Appendix — Northeastern Pharmaceutical & Chemical Co. v. United States

; Su US,

e7-63° Amo

yu Of Bet

No. | JOSEPH F. SPANIOL, JR.

abi.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

NORTHEASTERN PHARMACEUTICAL AND CHEMICAL

COMPANY, INC., ef a/.,

Petitioner,

VS.

UNITED STATES OF AMERICA,

Respondent.

APPENDIX TO PETITION FOR WRIT OF

CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE EIGHTH CIRCUIT

TED L. PERRYMAN*

JOHN L. WALKER

ROBERTS, PERRYMAN & BOMKAMP, P.C.

1015 Locust Street, Suite 700

St. Louis, Missouri 63101

(314) 421-1850

Attorneys for Petitioners

* Counsel of Record

St. Louis Law Printing Co., Inc., 411 No. Tenth Street 63101 314-231-4477

TABLE OF CONTENTS

Page

Appendix A - Opinion of Court of Appeals ........... A-1l

Appendix B - Judgment of Court of Appeals.......... A-48

Appendix C - Order of Court of Appeals denying peti-

PIL ook pu cue cvewvssonses A-49

Appendix D - Memorandum Opinion of District Court - A-50

Appendix E - Order for final Judgment .............. A-109

Appendix F - Order of District Court denying motion to

alter or amend judgment.............. A-112

Appendix G - Notice of Appeal ..................... A-114

Appendix H - Notice of Cross-Appeal ............... A-II15

Appendix I - Constitutional and statutory provisions

EE cs SCEN ar Oded aba Skea Nea A-116

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 84-1837

Lnited States of America,

Appellee,

¥.

Northeastern Pharmaceutical & Chemical Co., Inc.,

a Dissolved Delaware Corporation, Edwin Michaels

and John W. Lee,

Appellants.

Ronald Mills and Syntex Agribusiness, Inc.

No. 84-1853

United States of America,

Appellant,

v.

Northeastern Pharmaceutical & Chemica! Co., Inc.,

a Dissolved Delaware Corporation, Edwin Michaels

and John W. Lee,

Appellees,

Ronald Mills and Syntex Agribusiness, Inc.

Appeal and Cross-appeal from

the United States District Court

for the Western District of Missouri

—A-2—.

Submitted: March 25, 1985

Filed: December 31, 1986

Before McMILLIAN, JOHN R. GIBSON and BOWMAN,

Circuit Judges.

McMILLIAN, Circuit Judge.

Northeastern Pharmaceutical & Chemica! Co. (NEPACCO),

Edwin Michaels and John W. Lee appeal from a final judgment

entered in the District Court' for the Western District of

Missouri finding them and Ronald Mills jointly and severally

liable for response costs incurred by the government after

December 11, 1980, and all future response costs relative to the

cleanup of the Denney farm site that are not inconsistent with

the national contingency plan (NCP) pursuant to §§ 104, 107 of

the Comprehensive Environmental Response, Compensation,

and Liability Act of 1980 (CERCLA), 42 U.S.C.n§§ 9604, 9607

(appeal No. 84-1837). For reversal, appellants argue the district

court erred in (1) applying CERCLA retroactively, (2) finding

Michaels and Lee individually liable, (3) failing to dismiss

NEPACCO as a party defendant, (4) awarding response costs

absent affirmative proof that the response costs were consistent

with the NCP, (5) refusing to reduce the award of response costs

by the amount of a prior settlement, and (6) denying appellants

a jury trial.

The United States cross-appeals from that part of the district

court judgment denying recovery of response costs incurred

before December 11, 1980, and finding appellants and Mills

were not liable for response costs pursuant to § 7003(a) of the

' The Honorable Russell G. Clark, United States District Judge for

the Western District of Missouri.

pay wen

Resource Conservation and Recovery Act of 1976 (RCRA) (also

known as the Solid Waste Disposal Act), as amended, 42

U.S.C.A. § 6973(a) (West Supp. 1986) (appeal No. 84-1853).

For reversal the government argues the district court erred in (1)

finding the government could not recover response costs incur-

red before the effective date of CERCLA, December 11, 1980,

and (2) finding appellants and Mills were not liable for response

costs under RCRA § 7003(a), 42 U.S.C.A. § 6973(a) (West

Supp. 1986).

For the reasons discussed below, we affirm in part, reverse in

part, and remand for further proceedings consistent with this

opinion.

I. FACTS

The following statement of facts is taken in large part from

the district court’s excellent memorandum opinion, United

States v. Northeastern Pharmaceutical & Chemical Co., 579 F.

Supp. 823 (W.D. Mo. 1984) (VEPACCO). NEPACCO was in-

corporated in 1966 under the laws of De'aware; its principal of-

fice was located in Stamford, Connecticut. Although NEPAC-

CO’s corporate charter was forfeited in 1976 for failure to

maintain an agent for service of process, NEPACCO did not

file a certificate of voluntary dissolution with the secretary of

state of Delaware. In 1974 its corporate assets were liquidated,

and the proceeds were used to pay corporate debts and then

distributed to the shareholders. Michaels formed NEPACCO,

was a major shareholder, and was its president. Lee was

NEPACCO’s vice-president, the supervisor of its manufactur-

ing plant located in Verona, Missouri, and also a shareholder.

Mills was employed as shift supervisor at NEPACCO’s Verona

plant.

From April 1970 to January 1972 NEPACCO manufactured

the disinfectant hexachlorophene at its Verona plant. NEPAC-

CO leased the plant from Hoffman-Taff, Inc.; Syntex

Agribusiness, Inc. (Syntex), is the successor to Hoffman-Taff.

— ron

Michaels and Lee knew that NEPACCO’s manufacturing pro-

cess produced various hazardous and toxic byproducts, in-

cluding 2,4,5-trichlorophenol (TCP), 2,3,7,8-tetrachloro-

dibenzo-p-dioxin (TCDD or dioxin), and toluene. The waste

byproducts were pumped into a holding tank which was

periodically emptied by waste haulers. Occasionally, however,

excess waster byproducts were sealed in 55-gallon drums and

then stored at the plant.

In July 1971 Mills approached NEPACCO plant manager Bill

Ray with a proposal to dispose of the waste-filled 55-gallon

drums on a farm owned by James Denney located about seven

miles south of Verona. Ray visited the Denney farm and

discussed the proposal with Lee; Lee approved the use of Mills’

services and the Denney farm as a disposal site. In mid-July

1971 Mills and Gerald Lechner dumped approximately 85 of the

55-gallon drums into a large trench on the Denney farm (Den-

ney farm site) that had been excavated by Leon Vaughn.

Vaughn then fiiled in the trench. Only NEPACCO drums were

disposed of at the Denney farm site.

In October 1979 the Environmental Protection Agency (EPA)

received an anonymous tip that hazardous wastes had been

disposed of at the Denney farm. Subsequent EPA investigation

confirmed that hazardous wastes had in fact been disposed of at

the Denney farm and the site was not geologically suitable for

the disposal of hazardous wastes. Between January and April

1980 the EPA prepared a plan for the cleanup of the Denney

farm site and constructed an access road and a security fence.

During April 1980 the EPA conducted an on-site investigation,

exposed and sampled 13 of the 55-gallon drums, which were

found to be badly deteriorated, and tock water aiid soil

samples. The samples were found to contain ‘‘alarmingly’’ high

concentrations of dioxin, TCP and toluene.

In July 1980 the EPA installed a temporary cap over the

trench to prevent the entry and run-off of surface water and to

minimize contamination of the surrounding soil and ground-

ee

water. The EPA also contracted with Ecology & Environment,

Inc., for the preparation of a feasibility study for the cleanup of

the Denney farm site. Additional on-site testing was conducted.

In August 1980 the government filed its initial complaint against

NEPACCO, the generator of the hazardous substances;

Michaels and Lee, the corporate officers responsible for arrang-

ing for the disposal of the hazardous substances; Mills, the

transporter of the hazardous substances; and Syntex, the owner

and lessor of the Verona plant, seeking injunctive relief and

reimbursement of response costs pursuant to RCRA § 700, 42

U.S.C. § 6973 (count I). In September 1983 the feasibility study

was completed.

In the meantime the EPA had been negotiating with Syntex

about Syntex’s liability for cleanup of the Denney farm site. In

September 1980 the government and Syntex entered into a set-

tlement and consent decree. Pursuant to the terms of the settle-

ment, Syntex would pay $100,000 of the government’s response

costs and handle the removal, storage and permanent disposal

of the hazardous substances from the Denney farm site. The

EPA approved Syntex’s proposed cleanup plan, and in June

1981 Syntex began excavation of the trench. In November 1981

the site was closed. The 55-gallon drums are now stored in a

specially constructed concrete bunker om the Denney farm. The

drums as stored do not present an immineni and substantial ¢ -

dangerment to health or the environment; however, no plan fur

permanent disposal has been developed, and the site will con-

tinue to require testing and monitoring in the future.

In August 1982 the government filed an amended complaint

adding counts for relief pursuant to CERCLA §§ 104, 106, 107,

42 U.S.C. §§ 9604, 9606, 9607 (counts II and III). CERCLA

was enacted afier the filing of the initial complaint. In

September 1982 the district court granted partial summary judg-

ment in favor of the government, holding NEPACCO had the

capacity to be sued under Delaware law. In September 1983 the

district court denied the defense demand for a jury trial, holding

— > wo

the government’s request for recovery of its response costs was

comparable to restitution and thus an equitable remedy. The

trial was conducted during October 1983. The district court fil-

ed its memorandum opinion in January 1984.

Il. DISTRICT COURT DECISION

The district court found that dioxin, hexachlorophene, TCP,

TCB (1,2,3,5-tetrachlorobenzene, also found at the Denney

farm site), and toluene have high levels of toxicity at low-dose

levels and are thus ‘‘hazardous substances’’ within the meaning

of RCRA § 1004(5), 42 U.S.C. § 6903(5), and CERCLA §

101(14), 42 U.S.C. § 9601(14). 579 F. Supp. at 832, 845; see

also United States v. Vertac Chemical Corp., 489 F. Supp. 870,

874-79 (E.D. Ark. 1980) (dioxin). The district court also found

there was a substantial likelihcod that the environment and

human beings would be exposed to the hazardous substances

that had been disposed of at the Denney farm site. 579 F. Supp.

at 846 & n.28 (discussing meaning of ‘‘imminent and substantial

endangerment’’ standard). A state geologist testified the Den-

ney farm site is located in an area in which substances rapidly

move through the soil and into the groundwater and, although

no dioxin had been found in the water in nearby wells, dioxin

had been found as far as 30 inches beneath the soil in the trench.

Id. at 832-33.

A. RCRA Findings

The district court held that RCRA § 7003(a), 42 U.S.C. §

6973(a), requires a finding of negligence in order to hold past

off-site generators and transporters liable for response costs, id.

at 836, and thus RCRA did not apply to past non-negligent off-

site generators and transporters of hazardous substances. /d. at

834-37; accord United States v. A & F Materials Co., 578 F.

Supp. 1249, 1258 (S.D. Ill. 1984); United States v. Waste In-

dustries, Inc., 556 F. Supp. 1301, 1308 (E.D.N.C. 1982), rev’d,

734 F.2d 159 (4th Cir. 1984); United States v. Wade, 546 F.

Supp. 785, 790 (E.D. pa. 1982), appeal dismissed, 713 F.2d 49

yo

(3d Cir. 1983); United States v. Midwest Solvent Recovery, Inc.,

484 F. Supp. 138, 144 (N.D. Ind. 1980).

B. CERCLA Findings

CERCLA § 104, 42 U.S.C. § 9604, authorizes the EPA to

take direct ‘‘response’’ actions, which can include either short-

term ‘‘removal’’ actions or long-term ‘‘remedial’’ actions or

both, pursuant to the NCP, with funds from the ‘‘Superfund,’”?

and to seek recovery of response costs from responsible parties

pursuant to CERCLA § 107, 42 U.S.C. § 9607, in order to

replenish the Superfund. The EPA can also use CERCLA §

106, 42 U.S.C. §9606, to seek injunctions to compel responsible

parties to clean up hazardous waste sites that constitute an ‘‘im-

minent and substantial endangerment”’ to health and the en-

vironment. In the present case, count II sought injunctive relief

pursuant to CERCLA § 106, 42 U.S.C. § 9606, and count III

sought recovery of the government’s past and future response

costs pursuant to CERCLA §§ 104, 107, 42 U.S.C. §§ 9604,

9607.

The district court applied CERCLA retroactively, 579 F.

Supp. at 839, but held the government could not recover

response costs incurred before the effective date of CERCLA,

December 11, 1980. Jd. at 841. The district court also held

CERCLA imposes a standard of strict liability, id. at 843-44,

and that responsible parties can be held jointly and severally

liable, id. at 844-45.

The district court also found NEPACCO liable as an “‘owner

Or operator’ pursuant to CERCLA § 107(a)(1), 42 U.S.C. §

9607(a)(1). Jd. at 847. With respect to the individual defen-

? CERCLA establishes two funds: CERCLA § 232, 42 U.S.C. §

9641, establishes the Post-Closure Liability Trust Fund, which is

funded through taxes on hazardous substances dispose of at

qualified disposal facilities, and the ‘‘Superfund,’’ or Haz rdous

Substances Response Trust, which is funded largely by special taxes

on the petroleum and chemical industries and also by general ap-

propriations.

—

dants, the district court found Mills liable as a ‘‘person who...

accepted any hazardous substances for transport to disposal. . .

sites selected by such person,’’ pursuant to CERCLA §

107(a)(4), 42 U.S.C. § 9607(a)(4). Id. Mills was not represented

by counsel in the district court and has not appealed. The

district court also found Lee liable as an ‘‘owner or operator’’

pursuant to CERCLA § 107(a)(1), 42 U.S.C. § 9607(a)(1), and

as a ‘‘person who by contract, agreement, or otherwise. . . ar-

ranged with a transporter for transport for disposal . . . of

hazardous substances,’’ pursuant to CERCLA § 107(a)(3), 42

U.S.C. § 9607(a)(3). Id. at 847-49. The district court found

Michaels liable as a person who arranged for the transport and

disposal of hazardous substances pursuant to CERCLA §

107(a)(3), 42 U.S.C. § 9607(a)(3). Jd. at 849 n.31. The liability

of NEPACCO, Lee, Michaels, and Mills was joint and several.

Id. at 849-50.

The district court further found the government’s right to

recovery of response costs was very broad and included litiga-

tion costs, attorney’s fees, future response costs, and prejudg-

ment interest, and that the defendants in an action by the

government for recovery of response costs had the burden of

proving that the government’s response costs were inconsistent

with the NCP. /d. at 850-52. NEPACCO, Michaels and Lee

have appealed. Mills has not appealed. The government filed a

cross-appeal. Syntex filed an amicus curiae brief, generally in

support of appellants’ retroactivity arguments.’

> We do not consider in this appeal and cross-appeal the arguments

raised by Syntex about causation, strict liability, joint and several

liability, and separation of powers. Syntex, as amicus, cannot raise

issues not raised by the parties. See, e.g., preservation Coalition, Inc.

v. Pierce, 667 F.2d 851, 861-62 (9th Cir. 1982); Bing v. Roadway Ex-

press, Inc., 485 F.2d 441, 452 (Sth Cir. 1973). Most cases have impos-

ed strict liability and joint and several liability under RCRA and

CERCLA. See, e.g., United States v. Ottati & Goss, Inc., 630 F.

Supp. 1361, 1395-96, 1401 (D.N.H. 1985); United States v. Conserva-

tion Chemical Co., 619 F. Supp. 162, 191, 198-99, 204 (W.D. Mo.

1985); United States v. Chem-Dyne Corp., 572 F. Supp. 802, 808-11

(S.D. Ohio 1983). See also Developments in the Law— Toxic Waste

Litigation, 99 Harv. L. Rev. 1498, 1517-43 (1986).

ee ee eT

— > va

lil. CERCLA— RETROACTIVITY

A. Application of CERCLA to Pre-1980 Acts.

Appellants first argue the district court erred in applying

CERCLA retroactively, that is, to impose liability for acts com-

mitted before its effective date, December 11, 1980. CERCLA §

302(a), 42 U.S.C. § 9652(a), provides that ‘‘[u]nless otherwise

provided, all provisions of this chapter shall be effective on

December 11, 1980.’’ Appellants argue that CERCLA should

not apply to pre-enactment conduct that was neither negligent

nor unlawful when committed. Appeliants argue that all the

conduct at issue occurred in the early 1970s, well before

CERCLA became effective. Appellants also argue that there is

no language supporting retroactive application in CERCLA’s

liability section, CERCLA § 107, 42 U.S.C. § 9607, or in the

legislative history. Appellants further argue that because

CERCLA imposes a new kind of liability, retroactive applica-

tion of CERCLA violates due process and the taking clause. We

disagree.

The district court correctly found Congress intended

CERCLA to apply retroactively. Jd. at 839. We acknowledge

there is a presumption against the retroactive application of

statutes. See United States v. Security Industrial Bank, 459

U.S. 70, 79 (1982). We hold, however, that CERCLA § 302(a),

42 U.S.C. § 9652(a), is ‘‘merely a standard ‘effective date’ pro-

vision that indicates the date wnen an action can first be

brought and when the time begins to run for issuing regulations

and doing other future acts mandated by the statute.’’ United

States v. Shell Oil Co., 605 F. Supp. 1064, 1075 (D. Colo. 1985);

cf. Von Allmen v. Connecticut Teachers Retirement Board, 613

F.2d 356, 359-60 (2d Cir. 1979) (veterans statute).

Although CERCLA does not expressly provide for retroac-

tivity, it is manifestly clear that Congress intended CERCLA to

have retroactive effect. The language used in the key liability

provision, CERCLA § 107, 42 U.S.C. § 9607, refers to actions

eet |

— A-10 —

and conditions in the past tense: ‘‘any person who at the time of

disposal of any hazardous substances owned or operated,”’

CERCLA § 107(a)(2), 42 U.S.C. § 9607(a)(2), ‘‘any person who

. arranged with a transporter for transport for disposal,’’

CERCLA § 107(a)(3), 42 U.S.C. § 9607(a)(3), and ‘‘any person

who .. . accepted any hazardous substances for transport to...

sites selected by such person,’’ CERCLA § 107(a)(4), 42 U.S.C.

§ 9607(a)(4). See, e.g., United States v. Conservation Chemical

Co., 619 F. Supp. 162, 220 (W.D. Mo. 1985); United States v.

