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20 ELR 20879 | Environmental Law Reporter | copyright © 1990 | All rights reserved United States v. BlissNo. 84-2086C(1) (E.D. Mo. September 27, 1988)The court holds that four defendants — the person arranging to transport and dispose of hazardous waste, his corporate successor, the corporation owning a site where waste was deposited, and a corporate officer of the corporation that owned the site — are jointly and severally liable under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) for response costs incurred by the federal government and Missouri at two sites. The court first holds that the sites are facilities under CERCLA because they are areas where hazardous substances were deposited. The court holds that there was a release of hazardous substances from the sites and that the federal and state governments have incurred response costs in connection with the cleanup of the sites. The court holds that the person arranging for disposal and transport of the waste is a responsible person under CERCLA § 107(a)(3) even if he did not know where the waste would be deposited or that it was hazardous. The court holds that retroactive application of CERCLA to this defendant's conduct is not unconstitutional. The court holds that the first defendant's corporate successor is also liable under CERCLA § 107(a)(3). The court, referring to Missouri law, rules that the doctrine of successor liability applies to CERCLA cases. The court then holds that collateral estoppel bars relitigation of the successor liability issue, which was litigated fully and fairly by the Missouri Supreme Court. The court holds that the statutory trustees of a company that owned one of the sites when hazardous substances were disposed there are liable under § 107(a)(2). The court holds that the president of this company is personally liable under § 107(a)(2). The government does not have to pierce the corporate veil to impose personal liability on a corporate officer when a corporate officer who owns interest in a facility and is actively participating in its management can be held liable as an owner or operator of the facility. Finally, the court holds that defendants are jointly and severally liable for the government's response costs, since there is no reasonable basis for apportioning the harm. Joint and several liability is imposed where two or more persons cause a single and indivisible harm and each is subject to liability for the entire harm. Counsel for Plaintiffs Joseph Moore, U.S. Attorney General Brian G. Donohue Counsel for Defendants Eric Rothenberg Nangle, J.: This matter is now before the Court on the motions of the United States and the State of Missouri for partial summary judgment. In these consolidated cases, the United States and the State of Missouri seek recovery of costs incurred in connection with responding to the actual or threatened release of hazardous substances at two sites near Ellisville, Missouri pursuant to § 107(a) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), as amended, 42 U.S.C. § 9607(a). By the present motion, the United States seeks partial summary judgment on the issue of liability against defendants Russell Martin Bliss and Jerry-Russell Bliss, Inc. for the recovery of costs incurred in connection with environmental response actions at the Ellisville/Callahan site and against defendants Russell Martin Bliss, Jerry-Russell Bliss, Inc., Ben D. Houlihan, and Edward J. Houlihan, as statutory trustees of the Houlihan Nursery Company, and Joseph P. Houlihan, Jr., individually and as a statutory trustee for the Houlihan Nursery Company, for the recovery of response costs in connection with the Ellisville/Rosalie site. The State of Missouri seeks partial summary judgment on the issue of liability against defendants Russell Martin Bliss and Jerry-Russell Bliss, Inc. for recovery of response costs in connection with the Ellisville/Callahan and Ellisville/Rosalie sites. A. The Ellisville/Callahan Site During the late 1960's and continuing through the mid 1970's, Russell Martin Bliss, doing business as Bliss Waste Oil Company, Bliss Waste Oil Service and other similar names, arranged with American Can Company (reorganized as Primerica Corporation and American National stional Can Company), General Cable Corporation (presently a subsidiary of G.K. Technologies, Inc.), the Orchard Corporation of America, and Kisco Company, Inc. (hereinafter collectively referred to as generator defendants) to dispose of drums of industrial waste from facilities owned or operated by the generator defendants.1 Russell Martin Bliss, in turn, hired Grover Callahan2 to transport and dispose of the drummed industrial waste. Callahan transported several hundred drums of waste to the Ellisville/Callahan site, where he resided with his wife Jean Ellen Callahan, and disposed of them in a ravine on the property. In 1978, Jerry-Russell Bliss, Inc. was incorporated and took over the unincorporated waste disposal business formerly conducted by Russell Martin Bliss. In September 1980, the Missouri Department of Natural Resources (MDNR) collected samples of the contents of the drums buried at the Callahan site and leachate in