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GARY STEEL SUPPLY CO. v. REAGAN

April 20, 1989

GARY STEEL SUPPLY COMPANY, Plaintiff,
v.
RONALD REAGAN, in his capacity as President of the United States of America, et al; Defendants


Paul E. Plunkett, United States District Judge.


The opinion of the court was delivered by: PLUNKETT

PAUL E. PLUNKETT, UNITED STATES DISTRICT JUDGE

 Gary Steel Supply Company ("GS") seeks reimbursement under § 106(b)(2) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. § 9606(b)(2), for funds expended by GS in complying with administrative orders issued by the United States Environmental Protection Agency ("EPA"). The EPA has moved to dismiss the complaint because SARA, which amended 42 U.S.C. § 9606 to provide for the compensation GS seeks, was effective as of October 17, 1986, after the EPA had issued its administrative order, and therefore the amendment does not apply to the costs sought by GS. This is a case of first impression. We find that the amendment providing for reimbursement does not apply to GS and grant the motion to dismiss.

 Facts

 The essential facts, for purposes of this motion, appear to be undisputed. CERCLA provides that the EPA can issue administrative orders and bring civil proceedings requiring certain classes of persons associated with hazardous waste sites to remedy conditions at the sites which may pose imminent and substantial endangerment to public health or welfare or to the environment. Prior to October 17, 1986, persons receiving such an order were required to comply with it or face fines. If a person failed to comply, the EPA could bring an enforcement action against the person in federal court, at which time the person could raise as a defense to compliance that it was not properly liable under 42 U.S.C. § 9607 for cleanup costs. However, if the court held that the person had failed to comply with the order without sufficient cause, he could be held liable for punitive damages of up to three times the costs the EPA incurred as a result of the failure to comply. 42 U.S.C. § 9607(c)(3).

 According to plaintiff, prior to 1976, GS delivered materials to the Conservation Chemical Company of Illinois ("CCCI"). CCCI used these materials to produce waste water treatment chemicals. Prior to 1976, CCCI's facility was not being used for disposal, storage, or treatment of these materials. On September 27, 1985, the EPA issued an administrative order naming GS as one of nineteen potentially responsible persons ("PRPs") for the presence of cynanide and/or acid materials discovered at the CCCI facility, and ordering the PRPs to undertake emergency removal activities at CCCI. GS and the other PRPs hired an environmental consultant, who prepared a plan. The group decided to undertake a voluntary cleanup of the site.

 Meanwhile, SARA became effective on October 17, 1986. As of that date, 42 U.S.C. § 9606(b)(1) provided:

 
(2)(A) Any person who receives and complies with the terms of any order issued under subsection (a) of this section may, within 60 days after completion of the required action, petition the President for reimbursement from the fund for the reasonable costs of such action, plus interest . . . .
 
(B) If the President refuses to grant all or part of a petition made under this paragraph, the petitioner may within 30 days of receipt of such refusal file an action against the President in the appropriate United States district court seeking reimbursement from the fund.
 
(C) Except as provided in subparagraph
 
(D), to obtain reimbursement, the petitioner shall establish by a preponderance of the evidence that it is not liable for response costs under section 9607(a) of this title and that costs for which it seeks reimbursement are reasonable in light of the action required by the relevant order.

 On April 16, 1987, the group submitted to the EPA a proposed plan for cleanup procedures at CCCI. The EPA approved the plan on April 30, 1987. On June 8, 1987, the group began cleanup work in accordance with the plan. This work was completed on May 25, 1988.

 On July 21, 1988, GS petitioned the defendants for reimbursement under 42 U.S.C. § 9606(b)(2) for the amount it had spent: $ 219,233.75 in direct costs and approximately $ 20,000 in indirect costs. GS alleged that it was not liable under CERCLA for cleanup costs because it had not entered into any agreements or arrangements for the storage, treatment or disposal of materials at the CCCI facility. 42 U.S.C. § 9607(a)(3). GS further alleged that the reimbursement it sought was for reasonable costs. The EPA denied the petition in a letter received by GS on September 27, 1988. The EPA's letter stated that the basis for its denial was that 42 U.S.C. § 9606 "does ...


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