                                                                                                                           Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-12-1994

Beaser East, Inc. v. Mead Corp.
Precedential or Non-Precedential:

Docket 93-3372




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT

                             ___________

                             No. 93-3372
                             ___________


                       BEAZER EAST, INC.,
                                    Appellant

                                  v.

                      THE MEAD CORPORATION,
                                     Appellee

                             ___________

          Appeal from the United States District Court
            for the Western District of Pennsylvania
                (D.C. Civil Action No. 91-00408)

                             ___________

                   Argued:     February 15, 1994


     PRESENT:   BECKER, HUTCHINSON and COWEN, Circuit Judges


                   (Filed     September 12, 1994)

                             ____________

George E. Yokitis, Esquire
Kenneth R. Bruce, Esquire
Albert Bates, Jr., IV, Esquire
Dean A. Calland, Esquire             (Argued)
Babst, Calland, Clements & Zomnir, P.C.
8th Floor
Two Gateway Center
Pittsburgh, PA     15222

          and

Billie S. Flaherty, Esquire
Beazer East, Inc.
436 Seventh Avenue
Pittsburgh, PA     15219
and
Robert L. Schuftan, Esquire
Wildman, Harrold, Allen & Dixon
225 West Wacker Drive
Chicago, IL     60606
               Attorneys for Appellant

Alan M. Wiseman, Esquire               (Argued)
Thomas A. Isaacson, Esquire
Howrey & Simon
1299 Pennsylvania Avenue, N.W.
Washington, DC     20004-2402

          and

George P. Faines, Esquire
John H. Bingler, Jr., Esquire
Thorp, Reed & Armstrong
One Riverfront Center
Pittsburgh, PA     15222
               Attorneys for Appellee


                             ____________

                       OPINION OF THE COURT
                           ____________



HUTCHINSON, Circuit Judge.



          Appellant, Beazer East, Inc. ("Beazer"), appeals an

order of the United States District Court for the Western

District of Pennsylvania dismissing Beazer's claims for indemnity

and contribution.   Beazer claimed appellee, The Mead Corporation

("Mead"), was bound by a promise to pay Beazer all or part of

Beazer's response costs on a Comprehensive Environmental Response

Compensation and Liability Act, 42 U.S.C.A. § 9601-9675 (West

1983 & Supp. 1994) ("CERCLA"), cleanup of a site Beazer's

predecessor had acquired from Mead's predecessor.   Instead, the
district court granted summary judgment to Mead on Mead's

counterclaim for indemnity from Beazer against Mead's response

costs.   In doing so, the district court adopted a United States

Magistrate Judge's report and recommendation ("Magistrate Judge's

Report").   The magistrate judge had concluded that Mead was a

responsible party for purposes of CERCLA but that the asset

purchase agreement ("Agreement") under which Beazer had acquired

the site of the contaminated facility, the Woodward Facility Coke

Plant (the "Woodward Facility" or "Coke Plant"), required Beazer

to indemnify Mead against CERCLA liability.   The magistrate judge

reasoned that a provision for indemnification in a contract that

predates CERCLA's enactment will govern the responsibility of the

contracting parties inter se for payment of CERCLA cleanup costs

if the indemnification or release provision is a general release

from all liability arising out of a particular transfer or

contains an unambiguous promise to indemnify against all

liabilities that environmental law, present or future, may impose

because of pollutants on the property transferred.   The

magistrate judge then concluded that the asset purchase agreement

between Mead's predecessor, the seller, and Beazer's predecessor,

the buyer of the contaminated site, unambiguously required Beazer

to indemnify Mead against any liability for injury to the

environment from substances on the property, including cleanup

under CERCLA, no matter who polluted the site.   The paragraph in

question, Paragraph 4(c) of the agreement, required the buyer and

its successors to assume and perform "[o]bligations of the Coke

Plant to comply from and after the Closing Date with all of the
terms and conditions of any . . .    solid waste disposal permit,

license or order, hereafter issued by the United States

Environmental Protection Agency . . . in accordance with

applications now pending and listed in Exhibit F hereto."

Appellant's Appendix ("App.") at 23.

          On appeal Beazer argues that the district court erred

in concluding this indemnity provision was unambiguously broad

enough to impose on it a general duty to indemnify Mead against

all environmental liability under either state or federal common

law concerning the construction of such contracts of indemnity.

          We agree with the magistrate judge and the district

court concerning the substance if not the source of the standard

that must be used in determining the effect of an indemnity

clause on a party's liability under laws subsequently enacted to

protect the environment.   We part ways with the magistrate judge

and the district court, however, in the application of this

standard to the provision at hand.    We agree with Beazer that

Paragraph 4(c) of this agreement does not plainly and

unambiguously require it to indemnify Mead for cleanup costs at

the Coke Plant, and therefore reverse the order of the district

court granting Mead summary judgment, vacate the order which

dismisses Beazer's claim for contribution and remand for further

proceedings consistent with this opinion.    On remand the district

court will have to consider both parties' contribution claims,

and determine the proper apportionment of CERCLA liability.



                I.   Factual & Procedural History
            Mead's predecessor, the Woodward Corporation, operated

the Woodward Facility as a coke and coke-by products

manufacturing facility from 1905 until 1968.    In 1968, the

Woodward Iron Company merged with Mead.    Mead, in turn, operated

the Coke Plant until 1974, when it sold the facility and

surrounding land to Beazer's predecessor, Koppers Company, Inc.

("KCI").    KCI purchased the Coke Plant under the Agreement in

question.    Paragraph 4 of the Agreement provides that KCI, as

buyer, or its successors, will assume certain agreements and

liabilities. It reads:
          As of the Closing Date, Buyer shall assume
          and agree to perform:

                 a.   . . . all other commitments,
            liabilities and obligations expressly assumed
            by Buyer pursuant to this Purchase Agreement.

