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Louisiana-Pacific Corp. v. Asarco Inc.

filed: April 28, 1994.

LOUISIANA-PACIFIC CORPORATION; PORT OF TACOMA, PLAINTIFFS-APPELLEES,
v.
ASARCO INCORPORATED, DEFENDANT-THIRD-PARTY PLAINTIFF-APPELLANT, V. WILLIAM FJETLAND; B & L TRUCKING AND CONSTRUCTION CO., INC.; INDUSTRIAL MINERAL PRODUCTS, INC.; MURRAY PACIFIC CORPORATION; PORTAC, INC.; CASCADE TIMBER COMPANY; EXECUTIVE BARK INC.; WASSER & WINTERS COMPANY; EAGLE TRUCKING, INC., THIRD-PARTY DEFENDANTS-APPELLEES. LOUISIANA-PACIFIC CORPORATION, PLAINTIFF, V. CASCADE TIMBER COMPANY, THIRD-PARTY DEFENDANT-COUNTER-CLAIMANT-APPELLANT, V. ASARCO INCORPORATED, DEFENDANT-THIRD-PARTY PLAINTIFF-APPELLEE, WILLIAM FJETLAND; B & L TRUCKING AND CONSTRUCTION CO., INC.; INDUSTRIAL MINERAL PRODUCTS, INC.; MURRAY PACIFIC CORPORATION; PORTAC, INC., THIRD-PARTY DEFENDANTS. LOUISIANA-PACIFIC CORPORATION; PORT OF TACOMA, PLAINTIFFS, PORTAC, INC., THIRD-PARTY DEFENDANT-COUNTER-CLAIMANT-APPELLANT, V. ASARCO INCORPORATED, DEFENDANT-THIRD-PARTY PLAINTIFF-APPELLEE, WILLIAM FJETLAND, ET AL., THIRD-PARTY DEFENDANTS. LOUISIANA-PACIFIC CORPORATION; PLAINTIFF, V. MURRAY PACIFIC CORPORATION, THIRD-PARTY DEFENDANT-COUNTER-CLAIMANT-APPELLANT, V. ASARCO INCORPORATED, DEFENDANT-THIRD-PARTY PLAINTIFF-APPELLEE, WILLIAM FJETLAND; B & L TRUCKING AND CONSTRUCTION CO., INC.; INDUSTRIAL MINERAL PRODUCTS, INC., THIRD-PARTY DEFENDANTS. LOUISIANA-PACIFIC CORPORATION, PORT OF TACOMA, PLAINTIFFS, WASSER & WINTERS COMPANY, THIRD-PARTY DEFENDANT-COUNTER-CLAIMANT-APPELLANT, V. ASARCO INCORPORATED, DEFENDANT-THIRD-PARTY PLAINTIFF-APPELLEE, WILLIAM FJETLAND, ET AL., THIRD-PARTY DEFENDANTS. LOUISIANA-PACIFIC CORPORATION, PLAINTIFF, AND PORT OF TACOMA, PLAINTIFF-APPELLANT, V. ASARCO INCORPORATED, DEFENDANT-THIRD-PARTY PLAINTIFF-APPELLEE.



Appeals from the United States District Court for the Western District of Washington. D.C. No. CV-88-00217-RJB, D.C. No. CV-88-00217-TB. Robert J. Bryan, District Judge, Presiding. Original Opinion Previously Reported at:,.

Before: Eugene A. Wright, David R. Thompson and Andrew J. Kleinfeld, Circuit Judges. Opinion by Judge Thompson.

Author: Thompson

AMENDED OPINION AND ORDER

THOMPSON, Circuit Judge:

OVERVIEW

This suit arises from the pollution of several sites near the Port of Tacoma ("the Port") by heavy metal contaminants leached from a slag and woodwaste mixture. ASARCO, Inc. ("ASARCO") produced the slag as a by-product of its smelting operations. ASARCO was found liable to the site owners and operators under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601-9626 (1988) ("CERCLA"); the Washington Hazardous Waste Management Act, Wash. Rev. Code Ann. § 70.105.005 et seq. (West 1992) ("the HWMA"); and the Washington Products Liability Act, Wash. Rev. Code Ann. § 7.72.010 et seq. (West 1992) ("the WPLA").

On appeal, ASARCO contends slag is excluded from CERCLA's definition of hazardous substances under the Bevill Amendment, and the jury's finding that slag was a product for WPLA purposes precluded a finding that it was a hazardous substance under the HWMA and CERCLA. It also argues the state statute of limitations had expired on all the state law claims.

ASARCO further contends the district court erred in denying its motion for summary judgment on the HWMA claims because its sales of slag occurred before the HWMA allowed a private cause of action, and the slag sales occurred at a time when Washington regulations excluded "materials in commerce" from the HWMA.