Sheli Oil Co., 605 F. Supp. at 1069-73; United States v. South

Carolina Recycling & Disposal, Inc., 20 EnvRt Rep. Cases

(BNA) 1753, 1760-62 (D.S.C. 1984)‘; United States v. A & F

Materials Co., 577 F. Supp. at 1259; United States v. Price, 577

F. Supp. 1103, 1111-12 (D.N.J. 1983); Ohio ex rel. Brown v.

Georgeoff, 562 F. Supp. 1300, 1312 (N.D. Ohio 1983); United

States v. Outboard Marine Corp., 556 F. Supp. 54, 57 (N.D. Il.

1982); United States v. Reilly Tar & Chemical Corp., 546 F.

Supp. 1100, 1113-14 (D. Minn. 1982); see generally

Developments in the Law— Toxic Waste Litigation, 99 Harv.

L. Rev. 1498 (1986) (Developments).

Further, the statutory scheme itself is overwhelmingly

remedial and retroactive. CERCLA authorizes the EPA to

force responsible parties to clean up inactive or abandoned

hazardous substance sites, CERCLA § 106, 42 U.S.C. § 9606,

and authorizes federal, state and local governements and private

parties to clean up such sites and then seek recovery of their

response costs from responsible parties, CERCLA §§ 104, 107,

42 U.S.C. §§ 9604, 9607. In order to be effective, CERCLA

‘ The court in United States v. South Carolina Recycling &

Disposal, Inc., 20 Env’t Rep. Cases (BNA) 1753, 1760 (D.S.C. 1984),

noted CERCLA does not appiy ‘‘retroactively’’ because it does not

impose liability for past conduct; rather, CERCLA imposes liability

upon those parties responsibie for causing certain conditions, that is,

the release or threatened release or hazardous substances, that are the

present or future results of their past actions.

— A-ll —

must reach past conduct. CERCLA’s backward-looking focus

is confirmed by the legislative history. See generally H.R. Rep.

No. 1016, 96th Cong., 2d Sess., reprinted ir 1980 U.S. Code

Cong. & Ad. News 6119 (CERCLA House Report). Congress

intended CERCLA ‘“‘to initiate and establish a comprehensive

response and financing mechanism to abate and control the vast

problems associated with abandoned and inactive hazardous

waste disposal sites.’’ Jd. at 22, 1980 U.S. Code Cong. & Ad.

News at 6125.

The district court also correctly found that retroactive ap-

plication of CERCLA does not violate due process. 579 F.

Supp. at 840-41. Appellants argue CERCLA creates a new

form of liability that is designed to deter and punish those who,

according to current standards, improperly disposed of hazar-

dous substances in the past. We disagree.

It is by now well established that legislative Acts ad-

justing the burdens and benefits of economic life come to

the Court with a presumption of constitutionality, and that

the burden is on one complaining of a due process viola-

tion to establish that the legislature has acted in an ar-

bitrary and irrational way. [L]egislation readjusting rights

and burdens is not unlawful solely because it upsets other-

wise settled expectations. This is true even though the ef-

fect of the legislation is to impose a new duty or liability

based on past acts.

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, i5 (1976)

(citations omitted). Due process is satisfied ‘‘simply by showing

tht the retroactive application of the legislation is itself justified

by a rational legislative purpose.’’ Pension Benefit Guarunty

Corp. v. R.A. Gray & Co., 467 U.S. 717, 730 (1984). ‘‘Provid-

ed 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 within

the exclusive province of the legislative and executive branches .

ee © wr.

— A-12 —

Appellants failed to show that Congress acted in an arbitrary

and irrational manner. Cleaning up inactive and abandoned

hazardous waste disposal sites is a legitimate legislative purpose,

and Congress acted in a rational manner in imposing liability

for the cost of cleaning up such sites upon those parties who

created and profited from the sites and upon the chemical in-

dustry as a whole, NEPACCO, 579 F. Supp. at 841. See United

States v. Ottati & Goss, Inc., 630 F. Supp. 1361, 1398-99

(D.N.H. 1985); United States v. Conservation Chemical Co.,

619 F. Supp. at 221-22; United States v. Shell Oil Co., 605 F.

Supp. at 1072-73; United States v. South Carolina Recycling &

Disposal, Inc., 20 Env’t Rep. Cases (BNA) at 1761-62; see

generally Developments, 99 Harv. L. Rev. at 1556-62. We hold

retroactive application of CERCLA to impose liability upon

responsible parties for acts committed before the effective date

of the statute does not violate due process.

Appellants also summarily argue retroactive application of

CERCLA constitutes an unconstitutional taking of property.

We disagree. First, because appellants do not have a property

interest in the Denney farm site, we question appellants’ stan-

ding to raise a taking issue. Second, we hesitate to characterize

the government’s cleanup as a taking at all; the government’s

cleanup of the Denney farm site has not deprived the property

owner of any property interest. See United States v. Conserva-

tion Chemical Co., 619 F. Supp. at 216-17. Instead, the govern-

ment’s cleanup of the site abated an ‘‘imminent and substantial

endangerment’’ to the public health and the environment, thus

eliminating a public nuisance and restoring value to the property

by removing the hazardous substances. See generally

Developments, 99 Harv. L. REv. at 1564-65 & nn.111, 114,

citing Blaymore, Retroactive Application of Superfund: Can

Oid Dogs Be Taught New Tricks?, 12 B.C. Envtl. Aff. L. Rev.

1, 43-46 (1985).

— A-13 —

B. Application of CERCLA to Pre-1980 Costs

Related to the question of CERCLA’s application to pre-1980

acts is the question whether the government can recover

response costs incurred prior to CERCLA’s effective date. This

issue is raised by the government’s cross-appeal. The district

court held that the government could not recover its pre-

enactment response costs. NEPACCO, 579 F. Supp. at 841-43.

The government argues on cross-appeal that the district court

erred in denying the government recovery of its pre-eCERCLA

response costs. The government argues a close examination of

the statutory language and scheme, legislative history and

legislative purpose supports retroactive liability for pre-

enactment response costs.

The district court concluded that because of the magnitude of

the potential liability for pre-enactment response costs, ‘‘it is

difficult to believe that if Congress had intended to make the

defendants liable for pre-CERCLA expenses, it would not have

said so explicitly and clearly in the statutory language, commit-

tee reports or floor debates.’’ Id. at 843; accord United States

v. Wade, 20 Env’t Rep. Cases (BNA) 1849, 1850-51 (E.D. Pa.

1984). The district court found that CERCLA itself did not

clearly specify whether pre-enactment response costs were

recoverable because the ‘‘statutory language ‘all costs . . . incur-

red’ [in CERCLA § 107(a),] 42 U.S.C. § 9607(a), is susceptivle

to varying interpretations, either all costs incurred regardless of

when incurred or all costs incurred from the date of

enactment.’’ Jd. at 842. The district court noted that ‘‘[t]he

[NCP] makes no provision for the recovery of pre-CERCLA

response costs,”’ id., citing 40 C.F.R. Part 300 (1983), and that

the ‘‘time limitations placed in sections 104(c)(3), 107(f) and

111(d)(1) [,42 U.S.C. §§ 9607(c)(3), (f), 9677(d),}] could equally

indicate that these are the only provisions in which pre-

CERCLA costs may be recoverable.’’ Id. The district court also

found the legislative history ‘‘unpersuasive’’ because recovery

of pre-CERCLA response costs was not discussed at all in the

— on

House, id. at 843 n.21, and the only references to authority to

recover pre-CERCLA response costs in the Senate, § 4(a))2) and

§ 4(n) of S. 1480, were deleted and not enacted. /d. at 843.

After the present case was decided, this issue was exhaustively

examined and resolved in favor of recovery of pre-CERCLA

response costs in United States v. Shell Oil Co., 605 F. Supp. at

1072-79. We find the analysis in United States v. Shell Oil Co.

to be convincing. Accord Mayor of Boonton v. Drew Chemical

Corp., 621 F. Supp. 663, 668-69 (D.N.J. 1985); United States v.

Ward, 618 F. Supp. 884, 989-99 (E.D.N.C. 1985).

In United States v. Shell Oil Co. the federal government sued

under CERCLA §§ 104, 107, 42 U.S.C. §§ 9604, 9607, to

recover the costs it had incurred and will incur in cleaning up the

heavily contaminated Rocky Mountain Arsenal located outside

of Denver, Colorado. The Rocky Mountain Arsenal has been

owned by the United States since 1942 and was used by the

United States Department of the Army for manufacturing and

handling various chemicals and munitions. In addition, since

1947, Shell Oil and its predecessors had leased part of the

Arsenal for the manufacture of pesticides, herbicides and other

chemicals. The Army’s wastes and all or some of Shell’s wastes

were disposed of through, waste disposal systems built and

operated by the Army. The waste disposal systems repeatedly

failed and released the commingled wastes into the environ-

ment, severely contaminating the Arsenal and threatening the

surrounding environment. In 1975 the Army began to clean up

the Arsenal. By December 1, 1983, before CERCLA was

enacted, the Army had incurred about $48 million in response

costs and, by January 1984, had proposed four alternative

cleanup programs, with estimated future response costs ranging

from $210 million to $1.8 billion, and recommended the pro-

gram estimated to cost $360 million. Shell argued, among other

things, that CERCLA did not authorize recovery of the Army’s

pre-enactment response costs.

— A-15 —

The Shell Oil court disagreed and held CERCLA authorized

recovery of pre-enactment response costs. 605 F. Supp. at 1079.

First, the Shel/ Oil court agreed with the district court in the pre-

sent case-that ‘‘congressional intent to either impose or

withhold liability for response costs incurred before CERCLA

cannot be divined from the verb tenses in [CERCLA] § 107)a)

[,.42 U.S.C. § 9607(a)].’’ Jd. at 1073. The Shell Oii court ex-

amined the grammatical structure of CERCLA § 107(a), 42

U.S.C. § 9607(a), and concluded hat each party’s argument

cancelled the other out. J/d., cit 1g Ohio ex rel. Brown v.

Georgeoff, 562 F. Supp. at 1309-10. Shell had argued that ‘‘use

of the imperative ‘shall’ . . . indicate[d] [that Congress] intend-

ed prospective operation of the liability provision.’’ 605 F.

Supp. at 1073. The government had argued, however, that ‘‘all

the other verbs in [CERCLA] § 107(a) [, 42 U.S.C. § 9607(a),]

including ‘costs . . . incurred,’ [were] in the past tense (with the

exception of ‘accepts’). . . . [and thus should] be interpreted to

include pre-enactment events.’’ Jd.

The Shell Oil court did not address the NCP’s failure to pro-

vide for recovery of pre-CERCLA response costs. The Shell Oil

court, however, considered and rejected the related argument

that the requirement in CERCLA § 107(a), 42 U.S.C. § 9607(a),

that recoverable costs were those costs ‘‘not inconsistent with

the [NCP]’’ indicated Congress’ intent that liability for costs

was prospective only. The She// Oil court concluded the ‘‘[t}he

consistency requirement addresses the nature of the response ac-

tion for which costs can be recovered, not the timing of the ac-

tion.’’ Jd. at 1074. The Sheil/ Oil court also refused to interpret

the effective date provision, CERCLA § 302(a), 42 U.S.C. §

9652(a), to limit liability to pre-enactment response costs. /d. at

1075.

Because CERCLA §§ 107(c)(3), 107(f) and 111(d), 42 U.S.C.

§§ 9607(c)(3), (f), 9611(d), contain express time limitations, the

absence of any time limitations in CERCLA § 107(a), 42 U.S.C.

§ 9607(a), arguably supports only prospective liability for

— A-16 —

response costs. CERCLA § 107(c)(3), 42 U.S.C. § 9607(c)(3),

provides a state with a credit against its share of future

maintenance costs for its documented cleanup costs expended

after January 1, 1978 and before December 11, 1980, for

CERCLA § 111, 42 U.S.C. § 9611, actions. This provision

specifies the funding relationship between the federal govern-

ment and individual states for future maintenance costs and

does not address whether the government can recover pre-

CERCLA response from responsible parties.

CERCLA § 107(a)(4)(A)-(C), 42 U.S.C. § 9607(a)(4)(A)-(C),

sets forth three types of liability: (A) response costs incurred by

the United States or a state that are not inconsistent with the

NCP, (B) any other necessary response costs incurred by any

other person that are consistent with the NCP, and (C) natural

resource damages. By separately considering the place of each

type of liability in the statutory scheme, we can discern Congres-

sional intent with respect to recovery of pre-enactment response

costs. CERCLA §§ 107(f), 111(d)(1), 42 U.S.C. §§ 9607(f),

9611(d)(1), preclude recovery of natural resource damages and

claims for such damages against the Superfund if the release of

hazardous substances and the resulting natural resource injury

occurred wholly before CERCLA’s enactment. The Sheil Oil

court noted the provisions authorizing recovery of response

costs by the government, CERCLA § 107(a)(4)(A), 42 U.S.C. §

9607(a)(4)(A), and by any other person, CERCLA §

107(a)(4)(B), 42 U.S.C. § 9607(a)(4)(B), do not contain time

limitations and decided ‘‘[iJn order to give meaning to these

[time limitation] provisions [in CERCLA §§ 107(f), 111(d)(1),

42 U.S.C. §§ 9607(f), 9611(d)(1)], one must assume that liability

for other damages — costs of removal or remedial action incur-

red by the United States or a State (§ 107(a)(4)(A)), and other

necessary response costs incurred by any other person (§

107(a)(4)(B)) — is not so limited.’’ 605 F.Supp. at 1076. Thus,

the Shell Oil court concluded ‘‘Congress implicitly authorized

retroactive application of sections 107(a)(4)(A) and (B) by affir-

matively limiting retroactive application of the third category of

—

liability, damages to natural resources, section 107(a)(4)(C).”’

Id. Cf. United States v. Conservation Chemical Co. 619 F.

Supp. at 213 (three year statute of limitations in CERCLA §

112(d), 42 U.S.C. § 9612(d), applies only to claims against the

Superfund and for natural resource damages), citing United

States v. Mottolo, 605 F. Supp. 898, 901-10 (D.N.H. 1985).

As further explained by the She// Oil court

[t]here is good reason to preclude use of CERCLA

monies and liability for cleanup of sites where both the

release and the damages occurred wholly before enact-

ment. The sites excluded under 107(f) and 111(d) are

stable sites, that is, the environment, though damaged, will

not deteriorate further. ...Congress apparently decided to

utilize the limited resources of the fund created by

CERCLA to clean up the thousands of sites. . .which are

not stable. CERCLA’s goal is to clean up these sites

before further damage occurs.

At the opposite end of the spectrum from the stable sites

excluded under 107(f) and 111(d) are those sites. . .where

the danger to the public health and welfare and to the en-

vironment was so imminent that the United States proceed-

ed with cleanup without a special fund of money for that

purpose and without assurance that it would be repaid by

the persons responsible for the contamination. It was sites

containing this magnitude of public danger that prompted

Congress to enact CERCLA.

Construing section 107(a) to preclude recovery of pre-

enactment response costs would carve out an exception to

the general retroactive scheme of the statute for those most

severe situations where. . .the government’s response com-

menced prior to the enactment of the statute. ... Congress

could [not] have intended to protect the public fisc by im-

posing liability on the responsible parties, yet except the

sites where response had already commenced because the

'

— A-18 —

situations were the most imminently threatening. Such an

interpretation would penalize the government for prompt

response and provide an undeserved windfall to the parties

who had created, then abandoned, some of the most

egregious sites.

605 F. Supp. at 1076-77.

The Shell Oil court then reviewed the legislative history of

CERCLA, including the treatment of § 4(a)(2) and § 4(n) of S.

1480, and concluded it supported imposing liability for pre-

enactment response costs. Jd. at 1077-79. The legislative

history of CERCLA is very difficult to follow, in part because

[t]wo different bills proceeded through the House and the

Senate. The Senate made certain last minute amendments

to its bill, (S. 1480, 96th Cong., 2d Sess. 1980), most

notably the removal of provisions imposing liability for

personal injury caused by hazardous waste disposal. The

House then struck the language in its bill, H.R. 7020, 96

Cong.2d Sess. (1980), and substituted the language of the

Senate bill. H.R. 7020, as amended, was eventually

enacted. The bill retained the House file number, ap-

parently because of a requirement that appropriations

measures Originate in the House.

United States v. Reilly Tar & Chemical Corp., 546 F. Supp. at

1111. As explained by the Shel! Oil court

[t}he liability provisions of CERCLA were derived large-

ly from the original Senate bill, S. 1480. S. 1480 contained

a liability provision for both costs of removal (§ 4(a)(1))

and for natural resources, property and personal injury

damages (§ 4(a)(2)). During discussions of S. 1480 in the

Senate Committee on Environment and Public Works,

concern was expressed about retroactive application of the

bill. ... Senator Domenici introduced a new § 4(n) which

limited recovery for pre-enactment damages recoverable

under § 4(a)(2).

— A-19 —

Significantly, § 4(n)(1) did not apply to § 4(a)(1) which

provided liability for response costs. The Senate report [at

37] emphasized the limited scope of § 4(n): .. .‘*Costs of

removal (cleanup and containment) are not affected by this

provision, nor are any damages associated with continuing

releases.”’

605 F. Supp. at 1077-78. As noted by the district court in the

present case, both § 4(a)(2) and § 4(n) were deleted from the

enacted bill. 579 F. Supp. at 843. We agree with the Shei/ Oil

court, however, that the deletion of these subsections in fact in-

dicates Congress intended to permit recovery of pre-CERCLA

response costs because

[t]he time limitations on damages added by § 4({n) of S.

1840 were maintained in the final version of CERCLA as

the §§ 107(f) and 111(d) limitations on recovery of natural

resources damages. The remaining time limitations of §

4(n) were deleted only because the substantive liability pro-

visions for property and personal injury damages [in §

4(a)(2)] were deleted from the statute. Thus, the scheme of

§ 4(n) in limiting recovery for pre-enactment damages, but

not response costs, was maintained in the final statute. The

legislative history of § 4(n), including the comments em-

phasizing that recovery of removal costs is not to be

limited by retroactivity concerns, therefore applies to the

statute as passed.

605 F. Supp. at 1079 (emphasis added).

In summary, we hold the district court erred in finding that

CERCLA does not authorize recovery of pre-enactment

response costs. That part of the district court judgment holding

that pre-enactment response costs cannot be recovered is revers-

ed.

