Geraghty & Miller, Inc. v. Conoco Inc.

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT
______________________

No. 99-20020
______________________

GERAGHTY AND MILLER, INC.,
Plaintiff - Counter Defendant - Appellee,

versus

CONOCO INC.; CONDEA VISTA CHEMICAL COMPANY,
Defendants - Counter Claimants - Appellants.

___________________________________________________________________

Appeal from the United States District Court for the
Southern District of Texas
___________________________________________________________________
December 14, 2000
Before POLITZ, GIBSON,* and HIGGINBOTHAM, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Conoco Inc. and Condea Vista Chemical Company appeal the

district court's order granting summary judgment to Geraghty and

Miller, Inc. ("G&M") in this environmental clean-up action. This

case includes a claim under CERCLA, the Comprehensive Environmental

Response, Compensation and Liability Act, as well as state common

law claims. We affirm in part and, because a genuine issue exists

as to certain material facts, we reverse in part.

The parties do agree on a sufficient number of background

facts to set the stage. This dispute arises out of an

*
Circuit Judge of the Eighth Circuit, sitting by designation.

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environmental clean-up at the Lake Charles Chemical Complex in

Westlake, Louisiana. The Complex has been owned and operated by

Conoco or Vista since 1961, and in 1968 Conoco began managing

ethylene dichloride at the facility. Ethylene dichloride, a

feedstock in the production of vinyl chloride monomer, is a

"hazardous substance" as CERCLA defines that term. As a result of

historic releases and migration, ethylene dichloride contamination

occurred in soil from the surface to at least twenty-five feet down

and in shallow groundwater zones.

The Louisiana Department of Environmental Quality required

Conoco to investigate and address the ethylene dichloride

contamination under state groundwater protection laws and

regulations and federal and state solid waste laws and regulations.

It also required Conoco to put in place a groundwater monitoring

and assessment program pursuant to the Resource Conservation and

Recovery Act (RCRA), 42 U.S.C. §§ 6901-6992k (1994), and its

corresponding regulations and their Louisiana state counterparts.

As is often the case in such clean-ups, the process was set to take

place in stages. Conoco and G&M entered into a contract on March

12, 1985 under which G&M was to furnish all required services for

"Ground-Water Quality Assessment, Phase 2" at the Vinyl Chloride

Monomer Plant Area and Waste Water Treatment Area ("the Plant") of

the Complex. Vista was a third-party beneficiary under the

contract.

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 Under the contract, G&M was to assess possible contamination

beneath several suspected source areas at the Complex. It was to

perform that assessment by 1) preparing design specifications for

the installation of groundwater monitor wells and piezometers used

to monitor possible groundwater contamination at the Complex; 2)

installing the monitor wells and piezometers; and 3) sampling the

monitor wells following installation. G&M completed the

installation of fifty monitor wells on July 23, 1985.

For approximately the following year, G&M sampled the monitor

wells and interpreted the monitoring data to determine the nature

and extent of contamination. G&M submitted quarterly reports to

Conoco/Vista to advise them of the results.

Sometime before May 1988, Conoco/Vista began to suspect

potentially serious technical and physical deficiencies in three of

the monitor wells G&M had installed. They were concerned that such

deficiencies were aggravating the contamination. Conoco/Vista

received approval from the Louisiana Department in May 1988 to plug

and abandon those wells. Conoco/Vista allege that they uncovered

physical evidence that the three wells were not installed according

to the contract specifications, and they sent a series of letters

to G&M concerning the deficiencies. In December 1989, Conoco/Vista

plugged and abandoned a fourth well, and they allege that this well

also was not installed according to specifications.

These experiences caused Conoco/Vista to question the

soundness of the remaining wells and other parts of the groundwater

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monitoring system. Conoco/Vista and G&M discussed who was

responsible for the costs associated with these allegedly defective

wells, but they were unable to resolve the issue. On August 27,

1990, the parties entered into the Groundwater Wells Interim

Agreement. The Interim Agreement called for the parties to agree

upon criteria for determining whether a given monitor well was

"suspect" or "not suspect" of being improperly installed, and to

agree upon criteria for determining whether a given well was

"properly" or "not properly" installed. Once the criteria were in

place, the parties would apply them to each of the wells to

determine which needed to be removed and who would bear the costs.

That never occurred, however, because the parties never agreed on

the criteria.

The parties entered into the Interim Agreement to allocate

responsibility between them for the costs of plugging and

abandoning additional wells that they were to agree upon as being

"suspect." G&M maintains that there was no other purpose for

entering into the deal, but Conoco/Vista insist that the Interim

Agreement gave the parties time to investigate the integrity of the

wells while not allowing the statute of limitations to run on any

defect claims that remained unresolved. Conoco/Vista assert that

G&M received, as consideration for the deal, a release from

approximately $250,000 in monitor well plugging and abandonment

costs.

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 Conoco/Vista retained other environmental consulting firms to

continue the groundwater assessment program. Upon the

recommendation of one such consultant, Conoco/Vista plugged and

abandoned the remaining G&M-installed wells in 1993 and replaced

them.

In April 1993, Conoco/Vista filed suit against G&M in Texas

state court, alleging state common law causes of action. During

the course of that litigation, the Texas Court of Appeals held that

the language in the Interim Agreement concerning a possible tolling

and extension of the statute of limitations was ambiguous as a

matter of law.

