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United States v. Conservation Chem. Co.

ELR Citation: 16 ELR 20193
Nos. No. 82-0983-CV-W-5, 619 F. Supp. 162/24 ERC 1008/(W.D. Mo., 07/02/1985) Special master's recommendations

The court for the most part approves the recommendations and adopts the reasoning of a special master on a host of issues concerning the liability of owners and operators, generators, and third-party generator defendants in a federal action for response costs and injunctive relief under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the imminent hazard provision of the Resource Conservation and Recovery Act (RCRA). The court enters its rulings in summary form, appending the lengthy master's report. The summary rulings cover seven sets of issues, for each set first identifying the issues on which the court grants summary judgment and then the issues to be resolved after further litigation.

Starting with plaintiff's motions for summary judgment on liability issues under CERCLA §§106(a) and 107(a) and RCRA §7003, the court holds the Conservation Chemical Company (CCC), the company that owned and operated the Kansas City disposal site, and Conservation Chemical Company of Illinois (CCCI), a company that accepted waste in Illinois for transport to and disposal in the CCC site, are liable under CERCLA §107(a) for government response costs incurred at the site. The master concluded that (1) the CCC site is a "facility" for the purposes of that section since hazardous substances came to be located there, (2) there has been a release and a threatened release of hazardous substances from the site, (3) the government has incurred response costs of the types reimbursable under CERCLA, and (4) CCC is the current owner of the site and therefore liable under CERCLA §107(a)(1) and was the owner at the time hazardous substances were disposed of there, covered by §107(a)(2) while CCCI arranged for the disposal of hazardous substances at the site within the meaning of §107(a)(3) and is also liable as a transporter under §107(a)(4). The court rejects the master's recommendation that CCC and CCCI, who did not dispute that the government's response costs were consistent with the CERCLA national contingency plan (NCP), be barred from challenging the consistency of those costs at trial. The court grants plaintiff's motion for summary judgment on its response cost claim against CCC and CCCI for those response costs that defendants do not prove inconsistent with the NCP at trial.

The court holds that there is an imminent and substantial endangerment at the CCC site within the meaning of CERCLA §106. The master interpreted §106 broadly: there is no need to prove an actual endangerment, just the risk of an endangerment; the endangerment may be to human health, human economic or aesthetic interests, or to the environment; the government need not quantify the risk of harm; and there is no need to show that the situation is an emergency. The master concluded that defendants' own limited remedial investigation, which found that substantial quantities of substances hazardous to human health and environmental resources had leaked from the CCC site exposing some people in the vicinity to the substances, was sufficient to support a finding that an imminent and substantial endangerment exists as a matter of law. The court grants plaintiff's summary judgment motion.

The court holds that CCC and CCCI are liable for the injunctive relief requested by plaintiff under CERCLA §106, granting plaintiff's summary judgment motion. The mastere asserted that §107(a) determines who may be liable under § 106 as well.

The court holds that there is an imminent and substantial endangerment at the site as defined in RCRA §7003. The master concluded that the evidence demonstrating such endangerment for CERCLA satisfies the requirements of §7003. The court grants plaintiff's summary judgment motion.

The court holds that CCC is liable to abate the endangerment under §7003, granting plaintiff's summary judgment motion. The master found that the endangerment at the site resulted from the "disposal" of "hazardous wastes" as defined in RCRA. The master recommended a holding on liability only for CCC, however. As owner and operator of the site when the wastes were disposed of, CCC clearly "contributed to" the endangerment and is liable.

The court rules that the scope of liability under RCRA §7003 is joint and several unless the harm is divisible. The master recommended this ruling on the theory that §7003 by its terms grants the courts broad power to order whatever relief is necessary to abate the endangerment and is essentially a codification of common-law nuisance, the modern rule that imposes joint and several liability. Again, the court grants plaintiff's motion for summary judgment.

The court declines to rule on the scope of the endangerment, based on the master's conclusion that the parties dispute basic questions on this subject. The master also noted that generator defendants claim that the government's response costs are not consistent with the NCP and the court allows all defendants to further litigate this issue. The court also accepts the master's recommendation not to rule on the liability of generator defendants under CERCLA §§106 and 107 because they raised questions of fact about whether their wastes had indeed been shipped to the CCC site.