the disposal area. The laboratory analysis of the samples revealed the presence of napthalene, bis (2-ethyl hexyl) phthalate, di-n-butyl phthalate, diethyl phthalate and dimethyl phthalate, nitrobenzene, isophorone and phenol and confirmed that these substances were released at the site. In January through February 1982, the Environmental Protection Agency (EPA) and the MDNR undertook immediate removal actions at the Callahan site which included excavation and disposal of over 1200 drums of waste. In July 1985, the EPA determined, on the basis of a remedial investigation and feasibility study, that remedial actions should be implemented to control erosion and slippage of the excavated area and to remove vestiges of the removal response action. The United States and the State of Missouri incurred response costs in connection with the removal of waste materials from the Callahan site. B. The Ellisville/Rosalie Site Grover Callahan also transported drums of industrial waste from the generator defendants to the Ellisville/Rosalie site. The Rosalie site was owned by the Houlihan Nursery Company from approximately 1953 to 1980. The Houlihan Nursery Company was a Missouri corporation until January 1, 1983 when its corporate charter was forfeited and cancelled by the Secretary of State of Missouri for failure to comply with annual registration requirements. Joseph P. Houlihan, Jr., Edward J. Houlihan and Ben D. Houlihan, who were officers and directors of the Houlihan Nursery Company at the time of the forfeiture, thereafter became statutory trustees of the corporation pursuant to Missouri Revised Statute § 351.525(4). Each of the Houlihan defendants owned 20% of the stock in the Houlihan Nursery Company. Joseph P. Houlihan, Jr., former President of the Houlihan Nursery Company, resided at the Rosalie site and gave Callahan permission to dispose of the drums on the property. Houlihan also assisted Callahan in unloading some fo the drums at the site. In September 1980, the MDNR collected samples of the contents of the drums disposed of at the Rosalie site. The laboratory analysis of the samples revealed the presence of naphthalene, bis [20 ELR 20880] (2-ethyl hexyl) phthalate, di-n-butyl phthalate, diethyl phthalate, anthracene/phenanthrene, heptachlor, bis (2-chloroethyl) ether, nitrobenzene, di-n-octyl phthalate, chrysene/benzo(a) anthracene, dibenzo (a,H) anthracene and N-nitrosodiphenylamine. In June 1981, the MDNR removed approximately 150 drums from the Rosalie site. In July 1985, the EPA determined, on the basis of a remedial investigation and feasibility study, that remedial actions, including removal and offsite disposal of contaminated soil, drums and other debris, were necessary. The United States and the State of Missouri incurred response costs in connection with the removal of waste from the Rosalie site. In determining whether summary judgment should issue, the facts and inferences from these facts are viewed in the light most favorable to the non-moving party and the burden is placed on the movingparty to establish both the absence of a genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving party has met this burden, however, the non-moving party may not rest on the allegations in its pleadings but by affidavit and other evidence must set forth specific facts showing that a genuine issue of material fact exists. Fed. R. Civ. P. 56(e). See also 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2739 (1983). Recently, the Supreme Court noted that: "Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal rules as a whole, which are designed to 'secure the just, speedy and inexpensive determination of every action'." Celotex, 477 U.S. at 327 (quoting Fed.R.Civ.P. 1). Thus, the non-moving party "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. "Where the record as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial'." Id. at 587. The Eighth Circuit has acknowledged that the "trilogy of recent Supreme Court opinions" demonstrates that the courts should be "more hospitable to summary judgments than in the past" and that a motion for summary judgment "can be a tool of great utility in removing factually in substantial cases from crowded dockets, freeing courts' trial time for those cases that really do raise genuine issues of material fact." City of Mt. Pleasant, Iowa v. Associated Electric Cooperative, Inc., 838 F.2d 268, 273 (8th Cir. 1988). In 1980, Congress enacted CERCLA to provide a comprehensive scheme for responding to the problems associated with abandoned and inactive hazardous waste disposal sites. H.R. Rep. No. 1016, 96th Cong., 2d Sess. 22, reprinted in 1980 U.S. Code Cong. & Admin. News 6119, 6125.3 Section 104 of CERCLA authorizes the federal and state governments to clean up hazardous waste sites, and then seek recovery of costs incurred in connection with the cleanup from the responsible parties pursuant to § 107 of CERCLA. 42 U.S.C. §§ 9604, 9607; United States v. Northeastern Pharmaceutical & Chemical Co., Inc., 810 F.2d 726, 733 [17 ELR 20603] (8th Cir. 1986), cert. denied, 108 S. Ct. 146 (1987).4 Government response actions include either short-term "removal" actions or long-term, permanent "remedial" actions, or both. 42 U.S.C. §§ 9610(23), (24), 9604. The government may recover its costs for both types of response actions from responsible persons pursuant to § 107(a) of CERCLA. 