Petition for Writ of Certiorari — Hercules Inc. Inc. v. United States (Nos. 06-865, 06-1014, 06-853)
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oupreme Court, U.S
rilLlEep
06-855 DEC 14 2006
) OFFICE OF THE CLERK
No.
IN THE
Supreme Court of the Gnited States
HERCULES INCORPORATED,
Petitioner,
UNITED STATES OF AMERICA,
Respondent.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
PETITION FOR WRIT OF CERTIORARI
W. GORDON HAMLIN, JR. LAURENCE H. TRIBE
\V. ROBERT DENHAM. JR. Counsel of Record
POWELL GOLDSTEIN LLP JONATHAN S. MASSEY
One Atlantic Center Hauser Hall 420
Fourteenth Floor 1575 Massachusetts Avenue
1201 W. Peachtree Street, N.W. Cambridge, MA 02138
Atlanta, GA 30309-3488 (617) 495-4621
(404) 372-6600
Counsel for Petitioner
QUESTIONS PRESENTED
1. Whether the Fifth Amendment to the Constitution
permits the unexpected and unforeseeable imposition of over
$100 million in retroactive liability that is utterly
disproportionate to a party’s conduct, without any
consideration of the factors articulated by this Court in
Eastern Enterprises v. Apfel, 524 U.S. 498 (1998).
2. Whether the Environmental Protection Agency’s use
of its cancer potency factor for dioxin is contrary to the
Administrative Procedure Act, 5 U.S.C. § 553, because EPA
admittedly has applied this factor inflexibly and without
exception for over twenty-five years, effectively creating a
legislative rule, but without ever subjecting it to notice-and-
comment rulemaking.
PARTIES TO THE PROCEEDINGS BELOW
In addition to the parties listed in the caption, Crompton
Co./CIE (formerly known as Uniroyal Chemical Ltd.)
appeared as an appellant in the Court of Appeals. The
Arkansas Department of Pollution Control and Ecology
appeared as a plaintiff in the District Court. The following
parties appeared as defendants or third-party defendants in the
District Court: Vertac Chemical Corporation, Velsicol
Chemical Corporation, Inter-Ag Corporation, the Department
of Defense, Standard Chlorine of Delaware, Inc., BASF
Aktiengesellshaft, BASF Corporation, and The Dow
Chemical Company.
ill
RULE 29.6 STATEMENT
Petitioner Hercules Incorporated states that it has no
parent companies and that no publicly-held company owns
10% or more of its stock.
1V
TABLE OF CONTENTS
CO ee WRT SURED itscncinyoctassevevertserermensioseontersontins ]
PARTIES TO THE PROCEEDINGS BELOW .................. ll
PRPs CMe ETAT IEE. essnperilenisocnidcsineitncdebeciersivestiniavnats 1H
Pe SAE FAR EER Mee iekedccsenpcttnnsedocccetadivncenbietiunrscn vi
I ATT sated stivesdecicernitiprenniehsiioctobonscsuscacnetegnenes 1
Fa I sieateeritiesednbiokansidasucncascidpnbivreptabeierectslecceniin 1
RELEVANT CONSTITUTIONAL AND
EPR ERS FRE OO vievcctintchadecosncenvnstvccaoar l
DEP AOMREGE SIE ERR ARES ceccsivcceiiscerjnrterssnsveversenessssveins 1
3 III oc cicicosseveisvscoscccouasnicsiindstncasigcveciie 3
2: Generation and Disposal of Wastes By
Vertac Under Governmental
Supervision After Hercules Had Left
eS Eee a MLD A Lp RENO PULTE ROT 5
3 EPA’s Claims Against Hercules .................. 8
4. The Decisions Below ........ccccccsssesesssessseees. 12
REASONS FOR GRANTING THE WRIT .......0.0.0 eee 13
I. REVIEW IS WARRANTED TO
ADDRESS THE QUESTION OF THE
CONSTITUTIONAL LIMITS ON
RETROACTIVE LIABILITY ......:0cccccereees 13
Vv {
A. The Eighth Circuit’s Judgment
Is Inconsistent With Eastern
Enterprises Because It Failed
To Apply The Factors
Articulated By This Court .............. 14
B. The Eighth Circuit’s Judgment
Is Inconsistent With Eastern
Enterprises Because It Ignored
the Difference Between Facial
and As-Applied Challenges ........... 18
[ The Confusion and Division
Among the Lower Courts
Regarding Eastern Enterprises
Underscore the Need for
COMI asa: Fcsnrasdevvencaicunacaecapionern 20
IT, REVIEW IS WARRANTED FOR
THE SEPARATE REASON THAT
EPA’S USE OF ITS POTENCY
FACTOR IS INCONSISTENT WITH
THE APA AND WITH DECISIONS
OF OTHER U.S. COURTS OF
GRE TPE sci ssctsnaibrscghiseiibzeriasvsnctnialineenads 24
ee OUAET cparlcsdesestinheessrcdeegeradsatieceinvuadeceienelichcodirmios 30
PRET EMEA AD: Si kvcaclnaiithaetaltvidiiasborndcenieds follows Conclusion
vil
TABLE OF AUTHORITIES
Cases
ABB Indus. Sys., Inc. v. Prime Tech., Inc.,
Se ce Sk Ce FIO) ceskvepanincenbinheepincenuionit 17
Alaska v. DOT,
BGS E26 BGT CA, BGG) svi ccessidcinvecsrsevesceieties 28
American Hospital Association v. Bowen,
SOA FAG FST CAI EGG) nvvscicenenscniscnserecteenpents 29
Anker Energy Corp. v. Consolidated Coal Co.,
177 F.3d 161 (CA3), cert. denied,
hc CO AE OED vecitcacianigteosiptenvvcestindeeineeniins 21
Association of Bituminous Contractors, Inc. v. Apfel,
156 FSG 1ZAC(CADC T9FG) ann cccrcvacocccnrsrcvccveensans 21
A.T. Massey Coal Co., Inc. v. Massanari,
305 F.3d 226 (CA4 2002), cert. denied,
Fe Ais FI Ae CEP acess cessensosncbnbiesescanndlotcsiabgin 21
Avoyelles Sportsmen's League, Inc. v. Marsh,
FE ee OT Ge SOE E vereninrsivteincsponisenniokinns 27-28
Barnhart v. Peabody Coal Co.,
re Es BPP E biceicicitevadvicivaguletasuimupecbietinndos 23
Batterton v. Marshall,
RF re eG AT TD vaveow ester scciiscttcrvicivetieess 28
Chamber of Commerce of the U.S. v. OSHA,
G36 F 20 AGE (CADC PSBO) .ccsesvseccesisserrvevesccsiccness 29
Vii
Columbia Broadcasting System, Inc. y. United States,
SUG Ws GEE CED thine treresaitenandin cebbbiclanieetveviniin 26
Community Nutrition Institute v. Young,
818 F.2d 943 (CADC 1987) (per curiam) .....:........ 28
Eastern Enterprises v. Apfel,
Se is Be GND pcin vhccinncasenevvansavicenivetonnetices passim
Environmental Integrity Project v. EPA,
GES FS Ce SED hoartsterssinensscestiecnsiorcvens 28
Franklin County Convention Facilities Auth. v.
American Premier Underwriters, Inc.,
FE BFE SaW Ce ZOE) eiisvwrtcccocenstsetenatincvectib easy 21
General Elec. Co. v. EPA,
FPO CSE STI CATS BOD Asccstincvciesnscitneticiisceiiins 27
G.J. Leasing Co., Inc. v. Union Elec. Co.,
SF Sie Cea CE tess snverndsinsenccseesisignnintins 16
Golan v. Ashcroft,
310 F. Supp.2d 1215 (D. Colo. 2004) 0. 22
Grutter v. Bollinger,
Br ies Tee Gt bs sincivibinctninnccensicersniecbdniaaentiaane 23
Hercules v. United States,
SEATS. BET GaN éicciinteinceiiessecsecticcadaiagtetueseiacion 17
Jerri’s Ceramic Arts v. Consumer Product Safety
Comm'n, 874 F.2d 205 (CA4 1989)... cecceesseeeees 28
Kelo v. City of New London,
Ee Se Dee CD sev desvnicseviesecceies cotoviptiisubinncins 24
Vili
Lingle v. Chevron U.S.A. Inc.,
Sih oF. SEE CICS) scvccesessesnnsnianinigiirnsiavvenisnioiooes 24
McLouth Steel Prod. Corp. v. Thomas,
S38 F.2d VST CCA TOCSY cscicsccccissieccscusoreveeeess 26
National Family Planning & Reproductive Health
Ass'n, Inc. v. Sullivan, 979 F.2d 227
SATA, USGES csisvissctasionsnsaiatiticeeeepnestnaaledianinae. 29
National Knitwear Manufacturers Ass’n v.
Consumer Products Safety Comm'n,
GG F Ze Bi COI TOG ED ssrsisicecsiscsperccdicnndctocrnin 28
O’Dell v. Hercules, Inc.,
FOR FP 26 TIGA IGAR PSG GD sscreistccisinictstaneven 5
Patella v. Ret. Bd. of the R.I. Employees ’ Ret. Sys.,
E739 .36 SOCAL BOE thinsiccieonnacions 22
Pickus v. United States Board of Parole,
SOT FE AG VEGF CAI UGTA D sesssvicerevecisansneriorsecters 28
Planned Parenthood of Southeastern Pa. v. Casey,
947 F.2d 682 (CA3 1991), modified on other
grounds, SOS SB. CSS EGIL) cvecsesecsssedevecscoceete 22-23
Purolator Prods. Corp. v. Allied-Signal, Inc.,
772 F. Supp. 124 (W. DN.Y. 1991) ...ccscosccoscessacsees 18
S & M Brands, Inc. v. Summers,
2005 WL 3160869 (M.D. Tenn. 2005) .................. 22
Tahoe-Sierra Preservation Council, Inc. v.
