Petition for Writ of Certiorari — Monsanto Co. v. United States
Supreme Court brief1989
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IN THE
Supreme Court of the Gnited States
October Term, 1988
MONSANTO COMPANY, ALLIED-SIGNAL, INC.
AND EM INDUSTRIES, INC..,
Petitioners,
v.
UNITED STATES OF AMERICA,
SOUTH CAROLINA DEPARTMENT OF HEALTH
AND ENVIRONMENTAL CONTROL,
Respondents.
PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS FOR
THE FOURTH CIRCUIT
GEORGE CLEMON FREEMAN, JR.
(COUNSEL OF RECORD)
ALFRED R. LIGHT
[THOMAS E. KNAUER
Hunton & Williams
707 East Main Street
Richmond, Virginia 23219
804/788-8200
Counsel for Petitioners
February 23, 1989
QUESTIONS PRESENTED
. Can a court, over a defendant's objection, mandate bifur-
cation of liability and allocation issues in a cost recovery
suit under The Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (*°CERCLA”™)
into two separate actions without complying with Federal
Rule of Civil Procedure 54(b)”?
in fashioning a uniform “‘federal common iaw” for when
joint and several liability is appropriate under CERCLA,
did the court below err in adopting the standard of liability
under Section 433A of the Restatement (Second) of Torts
but rejecting the burden of proof provisions of Section
433B?
. By creating federa! rights and remedies outside congres-
sional guidelines, did the court below ignore this Court's
recent admonitions to lower federal courts, based on
separation of powers principles, to avoid unguided resolu-
tion of important questions of public policy.
LIST OF PARTIES
The parties to the proceeding below were the United
States of America. the South Carolina Department of Health
and Environmental Control, Oscar Seidenberg, Harvey Hut-
chinson, Monsanto Company, Allied-Signal, Inc. (formerly
Allied Corporation), and EM Industries, Inc. EM Industries ts
a Wholly owned subsidiary of Merck A.G., Zug., Switzerland.
Monsanto Company owns less than 100 percent of the follow-
ing companies:
Monsanto Chemicals of India Limited
Monsanto Chemical (Thailand) Limited
Monsanto (Malaysia) Sdn. Berhad
P. T. Monagro Kimia
Advent Eurofund Limited
Advent Techno Venture Investment Corp. N.V.
Andreae-Noris-Zahn AG (ANZAG)
Biolab Industrias Farmaceuticas S.A. (BIOLAB)
Chipman Limited
Companhia Brasileira de Estireno (CBE)
Fosbrasil S.A.
HybriTech Europe SNC
Industrias Resistol, S.A. (IRSA)
Invitron Corporation
Kinetek Systems Incorporated
K.K. Astro
Korag Company Limited
Korsil Company Limited (KORSIL)
Kumho Monsanto Inc. (KMI1)
Mitsubishi Monsanto Chemical Company (MMK)
Nippon Cooper Kabushiki Kaisha
Nomix Manufacturing Company Limited
Nomix ple
Oxford Glycosystems Limited (OGS)
Ryowa K. K.
Taikomenban Kogyo
Tsukuba Service Company, Ltd.
Table of Contents
Questions Presented. . * An ess
List of Parties ....... Cr ee et i
Opmions Below ...............
Statement of Jurisdiction .............. 7h
Constitutional and Statutory Provisions Involvec 2
TS OS 3
Reasons for Granting the Writ)... ....... eae : 11
Ee ao Sd lI
1. THE COMPULSORY TWO-ACTIONS
I Ay ont 2 13
A. THE MAJORITY OPINION BELOW DISREGARDED EQUI-
TABLE PRINCIPLES BY TREATING DEFENDANTS EQUI-
TABLE RIGHT TO REDUCTION OF THE AMOUNT RE-
COVERABLE BY THE PLAINTIFFS AS A COUNTERCLAIM
I gk es ht ee ee 13
B. THE MAJORITY OPINION BELOW FAILED TO CONSIDER
THE GOVERNING PROCEDURAL LAW AND THE FACT
I'HAT THE LOWER COURT DID NOT MAKE THE EX-
PRESS DETERMINATION UNDER RULE 54(b) REQUIRED
FOR A BIFURCATED DECISION. INSTEAD, IT CREATED
4 DE FACTO EXCEPTION TO THE FEDERAL RULES OF!
Civil PROCEDURE FOR CERCLA CASES .......... 15
C. BECAUSE IT PROVIDES NO MECHANISM FOR ADJUST-
ING SETTLEMENT AMOUNTS, THE RULING BELOW
MAY RESULT IN DEFENDANTS ULTIMATELY BEING
LIABLE FOR MORE THAN THEIR JUST PORTION OF RE-
SPONSE COSTS AND AFFORD THE PLAINTIFFS DOUBLE
RECOVERY. THIS COULD POSE MAJOR CONSTITU-
a 17
Il. THE BURDEN OF PROOF ISSUE ............. 24
eg ke ee we ee hes es 29
Appendices
A. ORDER OF THE UNITED STATES COURT OF APPEALS
Semue) EPECEMBER 2.19088 .................0. A-|
B. OPINION OF THE UNITED STATES COURT OF
APPEALS DATED SEPTEMBER 7, 1988 ............ B-]
C. ORDER OF THE UNITED STATES COURT OF APPEALS
Seemenuementyed 90, 10665..................4.. C-]
D. AMENDED JUDGMENT OF THE UNITED STATES Dis-
rRICT COURT DATED SEPTEMBER 23, 1986 ........ D-|
ill
OPINION OF THE UNITED STATES DISTRICT COURT
DATED FEBRUARY 22. 1984
FE. ORDER OF THE UNITED STATES DISTRICT COUR
DATED DECEMBER i9g, iG&S
FINAL OrbDER OF THE UNITED STATES
CourRT DATED AUGUST 14. 19386
H. OPINION OF THE UNITED STATES DISTR
Court, Mo_aA DEVELOPMENT CORP
STATES. DATED MAy 6
lable of Authorities
Cases
1B. Small ( { Su R (
lL! S. 233 (1925
Ba s Lu a ® ] ( ( rer 1
tps IOS S. ¢ 1645 (1988
Bowen Vv. Georgetown [ H
U.S 109 S. Ct. 468 (1988
( } vy. S ra Club, 451 U.S. 28 Q&
( tf Ne Yor Exxon Cor 697 F. Suny
S.D. N.Y QRS
} } O homa. 455 U.S. 104 89
ot His 5 / (21D r ¢ } \ f Va ChlLU
No. 85 C 1142, slip op.. re nted in Haz. W
Rey 12.055 (N.D. Tl. 198° IN¢ ailable o
Gented libra Dist file
/ al Savi t n insu Co? kK
816 F.2d '30 (4th ¢ 1987
¢ Wi tik U.S. 333 74
k Disnasal. Im Brownine-Ferris Ind
Vermont, I} 845 F.2d 404 (2d Cir. 1988).
} ( 109 S. Ct. $27 (1988)
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1 LEXIS
>
Page
Middlesex County Sewerage Authority v. National Sea
Clammers Ass'n., 453 U.S. 1 (1981)
Payne v. Hook, 74 U.S. 425 (1869) S
Pennsylvania v. Union Gas Company, 832 F.2d 1343
(3d Cir. 1987). cert Prantle d, is S&S. Ct i719 (1988),
argued, Oct. 31, 1988 1s
Ratner v. Sioux Natural Gas Corp., 719 F.2d 801 (Sth
Cir. 1983), appeal after remand, 770 F.2d S12 (1985) 20
Solem v. Helm, 463 U.S. 277 (1983) 22
Stone v. White, 301 U.S. $32 (1937) 13.14.15
Texas Industries, Inc. v. Radcliff Materials, Inc., 45]
U.S. 630 (1981) 27
Touche Ross & Co. v. Redington, 442 U.S. 560 (1979) 2/
Transamerica Mortgage Advisors, Inc. v. Lewis, 444
U.S. 11 (1979) .. a 2)
United States v. Conservation Chemical Co., 619
F.Supp. 162 (W.D. Mo. 1985) 10,23
United States v. Hardage, 26 Env't Rep. Cas. (BNA)
(W.D. Okla. 1987) ..... 14.24
United States v. Moore, 28 Env't Rep Cas. (BNA)
1150 (E.D.Va. 1988) . 16.20
United States v. Mottolo, 605 F. Supp. 898 (D. N.H
> ee 16.19.24
United States v. Nicolet, Inc., No. 85-3060, slip op
(E.D. Pa. Dec. 31, 1986) (available on LEXIS, Genfed
library, Dist file) .... / 16
‘nited States v. Northeastern Pharmaceutical & Chem
{
ical Co., 810 F.2d 726 (8th Cir. 1986), cert. denied
108 S. Ct. 146 (1987) ... eae 19
United States v. Shell, 605 F Supp 1064 (D. Colo
yt) ee eee § 24
Inc., 653 F. Supp. 984 (D. S.C. 1984), aff'd in part,
vacated in part sub nom., United States v. Monsanto
Co., 858 F.2d 160 (4th Cir. 1988) . . passim
United States v. Ward, 448 U.S. 242 (1980) 22
Universities Research Ass'n. v. Coutu, 450 U.S. 754
(1981) Aa
WitOn » SPENCE) andbags Orp.. 765 « 6 (2
Vuitton v. Sj Handl ( 65 F.2d Yb
Cir. 1985S) Leas
Weave rv Graham. 450) { S 24 (1981)
Constitutional Provisions
U.S. Const. Amend. \
U.S. Const. Amend. VIII
Statutory Provisions
Prmtsieetcive Savisonmental Response, |
) id Liabilit Act of 1980. 4 S (
1675 (1982 & Supp. IV 198¢
Section 106. 42 U.S.( JE RIK S
1QR6
Section 107, 42 U.S.( ¥ 27 & S
1986)
section 10 oY, | S» ( A017 < -
Section 107(a)(3), 42 U.S. S JOT (a3 Supp
19X6)
Section 113. 42 U.S.C. § 9613 (1982 & Supy
19X86)
section 11 3(f). 4) | 5 \ OF if Supp
Section 113(f)(1). 42 U.S.C. §96134
(Supp IV 1986)
Section 113(f)(2). 42 U.S.C. 8961342) (Supt
Section 114(b), 42 U.S.C. §$ 9614(b) (1982
Resource Conservation and Recovery Act. 42 |
691) 1-699 11 (198? & Supp IV 1986)
Section 7003, 42 U.S.C. § 6973 (1982 & Supp
28 U.S.C. § 1254(1) (Supp. IV 1986)
Rules
Federai Rules of Civil Procedure
Rule 13a)
Rule 54(b)
aye
Vliscellaneous
* \ \ ( f )<
/) ( k
i 5 1-2 B
< ry
( ( {
\ x IX : ISS
} \ 4 ne f c ct S% . ys
Ne S. Code g & Ad. N s f
‘ ( /
\ k IN¢
\ ’ k )
\A ( { } }
(
\ } } Ss
S $33] 4,24,2°
Sc 433} 49.94
*
Sec 433B. ¢ Ss
k > , / ) \ atomint )
S. SI. 98th Cong Ist Sess 1}QOXS is reported by Ser
Environment and Public Works Committee
S. Hrng. 60, Superfund Improvement Act of 1985S, He g
on S.S1 and 8.494 before the Committee on I
ment and Public Works. United States Senate, 99tl
Cong.. Ist Sess. (Feb. 25, 1985)
% Hrng 61. Insurance Issue ‘ ad? ad 5 i] ervitd ‘ Hearings
before the Committee on Environment and Public
Works. United States Senate, 99th Cong., Ist Sess
(April 3, 1985)
S. Hrng. 415, Superfund Improvement Act of 1985, H¢
ings on 8.51 before the Committee on the Judic!
United States Senate. 99th Cong., Ist Sess. (June
1ORS) 16
S. Rep. No. 11. 99th Cong Ist Sess. (1985)
IN THE
Supreme Court of the Gnited States
October Term, 1988
ee
Monsanto Company, Aliied-Signal, Inc.
and EM Industries, Inc.,
Petitioners,
Vv.
United States of America,
South Carolina Department of Health and
Environmental Control,
Respondents.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Monsanto Company, Allied-Signal, Inc. and EM Indus-
tries, Inc. respectfully petition the Court for a writ of certio-
rari to review the judgment of the United States Court of
Appeals for the Fourth Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App. B) is reported
as United States v. Monsanto Co., 858 F.2d 160 (4th Cir.
1988). The opinion of the district court (Anp. E) is reported in
United States v. South Carolina Recycling & Disposal, Inc..,
653 F. Supp. 984 (D. S.C. 1984).
STATEMENT OF JURISDICTION
The judgment of the court of appeals was entered on
September 7, 1988. A timely petition for rehearing and sug-
gestion for rehearing in banc was denied on December 2, 1988
by a § to 4 vote of the sitting judges. two having recused
themselves (App. A). The jurisdiction of the Court is invoked
under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY PROVISIONS
INVOLVED
Amendment \
No person shall be ... deprived > eae property.
without due process of law.
Amendment VIII
Excessive bail shall not be required. nor excessive fines
imposed .
CERCLA Section 107(a)
(a) Notwithstanding any other provision or rule of law,
and subject only to the defenses set forth in subsection (b) of
this section.
(3) any person who by contract, agreement, or
otherwise arranged for disposal or treatment, or
arranged with a iransporter for transport for dis-
posal 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 contain-
ing such hazardous substances .
from which there ts a release, or a threatened
release which causes the incurrence of response
costs. of a hazardous substance, shall be liable for—
(A) all costs of removal or remedial ac-
tion incurred by the United States Gov-
ernment or a State or an Indian Tribe not
inconsistent with the national contingency
plan:
(B) any other necessary costs of response
incurred by any other person consistent
with the national contingency plan.
CERCLA Section 113(f)(1), (2)
(1) CONTRIBUTION.—Any person may seek
contribution from any other person who ts liable o1
yd
potentially liable under section 107(a), during or
following any civil action under section 106 or under
section 107(a). Such claims shall be brought in
accordance with this section and the Federal Rules
of Civil Procedure, and shall be governed by Fed-
eral law. 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 106 or section 107.
(2) SETTLEMENT.—A person who has resolved
its liability to the United States or a State in an
administrative or judicially approved settlement
shall not be liable for claims for contribution regard-
ing matters addressed in the settlement. Such set-
tlement does not discharge any of the other poten-
tially liable persons unless its terms so provide, but
it reduces the potential liability of the others by the
amount of the settlement.
STATEMENT OF THE CASE
I. The Legal Questions Presented
This is an appeal from a judgment holding Monsanto
Company, Allied-Signal, Inc. and EM Industries, Inc. (the
“generator defendants” or “‘petitioners’’) jointly and sever-
ally liable to the United States and South Carolina (collec-
tively called the ““governmenis’’) under Section 107(a)(3) of
the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (“CERCLA”), 42 U.S.C.
§ 9607(a)(3)(Supp. IV 1986), for response costs arising from
the release or threat of release of hazardous substances from
the Bluff Road hazardous waste storage facility. It is one of
the first test cases to determine the scope of CERCLA liability
under a confusing and poorly drafted statute. The decision
below involved (1) the substantive standards of liability under
that Act, (2) two procedural issues and (3) difficult constitu-
tional questions.
Despite the importance of all these questions, petitioners
seek review of only two closely related procedural issues. If
these two issues are correctly resolved. the harshness of the
lower court's substantive holdings can be mitigated and
difficult constitutional issues otherwise presented avoided.
The first procedural issue is clear cut: Whether CERCLA
preempts the Federal Rules of Civil Procedure and principles
of equity applicable to actions for restitution so as to give a
district court discretion to enter final judgment against a
defendant for all cleanup costs the plaintiff has incurred
without any adjustments in the award for the share of respon-
sibility of the plaintiff and those who settled with the plaintiff.
The decision below not only departs from the long-standing
principle that in an equitable proceeding the court will decide
all matters in dispute and decree complete relief, but it is also
directly contrary to congressional intent as reaffirmed in the
1986 amendments to CERCLA. There Congress rejected an
amendment sponsored by the Government that would have
preempted the Federal Rules of Civil Procedure and the
normal rules of equity and substituted compulsory bifurcation
of CERCLA liability and allocation issues. Congress instead
mandated in new CERCLA § 113(f)(1) continued adherence to
the Federal Rules of Civil Procedure and specifically autho-
rized defendants to seek contribution “‘during or following” a
CERCLA § 107 action.
The second procedural issue is also clear cut. The court
below held that Section 433A of the Restatement (Second) of
Torts sets forth the uniform federal *‘common law”’ rule for
application of joint and several liability under CERCLA. That
section contemplates that the burden of proof as to apportion-
ment will be determined by Section 433B. Section 433B in
turn provides that the burden is normally upon the plaintiff,
with two exceptions. One exception, clause (2), provides that
where actions of the defendant and others contributed to the
plaintiffs harm and the defendant seeks to limit his liability,
the defendant has the burden. But comment d in the Restate-
ment makes it clear that the exception in clause (2) Is
applicable only where the plaintiff is “‘entirely innocent.”’ In
the context of CERCLA, this is where the plaintiff is not
himself a “‘potentially responsible party’> under CERCLA
because he did not also contribute to the harm remedied by
the cleanup. The court below took the half of the Restatement
rule which defines who can be held jointly and severally liable
but failed to follow the second half which lays down who has
the burden of proof. Yet under Section 433B, it is clear that
because the governments’ wastes also contributed to ihe harm
remedied, the burden was upon the plaintiff governments to
prove defendant generators’ apportioned contribution to the
harm. Thus, the courts below erred in holding that the burden
of proof of apportionment was on the generator defendants.