—

IV. RCRA

A. Standard and Scope of § 7003 Liability

As an alternative basis for recovery of the response costs in-

curred before December 11, 1980, the government argues on

cross-appeal that it can also recover its response costs pursuant

to RCRA § 7003(a), 42 U.S.C.A. § 9673(a) (West Supp. 1986).

The district court did not reach the recovery issue because it

held that under RCRA § 7003(a), 42 U.S.C. § 6973(a) (prior to

1984 amendments discussed below), proof of fault or negligence

was required in order to impose liability upon past off-site

generators and transporters. 579 F. Supp. at 834-37. Because

the government did not allege or prove negligence, the district

court found no liability under RCRA § 7003(a), 42 U.S.C. §

9673(a) (prior to 1984 amendments). /d. at 837. The govern-

ment argues that the standard of liability under RCRA §

7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986), as initially

enacted and as amended in 1984, is strict liability, not

negligence, and that liability under RCRA can be imposed even

though the acts of disposal occurred before RCRA became ef-

fective in 1976. We agree.

RCRA was initially enacted in 1976, Pub. L. No. 94-580, 90

Stat. 2826 (1976), and was amended in 1978, Pub. L. No.

95-609, 92 Stat. 3083 (1978), and 1980, Pub. L. No. 96-482, 92

Stat. 2348 (1980). In November 1984, after the district court’s

January 1984 decision in the present case, RCRA was again

amended by the Hazardous and Solid Waste Amendments of

1984, Pub. L. No. 98-616, 98 Stat. 3271 (1984) (1984 amend-

ments). We have considered the 1984 amendments and the ac-

companying legislative history and, for the reasons discussed

below, we believe the 1984 amendments support the govern-

ment’s arguments about RCRA’s standard and scope of liability

and retroactivity.

The critical issue is the meaning of the phrase ‘‘contributing

to.’’ Before its amendment in 1984, RCRA § 7003(a), 42

— A-21 —

U.S.C. § 6973(a), imposed liability upon any person ‘“‘con-

tributing to’’ ‘‘the handling, storage, treatment, transportation

or disposal of any solid or hazardous waste’’ that ‘‘may present

an imminent and substantial endangerment to health or the en-

vironment.’’ The district court did not find either the statutory

language or the statutory framework helpful in determining

whether past non-negligent off-site generators and transporters

were liable under RCRA § 7003(a), 42 U.S.C. § 6973(a) (prior to

the 1984 amendments). 579 F. Supp. at 834. The district court

then considered the legislative history of the 1980 amendments,

id. at 835-36, because ‘‘[t]he legislative history of the [RCRA] as

originally enacted contains no specific discussion of the reach of

section 7003 and no mention of the reasons for its insertion. The

hastiness of the [RCRA’s] passage in the final days of a congres-

sional session has been well-documented.’’ United States v.

Waste Industries, Inc. 734 F.2d 159, 165 (4th Cir. 1984), citing

Kovacs & Klucsik, The New Federal Role in Solid Waste

Managemet: The Resource Conservation & Recovery Act of

1976, 3 Colum. J. Envtl. L. 205, 216-20 (1976).

The district court found two apparently contradictory

references in the legislative history. The report on Hazardous

Waste Disposal issued by the Subcommittee on Oversight and

Investigations of the Committee on Interstate aad Foreign

Commerce, H.R. Comm. Print No. IFC 31, 96th Cong., Ist

Sess. 31 (1979) (the Eckhardt Report), stated that ‘‘a company

that generates hazardous waste would be someone ‘contributing

to’ an endangerment under § 7003, even where someone else

deposited the waste in an improper disposal site similar to strict

liability under common law.”’ The strict liability language in the

Eckhardt Report, however, was not adopted later in the Senate

Report, which stated

a company that generated hazardous waste might be so-

meone ‘‘contributing to’’ air endangerment under section

7003 even where someone else deposited the waste in an

improper disposal site (similar to strict liability under com-

mon law), where the generator had knowledge of the illicit

—

disposal or failed to exercise due care in selecting or in-

structing the entity actually conducting the disposal.

S. Rep. No. 172, 96th Cong., 2d Sess. 5, reprinted in 1980 U.S.

Code Cong. & Ad. News 5019, 5023. The district court resolved

the battle between the conflicting legislative references in favor

of the Senate Report and held that the language in the Senate

Report ‘‘would suggest strict liability of present responsible lan-

downers, but the qualifying phrases ‘illicit disposal or failed to

exercise due care’ requires a finding of negligence prior to

holding past off-site generators or transporters liable.’’ 579 F.

Supp. at 836; accord United States v. Waste Industries, Inc.,

556 F. Supp. at 1308; United States v. Wade, 546 F. Supp. at

790. But see, e.g., United States v. Reilly Tar & Chemical Corp.

546 F. Supp. at 1108; United States v. Price, 523 F. Supp. 1055,

1070-71 (D.N.J. 1981), aff’d, 688 F.2d 204 (3d Cir. 1982);

United States v. Diamond Shamrock Corp., 17 Env’t Rep.

Cases (BNA) 1329, 1333-34 (N.D. Ohio 1981); United States v.

Solvents Recovery Service, 496 F. Supp. 1127, 1139 (D. Conn.

1980).

Then, in November 1984, Congress passed and President

Reagan signed the 1984 amendments, which were described as

‘*clarifying’’ amendments and specifically addressed the stan-

dard and scope of liability of § 7003(a). As amended in 1984,

RCRA § 7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986)

(new language underlined; deleted language in brackets), now

provides in pertinent part:

Notwithstanding any other provision of this chapter, upon

receipt of evidence that the past or present handling,

storage, treatment, transportation or disposal of any solid

waste or hazardous waste may present an imminent and

substantial endangerment to health or the environment,

the Administrator may bring suit on behalf of the United

States in the appropriate district court [to immediately

restrain any person] against any person (including any past

or present generator, past or present transporter, or past or

— A-23 —

present owner or operator of a treatment, storage, or

disposal facility) who has contributed or who is con-

tributing to such handling, storage, treatment, transporta-

tion or disposal [to stop] to reatrain such person from such

handling, storage, treatment, transportation, or disposal

[or to take such other action as may be necessary], /o order

such person to take such other action as may be necessary,

or both.

As amended, RCRA § 7003(a), 42 U.S.C.A. § 6973(a) (West

Supp. 1986), specifically applies to past generators and

transporters. See United States v. Ottari & Gross, Inc. 630 F.

Supp. at 1400 (applying RCRA as amended in 1984); United

States v. Conservation Chemical Co., 619 F. Supp. at 217-18

(applying RCRA as amended in 1984).

Congress’ intent with respect to the standard of liability under

RCRA § 7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986), as

amended by the 1984 amendments, is clearly set forth in the ac-

companying House Conference Report.* The House Con-

* The earlier House Report also stated:

[t]hese amendments are intended to clarify the breadth of Sec-

tion 7003 as to the persons, conditions and acts it covers. The

amendments clearly provide that anyone who has contributed or

is contributing to the creation, existence, or maintenance of an

imminent and substantial endangerment is subject to the

equitable authority of Section 7003, without regard to fault or

negligence. Such persons include, but are not limited to, past

and present generators (both off-site and on-site) of hazardous

wastes, past and present owners and operators of waste treat-

ment, storage, or disposal facilities, and past and present

transporters of solid or hazardous wastes. \n addition, Section

7003 is clarified to establish that it applies to any act, whether

past or present, which has resulted in or may result in an immi-

nent and substantial endangerment to public health or the en-

vironment....

As evidenced by the definition of ‘‘disposal’’ in Section

1004(3), which includes the ‘‘leaking’’ of hazardous wastes, Sec-

tion 7003 has always provided the authority to require the abate-

ie il ill

——

ference Report also expressly disapproved of the Wade and

Waste Industries cases, which were relied upon by the

NEPACCO court, as well as the NEPACCO decision itself. The

House Conference Report stated:

ment of present conditions of endangerment resulting from past

disposal practices, whether intentional or unintentional... .

Moreover, because Section 7003 focuses on the abatemeni of

conditions threatening health and the environment and not a

particular human activity, it has a/ways reached those persons

who have contributed in the past or are presently contributing to

the endangerment, including but not limited to generators,

regardless of fault or negligence. The amendment, by adding

the words ‘‘have contributed”’ is merely intended to clarify the

existing authority. Thus, for example, non-negligent generators

whose wastes are no longer being deposited or dumped at a par-

ticular site may be ordered to abate the hazard to health or the

environment posed by the leaking of wastes they once deposited

or caused to be deposited on the site. The amendment reflects

the long-standing view that generators and other persons involv-

ed in the handling, storage, treatment, transportation, or

disposal of hazardous wastes must share in the responsibility for

the abatement of the hazards arising from their activities.

In addition, due to the nature of the hazards presented by

disposal sites , Section 7003 is ‘‘intended to confer upon the

courts the authority to grant affirmative equitable relief to the

extent necessary to eliminate any risks posed by toxic wastes.”’

United States v. Price, 688 F.2d 204, 213-14 (3d Cir. 1982). The

section was intended and is intended to abate conditions

resulting from past activities. Hence, the lower court decisions

in United States v. Wade, 546 F. Supp. 785 (E.D. Pa. 1982), and

United States v. Waste Industries, Inc., No. 80-4-Civ-7

(E.D.N.C. 1983), which restricted the application of Section

7003, are inconsistent with the authority conferred by the section

as initially enacted and with these clarifying amendments.

H.R. Rep. No. 198 (Part I), 98th Cong., 2d Sess. 47-49 (1983) (em-

phasis added), reprinted in 1984 U.S. Code Cong. & Ad. News 5576,

5606-09 (emphasis added).

— A-25 —

Section 7003 focuses on the abatement of conditions

threatening health and the environment and not particular-

ly human activity. Therefore, it has always reached those

persons who have contributed in the past or are presently

contributing to the endangerment, including but not

limited to generators, regardless of fault or negligence. The

amendment, by adding the words ‘‘have contributed’’ is

merely intended to clarify the existing authority. Thus, for

example, non-negligent generators whose wastes are no

longer being deposited or dumped at a particular site may

be ordered to abate the hazard to health or the environ-

ment posed by the leaking of the wastes they once

generated and which have been deposited on the site. The

amendment reflects the long-standing view that generators

and other persons involved in the handling, storage, treat-

ment, transportation or disposal of hazardous wastes must

share in the responsibility for the abatement of the hazards

arising from their activities. The section was intended and

is intended to abate conditions resulting from past ac-

tivities. Hence, the district court decisions in United States

v. Wade, 546 F. Supp. 785 (E.D. Pa. 1982), United States

v. Waste Industries, Inc., No. 80-4-Civ-7 (E.D.N.C. 1983),

and United States v. Northeastern Pharmaceutical &

Chemical Co., 579 F. Supp. 823 (W.D. Mo. 1984), which

restricted the application of section 7003, are inconsistent

with the authority conferred by the section as initially

enacted and with these clarifying amendments.

H.R. Conf. Rep. No. 1133, 98th Cong., 2d Sess. 119 (1984)

(emphasis added), reprinted in 1984 U.S. Code Cong. & Ad.

News 5649, 5690 (emphasis added).

Thus, following the 1984 amendments, past off-site

generators and transporters are within the scope of RCRA §

7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986). From the

legislative history of the 1984 amendments, it is clear that Con-

gress intended RCRA § 7003(a), 42 U.S.C.A. § 6973(a) (West

— A-26 —

Supp. 1986), as initially enacted and as amended, to impose

liability without fault or negligence and to apply to the present

conditions resulting from past activities. In other words, RCRA

§ 7003(a), 42 U.S.C.A. § 6973(aj (West Supp. 1986), as initially

enacted and as amended, applies to past non-negligent off-site

generators like NEPACCO and to non-negligent past

transporters like Mills. See United States v. Ottati & Goss, Inc.,

630 F. Supp. at 1400-01 (applying RCRA as amended in 1984),

citing United States v. Hardage, 18 Env’t Rep. Cases (BNA)

1685, 1686 (W.D. Okla. 1982) (RCRA as amended in 1980);

United States v. Conservation Chemical Co., 619 F. Supp. at

198.

Appellants argue, however, that the 1984 amendments should

not be applied to them because the 1984 amendments are not

merely ‘‘clarifying’’ amendments but instead substantively

changed the existing law. We disagree. First, Congress itself ex-

pressly characterized the 1984 amendments as ‘‘clarifying’’

amendments. Second, as part of the legislative history of the

1984 amendments, Congress expressly stated what its intention

had been when it initially passed the RCRA in 1976, even

though the 1976 legislative history contained no specific discus-

sion of the standard and scope of liability of § 7003(a).

Although this is not legislative history as such, the views of

subsequent Congresses on the same or similar statutes are

entitled to some weight in the construction of previous

legislation. Although the views of subsequent Congresses

cannot override the unmistakable intent of the enacting

one, this is not a problem in this case because there was no

absolutely ‘‘unmistakable intent’’ of Congress concerning

section 7003. To the extent that the precise intent of the

enacting Congress may be obscure, the views of subse-

quent Congresses should be given greater deference than

they wouid be otherwise entitled to receive.

United States v. Waste Industries, Inc., 734 F.2d at 166 (discuss-

ing legislative history of 1980 RCRA amendments) (citations

—

omitted); see also Seatrain Shipbuilding Corp. v. Shell Oil Co.,

444 U.S. 572, 596 (1980). Thus, by passing the 1984 amend-

ments, the 98th Congress made clear that the intention of the

94th Congress in enacting the RCRA in 1976 had been to impose

liability upon past non-negligent off-site generators and

transporters of hazardous waste.

B. Retroactivity

This argument is closely related to the question of the scope

of § 7003(a) liability discussed above. Appellants argue that

because RCRA, unlike CERCLA, is prospective in focus and

was not enacted until 1976, RCRA cannot be retroactively ap-

plied to impose liability on them for acts that occurred in 1971.

A similar retroactivity argument was raised in United States v.

Price, 523 F. Supp. at 1071-72. The defendants in United States

v. Price had argued that RCRA could not be applied retroac-

tively to impose liability on them for disposing of toxic wastes in

1972. The Price court rejected the retroactivity argument,

stating

[t]he gravamen of a section 7003 action . . . is not defen-

dants’ dumping practices, which admittedly ceased with

respect to toxic wastes in 1972, but the present imminent

hazard posed by the continuing disposal [, which is defined

by RCRA § 1003(3), 42 U.S.C. § 6903(3), to include *‘[t}he

... leaking... of any solid waste or hazardous waste into

or on any land or water,’’] of ccntaminants into the

groundwater [for into the environment]. Thus, the statute

neither punishes wrongdoing nor imposes liability for in-

juries inflicted by past acts. Rather, as defendants

themselves argue, its orientation is essentially prospective.

When construed in this manner, the statute is simply not

retroactive. It merely relates to current and future condi-

tions.

Id. at 1071; accord United States v. Diamond Shamrock Corp.,

17 Env’t Rep. Cases (BNA) at 1333-34; cf. United States v.

— A-28 —

South Carolina Recycling & Disposal, Inc., 20 Env’t Rep. Cases

(BNA) at 1760-61 (similar analysis of CERCLA). We hold

RCRA is not retroactive because it imposes liability for the pre-

sent and future conditions resulting from past acts. But cf.

United States v. Conservation Chemical Co., 619 F. Supp. at

220-22 (holding RCRA should be considered a retroactive law,

but finding no due process violation).

In summary, we hold that RCRA § 7003(a), 42 U.S.C.A. §

6973(a) (West Supp. 1986), as initially enacted and as clarified

by the 1984 amendments, imposes strict liability upon past off-

site generators of hazardous waste and upon past transporters

of hazardous waste. We reverse that part of the district court

judgment holding that RCRA does not apply to past non-

negligent off-site generators and transporters.

V. SCOPE OF LIABILITY

The district court found NEPACCO liable as the ‘‘owner or

operator’? of a ‘‘facility’’ (the NEPACCO plant) under

CERCLA § 107(a)(1), 42 U.S.C. § 9607(a)(1), and as a

‘*person’’ who arranged for the transportation and disposal of

hazardous substances under CERCLA § 107(a)(3), 42 U.S.C. §

9607(a)(3). 579 F. Supp. at 847. The district court found Lee

liable as a ‘‘person’’ who arranged for the disposal of hazardous

substances under CERCLA § 107(a)(3), 42 U.S.C. § 9607(a)(3),

id. at 847-48, and as an ‘‘owner or operator’’ of the NEPACCO

plant under CERCLA § 107(a)(1), 42 U.S.C. § 9607(a)(1), by

**piercing the corporate veil.’’ Jd. at 848-49. The district court

also found Michaels liable as an ‘‘owner or operator’’ of the

NEPACCO plant under CERCLA § 107(a)({1), 42 U.S.C. §

9607(a)(1). Jd. at 849.

Appellants concede NEPACCO is liable under CERCLA §

107(a)(3), 42 U.S.C. § 9607(a)(3), for arranging for the

transportation and disposal of hazardous substances at the Den-

ney farm site. Brief for Appellants at 25-26. Because NEPAC-

CO’s assets have already been liquidated and distributed to its

— A-29 —

shareholders, however, it is unlikely that the government wiil be

able to recover anything from NEPACCO.

Appellants argue (1) they cannot be held liable as ‘‘owners or

operators”’ of a ‘‘facility’’ because ‘‘facility’’ refers to the place

where hazardous substances are located and they did not own or

operate the Denney farm site, (2) Lee cannot be held individuai-

ly liable for arranging for the transportation and disposal of

hazardous substances because he did not ‘‘own or possess’’ the

hazardous substances and because he made those arrangements

as a corporate officer or employee acting on behalf of NEPAC-

CO, and (3) the district court erred in finding Lee and Michaels

individually liable by ‘‘piercing the corporate veil.’’ Appellants

have not claimed that any of CERCLA’s limited affirmative

defenses apply to them. See CERCLA’s limited affirmative

defenses apply to them. See CERCLA § 107(b)(1), (2), (3), 42

U.S.C. § 9607(b))1), (2), (3) (no liability if defendatn establishes

by preponderance of evidence that release was caused solely by

act of God, act of war, act or omission of third party other than

employee or agent or by contract only if defendant establishes

due care and precautions against foreseeable consequences

taken); see, e.g., United States v. Ward, 618 F. Supp. at 897-98;

United States v. Conservation Chemical Co., 619 F. Supp. at

203-04; see generally Developments, 99 Harv. L. Rev. at

1543-48.

