# Petition for Writ of Certiorari — GenCorp, Inc. v. Olin Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2005
- **Citation:** 546 U.S. 935

## Text

Supreme Court, U.S.
FILED
05-11 JUN 27 2005
No. —— OFFICE OF THE cic

In the
Supreme Court of the United States

GENCORP INC.,
Petitioner,
Vv.
OLIN CORPORATION,
Respondent.

On Petition for a Writ of Certiorari to the
United States Court of Appeals for the Sixth Circuit

PETITION FOR A WRIT OF CERTIORARI

Rosert J. JONKER* MICHAEL Harpy

JoHN V. ByL KEELY J. O'BRYAN

DEAN F. PAciFic Thompson Hine LLP
Warner Norcross & Judd LLP 3900 Key Center
900 Fifth Third Center 127 Public Square
111 Lyon Street, N. W. Cleveland, OH 44114-1291
Grand Rapids, MI 49503 (216) 566-5500
(616) 752-2000 Counsel for Petitioner
Counsel for Petitioner
June 27, 2005 * Counsel of Record

Becker Gallagher Legal Publishing, Inc. 800.890.5001

ey 2

POR TROT NEAR,

Ca a as San Ga on cn ee

i
QUESTIONS PRESENTED

1. Is a unilateral administrative order a “civil action” that
triggers a right of contribution under section 113(f)(1) of
CERCLA, 42 U.S.C. § 9613(f)(1), a question this Court
reserved in Cooper Industries, Inc. v. Aviall Services,
Inc., 125 S. Ct. 577 (2004)?

2. Can a party who neither -“owned [nJor possessed”
hazardous substances be liable for arranging for disposal
of those substances under section 107(a)(3) of CERCLA,
42 U.S.C. § 9607(a)(3)?

3. Cana party that did not actually arrange for disposal of
hazardous substances be liable under section 107(a)(3) of
CERCLA, 42 U.S.C. § 9607(a)(3), despite this Court’s
unanimous holding in United States v. Bestfoods, 524
U.S. 51 (1998), requiring actual operation of disposal
facilities for liability under section 107(a)(2) of CERCLA,
42 U.S.C. § 9607(a)(2)?

li

PARTIES TO THE PROCEEDING AND
RULE 29.6 STATEMENT

The only parties to this proceeding are Petitioner GenCorp
Inc. and Respondent Olin Corporation. Pursuant to Supreme
Court Rule 29.6, Petitioner GenCorp Inc. states that it has no
parent corporation.

TABLE OF CONTENTS

Page
QUESTIONS PRESENTED ...........-.------ i
PARTIES TO THE PROCEEDING AND
RULE 29.6 STATEMENT ............------- ii
J FS v
PETITION FOR A WRIT OF CERTIORARI ....... l
rr 1
bra, he Sv eee exne l
STATUTORY PROVISIONS INVOLVED ......... l
ee ee pep aae nee hee 2
STATEMENT OF THECASE ...........----- 4
tts isis a ee ae & oalbie 6 4-678 4

II. The Trial Court Imposes Liability Under Section
113(f(1) On GenCorp ........2-22-20ee-, 5

Ill. The Sixth Circuit Affirms Even Though GenCorp
Did Not Own Or Possess Olin’s Hazardous Waste
And Did Not Actually Arrange For Its Disposal . 6

IV. The Sixth Circuit Does Not Address The Effect Of
Cooper Industries, Inc. v. Aviall Services, Inc. . 7

«ata acca

iv
REASONS FOR GRANTING THE PETITION ...... 8

I. This Court Should Grant The Petition To Address
The Issue Reserved In Cooper Industries ..... 9

Il. The Sixth Circuit’s Decision Conflicts With
Relevant Decisions Of This Court .......... 14

A. The imposition of arranger liability under
CERCLA conflicts with this Court’s analysis
in Dole Food Co. v. Patrickson ......... 14

B. The Sixth Circuit’s decision nullifies the
CERCLA liability limits this Court established

in United States v. Bestfoods ........... 16
CAME 6. as cw e555 4a bbs need ese ea 18
APPENDIX

Appendix A - 3/29/05 - Sixth Circuit Order
FE Pe re terre la

Appendix B - 11/22/04 - Sixth Circuit Opinion .. . . 3a

Appendix C - 7/14/99 - District Court
Memorandum and Opinion ................ 33a

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TABLE OF AUTHORITIES
Page

Cases
Atkinson v. Sinclair Refining Co.,

SIO U.S. TICE ao ws vine ws ca eens eeees 9
Barrows v. American Airlines, Inc.,

164 F. Supp. 2d 179(D. Mass. 2001) ........--. 13
Blue Chip Stamps v. Manor Drug Stores,

PviGie @ rift. c> Sere. . Terroir. 9
Bradley v. United States,

PY & Yi, ot ere ere a 2 9
Brogan v. United States,

S22 GE SURG 06 hhc ae eaten 15
Carter-Jones Lumber Co. v. Dixie Distribution Co..,

166 F.3d 840 (6th Cir. 1999) ............-. 6, 16
Complete Auto Transit, Inc. v. Reis,

451 UB, 401 CISED) 20 ce sr sete: yer te

\

Cooper Industries, Inc. v. Aviall Services, Inc.,

495.6. Cx. S77 Gk oc a ed dhe ee passim
Dole Food, Inc. v. Patrickson,

$38 U.S. 468 GGUS) uc cc ce sae a ce eees passim

Good Samaritan Hospital v. Shalala,
~ SiR 8). Seer ee 15

vi

Herman & MacLean v. Huddleston,

GP Uae SOP UREEED ke vawdineedbienwesauen 9
In re Hinote, |
179 F.R.D. 335 (S.D. Ala. 1998) ............ 13

Lawrence v. Chater,
FeO Ul Bae Clee 0 steeds wennsneee 11, 12

N.V. Philips’ Gloeilampenfabrieken v. AEC,
316 F.26 460 GD. Cir. TSG cccccccvcccces 13

th li a ars

Oppenheim v. Campbell,
$71 F.2d 660 (D.C. Cir. 1978) .............. 13

Pharmacia Corp. v. Clayton Chemical Acquisition LLC,
No. 02-CV-0428, 2005 WL 615755

C.D. Ti. Hat. G, See 6.604 dee 10, 13
Raytheon Constructors, Inc. v. Asarco,

368 F.36 2254 CHG. BOO 6 cbt csc decane 17
Riley v. Kurtz,

361 F.3d 906 (6th Cir. 2004) ............2..- 13

Stutson v. United States,
is SY...) Peweerr yy 12

United States v. Bestfoods,
Tae UD. Fa Gee s ba ak oaee saunas passim

United States v. Northeastern Pharmaceutical &
Chemical Co., 810 F.2d 726 (8th Cir. 1986) ..... 15

2 L——

vil

United States v. Shell Oil Co.,
294 F.3d 1045 (9th Cir. 2002)......

Warden, Lewisburg Penitentiary v. Marrero
417 U.S. 653 (1974) ..........--

Statutes

Oe OU be isi oyesee ss
28 U.S.C. § 1603(b)(2)......-------
28 U.S.C. §240\(a) ........------
42 U.S.C. $905 .........---005-
BUSO BONE. oi. cicvecvess.
42 U.S.C. § 9607(aX3) ....---------
42 U.S.C. $ 9613(f) .......-----6--
42 U.S.C. § 9613(f(1) ....- 2. - ee ee
42 U.S.C. § 9613(g)3).....--------

Miscellaneous

Black’s Law Dictionary, 29 (7th ed. 1999)

FRR ers

1) one PR pC

1
PETITION FOR A WRIT OF CERTIORARI

Petitioner, GenCorp Inc. (“GenCorp”), respectfully
petitions this Court to review the judgment of the United
States Court of Appeals for the Sixth Circuit.

OPINIONS BELOW

The opinion of the Sixth Circuit (App. 3a-22a) is reported
at 390 F.3d 433 (6th Cir. 2004). The opinions of the trial
court are unreported. The liability decision of the trial court
is reproduced at App. 33a-109a.

JURISDICTION

The Sixth Circuit’s judgment was entered on November
22, 2004. (App. 3a.) The Sixth Circuit denied GenCorp’s
petition for rehearing and suggestion for rehearing en banc on
March 29, 2005. (App. la.) This Court has jurisdiction
under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED
Section 113(f)(1) of the Comprehensive Environmental

Response, Compensation, and Liability Act (“CERCLA”), 42
U.S.C. § 9613(f)(1), provides in relevant part:

Any person may seek contribution from any other
person who is liable or potentially liable under section
9607(a) of this title, during or following any civil
action under section 9606 of this title or under section
9607(a) of this title. Such claims shall be brought in
accordance with this section and the Federal Rules of

2

Civil Procedure, and shall be governed by Federal
law. ...

Section 107(a)(3) of CERCLA, 42 U.S.C. § 9607(a),
provides in relevant part that persons who are liable under
CERCLA include the following:

[A]Jny person who by contract, agreement, or
otherwise arranged for disposal or treatment, or
arranged with a transporter for disposal or treatment,
of hazardous substances owned or possessed by such
person, by any other party or entity, at any facility or
incineration vessel owned or operated by another
party or entity and containing such hazardous
substances... .

INTRODUCTION

This case involves an issue of national importance that this
Court specifically reserved in Cooper Industries, Inc. v.
Aviall Services, Inc., 125 S. Ct. 577 (2004): whether a
unilateral administrative order (“UAO”) issued by the United
States Environmental Protection Agency (“EPA”) under
section 106 of CERCLA, 42 U.S.C. § 9606, is a “civil
action” that permits a party subject to the UAO to bring a
contribution action under CERCLA. In Cooper Industries,
this Court held that a party cannot maintain a contribution
action under section 113 of CERCLA, 42 U.S.C. § 9613(f),
unless the party was previously sued in a “civil action” under
section 106 or section 107(a) of CERCLA. This Court
specifically reserved the question of whether a UAO is a
“civil action,” because the question was not presented by the
facts of Cooper Industries. The present dispute squarely
presents that question, because the vast majority of the more
than $60 million of environmental response costs that

Tae RRO De ha BE a tet Sta

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Respondent Olin seeks to recover from Petitioner were
incurred under UAOs.

There are nearly 1,000 UAOs presently pending in forty-
seven states, involving billions of dollars of cleanup expenses.
See United States Environmental Protection Agency,
Superfund Information Systems, CERCLIS Database,
available at http://cfpub.epa.gov/supercpad/cursites/srchsies.
cfm. (Last visited May 10, 2005). In this case, as in
numerous others, a party subject to a UAO has sought
contribution from other potentially responsible parties under
section 113(f)(1) of CERCLA. But following this Court’s
reasoning in Cooper Industries, section 113(f)(1)’s plain,
unambiguous statutory language does not allow a contribution
action to be maintained based solely ona UAO. Accordingly,
this Court should grant certiorari to resolve this important
issue or, in the alternative, grant certiorari, vacate the Sixth
Circuit’s decision, and remand for further consideration
consistent with Cooper Industries.

This case also raises important questions regarding the
scope of liability under section 107(a)(3) of CERCLA. The
Sixth Circuit decided to impose liability under CERCLA
against Petitioner GenCorp, which did not own or possess and
which did not actually arrange for the disposal of hazardous
substances, as section 107(a)(3) plainly requires. Instead, the
Sixth Circuit imposed liability based on a “control” test that
does not appear anywhere in the statutory language. The
Sixth Circuit’s decision squarely conflicts with this Court’s
analysis of analogous statutory language in Dole Food, Inc. v.
Patrickson, 538 U.S. 468 (2003). It also conflicts with the
carefully crafted liability limitations this Court announced in
United States v. Bestfoods, 524 U.S. 51 (1998), which made
clear that CERCLA only imposes direct liability on a party

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for the party’s own actions, not for the alleged “control” of
other parties.

The CERCLA liability issues raised in this dispute present
recurring questions of national significance as the country’s
efforts to remediate environmental contamination continue,
and the lawsuits those efforts invariably spawn persist. The
importance of the questions presented counsels in favor of this
Court’s grant of the petition.

STATEMENT OF THE CASE
: Overview.

In the 1960s, Petitioner GenCorp, then known as General
Tire and Rubber Company, manufactured urethane foam for
mattresses and other products. (App. 5a.) GenCorp’s
process for producing the foam required the chemical toluene
di-isocyanate (“TDI”). (/d.) Respondent Olin had developed
a proprietary process for the commercial production of TDI
and was looking for customers. (App. 5a, 35a.)

Olin and GenCorp negotiated a supply contract in 1962 by
which Olin would sell TDI to GenCorp. (App. 5a.) Under
the contract, Olin built a plant to produce TDI on land owned
by GenCorp. (/d.) Olin owned and operated the plant,
manufactured the TDI, owned the hazardous waste created by
the plant, and made arrangements with a local transporter to
haul Olin’s hazardous waste to a landfill known as “Big D.”
(App. 6a.) GenCorp was Olin’s customer, agreeing to buy
half of the TDI Olin manufactured at its TDI plant. (Jd.)
GenCorp also secured an option to purchase the plant from
Olin (App. 45a), although the option was never exercised and
Olin owned and operated the plant until Olin dismantled it.
(App. 9a, 52a.)

5

Olin acknowledged environmental problems at Big D in
1970 (App. 9a.), and the EPA issued a UAO against Olin for
the cleanup of the TDI plant site, known as the Fields Brook
site, on March 22, 1989. (App. 58a, 68a.) A year later, the
EPA issued a UAO against Olin for the cleanup of the Big D
site. (App. 10a, 59a, 68a.) GenCorp was not named in the
UAOs. Olin claims it incurred more than $65 million in
remediation and response costs. (App. 9a, 62a.)
Importantly, the EPA never initiated a judicial proceeding to
impose the cleanup plan or require Olin to fund it.’