42 U.S.C. § 9607(a). Section 107(a) provides that the following persons are responsible for response costs incurred by the federal or state government: (1) the current owners or operators of a vessel or facility; (2) any person who owned or operated any facility at the time when hazardous substances were disposed of; (3) any person who, by contract, agreement or otherwise, arranged for disposal, treatment, or transport of hazardous substances; and (4) any person who transports a hazardous substance to a facility selected by the transporter.5 To establish liability under § 107(a) of CERCLA, the United States and the State of Missouri must establish the following: (1) each site is a "facility"; (2) there has been a "release" or "threatened release" of a "hazardous substance" from the Callahan and Rosalie sites; (3) the United States and the State of Missouri have incurred response costs in connection with the release or threatened release; and (4) each defendant falls within at least one of the four categories of responsible persons set forth in § 107(a)(1)-(4). See T&E Industries, Inc. v. Safety Light Corp., 680 F. Supp. 696, 708[18 ELR 20926] (D.N.J. 1988); United States v. Bliss, 667 F. Supp. 1298, 1304 [18 ELR 20055] (E.D. Mo. 1987); United States v. Stringfellow, 661 F. Supp. 1053, 1059 [17 ELR 21134] (C.D. Cal. 1987); United States v. Conservation Chemical Co., 619 F. Supp. 162, 184 [16 ELR 20193] (W.D. Mo. 1985). CERCLA defines "facility" broadly to encompass "any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located . . ." 42 U.S.C. § 9601(9)(B), as well as any building, well, landfill, motor vehicle or other container from which hazardous substances have been released. 42 U.S.C. § 9601(9)(A); Bliss, 667 F. Supp. at 1305; United States v. Metate Asbestos Corp., 584 F. Supp. 1143, 1148 [14 ELR 20433] (D. Ariz. 1984). In the present case, the Callahan and Rosalie sites are facilities within the meaning of CERCLA because they are areas where hazardous substances were deposited. Section 101(14) of CERCLA defines hazardous substances by incorporating substances identified by name or characteristic under a variety of federal environmental statutes. 42 U.S.C. § 9601(14). Section 102 of CERCLA authorizes the Administrator of the EPA to promulgate regulations listing the elements, compounds and wastes designated as hazardous substances. 42 U.S.C. § 9602(a). The substances recovered by the Missouri Department of Natural Resources from the Callahan and Rosalie sites are within CERCLA's definition of hazardous substances because each of the substances appears on the EPA list of hazardous substances. See 40 C.F.R. Part 302 (1987), Table 302.4 — List of Hazardous Substances and Reportable Quantities.6 Therefore, plaintiffs have established the first element of liability under CERCLA. B. Release or Threatened Release There was clearly a "release" of hazardous substances from [20 ELR 20881] the Callahan and Rosalie sites. Section 101(22) of CERCLA defines "release" as "any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment (including the abandonment or discarding of barrels, containers, and other closed receptacles containing any hazardous substance or pollutant, or contaminant)." 42 U.S.C. § 9601(22). The presence of hazardous substances in the drums disposed of at the Callahan and Rosalie sites and in the leachate flowing from the disposal area constitutes a release. Therefore, plaintiffs have established the second element of liability under CERCLA. The federal and state governments have incurred response costs in connection with the cleanup of the Callahan and Rosalie sites. As a result of the disposal of the drummed industrial waste at the Callahan and Rosalie sites, the federal and state governments initiated a variety of response actions including removal of the drummed waste and disposal of contaminated soil and other debris. The affidavit of John C. Anderson, an employee of the EPA, dated February 8, 1988, indicates that the EPA has expended in excess of $ 1 million for response actions in connection with the Callahan and Rosalie sites. The affidavit of Nicholas DiPasquale, Director of the Missouri Waste Management Program, dated April 21, 1988, indicates that the State of Missouri has expended in excess of $ 250,000 in connection with the cleanup of hazardous waste at the Callahan and Rosalie sites. Therefore, plaintiffs have established the third element of liability under CERCLA. In addition to the three elements discussed above, the United States and the State of Missouri must establish that the defendants fall within at least one of the four categories of responsible persons set forth in § 107(a) of CERCLA. 42 U.S.C. § 9607(a). 