The government argues Lee can be held individually liable

without ‘‘piercing the corporate veil,’’? under CERCLA §

107(a)(3), 42 U.S.C. § 9607(a)(3), and that Lee and Michaels

can be held individually liable as ‘‘contributors’’ under RCRA §

7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986). For the

reasons discussed below, we agree with the government’s liabili-

ty arguments.°®

* Despite the findings by the district court, the government did not

seek to impose liability upon NEPACCO, Lee and Michaels under

CERCLA § 107(a)(1), 42 U.S.C. § 9607(a)(1), as the owners or

— A-30 —

A. Liability under CERCLA § 107(a)(1), 42 U.S.C. §

9607(a)(1)

First, appellants argue the district court erred in finding them

liable under CERCLA § 107(a)(1), 42 U.S.C. § 9607(a)(1), as

the ‘‘owners and operators’’ of a ‘‘facility’’ where hazardous

substances are located. Appellants argue that, regardless of

their relationship to the NEPACCO plant, they neither owned

nor operated the Denney farm site, and that it is the Denney

farm site, not the NEPACCO plant, that is a ‘‘facility’’ for pur-

poses of ‘‘owner and operator’’ liability under CERCLA §

107(a)(1), 42 U.S.C. § 9607(a)(1). We agree.

CERCLA defines the term ‘‘facility’’ in part as ‘‘any site or

area where a hazardous substance has been deposited, stored,

disposed of, or placed, or otherwise come to be located.”’

CERCLA § 101(9)(B), 42 U.S.C. § 9601(9)(B); see New York v.

Shore Realty Corp., 759 F.2d 1032, 1043 n.15 (2d Cir. 1985).

The term ‘‘facility’’ should be construed very broadly to include

‘‘virtually any place at which hazardous wastes have been

_ dumped, or otherwise disposed of.’’ United States v. Ward, 618

F. Supp. at 895 (definition of ‘‘facility’’ includes roadsides

where hazardous waste was dumped); see also United States v.

Conservation Chemical Co., 619 F. Supp. at 185 (stereotypical

waste disposal facility); New York v. General Electric Co., 592

F. Supp. 291, 296 (N.D.N.Y. 1984) (dragstrip); United States v.

Metate Asbestos Corp., 584 F. Supp. 1143, 1148 (D. Ariz. 1984)

scaulimiaeniiaaed _ *

operators of a facility where hazardous substances are located, and in

these appeals the government has expressed no opinion with respect to

‘owner and operator”’ liability under the circumstances in the present

case. Brief for Appellee at 46 n.23. The government further argues

that it is unnecessary to decide whether Michaels would also be liable

under CERCLA § 107)a)(3), 42 U.S.C. § 9607(a)(3), because RCRA §

7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986), ‘‘so clearly fits the

circumstances of this case.’’ Brief for Appellee at 47 n.24. The

district court did not reach the question of Michaels’ liability under

CERCLA § 107(a), 42 U.S.C. § 9607(a). 579 F. Supp. at 849 n.31.

—

— A-31 —

(real estate subdivision). In the present case, however, the place

where the hazardous substances were disposed of and where the

government has concentrated its cleanup efforts is the Denney

farm site, not the NEPACCO plant. The Denney farm site is

the ‘‘facility.”’ Because NEPACCO, Lee and Michaels did not

own or operate the Denney farm site, they cannot be held liable

as the ‘‘owners or operators”’ of a ‘‘facility’” where hazardous

substances are located under CERCLA § 107(a)(1), 42 U.S.C. §

9607(a)(1).

B. Individual Liability under CERCLA § 107(a)(3), 42

U.S.C. § 9607(a)(3)

CERCLA § 107(a)(3), 42 U.S.C. § 9607(a)(3), imposes strict

liability upon ‘‘any person’’ who arranged for the disposal or

transporation for disposal of hazardous substances. As defined

by statute, the term ‘‘person’’ includes both individuals and

corporations and does not exclude corporate officers or

employees. See CERCLA § 101(21), 42 U.S.C. § 9601(21);

United Staies v. Ward, 618 F. Supp. at 894 (CERCLA); cf.

United States v. Pollution Abatement Services of Oswego, Inc.,

763 F.2d 133, 134-35 (2d Cir.) (individual liability for violation

of Rivers and Harbors Appropriation Act of 1899), cert.

denied, 106 S. Ct. 605 (1985). Congress could have limited the

statutory definition of ‘‘person’’ but chose not to do so. Com-

pare CERCLA § 101(20A), 42 U.S.C. § 9601(20A) (limiting

definition of ‘‘owner or operator’’). Moreover, construction of

CERCLA to impose liability upon only the corporation and not

the individual corporate officers and employees who are

responsbile for making corporate decisions about the handling

and disposal of hazardous substances would open an enormous,

and clearly unintended, loophole in the statutory scheme.

First, Lee argues he cannot be held individually liable for hav-

ing arranged for the transportation and disposal of hazardous

substances under CERCLA § 107(a)(3), 42 U.S.C. § 9607(a)(3),

becuase he did not personally own or possess the hazardous

alll

— A-32 —

substances. Lee argues NEPACCO owned or possessed the

hazardous substances.

The government argues Lee ‘‘possessed’’ the hazardous

substances within the meaning of CERCLA § 107(a)(3), 42

U.S.C. § 9607(a)(3), because, as NEPACCO’s plant supervisor,

Lee had actual ‘‘control’’ over the NEPACCO plant’s hazar-

dous substances. We agree. It is the authority to confrol the

handling and disposal of hazardous substances that is critical

under the statutory scheme. The district court found that Lee,

as plant supervisor, actually knew about, had immedicate super-

vision over, and was directly responsible for arranging for the

transporation and disposal of the NEPACCO plant’s hazardous

substances at the Denney farm site. We believe requiring proof

of personal ownership or actual physical possession of hazar-

dous substances as a precondition for liability under CERCLA §

107(a)(3), 42 U.S.C. § 9607(a)(3), would be inconsistent with the

broad remedial purposes of CERCLA. Cf. United States v.

Mottolo, 14 Envtl. L. Rep. (Envtl. L. Inst.) 20497, 20499

(D.N.H. 1984) (person who arranges for disposal or transporta-

tion for disposal need not own or possess the hazardous waste).

Next, Lee argues that because he arranged for the transporta-

tion and disposal of the hazardous stubstances as a corporate

officer or employee acting on behalf of NEPACCO, he cannot

be held individually liable for NEPACCO’s violations. Lee also

argues the district court erred in disregarding the corporate enti-

ty by ‘‘piercing the corporate veil’? because there was no

evidence that NEPACCO was inadequately capitalized, the cor-

porate formalities were not observed, individual and corporate

interests were not separate, personal and corporate funds were

commingled or corporate property was diverted, or the cor-

porate form was used unjustly or fraudulently.

The government argues Lee can be held individually liable,

without ‘“‘piercing the corporate veil,’’ because Lee personally

arranged for the disposal of hazardous substances in violation

— A-33 —

of CERCLA §107)a)(3), 42 U.S.C. § 9607(a)(3). We agree. As

discussed below, Lee can be held individually liable because he

personally participated in conduct that violated CERCLA; this

personal liability is distinct from the derivative liability that

results from ‘‘piercing the corporate veil.’ ‘‘The effect of pier-

cing a corporate veil is to hold the owner [of the corporation]

liable. The rationale for piercing the corporate veil is that the

corporation is something less than a bona fide independent enti-

tv.”’ Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir.

1978). Here, Lee is liable because he personally participated in

the wrongful conduct and not because he is one of the owners of

what may have been a less than bona fide corporation. For this

reason, we need not decide whether the district court erred in

piercing the corporate veil under these circumstances.

We now turn to Lee’s basic argument. Lee argues that he

cannot be held individually liable for NEPACCO’s wrongful

conduct because he acted solely as a corporate officer or

employee on behalf of NEPACCO. The liability imposed upon

Lee, however, was not derivative but personal. Liability was

not premised solely upon Lee’s status as a corporate officer or

employee. Rather, Lee is individually liable under CERCLA §

107(a)(3), 42 U.S.C. § 9607(a)(3), because he personally arrang-

ed for the transportation and disposal of hazardous substances

on behalf of NEPACCO and thus actually participated in

NEPACCO’s CERCLA violations.

A corporate officer is individually liable for the torts he

[or she] personally commits [on behalf of the corporation]

and cannot shield himself [or herself] behind a corporation

when he [or she] is an actual participant in the tort. The

fact that an officer is acting for a corporation also may

make the corporation vicariously or secondarily liable

under the doctrine of respondeat superior; it does not

however relieve the individual of his [or her] responsibility.

Donsco, Inc. v. Casper Corp., 587 F.2d at 606 (citations omit-

ted); see New York v. Shore Realty Corp., 759 F.2d at 1052-53

— << oa

(CERCLA; New York law); United States v. © onservation,

Chemical Co., 619 F. Supp. at 187-90 (CERCLA); United

States v. Carolawn Cc., 14 Envtl. L. Rep. (Envtl. L. Inst.)

10699, 20700 (D.S.C. 1984) (CERCLA); United States v. Mot-

tolo, 14 Envtl. L. Rep. (Envtl. L. Inst.) at 20499; cf. United

States v. Pollution Abatement Services of Oswego, Inc., 763

F.2d at 135 (corporate officers liable for violating Rivers and

Harbors Appropriations Act of 1899); see also Escude Cruz v.

Ortho Pharmaceutical Corp., 619 F.2d 902, 907 (ist Cir. 1980)

(general discussion of liability of corporate officers for par-

ticipation in corporate torts), citing Lobato v. Pay Less Drug

Stores, Inc., 261 f.2d 406, 408-09 (10th Cir. 1958); see generally

3A W. Fletcher, Cyclopedia of the Law of Private Corporations

§ 1135 (rev. perm. ed. 1986). Thus, Lee’s personal involvement

in NEPACCO’s CERCLA violations made him individually

liable.

C. Individual Liability under RCRA § 7003(a), 42

U.S.C.a. § 6973(a) (West Supp. 1986)

The district court did not reach the question of individual

liability under RCRA because it concluded that RCRA did not

impose liability upon past non-negligent off-site generators like

NEPACCO. As we discussed in Part IV, RCRA is applicable to

past non-negligent off-site generators. The government argues

Lee and Michaels are individually liable as ‘‘contributors’’

under RCRA § 7003(a), 42 U.S.C.A. § 6973(a) (West Supp.

1986). We agree.

RCRA § 7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986),

imposes strict liability upon ‘‘any person’’ who is contributing

or who has contributed to the disposal of hazardous substances

that may present an imminent and substantial endangerment to

health or the environment. As defined by statute, the term

**person’’ includes both individuals and corporations and does

not exclude corporate officers and employees. See RCRA §

1004(15), 42 U.S.C. § 6903(15); cf. United States v. Johnson &

————eE

— A-35 —

Towers, Inc., 741 F.2d 662, 665-66 (3d Cir. 1984) (employees

could be criminally prosecuted for RCRA violations), cert.

denied, 469 U.S. 1208 (1985); United States v. Ward, 676 F.2d

94, 97 (4th Cir.) (chairperson of board convicted of unlawful

disposal of toxic substances in violation of 15 U.S.C. §§ 2605,

2614, and 40 C.F.R. § 761.01(b)), cert. denied, 459 U.S. 835

(1982). As with the CERCLA definition of ‘‘person,’’ Congress

could have limited the RCRA definition of ‘‘person’’ but did

not do so. Compare CERCLA § 101(20A), 42 U.S.C. §

9601(20A)} (limiting definition of ‘‘owner and operator’’). More

importantly, imposing liability upon only the corporation, but

not those corporate officers and employees who actually make

corporate decisions, would be inconsistent with Congress’ in-

tent to impose liability upon the persons who are involved in the

handling and disposal of hazardous substances. See United

States v. Price, 523 F. Supp. at 1073; see also H.R. Conf. Rep.

No. 1133, 98th Cong., 2d Sess. 119, reprinted in 1984 U.S. Code

Cong. & Ad. News at 5690; S. Rep. No. 172, 96th Cong., 2d

Sess. 5, reprinted in 1980 U.S. Code Cong. & Ad. News 8665,

8669.

Our analysis of the scope of individual liability under the

RCRA is similar to our analysis of the scope of individual

liability under CERCLA. NEPACCO violated RCRA §

7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986), by ‘‘con-

tributing to’’ the disposal of hazardous substances at the Den-

ney farm site that presented an imminent and substantial en-

dangerment to health and the environment. Thus, Lee and

Michaels can be held individually liable if they were personally

involved in or directly responsible for corporate acts in violation

of RCRA. Cf. United States v. Pollution Abatement Services

of Oswego, Inc., 763 F.2d at 134 (corporate officers and

shareholders individually liable for company discharging refuse

into creek in violation of Rivers and Harbors Appropriations

Act of 1899); United States v. Johnson & Towers, Inc., 741

F.2d at 664-66 (employees criminally liable for RCRA viola-

tions).

hi —

We hold Lee and Michaels are individually liable as ‘‘con-

tributors’’ under RCRA § 7003(a), 42 U.S.C.a. § 9673(a) (West

Supp. 1986). Lee actually participated in the conduct that

violated RCRA; he personally arranged for the transporation

and disposal of hazardous substances that presented an immi-

nent and substantial endangerment to health and the environ-

ment. Unlike Lee, Michaels was not personally involved in the

actual decision to transport and dispose of the hazardous

substances. As NEPACCO’s corporate president and as a ma-

jor NEPACCO shareholder, however, Michaels was the in-

dividual in charge of and directly responsible for all of NEPAC-

CO’s operations, including those at the Verona plant, and he

had the ultimate authority to control the disposal of NEPAC-

CO’s hazardous substances. Cf. New York v. Shore Realty

Corp., 759 f.2d at 1052-53 (shareholder-manager held liable

under CERCLA).

In summary, we hold Lee individually liable for arranging for

the transportation and disposal of hazardous substances in

violation of CERCLA § 107(a)(3), 42 U.S.C. § 9607(a)(3), and

Lee and Michaels individually liable for contributing to an im-

minent and substantial endangerment to health and the environ-

ment in violation of RCRA § 7003(a), 42 U.S.C.A. § 6973(a)

(West Supp. 1986).

VI. CAPACITY OF NEPACCO TO BE SUED

The capacity of a corporation to sue or be sued is determined

by the law under which it is organized. Fed. R. Civ. P. 17(b).

The district court held, under Delaware law, ‘‘a corporation

with a forfeited charter is not completely dead for all purposes,

but merely in ‘a state of coma,’ during which it is still subject to

suit, even if the suit is brought more than three years after the

charter forfeiture.’’ 579 F. Supp. at 827 n.1, citing Ross v.

Venezuelan-American Independent Oil Producers Ass’n, 230 F.

Supp. 701 (D. Del. 1964), and Wax v. Riverview Cemetery Co.,

41 Del. (2 Terry) 424, 24 A.2d 431 (Super. Ct. 1942).

— A-37 —

Appeliants argue the district court erred in holding that under

Delaware law NEPACCO had the capacity to be sued. Ap-

pellants argue NEPACCO did not have the capacity to be sued

because the government’s action was not brought against

NEPACCO until 1980, more than three years after NEPACCO

had ceased to do business (1972), had liquidated its assets

(1974), and had forfeited its charter for failure to nominate a

successor registered agent (1976). See Del. Code Ann. tit. 8, §

278. Appellants admit that NEPACCO has failed to file a cer-

tificate of voluntary dissolution with the Delaware Secretary of

State, but they argue that NEPACCO simply no longer exists as

a corporate entity. Appellants argue that under Delaware law

the three-year period begins to run after either dissolution or

forfeiture, citing Frederic G. Krapf & Son, Inc. v. Gorson, 243

A.2d 713, 715 (Del. Super. Ct. 1968).

The government argues the district court correctly held that

under Delaware law NEPACCO had the capacity to be sued.

The government argues that forfeiture of the corporate charter

and voluntary dissolution are not equivalent and that under

Delaware law a corporation whose charter has been forfeited

has not in fact been dissolved, but instead is merely in a

suspended state from which it can be revived at any time.

Although the language in Frederic G. Krapf & Son, Inc. v.

Gorson, id. at 714, suggest that forfeiture and dissolution may

be comparable for purposes of Del. Code Ann. tit. 8, § 278, we

agree with the district court that forfeiture of the corporate

charter and voluntary dissolution of the corporation are not

legally equivalent. The cases distinguishing forfeiture from

dissolution are preoccupied with preserving the marketability of

titles; however, the case law does support the district court’s

analysis distinguishing forfeiture from voluntary dissolution. In

the key case, Wax v. Riverview Cemetery Co., a holding com-

pany had mortgaged certain property it owned. The holding

company then conveyed the property and mortgage to a third

party. The holding company’s charter was then revoked for

— A-38 —

nonpayment of taxes. Nine years iater the mortgage foreclosed

on the property and bought it at a judicial sale. When the mor-

tgagee later sold the property, the prospective buyer chailenged

the marketability of the mortgagee’s title. The state court held

that forfeiture of the holding company’s charter for nonpay-

ment of taxes ‘‘does no more than forfeit the corporate right to

do business, but does not extinguish the corporation as a legal

entity,’’ and, therefore, the holding company could still ‘‘serve

as [a] repository of title and as [an] obligor of a debt.’’ 24 A.2d

at 436. Accord Ross v. Venezuelan-American Independent Oil

Producers Ass’n, 230 F. Supp. at 703-04 (federal district court

for the District of Delaware interpreting Delaware law); see

generally 16A W. Fletcher, Cyclopedia of the Law of Private

Corporations ch. 65 (rev. perm. ed. 1979). But cf. Johnson v.

Helicopter & Airplane Services Corp., 404 F. Supp. 726, 730-35

(D. Md. 1975) (overview of Delaware and federal cases; holding

that a corporation that had been dissolved, even though it was

still conducting certain proceedings brought during its winding-

up period, had lost its capacity to sue and be sued and thus

could not be sued more than three years after dissolution).

Here, NEPACCO has lost its charter, but it has not been

dissolved. We agree with the district court that, under these cir-

cumstances, NEPACCO’s charter can be ‘‘revived’’ and that it

has the capacity to be sued even though the government’s initial

complaint was not filed until more than three years after

forfeiture.