Il. The Trial Court Imposes Liability Under Section
113(f)(1) On GenCorp

After “completely exclud{ing] GenCorp from more than
a decade of negotiations with the US EPA,” Olin belatedly
targeted GenCorp by asserting that GenCorp was liable to
Olin for contribution under section 113(f)(1) of CERCLA.
(App. 98a.) After a bench trial, the trial court concluded that
GenCorp was liable under section 113(f)(1) for having
arranged for the disposal of Olin’s hazardous waste (App.
12a, 91a-92a), even though the trial court did not find that
GenCorp ever owned or possessed the hazardous waste
disposed at issue. The trial court imposed on GenCorp 40%
of the cleanup costs for the Fields Brook site and 30% of the
cost for the cleanup associated with the Big D dump site.
(App. 12a, 108a.)

! Both the EPA and the Ohio Environmental Protection Agency did
sue Olin under section 107(a) of CERCLA to recover oversight
costs. Olin settled these suits and agreed to reimburse these
government agencies for their administrative costs. These costs are
distinct from the costs Olin incurred to remediate its pollution of the
TDI plant and Big D sites.

6

Ili. The Sixth Circuit Affirms Even Though GenCorp
Did Not Own Or Possess Olin’s Hazardous Waste
And Did Not Actually Arrange For Its Disposal.

The Sixth Circuit affirmed the trial court decision on
November 22, 2004. (App. 4a.) The Sixth Circuit concluded
that even though Olin, not GenCorp, actually arranged for
disposal of the hazardous waste, and Olin, not GenCorp,
owned and possessed the hazardous waste, GenCorp could be
held liable as an arranger under CERCLA. (App. 4a, 20a,
21a-28a.)

The Sixth Circuit began by refusing to apply what the
Sixth Circuit had previously referred to as the “Bestfoods
requirement” that a defendant “be actively involved in the
arrangements for disposal.” See Carter-Jones Lumber Co. v.
Dixie Distrib. Co., 166 F.3d 840, 846-47 (6th Cir. 1999).
Instead, the Sixth Circuit limited this Court’s reasoning in
Bestfoods to the proposition “that CERCLA does not alter the
common-law principle that, in the absence of a valid reason
for piercing the corporate veil, a parent corporation is not
liable for the acts of subsidiaries.” (App. 23a.) The court
concluded that GenCorp, as a large Olin customer, had a
generalized intent to dispose of the hazardous waste at issue
even though GenCorp was not actually involved in making
arrangements for disposal of the waste.

The Sixth Circuit compounded its limitation of Bestfoods
by concluding that GenCorp could be liable for arranging for
the disposal of hazardous substances that it never “owned or
possessed.” Instead, the court affirmed liability based solely
on alleged “control” of the hazardous substances owned and
possessed by Olin. (App. 26a-28a.) In effect, the court
concluded that control of hazardous waste was an adequate

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substitute for the statutory requirement of ownership or
possession.

IV. The Sixth Circuit Does Not Address The Effect Of
Cooper Industries, Inc. v. Aviall Services, Inc.

On December 6, 2004, GenCorp filed a timely petition for
rehearing and suggestion for rehearing en banc. In its
petition, GenCorp advised the Sixth Circuit of this Court’s
pending decision in Cooper Industries, Inc. v. Aviall Services,
Inc. While GenCorp’s petition was pending, the Court issued
its decision in Cooper Industries, holding that CERCLA’s
plain language requires that a party be subject to a civil action
under section 106 or 107(a) of CERCLA before that party can
seek contribution from other potentially responsible parties
under section 113(f)(1). Cooper Indus., Inc. v. Aviall Servs.
Inc., 125 S. Ct. 577 (2004). GenCorp sought and received
leave to file a reply brief to address the effect of the Cooper
Industries decision on this case.

In its reply brief, GenCorp explained that Olin’s claims
should be barred after Cooper Industries because Olin was not
subject to a civil action under section 106 or 107(a) of
CERCLA. Instead, Olin incurred remediation and response
costs complying with UAOs issued by the EPA. Because the
issue of whether a UAO is a “civil action” under section
113(f)(1) was specifically reserved by this Court in Cooper
Industries, 125 S. Ct. at 584 n.5, GenCorp urged the Sixth
Circuit to grant its petition and vacate judgment in favor of
Olin so that either the Sixth Circuit or the district court could
consider whether a unilateral administrative order was a civil
action. The Sixth Circuit denied GenCorp’s petition for
rehearing without comment and without addressing the effect
of this Court’s decision in Cooper Industries. (App. la.)

¥

8
REASONS FOR GRANTING THE PETITION

This case presents a question of national legal importance
that this Court specifically reserved in Cooper Industries:
whether an administrative order is a “civil action” that
permits a party to maintain a contribution claim under section
113(f)(1) of CERCLA. The Sixth Circuit did not address that
issue, leaving in flux the status of CERCLA contribution
actions involving the nearly 1,000 UAOs that are currently
pending across the country. This Court should grant the
petition and either address the merits of GenCorp’s appeal, or
summarily vacate and remand for reconsideration in light of
Cooper Industries.

This case also presents questions of national import
regarding the scope of arranger liability under CERCLA.
The Sixth Circuit’s decision broadens the scope of liability
under CERCLA beyond the plain language of the statute itself
to impose liability on a party that did not “own” or “possess”
hazardous substances and did not actually arrange for the
disposal of that waste. The decision below thus conflicts with
this Court’s decisions in United States v. Bestfoods, 524 U.S.
512 (1998), and Dole Food, Inc. v. Patrickson, 538 U.S. 468
(2003). Indeed, the decision below effectively imposes
arranger liability on customers simply for purchasing products
with knowledge that the production process will create
hazardous substances that must be disposed, an unprecedented
expansion of CERCLA liability _ rewrites CERCLA’s
liability requirements.

This Court may, of course, allow the issues in this case to
“percolate” in the lower courts until a conflict among the
courts of appeals develops. But in view of the inevitably
recurring nature of the issues, the prospects are high that a
circuit split will emerge. The ensuing percolation is likely to

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impose a substantial cost on an already overtaxed federal
judiciary. Not only are there a substantial number of
potential plaintiffs who may have an incentive to bring suits
like Olin’s, but those suits are inherently complex, involving
expert testimony and scientific inquiry about site conditions.
In short, if GenCorp is correct that CERCLA does not
authorize contribution following a UAO or based solely on
alleged “control,” then allowing such litigation to go forward
will result in a wasteful expenditure of time and resources for
all concerned. These questions are sufficiently important to
warrant resolution now, just as this Court resolved the
companion question in Cooper Industries.

I. This Court Should Grant The Petition To Address
The Issue Reserved In Cooper Industries.

This Court has often granted certiorari to consider issues
that it specifically reserved in earlier decisions. E.g.,
Herman & MacLean v. Huddleston, 459 U.S. 375, 379-80 &
n.6 (1983) (noting that certiorari had been granted to consider
an issue the Court had previously reserved in Blue Chip
Stamps v. Manor Drug Stores, 421 U.S. 723, 752 n.15
(1975)); Complete Auto Transit, Inc. v. Reis, 451 U.S. 401,
402 (1981) (explaining that certiorari was granted to decide an
“important question of federal labor law” reserved in
Atkinson v. Sinclair Refining Co., 370 U.S. 238, 249 n.7
(1962)). Indeed, this Court has even granted certiorari to
consider issues reserved during the preceding term. Warden,
Lewisburg Penitentiary v. Marrero, 417 U.S. 653, 656 (1974)
(deciding a question that was specifically reserved in Bradley
vy. United States, 410 U.S. 605 (1973)). The present dispute
presents a question this Court reserved in Cooper Industries,
and that issue should be decided now.

10

In Cooper Industries, this Court granted certiorari to

address whether a party may maintain an action for
contribution under section 113(f)(1) of CERCLA in the
absence of a prior civil action under CERCLA sections 106
or 107(a). Respondent Aviall brought suit under section
113(f)(1), seeking contribution for expenses Aviall incurred
responding to a state agency’s cleanup demands. 125 S. Ct.
at 582. This Court explained that Aviall could not maintain
an action under section 113(f)(1), because Aviall’s suit was
not brought “during or following any civil action under
section 9606 . . . or under section 9607(a) ... .” Jd. at 583;
42 U.S-C. § 9613(f)(1). Aviall was not subject to an
administrative order under section 106, however, so this
Court reserved the issue of “whether such an order would
qualify as a ‘civil action under section 9606 . . . or under
section 9607(a)’ of CERCLA.” Cooper Indus., 125 S. Ct. at
584 n.5 (quoting 42 U.S.C. § 9613(f)(1)). The importance of
the issue this Court appropriately reserved in Cooper
Industries is underscored by the fact that within months of the
decision, a district court had already dismissed claims under
section 113(f)(1) where the plaintiff incurred cleanup
expenses in response to a section 106 UAO. Pharmacia
Corp. v. Clayton Chem. Acquisition LLC, No. 02-CV-0428,
2005 WL 615755, at *11 (S.D. Ill. Mar. 8, 2005).

Here, Respondent Olin similarly incurred almost all of the
costs at issue under two of the EPA’s nearly 1,000 pending
UAOs. Olin did not incur any remediation or response costs
for the Big D and TDI plant sites related to any past or
pending civil action under section 106 or section 107(a) of
CERCLA.’ Accordingly, Olin cannot maintain its claims

? Olin’s contribution action seeks contribution for remediation and
response costs related to three contaminated sites: Big D, Fields

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against GenCorp under section 113(f)(1) unless the two UAOs
are “civil actions.”

This Court granted certiorari to Cooper Industries on
January 9, 2004, after the substantive briefing in the present

case was already complete. The Sixth Circuit’s decision _

below was entered on November 22, 2004, a few weeks
before this Court issued its decision in Cooper Industries.
Accordingly, GenCorp advised the Sixth Circuit of the
potential impact of the Court’s pending Cooper Industries
decision in its petition for rehearing and suggestion for
rehearing en banc. After the Cooper Industries decision was
issued, GenCorp obtained leave from the Sixth Circuit to file
a reply brief that addressed the effect of Cooper Industries on
this case.2 GenCorp noted that this Court specifically
reserved the issue of whether a UAO can be considered a civil
action to justify a contribution claim under section 113(f)(1).

The Sixth Circuit denied GenCorp’s petition for rehearing
without acknowledging Cooper Industries. (App. la-2a.)
This case is therefore ripe for an order granting certiorari,
vacating the Sixth Circuit’s decision, and remanding the case
for further consideration (“GVR”). The Court explained its
practice of issuing GVR orders in Lawrence v. Chater:

Brook, and the Reserve Environmental Site (CRES”). The vast
majority of the more than $60 million for which Olin seeks
contribution was not subject to any judicial proceeding under
section 106 or section 107(a), and was incurred by Olin under the
EPA’s UAOs for the cleanup of the Big D and Fields Brook sites.

3 GenCorp also raised the question in the district court between the

time of the Fifth Circuit’s panel and en banc decisions, and before
this Court granted certiorari in Cooper Industries.

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Where intervening developments, or _ recent
developments that we have reason to believe the court
below did not fully consider, reveal a reasonable
probability that the decision below rests upon a
premise that the lower court would reject if given the
opportunity for further consideration, and where it
appears that such a redetermination may determine the
ultimate outcome of the litigation, a GVR order is, we
believe, potentially appropriate.

Lawrence v. Chater, 516 U.S. 163, 167 (1996). The most
common reason for issuing a GVR order is “a postjudgment
decision of this Court . . . [that] has cast doubt upon the
judgment rendered by a lower . . . court.” Stutson v. United
States, 516 U.S. 163, 181 (1996) (Scalia, J. dissenting from
the grant of certiorari in Stutson as well as Lawrence) (citing
cases); see Lawrence, 516 U.S. at 166. GVR orders are
especially appropriate where, as here, the Court of Appeals
writes no opinion showing whether and how it considered -
precedent of this Court that the district court did not have any
opportunity to consider. See id. at 169.

This Court’s decision in Cooper Industries is an
intervening development that neither the Sixth Circuit nor the
district court had opportunity to consider. It occurred after
the Sixth Circuit issued its decision on GenCorp’s appeal.
Moreover, the Sixth Circuit’s decision denying rehearing fails
to show whether and how that court considered the Cooper
Industries decision. Instead, the Sixth Circuit’s order
peremptorily denied GenCorp’s petition for rehearing without
substantive comment.

Moreover, Cooper Industries should have outcome-
determinative effect on Olin’s contribution claim. As the
United States District Court for the Southern District of

TE a OP

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Illinois explained in Pharmacia, the phrase “civil action” in
section 113(f)(1) must mean “a non-criminal judicial
proceeding.” Pharmacia, supra at *7. See also Riley v.
Kurtz, 361 F.3d 906, 914 (6th Cir. 2004) (quoting Black's
Law Dictionary, 29 (7th ed. 1999)) (“Black's Law Dictionary
defines [the term ‘action’] as ‘any judicial proceeding, which,
if conducted to a determination, will result in a judgment or
decree.’”). And interpreting the term “civil action” in section
113(f)(1) to refer solely to judicial proceedings is consistent
with the interpretation given that term in other contexts. For
example, Federal Rule of Civil Procedure 3 states “a civil
action is commenced by filing a complaint with the court.”
Likewise, the term “civil action” as used in 28 U.S.C.
§ 2401(a) “‘is a term of art judicially and statutorily defined
as one “commenced by filing a complaint with [a] court,” not
an executive board’.” Oppenheim v. Campbell, 571 F.2d
660, 663 (D.C. Cir. 1978) (quoting N.V. Philips’
Gloeilampenfabrieken v. AEC, 316 F.2d 401, 406 (D.C. Cir.
1963)) (alteration in original). See also In re Hinote, 179
F.R.D. 335, 336 (S.D. Ala. 1998) (removal under 28 U.S.C.
§ 1441 applies only to a “civil action” and accordingly
requires the filing of a complaint in court); Barrows v. Am.
Airlines, Inc., 164 F. Supp. 2d 179, 182 (D. Mass. 2001)
(same).

