U.S. v. Olin Corp.

Page 1506

107 F.3d 1506

44 ERC 1225, 65 USLW 2639, 27 Envtl.

L. Rep. 20,778,

10 Fla. L. Weekly Fed. C 784

USA, acting at request of the Administrator of the United States Environmental Protection Agency (EPA) Plaintiff-Appellant, v. OLIN CORPORATION, Defendant-Appellee.

No. 96-6645.

United States Court of Appeals Eleventh Circuit.

March 25, 1997.

J. Don Foster, U.S. Attorney, Eugene A. Seidel, Asst. U.S. Attorney, Mobile, AL, Robert A. Kaplan, Environmental Enforcement Section, Environment & Natural Resources Division, U.S. Department of Justice, and Robert R. Homiak, John A. Bryson, U.S. Department of Justice, Washington, DC, Lois Schiffer, Asst. Atty. Gen., Washington, DC, for plaintiff-appellant.

Michael W. Steinberg, Alex S. Karlin, Washington, DC, for defendant-appellee.

George Clemon Freeman, Jr., Hunton & Williams, Richmond, VA, for amicus curiae Alabama Great Southern R. Co. et al.

Stephen S. Ostrach, New England Legal Foundation, Boston, MA, amicus for New England Legal Foundation.

Thomas W. Brunner, Laura A. Foggan, Christopher D. Cerf, Daniel E. Troy, Allison R. Hayward, Wiley, Rein & Fielding, Washington, DC, amicus for Insurance Environmental Lit. Assoc.

Pamela R. Masters, Rowe, Foltz & Martin, P.C., Atlanta, GA, amicus for Alliance of American Insurers.

Donald B. Ayer, Elliot Eder, Brooks M. Beard, Jones, Day, Reavis & Pogue, Washington, DC, amicus for Ronson Corporation and Union Pacific Railroad.

Daniel J. Popeo, Paul D. Kamenar, Washington Legal Foundation, Washington, DC, amicus for U.S. Representatives Michael Oxley, et al.

Barry M. Hartman, John P. Krill, Jr., Carl C. Risch, Kirkpatrick & Lockhart LLP, Washington, DC, amicus.

Robin L. Rivett, Anne M. Hawkins, Pacific Legal Foundation, Sacramento, CA, amicus for Pacific Legal Foundation and Competitive Enterprise Institute.

Barbara Wixon-Bonfiglio, George D. Baker, Williams & Jensen, P.C., Washington, DC, amicus for Superfund Reform '95, Inc.

Appeal from the United States District Court for the Southern District of Alabama.

Before ANDERSON, Circuit Judge, and KRAVITCH and HENDERSON, Senior Circuit Judges.

KRAVITCH, Senior Circuit Judge:

Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") to counteract the environmental threats associated with hazardous waste disposal. In this case, the district court dismissed the government's complaint brought under CERCLA against Olin Corporation ("Olin"). It ruled that: (1) the Constitution prohibits enforcement of CERCLA against a party if the environmental effects of that party's conduct remain limited to its own property; and (2) CERCLA's cleanup liability provisions apply prospectively only. The government appeals and we reverse.

I.

Olin has operated a chemical manufacturing facility in McIntosh, Alabama since 1951. Until 1982, the plant produced mercury- and chlorine-based commercial chemicals that contaminated significant segments of Olin's property. This appeal involves one such portion of the site, called Operable Unit # 1 ("OU-1"). Groundwater and soil pollution at OU-1 make it unfit for future residential use. Nevertheless, contamination from OU-1 presently remains localized to Olin's site because the company regulates groundwater flow beneath its property. ¹

II.

The government brought a civil action in the district court, seeking a cleanup order against Olin and reimbursement for response costs, pursuant to sections 106(a) and 107 of CERCLA. ² After negotiations, the parties agreed to a consent decree that called for Olin to pay all costs associated with remediation of OU-1. The proposal resolved Olin's liability for contamination at OU-1 caused by disposal activities before and after CERCLA's effective date of December 11, 1980, see 42 U.S.C. § 9652(a).

When the parties presented the consent decree to the district court, it sua sponte ordered them to address the impact of the Supreme Court's decision in United States v. Lopez, 514 U.S. 549, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995) (invalidating Gun-Free School Zones Act under the Commerce Clause), on the legality of their proposal. Olin complied with that order by answering the original complaint. It asserted that the Lopez Court's construction of the Commerce Clause precluded constitutional application of CERCLA in this case. In addition, Olin contended that CERCLA was not intended to impose liability for conduct predating the statute's enactment. The district court agreed with Olin on both counts, denied the motion to enter the consent decree and dismissed the government's complaint.

III.