In April 1997, with the state court lawsuit still pending, G&M

filed the instant CERCLA action, seeking reimbursement from

Conoco/Vista for G&M's past and future response costs.

Conoco/Vista filed a counterclaim two months later, also seeking

relief under sections 107 and 113 of CERCLA. Meanwhile, the state

court case was trifurcated for trial, with the first phase focused

on whether the Interim Agreement tolled the statutes of

limitations. Trial began in phase one in November 1997 and, while

the jury was deliberating, Conoco/Vista took a voluntary non-suit

and the state court judge dismissed the lawsuit.

After the district court granted partial summary judgment to

G&M, Conoco/Vista amended their counterclaim to omit their section

107 CERCLA claim and to add the state common law claims.

Ultimately, G&M voluntarily dismissed its complaint, leaving only

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Conoco/Vista's CERCLA section 113 and state common law

counterclaims at issue.

Less than a month before this case was to begin trial, G&M

unsuccessfully sought leave to file a partial summary judgment

motion on the basis that Conoco/Vista's CERCLA counterclaim was

time-barred. When the parties appeared for trial on the scheduled

date, the district court discussed the case with counsel and

suspended the start of the trial. Less than a week later, the

district court granted summary judgment to G&M on several grounds

including that the CERCLA claim was time-barred.

The district court held that Conoco/Vista's state common law

claims were barred by Texas statutes of limitations; that G&M was

not liable for contribution because it was not a "covered person"

under CERCLA as an operator, arranger, or transporter of hazardous

materials; and that the six-year limitation period of 42 U.S.C. §

9613(g)(2) (1994) barred Conoco/Vista's CERCLA claim. We address

each of these issues, along with Conoco/Vista's complaint that the

district court entered summary judgment without giving them notice

and an opportunity to respond.

I.

The district court entered summary judgment for G&M without

providing the notice required by Rule 56(c) of the Federal Rules of

Civil Procedure. Conoco/Vista argue that they were unfairly

prejudiced because they did not have notice that the district court

was contemplating entering a dispositive order, nor did they have

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an opportunity to respond or to present evidence. We review under

the harmless error standard. See Nowlin v. Resolution Trust Corp.,

33 F.3d 498, 504 (5th Cir. 1994).

By the time this case reached its trial date, G&M had filed

three motions for partial summary judgment and had attempted to

file a fourth. The district court had granted G&M's motion that

Conoco/Vista be declared "covered persons" under CERCLA, had denied

G&M's motion that it be declared not to be a "covered person", and

had yet to rule on G&M's motion seeking summary judgment on

Conoco/Vista's state common law claims. Conoco/Vista had filed

briefs and affidavits in opposition to those three motions. G&M

had sought leave to file a motion that the remaining CERCLA claim

be declared barred by the statute of limitations, but the district

court denied leave because the motion was untimely. Thus, all of

the issues except the CERCLA statute of limitations had been fully

briefed by the time the case was ready for trial.

When the district court entered its order granting complete

summary judgment to G&M, the parties expected to be in the midst of

a non-jury trial. When they arrived for trial on the appointed

day, the district court announced the view that it would be

beneficial to take some time to narrow the issues so that the

evidence could be streamlined. The court indicated that it would

review the file and directed the parties to return the following

day to begin trial. After its review, the district court concluded

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that all of the claims were amenable to judgment as a matter of

law.

While the district court erred by not observing the notice

requirements of Rule 56(c), this procedural error was later cured.

After the district court entered its summary judgment order,

Conoco/Vista filed a motion for rehearing/new trial along with a

brief on the CERCLA statute of limitations issue. In their motion,

Conoco/Vista pointed out what they believed to be disputed material

facts and offered citations to the record for those facts. They

did not, however, submit any additional affidavits or documentary

evidence.

Conoco/Vista pointed out that they had not received notice and

an opportunity to respond to the CERCLA statute of limitations

issue, as the court had denied G&M leave to file its partial

summary judgment motion on that issue. To support their argument,

Conoco/Vista attached an affidavit and an exhibit to their separate

brief on the CERCLA statute of limitations issue.

The district court considered both the motion and the brief

and determined that summary judgment was still appropriate. The

district court thus revisited all of the issues in the summary

judgment order. Conoco/Vista ultimately had an opportunity to be

heard on all of the issues,1 and the district court's post-summary

judgment consideration and ruling cured any procedural defect. See

1
Conoco/Vista admit in their brief on appeal that they had
such an opportunity: "[T]he evidence Conoco and Vista would have
presented to the court in response to the summary judgment motion
was filed in connection with their motion for rehearing."

-8-
Barney v. IRS, 618 F.2d 1268, 1271 n.8 (8th Cir. 1980); United

States v. Shelly's Riverside Heights Lot X, 859 F. Supp. 150, 151

(M.D. Pa. 1994).

District courts are empowered to enter summary judgment sua

sponte. See Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986).

Although we disagree with some of the district court's legal

conclusions, its consideration of summary judgment in the first

instance without notice and hearing was harmless error.

II.

We turn now to the district court's rulings on the substantive

legal issues. We review the grant of summary judgment de novo.

