPA for violations
of CERCLA, requiring Olin to reimburse EPA's oversight costs and to clean
up the contamination at the plant. To recover the costs it incurred, Olin then
sued Yeargin seeking indemnity under its contract with Yeargin as well
as contribution under CERCLA and the Tennessee Uniform Contribution Among
Tortfeasors Act ("TUCATA"). The trial court dismissed Olin's contractual
indemnity claim seeking reimbursement for the amount Olin paid in settlement
to the Yeargin employees and for its CERCLA and OSHA costs. In addition,
the trial court dismissed Olin's claims for contribution under TUCATA and
its claims for contribution under CERCLA seeking reimbursement for costs
associated with the Yeargin employees' transport of mercury to their homes.
The trial court also denied Yeargin's motion for summary judgment on Olin's
breach of contract claim. Later, on February 11, 1997, the district court
denied subsequent motions filed by Olin regarding its remaining claims.
Thereafter, Olin appealed to the United States Court of Appeals for the
Sixth Circuit. On Olin's claim for contractual indemnity,
the Sixth Circuit disagreed with the trial court's decision related to
the costs, fines and penalties Olin incurred for its alleged violation
of environmental laws. The Sixth Circuit held that while there was no specific
reference in the agreement to environmental liability, the language was
sufficiently broad to encompass various costs, fines and penalties incurred
by Olin in connection with its alleged violations of federal and state
environmental laws because the violations caused property and personal
injuries to the Yeargin employees and their spouses. Yeargin was, therefore,
required under the indemnity agreement to reimburse Olin for such costs. As to Olin's other claims for contribution,
however, the Sixth Circuit agreed with the trial court in several respects.
First, the Sixth Circuit held that Yeargin need not indemnify Olin for
Olin's own negligence because the contractual language of the indemnity
agreement was too ambiguous to impose such a duty. In addition, the court
held that Yeargin did not owe Olin reimbursement for any payments in connection
with Olin's settlement agreement with the Yeargin employees and their spouses
because under Tennessee's comparative negligence standard, Olin was only
responsible for settling its portion of liability. Olin was, thus, not
entitled to contribution to the extent that Olin's payments to the Yeargin
employees and their spouses represented compensation for Olin's allegedly
fraudulent conduct or for compensation for the employee's trespass and
nuisance claims. Likewise, the court held that Olin is not entitled to
statutory contribution under TUCATA because the right for contribution
under TUCATA arises only when the party has paid more than his proportional
share of liability and Olin did not provide evidence that the settlement
agreements between the Yeargin employees and their spouses resolved both
the claims against Olin and against Yeargin. Accordingly, the Sixth Circuit affirmed the
trial court's decision in all respects, except for Olin's claim for contractual
indemnification for the various costs, fines and penalties it incurred
in connection with its violation of various state and federal environmental
statutes. Therefore, the Sixth Circuit reversed the trial court's order
granting Yeargin's motion for summary judgment on this claim and remanded
the action to the trial court for further proceedings. State Developments
NAACP-Flint Chapter v Engler, No 205264
(Mich Ct App, Nov 24, 1998). The plaintiffs, a group of environmental and
civil rights organizations and concerned citizens, brought suit against
the Governor of Michigan and MDEQ, challenging MDEQ's decision to grant
an air emission permit for a wood waste electric generating incinerator
in Genesee Township. The plaintiffs alleged that the issuance of the permit
violated Title VI of the Federal Civil Rights Act of 1964; the Equal Protection
Clause of the Michigan Constitution, Mich. Const 1963, art I, § 2;
the Michigan Environmental Protection Act ("MEPA")(now Part 17 of NREPA);
and the Michigan Civil Rights Act. The complaint sought broad equitable
relief to enjoin operation of the incinerator and to require MDEQ to revise
the air permit for the incinerator. In the course of litigation, all of
the plaintiffs' claims were dismissed except for the claims under the Michigan
Civil Rights Act. After a trial without a jury, the trial court dismissed
the Michigan Civil Rights Act claim. Although the trial court dismissed the last
claim before it, i.e. the Michigan Civil Rights Act claim, the trial court
issued an injunction against the defendants directing them not to issue
air permits for "major air pollution sources" in Genesee County until MDEQ
had developed and adopted policies and procedures to ensure that MDEQ's
air permit procedures adequately protect the public health, safety, and
general welfare pursuant to Mich Const 1963, art IV §§ 51 and
52 and Part 55 of NREPA. After the court's decision, the plaintiffs filed
a motion to amend their complaint to add claims under Mich Const 1963,
art IV, §§ 51 and 52 and Part 55 to conform with the trial court's
decision, but that motion was denied by the trial court. The defendants appealed and the plaintiffs
cross-appealed the trial court's decision. The defendants presented three
arguments to the court of appeals: (1) the trial court erred by issuing
an injunction on a claim the plaintiffs did not plead and which was not
before the court, (2) the trial court could not issue an injunction after
dismissing the last of the plaintiffs' claims because at that time there
was no longer a case pending before the court, and (3) the issuance of
the injunction violated principles of separation of powers. The court of appeals found that it was undisputed
that the plaintiffs did not seek an injunction on the ground that the MDEQ
air permit process violated the Michigan Constitution and Part 55. No such
claim was contained in the complaint and the plaintiffs did not argue such
a theory at trial. The appeals court held that the trial court had no authority
to issue an injunction on the basis of claims that were neither pleaded