Tahoe Regional Planning Agency,
SSS £5. FUE CED siccrcticorscetcententroniinitvtceanitiaihes 23
ix
United States v. Alcan Aluminum Corp.,
315 F.3d 179 (CA2 2003), cert. denied,
EGS PETRY bivstsesnntivecsiversissiceseventsesecticsees 21
United States v. CDMG Realty Co.,
BP IE PAE EGAD EIDO) cvseversivouseroecenvesssesesonsevecsie 17
United States v. Dico,
BE OE CAS BOGE) cccsesyscvccccisvocessorvecssesssesee 19
United States v. Hercules, Inc.,
PE Oe FP GAAS BOIL) ccccvveciccacereccesvoreses 4, 6-7, 12
United States v. Ottati & Goss, Inc.,
PE Fhe ME CRE. BOIO) sévcccvncssceosvesscecsenseccoscesess 25
United States v. Picciotto,
Be ee, PT GMs POE) sevscrsevescecevercocesssvessences 29
United States v. Vertac Chemical Corp.,
46 F.3d 803 (CA8), cert. denied,
CD ac ciccipecccstnaveverediverserssiteceesene 17
United States v. Vertac Chemical Corp.,
855 F.2d 856 (CA8 1988), vacating
ee SPP CES P AIR, IGT) avevvessscerensorreceeseess 8
United States vy. Vertac Chemical Corp.,
79 F.Supp.2d 1034 (E.D. Ark. 1999) oe. 4,16
United States v. Vertac Chemical Corp.,
489 F. Supp. 870 (E.D. Ark. 1980) ...... ce eeeeeeeeees 7
United States v. Vertac Chemical Corp.,
756 F. Supp. 1215 (E.D. Ark. 1991), aff'd,
EE FICE I CSE) ccccccccscoscrcccsascicnsecsecaeessveces 8
United States Tel. Ass'n v. FCC,
BB P36 T2358 CCA BD ccecinsstnctvernnsetstaencvamsaiion 26
U.S. Fidelity & Guar. Co. v. McKeithen,
FAME FO GAS CCAS BOGE crccstrtcccienectvincintpiciintonnins 21
Wisconsin Right to Life, Inc. v. FEC,
126 S.Ct. 1016 (2006) (per curiam) .........: cece 19
STATUTORY AND ADMINISTRATIVE MATERIALS:
FR Sb SP aEnED: Gccashepecanaicnanieciebiadabbleke mtasabisaatibialid 1,25
Ati: BE PO TAA. decitsnsiniatichcnnanesaelbcanaaa 14
Be RI TE RULE) cisesivisctsenincdbinsntiesecaheteenbinnitiieihecaeliaias ]
ee CE, Be scccctiseviccccosivmnesdstrianciageoieaeman 6
Me Gh ads WF TOD Sicckdinnaninintibcbabiaimunaniel 1,3
OE AF cary Oe PE picacvecavesesecsdiccietdensiiaamaiacinn 1, 82
GE FEB Fe hick iibicisnccceiventsshticieanbiciaddcieiilasnddiianaat 16
FO UE, 0 OE chcdecscoinivstasipiecmeninpetintsiceniteeinachciameasels 17
SF Fa ek PI VEE priiitaieinekicsnniaerbeesinianion 7
S. Rep. No. 248, 79th Cong., 2d Sess. (1946) ...... eee 29
4S Ped. Hee. T5597 CGR. 11, TIO) occicsescocsssnsinssovavenivivesonse 6
43. FOG. FO, SARTO CR BG, TIO D cscccnscccsetinesesticincienneceteia 6
X1
MISCELLANEOUS:
Stephen Breyer, BREAKING THE VICIOUS CYCLE:
TOWARD EFFECTIVE RISK REGULATION
EGE A cissiehaccsihcschiaicctlectidieedstibisdicion salsditinas iicekclebaaobeian 2-3, 25
Bruce Howard, “A New Justification for Retroactive
Liability in CERCLA: An Appreciation of the
Synergy Between Common and Statutory
Law,” 42 St. Louis U.L.J. 847 (1998) oe 22
Jan G. Laitos, “The New Retroactivity Causation
Standard,” 51 ALA. L. REV. 1123 (2000) .............. 22
National Academy of Sciences, Health Risks from
Dioxin and Related Compounds: Evaluation of
the EPA Reassessment (July 11, 2006) ..........00... 30
Daniel E. Troy, “Retroactive Legislation” (American
Baterprion Wngtitiste 1997} .cccevsccsesscserossovvsvessensessose 22
PETITION FOR A WRIT OF CERTIORARI
Petitioner § Hercules Incorporated (“Hercules’’)
respectfully petitions for a writ of certiorari to review the
judgment of the United States Court of Appeals for the Eighth
Circuit in this case.
OPINIONS BELOW
The Eighth Circuit’s opinion (Pet. App. la-24a) is
published at 453 F.3d 1031 (8th Cir. 2006). The opinion of
the district court (Pet. App. 25a-65a) is published at 364
F.Supp.2d 941 (E.D. Ark. 2005).
JURISDICTION
The Court of Appeals denied a timely petition for
rehearing and rehearing en banc on September 19, 2006.
(Pet. App. 66a). This Court has jurisdiction pursuant to 28
U.S.C. § 1254(1).
RELEVANT CONSTITUTIONAL AND
STATUTORY PROVISIONS
The Fifth Amendment provides in relevant part: “No
person shall . . . be deprived of life, liberty, or property,
without due process of law; nor shall private property be
taken for public use, without just compensation.” Relevant
statutory excerpts from 42 U.S.C. §§ 9607(a), § 9613()(2),
and 5 U.S.C. § 553(b) are reprinted in the Appendix (Pet.
App. 67a-69a).
STATEMENT OF THE CASE
In this case, the Eighth Circuit imposed over $100
million in unexpected and unforeseeable retroactive liability
on Hercules under CERCLA, the Superfund statute. The
Court of Appeals required Hercules to pay cleanup costs for
wastes generated at a chemical plant by a third-party
purchaser, even though the generation and disposal of those
wastes indisputably occurred years afier Hercules had ceased
production and sold the plant, and years after Hercules
exercised control at the site. In fact, the waste accumulation
and disposal occurred when the site was under continuous
supervision by a federal court and state and federal
environmental agencies. Pet. App. 4a-6a. The Eighth Circuit
nonetheless held Hercules liable on the ground that a highly
tenuous but-for- causal chain could be constructed between
Hercules and the waste at issue. The Court of Appeals opined
that, because it had upheld ‘ :e retroactive application of
CERCLA in a different case with different facts, it could
impose over $100 million in retroactive liability in this case
without even considering the principles of Eastern
Enterprises v. Apfel, 524 U.S. 498 (1998).
The Eighth Circuit further held that the Environmental
Protection Agency (“EPA”) was not required to submit its
cancer potency factor for dioxin to public comment and
rulemaking under the Administrative Procedure Act (“APA”),
even though the agency has treated its potency factor as a
legislative rule for over two decades at every dioxin site in the
country, without exception — resulting in nationwide costs of
over $100 billion. EPA’s failure to comply with the basic
requirements of notice-and-comment rulemaking has allowed
the agency to evade the overwhelming scientific evidence
against its potency factor and to avoid accountability for its
regulatory and political choices. This is a textbook case of an
administrative agency run amok. Yet the Court of Appeals
opined that EPA’s potency factor was not a legislative rule
because the agency claimed in litigation briefs (but not in the
administrative records) that it was only “advisory.” Pet. App.
21a. The Eighth Circuit’s ruling conflicts with administrative
law decisions by other courts of appeals, particularly the D.C.
Circuit, which has a well-developed body of precedent on the
issue of when rulemaking is required.
This case is of national significance. The CERCLA
statute’s retroactive application of strict, joint and several
liability to non-negligent activity is unique in American law
and has imposed massive economic costs. See Stephen
Breyer, BREAKING THE VICIOUS CYCLE: TOWARD EFFECTIVE
RISK REGULATION 18 (1993). The holdings of the Eighth
Circuit raise important questions of federal law and conflict
with decisions of this Court and of Courts of Appeals outside
the Eighth Circuit. The questions presented are independent
of each other, and this Court’s plenary review is amply
warranted on both.
1. Background.
This case is a CERCLA cost recovery action, filed by the
United States pursuant to 42 U.S.C. § 9607(a), involving a
chemical manufacturing plant known as the Vertac Chemical
Corp. (“Vertac”) site in Jacksonville, Arkansas. Hercules
acquired the plant in December 1961 from Reasor-Hill
Corporation and substantially improved it over the course of
the next decade before ceasing production in 1970. Pet. App.
3a-4a. Hercules’ primary products were herbicides known as
2,4-Dichlorophenoxyacetic acid (“2,4-D”) and 2,4,5-
Trichlorophenoxyacetic acid (“2,4,5-T”’). These herbicides
are synthetic growth hormones that kill weeds or brush by
accelerating growth to the point of natural death. Under
normal conditioiis, each herbicide biodegrades relatively
quickly into harmless substances. They were used as
replacements for lead arsenate, a much more lethal herbicide.
JA24101-24102.
Hercules sold over 90% of its 2,4,5-T production to the
Department of Defense under rated orders (which could not
be refused) as a component of the defoliant “Agent Orange.”
JA24854. (Agent Orange was used by the US military in
Vietnam to defoliate the forest canopy which provided cover
for enemy troops.) In 1965, Hercules learned that the
manufacture of 2,4,5-T created a trace by-product known as |
2,3,7,8-Tetrachlorodibenzo-p-dioxin (“TCDD” or “dioxin”.