                               *   *   *

                 c.   Obligations of the Coke Plant to
            comply from and after the Closing Date with
            all of the terms and conditions of any NPDES
            permit issued by the United States
            Environmental Protection Agency or the then
            permitting authority, any permit or order
            issued by the Alabama Water Improvement
            Commission and the Alabama Air Pollution
            Control Commission of the State of Alabama or
            any successor authority, any license, permit
            or order issued by the Jefferson County
            Department of Health, and of any other
            wastewater or runoff water discharge permit,
            license or order, air pollution permit,
            license or order, solid waste disposal
            permit, license or order, hereafter issued by
            the United States Environmental Protection
            Agency and/or by the State of Alabama and/or
            any of its political subdivisions, all in
            accordance with applications now pending and
            listed on Exhibit F hereto.
App. at 22-23.   Exhibit F contains a "List of Environmental

Applications and Permits."   It is divided into two parts, one for

permits related to air and one for permits related to water.

Exhibit F lists no permits related to solid waste.   All the

listed permits refer to their date of issuance and the issuing

authority.

          Paragraph 8(a) of the Agreement requires Mead, the

seller, to indemnify Beazer, the buyer, against certain other

liabilities.  It provides:
               a.   Indemnity Against Unassumed
          Liabilities. Mead hereby indemnifies Buyer
          against and hereby agrees to hold Buyer
          harmless from and to reimburse Buyer for any
          and all liabilities, losses, damages, costs
          of settlement and expenses . . . which may be
          imposed upon or incurred by Buyer in
          connection with any liabilities or
          obligations of Mead other than those
          expressly assumed by Buyer.



App. at 29.

          Paragraph 8(b), on the other hand, requires Beazer, as

the buyer's successor, to indemnify Mead, as seller's successor,

against other liabilities, including whatever liabilities

paragraph 4(c) imposes on the buyer. It reads:
               b.    Indemnity Against Assumed
          Liabilities. Buyer hereby indemnifies Mead
          against and hereby agrees to hold Mead
          harmless from and to reimburse Mead for any
          and all liabilities, losses, damages, costs
          of settlement and expenses . . . which may be
          imposed upon or incurred by Mead in
          connection with any liabilities or
          obligations of Mead and/or the Coke Plant
          assumed by Buyer under this Purchase
          Agreement.
App. at 30.

          In 1977, KCI transferred the Coke Plant and surrounding

land to the Industrial Development Board of the City of

Fairfield, Alabama ("IDB").    In turn, IDB leased the premises

back to KCI.   KCI continued to operate the facility.     In 1988,

Beazer acquired KCI and transferred the lease to a newly created

corporation, Koppers Industries, Inc. ("KII").   At about this

same time IDB transferred its ownership interest in the Coke

Plant and the surrounding land back to KII.

          In 1981, the United States Environmental Protection

Agency ("EPA") and the Alabama Department of Environmental

Management began to investigate the Coke Plant site for toxic

substances.    As a result, EPA asked Beazer to sign an

Administrative Order on Consent (the "Order") that would require

Beazer to do a site-wide environmental investigation and

eventually cleanup the site.   On June 21, 1991, Beazer signed the

Order.   Issued pursuant to the Solid Waste Disposal Act, it

identifies thirty-nine problem areas at the Coke Plant.      The

Order calls each of them a "solid waste management unit."        Beazer

agreed to test each of these units for the presence of toxic

wastes and then clean them up as necessary.

          On March 6, 1991, Beazer filed this action.      The

complaint, following amendment and dismissal of several counts,

claimed contribution from Mead against any response costs Beazer

incurred under CERCLA, 42 U.S.C.A. §§ 9607(a), 9613(f), or
indemnification from Mead based on Paragraph 8(a) of the

Agreement.   Under the Agreement's indemnification provisions,

Beazer claimed that the expense of investigating the toxicity of

these areas and cleaning them up was ultimately Mead's

responsibility.   Beazer also alleged that many of the solid waste

management units it agreed to cleanup are parts of the site that

Mead had dedicated to waste management but Beazer had never

utilized while it was operating the facility.

          Mead denied any obligation either to indemnify Beazer

against these costs or to contribute to the cost of testing,

investigating or cleaning up the site.    It also asserted a

counterclaim under Paragraph 4(c) of the Agreement demanding that

KCI and Beazer, as KCI's successor in interest, indemnify Mead,

hold it harmless and reimburse it for all response costs that

investigation and cleanup of toxic wastes deposited on or in the

Coke Plant or its environs may require.    In another counterclaim,

Mead asserted, in the alternative, a right to contribution from

Beazer for any CERCLA costs Mead might be required to pay.

          Beazer filed a motion for a partial summary judgment

seeking a declaration that Mead was a responsible operator under

sections 107(a) and 113(f) of CERCLA, and that Paragraph 8(a) of

the Agreement required Mead to indemnify Beazer against liability

for all response costs.   Mead filed a cross-motion for summary

judgment asserting that Paragraph 4(c) of the Agreement relieved

it of any obligation to indemnify Beazer or contribute to any

cleanup costs Beazer might incur, and that Paragraphs 4(c)
and 8(b) combined to obligate Beazer to indemnify Mead against

any CERCLA response costs Mead might incur.

          The magistrate judge to whom the district court had

referred these motions issued a report recommending that Mead be

held liable as a "responsible party" for any government paid

response costs, that Mead's cross-motion for summary judgment

against Beazer be granted and that Beazer's action be dismissed

in its entirety.   Beazer filed timely objections, but the

district court adopted the Magistrate's Report as its opinion,

granted Mead's cross-motion for summary judgment and dismissed

all of Beazer's claims.   Beazer filed this timely appeal.
              II.   Jurisdiction & Standard of Review

           The district court had subject matter jurisdiction over

this case under 28 U.S.C.A. §§ 1331, 1332, 1367 (West 1993) and

42 U.S.C.A. § 9613(b) (West Supp. 1993).     We have appellate

jurisdiction over the district court's final order dismissing

Beazer's claims and granting Mead's counterclaim under 28

U.S.C.A. § 1291 (West 1993).

