United States v. Monsanto: Inconsistency in the Government's Position on the Timing of CERCLA Contribution Claims

Alfred R. Light

Mr. Light practices environmental law with the firm of Hunton & Williams in Richmond, Virginia. He was among the attorneys representing the generator defendants in the appeal of United States v. Monsanto in the Fourth Circuit.

[19 ELR 10163]

In September of last year the Fourth Circuit handed down its decision in United States v. Monsanto Co.¹ The court affirmed the imposition of joint and several liability under the Comprehensive Environmental Response, Compensation, and Liability Act² (CERCLA) on site owners and waste generators for governmental response costs incurred at the Bluff Road site in South Carolina. Liability was imposed despite the site owners' lack of involvement in the waste disposal operations carried out by their lessees, and despite the government's failure to offer proof that the generators' substances sent to the site actually were at the site when the response costs were incurred. In holding that the defendants' liability was joint and several, the court found the burden of establishing a basis for apportioning liability to be on the defendants, despite the fact that the federal and South Carolina governments also generated wastes at the site.

The Monsanto case came up in discussion at a conference last fall at which Hank Habicht, former Assistant Attorney General for the Department of Justice's Lands Division, spoke. Habicht noted that the decision had been issued on September 7 — the very date that George Bush, as candidate for the Presidency, had confusedly identified as Pearl Harbor Day. According to Habicht, Monsanto was a devastating "Pearl Harbor" for defendants and so, at least in the Superfund context, Bush had been correct.

Mr. Habicht's characterization of Monsanto is rather typical of the government's proselyting concerning the court's opinion in that case. In the interest of balance in the environmental press, I wish to lay out one particular aspect of the dispute between the government and the generator defendants in Monsanto, for which a petition for certiorari is now pending. The issue is an important one: the timing of CERCLA contribution claims. The general message is also important — a defendant's best arguments may be found in the government's memoranda in other pending cases.

Monsanto

The district court in Monsanto declined to apportion liability among the defendants on the basis of volume of waste handled by the waste disposer for each generator, and instead held them jointly and severally liable.³ The district court believed that cost allocation should be left to a separate action for contribution "after plaintiff has been made whole."⁴ In affirming the district court decision, the Fourth Circuit stated:

Had we sat in place of the district court, we would have ruled as it did on the apportionment issue, but may well have retained the action to dispose of the contribution questions. That procedural course, however, was committed to the trial court's discretion and we find no abuse of it.⁵

In his dissent to the Fourth Circuit majority's decision, Judge Widener disagreed on this issue. He explained that CERCLA § 113(f)⁶ vests discretion in the person seeking contribution to bring or not to bring a claim for contribution in the plaintiff's action.⁷ Noting that § 113(f) provides that "any person" may seek contribution during or following a § 107⁸ action, he rejected the majority's apparent interpretation of § 113 to vest discretion in the trial court to defer decision on contribution claims until after judgment. Judge Widener stated:

[T]he statute plainly provides that discretion with respect to contribution is not in the district court to consider relief or not as the majority opinion holds; rather, it is in the generator to seek relief, for "any person" certainly includes the generators of the waste. So, since the matter was brought before the district court, that court had no discretion but to decide the question … While I agree that the claims may be asserted in a separate action, if they are asserted in the main case they must be decided.⁹

[19 ELR 10164]

Following Fourth Circuit's decision, defendants petitioned for rehearing en banc. In its answer to the petitions, the United States contended that CERCLA § 113(f) "unambiguously" vests the "trial court" with discretion "to decide whether contribution claims are more appropriately considered during or following the government's action under Section 107." The United States thus adopted the majority's view and expressly rejected Judge Widner's interpretation of CERCLA § 113(f).

United States v. Seymour Recycling Corp.

The position of the United States in Monsanto on the timing of contribution claims contrasts sharply with its position in any earlier 1988 case. In United States v. Seymour Recycling Corp.,¹⁰ third-party defendant City of Seymour argued that the district court should not grant the generator defendants' motion for summary judgment on the city's liability in contribution because CERCLA § 113(f) defers decision on contribution claims until after judgment or settlement between the original defendants and the United States.