Likewise, interpreting “civil action” to exclude UAOs is
consistent with section 113(g)(3), which establishes a three-
year statute of limitations for contribution actions under
section 113(f)(1) that starts to run at “judgment.” 42 U.S.C.
§ 9613(g)(3). As the Pharmacia court explained, “no
judgment exists as to an administrative order.” Pharmacia,
supra at *7. If, a UAO is not a “civil action” as required by
section 113(f)(1), then Olin cannot maintain a contribution
claim against GenCorp under section 113(f)(1).

14

Because the Sixth Circuit and the district court did not
have the opportunity to assess the effect of Cooper Industries
on this case, and because the Sixth Circuit gave no indication
whether and how it addressed the decision in its order denying
rehearing, this case is ideal for a GVR order. Alternatively,
the national importance of the issue this Court reserved in
Cooper Industries counsels in favor of granting GenCorp’s
petition for certiorari and resolving the issue on the merits.

Il. The Sixth Circuit’s Decision Conflicts With
Relevant Decisions Of This Court.

A. The imposition of arranger liability under
CERCLA conflicts with this Court’s analysis in
Dole Food Co. v. Patrickson.

Section 107(a)(3) of CERCLA imposes liability on
persons “who . . . arranged for disposal . . . of hazardous
substances owned or possessed by such person.” 42 U.S.C.
§ 9607(a)(3) (emphasis added). The Sixth Circuit affirmed
the trial court’s decision to impose liability on GenCorp even
though GenCorp did not own or possess the hazardous waste
because GenCorp had some measure of “control over the
hazardous waste.” (App. 27a.) The lower courts’ decisions
are contrary to this Court’s analysis of similar statutory
language in Dole Food Co. v. Patrickson, 538 U.S. at 476-
77.

In Dole Food, this Court addressed whether Israel’s
“considerable control” over two corporations made those
corporations instrumentalities of Israel under the Foreign
Sovereign Immunities Act (“FSIA”). Jd. at 477. The FSIA
defines “instrumentality” to be “any entity . . . a majority of
whose shares or other ownership interest is owned by a
foreign state.” 28 U.S.C. § 1603(b)(2). Israel did not own

Pee oe le Fe ee

ane ee eh

15

the corporations, but two defendants claimed that Israel’s
“considerable control” over the companies’ operations should
fulfill the statute’s ownership requirement. Dole Food, 538
U.S. at 477.

The Court explained that control and ownership are
“distinct concepts,” and held that “the terms of [the FSIA] are
explicit and straightforward . . . ownership . . . not control,
is the benchmark of instrumentality status.” /d. at 477
(emphasis added).

Section 107(a)(3) plainly and unambiguously requires
ownership or possession of the hazardous waste to impose
liability on a defendant. 42 U.S.C. § 9607(a)(3). Courts that
have imposed arranger liability based on control, rather than
the statutorily required possession or ownership, have done so
based on the theory that “requiring proof of personal
ownership or actual physical possession of hazardous
substances . . . would be inconsistent with the broad remedial
purposes of CERCLA.” (App. 26a); United States v.
Northeastern Pharm. & Chem. Co., 810 F.2d 726, 743 (8th
Cir. 1986). See also United States v. Shell Oil Co. , 294 F.3d
1045, 1056, 1058 (9th Cir. 2002). But such policy
considerations cannot trump the plain language of a statute.
Brogan v. United States, 522 U.S. 398, 408 (1998). See also
Good Samaritan Hosp. v. Shalala, 508 U.S. 402, 409 (1993)
(“The starting point in interpreting a statute is its language. ”).
Accordingly, the Sixth Circuit’s decision to import a control-
based standard into a statute that requires ownership or
possession conflicts with this Court’s analysis in Dole Food.

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16

B. The Sixth Circuit’s decision nullifies the CERCLA
liability limits this Court established in United
States v. Bestfoods.

The analysis for imposing arranger liability under section
107(a)(3) is analogous to that for imposing “operator liability”
under section 107(a)(2). In United States v. Bestfoods, 524
U.S. 51 (1998), this Court applied the plain language of the
statute to limit direct operator liability. The courts of appeals
have subsequently applied the reasoning in Bestfoods to limit
arranger liability under section 107(a)(3) to parties who are
“actively involved in the arrangements for disposal.” Carter-
Jones Lumber Co. v. Dixie Distrib. Co., 166 F.3d 840, 846-
47 (6th Cir. 1999); see also Raytheon Constructors, Inc. v.
Asarco, 368 F.3d 1214, 1220 (10th Cir. 2003). The decision
below effectively nullifies the limits on CERCLA liability
recognized in Bestfoods, because it imposes liability on a
party that had only a generalized intent to purchase a product
from a supplier that would necessarily generate a hazardous
waste stream while making the product, not because of any
actual involvement in arranging for disposal of the waste.

In Bestfoods, the Court rejected the trial court’s
“participation and control” standard for imposing direct
liability. See Bestfoods, 524 U.S. at 67-69. Rather, the
Bestfoods Court held that direct liability under CERCLA may
attach only if the parent company actually operates the
polluting facility, not merely because the parent has the ability
to control, or even actually controls, the subsidiary. /d. at
64.

When applied to claims of arranger liability under section
107(a)(3), the Court’s Bestfoods analysis indicates that
knowledge of disposal by others, and even control or
influence over disposal decisions by others, does not satisfy

Wise Neauiaddaeluad ahaa iyi Gata kaa PRO he Tee ee eT pee ee

17

the statutory requirement for arranger liability. Instead,
Bestfoods requires that a party be actively involved in
arranging for disposal.

The Sixth Circuit’s decision below to impose liability
based solely on GenCorp’s generalized intent that waste
would be disposed of thus conflicts with Bestfoods. The
decision would permit a parent corporation that is shielded
from CERCLA liability by Bestfoods to be liable as an
arranger, permitting an end run around the Bestfoods liability
limits. Indeed, if the panel’s analysis is correct, then the
parent company in Bestfoods would have to be liable as an
arranger based on its knowledge of and involvement in its
subsidiary’s waste disposal. In every case where Bestfoods
precludes CERCLA liability, liability could nevertheless be
imposed under the panel’s analysis. Without the limits of
Bestfoods, virtually every customer that purchases significant
quantities of products from a manufacturer that has to
generate and dispose of hazardous waste ‘v ill face potential
liability for cleanup costs the supplier later incurs. This Court
should grant certiorari and address these important issues of
federal environmental law.

18
CONCLUSION

The petition for a writ of certiorari should be granted or, in
the alternative, the Court should grant the writ of certiorari,
vacate the Sixth Circuit’s decision, and remand the case to the
Sixth Circuit to address the effect of the Court’s decision in
Cooper Industries.

June 27, 2005 Respectfully submitted,

ROBERT J. JONKER*®

JOHN V. BYL

DEAN F. PACIFIC
Warner Norcross & Judd LLP
900 Fifth Third Center
111 Lyon Street, N.W.
Grand Rapids, MI 49503
(616) 752-2000

Counsel for Petitioner

*counsel of record

MICHAEL HARDY

KEELY J. O’BRYAN
Thompson Hine LLP
3900 Key Center
127 Public Square
Cleveland, OH 44114-1291]
(216) 566-5500

Counsel for Petitioner

4) WLR A eA &

la

APPENDIX A

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

Nos. 03-3019/3211

[Filed March 29, 2005]

Defendant-Appellee/Cross-Appellant.

GENCORP, INC., )
Plaintiff-Appellant/Cross-Appellee, )

)

v. )
)

OLIN CORPORATION, )
)

)

BEFORE: MARTIN and SUTTON, Circuit Judges; and
WILLIAMS,’ District Judge.

ORDER

The court having received a petition for rehearing en
banc, and the petition having been circulated not only to the

* Hon. Glen M. Williams, Senior United States District Judge
for the Western District of Virginia, sitting by designation.

2a

original panel members but also to all other active’ judges of
this court, and no judge of this court having requested a vote
on the suggestion for rehearing en banc, the petition for
rehearing has been referred to the original panel.

The panel has further reviewed the petition for rehearing
and concludes that the issues raised in the petition were fully
considered upon the original submission and decision of the
cases. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT

/s/
Leonard Green, Clerk

Judge Moore recused herself from participation in this
. ruling.

3a

APPENDIX B

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT

Nos. 03-3019/3211

[Filed November 22, 2004]

GENCORP, INC.,
Plaintiff-Appellant/Cross-Appellee,

V.

OLIN CORPORATION,
Defendant-A ppellee/Cross-Appellant.

Nee ee eee ae ee

BEFORE: MARTIN and SUTTON, Circuit Judges; and 4
WILLIAMS,’ District Judge. :

Appeal from the United States District Court
for the Northern District of Ohio at Cleveland
No. 93-02269
David S. Perelman, Magistrate Judge

* Hon. Glen M. Williams, Senior United States District Judge
for the Western District of Virginia, sitting by designation.

4a

OPINION

SUTTON, Circuit Judge. In the 1960s, GenCorp, Inc. and
Olin Corporation began a business relationship that defies
easy categorization. By agreement of the parties, Olin built a
manufacturing plant with GenCorp’s assistance that for more
than a decade supplied GenCorp with a chemical used to
produce urethane foam. The manufacturing plant also
produced hazardous waste. Plant operators hauled the waste
to an offsite landfill, which eventually landed on the EPA’s
National Priority List of hazardous waste facilities and which
generated clean-up costs of more than $ 65 million.

Olin sued GenCorp under the Comprehensive
Environmental Response, Compensation and Liability Act
(CERCLA), 42 U.S.C. § 9601 et seqg., to recover a
percentage of the clean-up costs and to obtain a declaratory
judgment that GenCorp bore responsibility for that same
percentage of future costs. The district court granted the
relief, concluding that GenCorp was a “[c]overed person{]”
under § 9607(a) of the statute because it “arranged for
disposal . . . of hazardous substances” and concluding that it
was responsible for 70% of the clean-up costs at the landfill.
We agree with that conclusion and reject each of the parties’
other challenges to the district court’s decision except one:
Olin’s claim that a declaratory judgment should have been
entered. Accordingly, we affirm the district court’s judgment
as to GenCorp’s contribution liability and the apportionment
of liability between the parties but remand the case to
consider Olin’s request for a declaratory judgment.

Sa

I.
A.

During the 1960s, GenCorp (once known as “General
Tire and Rubber Company”) manufactured urethane foam—a
material used in carpets and mattresses, among other
products—at a plant (the “PVC Plant”) located in Ashtabula,
Ohio. Among other ingredients, the production of the foam
required toluene di-isocyanate (“TDI”), which is a “critical”
chemical ingredient in the process. JA 1319. To minimize the
financial risks of urethane production, GenCorp sought a
reliable and cost-effective source of TDI.

Olin Corporation claimed to have a supply answer ta-this
demand. Having developed a cost-effective process for
producing TDI, which involved highly toxic chemicals,
including phosgene or “mustard” gas, it began discussions
with GenCorp about building and operating a plant for
manufacturing the chemical (the “TDI Plant”). On June 21,
1962, after lengthy negotiations, the parties concluded a final
agreement (the “1962 Agreement”).

As the contractual cornerstone of the 1962 Agreement,
Olin agreed to “erect or cause to be erected, at its sole cost
and expense” the TDI Plant. JA 660. The parties agreed to
locate the plant on land owned by GenCorp, which was
adjacent to GenCorp’s own PVC Plant (where the TDI from
Olin’s new plant would eventually be converted into urethane
foam), and agreed that Olin would pay GenCorp $10 a year
for the lease of the land. Olin also agreed to build a second
plant at its own expense to produce toluene di-amine or
“TDA”—a chemical needed in the TDI manufacturing
process—and to supply enough TDA to meet the TDI Plant's
requirements.

6a

In return, GenCorp agreed to purchase 50% of the TDI
Plant’s output at cost, which included variable costs, fixed
costs for the TDI Plant and “related facilities,” and a “charge-
in” for the TDA supplied by Olin to the plant. JA 671. Both
parties remained free to sell TDI to third parties without
sharing any profits from these sales. GenCorp also agreed to
purchase hydrochloric acid—an additional byproduct of the
TDI manufacturing process—from Olin and to supply steam
from its PVC Plant to meet the TDI Plant requirements.

Olin initially retained title to the TDI Plant under the 1962
Agreement and “owned and operated” the plant. JA 660, 663.
The parties agreed that at some later date Olin would “sell,
convey and transfer” title to the TDI Plant to GenCorp at
Olin’s then-current book value for the plant. JA 678-79.
GenCorp agreed to advance Olin up to one half of its total
capital costs for the plant as “earnest money [] towards its
obligation to purchase and acquire the TDI Plant.” JA 680.
That amount, it was agreed, would be “credited by Olin
against the ultimate sale and purchase price” due at the future
sale. Id. The parties affirmed in a separate agreement that
GenCorp had a “definite obligation to take title” to the TDI
Plant and had committed itself to this purchase through a
“substantial deposit against the ultimate purchase price.” JA
699. In accordance with these future plans for ownership of
the plant, the engineering specifications for the plant were
“subject to the approval” of both GenCorp and Olin, JA 662,
and Olin agreed not to make any capital expenditures without
GenCorp’s approval after the plant’s start-up. Olin also
agreed to insure the TDI Plant for “all risk of loss, liability
and damage to property and facilities.” JA 679.

To the ends of “oversee[ing] the construction, operation
and management of the TDI plant,” the contract created a
four-member committee (the “TDI Committee”) composed of

7a

two representatives of GenCorp and two representatives of
Olin. In consultation with the committee, Olin agreed to select
a Plant Manager and other staff “to supervise the day-to-day
operation of the plant.” JA 663. Olin also agreed to appoint
a Committee Manager, who was the sole party authorized to
instruct the Plant Manager on behalf of the Committee. The
1962 Agreement contained no guidelines for committee
governance--i.e., specifying whether decisionmaking would
occur by consensus or by majority vote, or how a deadlock
would be resolved—but rather allowed the Committee to
devise its own management rules (which apparently were
never created).

