Petition for Writ of Certiorari — Chemtura Canada Canada Co. Co./CIE v. United States (Nos. 06-853, 06-1014, 06-865)
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Suprame Count
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No. 06-
Tex,
riivs Or THE CLERK
IN THE
Supreme Court of the United States
CHEMTURA CANADA CO//CIE
(formerly known as CROMPTON CO./CIE,
formerly known as UNIROYAL CHEMICAL LIMITED),
Petitioner,
V
UNITED STATES OF AMERICA and
HERCULES INCORPORATED,
Respondents.
Own PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
STEVEN W. QUATTLEBAUM
E. B. Cuices [V*
JosePH R. FALASCO
QUATTLEBAUM. GROOMS,
Tutt & Burrow PLLC
11i Center Street. Suite 1900
Little Rock, Arkansas 72201
(501) 379-1700
* Counsel of Record Attorneys for Petitioner |
YOS 346)
i
QUESTIONS PRESENTED FOR REVIEW
1. Whether the Eighth Circuit erred in holding — contrary
to the Second, Third, Fifth, Seventh, Ninth, Tenth, and
Eleventh Circuits — that an entity that exercised no control
over the disposal or treatment of hazardous substances, and
had neither the authority nor the opportunity to control the
disposal or treatment of hazardous substances, may
nevertheless be held liable as one that “arranged for” the
disposal or treatment of hazardous substances under
§ 107(a) of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601 ef seq.
2. Whether retroactive application of § 107(a) of the
Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. § 9601 et seq., to impose
unforeseeable joint-and-several liability for over $110 million
based on lawful, non-negligent conduct involving only about
$1.5 million in transactions violates the Fifth Amendment
to the United States Constitution. ;
ii
CORPORATE DISCLOSURE STATEMENT
Chemtura Canada Co./Cie, formerly known as Crompton
Co./Cie, formerly known as Uniroyal Chemical Limited, is
wholly owned by Crompton European Holdings B.V., a Dutch
company, and is indirectly wholly owned by Chemtura
Corporation, whose stock is publicly traded on the New York
Stock Exchange.
ill
TABLE OF CONTENTS
QUESTIONS PRESENTED FOR REVIEW
CORPORATE DISCLOSURE STATEMENT
TABLE OF CONTENTS
TABLE OF CITED AUTHORITIES
TABLE OF APPENDICES
OPINIONS BELOW
JURISDICTION
STATUTORY AND CONSTITUTIONAL
PROVISIONS INVOLVED
STATEMENT OF THE CASE
REASONS FOR GRANTING THE PETITION ...
I. The Eighth Circuit’s Interpretation Of
CERCLA Arranger Liability Conflicts With
The Statutory Language And The Decisions
Of Other Courts of Appeals. .............
Contents
II. The Court of Appeals’ Opinion Imposes
Unforeseeable Joint-And-Several Liability
For Over $110 Million Based On Lawful,
Non-Negligent Conduct In. vlving Only
About $1.5 Million In Transactions In
Violation Of The Fifth Amendment To The
United States Constitution. .............. 15
CONCLUSION
TABLE OF CITED AUTHORITIES
Cases:
Amcast Indus. Corp. v. Detrex Corp., 2 F.3d 746
(7th Cir. 1993), cert. denied, 510 U.S. 1044 (1994)
Coeur D’Alene Tribe v. Asarco Inc., 280 F. Supp.2d
1094 (D. Idaho 2003)
Connolly v. Pension Benefit Guar. Corp., 475 U.S.
211 (1986)
Concrete Sales and Servs., Inc. v. Blue Bird Body
Co., 211 F.3d 1333 (11th Cir. 2000)
Eastern Enterprises v. Apfel, 524 U.S. 498 (1998) ...
Page
6, 16, 17, 18, 19
Franklin County Conv. Facilities v. American
Premier, 240 F.3d 534 (6th Cir. 2001)
Freeman v. Glaxo Wellcome, Inc., 189 F.3d 160
(2d Cir. 1999)
General Elec. Co. v. AAMCO Transmissions, Inc.,
962 F.2d 281 (2d Cir. 1992)
Geraghty and Miller, Inc. v. Conoco Inc., 234 F.3d
917 (Sth Cir. 2001), cert. denied, 533 U.S. 950
(2001)
Cited Authorities
Jones-Hamilton Co. v. Beazer Materials & Servs.,
Inc., 973 F.2d 688 (9th Cir. 1992)
Kaiser Aetna v. United States, 444 U.S. 164 (1979)
Kaiser Aluminum & Chem. Corp. v. Bonjorno,
494 U.S. 827 (1990)
Landgraf v. USI Film Prods., 511 U.S. 244 (1994)
Mathews v. Dow Chem. Co., 947 F. Supp. 1517
(D. Colo. 1996)
Morton Intern., Inc. v. A.E. Staley Mfg. Co., 343 F.3d
669 (3d Cir. 2003)
Pneumo Abex Corp. v. High Point, Thomasville and
Denton R.R. Co., 142 F.3d 769 (4th Cir. 1998) ..
Raytheon Constructors, Inc. v. Asarco, Inc., 368 F.3d
1214 (10th Cir. 2003)
South Florida Water Mgmt. Dist. v. Montalvo,
84 F.3d 402 (11th Cir. 1996)
United States v. Aceto Agric. Chems. Corp., 872 F.2d
Page
ays 2 Lee... Baer rere ere ear tom 82
Vil
Cited Authorities
Page
United States v. Alcan Aluminum Corp., 315 F.3d
179 (2d Cir. 2003)
United States v. Bestfoods, 524 U.S. 51 (1998)
United States v. Cello-Foil Prods., Inc., 100 F.3d
1227 (6th Cir. 1996) 7, & 14% 3
United States v. Gurley, 43 F.3d 1188 (8th Cir.1994)
United States v. Hercules, Inc., 247 F.3d 706
(8th Cir. 2001) 1, 3, 5, 6, 8, 10, 18
United States v. Iron Mountain Mines, Inc.,
881 F.Supp. 1432 (E.D. Cal. 1995) 12
United States v. Shell Oil Co., 294 F.3d 1045
(9th Cir. 2002)
United States v. TIC Inv. Corp., 68 F.3d 1082
(8th Cir. 1995)
United States v. Vertac Chem. Corp., 453 F.3d 1031
(8th Cir. 2006) Los Se oe ee Be
United States v. Vertac Chem. Corp., 46 F.3d 803
(8th Cir. 1995)
United States v. Vertac Chem. Corp., 364 F. Supp.2d
941 (E.D. Ark. 2005)
vill
Cited Authorities
Page
United States v. Vertac Chem. Corp., 79 F. Supp.2d
1034 (E.D. Ark. 1999), vacated, 247 F.3d 706 (8th
Cir.), cert. denied, 534 U.S. 1065 (2001) 5, 8, 19
United States v. Vertac Chem. Corp., 33 F. Supp.2d
769 (E.D. Ark. 1998)
United States v. Vertac Chem. Corp., 966 F. Supp.
1491 (E.D. Ark. 1997), aff’d in part and rev’d in
part, 247 F.3d 706 (8th Cir.), cert. denied,
534 U.S. 1065 (2001)
United States v. Vertac Chem. Corp., 756 F. Supp.
1215 (E.D. Ark. 1991), aff’d, 961 F.2d 786
(8th Cir. 1992)
United States v. Vertac Chem. Corp., 671 F. Supp.
595 (E.D. Ark. 1987), vacated, 855 F.2d 856
(8th Cir. 1988) (table)
United States v. Vertac Chem. Corp., 588 F. Supp.
1294 (E.D. Ark. 1984)
United States Constitution:
U.S. Const. amend V
ix
Cited Authorities
Rules:
Sup. Ct. R. 10(a)
Sup. Ct. R. 10(c)
Statutes:
26 U.S.C. §§ 9701-22
28 U.S.C. § 1254
28 U.S.C.
28 U.S.C.
28 U.S.C.
33 U.S.C. § 1345
42 U.S.C. § 6973
ree
i ae gO 6) ae 2,3, 4, 6, 14
42 U.S.C. § 9613
x
TABLE OF APPENDICES
Appendix A — Opinion Of The United States Court
Of Appeals For The Eighth Circuit Filed July 13,
Appendix B — Opinion Of The United States District
Court For The Eastern District Of Arkansas,
Western Division Dated March 30, 2005
Appendix C — Opinion Of The United States Court
Of Appeals For The Eighth Circuit Filed April 10,
Appendix D — Memorandum Opinion And Order
Of The United States District Court For The
Eastern District Of Arkansas, Western Division
Dated October 23, 1998
Appendix E — Opinion Of The United States District
Court For The Eastern District Of Arkansas Dated
May 21, 1997
Appendix F — Order Of The United States Court
Of Appeals For The Eighth Circuit Denying
Petition For Rehearing Filed September 19,
]
Chemtura Canada Co./Cie, formerly known as Crompton
Co./Cie, formerly known as Uniroyal Chemical Limited
(“Uniroyal”), petitions this Court for a writ of certiorari to the
United States Court of Appeals for the Eighth Circuit.
OPINIONS BELOW
The relevant opinions of the Court of Appeals are published
at United States v. Hercules, Inc., 247 F.3d 706 (8th Cir. 2001)
(Appendix C), and United States v. Vertac Chemical
Corporation, 453 F.3d 1031 (8th Cir. 2006) (Appendix A). The
relevant opinions of the United States District Court for the
Eastern District of Arkansas are published at United States v.
- Vertac Chemical Corporation, 966 F. Supp. 1491 (E.D. Ark.
1997) (Appendix E), United States v. Vertac Chemical
Corporation, 33 F. Supp.2d 769 (E.D. Ark. 1998) (Appendix
D), and United States v. Vertac Chemical Corporation, 364
F. Supp.2d 941 (E.D. Ark. 2005) (Appendix B).
JURISDICTION
The Court of Appeals filed its opinion on July 13, 2006.
The Court of Appeals denied a timely petition for rehearing and
rehearing en banc on September 19, 2006. This Court has
jurisdiction under 28 U.S.C. § 1254.
STATUTORY AND CONSTITUTIONAL
PROVISIONS INVOLVED
Section 107(a) of the Comprehensive Environmental
Response, Compensation, and Liability Act provides, in
pertinent part:
Notwithstanding any other provision or rule of
law, and subject only to the defenses set forth in
2
subsection (b) of this section— ... (3) any person
who by contract, agreement, or otherwise arranged
for disposal or treatment, or arranged with a
transporter for transport for disposal or treatment,
of hazardous substances owned or possessed by such
person, by another party or entity, at any facility or
incineration vessel owned or operated by another
party or entity and containing such hazardous
substances ... shall be liable... .
42 U.S.C. § 9607(a).
The Fifth Amendment to the United States Constitution
provides, in pertinent part: “No person shall be .. . deprived of
... property, without due process of law; nor shall private
property be taken for public use, without just compensation.”
STATEMENT OF THE CASE
This petition arises from actions brought by the United
States, the State of Arkansas, and Hercules Incorporated
(“Hercules”) against Uniroyal, culminating in a judgment of
joint-and-several liability for over $110 million under the
Comprehensive Environmental Response, Compensation, and
Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq. The District
Court originally had subject-matter jurisdiction under 28 U.S.C.
§§ 1331 and 1335, 42 U.S.C. § 6973, and 33 U.S.C. § 1345.
The District Court had subject-matter jurisdiction over claims
later added under 42 U.S.C. §§ 9607 and 9613. The Court of
Appeals had jurisdiction over the relevant appeals under 28
U.S.C. § 1291.
The United States initially developed the Vertac Chemical
Corporation (“Vertac”) site in Jacksonville, Arkansas, as a
munitions factory in the 1930s. The site was sold in the 1940s
3
to Reasor-Hill Corporation (“Reasor-Hill”), now a defunct
company. Reasor-Hill began manufacturing phenoxy herbicides,
including trichlorophenoxyacetic acid (“2,4,5-T”), at the site in
1958. In 1961, Hercules bought the site, and, in 1974, Hercules
leased the site to Transvaal, Inc., the predecessor to Vertac. Vertac
bought the site from Hercules in 1976. Hercules produced 2,4,5-
T at the site from 1961 until 1970. Vertac produced 2,4,5-T
at the site from 1971 until 1979. Site operators produced
the other principal product manufactured at the site,
dichlorophenoxyacetic acid (“2,4-D”), from 1958 until 1986.
See United States v. Vertac Chem. Corp., 453 F.3d 1031, 1036-
38 (8th Cir. 2006).
In 1980, the United States Environmental Protection Agency
sued Vertac and Hercules for an injunction against the discharge
of hazardous waste at the site. United States v. Hercules, Inc.,
247 F.3d 706, 713 (8th Cir.), cert. denied, 534 U.S. 1065 (2001).
“The Arkansas Department of Pollution Control and Ecology
sought similar relief under state law.” Id.:“Several years later,
the [District Court] approved consent decrees representing a
negotiated remedial plan to address the containment and
monitoring of waste.” /d. (citing United States v. Vertac Chem.
Corp., 588 F. Supp. 1294, 1296-97 (E.D. Ark. 1984)). “The
lawsuit was later converted into” an action under CERCLA. Id.
Although Vertac stipulated that it was an owner and
operator of the site liable to the government for
response costs under CERCLA, it ultimately failed
to comply with the consent decrees and eventually
sold its assets to third parties, forcing the [District
Court] in 1987 to appoint a receiver to handle the
company’s affairs.
Id. (citing United States v. Vertac Chem. Corp., 671 F. Supp.
595, 623-24 (E.D. Ark. 1987), vacated, 855 F.2d 856 (8th Cir.
4
1988) (table); United States v. Vertac Chem. Corp., 756 F. Supp.
1215 (E.D. Ark. 1991), aff’d, 961 F.2d 786 (8th Cir. 1992)).
“In an effort to identify all those potentially liable for
environmental harm at the site, numerous additional parties,
including the United States Department of Defense, were
brought into the suit.” Jd. “These parties filed various cross-
claims, counterclaims, and third part complaints; many of the
parties settled [for a few million dollars] and entered into consent
decrees.” Jd. at 713-14.
The Court of Appeals summarized the pertinent facts as to
Uniroyal:
Uniroyal was one of Vertac’s customers and
purchased 2,4,5-T and other products from Vertac
in the 1970s. In 1978, Vertac informed Uniroyal that
it lacked the funds to purchase enough 1,2,4,5-
tetrachlorobenzene (TCB), a key ingredient in the
manufacture of 2,4,5-T, to fulfill its contractual
obligations to Uniroyal. Uniroyal agreed to supply
Vertac with enough TCB to create some 1.3 million
pounds of 2,4,5-T that was to be shipped back to
Uniroyal. Vertac did not purchase the TCB directly
from Uniroyal, but instead reduced the amount it
charged Uniroyal for the 2,4,5-T to reflect the value
of the TCB that Uniroyal had supplied. This
arrangement was embodied in two separate contracts
and was carried out between March 1978 and March
1979. The 2,4,5-T that was produced with Uniroyal’s
TCB represents less than one percent of the more
than 150 million pounds of 2,4-D and 2,4,5-T that
were manufactured at the site over the course of its
operation.
Vertac, 453 F.3d at 1038. The District Court found that Uniroyal
owned the TCB throughout the manufacturing process. The
5
Court of Appeals upheld that finding as not “clearly erroneous.”
Hercules, 247 F.3d at 721.
Notwithstanding the issue of ownership, the parties
stipulated in the District Court that Uniroyal exercised no
control over Vertac’s manufacture of 2,4,5-T or over the
operation of the site. The District Court found that “Uniroyal
was in no position to manage the disposal of any hazardous
materials.” United States.v. Vertac Chem. Corp., 79
F. Supp.2d 1034, 1040 (E.D. Ark. 1999), vacated on other
grounds, 247 F.3d 706 (8th Cir.), cert. denied, 534 U.S. 1065
(2001). No one ever challenged that factual finding on appeal.
Former employees and officers of Vertac testified that
Uniroyal had no authority to control Vertac’s operations. That
Uniroyal did not have the authority or opportunity to control
the disposal or treatment of hazardous substances at the
Vertac site was implicit in the decisions of the District Court
and the Court of Appeals. See United States v. Vertac Chem.
Corp., 966 F. Supp. 1491 (E.D. Ark. 1997), aff’d in part and
rev'd in part, 247 F.3d 706 (8th Cir.), cert. denied, 534 US.
1065 (2001).
Although Uniroyal never had the opportunity to control
any aspect of Vertac’s disposal or treatment of any hazardous
substances, the District Court found Uniroyal liable as an
entity that “arranged for” the disposal or treatment of
hazardous substances under CERCLA § 107(a)(3), holding
that “actual control [is] not necessary for arranger liability.”
Vertac, 966 F. Supp. at 1501. Uniroyal challenged that
decision on appeal, but the Court of Appeals affirmed.
Hercules, 247 F.3d at 720; Vertac, 453 F.3d at 1047.
Uniroyal also argued that retroactive application of
CERCLA on the facts of this case violated the Due Process
6
and Takings Clauses of the Fifth Amendment to the United
States Constitution because Uniroyal’s liability was
unforeseeable and substantially disproportionate to
Uniroyal’s conduct. The Court of Appeals initially recognized
that inquiry into the constitutionality of CERCLA in this case
would be “essentially ad hoc and fact intensive.” Hercules,
247 F.3d at 722 (citing Eastern Enterprises v. Apfel, 524 U.S.
498, 523 (1998) (plurality opinion)). However, the Court of
Appeals ultimately rejected Uniroyal’s as-applied
constitutional challenge without any analysis of the facts of
the case. Vertac, 453 F.3d at 1047-48.
Uniroyal first asks this Court to resolve a split among
the Courts of Appeals concerning the standard for imposing
“arranger liability” under CERCLA. Here, the Eighth Circuit
— contrary to the Second, Third, Fifth, Seventh, Ninth, Tenth,
and Eleventh Circuits — held an entity that exercised no
control over the disposal or treatment of hazardous
substances, and possessed neither the authority nor the
opportunity to control the disposal or treatment of hazardous
substances, liable as one that “arranged for’ the disposal or
treatment of hazardous substances. This petition thus raises
an important issue that was decided by the Court of Appeals
in a manner that conflicts with the decisions of other Courts
of Appeals. This Court should resolve that conflict. Sup. Ct.