1. Liability of Russell Martin Bliss The United States and the State of Missouri assert that defendant Russell Martin Bliss is liable under § 107(a)(3) as the party who arranged for disposal of hazardous substances and under § 107(a)(4) as a transporter, through Grover Callahan, of the hazardous waste. The undisputed facts establish that Russell Martin Bliss arranged for the disposal of the hazardous waste with the generator defendants and arranged for the transport of the hazardous substances with Grover Callahan. Bliss argues that he cannot be held liable under CERCLA because he did not generate or transport the hazardous waste, did not choose the disposal site, and did not know that the materials for which he arranged disposal were hazardous substances. Bliss also challenges the constitutionality of retroactive application of CERCLA. Section 107(a)(3) encompasses not only generators of hazardous waste but also non-generators who merely arrange for the disposal and transport of hazardous waste. Bliss, 667 F. Supp. at 1306. It is not necessary for the person who arranges for disposal or transport to own or possess the waste or to actually transport the waste for liability to attach under § 107(a)(3). Northeastern Pharmaceutical, 810 F.2d at 743; United States v. Mottolo, 629 F. Supp. 56, 60 [14 ELR 20497] (D.N.H. 1984). Section 107(a)(3) also does not require the party who arranges for disposal to know where the substances will be deposited. United States v. Ward, 618 F. Supp. 884, 895 [16 ELR 20127](E.D.N.C. 1985). To add such a requirement to § 107(a)(3) would permit those who arrange for disposal of hazardous waste to avoid liability under CERCLA by allowing the transporter or some other party to select the disposal site. Id. If Congress had intended liability under § 107(a)(3) to attach only if the party who arranged for disposal selected the disposal site, Congress could have included an express requirement of site selection under § 107(a)(3) as it did under § 107(a)(4). In his affidavit, Bliss concedes that he arranged with Grover Callahan to dispose of the generator defendant's drummed waste, but suggests that he should not be held liable under CERCLA because Grover Callahan was a self-employed subcontractor responsible for his own actions. Section 107(b) sets forth three defenses to liability under § 107(a) of CERCLA.7 The third-party defense set forth in § 107(b)(3) provides that a person will not be held liable if the release or threat of release was caused solely by the act or omission of a third party. This defense is not available, however, when the acts or omissions of the third party occur "in connection with a contractual relationship, existing directly or indirectly, with the defendant." 42 U.S.C. § 9607(b)(3). The contractual relationship between Bliss and Callahan places Bliss beyond the scope of the third-party defense. See Bliss, 667 F. Supp. at 1304 n.3; Ward, 618 F. Supp. at 895. Bliss cannot avoid liability under § 107(a) by contending that he did not know that the substances disposed of were hazardous substances. CERCLA imposes strict liability upon responsible parties without regard to the defendant's culpability or state of mind subject only to the three limited defenses set forth in § 107(b). State of New York v. Shore Realty Corp., 759 F.2d 1032, 1044 [15 ELR 20358] (2d Cir. 1985); Bliss; 667 F. Supp. at 1304; Stringfellow, 661 F. Supp. 1062; United States v. Dickerson, 640 F. Supp. 448, 451 [16 ELR 20970] (D. Md. 1986); United States v. Conservation Chemical Co., 589 F. Supp. 59, 62 [14 ELR 20207] (W.D. Mo. 1984).8 Therefore, Bliss' defense of lack of knowledge, which is based upon defendant's mental state and not upon one of the defenses enumerated in § 107(b), must fail. In a related argument, Bliss contends that application of CERCLA to his actions, which occurred prior tothe enactment of CERCLA in 1980, would be unconstitutional. The Eighth Circuit, in United States v. Northeastern Pharmaceutical & Chemical Co., Inc., rejected constitutional challenges to retroactive application of CERCLA and held that CERCLA could be applied to impose liability upon responsible parties for acts committed prior to the effective date of the statute. Northeastern Pharmaceutical, 810 F.2d at 734. The Eighth Circuit found that although CERCLA does not expressly provide for retroactivity, the statutory language which refers to prior conduct and events and the remedial nature of the statutory scheme indicates that Congress intended CERCLA to have retroactive effect. Id. at 733-34. Other courts have likewise concluded that retroactive application of CERCLA is constitutional. Dickerson, 640 F. Supp. at 451; United States v. Ottati & Goss, Inc., 630 F. Supp. 1361, 1398 [16 ELR 20763] (D.N.H. 1985); Conservation Chemical Co., 619 F. Supp. at 218-22; United States v. Shell Oil Co., 605 F. Supp. 1064, 1072 [15 ELR 20337] (D. Colo. 1985); State ex rel. Brown v. Georgeoff, 562 F. Supp. 1300, 1314 (N.D. Ohio 1983). Based upon the foregoing authority, the Court finds that retroactive application of CERCLA to defendant Bliss' conduct is constitutionally permissible. The Court concludes that Russell Martin Bliss is liable under § 107(a)(3) of CERCLA because he arranged for the disposal of hazardous waste with the generator defendants and arranged for the transport of the waste with Grover Callahan.9 2. Liability of Jerry-Russell Bliss, Inc. The United States and the State of Missouri assert that Jerry-Russell Bliss, Inc. is liable under CERCLA as a successor in liability to the unincorporated