Although not detailed in the agreement, GenCorp supplied
all of the TDI Plant’s hourly workers, keeping them on its
own payroll and negotiating a collective bargaining agreement
for them. Olin, on the other hand, supplied and paid many of
the plant’s salaried, supervisory employees, including the
Plant Manager and other departmental heads, although
GenCorp filled some management positions with its own
employees. All employees ultimately reported to the Olin-
appointed Plant Manager.

The 1962 Agreement did not address hazardous waste
disposal. The TDI manufacturing process generated at least
two byproducts that amount to “hazardous waste” for
CERCLA purposes: a tar-like residue waste and spent
vacuum-pump oils, both of which contain the toxic chemicals
TDI, TDA and chlorobenzene. Early plant designs
contemplated generation and disposal of the TDI residue. The
TDI Plant engineer told Phillip Sayre, a GenCorp employee
who reviewed the design specifications, that the TDI chemical
residue would be “drum[med] [] off and bur[ied].” JA 1323.
Despite Sayre’s concerns about the dangers of this plan,
which he conveyed to his supervisors at GenCorp, GenCorp

SS

8a

approved the plant designs and capital appropriation requests
by Olin. Jd.

After approving the plant designs, the TDI Committee
discussed TDI residue disposal and the GenCorp committee
members researched and recommended offsite locations for
disposal sites in view of their greater familiarity with the
Ashtabula area. D. Ct. Op. of July 14, 1999, at 40
{hereinafter D. Ct. Op.]. TDI employees disposed of some
waste at the plant site itself, which the parties agree caused a
“release” into the waterway known as “Fields Brook” that ran
between the TDI and PVC Plants on GenCorp’s land (a site
that is the subject of this litigation but not this appeal). Jd.
Benjamin Brenkus, a hauler apparently hired by the Olin Plant
Manager, carried other waste offsite. From the beginning of
plant operations in 1964 through February 1976, Brenkus
hauled waste to the Big D site, all of which the TDI Plant
hourly employees had placed in metal drums and loaded onto
Brenkus’ truck for disposal. D. Ct. Op. at 41. Payment for
Brenkus’ hauling efforts required completion of a service
requisition form, which on occasion GenCorp employees in
intermediate management positions signed. /d.

Over the years of the TDI Plant’s operation, the
Committee addressed the issue of waste disposal in a variety
of ways. TDI residue disposal (i.e., the hauling costs)
appeared as a line item on Olin’s budget for the TDI Plant,
which the Committee approved, and which GenCorp paid for
as part of the variable costs incorporated into the TDI price.
The Committee approved (apparently without dissension)
capital expenditures aimed at reducing the volume of waste
generated by the plant. D. Ct. Op. at 41. GenCorp Committee
member Robert Laundrie visited the Big D site more than
once, and he issued his criticisms of disposal methods to
Olin’s Plant Manager, id. at 40-41 (although the record

9a

contains no evidence as to whether Olin acted upon these
concerns). And GenCorp and Olin jointly funded “Golden
TDI” research, a program aimed (fruitlessly, it turns out) at
finding commercial uses for the TDI residue in order to
reduce the amount of waste shipped offsite. /d. at 41.

Despite the title-transfer provision of the 1962 Agreement,
GenCorp never purchased the TDI Plant from Olin. Instead,
on September 27, 1971, the parties signed a new agreement
(the “1971 Agreement”) that terminated the 1962 Agreement
effective October 1, 1973. In the new agreement GenCorp
relinquished its right to purchase the TDI Plant in exchange
for a $ 1.65 million payment from Olin as reimbursement for
its earlier “earnest money.” JA 929. GenCorp also extended
its lease of the land on which the plant was located for three
additional twenty-year terms. In a separate agreement signed
on the same day, the parties agreed that GenCorp would
purchase “not less than 80%” of its yearly TDI requirements
at a price determined under a new formula supplied by the
agreement (essentially the lesser of market price or cost). JA
931. At the same time they signed these new agreements, the
parties unwound earlier employment arrangements by
transferring the GenCorp employees working at the TDI Plant
to Olin’s payroll and by dissolving the TDI Committee. D.
Ct. Op. at 15.

In the late 1970s, Olin began investigating toxic
contamination at the Big D site, identifying the property as an
“area of concern requiring further study.” D. Ct. Op. at 16.
In May of 1980, the Ohio EPA requested information from
Olin about disposal of waste from the plant. And in June of
1981, the matter came before the federal EPA, after Olin filed
a notification required by CERCLA that it had disposed of

10a

28,000 tons of waste at the Big D site. The TDI Plant ceased
operations later that year, and Olin began dismantling the
facilities as well as performing clean up and decontamination
of the plant site.

At its own initiative, but in consultation with state
environmental officials, Olin performed an erosion-control
project at the Big D site in 1982. The project increased the
slope gradient of the landfill through the addition of topsoil
and clay in order to redirect storm water run-off, at a cost of
over $780,000, D. Ct. Op. at 18—none of which Olin seeks
to recover from GenCorp. Olin informed the state and federal
environmental agencies about its efforts, claiming that “the
[Big D site] is not a significant threat to human health or the
environment and no further corrective action is required or
warranted.” JA 1110.

The federal EPA disagreed with this assessment. On
September 8, 1983, after a notice-and-comment period, it
placed both the Big D and Fields Brook sites on the National
Priority List for clean-up. In 1985, the federal agency notified
Olin that it was a “potential responsible party” for the site and
requested that Olin provide information concerning the site
and conduct a “remedial investigation and feasibility study”
for the landfill. /d.; D. Ct. Op. at 19. Negotiations for a
remedial action plan for Big D took place during 1989 and
1990. When Olin refused to yield on certain points in the
negotiations, the federal EPA issued a_ unilateral
administrative order on March 27, 1990, under CERCLA
§ 106, 42 U.S.C. § 9606, requiring Olin to implement the
agency’s remedial action plan for the site. D. Ct. Op. at 20-
21. Olin formed a “Big D Site team” and in late 1992 began
implementing the remedial action plan. /d. at 21-23.

lla
We

Anticipating that Olin would seek contribution for these
remediation costs, GenCorp filed a declaratory judgment
action against Olin on October 25, 1993, in the United States
District Court for the Northern District of Ohio. GenCorp
sought a declaration that it was not liable under CERCLA for
the clean-up costs at Big D and Fields Brook, among other
sites. Olin counterclaimed, seeking its own declaration either
that GenCorp was jointly and severally liable with Olin for
the response costs or owed Olin contribution for at least one
half of the costs. The parties voluntarily dismissed GenCorp’s
claim in 1995, but continued litigating Olin’s counterclaim.
GenCorp eventually amended its response to Olin’s
counterclaim, claiming “breach of contract to insure” the TDI
plant, among other claims. JA 161.

By consent of the parties, the district court transferred the

case to Magistrate Judge David Perelman for trial. The court —

initially denied both parties’ motions for summary judgment,
determining that genuine issues of fact precluded any pre-trial
disposition of the claims. Before trial, however, the district
court reconsidered its decision in light of intervening case law
and entered summary judgment against Olin on one of its
counterclaims. It determined that Olin could not maintain its
claim for joint and several liability under CERCLA § 107
because it was a potentially liable party itself and thus could
seek only contribution from GenCorp. See D. Ct. Mem. &
Order of Feb. 23, 1999, at JA 387; Centerior Serv. Co. v.
Acme Scrap Iron & Metal Corp., 153 F.3d 344, 356 (6th Cir.
1998).

With respect to Olin’s remaining contribution claim under
§ 113(f), the district court conducted trial proceedings in three
phases. Phase I dealt with the initial question of liability;

Rae SE Bchons Din pth nee Sans es Bag Ki re Se MAP ATL Rit Joe
Fs a See Serie stioe Halse RS 2 ¢ ee eae

12a

Phase II allocated liability between the parties on a percentage
basis; and Phase III assigned a dollar amount to these
percentages. After a bench trial addressing the Phase I and II
issues, the district court determined that GenCorp was liable
as an “arranger” of hazardous waste disposal under CERCLA
either by virtue of its affiliation with Olin in an “association”
or “commercial entity” (but not a joint venture)--such that the
two companies constituted a single “person” under 42 U.S.C.
§ 9601—or by virtue of its activities carried out in its own
name. D. Ct. Op. at 47. The court also determined that
GenCorp was liable as an “owner” and an “operator” of the
land on which the plant was built. /d. at 42-43. In addressing
the parties’ respective shares of liability, the district court
concluded that GenCorp should bear 30% of the costs of Big
D (and Olin 70%) and GenCorp should bear 40% of the costs
of the Fields Brook site (and Olin 60%). D. Ct. Op. at 60.
During Phase III, the district court determined that these
liability shares translated into costs to GenCorp of
approximately $19 million (plus more than $9 million in
prejudgment interest) and entered a judgment in that amount.
D. Ct. Op. of May 10, 2002 at 77-78; Judgment Order at JA
597.

The district court did not finally resolve GenCorp’s
breach-of-contract claims based on Olin’s alleged promise to
insure. It tabled the ultimate resolution of the claim in light of
a pending dispute in the Southern District of New York
between Olin and its insurers over the insurers’ responsibility
to pay for the hazardous waste clean-up costs. The court
determined that Olin had satisfied its contractual obligation to
GenCorp, and if Olin obtained any recovery from its insurers
in the New York proceeding, that recovery would “inure to
the benefit of . . . [GenCorp]” as well. D. Ct. Op. of May
10, 2002, at 77. Because that parallel proceeding had not
concluded, the district court “held in abeyance a

13a

determination as to what share of any recovery [in the New
York litigation] would be GenCorp’s,” but entered a final
judgment in the remainder of the suit under Federal Rule of
Civil Procedure 54(b). Id.

The appeal and cross-appeal from the district court’s
judgment raise a host of questions: (1) does this Court have
jurisdiction over the suit? (2) does the statute of limitations
bar Olin’s claim? (3) is GenCorp liable for response costs
related to the Big D site as an “arranger” for the disposal of
hazardous waste generated by the TDI Plant? (4) did the
district court abuse its discretion in determining each parties’
proportionate responsibility for the clean-up costs? (5) did the
district court err in awarding prejudgment interest? and (6)
should the district court have granted Olin’s request for
declaratory relief regarding future clean-up costs?

il.

As a matter of first priority, the Court has jurisdiction
over this appeal. Under Rule 54(b) of the Federal Rules of
Civil Procedure, a district court may, “[w]hen more than one
claim for relief is presented in an action, . . . direct the entry
of a final judgment as to one or more but fewer than all of the
claims,” provided that the court makes “an express
determination that there is no just reason for delay and upon
express direction for the entry of judgment.” Compliance with
the rule permits immediate appellate review of a district
court’s judgment even though the lawsuit contains unresolved
claims. See Gen. Acquisition, Inc. v. GenCorp, Inc., 23 F.3d
1022, 1026 (6th Cir. 1994).

To comply with the rule, a district court initially must
expressly “direct the entry of final judgment as to one or
more but fewer than all of the claims” in the case. /d. It then

14a

must determine whether “the needs of the parties” outweigh
the efficiency of having one appeal at the conclusion of the
case in its entirety, and it must spell out its reasons for
concluding that prompt review is preferable. /d. at 1027. On
appeal, we review compliance with the first requirement de
novo, id. at 1027, and compliance with the second
requirement for an abuse of discretion, id.; see also Curtiss-
Wright Corp. v. Gen. Elec. Corp., 446 U.S. 1, 10, 100S. Ct.
1460, 64 L. Ed. 2d 1 (1980).

As to the first requirement, this case involves more than
one claim and the district court permissibly entered final
judgment as to all but one of the claims—GenCorp’s contract
claim that Olin failed to obtain insurance for the TDI Plant.
A “claim” under Rule 54(b) “denotes the aggregate of
operative facts which give rise to a right enforceable in the
- courts” even if the party has raised different theories of relief.
Gen. Acquisition, 23 F.3d at 1028 (quotation marks omitted).
In this case, the district court had before it Olin’s contribution
claim as well as GenCorp’s breach-of-contract and other
claims. Olin’s contribution claim arises under CERCLA while
GenCorp’s contract claim arises under state law governing
contractual rights and fiduciary responsibilities. The claims
also do not share a single “aggregate of operative facts.”
Olin’s CERCLA claim arises from the disposal of hazardous
waste at the Big D landfill, while GenCorp’s claim arises out
of Olin’s alleged duty to insure for risks related to the TDI
Plant. Nor does the fact that Olin’s recovery on its claim
could be set off in full or in part by GenCorp’s recovery on
its cfaim impede the separability of these claims for appeal
purposes. See Curtiss-Wright, 446 U.S. 1, 100 S. Ct. 1460,
64 L. Ed. 2d 1 (reversing court-of-appeals determination that
certification of claim was improper because pending
counterclaim could ultimately provide set-off to liability).
Lastly, the district court’s resolution of the CERCLA claim

15a

satisfies the finality requirement of Rule 54(b) and 28 U.S.C.
§ 1291, as the court provided an “ultimate disposition” of the
claim and addressed all forms of relief requested by Olin.
Compare Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 96
S. Ct. 1202, 47 L. Ed. 2d 435 (1976) (concluding that district
court’s finding of liability, which did not address any of the
relief requested by the plaintiff, did not satisfy Rule 54(b));
Gen. Acquisition, 23 F.3d at 1027 (determining that district
court’s judgment resolving damages issue but not liability was
not “final”).

As to the second requirement, the district court did not
~ abuse its discretion in concluding that it would be efficient
presently to dispose of all of the claims, save for GenCorp’s
insurance-contract claim. In arguing to the contrary, GenCorp
contends that the district court “failed to make the required
findings or to balance the. . . factors that should be
considered.” GenCorp’s Mot. to Dismiss at 2. In fact,
however, the district court did explain why there was no “just
reason for delay.” D. Ct. Op. of Nov. 21, 2002, at 10. And
its explanations for certifying the partial judgment for appeal
in this decade-long suit made ample sense given that the only
question remaining on GenCorp’s claim was one that would
be resolved by another court and given the likelihood that
GenCorp would appeal its CERCLA liability (in view of its
possible preclusive effect) even if the amount owed was
wholly offset by an insurance recovery.