           We exercise plenary review over a district court's

grant of summary judgment.     Viewing the evidence in the light

most favorable to the non-moving party, we must determine whether

there remain any genuine issues of material fact and, if not,

whether the moving party is entitled to judgment as a matter of

law.   See Bank of Nova Scotia v. Equitable Fin. Management, Inc.,

882 F.2d 81, 83 (3d Cir. 1989).



                           III.   Analysis

           Section 9607(e)(1) of CERCLA provides:
           No indemnification, hold harmless, or similar
           agreement or conveyance shall be effective to
           transfer from the owner or operator of any
           vessel or facility or from any person who may
           be liable for a release or threat of release
           under this section, to any other person the
           liability imposed under this section.
           Nothing in this subsection shall bar any
           agreement to insure, hold harmless, or
           indemnify a party to such agreement for any
           liability under this section.



42 U.S.C.A. § 9607(e)(1) (West 1983).     On first reading, this

appears internally inconsistent.     We have reconciled its two

sentences by construing them to mean "agreements to indemnify or
hold harmless are enforceable between the parties but not against

the government."    Smith Land & Improvement Corp. v. Celotex

Corp., 851 F.2d 86, 89 (3d Cir. 1988), cert. denied, 488 U.S 1029

(1989); see also United States v. Hardage, 985 F.2d 1427, 1433

(10th Cir. 1993) (Under section 9607(e)(1) "responsible parties

may not altogether transfer their CERCLA liability, [but] they

have the right to obtain indemnification for that liability.")

(citations omitted) (emphasis in original).    As the district

court recognized in Hatco Corp. v. W.R. Grace & Co.--Conn., 801

F. Supp. 1309 (D.N.J. 1992):
          Because § 9607(e)(1) renders ineffective any
          attempt to completely "transfer" liability,
          the most a party can do to limit its
          liability under CERCLA is to obtain from
          another an agreement "to insure, hold
          harmless, or indemnify" it from any
          liabilities established against it.



Id. at 1317 (quoting 42 U.S.C.A. § 9607(e)(1)).
          Thus, Beazer could have lawfully agreed to indemnify

Mead for its CERCLA liability or, conversely, Mead could have
lawfully agreed to indemnify Beazer.   The issue is whether either

did so.   The Agreement the parties rely on was executed before

CERCLA was enacted.   Therefore, we must, at the outset, resolve

the preliminary issue of whether a contract of indemnity that

predates CERCLA can be construed to include indemnity against

CERCLA liability.   This is a question of first impression in this

Court.

          Other courts that have analyzed pre-CERCLA indemnity

provisions have uniformly held that a pre-CERCLA agreement can
require one party to indemnify another against CERCLA liability.

See, e.g., Kerr-McGee Chem. Corp. v. Lefton Iron & Metal Co., 14

F.3d 321, 327 (7th Cir. 1994); Hatco Corp., 801 F. Supp. at 1317-

18; Purolator Prods. Corp. v. Allied-Signal, Inc., 772 F. Supp.

124, 132 (W.D.N.Y. 1991); Mobay Corp. v. Allied-Signal, Inc., 761

F. Supp. 345, 356-58 (D.N.J. 1991).    We find the reasoning of

these courts persuasive.    Accordingly, we hold that a pre-CERCLA

agreement can require an indemnitor to hold the indemnitee

harmless from CERCLA liability.

          Nevertheless, not all pre-CERCLA promises to indemnify

cover CERCLA liability.    We must look to see whether an

indemnification provision is either specific enough to include

CERCLA liability or general enough to include any and all

environmental liability which would, naturally, include

subsequent CERCLA claims.    The first step in this inquiry is to

determine what law applies to the construction or interpretation

of contractual provisions that affect responsibilities Congress

has imposed on us in statutes enacted to enforce this nation's

strong commitment to a clean, safe and attractive environment.

We now turn to this issue, also one of first impression in this

Court.



                                  A.

          In deciding what law to apply to determine whether

Paragraphs 4(c) and 8(a) establish an obligation for Beazer to

indemnify Mead against CERCLA liability or Mead to indemnify

Beazer, the magistrate judge looked first to the law the parties
chose in Paragraph 13(k)(1) of the Agreement.    It provides that

Alabama law will govern.1    Seeing "no reason to frustrate the

obvious and expressed intent of the parties," the magistrate

judge said he would apply Alabama law to decide whether the

Agreement's indemnity provisions were clear enough to require

Beazer to hold Mead harmless against CERCLA liability at the

site.   Magistrate Judge's Report at 9.

           Finding no Alabama law directly on point, the

magistrate judge took a cue from the holdings of the United

States District Court for the District of New Jersey that pre-

CERCLA agreements may cover CERCLA liability if such agreements

are "worded broadly enough to encompass any and all liabilities,

or if environmental liability is clearly referred to in the

agreement."     Id. at 9-10 (citing Hatco Corp., 801 F. Supp. at

1318; Purolator Prods. Corp., 772 F. Supp. at 132; Mobay Corp.,

761 F. Supp. at 356; Southland Corp. v. Ashland Oil Inc., 696

F. Supp. 994 (D.N.J. 1988)).     After concluding that Alabama law

on the meaning of contracts was not inconsistent with this

developing standard of federal common law, the magistrate judge

saw no impediment to interpreting the Agreement under Alabama

contract law.    Nevertheless, he pointed out that construction or

interpretation of a pre-CERCLA indemnity clause's effect on

CERCLA liability might "be an issue best determined by a uniform


1
 . The paragraph states, "Each of the parties elects that this
Purchase Agreement shall be governed, construed and enforced in
accordance with the laws of the State of Alabama." App. at 44-
45.
federal rule . . . and that the federal case law establishing the

standard under CERCLA may override any inconsistent state law in

this respect."    Id. at 10 n.2.

          The first question that we should ask is whether the

national interest in uniform application of federal statutory law

requires federal courts to develop a federal common law to

preclude willy-nilly use of various state law principles in

interpreting or construing indemnification provisions that affect

liabilities under CERCLA.    Cf. O'Melveny & Myers v. Federal

Deposit Insurance Corp., 114 S. Ct. 2048, 2052-55 (1994).