waste oil disposal business formerly conducted by Russell Martin Bliss. Plaintiffs rely upon the Missouri Supreme Court decision in Jerry-Russell Bliss, Inc. v. Hazardous Waste Management Comm'n, 702 S.W.2d 77 [16 ELR 20492] (Mo. 1986) and the doctrine of collateral estoppel to establish the successor in liability status of Jerry-Russell Bliss, Inc. The Court must initially determine whether and under what circumstances the doctrine of corporate successor liability applies in CERCLA actions. CERCLA fails to expressly address the issue of corporate successor liability. Because hazardous waste disposal and release is a problem of national magnitude and involves substantial federal interests, the courts have concluded that Congress intended the courts to apply federal common law principles to fill in the gaps in CERCLA's statutory scheme.10 See Smith Land & Improvement Corp. v. The Celotex Corp., 851 F.2d 86, 91 [18 ELR 21026] (3d Cir. 1988); United States v. A&F Materials Co., 578 F. Supp. 1249, 1255 [14 ELR 20105] (S.D. Ill. 1984); United States v. Chem-Dyne Corp., 572 F. Supp. 802, 809-10 [13 ELR 20986] (S.D. Ohio 1983); see also Bliss, 667 F. Supp. at 1308 n. 8 (suggesting that interest in national uniformity favors application of federal common law). In fashioning the appropriate federal common law rule, the Court may refer to state common law for guidance as long as it is compatible with the purposes of the federal statute. Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 457 (1957). Under Missouri law, a corporation may be held liable as a successor for the debts and liabilities of the transferor corporation only when (1) the purchasing corporation expressly or impliedly agrees to assume the seller's debts; (2) the transaction amounts to a consolidation or merger of the corporations; (3) the purchasing corporation is merely a continuation of the selling corporation; or (4) the transaction is entered into fraudulently to escape liability. Brockman v. O'Neill, 565 S.W.2d 796, 798 (Mo. App. 1978), see also Tucker v. Paxson Machine Co., 645 F.2d 620, 622 (8th Cir. 1981) (applying Missouri law). The Missouri doctrine of corporate successor liability is consistent with generally recognized common law principles of successor liability. See 19 Am. Jur. 2d Corporations §§ 2704-2705 (1986); W. Fletcher, 15 Cyclopedia of the Law of Private Corporations §§ 7122-7123 (1983); Annotation, Similarity of Ownership or Control as Basis for Charging Corporation Acquiring Assets of Another with Liability for Former Owner's Debts, 49 A.L.R. 3d 881, 883 (1973). Imposition of successor liability under the circumstances permitted under Missouri law would further CERCLA's policy of placing the burden of response costs upon responsible parties rather than the public at large. See Smithland, 851 F.2d at 92. Having concluded that the imposition of successor liability is consistent with the purposes underlying CERCLA, the Court must now address the plaintiffs' collateral estoppel argument. In Jerry-Russell Bliss, Inc. v. Hazardous Waste Management Comm'n, 702 S.W.2d 77 [16 ELR 20492] (Mo. 1986), the Missouri Supreme Court, which was faced with the precise issue of successor liability raised in the present case, ruled that Jerry-Russell Bliss, Inc. was merely a continuation of the former unincorporated Bliss Waste Oil Company owned and operated by Russell Martin Bliss, and was thus responsible for the actions of the predecessor company, its principals, and its employees. Id. at 82-83. Under the federal full faith and credit statute, a federal court must give the same preclusive effect to a prior state court judgment that the state court would give to the judgment. 28 U.S.C. § 1728. The statute requires the federal court to apply the state's standards of collateral estoppel (issue preclusion) as well as its standards of res judicata (claim preclusion). Winters v. Lavine, 574 F.2d 46, 54 (2d Cir. 1978); see Migra v. Warren City School District Board of Education, 465 U.S. 75, 81 (1984) (claim preclusion); Allen v. McCurry, 449 U.S. 90, 103-04 (1980) (issue preclusion). Bliss argues that the ruling in the Missouri Supreme Court opinion cannot be binding in this action because the adjudication concerned an application for a hazardous waste transporter's license, not CERCLA liability. Unlike res judicata, the state action need not concern the same underlying cause of action in order for collateral estoppel to apply. Under Missouri law, collateral estoppel bars relitigation of an issue decided in a prior proceeding when: (1) the issue decided in the prior proceeding is identical to the issue in the present action; (2) the prior adjudication resulted in a judgment on the merits; (3) the party against whom collateral estoppel is asserted was a party to or in privity with a party to the prior adjudication; and (4) the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the prior adjudication. Oates v. Safeco Insurance Company of America, 583 S.W.2d 713, 719 (Mo. banc 1979); see also Tyler v. Harper, 744 F.2d 653, 655 (8th Cir. 1984), cert. denied, 470 U.S. 1057 (1985) (applying Missouri law). The Missouri Supreme Court decision in Jerry-Russell Bliss, Inc. represents a final adjudication of the successor liability issue on the merits after a full and fair opportunity to litigate the issue. Therefore, Jerry-Russell, Inc. is liable under § 107(a)(3) as a successor to the business of Russell Martin Bliss. Accord Bliss, 667 F. Supp. at 1307-08. 