ASARCO also argues that the district court erred by imposing response costs against it under CERCLA for the cleanup of the site known as the "Portac site" because the claimants failed to comply with the National Contingency Plan ("the NCP"); awarding attorney fees and costs under CERCLA which are not recoverable under that statute; awarding loss-of-use damages under the WPLA for loss of use of the Portac site; and making various awards of attorney fees, costs, and prejudgment interest under state law.

Finally, ASARCO argues that it is entitled to a new trial because the district court erred in making rulings that affected the jury's verdict on the question of comparative fault. In support of this argument it contends the district court erred by refusing to admit evidence of the plaintiffs' violations of the permit requirements of the Clean Water Act, 33 U.S.C. § 1342(p) (1988); refusing to instruct the jury that evidence of violations of the Washington Water Pollution Control Act, Wash. Rev. Code Ann. § 90.48.010 et seq. (West 1992) ("the WPCA"), was evidence of negligence; and giving erroneous jury instructions under the HWMA.

The plaintiffs cross-appeal. They contend the district court erred in reducing their attorney fees under CERCLA by the percentage of comparative fault assigned to them. In addition, they contend the district court erred in determining that their nuisance claims were preempted by the WPLA and in dismissing their claims under the Washington Model Toxics Control Act, Wash. Rev. Code Ann. § 70.105D.010 et seq. (Amended 1993) ("the MTCA").

We have jurisdiction under 28 U.S.C. § 1291. We affirm the award of damages under CERCLA. We reverse the award of attorney fees under CERCLA, and the award of litigation expenses to the extent that award included expenses not recoverable as costs under 28 U.S.C. §§ 1821(b) and 1920. We also reverse the finding of liability under the HWMA, and the award of loss-of-use damages under the WPLA. We remand to the district court the question of when the statute of limitations began to run on the plaintiffs' WPLA claims. Because of a recent amendment to the MTCA, we reverse the district court's dismissal of the plaintiffs' claims under that statute. Although the damages recoverable under the MTCA might not exceed the damages recoverable under CERCLA, a question on which we express no opinion, attorney fees are recoverable under the MTCA. Accordingly, we remand the MTCA claims to the district court.

We reverse the district court's dismissal of the plaintiffs' intentional common-law nuisance claim. We hold that although the WPLA preempts the plaintiffs' common-law nuisance claim based on allegations of negligence, it does not preempt the common-law nuisance claim based on allegations of intentional conduct, and we remand that claim to the district court.

FACTS

ASARCO has been smelting copper from copper ore at its smelter near Tacoma since 1905. Smelting separates copper out of copper ore and produces large amounts of a by-product called slag. For many years ASARCO dumped most of its slag into Commencement Bay. It had an agreement with the Metropolitan Park District of Tacoma to maintain a breakwater at that site.

In about 1973, ASARCO embarked on a plan to develop a market for its slag. It contracted with Black Knight, Inc. ("Black Knight") to take all of ASARCO's slag and resell what it could. Black Knight decided to market the slag for use as "ballast" in logyards. The logyards used the slag essentially like gravel, to provide firmer ground. This made the storage of logs and the operation of heavy equipment easier. The logyards would use a load of slag until it became too mixed together with woodwaste and other debris. They would then have it hauled away and put down a new load. Beginning in 1978, the six logyards involved in this suit hauled their slag/woodwaste to the B & L Landfill.

In 1980, the Environmental Protection Agency ("the EPA") found high concentrations of heavy metals in water runoff from one of the Murray-Pacific logyards. The EPA turned its findings over to the Washington Department of Ecology ("the WDOE"). The WDOE determined that slag was the likely cause of the contamination. Over the course of the next several years the WDOE sent letters, made phone calls, and held meetings with representatives of the affected sites, but it took no formal action. In 1986, WDOE began formally requiring cleanups. This case concerns who will bear the cost of these cleanups.*fn1

The first party to file suit was Louisiana-Pacific Corp. ("Louisiana-Pacific"). It sued ASARCO for response costs for the cleanup of its logyard and for contribution or indemnity for its liability for the cost of cleanup of the B & L Landfill. It brought the suit under CERCLA. ASARCO counter-claimed against Louisiana-Pacific under CERCLA and state law.

ASARCO also brought third-party claims against several other logyards that had disposed of slag/woodwaste mix at the B & L Landfill. It also sued William Fjetland, the owner and operator of B & L Landfill and B & L Trucking (which had transported the mix), and L-Bar Products, Inc. ("L-Bar"), which had bought assets of Industrial Mineral Products ("IMP"), the parent company of Black Knight. Some of these third-party defendants then counter-claimed against ASARCO asserting claims under CERCLA, the HWMA, the MTCA, and the WPLA. These parties also asserted common-law claims against ASARCO. The common-law claims included trespass, nuisance, negligence, negligent misrepresentation, fraud and breach of warranty.