See Uniroyal Chemical Co. v. Deltech Corp., 160 F.3d 238, 241 (5th

Cir. 1998). G&M bears the burden of showing the absence of

evidence to support Conoco/Vista's case, and Conoco/Vista must set

forth specific facts demonstrating a genuine issue for trial. We

view the facts in the light most favorable to Conoco/Vista and draw

all reasonable inferences in their favor. If Conoco/Vista set

forth specific facts essential to their claims, a genuine issue of

material fact will preclude summary judgment. See Coleman v.

Houston Indep. School Dist., 113 F.3d 528, 533 (5th Cir. 1997).

A.

CERCLA contains different statutes of limitations for section

107(a) cost-recovery actions and for section 113 contribution

actions. See 42 U.S.C. § 9613(g)(2)(B) (1994) (six-year statute

for initial action for recovery of remedial costs under section

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107(a), triggered by beginning of physical on-site construction);

42 U.S.C. § 9613(g)(3) (three-year period for contribution action

under section 113, with three alternative triggering events: a

prior judgment, an administrative order, or a judicially approved

settlement). Whether a party is seeking recovery under section

107(a) or contribution under section 113 does not always determine

the applicable statute of limitations. In cases such as this one

where a party seeks contribution but none of the triggering events

has occurred, Congress did not designate the statute of

limitations.

The district court determined that Conoco/Vista's CERCLA claim

is governed and barred by the six-year statute of limitations. The

court characterized this as an initial action for the recovery of

remediation costs and found that Conoco/Vista initiated remedial

on-site construction in 1987. According to the district court's

application, the statute of limitations expired in 1993. Because

Conoco/Vista did not file their CERCLA counterclaim until 1997, the

district court found it time-barred.

Conoco/Vista argue that their CERCLA contribution claim is

governed by the three-year limitations period, as 42 U.S.C. §

9613(g)(3) is the only section that on its face applies to

contribution actions. Conoco/Vista insist that their counterclaim

was timely because it was filed before any of the triggering events

contained in section 113(g)(3) occurred. Under their theory, it is

indeterminate when the limitations period would ever expire.

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 In the alternative, Conoco/Vista assert that, even if section

113(g)(2) applies, the statute of limitations has not run or

material facts are in dispute as to whether it has run. They

further assert that G&M waived the affirmative defense of section

113(g)(2) by not properly or timely pleading it.

B.

The circuits are split on the appropriate statute of

limitations to apply in a case that is neither a recovery claim

under section 107 nor derivative of or responsive to any other

formalized dispute. There are three basic approaches to the issue,

see City of Merced v. R.A. Fields, 997 F. Supp. 1326, 1334 (E.D.

Cal. 1998) (collecting cases), but our court has not yet adopted

any of the three. Under the first approach, we would find that the

plain language of section 113(g)(3) establishes no statute of

limitations for this case. Under the second, we would use the six-

year statute of limitations in section 113(g)(2), for reasons

explained below. Under the third, we would use the three-year

statute of limitations in section 113(g)(3) and import another

triggering event from federal common law. See id.

We conclude that the Tenth Circuit's reasoning in favor of the

second approach in Sun Co. v. Browning-Ferris, Inc., 124 F.3d 1187

(10th Cir. 1997), is the most persuasive. In Sun Co., the Tenth

Circuit analyzes the statutory framework and applies it in a

practical way. Its rationale begins with the explanation that

-11-
while section 113(f)2 is the vehicle for bringing a contribution

action, it does not create a new cause of action or create any new

liabilities. Rather, it is a mechanism for apportioning costs that

are recoverable under section 107. See id. at 1191 (citing cases).

In other words, a section 113 contribution action is a claim for

collection of the costs referred to in section 107. By definition,

the Tenth Circuit reasons, a contribution action is merely one type

of cost-recovery action. See id. at 1192. If there has been no

prior section 107 cost-recovery action, a contribution action

becomes an "initial action for recovery of the costs referred to in

section 9607 of this title," and must be brought "within 6 years

after initiation of physical on-site construction of the remedial

action." Id. (quoting 42 U.S.C. § 9613(g)(2)(B)).

We hold that the statute of limitations found in CERCLA

section 113(g)(2) applies to initial contribution actions such as

this. If we were to accept Conoco/Vista's argument and apply

section 113(g)(3), the statute of limitations would be indefinite

2
Section 113(f) of CERCLA provides:

Any person may seek contribution from any other person
who is liable or potentially liable under section 9607(a)
of this title, during or following any civil action under
section 9606 of this title or under section 9607(a) of
this title. . . . In resolving contribution claims, the
court may allocate response costs among liable parties
using such equitable factors as the court determines are
appropriate. Nothing in this subsection shall diminish
the right of any person to bring an action for
contribution in the absence of a civil action under
section 9606 of this title or section 9607 of this title.

42 U.S.C. § 9613(f)(1) (1994).

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because a triggering event might never occur. This result would

undermine the certainty that statutes of limitations are designed

to further.