Il.

GenCorp next argues that Olin failed to comply with the
applicable statute of limitations in bringing its CERCLA
contribution claim. We disagree.

16a

As an initial point of reference, the parties share common
ground that § 113(g)(2) of CERCLA, 42 U.S.C.
§ 9613(g)(2), applies to this action. They agree with the
district court that § 113(g)(2)—not § 113(g)(3) (entitled
“Contribution”)—applies to this case because Olin incurred
clean-up costs at Big D not as the result of a court judgment
or settlement with the government but as the result of a
unilateral administrative order issued by the EPA under
§ 9606. For this reason, the district court concluded, Olin’s
counterclaim constituted “an initial action for recovery of []
costs” under § 113(g)(2). See D. Ct. Op. at 25-27; Sun Co.
v. Browning-Ferris, Inc., 124 F.3d 1187 (10th Cir. 1997)
(deciding that where a party bringing a contribution suit
incurs clean-up costs by means other than a judgment or
settlement, e.g., a unilateral administrative order, that suit is
the “initial action” for recovery of costs under § 113(g)(2));
see also Geraghty & Miller, Inc. v. Conoco Inc., 234 F.3d
917, 924-25 (Sth Cir. 2000) (adopting rationale of Sun);
Centerior, 153 F.3d at 355 (agreeing in dicta with Sun).

Having agreed that § 113(g)(2) governs this case, the
parties dispute which portion of § 113(g)(2) applies. Section
113(g)(2) contains two different time limitations, and
provides:

An initial action for recovery of [] costs . . . must be
commenced-- (A) for a removal action, within 3 years
after completion of the removal action . . .; and

(B) for a remedial action, within 6 years after
initiation of physical on-site construction of the
remedial action, except that, if the remedial action is
initiated within 3 years after the completion of the
removal action, costs incurred in the removal action
may be recovered in the cost recovery action.

17a

42 U.S.C. § 9613(g)(2). In GenCorp’s view, the actions
taken by Olin in the early 1980s at the Big D site—changing
the slope of the land and adding topsoil at a cost of
$780,000—triggered the “initiation” of “remedial action” for
the statute of limitations, which means that the time for
bringing a remedial-recovery lawsuit has long since passed.
In Olin’s view, the limitations period did not begin running in
the 1980s (1) because these earlier efforts constituted
“removal” but not “remedial” actions and (2) because the
work done in the early 1980s was “separate and distinct from,
and could not start the limitations period for, the work done
in the 1990s in response to the EPA’s orders” even if the
earlier work was “remedial” in nature. Olin Br. at 53. (Olin
also argues that GenCorp waived its statute-of-limitations
defense, but we need not reach that question.)

In resolving this issue, the district court looked to the
National Contingency Plan regulations defining removal
actions, and determined that Olin’s “work performed in the
early 1980s falls within the parameters of removal actions.”
D. Ct. Op. at 28. The district court noted that the short
duration of the project and its relatively low cost indicated
that the action constituted removal, not remediation. Id. The
work done in the 1980s, the court added, did not meet the test
for remedial actions because it took place before the
“remedial investigation and feasibility study” and before the
EPA’s unilateral administrative order implementing the final
plan for the site. Id. at 29.

We agree with this analysis—with one elaboration. The
salient point here is that CERCLA’s definition of “remedial
action” imposes a separate requirement on the term:
“remedial action” encompasses only “those actions consistent
with [the] permanent remedy taken . . . to prevent or
minimize the release of hazardous substances,” and unless

18a

“remedial action” meeting this requirement has begun, the
statute-of-limitations-triggering event cannot occur. 42 U.S.C.
§ 9601(24) (emphasis added). Critically, Olin’s earlier actions
at the landfill were not consistent with the “permanent
remedy” for the site—namely, the final remedial plan
implemented by the federal EPA. Indeed, in adding topsoil
and clay covers to prevent soil erosion and in changing the
slope gradient of the site, Olin’s interim measure was
inconsistent with the federal EPA’s remedial p' un. The final
plan called for Olin to dismantle its previous work at the site
by removing the clay cap, excavating the site and removing
and incinerating waste and contaminated soil from the site.
D. Ct. Op. at 29. For this reason, “the prior work was not
‘permanent’ as would be required for a remedial action, nor
was it consistent with the remedy mandated by the EPA in the
1990 [unilateral order].” Jd.

In addressing this issue, the Ninth Circuit has concluded
that “the initiation of physical on-site construction of the
remedial action” under 42 U.S.C. § 9601(24) and
§ 9613(g)(2) “can only occur after the final remediation plan
is adopted” and that action taken before the plan adoption
cannot constitute “remedial action” for statute-of-limitations
purposes. California ex rel. Cal. Dep’t of Toxic Substances
Control v. Neville Chem. Co., 358 F.3d 661, 667 (9th Cir.
2004) (emphasis added); see also 42 U.S.C. § 9617 (outlining
procedures for proposing and adopting a final remedial action
plan). While other circuits have rejected this bright-line rule,
they adhere to the principle that for a “remedial action” to
begin, the work must be “consistent with [the] permanent
remedy.” See Geraghty & Miller, 234 F.3d 917; United
States v. Navistar Int’l Transp. Corp., 152 F.3d 702 (7th Cir.
1998). We need not decide today whether to adopt the Ninth
Circuit’s bright-line rule because it would not affect the
outcome of this case. In this instance, Olin’s work in the

Rey eed Be re Ba

on oe elena elat

a nt Ba atime

19a

1980s at Big D was not consistent with the EPA-ordered final
remedial plan, irrespective of the timing of the work, and
GenCorp offers no argument otherwise. Under these
circumstances, Olin’s actions in the 1980s did not trigger the
statute of limitations for recovery of its costs related to its
“remedial” actions over a decade later.

IV.

Turning to Olin’s contribution claim, the parties agree that
several preconditions for CERCLA liability have been
established: (1) the Big D site is a “facility” under 42 U.S.C.
§ 9601(9); (2) a “release” of “hazardous substances” (the TDI
residue) occurred; and (3) the release caused Olin to incur
“necessary costs of response,” see 42 U.S.C. § 9607(a). See
Stip. of Parties at JA 121; Centerior, 153 F.3d at 347-48. The
only element of CERCLA liability in dispute is whether
GenCorp falls into one of four categories of “potentially
responsible parties” described in CERCLA § 107(a)(1)-(4).

Invoking § 107(a)(3) of CERCLA, the district court
concluded that GenCorp was an “arranger” of hazardous
waste disposal: a “person who by contract, agreement, Or
otherwise arranged for disposal or treatment, or arranged with
a transporter for transport for disposal or treatment, of
hazardous substances owned or possessed by such person, by
any other party or entity, at any facility or incineration vessel
owned or operated by another party or entity and containing
such hazardous substances.” 42 U.S.C. § 9607(a)(3). In
reaching this conclusion, the district court embraced two
alternative theories of “arranger” liability: (1) that the
relationship Olin formed with GenCorp created a single
“person” under 42 U.S.C. § 9601(21)—as an “association”
or a “commercial entity” —such that Olin’s actions regarding
hazardous waste disposal could be attributed to GenCorp; and

20a

(2) GenCorp “arranged for disposal” of hazardous waste in its
own right as a separate er liable “person.” D. Ct.
Op. at 30, 47.

GenCorp challenges each of these conclusions on appeal.
Because we conclude that GenCorp “arranged for” hazardous
waste disposal in its own capacity, we need not address the
separate question whether the two companies formed an
“association” or “commercial entity” under 42 U.S.C.
§ 9601(21).

A.

CERCLA imposes liability on any person who
“arrange[s]” “by contract, agreement or otherwise” for the
“disposal or treatment . . . [or] for transport for disposal or
treatment” of “hazardous substances” that is “owned or
possessed” by that person. 42 U.S.C. § 9607(a)(3). While the
legislation does not define what it means to “arrange” for
disposal of waste, traditional definitions of the word, its
statutory context and case law supply ample clues. To
“arrange” for something means to “plan or prepare” for it,
though not necessarily to implement the plan. Webster’s II
New College Dictionary 62 (2001). Making such preparations,
moreover, does not require a formal disposal agreement, as
the statute provides that a person may arrange for hazardous
waste disposal “by contract, agreement or otherwise.” 42
U.S.C. § 9607(a)(3) (emphasis added). Neither must the
arrangements for waste disposal stem from a discrete event;
they may arise from a broader “transaction.” See United
States v. Cello-Foil, Prods., Inc., 100 F.3d 1227, 1231 (6th
Cir. 1996).

Circuit precedent also makes clear that one may not
become an arranger through inadvertence. The party must

2la

have some intent to make preparations for the disposal of
hazardous waste, though that intent goes to the matter of
disposing waste generally, not to disposing of it in a particular
manner or at a particular location. See id. at 1231-32
(“[O]nce it has been demonstrated that a party possessed the
requisite intent to be an arranger, the party cannot escape
liability by claiming that it had no intent to have the waste
disposed in a particular manner or at a particular site.”);
United States v. Aceto Agricultural Chems. Corp., 872 F.2d
1373, 1380 (8th Cir. 1989); see also CPC Int'l, Inc. v.
Aerojet-Gen. Corp., 759 F. Supp. 1269, 1279 (W.D. Mich.
1991); cf. United States v. Township of Brighton, 153 F.3d

307, 315 (6th Cir. 1998) (noting that it is “no defense” to.

operator liability that the “actor [was not] responsible for a
particular hazard”). The requisite intent may be “inferred
from the totality of the circumstances,” Cello-Foil, 100 F.3d
at 1231, and need not depend on the parties’ own
characterizations of their transactions, Aceto, 872 F.3d at
1381—all of which makes this inquiry highly fact-driven,
Cello-Foil, 100 F.3d at 1231.

Measured by these requirements, the district court
correctly concluded that GenCorp arranged for the disposal of
hazardous waste from the TDI Plant. GenCorp and Olin
entered into the 1962 Agreement to build a manufacturing
plant that would convert TDA (which Olin would produce)
into TDI (which GenCorp would purchase and use in its own
production of urethane foam). The generation of toxic waste
was a natural byproduct of this manufacturing process. And
even if GenCorp somehow did not realize that this process
would generate hazardous waste when it entered into the
contract (because Olin held the patent for the process), it
necessarily appreciated this reality when it approved the plant
design specifications and capital expenditure requests. The
construction plans specifically provided that the hazardous

a po et chs ind ont vane Be

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22a

waste generated by the TDI Plant would be placed in drums
and buried at an offsite location.

Other facts found by the district court show that the
parties’ business arrangements for the TDI Plant encompassed
plans or preparations for waste disposal: (1) the TDI
Committee (whose membership included equal numbers of
representatives from Olin and GenCorp) discussed TDI
residue disposal; (2) GenCorp Committee members in
particular researched and recommended waste disposal
locations; (3) the TDI Committee approved methods to reduce
the volume of waste sent offsite (i.e., to the Big D landfill)
through capital improvements to the plant; and (4) Olin and
GenCorp both funded research aimed at further reducing the
volume of residue waste that needed to be disposed offsite.
See D. Ct. Op. at 45-46. Considered together, these facts
amply show that GenCorp “intended to” (and actually did)
“enter into a transaction that included an ‘arrangement for’
the disposal of hazardous substances.” Cello-Foil, 100 F.3d
at 1231; accord Carter-Jones Lumber Co. v. Dixie
Distributing Co., 166 F.3d 840, 845 (6th Cir. 1999).

GenCorp’s arguments to the contrary amount to variations
on two themes: (1) GenCorp did not actively participate in
arranging for the waste disposal at Big D and (2) GenCorp did
not “own or possess” the hazardous waste. Neither argument
is convincing.

In advancing its first argument, GenCorp leans heavily on
United States v. Bestfoods, 524 U.S. 51, 118 S. Ct. 1876,
141 L. Ed. 2d 43 (1998), and this Court’s interpretation of
the decision in Carter-Jones, 166 F.3d 840, and in Township
of Brighton, 153 F.3d 307. To GenCorp’s way of thinking,

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23a

Bestfoods, Carter-Jones and Township of Brighton require a
party “to actually dispose of hazardous waste,” something
that GenCorp allegedly never did. GenCorp Br. at 24.

This trio of cases does not bear the weight that GenCorp
places on them. Bestfoods dealt with a parent company’s
potential liability under 42 U.S.C. § 9607(a)(2) as an
“operator” of a polluting facility owned and operated by its
subsidiary. 524 U.S. at 55. The Court rejected the proposition
that a parent corporation’s participation in and control over its
subsidiary’s operations “without more” sufficed for operator
liability. Jd. The Court instead held that for liability to attach
either the corporate veil must be pierced or the parent must
independently meet the test for operator liability through

actions in its own capacity, not its subsidiary’s. Id.

Carter-Jones took the logical next step of extending
Bestfoods to an individual corporate shareholder facing
potential arranger liability under CERCLA § 107(a)(3). 166
F.3d at 846-47. In doing so, it concluded that the district
court’s findings “satisf[ied] the Bestfoods requirement that an
officer be actively involved in the arrangements for disposal
before individual liability may be imposed.” Jd.

Township of Brighton applied the Bestfoods principle in
the context of a governmental entity’s potential liability as an
“operator” of a waste facility. It concluded that “we apply the
same plain-meaning standard articulated in Bestfoods to any
context, whether the defendant is acting in a corporate,
governmental, or any other capacity.” 153 F.3d at 314 n.7.