If left standing, the precedents below pose substantial
problems in a number of ongoing cases. First, they will
substantially increase the likelihood that the ultimate inci-
dence of CERCLA’s retroactive liability will be unfair and
perhaps so grossly disproportionate in some instances as to be
unconstitutional. Second, because the Fourth Circuit's posi-
tions on apportionment of CERCLA liability are fundamen-
tally inconsistent with that taken by district courts in the First,
Second, Third, Seventh, Ninth and Tenth Circuits, also
seeking a uniform CERCLA ‘‘federal common law”’ rule, the
decision below portends an impending split among the cir-
cuits.
II. Their Factual and Procedural Context
Both questions presented arise out of the cleanup of the
Bluff Road site, a waste storage facility operated between
1972 and 1980 by industrial waste haulers licensed by South
Carolina. Both governments, generator defendants, and as
many as 78 other waste generators contracted with the waste
haulers for disposal or treatment of their wastes. The Federal
agencies that disposed of their wastes included the U-S.
Environmental Protection Agency (“‘EPA’’), the Centers for
Disease Control (**CDC’’), the Air Force and the Army.
There is no allegation that generator defendants, the govern-
ments or any other generators violated any then-existent law
or regulation through their disposal arrangements or that they
were negligent in any way. Thus, all who dealt with the waste
haulers were within the same class of waste generators,
whether their conduct giving rise to strict liability under
CERCLA is viewed as “‘tortious’’ or “‘innocent’’ in the
context of the common law principles set forth in Section 433
of the Restatement (Second) of Torts.
The Federal Government initially filed suit against the
waste haulers, seeking abatement of releases from the site
under Section 7003 of the Resource Conservation and Recov-
ery Act (*RCRA’’), 42 U.S.C. § 6973 (1982 & Supp. IV 1986).
South Carolina intervened as a plaintiff. Thereafter, both
plaintiffs entered into a partial consent decree with one waste
generator, RAD Services, Inc. (*RAD”’) for cleanup of 75%
of the surface at the site. Under the settlement RAD was to be
paid $1,597,785 for cleanup work from a Settlement Fund to
be administered by South Carolina. Also, RAD agreed to
contribute specified services. Separately, the plaintiffs en-
tered into settlement agreements with twelve other waste
generators. In exchange for payments to the fund, the plain-
tiffs released them from all claims arising out of the surface
cleanup. The Government contributed $51,975 to the Settle-
ment Fund for EPA’s wastes, but nothing for the wastes of
other agencies. South Carolina contributed nothing for its
wastes.
These settlements grew out of the Government's investiga-
tions to identify all generators whose wastes were handled by the
waste haulers. Prior to the settlements, the Government com-
piled a preliminary list of 75 entities that had contracted with the
haulers. The Government then picked 24 from the list and
proposed the allocation of the cleanup costs among them on a
volumetric basis. The apportioned shares were based on the
‘‘Waste Quantity (gallons)”’ that the haulers’ records showed
had been handled for each generator, divided into the total
volume of wastes handled for all those on this short list. The
Government's omission of the volumes of wastes of South
Carolina and 41 other identified generators who were not in-
cluded on the short list thus increased the percentages attributed
to those included on the short list. Under the Government's
apportionment scheme, the volume allocated to Federal agen-
cies totaled 3.07% (EPA 1.89%, the Air Force 0.57%, CDC
0.41% and the Army 0.20%). The volumes allocated to the three
generator defendants were: Allied 12.23%, EM Industries 8.27%
and Monsanto 1.91%. The volumes allocated to the 15 genera-
tors who then or subsequently settled with the Governments
aggregated 77.5%.
The generator defendants refused to settle because (1)
they maintained that their wastes were not at the site at the
time of cleanup, (2) they differed with the governments as to
the appropriate interpretation of the statute and (3) the
governments were not proposing to shoulder an equitable
share of the cleanup costs even under their theory of liability.
So the governments filed a Second Amended and Supplemen-
tal Complaint adding the three generator defendants and three
additional parties. Subsequently the plaintiffs moved for par-
tial summary judgment on the issue of each generator defend-
ant’s joint and several liability under CERCLA § 107. The
court accepted the governments’ theory that the plaintiffs
need not show that a defendant's wastes were at the site at the
time of cleanup. The court ruled that
[ajll they have to show was that at one time they
[the defendants’ wastes] were on the site. And
further, that at the time of the cleanup, that waste
materials like, or the same as the generator defend-
ants was at the site. Whether it was any of the four
defendant’s materials or not.
Transcript of Proceedings before the Hon. Charles E. Simon,
Jr., Jan. 13, 1984, at 23.
The defendants argued that the evidentiary dispute as to
whether their wastes were on-site at cleanup time was also
material to the joint and several liability issues of *‘indivisi-
bility’’ and ‘‘apportionment,”’ as well as the ‘‘causation”’
issue. Defendants maintained that the amount of any award
against them should be reduced by the shares of contribution
to the harm of the plaintiffs and those who had settled with the
plaintiffs. The defendants also maintained that the burden of
apportionment was the plaintiffs’, not the defendants’, since
the plaintiffs were also equally “responsible parties’’ under
CERCLA. The district court rejected these arguments. It held
that the only joint and several liability issue was whether “‘the
harm at the Bluff Road site was divisible.’ It found that *‘[i]f
the injury is indivisible, that should be the end of the inquiry.”’
Transcript of Proceeding before the Hon. Charles E. Simon,
Jr., Jan. 13, 1984, at 83. Whether a defendant’s wastes were
present at the site at the time of response was immaterial
under the court’s theory, either to the issue of whether
liability existed, or if existent, whether it should be joint and
several. It was enough that wastes “‘like”’ the defendant's
were there. Thus, despite the mistaken assumption of the
court of appeals, 858 F.2d at 170-71, the district court never
considered whether any of the generator defendants’ wastes
were actually contained at the site at the time of cleanup. The
lower court simply ruled that such evidence was irrelevant.
Thus, the court granted partial summary judgment for plain-
tiffs, holding that each generator defendant was jointly and
severally liable for all costs under CERCLA § 107. It refused
to consider the plaintiffs’ shares of responsibility for the harm
remedied. requiring defendants to pursue that issue in a
separate, subsequent action for contribution. It also did not
reduce the judgment to reflect the plaintiffs’ settkements with
other potentially responsible parties. App. D.
After a later hearing on damages. the district court
entered final judgment. App. D. The generator defendants
appealed to the U.S. Court of Appeals for the Fourth Circuit.
They argued that the lower court erred because CERCLA
liability should be interpreted in light of common law princi-
ples reflected in the Restatement (Second) of Torts, which (1)
require a plaintiff to prove, for imposition of joint and several
liability, that a defendant’s conduct was a substantial factor in
producing the harm and (2) impose the burden of proof as to
apportionment on the plaintiff, not the defendant, when the
plaintiff has also contributed to the harm. Defendants also
argued that the statute as so interpreted and applied to them
was unconstitutional because: the court’s fashioning of CER-
CLA liability criteria outside the scope of congressional
guidelines violated separation of powers principles, and the
Act as interpreted and applied to them violated constitutional
constraints on retroactive and disproportionate sanctions and
was also a bill of attainder. The landowners also appealed,
raising issues not relevant to this petition. The Government
appealed the lower court’s denial of prejudgment interest.
Faced with the inconsistency of the arguments they had
made below and the lower court’s decision, the governments,
at the appellate level, shifted their position on two key legal
issues. First, they agreed that defendants could avoid liability
by proving that their wastes were not at the site when cleanup
commenced. But they argued that the defendants had not
tendered sufficient evidence on that point to avoid summary
judgment. Second, the governments also accepted the posi-
tion of Restatement (Second) of Torts § 433A that joint and
several liability is inappropriate where **(a) there are distinct
harms, or (b) there is a reasonable basis for determining the
contribution of each cause to a single harm.”* In the court
below the governments had argued that the ‘or’ should be
read as if it were ‘“‘and,”’ and the lower court had accepted
their argument. Again, however, the governments argued to
the court of appeals that the defendants had not tendered
sufficient evidence of a ‘‘reasonable basis for determining the
contribution”’ to avoid summary judgment that they were
jointly and severally liable.
After the appeal had been argued, but while the decision
was still pending, the Government settled with one of the
appellants, Aquair Corporation. A two to one majority of the
Fourth Circuit panel approved the settlement. but made no
fairness review and did not reduce the amount of the district
court judgment against the remaining defendants. App. C.
Subsequently, the Fourth Circuit upheld the lower
court’s imposition of strict, joint and several liability on the
generator defendants and the landowners and remanded with
instructions to the lower court to reconsider the question of
prejudgment interest. App. B. It also rejected the generator
defendants’ argument that where the plaintiff had also con-
tributed to the harm, and was equally “‘innocent’’ or equally
‘*guilty as the defendant,”’ the plaintiff has the burden of proof
as to apportionment. The court cited both Sections 433A and
433B of the Restatement as controlling. 858 F.2d at 172. But
without explanation, the court ignored the clear intent of
comment d to Section 433B that the burden is upon the
plaintiff in such circumstances. Finally, the court observed
that
[w]e share the appellants’ concern that they not be
ultimately responsible for reimbursing more than
their just portion of the governments’ response
costs. .. . Had we sat in place of the district court,
we would have ruled as it did on the apportionment
issue, but may well have retained the action to
dispose of the contribution questions. ... That
procedural course, however, was committed to the
trial court’s discretion and we find no abuse of it. As
we have stated, the defendants still have the right to
sue responsible parties for contribution, and in that
10
action they may assert both legal and equitable
theories of cost allocation.
858 F.2d at 173 (emphasis added).
As to generator defendants’ constitutional arguments, the
court declined to reach the separation of powers argument,
stating that it had not been raised below. And while agreeing
that CERCLA applied liability retroactively for constitutional
purposes, the court rejected the bill of attainder and ex post
facto arguments on the grounds that
[t]he existence of joint and several liability in cases
of indivisible harm does not transform an otherwise
constitutional obligation into one that exacts pun-
ishment. *‘Where there are oppertunities for contri-
bution... as well as for joinder or impleader of
responsible parties (Fed. R. Civ. P. Rules 14, 20 and
21). it can hardly be said that imposition of joint and
several liability would be unconstitutional.’ Con-
servation Chemical, 619 F. Supp. at 214-15.
858 F.2d at 175, n.33. The court did not address the defend-
ants’ eighth amendment and due process “proportionality”
arguments, apparently because it assumed that defendants
through subsequent contribution suits could mitigate or av oid
any grossly disproportionate incidence of CERCLA liability.
Judge Widener dissented to upholding the lower court's
dismissal of the generator defendants’ request for allocation
based upon their equitable right to reduction of the judgment
to reflect the plaintiffs’ contribution to the harm. He reasoned
that a CERCLA cost recovery suit is an equitable action and
that it is a universal and unvarying rule of equity that the court
will decide all matters in dispute and decree complete relief.
Moreover. he noted that CERCLA expressly provides that
“fajny 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.” 858 F.2d at 177
(emphasis in original). He continued:
[S]ince the matter was brought before the district
court, that court had no discretion but to decide the
question. To repeat. the discretion is in the party to
make the claim, not in the district court to defer
decision. While I agree that the claims may be
asserted in a separate action, if they are asserted in
the main case they must be decided.
Id. (footnote omitted). He concluded: ““Not only do the
statute and federal procedural law require the course I have
suggested, I think the interests of justice as well as judicial
economy are best served by proceeding in that manner.”* /d.
On September 20, 1988, generator defendants filed a
timely petition for rehearing and suggestion for rehearing in
banc. They urged that in upholding the lower court's splitting
of this single action for equitable restitution into two separate
actions for liability and contribution, the majority opinion
overlooked several important facts and law. Unless corrected,
the result, could be an ultimate failure to obtain a meaningful
apportionment of liability and thus needless and improper
imposition on defendants of substantial, disproportionate lia-
bility under CERCLA. Such needless and unfair results could
be avoided, however, if the court reversed and remanded with
instructions to (a) retain jurisdiction, (b) allocate liability and
(c) reflect such allocation in the amount of the final judgment.
On December 2, 1988, the court of appeals denied the
suggestion for hearing en banc by a 5 to 4 vote. Judges
Russell, Widener, Hall and Chapman voted to rehear the case:
Judges Winter, Phillips, Murnaghan, Sprouse and Ervin voted
against; and Judges Wilkinson and Wilkins disqualified them-
selves. App. A.
REASONS FOR GRANTING THE WRIT
SUMMARY
CERCLA is a complex, poorly drafted, statute that seeks
to remedy a major, pressing social problem: the threat to
public health and the environment posed by past disposal of
hazardous wastes. Well over one hundred CERCLA cases are
pending in district courts throughout the country. Most are
long, drawn out affairs, involving many parties and complex
issues of fact and law. Only a relatively few cases have
reached the courts of appeals and have been decided there.
This case is one of that small number. The basic approach as
to CERCLA apportionment followed below is contrary to
| >
congressional intent and inconsistent with the approach fol-
lowed by district courts in other circuits.
Under long-standing equitable principles, the procedural
question of mandatory bifurcation raised in this petition was
erroneously decided below. It was also decided exactly op-
posite to congressional intent, as clarified and confirmed in the
1986 Amendments to CERCLA. At the instance of the Gov-
ernment, a divided Fourth Circuit panel carved vut an excep-
tion to general equitable principles and the Federal Rules of
Civil Procedure for CERCLA cases. If the exception is left
standing, it will foster confusion in pending and future district
court cases and present a serious obstacle to fair and reason-
able settlement of multiple CERCLA claims.
Moreover, the mandated “‘two actions” procedure sanc-
tioned by the circuit court’s holding may result in the ultimate
incidence of CERCLA liability on the petitioners, and many
other CERCLA defendants in other similar cases, being far
out of proportion to their equitable shares of CERCLA
responsibility. By deferring consideration of allocation issues
until after defendants have been required to reimburse plain-
uff for all costs, defendants would suffer deprivation prior to
the necessary statutory proportionality inquiry. Also if that
ultimate incidence is many times a defendant's judicially
allocated ‘‘fair share’’ of contribution to the harm, the result
could be so disproportionate as to be punitive in effect. Thus,
if this Court decides in Kelco Disposal, Inc. v. Browning-
Ferris Industries of Vermont, Inc., 845 F.2d 404 (2d Cir.
1988), cert. granted, 109 S. Ct. 527 (1988), that the eighth
amendment or due process clause imposes proportionality
constraints on punitive damages, the end result of the proce-
dure sanctioned by the court below could raise serious
constitutional questions. Meanwhile, however, the judgment
in this case will become final before the defendants’ fair shares
of the allocated costs have been ultimately determined in the
separate contribution action. Thus defendants could be denied
a meaningful, timely forum to present their proof that the
liability imposed upon them retroactively under CERCLA is
so grossly disproportional as to be unconstitutional under the
Constitution’s multiple constraints against retroactive punish-
ment.
The burden of proof issue raised in this petition is
likewise straightforward and the answer equally clear. The
court below, while correctly looking to the Restatement
(Second) of Torts for the applicable federal common law rule
as to joint and several liability under CERCLA, erroneously
rejected without explanation the Restatement rule as to who
has the burden of proof of apportionment where the plaintiff
also contributed to the harm for which it seeks recovery. By
reversing the long-standing common law rule, the court de-
parted from the congressional guidelines. This violated this
Court's recent admonitions, based on separation of powers
principles, that the rights and remedies under federal common
law are for Congress alone to pronounce and, thus, where the
fact or extent of congressional innovation is significantly
uncertain, the courts should resolve the uncertainty against
change. Since many CERCLA plaintiffs, both governmental
and private, are also “‘potentially responsible parties’’ under
CERCLA, the question of who has this burden also arises at
many sites.
I. THE COMPULSORY TWO-ACTIONS ISSUE
A. THE MAJORITY OPINION BELOW DISREGARDED
EQUITABLE PRINCIPLES BY TREATING DEFENDANTS.
EQUITABLE RIGHT TO REDUCTION OF THE AMOUNT
RECOVERABLE BY THE PLAINTIFFS AS A COUNTER-
CLAIM FOR CONTRIBUTION.
A counterclaim is a cause of action in favor of the
defendant on which he might have sued the plaintiff and
obtained affirmative relief in a separate action. 80 C.J.S..,
Set-Off and Counterclaim § 6 (1953) at 1S. A defense by way
of recoupment is not the same as an affirmative cause of
action. Basic Boats, Inc. v. United States, 311 F. Supp. 596,
598 (E.D. Va. 1970). The plaintiffs’ liability “‘is not a set-off or
a counterclaim, but is an equitable reason”’ why they “‘ought
not to recover’ all the damages from the defendants. Stone v.
White, 301 U.S. 532, 538-39 (1937).
As the plaintiffs, the governments framed this case. They
presented only one set of claims—their own against the
defendants. The district court took this single claim and
carved out from the governments’ case the defendants’ partial
defense based on the governments’ own shares of the harm
[4
and required that the equitable reduction for their shares take
place only by way of a separate, subsequent action. In other
words, the district court’s action requires the defendants to
satisfy the judgment in full and then bring a new, separate suit
against the plaintiffs for contribution of their fair shares.
This approach is diametrically opposite the correct anal-
ysis of a defendant’s claim for reduction. In another recent
CERCLA § 107 case, Mola Development Corp. v. United
States, No. CV 82-0819-RMT(JRx), slip op. at 2 (C.D. Cal.
May 6, 1986) (App. H), the court reasoned that the plaintiffs
responsibility for damages must be litigated in the case in
chief:
(A] counterclaim for indemnity or contribution is
illogical. For example, if A sues B, A has the burden
of proving B’s liability and the amount thereof in
A’s case in chief. B. in its defense, might show
limitations on its liability or amount thereof. As a
result, in the trial on A’s complaint against B, the
relative responsibility for A’s loss will be litigated. It
B counterclaimed against A for indemnity or contri-
bution, B would be making a claim against A to shift
to or share with A any loss B incurs as a result of
A’s suit against B. However, any basis that could
exist for B’s counterclaim must be litigated on A’s
complaint and B’s defenses thereto. As a result, any
shifting or sharing of the loss is liigated on A’s
complaint and no basis exists for B’s counterclaim.