Contrary to Conoco/Vista's argument, G&M did assert this

affirmative defense in a sufficiently timely manner. G&M included

the statute of limitations as an affirmative defense in its first

responsive pleading, thereby putting Conoco/Vista on notice of the

issue. Even though G&M initially relied on the limitations period

of section 113(g)(3), a mere assertion of the defense satisfies the

pleading requirements of Rule 8 of the Federal Rules of Civil

Procedure. See Daingerfield Island Protective Soc'y v. Babbitt, 40

F.3d 442, 444-45 (D.C. Cir. 1994). Moreover, the pretrial order

recited G&M's assertion that the CERCLA claim was barred by the

statute of limitations, with a precise citation to the statute.

Conoco/Vista were not surprised or prejudiced by the district

court's consideration of the issue. See Allied Chem. Corp. v.

Mackay, 695 F.2d 854, 855-56 (5th Cir. 1983); Hargett v. Valley

Fed. Sav. Bank, 60 F.3d 754, 763 (11th Cir. 1995).

C.

Our review of the CERCLA statute of limitations issue does not

end with our determination that section 113(g)(2) applies. We must

next decide whether Conoco/Vista's response actions at the Complex

are properly categorized as "remedial" or "removal" to determine

whether the counterclaim is timely. See 42 U.S.C. § 9613(g)(2)

(under subsection (A), an action for recovery of costs of a

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"removal action" must be filed "within 3 years after completion of

the removal action"; under subsection (B), an action to recover

costs of a "remedial action" must be filed "within 6 years after

initiation of physical on-site construction of the remedial

action").

The district court determined that Conoco/Vista were engaged

in ongoing remediation at the Complex and that physical on-site

construction began in 1987. It also determined that Conoco/Vista

were currently involved in removal and remediation activities.

Conoco/Vista argue that their counterclaim seeks recovery of costs

for what can only be characterized as removal of the contamination.

Not surprisingly, G&M agrees with the district court's

determinations that remediation activities were in place and that

they began in 1987.

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 Congress provided definitions for "removal"3 and "remedial

action,"4 and the classification of the activity is determined as

3
CERCLA defines "remove" or "removal" as:

the cleanup or removal of released hazardous substances
from the environment, such actions as may be necessary
taken in the event of the threat of release of hazardous
substances into the environment, such actions as may be
necessary to monitor, assess, and evaluate the release or
threat of release of hazardous substances, the disposal
of removed material, or the taking of such other actions
as may be necessary to prevent, minimize, or mitigate
damage to the public health or welfare or to the
environment, which may otherwise result from a release or
threat of release. The term includes, in addition,
without being limited to, security fencing or other
measures to limit access, provision of alternative water
supplies, temporary evacuation and housing of threatened
individuals not otherwise provided for, action taken
under section 9604(b) of this title, and any emergency
assistance which may be provided under the Disaster
Relief and Emergency Assistance Act.

42 U.S.C. § 9601(23).
4
CERCLA defines "remedy" or "remedial action" as:

those actions consistent with permanent remedy taken
instead of or in addition to removal actions in the event
of a release or threatened release of a hazardous
substance into the environment, to prevent or minimize
the release of hazardous substances so that they do not
migrate to cause substantial danger to present or future
public health or welfare or the environment. The term
includes, but is not limited to, such actions at the
location of the release as storage, confinement,
perimeter protection using dikes, trenches, or ditches,
clay cover, neutralization, cleanup of released hazardous
substances and associated contaminated materials,
recycling or reuse, diversion, destruction, segregation
of reactive wastes, dredging or excavations, repair or
replacement of leaking containers, collection of leachate
and runoff, onsite treatment or incineration, provision
of alternative water supplies, and any monitoring
reasonably required to assure that such actions protect
the public health and welfare and the environment. The
term includes the costs of permanent relocation of
residents and businesses and community facilities where

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a matter of law. See Advanced Micro Devices, Inc. v. National

Semiconductor Corp., 38 F. Supp. 2d 802, 809 (N.D. Cal. 1999);

United States v. Vertac Chem. Corp., 33 F. Supp. 2d 769, 782 (E.D.

Ark. 1998). In reviewing the undisputed facts and the parties'

arguments concerning how we should apply the relevant law to those

facts, it strikes us that confusion often results because the

industry use of "remediation" is not synonymous with CERCLA's

definition of "remedial." Moreover, the CERCLA definitions are

expansive enough that certain activities may well be covered by

both. This is a question of law with some complexity. "Elements

of either response action may overlap and semantics often obscure

the actual nature of the cleanup performed." Public Serv. Co. v.

Gates Rubber Co., 175 F.3d 1177, 1182 (10th Cir. 1999).

Although the cases on this issue tend to be highly fact-

specific, certain principles emerge. We have often noted that

removal actions generally are immediate or interim responses, and

remedial actions generally are permanent responses. See, e.g., OHM

Remediation Servs. v. Evans Cooperage Co., 116 F.3d 1574, 1578 (5th

Cir. 1997). In addition, "Congress intended that the term 'removal

the President determines that, alone or in combination
with other measures, such relocation is more cost-
effective than and environmentally preferable to the
transportation, storage, treatment, destruction, or
secure disposition offsite of hazardous substances, or
may otherwise be necessary to protect the public health
or welfare; the term includes offsite transport and
offsite storage, treatment, destruction, or secure
disposition of hazardous substances and associated
contaminated materials.