We review de novo the constitutional challenge to CERCLA and the purely legal question of whether the statute's cleanup liability provisions apply retroactively. See generally Heuer v. United States Secretary of State, 20 F.3d 424, 426 (11th Cir.), cert. denied, 513 U.S. 1014, 115 S.Ct. 573, 130 L.Ed.2d 490 (1994).

A.

The district court found that the enforcement of CERCLA against Olin violated the Commerce Clause as interpreted by the Supreme Court in Lopez. The Lopez Court held that the Commerce Clause empowers Congress to regulate: (1) channels of interstate commerce; (2) instrumentalities of and persons or things in interstate commerce; and (3) intrastate activities that substantially affect interstate commerce. See Lopez, 514 U.S. at ---- - ----, 115 S.Ct. at 1629-30. This case, like Lopez, concerns the third category.

Lopez did not alter the constitutional standard for federal statutes regulating intrastate activities. See id. at ---- - ----, 115 S.Ct. at 1628-30 (documenting consistency of Court's Commerce Clause jurisprudence since 1942); 1637 (Kennedy, J., concurring) ("Stare decisis operates with great force in counseling us not to call in question the essential principles now in place respecting the congressional power to regulate transactions of a commercial nature."). Simply stated, "the proper test requires an analysis of whether the regulated activity 'substantially affects' interstate commerce." Id. at ----, 115 S.Ct. at 1630. Congress can maintain the constitutionality of its statutes under this standard by including in each a "jurisdictional element which would ensure, through case-by-case inquiry, that the [regulated activity] in question affects interstate commerce." Id. at ----, 115 S.Ct. at 1631. ³ In addition, Congress, or a committee thereof, can make legislative findings indicating that a statute regulates activities with a substantial effect on interstate commerce. See id. If Congress does so, a court may not override these findings unless they lack a rational basis. See Cheffer v. Reno, 55 F.3d 1517, 1520-21 (11th Cir.1995) (upholding Freedom of Access to Clinic Entrances Act because legislative findings were "plausible and provided rational basis for concluding that the Access Act regulates activity which 'substantially affects' interstate commerce").

When Congress fails to ensure a statute's compliance with the Commerce Clause, however, courts must determine independently whether the statute regulates "activities that arise out of or are connected with a commercial transaction, which viewed in the aggregate, substantially affect[ ] interstate commerce." Lopez, 514 U.S. at ----, 115 S.Ct. at 1631. This determination turns on whether the statute constitutes "an essential part of a larger regulation of economic activity, in which the regulatory scheme could be undercut unless the intrastate activity were regulated." Id. A court's focus, thus, cannot be excessively narrow; if the statute regulates a "class of activities ... and that class is within the reach of the federal power, the courts have no power 'to excise, as trivial, individual instances' of the class." Perez v. United States, 402 U.S. 146, 154, 91 S.Ct. 1357, 1361-62, 28 L.Ed.2d 686 (1971) (quoting Maryland v. Wirtz, 392 U.S. 183, 193, 88 S.Ct. 2017, 2022, 20 L.Ed.2d 1020 (1968), overruled on other grounds, Nat'l League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), overruled by Garcia v. San Antonio, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985)). See also Lopez, 514 U.S. at ----, 115 S.Ct. at 1629 (" '[W]here a general regulatory statute bears a substantial relation to commerce, the de minimis character of individual instances arising under that statute is of no consequence.' " (emphasis omitted) (quoting Wirtz, 392 U.S. at 197 n. 27, 88 S.Ct. at 2024 n. 27)).

The district court's Commerce Clause analysis conflicts with the foregoing standard in two main respects. First, the district court indicated that under Lopez a statute must regulate economic activity directly to satisfy the Commerce Clause. See Olin Corp., 927 F.Supp. at 1532. Actually, as noted above, Lopez reiterates that a statute will pass constitutional muster if it regulates an activity, whatever its nature, "that arise[s] out of or [is] connected with a commercial transaction, which viewed in the aggregate, substantially affects interstate commerce." See Lopez, 514 U.S. at ----, 115 S.Ct. at 1631. ⁴ The district court also concluded that Lopez requires every statute enacted pursuant to Congress's Commerce Clause authority to contain a jurisdictional element. See Olin Corp., 927 F.Supp. at 1532. In fact, the Lopez Court recognized that a statute without a jurisdictional element still would stand under the Commerce Clause, if the law satisfied the substantial effects test. See Lopez, 514 U.S. at ---- - ----, 115 S.Ct. at 1632-34. ⁵

Our evaluation of CERCLA under the foregoing framework leads us to reject Olin's constitutional challenge. Specifically, we conclude that although Congress did not include in CERCLA either legislative findings ⁶ or a jurisdictional element, the statute remains valid as applied in this case because it regulates a class of activities that substantially affects interstate commerce. The proper analysis first requires identification of the "class of activities" involved...