3. Liability of the Statutory Trustees of the Houlihan Nursery Company The United States and the State of Missouri assert that Joseph P. Houlihan, Jr., Ben D. Houlihan and Edward J. Houlihan, in their capacities as statutory trustees of the Houlihan Nursery Company, are liable under § 107(a)(2). The parties agree that if the statutory trustees are liable under CERCLA, they are jointly and severally liable in their capacities as trustees only to the extent of the corporate property and effects which came into their hands. See Mo. Rev. Stat. § 351.525(4); Commerce Bank of Festus v. Bradshaw, 699 S.W.2d 119, 120 (Mo. App. 1985). It is not necessary for a person to be a current owner or operator of a facility in order to be held liable under CERCLA. Section § 107(a)(1) imposes liability upon current owners or operators of a facility whereas § 107(a)(2) covers prior owners or operators who owned or operated the facility at the time of the disposal of hazardous substances. 42 U.S.C. §§ 9607(a)(1) and (2); Shore Realty Corp., 759 F.2d at 1044; Conservation Chemicals Co., 619 F. Supp. at 187. Section 101(20)(A) defines "owner or operator" as "any person owning or operating" an "onshore or offshore facility." 42 U.S.C. § 9601(20)(A). The term "person" includes corporations as well as individuals. 42 U.S.C. § 9601(21). The undisputed facts establish that Houlihan Nursery Company owned the Rosalie site at the time of the disposal of hazardous substances at the site. The Court previously concluded that the Rosalie site is a "facility" within the meaning of CERCLA. Therefore, Houlihan Nursery Company, as the owner of the facility at the time of the disposal clearly falls within the definition of responsible persons set forth in § 107(a)(2). Imposition of liability upon the statutory trustees is proper because they are the legal representatives of the defunct corporation. See SAB Harmon Industries, Inc. v. All State Building Systems, 733 S.W.2d 476, 483 (Mo. App. 1987). The Court concludes that the statutory trustees are liable under § 107(a)(2) to the extent of corporate assets which came into their hands. 4. Personal Liability of Joseph P. Houlihan, Jr. The United States and the State of Missouri seek to impose personal liability upon Joseph P. Houlihan, Jr. under § 107(a)(2) as operator of the Rosalie facility. Houlihan argues that the government must prove that he was both an owner and operator of the facility and must pierce the corporate veil in order to impose personal liability upon him. While the use of the phrase "owner and operator" in § 107(a)(1) may be misleading, § 107(a)(2) is phrased in the disjunctive and clearly provides that any person who "owned or operated" any facility at the time of disposal may be held liable for response costs. 42 U.S.C. § 9607(a)(2). The CERCLA definition of owner or operator is likewise phrased in the disjunctive. 42 U.S.C. § 9601(20)(A). Furthermore, courts construing §§ 107(a)(1) and (2) have concluded that an individual need not be both an owner and an operator to be held liable under CERCLA. See Shore Realty Corp., 759 F.2d at 1052; [20 ELR 20883] United States v. Northernaire Plating Co., 670 F. Supp. 742, 747-48 [18 ELR 20712] (W.D. Mi. 1987); United States v. Maryland Bank and Trust Co., 24 ERC 1193, 1196 [16 ELR 20557] (D. Md. 1986); United States v. Northeastern Pharmaceutical & Chemical Co., Inc. 579 F. Supp. 823, 848 n. 29 [14 ELR 20212] (W.D. Mo. 1984), aff'd in part, rev'd in part, 810 F.2d 726 [17 ELR 20603] (8th Cir. 1986). A corporate officer "who owns interest in a facility and is actively participating in its management can be held liable" as an owner or operator of the facility notwithstanding the corporate character of the business. Northeastern Pharmaceutical, 579 F. Supp. at 848-49; see Shore Realty Corp., 759 F.2d at 1052; State of Idaho v. Bunker Hill Co., 635 F. Supp. 665, 671-72 (D. Idaho 1986); United States v. Carolawn, 21 ERC 2124, 2131 [14 ELR 20696] (D.S.C. 1984). When a corporate officer's liability is based upon his personal participation in the creation of the hazardous waste site, it is not necessary to pierce the corporate veil to impose personal liability. See Northeastern Pharmaceutical, 810 F.2d at 744. As President of the Houlihan Nursery Company and resident at the Rosalie site, Joseph P. Houlihan, Jr. had the authority to control the disposal of hazardous waste and to prevent the damage caused by the disposal at the site. He exercised control over the facility by giving Callahan permission to dispose of the hazardous substances on the property and by assisting Callahan in the unloading of some of the drummed waste. Joseph P. Houlihan, Jr. was also a major shareholder in the Houlihan Nursery Company and actively participated in the management of the corporation. The evidence presented is sufficient to hold Joseph P. Houlihan, Jr. personally liable under § 107(a)(2) as an owner or operator of the Rosalie site. Imposition of