(Emphasis added.) Thus, as the Mola Development court
recognized, the plaintiffs responsibility vel non is an issue
necessarily part of the case-in-chief. Accord United States v.
Hardage, 26 Env't Rep. Cas. (BNA) 1049, 1052 (W.D. Okla.
1987).
All agree that CERCLA cost recovery and contribution
actions sound in equity. But equity “‘does not countenance
the idle ceremony” of the district court’s procedural course.
Stone v. White, 301 U.S. 532, 537 (1937). To avoid circuity,
the courts below should have taken cognizance of the tdentity
in interest of the EPA and the other liable agencies of the
Federal Government. But they did not. Yet this Court has
long recognized in parallel equitable actions that the Govern-
15
ment is a unitary entity and its agencies collectively and
singularly are the United States Government. E.g., Stone v.
White, 301 U.S. at 537; Pavne v. Hook, 74 U.S. 425 (1869):
see also United States v. Shell, 605 F. Supp. 1064, 1082 (D.
Colo., 1985), (*The United States argues that it and the
Department of the Army are one and the same entity as a
matter of law.’’), id. at 1083 (“The case is not unlike a
common comparative negligence case where a defendant
asserts that the injured plaintiff's conduct caused some or all
of his own injury. Procedurally, the plaintiff is not joined as a
defendant; rather the court apportions responsibility for the
damages.’’)
The majority opinion below overiooked these traditional
equitable principles. which treat reduction of the judgment
according to the plaintiff's share of responsibility as a defense,
not a separate claim. Stone v. White, 301 U.S. at 539.
B. THE MAJORITY OPINION BELOW FAILED TO CON-
SIDER THE GOVERNING FEDERAL PROCEDURAL LAW
AND THE FACT THAT THE LOWER COURT DID NOT
MAKE THE EXPRESS DETERMINATION UNDER RULI
54(b) REQUIRED FOR A BIFURCATED DECISION. IN-
STEAD, IT CREATED A DE FACTO EXCEPTION TO THI
FEDERAL RULES oF Civit PRoceEpURE FOR CERCLA
CASES.
In sanctioning the mandatory bifurcation of this action,
the majority opinion also ignored the clear language of the
governing statutory law. First, although the majority opinion
quotes the language of CERCLA § 113((1) in footnote 13, it
overlooks that section’s command that *‘[s]uch claims shall be
brought in accordance with . . . the Federal Rules of Civil
Procedure, and shall be governed by Federal law.”’ 42 U.S.C.
» 9613(f(1)(Supp. IV 1986) (emphasis added). The legislative
history of this language emphasizes that courts are to resolve
claims for allocation ‘‘on a case-by-case basis, taking relevant
equitable considerations into account.’ H.R. Rep. No. 253,
99th Cong., Ist Sess., pt. 3 at 19 (1985), reprinted in 1986 U.S.
Code Cong. & Ad. News 3042.
The defendants’ equitable defense was an issue in the
case-in-chief and thus had to be heard before entry of final
judgment. But even if defendants’ equitable defense were a
16
‘““claim’’ within the contemplation of Section 113(H(1), then
defendants’ claim was a compulsory counterclaim in the
nature of recoupment. United States v. Mottolo, 605 F. Supp.
898. 910-11 (D. N.H. 1985). Accord United States v. Moore,
28 Env't Rep. Cas (BNA) 1150, 1152 CE.D. Va. 1988); United
States Vv. Nicolet, Inc.. No. 85-3060, slip Op. (E.D. Pa. Dec.
31. 1986) (available on Lexis. Genfed Library Dist file). Thus
CERCLA. which expressly incorporates the Federal Rules of
Civil Procedure, requires that this “‘claim’’ must be asserted
in plaintiff's case rather than in a separate action. CERCLA §
113(f)(1): Fed. R. Civ. P. 13(a).
Although cross-claims and third-party actions may be
accelerated or deferred at a defendant's option, under Fed. R.
Civ. P. 13(a) compulsory counterclaims may not be deferred
except in instances not material here. While the trial court
may bifurcate its decision of issues of liability and allocation
into separate phases of the same proceeding, it may not sever
them and render final judgment on the former unless it makes
the express determination required by Rule 54(b) “that there
is no just reason for delay.”’ The district court made no such
determination here.
The decisions below permit the governments to ignore
the Federal Rules and to defer. and perhaps avoid, their own
equitable obligations. This is contrary to both equitable prin-
ciples and CERCLA § 113(f), which was added by the 1986
amendments to “‘ratify’’ existing law. See H.R. Rep. No. 253,
99th Cong., Ist Sess.. Pt. 3 at 18 (1985), reprinted in 1986 U.S.
Code Cong. & Admin. News 3041: 131 Cong. Rec. S11,857
(daily ed. Sept. 20, 1985) (Statement of Sen. Thurmond).
In the course of the 1986 Amendments, EPA sought an
amendment to compel the bifurcation of determinations of
liability and contribution into two separate actions. EPA was
initially successful in the Senate. S. 51. as reported by the
Senate Environment and Public Works Committee, contained
an amendment that would have precluded defendants sued
under CERCLA §& 107 from bringing claims for contribution
until after a judgment had been entered or a settlement was
reached. S. 51, 99th Cong., Ist Sess., at § 126: S. Hrng. 60,
Superfund Improvement Act of 1985, Hearings on S. 51 and S.
494 before the Senate Committee on Environment and Public
Works. 99th Cong. Ist Sess., 104-105 (Feb. 25, 1985); S. Rep.
ee
No. Il, 99th Corg., Ist Sess., 44-45 (March 18, 1985).
Subsequently, however, the Senate rejected this amendment
after several senators objected to it. See S. Hrng. 61, /nsur-
ance Issues and Superfund, Hearing before the Senate Com-
mittee on Environment and Public Works, 99th Cong., Ist
Sess., 21-22 (April 3, 1985) (Senator Mitchell); S. Hrng. 415,
Superfund Improvement Act of 1985, Hearing on S. 51 before
the Senate Committee on the Judiciary, 99th Cong., Ist Sess.,
77-78 (June 7, 1985) (Senator Simpson); id. at 91 (Senator
Hatch); id. at 99-101 (Senator Specter). In supporting the
Judiciary Committee’s substitute amendment on the floor,
Senator Thurmond said:
One issue addressed by these amendments ts the
right to contribution; that is, the right of one defend-
ant to pursue reimbursement from codefendants.
All of the expert witnesses appearing before the
committee agreed that the right to contribution
should be codified in order to encourage responsible
parties to engage in cleanup and settlement. The
committee proposal would codify that right and,
retaining current law, would allow a judge the
discretion and flexibility to best manage the contri-
bution issues in a law suit.
131 Cong. Rec. S11,857 (daily ed. Sept. 20, 1985) (emphasis
added).
In the bill passed by the Senate the provision reported by
the Environment and Public Works Committee was deleted
and the substitute sponsored by members of the Judiciary
Committee adopted. This is the current CERCLA § 113(f)(1).
C. BECAUSE IT PROVIDES NO MECHANISM FOR AD-
JUSTING SETTLEMENT AMOUNTS, THE RULING BE-
LOW MAY RESULT IN DEFENDANTS ULTIMATELY
BEING LIABLE FOR SUBSTANTIALLY MORE THAN
THEIR JUST PORTION OF RESPONSE COSTS AND AF-
FORD THE PLAINTIFFS DOUBLE RECOVERY. THIS
COULD POSE MAJOR CONSTITUTIONAL PROBLEMS.
The majority opinion be' .w recognized generator detend-
ants’ legitimate ‘““concern th. they not be ultimately respon-
sible for reimbursing more than their just portion of the
governments’ response costs.”’ 858 F.2d 173. The majority
18
was mistaken, however. in assuming that through a separate
action for contribution generator defendants ultimately would
be able to prevent that inequity. To the contrary. by upholding
the district court’s mandated separation of the liability and
allocation issues into two separate actions, the majority
substantially increased the likelihood that defendants will
never be able to obtain sufficient contribution to avoid this
disparate result.
As to claims against the governments, the majority below
stated reassuringly that “‘any further claims against the EPA
and other responsible government instrumentalities may be
resolved in a contribution action pursuant to CERCLA sec-
tion 113(f).”’ 858 F.2d 173, n.28. But as to the claims against
the nongovernmental settling defendants, who obviously will
bear a major portion of contribution to the harm once an
allocation is made, the court of appeals expressly refused to
determine the effect of such settlements on defendants’ rigiscs
to contribution againsi them. saying it was premature. 858
F.2d 173, 0.29.
Thus. the course required by the district court, and
upheld by the majority below, appears to be a final judgment
against the generator defendants for all the costs with no
procedure available for mitigation by future contribution
based on the settling nongovernmental parties’ allocated
responsibility for the harm. This result obtains because the
contribution protection component of CERCLA § I13(f)(2)
expressly provides that the effect of releases is to discharge
the settling party from contribution claims. The only real
question left unanswered by the court of appeals for resolu-
tion in the separate contribution action is whether the gener-
ator defendants can recover the settlors’ allocated shares back
from the governments.
Moreover, even the court’s assumption that the defend-
ants can obtain any contribution from the State of South
Carolina in a subsequent, separate action may prove errone-
ous. The issues of whether Congress in CERCLA has waived.
or constitutionality can waive, a state’s immunity to contri-
bution suits by private parties is currently pending before the
Court in Pennsylvania v. Union Gas Company, 832 F.2d 1343
(3rd Cir. 1987). cert. granted. 108 S. Ct. 1219 (1988). argued.
Oct. 31. 1988. If this Court holds that such immunity has not
19
or could not be waived, then defendants will ultimately be
forced to bear South Carolina’s share. That unfair result
would be precluded, however, had the lower court retained
jurisdiction. By joining in the suit here, South Carolina waived
its sovereign immunity to valid defenses such as recoupment
and setoff. Thus, the district court could have subsequently
reduced the amount of the judgment in favor of South Caro-
lina as plaintiff by South Carolina’s fair share as waste
contributor. See United States v. Mottolo, 605 F. Supp. 898,
910-11 (D. N.H. 1985).
In any event, since the judgment here will have already
become final without having been reduced by amounts paid in
settlement, there appears to be no procedural mechanism
available for giving effect to the second command of CER-
CLA § 113(f)(2). That command is that a settlement ‘reduces
the potential liability of the others by the amount of the
settlement.”’ 42 U.S.C. § 9613(f)(2) (Supp. IV 1986). If no
such procedural mechanism for partially adjusting the ‘‘final
judgment” exists, the substantive result would be contrary to
established principles of common law and equity. Federal
Savings & Loan Insurance Corp. v. Reeves, 816 F.2d 130, 137
(4th Cir. 1987) (under federal common law, partial satisfaction
reduces the total for which the remaining defendants are
responsible): United States v. Northeastern Pharmaceutical
& Chemical Co., 810 F.2d 726, 748-49 (8th Cir. 1986) cert
denied, 108 S. Ct. 146 (1987); Uniform Comparative Fault Act
» 6, 12 U.L.A. Civil Proc. & Rem. Laws 50 (Supp. 1988):
Restatement (Second) of Torts § 885(c) (1982).
This fear is not an idle one. The district court and the
Fourth Circuit majority approved settlements with other
parties in this case without reducing the amount of the
judgment against generator defendants. The district court
entered a settlement between the United States and one
defendant. United States v. South Carolina Recycling &
Disposal, Inc., 653 F. Supp. 984, 1010 (D. S.C. 1985) (App.
F). But in its final judgment, the district court did not reduce
the judgment against the generator defendants in accordance
with this settlement. Likewise, after argument of this appeal.
the governments settied with one of the appellants, and the
Fourth Circuit pane! approved the settlement without a hear-
ing Gespite Judge Widener’s dissent. (App. B). The subse-
20
quent majority opinion on the merits of the appeal neither
reduced the judgment against the remaining appellants nor
addressed the effect of this settlement. Yet the law requires
that the effects of settlement on the liability of nonsettling
joint tortfeasors be addressed. See Ratner v. Sioux Natural
Gas Corp., 719 F.2d 801, 803 (Sth Cir. 1983), appeal after
remand, 770 F.2d 512 (1985). See also United States v.
Moore, 28 Env’t Rep. Cas. (BNA) 1152 (E.D. Va. 1988). The
entry of these settlements without such an inquiry is contrary
to CERCLA, as well as the equitable principles cited in Judge
Widener’s dissent. In addition, the failure to reduce the
amount of the final judgment against generator defendants
permits the plaintiffs to obtain double recoveries. That is also
contrary to equitable principles and the congressional policy
reflected in CERCLA § 114(b).
Several district courts in other circuits have had occasion
to determine what should be the “federal common law’’ as to
the effect of a settlement with one responsible party under
CERCLA on the liability of the remaining responsible parties
in the context of a suit for contribution. In Lyncott Corp. v.
Chemical Waste Management, Inc., 690 F. Supp. 1409, 1418
(E.D. Pa. 1988), the court determined the principles of the
Uniform Comparative Fault Act (**U.C.F.A.”’) are most
consistent with CERCLA because
[it] expressly provides for the application of com-
parative fault in actions based upon strict liability.
_.. In addition, the U.C.F.A. avoids the inequity
that might develop were non-settlers forced to ab-
sorb the total cost of shares of responsibility that are
not allocable to solvent responsible parties. . . . [I]t
also solves the problem of settlements involving
non-monetary consideration.
(Citations omitted.) Under Section 6 of the U.C.F.A. the
effect of release is that ‘the claim of the releasing person
against other persons is reduced by the amount of the released
person's equitable share of the obligation. . . ..’ The court
accordingly held in a declaratory judgment action that a
settlement between a CERCLA plaintiff and a CERCLA
defendant relieved that defendant from CERCLA liability and
gave it protection from contribution. Thus, that defendant's
“equitable shares of the response costs, if any, must be
tr
attributed to plaintiff in the CERCLA litigation.’ 690 F. Supp.
at 1418. Accord Edward Hines Lumber Co. v. Vulcan Mate-
rials Co., No. 85 C 1142, slip op. at 3. reprinted in Haz. V/aste
Lit. Rep. (Andrews) 12,055, 12.056 (N.D. Ill. 1987) (also
available on LEXIS, Genfed library, Dist file) (holding that
the ‘comparative fault rule’’ applies to CERCLA settlements
and it ‘‘allows the non-settling defendant to offset its liability
to the plaintiff by an amount proportionate to the settling
defendant’s responsibility’’); see also City of New York vy.
Exxon Corporation, 697 F. Supp. 677 (S.D. N.Y., 1988)
(available on LEXIS, Genfed library. Dist file) (‘Under
alternative contribution frameworks, the City’s recovery
against the remaining defendants would likely be reduced at
least by the settling parties proportionate share of the fault if
it turns out to be greater than the settlement amount.”’).
Had the Fourth Circuit required the district court to
retain jurisdiction and thus control over the amount of the
judgment against the defendants, then once the equitable
shares of the settlors had been determined in the remanded
proceedings, the district court could have reduced the amount
of the judgment accordingly. The only other way to attain the
same result under the “‘two-actions’’ procedure mandated
here would be to enter an award for the defendants against the
governments in the contribution suit in an amount reflecting
the governments’ and the settling defendants’ shares, plus
interest for the period between the two separate judgments.
Unless that takes place, the two-separate-actions procedure
will ultimately result in generator defendants being unfairly
saddled with more of the costs than would have been imposed
on them if the lower court had decided the allocation issue in
a single equitable proceeding.
The Court recently granted certiorari in Kelco Disposal
Inc. v. Browning-Ferris Industries of Vermont, Inc., 845 F.2d
404 (2d Cir. 1988), cert. granted, 109 S. Ct. 527 (1988). There
one of the issues is whether punitive damages ‘amounting to
more than 100 times the plaintiff's actual damages from [a]
purely economic tort is excessive under the Eighth Amend-
ment or otherwise.”’ 57 U.S.L.W. 3390 (Dec. 6, 1988). It is
possible that the Court may decide that proportionality con-
straints do exist under either an eighth amendment or a due
process rationale. If so, then one such constraint in punitive
PT?
a
damages cases involving purely economic injuries may be that
they cannot exceed a reasonable multiple of actual damages.
Thus, if the Constitution imposes proportionality constraints
on the amount of property that can be taken as punishment for
tortious or criminal conduct, surely there must be at least
equivalent limitations on how much property can be taken for
‘innocent’? (non-tortious and non-criminal) conduct. Put an-
other way, in specific factual contexts if the ultimate incidence
of CERCLA liability is many times a defendant's fairly
apportioned share, liability could be so grossly disproportion-
ate as to be punitive in effect under a United States v. Ward,
448 U.S. 242, 248-49 (1980), and Kennedy v. Mendoza-
Martinez, 372 U.S. 144 (1963), type analysis. There must be a
point at which the nexus of a particular defendant with the
harm remedied becomes so attentuated that ‘‘restitution”’
could no longer be said to be ‘‘equitable’’ and thus becomes
‘*exaction.’’ Where such disproportionate liability is imposed
retroactively, it could hardly be said to have a “‘rational
basis’’ or to be ‘“‘reasonable regulation.”” See Bowen v.
Georgetown University Hospital, __ U.S. __ , 109 S.Ct. 468,
475, 479 (1988) (Scalia, J., concurring).
Moreover, if the imposition of liability becomes so dis-
proportionate as to be punitive in effect, it also violates
multiple constitutional constraints on retroactive and dispro-
portionate punishment. F.g., Solem v. Helm, 463 U.S. 277
(1983); McCleskey v. Kemp, 481 U.S. 279, 315 (1987) (‘The
Eighth Amendment is not limited to capital punishment, but
applies to all penalties.”’); Weaver v. Graham, 450 U.S. 24,
28-31 (1981); Vuitton v. Spencer Handbags Corp., 765 F.2d
966, 972 (2nd Cir. 1985); See also Freeman, Justice Powell's
Constitutional Opinions, 45 Wash. & Lee L. Rev. 411,
443-446 (1988); Freeman, /nappropriate and Unconstitutional
Retroactive Application of Superfund Liability, 42 Bus. Law
215 (1986); Jeffries, A Comment on the Constitutionality of
Punitive Damages, 72 Va. L. Rev. 139 (1986).