The United States filed an amicus brief in support of the generator defendants' motion for summary judgment. The brief stated:

When SARA was enacted in 1986, the right of contribution was expressly confirmed. The City, however, claims that "the right to seek contribution arises only after the contribution claimant has settled with the plaintiff and made the plaintiff whole." The United States takes issue with this construction of the statute…. [B]y its express and unambiguous terms, CERCLA provides that contribution claims are ripe before a claimant's accountability is fixed by either judgment or settlement.¹¹

Unresolved Conflict in the United States' Position

In my opinion, the United States' analysis in its Seymour brief follows Judge Widener's interpretation of CERCLA § 113(f), expressed in his dissent in Monsanto. Like Federal Rule of Civil Procedure 14(a), which provides for impleader,¹² CERCLA § 113(f) clearly and unambiguously provides for the acceleration of contribution claims at the option of the defendant. In its answer to the petitions for rehearing in Monsanto, therefore, the United States essentially reversed its interpretation of CERCLA § 113(f), and instead now supports the opposing view. Its two positions directly conflict.

The United States, however, has maintained that there is no conflict. In a letter to the Clerk dated October 13, 1988, counsel for the United States argued that the positions of the United States in Seymour and in Monsanto are "entirely consistent."¹³ He asserted:

Conceding that a contribution claim is ripe does not mean that a court lacks discretion to defer it in order to avoid interference with the government's action to replenish the Superfund. The arguments made in Seymour and in this case are entirely consistent and do not represent a reversal in any sense.¹⁴

The government's argument fails to recognize the general proposition that ripe claims should be heard. Ripeness is the jurisprudential doctrine under which a court is required to evaluate both the fitness of issues presented for decision and the hardship to parties of withholding judicial consideration.¹⁵ When an issue is ripe for decision, the court should not decline to hear the merits.¹⁶

In an order dated October 24, 1988,¹⁷ the Fourth Circuit in Monsanto directed the United States to respond more formally to the Seymour inconsistency charge. The United States did so on October 28,¹⁸ reiterating its "crucial principle" that the district court be able to defer contribution in cases where CERCLA's "purpose of rapidly cleaning up dump sites and placing the costs on those who created the problem" would be served.¹⁹

In this second response, the government distinguished Allied Corp. v. Acme Solvents Reclaiming, Inc.,²⁰ a case in which the court heard contribution claims in the plaintiff's action. The government explained that Allied "was brought by private parties who had cleaned up a site and sought recovery under Section 107(a)(4)(B) of CERCLA … Hence, contribution claims could not have interfered with governmental efforts to clean up a site and replenish the Fund."²¹ The government failed to note that the Monsanto case on appeal was itself a cost recovery case in which judgment was entered after cleanup had been completed. The "distinction" between the cases was thus reduced to the differences in the identities of the plaintiffs and the sources of the cleanup funds.

As a matter of public policy, there is remarkable irony in the government's rationale for delaying contribution [19 ELR 10165] claims. In Monsanto, the generator defendants' "contribution claims" were counterclaims against the plaintiffs, the United States and South Carolina, who were also Bluff Road generators.²² The "two-action" procedure requires that the Superfund finance both the plaintiffs' and defendants' shares, that the generator defendants pay all of the cleanup costs, and that they then bring a new, separate suit against the generator plaintiffs for contribution of the plaintiffs' fair shares. This procedure creates the perverse incentive for liable federal agencies not to pay their appropriate share of cleanup expenses in an expeditious manner. Their shares are in effect financed initially by the Superfund, and then by the liable defendants. A more efficient, effective, and environmentally preferable alternative to this circuitry would be for the liable governmental entities to pay their fair shares of the cleanup costs without use of the Superfund or the generator defendants at all for that purpose.²³

In the end, the United States avoided having to confront these issues further in the Fourth Circuit. On December 2, just a few days before the real Pearl Harbor Day, a plurality of five decided not to rehear Monsanto en banc.²⁴ Four judges voted to rehear the case, but two others disqualified themselves from voting. The generator defendants filed their petition for a writ of certiorari in the United States Supreme Court on February 24, 1989.²⁵

1. 858 F.2d 160, 19 ELR 20085 (4th Cir. 1988).

2. 42 U.S. §§ 9601-9675, ELR STAT. 44001-44081.

3. See United States v. South Carolina Recycling & Disposal, Inc., 653 F. Supp. 984, 995 & n. 8, 14 ELR 20272, 20276 & n. 8 (D.S.C. 1984).

4. See id.

5. 858 F.2d at 173, 19 ELR at 20090 (citing CERCLA § 113(f), 42 U.S.C. § 9613(f), ELR STAT. 44041).

6. 42 U.S.C. § 9613(f), ELR STAT. 44041.