          Generally, federal law governs the validity of an

agreement releasing a cause of action arising under federal law;

see Dice v. Akron, Canton & Youngstown R.R. Co., 342 U.S. 359,

361 (1952), but the construction or interpretation of a private

contract is generally thought to be a question of state law.

Accordingly, most courts have recognized that imposition of

CERCLA liability on a successor corporation is a question of

federal law.     See, e.g., John S. Boyd, Co. v. Boston Gas. Co.,

992 F.2d 401, 406 (1st Cir. 1993); Mardan Corp. v. C.G.C. Music,
Ltd., 804 F.2d 1454, 1457 (9th Cir. 1986); HRW Sys., Inc. v.

Washington Gas Light Co., 823 F. Supp. 318 326-28 (D. Md. 1993);

Chesapeake & Potomac Tel. Co. v. Peck Iron & Metal Co., 814

F. Supp. 1266, 1267-68 (E.D. Va. 1992).

          Nevertheless, all of the courts of appeals that have

considered developing a federal rule of decision appear to have

decided it is better to look to state law in interpreting or
construing a contract's indemnification provisions vis-á-vis

CERCLA.2

            In John S. Boyd Co., the United States Court of Appeals

for the First Circuit looked to the Massachusetts law of

contracts to apportion CERCLA liability among contracting parties

inter se.    In construing the parties' written agreement, it said,

"state contract law . . . provide[s] the substantive rule, so

long as it is not hostile to the federal interests animating

CERCLA."    John S. Boyd Co., 992 F.2d at 406 (citations omitted);

Hardage, 985 F.2d at 1433 n.2 ("Because the government's

interests are unaffected by the allocation of liability between

jointly and severally liable parties, we easily conclude that a

uniform federal rule is unnecessary and that state law will

govern the indemnification clauses."); see also O'Melveny, 114

S. Ct. at 2055 ("Our cases uniformly require the existence of [a

2
 . See John S. Boyd Co., 992 F.2d at 406 (incorporating state
law into federal law to construe an agreement pertaining to
CERCLA liability); Olin Corp. v. Consolidated Aluminum Corp., 5
F.3d 10, 15 (2d Cir. 1993) (state law supplies the principles
that govern the construction or interpretation of indemnification
clause applicable to CERCLA liability); Hardage, 985 F.2d at 1433
& n.2; Mardan Corp., 804 F.2d at 1458, 1460 (holding that federal
courts should look to applicable state law to decide the validity
of releases of claims under CERCLA); see also City of Phoenix,
Az. v. Garbage Servs. Co., 827 F. Supp. 600, 602-03 (D. Ariz.
1993) ("When developing federal common law, the court must decide
whether to fashion a nationally uniform federal rule, or
incorporate state law as the federal rule of decision. . . . The
Ninth Circuit Court of Appeals has taken both approaches when
filling in the gaps left by CERCLA, depending on the context.")
(citations omitted); cf. HRW Sys. Inc., 823 F. Supp. at 328
(adopting federal "continuity of enterprise test endorsed by
Fourth Circuit rather than state law to determination of
corporate successor liability); Chesapeake & Potomac Tel., 814
F. Supp. at 1268 (same).
significant conflict between some federal policy or interest and

the use of state law] as a precondition for recognition of a

federal rule of decision.").

          The United States Court of Appeals for the Ninth

Circuit has analyzed the issue of choosing state or federal

common law to determine whether private indemnification

agreements cover CERCLA liability in depth.     See Mardan Corp.,

804 F.2d at 1458-60.    In Mardan Corp., the government, in an

amicus brief, argued for state law to provide the substance of

the decision rule.     It said that "whether and when agreements

between private 'responsible parties' can settle disputes over

contribution rights under [CERCLA]" did not require the

development of a uniform federal rule.    Id. at 1458.   The court

of appeals stated:
          [S]ection [9607(e)(1)] expressly preserves
          agreements to insure, to hold harmless, or to
          indemnify a party held liable under [CERCLA].
          Absent CERCLA, these contracts would be
          interpreted under state law. By preserving
          such agreements, Congress seems to have
          expressed an intent to preserve the
          associated body of state law under which
          agreements between private parties would
          normally be interpreted. Certainly federal
          courts need not fashion federal common law to
          interpret every settlement of liability that
          arises under federal statutes.



Id.
          Because Congress's intent to require a federal rule of

decision was "not entirely clear," the court of appeals

considered whether the policies Congress sought to advance by
enacting CERCLA required a uniform federal standard for the

interpretation and construction of indemnity clauses.      For

guidance it looked to the Supreme Court's opinion in United

States v. Kimbell Foods, Inc., 440 U.S. 715 (1979).     Id.      Kimbell

Foods set out the factors courts should use to determine when a

uniform federal rule is needed to decide federal claims based on

federal statutes when Congress has not made clear its intent on

what law should supply a rule of decision.    See Kimbell Foods,

440 U.S. at 728-29. They are:
          (1) whether the issue requires "a nationally
          uniform body of law"; (2) "whether
          application of state law would frustrate
          specific objectives of the federal programs";
          and (3) whether "application of a federal
          rule would disrupt commercial relationships
          predicated on state law."



Mardan Corp., 804 F.2d at 1458 (citing Kimbell Foods, 440 U.S. at
728-29).    The court of appeals in Mardan Corp. applied Kimbell

Foods and concluded there was no need for a federal common law

standard.    It stated:
                 First, we find no reason to think that
            the issue requires a uniform body of law.
            Commercial enterprises selling their assets
            or insuring themselves will normally look to
            state law to interpret their indemnification
            provisions, which will generally indemnify
            the enterprises against a whole host of
            possible liabilities. Disuniformity does not
            seem to impose any particular burden. . . .

                 Second, the application of state law to
            interpret such releases will not frustrate
            the objectives of CERCLA. Contractual
            arrangements apportioning CERCLA liabilities
            between private "responsible parties" are
            essentially tangential to the enforcement of
            CERCLA's liability provisions. Such
          agreements cannot alter or excuse the
          underlying liability, but can only change who
          ultimately pays that liability. . . .