Also, if a CERCLA plaintiff is given discretion to shift a
disproportional share of CERCLA liability to a defendant
selected by him through a manipulative strategy of settle-
ments, bifurcated, separate actions and shifts in the common
law burden of proof, the potential for discrimination in the
absence of constraining guidelines raises substantial due pro-
23
cess and equal protection questions. CERCLA damages could
be imposed “in wholly unpredictable amounts bearing no
necessary relation to the actual harm caused.’ Gertz v.
Welch, 418 U.S. 323, 350 (1974). See also Bankers Life &
Casualty Co. v. Crenshaw, __ U.S. _ , 108 S.Ct. 1645,
1655-56 (1988) (O’Connor, J., concurring); (The ‘‘wholly
standardless discretion to determine the severity of punish-
ment appears inconsistent with due process.”’); Eddings v.
Oklahoma, 455 U.S. 104, 111 (1982); A. B. Small Co. v.
American Sugar Refining Co., 267 U.S. 233, 239 (1925) (The
defendant attempts to distinguish those cases [United States
Vv. Cohen Grocery Co., 255 U.S. 81 and Weeds Inc. v. United
States, 255 U.S. 109] because they were criminal prosecu-
tions. But that is not an adequate distinction. The ground or
principle of the decisions was not such as to be applicable oniy
to criminal prosecutions. It was not the criminal penalty that
was held invalid, but the exaction of obedience to a rule or
standard which was so vague and indefinite as really to be no
rule or standard at all. Any other means of exaction . . . was
equally within the principle of those cases. They have been so
construed and applied by other courts in civil proceedings.’’)
(citations omitted.)
Both the Fourth Circuit below, and the Conservation
Chemical court which it quoted, implicitly recognized that if
the ultimate incidence of CERCLA liability were unlimited,
serious constitutional problems would be presented:
The existence of joint and several liability in cases
of indivisible harm does not transform an otherwise
constitutional obligation into one that exacts pun-
ishment. *‘Where there are opportunities for contri-
bution . . . as well as for joinder or impleader of
responsible parties (Fed. R. Civ. P. Rules 14, 20 and
21), it can hardly be said that imposition of joint and
several liability would be unconstitutional.’* Con-
servation Chemical, 619 F. Supp. at 214-15.
858 F.2d at 175, n.33.
But because it assumed that the defendants would be able
to avoid grossly disproportionate liability through a subse-
quent suit for contribution, the Fourth Circuit did not address
the eighth amendment and due process arguments based on
24
the combined effects of disproportionality and retroactivity. It
also used that optimistic assumption to reject generator de-
fendants’ ex post facto and attainder arguments. But from
hindsight. the court’s assumption may prove false. To fore-
stall such a consequence. the statutory allocation of CERCLA
liability should precede the entry of final judgment in this
CERCLA § 107 suit.
The procedural problems posed here are by no means
confined to this particular case. Since the Fourth Circuit is the
first circuit court of appeals to speak to these issues, the
precedents may spread to other circuits as the Government
seeks to obtain from the courts what Congress denied it in the
1986 CERCLA Amendments. Moreover, the two-separate-
actions approach upheld by the Fourth Circuit is inconsistent
with the approaches taken by district courts in the First,
Second, Third. Seventh, Ninth and Tenth Circuits in the
Mottolo, Exxon, Lyncott, Mola, Hines Lumber, Hardage and
Shell cases cited above and thus portends a serious impending
split among the circuits.
Il. THE BURDEN OF PROOF ISSUE
Phe court below stated that the Restatement (Second) of
Torts represents “‘the correct and uniform federal rules appli-
cable to CERCLA cases.” 858 F.2d at 172. But that court
ignored the statements in the Restatement as to who has the
burden of proof. Comment g to Section 433A states that **[a]s
to the burden of proof. and the effect of failure to produce
evidence justifying the apportionment, see § 433B.°° Subsec-
tion 2 of Section 433B lays down a general rule that
iwlihere the tortious conduct of two or more actors
has combined to bring out the harm to the plaintiff,
and one or more of the actors seeks to limit his
liability on the ground that the harm is capable of
apportionment among them, the burden of proof as
to the apportionment is upon each such actor.
But comment d makes it clear that shifting the burden to the
defendant under this rule is predicated upon his being in a
class different from the plaintiff. Comment d explains that
(tlhe reason tor the exceptional rule placing the
burden of proof as to apportionment upon the
defendant or defendants is the injustice of allowing
a proved wrongdoer who has in fact caused harm to
the plaintiff to escape liability merely because the
harm which he has inflicted has combined with
similar harm inflicted by other wrongdoers,. and the
nature of the harm itself has made it necessary that
evidence be produced before it can be apportioned.
In such a case, the defendant may justly be required
to assume the burden of producing that evidence, or
if he is not able to do so, of bearing the full
responsibility. As between the proved tortfeasor
who has clearly caused some harm, and the entirely
innocent plaintiff, any hardship due to lack of
evidence as to the extent of the harm caused should
fail upon the former.
(Emphasis added.)
Here the plaintiffs, the Government and South Carolina,
were in the same class as the generator defendants—all had
contracted with the same transporters for disposal of their
hazardous wastes. Under their own theory of the case, which
the court of appeals adopted, the governments and the gen-
erator defendants had all contributed to the harm. Moreover,
the plaintiffs offered no proof as to any differences in the
qualitative conduct or the wastes of the generator defendants
and their own agencies that would avoid this shift of the
burden of proof back to the plaintiffs under the logic of
comment d. Thus, under no circumstances could the govern-
ments be characterized as “‘entirely innocent plaintiff]s]”° as
compared to the defendants within the contemplation of
comment d. For that reason, the governments could not avail
themselves of the Subsection (2) exception and were instead
subject to the general rule of Section 433B that:
(1) Except as stated in Subsections (2) and (3), the
burden of proof that the tortious conduct of the
defendant has caused the harm to the plaintiff is
upon the plaintiff.
Additionally, Restatement comment e on Section 433B
(2) sounds a caveat that would be applicable to the situation
here even if the plaintiffs were not within the same class of
26
responsible parties as the generator defendants and thus were
‘entirely innocent’’ as contemplated in comment d. Comment
e states:
The cases thus far decided in which the rule stated
in Subsection (2) has been applied all have involved
a small number of tortfeasors, such as two or three.
The possibility arises that there may be so large a
number of actors, each of whom contribute a rela-
tively small and insignificant part to the total harm,
that the application of the rule may cause dispro-
portionate hardship to defendants. Thus if a hun-
dred factories each contribute a small, but. still
uncertain, amount of poilution to a stream, to hold
each of them liable for the entire damage because he
cannot show the amount of his contribution may
perhaps be unjust. Such cases have not arisen,
possibly because in such cases some evidence lim-
iting the liability always has been in fact available.
This comment on when the burden of proof should shift ts
based upon what is fair in light of the relative conduct of the
parties and their potential access to the facts necessary for
apportionment. Usually, where the wastes of multiple gener-
ators are involved, the Government will, because of its broad
investigative powers and its resources, be in a better position
to marshall the facts relative to apportionment. That clearly
was the case here where the Government identified a large list
of all who had dealt with the waste transporters, marshalled
the facts as to volumes of waste disposed of by each and,
indeed, settled with a substantial number of generators on a
volumetric apportionment basis.
The court of appeals acknowledged the applicability of
Section 433B to CERCLA actions but then failed to apply ii.
It inexplicably gave no reason for accepting Section 433A and
rejecting the generator defendants’ arguments on the applica-
bility of Section 433B. Its failure to follow Section 433B, by
reversing the burden of proof on the apportionment Issue,
compounds the problems for petitioners posed by the court's
other procedural error in upholding the lower court’s manda-
tory bifurcation of the liability and allocation issues into two
separate suits.
Congress in CERCLA did not spell out the criteria for
when and under what circumstances joint and several liability
could be imposed under CERCLA. In the absence of statutory
guidance, most courts have turned to its legislative history
and fastened on to the statement of one of the principal
sponsors of the Senate compromise bill that became the law
that the applicability of joint and several liability was to be
governed by “‘traditional and evolving principles of common
law.’ 126 Cong. Rec. 30932 (1980) (statement of Sen. Ran-
dolph). Many courts, like the court of appeals below, have
looked to the Restatement (Second) of Torts for the applicable
common law principles.
The court of appeals’ unexplained rejection of those
principles as reflected in Section 433A and B’s rule as to the
burden of proof departs from the Congressional guidance.
This freewheeling judicial creation of federal substantive and
procedural law is counter to the teaching of a number of
recent decisions of this Court. See, e.g., California v. Sierra
Club, 451 U.S. 287 (1981): Middlesex County Sewerage
Authority v.. National Sea Clammers Ass'n, 453 U.S. 1
(1981); Texas Industries v. Radcliff Materials, Inc., 451 U.S.
630 (1981); Universities Research Assoc., Inc. v. Coutu, 450
U.S. 754 (1981); Touche Ross & Co. v. Redington, 442 U.S.
$60, 568 (1979): Transamerica Mortgage Advisors, Inc. v.
Lewis, 444 U.S. 11 (1979). These opinions are not **constitu-
tional;”’ they concern policies of statutory construction and
judicial decisionmaking. Yet those policies are grounded in
the constitutional structure of separation of powers. They call
for an approach to statutory construction that curtails open-
ended legislative delegations and avoids unguided judicial
resolution of important questions of public policy. They teach
that where the fact or extent of congressional innovation is
significantly uncertain, the courts should resolve the uncer-
tainty against change. Here the departure from separation of
powers principles was much greater than the situations dis-
cussed in the above cases. The Restatement is clear and
unambiguous on the burden of proof issue and it undoubtedly
embodies *‘the common law.”* Thus the court below was not
acting in the face of a *‘vacuum”™ or ‘‘gap’’ and forced to
create “interstitial law.” It simply ignored the common law
28
and, at the instance of the plaintiffs. substituted its own notion
as to what the law ought to be.
In other contexts, the Government has sharply criticized
attempts to underniine traditional common law constraints on
the applicability of joint and several liability by shifting the
burden of proof. A recent Justice Department report specifically
noted that
in the past decade there has been a veritable explosion
of tort liability in the United States . . . . [One of its
principal causes has been] [t]he undermining of cau-
sation through a variety of questionable practices and
doctrines which shift liability to ““deep pocket” de-
fendants even though they did not cause the underly-
ing injury or had only a limited or tangential involve-
ment.
United States Department of Justice, Report of the Tort Policy
Working Group on the Causes, Extent and Policy Implications
of the Current Crisis in Insurance Availability and Affordability,
at 2. (February, 1986) The Report went on to say that one
means that has been used to undermine causation—
increasingly common in toxic torts cases—is the use
of presumptions or burden-shifting techniques to
force the defendant to prove the lack of causation in
order to avoid liability. Frequently, this amounts to
asking the defendant to meet an impossible burden
of proving the negative.
Id. at 34-35.
Since the Government is perhaps the largest waste genera-
tor in the country and its wastes are present at many CERCLA
sites. this question of who has the burden of proof is pertinent in
many CERCLA cases. Moreover, many other CERCLA plain-
tiffs beside the Government have also contributed to the harm or
threat of harm at sites they have cleaned up and for which they
in turn seek cost recovery under CERCLA § 107(a). This
Court's reaffirmation of the Restatement’s common law rule as
to who has the burden of proof in determining whether joint and
several liability is appropriate is needed to put the CERCLA
liability regime back within the congressional guidelines. Such a
decision would also reinforce this Court's recent admonitions to
the lower federal courts to avoid free wheeling. unguided,
creation of federal nghts and remedies.
CONCLUSION
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lhis page intentionally left blank
APPENDICES
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
FILED
DEC 2? 1988
LS. Courts of Appeals
Fourth Circuit
No. 86-1261(L)
No. 86-1263
No. 86-1265
United States of America, et al. ippellees
versus
Monsanto Company, et al.., Appellants,
and
South Carolina Recycling
and Disposal, Inc., et al., Defendants.
On Petition for Rehearing with Suggestion for
Rehearing In Banc.
The appellants’ petitions for rehearing and suggestions
for rehearing in banc were submitted to this Court.
In a requested poll of the Court on the suggestions for
rehearing in banc, Judges Russell, Widener, Hall and Chap-
man voted to rehear the case in banc; and Chief Judge Winter
and Judges Phillips, Murnaghan, Sprouse and Ervin voted
against in banc rehearing. Judge Wilkinson and Judge Wilkins
disqualified themselves from voting.
As the panel considered the petitions for rehearing and a
majority is of the opinion that they should be denied, and as a
majority of the active circuit judges participating voted to
deny rehearing in banc:
A-2
IT IS ADJUDGED AND ORDERED that the petitions
for rehearing and suggestions for rehearing in banc are denied.
Entered at the direction of Judge Sprouse for a panel
consisting of Judge Widener, Judge Sprouse and Judge Ervin.
For the Court.
s/ JOHN M. GREACEN
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 86-1261
UNITED STATES OF AMERICA; SOUTH
CAROLINA DEPARTMENT OF HEALTH AND
ENVIRONMENTAL CONTROL
Plaintiffs-Appellees
Vv.
MONSANTO COMPANY:
ALLIED CORPORATION:
E. M. INDUSTRIES, INC.:
Defendants-Appellants
AMERICAN INSURANCE ASSOCIATION:
CHEMICAL MANUFACTURERS
ASSOCIATION
Amict Curiae
and
SOUTH CAROLINA RECYCLING AND
DISPOSAL, INC.: COLUMBIA ORGANIC
CHEMICAL COMPANY: OSCAR SEIDENBERG:
HARVEY HUTCHINSON: EATON
CORPORATION: RAD SERVICES, IN€.:
AQUAIR CORPORATION:
Defendants
V.
G. D. SEARLE & COMPANY:
WILL ROSS, INC.
Third Party Defendants
B-2
No. 86-1263
UNITED STATES OF AMERICA; SOUTH
CAROLINA DEPARTMENT OF HEALTH AND
ENVIRONMENTAL CONTROL
Plaintiffs-Appellees
°
OSCAR SEIDENBERG:
HARVEY HUTCHINSON;
Defendants-Appellants
AMERICAN INSURANCE ASSOCIATION;
CHEMICAL MANUFACTURERS
ASSOCIATION
Amici Curiae
and
MONSANTO COMPANY: ALLIED CORPORATION;
AQUAIR CORPORATION: E. M. INDUSTRIES.
INC.: SOUTH CAROLINA RECYCLING AND
DISPOSAL, INC.: COLUMBIA ORGANIC
CHEMICAL COMPANY: EATON CORPORATION;
RAD SERVICES, INC.
Defendants
V.
G. D. SEARLE & COMPANY:
WILL ROSS, INC.
Third Party Defendants
B-3
No. 86-1265
UNITED STATES OF AMERICA
Plaintiff-Appellant
and
SOUTH CAROLINA DEPARTMENT OF
HEALTH AND ENVIRONMENTAL CONTROL
Plaintiff
v.
MONSANTO COMPANY: ALLIED CORPORATION:
E. M. INDUSTRIES, INC... SOUTH CAROLINA
RECYCLING AND DISPOSAL, INC.:
OSCAR SEIDENBERG:
HARVEY HUTCHINSON:
2 Defendants-Appellees
AMERICAN INSURANCE CORPORATION:
CHEMICAL MANUFACTURERS
ASSOCIATION
Amict Curiae
and
COLUMBIA ORGANIC CHEMICAL
COMPANY: EATON CORPORATION: RAD
SERVICES, INC.:; AQUAIR CORPORATION
Defendants
vi
G. D. SEARLE & COMPANY:
WILL ROSS, INC.
Third Party Defendants
B-4
Appeal from the United States District Court for the District
of South Carolina, at Columbia. Charles E. Simons, Jr., Sen-
ior United States District Judge. (CA-80-1274-6).
Argued: October 8, 1987 Decided: September 7, 1988
Before WIDENER,. SPROUSE, and ERVIN.
Circuit Judges.
George Clemon Freeman, Jr. (William F. Kennedy; Alfred R.
Light; Thomas E. Knauer: Hunton & Williams on brief):
Isadore S. Bernstein (Hammer & Bernstein on brief) for
Appellants: David Carlisle Shilton, Department of Justice
(F. Henry Habicht, Il, Assistant Attorney General: Myles E.
Flint, Deputy Assistant Attorney General: Vinton D. Lide,
United States Attorney; Mary G. Slocum, Assistant United
States Attorney: Jacques B. Gelin, Department of Justice:
Walton J. McLeod, III, General Counsei, South Carolina
Department of Health & Environmental Control: Charles De
Saillan: Dov Weitman, Environmental Protection Agency on
brief) for Apdellees: (Edward W. Warren: David G. Norell:
Amy R. Sabrin; Kirkland & Ellis; David F. Zoll, Barbara A.
Hindin on brief) for Amicus Curiae Chemical Manufacturers
Association: (Thomas W. Brunner: Laura A. Foggan; Piper &
Marbury on brief) for Amicus Curiae American Insurance
Association.
SPROUSE. Circuit Judge:
Oscar Seidenberg and Harvey Hutchinson (the site-
owners) and Allied Corporation, Monsanto Company, and
EM Industries, Inc. (the generator defendants),'! appeal from
the district court’s entry of summary judgment holding them
liable to the United States and the State of South Carolina (the
governments) under section 107(a) of the Comprehensive
‘Originally a named generator defendant in this case, Aquair
Corporation has entered into a settlement agreement with the
plaintiffs.