R. 10(a).
Uniroyal next asks this Court to decide whether
retroactive application of CERCLA to impose unforeseeable,
staggering joint-and-several liability that is disproportionate
to the actor’s lawful, non-negligent conduct violates the Fifth
Amendment to the United States Constitution. The
transactions at issue between Uniroyal and Vertac involved
approximately $1.5 million, yet the Court of Appeals’
decision could result in the imposition of liability on Uniroyal
for over $110 million in response costs. This petition raises
an important federal question that was decided by the Court
of Appeals in conflict with the decisions of this Court. This
Court should address that question. Sup. Ct. R. 10(c).
REASONS FOR GRANTING THE PETITION
The Eighth Circuit’s Interpretation Of CERCLA
Arranger Liability Conflicts With The Statutory
Language And The Decisions Of Other Courts of
Appeals.
Section 107(a)(3) of CERCLA imposes liability on “any
person who by contract, agreement, or otherwise arranged
for disposal or treatment ... of hazardous substances .. .
owned or possessed by such person... .” 42 U.S.C.
§ 9607(a)(3). For arranger liability to attach, a person must
both “own[{] or possess[]” hazardous substances and
“arrange[] for” their disposal or treatment. Jd. “CERCLA
does not define the phrase ‘arranged for.’” South Florida
Water Mgmt. Dist. v. Montalvo, 84 F.3d 402, 406 (1 Ith Cir.
1996) (internal citations omitted); see also United States v.
Cello-Foil Prods., Inc., 100 F.3d 1227, 1231 (6th Cir. 1996)
(same); Amcast Indus. Corp. v. Detrex Corp., 2 F.3d 746,
751 (7th Cir. 1993) (same), cert. denied, 510 U.S. 1044
(1994). CERCLA’s legislative history provides little guidance
in determining the meaning of these words. Montalvo, 84
F.3d at 406 n. 6; United States v. Aceto Agric. Chems. Corp.,
872 F.2d 1373, 1380 n. 8 (8th Cir. 1989). “Congress has left
this task to the courts, and the courts have at times struggled
with the contours of ‘arranger liability’ under § 107(a)(3).”
Montalvo, 84 F.3d at 406.
.
The parties stipulated that Uniroyal exercised no control
over the manufacture of 2,4,5-T or over the operation of the
Vertac site. The District Court found that “Uniroyal was in
no position to manage the disposal of any hazardous
materials.” Vertac, 79 F. Supp.2d at 1040. Nonetheless, both
the District Court and the Court of Appeals held Uniroyal
liable as an arranger, reasoning that Uniroyal owned the TCB
throughout Vertac’s manufacturing process and that control
is not “necessary” to expose a person to arranger liability.
Vertac, 966 F. Supp. at 1501; Hercules, 247 F.3d at 720.
The holding that control is unnecessary conflicts with the
plain language of § 107(a)(3), which requires that a person
both “owned or possessed” the hazardous substances and
“arranged for” their disposal or treatment. See Morton Intern.,
Inc. v. A.E. Staley Mfg. Co., 343 F.3d 669, 676-77 (3d Cir.
2003). The Court of Appeals read the words arranged for
out of § 107(a)(3) and rendered this central language of the
statute superfluous.
The Courts of Appeals have adopted differing standards
for the imposition of CERCLA arranger liability. The Third
Circuit recognized:
Almost all of our sister circuit courts have adopted
a standard for “arranger liability,” but the
standards adopted vary. See Geraghty and Miller,
Inc. v. Conoco Inc., 234 F.3d 917, 929 (Sth Cir.
2001), cert. denied, 533 U.S. 950, 121 S.Ct. 2592,
150 L.Ed.2d 751 (2001); Freeman v. Glaxo
Wellcome, Inc., 189 F.3d 160, 164 (2d Cir. 1999);
Pneumo Abex Corp. v. High Point, Thomasville
and Denton R.R. Co., 142 F.3d 769, 775 (4th Cir.
1998); United States v. Cello-Foil Products, Inc.,
100 F.3d 1227, 1231-32 (6th Cir. 1996); South
9
Florida Water Management District v. Montalvo,
84 F.3d 402, 407 (11th Cir. 1996); Amcast
Industrial Corporation v. Detrex Corp., 2 F.3d
746, 751 (7th Cir. 1993); Jones-Hamilton Co. v.
Beazer Materials & Servs., Inc., 973 F.2d 688,
695 (9th Cir. 1992); United States v. Aceto
Agricultural Chems. Corp., 872 F.2d 1373, 1381-
82 (8th Cir. 1989).
Morton, 343 F.3d at 676-77.
Even before the decisions below, the Eighth Circuit had
advanced the most liberal interpretation of the words
arranged for. See Mathews v. Dow Chem. Co., 947 F. Supp.
1517, 1523 (D. Colo. 1996) (citing Aceto, 872 F.2d at 1378-
82). In Aceto, the Court of Appeals emphasized that, because
of an allegation of ownership, it was reasonable to infer from
the complaint that the defendants had the authority to control
the waste-disposal practices at issue. 872 F.2d at 1383.
However, in the case at bar, the Court of Appeals discounted
the importance of that conclusion. Despite the fact that, in
Aceto, there was no meaningful difference between the
CERCLA claim and the claim under the Resource
Conservation and Recovery Act, 42 U.S.C. § 6973 et seq.
(“RCRA”), the Court of Appeals below reasoned:
Although we stated in Aceto that “it may be
reasonably inferred that [defendants] had the
authority to control the way in which the
pesticides were formulated,” . . . this observation
came as part of our discussion of RCRA and was
not necessary to our prior conclusion that the
complaint stated a valid claim under CERCLA.
Indeed, in the portion of Aceto that discussed
10
CERCLA, we specifically rejected the defendants’
contention that control is required in every
circumstance. To support their argument, the
defendants in Aceto quoted NEPACCO, 810 F.2d
at 743, for the proposition that they should “escape
liability because they had no authority to control”
the formulation and disposal process.... We
distinguished NEPACCO by observing that a
finding of control had been necessary in that case
only because ownership was lacking. . . . The
Aceto defendants, however, unlike those in
NEPACCO, “actually owned the hazardous
substances, as well as the work in process,” ...
and thus an arguable absence of control did not
mandate dismissal of the complaint. Control,
therefore, is not a necessary factor in every case
of arranger liability... .
Hercules, 247 F.3d at 720 (internal citations omitted).
Holding that the imposition of arranger liability does not
require a finding of control, the Court of Appeals departed
from its earlier interpretation of CERCLA arranger liability.
The Court of Appeals had unequivocally stated, “We agree
... that, in the wake of United States v. Gurley, 43 F.3d
1188 (8th Cir.1994),] and [United States v. Vertac Chemical
Corporation, 46 F.3d 803 (8th Cir. 1995)], a finding of
arranger liability requires some level of actual participation
in, or exercise of control over, activities that are causally
connected to, or have some nexus with the arrangement for
disposal of hazardous substances or the off-site disposal
itself.” United States v. TIC Inv. Corp., 68 F.3d 1082, 1087-
88 (8th Cir. 1995). Indeed, in an earlier appeal in this very
case, the Court of Appeals held that the United States
11
Department of Defense was not liable for any response costs
because it did not control the disposal of hazardous substances.
Vertac, 46 F.3d at 809. The Court of Appeals’ current standard
for arranger liability, as articulated below, reaches much further
than these earlier cases.
Numerous Courts of Appeals have rejected the Eighth
Circuit’s approach. At the other end of the spectrum, the United
States Court of Appeals for the Second Circuit held:
Congress employed traditional notions of duty and
obligation in deciding which entities would be liable
under CERCLA as arrangers for the disposal of
hazardous substances. Accordingly, this court
concludes that it is the obligation to exercise control
over hazardous waste disposal, and not the mere
ability or opportunity to control the disposal of
hazardous substances that makes an entity an
arranger under CERCLA’s liability provision.
General Elec. Co. vy. AAMCO Transmissions, Inc., 962 F.2d 281,
286 (2d Cir. 1992) (emphasis in original). The Second Circuit
observed that “courts have found that ownership of hazardous
substance, when combined with actual control over the process
that generates the hazardous waste, supports arranger liability.”
Id. at 287. In the Second Circuit, even “the opportunity or ability
to control a third-party’s waste disposal practices” does not
suffice to hold a person “liable as an entity that ‘otherwise
arranged for’ disposal or transport of hazardous waste.” /d. at
286. The United States Court of Appeals for the Fifth Circuit
cited the Second Circuit’s opinion with approval. See Geraghty
and Miller, Inc. v. Conoco, Inc., 234 F.3d 917, 929 (Sth Cir.
2000), cert. denied, 533 U.S. 950 (2001).
12
Likewise, the United States Court of Appeals for the
Third Circuit has explained, “Ownership or possession of
the hazardous substance must be demonstrated, but this factor
alone will not suffice to establish liability. A plaintiff must
also demonstrate either control over the process that results
in a release of hazardous waste or knowledge that such a
release will occur during the process.” Morton, 343 F.3d at
677-78.
Using the Eighth Circuit’s earlier cases, the United States
Court of Appeals for the Ninth Circuit expressed its view as
follows:
To summarize our view of Aceto and NEPACCO,
and to assess the interrelationship of the factors
of ownership, possession, and control over waste
disposal, we can do no better than to quote from
Judge Levi’s careful opinion in United States v.
Iron Mountain Mines, Inc., 881 F.Supp. 1432
(E.D. Cal. 1995). He writes:
It is true that some cases impose arranger
liability on parties who did not literally own
or physically possess hazardous waste at the
time it was disposed of or released. But in
each of these cases the party either was the
source of the pollution or managed its
disposal by the arranger [citing numerous
cases, including Aceto and NEPACCO|.
No court has imposed arranger liability on a
party who never owned or possessed, and
never had any authority to control or duty to
dispose of, the hazardous materials at issue.
13
See, e.g., General Elec. Co. v. AAMCO
Transmissions, Inc., 962 F.2d 281, 286 (2d
Cir. 1992) (“it is the obligation to exercise
control over hazardous waste disposal, and
not the mere ability or opportunity to control
the disposal of hazardous substances that
makes an entity an arranger under CERCLA’s
liability provision”) (emphasis in original).
United States v. Shell Oil Co., 294 F.3d 1045, 1058-59 (9th
Cir. 2002).
The United States Court of Appeals for the Eleventh
Circuit interpreted the Eighth Circuit’s decision in Aceto as
Uniroyal did. The Eleventh Circuit rejected the plaintiffs’
reliance on Aceto in South Florida Water Management
District v. Montalvo, 84 F.3d 402 (11th Cir. 1996). The
Montalvo panel noted that, in Aceto, the Eighth Circuit had
concluded that “it was possible to infer the manufacturers
exercised some control over the formulator’s mixing
process.” Jd. at 408. The Eleventh Circuit found that the
Montalvo plaintiffs had not alleged that the defendants “had
sufficient knowledge of or control over plaintiffs’ disposal
practices to be held liable” as “arrangers” for the disposal of
hazardous substances. /d. at 409. And the United States Court
of Appeals for the Eleventh Circuit has ruled,
If Congress wishes to impose liability on parties
who contract for services that produce hazardous
waste, it, not us, has the authority to do so. We
emphasize, however, that our opinion does not
foreclose the possibility that a party could so
control and benefit from another company’s
id
production of hazardous waste that arranger
liability would arise under 42 U.S.C. § 9607(a)(3).
Concrete Sales and Servs., Inc. v. Blue Bird Body Co., 211
F.3d 1333, 1339 (Lith Cir. 2000). See Amcast Indus. Corp.
v. Detrex Corp., 2 F.3d 746, 751 (7th Cir. 1993) (“The words
(‘arranged for’] imply intentional action. The only thing that
Detrex arranged for Transport Services to do was to deliver
TCE to Elkhart’s storage tanks. It did not arrange for spilling
the stuff on the ground.”), cert. denied, 510 U.S. 1044 (1994).
The United States Court of Appeals for the Tenth Circuit
applied this Court’s decision in United States v. Bestfoods,
524 U.S. 51 (1998), which defined the standard for “operator
liability” to require one to “manage, direct, or conduct
operations specifically related to pollution, that is, operations
having to do with the leakage or disposal of hazardous waste,
or decisions about compliance with environmental
regulations,” to cases involving arranger liability. Raytheon
Constructors, Inc. v. Asarco, Inc., 368 F.3d 1214, 1217 (10th
Cir. 2003).
If the United States had brought this case in the Second,
Third, Fifth, Seventh, Ninth, Tenth, or Eleventh Circuit,
Uniroyal likely would not have been held liable under
CERCLA as one that “arranged for” the disposal or treatment
of hazardous substances. At the same time, in addition to the
Eighth Circuit, the United States Court of Appeals for the
Sixth Circuit imposes arranger liability in the absence of a
finding of control. The Sixth Circuit held that “a party can
be responsible for ‘arranging for’ disposal, even when it has
no control over the process leading to the release of
substances.” United States v. Cello-Foil Prods., Inc., 100 F.3d
1227, 1232 (6th Cir. 1996). The appropriate inquiry,
15
according to the Sixth Circuit, “is whether the party intended
to enter into a transaction that included an ‘arrangement for’
the disposal of hazardous substances.” /d. at 1231.
The Courts of Appeals’ differing standards for the
imposition of CERCLA arranger liability generate confusion
and inequity in the marketplace. While the Second Circuit
requires an obligation to control the disposal or treatment of
hazardous substances to impose arranger liability, the Eighth
Circuit held Uniroyal liable as an arranger despite the absence
of even the opportunity to control the disposal or treatment
of hazardous substances. Liability for environmental cleanup
costs is often staggering: Here, the judgment potentially
exposes Uniroyal to liability for over $110 million. This
Court should resolve the split among the Circuit Courts of
Appeals and provide a uniform standard for the imposition
of CERCLA arranger liability.
II. The Court of Appeals’ Opinion Imposes Unforeseeable
Joint-And-Several Liability For Over $110 Million
Based On Lawful, Non-Negligent Conduct Involving
Only About $1.5 Million In Transactions In Violation
Of The Fifth Amendment To The United States
Constitution.
The Court of Appeals rejected Uniroyal’s as-applied
challenge to CERCLA’s constitutionality on the ground
that it had previously rejected challenges to CERCLA’s
constitutionality. Vertac, 453 F.3d at 1047-48. The Court of
Appeals ruled that the retroactive application of CERCLA is
never unconstitutional, even when a retroactive application
imposes severe liability on a limited class of parties that could
not have anticipated the liability and the liability is
substantially disproportionate to the parties’ experience and
settled expectations.
16
“(T]he presumption against retroactive legislation is
deeply rooted in our jurisprudence.” Landgraf v. USI Film
Prods., 511 U.S. 244, 265 (1994). The retroactive application
of legislation that imposes unexpected, severe, and
disproportionate liability violates the Fifth Amendment to
the United States Constitution. Eastern Enterprises v. Apfel,
524 U.S. 498 (1998). “Elementary considerations of fairness
dictate that individuals should have an opportunity to know
what the law is and to conform their conduct accordingly;
settled expectations should not be lightly disrupted.”
Landgraf, 511 U.S. at 265. The “principle that the legal effect
of conduct should ordinarily be assessed under the law that
existed when the conduct took place has timeless and
universal appeal.” Jd. (quoting Kaiser Aluminum & Chem.
Corp. v. Bonjorno, 494 U.S. 827, 855 (1990) (Scalia, J.,
concurring)). CERCLA does not expressly provide for
retroactivity, and Uniroyal’s activities giving rise to CERCLA
liability in this case predated CERCLA and were lawful and
non-negligent. Nonetheless, Uniroyal was unexpectedly held
jointly and severally liable for over $110 million in CERCLA
response costs.
In Eastern Enterprises, this Court held the Coal Industry
Retiree Health Benefit Act of 1992 (the “Coal Act”),
26 U.S.C. §§ 9701-22, unconstitutional as applied to impose
retroactive liability on a company to pay health benefits to
over 1,000 of its former employees. Although there was no
single opinion for the Court, Justice O’Connor, writing for a
plurality that included Chief Justice Rehnquist, Justice Scalia,
and Justice Thomas, distilled three factors of “particular
significance” from prior cases: “The economic impact of the
regulation, its interference with reasonable investment
backed expectations, and the character of the governmental
action.” Eastern Enters., 524 U.S. at 523; see also Kaiser
17
Aetna v. United States, 444 U.S. 164, 174-75 (1979). The
plurality opined that, while several prior cases had upheld
retroactive statutes, their imposition of retroactive liability was
“confined to short and limited periods required by the
practicalities of producing national legislation.” Eastern Enters.,
524 U.S. at 526. The plurality concluded that the Takings Clause
of the Fifth Amendment forbids the application of a statute in a
particular case if the law “imposes severe retroactive liability
on a limited class of parties that could not have anticipated the
liability, and [if] the extent of that liability is substantially
disproportionate to the parties’ experience.” /d. at 528-29.
Justice Kennedy, concurring in the judgment and dissenting
in part, agreed that the Coal Act, as applied to Eastern
Enterprises, was arbitrary and therefore unconstitutional. Justice
Kennedy rested his decision on the Due Process Clause of the
Fifth Amendment rather than on the Takings Clause. That said,
Justice Kennedy stated that he was “in full accord with many of
the plurality’s conclusions[.]” /d. at 539. He agreed that “[t]he
plurality’s careful assessment of the history and purpose of the
statute in question demonstrates the necessity to hold it arbitrary
and beyond the legitimate authority of the Government to enact.”
Id.
The four dissenters likewise recognized that retroactive
application of a federal statute may be unconstitutional under
the Due Process Clause of the Fifth Amendment. The dissenters
explained that, “like the plurality,” they “would inquire if the
law” as applied retroactively was “fundamentally unfair or
unjust.” /d. at 558 (Breyer, J., joined by Stevens, Souter, and
Ginsburg, JJ., dissenting). “{TJhe Due Process Clause can offer
protection against legislation that is unfairly retroactive[,] for
... @ law that is fundamentally unfair because of its retroactivity
is a law that is basically arbitrary.” /d. at 557. The dissent noted
18
that the same three factors articulated by the plurality could
properly be applied in the due process, rather than takings,
context. Jd. (citing Connolly v. Pension Benefit Guar. Corp.,
475 U.S. 211, 227 (1986)). The dissenters concluded that,
on the facts before them, retroactive application of the Coal
Act to Eastern Enterprises was not fundamentally unfair or
unjust. But every Justice in Eastern Enterprises agreed with
the core proposition that “an unfair retroactive assessment
of liability upsets settled expectations, and ... thereby
undermines a basic objective of law itself.” Id. at 558 (Breyer,
J., joined by Stevens, Souter, and Ginsburg, JJ., dissenting);
compare id. at 532 (plurality) (“Retroactivity is generally
disfavored in the law, in accordance with fundamental notions
of justice that have been recognized throughout history”)
(internal quotation marks and citations omitted); id. at 547
(Kennedy, J., concurring in the judgment) (“for centuries our
law has harbored a singular distrust of retroactive statutes”).