42 U.S.C. § 9601(24).

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action' be given a broad interpretation." See, e.g., Kelley v.

E.I. DuPont de Nemours and Co., 17 F.3d 836, 843 (6th Cir. 1994).

With these principles in mind, we conclude that the response

action in this case is properly classified as removal. The

groundwater quality assessment program that Conoco/Vista instituted

by order of the Louisiana Department was conducted in three phases.

The first phase was one of assessment only, to confirm the presence

of contaminants and understand the groundwater flow and other

underground conditions. The second phase--and the only one that

G&M participated in--was a more detailed assessment to determine

the extent of contaminants in the first fifty feet of soil and to

investigate water quality below that level. The third phase

included establishing a groundwater monitoring and remediation

program and conducting a feasibility study of remedial

alternatives. In the specifications and contract documents, G&M

described the third phase as "a comprehensive rate-and-extent

assessment of migrating ground-water contaminants, and if

necessary, a determination of the appropriate remedial actions

necessary to abate contaminant movement."

The operative facts are that G&M installed monitor wells and

piezometers at the Complex. In describing the scope of the work it

was to perform under the contract, G&M stated that it had designed

the monitor wells and piezometers to collect data but also "so that

they can be converted to recovery wells if needed." At the time,

G&M apparently did not consider its work to include any remediation

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efforts, and only considered it a possibility that its work would

be part of a recovery effort.

Although Conoco/Vista eventually removed and replaced these

wells, they were part of a pilot corrective action program that

Conoco/Vista instituted in response to the Louisiana Department

order. Their ultimate use is irrelevant, however, because the

crucial response activity is that which occurred during G&M's

involvement. Thus, even if the wells had remained in place and

their use converted to an unquestionably remedial purpose, that

would not change the classification for statute of limitations

purposes. See Louisiana v. Braselman Corp., 78 F. Supp. 2d 543,

549 (E.D. La. 1999) (monitoring wells were used during

investigation and design phases of project; their continued use

during remedial action phase did not convert the pilot study to

remedial action); Advanced Micro Devices, 38 F. Supp. 2d at 813

("The fact that the extraction activities ultimately did not turn

out to be short-term, because they were implemented in the final

remedy four years later, cannot now be considered in hindsight.").

The undisputed facts show that no permanent remedy was in

place for the Complex when G&M constructed and installed the wells.

Even if the wells performed some function that falls within the

definition of remedial activity, that does not automatically

exclude them from classification as removal activities. There can

be some overlap between the two. See General Elec. Co. v. Litton

Indus. Automation Sys., Inc., 920 F.2d 1415, 1419 (8th Cir. 1990)

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(although CERCLA lists excavation as an example of remedial

activity, excavation can be and under facts of case is a removal

activity).

Although G&M suggests that a clean-up program of this

magnitude and duration must be categorized as remedial, we are not

persuaded. The record shows that the Louisiana Department had yet

to issue its final decision, and only that decision will define the

ultimate remedial strategy for the Complex. Even if the

replacements for these wells are integral to the long-term

remediation of the site, that does not mean that their initial

placement cannot be categorized as removal. See General Elec. Co.,

920 F.2d at 1419 n.4; Advanced Micro Devices, 38 F. Supp. 2d at

813; EPA v. TMG Enters., Inc., 979 F. Supp. 1110, 1130 (W.D. Ky.

1997).

We hold that the activities at issue are properly categorized

as removal activities, and the statute of limitations does not bar

Conoco/Vista's counterclaim for CERCLA contribution.

III.

Having determined that Conoco/Vista's CERCLA counterclaim was

timely, we must next decide whether G&M is a "covered person" under

CERCLA and therefore amenable to a contribution claim. See CERCLA

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§ 107(a), 42 U.S.C. § 9607(a) (1994).5 The statute defines a

"covered person" as:

(1) the owner and operator of a vessel or a
facility,

(2) any person who at the time of disposal of any
hazardous substance owned or operated any facility at
which such hazardous substances were disposed of,

(3) any person who by contract, agreement, or
otherwise arranged for disposal or treatment, or arranged
with a transporter for transport for disposal or
treatment, of hazardous substances owned or possessed by
such person, by any other party or entity, at any
facility or incineration vessel owned or operated by
another party or entity and containing such hazardous
substances, and

(4) any person who accepts or accepted any hazardous
substances for transport to disposal or treatment
facilities, incineration vessels or sites selected by
such person, from which there is a release, or a
threatened release which causes the incurrence of
response costs, of a hazardous substance. . . .

The district court held that G&M is not an operator, arranger,

or transporter of hazardous substances.6 The court described G&M

as "merely an environmental contractor employed to investigate and

assist in constructing a facility for remedying contamination

already in the soils."

5
To prevail in a contribution action, Conoco/Vista must show
1) G&M is a "covered person" under CERCLA section 107(a); 2) the
Complex is a "facility" under CERCLA; 3) a "release" or "threatened
release" of a "hazardous substance" occurred at the facility; and
4) the release or threatened release caused Conoco/Vista to incur
response costs. See 3550 Stevens Creek Assocs. v. Barclays Bank,
915 F.2d 1355, 1358 (9th Cir. 1990). The last three elements are
not at issue in this appeal.
6
Conoco/Vista did not allege that G&M is the owner of the
Complex.