B-5
Environmental Response, Compensation, and Liability Act of
1980 (CERCLA). 42 U.S.C.A. § 9607(a) (West Supp. 1987).
The court determined that the defendants were liable jointly
and severally for $1,813,624 in response costs accrued from
the partial removal of hazardous waste from a disposal facility
located near Columbia, South Carolina. The court declined,
however, to assess prejudgment interest against the defend-
ants. We affirm the district court's liability holdings, but we
vacate and remand for reconsideration its denial of prejudg-
ment interest.
i.
In 1972, Seidenberg and Hutchinson leased a four-acre
tract of land they owned to the Columbia Organic Chemical
Company (COCC), a South Carolina chemical manufacturing
corporation. The property, located along Bluff Road near
Columbia, South Carolina, consisted of a small warehouse
and surrounding areas. The lease was verbal, on a month-to-
month basis, and according to the siteowners’ deposition
testimony, was executed for the sole purpose of allowing
COCC to store raw materials and finished products in the
warehouse. Seidenberg and Hutchinson received monthly
lease payments of $200, which increased to $350 by 1980.
In the mid-1970s, COCC expanded its business to include
the brokering and recycling of chemical waste generated by
third parties. It used the Bluff Road site as a waste storage and
disposal facility for its new operations. In 1976, COCC’s
principals incorporated South Carolina Recycling and Dis-
posal Inc. (SCRDI), for the purpose of assuming COCC’s
waste-handling business, and the site-owners began accepting
lease payments from SCRDI.
SCRDI contracted with numerous off-site waste produc-
ers for the transport, recycling, and disposal of chemical and
other waste. Among these producers were agencies of the
federal government and South Carolina,? and various private
. °The federal instrumentalities that contracted with SCRDI
included the Environmental Protection Agency, the Army, the Air
Force, and the Center for Disease Control. The South Carolina
_B-6
entities including the three generator defendants in this titiga-
tion. Although SCRDI operated other disposal sites, it depos-
ited much of the waste it received at the Bluff Road facility.
The waste stored at Bluff Road contained many chemical
substances that federal law defines as “hazardous.”
Between 1976 and 1980, SCRDI haphazardly deposited
more than 7.000 fifty-five gallon drums of chemical waste on
the four-acre Bluff Road site. It placed waste laden drums and
containers wherever there was space, often without pallets to
protect them from the damp ground. It stacked drums on top
of one another without regard to the chemical compatibility of
their contents. It maintained no documented safety proce-
dures and kept no inventory of the stored chemicals. Over
time many of the drums rusted, rotted, and otherwise deteri-
orated. Hazardous substances leaked from the decaying
drums and oozed into the ground. The substances com-
mingled with incompatible chemicals that had escaped from
other containers. generating noxious fumes, fires, and explo-
sions.
On October 26. 1977. a toxic cloud formed when chemi-
cals leaking from rusted drums reacted wiih rainwater.
Twelve responding firemen were hospitalized.* Again, on
July 24, 1979, an explosion and fire resulted when chemicals
stored in glass jars leaked onto drums containing incompatible
substances. SCRDI's site manager could not identify the
substances that caused the explosion, making the fire difficult
to extinguish.
In 1980. the Environmental Protection Agency (EPA)
inspected the Bluff Road site. its investigation revealed that
the facility was filled well beyond its capacity with chemical
waste. The number of drums and the reckless manner in
which they were stacked precluded access to various areas In
the site. Many of the drums observed were unlabeled, or their
labels had become unreadable from exposure, rendering it
Department of Health and Environmental Control also contracted
with SCRDI for waste disposal.
‘This incident sparked substantial publicity, and the siteowners
concede that as of June 1977 they were aware of hazardous waste
disposal activities taking place on their Bluff Road property.
B-7
impossible to identify their contents. The EPA concluded that
the site posed *“‘a major fire hazard.”
Later that year, the United States filed suit under section
7003 of the Resource Conservation and Recovery Act, 42
U.S.C. § 6973, against SCRDI, COCC, and Oscar Seidenberg.
The complaint was filed before the December 11, 1980. effec-
tive date of CERCLA, and it sought only injunctive relief.
Thereafter, the State of South Carolina intervened as a
plaintiff in the pending action.
In the course of discovery, the governments identified a
number of waste generators, including the generator defend-
ants in this appeal, that contracted with SCRDI for waste
disposal. The governments notified the generators that they
were potentially responsible for the costs of cleanup at Bluff
Road under section 107(a) of the newly-enacted CERCLA. As
a result of these contacts, the governments executed individ-
ual settlement agreements with twelve of the identified off-site
producers. The generator defendants, however, declined to
settle.
Using funds received from the settlements. the govern-
ments contracted with Triangle Resource Industries (TRI) to
conduct a partial surface cleanup at the site. The contract
required RAD Services, Inc., a subsidiary of TRI, to remove
75% of the drums found there and to keep a log of the removed
drums. RAD completed its partial cleanup operation in Octo-
ber 1982. The log it prepared documented that it had removed
containers and drums bearing the labels or markings of each of
the three generator defendants.
The EPA reinspected the site after the first phase of the
cleanup had been completed. The inspection revealed that
closed drums and containers labeled with the insignia of each
of the three generator defendants remained at the site. The
EPA also collected samples of surface water, soil, and sedi-
ment from the site. Laboratory tests of the samples disclosed
that several hazardous substances? contained in the waste the
‘The term “hazardous substance” is defined in section 101(14)
of the CERCLA, 42 U.S.A. § 9601(14) (West Supp. !987). The
definition incorporates by reference the substances listed as hazard-
B-&
generator defendants had shipped to the site remained present
at the site.*
Thereafter, South Carolina completed the remaining 25
of the surface cleanup. It used federal funds from the Haz-
ardous Substances Response Trust | und (Superfund). 42
U.S.C. § 9631. as well as state money from the South Carolina
Hazardous Waste Contingency Fund. 5.¢ Code Ann. §
56-160. and in-kind contribution of other state funds to match
the federal contribution.
44
++-
In 1982. the governments filed an amended complaint.
adding the three generator defendants and site-owner Harve)
Hutchinson. and including claims under section 107(a) of
CERCLA against all of the nonsettling defendants. The gov-
ernments alleged that the generator defendants and site-
owners were jointly and severally liable under section 107(a)
for the costs expended completing the surface cleanup at Bluff
Road.
in response, the site-owners contended that they were
innocent absentee landlords unaware of and unconnected to
the waste disposal activities that took place on their land.
They maintained that their lease with COCC did not allow
COCC (or SCRDI to store chemical waste on the premises.
but they admitted that they became unaware of waste storage
in 1977 and accepted lease payments until 1980.
ous or toxic under the Clean Water Act, 33 U.S.C.A. §§ 1317(a),
1321(b)(2)a) (West 1986), the Clean Air Act, 42 U.S.C. § 7412(b).
the Resource Conservation and Recover) Act of 1976, 42 U.S.C.A..
§ 6921 (West 1983 & Supp. 1987), and the Toxic Substances Control
Act. 15 U.S.C. § 2606. Section 102¢a) of CERCLA also authorizes
EPA to list additional substances that “‘may present substantial
danger to the public health or welfare or the environment.” 42
U.S.C.A. § 9602(a) (West Supp. 1987).
‘It is undisputed that hazardous substances of the sort con-
tained in each of the generator defendants’ waste materials were
found at the site. These substances included 1.1,1-Trichloroethane,
acetone, phenol, cresol (methyl phenol). chlorophenoi, and 2.4-
dichlorophenol.
governments response costs Among other detenses C
aimed that none of their specific waste materials contribute
oO the haZardous conditions Blutf Road nd t! e aC C
position of ( I R¢ | \ ) I tne Was CONS
The so asserted tl hey could establist
L gete SC ) ( I R¢ | \ ) t\ nae me 0) lO”? ) »
4°) ‘io QAIT(h 4 a SHOWIN tr ne f nme site
Re sed Sole nroug! ne conduct ol nre e(
wo \ ) co ne Ite novec LOI ‘ 1g <
1 v de he Ing ne d ‘ \ UV) l YTa
e gove ents) summ jJuaggment motion on CERCLA
f L LU) ice ind h. [ re) | ie deiend in ‘ We v
esponsibdie parties under section 107(a). and that none of
em had presented sufficient evidence to support an affir
ve defense under section 107(b The court further con
cluded that the environmental harm at Bluff Road was “‘indi
sible.” and it held all of the defendants jointly and severally,
ve lor the governments response costs. United States \
South Carolina Recycline & Disposal. Inc.. 653 F. Si pp. 984
D.S.C. 1984) (SCRDI)
As to the site-owners liabilitv. the court found it suffi
ent that they owned the Bluff Road site at the time hazard
us substances were deposited there. /d. at 993 (interpreting
42 U.S.C.A. § 9607(a)(2) (West Supp. 1987)). It rejected their
contentions that Congress did not intend to subject ‘‘in-
nocent’ landowners to CERCLA liability. The court similarly
found summary judgment appropriate against the generator
Section 101(25) of CERCLA provides that ** ‘respond’ or
response means remove, removal, remedy, and remedial action,
all such terms (including the terms ‘removal’ and ‘remedial action’)
include enforcement activities related thereto.’ 42 U.S.C.A
9601(25) (West Supp. 1987). The terms ‘“‘remove’™’ and *‘removal,”’
and ‘remedy’ and ‘‘remedial action” are in turn defined at sections
l01(23) and 101(24), 42 U.S.C.A. 8§ 9601 (23), (24) (West Supp
1987)
In its initial summary judgment order, the court refused to hold
COCC liable for response costs. After subsequent proceedings.
however, the court found that COCC was engaged in a joint venture
with SCRDI and therefore shared its liability for the governments’
costs. COCC has not appeaied from that ruling
—————————— NT
B-10
defendants because it was undisputed that (1) they shipped
hazardous substances to the Bluff Road facility; (2) hazardous
substances ‘‘like’’ those present in the generator defendants’
waste were found at the facility: and (3) there had been a
release of hazardous substances at the site. SCRDI, 653 F.
Supp. at 991-93 (interpreting 42 U.S.C.A. 8 9607(a)(3) (West
Supp. 1987)). In this context, the court rejected the generator
defendants’ arguments that the governments had to prove that
their specific waste contributed to the harm at the site, and it
found their constitutional contentions to be ‘without force.”
SCRDI. 653 F. Supp. at 992-93, 995-98. Finally, since none of
the defendants challenged the governments’ itemized ac-
counting of response costs, the court ordered them to pay the
full $1 $13.624 that had been requested. Id. at 1009, 1014. It
refused. however, to add prejudgment interest to the amount
owed. Id. at 1009. This appeal followed.
Il.
The site-owners and the generator defendants first con-
test the imposition of CERCLA liability vel non, and they
challenge the propriety of summary judgment in light of the
evidence presented to the trial court. The site-owners also
reassert the “innocent landowner” defense that the district
court rejected, and claim that the court erroneously precluded
them from presenting evidence of a valid affirmative defense
under section 107(b)(3), 42 U.S.C. § 9607(b)(3). The generator
defendants likewise repeat their arguments based on the
governments’ failure to establish a nexus between their spe-
cific waste and the harm at the site. They also claim that the
trial court ignored material factual issues relevant to affir-
mative defenses to liability. We address these contentions
sequentially, but pause briefly to review the structure of
CERCLA’s liability scheme.
In CERCLA. Congress established “an array of mecha-
nisms to combat the increasingly serious problem of hazard-
ous substance releases.” Dedham Water Co. V. Cumberland
Farms Dairy, Inc., 805 F.2d 1074, 1078 (Ist Cir. 1986).*
xAs one district court has stated, the statute prov ides the federal
government with “the tools necessary for a prompt and effective
B-11
Section 107(a) of the statute sets forth the principal mecha-
nism for recovery of costs expended in the cleanup of waste
disposal facilities. At the time the district court entered
judgment,’ section 107(a) provided in pertinent part:
(a) Covered persons; scope
Notwithstanding any other provision or rule of
law, and subject only to the defenses set forth in
subsection (b) of this section—
(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, [and]
(3) any person who by contract, agreement, or
otherwise arranged for disposal or treatement, 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 owned or operated by another
party or entity and containing such hazardous sub-
stances, and
(4) ...from which there is a release, or a
threatened release which causes the incurrence of
response costs, of a hazardous substance, shall be
liable for—-
(A) all costs of removal or remedial action
incurred by the United States Government or a
State not inconsistent with the national contin-
gency plan.
4? U.S.C.A. § 9607(a) (West Supp. 1987).
response to problems of national magnitude resulting from hazard-
ous waste disposal,”’ and it evinces congressional intent “‘that those
responsible for problems caused by the disposal of chemical poisons
bear the costs and responsibility of remedying the harmful condi-
tions they created.”’ United States v. Reilly Tar & Chemical Corp.,
546 F. Supp. 1100, 1112 (D. Minn. 1982).
Congress amended section 107(a) in 1986, Pub. L. No. 99-499,
100 Stat. 1628-30, 1692, 1693, 1705-06 (1986), but the changes are not
material to the issues presented in this part of the appeal.
B-12
In our view, the plain language of section 107(a) clearly
defines the scope of intended liability under the statute and the
elements of proof necessary to establish it.'° We agree with
the overwhelming body of precedent that has interpreted
section 107(a) as establishing a strict liability scheme.'' Fur-
ther, in light of the evidence presented here, we are persuaded
that the district court correctly held that the governments
satisfied all the elements of section 107(a) liability as to both
the siteowners and the generator defendants.
a
A. SITE-OWNERS) LIABILITY
In light of the strict liability imposed by section 107(a), we
cannot agree with the site-owners contention that they are not
within the class of owners Congress intended to hold liable.
The traditional elements of tort culpability on which the
site-owners rely simply are absent from the statute. The plain
language of section 107(a)(2) extends liability to owners of
\0Many courts have provided succinct analyses of CERCLA’s
legislative history, see generally Dedham Water Co. v. Cumberland
Farms Dairy, Inc., 805 F.2d 1074, 1080-82 (Ist Cir. 1986); New York
v. Shore Realty Corp., 759 F.2d 1032, 1039-42 (2d. Cir. 1985);
United States Vv. Shell Oil Co., 605 F. Supp. 1064, 1068-79 (D. Colo.
1985). which are instructive but need not be repeated here because
of the clarity of the liability provisions at issue. See Blum v.
Stenson. 465 U.S. 886, 896 (1984) (Where... resolution of a
question of federal law turns on a statute and the intention of
Congress, we look first to the statutory language and then to the
legislative history if the statutory language ts unclear.’’).
See e.g., Levin Metals Corp. v. Parr-Richmond Terminal Co.,
799 F.2d 1312. 1316 (9th Cir. 1986); New York v. Shore Realty
Corp., 759 F.2d 1032, 1042 (2d Cir. 1985); Violet v. Picillo, 648 F.
Supp. 1283, 1290 (D.R.1. 1986) (and cases cited therein); see also
United States v. Northeastern Pharmaceutical & Chemical Co., 810
F.2d 726. 732 n.3 (8th Cir. 1986), cert. denied, 108 S. Ct. 146 (1987)
(dictum).
In addition to the unanimous judicial viewpoint that Congress
intended CERCLA liability to be strict, we observe that CERCLA
section 101(32). 42 U.S.C.A. § 9601(32) (West Supp. 1987), provides
that the standard of liability applicable to CERCLA actions shall be
that which governs actions under section 311 of the Clean Water
Act. 33 U.S.C. § 1321. In Steuart Transportation Co. v. Allied
Towing Corp., 596 F. 2d 609, 613 (4th Cir. 1979), we held that the
standard of liability under section 311 is strict liability.
B-13
waste facilities regardless of their degree of participation in
the subsequent disposal of hazardous waste.
Under section 107(a)(2), any person who owned a facility
at a time when hazardous substances were deposited there
may be held liable for all costs of removal or remedial action
if a release or threatened release!? of a hazardous substance
occurs. The site-owners do not dispute their ownership of the
Bluff Road facility, or the fact that releases occurred there
during their period of ownership. Under these circumstances,
all the prerequisites to section 107(a) liability have been
satisfied.'? See Shore Realty, 759 F.2d at 1043-44 (site-owner
"The statute defines ‘release’ to include ‘‘any spilling, leak-
ing, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing into the environment
(including the abandonment or discarding of barrels, containers, and
other closed receptacles containing any hazardous substance or
pollutant or contaminani).”’ 42 U.S.C.A. § 9601(22) (West Supp.
1987).
'*The site-owners’ relative degree of fault would, of course, be
relevant in any subsequent action for contribution brought pursuant
to 42 U.S.C.A. § 9613(f) (West Supp. 1987). Congress, in the
Superfund Amendments and Reauthorization Act of 1986, Pub. L.
99-499, § 113, 100 Stat. 1613, 1647 (1986) [hereafter SARA], estab-
lished a right of contribution in favor of defendants sued under
CERCLA section 107(a). Section 113(f)(1) 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. Such claims shall be brought in accordance with
this section and the Federal Rules of Civil Procedure, and
shall be governed by Federal law. 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 or section
9607 of this title.
42 U.S.C.A. § 9613(f) (West Supp. 1987). The legislative history of
this amendment suggests that in arriving at an equitable allocation of
costs, a court may consider, among other things, the degree of
involvement by parties in the generation, transportation, treatment,
storage, or disposal of hazardous substances. H.R. Rep. No. 253
) |
B-14
held liable under CERCLA section 107(a)(1) even though he
did not contribute to the presence or cause the release of
hazardous substances at the facility.)'4
The site-owners nonetheless contend that the district
court’s grant of summary judgment improperly denied them
the opportunity to present an affirmative defense under sec-
tion 107(b)(3). Section 107(b)(3) sets forth a limited affirmative
defense based on the complete absence of causation. See
Shore Realty, 759 F.2d at 1044. It requires proof that the
release or threatened release of hazardous substances and
resulting damages were caused solely by *‘a third party other
than... one whose act or ommission occurs in connection
with a contractual relationship, existing directly or indirectly,
with the defendant... ..’ 42 U.S.C. § 9607(b)(3). A second
element of the defense requires proof that the defendant
‘took precautions against forseeable acts or omissions of any
such third party and the consequences that could foreseeably
result from such acts or omissions.” Jd. We agree with the
district court that under no view of the evidence could the
site-owners satisfy either of these proof requirements.