                                *   *   *

                  Finally, we are convinced that
             application of a federal rule . . . would
             disrupt commercial relationships predicated
             on state law. . . . Creating a federal rule
             to govern CERCLA releases would introduce
             confusion and uncertainty into these
             commercial relationships in two respects.
             One, buyers and sellers would face greater
             confusion about which body of law to turn to.
             Two, the creation of a federal rule, as
             opposed to incorporating a ready-made and
             fully fleshed out body of state law, would,
             during the development of that federal rule,
             leave parties very uncertain about what rule
             governed CERCLA releases. . . .



Id. at 1458-60.

          Judge Reinhardt, in a dissent in Mardan Corp., thought

that a uniform federal rule should be applied to determine

whether any particular agreement indemnified against CERCLA

liability.    Mardan Corp., 804 F.2d at 1463 (Reinhardt, J.

dissenting).    Citing cases that adopted uniform federal rules to
determine liability under section 9607 and the legislative

history of that section stressing the need for "'a uniform rule

of law . . . to discourage business[es] dealing in hazardous

substances from locating primarily in states with more lenient

laws,'" Judge Reinhardt reasoned that "a uniform federal rule

regarding releases from CERCLA liability serves Congress' goals

in the same manner that a uniform rule regarding liability does."

Id. at 1464 (citing 5 U.S.C.C.A.N. 6119, 6119-20, 6132 (1980) and
quoting 126 Cong. Rec. H11787 (daily ed. Dec. 3, 1980) (statement

of Representative Florio, CERCLA House sponsor) (alteration in

original)).   But see id. at 1459-60 (majority opinion) (arguing

that parties are still fully liable to the government regardless

of applicable law and concluding that adoption of state law does

not conflict with congressional purpose underlying CERCLA).

          Though this Court has yet to consider what law should

govern the construction or interpretation of any particular

indemnity provision on the apportionment of CERCLA liability

among contracting parties, we have adopted a federal common law

standard in other environmental contexts.3   In Smith Land &

Improvement Corp. v. Celotex Corp., we stressed the need for

uniform standards if CERCLA is to be effective and indicated that

a district court considering successor liability under CERCLA

should look to "[t]he general doctrine of successor liability in

operation in most states . . . rather than the excessively narrow

statutes which might apply in only a few states."    Smith Land &

Improvement Corp., 851 F.2d at 92.   We reasoned if we refused to

apply uniform federal standards to regulate CERCLA liability,

"CERCLA aims may be evaded easily by a responsible party's choice

to arrange a merger or consolidation under the laws of particular

states which unduly restrict successor liability."   Id.   In

Lansford-Coaldale Water Authority v. Tonolli Corp., 4 F.3d 1209

3
 . It is perhaps material to note that these standards do not
spring full formed and grown from the heads of federal judges as
Athena did from Zeus nor does any Delphic oracle whisper
uniformly in each judge's ear. See Manfred Lurker, Dictionary of
Gods & Goddesses, Devils & Demons 44-45 (1987)
(3d Cir. 1993), we also expressed a preference for uniform

federal standards to govern CERCLA liability.    We held that

"given the federal interest in uniformity in the application of

CERCLA, it is federal common law, and not state law, which

governs when corporate veil-piercing is justified under CERCLA."

Id. at 1225 (citations omitted).

          None of our cases, however, deal with the need for a

federal standard in interpreting or construing contracts to

indemnify and our sister courts of appeals have uniformly

selected state law.   See supra note 2.   Fortunately we see no

need to create a circuit conflict and will join the other courts

of appeals that look to the law of a particular state concerning

the construction or interpretation of contracts of indemnity to

determine whether a particular indemnification provision covers

CERCLA liability.   We thus endorse the majority's reasoning and

application of the Kimbell Foods test in Mardan Corp.

          Moreover, we see support for this principle in the

Supreme Court's recent decision in O'Melveny & Myers.   It teaches

us that special federal rules are justified only in "situations

where there is a 'significant conflict between some federal

policy or interest and the use of state law.'"    O'Melveny &
Myers, 114 S. Ct. at 2055 (quoting Wallis v. Pan American

Petroleum Corp., 384 U.S. 63, 68 (1966)).

          In O'Melveny & Myers, the Supreme Court considered

whether federal or state decisional law should govern the

question of imputation of knowledge in a suit where the FDIC sued

in its capacity as receiver for a federally insured bank that had
failed.   The FDIC argued that Kimbell Foods required the district

court to apply a uniform federal rule of decision to determine

FDIC's rights because "federal law governs questions involving

the rights of the United States under nationwide federal

programs."   O'Melveny & Myers, 114 S. Ct. at 2053 (quoting

Kimbell Foods, 440 U.S. at 726).    The Supreme Court first stated,

"[T]he FDIC is not the United States, and even if it were we

would be begging the question to assume that it was asserting its

own rights rather than, as receiver, the rights of [the failed

bank.]"   Id. (emphasis added).   It went on to note, "The rules of

decision at issue here do not govern the primary conduct of the

United States or any of its agents or contractors, but affect

only the FDIC's rights and liabilities, as receiver, with respect

to primary conduct on the part of private actors that has already

occurred."   Id. at 3055 (emphasis added).   The Supreme Court then

held that the issue of imputed knowledge in bank receivership

cases "is not one of those extraordinary cases in which the

judicial creation of a federal rule of decision is warranted."

Id. at 2056.

          How Beazer and Mead apportion their CERCLA liability

among themselves does not affect the primary duty they owe the

United States to clean up the poisons left to befoul the site

both used.   Whether one must indemnify the other concerns instead

the liability of private actors for acts already done, just as

the liability of the alleged tortfeasor in O'Melveny involved the
FDIC's right, as successor to the private right of an injured

party, to recover for the injuries its predecessor had suffered
as a result of past acts.   How much Beazer or Mead pay each other

seems to us to have even less effect on the United States than

did the ability of FDIC to recover for tort injuries suffered by

the failed bank it took over.   The interpretation and

construction of Paragraph 4(c) has no impact on either party's

liability to the government.    See Smith Land & Improvement Corp.,

851 F.2d at 89.   On reason as well as authority, we therefore

hold that state law should determine whether any particular

contract of indemnity provision can be construed generally or

broadly enough to cover one responsible party's liability to

another.