Some courts, including the Court of Appeals below in
one opinion, have recognized that Eastern Enterprises can
provide a basis to challenge a retroactive application of
CERCLA. See, e.g., Hercules, Inc., 247 F.3d at 722 (stating
that “inquiry into the constitutionality of CERCLA ... would
be ‘essentially ad hoc and fact intensive’”) (quoting Eastern
Enterprises); Coeur D’Alene Tribe v. Asarco Inc., 280 F.
Supp.2d 1094, 1111 (D. Idaho 2003) (“Defendants’ argument
that the retroactive application of CERCLA in this case is a
taking or in violation of the due process clause of the
Constitution as discussed in Eastern Enterprises [] is
reserved until the dollar amount of the damages is established
in the second phase of the trial.””). Other courts have refused
to apply Eastern Enterprises to evaluate the constitutionality
of the retroactive application of CERCLA on the ground that
the decision has no precedential effect. See, e. g., United States
19
v. Alcan Aluminum Corp., 315 F.3d 179, 189 (2d Cir. 2003)
(“The only binding aspect of [Eastern Enterprises] is its
specific result, and so the authority of Eastern Enterprises
is confined to its holding that the Coal Act is unconstitutional
as applied to Eastern Enterprises.”); Franklin County Conv.
Facilities vy. American Premier, 240 F.3d 534, 552 (6th Cir.
2001) (holding that ‘Eastern Enterprises has no precedential
effect [on the retroactive application of CERCLA] because
no single rationale was agreed upon by the Court’).
The judgment in this case holds Uniroyal jointly and
severally liable for over $110 million in response costs as a
result of lawful, non-negligent conduct involving only $1.5
million in transactions. As the District Court recognized,
“Uniroyal and Hercules are left ‘holding the bag’ for Vertac,
who at least arguably caused the greatest amount of harm.”
Vertac, 79 F. Supp.2d at 1036. Retroactive application of
CERCLA can result in this sort of large-scale, unexpected
liability and thereby undermine the “free, dynamic society”
that is “fostered by a rule of law that gives people confidence
about the legal consequences of their actions.” Landgraf, 511
U.S. at 266. The Court of Appeals’ ruling that the retroactive
application of CERCLA is never susceptible to an as-applied
constitutional challenge fails to address this Court’s opinion
_in Landgraf and directly contradicts the views of all the
Justices of this Court in Eastern Enterprises. This Court
should decide whether the retroactive application of
CERCLA can violate the Constitution and whether it does
so as to Uniroyal in this case.
20
CONCLUSION
For all these reasons, the petition for a writ of certiorari to
the United States Court of Appeals for the Eighth Circuit should
be granted.
Respectfully submitted,
STEVEN W. QUATTLEBAUM
E. B. Cues ['V*
JoserH R. FALAsco
QUATTLEBAUM, GROOMS,
TuLL & Burrow PLLC
111 Center Street, Suite 1900
Little Rock, Arkansas 72201
(501) 379-1700
Attorneys for Petitioner
* Counsel of Record
APPENDIX
la
APPENDIX A — OPINION OF THE UNITED STATES
COURT OF APPEALS FOR THE EIGHTH CIRCUIT
FILED JULY 13, 2006
UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
Nos. 05-3147, 05-3153.
Submitted: March 13, 2006.
Filed: July 13, 2006.
Rehearing and Rehearing En Banc Sept. 19, 2006"
UNITED STATES of America,
Plaintiff/Appellee,
Arkansas Department of Pollution Control and Ecology,
Plaintiff,
V.
VERTAC CHEMICAL CORPORATION,
Defendant,
Hercules, Inc.,
Defendant/Appellant,
* Chief Judge Loken did not participate in the consideration or
decision of this matter.
2a
Appendix A
Inter-Ag Corporation; Department of Defense; Dow
Chemical Corporation; Velsicol Chemical Corporation; John
Does, 1-5; Chemtura Corporation, formerly known as
Crompton Co., formerly known as CIE, formerly known
as Uniroyal Chemical Limited,
Defendants,
John Doull, Ph.D., M.D.; Karl K. Rozman, Ph.D.; William
J. Waddell, M.D.; K. Roger Hornbrook, Ph.D.; Daniel M.
Byrd, III, Ph.D., D.A.B.T.; Robert Golden, Ph.D.; B. Frank
Vincent, Ph.D.; American Council on Science and Health,
Amici on behalf of Appellant.
United States of America,
Plaintiff/Appellee,
Arkansas Department of Pollution Control and Ecology,
Plaintiff,
Fe
Vertac Chemical Corporation; Hercules, Inc.; Inter-Ag
Corporation; Department of Defense; Dow Chemical
Corporation; Velsicol Chemical Corporation;
John Does, 1-5;
Defendants,
Crompton Co./CIE,
Defendant/Appeltant.
3a
Appendix A
Before WOLLMAN, FAGG, and RILEY, Circuit Judges.
WOLLMAN, Circuit Judge.
Hercules, Inc. (Hercules) and Crompton Co./Cie
(Uniroyal)' raise constitutional claims and argue that the
district court? erred in assigning and apportioning liability
for environmental cleanup costs pursuant to the
Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), 42 U.S.C. § § 9601-0675, as
amended by the Superfund Amendments and Reauthorization
Act of 1986 (SARA), Pub.L. No. 99-499, 11 Stat. 1613. We
affirm.
I. BACKGROUND
This case involves twenty-six years of litigation and
numerous district court and appellate opinions, both
published and unpublished. At issue is the cost the United
States has incurred in its environmental cleanup efforts at
the Vertac Chemical Plant site in Jacksonville, Arkansas (the
Jacksonville site or the site). The full procedural and factual
history of this case has been discussed in several previous
decisions. This opinion will address the relevant portions of
each.
1. As of January 30, 2001, Uniroyal Chemical Limited changed
its name to Crompton Co./Cie. For consistency, we will use Uniroyal
throughout this opinion.
2. The Honorable George. Howard, Jr., United States District
Judge for the Eastern District of Arkansas.
4a
Appendix A
A. Factual History
The Jacksonville site was originally developed by
the federal government in the 1930s as a munitions factory.
In the late 1940s, the site was sold to Reasor-Hill Corporation
(Reasor-Hill), a now-defunct company. Reasor-Hill
first manufactured various pesticides, but began
manufacturing phenoxy herbicides in 1958. These
herbicides included dichlorophenoxyacetic acid (2,4-D) and
trichlorophenoxyacetic acid (2,4,5-T), synthetic hormones
that kill weeds or brush by accelerating growth to the point
of natural death. Although these herbicides biodegrade into
harmless substances, the manufacture of 2,4,5-T (but not 2,4-
D) creates a toxic byproduct that is now viewed as hazardous
to humans, 2,3,7,8-tetrachlorodibenzo-p-dioxin (dioxin).
While Reasor-Hill operated the site, an unknown quantity of
these and other untreated chemical wastes from the
production processes flowed through cooling ponds on the
west side of the plant into a nearby stream, Rocky Branch
Creek. Other wastes were stored in drums stacked in a field
on the site.
In 1961, Hercules bought the site and continued to
manufacture herbicides, including 2,4-D and 2,4,5-T, at the
plant until 1970. During this period, Hercules sold the bulk
of its product to the United States Department of Defense as
the defoliant Agent Orange, a herbicide made from a mixture
of 2,4-D and 2,4,5-T that was used in Vietnam to clear jungle
undergrowth.
Soon after Hercules took over the site, it buried the
deteriorating drums left by Reasor-Hill in unlined trenches
Sa
Appendix A
in the southeast corner of the site. Until late 1964, Hercules
continued Reasor-Hill’s practice of discharging untreated
waste water directly into Rocky Branch Creek. Hercules then
constructed a waste water pretreatment system, but the system
did not remove dioxin. It consisted of a neutralization trench
designed to reduce the acidity of the water, an equalization
basin designed to stabilize the rate of flow into the City of
Jacksonville’s sewage system, and a pump and pipe to deliver
the treated water to the sewage system. The system’s
equalization basin frequently overflowed during heavy
rainfalls, and it leaked.
After it learned of the toxicity of dioxin in 1965, Hercules
instituted a toluene extraction process designed to remove
organic impurities from 2,4,5-T products. This process
yielded residue (stillbottoms) containing extremely high
levels of dioxin. Hercules placed this residue in drums, some
of which it buried at the site and some of which it disposed
of at a nearby landfill. Hercules acknowledges that numerous
leaks and spills occurred during its operation of the site.
When the drums leaked in the process area before being
transported to the drum burial pit, Hercules’s practice was
to place any contaminated soil into the drum.
In 1970, Hercules ceased production at the site. Hercules
cleaned out all of its equipment and production vessels,
buried its waste, and shipped empty drums off-site. In 1971,
it leased the facility to Transvaal, Inc., which later became
Vertac Chemical Corp. (Vertac).’
3. Transvaal reorganized as Vertac in 1976. In this opinion, we
will refer to both corporations as Vertac.
6a
Appendix A
Vertac continued to manufacture 2,4-D and 2,4,5-T and
followed Hercules’s practice of burying most of the waste.
In 1975, however, Vertac began shipping its 2,4-D waste to
off-site landfills and began to store its 2,4,5-T stillbottoms
above ground with the hope that the waste would someday
be recycled. In 1976, Vertac purchased the site from Hercules.
Vertac voluntarily ceased manufacturing 2,4,5-T and 2,4,5-
TP on March 15, 1979.
On February 26, 1980, the United States Environmental
Protection Agency (EPA) issued a proposed rule under the
Toxic Substances Control Act to prevent Vertac from
disposing of the dioxin from the Jacksonville site. This rule,
known as the Vertac Rule, became final later that year and
prohibited the off-site disposal of 2,4-D wastes that contained
dioxin. If Vertac could show that a batch of 2,4-D produced
waste that was free of dioxins, it could dispose of that waste
and all subsequent 2,4-D waste off-site.
According to testimony at the hearing on the proposed
rule, Vertac had approximately 3200 drums of wastes
resulting from the production of 2,4-D. The first set of
samples taken from seven hundred drums of waste resulting
from the initial production of 2,4-D revealed dioxin levels
of approximately twenty parts per billion (ppb). The samples
were later sent to Wright State University and Monsanto
Company for testing. Monsanto could not detect any dioxin
with its analytical equipment, but Wright State detected
.7 ppb. In a second sampling of 1000 drums, it detected .5
ppb and the next sampling showed .3 ppb. Because the 2,4-
D waste contained dioxin, Vertac stopped analyzing samples
of the waste and allowed the drums to accumulate. Later
7a
Appendix A
testing by the State of Arkansas, as well as the results of trial
burns, revealed the presence of dioxin in the drums.
Vertac continued its operations until 1986. In 1987, it
abandoned the site, and the site went into receivership. By
then, there were nearly 29,000 drums at the site that contained
waste materials including 2,4-D, 2,4,5-T, and dioxin. Some
drums were labeled T waste, some D waste, some were
marked T and D, and some were not marked at all. Many of
these markings were indistinguishable or unreadable. More
than 15,000 drums were stored outside and exposed to the
elements. The drums were stacked three high on deteriorating
pallets and were failing at a rate of between five to three
hundred drums per week.
Many of the drums had corroded and leaked,
contaminating the soil, groundwater, and buildings at the site.
Contamination was found in other areas of the site, at the
landfills, in nearby neighborhoods, and in the grounds
adjacent to the site. After Vertac abandoned the plant, the
EPA took over the site, closed down all operations, and
assumed cleanup responsibilities that have cost well over
$110 million to date.
To carry out its response measures, the EPA divided the
site into five units: off-site areas, operable units 1, 2, and 3,
and the incineration response action. Several removal actions
addressed the immediate threat posed by the drummed waste
left on the site when it was abandoned. Four remedial actions
addressed the long term solutions for the rest of the site and
the surrounding area affected by the site. For each of the
remedial actions, the National Contingency Plan required the
8a
Appendix A
EPA to (1) conduct a remedial investigation of the site
conditions, including an endangerment assessment of the
threats posed by the contamination at the site; (2) perform a
feasibility study examining the various technical alternatives
for remediating the site; (3) take public comment on the EPA’s
proposed remedial action plan based on the alternatives
discussed in the feasibility study; (4) compile an
administrative record for remedial action decision making;
and (5) issue a written record of decision (ROD) explaining
the Regional Administrator’s reasoning in selecting the final
remedial action plan and responding to the public comments
received.
Uniroyal was one of Vertac’s customers and purchased
2,4,5-T and other products from Vertac in the 1970s. In 1978,
Vertac informed Uniroyal that it lacked the funds to purchase
enough 1,2,4,5-tetrachlorobenzene (TCB), a key ingredient
in the manufacture of 2,4,5-T, to fulfill its contractual
obligations to Uniroyal. Uniroyal agreed to supply Vertac
with enough TCB to create some 1.3 million pounds of 2,4,5-
T that was to be shipped back to Uniroyal. Vertac did not
purchase the TCB directly from Uniroyal, but instead reduced
the amount it charged Uniroyal for the 2,4,5-T to reflect the
value of the TCB that Uniroyal had supplied. This
arrangement was embodied tn two separate contracts and was
carried out between March 1978 and March 1979. The 2,4,5-
T that was produced with Uniroyal’s TCB represents less
than one percent of the more than 150 million pounds of
2,4-D and 2,4,5-T that were manufactured at the site over
the course of its operation.
9a
Appendix A
B. Procedural History’
On October 12, 1993, the district court granted the
government’s motion for summary judgment, holding that
Hercules was jointly and severally liable under CERCLA
sections 107(a)(2) and (3) for the response costs incurred by
the United States with regard to the Jacksonville site.
42 U.S.C. § 9607(a)(2) and (3); United States v. Vertac Chem.
Corp., 841 F.Supp. 884 (E.D.Ark.1993). Hercules moved for
reconsideration, arguing that disputed issues of fact existed
regarding divisibility. On November 1, 1993, the district court
denied Hercules’s motion, finding H ies had failed
to present evidence in support of its divisibility of harm
defense.
Hercules appealed that decision, and we reversed and
remanded the case to the district court to reconsider
Hercules’s claim of divisibility in light of the legal standards
enunciated in our April 11, 2001, opinion.’ United States v.
Hercules, Inc., 247 F.3d 706 (8th Cir.2001) (VVertac X/). In
October and December 2001, the district court held an
evidentiary hearing on Hercules’s divisibility of harm
4. Litigation began in 1980. For a description of the early
procedural history, see United States v. Hercules, Inc., 247 F.3d 706
(8th Cir.2001) and United States v. Vertac Chem. Corp., 966 F.Supp.
1491 (E.D.Ark.1997).
5. In its most recent opinion, the district court noted an
inconsistency in our April 11, 2001, opinion. In that opinion, we
meant to vacate: (1) the unpublished opinion issued on October 12,
1993, and (2) the denial of the motion to reconsider issued on
Nevemiber 1, 1993.
10a
Appendix A
defense, resulting in a transcript of some 2300 pages in
length. The parties submitted post-hearing briefs, together
with a voluminous record that included documents, exhibits,
transcripts, depositions, and the administrative record. The
district court considered the entire record, applied the law as
stated in Vertac XI, and held that Hercules had failed to
establish its divisibility of harm defense, with the exception
of one off-site landfill, the Rogers Road landfill (a divisibility
finding that the government does not challenge). United
States v. Vertac Chem. Corp., 364 F.Supp.2d 941
(E.D.Ark.2005) (Vertac XII).
In its final judgment following its March 30, 2005,
memorandum opinion and order, the district court held that
Hercules and Uniroyal were jointly and severally liable to
the United States for the following amounts: (1) Hercules,
in the amount of $119,318,504, plus any additional response
costs, and (2) Uniroyal, in the amount of $110,410,161, plus
any additional costs. The district court had previously
allocated the amount of contribution of the total response
costs for which each entity was jointly and severally liable.
To the extent that the United States enforces its judgment,
Hercules is entitled to contribution from Uniroyal in an
amount equal to 2.6 percent of $110,410,161, and Uniroyal
is entitled to contribution from Hercules in an amount equal
to 97.4 percent of $110,410,161.
On appeal, Hercules argues that the district court erred
in apportioning liability. Uniroyal argues that we should
overturn our holding in Vertac X/ that affirmed the district
court’s holding that Uniroyal was liable. Hercules and
Uniroyal further argue that the district court’s imposition of
retroactive liability was unconstitutional.
lla
Appendix A
II. HERCULES’S LIABILITY
Hercules challenges the district court’s liability
determination on both legal and factual grounds. We will
first address Hercules’s contention that the district court
applied the wrong legal standard in determining whether
Hercules established its divisibility of harm defense. We will
then turn to Hercules’s argument that the drummed waste,
the stillbottoms, Operable Unit 1 (OU-1), the Jacksonville
Landfill, the soils, and the groundwater are each separate
sites capable of further apportionment.
We review de novo the district court’s legal conclusions.
Richardson v. Sugg, 448 F.3d 1046, 1052 (8th Cir.2006). We
review its factual findings for clear error. /d. “Using this
standard, we will overturn a factual finding only if it is not
supported by substantial evidence in the record, if it is based
on an erroneous view of the law, or if we are left with the
definite and firm conviction that an error was made.” Id. We
give due regard to the district court’s opportunity to judge
the credibility of the witnesses. Id. “A district court’s choice
between two permissible views of evidence cannot be clearly
erroneous.” Tadlock v. Powell, 291 F.3d 541, 546 (8th
Cir.2002).
A. Legal Standard
Hercules contends that the district court erred in
concluding that the site could not be separated into divisible
geographic units. As to the drums, Hercules argues that the
district court failed to consider whether there existed a single,
divisible harm and addressed only whether there existed
[2a
Appendix A
distinct harms. The thrust of Hercules’s arguments is factual,
however, and the district court applied the appropriate legal
standard.
In Vertac XI we held that a defendant must prove by a
preponderance of the evidence that there exists a reasonable
basis for divisibility. Vertac XI, 247 F.3d at 717.
The proper standard for determining divisibility
... is that the defendant show either distinct harms
or a reasonable basis for apportioning causation
for a single harm. A defendant need not prove that
its waste did not, or could not, contribute to any
of the harm at a CERCLA site in order to establish
divisibility, because it is also possible to prove
divisibility of single harms based on volumetric,
chronological or other types of evidence. A site
may also be divisible if a defendant can establish
that it consists of non-contiguous areas of
contamination.