7. See 858 F.2d at 176-177, 19 ELR at 20092 (Widener, J., dissenting in part).

8. CERCLA § 107, 42 U.S.C. § 9607, ELR STAT. 44024.

9. 858 F.2d at 177, 19 ELR at 20092.

10. 686 F. Supp. 696, 19 ELR 20523 (S.D. Ind. 1988).

11. Brief for the United States at 7, United States v. Seymour Recycling Corp., 686 F. Supp. 696 (S.D. Ind. 1988). The court, apparently rejecting the position of the federal government, held that the generator defendants' motion for summary judgment on their contribution claim was premature, saying that while a party may seek contribution during the pendency of a § 107 action, the party may gain contribution only after it has resolved its liability with the United States or a state. 686 F. Supp. at 700, 19 ELR at 20525.

12. See Jennings v. United States, 374 F.2d 983, 986 n.4 (4th Cir. 1967) ("Impleader … avoids the inconvenience and expense of instituting a separate … action."); Lumberman's Mutual Insurance Co. v. Massachusetts Bonding & Insurance Co., 310 F.2d 627, 630 (4th Cir. 1962) (endorsing conditional orders regarding claims asserted under Rule 14(a) that are issued before substantive contribution rights arise). Cf. 3 J. MOORE, W. TAGGART & J. WICKER, MOORE'S FEDERAL PRACTICE § 14.08 (1987) (contribution claims are accelerated under Rule 14(a)).

13. Letter to John Greacen, Clerk of the United States Court of Appeals for the Fourth Circuit, October 13, 1988.

14. Id.

15. See Abbott Laboratories v. Gardner, 387 U.S. 136 (1967).

16. See, e.g., Exxon Corp. v. Federal Trade Comm'n, 588 F.2d 895, 903 (3d Cir. 1978) ("Thus, appellants' first two claims are both fit for judicial resolution and substantial hardship may result to appellants if there is no judicial consideration. Therefore, the district court did not have discretion to decline to hear the merits of these claims.").

17. Letter from John M. Greacen, Clerk, United States Court of Appeals for the Fourth Circuit to David C. Shilton, et al., dated October 24, 1988 ("This will confirm my telephone conversation of today with government counsel instructing him to disregard the inadvertent request from this office dated October 20, 1988, for an answer to the petitions for rehearing and suggestions for rehearing en banc, and instead, to response to appellant's FRAP 28(j) materials submitted on October 7, 1988.").

18. Response of the United States to Appellants' Rule 28(j) Submissions, United States v. Monsanto Co., Nos. 86-1261(L), -1263, -1265 (4th Cir. filed Oct. 28, 1988).

19. Id. at 3.

20. 691 F. Supp. 1100 (N.D. Ill. 1988).

21. Response of the United States to Appellants' Rule 28(j) Submissions, supra note 19, at 3-4.

22. These "claims" really ought to be considered partial defenses to the governments' claims rather than counterclaims for contribution or recoupment. The liability of the plaintiffs is an "equitable reason" why the plaintiffs "ought not to recover" fully from the defendants. See Stone v. White, 301 U.S. 532, 538-39 (1937); Mola Development Corp. v. United States, No. CV 82-0819-RMT(JRx), slip op. at 2 (C.D. Cal. May 6, 1986) ("[A]ny counterclaim for … contribution is illogical … [A]ny basis that could exist for B's counterclaim must be litigated on A's complaint and B's defenses thereto.").

23. Normally, a court of equity disfavors circuity of action and requires that a trustee (i.e., the Fund financing the government's share) and a beneficiary (the liable government agencies) be treated collectively and singularly as a single entity in a single proceeding. See, e.g., Stone v. White, 301 U.S. at 537. See also United States v. Shell Oil Co., 605 F. Supp. 1064, 1082, 15 ELR 20337, 20344 (D. Colo. 1985) ("The United States argues that it and the Department of the Army are one and the same entity as a matter of law."); id. at 1083, 15 ELR at 20344 ("The case is not unlike a common comparative negligence case where a defendant asserts that the injured plaintiff's conduct causes some or all of his own injury. Procedurally, the plaintiff is not joined as a defendant; rather, the court apportions responsibility for the damages.").

24. United States v. Monsanto Co., Nos. 86-1261, -1263, -1265 (4th Cir. Dec. 2, 1988).

25. Monsanto Co., Allied-Signal, Inc., and EM Industries, Inc. v. United States, No. __ (petition filed Feb. 24, 1989).