                                 B.

           Having determined that state law on the interpretation

and construction of indemnification agreements applies to this

case, we turn to the question of what state law should be

applied.   On that issue, we can quickly agree with the district

court and apply Alabama law.4

4
 . We again note the magistrate judge, despite his summary
conclusion that Alabama law controls, seems to have applied the
standard adopted by the United States District Court for the
District of New Jersey. That court has used a federal standard
to conclude that an indemnification or release provision which
affects a party's CERCLA liability must be:

           (1) a broad waiver of "all liabilities of any
           type whatsoever" . . . which would clearly
           evince the parties' broad intent to finally
           settle all present and future liability
           issues arising from the sale,; or (2) at a
           minimum, "must at least mention that one
           party is assuming [all] environmental-type
           liabilities" . . . which would clearly evince
          We look to decisions of the Alabama courts and

especially those of the Supreme Court of Alabama.   Its most

recent decision concerning the interpretation or construction of

indemnification provisions is Nationwide Mutual Insurance Co. v.

Hall, Nos. 1921128 & 1921272, 1994 WL 107547 (Ala. April 1,

1994).   There, it held that indemnification agreements are

enforceable in Alabama if "'the parties knowingly, evenhandedly,

and for valid consideration, intelligently enter into an

agreement whereby one party agrees to indemnify against the

indemnitee's own wrongs, [and if that agreement is] expressed in

clear and unequivocal language."   Nationwide Mut. Ins. Co., 1994

WL 107547 at *3 (quoting Industrial Tile, Inc. v. Stewart, 388

So.2d 171, 175-76 (Ala. 1980), cert. denied, 449 U.S. 1081 (1981)

(alteration in original)).   In Nationwide, Alabama's supreme

court recognized that indemnity agreements covered only those

incidents within their plain meaning and the court expressed a

strong preference for this limitation.   Id. (quoting Craig

Constr. Co. v. Hendrix, 568 So.2d 752, 757 (Ala. 1990);

Industrial Tile, Inc., 388 So.2d at 176).   The supreme court then

stated that "an indemnity contract purporting to indemnify for

the consequences of the indemnitee's own negligence is

(..continued)
          the parties' intent to settle all issues
          related to present and future environmental
          liabilities.

Hatco Corp., 801 F. Supp. at 1317-18 (quoting and citing Mobay
Corp., 761 F. Supp. at 358 & n.15) (emphasis in original). The
magistrate judge states, however, that he used this standard
because it is consistent with Alabama law.
unambiguous, and therefore, enforceable when its language

specifically refers to the negligence of the indemnitee. . . .

[but that] such 'talismanic' or thaumaturgic language is not

necessary if the requisite intent is otherwise clear."    Id.

(citations omitted).5

          We conclude that Alabama law requires a plain and

unambiguous expression of intent to cover the cost of the

liability in question.   Using this standard, we now consider

whether Paragraph 4(c) unambiguously expresses Beazer's intent to

indemnify Mead against CERCLA liability.



                                  C.

          The crux of the parties' argument concerns the district

court's conclusion that Beazer expressly and unambiguously agreed

to indemnify Mead for its CERCLA liability.6   They disagree as to

whether the magistrate judge correctly applied Alabama's limiting

standard to the Agreement. Paragraph 4(c) reads:
          4. Assumption of Agreements and Liabilities

          As of the Closing Date, Buyer [Beazer] shall
          assume and agree to perform:

                              *   *    *

          c.   Obligations of the Coke Plant to comply
               from and after the Closing Date with all

5
 . We do not think Alabama would apply a different rule in
deciding whether an indemnity clause covers strict liability
under environmental law.
6
 . Whether an agreement is unambiguous is a question of law.
McDonald v. U.S. Die Casting & Dev. Corp., 585 So. 2d 853, 855
(Ala. 1991).
                of the terms and conditions of . . . any
                solid waste disposal permit, license or
                order, hereafter issued by the United
                States Environmental Protection Agency
                . . . all in accordance with
                applications now pending and listed on
                Exhibit F hereto.



App. at 23.7   Exhibit F is divided into two parts.   Beazer argues

that Paragraph 4(c) limits its agreement to assume Mead's

environmental liabilities to the permits mentioned in Exhibit F's

"List of Environmental Applications and Permits."     Because

neither part of Exhibit F mentions any solid waste permit, Beazer

contends that Paragraph 4(c)'s promise to indemnify does not

unambiguously cover CERCLA response costs incurred in removing

any toxic wastes found in or around the Coke Plant.

          After concluding that Paragraph 4(c) did not

unambiguously rule out a promise to indemnify Mead against CERCLA


7
 . Beazer's duty to indemnify is controlled by Paragraph 8(b) of
the Agreement which provides:

               Buyer [Beazer] hereby indemnifies Mead
          against and hereby agrees to hold Mead
          harmless from and to reimburse Mead for any
          and all liabilities, losses, damages, costs
          of settlement and expenses . . . which may be
          imposed upon or incurred by Mead in
          connection with any liabilities or
          obligations of Mead and/or the Coke Plant
          assumed by Buyer under this Purchase
          Agreement.

App. at 30. The obligations imposed by Paragraph 4 constitute
"liabilities or obligations . . . assumed by Buyer [Beazer] under
this Purchase Agreement." Id. Thus, if Paragraph 4 encompasses
CERCLA liability, Beazer would be required to indemnify Mead
under Paragraph 8(b) of the Agreement.
liability, the magistrate judge went on to consider whether it

unambiguously required Beazer to indemnify Mead for CERCLA

liability under the federal standard announced in Mobay Corp.     He

acknowledged that Paragraph 4(c) was not a broad, general promise

to indemnify Mead against all liability.   Nevertheless, he

concluded that the text of the paragraph
          clearly implies that, as between Beazer and
          Mead, Beazer would be responsible for any
          environmental liability arising from the
          Woodward Facility after the date of the sale.
          Even more than this implication regarding all
          environmental liability, the provision
          expressly provides that Beazer will be
          responsible for complying with orders issued
          by the EPA regarding solid waste.