Id. at 719 (internal quotations and citations omitted). We
noted that proving divisibility is a “very difficult proposition”
and that where the harms are incapable of division, the district
court should not make an arbitrary apportionment. /d. at 717.
In its opinion, the district court applied the standard for
determining divisibility as set forth in Vertac X/. The district
court first considered whether Hercules established a
reasonable basis for divisibility by proving by a
preponderance of the evidence that the site could be divisible
13a
Appendix A
on a geographical basis.© Under its geographical
apportionment theory, Hercules argued that each operable
unit within the Jacksonville site is a separate site for purposes
of divisibility. In considering and ultimately rejecting
Hercules’s argument, the district court found that the EPA
divided the site into operable units for the purposes of
remediation and that the “operable units did not solely
address geographical portions of the Site.” Vertac XII, 364
F.Supp.2d at 951.
With regard to the drums, Hercules argues that the district
court erroneously held that cross-contamination and
commingling of dioxin prevented Hercules from establishing
a reasonable basis for divisibility. In Vertac XI, we held that
a single harm may be treated as divisible when it is possible
to discern the degree to which different parties contributed
to the damage. “Single harms may also be treated as divisible
in terms of degree, based, for example on the relative
quantities of waste discharged into the stream. Divisibility
of this type may be provable even where wastes have become
cross-contaminated and commingled.” 247 F.3d at 718
(internal quotations omitted). Hercules, however, did not
argue that the drums caused a single, divisible harm that could
be apportioned based on relative quantities of waste or
volumetric evidence. As the government points out, this
argument would have been inconsistent with Hercules’s
6. We have considered Hercules’s argument concerning
the information contained in one of the government’s exhibits
(Exhibit K). Because the district court expressly stated at the time it
granted the government's motion to withdraw the exhibit that it would
not rely on the exhibit in ruling on Hercules’s divisibility defense,
we conclude that this argument is without merit.
l4a
Appendix A
argument that it should not be held liable for any of the
drummed waste.
B. Drummed Waste
The 28,500 drums contained 2,4-D and 2,4,5-T
stillbottom wastes, dioxin, and other hazardous and toxic
substances. When the site went into receivership, the drums
were leaking, corroding, and failing. By February 1989, the
failed drums had been placed inside new, larger drums
(overpacked). Because the drums contained corrosive
materials, maintenance of the drums was an ongoing process.
The EPA determined that the wastes on the site posed a threat
to public health and welfare and the environment. The
drummed material was considered acutely hazardous waste,
and the EPA chose to dispose of the wastes by incineration.
The Arkansas Department of Pollution Control and Ecology
(ADPC & E) managed the incineration from 1989 until June
1993, when the EPA took over the on-site incineration of the
drums.
Hercules argues that the district court clearly erred in
finding the following: (1) the EPA and the ADPC & E decided
to incinerate the 2,4-D waste drums because of the dioxin
contained therein; (2) Hercules was responsible for the cross-
contamination of the plant equipment causing 2,4-D waste
drums to contain dioxin; and (3) Hercules was responsible
for the commingling of the 2,4-D waste and the dioxin
contaminated soil, causing the drums to contain dioxin.
Hercules first argues that it should not be held liable for
the cost of incinerating the 2,4-D waste drums because those
15a
Appendix A
drums would have been incinerated regardless of whether
they were contaminated with dioxin. The district court
concluded that Hercules’s argument did not “withstand
scrutiny” and found that the EPA and Arkansas were
concerned that a potential fire, explosion, or tornado could
spread dioxin into the environment. Vertac XII, 364
F.Supp.2d at 953. Thus, the district court determined that
“fijt was not, as Hercules argues, the dirt in the drums that
drove the incineration; rather it was the dioxin in the dirt
that drove the incineration of the drums.” /d.
As the district court noted, in the factual background of
the case, the Vertac Rule permitted Vertac to landfill the
2,4-D waste drums only after showing that the drums
contained no dioxin. This was never shown, and Phyllis
Moore, Ph.D., the former director of the ADPC & E, and
Randall Mathis, her successor, testified (1) that time was of
the essence, (2) that further testing was expensive and time
consuming, (3) that the 2,4-D drums were corroding and
failing, and (4) that the drums posed an imminent risk of fire
and explosion.
Dr. Moore was involved in the initial decision to
incinerate the 2,4-D waste drums. Although she stated that
the “issue of dirt” did not influence her decision, Dr. Moore
testified that a primary concern was the presence of dioxin
in the 2,4-D waste drums, regardless of whether it was
transmitted to the drums by cross-contamination at the
production facility or by the overpacking of the drums with
contaminated soil. J.A. at 26433-34. She further testified that
it was important that the method of incineration satisfy the
requirements of the ADPC & E and the EPA for destruction
l6a
Appendix A
of dioxin. Regarding the ultimate decision to incinerate,
Dr. Moore testified that the state “would have looked at other
options” if there had been no dioxin in any of the drums.
J.A. at 26445. We thus reject Hercules’s argument that the
incineration of the 2,4-D drums was in no way attributable
to dioxin.
Hercules next argues that the district court clearly erred
in finding that the equipment at the plant contaminated
2,4-D waste with dioxin after Hercules had cleaned the
production vessels in 1970. The district court found that “the
cleanup of the equipment was not as thorough as portrayed
by Hercules, and that the plant equipment was cross-
contaminated with 2,4-D, 2,4,5-T, and dioxin.” Vertac XI,
364 F.Supp.2d at 952. The district court rejected Hercules’s
theory that Vertac’s chemical production: flushed the dioxin
out of the production vessels.
In its brief, Hercules recites portions of Arthur
Treisback’s affidavit, which was excluded as hearsay at trial
and is not part of the record on appeal, and relies primarily
on Treisback’s deposition testimony, portions of which were
read into evidence by Richard Karkkainen during his
testimony. Treisback was Hercules’s plant manager in charge
of the 1970 plant cleanup, and Karkkainen was Vertac’s
director of environment and safety from 1979 to 1986.
Karkkainen testified that Treisback’s deposition testimony
described the common practice of cleaning plant equipment
and, although Karkkainen had no personal knowledge of the
cleaning, that it was likely that Hercules followed the
common practice. J.A. at 26458. Karkkainen further testified
that there was no indication that the cleaning process was
successful. J.A. at 26562.
17a
Appendix A
The district court also heard the testimony of Reeddie
Ray and Stephen Quigley. Ray worked for Hercules from
1964 to 1970 and was involved in the plant cleanup. Ray
testified extensively about how the equipment was cleaned.
To clean the tanks, “[w]e washed them out with a water
hose.... Only time we heated the water if there was sediment
in the bottom of the tank.” Regarding the process lines,
“Process lines were cleaned with steam.... We had to
' disassemble the lines to get water out of the tank.” Ray did
not recall using any solvents: “The only time we used solvent
is where we wanted to take the sediment and circulate and
dissolve something in it, but I don’t think we used solvent.
I think we just used water and steam, that’s all.” J.A. at 27522-
2? Quigley, Uniroyal’s expert, testified that it was unlikely
that solvents were used to clean the equipment and even if
they were, it is likely that some contamination would remain
in the equipment. J.A. at 28089-90. Given the evidence before
the district court, we conclude that it did not err in finding
that dioxin remained in the plant after Hercules’s 1970
cleaning.
Hercules contends that the district court clearly erred in
rejecting its flushing theory. According to this theory, after
Vertac shifted plant production exclusively to products that
do not generate dioxin, about ten production runs would have
flushed out any significant amount of dioxin remaining in
the plant equipment. Because Vertac stopped producing
2,4,5-T in March 1979, three years after Hercules sold the
plant to Vertac, Hercules argued that there could be no
detectable dioxin in the 2,4-D waste in late 1979, when Vertac
began to accumulate the 2,4-D waste drums. The district court
disregarded the flushing theory as, “just that-a theory” and
18a
Appendix A
noted that “[a]fter nearly eight years of only 2,4-D production,
dioxin and 2,4,5-T were present in plant equipment.”
Vertac XII, 364 F.Supp.2d at 952.
We conclude that the district court did not err in rejecting
Hercules’s flushing theory.’ The district court stated that,
because the plant equipment contained dioxin and 2,4,5-T
after nearly eight years of 2,4-D production, “the evidence
basically disproves the theory.” The finding that dioxin was
present in the plant equipment is supported by the evidence.
An EPA inventory of the process vessels and tanks in the
central process area of the Jacksonville site showed that 140
of the 213 process vessels contained chemical material
including 2,4-D, 2,4,5-T, and dioxin. J.A. at 19779-80. Of
the ninety-six vessels sampled, more than half were
contaminated with dioxin at levels greater than 0.3 ppb. J.A.
at 19780. Hercules argues that the data showing
contamination of the plant equipment was untrustworthy, but
Hercules has failed to show that the EPA or the district court
relied on that evidence. Hercules’s expert witness, Randal
Maud, Ph.D., served as the project manager for Hercules at
the Jacksonville site to assess the environmental
consequences of the site. He testified that the unreliable data,
“would likely not be used because of the quality assurance
problems.” J.A. at 28256.
Finally, with regard to the drummed waste, Hercules
argues that the district court erred in holding Hercules liable
7. Hercules argues that the government’s attorncy made a
judicial admission supporting Hercules’s flushing theory. Having
reviewed the record, we conclude that the statements in question
did not rise to the level of a binding judicial admission.
19a
Appendix A
for the waste that was placed in the drums during
overpacking. Hercules contends that either the placement of
the dioxin-contaminated soil into the 2,4-D drums constituted
a second disposal under CERCLA, for which it is not liable,
or that the overpacking by Vertac or the EPA constituted a
superseding cause, thereby relieving Hercules of liability.
Hercules does not dispute, however, that it contaminated the
soil with dioxin at the Jacksonville site.
As the district court recited in its decision, disposal under
CERCLA is defined as the “discharge, deposit, injection,
dumping, spilling, leaking, or placing of any solid waste or
hazardous waste into or on any land or water so that such
. waste ... may enter the environment.” 42 U.S.C.
8§ 6903(3), 9601(29). Hercules caused dioxin to enter the
environment, thereby disposing of the waste. That Vertac and
the EPA overpacked leaking drums in an effort to contain
the further contamination of the site does not absolve
Hercules of CERCLA liability. Accordingly, Hercules
remains responsible for the ongoing contamination caused
by the dioxin, for that contamination was not solely caused
by the act of a third party.
C. Stillbottoms
Hercules argues that the stillbottom waste was not
disposed of until after Hercules sold the plant and that thus
it is not responsible for any of the costs related to that
disposal. Vertac began accumulating 2,4,5-T stillbottom
drums on-site in 1975, and it bought the plant from Hercules
in 1976. Hercules claims that Vertac merely stored the waste
for the purpose of later recycling, and thus did not dispose
20a
Appendix A
of the waste until 1979, when the registration for 2,4,5-T
was suspended. Accordingly, Hercules claims that the 2,4,5-
T stillbottom drums constituted a distinct harm and that it
should not be liable for their incineration.
Section 103(a) of CERCLA holds liable “any person who
at the time of disposal of any hazardous substance owned or
operated any facility at which such hazardous substances
were disposed of.” 42 U.S.C. § 9607(a)(2). The term
“facility” includes, “any site or area where a hazardous
substance has been deposited, stored, disposed of, or placed.”
42 U.S.C. § 9601(9). Finally, as we recounted above, disposal
includes placing hazardous waste in a manner that allows
the waste to enter the environment. Simply stated, the district
court found that Hercules owned a facility at which hazardous
waste was allowed to enter the environment. Specifically, it
found that the stillbottoms leaked onto the ground when
Hercules owned the plant. This finding is supported by
Quigley’s expert testimony: “[W]hen the wastes
[stillbottoms] were put into drums for disposal, they were
put into recycle drums, ... and those recycle drums did leak,
some of them instantaneously upon having the waste put in
them, and other times shortly after the waste being put in
them.” J.A. at 28082. Robert Fischer, a chemist with Hercules
and Vertac, also testified that the deterioration of the T drums
was one of the major sources of dioxin contamination at the
site. J.A. at 27060. In light of this testimony, we conclude
that the district court did not clearly err in holding Hercules
liable for the incineration of the stillbottoms.
2la
Appendix A
D. Operable Unit 1
OU-1 consisted of the above-ground media, including
the process vessels (e.g. the storage tanks, chemical reaction
vessels) in the central process area. The ROD for OU-1
required that plant equipment be dismantled and salvaged to
the extent possible and that all other nonsalvageable material
be placed in an on-site landfill. Any hazardous material not
suitable for the landfill was to be incinerated. Hercules
implemented the remedy pursuant to Unilateral
Administrative Order (UAO) issued by the EPA.
Hercules argues that the district court erred in holding it
liable for the cleanup of OU-1, including the demolition,
removal, and disposal of plant buildings and equipment, and
their process waste contents. Hercules admits liability for
part of the OU-1.' It contends that it established a reasonable
basis of divisibility for further apportioning liability. Hercules
argues that the district court erred in finding (1) that the plant
buildings were demolished because they contained dioxin,
(2) that Hercules was responsible for the contamination of
the equipment, the shredded trash, and the pallets, and (3)
that the EPA’s response action was not arbitrary or capricious.
The district court found that “[t]he buildings were
demolished because the risk of collapse might cause release
and human exposure to herbicide process contamination,
including unacceptable levels of TCDD [dioxin].” We
conclude that the record adequately supports this finding.
8. Hercules accepted responsibility for the spent carbon wastes
it generated.
22a
Appendix A
Maud testified that the EPA was concerned about the
buildings because they were falling into disrepair and because
“they contained large amounts of asbestos siding and roofing
and asbestos interiors, some of which also contained dioxin
dust.” J.A. at 28265. The ROD states that in the event of a
catastrophe, “Based on the 2,3,7,8-TCDD (dioxin)
concentrations found in [OU-1], human exposure to
concentrations in excess of those considered acceptable ...
could occur.” J.A. at 19811.
Hercules further contends that the district court clearly
erred in finding that Hercules was responsible for the
contamination of the plant equipment. In his expert testimony,
Eugene Meyer, Ph.D., affirmed the statement from his 1998
affidavit that “[t]he presence of 2,3,7,8-TCDD [dioxin] was
established through samples in all of the following: surface
and subsurface materials collected from the site sewers,
distillation bottoms, waste activated carbons, leachate from
on-site buildings, trash, shredded pallets, and the sludges
generated during the treatment of waste waters.” J.A. at
27928. Although Hercules’s project manager for EPA
compliance, Douglas Keilman, opined that Hercules did not
cause the contamination, his opinion was based on the
flushing theory. For the reasons stated above, we again
conclude that the district court did not clearly err in rejecting
that theory.
The district court found that “Hercules cannot establish
that it was not the source of the contamination on the
shredded trash and pallets.” Vertac XII, 364 F.Supp.2d at 955.
The shredded trash included things like hard hats, broken
tools, and tyvex suits, and the pallets were used to store
23a
Appendix A
drummed waste at the site. Although Keilman testified that
the trash had been accumulating since 1980, there was no
evidence to show that Vertac, and not Hercules, caused the
contamination of the trash. The district court found that the
pallets were contaminated by both leaking drums and
contaminated soil. Because Hercules is responsible for the
contaminated soil, the district court did not err in further
holding it responsible for the pallets.
Finally, Hercules argues that the EPA’s issuance of a
UAO requiring Hercules to dismantle and to landfill the
equipment and buildings at the site was arbitrary and
capricious. We disagree. Section 113(j) of CERCLA allows
a defendant to avoid paying response costs to the extent that
it can show that the response action was arbitrary and
capricious. 42 U.S.C. § 9613(j). Hercules does not argue that
the disposal of the building and equipment is arbitrary and
capricious, but rather that the EPA was arbitrary and
capricious in issuing a UAO. To support the issuance of a
UAO, there must be evidence that there ‘may be an imminent
and substantial endangerment to the public health or welfare
or the environment because of an actual or threatened release
of a hazardous substance from a facility.” 42 U.S.C. § 9606(a)
(emphasis added). Because the record contains sufficient
evidence to support the EPA’s determination that the
cautionary “may be” threat of imminent substantial
endangerment had been established, its decision to issue the
UAO was not arbitrary and capricious.
24a
Appendix A
E. Jacksonville Landfill
The district court found that Hercules disposed of
hazardous wastes at the Jacksonville Landfill and held
Hercules liable for the cleanup costs associated with the
landfill. In its investigation, the EPA found rusting drums
and piles of “white fibrous, absorbent-type materials” at the
Jacksonville Landfill. Tests confirmed the presence of dioxin,
2,4,5-T, and other chemicals associated with the Jacksonville
site. In its ROD, the EPA called for the excavation of
contaminated soils, the replacement and capping of the
excavated areas with clean soil, and the cleaning and removal
of large refuse items. The contaminated soil and drums were
incinerated at the site. Although Hercules admits that it took
some nonhazardous waste to the Jacksonville Landfill, it
argues that the district court clearly erred in finding that
Hercules disposed of hazardous wastes at the Jacksonville
Landfill, and it contends that the EPA’s response was arbitrary
and capricious.
We conclude that the district court’s finding is supported
by substantial evidence. Indeed, the district court cited the
testimony by four Hercules employees that they took
chemical wastes to the Jacksonville Landfill. Billy Honey
worked maintenance at the plant from the time Hercules
bought it until it closed. J.A. at 26291. He testified that he
hauled drums filled with chemical waste to the Jacksonville
Landfill. J.A. at 26299-300. Doyce Shurley worked for
Hercules in the early 1960s, and he recalled taking a barrel
of stillbottoms to the landfill. Vincent Dodson worked for
Hercules in the late 1960s, and he testified that chemical
wastes were disposed of at the landfill. When asked what
25a
Appendix A
type of waste was taken to the Jacksonville landfill, Leroy
Jordan replied, “We took [waste] from each trash pick-up
point. We took it from every rig and barrels. We cleaned out
the incinerator and carried that stuff over there. Anything
that they needed to get rid of, and that included benzen
barrels, trash from the lunchroom, barrels of goop, acid,
anything and everything.” J.A. at 26352.
Hercules argues that this testimony should be discredited
because it presented contradictory evidence to counter it. The
short answer to this contention is to note once again that a
district court’s choice between two permissible views of the
evidence is no basis for a conclusion that its factual finding
is clearly erroneous. Tadlock, 291 F.3d at 546.