First, the site-owners could not establish the absence of a
direct or indirect contractual relationship necessary to main-
tain the affirmative defense. They concede they entered into a
lease agreement with COCC. They accepted rent from COCC,
and after SCRDI was incorporated, they accepted rent from
SCRDI. See United States v. Northernaire Plating Co., 670
F. Supp. 742, 747-48 (W.D. Mich. 1987) (owner who leased
facility to disposing party could not assert affirmative
defense). Second, the site-owners presented no evidence that
they took precautionary action against the forseeable conduct
of COCC or SCRDI. They argued to the trial court that,
although they were aware COCC was a chemical manufactur-
(III), 99th Cong., Ist Sess. 19 (1985), reprinted in 1986 U.S. Code
Cong. & Admin. News 3038, 3042.
'4Congress, in section 101(35) of SARA, acknowledged that
jandowners may affirmatively avoid liability if they can prove they
did not know and had no reason to know that hazardous substances
were disposed of on their land at the time they acquired title or
possession. 42 U.S.C.A. § 9601(35) (West Supp. 1987). This explic-
itly drafted exception further signals Congress’ intent to impose
liability on landowners who cannot satisfy its express requirements.
5 aaa ail
B-15
ing company, they were completely ignorant of all waste
disposal activities at Bluff Road before 1977. They maintained
that they never inspected the site prior to that time. In our
view, the statute does not sanction such willful or negligent
blindness on the part of absentee owners. The district court
committed no error in entering summary judgment against the
site-owners.
B. GENERATOR DEFENDANTS’ LIABILITY
The generator defendants first contend that the district
court misinterpreted section 107(a)(3) because it failed to read
into a statute a requirement that the governments prove a
nexus between the waste they sent to the site and the resulting
environmental harm. They maintain that the statutory phrase
“containing such hazardous substances”’ requires proof that
the specific substances they generated and sent to the site
were present at the facility at the time of release. The district
court held, however, that the statute was satisfied by proof
that hazardous substances “‘‘like’’ those contained in the
generator defendants’ waste were found at the site. SCRDI,
653 F. Supp. at 991-92. We agree with the district court’s
interpretation.
Reduced of surplus language, sections 107(a)(3) and (4)
impose liability on off-site waste generators who:
‘arranged for disposal . . . of hazardous substances
. at any facility ... containing such hazardous
substances . . . from which there is a release. . . of
a hazardous substance.”
42 U.S.C.A. 8§ 9607(a) (3), (4) (West Supp. 1987) (emphasis
supplied). In our view, the plain meaning of the adjective
‘such’? in the phrase ‘“‘containing such hazardous sub-
Stances”’ is “‘[a]like, similar, of the like kind.’’ Black’s Law
Dictionary 1284 (Sth ed. 1979). As used in the statute, the
phrase ‘‘such hazardous substances’’ denotes hazardous sub-
stances alike, similar, or of a like kind to those that were
present in a generator defendant's waste or that could have
been produced by the mixture of the defendant’s waste with
other waste present at the site. It does not mean that the
plaintiff must trace the ownership of each generic chemical
compound found at a site. Absent proof that a generator
defendant’s specific waste remained at a facility at the time of
B-16
release, a showing of chemical similarity between hazardous
substances is sufficient.'*
The overall structure of CERCLA’s liability provisions
also militates against the generator defendants’ “‘proof of
ownership’? argument. In Shore Realty, the Second Circuit
held with respect to site-owners that requiring proof of
ownership at any time later than the time of disposal would go
far toward rendering the section 107(b) defenses superfluous.
Shore Realty, 759 F.2d at 1044. We agree with the court's
reading of the statute and conclude that its reasoning applies
equally to the generator defendants’ contentions. As the
statute provides—*‘[nJotwithstanding any other provision or
rule of law’’—liability under section 107(a) is “*subject only to
the defenses set forth’ in section 107(b). 42 U.S.C.A.
§ 9607(a) (West Supp. 1987) (emphasis added). Each of the
three defenses'® established in section 107(b) “‘carves out
from liability an exception based on causation.’ Shore Re-
alty, 759 F.2d at 1044. Congress has, therefore, allocated the
burden of disproving causation to the defendant who profited
from the generation and inexpensive disposal of hazardous
waste. We decline to interpret the statute in a way that would
neutralize the force of Congress’ intent.!'’
ISCERCLA plaintiffs need not perform exhaustive chemical
analyses of hazardous substances found at a disposal site. See
SCRDI, 653 F. Supp. at 993 n.6. They must, however, present
evidence that a generator defendant's waste was shipped to a site
and that hazardous substances similar to those contained in the
defendant’s waste remained present at the time of release. The
defendant, of course, may in turn present evidence of an affirmative
defense to liability.
'6]n addition to the limited third-party defense discussed above.
sections 107(b)(1) and (2) respectively allow defendants to avoid
liability by proving that the release and resulting damages were
‘caused solely’’ by an act of God or an act of war. 42 U.S.C.
§ 9607(b)(1)(2).
'7In fact, Congress specifically declined to include a similar
nexus requirement in CERCLA. As the Second Circuit in Shore
Realty observed, an early House version of what ultimately became
section 107(a) limited liability to “‘any person who caused or
contributed to the release or threatened release.”’ 759 F.2d at 1044
(quoting H.R. Rep. 7020, 96th Cong., 2d Sess. § 3071(a) (1980)),
reprinted in 2 A Legislative History of the Comprehensive Environ-
mental Response, Compensation and Liability Act of 1980 at 438.
B-17
Finally, the purpose underlying CERCLA’s liability pro-
visions counsels against the generator defendants’ argument.
Throughout the statute’s legislative history, there appears the
recurring theme of facilitating prompt action to remedy the
environmental blight of unscrupulous waste disposal.'® In
deleting causation language from section 107(a), we assume as
have many other courts, that Congress knew of the synergistic
and migratory capacities of leaking chemical waste, and the
technological infeasibility of tracing improperly disposed
waste to its source.'? In view of this, we will not frustrate the
Statute’s salutary goals by engrafting a ‘‘proof of ownership”
requirement, which in practice, would be as onerous as the
language Congress saw fit to delete. See United States v.
Wade, 577 F. Supp. 1326, 1332 (E.D. Pa. 1983) (*‘to require a
plaintiff under CERCLA to ‘fingerprint’ wastes is to eviscer-
ate the statute.*’).
The generator defendants next argue that the trial court
ignored evidence that established genuine factual issues as to
the existence of an affirmative defense to liability. They
maintain that summary judgment was inappropriate because
they presented some evidence that all of their waste had been
removed from Bluff Road prior to cleanup. We agree with the
As ultimately enacted after House and Senate compromise, how-
ever, CERCLA “imposed liability on classes of persons without
reference to whether they caused or contributed to the release or
threat of release.”’ Shore Realty, 759 F.2d at 1044. The legislature
thus eliminated the element of causation from the plaintiff's liability
case. Id.; see also United States v. Bliss, 667 F. Supp. 1298, 1309
(E.D. Mo. 1987) (“‘traditional tort notions, such as proximate cause,
do not apply’’); Violet v. Picillo, 648 F. Supp. 1283, 1290-93 (D.R.I.
1986) (minimal causal nexus); United States v. Conservation Chem-
ical Co., 619 F. Supp. 162, 190 (W.D. Mo. 1985): United States v.
Wade, 577 F. Supp. 1326, 1331-34 (E.D. Pa. 1983).
‘The legislative history underlying the Superfund Amendments
and Reauthorization Act of 1986 echoed this theme with even
greater force than that underlying CERCLA’s original enactment in
1980.
‘In advancing their arduous proof requirements, the generator
defendants make little mention of the fact that leaking chemicals
may combine to form new compounds or escape into the atmo-
sphere before proper response action can be taken. See cases cited
supra note 17.
B-18
trial court, however, that the materials on which the generator
defendants rely were insufficient to create a genuine issue of
material fact.
The generator defendants offered only conclusory allega-
tions, principally based *‘on information and belief,’’ that
their waste, originally deposited at Bluff Road, was at some
time prior to 1979 transported from that facility to other sites
operated by SCRDI.*° To withstand summary judgment under
section 107(b)(3), however, the generator defendants had to
produce specific evidence creating a genuine issue that all of
their waste was removed from the site prior to the release of
hazardous substances there. See 42 U.S.C. § 9607(b)(3).7! In
light of the uncontroverted proof that containers bearing each
of the defendants’ markings remained present at the site at the
time of cleanup and the fact that hazardous substances
chemically similar to those contained in the generators’ waste
were found, the generator defendants’ affidavits and deposi-
20The generator defendants offered the following materials:
1. An officer of the company that oversaw the final cleanup at
Bluff Road testified that he did not know whether drums bearing
Allied’s label actually contained Allied’s waste when they were
removed from the site.
2. An officer of EM Industries averred that SCRDI assured him
prior to 1980 that none of EM Industries’ waste had been deposited
at Bluff Road.
3. An officer of Monsanto averred that two of his employees
inspected the site in 1979, and while they “‘did not explore all areas
of the site, upon information and belief they did not observe any
drums of material taken from [Monsanto's plant].”’
4. An officer of Allied averred that SCRDI’s site manager at
Bluff Road told him in 1979 that all of Allied’s waste was removed
from the site before 1977.
None of these largely second-hand allegations were supported
by evidence tending to show that any of the generators’ waste
materials were actually taken away from the site. ““The mere
existence of a scintilla of evidence in support of the [nonmoving
party's] position will be insufficient [to avoid summary judgment];
there must be evidence on which the [finder of fact] could reason-
ably find for the [nonmoving party].°° Anderson v. Liberty Lobby,
Inc., 106 S. Ct. 2505, 2512 (1986).
2\Had they produced such evidence, it would have created an
issue as to whether the “‘release or threat of release of a hazardous
substance and the damages resulting therefrom were caused solely
by ... an act or omission of a third party.”’ 42 U.S.C. § 9607(b)(3).
B-19
tion testimony simply failed to establish complete removal as
a genuine issue. See Celotex v. Catrett, 477 U.S. 317 (1986)
(summary judgment appropriately granted against nonmoving
party who failed to produce evidence supporting an element
essential to its case on which it bore burden of proof at trial).
The appellants next challenge the district court’s imposi-
tion of joint and several liability for the governments’ re-
sponse costs.*?? The court concluded that joint and several
liability was appropriate because the environmental harm at
Bluif Road was “‘indivisible’’ and the appellants had *‘failed to
meet their burden of proving otherwise.’ SCRDI, 653 F.
Supp. at 994. We agree with its conclusion.
While CERCLA does not mandate the imposition of joint
and several liability, it permits it in cases of indivisible harm.
See Shore Realty, 759 F.2d at 1042 n.13: United States v.
Chem-Dyne, 572 F. Supp. 802, 810-i1 (S.D. Ohio 1983). In
each case, the court must consider traditional and evolving
principles of federal common law,?? which Congress has teft
to the courts to supply interstitially.
>2The site-owners limit their joint and several liability argument
to the contention that it is inequitable under the circumstances of
this case, i.e., their limited degree of participation in waste disposal
activities at Bluff Road. As we have stated, however, such equitable
factors are relevant in subsequent actions for contribution. They are
not pertinent to the question of joint and several! liability. which
focuses principally on the divisibility among responsible parties of
the harm te the environment.
As many courts have noted, a proposed requirement that joint
and several liability be imposed in all CERCLA cases was de'eted
from the final version of the bill. See, e.g., Chem-Dyne, 572 F.
Supp. at 806. “‘The deletion,’ however, ‘‘was not intended as a
rejection of joint and several liability,”’ but rather “‘to have the
scope of liability determined under common law principles.”’ /d. at
808. We adopt the Chem-Dyne court’s thorough discussion of
CERCLA’s legislative history with respect to joint and several
liability. We note that the approach taken in Chem-Dyne was
subsequently confirmed as correct by Congress in its consideration
of SARA’s contribution provisions. See H.R. Rep. No. 253 (1), 99th
Cong., 2d Sess., 79-90 (1985). reprinted in 1986 U.S. Code Cong. &
Admin. News at 2835, 2861-62.
B-20
Under common law rules, when two or more persons act
independently to cause a single harm for which there is a
reasonable basis of apportionment according to the contribu-
tion of each, each is held liable only for the portion of harm
that he causes. Edmonds v. Compagni Generale Transatlan-
tique, 443 U.S. 256, 260 n.8 (1979). When such persons cause
a single and indivisible harm, however, they are held liable
jointly and severally for the entire harm. /d. (citing Restate-
ment (Second) of Torts § 433A (1965)). We think these
principles, as reflected in the Restatement (Second) of Torts,
represent the correct and uniform federal rules applicable to
CERCLA cases.
Section 433A of the Restatement provides:
(1) Damages for harm are to be apportioned
among two or more causes where
(a) there are distinct harms, or
(b) there is a reasonable basis for determining
the contribution of each cause to a single
harm.
(2) Damages for any other harm cannot be appor-
tioned among two or more Causes.
Restatement (Second) of Torts § 433A (1965).
Placing their argument into the Restatement framework,
the generator defendants concede that the environmental
damage at Bluff Road constituted a “single harm,” but .
contend that there was a reasonable basis for apportioning the
harm. They observe that each of the off-site generators with
whom SCRDI contracted sent a potentially identifiable vol-
ume of waste to the Bluff Road site, and they maintain that
liability should have been apportioned according to the vol-
ume they deposited as compared to the total volume disposed
of there by all parties. In light of the conditions at Bluff Road,
we cannot accept this method as a basis for apportionment.
The generator defendants bore the burden of establishing
a reasonable basis for apportioning liability among responsible
parties. Chem-Dyne, 572 F. Supp. at 810; Restatement
B-21]
(Second) of Torts § 433B (1965).24 To meet this burden. the
generator defendants had to establish that the environmental
harm at Bluff Road was divisible among responsible parties.
They presented no evidence, however, showing a relationship
between waste volume, the release of hazardous substances.
and the harm at the site.25 Further, in light of the comingling
of hazardous substances, the district court could not have
reasonably apportioned liability without some evidence dis-
closing the individual and interactive qualities of the sub-
stances deposited there. Common sense counsels that a
million gallons of certain substances could be mixed together
without significant consequences, whereas a few pints of
others improperly mixed could result in disastrous
consequences.*° Under other circumstances proportionate
volumes of hazardous substances may well be probative of
contributory harm.’ In this case, however. volume could not
Section 433(B)(2) of the Restatement provides:
Where the tortious conduct of two or more actors has
combined to bring about harm to the plaintiff, and one or
more of the actors seeks to limit his liability on the ground
that the harm is capable of apportionment among them, the
burden of proof as to the apportionment is upon each such
actor.
Restatement (Second) of Torts § 433(B)(2) (1965).
>SAt minimum, such evidence was crucial to demonstrate that a
volumetric apportionment scheme was reasonable. The govern-
ments presented considerable evidence identifying numerous haz-
ardous substances found at Bluff Road. An EPA investigator re-
ported, for example, that in the first cleanup phase RAD Services
encountered substances “‘in every hazard class, including explo-
sives such as crystallized dynamite and nitroglycerine. Numerous
examples were found of oxidizers, flammable and nonflammable
liquids, poisons, corrosives, containerized gases, and even a small
amount of radioactive material.’’ Under these circumstances, volu-
metric apportionment based on the overall quantity of waste, as
opposed to the quantity and quality of hazardous substances con-
tained in the waste would have made little sense.
*>We agree with the district court that evidence disclosing the
relative toxicity, migratory potential, and synergistic capacity of the
hazardous substances at the site would be relevant to establishing
divisibility of harm.
“Volumetric contributions provide a reasonable basis for ap-
portioning liability only if it can be reasonably assumed, or it has
B-22
establish the effective contribution of each waste generator to
the harm at the Bluff Road site.
Although we find no error in the trial court’s imposition of
joint and several liability, we share the appellants’ conceini
that they not be ultimately responsible for reimbursing more
than their just portion of the governments’ response costs.**
In its refusal to apportion liability, the district court likewise
recognized the validity of their demand that they not be
required to shoulder a disproportionate amount of the costs. It
ruled. however, that making the governments © hole for
response costs was the primary consideration and that cost
allocation was a matter ‘“‘more appropriately considered in an
action for contribution between responsible parties after
plaintiff has been made whole.” SCRDI, 653 F. Supp. at 995
& n.&. Had we sat in place of the district court, we would have
ruled as it did on the apportionment issue, but may well have
retained the action to dispose of the contribution questions.
See 42 U.S.C.A. § 9613(f) (West Supp. 1987). That procedural
course. however, was committed to the trial court's discretion
and we find no abuse of it. As we have stated, the defendants
still have the right to sue responsible parties for contribution,
and in that action they may assert both legal and equitable
theories of cost allocation.*®
been demonstrated. that independent factors had no substantial
effect on the harm to the environment. Cf. Restatement (Second) of
Torts § 433A comment d, illustrations 4, 5 (1965).
>*The final judgment holds the defendants liable for slightly less
than half of the total costs incurred in the cleanup, while it appears
that the generator defendants collectively produced approximately
22% of the waste that SCRDI handled. Other evidence indicates that
agencies of the federal government produced more waste than did
generator defendant Monsanto, and suggests that the amounts
contributed by the settling parties do not bear a strictly proportion-
ate relationship to the total costs of cleaning the facility. We note,
however. that a substantial portion of the final judgment is attribut-
able to litigation costs. We also observe that the EPA has contrib-
uted upwards of $50,000 to the Bluff Road cleanup, and that any
further claims against the EPA and other responsible government
instrumentalities may be resolved in a contribution action pursuant
to CERCLA section 113(f).