personal liability upon Joseph P. Houlihan, Jr., as a party who had authority to control the operations of the facility and the disposal of the waste at the Rosalie site, furthers the legislative intent to impose liability for response costs upon the parties responsible for creation of hazardous waste sites. IV. Joint and Several Liability The United States and the State of Missouri request the Court to find that the defendants named in each of the consolidated cases are jointly and severally liable for the response costs incurred in connection with the site which is the subject of the particular case.11 Therefore, the Court must determine whether Russell Martin Bliss and Jerry-Russell Bliss, Inc. are jointly and severally liable for response costs incurred in connection with the cleanup of the Callahan site and whether the Bliss defendants, the statutory trustees of the Houlihan Nursery Company, and Joseph P. Houlihan, Jr. are jointly and severally liable for response costs incurred in connection with the cleanup of the Rosalie site.12 Although CERCLA does not expressly mandate joint and several liability, joint and several liability may be imposed through a case-by-case application of federal common law principles. Bliss, 667 F. Supp. at 1312; Shell Oil Co., 605 F. Supp. at 1083 n.9; Chem-Dyne Corp., 572 F. Supp. at 809-10.13 In Chem-Dyne, the Court described the common law rule with respect to joint and several liability as follows: [W]here two or more persons cause a single and indivisible harm, each is subject to liability for the entire harm . . . and [when] one or more of the defendants seeks to limit his liability on the ground that the entire harm is capable of apportionment, the burden of proof as to apportionment is upon each defendant. Chem-Dyne Corp., 572 F. Supp. at 810 (citations omitted). In Bliss, this Court adopted the common law formulation set forth in the Chem-Dyne decision. Bliss, 667 F. Supp. at 1313.14 With respect to the Callahan site, the Bliss defendants do not assert, nor does the Court ascertain, any reasonable basis for apportioning the harm caused by Russell Martin Bliss and Jerry-Russell Bliss, Inc. Therefore, the Court finds that the Bliss defendants are jointly and severally liable under CERCLA for the response costs incurred by the state and federal governments in connection with the Callahan site. With respect to the Rosalie site, the Bliss defendants, the statutory trustees of Houlihan Nursery Company, and Joseph P. Houlihan, Jr. have not demonstrated that the harm is divisible and capable of apportionment. Each defendant played a significant role in the actual or threatened release of hazardous substances at the Rosalie site. Therefore, the Court finds that defendants Russell Martin Bliss, Jerry-Russell Bliss, Inc., the statutory trustees of Houlihan Nursery Company, and Joseph P. Houlihan, Jr. are jointly and severally liable under CERCLA for the response costs incurred by the United States in connection with the Rosalie site and that the Bliss defendants are jointly and severally liable for the response costs incurred by the State of Missouri in connection with the Rosalie site.15 Accordingly, for the foregoing reasons, the motions of the United States and the State of Missouri for partial summary judgment are granted. Defendants Russell Martin Bliss and Jerry-Russell Bliss, Inc. are jointly and severally liable under § 107(a)(3) for the response costs incurred by the United States and the State of Missouri in connection with the Callahan site and for the response costs of the State of Missouri in connection with the Rosalie site. Defendants Russell Martin Bliss, Jerry-Russell Bliss, Inc., the statutory trustees of the Houlihan Nursery Company, and Joseph P. Houlihan Jr. are jointly and severally liable under § 107(a) for the response costs incurred by the United States in connection with the Rosalie site. 1. A Consent Decree, resolving the claims of the United States and the State of Missouri against the generator defendants, was entered by this Court on December 14, 1987. 2. A Consent Decree, resolving the claims of the United States and the State of Missouri against defendants Grover Callahan and Jean Ellen Callahan was entered by this Court on September 27, 1988. 3. CERCLA was designed to fill a major gap in hazardous waste legislation left by the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §§ 6901 et seq. H.R. Rep. No. 1016, 96th Cong., 2d Sess. 22, reprinted in 1980 U.S. Code Cong & Admin. News 6119, 6125. RCRA authorized the EPA to promulgate standards and regulations to govern the treatment, storage, transportation and disposal of hazardous waste. Under RCRA, which is predominantly prospective in nature, the government could bring suit to force cleanup of a hazardous waste site only if the site posed an imminent danger to the public health or environment. CERCLA closes the regulatory gap by authorizing the EPA to clean up inactive hazardous waste sites. See F. Skillern, Environmental Protection: The Legal Framework § 5A.01 (1st ed. Supp. 1988). 4. Under § 106(a) of CERCLA, the EPA may also seek injunctive relief to compel the responsible parties to clean up hazardous waste sites that pose an "imminent and substantial" danger to the public health. 