The central lessons of these cases are (1) that CERCLA
does not alter the corporate-law principle that, in the absence
of a valid reason for piercing the corporate veil, a parent
corporation is not liable for the acts of its subsidiaries, and

24a

(2) an alleged violator must independently satisfy the test for
CERCLA liability—whether for operator liability, as in
Bestfoods, or for arranger liability, as in Carter-Jones. The
cases, however, do not alter the basic principles for
ascertaining “arranger” liability. The references in these cases
to “active involvement” or “actual control” relate either to the
substantive standard for operator liability, Bestfoods, 524
U.S. at 66-67; Township of Brighton, 153 F.3d at 314, or
refer to the notion that an entity must itself be involved as an
“operator” or an “arranger,” Carter-Jones, 166 F.3d at 846-
47. Nowhere in these cases is there any suggestion that a
party must have been “actively involved” in arranging to
dispose of hazardous waste at a particular location and in a
particular manner. All of this means that even if Olin rather
than GenCorp specifically engaged Benjamin Brenkus’
hauling services to carry the hazardous waste to Big D, see
GenCorp Br. at 30-31, that fact does not insulate GenCorp
from liability for “arrang[ing] for” the disposal of hazardous
waste.

GenCorp’s second argument fares no better. In claiming
that it cannot be liable as an “arranger” unless it “owned or
possessed” the hazardous waste (the contaminated residue and
vacuum-pump oils), GenCorp points out that the district court
never found that it had title to or physically held the waste but
found only that it had a “nexus” to the waste. As an initial
matter, however, the company bears some responsibility for
this omission (if indeed it was an omission). GenCorp did not
squarely join this issue at the district court level, and it cannot
fairly criticize the district court for failing to address an issue
it never directly raised. See GenCorp Post-Trial Br. at JA
222-24 (arguing that disposal activities of hourly TDI Plant
employees on its payroll did not satisfy arranger liability
requirements); PACAAR Inc. v. TeleScan Technologies,
L.L.C., 319 F.3d 243, 258 (6th Cir. 2003).

25a

The legal argument, at any rate, is mistaken. Section
107(a)(3) of CERCLA, it is true, imposes liability on “any
person who . . . arranged for disposal . . . of hazardous
substances owned or possessed by such person.” 42 U.S.C.
§ 9607(a)(3) (emphasis added). But to say that the statute
requires ownership or possession of the waste does not
establish what evidence will satisfy the requirement or, more
particularly, whether constructive ownership or possession
will suffice.

When Congress enacted CERCLA in 1980, it did so
against a statutory and common-law backdrop that had long
dignified constructive ownership as a legitimate means by
which to establish criminal and other forms of liability for
individuals and entities that did not have title to or physically
possess certain items. See, é.8., United States v. Crippen, 459
F.2d 1387, 1388 (3d Cir. 1972) (“constructive”
possession— “dominion and control over the {[]
substance”—may satisfy the possession requirement in 21
U.S.C. § 841); United States v. Hutchinson, 488 F.2d 484,
488 (8th Cir. 1973) (possession in § 841 may be “actual or
constructive”); United States v. Poore, 594 F.2d 39, 43 (4th
Cir. 1979) (accepting constructive possession as satisfying 26
U.S.C. § 5861(d)’s possession requirement); State v. Wolery,
46 Ohio St. 2d 316, 348 N.E.2d 351, 360 (Ohio 1976) (“The
prevailing rule at common law and in most jurisdictions is that
actual physical possession is not a requisite of receiving
[stolen property]. Possession may be constructive.”)
(quotation marks omitted); People v. Mumford, 60 Mich.
‘App. 279, 230 N.W.2d 395, 396-97 (Mich. App. 1975)
(“possession” element in a drug offense “is to be construed in
its commonly understood sense and may encompass both
actual and constructive possession”); Duchac v. State, 505
S.W.2d 237, 240-41 (Tenn. 1973) (it “appears to be the
general rule throughout the United States” that “effective

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26a

control” over burglary tools satisfies the possession
requirement for that offense).

Under these circumstances, courts quite appropriately
infer that Congress meant the phrase “ownership or
possession” to include constructive ownership or possession.
See Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730,
739, 109 S. Ct. 2166, 104 L. Ed. 2d 811 (1989) (“[W]here
Congress uses terms that have accumulated settled meaning
under . . . the common law, a court must infer, unless the
statute otherwise dictates, that Congress means to incorporate
the established meaning of these terms.”) (quotation omitted);
cf. Overstreet v. North Shore Corp., 318 U.S. 125, 63 S. Ct.
494, 87 L. Ed. 656 (1943) (interpreting statutory phrase by
reference to its meaning in another statute); see generally 2B
Norman J. Singer, Sutherland on Statutory Construction
§ 53.03 (Sth ed. 1992) (“It is well established that the
interpretation of a doubtful statute may be influenced by
language of other statutes which are not specifically related,
but which apply to similar persons, things, or relationships. ”).

In imposing arranger liability on companies under
CERCLA, other circuits have accepted less than legal title or
physical possession. See United States v. Sheli Oil Co., 294
F.3d 1045, 1058 (9th Cir. 2002) (accepting the premise that
“parties who did not literally own or physically possess
hazardous waste at the time it was disposed of or released”
may be liable); Catellus Dev. Corp. v. United States, 34 F.3d
748, 752 (9th Cir. 1994) (considering ownership or control to
be “evidence” of, but not a precondition for, arranger
liability); United States v. Northeastern Pharm. & Chem. Co.,
Inc., 810 F.2d 726, 743 (8th Cir. 1986) (“[R]Jequiring proof
of personal ownership or actual physical possession of
hazardous substances . . . would be inconsistent with the
broad remedial purposes of CERCLA.”); see also Geraghty

27a

& Miller, 234 F.3d at 929 (stating that a “nexus”—l.é., an
obligation to control the hazardous waste—must exist). As
these cases indicate, control over the hazardous waste may
suffice where literal ownership or possession falls short. See
Shell Oil, 294 F.3d at 1058 (summarizing that courts have not
imposed arranger liability without either ownership of the -
waste or “authority to control or duty to dispose of”
hazardous waste) (citing United States v. Iron Mt. Mines,
Inc., 881 F. Supp. 1432, 1451 (E.D. Colo. 1995));
Northeastern Pharm., 810 F.2d at 743-44 (individual
corporate officer’s “actual control” satisfied the statute’s
possession requirement); CPC Int’l, 759 F. Supp. at 1278
(“section 107(a)(3) requires the assumption of responsibility —
for or control over the disposition of hazardous waste” rather
than legal title).

For several reasons, GenCorp’s control over the
hazardous waste suffices to establish constructive ownership
and possession. First, even if GenCorp never held title to the
TDI Plant, it had an active interest in the facility through its
option to buy the plant, secured by its “earnest money” —its
contribution of one half of the construction costs. Second,
GenCorp had equal representation on the Committee that
oversaw “the construction, operation and management of the
TDI Plant.” Third, the Committee approved the design plans,
capital appropriations requests and the budgets of the TDI
Plant, all of which contemplated continued offsite waste
disposal. Indeed, on the basis of these facts, among others,
the district court permissibly concluded that GenCorp was an
“operator” of the TDI Plant by “managing, directing, or
conducting operations specifically related to pollution,” D.
Ct. Op. at 42-43. Surely a person who “manages” activities
“specifically related to pollution” at a plant exercises control
over the waste disposa! process.

28a

These facts and the district court’s fact finding also show
that GenCorp and Olin did not have a traditional buyer-seller
relationship. Contrary to GenCorp’s concerns, in other
words, our decision does not mean that mere customers of
waste-generating manufacturers or processors will face
“arranger” liability under CERCLA—unless, that is, they
exercise control over_the hazardous waste and its disposal as
GenCorp did in implementing this unique business
relationship. See Morton Int’l, Inc. v. A.E. Staley Mfg., Co.,
343 F.3d 669, 683 (3d Cir. 2003); Shell Oil, 294 F.2d at
1057; Concrete Sales & Servs., Inc. v. Blue Bird Body Co.,
211 F.3d 1333, 1339 (11th Cir. 2000); Gen. Electric Co. v.
AAMCO Transmissions, Inc., 962 F.2d 281, 287 (2d Cir.
1992).

GenCorp, lastly, appears to argue that even if the
evidence establishes its “arranger” status under the 1962
Agreement with Olin, the evidence does not support the
district court’s finding of arranger liability after the parties
unwound the agreement (effective October 1, 1973). See
GenCorp Br. at 40. While that argument may weil have
force—particularly since GenCorp’s involvement in oversight
of the TDI Plant ended in 1973—GenCorp does not address
the district court’s conclusion that post-1973 activities would
not have made a material difference to the cost allocation in
view of the extent of contamination at Big D that had already
taken place by that time. See D. Ct. Op. at 55. Accordingly,
we reject this claim.

V.

Both parties challenge the district court’s allocation of
costs. In its cross-appeal, Olin challenges the district court’s
allocation of liability for the Big D clean-up (70% Olin, 30%
GenCorp), claiming that it should have evenly divided the

29a

costs between the two companies. According to Olin, the
district court abused its discretion in allocating costs, by
improperly considering two factors: (1) Olin’s several-year
delay in giving notice to GenCorp of the federal EPA’s
involvement at the Big D site, and (2) Olin’s relatively greater
authority over the TDI Plant under the parties’ 1962
Agreement.

Olin must run uphill in making this argument. Abuse-of-
discretion review applies to the district court’s allocation of
costs. See United States v. Consolidation Coal Co., 345 F.3d
409, 412 (6th Cir. 2003). And the statute augments that
discretion by saying that the court “may allocate response
costs . . . using such equitable factors as the court determines
are appropriate,” 42 U.S.C. § 9613(f)(1) (emphasis added).
Even if Olin is correct that it had no legal duty to notify
GenCorp before beginning to clean up the site, see Olin Br.
at 63, the district court permissibly considered the fact that
“Olin foreclosed GenCorp from cooperating with the
regulatory authorities during years of negotiation . . . and
then, after extensive clean-up work was underway . . . called
upon GenCorp to be a partner in cost-sharing as a fait
accompli.” D. Ct. Op. at 53. The nature of the remediation
plan and the costs associated with it assuredly could have been
affected by the participation of a third party who knew the
facility first hand. That we will never know the answer to that
question with certitude, however, is precisely why the defense
of laches exists and why this factor bears a similarity to that
“equitable” defense. See United States v. R. W. Meyer, Inc.,
932 F.2d 568, 572 (6th Cir. 1991) (noting that under
CERCLA § 113(f)(1) a court may consider “any factor it
deems in the interest of justice in allocating contribution
recovery . . . . No exhaustive list of criteria . . . should be
formulated . . . . [but] [a] court may consider . . . any
traditional equitable defenses”) (emphasis added).

30a

GenCorp similarly challenges the district court’s allocation
of liability with respect to the Fields Brook site (60% Olin,
40% GenCorp). But because GenCorp raised this issue for the
first time in its reply brief and because GenCorp failed even
to develop the argument there, we need not consider it here.
See Priddy v. Edelman, 883 F.2d 438, 446 (6th Cir. 1989).

VI.

GenCorp next argues that even if we affirm the district
court’s judgment as to its contribution liability (which we do),
we must reverse the award of prejudgment interest to Olin. In
doing so, it raises two challenges to the district court’s
analysis: (1) the trial court erroneously believed that
prejudgment interest in a CERCLA contribution action is
mandatory, and (2) Olin’s “inexplicable delay” in bringing
the suit “eliminate[d]” its claim for such interest. GenCorp
Br. at 60.

The terms of the statute and recent case law foreclose both
arguments. An award of prejudgment interest—whether in a
joint and several liability action under § 107 or a contribution
action under § 113 of CERCLA—is mandatory and the statute
makes no exception for late claims. See 42 U.S.C. § 9607(a)
(“The amounts recoverable in an action under this section
shall include interest on the amounts recoverable under [other
provisions].”) (emphasis added); Consolidation Coal, 345
F.3d at 415 (deciding, in the context of a contribution action,
that “[a]n award of prejudgment interest . . . is mandatory”);
see also Township of Brighton, 153 F.3d at 321 (interest is
mandatory in a § 107 action). The district court accordingly
did not abuse its discretion in awarding prejudgment interest
on this claim.

3la

Vil.

In its cross-appeal, Olin also claims that the district court
should have “entered a declaratory judgment finding
[GenCorp] liable for Olin’s allowable response costs incurred
after December 31, 1999, at the previously-determined
percentage share for each site.” D. Ct. Op. of Jan. 22, 2003,
at JA 602. Section 113(g)(2), the relevant statute, provides as
follows: “In any [] action described in this subsection, the
court shall enter a declaratory judgment on liability for
response costs or damages that will be binding on any
subsequent . . . actions to recover further response costs or
damages.” 42 U.S.C. § 9613(g)(2) (emphasis added). Case
law confirms that the words mean what they say. In the
context of a § 107 action, this Court has held that “the entry
of declaratory judgment as to liability is mandatory.” Kelley
v. EL. DuPont De Nemours & Co., 17 F.3d 836, 844 (6th
Cir. 1994). GenCorp responds that whether declaratory relief
as to future liability in a contribution suit is mandatory is an
open question in this circuit—one on which other courts have
divided—and that awarding declaratory relief is inherently a
“discretionary” function of district courts. GenCorp Reply
Br. at 53.

We agree with Olin insofar a8 it claims that requests for
declaratory judgments concerning future response costs in
§ 107 and § 113(f) suits must be treated alike. The sections
governing contribution “work in conjunction” with the
liability provisions of § 107(a), as “parties seeking
contribution” must turn to “ § 107 to establish the basis and
elements of liability of the defendants.” Centerior, 153 F.3d
at 350; see also Dent v. Beazer Materials & Servs., Inc., 156
F.3d 523, 531-32 (4th Cir. 1998) (determining, in a
contribution action, that a court must enter declaratory relief
as to future response costs where liability for existing costs is

32a

~ established); AlliedSignal v. Amcast Int’l Corp., 177 F. Supp.

2d 713, 757 (S.D. Ohio 2001).