~»Contrarv to the generator defendants’ request, it would be
premature for us to interpret the effect of settlement on the rights of
B-23
IV.
The generator defendants raise numerous constitutional
challenges to the district court's interpretation and application
of CERCLA. They contend that the imposition of *‘dispro-
portionate”’ liability without proof of causation violated con-
stitutional limitations on retroactive statutory application and
that it converted CERCLA into a bill of attainder and an ex
post facte law. They further assert, along with the site-
owners, that the trial court’s construction of CERCLA in-
fringed their substantive due process rights.
The district court held that CERCLA does not create
retroactive liability, but imposes a prospective obligation for
the post-enactment environmental consequences of the de-
fendants’ past acts. SCRDI, 653 F. Supp. at 996. Alterna-
tiveiy, the court held that even if CERCLA is understood to
operate retroactively, it nonetheless satisfies the dictates of
due process because its liability scheme is rationally related to
a valid legislative purpose. /d. at 997-98. We agree with the
court’s latter holding, and we find no merit to the generator
defendants’ bill of attainder and ex post facto arguments.*°
Many courts have concluded that Congress intended
CERCLA’s liability provisions to apply retroactively to pre-
enactment disposal activities of off-site waste generators.
nonsetiling parties in contribution actions under CERCLA section
113(f)(2), 42 U.S.C.A. § 9613(f)(2) (West Supp. 1987). We observe,
however, that the possibility this subsection precludes contribution
actions against settling parties signals legislative policy to encourage
settlement in CERCLA cieanup actions. At the same time, we
recognize that the language of CERCLA’s new contribution provi-
sions reveals Congress’ concern that the relative culpability of each
responsible party be considered in determining the proportionate
share of costs each must bear.
The generator d¢fendants also assert, for the first time on
appeal, that the district court’s interpretation of CERCLA violated
the separation of powers doctrine. They argue that the court's
imposition of strict liability without proof of factual causation
departed from Congress’ intent, and that the court strayed from
common-law principles in holding the defendants jointly liable.
These arguments constitute little more than a repackaging of the
Statutory interpretation contentions we have already considered and
rejected. Because we perceive no exceptional circumstances. we
decline to review the separation of powers contention de novo.
B-24
They have held uniformly that retroactive operation survives
the Supreme Court's tests for due process validity.*! We agree
with their analysis.
In Usery v. Turner Eikhorn Mining 7o., 428 U.S. |
(1976), the Supreme Court. in a different context, rejected a
due process challenge to the retroactive operation of the
liability provisions in the Black Lung Benefits Act of 1972.
The Court stated that ‘‘a presumption of constitutionality
attaches to ‘‘legislative Acts adjusting the burdens and bene-
fits of economic life.’ and that ‘the burden is on one
complaining of a due process violation to establish that the
legislature has acted in an arbitrary and irrational way. Id. at
15. It reasoned that although the Act imposed new liability for
disabilities developed prior to its enactment, its operation was
‘justified as a rational measure to spread the costs of the
employees’ disabilities to those who have profited from the
fruits of their labor.” /d. at 18.*°
The reasoning of Turner Elkhorn applies with great force
to the retroactivity contentions advanced here. While the
generator defendants profited from inexpensive waste dis-
posal methods that may have been technically ‘legal’ prior to
1See, e.g., United States vy. Northeastern Pharmaceutical &
Chemical Co., Inc., 810 F.2d 726, 732-34 (8th Cir. 1986). cert.
denied. 108 S. Ci. 146 (1987) (NEPACCO), United States v. Hooker
Chemicals & Plastics Corp., No. Civ-79-990C (W.D.N.Y. Feb. 23,
1988) (Available on WESTLAW DCT database); United States v.
Shell Oil Co.. 605 F. Supp. 1064, 1069-73 (D. Colo. 1985). These
decisions hold that CERCLA’s legislative history and the past-tense
language of section 107(a) evince congressional intent to apply
CERCLA retroactively.
2Similarly, in Pension Benefit Guaranty Corp. v. R.A. Gray &
Co., the Court stated:
Provided that the retroactive application of a statute is
supported by a legitimate legislative purpose furthered by
rational means, judgments about the wisdom of such
legislation remain w'thin the exclusive province of the
legislative and executive branches.
_. . [Due process is satisfied] simply by showing that
the retroactive application is itself justified by a rational
legislative purpose.
467 U.S. 717, 729. 730 (1984).
B-25
CERCLA’s enactment, it was certainly foreseeable at the
time that improper disposal could cause enormous damage to
the environment. CERCLA operates remedially to spread the
costs of responding to improper waste disposal among all
parties that played a role in creating the hazardous conditions.
Where those conditions are indivisible, joint and several
liability is logical, and it works to endure complete cost
recovery. We do not think these consequences are ‘‘particu-
larly harsh and oppressive,’’ United States Trust Co. v. New
Jersey, 431 U.S. 1, 17 n.13 (1977) (retrospective civil liability
not unconstitutional unless it is particularly harsh and oppres-
sive), and we agree with the Eighth Circuit that retroactive
application of CERCLA does not violate due process. United
States v. Northeastern Pharniaceutical & Chemical Co..,
Inc., 810 F.2d 726, 734 (8th Cir. 1986), cert. denied, 108 S. Ct.
146 (1987).
Nor does the imposition of strict, joint and several
liability convert CERCLA into a bill of attainder or an ex post
facto law. United States v. Conservation Chemical €o., 619
F. Supp. 162, 214 (W.D. Mo. 1985); United States v. Tyson,
25 Env’t Rep. Cas. (BNA) 1897 (E.D. Pa. 1986). The infliction
of punishment, either legislatively or retrospectively, is a sine
qua non Of legislation that runs afoul of these constitutional
prohibitions. See Nixon v. Administrator of General Services.
433 U.S. 425, 473-84 (1977) (bill of attainder analysis); Weaver
v. Graham, 450 U.S. 24, 28-30 (1981) (ex post facto law
analysis). CERCLA does not exact punishment. Rather it
creates a reimbursement obligation on any person judicially
determined responsible for the costs of remedying hazardous
conditions at a waste disposal facility. The restitution of
cleanup costs was not intended to operate, nor does it operate
in fact, as a criminal penalty or a punitive deterrent. Cf. Tull
Vv. United States, 107 S. Ct. 1831, 1838 (1987) (distinguishing
civil penalties under Clean Water Act from equitable remedy
of restitution). Moreover, as this case amply demonstrates,
Congress did not impose that obligation automatically on a
legislatively defined class of persons.*
The existence of joint and several liability in cases of indivis-
ible harm does not transform an otherwise constitutional obligation
into one that exacts punishment. ‘Where there are opportunities for
B-26
¥
The United States contends on cross-appeal that the
district court erred in denying its rquest for prejudgment
interest on its response costs. At the time the court issued its
decision, CERCLA contained no explicit provision for the
award of prejudgment interest.*4 Since then, however, Con-
gress has added the following language to section 107(a):
The amounts recoverable in an action under this
section shall include interest on the amounts recov-
erable under subparagraphs (A) through (D). Such
interest shall accrue from the later of (i) the date
payment of a specified amount is demanded in writ-
ing, or (ii) the date of the expenditure concerned.
The rate of interest on the outstanding unpaid bal-
ance of the amounts recoverable under this section
shall be the same rate as is specified for interest on
investments of the Hazardous Substance Superfund
established under subchapter A of chapter 98 of Title
26. For purposes of applying such amendments to
interest under this subsection, the term *‘comparable
maturity’’ shall be determined with reference to the
date on which interest accruing under this subsection
commences.
42 U.S.C.A. 9607(a) (West Supp. 1987). Because of this
addition to the law, we look to the Supreme Court's decision
in Bradley v. Richmond School Board, 416 U.S. 696 (1974),
for the principles controlling application of later-enacted
amendments to previously accrued statutory liability. We
conclude under Bradley that the case must be remanded for
reconsideration of the interest queston pursuant to the terms
of amended statute.
contribution . . . as well as for joinder or impleader of responsible
parties (Fed. R. Civ. P. Rules 14, 20 and 21), it can hardly be said
that imposition of joint and several liability would be unconstitu-
tional.”’ Conservation Chemical, 619 F. Supp. at 214-15.
‘4Although some courts had found implicit authority within
section 107(e)(2), 42 U.S.C. § 9607(e)(2), for awarding interest, the
district court denied the government's request, concluding that the
defendants had not sought to delay the litigation and had not been
recalcitrant, deceptive or unreasonable.
ae
B-27
In Bradley, the Supreme Court ruled that when Congress
amends a law while a case is pending on direct appeal, the
general rule is that the appellate court should apply the law as
amended unless so doing would result in manifest injustice or
would contravene statutory direction or legislative history to
the contrary.*5 /d. at 711: see Nilson Van & Storage Co. v.
Marsh, 755 F.2d 362, 365 (4th Cir.), cert. denied, 474 U.S. 818
(1985). Here, the language and legislative history of the 1986
amendment reveal no statutory direction or congressional
intent to delay its application,** and the defendants have failed
to demonstrate any ‘‘manifest injustice’’ that would arise from
its immediate operation.
The generator defendants contend, however, that Con-
gress’ use of the word “‘shall’’ in the phrase ‘‘amounts
recoverable . . . shall include interest’* does not of itself make
the award of interest mandatory. Following Fourth Circuit
precedent, we must agree wth this contention as far as it
goes. See generally United Hospital Center, Inc. v. Richard-
son, 757 F.2d 1445, 1453 (4th Cir. 1985) (‘in a proper case
‘shall’ may properly be construed as permissive’’). We think,
however, in light of CERCLA’s restitutional purposes and
Congress’ intent to facilitate complete reimbursement, the
amendment generally establishes interest as an element of
recovery— ‘absent a convincing argument to the contrary.”’
In Bradley, the district court granted an award of attorneys
fees to civil rights plaintiffs, despite the absence of explicit statutory
authorization. While the case was pending on appeal before this
court, Congress authorized such fee awards in the Education Act
Amendments of 1972. Although a majority of the en bane court
reversed the award on other grounds, Bradley v. School Board, 472
F.2d 318 (4th Cir. 1972) (en banc), Judge Winter in dissent stated
that the new law should apply to cases pending on appeal. /d. at 335
(Winter, J. dissenting). In a unanimous reversal, the Supreme Court
largely adopted the reasoning of Judge Winter's dissent.
©The Third Circuit in United States v. Union Gas Co., 832 F.2d
1243 (3rd Cir. 1987), cert. granted, 56 U.S.L.W. 638 (March 22,
1988) recently applied another section of the 1986 Superfund
Amendments to a case that was pending on appeal when the
amendments were enacted. The court stated, “‘[t]o the extent that
the added language serves to ‘clarify’ CERCLA, it amounts to a
subsequent declaration of congressional intent that deserves great
weight.”’ Jd. at 1350 (citing Red Lion Broadcasting v. F.C.C., 395
U.S. 367, 380-82 (1969)).
a
B-28
Sterling Forest Associates v. Barnett-Range Corp.. No. 87-
2514, slip op. at 9 (4th Cir. Feb. 26, 1988). Such an argument
should be made in the first instance to the district court.
Accordingly. we must remand the case for reconsideration of
| the interest question under the terms and purposes sought to
be achieved by the amended statute.
VI.
In view of the above. the judgement of the district court
as to the CERCLA liability of the site-owners and generator
defendants is affirmed. The case is remanded, however, for
reconsideration of the question of prejudgment interest.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED.
WIDENER, Circuit Judge. concurring and dissenting:
| concur in the majority opinion in all respects save its
decision not to require the district court to treat the issue of
allocation of costs of cleanup among the various defendants,
slip op. at 27-28. and, as to that, I respectfully dissent. While
it may be true that a subsequent suit for contribution may
adequately apportion the damages among the defendants, |
am of opinion that the district court, as a court of equity, Is
required to retain jurisdiction and answer that question now.
So far as I know, it is now and has been the general law
without any variance that when a court of equity has jurisdiction
it *‘will decide all matters in dispute and decree complete relief.”
e.g. Alexander v. Hillman, 296 U.S. 222, 242 (1935), see Pome-
roy’s Equity Jurisprudence, 3rd Ed (1905) § 181, 231, and that a
court of equity should dispose of a case *‘so as to end litigation,
not to foster it; to diminish suits, not to multiply them.” Payne
v. Hook, 74 U.S. 425, 432, 19 L.Ed. 260, 262 (1869). In Payne.
a case which should control here, even if the statute does not,
the Supreme Court held that once a court of equity had jurisdic-
tion to determine liability for an estate administrator's miscon-
duct, it also had the duty to determine the amount the sureties
would pay in the event the administrator could not satisfy the
judgment. In the face of the admitted liability of the sureties in a
separate action at law, 19 L.Ed. at 262, the Court nevertheless
Denese
B-29
required the lower court in equity to ascertain the liability of the
sureties in the same suit in order that the matter, should the
administrator be unable to pay, not be **. . . turned over to a
court of law, to renew the litigation with his sureties.’* 262 L.Ed.
at 262. Thus, almost the same situation pertained in Payne which
is present here, but with opposite result.
I see great danger in postponing the ultimate apportioning of
the damages to a later day. As an example, a small generator
which deposited a few gallons of relatively innocuous waste
liquid at a site is jointly and severally liable for the entire cost of
cleanup under this decision. And with that I agree. If that
generator were readily available and solvent, however, the
government might well, and probably would, proceed against
him first in collecting its judgment. The vagaries of and delays in
his subsequent suit for contribution might result in needless
financial disaster. | do not see this as a desired or even permis-
sible result.
The statute involved, 42 U.S.C. 9613(M(1). provides that
/a]ny 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.”’ (Italics added) Thus, the
statute plainly provides that discretion with respect to contribu-
tion is not in the district court to consider relief or not as the
majority opinion holds; rather, it is in the generator to seek relief.
for ‘“any person”’ certainly includes the generators of the waste.
So, since the matter was brought before the district court, that
court had no discretion but to decide the question.' To repeat,
the discretion is in the party to make the claim, not in the district
court to defer decision. While I agree that the claims may be
asserted in a separate action. if they are asserted in the main case
they must be decided.
Section 9613(f)(1) is entirely in accord with Payne, and |
think we make a mistake of no little consequence in deciding that
the district court has the discretion either to decide the matter
before it or to relegate the parties to a separate suit.
‘In the unlikely event that there was not sufficient evidence
before the district court, it should simply have required more
evidence to be taken, or should on remand should my view have
prevailed.
B-30
Not only do the statute and federal procedural law require the
course I have suggested, | think that the interests of justice as
well as judicial economy are best served by proceeding in that
manner.
APPENDIX C
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
FILED
AUG 30 1988
U.S. Court of Appeals
Fourth Circuit
No. 86-126]
No. 86-1263
No. 86-1265
United States of America. et al..
Plaintiffs-Appellees,
V.
Monsanto Co.. et al..
De fe ndants- Appe llanis
American Insurance Assoc.. et al..
Amict Curiae,
and
South Carolina Recycling
and Disposal, Inc., et al.,
De he ndants.
Vv.
G. D. Searle & Co.. et al..
Third Party Defendants
Appeals from the United States District Court for
the District of South Carolina, at Columbia, Charles E.
Simons, Jr., District Judge.
Upon consideration of the government's motion to enter
consent decree and the response thereto,
IT IS ORDERED that the government's motion to enter
the consent decree for response costs and dismissal of AquAir
Corporation is granted.
~~
ty
Entered at the direction of Judge Sprouse, with the
concurrence of Judge Ervin. Judge Widener dissents.
For the Court.
s/ JOHN M. GREACEN
Clerk
D-|
APPENDIX D
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
UNITED STATES
OF AMERICA
and
SOUTH CAROLINA
DEPARTMENT OF
HEALTH AND
ENVIRONMENTAL
CONTROL Amended
JUDGMENT IN A CIVIL CASE
\
SOUTH CAROLINA
RECYCLING AND
DISPOSAL, INC.;
OSCAR SEIDENBERG:
HARVEY HUTCHINSON:
MONSANTO COMPANY:
ALLIED CORPORATION:
AQUAIR CORPORATION
AND EM INDUSTRIES, INC. CASE NO. 3:80-1274-6
___ Jury Verdict. This action came before the Court for a trial
by jury. The issues have been tried and the jury has rendered
its verdict.
x_ Decision by Court. This action came to hearing before
the Court. The issues have been heard and a decision has been
rendered.
IT IS ORDERED AND ADJUDGED that the Plaintiff.
United States of America, recover of the defendants jointly
and severally the sum of One Million, Five Hundred Sixty-
One Thousand, One Hundred Thirty-Four Dollars and 55/100
($1,561,134.55).
IT IS FURTHER ORDERED that the Plaintiff Interve-
nor, South Carolina Department of Health and Environmental
a
D-2
Control. recover of the defendants jointly and severally the
sum of Two Hundred Fifty Two Thousand, Four Hundred
Eighty Nine Dollars and 46/100 ($252,489.46).
Post-judgment interest will run at the rate of 5.63 percent
Entered FILED
9-33-86; Sep 23 1986
John W. Williams, Clerk
U.S. District Court
September 23, 1986 JOHN W. WILLIAMS
DATE CLERK
By s/ Lori F. GOLDII s/ Lort F. GOLDII
Deputy Clerk (By) Deputy Clerk
E-]
APPENDIX E
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
UNITED STATES
OF AMERICA,
Plaintiff, Civil Action No. 80-1274-6
and
ORDER
SOUTH CAROLINA
DEPARTMENT OF
HEALTH AND
ENVIRONMENTAL
CONTROL,
Plaintiff-Intervenor,
VS.
