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United States v. Monsanto Co.

Citation: 19 ELR 20085
No. Nos. 86-1261 et al., 858 F.2d 160/28 ERC 1177/(4th Cir., 09/07/1988) Aff'd in part

The court holds that waste site owners and waste generators are jointly and severally liable for Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) response costs and prejudgment interest, rejecting volume of waste deposited by each party as a reasonable basis for apportioning liability. The United States and South Carolina state governments had incurred the response costs at the Bluff Road site near Columbia, South Carolina. The court first holds owners of the waste site liable under CERCLA § 107(a)(2). Any person who owned the site at the time when hazardous substances were deposited there may be held liable. The third-party defense set out in CERCLA § 107(b)(3) is not available to these site owners, because the defense requires that the site owners have no contractual connection to the third party who deposited the waste, and here the site owners had a lease with the third parties. Moreover, the defense requires that the site owner take precautions against the foreseeable conduct of third parties, but here the site owners did not inspect their property even though they knew they were leasing to a chemical manufacturing company.

The court next holds that the waste generators are liable even though there is no proof that their specific wastes were present at the site at the time of release, so long as hazardous substances "like" those of the generators were found at the site, and the generators' wastes were shipped to the site in the first place. The burden of disproving causation is on the defendant. The court holds that the evidence that these generators' wastes were shipped to another site is insufficient to create a genuine issue of material fact.

The court holds that joint and several liability is appropriate in this case. While CERCLA does not mandate the imposition of joint and several liability, it permits it in cases of indivisible harm. Defendants bear the burden of establishing a reasonable basis for apportioning liability among responsible parties. Apportioning based on volume of waste sent to the site is not reasonable without showing a relationship between waste volume and the releases of hazardous substances and the harm resulting from them. Where hazardous substances have been commingled, there must be some evidence of their individual and interactive qualities. Relative toxicity, migratory potential, and synergistic capacity would also be relevant. The court thus upholds the district court's decision to defer cost allocation until a contribution action among responsible parties is brought. The court notes that although the district court could have retained the action to dispose of the contribution questions, its decision not to do so was not an abuse of discretion.

The court next rules that CERCLA's retroactive liability does not violate the due process clause of the Constitution, since it is rationally related to a valid legislative purpose. Moreover, the imposition of strict and joint and several liability does not convert CERCLA into a bill of attainder or an ex post facto law. CERCLA does not exact punishment.

The court holds that the government may be entitled to prejudgment interest. Although CERCLA did not contain a prejudgment interest provision at the time of the district court decision, CERCLA has since been amended to include such a provision. The general rule is that an appellate court should apply the law as amended unless this would result in manifest injustice or would contravene statutory direction or legislative history to the contrary. No manifest injustice would result in this case, and there is no congressional directive to the contrary. The CERCLA amendments establish prejudgment interest as an element of recovery absent a convincing argument to the contrary, and any such arguments should be addressed first to the district court.

The dissent would have held that the district court was required to retain jurisdiction over the case and decide the apportionment issue.

[District court decisions in this case appear at 14 ELR 20272, 20895; and 17 ELR 20843, 20845, 20847. Briefs in the district court case are digested at ELR PENDING LIT. 65762 and 65804; briefs in the appellate court case are digested at ELR PENDING LIT. 65943 and 65960.]

Counsel for Appellants
George Cleman Freeman Jr., William F. Kennedy, Alfred R. Light, Thomas E. Knauer
Hunton & Williams
707 E. Main St., Richmond VA 23212
(804) 788-8200

Counsel for Appellees
David C. Shilton
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-5580

Before WIDENER, SPROUSE and ERVIN, Circuit Judges.