Entry of a declaratory judgment, however, cannot be fully
mandatory. Under Article III of the United States
Constitution, “Congress cannot create a right of action where
no case or controversy otherwise exists.” Kelley, 17 F.3d at
844. In order to satisfy the “case or controversy”
requirement, “a party seeking declaratory relief must allege
facts to support a likelihood” that it will incur future costs
recoverable under CERCLA. /d. at 845. Based on the record
before us, we are unable to find sufficient evidence of future
response costs to satisfy the “case or controversy”
requirement. Therefore, we remand this jurisdictional issue to
the district court for initial consideration of whether a “case
or controversy” exists, and if so, for the entry of a
declaratory judgment for future response costs.

Vill.

For these reasons, we affirm the district court’s judgment
as to GenCorp’s contribution liability and its (and Olin’s)
relative shares of the remediation costs. We remand,
however, for a determination by the district court whether a
“case or controversy” exists with respect to continuing clean-
up costs, and if that jurisdictional requirement is satisfied, for
the entry of a declaratory judgment.

APPENDIX C

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
CASE NO. 5:93CV2269

[Filed July 14, 1999]

GenCorp, Inc.,
Plaintiff/Counter-defendant

V.

Olin Corporation,
Defendant/Counter-plaintiff

i a a a a a a

Magistrate Judge David S. Perelman

34a
MEMORANDUM OPINION AND ORDER

Currently pending are the remaining counter-claims' of
Olin Corporation (hereinafter “Olin”) filed against GenCorp,
Inc. (hereinafter “GenCorp”)’ under Section 107(a) of the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. § 9607(a) (CERCLA) as
amended by the Superfund Amendments and Reauthorization
Act of 1986 (SARA) seeking contribution from GenCorp
under Section 113(f) of CERCLA, 42 U.S.C. § 9613(f) and
29 U.S.C. § 2201, “for at least fifty percent of the response
costs incurred by Olin” as well as a declaratory judgment that
pursuant to CERCLA §§ 107(a) and 113(f) “GenCorp is
jointly and severally liable for all damages and response
costs” (Count IV), and under CERCLA Section 113(g), 42
U.S.C. § 9613(g)(2) and 29 U.S.C. § 2201, seeking a
declaratory judgment that “GenCorp is liable for at least fifty

' Count I of the complaint, which sought to compel arbitration
of the issues raised herein, was nullified by an order entered by
Judge George W. White on January 20, 1994 in which he denied
the motion of Olin to compel arbitration and held that the parties
were “enjoined from any further arbitration of this matter.” Count
II was dismissed in an order dated February 24, 1999, in which this
Court held that parties who themselves are PRPs potentially liable
under CERCLA and compelled to initiate a hazardous waste site
cleanup may not bring an action for joint and several cost recovery
and are limited to actions for contribution governed by the
mechanisms set forth in CERCLA § 113(f).

? For ease of reference herein GenCorp, Inc., which was
formerly known as the General Tire and Rubber Company will be
referred to as “GenCorp” and Olin Corporation, which was
formerly known as Olin Mathieson Chemical Corporation, will be
referred to as “Olin.”

35a

percent of the response costs incurred and to be incurred by
Olin” (Count IIl).

The factual and procedural background of this case are as
follows.

GenCorp’s manufacturing of urethane foam in the 1960’s
required as a critical ingredient large amounts of toluene di-
isocyanate (“TDI”), and GenCorp investigated potential
suppliers in an attempt to reduce its manufacturing costs. In
so doing, it entered into negotiations with Olin, as Olin had
developed and held patents on a more cost-effective process
for manufacturing TDI. That process was considered to be
complex and dangerous, as it involved the use of toxic
phosgene gas, commonly know as “mustard gas.”

On December 1, 1961, the parties entered into an
agreement calling for protection of certain business secrets
which would be disclosed during discussions to be undertaken
in pursuit of a “joint enterprise” for the manufacture of TDI.
On December 12, 1961 they entered into another agreement
(“the 1961 Agreement”) which basically provided that the
parties would share the costs of jointly constructing a TDI
Plant and each would have a 50% undivided interest in the
plant, as illustrated in the following contract language.

Article II. Section A: ...[eJach party shall have a
50% undivided interest in the plant and in all related
facilities erected or acquired jointly by the parties and
shall bear 50% of all costs entailed in the design,
construction, or acquisition and start-up of such plant
and facilities.

Article IV. Section A: ...the TDI Plant will be
operated for the benefit and account of General and

36a

Olin until the parties agree upon termination of the
joint operations or until otherwise terminated as
provided herein. A committee (the Committee)
consisting of an equal number of representatives of
General and Olin will have responsibility for the
management of the construction and operation of the
TDI Plant. The Committee will adopt and be governed
by its own rules of procedure. The chairmanship of
the Committee will rotate annually between General
and Olin. The Committee will select a plant manager
and a staff to supervise the day-to-day operations of
the plant. Full-time plant personnel will be on the
payroll of General or Olin respectively and will be
entitled to the normal employee benefits of the
particular employer which makes their services
available.

That agreement further provided that each party would be
entitled to 50% of the production capacity of the TDI Plant,
with variable costs to be allocated in proportion to the TDI
removed from the plant by each party. While the agreement
provided for the parties to jointly expand the plant, to the
extent that only one party sought to do so that party would
bear the costs of expansion.

With regard to disposal of the waste by-product of
manufacturing TDI, which included hazardous substances
such as hydrochloric acid, the agreement provided:

{T]he parties will use their best efforts to arrange for
the economical disposition of the hydrochloric
acid....Proceeds or costs of such disposal of acid will
be allocated to the parties during any year in the ratio
in which the parties take TDI during such year.

37a

During the course of the next six months, the parties
exchanged drafts of revisions to the aforementioned
agreement, beginning with the following (in which the
revisions are underlined and replacement language appears in
parenthesis):

A. Olin will erect or cause to be erected, at its cost
and expense, at a location adjacent to General’s PVC

plant at Ashtabula, Ohio, a plant for the production of
Toluene Di-Isocyanate (TDI) from Toluene.

(IV A) Il. OWNERSHIP OF PLANT (OPERATION)
(Except as specifically other wise provided
herein, the TDI Plant will be operated for the
benefit and account of General and Olin until
the parties agree upon termination of joint
operations or until otherwise terminated as
provided herein.) A. the TDI Plant will be

A, UY iS SOOO

owned and operated by Olin until such time as
General takes title thereto as hereinafter
provided. Olin agrees to train and teach
General’s assigned personnel in the know-how
of Olin’s process for producing from TDA in
the TDI Plant, and in the operation and
management of the TDI Plant. See old IV A.
(A) Olin will establish a consulting committee
(the Committee) consisting of an equal number
of representatives of Olin and General (will
have responsibility for the management of the
construction and operation) to oversee _the
construction, operation and management of the
TDI Plant to the end_ that General's
nt. staff and workmen assi
the TDI Plant ion wil

familiar with the Olin process and _ the

38a

operation and management of the TDI Plant.
The committee will adopt and be governed by

its own rules of procedure. (The Chairmanship
of the Committee will rotate annually between
General and Olin.) Olin (The Committee) will
select a (Plant) Manager for the plant and a
staff to supervise the day-to-day operation of
the plant, consulting with the Committee. Full-
time plant personnel will be (on the payroll of)
supplied by General and Olin (respectively)
and will remain on the payroll of, and will be
entitled to the normal employee benefits of the
(particular) respective employer (Company
which makes their services available) as the
case_may be. All such costs, (for such
personnel) including (costs of) fringe benefits,
will be charged to the (operation) cost of the
TDI Plant operation. B. The parties
contemplate that (each of them) General may
be requested to furnish certain services (such
as maintenance, accounting and purchasing)
required in connection with the operation of
the TDI Plant, (if it should appear that such
services can be performed more economically
in this manner.) (The cost of such services
would be subject to negotiation between the

parties.) Any such services rendered or made
available by General shall be at General’s cost.

Another revision sent by Olin to GenCorp on or about
May 29, 1962, included a provision that the plant would be
constructed at the sole expense of Olin and another stating
that the real estate taxes on the property would also be Olin’s
responsibility. Another significant change to the contract
language appeared in Article IV, with GenCorp now

39a

purchasing TDI from Olin with the purchase price to be based
upon 50% of the fixed cost of the plant. The revised Article
IV was as follows:

IV. OUTPUT OF TDI

A. For the period of time that title to the TDI
Plant remains in Olin as herein elsewhere specified,
Olin agrees to make available to General, for
purchase, fifty per cent (50%) of the actual output
capacity of the TDI Plant. General will be entitled to
purchase any capacity not utilized at any time by Olin.
For purposes of this Article, actual capacity is
assumed to be 20,000,000 pounds per year. If the
actual capacity should be more or less than
20,000,000 pounds, the figures which appear below
will be adjusted to reflect this difference.

B. The parties will agree upon the classification of
all costs into the categories of fixed or variable costs.

C. General agrees to pay a purchase price for the
TDI computed as follow: Prior to the time the TDI
Plant goes on stream, an amount equal to one half of
all operating expense of the TDI Plant and related
facilities. After the TDI Plant goes on stream, an
amount equal to fifty per cent (50%) of the fixed
costs, including depreciation, in any contract year in
which neither General purchases or Olin takes more
than 10,000,000 pounds of TDI from the TDI Plant.
After the TDI Plant does on stream, if General
purchases more than 10,000,000 pounds during any
contract year, General will pay a purchase price in
cash to Olin as a use charge an amount equal to an
additional one per cent (1%) for quantities of less than

40a

200,000 pounds. After the plant goes on stream, if
Olin should take more than 10,000,000 pounds of TDI
from the TDI Plant during any contract year, General
will be relieved of its requirement to pay as _a
purchase price fifty per cent (50%) of the fixed costs
to the extent of one per cent (1%) of the total fixed
costs for such year for each additional 200,000 pounds
of TDI taken by Olin and an appropriate fraction of
one per cent (1%) for quantities of less than 200,000
pounds.

Article II, Section A was revised to read in part:

..-Olin will establish a committee (the Committee)
consisting cf two (2) representatives each of Olin and
General for construction, production and financial
responsibility of the TDI Plant to the end that
General’s staff and workmen assigned to the TDI
Plant operation will be thoroughly familiar with the
Olin process and operation of the TDI Plant...Olin, in
connection with the Committee, will select a manager
for the plant and a staff to supervise the day-to-day
operation of the plant.

Another proposed draft from GenCorp dated, June 1, 1962
and marked “final,” included in part the following revisions

to Article II, Section A:

..-Olin will establish a committee (the Committee)
consisting of two (2) representatives each of Olin and
General to supervise and control construction and
operation of the TDI Plant. Olin agrees General’s staff
and workmen assigned to the TDI Plant operation will
be made thoroughly familiar with the Olin process and
the operation of the TDI Plant...Olin, in conjunction

4la

with the Committee, will select a manager for the
plant and a staff for the day-to-day operation of the
plant.

That was not to be the final draft, as Olin sent to GenCorp
further amendment: to the proposed contract language, dated
June 14, 1962. Olin’s new proposed contract language
omitted the Committee’s obligation to “supervise and control”
the construction and operation of the plant and substituted the
responsibility to “oversee” the construction, operation and
management of the plant. Most significantly, the new
language would empower Olin to independently select the
management of the plant, provided that there had been
“consultation” with the Committee. Article II. Section A was
revised in part as follows:

Olin will establish a committee (the Committee)
consisting of an equal number of representatives of
Olin and General to oversee the construction,
operation, and management of the TDI Plant. Olin
agrees that General’s staff and workmen assigned to
the TDI Plant operation will be made thoroughly
familiar with the Olin process and the operation and
management of the TDI Plant... Olin, after consulting
with the Committee, will select a manager for the
plant and a staff to supervise the day-to-day operation
of the plant.

Final agreement was reached on June 21, 1962 (“the 1962
Agreement”). The final version of Article Il, Section A
paralleled the language of the June 14th draft which omitted
the Committee’s ability to “supervise and control” the
construction and operation of the TDI Plant. In addition, Olin
was to select a Plant Manager, as well as staff to supervise the

42a

day-to-day operations of the plant. The 1962 Agreement

provided in pertinent part:

I. LOCATION AND CAPACITY OF PLANT

A. Olin will erect or cause to be erected, at its sole
cost and expense, at a location adjacent to General’s
PVC plant at Ashtabula, Ohio, a plant for the
production of Toluene Di-Isocyanate (TDI) from
Toluene Di-Amine (TDA), having an annual design
capacity of 20,000,000 pounds of TDI, at an estimated
cost of $4,500,000, exclusive of steam.

B. The TDI Plant will be located on land owned
by General, which site shall be suitable for erection
and operation of the TDI Plant and of sufficient size to
allow for future expansion (shown on Exhibit “A”
attached)...Real estate taxes and special assessments
assessed against the land licensed herein and the
improvements being placed thereon shall be charged
to Olin from the signing hereof until the transfer
date....

FHKKKX

Il. OWNERSHIP OF PLANT

A. The TDI Plant will be owned and operated by
Olin until such time as General takes title thereto as
hereinafter provided. Olin agrees to train and teach
General’s assigned personnel in the know-how of
Olin’s process for producing TDI from TDA in the
TDI Plant, and in the operation and management of
the TDI Plant. Olin will establish a committee (the
Committee) consisting of an equal number of

43a

representatives of Olin and General to oversee the
construction, operation and management of the TDI
Plant. Olin agrees that General’s staff and workmen
assigned to the TDI plant operation will be made
thoroughly familiar with the Olin process and the
operation and management of the TDI Plant. The
Committee will adopt and be governed by its own
rules of procedure. Olin, after consulting with the
Committee, will select a manager for the plant and a
staff to supervise the day-to-day operation of the plant.
Full-time plant personnel will be supplied by General
and Olin and will remain on the payroll of and will be
entitled to the normal employee benefits of the
respective employer, as the case may be. All such
costs, including fringe benefits, will be charged to the
cost of the TDI Plant operation...