SOUTH CAROLINA
RECYCLING AND FILED
DISPOSAL, INC.: Feb. 23, 1984
COLUMBIA ORGANIC ) John W. Williams,
CHEMICAL COMPANY; ) Clerk
OSCAR SEIDENBERG: ) Columbia, S.C
HARVEY HUTCHINSON: )
MONSANTO COMPANY:
ALLIED CORPORATION, )
AQUAIR CORPORATION: )
EATON CORPORATION: )
)
)
)
)
)
)
)
)
}
)
}
}
)
)
)
}
)
)
\
)
)
)
)
)
)
and EM INDUSTRIES, INC..,
Defendants,
Va
G.D. SEARLE & CO., and
WILL ROSS, INC..
Third-Party Defendants
_— A
E-2
INTRODUCTION
This action was instituted by plaintiff United States
pursuant to Section 107 of the Comprehensive Environmental
Response. Compensation, and Liability Act of 1980
(“CERCLA”), 42 U.S.C. $9607, to recover costs of removing
hazardous substances from the surface of the Bluff Road site,
4 hazardous waste site located near Columbia, South Caro-
lina. Named as defendants in this action are four hazardous
waste ‘“‘generators’’, the two owners of the Bluff Road prop-
erty, a lessee of at least a portion of the site, and the site
operator.
Plaintiff United States has filed for partial summary
judgment on the issue of each defendant's joint and several
liability for costs incurred in responding to the hazardous
conditions posed by the site. The generator defendants have
likewise filed motions for summary judgment against plaintiff,
as has Columbia Organic Chemical Company (*COCC’™), a
lessee of at least a portion of the site.!
The Federal Rules of Civil Procedure provide, in pert-
nent part, that summary judgment
shall be rendered forthwith if in the pleadings, dep-
ositions. answers to interrogatories and admissions
on file. together with affidavits, if any, show that
there is no genuine issue as to a material fact and that
the moving party is entitled to a judgment as a matter
of law.
Rule S6(c). The Rules also allow that summary judgment
“may be rendered on the issue of liability alone although there
is a genuine issue as to the amount of damages.’ Jd. While
‘‘any doubt as to the existence of a genuine issue of fact Is to
be resolved against the moving party.”’ Wessinger Vv. Southern
Ry. Co., Inc., 438 F. Supp. 1256, 1259 (D.S.C. 1977), the
cinction of the Rule is not to preserve purely speculative
issues of fact for trial. Atlantic States Construction Co. V.
Robert E. Lee & Co., 466 F.2d 827 (4th Cir. 1969). ~ Phe vers
‘(A factual dispute exists regarding whether COCC leased all of
the Bluff Road site or only a portion thereof, as well as hethe
COCC was ever involved in hazardous waste disposal or storage
activilies.
E-3
mission of the summary judgment procedure is to pierce the
pleadings and to assess the proof in order to see if there is a
genuine need for trial.”’ /d. at 829. Furthermore, summary
judgment is not to be denied merely because the pleadings
create the appearance of a dispute. Watson v. Southern Ry.
Co., 420 F. Supp. 483 (D.S.C. 1975), aff'd, 542 F.2d 1170 (4th
Cir. 1976). Rather, “if in essence there is no real dispute as to
the salient facts,’’ the goal of the court is
to smoke out if there is any case, i.e., any genuine
issue as to any material fact, and. if there is no case,
to conserve judicial time and energy by avoiding an
unnecessary trial and by providing a speedy and
efficient summary disposition.
Bland v. Norfolk & Southern Ry. Co., 406 F.2d 863, 866 (4th
Cir. 1969).
Reviewing the record in a light most favorable to the
parties opposing the various motions, this court concludes
that there are no material issues of fact in dispute other than
the nature of COCC’s business activities and the terms of its
lease of the Bluff Road site. Thus, based on the undisputed
facts, the court determines that the summary judgment mo-
tions of the defendants should be denied. The court further
concludes that summary judgment should be granted in favor
of the plaintiff against ail defendants except COCC on the
issue Of those defendants’ joint and several liability under
CERCLA for costs incurred by the government in cleaning up
the surface of the Bluff Road site.
THE UNDISPUTED FACTS
The undisputed facts established in the record can be
summarized as follows. In 1972, Max G. Gergel, President of
COCC, negotiated a verbal lease of at least a part of the Bluff
Road site, a four acre piece of property located along Bluff
Road near Columbia, South Carolina, on behalf of COCC with
the property owners, Oscar Seidenberg (“‘Siedenberg’’) and
Harvey Hutchinson (‘Hutchinson’). COCC purportedly
planned to use its leasehold for storage of raw chemicals and
materials used in its manufacturing processes. COCC contin-
ued to lease at least a part of the property from the owners
until 1978.
E-4
In late 1973 or early 1974, several individuals associated
with COCC—James Q. A. McClure, Max Gergel, and Henry
Tischler —began storing hazardous wastes, including hazard-
ous substances, at the Bluff Road site as part of a waste
brokering and recycling operation. In 1976, the three indiviu-
dals incorporated South Carolina Recycling and Disposal Inc.
(*SCRDI"’) and thereafter continued hazardous waste opera-
tions at the site under auspices of the corporation. SCRDI
occupied part of the site from the years 1976 to 1978, and it
assumed the verbal lease in 1978.
During the course of operations at the site by SCRDI and
its predecessors, an environmental hazard of staggering pro-
portions developed. Some 7,200 fifty-five gallon drums of
hazardous substances, including materials which are toxic,
carcinogenic, mutagenic, explosive, and highly flammable,
accumulated at the site. The drugs were randomly and hap-
hazardly stacked upon one another without regard to their
source or the compatibility of the substances within. Many
drums deteriorated to the point that their hazardous contents
were leaking and oozing onto the ground and onto other
drums. The exposure of these substances to the elements, as
well as to other substances with which they comingled,
caused a number of fires and explosions and generated
noxious and toxic fumes.
Given the extremity of conditions at the site, the United
States Environmental Protection Agency (“EPA”) deter-
mined that the storage and disposal of hazardous substances
there had resulted in releases and threatened releases of
hazardous substances into the environment. EPA endeavored
to remedy the hazardous conditions. An agreement was
reached with twelve waste generators and one transporter
associated with the site to perform 75% of the surface removal
work at the site. The South Carolina Department of Health
and Environmental Control (**~DHEC*’) and several agencies
of the federal government, also generators of some of the
wastes at the Bluff Road site, have agreed as well to contrib-
ute funds to remedial activities at the site. Money from the
Hazardous Substance Response Trust Fund established under
CERLCA was used to finance the cleanup of the remaining
25% of the site’s surface. Plaintiff seeks to recover costs
associated with the second phase of the cleanup in this action.
E-5S
The generator defendants—AquAir Corporation
(“‘AquAir’’), Allied Corporation (**Allied’*), Monsanto Com-
pany (*‘Monsanto’’), and EM Industries, Inc. (**“EM’’)—are
companies that arranged with SCRDI and its predecessors for
treatment or disposal of hazardous substances. Drums belong-
ing to each of these defendants were observed at the site
during and before cleanup of the site. Moreover, hazardous
substances of the same type found in each of these defend-
ant’s wastes were identified in samples taken at the site during
cleanup operations.
DEFENDANT’S LIABILITY UNDER CERCLA §107
In Section 107(a)(1)-(4) of CERCLA, 42 U.S.C. § 9607(a)
(1)-(4), Congress established a liability classification scheme
which identifies four classes of defendants and describes the
connection to a given waste site necessary for each to be held
liable for response costs resulting from the release or threat of
release of hazardous substances at the site. Once the requisite
nexus is established, each class is strictly liable? unless they
can prove that, under the defenses enumerated in CERCLA
Section 107(b)(1)-(4), the release or threat of release of haz-
ardous substances was caused solely by unrelated persons or
events. Applying Section 107(a) to the undisputed facts, each
defendant is clearly liable.
A. LIABILITY OF GENERATOR DEFENDANTS
Section 107(a) of CERCLA provides in part that
>The standard of liability provided for in Section i107 is undoubt-
edly strict liability. See, e.g., United States v. Price, Civil Action
No. 80-4104, 19 E.R.C. 1638, 1647 (D.N.J. July 28, 1983); City of
Philadelphia v. Stepan Chemical Co., 544 F. Supp. 1135, 1148 (E.D.
Pa. 1982); United States v. Royal N. Hardage, No. CIV 80-1031-W,
Findings of Fact and Conclusions of Law (W.D. Okla. December 13,
1982), 13 ELR 20189. Apart from the express language of the
provision, the definitional section of CERCLA, 42 U.S.C. $9601
(32), makes it clear that the standard of liability that obtains under
CERCLA ts the same as the standard under Section 311 of the Clean
Water Act, 33 U.S.C. $1321. That section clearly imposes strict
liability. See, e.g., United States v. Bear Marine Services, 509 F.
Supp. 710 (E.D. La. 1980), rem'd on other grounds, 696 F.2d 1117
(Sth Cir. 1983): United States v. Tex Tow, 589 F.2d 1310 (7th Cir.
1978).
E-6
Notwithstanding any other provision or rule of
law. and subject only to the defenses set forth in
subsection (b) of this sectlon—
(3) any person who by contract, agreement, or
otherwise arranged for disposal or treatment, oF
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 owned or operated by another
party or entity and containing such hazardous sub-
stances .. . from which there is a release, or threat-
ened release which causes the incurrence of re-
sponse costs, of a hazardous substance, shall be
liable for—
(A) all costs of removai or remedial action
incurred bythe United States Government or a
State not inconsistent with the national contin-
gency plan....
42 U.S.C. § 9607(a).
Stripping away the excess language of the statute, a
generator may be held liable under Section 107(a)(3) of
CERCLA if the government can prove that:
a. The generator’s hazardous substances were, at some
point in the past, shipped to a facility:
b. The generator’s hazardous substances or hazardous
substances like those of the generator were present at the site;
c. There was a release or threatened release of a or any
hazardous substance at the site;
d. The release or threatened release causes the incur-
rence of response costs.
Under CERCLA’s express terms, plaintiff need proving noth-
ing more. See United States Vv. Wade, 577 F. Supp. 1326(E.D.
Pa. 1983).
Generator defendants would nonetheless have this court
require plaintiff to prove that hazardous substances traceable
to each generator were released at the Bluff Road site or that
E-7
their specific substances were more than a de minimus factor
in a release or threatened release. Significantly, similar *‘cau-
sation’’ arguments were recently expressly rejected by the
Eastern District of Pennsylvania in United States v. Wade,
supra, a case on all fours factually with this one.
In Wade, the court held that to require specific proof of
causation would not only be at odds with the express language
of the statute, but also would effectively ‘‘eviscerate the
statute’’ because of the technologicai infeasibility of *‘finger-
printing’ a given generator’s substances at a site. /d. at 1332.
In support of its conclusion, the court noted that Congress
considered and rejected language imposing liability on “‘any
person who caused or contributed to the release’’4 in favor of
CERCLA’s present liability classification scheme, which
clearly does not include comparable language. /d. at 1333.
Concluding that Congress had not intended to saddle the
government with an impossible causation burden, the court
held that “*[{t]he only required nexus between the defendant
and the site is that the defendant have dumped his waste there
and that the hazardous substances found in the defendant's
waste are also found at the site.”’ /d. at 1333.
‘The generator defendants in Wade, like the generator detend-
ants in this case, read CERCLA Section 107(a)(3) to require a
showing that a generator’s substances were shipped to a site and
that there was a release or threatened release of such hazardous
substances. The statute, however. requires only that there be a
release or threatened release of a or any hazardous substance at the
site.
4The Court was referring to H.R. 7020, 96th Cong., 2d Sess.,
§3071(a)(1), 126 Cong. Rec. at H9459 (daily ed. Sept. 23, 1980) and
Senate Staff Working Paper #1 on S. 1480: Senate Comm. on Envir.
and Pub. Works, 96th Cong., 2d Sess. §4(a) (February 1, 1980),
reprinted in A Legislative History of the Comprehensive Environ-
mental Response, Compensation, and Liability Act of 1980, Senate
Comm. on Envir. and Pub. Works, S. Doc. No. 97-14, 96th Cong.,
2d Sess. (1983).
Notably, provisions of CERCLA’s legislative history cited dy
generator defendants for the proposition that specific causation must
be shown under Section 107(a)(3) relate either to the original
causation language in H.R. 7029 or to a personal injury remedy that
was also dropped from the Act. These provisions are, therefore,
unpersuasive.
E-8
This court agrees with the conclusions reached in Wade
and therefore rejects defendants’ causation arguments. Plain-
tiffs burden of proof is defined by and limited to the express
terms of the statute.’ Applying those terms to the undisputed
facts, it is clear that each of the generator defendants made
arrangements with SCRDI or its predecessors for disposal or
treatment of wastes containing hazardous substances and
that, as evidenced by the identification of each generator’s
drums at the Bluff Road site, such wastes were shipped to the
site. It is further undisputed that hazardous substances like
those of each of the generator defendants were present at the
site at the time of cleanup, as shown oy samples taken at the
site: that there were releases and threatened releases of
hazardous substances at the site; and that the government
incurred costs in responding to those releases and threatened
‘The statute takes into account the synergistic potential of
improperly managed hazardous substances and essentially pre-
sumes a contributory ‘‘causal’’ relationship between each of the
hazardous substances disposed of at a site and the hazardous
conditions existing at the site. This presumption may be rebutted
under Section 107(b) of CERCLA if a defendant can show that the
conditions at the site were caused solely by a person unrelated
contractually to that defendant. While some of the defendants stated
Section 107(b) defenses in their answers, none of them have
supported that defense by way of affidavits or otherwise. Under
summary judgment procedure, a party “‘may not rest upon the mere
allegations or denials of his pleading but... . by affidavits or
otherwise provided in this rule, must set forth specific facts showing
that is a genuine issue for trial.” Fed. R. Civ. P. 56(e).
This court does not mean to suggest that because the govern-
ment was able to show by way of chemical analysis in this case that
each generator’s substances or substances like those of each gener-
ator were at the site, it must undertake extensive sampling and
analysis in performing cleanups. As the government pointed out in
its affidavits, it would have cost in the range of $2.5 million to
attempt through analytical means to identify all waste types in the
conglomerate of materials storéd at the Bluff Road site, approxi-
mately five times the cost of surface removal itself. Less resource
exhaustive means of showing that a generator’s waste or similar
wastes are at a site, such as by identification of a generator’s drum
at the site during cleanup or by way of documentary or circumstan-
tial proof that the wastes were hauled to the site absent proof that
they were subsequently taken away, should also be sufficient to
satisfy this element of proof.
E-9
releases. Thus, based on the undisputed facts, each of these
generator defendants is subject to liability under Section 107
of CERCLA.
B. LIABILITY OF THE LANDOWNERS
Under Section 107(a)(2) of CERCLA. “any person who
at the time of disposal of any hazardous substance owned or
operated any facility at which hazardous substances were
disposed of’ and at which there has been a release or
threatened release of hazardous substances, is liable for
response costs incurred at the site. 42 U.S.C. §9607(a)(2). The
landowners Hutchinson and Seidenberg do not dispute their
ownership of the Bluff Road property or that hazardous
substances were disposed on the property during their period
of ownership. They also have not disputed that there were
releases and threatened releases of hazardous substances at
the site which caused the incurrence of response costs.
Consequently, there are no material issues with respect to
these defendants’ liability.
In this connection, the court notes that after the summary
judgment hearing, the landowners sought to amend their
Answer, which the court permitted with plaintiffs consent.
The landowners urge that their Answer. as amended, raises
disputed issues of fact concerning the affirmative defense to
liability provided by 42 U.S.C. $9607(b)(3). The court does
not agree that the amended Answer and the landowners’
affidavits raise such genuine issues of fact. The §9607(b)(3)
defense would require the landowners to prove inter alia that
“the release or threat of release of a hazardous substance and
the damages resulting thereform were caused solely by. . . (3)
an act or omission of a third party other than. . . one whose
act OF OMission Occurs in connection with the contractual
relationship, existing directly or indirectly with the de-
fendant. . . ."’ (emphasis added). Because there is NO question
of the contractual link between the landowners and SCRDI,
Whose liability is admitted, the landowners cannot under any
circumstances prove that the release was caused “‘solely”* by
a third party which did not share a contractual relationship
with them. Thus, because the §9607(b)(3) defense is unavail-
able to them from the outset, the landowners cannot rely on
disputed factual issues concerning its other requirements to
bar the summary judgment against them.
E-10
C. LiaBitity oF SCRDI
SCRDI has not contested any facts material to its liability
as operator of the Bluff Road site. Furthermore, SCRDI's
counsel consented to the entry of summary judgment against
SCRDI at oral argument on this matter.
D. LIABILITY OF COCC
COCC has attempted to show a factual dispute with
respect to its responsibility for the Bluff Road site by way of
affidavits written in July of 1980 by its President, Steven
Reichlyn and its former President, Max Gergel. Portions of
both affidavits state that COCC was never involved in haz-
ardous waste disposal or storage activities. The Reichlyn
affidavit further suggests that COCC leases only a fraction of
the Bluff Road site from the landowners.
Plaintiff has moved to strike these assertions in the
affidavits, arguing that they fail to raise a genuine issue of fact
because they are grossly inconsistent with the rest of the
record in the case. Plaintiff further contends that the state-
ments in the Reichlyn affidavit are not based on personal
knowledge.
While the court recognizes that other aspecis of the
record sharply conflict with the affidavits offered by COCC, it
concludes that such credibility determinations should be made
at trial, and not on a motion for summary judgment.
JOINT AND SEVERAL LIABILITY OF DEFENDANTS
Having determined that each of the defendants except, at
this point, COCC, are liable for response costs under Section,
107(a) of CERCLA, the extent of their liability must now be
determined. Several courts have recently addressed this issue
and have reached the conclusion that joint and several
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