Vil. BURDEN OF PROOF OF RESPONSE COSTS

The district court found appellants had the burden of proving

the government’s response costs were inconsistent with the

NCP, 579 F. Supp. at 580, and that response costs that are not

inconsistent with the NCP are conclusively presumed to be

reasonable and therefore recoverable, id. at 851. Appellants

argue the district court erred in requiring them to prove the

response costs were inconsistent with the NCP, not cost-

v SR:

— A-39 —

effective or unnecessary. Appellants further argue the district

court erred in assuming all costs that are consistent with the

NCP are conclusively presumed to be reasonable. Appellants

note that the information and facts necessary to establish con-

sistency with the NCP are matters within the possession of the

governmient.

We believe the district court’s analysis is correct. CERCLA §

107(a)(4)(A), 42 U.S.C. § 9607({a)(4)(A), states that the govern-

ment may recover from responsible parties ‘‘all costs of removal

or remedial action . . . not inconsistent-with the [NCP].’’ The

statutory language itself establishes an exception for costs that

are inconsistent with the NCP, but appellants, as the parties

claiming the benefit of the exception, have the burden of prov-

ing that certain costs are inconsistent with the NCP and,

therefore, not recoverable. See United States v. First City Na-

tional Bank, 386 U.S. 361, 366 (1967). Contrary to appellants’

argument, ‘‘not inconsistent’’ is not, at least for purposes of

statutory construction and not syntax, the same as

‘*consistent.’’ See, e.g., United States v. Ward, 618 F. Supp. at

899; United States v. Conservation Chemical Co., 619 F. Supp.

at 186; Lone Pine Steering Comm. v. EPA, 600 F. Supp. 1487,

1499 (D.N.J.), aff’d, 777 F.2d 882 (3d Cir. 1985), cert. denied,

106 S. Ct. 1970 (1986); New York v. General Electric Co., 592

F. Supp. at 303-04 (state action for recovery of response costs);

J.V. Peters & Co. v. Ruckelshaus, 584 f. Supp. 1005, 1010

(N.D. Ohio 1984), aff’d, 767 F.2d 263 (6th Cir. 1985).

The statutory scheme also supports allocation of the burden

of proof of inconsistency with the NCP upon the defendants

when the government seeks recovery of its response costs. As

noted above, CERCLA § 107(a)(4)(A), 42 U.S.C. §

9607(a)(4)(A), provides that the federal government or a state

can recover ‘‘all costs of removal or remedial action . . . not in-

consistent with the [NCP].’’ In comparison, CERCLA §

107(a)(4)(B), 42 U.S.C. § 9607(a)(4)(B), provides that ‘‘any

other person,’’ referring to any ‘‘person’’ other than the federal

ee ee TS

—_ va

governement or a state, can recover ‘‘any other necessary costs

of response . . . consistent with the [NCP].’’ That statutory

language indicates that nongovernmental entities must prove

that their response costs are consistent with the NCP in order to

recover them. The statutory scheme thus differentiates between

governmental and nongovernmental entities in allocating the

burden of proof of whether resonse costs are consistent with the

NCP. See, e.g., United States v. Ward, 618 F. Supp. at 899;

New York v. General Electric Co., 592 F. Supp. at 303-04 (state

action for recovery of response costs).

The statutory language also supports the district court’s

reasoning that under CERCLA § 107(a)(4)(A), 42 U.S.C. §

9607(a)(4)(A), ‘‘all costs’’ incurred by the government that are

not inconsistent with the NCP are conclusively presumed to be

reasonable. CERCLA does not refer to ‘‘all reasonable costs”’

but simply to ‘‘all costs.’’ Cf. Federal Water Pollution Control

Act § 311(f) (FWPCA), 33 U.S.C. § 1321(f) (responsible parties

are liable for ‘‘actual costs incurred’’ by the government for

cleanup); see, e.g., Union Petroleum Corp. v. United States,

228 Ct. Cl. 54, 651 F.2d 734, 744 (1981) (construing ‘‘actual

costs incurred’’ in 33 U.S.C. § 1321(f) to apply conclusive

presumption of reasonableness). Case law interpreting the

FWPCA is relevant because CERCLA defines the NCP by

referring to the NCP mandated by the FWPCA. CERCLA §§

101(31), 105, 42 U.S.C. §§ 9601(31), 9605; see United States v.

Conservation Chemical Co., 619 F. Supp. at 204 (noting cross-

references in CERCLA to FWPCA); United States v. Shell Oil

Co., 605 F. Supp. at 1073-74 & n.4 (the NCP as revised to incor-

porate CERCLA was issued in 1982).’

’ The 1982 NCP, 40 C.F.R. § 300.1-.86 (1985), was revised effective

Feb. 18, 1986, 50 Fed. REg. 47,912-79 (1985).

i ee Ri ine Wt FN Recline, Will tell Wee 9 eR dia” che ln se

~ ft x

Appellants also argue the district court erred in requiring

them to establish that the government’s cleanup actions were

cost-effective and necessary. This argument challenges the

government’s choice of a particular cleanup method. We note,

however, that CERCLA § 105(3), (7), 42 U.S.C. § 9605(3), (7),

requires the EPA, as the agency designated by the President, to

revise the NCP required by § 311 of the FWPCA, 33 U.S.C. §

1321, to include the ‘‘national hazardous substance response

plan,’’ which is specifically required by CERCLA to include

‘*tncihods and criteria for determining the appropriate extent of

removal, remedy, and other measures,’’ and ‘‘means of assur-

ing that remedial action measures are cost-effective.’’ Con-

sideration of whether particular action is ‘‘necessary’’ is thus

factored into the ‘‘cost-effective’’ equation. The term ‘“‘cost-

effective’ is defined by regulation as ‘‘the lowest cost alter-

native that is technologically feasible and reliable and which ef-

fectively mitigates and minimizes damage to and provides ade-

quate protection of public health, welfare, or the

environment.’’ 40 C.F.R. § 300.68(j) (1986).

Because determining the appropriate removal and remedial

action involves specialized knowledge and expertise, the choice

of a particular cleanup method is a matter within the discretion

of the EPA. The applicable standard of review is whether the

agency’s choice is arbitrary and capricious. As explained in

United States v. Ward,

{i]f [appellants] wish the court to review the consistency of

[the government’s] actions with the NCP, then they are

essentially alleging that the EPA did not carry out its

statutory duties. The statute provides liability except for

costs ‘‘not inconsistent’’ with the NCP. This language re-

quires deference by this court to the judgement of agency

professionals. [Appellants], therefore, may not seek to

have the court substitute its own judgment for that of the

EPA. [Appellants] may only show that the EPA’s decision

about the method of cleanup was “‘inconsistent’’ with the

od

—s

NCP in that the EPA was arbitrary and capricious in the

discharge of their duties under the NCP.

618 F. Supp. at 900.

Here, appellants failed to show that the government’s

response costs were inconsistent with the NCP. Appellants also

failed to show that the EPA acted arbitrarily and capriciously in

choosing the particular method it used to clean up the Denney

farm site.

Vill. REDUCTION OF AWARD BY AMOUNT OF PRIOR

SETTLEMENT

Appellants next argue the district court erred in refusing to

reduce the amount of its judgment by $100,000, the amount

paid by Syntex pursuant to the settlement and consent decree in

September 1980. Appellants argue that unless the judgment is

offset by the amount of the Syntex settlement, the government

will improperly receive a double recovery of that amount from

Syntex and appellants. Thus, appellants argue the district court

should have reduced the awrd by $100,000.

The government argues the district court correctly refused to

reduce the award by the amount of the Syntex settlement. We

agree. According to the government’s exhibits, the government

did not seek a double recovery. The government had incurred

response costs of $494,639.54 through March 10, 1983, but

sought recovery from appellants of only $394.639.54, or the

total amount of its response costs tc date reduced by the

$100,000 Syntex settlement, plus future response costs. Thus,

the government sought to recover from appellants an amount

that had already been reduced to reflect the amount of the

Syntex settlement.

IX. DEMAN® FOR JURY TRIAL

Appellants next argue the district court erred in denying their

demand for a jury trial because the government’s action for

re

at Se li.

— ©:

recovery of its response costs under CERCLA and RCRA was

essentially a claim for legal damages. We disagree. When the

government seeks recovery of its response costs under CERCLA

or its abatement costs under RCRA, it is in effect seeking

equitable relief in the form of restitution or reimbursement of

the costs it expended in order to respond to the health and en-

vironmental danger presented by hazardous substances. See,

e.g., United States v. Price, 688 F.2d at 213-14 (reimbursement

of abatement costs under RCRA as equitable relief); United

States v. Mottolo, 605 F. Supp. at 912-13 (citing seven cases, in-

cluding NEPACCO, that characterize recovery of response

costs under CERCLA as equitable relief); see generally

Developments, 99 Harv. L. Rev. at 1492 & nn.46, 47. The

district court correctly found appellants did not have a right to a

jury trial of claims for equitable relief. See Ross v. Bernhard,

396 U.S. 531, 533 (1970).

X. CONCLUSION

In conclusion, we hold (1) CERCLA applies retroactively, (2)

the government can recover its pre-enactment response costs

under CERCLA, (3) RCRA imposes strict liability upon past

off-site generators and transporters of hazardous substances,

(4) Lee and Michaels can be held individually liable, (5)

NEPACCO had the capacity to be sued, (6) appellants had the

burden of proving the government’s response costs were incon-

sistent with the NCP, (7) the government’s award shouid not be

reduced by the Syntex settlement, and (8) appellants did not

have the right to a jury trial.

Accordingly, the judgment of the district court is affirmed in

part, reversed in part and remanded for further proceedings

consistent with this opinion. The district court’s refusal to

dismiss NEPACCO as a party cefendant, retroactive applica-

tion of CERCLA to pre-enacinient conduct, imposition of in-

dividual liability upon corporate officers who actually control

the handling and disposal of hazardous substances, placement

—_-' oo

upon the responsible parties of the burden of proof that the

government’s response costs are inconsistent with the NCP,

refusal to reduce the award by the amount of the prior settle-

ment, and denial of a jury trial are affirmed. The district

court’s refusal to allow the government to recover its response

costs incurred before the enactment of CERCLA in 1980,

refusal to impose strict liability upon past off-site generators

and transporters of hazardous substances under RCRA §

7003(a), 42 U.S.C.A. § 6973(a) (West Supp. 1986), and imposi-

tion of liability upon appellants as owners or operators of a

facility pursuant to CERCLA § 107(a)(1), 42 U.S.C. §

9607(a)(1), are reversed.

On remand, before awarding a specific amount of pre-

enactment response costs to the government under CERCLA,

the district court should afford appellants an opportunity to

show that the government’s pre-enactment response costs were

inconsistent with the NCP. Alternatively, because the govern-

ment also sought to recover the response costs it incurred before

the enactment of CERCLA in the form of equitable relief as

abatement costs under RCRA, on remand the district court

could grant the government recovery of such costs as a matter of

equitable discretion.

JOHN R. GIBSON, Circuit Judge, concurring in part and dis-

senting in part.

I concur with the court’s opinion except for parts IV-A, IV-B,

and V-C, holding that RCRA § 7003(a), 42 U.S.C. § 6973(a)

(1982), imposes liability on past off-site nonnegligent generators

and transporters and determining that the government could

recover its response costs from Lee and Michaels under section

7003(a). I respectfully dissent from the court’s opinion as to

those points.

The majority’s analysis of liability under the RCRA focuses

exclusively on the legislative history of the 1984 amendments to

the RCRA. The majority particularly rely on House Con-

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— A-45 —

ference Report No. 1133, which singles out the district court’s

opinion and states that it is ‘‘inconsistent with the authority

conferred by \section 7003] as initially enacted and with these

clarifying amendments.’’ H.R. Conf. Rep. No. 1133, 98th

Cong., 2d Sess. 119 (1984), reprinted in 1984 U.S. Code Cong. &

Ad. News 5649, 5690. The Conference Report also states that

section 7003 ‘‘has always’’ reached nonnegligent generators and

transporters. Jd. From these statements, the majority conclude

that ‘‘the 98th Congress made clear that the intention of the

94th Congress in enacting the RCRA in 1976 had been to impose

liability upon past nonnegligent off-site generators and

transporters of hazardous waste.’’ Ante at 27. Thus, the ma-

jority hold that the RCRA as it read prior to the 1984 amend-

ments imposed strict liability upon past generators and

transporters and that the district court erred in holding that pro-

of of fault or negligence was necessary for the government to

recover its response costs under the RCRA. Ante at 26-27.

1 think that the 1984 House Conference Report is nothing

more than a blatant effort by members of a later Congress to

graft their personal views of the scope of liability under the

RCRA onto the original act. It is bootstrapping, and the ma-

jority fail to recognize it as such. The Conference Report

characterizes the 1984 amendments as ‘‘clarifying’’ the RCRA.

The ‘‘clarifying’’ amendments to section 7003, however, did not

alter the crucial phrase ‘‘contributing to,’’ the construction of

which the majority acknowledge as ‘‘the critical issue,’’ ante at

21, other than to cast it in both the present and the past tense:

**has contributed to or * * * is contributing.’’ 42 U.S.C.A. §

6973(a) (West Supp. 1986). Nor do the amendments supply a

definition for this phrase. The amendments to section 7003(a)

are directed toward changing the scope of the section to reach

past as well as present and future generators and transporters of

hazardous waste. I believe this to be a substantive change,

rather than a clarification. In any event, because the amend-

ments did not relate to the ‘‘contributing to’’ language, the

statements in the House Conference report regarding the stan-

—~

dard cf liability under section 7003(a)—negligence versus strict

liability—are wholly gratuitous.

‘T]he views of a subsequent Congress form a hazardous

basis for inferring the intent of an earlier one.’’ United States v.

Price, 361 U.S. 304, 313 (1960). ‘‘[S]Juch ‘[ljegislative observa-

tions. . .are in no sense part of the legislative history.’ ‘It is the

intent of the Congress that enacted [the section] . . . that con-

trols.’ ’? Oscar Mayer & Co. v. Evans, 441 U.S. 750, 758 (1979)

(quoting United Airlines, Inc. v. McMann, 434 U.s. 192, 200

n.7 (1977), and Teamsters v. United States, 431 U.S. 324, 354

n.39 (1977)). Moreover, the Supreme Court has observed that

‘*subsequent legislative history will rarely override a reasonable

interpretation of a statute that can be gleaned from its language

and legislative history prior to its enactment.’’ Consumer Pro-

ducts Safety Commission v. GTE Sylvania, 447 U.S. 102, 118

n.13 (1980). This court has also recently acknowledged the

dubious value of subsequent legislative history. See Citizens

State Bank of Marshfield v. FDIC, 751 F.2d 209, 217 (1984).

Applying these principles to the district court’s interpretation of

the RCRA and its legislative history, I would affirm its

resonable conclusion that Congress did not intend to impose

strict liability on past generators and transporters of hazardous

waste. I would not accept at face value the assertion by certain

members of the 98th Congress that they can divine the intent of

the 94th Congress in enacting the RCRA some eight years

earlier.

I recognize that the substance of the 1984 amendments may

have a bearing on this case. The district court did not have

before it the amendments or their associated legislative

materials. As a general rule we are to apply the law in effect at

the time we render our decision. See, e.g., Bradley v. Richmond

School Board, 416 U.S. 696, 711 (1974). The majority purport

to base their decision on the RCRA as it existed prior to the 1984

amendments, however, and agree with the House Conference

Report that the i984 amendments, merely ‘‘clarified’’ the scope

— A-47 —

of liability under the RCRA. Ante at 28. I differ. I have

already observed that I believe the 1984 amendments

significantly altered the scope of liability under the RCRA. I

think that the parties should at least be given the opportunity to

develop their factual and legal contentions as to the effect of

and in light of the 1984 amendments before the district court

and thus present the issue more squarely for our consideration,

if appealed.

I also disagree with the majority’s determination that Lee and

Michaels are liable under section 7003(a) for the government’s

response costs as generators and transporters. The district court

did not reach this issue, as it concluded that RCRA liability did

not extend to past nonnegligent generators and transporters of

hazardous waste. The majority, however, both reverse the

district court’s legal conclusion and then find as a factual matter

that Lee and Michaels are liable. Ante at 36-37. This type of

factfinding is clearly the province of the district court, and

remanding the question of liability to the district court is more

appropriate than the course of action taken by the court today.

Missouri Pacific Joint Protective Board v. Missouri Pacific

Railroad Co., 730 F.2d 533, 537 (8th Cir. 1984).

al a a ore

No hee

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64M Ose

A true copy.

Attest:

Clerk, U.S. Court of Appeals, Eighth Circuit.

—_—

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Nos. 84-1837/1853WM

United States of America,

Appellee/Cross-Appellant,

Vv.

Northeastern Pharmaceutical & Chemical Co.,

Inc., etc., et al.,

Appellants/Cross-Appellees.

Ronald Mills and Syntex Agri-business, Inc.

Appeal and Cross-appeal from the United States

District Court for the Western District of Missouri.

JUDGMENT

These appeals from the United States District Court were sub-

mitted on the record of the said district court, briefs of the par-

ties and were argued by counsel.

Upon consideration of the premises, it is hereby adjudged

and decreed that the judgment of the district court is affirmed in

part, reversed in part and remanded for further proceedings

consistent with the opinion of this Court.

December 31, 1986

Appellee/Cross-Appellant will recover from appellants/cross-

appellees the sum of $117.30.

Order entered in accordance with opinion.

/s/ Robert D. St. Vrain

Clerk, U.S. Court of Appeals, 8th Circuit.

— Ad —

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Nos. 84-1837/1853WM

United States of America,

Appellant/Cross-Appellant,

Vv.

Northeastern Pharmaceutical & Chemica! Co., Inc.,

etc., et al.,

Appellants/Cross-Appellees.

Appeals from the United States District Court

for the Western District of Missouri.

Appellants/Cross-Appellees’ petition for rehearing en banc

has been considered by the Court and is denied.

Judges John R. Gibson and Theodore McMillian would have

granted the petitions. Judge Arnold declined to participate in

the voting.

Petition for rehearing by the panel is also denied.

April 8, 1987

Order entered at the Direction of the Court:

Clerk, U. S. Court of Appeals, Eighth Circuit.

— A-50 — :

APPENDIX D

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF MISSOURI

SOUTHERN DIVISION

No. 80-5066-CV-S-4

United States of America,

Plaintiff,

VS.

Northeastern Pharmaceutical and Chemical

Company, Inc., et al.,

Defendants.