Hercules contends that the EPA’s response to the
Jacksonville landfill was inappropriate for the following
reasons: (1) the cancer potency factor used by the EPA in its
risk assessment constitutes a rule under the Administrative
Procedures Act (APA) that must be overturned because it
was not subject to notice and comment, and (2) the EPA’s
exposure assumptions were arbitrary and capricious.
We disagree.
The cancer potency factor was used to calculate the risk
and to set dioxin cleanup standards for the soil and sediments
at the Jacksonville site. To determine whether a statement
by an agency is a legislative rule or policy, we apply the
two-part test of McLouth Steel Prod. Corp. v. Thomas, 838
F.2d 1317, 1320 (D.C.Cir.1988). A policy statement (1) does
not have a binding effect; it does not impose any rights and
obligation; and (2) a policy “genuinely leaves the agency and
26a
Appendix A
its decisionmakers free to exercise discretion.” /d. (internal
quotations omitted). The district court concluded that the
“Health Assessment Document which set forth the cancer
potency factor does not impose any rights [or] obligations.
It is at most only a technical and advisory report. It did not
obligate the agency or public in determining acceptable risks
associated with dioxin.” United States v. Vertac Chem. Corp.,
33 F.Supp.2d 769, 779 (E.D.Ark.1998) (Vertac IX ).
This finding is adequately supported by the record. As
the district court noted, the EPA Regional Administrator
considered the lower figure proposed by Hercules’s
contractor, ChemRisk, and rejected it. Indeed, in the ROD
for the Jacksonville landfill, the EPA addressed why
ChemRisk’s calculations would not be used, “Hercules Inc.
submitted a report prepared by ChemRisk which provided
calculations resulting in cleanup goals differing from EPA’s
for dioxin. The report utilized certain calculations and
assumptions which were contrary to EPA guidance and
resulted in cleanup goals much less restrictive than those
calculated by the EPA.” J.A. at 16407. The document goes
on to discuss the discrepancies between the EPA’s and
ChemRisk’s methods of calculating site related risks and to
explain that the EPA rejected ChemRisks proposal because
“ChemRisk’s proposed cleanup goals, using EPA’s risk
assessment approach, would not result in excess cancer risks
(after remediation) within the acceptable risk range.” J.A. at
16408. The EPA considered Hercules’s comments on the
EPA’s application of the cancer potency factor with regard
to the cleanup levels at the site and responded to the
comments in the final RODs.
27a
Appendix A
Hercules argues that the exposure assessments used by
the EPA were arbitrary and capricious and did not justify the
remedial order. Having considered the ROD and related
evidence, we conclude that this argument is without merit.
F. Soils and Groundwater
The revised ROD for Operable Unit 2 (OU-2) addressed
contaminated on-site soils, foundations, and underground
utilities and off-site soils and sediments that had been
excavated from off-site areas and stored on the site. The
remedy selected required the excavation of dioxin
contaminated soil, and the disposal of this soil in an on-site
containment vault. The ROD for Operable Unit 3 (OU-3)
dealt with groundwater contamination under the site. It states
that “groundwater contamination at the site is complex,
resulting from past waste management and disposal practices.
Sources of contamination include on-site landfills, spills and
discharges into the central ditch, Reasor Hill well, and other
parts of the central process area.” J.A. at 20136.
Hercules argues that the soil and groundwater
contamination were divisible as successive harms based on
the relative production volumes of 2,4,5-T and 2,4,5-TP
attributable to Hercules from 1961 until it sold the plant in
1976 and to Vertac from that point until it ceased production
of 2,4,5-T in 1979. Based on the estimated production figures,
Keilman determined that Hercules was responsible for
70.74% of the EPA’s response costs. J.A. at 27177. To reach
this figure, Hercules relied on the following assumptions and
evidence: (1) Hercules assumed that leaks and spills took
place at roughly the same frequency and severity during the
28a
Appendix A
plant’s production of 2,4,5-T and 2,4,5-TP; (2) Keilman
testified that prior to 1965, most of the dioxin left the plant
with the product; (3) Hercules offered evidence that the half-
life of dioxin in soil is approximately twelve years, though
it ranged from a few days to decades; and (4) Hercules touted
its housekeeping and maintenance practices as being far
superior to those of Vertac.
The district court determined that this evidence was not
sufficiently concrete and specific to apportion the harm. Most
importantly, there was no evidentiary basis for Hercules’s
assumption that the release of wastes at the site was related
to production volumes, nor was there any testimony that there
was any reasonably constant ratio or direct correlation
between the releases of dioxin and production of dioxin
generating products. As the district court pointed out and as
the record reveals, the production methods changed over the
years, the specifications for the product varied, Hercules and
Vertac used different methods of disposal of dioxin
contaminated filter paper and cardboard drums, and each
companies experienced different plant eruptions. Although
Hercules may be able to fairly estimate the production
volumes of 2,4,5-T and 2,4,5-TP from the time it owned the
plant, the district court correctly held that it cannot establish
the inferences necessary to prove a reasonable basis for
apportionment of harm.
Hercules argues that the EPA’s response choices for the
soils, groundwater, and off-site areas are arbitrary and
capricious and that Hercules should not be held liable for
the corresponding response costs. Having considered the
record, we conclude that Hercules’s argument is without
merit.
29a
Appendix A
III. UNIROYAL’S LIABILITY
Uniroyal argues that we should hold that it is not liable
as an arranger under CERCLA, and thus overturn the panel’s
decision in Vertac XI. ““When a case has been decided by
this court on appeal and remanded to the district court, every
question which was before this court and disposed of by its
decree is finally settled and determined.” Klein v. Arkoma
Prod. Co., 73 F.3d 779, 784 (8th Cir.1996). Absent
intervening controlling authority, we are bound by the
decision of the previous panel. Liberty Mut. Ins. Co. v. Elgin
Warehouse & Equip., 4 F.3d 567, 571 (8th Cir. 1993). Uniroyal
pointed to no new controlling authority, and thus the
affirmance of the district court’s finding of liability in Vertac
XI is the law of the case. Because that holding is not “clearly
erroneous” nor does letting it stand “work a manifest
injustice,” we refuse to disturb it. Liberty Mut. Ins. Co., 4
F.3d at 570-71.
IV. RETROACTIVITY
Hercules and Uniroyal contend that the retroactive
application of CERCLA to impose liability is unconstitutional
under the Supreme Court’s decision in Eastern Enterprises
v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451
(1998). We previously resolved this exact issue in United
States v. Dico, in which we held that CERCLA’s retroactive
application remained constitutional after Eastern Enterprises.
Dico, 266 F.3d 864, 879-880 (8th Cir.2001). We are thus
bound by our Circuit’s precedent and accordingly will not
revisit the issue. See United States v. Wright, 22 F.3d 787,
30a
Appendix A
788 (8th Cir.1994) (“[A] panel of this Court is bound by a
prior Eighth Circuit decision unless that case is overruled
by the Court sitting en banc.”).
V. CONCLUSION
The judgment is affirmed.
3la
APPENDIX B — OPINION OF THE UNITED STATES
DISTRICT COURT FOR THE EASTERN DISTRICT
OF ARKANSAS, WESTERN DIVISION
DATED MARCH 30, 2005
UNITED STATES DISTRICT COURT
E.D. ARKANSAS
WESTERN DIVISION
No. CIV. 4:80CV00109GH
UNITED STATES OF AMERICA,
Plaintiff,
V.
VERTAC CHEMICAL CORP., et al.,
Defendants.
March 30, 2005.
MEMORANDUM OPINION AND ORDER
GEORGE HOWARD, JR., District Judge.
The Vertac Site in Jacksonville, Arkansas, has been the
focus of litigation for 25 years. The history of the Vertac
Site and Off-Site areas has been discussed in numerous prior
decisions.' This Court previously found both Hercules
1. United Sates vy. Vertac Chem. Corp., 489 F.Supp. 870
(E.D.Ark.1980); United States v. Vertac Chem. Corp., 588 F.Supp.
1294 (E.D.Ark.1984); United States v. Vertac Chem. Corp., 671
(Cont'd)
32a
Appendix B
Incorporated (“Hercules”) and Uniroyal Chemical Limited
(“Uniroyal”)? jointly and severally liable under the
Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (“CERCLA”), 42 U.S.C. §§ 9601
et seq. for all response costs incurred and to be incurred by
the United States at the Site and related areas, and entered
judgment in the amount of $102,878,641.35. United States
v. Vertac, 33 F.Supp.2d 769 (E.D.Ark.1998). In what was
hoped to be the last decision in this matter, the Court allocated
the costs between Hercules and Uniroyal. United States v.
Vertac, 79 F.Supp.2d 1034 (E.D.Ark.1999).
GENESIS OF THIS DECISION
On October 12, 1993, the Court granted the United
States’ motion for summary judgment and found that
Hercules was jointly and severally liable under Section
107(a)(2) and (3) of CERCLA, 42 U.S.C. § 9607(a)(2) and
(3) for the response costs incurred by the United States with
regard to the Vertac Site. Hercules moved for reconsideration,
(Cont'd)
F.Supp. 595 (E.D.Ark.1987), vacated, 855 F.2d 856 (8th Cir. 1988);
United States v. Vertac Chem. Corp., 756 F.Supp. 1215
(E.D.Ark.1991), aff’d, 961 F.2d 796 (8th Cir. 1992); United States v.
Vertac Chem. Corp., 966 F.Supp. 1491 (E.D.Ark.1997); United States
v. Vertac Chem. Corp., 33 F.Supp.2d 769 (E.D.Ark.1998); United
States v. Vertac Chem. Corp., 79 F.Supp.2d 1034 (E.D.Ark.1999).
See also O'Dell v. Hercules, Inc., 687 F.Supp. 450
(E.D.Ark.1988)(O ’Dell-Bridges), aff'd 904 F.2d 1194 (8th Cir.1990).
2. As of January 30, 2001, the name of Uniroyal Chemical
Limited was changed to Crompton Co./Cie. For ease and consistency,
the Court will continue to use the name Uniroyal.
33a
Appendix B
at which time it argued that disputed issues of fact existed
regarding divisibility. The Court, on November 1, 1993,
denied the motion for reconsideration, finding, inter alia,
that Hercules had failed to present evidence in support of its
divisibility of harm argument.
On December 19, 1999, Hercules appealed the Court's
summary judgment ruling, arguing in part that the harm at
the Site is divisible. On April 11, 2001, the Eighth Circuit
Court of Appeals reversed the Court’s summary judgment
against Hercules on the issue of liability and remanded the
case for the Court to “address evidence supporting divisibility
in light of the proper legal standards.” United States v.
Hercules, Inc., 247 F.3d 706, 719 (8th Cir.2001). The Eighth
3. The Eighth Circuit’s decision is somewhat confusing. The
court stated that it was vacating United States v. Vertac Chem. Corp.,
841 F.Supp. 884 (E.D.Ark.1993) (“Vertac V”). Vertac V however
dealt only with the liability of the United States. In that case, Vertac,
Hercules and the State of Arkansas argued that the United States
should be held liable under CERCLA for its role in the production
of Agent Orange. The United States filed a motion for partial
summary judgment asking that the Court find that it is not liable.
fhe Court found the United States not to be liable, denying the
motions of Vertac, the State of Arkansas, and Hercules and granting
the motion of the United States.
The Eighth Circuit Court of Appeals affirmed the Court’s
conclusion that the United States was not liable as an “operator” or
“arranger” in United States v. Vertac Chem. Corp., 46 F.3d 803 (8th
Cir.1995) (‘Vertac VI’).
(Cont'd)
34a
Appendix B
Circuit also vacated the Court’s judgments on response costs,
United States v. Vertac Chem. Corp., 33 F.Supp.2d 769
(E.D.Ark.1998) (“Vertac IX’’) and allocation, United States v.
Vertac Chem. Corp., 79 F.Supp.2d 1034 (E.D.Ark.1999)
(“Vertac X”) pending the Court’s reconsideration of Hercules’
claim of divisibility. 247 F.3d at 721.
The Court scheduled a limited evidentiary hearing on the
divisibility of harm defense raised by Hercules. The hearing
was held between October 9 and 19, 2001 and December 11
and 12, 2001. The parties subsequently filed post-hearing briefs.
The record, needless to say, is voluminous, comprising not only
the numerous filed documents, but exhibits and transcripts
admitted at the evidentiary hearing, exhibits and transcripts of
the various trials in this action, evidentiary and deposition
testimony of other federal actions involving Hercules, and the
(Cont'd)
Vertac V did not grant summary judgment on the United States’
motion for summary judgment against Hercules on the issue of
liability and did not address Hercules’ argument concerning
divisibility of harm. The finding of joint and several liability of
Hercules was issued in an unpublished decision entered on October
12, 1993. (document no. 1826) (granting United States’ motion for
partial summary judgment against Hercules on the issue of liability
under CERCLA). The subsequent order denying Hercules’ motion
for reconsideration on the issue of divisibility, also unpublished,
was entered on November |, 1993 (document no. 1875)(denying
Hercules’ motion for reconsideration of October 12, 1993 Order).
Should the Eighth Circuit again address this case, it might want
to clarify the record. It is unclear whether the Court’s decision in
841 F.Supp. 884 and affirmed in 46 F.3d 803 concerning the United
States’ liability should have been vacated.
35a.
Appendix B
52,000-page Administrative Record (AR) for the Site which
has been filed in this action as 8 compact discs (see docket
entry 2454). The Court has worked diligently to carefully review
the record in considering this case.
FACTUAL BACKGROUND
The Vertac Chemical Plant Site (“Site”) consists of
approximately 93 acres in Jacksonville, Arkansas. The Site was
originally developed by the federal government in the 1930s as
a munitions factory. Around 1948, Reasor-Hill Corporation
(“Reasor-Hill”), a now defunct company, purchased the Site
and first formulated finished insecticide products, primarily
DDT, aldrin, dieldrin, and toxaphene. In the mid-1950s, Reasor-
Hill modified the plant and began manufacturing phenoxy
herbicides, primarily 2,4, dichlorophenoxyacetic acid (“2,4-D”),
2,4,5 trichlorophenoxyacetic acid (“2,4,5-T”) and 2,4, 5
trichloropropionic acid (“2,4,5-TP” or “Silvex”). United States
v. Vertac Chem. Corp., 489 F.Supp. 870, 873 (E.D.Ark.1980)
(“Vertac I’). The chlorinated compound 2,4,5-trichlorophenol
(2,4,5-TCP or TCP) was an intermediate in the 2,4,5-T
manufacturing process. The manufacture of 2,4,5-T creates a
highly toxic byproduct, 2,3,7,8-tetrachlorodibenzo-p-dioxin
(“dioxin” or “TCDD”) that is now viewed as hazardous to
humans. Vertac XI] at 712. All of the herbicide related compounds
are listed hazardous wastes under the Resource Conservation
and Recovery Act (RCRA), 42 U.S.C. § 6921, 40 C.F.R.
§§ 261.31, 261.33, and the compounds 2,4,5-T, 2,4,5-TCP, 2,4,5-
TP are designated as “Acute Hazardous Wastes” under RCRA.
40 C.F.R. § 261.31. Additionally, all of the phenoxy herbicides
and TCP are designated as hazardous substances under
CERCLA. See 42 U.S.C. 9601(14); 40 C.F. R § 302.4.
36a
Appendix B
Reasor-Hill did not have a process to treat the waste
water that was produced. United States v. Vertac Chem. Corp.,
966 F.Supp. 1491, 1494 (E.D.Ark.1997) (“Vertac VIII”).
While Reasor-Hill operated the Site, an unknown quantity
of untreated chemical wastes from the production process
flowed through cooling ponds on the west side of the plant
into a nearby stream. Reasor-Hill disposed of large quantities
of pesticide (insecticide) and phenoxy herbicide wastes by
leaving the wastes in drums on the Site. Vertac Jat 874.
Hercules bought the Site from Reasor-Hill in 1961 and
continued to manufacture herbicides, including 2,4-D and
2,4,5-T, at the plant until 1971. United States v. Hercules,
247 F.3d 706, 712 (8th Cir.2001)(“Vertac XI’). When it
commenced operations at the Plant, Hercules found and then
buried on-site thousands of drums of pesticide and herbicide
wastes left by Reasor-Hill. Vertac VIII at 1494-95. The
southeast corner of the Site where Hercules buried the drums
was known as the Reasor-Hill drum burial area.
Hazardous substances, including insecticides, phenoxy
herbicides and TCDD dioxin, Jeached and flowed from the
Reasor-Hill drum burial area into Rocky Branch Creek.
Until late 1964, Hercules continued Reasor-Hill’s
practice of discharging untreated wastewater directly into
Rocky Branch Creek. Vertac / at 874. The waste water which
resulted from the manufacturing of 2,4,5-T or 2,4,5-TP
contained dioxin. Jd. In 1964, Hercules constructed a waste
water pretreatment system, which consisted of a
neutralization trench designed to reduce the acidity of the
water, an equalization basin designed to stabilize the rate of
37a
Apoendix B
flow into the City of Jacksonville’s sewage system, and a
pump and pipe to deliver the treated waste water to the
Jacksonville sewage system. Jd. The waste water pretreatment
system did not remove the dioxin. The basin frequently
overflowed directly into Rocky Branch Creek during heavy
rainfalls, and leaked.
Hercules manufactured formulations of 2,4,5-T, Silvex
and 2.4.-D acids for commercial customers. It used some of
the same equipment to manufacture both 2,4-D and 2,4,5-T
products, but the equipment could not manufacture both
simultaneously.
In 1964, Hercules was awarded a contract to produce
Agent Orange for the U.S. Department of Defense (“DOD").*
It produced and supplied Agent Orange to DOD through
1968. Agent Orange was a 50/50 mixture of the butyl esters
of 2,4,5-T and 2,4,-D acids; a much more concentrated form
of the acids than that sold by Hercules to its commercial
customers. Dioxin was formed as a by-product during the
production of Agent Orange. Vertac VIII at 1494. Due to strict
specifications in the Agent Orange contracts, Hercules was
forced to discard as waste more significant quantities of
material that did not meet specifications than was discarded
during production for commercial customers. At the same
time, Hercules continued manufacturing 2,4,5-T, silvex and
2.4-D for its commercial customers. As a result of the
increased production, the volume of wastes generated at the
Plant also increased.
4. Agent Orange was an herbicide used as a defoliant in
Vietnam. United States v. Vertac Chem. Corp., 46 F.3d 803, 805 (8th
Cir. 1995).
38a
Appendix B
In 1965, Hercules discovered that in the manufacture of
2,4,5-T, dioxin was generated in the process, specifically in
the dechlorinator, also known as the “sputnik.”° In that same
year, it began utilizing a “toluene extraction” system during
which dioxin and other impurities that were extracted
underwent a distillation process producing a residue
(stillbottoms). The toluene stillbottoms were contaminated
with TCDD and 2,3,7,8-tetrachloro-dibenzo-furan (TCDF).