KKK

IV. OUTPUT OF TDI

A. For the period of time that title to the TDI
Plant remains in Olin as herein elsewhere specified,
Olin agrees to make available to General, for
purchase, fifty per cent (50%) of the actual output
capacity of the TDI Plant. General will be entitled to
purchase any capacity not utilized at any time by Olin.
For purposes of this Article, actual capacity is
assumed to be 20,000,000 pounds per year. If the
actual capacity should be more or less that 20,000,000
pounds, the figures which appear below will be
adjusted to reflect this difference.

HEKK*E

44a

C. Prior to the time the TDI Plant goes on stream
General agrees to purchase fifty per cent (50%) of the
actual output of TDI produced therein at a purchase
price equal to one-half (%2) of all Olin’s operating
expenses (including start-up) of the TDI Plant and
related facilities. After the TDI Plant goes on stream,
General agrees to pay Olin, during such time as title
to the TDI Plant remains in Olin, in addition to the
variable costs of what-ever quantities of TDI General
may purchase from Olin, an amount equal to fifty per
cent (50%) of the fixed costs of the TDI Plant and
related facilities (including amortization), in any
contract year in which neither General purchases nor
Olin takes more than 10,000,000 pounds of TDI from
the TDI Plant. After the TDI Plant goes on stream, if
_General purchases more than 10,000,000 pounds
during any contract year, General will, in addition,
pay in cash to Olin as a use charge an amount equal to
an additional one per cent (1%) of the total fixed costs
for such contract year for each additional 200,000
pounds of TDI purchased by General and an
appropriate fraction of one per cent (1%) for
quantities of less than 200,000 pounds. After the TDI
Plant goes on stream, if Olin should take more than
10,000,000 pounds of TDI from the plant during any
contract year, General will be relieved of its
requirement to pay fifty per cent (50%) of the fixed
costs to the extent of one per cent (1%) of the total
fixed costs for such contract year for each additional
200,000 pounds of TDI taken by Olin and an
appropriate fraction of one per cent (1%) for
quantities of less than 200,000 pounds.

While GenCorp agreed to purchase fifty percent of the TDI
Plant output, which Olin would sell at its cost, Olin had the

45a

right to sell the remaining fifty percent to other purchasers at
a cost within Olin’s discretion, and had no obligation to share
the profits from such sales with GenCorp.

The 1962 Agreement further provided that GenCorp
would advance to Olin one-half of Olin’s capital cost as
earnest money consequent to its promise to purchase the plant
within three to five years, with GenCorp to earn interest on
that advance. In the event that the anticipated transfer of the
plant did not occur, GenCorp was to be reimbursed. Until the
time of transfer of title to the TDI Plant Olin was obligated to
“insure the TDI Plant for all risk of loss, liability and damage
to property and facilities in accordance with Olin’s normal
policy and mutually agreed between the parties[.]” The plant
was to be constructed on land owned by GenCorp adjacent to
GenCorp’s PVC plant located in Ashtabula, Ohio.

Pursuant to the 1962 Agreement Olin was also obligated
to construct a Toluene Di-Amine (“TDA”) plant which would
supply TDA to the TDI Plant.* While Olin was obligated to
disclose to GenCorp information “on the economics of its
process for the manufacture of...TDA,” there was no
obligation to provide to GenCorp actual process information
relating to TDA. Prior to the contemplated transfer of
ownersiip of the TDI Plant TDA would be “charge[d] in” by
Olin to the TDI Plant operations and after the date of transfer
Olin would sell TDA to GenCorp, while remaining free to sell
TDA to third parties.

3 TDA is a critical component in the manufacturing of TDI.
Olin was to construct a 16.5 million pound capacity TDA Plant at
another location, which turned out to be Doe Run, Kentucky, to
supply the TDA requirements of the TDI Plant.

46a

Until GenCorp acquired title of the TD} Plant, it was
obligated to purchase from Olin “the entire output of
hydrochloric acid from the TDI Plant,” to the extent that it
could be used in the production of vinyl chloride monomer at
GenCorp’s Ashtabula PVC plant.* Any leftover hydrochloric
acid was to be “neutralized or sold by Olin[,]” and the cost of
doing so was to be “allocated to the parties during any contact
year in the ratio in which the parties purchase and take TDI
during such year.”

As regarded Olin’s expertise in the TDI process, Olin
agreed to turn over information as to its “first TDI process,”
as well as a process under development at the time of the
1962 Agreement. Specifically, Olin was to “[SJupply to the
Engineers all process specifications and design data for its
TDI process to enable the Engineers to prepare full-scale
engineering drawings required for the construction and
operation of a TDI Plant embodying said process.”

Consistent with Article II A of the 1962 Agreement, the
parties entered into a side agreement for the purpose of
establishing a TDI Committee “to oversee the construction,
operation and management of the TDI Plant.” The four-
person committee consisted of two members from Olin and
two from GenCorp. The Committee Manager, who was to be
appointed by Olin, was the only person authorized by the
Committee to direct the Plant Manager.

As a consequence of the large quantities of residue wastes
generated by the TDI Plant, some of which were “hazardous”
(including TDI distillation and spent vacuum pump oils),

“In fact, GenCorp purchased the hydrochloric acid by-product
from the TDI Plant until approximately November 29, 1968.

47a

waste disposal became a concern in the early 1960’s. In an
effort to alleviate disposal issues GenCorp and Olin jointly
funded a research program referred to as the “Golden TDI”
project, the purpose of which was to develop a commercial
use for TDI residue waste. Ultimately the research was
unproductive and off-site waste disposal continued.

The TDI Plant was constructed pursuant to the 1962
Agreement and became operational in 1964.

On or about July 23, 1965 Olin and GenCorp entered into
an agreement (“1965 Agreement”) whereby GenCorp agreed
to lease to Olin, for a nominal sum of ten dollars per year, the
property upon which the TDI Plant was constructed.
Particulars of that agreement included the following:

Real estate taxes and such assessments assessed
against the leased premises and any improvements
placed thereon by [Olin] during the term or any
extension or extensions hereof, shall be paid for by
[Olin].

During the term or any extension or extensions
hereof, [Olin] shall, at its own cost and expense,
maintain:

(a) any and all insurance coverages it deems
desirable and/or necessary for its
improvements on the leased premises, and
otherwise, and

(b) the leased premises and the improvements
placed thereon by [Olin], in reasonably good
condition and repair.

|

48a

It is mutually agreed between [General Tire] and
[Olin] that all improvements placed on the leased
premises by [Olin] are and shall remain the property
of [Olin] during the term of this lease or any extension
or extensions hereof.

The 1965 Agreement paralleled the provision in the 1962
Agreement which described how prior to the date of transfer _
of the TDI Plant to GenCorp Olin would charge-in the TDA
supplied to the TDI Plant and after the transfer would sell the
TDA to GenCorp.* This new agreement specified a formula
meant to lower the costs of TDA so that the overall cost of
producing TDI would also be reduced. Trial testimony also
reflected that this charge-in procedure was a cost-reducing
measure, not a typical purchase/sale of TDA.°

During the period of operation of the TDI Plant residue
wastes and spent vacuum oils were transported to, and
deposited and placed onto, an off-site location referred to in
these proceedings by a number of names including “the Big
D Site,” ‘““the Big D Superfund Site,” “the Big D
Campground,” “the Dreslinski property,” “the Brenkus
landfill,” and “the Creek Road Site.”’ The TDI Plant ceased
the disposal of spent vacuum oils to this off-site location at the

> The prefatory language to the charge-in provision was “For
the purposes of computing Olin’s costs of TDI made available to
{[GenCorp] for purchase in accordance with the provisions of
Article IV below....”

® That would also hold true for the TDA pricing side letters
submitted into evidence.

’ For ease of reference in this opinion the site will be referred
to as the Big D Site.

——

49a

end of 1975, and did the same with regard to TDI residues at
the end of January of 1976.

In April of 1965, Mr. Robert Laundrie, GenCorp’s
| representative on the TDI Committee, inspected the Big D
Site and was sufficiently concerned with the conditions he
observed there that he wrote a letter to Mr. George Palmer,
the TDI Plant Manager, stating in pertinent part:

Wednesday, April 7, 1965, Mr. Valentich and myself
toured the area where the refuse from the TDI Plant is

dumped.
The following inadequacies were noted:
1. The refuse is not covered daily.

2. Liquid refuse is being dumped whereas only solids
were originally contemplated.

3. The coverage by earth is unsatisfactory. Drums
stick out from the covered portions and parts just
never are covered.

4. The slope of the dumping area is such that liquids
flow toward the river. Suitable dams would
prevent this flow toward the river.

5. There are no warning signs to ward off errant
children.

6. The nearest dwelling is about 500 feet from the
area.

50a

7. The odor of MCB was heavy. No CO CL2 was
noted, but masking by MCB might preclude noting
small quantities.

8. The odor of TDI was evident.

From 1964 through October 1, 1973 ail State of Ohio
Water Pollution Control Board (hereinafter “WPCB”) permits
pertaining to the TDI Plant were applied for and granted in
the name of Olin. In addition, requests for authorization of the
expenditure of capital funds at the TDI Plant were prepared
by Olin as “capital appropriations requests” (hereinafter
“CARs”) and submitted to the TDI Committee for approval,
and according to evidence of record, were never denied.

In 1970 a distillation column was installed at the TDI
Plant to reduce the “ortho content” of the TDA supplied by
Olin’s TDA plant which, in turn, would reduce the amount of
TDI residue waste. Ortho-TDA, a known hazardous
substance, caused TDI to be turbid, or milk-like in
appearance. Any unsold ortho-TDA was taken to GenCorp’s
PVC plant and burned in boilers. The new distillation column
was functioning by June, so that the residue waste was
reduced as of that time.

On September 29, 1970 Olin issued a press release
announcing plans for a new TDI Plant at a location in Lake
Charles, Louisiana. Construction began in August of 1971,

but no TDI was manufactured at that plant until August of
1973.

Mr. Laundrie inspected the Big D Site again in 1971, after
which he submitted an inter-organization memorandum stating
in part:

S5la

Approximately 600,000 pounds of residue per month
is being buried in this landfill. The vacuum oil is
buried in drums at a rate of 5 to 10 drums per month.

The amount of ground cover could not be determined
but the hauler claims at least 2 feet of cover. Whether
or not leaching from this dump could cause a problem
in the future is unknown but the close proximity to the
creek must be considered. The landfill being used is
not a state approved landfill operation.

A program is underway to make use of the residue as
a by-product for sale; however, I don’t expect this to
reach fruition for another year.

In April of 1971, Mr. Steven Cupach, TDI Plant
Manager, participated on behalf of Olin in a federal grand
jury investigation of the pollution of Fields Brook. On May
18th, Olin was indicted for alleged unlawful discharges of
suspended solids and chromates into Fields Brook. Two days
later, Olin entered a plea of “not guilty” to those charges.

Pursuant to discussions in a meeting held on June 3, 1971,
attended by Olin representatives as well as representatives of
the WPCB, Olin submitted a written proposal dated July 15,
1971 for the installation of equipment to reduce water
pollution discharge from the TDI Plant. Those plans were
approved by the WPCB on July 30, 1971.

In an agreement dated September 27, 1971 (hereinafter
“1971 Agreement”), Olin and GenCorp agreed that the 1962
Agreement would be terminated as of October 1, 1973.
Essentially, Olin bought out GenCorp’s right to purchase the
Ashtabula TDI Plant, for a sum of $1,650,000.00. Thus,
GenCorp was reimbursed its “earnest money,” with interest

52a

upon that sum already having been paid to GenCorp on a
monthly basis. Olin retained ownership of the TDI Plant and
GenCorp extended the lease agreement for the property upon
which the plant was located for three additional twenty year
terms at the same annual rental rate of ten dollars. That
agreement included the following language:

WHEREAS, Olin is the present owner and
operator of industrial facilities for the production of
Toluene Di-Isocyanate (TDI) at Ashtabula, Ohio
(Plant)...

On that same date the parties entered into a separate
agreement, the “TDI Product Sales Agreement,” or “TPS
Agreement,” which was to become effective October 1, 1973,
in which GenCorp agreed to purchase, on a yearly basis, “not
less than 80% of [GenCorp’s] requirements but in no event
more that 40,000,000 pounds per annum, unless mutually
agreed, of [TDI]...meeting the specifications...” attached to
the agreement. The TDI was to be shipped to GenCorp’s
operations in Indiana, Georgia, California and other mutually
agreed upon locations.

The TPS Agreement also provided that all TDI Plant
employees on GenCorp’s payroll would be removed and
transferred to Olin’s payroll, and the TDI Committee would
cease to exist. The agreement terminated GenCorp’s
obligation to purchase half of the plant production and, by the
end of 1973 GenCorp was no longer Olin’s largest customer.
GenCorp was to continue to supply steam to the TDI Plant at
cost, on a “first priority basis,” and to provide purchasing
services by way of a local purchasing agent (Mr. Neil
Gouhin) with the understanding that he functioned only with
Olin’s authority.

53a

The TDI Plant continued to generate wastes in the
production of TDI after the effective date of the TPS
Agreement, which remained in effect until October 1, 1978
when the parties entered into yet another sales agreement.

On June 28, 1971 and September 28, 1971, Olin filed
applications with the U.S. Army Corps of Engineers for a
discharge permit for the TDI Plant as required by the Refuse
: Act.

On November 30, 1971, Olin representative L.W. Roznoy
met with Mr. John Earl Richards, Chief of the Division of
Engineering of the Ohio Department of Health, to address
Olin’s plans to discontinue operations at the TDI Plant after
December 31, 1973. Those plans prompied Olin to request,
on July 15, 1971, a release from pollution abatement plans of
action previously submitted by Olin. On February 9, 1972
Mr. Roznoy forwarded a “Revised Water Pollution P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_1620%3A1. Public record. Not legal advice.