By contrast, the manufacturing process for 2,4-D did not
produce dioxin. While Hercules operated the plant from 1961
until 1970, there was no scientific evidence, anywhere in the
world, linking dioxin to cancer. Scientists from The Dow
4
Chemical Company published the first such research paper in
1978. JA24552.
The courts below found that Hercules operated the site in
an exemplary manner. The Eighth Circuit concluded that
“Hercules generally improved the safety and cleanliness of
the site and complied with environmental regulations between
1961 and 1971.” United States v. Hercules, Inc., 247 F.3d
706, 712 (CA8 2001). The District Court similarly cited
Hercules’ “cooperation with government officials”; explained
that “[t]here is no doubt that Hercules’ safety and
environmental programs are to be commended”; and opined
that “Hercules’ safety and maintenance programs are
laudatory.” United States v. Vertac Chemical Corp., 79
F.Supp.2d 1034, 1040 (E.D. Ark. 1999). For example,
Hercules installed an underground sewage system to collect
chemical wastes, upgraded major items of equipment to
prevent leaks and spills, installed curbs and gutters around
equipment areas, and took a number of other steps to “tighten
up” the production process. JA10473, 24066, 24081-24086,
24090-91. Hercules also took great care in its selection of an
onsite burial location for its chemical wastes and carefully
monitored nearby creeks to ensure that it was not polluting
them. Testing showed that the runoff water was safe enough
to drink. JA24101.
Hercules never had an accidental death while it ran the
plant. In fact, it operated for nearly seven years without a
single day of lost time due to an on-the-job-injury and won
numerous safety awards. JA24100, 24105. Hercules was the
only major manufacturer of 2,4,5-T in the world never to have
had an outbreak of chloracne, the signature illness of dioxin
exposure, in its workforce. JA10481. Other companies had
as many as 200 cases of chloracne. JA24091-95.
In the years after Hercules’ operations at the plant ended,
residents of the surrounding areas and former workers
sometimes alleged in legal proceedings that they had been
injured by exposure to dioxin. Hercules prevailed at every
trial.' In addition, a NIOSH mortality study found that
Hercules’ employees had /ower cancer rates than the general
public. JA10214-16, 10235-36, 24129. Extensive testing of
residents of Jacksonville and Mabelvale (a nearby
community) revealed essentially background concentrations
of dioxin — in fact, slightly lower than levels found in most
populations in the United States. JA24589-90.
2. Generation and Disposal of Wastes By Vertac
Under Governmental Supervision After
Hercules Had Left the Site.
Notwithstanding Hercules’ best efforts, the Jacksonville
plant was not profitable. In fact, in its ten years of operations,
Hercules lost $3 million on total sales of about $38 million.
JA20666-20668. Because Agent Orange (a non-consumer
product manufactured for and sold only to the United States
military) consumed nearly the entire productive capacity of
the plant for over three years, Hercules lost its domestic
customers for herbicides and shifted its sales force and
distribution network to other products. JA24075, 24495.
When the United States terminated its contracts with Hercules
in December 1968, JA10471, 24075, Hercules decided to shut
the plant down and seek a buyer or lessee, rather than rebuild
its sales and distribution network.
In 1970, Hercules ceased production and, as the Court of
Appeals found, “cleaned out all of its equipment and
production vessels, [legally] buried its waste, and shipped
' For example, in a case known as Keister, former plant workers and
family members contended, inter alia, that Hercules had conducted
ultrahazardous activities at the plant. Hercules presented extensive
medical evidence showing that the representative plaintiffs had normally
functioning immune systems and suffered from no injury caused by any
chemicals. JA10241-44, 24581-83. The jury returned defense verdicts on
all claims. In 1988, another jury returned verdicts for Hercules, finding
that it had created no risk of harm for persons residing near the plant site
or the two municipal landfills. The Eighth Circuit affirmed that judgment.
O'Dell v. Hercules, Inc., 904 F.2d 1194 (CA8 1990).
6
empty drums off-site.” Pet. App. 4a. In 1971, Hercules
leased the plant to another company, which later became
Vertac, and Hercules required it to comply with all applicable
laws and regulations. Vertac purchased the plant outright in
1976. Jd. Under the agreement of sale, Hercules retained no
liability for the business or the site, and Hercules believed
that its financial responsibilities at the site were over.
In 1978, researchers from Dow Chemical published the
first paper linking dioxin to any form of cancer (in this case,
liver cancer in female, but not male, laboratory rats).
JA24552. Vertac voluntarily ceased manufacturing 2,4,5-T
on March 15, 1979. Pet. App. 4a. On March 4, 1980, EPA
and the Arkansas Department of Pollution Control and
Ecology (“ADPC&E”) filed companion actions against
Vertac (as a current operator of the site) and Hercules (as a
former operator of the site) under the Resource Conservation
and Recovery Act, 42 U.S.C. § 6973 et seg. (“RCRA”),
seeking injunctive relief, primarily related to the storage and
management of waste. One week later, EPA published
regulations prohibiting Vertac from disposing of its drummed
waste. 45 Fed. Reg. 15592 (Mar. 11, 1980). After a 4-day
hearing, the District Court enjoined Vertac from releasing or
disposing of its waste. EPA soon issued a final rule, and
Vertac was thereafter prohibited from disposing of its waste
drums. 45 Fed. Reg. 32676 (May 19, 1980).
Vertac (not Hercules) generated approximately 26,000
drums of 2,4-D waste between 1979 and 1986 under the
supervision of the District Court, ADPC&E, and EPA. This
waste did not even exist when Hercules sold the plant in
1976. Pet. App. 4a, 14a-15a. Vertac (not Hercules) also
accumulated approximately 3,000 drums of 2,4,5-T waste
(known as “stillbottoms”), the vast majority of which were
generated after Vertac purchased the plant from Hercules.
The courts below found that Vertac stored the stillbottoms in
hopes of recycling the material. Pet. App. 16a, 31a; 247 F.3d
at 712; United States v. Vertac Chemical Corp., 489 F. Supp.
870, 875 (E.D. Ark. 1980).’
In 1987, after seven years of constant supervision by the
Court, EPA and ADPC&E, Vertac abandoned the site,
leaving behind some 26,000 drums of 2,4-D waste, 3,000
‘stillbottom drums of 2,4,5-T waste, buildings, equipment,
pallets, and trash. EPA took over the site, closed down all
operations, and decided to incinerate the drums. Pet. App. 4a-
6a.
EPA’s decision to incinerate the 26,000 2,4-D drums
abandoned by Vertac, however, was not driven by dioxin;
rather, EPA’s decision was driven by other risks posed by the
drums, as well as the regulatory classification of the waste
generated by Vertac. For example, EPA stated that,
“fajlthough cross-contamination with dioxin was a
consideration in incineration, the driving forces were the ban
on land disposal of F-listed wastes, the constant failure of the
drums due to their corrosive contents, and the fire and
explosion hazard presented by the drummed materials.”
JA22911.° EPA’s Project Manager admitted that the agency
“could not have disposed of that waste .. . without some type
of treatment []regardless of the level of dioxin.” EPA’s own
counsel stated that “it would not be relevant” whether the
? The stillbottom drums were remediated in 1979-1980 under RCRA
rather than CERCLA. Hercules and Vertac have already paid the RCRA
remediation costs. The drums were stored in a specially built shed, and
EPA stated in 1980 that they “pose no present threat to health or the
environment.” HADD0O007. In the Court of Appeals, EPA admitted that
the shed “stopped the drum failure.” EPA Brief at 58. Far from finding
that the stillbottom drums leaked, the District Court found in 1980 that the
stillbottoms tended to harden into something like a rubber ball.
HADDO006.
> “F-listed” wastes are defined as certain wastes listed by EPA at 40
C.F.R. § 261 App. VII, and in this case “the wastes generated were F-
listed wastes, regardless of the presence of dioxin.” 33 F. Supp.2d at 780.
drums contained dioxin because ADPC&E and EPA would
have incinerated them anyway. JA27853.°
3. EPA’s Claims Against Hercules.
Since 1987, EPA has never collected a penny from
Vertac or anyone else directly responsible for the waste in
question. ° Instead, it has pursued a cost recovery action
against Hercules as a “deep-pocket” target.
To be clear, Hercules does not challenge (and has not
challenged) EPA’s costs regarding waste generated or
disposed of by Hercules. It is undisputed that Hercules
cooperated fully with state and federal authorities, spent over
$40 million in cleanup costs, remedied (under RCRA) the
wastes lawfully buried onsite while it operated the plant, and
later committed to operate a groundwater treatment facility
until at least 2015. JA24196-99, 24597-615. None of EPA’s
costs at issue relate to Hercules’ buried waste.
Rather, this case involves EPA’s attempt to recover over
$100 million in cleanup costs for waste generated and
disposed of by Vertac — after Hercules had ceased its
operations at the site. EPA sought recovery from Hercules
for costs associated with the incineration of drums
accumulated and disposed of by Vertac (not Hercules),
operating under the supervision of the District Court, EPA,
* Similarly, EPA concluded that the principal perceived threat to human
health from the buildings related to asbestos, not dioxin. 1A27254, 27259,
27371-72, 28265-66, 28268-69, 28350-51.
° EPA initially sought an injunction against Vertac’s owners and
companies to which they had conveyed assets. The District Court found
that Vertac’s owners had fraudulently conveyed assets to evade
environmental liabilities. On appeal, the Eighth Circuit reversed because
EPA had failed to serve process on the new parties. United States v.
Vertac Chemical Corp., 855 F.2d 856 (CA8 1988), vacating, 671 F. Supp.
595 (E.D.Ark. 1987). On remand, EPA settled with Vertac’s assignees.
United States v. Vertac Chemical Corp., 756 F. Supp. 1215 (E.D. Ark.
1991), aff'd, 961 F.2d 796 (CA8 1992). However, EPA has never
received any funds from that settlement.
and ADPC&E. EPA also sought costs from Hercules for the
cleanup of Vertac’s buildings, equipment, pallets and trash —
including some items that did not even exist when Hercules
sold the plant in 1976.