MEMORANDUM OPINION

The plaintiff instituted this action on August 1, 1980 and filed

an amended complaint on August 19, 1982 seeking injunctive

relief and reimbursement of al! costs incurred in performing cer-

tain remedial and removal a«tions at the Denney farm site, near

Verona, Missouri, pursuant to section 7003 of the Resource

Conservation and Recovery Act (RCRA), 42 U.S.C. § 6973, and

sections 104, 106(a) and 107(a) of the Comprehensive En-

vironmental Response, Compensation, and Liability Act

(CERCLA), 42 U.S.C. §§ 9604, 9606(a) and 9607(a). The Court

has jurisdiction over this action pursuant to 28 U.S.C. § 1345;

42 U.S.C. § 6973, and 42 U.S.C. §§ 9604, 9606(a), and 9613(b).

Summary of Issues

The Court considered the following issues:

1. Whether section 7003 of RCRA or sections 104, 106(a) and

107(a) of CERCLA apply retroactively to hold past non-

negligent off-site generators and transporters liable for the costs

incurred in the cleanup of an inactive or abandoned hazardous

waste disposal site?

— A-51 —

2. Whether sections 104, 106(a) and 107(a) of CERCLA app-

ly retroactively to hold past non-negligent off-site generators

and transporters liable for response costs incurred prior to the

~ enactment of CERCLA?

3. If CERCLA is to be applied retroactively, does it violate

the Fifth Amendment Due Process Clause of the United States

Constitution?

4. What standard of liability should be imposed under

CERCLA — strict liability or negligence?

5. If the defendants are liable, whether joint and several

liability should be imposed?

6. Whethe; the Denney farm disposal site presented an immi-

nent and substantial endangerment to the public health or

welfare or the environment because of an actual or threatened

release of a hazardous substance from the site?

7. Whether these specific defendants are liable under the pro-

visions of CERCLA?

8. If the defendants are liable under CERCLA, what costs

are recoverable by plaintiff?

Summary of Conclusions of Law

The Court finds that:

1. Section 7003 of RCRA does not apply retroactively to past

non-negligent off-site generators and transporters.

2. Sections 104, 106(a) and 107(a) of CERCLA do apply

retroactively to past non-negligent off-site generators and

transporters.

3. Sections 104, 106(a) and 107(a) of CERCLA do not apply

retroactively to response costs incurred prior to December 11,

1980.

— A-52 —

4. CERCLA does not violate the Fifth Amendment Due Pro-

cess Clause.

5. The standard to be applied in determining liability under

CERCLA is strict liability.

6. CERCLA ailows for the imposition of joint and several

liability.

7. The Denney farm site presented an imminent and substan-

tial endangerment to the public health, welfare and the environ-

ment.

8. All four defendants are jointly and severally liable pur-

suant to CERCLA for all costs for salaries, expenses and at-

torney fees.

9. All four defendants are jointly and severally liable for pre-

judgment interest at the rate of 9% per annum calculated from

August 19, 1982, as well as, all future costs of removal or

remedial actions incurred by the plaintiff not inconsistent with

the national contingency plan.

\

INITIAL FINDINGS OF FACT

Defendant Northeastern Pharmaceutical and Chemical Co.,

Inc. (NEPACCO) is a corporation incorporated in 1966 under

the laws of Delaware with its principal office in Stamford, Con-

necticut. NEPACCO’s corporate charter was forfeited by the

Delaware-Secretary of State on August 22, 1976, for failure to

maintain an agent for service of process. NEPACCO never fil-

ed a certificate of voluntary dissolution with the Delaware

Secretary of State, although in 1974 its assets were liquidated

and the proceeds distributed to shareholders after payment of

the corporation’s outstanding debts.' Defendant Edwin B.

Michaels (Michaels) formed NEPACCO, held stock in the cor-

poration, and was its president. Defendant John W. Lee (Lee)

was the vice-president of NEPACCO and was also a

stockholder. Defendant Ronald Mills (Mills) was employed by

fd aetanX

~— :

NEPA“CCO at the Verona, Missouri plant as shift supervisor.

Defendant Syntex Agribusiness, Inc. (Syntex) is a corporation

incorporated in the State of Delaware and doing business in the

State of Missouri.

The NEPACCO Manufacturing Process

On June 7, 1967, defendani Michaels applied for a patent on

a method of manufacturing hexachlorophene. On February 6,

1968, defendants Michaels and Lee applied for a patent on a

method for purifying 2, 4, 5-trichlorophenol (TCP) and hex-

achlorophene. On or about November 18, 1969, NEPACCO

entered into an agreement with Hoffman-Taff, Inc., whereby

NEPACCO leased portions of the premises at an existing

manufacturing facility located near Verona, Missouri, and pur-

chased manufacturing equipment used by Hoffman-Taff and

located therein for the purpose of manufacturing hex-

achlorophene. Hoffman-Taff had manufactured the com-

pound known as agent orange prior to their closure and subse-

quent sell-out to Syntex. NEPACCO manufactured hex-

achlorophene at the Verona facility from April 1970 to January

1$72. Michaels was present at the Verona facility on a perma-

nent basis during the first year of operation and construction

(1970) and during that time had overall responsibility for com-

pany operations with the upper level employees reporting to

him. By early 1971, Michaels had moved back to the state of

Connecticut leaving the direct management responsibility for

the NEPACCO plant operation and for quality control with

Lee.

The process by which NEPACCO manufactured hex-

achlorophene involves two steps: First, the production of

2,4,5-Trichlorophenol (TCP) and second, the production of the

finished product, hexachlorophene. The first step in the pro-

duction of hexachlorophene involved a reaction to form a crude

intermediate TCP. This reaction involved a dist#tlation process

resulting in refined TCP as the distillate. 2,3,7,8-tetrachloro-

— A-54 —

benzo-p-dioxin (dioxin or TCDD), among other chemicals, was

formed as a by-product in the TCP process. The residue or

waste that resulted from the TCP distillation is called still bot-

toms, described as a ‘“‘dark oily sludge.’’ The highest concen-

trations of dioxin are found in the still bottoms. Still bottoms

were removed from the process every 3rd or 4th batch and

transferred to a 7,500 galion holding tank that was located on

the west side of the piant. The holding tank was periodically

emptied by waste haulers, who carried the still bottom residue

away in tank trunks.

The second step of the production process involved the reac-

tion of the refined TCP with sulfuric acid to form hex-

achlorophene as a precipitate. Toluene and water were then ad-

ded to this crude extraction. Decolorizing and filtering clays

were added to extract the undesirable shades of color and other

impurities, one of which was dioxin. The finished product was

hexachlorophene that resembled ‘‘white flour.’’ Waste streams

from the second step included: waste solvents; recrop liquor re-

maining after the hexachlorophene had been precipitated; clay

filter cake and waste water from both steps of the process as

well as from general maintenance and cleaning.

Dioxin may have been found in each waste stream. TCP,

TCB and Toluene may have been found in the waste solvents,

contaminated waste water and clay filter cake. Hex-

achlorophene may have been found in the recrop liquor and

clay filter cake. Depending upon the efficiency of the produc-

tion system, the refined TCP may have contained dioxin that

was passed on into the hexachlorophene process. Accordingly,

the more efficient a system, the less dioxin contained in the

refined TCP, if any. If tae refined TCP did contain dioxin,

then the dioxin would have been found in the following

materials, listed in high to low concentration priority: clay filter

cake, finished hexachlorophene and waste water. The industry

standard in 1971 for levels of dioxin in refined TCP was one

part per million (ppm). The process and equipment used by

— A-55 —

NEPACCO in 1971 met industry standa.ds and it was con-

ceivable that if the NEPACCO process was continuously effi-

cient the level of dioxin ‘ound in the refined TCP would have

been below | p.p.m.

Michaels and Lee knew that the NEPACCO manufacturing

process produced by-products that contained toxic substances,

including dioxin, that could be harmful to human health. Ap-

parently, Michaels and Lee had meetings with the NEPACCO

employees to inform them of the possible dangerous toxic

substances and procedures to avoid and remedy exposure to

these substances.

Unfortunately, the NEPACCO process was not without

mishap. On on:: occasion the 7,500 gallon waste storage tank

was filled to capacity and the overflow (still bottoms) was put in

four (4) bung type 55-gallon drums that were sealed and marked

with orange or red paint. Bill Ray (plant manager) testified that

once the storage tank was emptied by the tank truck haulers, the

still bottoms contained in the four bung-type barrels were

pumped back into the 7,500 gallon storage tank. On two or

three occasions the lines to the 7,500 storage tank became block-

ed necessitating a clean-out operation. On occasion, during

these clean-out operations, a small portion of the line spilled on-

to the floor of the plant and the employees performing the

operation. Ray recited one such incident in which he was

sprayed with a fine mist by approximately one and a half to two

gallons of the substance. Ray immediately showered and took

other precautionary steps. The residue and waste from these

cleanup operations were placed in trash cans and subsequently

taken to the sanitary land fill. Ray testified that he has suffered

n> ill effects from this incident.

In March of 1971 there was a fire at the NEPACCO plant that

resulted in the destruction of at least two batches of reactants in

the hexachlorophene production phase of the process. Due to

extensive damage, the plant was closed down for several weeks

— A-56 —

in order to clean up the residue, waste and damaged equipment

created by the fire. Some of the substances contained in the

production lines were saved and reused. During the summer of

1971, Lee and Ray initiated a major plant cleanup. The waste

and residue from the major cleanup were stored in the waste

storage area northwest of the plant building. This storage area

also contained refuse and wastes that had accumulated since the

opening of the plant.

NEPACCO used black drums with lids fastened by metal

rings for disposal of waste. According to the testimony,

Hoffman-Taff had used green and white drums to hold wastes

and several of these green and white drums remained on the

plant property after Hoffman-Taff ceased operations. Defen-

dant Lee testified that he originally noticed some of these green

and white drums stored on the eastern side of the plant building,

but by mid-1971, these drums had been moved to the northwest

storage area.

Disposal of Hazardous Waste at NEPACCO

Initially, the still bottoms residues from the NEPACCO pro-

cess were carried away in transport tanker trucks by Rollins-

Purle to their disposal plant in Louisiana. Later, due to cost

considerations, NEPACCO changed from Rollins-Purle to In-

dependent Petrochemical Corporation (IPC). Michaels was

present during negotiations with IPC over the contract to haul

still bottom residues from the NEPACCO plant and warned the

IPC representatives that the still bottoms were toxic and had to

- be handled and disposed of with care.

In or about July of 1971, defendant Mills approached Ray

concerning the disposal of the 55-gallon drums located in the

storage area northwest of the plant. Méills was not in the

business of waste disposal prior to this-date. Ray discussed the

proposal with Lee. Lee defined the desirable disposal site

characteristics, which included soil with a flint or clay consisten-

cy. There was credible evidence that Lee knew and approved of

g

:

3

|

— <n

the proposed use of Mill’s services and the disposal site. Ray

personally went to the disposal site prior to the actual delivery

and reported to Lee on his observations. Mills had previously

contacted James Denney (Denney) and arranged to dispose of

the drums on his farm. The Denney farm site is located approx-

imately seven miles south of Verona, Missouri.

In mid-July 1971, defendant Mills and Gerald Lechner

(Lechner), an assistant hired by Mills, loaded approximately

eighty-five 55-gallon drums containing wastes, located at the

northwest storage site. Defendant Mills and Lechner took the

drums to the Denney farm and deposited them in a large trench

approximately six to eight feet deep, ten feet wide and fifty feet

long. Mills hired Leon Vaughn (Vaughn) to excavate and close

the trench. Within two days, six loads were taken to the Denney

farm site, whereupon, the trench was closed by Vaughn. No

other materials were placed in the Denney farm trench other

than those transported by Mills and Lechner from the Verona

NEPACCO plant. Millis received $150.00 from NEPACCO for

each load that was taken to the Denney farm site and Denney

received $25.00 from Mills for each load.

Mills and Lechner testified concerning the description of the

drums hauled and their contents. According to Mills, most of

the drums were a black metal type with lids. Mills did not recall

whether there were any bung type drums hauled. Mills further

testified that some of the barrels contained a brown liquid

substance and some contained a white substance. Mills was cer-

tain that some of the barrels contained Toluene. Lechner gave a

more detailed description of the barreis and their contents. Ac-

cording to Lechner, some of the drums were a bung type top

and others had the open lid type top. Although most of the

drums were black, some were rust colored. The drums were in a

deteriorated condition. While Lechner was loading the barrels,

he managed to step through the lid of one barrel causing some

of the ‘‘dark sludge’, presumably still bottoms, contained in

the drum to get on his pants leg and boot. Lechner did not

— A-58 —

notice any immediate results but later noted that the substance

‘fate up’’ his pants leg and boot. Lechner testified that he has

suffered no physical injuries from the mishap.

Neither Mills nor Lechner could remember whether they

hauled any drums other than those colored black. James Den-

ney testified that when the trench was opened in 1980 by the

EPA he observed some green drums being taken from the

trench. Denney further testified that within a short period of

time after the trench had been covered, a strong odor emitted

from the trench. This strong odor continued for several mon-

ths, maybe years, but had ceased by 1979.

Gevernmental Response

In October of 1979 the Environmental Protection Agency

(EPA) received an anonymous tip indicating that waste

materials from thé NEPACCO plant had been disposed at the

Denney farm. Under the supervision of Daniel Harris (Harris),

an EPA environmental! engineer and field investigator, the EPA

commenced an investigation. The EPA confirmed through

state records that the NEPACCO operation did generate hazar-

dous waste. In October of 1979, EPA representatives met with

Denney, who confirmed that drums of wastes from the

NEPACCO plant had been buried in a trench at the Denney

farm and identified the location of the trench. EPA represen-

tatives contacted Dr. J. Hadley Williams (Williams), a geologist

with the Missouri Department of Natural Resources, for the

purpose of determining if the Denney farm was suitable for the

disposal of hazardous wastes. Dr. Williams indicated it was

not, due to the nature of the region’s subsurface composition

and ground water conditions. EPA representatives interviewed

approximately 25 other persons in October of 1979 in order to

gain some familiarity with the NEPACCO operation, its wastes,

and its waste disposal practices.

Between January and April of 1980, the EPA, along with

comments from state and federal officials, drafted a plan for an

nuieteieniimacnuaidamall

{

i

2

— A-59 —

on-site investigation at the Denney farm site. Prior to conduc-

ting On-site sampling tests, certain preliminary steps were com-

pleted, which included clearing the disposal site and an access

road and constructing a security fence around the site.

In April of 1980, the EPA commenced the on-site investiga-

tion which consisted of different teams of individuals collecting

soi! samples from boreholes at different distances around the

perimeter of the site, removing a portion of the soil covering the

trench, exposing 13 drums, sampling eight of them, and sampl-

ing the soil in and near the trench. Samples were also taken of

nearby well water. The drums exposed and those finally remov-

ed were in a deteriorated condition, exhibiting extreme rust and

decomposition.

A composite sample from the buried drums, collected during

the April 1980 investigation, was analyzed by Brehem

Laboratories at Wright State University and found to contain a

dioxin concentration as high as 319 parts per million (ppm). Dr.

Michael L. Taylor, associate director of the laboratory, testified

that he immediately telephoned the Region 7 office of the EPA

when he learned of the alarming high concentration of dioxin

found in the composite sample. Other samples from the buried

drums and soil samples collected during the April 1980 in-

vestigation were analyzed by the EPA and found to contain

TCP and toluene in concentrations as high as 6 ppm and 40

ppm, respectively. Dr. Robert D. Kloepfer (Kloepfer), an

analytical chemist and Chief of the Organic Analysis Section for

Region 7, EPA, noted seven samples with concentrations above

1.0 ppm, specifically those concentrations were reported as

follows: drum sample 1—6.6 ppm, drum sample 3—1.1 ppm,

sample No.’s ANO216—1.1 ppm, ANO217—2.1 ppm,

ANO237—6.3 ppm, ANO241—5.6 ppm and ANO271—.9

ppm. The standard variation (degree of accuracy) for these tests

is 25%, higher or lower. The EPA’s principal concern at this

time was the presence of dioxin.

— A-6 — :

After confirming that dioxin was present in the trench and

consulting with Dr. Williams, the EPA in June or July of 1980

installed a temporary cap over the trenc}i to prevent entry of

surface waters into the trench and thereby minimize release of

materials from the trench into the environment. EPA represen-

tatives continued to conduct surface and well water samplings to

monitor the site in order to detect any escape of the materials

from the trench.

Ecology and Environment, Inc. (Ecology and Environment),

under contract with the EPA, prepared an engineering feasibili-

ty study to serve as the plan for further response actions at the

Denney farm site. James Buchanon, regional project manager

for Ecology and Environment, testified that Ecology and En-

vironment was assigned three principal tasks: conduct a

feasibility study, provide expert technical advice at the site and

monitor the site. As part of these tasks, additional on-site

testing was completed to better define the extent of the release

and the size of the disposal trench. The final report and sugges-

tions for remedial action were issued in September, 1980. The

final report and suggestions issued by Ecology and Environment

were made under the hypothesis that the Denney farm trench

contained 26.4 Ibs. of dioxin, the maximum risk potential for

“this site. 7

In July and August of 1980, EPA representatives negotiated

with Syntex concerning the initial cleanup process and respon-

sibilities. On September 3, i980, a consent decree was entered

into by the EPA and Syntex.? In November of 1980, defendant

Syntex proposed a plan for a permanent solution involving the

removal, storage and ultimate disposal of the wastes discovered

at the Denney farm site. Once the Syntex plan was approved by

the EPA, Syntex began excavation of the contents of the

disposal trench in June of 1981. The excavation process took

approximately six weeks, due mainly to the safety precautions

taken against dioxin contamination of the workers.

Se ee Ne

— A-61 —

During the Syntex excavation, numerous drum and soil

samples were collected by the EPA and Syntex. The Syntex

analysis indicated migration of the dioxin into the subsurface

strata of the trench at least as far as 30 inches, in concentrations

ranging from 8.2 parts per billion (ppb) to 532 ppb. While

Syntex is in the process of implementing a permanent solution,

the EPA continues to monitor its implementation of the Syntex

plan and otherwise to meaitor the site and the surrounding area

to detect any past or present movement of hazardous waste

from the site or any significant change in the conditions.

The site was closed in November of 1981 and the drums are

stored in a concrete bunker on the site. According to Harris the

stored hazardous waste no longer presnets an imminent and

substantial endangerment to health or the environment, but

necessitates future monitoring and further response costs.