Magistrate Judge's Report at 15.   The magistrate judge construed

Paragraph 4(c) as a promise by the buyer and its successors to

indemnify the seller and its successors against all environmental

liabilities associated with the Coke Plant.

          In doing so, the magistrate judge decided that

Paragraph 4(c)'s textual reference to future "orders" issued by

state, local, and federal agencies contradicted the more

restrictive interpretation of Paragraph 4(c) which Beazer would

have us infer from the specific list of permits mentioned in

Exhibit F Paragraph 4(c).   If Paragraph 4(c) were confined to the

permits listed in Exhibit F, the magistrate judge reasoned that

Paragraph 4(c)'s reference to permits, licenses, and orders

"hereafter issued" would be meaningless.   Thus, he concluded that

Paragraph 4(c) did include all subsequent orders, permits, and

licenses relating to environmental liability including those
required or issued under CERCLA.   Accordingly, the magistrate

judge made the recommendation the district court accepted in

granting summary judgment to Mead and dismissing Beazer's claim

for contribution under CERCLA.

           Paragraph 4(c) does expressly make Beazer responsible

for "solid waste . . . permits issued by [EPA]," but it has as

additional limiting language; "all in accordance with

applications now pending and listed on Exhibit F hereto."

Therefore, Beazer contends that the magistrate judge erred when

he concluded that Paragraph 4(c) clearly and unambiguously

transferred Mead's CERCLA liability to Beazer.   Beazer first

argues that Paragraph 4(c) is no more than a "window" provision,

common in commercial agreements for the sale of assets, which

gives a seller interim protection against a buyer's failure to

comply with the conditions of any existing environmental permits

that are specifically listed, as they are here in Exhibit F.

Thus, Beazer argues that the magistrate judge erred when he

failed to consider the parties' basic decision to structure the

sale as a purchase of assets.    Beazer would have us infer that

the decision to buy and sell assets was mutually agreed on for

the express purpose of limiting the purchaser's liability.    We

think Beazer's argument that purchasers under asset purchase

agreements normally assume only those debts, obligations, and

liabilities of the seller that are expressly identified in the

agreement is plausible and that the district court's holding that

Beazer must indemnify Mead would be inconsistent with that

purpose.   Nevertheless, we have been unable to find any evidence
in this record that would unambiguously confirm that

interpretation, and the text of Paragraph 4(c) is at least

arguably to the contrary.   Cf. Watts v. TI, Inc., 561 So.2d 1057,

1059-60 (Ala. 1990).   Therefore, we conclude that Beazer's

argument about the nature and purpose of framing a transfer of a

business enterprise as a sale of assets begs the question on

Paragraph 4(c)'s meaning.

          Beazer's argument that the language of Paragraph 4(c)

is not clear enough to transfer Mead's CERCLA liability to Beazer

under Alabama law is more telling.    We conclude Paragraph 4(c) is

ambiguous under the principles of Alabama law that guides

determinations of contracts.    See Reeves Cedarhurst Dev. Corp. v.

First Amfed Corp., 507 So. 2d 184, 186 (Ala. 1992) ("An

instrument is unambiguous if only one reasonable meaning clearly

emerges.") (quoting Vainrib v. Downey, 565 So. 2d 647, 648 (Ala.

Civ. App. 1990).   The provision is subject to more than one

reasonable interpretation, and it is not plain enough to be

construed as an unambiguous promise by Beazer to indemnify Mead

against all environmental liability associated with the site of

the Coke Plant, including liability without fault under laws like

CERCLA, yet to be passed.   Therefore, it does not square with the

principle of Alabama law that promises to indemnify are limited

to subjects plainly expressed.

          Moreover, cases outside Alabama which have held a

release or indemnification provision covers CERCLA liability have

all involved indemnity clauses with much broader and more

inclusive language than here.    See, e.g., Kerr-McGee Chem. Corp.,
14 F.3d at 326-27; Olin Corp., 5 F.3d at 12-13; Hardage, 985 F.2d

at 1434; Niecko v. Emro Mktg. Co., 973 F.2d 1296, 1300 (6th Cir.

1992); Mardan Corp., 804 F.2d at 1461-62.    The Olin Corp. case

provides one recent example.8   The court of appeals held that

8
.   The sale agreement in Olin Corp. originally provided:

          [The buyer] hereby assumes and agrees to be
          responsible for and to pay, perform,
          discharge and indemnify [the seller] against,
          all liabilities (absolute or contingent),
          obligations and indebtedness of [the seller]
          related to the Aluminum Assets . . . as they
          exist on the Effective Time or arise
          thereafter with respect to actions or
          failures to act occurring prior to the
          Effective Time.

Olin Corp., 5 F.3d 12-13.   A later agreement in Olin Corp.
stated:

          In consideration of the payment on this date
          by [the seller] to [the buyer] of $3,700,000
          . . . [the buyer] hereby releases and settles
          all claims of any nature which [it] now has
          or hereafter could have against [the seller]
          . . . whether or not previously asserted,
          under or arising out of the Purchase
          Agreement . . ., or the transactions
          contemplated thereby.

Id. at 13 (footnote omitted).

    In the Kerr-McGee case the indemnification clause read:

          [The purchaser] expressly agrees to indemnify
          and to defend and hold [plaintiff's
          predecessor Moss-American], its officers,
          employees, and agents, free and harmless from
          and against any and all claims, damages,
          judgments, fines, penalties, assessments,
          losses, expenses, including interest, court
          costs and attorney fees, however the same may
          be caused, arising out of or resulting from,
          directly or indirectly, the following: (a)
          the purchase, dismantling or sale of the
this provision evidenced a "clear and unmistakable intent" to

transfer the seller's environmental liability to the buyer, even

future and unknown liability.    Olin Corp., 5 F.3d at 15-16.