Hercules buried drums of toluene stillbottoms and 2,4-D
wastes at the Site and disposed of them in the landfill areas.
Vertac VIII, at 1494. See also Vertac I at 875.
The drums were allowed to collect in the process areas,
sometimes for several months, before being transported to
the drum burial pit. The drums were thin gauge and were in
poor condition. Leakage occurred at the point of storage and
in transporting the drums to the drum burial area. Hercules’
practice was to scoop up any contaminated soil around the
leaking drum and place it into the drum.
Between June of 1964 and May of 1968, Hercules
produced almost 3 million gallons of undiluted Agent Orange
for DOD.
After the Agent Orange contracts terminated in 1968,
Hercules continued manufacturing 2,4,5-T, silvex and 2,4-
D for commercial customers until June 1970. Vertac VIII at
1495-96. In late 1970, Hercules ceased production at the Site
5. Tr.2001 at 877. The dechlorinator is the vessel in which
dioxin in formed during the process of making trichlorophenol.
Hercules later increased the number of “sputniks” from one to three.
39a
Appendix B
and cleaned it or “mothballed” it for the winter as Hercules
began to seek a buyer or lessee of the Plant.
On October 1, 1971, Hercules leased the Site to
Transvaal, Inc. (“Transvaal”) which later became Vertac
Chemical Corporation (“Vertac”). Among the actions
Transvaal took prior to starting operations was the
redrumming of about 50 to 100 55-gallon drums of 2,4,5-T
wastes, some of which were leaking.’ Transvaal continued
to manufacture 2,4,-D, 2,4,5-T and 2,4,5-TP and continued
to bury wastes on site. In 1975, Transvaal began shipping its
2,4-D waste to off-site landfills and began to store its 2,4,5-
T stillbottoms above ground with the hope of recycling the
waste. Vertac XI at 712. All waste burial took place while
Hercules owned the plant.
In August of 1976, Transvaal purchased the Site from
Hercules and reorganized as Vertac. Vertac continued to make
2.4-D, 2,4,5-T and 2,4,5-TP. Vertac J at 874. Vertac continued
its operations until 1986, when it abandoned the Site
altogether.
On February 28, 1979, the Environmental Protection
Agency (“EPA”) suspended many of the uses of 2,4,5-T.
Vertac I at 875. On March 15, 1979, Vertac voluntarily ceased
6. The extent of Hercules’ cleanup of the plant is in dispute
and is discussed below.
7. December 12, 1988 Deposition of Jerry Keister, p. 6-7
8. The drums of the toluenc stillbottoms were still on-site when
the State of Arkansas ordered them to be redrummed. 2001 Tr. at
734.
40a
Appendix B
manufacturing 2,4,5-T and 2,4,5-TP and overpacked its 2,4,5-
T stillbottom drums. /d.’
In 1980, Vertac recommenced the manufacture of 2,4-
D. It began redrumming, or overpacking, leaking drums that
it had accumulated on site.'° Spilled material along with dirt,
dust, and debris were scooped up and placed into the
overpacking drums.
EPA found that the 2,4-D wastes had been contaminated
with TCDD. On February 26, 1980, EPA issued a proposed
rule under the Toxic Substances Control Act (“TCSA”) to
prevent Vertac from disposing of TCDD wastes from the Site.
The rule, known as the “Vertac Rule,” became effective
March 11, 1980'' and final May 19, 1980.
The Vertac Rule prohibited the off-site shipment of 2,4,-
D wastes which contained TCDD.'? However, if Vertac could
show that a batch of 2,4-D was manufactured and produced
wastes free of dioxins, it could ship those wastes and all
subsequent wastes for off-site disposal unless it went back
to manufacturing 2,4,5-T. Vertac IX at 780.
According to testimony at the hearing on the proposed
rule, Vertac had approximately 3200 drums of wastes
9. The recontainerization was pursuant to a June 15, 1979 Order
by the Arkansas Department of Pollution Control and Ecology
(“ADPC & E”). Vertac I at 875-876.
10. 2001 Tr. at 354
11. 45 Fed.Reg. 15592
12. Id.
4la
Appendix B
resulting from the production of 2,4,-D. Analysis by Vertac
of three samples from 700 drums of wastes resulting from
the initial production of 2,4-D revealed TCDD levels of
approximately twenty parts per billion (“ppb”).'* Vertac then
sent samples of its 2,4-D wastes to Wright State University
and to Monsanto for testing. Monsanto was unable to detect
TCDD with its analytical equipment, but Wright State
detected TCDD in composite samples taken from 700 drums
of “D” wastes of .7 ppb 2,3,7,9-TCDD.'* Vertac IX at 780. It
subsequently found .5 ppb in another sampling of 1000 drums
and a third sampling done on an undisclosed number of drums
found .3ppb TCDD.'°
Finding that dioxin was present in the 2.4-D wastes,
Vertac stopped sampling and allowed the “D” wastes to
accumulate. Subsequent testing by the State of Arkansas as
well as the results of trial burns revealed the presence of
TCDDs and TCDFs in the drums. Vertac IX at 781.'° Both
TCDD and TCDF were generated exclusively in the
manufacture of 2,4,5-T and 2,4,5-TP, but not in the
manufacture of 2,4-D.
Sed
13. 45 Fed.Reg. 22678
14. Hercules contends that the Monsanto results of non-detect
were more reliable thas the Wright State University results, although
Hercules’ witness Robert Fisher acknowledged that Wright State had
a high resolution mass spectrometer which Monsanto did not have.
15. 2001 Tr. at 1647.
16. See also e.g., 2001 Tr. at 1665-1678 discussing results
obtained in 1993 by Richard Ehrhart, EPA Remedial Project Manager
for the incineration project of about 400 drums of 2,4-D wastes.
42a
Appendix B
The 2,4-D waste drums, because of the acidic nature of
their contents and their condition resulting from their storage
and handling, failed at a rapid rate. Beside being stored on
soil, the drums were also stacked several deep, three high,
and unbanded, by the thousands.
Vertac ceased operations in 1986 and abandoned the Site
in 1987. Vertac VIII at 1495.'’ When Vertac abandoned the
Site in January of 1987, there were nearly 29,000 drums
containing waste materials, including 2,4,5-T, 2,4,-D and
dioxin. “Many of these drums had corroded and leaked,
contaminating more soil, groundwater, and buildings at the
site.” Vertac XI at 712. Over 15,000 drums stored outside
were exposed to the elements. “Drums were stacked three
high on deteriorating pallets.” Vertac IX at 772. The drums
were failing at a rate of between five to 300 per week.'®
“EPA determined that the wastes on the site posed a threat
to public health and welfare and the environment. Residents
in the area could be exposed to hazardous substances and
should a large release occur, in the event of a tornado, fire,
or continued poor maintenance, the toxic waste could
contaminate the environment. EPA initiated a removal action
in 1987 to stabilize the drums and tanks and to provide site
security.” Vertac IX at 772.
17. See also United States v. Vertac Chem. Corp., 671 F.Supp.
595 (E.D.Ark.1987) for a description of Vertac’s actions in 1986
and 1987. The Eighth Circuit Court of Appeals vacated the decision
because Inter-Ag, the entity who purchased Vertac’s assets, had not
been joined as a party to the action. 855 F.2d 856 (8th Cir.1988)
(Table).
18. 2001 Tr. at 1427, Ex. 8073.
43a
Appendix B
Some of the drums were labeled “T” waste, some were
labeled “D” waste, some were marked “T” and “D” and some
were not marked at all. Many of the markings were
indistinguishable or unreadable. Vertac, 671 F.Supp. at 606.
“The drummed material was considered acutely
hazardous waste and was characterized as ‘F-listed’ wasted
under applicable ... RCRA regulations, 42 C.F.R. Part 261,
App. VII.” Vertac IX at 772. EPA chose to dispose of the
wastes by incineration. When the incineration of the drums
commenced, the contents of the drums were found to nave
different wastes including 2,4,-D, 2,4,5-T, 2,4,5-TP, dioxins,
dibenzofurans, and all sorts of various materials ranging from
dirt to broken pipes. EPA completed the on-site incineration
of the 2,4-D drummed waste in October, 1994. The remaining
3260 drums of 2,4,5-T wastes were shipped off-site for
incineration. Off-site shipment was completed in March,
1996. Vertac IX at 774.
SCOPE OF REVIEW
Hercules argues that in its latest order the court of appeals
vacated all previous findings of fact of this Court. That is,
the Court is now free to consider new evidence and new facts.
Hercules basically contends that the only evidence the Court
may now consider is that which was introduced at the hearing
on divisibility of harm that the Court conducted in 2001.
The Court ordered a hearing to consider additional
evidence on the issue of divisibility of harm. The Court finds
that it can consider the existing record. The Eighth Circuit
merely remanded the case for the Court to determine, based
44a
Appendix B
on the record, whether Hercules had established a basis for
establishing divisibility of harm. The Court of Appeals did not
remand for a new tnial.
The United States has already established, and the Court
has previously found, that there were releases and threats of
releases of hazardous substances during the time Hercules
owned or operated the Site, which caused the United States to
incur response costs. This is sufficient to establish Hercules’
liability under CERCLA for response costs. However, it does
not resolve the issue of liability completely. Hercules can “escape
joint and several liability” if it can demonstrate that the harm
incurred at the Site is divisible. United States v. Alcan Aluminum
Corp., 315 F.3d 179, 185 (2d Cir.2003).
The universal starting point for divisibility of harm
analyses in CERCLA cases is the Restatement
(Second) of Torts, which provides for the
apportionment of damages among two or more
parties when at least one is able to show either
(1) “distinct harms” or (2) a “reasonable basis for
determining the contribution of each cause to a single
harm.” Restatement (Second) of Torts § 433A
(1965).
Vertac XI, at 717.
Section 433A of the Restatement (Second) of Torts entitled
“Apportionment of Harm to Causes,” provides as follows:
(1) Damages for harm are to be apportioned
among two or more causes where
45a
Appendix B
(a) there are distinct harms, or
(b) there is a reasonable basis for
determining the contribution of each
cause to a single harm.
In other words, the defendant must prove that “there is a
way to determine what portion of the harm (i.e. the hazardous
substances present at the facility and the response costs
incurred in dealing with them) is fairly attributable to the
defendant as opposed to other responsible parties.” United
States vy. Manzo, 279 F.Supp.2d 558, 562 (D.N.J.2003)
(quoting United States v. Rohm & Haas Co., 2 F.3d 1265,
1280 (3d Cir.1993)). “ ‘Distinct harms’ are ‘those that may
properly be regarded as separate injuries.’ ” Vertac X/ at 717.
The burden is on Hercules to establish that there is a
reasonable basis for divisibility of harm. That burden is
substantial. United States v. Alcan Aluminum Corp., 315 F.3d
179, 185 (2d Cir.2003). The evidence in support of
divisibility “must be concrete and specific.” Vertac X/ at 718.
“{T]he question whether there is a reasonable basis for
apportionment depends on whether there is sufficient
evidence from which the court can determine the amount of
harm caused by each defendant.” In the Matter of Bell
Petroleum Svcs., Inc., 3 F.3d 889, 903 (Sth Cir.1993)(Bell
Petroleum). “(Where causation is unclear, divisibility is not
an opportunity for courts to ‘split the differetice’ in an attempt
to achieve equity.” /d. A court should not settle on a
compromise amount that it believes approximates the relative
responsibility of the parties. If in doubt, the court should
impose joint and several liability. United States v. Township
of Brighton, 153 F.3d 307, 319 (6th Cir.1998).
46a
Appendix B
ANALYSIS
Hercules advances several arguments in support of its
divisibility defense. It advances a type of “geographical
apportionment” theory, that is, that the harm at the Site is
divisible on the basis of operable units.'? Each operable unit
should be considered, according to Hercules, a separate
“site.” As to these different areas, Hercules argues that it is
liable only for the harm that it caused. Different approaches
are used, depending on the area. Thus, with regard to the
incineration of the drummed wastes, Operable Unit 1 (plant
equipment) (“OU-1”) and the Jacksonville and Rogers Road
landfills, Hercules contends that it has no liability. As to the
remaining sites, Hercules admits that it has some
responsibility for contamination of on site soils and
groundwater and the Off-Site Areas. It argues, however, that
the Court should apply a volumetrics approach for dividing
the harm.
19. Operable unit means a discrete action that comprises
an incremental step toward comprehensively
addressing site problems. This discrete portion of a
remedial response manages migration, or eliminates
or mitigates a release, threat of a release, or pathway
of exposure. The cleanup of a site can be divided
into a number of operable units, depending on the
complexity of the problems associated with the site.
Operable units may address geographical portions
of a site, specific site problems, or initial phases of
an action, or may consist of any set of actions
performed over time or any actions that are
concurrent but located in different parts of a site.
40 C.F.R. § 300.5.
47a
Appendix B
EPA and Uniroyal assert that Hercules cannot establish
that the harm is divisible because of the extensive cross-
contamination and commingling of dioxin and other
hazardous substances throughout all areas of the Site. They
note that Hercules’ operations and extensive waste disposals
at the Plant and on other areas of the Site from 1961 to 1971
contributed massive amounts of dioxin and other hazardous
substances to the Site. Furthermore, Hercules also owned
the Plant during the first five years of Transvaal/Vertac’s
operations there, and it is therefore legally responsible under
CERCLA for Vertac’s waste disposals during the period from
1971-1976.
The EPA divided the Site into separate operable units
for purposes of facilitating the remediation. The attempt to
apportion the harm based on operable units was rejected by
the court in United States v. Manzo, 279 F.Supp.2d 558, 574
(D.N.J.2003). “An operable unit is ‘a discrete action that
comprises an incremental step toward comprehensively
addressing site problems.’ 40 C.F.R. § 300.5. It is not a site,
although it ‘may address geographical portions of a site.’ “
Furthermore, in Manzo as here, the operable units did not
solely address geographical portions of the Site.*°
20. Randal Maud, Hercules’ cxpert in environmental
remediation and Project Manager at the Site, testified that the Site
was divided into “logical areas of study.” At first Operable Unit |
was all engineering structures above the land surface and Operable
Unit 2 was everything at land surface and below. Ground water was
spun off into a separate operable unit for administrative purposes
2001 Tr. at 2068-69.
48a
Appendix B
The Court is not persuaded that EPA’s selection
of remedial actions alone is a basis for dividing the harm.
See Washington v. United States, 922 F.Supp. 421, 428
(W.D.Wash.1996)(EPA’s selection of remedial actions
provides no basis for apportioning harm).
The Court will proceed to address the arguments raised
by Hercules, and determine whether there is a basis to divide
the harm in each of the areas.
Drummed Wastes
As discussed above, when EPA arrived at the Site after
Vertac abandoned in it found over 28,000 drums of waste
stored on the Site. The drummed wastes were incinerated as
part of a series of continuing removal actions that the State
of Arkansas and the EPA began in 1987.
There is no dispute that the 2,4-D waste drums were
accumulated on the Site beginning in late 1979, at least three
years after Hercules had sold the plant site to Vertac. Had
the drums merely contained identifiable 2,4-D wastes, the
Court might find that Hercules’ divisibility of harm argument
had merit. But, because they contained other hazardous
substances which were produced while Hercules owned the
plant, Hercules must demonstrate a basis for finding the harm
divisible.
Hercules makes several arguments to support its
contention that it is not liable for the incineration of the
drummed wastes. It has consistently contended that
the approximately 25,000 drums of 2,4-D waste and
49a
Appendix B
approximately 3,000 drums of 2,4,5-T still bottoms left
behind when Vertac abandoned the Site on January 31, 1987,
were each “distinct” harms, to which Hercules did not cause
EPA’s response costs.
Dioxin was found in the drums. The United States posits
two sources of contamination of the 2,4-D drums with TCDD,
TCDF,2,4,5-T and 2,4,5-TP One is the cross-contamination
from the equipment, especially equipment used in both the
production of 2,4-D and 2,4,5-T. The second source is the
contaminated soil, trash, debris and other materials placed
into the drums during the multiple overpackings. The soil
could have been contaminated with dioxin produced during
Hercules’ operation of the plant. No one can say that the
dioxin in the “D” drums did not come from Hercules.
Despite Hercules’ contention that the drums didn’t leak,
there is ample evidence to show that the drums of 2,4,5-T
still bottoms did leak on the ground when Hercules owned
the plant?! The on-site soils, especially, in the process area,
contained hazardous chemicals.*?
The soil was contaminated with wastes generated by
Hercules and Vertac. The drummed wastes stored on site
leaked at one time or another and had to be overpacked.
21. Robert Fisher, a chemist with Hercules and Vertac, and one
of the persons considered most knowledgeable about Hercules’
operations, testified that the deterioration of the T drums was one of
the major sources of dioxin contamination at the Site. 2001 Tr. at
907.
22. See e.g. Remedial Investigation and Feasibility Study for
a
OU
50a
Appendix B
During overpacking, the chemical material that had leaked
out on to the soil would be scooped up and put into the
overpacked drum. Thus, the D-drums most likely contained
soil contaminated by Hercules’ operations which had been
scooped up when the corroding drums were overpacked.
Hercules argues that it could not have caused the waste
to be contaminated through the production process or through
the p acement of contaminated dirt into the drums at a later
date. With regard to the production process, Hercules argues
that it thoroughly cleaned out the production vessels in 1970,
while looking for a buyer or lessee.
The same equipment was used to produce 2,4,-D and
2,4,5-T. Testimony at the hearing revealed that the cleanup
of the equipment was not as thorough as portrayed by
Hercules, and that the plant equipment was cross-
contaminated with 2,4-D, 2,4,5-T and dioxin.’
Hercules also relies on a “flushing theory,” i.e., that the
thousands of batches of material Vertac ran through the
production vessels would have thoroughly flushed the, dioxin
from the vessels to the point when it would be virtually non-
existent.** Thus, there should not have been, according to
Hercules, any residual contamination in the 2,4-D drums
23. See discussion of clean-up of OU-1, infra.
24. According to the “flushing theory,” if one makes a batch of
2,4,5-T and leaves i0% of the 2,4,5-T in the process vessel, each
subsequent batch of 2,4-D made would reduce the amount of 2,4,5-
T in the product such that in the period of time from 1971 to 1979
there would be less than one molecule remaining in any initial
resiaae) material. 2001 Tr. at 366-367.