The Port, which owned some of the logyard sites, then sued ASARCO for response costs under CERCLA and state law, and for indemnity and contribution for cleaning up the B & L Landfill. ASARCO filed counter-claims and cross-claims. Later ASARCO amended its third-party complaint in the Louisiana-Pacific action to include claims against another Fjetland company and IMP.*fn2

On ASARCO's motion, the district court dismissed all the state common-law claims except trespass, on the ground that they were preempted by the WPLA. It also dismissed the MTCA claims because at that time the MTCA did not provide for a private cause of action.*fn3 Finally, the court dismissed ASARCO's claims against IMP and L-Bar.*fn4 The remaining state law claims (HWMA, WPLA and trespass) were tried to a jury. The CERCLA claims were tried to the court.

The jury found ASARCO liable to each plaintiff on both the WPLA and HWMA claims. The jury found no liability for trespass. The district court found ASARCO liable under CERCLA.

In the damage phase of the trial, the jury found ASARCO between 75% and 100% liable under state law for the cleanup costs at the various sites. The court found ASARCO between 79% and 100% liable for the cleanup costs at the sites under CERCLA. The court's assessment of comparative fault under CERCLA was higher for each site than the jury's state law assessment. The court then used the respective percentages to compute ASARCO's liability under state law and CERCLA for the Portac site, where remedial actions had been completed. It also awarded attorney fees under both CERCLA and the HWMA, and costs under both federal and state law. It reduced these fees and costs by the relevant comparative fault percentages. This appeal and cross-appeal followed.

I

CERCLA LIABILITY

ASARCO argues its liability to all plaintiffs under

CERCLA should be reversed because slag contamination is excluded from CERCLA liability under the Bevill Amendment, and the jury's finding that slag is a product under the WPLA precluded a finding by the court that it was a waste under CERCLA. ASARCO further argues that the liability imposed on it for the cleanup of the Portac site should be reversed because the cleanup did not comply with the NCP. Finally, ASARCO argues that even if it is liable under CERCLA, the district court erred in awarding the plaintiffs attorney fees and costs.

A. Is slag a hazardous substance under CERCLA despite the Bevill Amendment reference in section 9601(14)(C)?

ASARCO contends that slag is excepted from the definition of "hazardous substance" under CERCLA, 42 U.S.C. § 9601(14). This section of the statute provides:

The term "hazardous substance" means (A) any substance designated pursuant to section 1321(b)(2)(A) of Title 33, (B) any element, compound, mixture, solution, or substance designated pursuant to section 9602 of this title, (C) any hazardous waste having the characteristics identified under or listed pursuant to section 3001 of the Solid Waste Disposal Act [42 U.S.C.A. § 6921] (but not including any waste the regulation of which under the Solid Waste Disposal Act [42 U.S.C.A. § 6901 et seq.] has been suspended by Act of Congress), (D) any toxic pollutant listed under section 1317(a) of Title 33, (E) any hazardous air pollutant listed under section 112 of the Clean Air Act [42 U.S.C.A. § 7412], and (F) any imminently hazardous chemical substance or mixture with respect to which the Administrator has taken action pursuant to section 2606 of Title 15. The term does not include petroleum, including crude oil or any fraction thereof which is not otherwise specifically listed or designated as a hazardous substance under subparagraphs (A) through (F) of this paragraph, and the term does not include natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas).

42 U.S.C. § 9601(14) (1988) (emphasis added). It is the italicized exception, which is a reference to the "Bevill Amendment" to the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq. (1988) ("the RCRA"), on which ASARCO relies.*fn5

It is undisputed that slag is a material exempted from RCRA regulation under the Bevill Amendment. ASARCO contends the incorporation of this exemption into section 9601(14)(C) of CERCLA operates to except slag from CERCLA regulation as well. The EPA and the plaintiffs contend the exception in CERCLA § 9601(14)(C) merely prevents slag from being characterized as a hazardous substance under that particular subsection. They argue that if slag releases substances characterized as hazardous under subsections 9601(14)(A), (B), (D), (E) or (F), slag is subject to CERCLA regulation.

This is a question of first impression in this circuit. The D.C. Circuit in Eagle-Picher Indus., Inc. v. United States EPA, 759 F.2d 922 (D.C. Cir. 1985), concluded that the specific exception in subsection (C) applied only to that subsection and that mining wastes and fly ash were subject to CERCLA liability as hazardous substances under other subsections of section 9601(14). We agree with this approach.