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 We agree with the district court concerning G&M's status as a

transporter, but we conclude that the disputed material facts

preclude the entry of summary judgment declaring that G&M is not an

operator or an arranger.

A.

Although the first category of "covered persons" refers to

"the owner and operator" of a facility, those words are not

redundant. In some circumstances the operator may not be the

owner. In addition, a facility may have more than one operator.

While we normally begin our analysis with the statutory

language, we do not obtain much assistance from the CERCLA

definition of a facility's "operator" as "any person . . .

operating" the facility. 42 U.S.C. § 9601(20)(A)(ii) (1994). We

look then to see how case law has supplied a definition.

[U]nder CERCLA, an operator is simply someone who directs
the workings of, manages, or conducts the affairs of a
facility. . . . [A]n operator must manage, direct, or
conduct operations specifically related to pollution,
that is, operations having to do with the leakage or
disposal of hazardous waste, or decisions about
compliance with environmental regulations.

United States v. Bestfoods, 524 U.S. 51, 66-67 (1998). For one to

be considered an operator, then, there must be some nexus between

that person's or entity's control and the hazardous waste contained

in the facility. This nexus has been described as a "well-settled

rule" that "'operator' liability. . . only attaches if the

defendant had authority to control the cause of the contamination

at the time the hazardous substances were released into the

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environment." Kaiser Aluminum & Chem. Corp. v. Catellus Dev.

Corp., 976 F.2d 1338, 1341 (9th Cir. 1992); see also CPC Int'l,

Inc. v. Aerojet-General Corp., 731 F. Supp. 783, 788 (W.D. Mich.

1989) ("The most commonly adopted yardstick for determining whether

a party is an owner-operator under CERCLA is the degree of control

that party is able to exert over the activity causing the

pollution.").

A court must decide whether a contractor is an operator after

considering the totality of the circumstances concerning its

involvement at the site. See K.C. 1986 Ltd. Partnership v. Reade

Mfg., 33 F. Supp. 2d 820, 834 (W.D. Mo. 1998). While Conoco/Vista

point out that G&M had a great deal of control over the placement,

design and installation of the wells, including the selection and

supervision of the subcontractor who performed the actual

installation, G&M portrays its role as one of lending advice and

expertise to the project that was ultimately controlled by

Conoco/Vista. However, it is more than the portrayal of the roles

that is in dispute. The parties also disagree on material facts

concerning Conoco/Vista's technical expertise, their supervision of

the work, and the parties' relative authority at the work-site.

Because the facts concerning the degree of G&M's control over the

monitor wells are in dispute, summary judgment declaring that G&M

was not an operator was premature.

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 B.

Arranger liability attaches under CERCLA when one has

"arranged for disposal" of hazardous substances. See 42 U.S.C. §

9607(a)(3). Because CERCLA does not define "arranged for," courts

sometimes look to the definition and interpretation of "disposal"

for assistance in deciding if one is an arranger. While we have

not provided a bright-line test for determining when one is an

"arranger," we have looked at "disposal" in the context of the

entire phrase. In Tanglewood East Homeowners v. Charles-Thomas,

Inc., 849 F.2d 1568, 1573 (5th Cir. 1988), we rejected a narrow

interpretation of "disposal," thereby leaving open the possibility

that one who moves hazardous waste intra-site can be held liable as

an arranger.7

The parties dispute if and how the hazardous waste was moved

by G&M at the Complex, including whether installation of the wells

by G&M's subcontractor caused migration of the ethylene dichloride.

Thus, the district court should not have entered summary judgment

on this issue. See Burlington N. R.R. Co. v. Woods Indus., Inc.,

815 F. Supp. 1384, 1392 (E.D. Wash. 1993) (even though lessee

didn't bring hazardous waste to the site, if facts revealed that

7
Tanglewood also declined to answer another argument G&M
raises, namely that arranger liability under CERCLA may not reach
beyond waste generators that enlist third parties as agents. When
asked to decide which specific businesses and activities are
covered by CERCLA, we declined to do so in the context of a Rule
12(b)(6) motion. 849 F.2d at 1573-74. We have not been asked to
articulate a list in this case.

-23-
its instructions to a third party caused waste to be dispersed

across the site it would be subject to arranger liability).

"Arranger" is another CERCLA term that is to be given a

liberal interpretation. See, e.g., United States v. Aceto Agric.

Chems. Corp., 872 F.2d 1373, 1380 (8th Cir. 1989). Our approach in

Tanglewood is consistent with that interpretation. We are mindful,

however, that just as a nexus must exist for operator liability to

attach, there must also be a nexus that allows one to be labeled an

arranger. One court has described that nexus as "the obligation to

exercise control over hazardous waste disposal, and not the mere

ability or opportunity to control the disposal." General Elec. Co.

v. Aamco Transmissions, Inc., 962 F.2d 281, 286 (2d Cir. 1992)

(emphasis in original). On remand, therefore, the totality of the

circumstances must take into consideration each of these factors.

C.