Endangerment to Health and the Environment

To date, dioxin has produced teratogenic, mutagenic,

fetotoxic and carcinogenic results in low dose levels in various

laboratory animals. Dr. D. Diane Courtney, a pharmacologist

with the EPA, testified that dioxin is particularly devastating to

specific organs of laboratory animals and human beings; ¢.g.,

liver, kidneys, intestines, nervous system, reproductive, and

skin. Dioxin is persistent in the environment and is bio-

accumulative in the tissues of plants and animals. According to

Dr. Courtney, there is presently no known safe level of dioxin in

the environment. Toluene has been shown to cause damage to

the liver and kidneys. Hexachlorophene has known tox-

icological properties and has caused pathological damage,

specifically brain deterioration in newborn animals, as well as

kidney and liver damage. Dioxin, hexachlorophene and toluene

have high levels of toxicity at low-dose levels.

There was a substantial likelihood that the environment and

human beings would be exposed to the toxic wastes dumped in

— A-62 —

the Denney farm trench. Dr. Williams testified that the Denney

farm is located in an area of karst terrain underlain by limestone

bedrock with sinks, underground streams and caverns. The

geohydrology at the Denney farm is such that particles, water

and leachate may move rapidly down through the soil to the

water table below. This rapid movement occurs through ran-

domly occurring discreet openings in the soil and rock. The

ground water beneath the Denney farm was estimated by Dr.

Williams to be the source of water for a number of nearby

residential and agricultural wells. While the ground water

beneath the site is believed to form a water table that may flow

towards Calton Creek, approximately one-third mile from the

Denney farm site, actual rates and directions of ground water

movement in the Denney farm area are impossible to predict.

Unfortunately, it is impossible to predict whether high levels of

toxic dioxin or other hazardous contaminants remain in the

karst soil beneath the Denney farm, presenting future

possibilities of exposure, if the permeability of the soil and

bedrock allow the substances to flow toward the Calton Creek.

Though not conclusive of the ground water movement beneath

the Denney farm site, Dr. Williams did conduct dye tests in the

region. Dr. Wiiliams placed a dye in certain boreholes upstream

on the Calton Creek in the Denney farm region in April of 1980.

One month later, May of 1980, Dr. Williams found traces of

this dye in area springs and wells and collecting in charcoal

packets placed downstream on the Calton Creek. Because of

the region’s soil conditions, there was a substantial likelihood of

the hazardous wastes in the trench at the Denney farm site

entering the environment and going into the ground water

system; whereupon, the contaminants may have come into con-

tact with members of the public who may have been adversely

affected by their exposure to these wastes.

Pursuant to the consent decree, entered September , 1980,

Syntex removed the deteriorated drums and other contaminated

materials from the trench and placed them in temporary

Sona? Settabs shaicr Po ithte Airc scrote Saint asain aeiaieal,

a i le Poe

= Af —

storage, concrete bunker, on the Denney farm site. As of yet,

Syntex has not successfully developed a feasible method of per-

manent disposal. The wastes no longer present an imminent

and substantial endangerment.

DISCUSSION

I. Section 7003 of the Resource Conservation and

Recovery Act of 1976 (RCRA), 42 U.S.C. § 6973 (1980)

Count I of plaintiff's amended complaint is based on

section 7003 of RCRA, which states, in pertinent part:

§ 6973. Imminent hazard

(a) Authority of Administrator

Notwithstanding any other provision of this chapter,

upon receipt of evidence that the handling, storage, treat-

ment, transportation or disposal of any solid waste or

hazardous waste may present an imminent and substantial —

endangerment to health or the environment, the Ad-

ministrator may bring suit on behalf of the United States in

the appropriate district court to immediately restrain any

person contributing to such handling, storage, treatment,

transportation or disposal to stop such handling, storage,

treatment, transportation or disposal or to take such other

action as may be necessary. The Administrator shall pro-

vide notice to the affected state of any such suit. The Ad-

ministrator may also, after notice to the affecte state, take

other action under this section including, but not limited

to, issuing such orders as may be necessary to protect

public health and the environment.

In order to recover the costs expended by the government under

section 7003, the plaintiff must show that the defendants are

such persons contributing to the handling, storage, treatment,

transportation or disposal of a hazardous waste which may pre-

sent an imminent and substantial endangerment to health or the

environment.

—_-

The Court finds that the defendants are not liable under sec-

tion 7003 for the response costs incurred prior to December 11,

1980. The pivotal issue relative to the application of section

7003 to the named defendants is whether the defendants were

**contributing to such handling, storage, treatment, transporta-

tion or disposal’’ within the intended scope of section 7003. It

must first be observed that the plaintiff does not allege

negligence on the part of the defendants. The Court has review-

ed the initial complaint, the amended complaint, the standard

pretrial order No. 2, and trial notes and has found no allegation

of negligence by the defendants. The issue is therefore more

properly narrowed to state, whether a past non-negligent off-

site generator and transporter can be held liable under section

7003 for response costs. Plaintiff contends that the defendants

are ‘‘contributing to’’ the present ‘‘disposal’’ of the hazardous

waste insofar as the hazardous wastes are presently ‘‘leaking”’

from the Denney farm site into the environment. In support of

this proposition, plaintiff further contends that section 7003

does not require present active human involvement but merely a

present imminent and substantial endangerment for which the

defendant is strictly liable, regardless of the time at which the

active human involvement ceased.’ Defendants in opposition

contend that section 7003 does not apply to inactive or aban-

doned sites such as the Denney farm site, United States v. Waste

Industries, 556 F.Supp. 1301, 1303-14 (E.D. N.C. 1982), and

even if section 7003 does apply to inactive sites, section 7003

does not make past non-negligent off-site generators or

transporters liable. United States v. Wade, 546 F.Supp. 785

(E.D. Pa. 1982). After a thorough review and analysis of the

statutory language, case law and legislative history, the Court

finds that section 7003 does not apply to past non-negligent off-

site generators or transporters. Because the Court makes this

narrow finding, it will not be necessary to address the issue of

whether section 7003 applies to inactive or abandoned sites

under different factual circumstances.

— pe

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—_—

If the statutory language is clear and unambiguous, then the

language is controlling. Touche Ross v. Redington, 442 U.S.

560, 568 (1979) and Ernst & Ernst v. Hochfelder, 425 U.S. 185,

197 (1976). If the defendants are to be held liable under section

7003 then they must be classified as part of the class of persons

**contributing to such handling, storage, treatment, transporta-

tion or disposal’’ resulting in the imminent and substantial en-

dangerment. 42 U.S.C. § 6973. Initially, the Court notes that

the phrase ‘‘contributing to’’ is not defined in the statutory

framework of RCRA, specifically 42 U.S.C. § 9603, nor does

the statutory framework of RCRA lend substantial support to

the inclusion of past non-negligent off-site generators or

transporters.

Not having found the statutory framework of RCRA par-

ticularly illuminating on the phrase ‘‘contributing to,’’ this

Court concurs in the language found in City of Philadelphia v.

Stepan Chemical Co., 544 F.Sup. 1135 (E.D. Pa. 1982),

quoting: ‘‘Chief Justice Marshali’s timeless observation that

‘[w]here the mind labors to discover the design of the

legislature, it seizes everything from which aid can be

derived....’ United States v. Fisher, 6 U.S. (2 Cranch) 358,

386 (1805).’’ Jd. at 1142. As numerous courts have noted, the

legislative history of RCRA and specifically 7003 is ‘‘quite sket-

chy,’’ Untied States v. Midwest Solvent Recovery, Inc., 484

F.Supp. 133, 143 (N.D. Ind. 1980), confusing and in some in-

stances seemingly contradicting. Waste Industries, 556 F.Supp.

at 1311; and Wade, 546 F.Supp. at 791. Apparently, Congress’

major purpose in passing RCRA was to control the manner of

disposing of hazardous wastes as opposed to cleaning up the

results of past disposal. RCRA ha been amply termed ‘‘cradle-

to-grave’’ regulatory legislation, designed to trace the life cycle

of hazardous waste.‘ Congress specifically stated the goal of

RCRA as follows:

The Committee believes that the approach taken by this

legislation eliminates the last remaining loophole in en-

—_—~

vironmental law, that of unregulated land disposal of

discarded materials and hazardous wastes... . This legisla-

tion is necessary if other environmental laws are to be both

cost and environmentally eifective.

H.R. Rep. No. 1491, 94th Cong., 2d Sess. 4, reprinted in [1976]

U.S. Code Cong. & Ad. News 6238, 6241-42. The Committee

Report continues to explain how the government has spent

substantial amounts of money on air and water pollution con-

trol merely to have the waste dumped into or on the ground. /d.

A!*hough it could be argued that Congress was unaware of

the pvublems arising from inactive or abandoned sites, Congress

expressly recited such instances of the damage caused by hazar-

dous waste disposal practices in the legislative history. H.R.

Rep. No. 1491, supra, at 17-24, reprinted in [1976] U.S. Code

Cong. & Ad. News at-6254-6261. It would be more properly

stated that Congress was unaware of the magnitude and expense

of inactive or abandoned sites, as well as the lack of current

means or financially responsible parties to clean up those sites.°

This Court concludes that Congress, knowledgeable of the ex-

istence of hazardous waste problems, chose to principally direct

RCRA’s provisions toward the regulation of the source and not

the results of hazardous waste disposal.°

In reviewing the subsequent legisiative history of RCRA and

CERCLA, it appears that Congress and the American public

became more aware of the magnitude and expense of the pro-

blems associated with inactive sites as the Love Canal and

similar sites came to the forefront.’ Congress appeared more

enlightened of the massive problems arising from inactive sites

when discussing the need for further legislation, ‘‘Since enact-

ment of [RCRA], a major new source of environmental concern

has surfaced: the tragic consequences of improperly, negligent-

ly, and recklessly hazardous waste disposal practices known as

the ‘inactive hazardous waste site problem.’ ... Existing law is

clearly inadequate to deal with this massive problem.’’ H.R.

ee ee ee re Tt -

—

Rep. No. 1016, 96th Cong., 2d Sess. 17-18, reprinted in [1980]

U.S. Code Cong. & Ad. News 6119, 6120.°

The only reference in the legislative history that would lend

support to the position that section 7003 applies to past non-

negligent off-site generators or transporters states, ‘‘a company

that generates hazardous waste would be someone ‘contributing

to’ an endangerment under § 7003, even where someone else

deposited the waste in an improper disposal site similar to strict

liability under common law.’’ Report on Hazardous Waste

Disposal by the Subcommittee on Oversight and Investigations

of the House Committee on Interstate and Foreign Commerce,

96th Cong., Ist Sess. 31 (Comm. Print 1979) [hereinafter cited

as Eckhardt Report]. This subcommittee report is subject to

numerous objections.* Most importantly, the broad language

of the Eckhardt Report was not adopted in the full Senate

report which reinstated a standard of negligence under section

7003, in stating:

[Slection 7003 should not be construed solely with respect

to the common law. Some terms and concepts, such as

person ‘contributing to’ disposal resulting in a substantial

endangerment, are meant to be more liberal than their

common law conterparts. For example, a company that

generated hazardous waste might be someone ‘con-

tributing to’ air endangerment under section 7003 even

where someone else deposited the waste in an improper

disposal site (similar to strict liability under common law),

where the generator had «nowledge of the illicit disposal or

failed to exercise due care in selecting or instructing the en-

tity actually conducting the disposal.

S. Rep. No. 172, 96th Cong., 2d Sess. 5, reprinted in [1980]

U.S. Code Cong. & Ad. News 5019, 5023 (emphasis added). At

best, this language would suggest strict liability of present

responsible landowners, but the qualifying phrase ‘‘illicit

disposal or failed to exercise due care’’ requires a finding of

negligence prior to holding past off-site generators or

— Ae —

transporters liable. Although this Court is in agreement that the

phrase ‘‘contributing to’’ is to be given a broad interpretation,

United States v. Price, 523 F.Supp. 1055, 1073 (D. N.J. 1981),

the Court believes the language found in Midwest Solvent

Recovery, Inc., 484 F.Supp. at 144, to be a more prudent con-

clusion, ‘‘Any provision that could logically be read so to ex-

pand the set of persons liable under the federal solid and hazar-

dous waste regulatory scheme would surely be identified as such

in the legislative history.’’ Jd. Accord Waste Industries, 556

F.Supp. at 1308; and Wade, 546 F.Supp. at 790.'°

After a careful review of what this Court believes to be all

cases relevant to the imposition of liability under section 7003,''

it has been unable to find any case in which liability has been im-

posed on past non-negligent off-site generators or transporters.

The broadest scope of liability given the phrase ‘‘contributing

to’’ was in United States v. Price, 523 F.Supp. 1055 (D. N.J.

1981), aff'd, 688 F.2d 204 (3rd Cir. 1982) (denying petition for

preliminary injunction and motion for summary judgment) and

United States v. Price, No. 80-4104 (D. N.J. July 28, 1983) (de-

nying past off-site generators’ motion for summary judgment).

In Price, 523 F.Supp. at 1069-1074, the Court held that liability

under section 7003 could encompass the present owners of the

inactive site, the past principle owner/operator and co-owner of

the site, as well as, an employee of the past owner/operator.

This Court does not deem it necessary to comment at this time

upon the rationale of the district court in Price, 523 F.Supp.,

except to point out that in its subsequent memorandum opi-

nion, Price, No. 80-4104, the court specifically reserved any

decision on the liability of past non-negligent off-site generators

under section 7003. /d., slip op. at 26 n.12.'?

The Court having reviewed the statutory language, the

legislative history and the past judicial interpretations of sec-

tions 7003 concludes that the defendants are not liable under

section 7003. This finding is based upon the Court’s conclusion

that section 7003 does not impose liability upon past non-

negligent off-site generators or transporters.'?

sib ————

— A-69 —

Il. Sections 104, 106(a) and 107(a) of the Comprehensive

Environmental Response, Compensation, and Liability

Act (CERCLA) of 1980, 42 U.S.C. §§ 9604, 9606(a) and

9607(a)

Counts II and III of the amended complaint were brought

pursuant to section 106(a) of CERCLA, 42 U.S.C. § 9606(a)

and sections 104, 107(a) of CERCLA, 42 U.S.C. §§ 9604 and

9607(a), respectively. Specifically, the prayer for relief includes

a request to abate an imminent and substantial endangerment to

health and the environment caused by the continuing storage

and disposal of hazardous waste at the zaney farm site and for

reimbursement of response costs incurred by the plaintiff.

Before dealing with the issues, a brief history and general

outline of CERCLA appears advisable for benefit of further

discussion. CERCLA was enacted in response to the inade-

quacies of RCRA and ‘‘to the growing problem caused by the

large number of uncontrolled ‘inactive hazardous waste sites.’

In fact, Congress, describing the background and necessity for

CERCLA, specifically noted that ‘existing law is clearly inade-

quate to deal with this massive problem. . .{and therefore] the

need for a strong legislative response is evident.’ [citation omit-

ted].”’ Price, No. 80-4104, slip op. at 11. See also Wade, 546

F.Supp. at 792-93. Most importantly, CERCLA establishes two

funding mechanisms for the cleanup and monitoring of hazar-

dous waste sites: the Hazardous Substance Response Trust

Fund, sections 211, 221, 42 U.S.C. §§ 9621 and 9631; and the

Post-Closure Liability Fund, sections 107(k), 111G) and 232, 42

U.S.C. §§ 9607(k), 9611(j) and 9641. After noting the specific

inagequacies of RCRA, Congress stated, ‘‘It is the intent of the

Committee in [CERCLA] ... to initiate and establish a com-

prehensive response and financing mechanism to abate and con-

trol the vast problems associated with abandoned and inactive

hazardous waste disposal sites.’” H.R. Rep. No. 1016, supra, at

22, reprinted in [1980] U.S. Code Cong. & Ad. News at 6125.

See Price, No. 80-4104, slip op. at 12. Suffice it to say in sum-

— A-70 —

mary, section 102 [42 U.S.C. § 9602] requires the government to

promulgate a list of hazardous substances, section 103 [42

U.S.C. § 9603] requires that the release from vessels and

facilities of wastes be reported to the EPA, section 104 [42

U.S.C. § 9604] grants the federal authorities'* broad authority

to respond to hazardous waste pollution by cleaning up the

source and mitigating its effects, section 106 [42 U.S.C. § 9606]

is an imminent hazard provision similar to RCRA’s section 7003

[42 U.S.C. § 6973], and section 107 [42 U.S.C. § 9607] lists

those responsible for the hazardous waste releases as well as

what they are responsible for.'*

A. Retroactive 4 zplication of CERCLA to Non-negligext

Past Off-Site Generators and Transporters

Defendants contend that sections 104, 106(a) and 107(a), 42

U.S.C. §§ 9604, 9606(a) and 9607(a), are not to be given

retroactive application, and if applied retroactively, the statutes

are in violation of constitutional due process. The Court finds

the defendants’ arguments without merit.

It is a well settled rule of law that legislation is presumed to

apply prospectively and that it is the plaintiff’s burden of proof

to show that the statute is to be given retroactive effect. Greene

v. United States, 376 U.S. 149, 160 (1964) (“‘unequivocal and in-

flexible import of the terms, and the manifest intention of the

legislature.’’ Jd.); and Alyeska Pipeline Service Co. v. United

States, 624 F.2d 1005, 1013 (Ct. Cl. 1980). The Court agrees

that the appropriate definition of retroactive application is,

‘‘one which ‘...creates a new obligation, imposes a new duty,

or attaches a new disability, in respect to transactions or con-

siderations already past....’’’ State ex rel. Brown v.

Georgeoff, 562 F.Supp. 1300, 1303 (N.D. Ohio 1983), quoting

Justice Story in Society for Propagating the Gospel v. Wheeler,

22 F.Cas. 756, 767 (C.C.D. N.H. 1814) (No. 13,156).

There can be littie doubt that sections 104 and 107(a) were in-

tended to apply retroactively. A brief review of the case law and

ih

legislative history clearly supports this proposition. It was the

precise inadequacies resulting from RCRA’s lack of applicabili-

ty to inactive and abandoned hazardous waste disposal sites that

prompted the passage of CERCLA. This Court concludes that

sections 104 and 107(a) of CERCLA were intended to apply

retroactively. Georgeoff, 562 F.Supp. at 1302-12; Waste In-

dustries, 556 F.Supp. at 1316-17; Wade, 546 F.Supp. at 792-93;

and Stepan Chemical Co., 544 F.Supp. at 1140-41.