The court rules that RCRA §7003 incorporates a causation requirement and declines to rule on the liability of generators pending further explication of their contribution to the endangerment. The master recommended ruling that the RCRA provision requires proof of causation since it is a codification of common law nuisance principles. He recommended that the court rule that a generator is liable under §7003 only if the government can show that the generator's wastes are contributing to the endangerment, or where wastes from several generators have been mixed together, that wastes of the type sent to the site by the generator are contributing to the problem.

The court denies the government's motion for summary judgment on the recoverability of response costs under RCRA §7003. The master concluded that the court might be able to award response costs under the equitable doctrine of restitution, but that whether such an award is appropriate could only be determined after a full examination of the equities of the case.

The court denies the motions for summary judgment on the indivisibility of the injury and the personal liability of the president and majority stockholder of CCC. As to personal liability under CERCLA, the master reviewed the case law and concluded that individuals who personally take responsibility for the operation of hazardous substance disposal may be held liable under §107(a)(1) or (a)(2). He recommended that the court not rule on the issue on the incomplete factual record available on the summary judgment motion, however.

Turning to the plaintiff's motions for summary judgment on defenses, the court first rules that CERCLA §107(b) provides affirmative defenses to strict liability under §§106(a) and 107(a). Although the court notes that it is ruling over the master's recommendation, the master concluded that §107(b) enumerated affirmative defenses to strict liability.

The court next rules that equitable defenses are available under CERCLA. The master concluded that equitable defenses are available under §106(a) because that section is built of equitable considerations. Since the same liability standards apply in §107, equitable defenses also are available under that section. Defenses of laches, unclean hands, waiver, and estoppel all might be available.

The court rules that the government need not comply with the prerequisites to recovery in CERCLA §§104 or 112(a) in actions under §§106(a) or 107(a). The master concluded that listing a site on the national priority list (NPL), a cooperative agreement with the state, or compliance with the 60-day notice requirement of §112(a) are not required in abatement or cost-recovery actions. The master also concluded that plaintiff was entitled to a declaration of defendants' liability for future response costs. The court also rules, in accord with the master's recommendation, that compliance with the notice provisions of RCRA §3008 is not a prerequisite to a §7003 action.

The court rules that the availability of a remedy at law does not preclude a grant of injunctive relief under CERCLA or RCRA. The master concluded that injunctive relief is available, but whether it is granted is a matter to be determined by the court in the exercise of its equitable discretion.

Following the recommendation of the master, the court rules that the statute of limitations in CERCLA §112 does not apply to cost recovery or abatement actions, but notes again that the defense of laches might be available.

The court rules that the provisions of CERCLA and RCRA invoked by plaintiff are not facially unconstitutional. The master concluded (1) that constitutional challenges to the provisions as applied were premature, (2) that CERCLA does not violate the Contracts Clause, since the clause applies only to state legislation, or, alternately, since CERCLA does not substantially impair defendants' contracts with CCC, (3) that CERCLA does not violate the ban on ex post facto legislation, which applies only to criminal laws, (4) that imposition of joint and several liability under CERCLA does not violate equal protection because rights of contribution are available, (5) that there is no taking because the government action seeks money, but does not infringe on any of defendants' property rights, (6) CERCLA and RCRA §7003 are retroactive beause they create new duties and obligations, but are constitutional because the retroactivity serves a legitimate legislative purpose, and (7) the liability scheme of CERCLA, as advanced by the government, does not violate substantive due process.

The court rules that one generator defendant's mining wastes may be hazardous substances despite the exception for mining wastes in RCRA.

The court next addresses motions for summary judgment on defendants' rights of contribution and whether third-party defendants are subject to joint and several liability. It first rules that if joint and several liability is imposed under CERCLA §§106 or 107, a right of contribution exists against responsible parties not sued by plaintiffs. The master concluded that CERCLA invites development of a federal common law of liability and that rights of contribution should be available. The court follows the master's recommendation in ruling that third-party defendants' liability is several, not joint and several, since obligations of contribution are limited to the third-party tortfeasor's equitable share of the injury, and that third-party plaintiffs cannot seek injunctive relief under CERCLA or RCRA.

The court rules that the principle of de minimis non curat lex does not apply to CERCLA defendants. The master points out that the equitable basis of CERCLA relief allows courts to protect those who contributed trivial shares of the hazardous substances in a site and that CERCLA's definition of "hazardous substance" does not take into account the volume or concentration of the toxic materials.