The district court correctly decided that G&M is not subject

to liability as a "transporter" of hazardous waste. CERCLA defines

"transportation" as "the movement of a hazardous substance by any

mode. . . ." 42 U.S.C. § 9601(26) (1994). Under CERCLA section

107(a)(4), however, liability is imposed on a person who transports

hazardous substances to a disposal or treatment facility or to

"sites selected by such person." Even if G&M's conduct resulted in

the unintended migration of ethylene dichloride, there is no

evidence that G&M moved the ethylene dichloride to another facility

or site. We affirm the entry of summary judgment on this issue.

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 IV.

We turn now to Conoco's state common law counterclaims of

breach of contract, fraud, breach of warranty, and negligence. The

district court entered summary judgment on all, finding them barred

by the applicable statutes of limitations. Conoco/Vista correctly

point out that G&M bears the burden of proof on such an affirmative

defense. See Bell v. Showa Denko K.K., 899 S.W.2d 749, 753 (Tex.

App. 1995, writ denied). They assert that their claims were timely

by virtue of the relation back doctrine and the Texas discovery

rule and that the parties agreed to toll the statutes as part of

the Interim Agreement.

A.

The Interim Agreement, signed by the parties in 1990, is not

a model of clarity. It recites that its purpose is to achieve

accord and satisfaction of past disputes and to suspend potential

future disputes about paying expenses associated with the

groundwater assessment program. The Agreement called for the

parties to reach further accord within 90 days on the criteria for

determining whether a well had been properly or improperly

installed. The parties agreed to pay all of their own expenses to

date, with Conoco/Vista agreeing to waive reimbursement of what it

now says was $250,000 in expenses. The final relevant portion of

the Agreement is in paragraph H, which adopted the ten-year

"statute of limitations" contained in Tex. Civ. Prac. & Rem. Code

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Ann. §§ 16.008 (West Supp. 2000) and 16.009 (West 1986)8 and

applied it to any unresolved claim for damages.

The parties make much of their disagreement as to the purpose

of the Interim Agreement. Conoco/Vista insist that paragraph H

reflects the parties' agreement to toll and extend the statute of

limitations, that its inclusion was an integral part of the deal,

and that G&M in effect received $250,000 as consideration for the

extension.9 G&M denies that such a purpose existed. This

disagreement is irrelevant to the basis for the summary judgment

order, however, because the district court found the document

unenforceable as an "agreement to enter into an agreement."

Under Texas law, parties may agree on certain contractual

terms, understanding them to be an agreement, while leaving other

terms open for future negotiation. See Scott v. Ingle Bros. Pac.,

Inc., 489 S.W.2d 554, 555 (Tex. 1972).10 Whether we agree with the

8
The statutes are in fact statutes of repose rather than
statutes of limitations. They permit a person to bring suit for
damages against architects, engineers and others who design and
construct improvements to real property or equipment attached to
real property no later than ten years after the improvements are
completed.
9
Elsewhere in their brief, Conoco/Vista argue that the
statutes of repose cited in paragraph H do not apply because G&M is
not an engineering or construction firm. Conoco/Vista cannot have
it both ways, and we disregard that argument.
10
We recognize that this is an incomplete statement of Texas
law. There are two essential elements that must be satisfied for
this kind of contract to be enforceable. First, the contract must
be sufficiently definite in its terms so that a court can
understand the promises made. Second, all material terms of the
contract must be agreed upon. See T.O. Stanley Boot Co. v. Bank of
El Paso, 847 S.W.2d 218, 221 (Tex. 1992).

-26-
district court that the Interim Agreement is an "agreement to

agree" ultimately makes no difference. In the state court lawsuit

--involving the same parties and exactly the same state common law

claims--the trial court entered summary judgment in favor of G&M on

the sole ground that the claims were barred by the applicable

statutes of limitations. Conoco/Vista appealed, arguing that a

question of fact existed as to whether paragraph H of the Interim

Agreement tolled and extended the statutes of limitations. The

Texas Court of Appeals reversed the summary judgment order, holding

that paragraph H is ambiguous as a matter of law and that its

interpretation is a fact issue.

This is a matter of state substantive law where we will defer

to the Texas Court of Appeals' decision. See United States v.

Johnson, 160 F.3d 1061, 1063 (5th Cir. 1998). We are required to

apply the doctrine of stare decisis to the Texas appellate court

decision on this issue, particularly because it was issued in a

case involving the same parties and the same issues. See Peregoy

v. Amoco Prod. Co., 742 F. Supp. 372, 374 (E.D. Tex. 1990), aff'd,

929 F.2d 196 (5th Cir. 1991).

Accepting the decision that the Interim Agreement dated August

27, 1990 is ambiguous, it is uncertain whether it tolls the statute

of limitations. We must reverse the summary judgment order on this

issue, then, unless we can determine as a matter of law that the

limitations period expired before that date.11

11
The district court made no finding as to when the Interim
Agreement was terminated. Under paragraph H, termination triggers

-27-
 B.

We return, then, to the fundamental question of when the

statute of limitations expired for each of the state law claims.

Conoco/Vista never answer that question directly. Rather, they

assert various reasons why their amended counterclaim was filed

within the requisite time without saying when that time expired.

Texas law provides the answer: the statute of limitations for

breach of contract, breach of warranty, and fraud is four years,12

and for negligence it is two years.13

Conoco/Vista argue that the discovery rule applies to each of

these actions, so that the limitations period began running when

they learned of the injury rather than when the injury occurred.