EPA’s theory of liability was nothing more than a highly
tenuous chain of but-for causation. EPA hypothesized that
dioxin created during Hercules’ former operation of the plant
might have seeped into the soil and that, many years after
Hercules sold the site, such soil might have been placed into
some of the drums by Vertac employees and EPA contractors
during drum cleanup and over-packing operations. As a
result, the employees and _ contractors might have
contaminated Vertac’s 2,4-D drums that did not otherwise
contain dioxin. Yet EPA ignored the fact that such cross-
contamination, if it occurred at all, would have happened
years after Hercules’ involvement with the site had ceased, at
a time when Hercules was powerless to control any site
activities, and during a time when the site was under the
supervision of the Court, EPA, and ADPC&E. Indeed,
dumping soil into drums would have been directly contrary to
the rules under which the cleanup proceeded. Instead,
workers were directed to place contaminated soil into
separate, special containers.°
© EPA’s theory was also a blatant post hoc rationalization. No EPA
representative had ever suggested at the time of the cleanup that the
drummed waste should be incinerated because of any dioxin-containing
dirt that might be inside. No EPA witness ever offered such testimony,
either. In fact, there was undisputed evidence that over 17,000 drums of
2,4-D waste (out of a total of 26,000) contained no dirt at all at the time
Vertac abandoned the plant. JA24828-31. A 1989 test of a random 30-
drum sample of 2,4-D waste indicated no detectable concentrations of
dioxin, JA24259, 24870, and the uncontradicted evidence at trial
demonstrated the invalidity of every analytical test purporting to find
dioxin in the 2,4-D waste drums. JA24248, 24257, 24372, 27809-18,
27859-65, 28137, 28430.
10
Similarly, EPA speculated that dioxin created during
Hercules’ former operation of the plant might have remained
in various production vessels after they were cleaned and sold
to Vertac and might have contaminated Vertac’s production
many years later. But the record contained no evidence
linking Hercules’ dioxin to any such cross-contamination.
Indeed, such a linkage would have been impossible to show,
because after the sale Vertac used the production vessels over
a 17~year period to manufacture millions of gallons of both
2,4,5-T and 2,4-D. During that time, Vertac mixed the
contents of vessels used to make dioxin-containing 2,4,5-T
with vessels used to make non-dioxin containing 2,4-D and
thereby permanently altered the condition of the vessels as
sold by Hercules many years earlier. Moreover, EPA’s
speculation was even more flimsy because, after Vertac
abandoned the site in early 1987, the only testing of its
production vessels was performed by a company convicted of
dioxin testing fraud in another state, and EPA itself concluded
that the test results were unreliable. JA28230-62.
Furthermore, EPA’s own evidence proved the thoroughness
with which Hercules cleaned the equipment in 1970’ and
showed that any Hercules residual would have long been
flushed out by Vertac’s own production.® The District Court
” An EPA witness testified that about 40 men worked on this “really big
job” for six months after Hercules stopped its operations in 1970.
JA12737-38, 12854. They removed the residues in the vessels with
heated water and even fire hoses. They were careful to remove the
sediments in the bottom of the vessels. JA27540-41. They disassembled
and cleaned the process lines and disconnected the pumps. JA27522-24,
27540-42. The EPA witness added that Hercules was “very professional”
and extremely safety conscious. JA12694-95,12707-09.
* EPA’s Project Manager for incineration agreed that 10 consecutive
batches of 2,4-D production would leave no mure than a few parts per
quadrillion of dioxin, even under the assumption of cross-contamination.
Tab 115 to MSJ, at 137-148. Another EPA project manager concurred.
JA15687-88. Such miniscule levels would have been orders of magnitude
below any threshold of regulatory concern. At least five other expert
11
had itself rejected the “lingering dioxin” theory in 1980.
HADD0018. In short, there was no evidence to support either
of EPA’s theories of liability against Hercules.
In addition, EPA based certain cleanup decisions on a
scientifically dubious “cancer potency factor” for dioxin that
the agency never subjected to rulemaking under the APA.
The potency factor is a number used by EPA “‘to calculate the
risk and to set dioxin cleanup standards.” Pet. App. 20a.
EPA created its potency factor for dioxin in 1980, ratified it in
a guidance document known as the 1985 Health Assessment,
and has never altered it since. EPA explained that its
decisions at the Vertac Site used the “[s]tandard cancer
potency factors.” JA22915. The agency stated: “In fact, if
EPA had not applied the cancer potency factor uniformly and
consistently across the country, .. . the agency could be
considered to be acting arbitrarily and capriciously.”
JA21228. When Hercules proposed a different potency
factor, EPA dismissed the proposal on the ground that it was
“not in accordance with EPA policy.” JA16528, 16902-03,
17041.
EPA has used the same potency factor across the nation
in a uniform and consistent manner. JA16897-98. A survey
of administrative Records of Decision (“RODs’’) at 35 dioxin
sites, JA16899-902, 17159-540, showed that EPA used its
“standard” potency factor at every site. JA22916-17. EPA
could not identify any dioxin site since the enactment of
CERCLA in 1980 where it had declined to use its standard
potency factor. Nor could EPA offer a single piece of paper
from the administrative records indicating an express intent to
reserve discretion on the issue. To the contrary, EPA
repeatedly admitted that it has applied the same potency
witnesses agreed conceptually that “flushing” would occur relatively
quickly.
” The cancer potency factor for dioxin is expressed as a specific number:
156,000 (mg/kg-day)'. JA16896.
12
factor uniformly and without exception at all sites where
dioxin contamination was sufficient to affect remedial
choices. JA16899, 17152. Because EPA has relied on an
invalid rule to make its response choices, it is not entitled to
recover its costs under 42 U.S.C. § 9613(j)(2).
4. The Decisions Below.
On October 23, 1998, the District Court granted
summary judgment to EPA on the issue of liability and held
Hercules jointly and severally liable under CERCLA for all of
EPA’s costs for the Vertac site and two municipal landfills.
33 F.Supp.2d 769. The court rejected Hercules’ claim that
the retroactive imposition of liability violated the Fifth
Amendment. /d. at 785. The court also opined that the
potency factor did not need to undergo notice-and-comment
rulemaking because it was a statement of “policy.” Jd. at 779.
In 2001, the Eighth Circuit reversed the District Court’s
summary judgment, opining that “the district court’s analysis
of Hercules’s divisibility arguments reflects a fundamental
misunderstanding of the doctrine of divisibility. These legal
errors clouded the court’s view of the evidence supporting
divisibility.”” 247 F.3d at 719. The Court of Appeals
remanded for a trial on divisibility of harm without reaching
the constitutional or potency factor issues.
On remand, the District Court held only a “limited
evidentiary hearing,” rather than a full trial, and refused to
permit any discovery, even though no expert witness
discovery had ever occurred. The court then took three and a
half years to issue findings of fact, which essentially
reiterated its previous conclusions. On March 30, 2005, the
Court effectively reinstated its prior orders and imposed more
than $100 million in retroactive liability against Hercules.
Pet. App. 65a-66a.
This time, the Eighth Circuit affirmed. It adopted EPA’s
tenuous cross-contamination theory, opining that:
13
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 further contamination of the site does not
absolve Hercules of CERCLA _iiability.
Accordingly, Hercules remains responsible for the
ongoing contamination caused by the dioxin....
Pet. App. 15a. The Court of Appeals rejected Hercules’
retroactivity challenge on the ground that it was bound by
circuit precedent holding that “CERCLA’s retroactive
application remained constitutional after Eastern
Enterprises.” Id. at 24a. In addition, the Eighth Circuit
upheld EPA’s potency factor for dioxin, even though it has
never been subject to notice-and-comment rulemaking. Jd. at
20a-21a.
REASONS FOR GRANTING THE WRIT
This case presents important issues of federal law. The
first issue involves a $100 million question of constitutional
retroactivity. The second involves a $100 billion question of
agency accountability and the use of science in the regulatory
process. On both questions, the judgment of the Eighth
Circuit is in conflict with decisions of this Court and of
Courts of Appeals outside the Eighth Circuit. This Court’s
plenary review is amply warranted.
I. REVIEW IS WARRANTED TO ADDRESS THE
QUESTION OF THE CONSTITUTIONAL
LIMITS ON RETROACTIVE LIABILITY.
This case involves the retroactive imposition of
astronomical liability on a model corporate citizen that did
nothing wrong, caused no harm, and yet has been unjustly
saddled with over $100 million in cleanup costs based on
circumstances outside its control — namely, the actions of a
subsequent purchaser operating under the supervision of
federal and state environmental agencies and under the
jurisdiction of a federal court. It would be difficult to find a
14
more obvious example of fundamentally unfair retroactive
liability. Although Hercules believes that many of the facts
found by the District Court and Court of Appeals are clearly
erroneous, that disagreement is not material to this petition.
This Court’s review is amply warranted even under the facts
as found by the courts below.
A. The Eighth Circuit’s Judgment Is Inconsistent
With Eastern Enterprises Because It Failed To
Apply The Factors Articulated By This Court.
Certiorari is necessary in this case because the Eighth
Circuit’s decision conflicts with Eastern Enterprises v. Apfel,
524 U.S. 498 (1998), which makes clear that, even where a
party is causally responsible for a particular harm, a
conclusion which in this case is exceptionally tenuous at best,
a reviewing court must nonetheless apply a three-factor test to
ensure that retroactive liability is reasonably foreseeable and
proportionate to the party’s conduct. The Court of Appeals in
this case failed to undertake the constitutionally mandated
inquiry — in square conflict with this Court’s decision in
Eastern Enterprises. Hercuies has not asserted, and does not
now assert, a facial challenge to the retroactive application of
CERCLA. Rather, Hercules challenges the constitutionality
of retroactive liability under CERCLA as applied to the facts
of this case, in which the Eighth Circuit failed to undertake
the requisite Eastern Enterprises analysis.
In Eastern Enterprises, this Court held that, under the
Fifth Amendment, the Coal Industry Retiree Health Benefit
Act of 1992, 26 U.S.C. §§ 9701-9722, could not be applied
retroactively to require a company which had once owned a
coal mining business to pay health care benefits to over 1,000
former employees of that business. 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 from prior case law three factors
of “particular significance” to the Fifth Amendment inquiry:
“the economic impact of the regulation, its interference with
15
reasonable investment backed expectations, and the character
of the governmental action.” 524 U.S. at 523-24.