The court rules that a generator may be liable under CERCLA §107 even though it did not select the disposal site, it transferred ownership to a transporter who also is liable, or the hazardous substances went to a site selected by the generator, but were transshipped to another site. The master concluded that the language and legislative history of §107(a)(3) make clear that selection of the site is not a prerequisite to generator liability. He rejected the argument that this result would produce duplicate liability among generators and transporters, finding that the statute clearly contemplates multiple liability, and concluded that transshipment of the waste by a third party does not absolve generators of liability.

The court rejects a third-party defendant's motion for summary judgment, which was based on the third-party defense in §107(b), but notes that the defense may be raised again in the trial on liability. Defendant argued that another, the waste transporter, was solely responsible for arranging for disposal at the CCC site, and that defendant's contractual relationship with the transporter did not defeat the defense, because the contract specified disposal at another site. The master expressed doubts about the validity of the defense in light of his earlier recommendation that transshipment be held not to obviate generator liability and concluded that defendant had not, and on a summary judgment probably could not, prove all the elements of the defense including the exercise of due care.

The court next adopts in their entirety the master's conclusions and recommendations on factual generator liability issues, liability for hazardous substances sold to CCC for use in treating other substances, in personam jurisdiction, and whether a company that formerly owned the CCC site could be liable as an owner or operator.

The master concluded that summary judgment on liability could not be granted against original and third-party generator defendants because they alleged that their wastes had never been taken to the CCC site or had been removed or treated before the releases occurred. Though noting that the government need not prove that a specific defendant's wastes were in fact released and that CERCLA would impose liability unless a generator whose hazardous substances did reach the site could prove that 100 percent had been destroyed or removed, the master concluded that the generator claims presented enough of an issue of material fact to bar summary judgment.

The master recommended that certain defendants who sold CCC materials constituting hazardous substances under CERCLA for use in treating wastes be denied summary judgment on the issue of liability. In rejecting one defendant's motion, the master concluded that the defendant's fly ash could be a hazardous substance even though it is not a hazardous waste under RCRA, because defendant did not prove that it does not contain other listed hazardous substances. Nor, the master concluded, are defendants' materials exempted from classification as hazardous substances by virtue of the fact that they were used to treat other hazardous substances. The master next rejected defendants' argument that they had not "arranged for disposal" of their materials because they sold the materials to CCC. He concludes that the key question is not whether the generator's intent in sending hazardous substances to a site was disposal or earning a profit, but rather whether the defendant was the one who made the decision as to the disposition of the hazardous substances.

The master recommended that third-party generator defendants whose only contacts with Missouri were that their hazardous substances were sent to the CCC site should be held subject to the district court's in personam jurisdiction. The result is consistent with both the Missouri long-arm jurisdiction statute and the requisites of due process. Defendants' acts in another state had the effect in Missouri of contributing to releases of hazardous substances, an effect that is essentially tortious. The nationally uniform statutory scheme of CERCLA negates the need to show intent to have this effect in Missouri or that the result was forseeable.

The master recommended denial of the summary judgment motion of a company that formerly owned the land on which the CCC site is located and continues to own adjacent property. Whether hazardous substances were disposed of on the land prior to its sale to CCC is an issue in dispute. Although no court has held an adjacent landowner liable under CERCLA, the master concludes that third-party plaintiffs could conceivably prove facts that would hold the adjacent landowner liable for response costs incurred on the CCC site.

Finally, the court defers ruling on a third-party generator defendant's motion for summary judgment absolving it of liability for the acts of a corporate predecessor. The master concluded that in light of new information submitted by defendant, it was impossible to resolve whether defendant was a continuation of a corporate predecessor that is clearly subject to liability as a generator on the summary judgment motion.

Counsel for Plaintiff
Kenneth Josephson, Ass't U.S. Attorney
549 U.S. Cthse., 811 Grand Ave., Kansas City MO 64106
(816) 374-3122

John R. Barker
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-3907

Counsel for Defendants
Michael E. Waldek, John L. Hayob, Terry L. Karnaze
Niewald, Waldek, Norris & Brown
2500 Commerce Tower, Kansas City MO 64105
(816) 842-3512

Jerome T. Wolf, Carl H. Helmstetter
Spencer, Fane, Britt & Browne
1000 Power & Light Bldg., 106 W. 14th St., Kansas City MO 64105
(816) 474-8100