in the plaintiffs' complaint nor requested by the plaintiffs at any time
before or during trial. The court ruled that granting an injunction in
such circumstances violated principles of due process because the defendants
had no notice of the need to defend against the claim. Therefore, the court
of appeals vacated the injunction issued by the trial court. The court
of appeals found it unnecessary to address the defendants' remaining arguments. The plaintiffs also appealed the trial court's
dismissal of their claim under the Michigan Civil Rights Act. The appeals
court upheld the trial court's decision, finding that the alleged failure
of MDEQ to consider race when issuing an air emission permit does not amount
to a denial of the full and equal enjoyment of the goods, services, privileges,
advantages, or accommodations of a place of public accommodation or public
service and, therefore, the plaintiffs had failed to allege a valid claim
under the Michigan Civil Rights Act. The plaintiffs also appealed the trial court's
dismissal, before trial, of their claim that the issuance of the air emission
permit for the incinerator violated the Equal Protection Clause of the
Michigan Constitution. The plaintiffs argued that the issuance of the permit
violated the Equal Protection Clause because emissions from the incinerator
would have a disparate impact on minorities living near the incinerator,
a community that allegedly was already exposed to more environmental hazards
than the general population. The trial court had dismissed this claim because
the plaintiffs failed to plead or present evidence that the defendants
intentionally discriminated against them in issuing the permit. The court
of appeals agreed, holding that a mere disparate impact, without intentional
or purposeful discrimination, is not a violation of the Equal Protection
Clause of the Michigan Constitution. Therefore, the court of appeals upheld
the dismissal of the Equal Protection Clause claim because the plaintiffs
had not alleged any intentional or purposeful discrimination. The court
of appeals vacated the injunction against the MDEQ, but otherwise affirmed
the trial court's ruling. Kiesel Intercounty Drain Drainage Dist
v Department of Natural Resources, 227 Mich App 327; 575 NW2d 791
(1998). The Kiesel Intercounty Drain Drainage District
("Kiesel") was established in 1969 to provide drainage for approximately
six square miles of land in Bay and Midland Counties. Construction of the
drainage project was interrupted on several occasions, but eventually the
portions of the drain in Bay County were completed and, in 1990, Kiesel
obtained the necessary rights of way to complete the portion of the drain
planned for Midland County. MDNR, however, notified Kiesel that it could
not complete the Midland County portion of the drain unless it obtained
a permit under the Wetland Protection Act (currently codified as Part 303
of NREPA) ("Wetland Act"). The Michigan Department of Agriculture also
notified Kiesel that a permit under the Inland Lakes and Streams Act (now
codified at Part 301 of NREPA) ("ILSA") would be required to complete the
project. Kiesel initially applied for a permit for a scaled down version
of the project, but the permit was denied. Kiesel then filed a lawsuit
in the Midland County Circuit Court seeking a declaration that the Midland
County portion of the drainage project was exempt from permitting requirements
under both ILSA and the Wetland Act. The trial court, on cross motions
for summary disposition, initially ruled that because the project was an
extension of a drain, permits under both ILSA and the Wetland Act were
required. Upon a motion by Kiesel, the trial court reconsidered its decision
in light of the Michigan Court of Appeals decision in MDNR v Huron County
Road Comm'n, 212 Mich App 510; 538 NW2d 68 (1995). In Huron County,
the court of appeals ruled that a project to extend an existing drain and
to add a 1,200 foot branch drain was exempt from Wetland Act permit requirements
under the Wetland Act's exemption for "maintenance, operation or improvement
which includes straightening, widening, or deepening" of an existing drain.
The court of appeals ruled that exempt maintenance and improvement activities
were not limited to straightening, widening, or deepening an existing drain,
but could also include extending an existing drain. Also, in the Huron
County opinion, the court of appeals ruled for similar reasons that
the same project was exempt from ILSA permitting requirements under ILSA's
exemption for "maintenance and improvement" of a drain constructed before
January 1, 1973. In light of the decision in Huron County,
the trial court reconsidered its earlier decision and granted summary judgment
to Kiesel, ruling that the Midland County portion of the drainage project
was exempt from both Wetland Act and ILSA permitting requirements as maintenance
and improvement of an existing drain. MDNR then appealed. By the time the
court of appeals heard this appeal, the Michigan Supreme Court had vacated
the decision in Huron County, without analysis. In reviewing this
appeal, the court of appeals focused on a provision of ILSA that had not
been brought to its attention by the litigants in the Huron County
case or the litigants in the Kiesel appeal. Section 30102(d) of ILSA states
that an ILSA permit is required before anyone may "create, enlarge or diminish
an inland lake or stream." The court held that, in light of this provision,
the extension or enlargement of an existing drain could not be exempt from
ILSA permitting requirements as maintenance and improvement of an existing
drain. Therefore, the court ruled that the Midland County portion of the
Kiesel drain was subject to ILSA permitting requirements. The court of
appeals also held that it was unnecessary for that court to determine whether
a Wetland Act permit also was required for the Kiesel project, given that
the project could not go forward until Kiesel obtains the necessary ILSA
permit. Huggett v Department of Natural Resources,
232 Mich App 188; 590 NW2d 747 (1998). In 1982, the State of Michigan deeded a parcel of land containing wetlands ("Site") to Michigan National Bank |
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