The remaining Justices applied similar reasoning,
although they would have framed the inquiry in terms of Fifth
Amendment due process rather than the Fifth Amendment’s
Takings Clause. Their point was that such laws are
constitutional only if the parties on whom liability is imposed
are responsible, in some real sense, for the costs they are
being asked to bear. See 524 U.S. at 539 (Kennedy, J.,
concurring in the judgment and dissenting in part); id. at 556-
58 (Breyer, J., joined by Stevens, Souter, and Ginsburg, JJ.,
dissenting). The dissenters explained that, “like the
plurality,” they “would inquire if the law” as applied
retroactively was “fundamentally unfair or unjust.” /d. at
558. “[T]he Due Process Clause can offer protection against
legislation that is unfairly retroactive ... for... a law that is
fundamentally unfair because of its retroactivity is basically
arbitrary.” Jd. at 557 (Breyer, J., dissenting).
The Eighth Circuit’s judgment conflicts with this Court’s
decision in Eastern Enterprises. The Eighth Circuit made no
attempt to apply — or even to consider — any of the factors
articulated by any of the Justices in Eastern Enterprises. It
never inquired as to “the economic impact of the regulation,”
524 US. at 523, even though the financial impact on Hercules
was distinctly more severe than the $50-100 million liability
at issue in Eastern Enterprises. After all, Eastern Enterprises
had earned substantial profits from coal mining from 1947-
1964 and from its subsidiary thereafter, which more than
offset the retroactive liability imposed by the government.
See 524 U.S. at 516. Here, by contrast, it is undisputed that
Hercules lost over $3 million on its decade of operations
(JA20666-68) and has already spent $40 million on cleanup
separate and apart from the amounts sought by EPA.
Similarly, the Eighth Circuit never inquired as to the
second factor cited by the Eastern Enterprises plurality —
“interference with reasonable investment backed
16
expectations.” 524 U.S. at 523-24. Even on the facts found
by the courts below, this factor should have led the Eighth
Circuit to invalidate the astronomical! liability imposed on
Hercules. The District Court acknowledged that “Uniroyal
and Hercules are left ‘holding the bag’ for Vertac, who at
least arguably caused the greatest amount of harm.” United
States v. Vertac Chemical Corp., 79 F.Supp.2d 1034, 1036
(ED Ark. 1999). Hercules’ operations at the site ceased a
decade before CERCLA took effect on December 11, 1980.
See 42 U.S.C. § 9652(a). Hercules had completely severed its
connection with the plant before researchers published the
first paper linking dioxin to any form of cancer in 1978. Even
if dioxin in some of the dirt at the Vertac site had been the
trigger for the decision to incinerate the drums, and even if
some of the dioxin had originated during Hercules’ prior
operations, Hercules plainly had no ability to prevent Vertac
or EPA’s contractors from violating cleanup protocols by
placing the dirt into Vertac drums, at a time when the District
Court, EPA and ADPC&E were supervising Vertac. Further,
EPA sought to recover costs for all of Vertac’s trash, pallets,
buildings, tanks, vessels, and pipes, whether or not they
existed when Hercules sold the plant in 1976, and whether or
not dioxin was a factor in EPA’s decision to remediate them.
The enormous retroactive liability imposed here thus
profoundly interferes with Hercules’ reasonable investment-
backed expectations.
Until now, the accepted rule has been that the sale of a
useful product, building, or piece of equipment does not
create CERCLA liability, even if it contains a hazardous
substance. G.J/. Leasing Co., Inc. v. Union Elec. Co., 54 F.3d
379, 384 (CA7 1995). Thus, in G./. Leasing, Judge Posner,
writing for the court, held that the seller of a plant was not
liable for the release of asbestos fibers caused by a third-party
contractor’s “ham-handed” job of dismantling the facility,
years after the sale. /d. at 385. Judge Posner explained that,
“fiji seems to us very odd, even in Superfund
17
Cloudcuckooland, to attribute the negligent, unforeseeable
conduct of the buyer’s agents to the seller.” Jd. See also ABB
Indus. Sys., Inc. v. Prime Tech., Inc., 120 F.3d 351, 359 (CA2
1997) (holding prior owners not liable despite passive spread
of contamination); United States v. CDMG Realty Co., 96
F.3d 706, 722 (CA3 1996) (same).
The Eighth Circuit’s ruling thus creates a circuit split, as
well as a significant shadow of uncertainty over long-
completed transactions that were undertaken against an
entirely different background understanding. No one
reasonably expected that CERCLA liability could arise in the
context of the sale of useful equipment to a purchaser who
then employed that equipment to manufacture products and
create waste. Heretofore, no court has ever held that the sale
of an operating plant constituted a “disposal” of material
inside the useful equipment. The decision below threatens to
upset the settled expectations of former owners who will be
shocked to discover that CERCLA liability may arise even
when the subsequent actions of their purchasers are
supervised by the government.
Imposing liability on Hercules would be every bit as
unjust as imposing it on the Department of Defense (“DOD”),
which initially developed the site in the 1930s as a munitions
plant and owned it during World War Il. Yet DOD has been
held not liable for any costs because it did not control the
disposal of waste during the Hercules years. United States v.
Vertac Chemical Corp., 46 F.3d 803, 809 (CA8), cert. denied,
515 U.S. 1158 (1995). Similarly, this Court has held that the
government may not be held responsible for Hercules’ costs
incurred in defending and settling tort claims related to Agent
Orange, even though DOD prescribed the formula and
detailed specifications for manufacture pursuant to the
Defense Production Act of 1950, 64 Stat. 798, as amended, 50
U.S.C.App. § 2061 et seg. See Hercules v. United States, 516
U.S. 417, 419 (1996). Precisely the same reasoning shows
18
the arbitrariness and disproportionality of imposing over $100
million in costs on Hercules.
The Eighth Circuit also ignored the third Lastern
Enterprises factor — “the character of the governmental
action.” 524 U.S. at 524. In Eastern Enterprises, the
statute’s remedial payment scheme was neither wholly
unfamiliar to, nor unforeseeable by, Eastern, which had
operated its former coal mining business against the
background understanding of a 1946 labor agreement, a 1947
retirement fund, and a 1950 benefit plan. See 524 US. at
505-08. Here, by contrast, the character of the governmental
action is extraordinary. “[P]arties could not be expected to
have foreseen CERCLA before it was enacted.” Purolator
Prods. Corp. v. Allied-Signal, Inc., 772 F. Supp. 124, 132
(W.D.N.Y. 1991). There is no way that Hercules could have
foreseen that it could one day be held liable for over $100
million in costs to clean up waste it did not create. Even the
dissenting Justices in Eastern Enterprise would find the
imposition of CERCLA liability unconstitutional in this case
because Hercules is simply not responsible in any real sense
for the costs which Hercules is being asked to bear. See 524
U.S. at 556-58, 566-68 (Breyer, J., joined by Stevens, Souter,
and Ginsburg, JJ., dissenting).
This case is a good vehicle to reaffirm the constitutional
principles governing retroactivity because the constitutional
violation here is plainer and more obvious than in Eastern
Enterprises. The Eighth Circuit’s failure to apply — or even
to consider — the three relevant factors is flatly inconsistent
with this Court’s governing precedent.
B. The Eighth Circuit’s Judgment Is Inconsistent
With Eastern Enterprises Because It Ignored the
Difference Between Facial and As-Applied
Challenges.
Instead of applying the Eastern Enterprises factors, the
Court of Appeals relied on pnor Eighth Circuit caselaw
19
upholding the retroactive application of CERCLA in a
different context. The Court of Appeals stated that “[w]e
previously resolved this exact issue in United States v. Dico,
in which we held that CERCLA’s retroactive application
remained constitutional after Eastern Enterprises.” Pet. App.
24a. The Court of Appeals thus interpreted Eighth Circuit
law as holding that all retroactive impositions of CERCLA
liability are ipso facto constitutional, regardless of the factual
context. The Court treated the retroactivity issue as one
solely of CERCLA’s facial constitutionality — ignoring the
principle that facial validity does not preclude an as-applied
challenge in a given case. E.g., Wisconsin Right to Life, Inc.
v. FEC, 126 S.Ct. 1016, 1018 (2006) (per curiam).’°
The Eighth Circuit’s judgment is squarely inconsistent
with Eastern Enterprises, where all nine Justices concluded
that a reviewing court must engage in a fact-intensive inquiry
to consider the particular facts and circumstances of
individual statutory applications in determining whether the
retroactive imposition of liability violates the Fifth
Amendment. See 524 U.S. at 523, 528-29 (plurality); id. at
549-50 (opinion of Kennedy, J.); id. at 559, 566-68 (Breyer,
J., dissenting).
The Court of Appeals created a further conflict with this
Court’s precedent by conflating causation with the
constitutional command of Eastern Enterprises. The Eighth
Circuit opined that, once Hercules “caused dioxin to enter the
'° The Eighth Circuit's reliance on United States v. Dico, 266 F.3d 864
(CA8 2001), demonstrates that it has created a rule that the retroactive
application of CERCLA is constitutional regardless of the facts of the
individual case and the factors prescribed in Eastern Enterprises. Dico
involved a completely different situation from this case. There, the
defendant had been directly responsible for cleanup costs because it “had
for many years used [a solvent] for degreasing and other industnal
applications” and released it onto its own site and into the public water
supply. 266 F.3d at 868. Unlike Dico, Hercules’ connection to the drums
and other wastes created and abandoned by Vertac, a subsequent
purchaser of the business, was, at best, tenuous.
ee sssseseéeeeeeeeeeeeeeeeeee
20
environment,” it would remain responsible for any “ongoing
contamination caused by the dioxin.” Pet. App. 15a. But that
sort of “but-for” reasoning is inconsistent with Eastern
Enterprises, which makes clear that the constitutional
question is not coterminous with the issue of causation. After
all, Eastern Enterprises itself was linked to the injury the Coal
Act sought to remedy: the company had employed the miners
involved, had benefited from their past labor, and was at least
partially responsible for their health conditions. Yet
retroactive application of the statute to Eastern Enterprises
was held unconstitutional. Indeed, all nine Justices in Eastern
Enterprises made clear that the Fifth Amendment may
sometimes preclude the imposition of disproportionate
retroactive liability even if a party is somehow causally
responsible for the harm in question. Eastern “could not have
contemplated liability” of the magnitude it faced. 524 US. at
531. Even though there was a causal link, it was too
“tenuous.” Id.; see also id. at 549-50 (opinion of Kennedy,
J.); id. at 558-59, 566-68 (Breyer, J., dissenting). The same
reasoning is applicable here, because any connection between
Hercules and the costs in question was too remote, too
tenuous, and too unforeseeable to support the astronomical
retroactive liability imposed. This Court’s review is urgently
needed.