          The court of appeals held:
          In no uncertain terms, [the purchaser] agreed
          to assume the liability for losses resulting
          from "the maintenance of any . . . claim
          . . . concerning pollution or nuisance
          . . . ." The indemnity provision covers all
          pollution and nuisance claims without
          limitation . . . . [and makes the purchaser]
          responsible for any liability imposed . . .
          under CERCLA.



Id. at 327 (footnote omitted).

          The contradictory terms and references of this

Agreement leave us with no firm conclusion as to the clear and

unmistakable intent of the parties.    Under applicable principles

of Alabama law, the parties failed to express the intent to

indemnify with the requisite clarity.    We hold, therefore, that

Paragraph 4(c) is not specific enough to impose on Beazer a duty

to indemnify Mead for their CERCLA response costs.
(..continued)
          personal property and real property by [the
          purchaser]; (b) the maintenance of any
          action, claim or order concerning pollution
          or nuisance; and (c) the use by [the
          purchaser] or its employees or agents of the
          personal property and real property.

Kerr-McGee Chem. Corp., 14 F.3d at 326-27 (emphasis added)
(footnote omitted). See also John S. Boyd Co., 992 F.2d at 403-
04 (construing a provision stating that "[the successor
corporation] agreed to assume 'all the duties and liabilities of
[its predecessor] related to [the] gas business'" and that "[the
successor corporation] agreed to 'indemnify and save harmless
[the predecessor corporation] from any duty or liability with
respect to the gas business.").
                                  D.

             Because Paragraphs 4(c) and 8 refer circuitously to

each other, it follows therefore that neither Paragraph 4(c) nor

Paragraph 8 expressly require either party to indemnify the

other.9   Accordingly, our earlier analysis requires us to reject

Beazer's argument that Paragraph 4(c) was intended to limit

Beazer's assumption of liabilities to those expressly listed in

Exhibit F, and that therefore because CERCLA is not a listed

obligation Mead must indemnify Beazer under Paragraph 8(a).

Beazer relies on the grammatical rule of the last antecedent to

assert that the language "all in accordance with . . . Exhibit F"

is a limitation on the preceding reference to "solid waste

disposal . . . order" in support of its argument that the

magistrate judge's construction of Paragraph 4(c)'s phrase "all

in accordance with" Exhibit F to mean "which includes" Exhibit F

must fail.    The phrase "all in accordance with" can be

interpreted as Beazer would have it, but it does not compel that

construction.    Beazer's contention that the magistrate judge

erred when he concluded the limitation of Paragraph 4(c) to the

permits expressly listed in Exhibit F would leave the words


9
 . Mead's duty to indemnify Beazer is set forth in Paragraph
8(a) of the Agreement. It is quoted in full supra, Part I,
typescript at 6. It requires Mead, the seller, to indemnify
Beazer, the buyer, against all liabilities other than those
"expressly assumed by the Buyer." Paragraph 8(b), quoted supra
in note 7, is its mirror image. It requires Beazer, the buyer,
to indemnify Mead, the seller, against all liabilities "assumed
by Buyer."
"hereafter issued" without meaning does not persuade us.     As we

have already explained, its argument that these words merely

reflect an intent to protect the seller during a transition

period immediately following the transfer of assets to the buyer

fails to shine through the murky text of Paragraph 4(c).

Beazer's suggested interpretation of the words "hereafter issued"

as limited to permits or licenses that might result from the

pending applications is again plausible, but not so plain as to

justify its construction under the Alabama rule that indemnity

provisions must be strictly construed and limited to their plain

meaning.



                                E.

           Paragraph 4(c) does not clearly state that Beazer has

agreed to assume all liability for toxic wastes under present or

future laws protecting the environment.    Though the phrase in

Paragraph 4(c), "hereafter issued," appears to look to the

future, the phrase "all in accordance with" appears to limit the

buyer's environmental liability to orders, permits and licenses

that are listed in the exhibit referenced.   Accordingly, nothing

in this agreement demonstrates a clear and unambiguous intent to

transfer all CERCLA liability to Beazer.

           Our refusal to construe Paragraph 4(c) as a clear

promise by Beazer to indemnify Mead against CERCLA response costs

leaves both Beazer and Mead responsible for their fair share of

the cleanup costs associated with the Coke Plant.    That result

reinforces CERCLA policy.   "Congress enacted CERCLA, a complex
piece of legislation . . .   to force polluters to pay for costs

associated with remedying their pollution."   United States v.

Alcan Aluminum Corp., 964 F.2d 252, 258 (3d Cir. 1992).   Thus, we

will reverse the district court's entry of summary judgment in

favor of Mead and remand this case for further proceedings on

Beazer's contribution claim.10



                         IV.     CONCLUSION



10
 .   Section 9613(f) provides, in relevant part:

               Any person may seek contribution from
          any other person who is liable or potentially
          liable 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.

                               *   *   *

               A person who has resolved its liability
          to the United States or a State for some or
          all of a response action or for some or all
          of the costs of such action in an
          administrative or judicially approved
          settlement may seek contribution from any
          person who is not party to a settlement
          . . . .

42 U.S.C.A. § 9613(f)(1), (3)(B) (West Supp. 1994). The
magistrate judge determined that Mead was a "responsible party"
for purposes of CERCLA liability. It declined, however, to
apportion the response costs or reach Mead's or Beazer's
contribution claims under section 9613(f) because it found that
Beazer had agreed to indemnify Mead for all CERCLA liability
under Paragraph 4(c) of the Agreement. On remand, the trial
court will have to revisit the parties' contribution claims and
correspondingly apportion liability for the attendant CERCLA
response costs.
          The order of the district court granting summary

judgment on Mead' counterclaim and the order dismissing Beazer's

claim for contribution will be reversed and the case will be

remanded to the district court for further proceedings consistent

with this opinion.