Under Texas law, the discovery rule (an exception to the general

rule)applies to breach of contract14 and fraud,15 but it does not

the running of the statute of limitations.
12
See Tex. Civ. Prac. & Rem. Code Ann. § 16.004 (West Supp.
2000)(fraud); Enterprise-Laredo Assocs. v. Hachar's, Inc., 839
S.W.2d 822, 837 (Tex. App. 1992, writ denied) (breach of contract);
S-C Indus. v. American Hydroponics Sys., Inc., 468 F.2d 852, 855-56
(5th Cir. 1972) (non-UCC breach of warranty subject to four-year
limitations in Tex. Rev. Civ. Stat. Ann. art. 5527, repealed and
now contained in § 16.004).
13
See Tex. Civ. Prac. & Rem. Code Ann. § 16.003 (West Supp.
2000).
14
See Enterprise-Laredo Assocs, 839 S.W.2d at 837.
15
See Quinn v. Press, 140 S.W.2d 438, 440 (Tex. 1940).

-28-
apply to breach of warranty16 or negligent design and construction17

causes of action.

We can apply the four- and two-year statutes of limitations to

the breach of warranty and negligence claims, as it is undisputed

that G&M completed its work in 1985. The statutes expired in 1989

and 1987, respectively, and none of Conoco/Vista's arguments serve

to change that conclusion.18

With respect to the breach of contract and fraud claims, G&M

bears the burden of proof as to the discovery rule. In order for

G&M to prevail on its affirmative defenses to the breach of

contract and fraud claims in a summary judgment motion, it must

16
See Martinez v. Humble Sand & Gravel, Inc., 940 S.W.2d 139,
147 (Tex. App. 1996), aff'd sub nom. Childs v. Haussecker, 974
S.W.2d 31 (Tex. 1998) (discovery rule does not apply to breach of
warranty claims under Tex. Bus. & Comm. Code Ann. § 2.725 relating
to sale of goods). Conoco/Vista allege that G&M breached an
express warranty, but they cite only cases regarding breach of an
implied warranty in support of their argument that the discovery
rule applies. Even if those cases were relevant, they are no
longer good law. See Clark v. DeLaval Separator Corp., 639 F.2d
1320, 1325 n.2 (5th Cir. 1981).
17
See Olson v. Passero, 402 S.W.2d 953, 954 (Tex. App. 1966,
writ ref'd n.r.e.).
18
We find no merit to Conoco/Vista's argument that the Texas
relation back doctrine provides relief. Conoco/Vista amended their
counterclaim in December 1997. That amendment could not relate
back to anything earlier than G&M's April 1997 complaint. The
pendency of the state court lawsuit before April 1997 did not toll
the statute of limitations for the federal court action. See
Cunningham v. Fox, 879 S.W.2d 210, 212 (Tex. App. 1994, writ
denied) ("A dismissal is the equivalent of a suit never having been
filed. . . . Therefore, if a suit is dismissed, the statute of
limitations is not tolled for any new pleading filed."); Armstrong
v. Ablon, 686 S.W.2d 194, 196 (Tex. App. 1984, no writ) ("Where a
plaintiff voluntarily abandons his suit, the statute of limitations
is not interrupted during the period when the suit was pending.").

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prove when the claims accrued and must negate the discovery rule by

proving as a matter of law that there is no genuine issue of fact

about when Conoco/Vista discovered or should have discovered the

nature of the injury. See Burns v. Thomas, 786 S.W.2d 266, 267

(Tex. 1990). We conclude that G&M has not met this burden, as the

facts are disputed concerning the date on which Conoco/Vista did or

should have discovered their injury.

Certainly Conoco/Vista cannot argue for a discovery date of

later than April 1993, because that is when they filed their state

court lawsuit. In their motion to reconsider the district court's

order, Conoco/Vista asserted that the window for them to have

discovered their injury is from May 1988 to sometime in 1992, when

they initiated the plugging and abandonment of the remaining wells.

G&M argues that Conoco/Vista discovered the injury in a series of

alternative ways from 1988 through 1993.

If we were reviewing this without the possible influence of

the Interim Agreement on the tolling issue, we would accept

Conoco/Vista's admission that they discovered their injury no later

than 1992. We would then apply the four-year statute of

limitations for breach of contract and fraud and conclude that

their 1997 counterclaim was not timely. However, as we noted

earlier, we must reverse the summary judgment order unless we can

conclude as a matter of law that the statute of limitations expired

before the Interim Agreement was signed on August 27, 1990.

Because we may not resolve the disputed facts concerning when the

-30-
injury was or should have been discovered, we leave this

determination for the district court.

V.

We reverse the district court's judgment and order with

respect to its conclusions that Conoco/Vista's CERCLA counterclaim

is barred by the statute of limitations, that G&M cannot be found

liable in a CERCLA contribution claim as an operator or an

arranger, and that Conoco/Vista's state law claims for breach of

contract and fraud are time-barred. We affirm the district court's

judgment and order insofar as it dismisses the CERCLA claim seeking

to hold G&M liable as a transporter and Conoco/Vista's counterclaim

for breach of warranty and negligence. We remand for further

proceedings consistent with this opinion.

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