C. The Confusion and Division Among the
Lower Courts Regarding Eastern Enterprises
Underscore the Need for Certiorari.
A circuit conflict is not a prerequisite to certiorari here.
After all, prior to Eastern Enterprises no lower court had
invalidated the retroactive application of the Coal Act on
constitutional grounds — indeed, an unbroken string of six
appellate decisions had upheld the retroactive application of
the Coal Act, and this Court had denied certiorari in three of
those casés. See 524 U.S. at 519 n.4.
Nevertheless, there 1s confusion in the circuits regarding
the status of Eastern Enterprises. Just as the Eighth Circuit
21
refused to apply the Eastern Enterprises factors, other circuits
have ignored the mandate of Eastern’ Enterprises. In
particular, the Second, Third, Fourth, Sixth, and D.C. Circuits
have limited Eastern Enterprises to its facts on the misguided
theory that there was no common ground between the
plurality and Justice Kennedy’s separate opinion. As the
Second Circuit has explained:
Because the substantive due process reasoning
presented in Justice Kennedy’s concurrence is not a
logical subset of the plurality’s takings analysis, no
“common denominator” can be said to exist among
the Court’s opinions. The only binding aspect of
such a splintered decision 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.
United States v. Alcan Aluminum Corp., 315 F.3d 179, 189
(CA2 2003), cert. denied, 540 U.S. 1103 (2004)."
These dismissive holdings cannot be squared with
decisions in other circuits applying Eastern Enterprises. For
example, in U.S. Fidelity & Guar. Co. v. McKeithen, 226 F.3d
412, 416-20 (CAS5 2000), the Fifth Circuit applied the three
Eastern Enterprises factors to hold that a state workers’
compensation statute altering a funding formula violated the
'' See also Franklin County Convention Facilities Auth. v. American
Premier Underwriters, Inc., 240 F.3d 534, 552 (CA6 2001) (“Eastern
Enterprises has no precedential effect on this case because no single
rationale was agreed upon by the Court.”); Association of Bituminous
Contractors, Inc. v. Apfel, 156 F.3d 1246, 1253-58 (CADC 1998) (“In
short, the government is correct in stating that the only binding aspect of
Eastern Enterprises is its specific result — holding the Coal Act
unconstitutional as applied to Eastern Enterprises.”); Anker Energy Corp.
v. Consolidated Coal Co., 177 F.3d 161, 169-74 (CA3) (quoting D.C.
Circuit), cert. denied, 528 U.S. 1003 (1999); A.7. Massey Coal Co., Inc. v.
Massanari, 305 F.3d 226, 236-37 (CA4 2002), cert. denied, 538 U.S.
1012 (2003) (citing the D.C. and Third Circuits).
22
Fifth Amendment as applied to pre-enactment insurance
contracts of insurers who had withdrawn from the state
market or had substantially reduced their underwriting in the
state. The First Circuit has also held that Eastern Enterprises
has precedential effect with respect to Takings Clause claims.
Patella v. Ret. Bd. of the R.J. Employees’ Ret. Sys., 173 F.3d
46, 58 (CAI 1999).'
The misguided attempt by the Eighth Circuit and other
circuits essentially to ignore Eastern Enterprises warrants this
Court’s plenary review. Justice Kennedy represented the fifth
vote in Eastern Enterprises holding the retroactive
application of the Coal Act unconstitutional under the Fifth
Amendment. “Where a Justice or Justices concurring in the
judgment in such a case articulates a legal standard which,
when applied, will necessarily produce results with which a
majority of the Court from that case would agree, that
standard is the law of the land.” Planned Parenthood of
Southeastern Pa. v. Casey, 947 F.2d 682, 693 (CA3 1991),
2 See also S & M Brands, Inc. v. Summers, 2005 WL 3160869, *9 (M.D.
Tenn. 2005) (relying on Eastern Enterprises to hold that the state violated
due process regarding escrow of certain funds); Golan v. Ashcroft, 310 F.
Supp.2d 1215, 1220 (D. Colo. 2004) (focusing on “Justice Kennedy’s
concurrence in Eastern Enterprises for the proposition that retroactive
legislation that unfairly burdens individuals and disrupts settled
expectations is arbitrary and, thus, violates due process,” in order to deny
motion to dismiss due process claim). Commentators have expressed the
same view. See, e.g., Bruce Howard, “A New Justification for Retroactive
Liability in CERCLA: An Appreciation of the Synergy Between Common
and Statutory Law,” 42 St. Louis U. L.J. 847, 847 n.al (1998) ( ‘[T]he
decision in Eastern Enterprises makes it clear that courts must be
prepared to find that in any given case the particular facts of CERCLA
liability, if enforced against an unfortunate party to the limits of the strict,
joint, several and retroactive law, will run afoul of the takings and due
process clauses of the Constitution.”); Jan G. Laitos, “The New
Retroactivity Causation Standard,” 51 ALA. L. Rev. 1123, 1129 n.35
(2000) (“The Eastern Enterprises result raises questions about the
constitutional validity of CERCLA”); Damiel E. Troy, “Retroactive
Legislation” 85 (American Enterprise Institute 1997) (arguing that
retroactive application of CERCLA may be unconstitutional).
23
modified on other grounds, 505 U.S. 833 (1992) (citing
Marks v. United States, 430 U.S. 188, 193 (1977)); see
Grutter v. Bollinger, 539 U.S. 306, 325 (2003).
Nor is it correct to suggest that there was no common
rationale in Eastern Enterprises. In the opening paragraph of
his separate opinion, Justice Kennedy went out of his way to
underscore that he was “in full accord with many of the
plurality’s conclusions.” 524 U.S. 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.” Jd. The fact that Justice Kennedy
viewed the case through the lens of the Fifth Amendment’s
Due Process Clause rather than the prism of the Takings
Clause neither vitiates the Court’s Fifth Amendment holding
nor transforms a 5-4 decision into a 4-1-4 ruling. If it did, the
Eastern Enterprises judgment would not have reversed the
decision below but would instead have affirmed that decision
by an equally divided Court. Indeed, even the dissenters
noted that the same three factors articulated by the plurality
could properly be applied in the due process rather than the
takings context. 524 U.S. at 567 (citing Connolly v. Pension
Benefit Guaranty Corp., 475 U.S. 211, 225-27 (1986)). No
Justice in Eastern Enterprises disputed that “an unfair
retroactive assessment of liability upsets settled expectations,
and... thereby undermines a basic objective of law itself,” or
questioned the need to inquire whether a law “is
fundamentally unfair or unjust” as applied in a particular case.
524 U.S. at 558 (Breyer, J., dissenting).
Accordingly, this Court has continued to treat Eastern
Enterprises as binding precedent.’? Justice Kennedy has
'S See, e.g., Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional
Planning Agency, 535 U.S. 302, 324 (2002); Barnhart v. Peabody Coal
Co., 537 U.S. 149, 174 (2003) (Scalia, J., joined by O’Connor and
Thomas, JJ., dissenting) (“We have held that the Commissioner's use of
this power [to require coal companies to pay health benefits} violates the
24
continued to describe his separate opinion in Eastern
Enterprises as calling for “heightened scrutiny for retroactive
legislation under the Due Process Clause.”'* This case is an
ideal vehicle for this Court to clarify the status of Eastern
Enterprises and the proper application of the factors
articulated in that decision.
Il. REVIEW IS WARRANTED FOR THE
SEPARATE REASON THAT EPA’S USE OF
ITS POTENCY FACTOR IS INCONSISTENT
WITH THE APA AND WITH DECISIONS OF
OTHER U.S. COURTS OF APPEALS.
Certiorari should be granted for the independent reason
that the Eighth Circuit’s decision with respect to the potency
factor for dioxin involves a. question of exceptional
importance and is inconsistent with the holdings of other
circuits, particularly the D.C. Circuit. There is no dispute
that, for the last 25 years, EPA has applied its “standard”
potency factor at every site at which dioxin affected remedial
choices. In fact, EPA has affirmatively stated that it would be
“arbitrary and capricious” for the agency not to do so. There
is no evidence that EPA retained any discretion to use any
other number. It reyected Hercules’ proposed alternative on
the ground that it was “not in accordance with EPA policy.”
JA16528, 16902-03, 17041. Thus, while parties were free to
propose alternative potency factors, EPA announced that it
would not consider them. JA16164-66. Reminiscent of the
imaginary “dirt-eating children” that Justice Breyer has
mocked so forcefully in similar contexts, EPA coupled its
Constitution to the extent it imposes severe retroactive liability on certain
coal companies.”’) (citing Eastern Enterprises).
'* Kelo v. City of New London, 125 S.Ct. 2655, 2670 (2005) (Kennedy, J.,
concurring); Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 548 (2005)
(Kennedy, J., concurring) (citing his Eastern Enterprises concurrence for
the proposition that “a regulation might be so arbitrary or rational as to
violate due process”).
25
potency factor with absurd exposure assumptions in order to
justify its response actions in this case.’
Under the APA, 5 U.S.C. § 553(b), an agency is required
to submit legislative rules to notice-and-comment rulemaking.
Yet the Eighth Circuit held that the potency factor was
exempt from this requirement because it was contained in
what was “at most only a technical and advisory report.” Pet.
App. 21a (quoting the District Court). The Court of Appeals
added that EPA had considered Hercules’ comments on the
potency factor and rejected them because they “were contrary
to EPA’s guidance.” /d. (citation omitted). The court found
it immaterial that EPA failed to cite a single deviation from
its dioxin “policy” since it was developed in 1980.