Sla
Appendix B
which were generated and stored by Vertac between the fall
of 1979 and 1986.
Hercules’ flushing theory remains just that-a theory. It
has not been subjected to scientific testing and validation.
Rather the evidence basically disproves the theory. After
nearly eight years of only 2,4-D production, dioxin and 2,4,5-
T were present in the plant equipment.
Hercules contends that the presence of dioxin in the 2,4-
D waste drums did not influence the decision to incinerate.
Hercules points to testimony by Dr. Phyllis Moore, Director
of the ADPC & E, who made the initial decision to incinerate
the drums, that the presence of dirt in the drums did not
influence the decision to incinerate.> Hercules further argues
that the placement of contaminated dirt into the drums would
constitute a separate “disposal” of hazardous substances
under CERCLA. Additionally, the redrumming efforts took
place after August, 1976, when Hercules sold the plant to
Vertac and therefore Hercules had nothing to do with the
redrumming efforts.
None of these arguments withstand scrutiny. A number
of witnesses, particularly from the State, testified about the
rationale for incineration. There was no doubt that the
drummed wastes presented a hazard to the area. EPA and the
State of Arkansas were concerned that because of the manner
in which the drums were stored, the risk of fire and explosion,
as well as the possibility of tornadoes, could spread the dioxin
25. Dr. Moore testified that the issue of “dirt” did not influence
the decision. 2001 Tr. at 279. However, she stated that the major
concern with the drums was the presence of dioxin. 2001 Tr. at 282.
52a
Appenaix B
into the environment. Additionally, witnesses testified that
because time was of the essence, testing a large number of
the drums to determine whether dioxin was present would
have been costly and time-consuming.”° It was not, as
Hercules argues, the dirt in the drums that drove the
incineration; rather it was the dioxin in the dirt that drove
the incineration of the drums.
Hercules also attacks the validity of the tests. The Court
is not in a position to discredit the testing procedures or
results. Witnesses from all parties maintained different
positions with regard to the testing results. The Court cannot
find as a matter of law that certain test results were not
reliable.
Hercules advances other innovative arguments to support
its contention that it did not cause some of the drums to be
contaminated with dioxin. One of these is that the placement
of the dirt into the drums is in itself a separate disposal.
“Disposal” under CERCLA has the same meaning
as “disposal” under the Solid Waste Disposal Act. 42 U.S.C.
§ 9601(29) The Solid Waste Disposal Act defines “ “disposal”
as the discharge, deposit, injection, dumping, spilling,
leaking, or placing of any solid waste or hazardous waste
into or on any land or water so that such solid waste or
hazardous waste or any constituent thereof may enter the
environment or be emitted into the air or discharged into
any waters, including ground waters.” 42 U.S.C. § 6903(3).
Hercules “disposed of” hazardous substances because it
placed those hazardous substances in a manner that allowed
26. See e.g. 2001 Tr. at 542, 1787.
53a
Appendix B
them to enter the environment. Attempts to further subdivide
actions in an attempt to escape liability borders on the absurd.
Hercules also argues that it is relieved of liability under
the doctrine of “superseding cause.” Restatement (Second)
of Torts, § 440. Comment b. It points to a number of actions
taken which would relieve it of responsibility.
The Court cannot find that “superseding cause” is a basis
for divisibility. The Restatement must be followed “only to
the extent that it is compatible with the provisions of
CERCLA.” 247 F.3d at 717. Recognizing a “superseding
cause” theory in this situation “would not be compatible”
with the strict liability provisions of CERCLA. Even
assuming the theory is applicable in CERCLA cases, it is
not applicable here.
The mere fact that other causes intervene between
the original act of negligence and the injury for
which recovery is sought is not sufficient to
relieve the original actor of liability, if the injury
is the natural and probable consequence of the
original negligent act or omission and is such as
might reasonably have been foreseen as probable.
Butler v. Arkansas Power & Light Co., 186 Ark.
611, 54 S.W.2d 984 [(1932)]; Arkansas Power &
Light Co. v. Marsh {195 Ark. 1135, 115 S.W.2d
825 (1938)], supra; Hayes v. Missouri Pac. R.R.
Co., 208 Ark. 370, 186 S.W.2d 780 (1945). The
original act or omission is not eliminated as a
proximate cause by an intervening cause unless
the latter is of itself sufficient to stand as the cause
54a
Appendix B
of the injury. Butler v. Arkansas Power & Light
Co., supra; Arkansas Power & Light Co. v. Marsh,
supra. The intervening cause must be such that
the injury would not have been suffered except
for the act, conduct or effect of the intervening
agent totally independent of the ‘acts or omission
constituting the primary negligence.
Pollard v. Union Pacific R. Co., 75 Ark.App. 75, 79, 54
S.W.3d 559, 562-563 (Ark.App.2001)
Here, the Court cannot find that the harms associated
with the drummed wastes, i.e., the contamination, would not
have occurred except for the totally independent acts of EPA,
the State of Arkansas, or Vertac.
“Moreover, the intervening act or omission of a third
person is not a superseding cause when the original actor’s
negligent conduct is a substantial factor in bringing about an
injury, if the actor, at the time of his negligent conduct,
realized that a third person might so act or if the intervening
act is a normal response to a situation created by the actor’s
conduct and the manner in which it is done ts not
extraordinarily negligent.” Ouachita Wilderness Institute,
Inc. v. Mergen, 329 Ark. 405, 415, 947 S.W.2d 780, 785
(Ark. 1997) There is no evidence that any action of any other
person or entity was “extraordinarily negligent” so as to
relieve Hercules of liability.
Hercules has not demonstrated that the drums did not
contain any hazardous substances that Hercules produced.
Hercules cannot show that any of those hazardous substances
5Sa
Appendix B
in the drums that were attributable to Hercules can be
distinguished from the hazardous substances in the drums that
were attributable to Vertac. There is evidence of cross
contamination of equipment. Vertac and Hercules used the same
equipment to make 2,4,-D and 2,4,5-T. Subsequent years of only
2,4,-D production did not rid the equipment of dioxin. Dioxin
was present in the soils; contaminated soil was placed in the
D-drums when they were overpacked. The soil, dust, shredded
pallets, shredded trash and the process areas were permeated
with TCDD, TCDF, 2,4-D, 2,4,5-T, 2,4,5-TP, chlorinated
benzenes and other hazardous wastes. The drum overpacking
process therefore added TCDD, TCDF and other hazardous
substances into the 2,4-D waste drums. The inner drums
continued to corrode, combining the contents of the inner drums
with those used in the overpacking.
Hercules cannot establish that it was not responsible for
the dioxin in the soil which was ultimately placed in the drums.
Even Hercules’ expert witnesses, Robert Fisher and Douglas
Keilman, both of whom worked for Hercules could not say that
the source of the dioxin in the “D” drums did not come from
Hercules.”’
The Court finds that Hercules has not provided any concrete
and specific evidence that the hazardous substances in the drums
were “distinct” such that Hercules should not be held responsible
for the costs incurred with the incineration of the drummed
wastes.
27. 2001 Tr. at 907-908. See also testimony of Steven Quigley,
an expert in environmental engineering for Uniroyal, who opined
that there is no way to identify the source of the 2,3,7,8-TCDD in
the D drums. 2001 Tr. at 1940.
56a
Appendix B
OU-I (Above Ground Media)
Hercules argues that the Court must look to the remedies
chosen and the situations which created the need for those
remedies to determine whether the harm is divisible with
respect to OU-1. Hercules divies up OU-1, declaring that it
is responsible for some harm but not for other.** That is, the
several different media should be characterized as “distinct”
environmental harms. |
Hercules contends that it cannot be held responsible for
hazardous materials in the tanks, vessels and equipment. It
claims that it removed all of its hazardous wastes when it
completely disassembled and cleaned out all the plant
equipment in 1971. Testimony at the hearing revealed that
the cleanup of the equipment was not as thorough as portrayed
by Hercules, and that all hazardous wastes were not
removed.”°
Furthermore, that Hercules cleaned the plant in 1971 is
irrelevant, because Hercules is liable as an owner while it
leased the plant to Transvaal. As an owner, it is responsible
for the contamination attributable to Transvaal’s operations.
See Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d
837, 846 (4th Cir.1992) wert. denied sub nom., Mumaw v.
Nurad, Inc., 506 U.S. 940, 113 S.Ct. 377, 121 L.Ed.2d 288
(1992){§ 9607(a)(2) imposes liability on owner of facility at
time disposal of hazardous waste); United States v. R.W.
28. It accepts responsibility for the costs related to the spent carbon.
29. See testimony of Reedie Ray, a former Hercules plant worker
who was involved in the plant cleaning process. 2001 Tr. at 1369.
57a
Appendix B
Meyer, Inc., 889 F.2d 1497, 1507 (6th Cir.1989), cert. denied,
494 U.S. 1057, 110 S.Ct. 1527, 108 L.Ed.2d 767 (1990).
In addition to its argument concerning the 1971 plant
cleanup, Hercules relies on its “flushing theory” to establish
that the hazardous substances found in the equipment were
not its own. As discussed above, the theory is not valid. ‘That
2,4,5-T and dioxin were found in the equipment after 8 years
of just 2,4-D production disproves Hercules’ theory.
Similarly, Hercules cannot establish that it was not the
source of the contamination on the shredded trash and pallets.
The pallets, which were used to store drummed wastes at
the site, became contaminated with the 2,4,5-T, 2,4-D and
dioxin leaked from the drums.*® The pallets also became
contaminated because they were in contact with the
contaminated soil.
Hercules also contaminated the buildings. Dioxin was
found in leachate from the buildings.*’ Wipe samples from
the buildings in OU-1 revealed reportable quantities of
dioxin. Dioxin was found in storage vessels.” The 1974
Sputnik eruption contaminated nearby buildings.
Hercules contends that the threat posed by the plant
buildings was the threat of collapse, as well as asbestos
contained in some building materials. Hercules argues that
it did not cause these threats. Vertac, in abandoning the plant
30. See exhibit 1149.
31. 2001 Tr. at 1771.
32. See Exhibits 1149 and 1150.
58a
Appendix B
and letting it fall into disrepair, was responsible for the
possibility of building collapse. The United States was
responsible for asbestos being in the buildings when it built
them to house the Arkansas Ordnance Plant.
Hercules is wrong. Asbestos was not the cause for the
remediation. The buildings were demolished because the risk
of collapse might cause release and human exposure to
herbicide process contamination, including unacceptable
levels of TCDD.
In sum, Hercules has not presented evidence to
demonstrate that it was not the source of the 2,4,5-T and
dioxin in the above-ground media, and therefore it is
responsible for the costs incurred with regard to OU-1.
OU-2 (Soils, Foundations and Underground Utilities)
Hercules argues that the harm at OU-2 can be
characterized as “successive.” Hercules contends that the
principles of Bell Petroleum apply with regard to OU-2.
According to Hercules, dioxin, a single harm, drove the
remedy. Synergistic effects, relative toxicity or differential
migratory potential are not factors. The contribution of each
harm can be reasonably estimated based on the production
volume of 2,4,5-T and 2,4,5-TP. Hercules would apportion
harm based on the production records of the 2,4,5-T and
2,4,5-TP that Hercules and Vertac produced during the years
each of them owned the plant.
59a
Appendix B
According to the OU-2 Record of Decision (“ROD”),
extensive dioxin contamination was found in soils in the
blowout area, the east drum storage area, around and to the
east of the broiler house, in the area of the existing and former
chlorination plants, and around the maintenance area.
Other contaminants of concern such as chlorophehols,
chlorobenzenes and chlorophenoxyacids were also
found throughout the Site soils, in relative concentrations
paralleling dioxin concentrations. **
“Where, as in this case, hazardous substances are
commingled, a defendant cannot rely on merely volumetric
evidence. Evidence must be produced ‘disclosing the
individual and interactive qualities of the substances
deposited’ at the Site.” United States v. Vertac, 966 F.Supp.
1491, 1504 (E.D.Ark.1997) (quoting United States v.
Monsanto Co., 858 F.2d 160, 172 (4th Cir.1988), cert. denied,
490 U.S. 1106, 109 S.Ct. 3156, 104 L.Ed.2d 1019 (1989)).
Additionally, proof of “relative toxicity, migratory potential,
degree of migration and synergistic capacity” of the
hazardous substances at the Site is relevant to the divisibility
of harm inquiry. United States v. Alcan Aluminum Corp., 315
F.3d 179, 186 (2d Cir.2003) (citation omitted) “(T]he volume
of waste of a particular generator is not an accurate predictor
of the risk associated with the waste because the toxicity or
migratory potential of a particular hazardous substance
generally varies independently of the volume .. .” United
States v. Chem-Dyne Corp., 572 F.Supp. 802, 811 (S.D.Ohio
1983).
33. See ROD for OU# 2, Exhibit 6815, p. 30-35.
60a
Appendix B
EPA contends that the Hercules has failed co present
accurate production records. Hercules counters that exact
numbers are not necessary; estimates suffice if they form a
reasonable basis for apportioning the harm. “If the expert
testimony and other evidence establishes a factual basis for
making a reasonable estimate that will fairly apportion
liability, joint and several liability should not be imposed in
the absence of exceptional circumstances.” Bell Petroleum,
3 F.3d at 903.
EPA asserts that Hercules’ reliance on sales records does
not establish a reasonable basis for dividing the harm.
Estimates of production were made because some of the
production records were lost. Unlike the pure volumetric
approach in Beil, the sales records fail to adequately account
for all the production. They do not account for product made
and not sold, off-spec material disposed of at the Site, or for
operational and waste disposal differences.
The volumetric approach presupposes that leaks and
spills took place at roughly the same amount and same
frequency and severity during the production of 2,4,5-T and
2,4,5-TP. Douglas Keilman, Hercules’ project manager
involved in the remediation and an expert witness for
Hercules, conceded that in order to use volumetric evidence,
he had to assume that the release of hazardous substances
was constant over time.** If that assumption is correct, then,
according to Hercules, the amount of dioxin contributed to
the soils would be roughly proportionate to the production
volume. Based on its calculations, Hercules contends that it
is responsible for 70.74% of EPA’s response costs for OU-2.
34. 2001 Tr. at 1323-24.
6la
Appendix B
The evidence, however, does not support the assumption
on which Hercules relies. There is no way to quantify the
releases of wastes at the Site with production volumes, and
there was not a constant ratio or direct correlation between
the two. Leaks and spills occurred regularly during the years
Hercules owned the Site. Production methods differed over
the years, resulting in differences in the amount of waste
generated. Until 1966, Hercules operated a blower or dryer
at the acid plant that spewed dioxin-bearing flaked acid
material around the Site. Thus, according to EPA, more
TCDD would have been in the waste than in the product
after Hercules installed the toluene wash process. The DOD
changed the specifications for the formulation of Agent
Orange during the time it was produced, precluding the
assumption that the ratio of waste to production volume
remained constant. The concentration of active ingredients
in the DOD product was different than that in the commercial
product. Additionally, waste disposal methods differed, with
some methods producing more contamination than others.’
The sputnik eruptions reveal the difficulty in relying on
volumetrics as a basis for divisibility of harm, and point to
35. For example, Hercules used a “tee-pee” burner to dispose of
its filter paper and cardboard drums that were contaminated with
hazardous substances. The tee-pee burner was essentially a device for
open burning. It was a large metal structure with a screen on the top,
about 30 to 40 feet tall. 2001 Tr. at 143, 740. The filter paper was coated
with 2,4,5-T, 2,4-D, as well as other chlorinated hydrocarbons.
2001Tr. at. 345-46. The cardboard drums contained TCB, a chlorinated
hydrocarbon which may produce dioxins when burned. The release of
hazardous substances into the air resulting from the burning may have
caused an unknown amount of dioxin contamination at the Site. Vertac
did not burn any wastes on the Site.
62a
Appendix B
the conclusion that production is not directly correlated to the
release of waste. The evidence reveals that there were as many
as twenty sputnik eruptions at the Site while Hercules owned
the plant, and another ten when it leased the plant to Transvaal.
The eruptions spread dioxin over the Site and Off-Site areas.
The worst eruption occurred in 1974 when Transvaal leased
the Site from Hercules.*®
Here there were differences in the operations, as well as
the generation and disposal of wastes, making this situation
unlike that in Bell Petroleum, where there was only one media
and one manner of disposal. There is no evidence in this case
that the generation of waste was proportional to the production
of product.
The manufacturing process at the Site yielded hazardous
substances other than dioxin. Hercules has provided no evidence
regarding the effect of these other substances on the migration
or transport of dioxin. It has presented no evidence regarding
the relationship between the volume of dioxin or other hazardous
substances generated, the release of dioxin or other hazardous
substances, and the harm at the Site.
Hercules did not present evidence of the relative toxicity,
migratory potential and degree of migration, and synergistic
effects or capacities of the various hazardous substances
deposited at the Site. It contends they are irrelevant as the
decision to remediate was based solely on dioxin. Thus,
these factors did not come into play in the selection and
implementation of remedies.
36. 2001 Tr. at 885. The most serious process upset was the
1974 sputnik eruption in terms of generation of dioxin.
63a
Appendix B
Hercules’ argument essentially places the burden on EPA
to prove it considered the “synergistic effects” and that its
failure to include mention of it in the ROD means that there
is no need for Hercules to present evidence. While EPA
may not have referred to synergistic effects of various
contaminants, it did consider the various hazardous
substances present at the Site, not relying solely on dioxin.
As the court cautioned in Monsanto, “[{vjolumetric
contributions provide a reasonable basis of apportioning
liability only if it can be reasonably assume, or it has been
demonstrated, that independent factors had no substantial
effect on the harm to the environment.” United States v.
Monsanto Co., 858 F.2d 160, 173 n. 27 (4th Cir.1988)
(emphasis added). Hercules has not demonstrated that
independent factors had no substantial effect on the harm.
For example, according to the testimony at the hearing,
the half-life of dioxin is affected by different conditions. *’
Hercules did not present any evidence as to the rate the dioxin
broke down at the Site and Off-Site areas based on photolysis,
dissipation and other factors. It did not present any evidence
of possible synergistic effects of the combinations of dioxin
with other toxic materials, such as 2,4-D and 2,4,5-T. In sum,
the Court finds that Hercules has not established a basis to
divide the harm at OU-2.
37. 2001 Tr. at 1195.
64a
Appendix B
Off-Site Areas
The Off-Site areas include soils, the floodplains and stream
sediments of Rocky Branch Creek and Bayou Meto, sanitary
sewer lines, and two municipal sewer plants and their structures.