The district court found that slag's components include copper, lead, arsenic and zinc. These are hazardous substances under subsections (A), (B) and (D) of section 9601(14). See 40 C.F.R. § 302.4 (listing copper, arsenic, lead and zinc under CERCLA § 102); 40 C.F.R. § 401.15 (listing copper, arsenic, lead and zinc under Clean Water Act § 307); 40 C.F.R. § 116.4 (listing arsenic trioxide under Clean Water Act § 311).

It is sufficient for CERCLA regulation that a substance is covered by any of the subsections of section 9601(14). Eagle-Picher, 759 F.2d at 930. The fact that slag is excepted from subsection (C) by the Bevill Amendment has no bearing on whether slag in its component forms is excepted from the other subsections. If it were to be so excepted, logically a more general exception applicable to all of the subsections, or at least to those that would encompass slag by including its components, would have been used. This is what Congress did when it excepted petroleum products from all of the subsections by the general exception at the end of section 9601(14) which provides:

The term ["hazardous substance"] does not include petroleum, including crude oil or any fraction thereof which is not otherwise specifically listed or designated as a hazardous substance under subparagraphs (A) through (F) of this paragraph, and the term does not include natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas).

42 U.S.C. § 9601(14) (1988).

Had Congress intended to except slag from CERCLA regulation as it did petroleum products, it easily could have done so. It did not. It is clear from the plain language and structure of section 9601 that the specific exception for slag in subsection (C) applies only to that subsection and that slag is regulated by CERCLA to the extent that it falls under any other subsection of section 9601(14).

ASARCO argues the meaning of section 9601(14) is not plain from its language, and that the legislative history demonstrates the statute's ambiguity. It points to Senate Report 96-848, a report on a draft of CERCLA. This report states in pertinent part:

It should be noted that any substance or material for which regulation is specifically suspended by Act of Congress under the Solid Waste Disposal Act is excluded from designation for the purpose of S. 1480, notwithstanding the presence in such substance of any hazardous or toxic chemical.

Sen. Rep. No. 96-848, reprinted in The Environmental Law Institute, Superfund: A Legislative History, at 12 (emphasis added).

Assuming arguendo that section 9601(14) is ambiguous as ASARCO contends, any ambiguity has been laid to rest by the interpretation of the statute by the EPA, the agency charged with administering CERCLA.

When a court reviews an agency's construction of [a] statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; . . . . If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984).

ASARCO argues that under INS v. Cardoza-Fonseca, 480 U.S. 421, 445-49, 94 L. Ed. 2d 434, 107 S. Ct. 1207 (1987), a question of pure statutory construction entitles the agency charged with enforcing the statute to no deference. While Cardoza-Fonseca might be read for this broad proposition, such a reading would create a direct conflict with Chevron. Moreover, the Court has explained the relationship between the two cases. In NLRB v. United Food & Commercial Workers Union, Local 23, AFL-CIO, 484 U.S. 112, 123 (1987), it referred to both cases in determining the meaning of a statute without noting any conflict. It suggested that the result in Cardoza-Fonseca came from the first step of Chevron 's two-step analysis. It said that the first step was to try "to determine congressional intent, using 'traditional tools of statutory construction.'" Id. The court went on, however, to cite Chevron for the proposition that if the first step failed, the agency's interpretation should be accepted if reasonable. Id.

The EPA has interpreted section 9601(14) to mean that the Bevill Amendment exception in subsection (C) refers only to that subsection. 48 Fed. Reg. 40663 (1983). The reasonableness of this interpretation is demonstrated by our analysis of what we have concluded to be the plain meaning of the statute. See supra.

ASARCO nonetheless argues we should hold that the EPA's interpretation of the statute is unreasonable because it would result in the complete nullification of the Bevill Amendment exception in subsection (C), an exception which specifically applies to slag. It points to the uncontradicted trial testimony of Dr. Twidwell, a doctor of metallurgical engineering with extensive experience. Dr. Twidwell testified that the components of all or virtually all Bevill Amendment wastes would fall under one of the other five categories of hazardous substances in section 9601(14). ASARCO argues Congress would not have enacted a meaningless provision of the statute. According to ASARCO, unless slag is entirely exempted from CERCLA by the Bevill Amendment exception in subsection (C), that exception is meaningless, because what the Bevill Amendment excepts from the statute in subsection (C) would be cancelled out by the inclusion of slag components in other subsections of section 9601.

ASARCO's argument is based on a false premise. It assumes that Congress meant for the statute to say something other than what it plainly says. What is clear is that Congress thought about an exemption for petroleum products and about hazardous wastes, including slag which is covered by the Bevill Amendment. Congress expressly provided a general ...


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