The Eighth Circuit’s decision is inconsistent with
administrative law rulings in other circuits (particularly in the
D.C. Circuit) holding that an agency’s uniform and inflexible
practice creates a legislative rule and triggers the need for
notice-and-comment rulemaking. The bare assertion by an
agency in a litigation brief that it has reserved discretion on
the matter is immaterial. The Eighth Circuit’s reasoning that
an agency can avoid rulemaking by purporting to consider
'S See United States v. Ottati & Goss, Inc., 900 F.2d 429, 441 (CA1 1990)
(Breyer, J.) (affirming lower court’s refusal to accept EPA’s target for
cleaning up soil contaminated with PCBs). See also BREAKING THE
VICIOUS CIRCLE, at 12 (spending $9.3 million to protect “non-existent
dirt-eating children” is the problem of “the last 10 percent’’). In this case,
EPA assumed that: (1) children would live every moment of their lives
between the ages of 2 and 5 on the Jacksonville landfill, (2) from ages 6
through 12, children would spend 56% of their time on the landfill, (3)
teenagers would never leave the landfill, and (4) adults would then spend
the next 50 years of their lives moored to the landfill. JA16341, 16859.
EPA made these assumptions despite the fencing around both the two
landfills, the low and declining population densities in the area, the poor
drainage and standing water, the location of the landfills in the hundred-
year floodplain (which would likely preclude financing for homes), and
the fact that no one had ever lived on either landfill. JA16307-08, 16358,
16979-80.
26
comments, and then invariably rejecting them as contrary to
agency policy, is inconsistent with this Court’s admonition
that “it is the substance of what the [agency] has purported to
do and has done which is decisive.” Columbia Broadcasting
System, Inc. v. United States, 316 U.S. 407, 416 (1942).
As the D.C, Circuit has declared, agency actions speak
louder than words: If the agency “will automatically decline
to entertain challenges to the statement’s position, then the
statement is binding.” McLouth Steel Prod. Corp. v. Thomas,
838 F.2d 1317, 1320 (CADC 1988). In McLouth, the D.C.
Circuit rejected EPA’s assertion that it did “not consider itself
. . . bound” by a model used to predict levels of hazardous
waste and that it “retained discretion to deviate from its use.”
Td. (internal quotation marks and citation omitted). The D.C.
Circuit held that agency practice proved otherwise and that
EPA had created a legislative rule requiring rulemaking:
“More critically than EPA’s language adopting the model, its
later conduct applying it confirms its binding character.” Jd.
at 1321. The D.C. Circuit noted that EPA was “close-minded
and dismissive in its denial of a delisting petition,” id.; “the
model is not just a ‘musing[ ] about what the [agency] might
do in the future’”; “EPA was simply unready to hear new
argument”; and “EPA has evidenced almost no readiness to
reexamine the basic propositions that make up the” model.
Id. (citation omitted; brackets in original). The D.C. Circuit
concluded that “[t]he model thus created a norm with
‘present-day binding effect,” even though EPA pointed to
four out of 100 cases where it deviated from the model. /d. at
1321.
Similarly, in United States Tel. Ass’n v. FCC, 28 F.3d
1232, 1233 (CADC 1994), the D.C. Circuit rejected an
agency’s claim that a schedule of penalties was a mere
“policy statement” because the agency’s practice showed that
it “intend[ed] to use that framework to cabin its discretion.”
Id. at 1233. <A “policy statement,” the court explained, is
merely “an indication of an agency’s current position on a
27
particular regulatory issue.” /d. The court noted that “[tjhe
schedule of fines has been employed in over 300 cases and
only in 8 does the Commission even claim that it departed
from the schedule.” Jd. It was, therefore, a rule.
By contrast, in this case EPA has never identified any
instance where it deviated from its potency factor in choosing
a dioxin remedy. This case is indistinguishable from General
Elec. Co. v. EPA, 290 F.3d 377, 384-85 (CADC 2002), where
the D.C. Circuit vacated an EPA “guidance document” with a
cancer potency factor for polychlorinated biphenyls
(“PCBs”). The court held that the guidance dccument was a
legislative rule, not a policy statement, and therefore should
have been issued only with the benefit of notice and comment
rulemaking. Jd. at 383-85. A guidance document that the
agency “administers with binding effect” qualifies as a rule,
and the agency “must observe the APA’s legislative
rulemaking procedures.” Jd. at 383 (citation and internal
quotation marks omitted). The D.C. Circuit stated that “[o]ur
cases likewise make clear that an agency pronouncement will
be considered binding if it . . . is applied by the agency in a
way that indicates it is binding.” J/d.. As in GE, the relevant
document in this case is a guidance document, namely the
1985 Health Assessment, and as in GE, there is no evidence
in the record that EPA retained any discretion whatsoever to
alter the potency factor. If anything, this case is even easier
than GE: whereas EPA’s potency factor for dioxin has
remained unchanged for more than two decades, it appears
that EPA’s factor for PCBs has diminished slightly over the
last twenty years. Compare 290 F.3d at 379 (factors ranging
from 0.04 to 2.0 (mg/kg/day)') with JA22727 (PCBs listed at
4.34 (mg/kg/day)')).
The fact that the potency factor is a number does not
render it any less a legislative rule. Other circuits have often
found that “rules establishing fixed criteria to contro] the
agencies’ decisions” amount to legislative rules. Avoyelles
Sportsmen's League, Inc. v. Marsh, 715 F.2d 897, 910 (CA5
28
1983). For example, in Community Nutrition Institute v.
Young, 818 F.2d 943, 950 (CADC 1987) (per curiam), the
D.C. Circuit held that an FDA “action level” of 20 parts per
billion (ppb) of the contaminant aflatoxin in food was a
legislative rule. Even though the FDA did not publish the
aflatoxin regulation in the C.F.R., and even though exceeding
the “action level” would not, without more, establish a
statutory violation, the Court of Appeals was “convinced that
FDA has bound itself,” and “this type of cabining of an
agency’s prosecutorial discretion can in fact rise to the level
of a substantive, legislative rule.” Jd. at 948. In Batterton v.
Marshall, 648 F.2d 694 (CADC 1980), the D.C. Circuit held
that a statistical formula for allocating unemployment aid
required rulemaking. The court explained that “[a] general
statement of policy” is “like a press release.” Jd. at 706.
“The statistical methodology at issue here does not merely
represent DOL’s future intention. It presents the course the
agency has selected and followed ....” Id. (internal
quotation marks omitted). The Eighth Circuit’s holding is
inconsistent with the D.C. Circuit’s well-reasoned analysis.’°
'© See also Environmental Integrity Project v. EPA, 425 F.3d 992, 998
(CADC 2005) (EPA’s interpretations required notice and comment
rulemaking because they were intended to be “bind[ing]”); Alaska v. DOT,
868 F.2d 441, 447 (CADC 1989) (finding that rules were legislative rather
than interpretive because they were “tests to shape and channel agency
enforcement”); Jerri’s Ceramic Arts v. Consumer Product Safety
Comm'n, 874 F.2d 205, 208 (CA4 1989) (“the Commission has made a
legislative rule and called it an interpretation”); National Knitwear
Manufacturers Ass'n v. Consumer Products Safety Comm'n, 666 F.2d 81,
83 (CA4 1981) (agency’s “characterization of its statement as an
exposition of its policy or interpretation of the standard does not preclude
our finding that it is something more”); Pickus v. United States Board of
Parole, 507 F.2d 1107, 1113 (CADC 1974) (Parole Board’s use of
guidelines established specific factors for determining parole eligibility
and therefore required rulemaking: “they are self imposed controls over
the manner and circumstances in which the agency will exercise its
plenary power”; “they thus narrow [agency’s] field of vision, minimizing
the influence of other factors and encouraging decisive reliance upon
factors whose significance might have been differently articulated”).
29
The question presented is a vital one. The legislative
history of the APA explains that “public participation . . . in
the rulemaking process is essential in order to permit
administrative agencies to inform themselves, and to afford
safeguards to private interests.” S. Rep. No. 248, 79th Cong.,
2d Sess. 19-20 (1946). “In light of the importance of these
policy goals of maximum participation and full information,”
American Hospital Association v. Bowen, 834 F.2d 1037,
1044-45 (CADC 1987), any exemption from the rulemaking
requirement “must be narrowly construed.” United States v.
Picciotto, 875 F.2d 345, 347 (CADC 1989). “A rulemaking
would force important issues into full public display and in
that sense make for more responsible administrative action.”
National Family Planning & Reproductive Health Ass'n, Inc.
v. Sullivan, 979 F.2d 227, 241 (CADC 1992) (internal
quotation marks omitted).
Nothing about this case would require this Court to
second-guess the agency on a substantive matter within its
expertise. Rather, this case involves the enforcement of a
procedural requirement at the heart of the APA: the need for
legislative rules to undergo public scrutiny as part of notice-
and-comment rulemaking.
A legislative rule is one that “provide{s] the policy
decision.” Chamber of Commerce of the U.S. v. OSHA, 636
F.2d 464, 469 (CADC 1980). In this case, EPA has used the
potency factor to make a hidden policy choice and to impose
over $100 billion in regulatory compliance costs across the
country. JA16903, 17713. By labeling its rule as mere
“guidance,” EPA has cynically evaded accountability for its
policy choice, shielded itself from notice-and-comment
rulemaking, and evaded judicial review. EPA was harshly
criticized by some of the nation’s leading toxicologists in a
brief amici curiae filed in the Eighth Circuit. See Brief of
John Doull, et al. (Oct. 3, 2005). These eminent scientists
attacked EPA’s uniform application of its potency factor and
its persistent refusal to consider the persuasive and mounting
30
body of scientific information that supports a different
approach to dioxin risk assessment and regulation. They
noted that EPA’s own Science Advisory Board has criticized
the model creating the agency’s potency factor — a criticism
recently echoed by the National Academy of Sciences. See
Health Risks from Dioxin and Related Compounds:
Evaluation of the EPA Reassessment (July 11, 2006).
