Hercules Incorporated, Olin Corporation, and Thiokol Corporation v. United States Environmental Protection Agency

938 F.2d 276, 291 U.S. App. D.C. 11, 21 Envtl. L. Rep. (Envtl. Law Inst.) 21356, 33 ERC (BNA) 1526, 1991 U.S. App. LEXIS 14648, 1991 WL 123969
CourtCourt of Appeals for the D.C. Circuit
DecidedJuly 12, 1991
Docket90-1368
StatusPublished
Cited by16 cases

This text of 938 F.2d 276 (Hercules Incorporated, Olin Corporation, and Thiokol Corporation v. United States Environmental Protection Agency) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Hercules Incorporated, Olin Corporation, and Thiokol Corporation v. United States Environmental Protection Agency, 938 F.2d 276, 291 U.S. App. D.C. 11, 21 Envtl. L. Rep. (Envtl. Law Inst.) 21356, 33 ERC (BNA) 1526, 1991 U.S. App. LEXIS 14648, 1991 WL 123969 (D.C. Cir. 1991).

Opinion

Opinion for the Court filed by Chief Judge MIKVA.

MIKVA, Chief Judge:

A 1986 amendment to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601 et seq. (1988), imposes notice and covenant requirements on federal agencies that transfer real property contaminated by hazardous substances. The Environmental Protection Agency (“EPA”), in implementing the notice requirements of the amendment, applied them only to properties where contamination occurred during the period of government ownership. The EPA also declined to provide a definition of what constitutes a contract for the transfer of real property or to address the issue of whether leases should be deemed transfers of real property, stating with respect to leases that the question was better left for case-by-case determination by agencies. Petitioners challenge each of these features of the EPA’s rulemaking and claim further that the proposed regulation failed to provide adequate notice that the EPA might adopt these positions in its final rule. Although we reject petitioners’ other arguments, we agree with them that the statutory language is unambiguous in extending the government’s notice obligations to all contaminated properties it owns regardless of whether the contamination occurred while the government owned the property; we therefore grant the petition for review.

I. Background

A. The Statutory Framework

CERCLA was enacted “to provide authority and funding for the cleanup of serious threats to public health and the environment resulting from disposal of hazardous waste.” Ohio v. EPA, 838 F.2d 1325, 1327 (D.C.Cir.1988). Under CERCLA, the EPA is required to devise a national contingency plan for responding to releases of hazardous substances and is authorized to use the Hazardous Substance Superfund to finance response costs. See 42 U.S.C. §§ 9604-9605, 9611. The EPA may seek recovery of cleanup costs from any responsible party it can locate. See 42 U.S.C. § 9607(a). Alternatively, the EPA may order a responsible party to clean up a site where there has been a release or a threatened release of a hazardous substance and the site presents an “imminent and substantial endangerment to the public health or welfare or the environment.” 42 U.S.C. § 9606(a). In addition, responsible parties may be liable for “any other necessary costs of response incurred by any other person consistent with the national contingency plan.” 42 U.S.C. § 9607(a)(4)(B). CERCLA identifies four categories of responsible parties subject to liability, including current owners or operators of facilities containing hazardous substances and owners or operators at the time of disposal. See 42 U.S.C. § 9607(a).

In 1986, Congress enacted the Superfund Amendments and Reauthorization Act (“SARA”), Pub.L. No. 99-499, 100 Stat. 1613, which amended CERCLA in a number of respects. Among other provisions, SARA added section 120 to CERCLA, 42 *279 U.S.C. § 9620, to address the problem of responsibility for hazardous substances located on federally owned sites. Section 120(a) provides that federal departments, agencies, and instrumentalities are subject to the provisions of CERCLA to the same extent as are private parties. Sections 120(b) — (f) establish a comprehensive program to ensure the identification and cleanup of federal sites. In section 120(h), the provision at issue here, Congress imposed notice and covenant requirements on federal agencies that transfer real property contaminated by hazardous substances. Section 120(h)(1) provides in relevant part:

[Wjhenever any department, agency, or instrumentality of the United States enters into any contract for the sale or other transfer of real property which is owned by the United States and on which any hazardous substance was stored for one year or more, known to have been released, or disposed of, the head of such department, agency, or instrumentality shall include in such contract notice of the type and quantity of such hazardous substance and notice of the time at which such storage, release, or disposal took place, to the extent such information is available on the basis of a complete search of agency files.

42 U.S.C. § 9620(h)(1). Section 120(h)(2) requires the EPA to issue regulations establishing the “form and manner” of the required notice. Finally, section 120(h)(3) requires that deeds for the transfer of federal real property contain the same notice as that required for contracts to transfer real property, as well as covenants warranting that remedial action has been taken to clean up the site and that the government will take any further remedial action found to be necessary after the date of the transfer.

B. EPA’s Regulatory Action

In January 1988, the EPA, exercising its authority under section 120(h)(2), published a proposed rule implementing the notice requirements of section 120(h)(1), stating that in most cases it intended to apply the requirements without regard to whether the hazardous substance activities occurred during the period of federal ownership or prior to the government’s acquisition of the property. See 53 Fed.Reg. 850, 851 (1988). The EPA expressed concern about the burden of applying the requirements to properties obtained by the government through foreclosure and expressed doubt that Congress intended section 120(h) to apply to such properties, but nonetheless decided that it would be “both prudent and appropriate” to apply the requirements to foreclosed properties, with an exclusion for certain small residential properties. See id. With regard to the latter, the EPA believed that “most small, residential properties would not be the site of any significant hazardous substances activity” and that any health or environmental gains from including them in the regulation “would be minimal.” Id. Among other features of the proposed rule, the EPA defined certain terms used in the statute (such as “storage,” “release,” and “disposal”), see id. at 852, 854, but did not define the phrase “transfer of real property,” stating only that it presumed Congress meant to incorporate the definition contained in the Federal Property Management Regulations (“FPMR”), 41 C.F.R. § 101-47. See 53 Fed.Reg. at 851. The proposed rule made no specific mention of leases.

In April 1990, fully two years after the statutory deadline, see 42 U.S.C. § 9620(h)(2), the EPA promulgated its final rule implementing section 120(h)(1). See

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938 F.2d 276, 291 U.S. App. D.C. 11, 21 Envtl. L. Rep. (Envtl. Law Inst.) 21356, 33 ERC (BNA) 1526, 1991 U.S. App. LEXIS 14648, 1991 WL 123969, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hercules-incorporated-olin-corporation-and-thiokol-corporation-v-united-cadc-1991.