42 U.S.C. § 9606(a). 5. Section 107(a) of CERCLA provides in pertinent part: Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section — (1) the owner and operator of a vessel or a facility, (2) 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, (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances, and (4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for — (A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan . . . 42 U.S.C. § 9607(a)(1)-(4)(A). 6. Defendants do not challenge the existence of hazardous substances at the Callahan and Rosalie sites and have not presented any evidence to rebut the government's proof of the presence of hazardous substances at the sites. 7. Section 107(b) provides as follows: There shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by — (3) an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant (except where the sole contractual arrangement arises from a published tariff and acceptance for carriage by a common carrier by rail), if the defendant establishes by a preponderance of the evidence that (a) he exercised due care with respect to the hazardous substance concerned, taking into consideration the characteristics of such hazardous substance, in light of all relevant facts and circumstances, and (b) he took precautions against foreseeable acts or omissions of any such third party and the consequences that could foreseeably result from such acts or omissions; or (4) any combination of the foregoing paragraphs. 8. Congress recently reaffirmed its intention that strict liability be imposed upon responsible parties under CERCLA: No change has been made in the standard of liability that applies under CERCLA. As under § 311 of the Federal Water Pollution Control Act, 33 U.S.C. 1321, liability under CERCLA is strict, that is, without regard to fault or willfulness. H.R. Rep. No. 253(I), 99th Cong., 2d Sess. 74, reprinted in 1986 U.S. Code Cong. & Admin. News 2835, 2856. 9. The Court, having concluded that Bliss is liable under § 107(a)(3), need not determine whether Bliss would also be liable under § 107(a)(4) because a person is liable under CERCLA if he falls within any one of the four categories of responsible persons set forth in § 107(a). 10. During Congressional debate, Representative Florio indicated that issues concerning the scope of CERCLA liability should be governed by traditional principles of federal common law to ensure national uniformity and to discourage hazardous businesses from locating in states with more lenient laws. 126 Cong. Rec. H. 11787 (daily ed. Dec. 3, 1980). 11. Plaintiffs do not assert, nor could they, that all defendants are jointly and severally liable for response costs incurred in connection with all four consolidated cases. 12. The issue of whether the liability of the settling defendants is joint and several or capable of apportionment is not before the Court. The settling defendants were afforded contribution protection by virtue of the consent decrees. Although the consent decrees do not discharge the liability of any of the non-settling defendants, they do reduce the amount of the non-setting defendants' potential liability by the amount of the respective settlements. 13. The original House and Senate Bills provided for imposition of joint and several liability. However, the final enactment deleted any explicit reference to joint and several liability. Nevertheless, the courts have concluded, on the basis of the legislative history and statutory language of CERCLA, that Congress did not intend to preclude joint and several liability, but intended the courts to determine the issue under evolving principles of traditional common law. For a thorough review of the legislative history concerning joint and several liability see United States v. A&F Materials Co., Inc., 578 F. Supp. 1249, 1252-55 [14 ELR 20105] (S.D. Ill. 1984); see generally, Note, Joint and Several Liability for Hazardous Waste Releases under the Superfund, 68 Va. L. Rev. 1157 (1982). Congress recently reaffirmed its intention that the issue of joint and several liability be determined by the courts on a case-by-case basis through application of a uniform federal common law rule. H.R. Rep. No. 253(1), 99th Cong., 2d Sess. 74, reprinted in 1986 U.S. Code Cong. & Admin. News 2835, 2856. 14. In a House report reviewing the superfund Amendments of 1986, the House Committee on Energy and Commerce quoted extensively from the Chem-Dyne decision and indicated that the "uniform federal rule on joint and several liability" set forth in the Chem-Dyne decision is "correct and should be followed." H.R. Rep. No. 253(I), 99th Cong., 2d Sess. 74, reprinted in 1986 U.S. Code Cong. & Admin. News 2835, 2856. 15. On February 14, 1986, the court granted the joint motion of the State of Missouri and the Houlihan defendants to dismiss without prejudice the state's action against Joseph P. Houlihan, Jr., Ben D. Houlihan, and Edward J. Houlihan in Cause No. 84-1148C(1). Therefore, the Houlihan defendants are not named in the motion of the State of Missouri for partial summary judgment. 20 ELR 20879 | Environmental Law Reporter | copyright © 1990 | All rights reserved |