Hercules posits that the Off-Site environmental harm can be
characterized as “successive.” As with OU-2, Hercules states
that because the remedy was based entirely on the presence of
dioxin, the synergistic effects, relative toxicity, and differential
migratory potential were not factors. Hercules argues that the
production volumes of Hercules and Vertac for 2,4,5-T and
2,4,5-TP are a basis to find divisibility of harm. Hercules further
contends that because Hercules and Vertac never owned or
operated these off-site areas, their respective liabilities can only
be as an “arranger.”
That Hercules did not own the off-site areas does not mean
that it can only be held liable as an “arranger.” CERCLA defines
“facility” broadly to include:
(A) any building, structure, installation, equipment,
pipe or pipeline (including any pipe into a sewer or
publicly owned treatment works), well, pit, pond,
lagoon, impoundment, ditch, landfill, storage
container, motor vehicle, rolling stock, or aircraft,
or
(B) any site or area where a hazardous substance
has been deposited, stored, disposed of, or placed,
or otherwise come to be located; but does not include
any consumer product in consumer use or any vessel.
42 U.S.C. § 9601(9). The Plant Site and Off-Site areas are not
distinct facilities, but are one facility for purposes of liability
under CERCLA.
65a
Appendix B
The definition of facility “applies not only to traditional
waste sites ... but also to any ‘area’ in and around which
hazardous substances have ‘come to be located... ’” Axel
Johnson, Inc. v. Carroll Carolina Oil Co., Inc., 191 F.3d 409,
417 (4th Cir.1999) (citations and internal quotations omitted).
The Tenth Circuit recently reviewed how federal courts
have interpreted “facility” under CERCLA, finding that
the circuits that have applied the defined term
“facility” have done so with a broad brush. See
Uniroyal Chem. Co., 160 F.3d at 245 (applying
broad definition of facility in an action under
§ 107 and stating “[iJn examining the contours of
§ 9601(9), it is apparent that facility is defined in
the broadest possible terms, encompassing far
more than traditional waste sites. It expressly
includes buildings, pipelines, motor vehicles,
rolling stock, wells, and aircraft. 42 U.S.C.
§ 9601(9)(A).”) (emphasis supplied); United
States v. Rohm and Haas Co., 2 F.3d 1265, 1279
(3d Cir.1993) (examining liability under § 107 and
noting “we think it evident from the broad
statutory definition of ‘facility’ that Congress did
not intend EPA to be straight-jacketed in this
manner in situations involving a _ release
transcending property boundaries”); 3550 Stevens
Creek Assocs. v. Barclays Bank of Cal., 915 F.2d
1355, 1360 n. 10 (9th Cir.1990) (determining
liability under § 107 and noting broad construction
of the term “facility,” “such that in order to show
that an area is a ‘facility,’ the plaintiff need only
66a
Appendix B
show that a hazardous substance under CERCLA is
placed there or has otherwise come to be located
there”) (internal citations omitted); New York v.
Shore Realty Corp., 759 F.2d 1032, 1043 n. 15 (2d
Cir.1985) (“CERCLA defines the term ‘facility’
broadly to include any property at which hazardous
substances have come to be located”); see also
Quaker State Minit-Lube, Inc. v. Fireman’s Fund Ins.
Co., 52 F.3d 1522, 1525 (10th Cir. 1995) (In a § 9607
action, “[t]he EPA designated the Ekotek Site
[consisting of three surface impoundments, piles and
pits of waste material, underground tanks, and an
underground drain field] a CERCLA facility
pursuant to 42 U.S.C. § 9601(9) because of
contamination by hazardous substances.”) (emphasis
supplied).
In a § 107 action, the Fourth Circuit noted that simply
because “‘a property could be divided [into multiple facilities]
does not, however, mean that it must be so divided for CERCLA
purposes.” Axel Johnson, Inc. v. Carroll Carolina Oil Co., 191
F.3d 409, 418 (4th Cir.1999). There, the hazardous substances
were not located only in the storage tanks and their associated
spill areas; rather, they were located throughout the property.
The court, after noting the “untenability of the contention that
anything that could be designated as a separate facility must be
so designated,” applied the broad definition of facility, and noted
that “[nJo court has held .. . that any area that could qualify as
a facility under the definition must be considered a separate
facility.” /d. at 417-18 (emphasis supplied); see also Tyson, 299
F.Supp.2d at 709 (treating plant or “an area [that] is managed
as a whole ... [as] a single facility for CERCLA purposes”).
ad
67a
Appendix B
We recognize that in a § 107 action, the
hazardous substances may have contaminated
large parts of a plant, while initially being emitted
from only one tank. See Axel Johnson, 191 F.3d
at 417. However, the underlying purpose of § 103,
that is, the alerting of government officials of a
potential hazardous substance release that may
require federal and local government response
assistance, is best served through treating the
Dorman Farm as a single facility. Solely owned
by Seaboard, it is managed and operated as one
facility, with one particular site purpose
(producing swine products). See also Akzo
Coatings, Inc. v. Aigner Corp., 960 F.Supp. 1354,
1359 (N.D.Ind.1996) (rejecting the argument that
each contamination source is a separate facility
because such argument “could have disastrous
consequences, for ultimately every separate
instance of contamination, down to each separate
barrel of hazardous waste, could feasibly be
construed to constitute a separate CERCLA
facility”), aff'd in part, vacated in part by, 197
F.3d 302 (7th Cir.1999); Quaker State Minit-Lube,
52 F.3d at 1525 (10th Cir.1995) (entire site, which
consisted of surface impoundments, piles and pits
of waste material, underground tanks, and an
underground drain field considered a facility for
§ 9607); Cytec Indus. v. B.F. Goodrich Co., 232
F.Supp.2d 821, 836 (S.D.Ohio 2002) (“This court
concludes that usually, although perhaps not
always, the definition of facility will be the entire
site or area, including single or contiguous
68a
Appendix B
properties, where hazardous wastes have been
deposited as part of the same operation or
management.”); Clear Lake Props. v. Rockwell
Int’l Corp., 959 F.Supp. 763, 767-68
(S.D.Tex.1997) (rejecting an attempt to create
unnatural boundaries between a building and the
site on which it is located).
Sierra Club v. Seaboard Farms Inc., 387 F.3d 1167, 1174-1175
(10th Cir.2004) (finding that farm complex as a whole, as
opposed to every barn, lagoon and land application area on
complex, constituted single “facility” under CERCLA)
In this case, the contamination from the Site migrated to
the contiguous off-site areas. Hercules contributed to the
contamination of the off-site areas when it operated the Plant
Site from 1961 to 1971 and when it leased the Plant Site to
Transvaal from 1971 to 1976, during which time Transvaal’s
Operations further contaminated the Plant Site and Off-Site
Areas. Therefore, Hercules is liable as an owner under section
107(a)(2) for contamination in the Off-Site Areas.
The Court has already discussed the flaws with applying a
volumetrics approach to the divisibility of harm with regard to
OU-2. The same analysis applies to the Off-Site areas. The Court
cannot find that the harm at the Off-Site areas is divisible based
on production volumes.
OU-3 (Groundwater)
Hercules states that it did not cause the groundwater
contamination which resulted from Vertac’s ownership and
operation of the Site after August, 1976. Hercules contends that
69a
Appendix B
the response costs associated with the remediation of
groundwater contamination are divisible as a successive harm.
Generalized organic compounds drove the remedy and,
according to Hercules, the costs can be apportioned based on
volumetrics because there are no synergistic or interactive effects
of the chemicals of concern, i.e., organics, upon each other. That
is, the amount of organic chemicals generated in the production
process, which would have been the source of contamination
of the groundwater, would have been proportional to total
production volume of all products, not just 2,4,5-T and 2,4,5-
TP. Furthermore, Hercules contends that the manufacturing
processes did not change materially over the time that Hercules
and Vertac operated the plant. Here, Hercules posits that the
Court should use total production volume to determine the
amount of harm caused by Hercules.
The flaws associated with Hercules’ volumetrics approach
discussed above apply equally to its argument with respect to
groundwater contamination. Furthermore, the evidence supports
a finding that Hercules disproportionately contaminated the
groundwater. There is no dispute that thousands of drums of
2,4-D and 2,4,5-T were buried on site during the time Hercules
owned the Site. The burying of such wastes in unlined pits
contributed to the groundwater contaminat‘on at the Site.
Furthermore, when Hercules operated the Site, waste was
poured into a well, resulting in contamination of the
groundwater.** Hercules is liable for the contamination of the
groundwater, not only as a result of its practices, but those
of Transvaal. “[GJround water contamination at the site is
complex, resulting from past water management and disposal
38. 2001 Tr. at 1968-69.
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Appendix B
practices. Sources of contamination include on-site landfills,
spills and discharges into the central ditch, Reasor Hill well,
and other parts of the central process area.”?? The dioxin
spewed from the sputnik eruption in 1974 contaminated the
groundwater.*? Sputnik waste which was probably
contaminated with dioxin was dumped in the marshy area
adjacent to the Boiler House.*! Furthermore, the record
establishes that Hercules’ operations contaminated other
areas encompassed by OU-3, such as the process area and
soils, including areas on the east side of the central ditch.
Hercules tries to distinguish the drum burial areas from
OU-3. Such an attempt is without merit. It admitted that it
was liable for ground water contamination. Hercules buried
drums containing hazardous wastes on site. The OU-3
remedial includes the burial areas and Hercules is responsible
for the contamination resulting from the burial of the drums.”
The contaminants of concern in the ground water were
released and disposed by Reasor-Hill, Hercules and
Transvaal/Vertac. Hercules has not produced any specific
evidence upon which to divide the harm.
Landfills
As Hercules never owned or operated the two landfills,
its liability arises as an arranger for the disposal of hazardous
39. Exhibit 6854, ROD for OU# 3, at p. 31.
40. See Exhibit 7513 at p. 124.
41. 2001 Tr. at 1245.
42. See Exhibit 6854, ROD for Operable Unit # 3.
Tila
Appendix B
substances at the landfills. Hercules argues that there is no
evidence that it ever disposed of CERCLA hazardous waste
at..the landfills.
Rogers Road Landfill
The Rogers Road Landfill is a ten-acre tract that the City
of Jacksonville acquired on September 16, 1953. Hercules
contends that it did not send any of its waste, garbage or
trash to the Rogers Road Landfill because it was closed
during the years that Hercules operated the plant. Hercules
states that the Rogers Road Landfill was opened from 1953
until 1959, closed between 1959 and 1973, and then reopened
for a brief period from 1973-1974. The exact dates that the
landfill was open are unclear; the Eighth Circuit in O’Dell v.
Hercules, Inc., 904 F.2d 1194, 1197 (8th Cir.1990) found
that “{t]he Rogers Road landfill had been closed by the city
of Jacksonville in 1959. However, unofficial dumping
occurred at Rogers Road.”*”
Fifteen to 50 drums of dioxin contaminated waste were
disposed of at the landfill. They were not labeled and were
very corroded.** Hazardous substances identical to those
generated by Hercules at the Site were found at the landfill,
43. See also Exhibit 8099, Technical Assistance: Rogers Road
Landfill. “From 1953 until 1974, approximately one-half of the site
was used intermittently as a municipal waste disposal facility and
an open dump.” But see 2001 Tr. at 349, deposition testimony of
Stephen Veale, remedial project manager for EPA, who stated that
Rogers Road was opened from 1953 to 1959, closed from 1959 to
1973 and then open again in 1973 to 1974.
44. Exhibit 6895, ROD for Rogers Road Landfill, pg. 1-4.
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Appendix B
including 2,3,7,8-TCDD, 2,4-D, 2,4,5-T, and 2,4,5-TP.** In
addition, Dieldrin, an herbicide produced by Reasor-Hill, was
found.
EPA in the ROD concluded that no detailed records were
found to prove how the contaminants of concern were placed
at the landfill.*° To establish Hercules’ liability for harm at
the Rogers Road landfill, EPA relies on the testimony of Alsie
Glover, who lived next door to the Rogers Road landfill and
in between it and the Graham Road landfill. She testified in
the O’Dell-Bridges trial that the Rogers Road Landfill was
opened from 1961 to 1967 and accessible during the years
Hercules operated its Jacksonville Plant.*7 She saw barrels
at the Rogers Road dump with the name “Hercules
Manufacturing Company.”** Photographs of the drums at the
landfill reveals no such labels or markings. The ROD states
that there were no discernable markings on the drums.‘?
Vincent Dodson, who worked for Hercules from the
summer of 1967 through 1969, testified in the O’Dell-Bridges
trial that the 55-gallon barrels he took to the Graham Road
landfill did not have Hercules’ name or logo.® Duane Reel,
45. Id. at 1-32.
46. AROOI821.
47. 2001 Tr. at 165.
48. 2001 Tr. at 171.
49. Exhibit 6895, p. 1-4.
50. Testimony of Vincent Dodson, O'Dell-Bridges trial, Feb.
16, 1988, p. 277.
73a
Appendix B
who was city engineer for the City of Jacksonville during
the time of the remediation, testified that the drums he
observed at the landfill did not have any labels on them.°*!
Martin Swanson, a remedial project manager for the
Jacksonville Site, testified that there were no marking on
the drums at the Rogers Road landfill and that there were no
materials at the landfill that had Hercules markings on them.*?
Billy Roberts began working for Reasor-Hill in 1954, and
worked almost continuously at the Site for 48 years.** He
stated that Reasor-Hill disposed of its filter paper at the
landfill. He recalled going to Rogers Road once and to the
Jacksonville landfill twice for Reasor-Hill. He could not state
definitely that he ever went to Rogers Road for Hercules.**
Also supporting Hercules’ position that it did not dispose
of wastes at Rogers Road is the presence of dieldrin. Dieldrin
was produced by Reasor-Hill, who operated the Site during
the time the Rogers Road landfill was opened. EPA states
that Hercules may have disposed of some of the Dieldrin
wastes that had been left by Reasor-Hill when Hercules
purchased the plant. This, of course, is speculation. It is
equally, if not more plausible, based on the testimony of Billy
Roberts, that Reasor-Hill disposed of the chemical wastes at
the landfill.
The Court also notes that the residents around the
landfills used empty barrels for their personal use, such as
51. 2001 Tr. at 151.
52. 2001 Tr. at 1524.
53. 2001 Tr. at 2050.
54. 2001 Tr. at 2054-55.
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Appendix B
for burning trash or for barbecue grills. They also used the
landfill to dump their wastes. It is quite possible that the
barrels could have been placed in the landfill by the
residents.°°
The Court finds that Hercules has met its burden of
establishing that it is not responsible for the harm caused at
the Rogers Road landfill. Thus, Hercules will not be
responsible for the costs incurred by the government with
respect to the Rogers Road landfill.
Jacksonville Landfill (also known as the Graham Road
Landfill or City Dump)
The Jacksonville Municipal Landfill Superfund Site is
an eight-acre plot purchased by the City of Jacksonville in
June, 1960. The landfill has been referred to as the
Jacksonville Landfill, the Graham Road Landfill, the Graham
Road Dump and the Jacksonville City Dump. About forty of
the eighty acres were used by the City for landfilling until
the landfill was closed in 1973.°
Between 15 and 50 drums were disposed of in an area
referred to as the “drum disposal area,” located behind the
pipeline on the south end of the landfill property. “Most of
the drums have corroded completely away, leaving piles of
white, fibrous, adsorbent-type materials.’*’ The contaminants
55. 2001 Tr. at 66-67, 191-194.
56. ARO02384.
57. AR002389.
75a
Appendix B
of concern that were detected were 2,3,7,8-TCDD, 2,4-D,
2,4,5-T, 2,4,5-TP and 2,4-DCP.*8
Hercules admits that it took some waste to the Graham
Road Landfill. However, Hercules states that the trash that
was taken did not contain hazardous substances. Thus,
Hercules contends that it was not responsible for the presence
of the hazardous substances, particularly the filter paper in
which the chemicals of concern were found, at the
Jacksonville Landfill.
The Court need not dwell long on Hercules’ argument.
The record is replete with testimony of Hercules’ employees
who took chemical wastes to the “city dump.” Vincent
Dodson, who worked for Hercules in the late 1960s, testified
that chemical wastes, including those that came from leaks
and spills and the Sputnik explosions, were scooped up,
placed in barrels and dumped at the Jacksonville landfill>°
Doyce Shurley, who worked for Hercules in the early 1960s,
remembered going to the Jacksonville Landfill two or three
times for Hercules to dispose of trash. He believed that he
once disposed of a barrel of toluene stillbottoms.®© Billy
Honey also testified that when he worked for Hercules he
hauled drums which contained chemical waste to the Graham
Road landfill.°' Similarly, LeRoy Jordan confirmed that he
58. ARO002396-97.
59. 2001 Tr. at 55, 70.
60. 2001 Tr. at 212.
61. 2001 Tr. at 144, 146-147.
76a
Appendix B
disposed of both liquid and solid waste barrels at the Graham
Road site for Hercules.°?
That the drums only contained filter paper, as Hercules
contends, does not absolve Hercules of arranging for the
disposal of hazardous substances. Filter paper was used in
the manufacture of 2,4-D, 2,4,5-T, and 2,4,5-TP and Hercules
used it in its product formulation. Filter paper was caked
with various wastes including TCDD.
Hercules also relies on “geographic considerations” as
a basis for limiting its harm. In United States v. Township of
Brighton, 153 F.3d 307, 320 (6th Cir. 1998), the court stated
that if the Township “could show that its ‘operating’ activities
were completely limited to a discrete and measurable section
of the property, and that the releases onto or from that section
represented a discrete and measurable harm, this would
provide a reasonable basis for apportionment.”
The non-contiguous areas, according to Hercules, are the
north and south sides of the Jacksonville landfill, areas which
were divided by a natural gas pipeline and opened for use at
different times. It contends that it only deposited waste on
the north side of the landfill, and it is therefore not responsible
for the response costs associated with the waste on the south
side of the landfill.
EPA presented a photograph of the Jacksonville Landfill
dated July 1969 showing that there was waste disposal south
62. 2001 Tr. at 200-202.
77a
Appendix B
of the pipeline right-of-way as of 1969. Vincent Dodson
testified that he disposed of wastes south of the pipeline.
Hercules cannot show that the trash, filter paper, and other
materials disposed of at the Jacksonville landfill were not
contaminated with hazardous substances, including dioxin,
2,4,5-T and 2,4-D. It also cannot demonstrate that it is not the
source of the contamination at the Jacksonville City landfill.
Thus, the Court finds that Hercules has not established a basis
to divide the harm at the Jacksonville City landfill.
Constitutionality of CERCLA
Hercules contends that the retroactive application
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