This Court should grant review to determine the
lawfulness of a regulatory regime that permits the EPA to set
a $100 billion national policy without responding to contrary
scientific information or subjecting its decisions to public
rulemaking, scientific scrutiny, and judicial review.
CONCLUSION
The petition for wnt of certiorari should be granted.
Respectfully submitted,
W. GORDON HAMLIN, JR. LAURENCE H. TRIBE
V. ROBERT DENHAM, JR. Counsel of Record
POWELL GOLDSTEIN LLP JONATHAN S. MASSEY
One Atlantic Center Hauser Hall 420
Fourteenth Floor 1575 Massachusetts Avenue
1201 W. Peachtree Street, N.W. Cambridge, MA 02138
Atlanta, GA 30309-3488 (617) 495-4621
(404) 572-6600
Counsel for Petitioner
December 2006
See ee ae eee
APPENDIX TABLE OF CONTENTS
APPENDIX A: OPINION OF THE U.S. COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
ERR IEEE Pir Sly DE cicesinansevinectecitiemnrienetentong la
APPENDIX B: OPINION OF THE U.S. DISTRICT
COURT FOR THE EASTERN DISTRICT OF
ARKANSAS DATED MARCH 30, 2005 ........... 25a
APPENDIX C: ORDER OF THE U.S. COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
DATED SEPTEMBER 19, 2006 .......0csssosseseeesees 66a
APPENDIX D: STATUTORY PROVISIONS ................ 67a
APPENDIX A: OPINION OF THE U.S. COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
DATED JULY 13, 2006
United States Court of Appeals,
Eighth Circuit.
UNITED STATES of America, Plaintiff/Appellee,
Arkansas Department of Pollution Control and Ecology,
Plaintiff, |
v.
VERTAC CHEMICAL CORPORATION, Defendant,
Hercules, Inc., Defendant/Appellant,
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,
V.
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/Appellant.
2a
Nos. 05-3147, 05-3153.
Submitted: March 13, 2006.
Filed: July 13, 2006.
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.
A. Factual History
The Jacksonville site was originally developed by the
federal government in the 1930s as a munitions factory. In
' As of January 30, 2001, Uniroyal Chemical Limited changed its name to
Crompton Co./Cie. For consistency, we will use Uniroyal throughout this
opinion.
? The Honorable George Howard, Jr., United States District Judge for the
Eastern District of Arkansas. The Honorable George Howard, Jr., United
States District Judge for the Eastern District of Arkansas.
3a
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 herwicides 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 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
4a
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 eperation 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).°
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
* Transvaal reorganized as Vertac in 1976. In this opinion, we will refer
to both corporations as Vertac.
Sa
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 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.
6a
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
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 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
7a
course of its operation.
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 that Hercules 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) (Vertac X7 ). In
October and December 2001, the district court held an
evidentiary hearing on Hercules's divisibility of harm 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 XJ, and held that Hercules had failed to
establish its divisibility of harm defense, with the exception of
* 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).
* In its most recent opinion, the district court noted an inconsistency in our
Apmi 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 November |, 1993.
8a
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 XT 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.
Il. 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.
9a
Richardson v. Sugg, 448 F.3d 1046, 1052 (8th Cir.2006). We
review its factual findings for clear error. Jd. "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 ari error was made." Jd. We
give due regard to the district court's opportunity to judge the
credibility of the witnesses. Jd. "A district court's choice
between two permissible views of evidence cannot be clearly
erroneous." Jadlock 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
distinct harms. The thrust of Hercules's arguments is factual,
however, and the district court applied the appropriate legal
standard.
In Vertac XT 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 , ssible to prove
divisibility of single harms based on volumetric,
cl:onological 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 (intemal quotations and citations omitted). We
10a
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 XI. 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
on a geogranhical 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 uliimately 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 XT, 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
® 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.
lla
apportioned based on relative quantities of waste or
volumetric evidence. As the government points out, this
argument would have been inconsistent with Hercules's
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
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
12a
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
"i]t 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." Jd.
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
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,
l3a
and that the plant equipment was cross-contaminated with
2,4-D, 2,4,5-T, and dioxin." Vertac XII, 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.
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. |
think we just used water and steam, that's all." J.A. at 27522-
23. 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
14a
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
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 mninety-six vessels sampled, more than half were
contaminated with dioxin at levels greater than 0.3 ppb. J.A.
-
Hercules argues that the government's attorney 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.
15a
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
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. § § 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 _ hiability. 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
16a
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 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" mcludes, "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: "[WJhen 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.
D. Operable Unit 1
OU-1 consisted of the above-ground media, including the
process vessels (e.g. the storage tanks, chemical reaction
17a
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.
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.
8 aaa
Hercules accepted responsibility for the spent carbon wastes it
generated.
18a
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 XI, 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
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
19a
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.
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
eourt 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
20a
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
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 nghts and obligation;
and (2) a policy "genuinely leaves the agency and its
decisionmakers free to exercise discretion." Jd. (internal
2la
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 LX).
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.
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
22a
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 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
23a
generating producis. 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.
Ill. 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 XT. "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
X17 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
24a
application of CERCLA to impose liability is unconstitutional
under the Supreme Court's decision in Eastern Enterprises v.
Apfel, 524 U.S. 498 (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, 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. The judgment is affirmed.
25a
APPENDIX B: OPINION OF THE U.S. DISTRICT
COURT FOR THE EASTERN DISTRICT OF
ARKANSAS DATED MARCH 30, 2005
United States District Court,
E.D. Arkansas,
Western Division.
UNITED STATES of America, Plaintiff,
v.
VERTAC CHEMICAL CORP., et al., Defendants.
No. CIV. 4:80CV00109GH.
March 30, 2005.
MEMORANDUM OPINION AND ORDER
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
Incorporated ("Hercules") and Uniroyal Chemical Limited
("Uniroyal")’ jointly and severally liable under the
Comprehensive Environmental Response, Compensation and
| United States v. 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 vy. Vertac Chem. Corp., 671 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), affd, 961 F.2d 795 (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).
> 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.
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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, 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 Circuit
> The Eighth Circuit's decision is somewhat confusing. The court stated
that it was vacating United States vy. 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. The Court found the United States not to be liable,
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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 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
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").
Vertac V did not grant summary judgment on the United States’
motion for summary sdgmeat against Hercules on the issue of liability
and did not address Hercules’ argument concerning divisibility of harm.
The finding of joint ané several lability of Hercules was issued in an
unpublished decision eaeered on October 12, 1993. (document no. 1826)
(granting United States’ motion for partial summary judgment against
Hercules on the issu> of liabi‘ity under CERCLA). The subsequent order
denying Hercules’ motion for reconsideration on the issue of divisibility,
also unpublished, was entered on November I, 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.
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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,
dichlorophenox yacetic 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 X7 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.
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
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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 J at
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 VII 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 herbic'des and
TCDD dioxin, leached and flowed from the Reasor-Hiil 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 J 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
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. Id. 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. [t 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.
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In 1964, Hercules was awarded a contract to produce
Agent Orange for the U.S. Department of Defense ("DOD").*
It preduced 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.
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 VIIT, 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
» 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).
> 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.
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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
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
redyumming 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.
® The extent of Hercules’ cleanup of the plant is in dispute and is discussed
below.
' December 12, 1988 Deposition of Jerry Keister, p. 6-7.
> The drums of the toluene stillbottoms were still on-site when the State of
Arkansas ordered them to be redrummed. 2001 Tr. at 734.
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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 manufacturing 2,4,5-T and 2,4,5-TP and overpacked
its 2,4,5-T stillbottom drums. Jd.’
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
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
® 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.
'© 2001 Tr. at 354.
'! 45 Fed.Reg. 15592.
? Id.
33a
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 LX 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.
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
'S 45 Fed.Reg. 32678.
4 Hercules contends that the Monsanto results of non-detect were more
reliable than 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.
'S 5001 Tr. at 1647.
© 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.
|
34a
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 LX 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 LX at 772.
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 have
different wastes including 2,4,-D, 2,4,5-T, 2,4,5-TP, dioxins,
'T 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).
'8 4001 Tr. at 1427. Ex. 8073.
35a
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
on the record, whether Hercules had established a basis for
establishing divisibility of harm. The Court of Appeals did
not remand for a new tnal.
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
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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
(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 v. 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 XT 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 X7 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." /n the Matter of Bell
Petroleum Svcs., Inc., 3 F.3d 889, 903 (Sth Cir.1993)(Bell
Petroleum). "{W)here causation is unclear, divisibility is not
37a
an opportunity for courts to 'split the difference’ 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).
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 | (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.
EPA and Uniroyal assert that Hercules cannot establish
that the harm is divisible because of the extensive cross-
is Operable unit means a discrete action that comprises an mcremental
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
probiems, 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.
38a
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.”
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
20 Randal Maud, Hercules’ expert in environmental remediation and
Project Manager at the Site, testified that the Site was divided into “logical
areas of study." At first Operable Unit 1 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.
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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
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
40a
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.
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 placement 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.2* Thus, there should not have been, according to
7! 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.
*? See e.g. Remedial Investigation and Feasibility Study for OU-2.
> See discussion of clean-up of OU-1, infra.
** According to the "flushing theory,” if one makes a batch of 2,4,5-T and
leaves 10% of the 2,4,5-T in the process vessel, each subsequent batch of
4la
Hercules, any residual contamination in the 2,4-D drums
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
into the environment. Additionally, witnesses testified that
because time was of the essence, testing a large number of the
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 residual] material. 2001 Tr. at 366-367.
*> Dr. Moore testified that the issue of "dirt" did not influence the decision.
2001 Tr. at 279. However, she stated that ine major concern with the
drums was the presence of dioxin. 2001 Tr. at 282.
42a
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 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 sumber of actions
taken which would relieve it of responsibility.
6 See e.g. 2001 Tr. at 542, 1787.
43a
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 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 omissicn constituting the primary
negligence.
Pollard v. Union Pacific R. Co., 75 Ark.App. 75, 79, 54
S.W.3d 559, 562-63 (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.
44a
"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 is 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
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
45a
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.
OU-1 (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
77 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 t
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