A more perplexing issue is the application of section 106(a) to

inactive or abandoned hazardous waste disposal sites. Section

106(a) is similar to section 7003 of RCRA in that they are both

emergency provisions, but this Court notes several critical dif-

ferences. Section 106(a) authorizes judicial action when an im-

minent and substantial endangerment to the public health,

welfare or the environment is caused by an actual or threatened

release of hazardous waste. Although the statutory language

does not explicitly refer to inactive sites, Congress made this ex-

plicitly clear.'* The Court finds that section 106(a) applies to in-

active sites and that the same persons listed as liable under sec-

tion 107(a) are liable under section 106(a). United States v. Reil-

ly Tar & Chemical Corp., 546 F.Supp. 1100, 1112-13 (D. Minn.

1982); and United States v. Outboard Marine Corp., 556

F.Supp. 54, 56 (N.D. Ill. 1982). To read sections 104, 106(a)

and 107(a) otherwise would be to emasculate the purpose of

CERCLA and the intent of Congress. H.R. Rep. No. 1016,

supra, at 17, reprinted in [1980] U.S. Code Cong. & Ad. News

6119."’

The defendants argue that if CERCLA is applied retroactive-

ly then it violates the Fifth Amendment Due Process Clause.

The fact that a statute has retroactive application does not make

it unconstitutional. Once it has been determined that Congress

intended the statute to apply retroactively, the statute is presum-

ed constitutional.

It is by now well established that legislative acts adjusting

the burdens and benefits of economic life come to the

— + o

Court with a presumption of constitutionality, 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.

Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976) (em-

phasis added). The defendants must therefore prove that Con-

gress acted arbitrarily and irrationally in the passage of

CERCLA.

In Turner Elkhorn Mining Co. the defendants challenged the

constitutionality of a provision in Title IV of the Federal Coal

Mine Health and Safety Act of 1969, as amended by the Black

Ling Benefits Act of 1972, 30 U.S.C. §§ 901 et seg. (1970 ed. &

Supp. IV), requiring the payment of benefits with respect to

miners who left employment in the indus'ry before the effective

date of the Act. The Court held the statute constitutional

because Congress acted in a rational manner in formulating the

provisions. /d. at 18. Indeed, “legislation readjusting rights

and burdens is not unlawful solely because it upsets otherwise

settled expectations [citations omitted]. This is true even

though the effect of the legislation is to impose a new duty or

liability based on past acts [citations omitted].’’ Jd. at 16.

It is clear that Congress intended to have the chemical in-

dustry, past and present, pay for the costs of Cleaning up inac-

tive hazardous waste sites. 126 Cong. Rec. $14,962, $14,963

(daily ed. Nov. 24, 1980) (remarks of Sen. Randolph); id. at

$14,966 (remarks of Sen. Stafford); id. at $14,972 (remarks of

Sen. Tsongas); and 12 Cong. Rec. HIl,799 (daily ed. Dec. a

1980) (remarks of Rep. Jeffords). Congress rationally con-

sidered the imposition of liability for the effects of past disposal

practices as a means to spread the costs of the cleanup on those

who created and profited from the waste disposal-generators,

transporters, and disposal site owners/operators. See also

Georgeoff, 562 F.Supp. at 1312; and S.Rep.No. 848, 96th

Cong., 2d Sess. 12 and 33-34, reprinted in [1980] U.S. Code

a MS

Cong. & Ad. News 6119. Accordingly, as in Turner Elkhorn

Mining Co., CERCLA’s imposition of liability for past acts is

rational and satisfies the Due Process Clause of the Fifth

Amendment.'*

Defendants contend that the provisions of CERCLA were not

intended to apply retroactively to costs incurred prior to the ef-

fective date of CERCLA, December 11, 1980, 42 U.S.C. §

9652(a). The plaintiff rebuts this contention by first arguing

that CERCLA specifically states that those liable under

CERCLA, ‘“‘shall be liable for—(A) ail costs of removal or

remedial action incurred by the United States Government . . .

not inconsistent with the national contingency plan... . 42

U.S.C. § 9607(a); therefore, implying that defendants are liable

for all costs regardless of when incurred. Second, plaintiff sug-

gests that Congress specifically intended CERCLA be given

retroactive effect to costs incurred, since Congress failed to in-

clude a provision limiting such recovery in § 9607(a). Finally,

plaintiff contends that the legislative history supports retroac-

tive application to costs incurred. Although the Court has held

that CERCLA applies to past acts of generators and

transporters, rendering them liable for response costs incurred

in cleaning up inactive hazardous waste sites, the prayer for

response costs incurred prior to CERCLA’s enactment is a

separate and distinct new duty from the obligation of post-

CERCLA liability for past acts.

Axiomatic, if the language of the statute is plain and unam-

biguous, then it controls. Section 302 of CERCLA, 42 U.S.C. §

9652 states, in pertinent part:

(a) Unless otherwise provided, all provisions of this

chapter shall be effective on December 11, 1980.

(c) Any regulation—

(1) respecting financial responsibility,

2) issued pursuant to any provision of law repealed or

superseded by this chapter, and

— A-74 —

(3) in effect on the date immediately preceding the effec-

tive date of this chapter shall be deemed to be a regulation

issued pursuant to the authority of this chapter and shall

remain in full force and effect unless or until superseded by

new regulations issued thereunder.

(d) Nothing in this chapter shall affect or modify in any

way the obligations or liabilites of any person under other

Federal or State law, including common law, with respect

to releases of hazardous substances or other pollutants or

contaminants. ...

Clearly, CERCLA became effective on December 11, 1980 and

does not modify financial responsibilities or duties under prior

laws unless specifically done so by provision. The Court in

Georgeoff previously noted that certain ‘‘provisions of

CERCLA support the view that CERCLA applies to pre-

enactment conduct.”’ 562 F.Supp. at 1311. Those provisions

are sections 104(c)(3), 107(f) and 111(d)(1), 42 U.S.C. §§

9604(c)(3), 9607(f) and 9611(d)(1). The plaintiff argues the

same observations made in Georgeoff, 562 F.Supp. at 1311:

CERCLA authorizes reimbursements from the Superfund

for response costs arising before CERCLA’s enactment,

indicating that at least some of the provisions of CERCLA

apply retroactively. Finally, the § 9607(f) prohibition on

recovery for injuries to natural resources occurring before

CERCLA’s enactment suggests, by implication, that a

similar prohibition does not apply to other response costs.

/d. (emphasis added). This Court, as the court in Georgeoff,

562 F.Supp. at 1311-12, concludes that the statutory language is

not equivocal as to the intent of Congress. The statutory

language ‘“‘all costs . . . incurred. . .’’ 42 U.S.C. § 9607(a), is

susceptible to varying interpretations, either all costs incurred

regardless of when incurred or all costs incurred from the date

of enactment. The national contingency plan makes no provi-

sion for the recovery of pre-CERCLA response costs. 40

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C.F.R. Part 300 (1983). References to time limitations placed in

sections 104(c)(3), 107(f) and 111(d)(1) could equally indicate

that these are the only provisions in which pre-CERCLA costs

may be recoverable. Most importantly, there is no clear and af-

firmative statement in the statute allowing for recovery of pre-

enactment response costs.

The only substantive discussion of the retroactive application

of CERCLA to the costs incurred is concerning the originally

drafted senate version of CERCLA, S.1480, as reported out of

the Senate Committee on Environmental and Public Works,

126 Cong. Rec. S.1480 (daily ed. July 11, 1980). The bill con-

tained an amendment introduced by Senator Dominici which

became section 4(n) of S.1480.'° The Sena © version contained

provisions concerning liability for rem: =. costs, section

4(a)(2), S.1480. Section 4(n) speaks to those liability provisions

under section 4(a)(2). The discussions concerning limits of

liability specifically dealt with section 4(a)(2) and not section

4(a)(1). As noted by plaintiff, the Senate Report accompanying

S.1480 states, ‘Section 4(n) specifies how claims for certain

damages occurring before the date of enactment will be handled

under $.1480. Costs of removal (cleanup and containment) are

not affected by this provision, nor are any damages associated

with continuing releases.”” Committee on Environment and

Public Works, $.1480. S.Rep.No.848, 96th Cong., 2d Sess. 344

(1980). Indeed, the plaintiff quotes Senator Dominici, explain-

ing that the purpose of section 4(n), ‘‘is that those kinds of

daimages become part of causes of action or costs of removal

and, therefore, are not affected by the retroactive limitations.’

Transcript of Senate Committee on Environment and Public

Works Mark-Up of S.1480, 194-195 (June 6, 1980).’’ In conclu-

sion, plaintiff suggests that in the absence of specific limitations

on liability for costs of removal or remedial actions, a party is

liable for such costs regardless of when they are incurred so long

as they are not shown to be inconsistent with the national con-

tingency plan.

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The legislative history is unpersuasive. Sections 4(a)(2) and

4(n) of S.1480 were essentially deleted from the enacted com-

promise bill. The only real reference in CERCLA to special

damages concerns destruction and loss of natural resources.

Section 107(a(C) and 111(d)(1), 42 U.S.C. §§ 9607(a)(C) and

9611(d)(1). As noted previously, CERCLA is not the ultimate

tool intended by its sponsors. In fact, the Original senate pro-

posal, S.1480, was severely compromised by the final enact-

ment.*° The lone statement of Senator Dominici falls short of

establishing that Congress intended to hold possibly hundreds

of past transporters and generators liable for pre-CERCLA

response costs, without limit in time or amount. Of equal im-

portance is the lack of discussion in the House concerning the

retroactive application of CERCLA to pre-enactment response

costs.*' Although the Court is cognizant of Congress’ intent to

hold the past generators and transporters liable for the costs in-

curred in cleaning up the results of inactive hazardous disposal

sites,”? in view of the repeated references to the millions of

dollars the government and others have spent on the cleanup of

inactive hazardous disposal sites prior to CERCLA and other

procedural and substantive inadequacies of pre-CERCLA

statutes, it is difficult to believe that if Congress had intended

to make the defendants liable for pre-CERCLA expenses, it

would not have said so explicitly and clearly in the statutory

language, committee reports or floor debates. Alyeska Pipeline

Service Co. v. United States, 624 F.2d 1003, 1016 (Ct. Cl. 1980).

Although it was possible for Congress to legislate the liability of

past generators and transporters for pre-CERCLA response

costs, they did not, and this Court does not deem it advisable to

engage in judicial legislation concerning a statute of such impor-

tance and controversy. All doubts of retroactive application

must be resolved in favor of the defendants; therefore, the

defendants are not liable for pre-CERCLA response costs.

B. Standard of Liability—Strict Liability

Defendants argue that negligence should be the standard for

liability under CERCLA, sections 104, 106(a) and 107(a);

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whereas, the plaintiff advocates a standard of strict liability.

Defendants are correct in noting that CERCLA does not ex-

plicitly contain a strict liability provision and, more important-

ly, the specific strict liability provision contained in the original

Senate bill was deleted from the statute as enacted. Presently,

section 107(a), after listing the categories of liable persons,

reads, ‘‘shall be liable’’ instead of the stricter Senate proposal

which read ‘‘shall be jointly, strictly, and severally liable.’’

S.1480, 96th Cong., 2d Sess., reprinted in, The Environmental

Emergency Response Act: Hearing Before the Senate Comm.

on Finance on S.1480, 96th Cong., 2d Sess. 5 (1980). See also

38 Cong. Q. Weekly Rep. 3436 (Nov. 29, 1980); and 126 Cong.

Rec. HIl, 787 (daily ed. Dec. 3, 1980) (remarks of Rep. Florio).

This Court finds that section 101(32), 42 U.S.C. § 9601(32) pro-

vides for strict iiability of past non-negligent off-site generators

and transporters, when it states: ‘‘ ‘liable’ or ‘liability’ under

this chapter shall be construed to be the standard of liability

which obtains under [section 311 of the Federal Water Pollution

Control Act (FWPCA) (commonly referred to as ‘‘the Clean

Water Act of 1977°’), 33 U.S.C. § 1321 (1981)).”’ Congress’

reference to § 1321 appears quite logical since the same defenses

to liability found in 42 U.S.C. § 9607(b) are also found in § 1321

as a Strict liability provision. United States v. M/V Big Sam,

681 F.2d 432 (Sth Cir. 1982), on petition for rehearing and sug-

gestions for rehearing en banc, 693 F.2d 451 (Sth Cir. 1982);

United States v. LeBeouf Bros. Towing Co., 621 F.2d 787 (Sth

Cir. 1980), cert. denied, 452 U.S. 906 (1981); Steuart Transpor-

tation Co. v. Allied Towing Corp., 596 F.2d 609 (4th Cir. 1979);

United States v. Tex-Tow, Inc., 589 F.2d 1310 (7th Cir. 1978);

and Burgess v. M/V Tamano, 564 F.2d 964 (Ist Cir. 1977); and

City of Philadelphia v. Stepan Chemical Co., 544 F.Supp. 1135,

1140 n.4 (E.D. Pa. 1982).?? Since this Court has already con-

cluded that section 106(a) applies to past off-site generators and

transporters, as does sections 104 and 107(a), the standard for

liability, strict liability, applies equally to all three sections. The

Court finds the defendants can be liable under the theory of

— A-78 —

‘\

strict liability, pursuant to sections 104, 106(a) and 107(a) of

CERCLA.

C. Joint and Several Liability

Defendants contend, inter alia, that liability of the parties

should be based on the relative fault and causation of the parties

resulting in the imminent and substantial endangerment,

whereas, the plaintiff contends that liability is joint and several.

As noted above the final language of Section 107(a), 42 U.S.C.

§ 9607(a), ‘si ull be liable for’’ differs dramatically from the

stricter standard imposed by Senate proposal S.1480, calling for

joint and several liability. This was part of the hastily drawn

compromise which resulted in the enactment of CERCLA.”

Although explicit reference to joint and several liability was

deleted from the final enactment, this Court finds that joint and

several liability is at least permissible, if not mandated, under

the facts of this case. Senator Jennings Randolph, stated during

the debates on the compromise bill:

We have kept strict liability in the compromise . . . but we

have deleted any reference to joing and several liability,

relying on common law principles to determine when par-

ties should be severaily liable.

It is intended that issues of liability not resolved by this

act, if any, shall be governed by traditional and evolving

principles of common law. An example is joint and several

liability. . . . [T]Jhe liability of joint tortfeasors will be

determined under common or previous statutory law.

126 Cong. Rec. $14,964 (daily ed. Nov. 24, 1980) (emphasis ad-

ded).?* Whether the specific standard is to be found in section

311 of FWPCA, 33 U.S.C. § 1321, as set forth in section 101(32)

of CERCLA, 42 U.S.C. § 9601(32), or the common law of the

states, the Court finds to be an oversight of statutory and

legislative guidance. The congressional statements, as noted

above, could lead to both. Granted this issue may be of pin-

— A-79 —

nacle importance in cases involving numerous generators,

transporters, site owners and a different state’s law; however,

the Court deems it unnecessary to address this issue under the

facts of the case at bar, which involve one generator, one

transporter and one landowner in the State of Missouri. The

Court concludes that the imminent and substantial endanger-

ment posed by the Denney farm site was the act of the defen-

dants working in concert to produce a single indivisible harm

and they are therefore jointly and severally liable for the

response costs incurred by the plaintiff, and for which plaintiff

is entitled to recover. Under this finding, the defendants would

be jointly and severally liable pursuant to the law of Missouri.

Stafford v. Muster, 582 S.W.2d 670, 677 (Mo. en banc 1979).

Section 311 of FWPCA, 33 U.S.C. § 1321, has also been con-

strued to allow joint and several liability. See United States v.

M/V Big Sam, 681 F.2d 432, 438-39 (Sth Cir. 1982), on petition

for rehearing and suggestions for rehearing en banc, 693 F.2d

451 (Sth Cir. 1982); United States v. Hollywood Marine, Inc.,

519 F.Supp. 688, 692 (S.D. Tex. 1981); and United States v.

Bear Marine Services, 509 F.Supp. 710, 718-19 (E.D. La.

1980).?¢

D. Imminent and Substantial Endangerment—Section

106(a), 42 U.S.C. § 9606(a)

Plaintiff bases this action, in part, on section 106(a) of

CERCLA, 42 U.S.C. § 9606(a), which states, in pertinent part:

(a) Maintenance, jurisdiction, etc.

. . when the President determines that there may be an

imminent and substantial endangerment to the public

health or welfare or the environment because of an actual

or threatened release of a hazardous substance from a

facility, he may require the Attorney General of the United

States to secure such relief as may be necessary to abate

such danger or threat, and the district court of the United

States .. . shall have jurisdiction to grant such relief as the

public interest and the equities of the case may require... .

—_- po

The listings of hazardous waste include: 2,4,5-Trichlorophenol

(TCP)-U230; Hexachlorophene-U-132; Toluene-U220; and

1,2,4,5-Tetrachlorobenzene (TCB)- U-207. 40 C.F.R. Part 261

(1980) and 40 C.F.R. Part 300 (1982). The Court finds that

these compounds and 2,3,7,8-tetrachlorodibenzo-p-dioxin

(dioxin or TCDD) are hazardous wastes within the meaning of

42 U.S.C. § 6903(5) and 42 U.S.C. § 9601(14). This finding is

based upon the high toxicity of these compounds at relatively

low dosage levels, as noted in this Court’s initial findings of

fact.

Although the phrase ‘‘imminent and substantial endanger-

ment’’ lacks specific definition in CERCLA, this Court is not

without guidance in its query. Section 106(a) is one of several

imminent hazard provisions included in environmental statutes

by Congress.’’ The standard for the application of section 7003

is a case-by-case assessment of the relationship between the

magnitude of risk and harm arising from the presence of the

hazardous waste.** The Court finds that the plaintiff has met its

burden of proof, the Denney farm site presented an imminent

and substantial endangerment to health and the environment.

The quantities of dioxin and other compounds found at the

Denney farm site were highly toxic at low dosage levels and

given the conditions of the soil and bedrock beneath the site,

there was a substantia! likelihood of human and environmental

exposure.

fl. Liability of the Defendants

Having found that there was a release and a threat of con-

tinued release of hazardous waste from the Denney farm site

that constituted an imminent and substantial endangerment to

health and the environment, the Court will address the issue of

whether the defendants are persons liable under sections 104,

106(a) and 107(a), 42 U.S.C. §§ 9604, 9606(a) and 9607(a). Each

defendant will be dealt with separately.

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Mills

Defendant Mills was an independent contractor who con-

tracted with representatives of NEPACCO to transport the

hazardous waste from their facility to the Denney farm site.

Defendant Mills had previously selected the Denney farm site

and contracted with

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