United States v. Monsanto Co.
1988 WL 91837, 858 F.2d 160 (1988)
Rule of Law:
Under CERCLA section 107(a), owners of facilities and generators who arranged for disposal of hazardous substances are strictly, jointly, and severally liable for response costs if there is a release or threatened release of hazardous substances 'like' those they contributed, regardless of specific causation or pre-enactment activities, provided the harm is indivisible.
Facts:
- In 1972, Oscar Seidenberg and Harvey Hutchinson (site-owners) leased a four-acre tract of land they owned along Bluff Road to Columbia Organic Chemical Company (COCC) for storing raw materials and finished products.
- In the mid-1970s, COCC expanded its business to include brokering and recycling chemical waste, using the Bluff Road site as a storage and disposal facility.
- In 1976, South Carolina Recycling and Disposal Inc. (SCRDI) was incorporated to assume COCC's waste-handling business, and the site-owners began accepting lease payments from SCRDI.
- Between 1976 and 1980, SCRDI haphazardly deposited over 7,000 fifty-five gallon drums of chemical waste on the Bluff Road site, often stacking them without regard to chemical compatibility, leading to rust, leaks, and commingling of hazardous substances.
- On October 26, 1977, a toxic cloud formed from leaking chemicals, resulting in hospitalization for twelve firemen; by this time, the site-owners were aware of waste disposal activities on their property.
- On July 24, 1979, an explosion and fire occurred at the site due to leaking chemicals.
- In 1980, an EPA inspection revealed the Bluff Road site was severely overfilled with unlabeled and deteriorated chemical waste drums, posing a “major fire hazard.”
- The governments identified several waste generators, including Allied Corporation, Monsanto Company, and EM Industries, Inc. (generator defendants), who had contracted with SCRDI for waste disposal at the Bluff Road facility.
Procedural Posture:
- In 1980, the United States filed a lawsuit under section 7003 of the Resource Conservation and Recovery Act (RCRA) against SCRDI, COCC, and Oscar Seidenberg in federal district court, seeking only injunctive relief.
- The State of South Carolina intervened as a plaintiff in the pending action.
- During discovery, the governments identified several waste generators and notified them of potential CERCLA liability.
- The governments executed individual settlement agreements with twelve off-site producers; however, Allied Corporation, Monsanto Company, and EM Industries, Inc. (generator defendants) declined to settle.
- Using settlement funds, the governments contracted for a partial surface cleanup at the Bluff Road site.
- In 1982, the governments filed an amended complaint, adding the three generator defendants and site-owner Harvey Hutchinson, and including claims under section 107(a) of CERCLA against all non-settling defendants, seeking to recover cleanup costs.
- The site-owners and generator defendants denied liability and subsequently moved for summary judgment.
- The federal district court granted the governments’ motion for summary judgment on CERCLA liability, finding all defendants to be responsible parties under section 107(a) and that the environmental harm was "indivisible," holding them jointly and severally liable for $1,813,624 in response costs, but declined to assess prejudgment interest.
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Issue:
Does CERCLA section 107(a) impose strict, joint and several liability on site-owners and waste generators for cleanup costs, including retroactive application, when hazardous substances 'like' those they contributed are present at an indivisible harm site, and is the district court obligated to apportion costs among liable parties at the initial liability stage?
Opinions:
Majority - SPROUSE, Circuit Judge
Yes, CERCLA section 107(a) imposes strict, joint and several liability on site-owners and waste generators for cleanup costs, including retroactive application, when hazardous substances 'like' those they contributed are present at an indivisible harm site, and the court is not obligated to apportion costs among liable parties at the initial liability stage. The court affirmed the district court's liability holdings, applying section 107(a) which establishes a strict liability scheme. For site-owners, liability under section 107(a)(2) extends to any person who owned a facility at the time hazardous substances were deposited, regardless of their degree of participation. Seidenberg and Hutchinson owned the Bluff Road facility when hazardous substances were deposited and releases occurred. Their "innocent landowner" defense failed because they had a direct contractual relationship with COCC/SCRDI (the disposing party) through a lease, and they presented no evidence of taking precautionary action against foreseeable conduct, even after becoming aware of waste storage. For generator defendants, liability under section 107(a)(3) and (4) does not require proof that their specific waste directly caused the harm or that their specific substances remained at the facility. The phrase "containing such hazardous substances" means hazardous substances "alike, similar, or of a like kind" to those present in the generator's waste. Requiring specific waste tracing would frustrate CERCLA's purpose of facilitating prompt cleanups, given the synergistic and migratory capacities of chemical waste and the technological infeasibility of tracing. Congress specifically removed causation language from section 107(a), placing the burden of disproving causation on the defendant through limited affirmative defenses. The generator defendants' conclusory allegations that their waste was removed were insufficient to create a genuine issue of material fact given the presence of drums with their markings and chemically similar hazardous substances. Joint and several liability is permissible under CERCLA for indivisible harm, guided by federal common law principles found in the Restatement (Second) of Torts. The environmental harm at Bluff Road was deemed a "single harm" and indivisible, with the burden on defendants to establish a reasonable basis for apportionment. The generator defendants' proposed volumetric apportionment was rejected because they presented no evidence relating waste volume to the release of hazardous substances and the harm, especially considering the commingling and varied toxicities of the substances. The court held that cost allocation is more appropriately considered in a subsequent contribution action among responsible parties, not in the initial liability determination to make the governments whole. Finally, the retroactive application of CERCLA to pre-enactment disposal activities is constitutional. It is rationally related to a legitimate legislative purpose of spreading the costs of improper waste disposal among those who profited from it, as established in Usery v. Turner Elkhorn Mining Co.. The imposition of strict, joint and several liability is remedial, not punitive, and therefore does not constitute a bill of attainder or an ex post facto law. The case was remanded for reconsideration of prejudgment interest, applying a later-enacted amendment to section 107(a) under the principles of Bradley v. Richmond School Board.
Concurring-in-part-and-dissenting-in-part - WIDENER, Circuit Judge
No, while I concur with the majority on all liability findings, I respectfully dissent from the decision not to require the district court to treat the issue of allocation of costs of cleanup among the various defendants at the initial stage. I believe that a court of equity, once it has jurisdiction, is required to decide all matters in dispute and decree complete relief, aiming to end litigation rather than foster it, as supported by Alexander v. Hillman and Payne v. Hook. Postponing the ultimate apportionment of damages to a later contribution suit could lead to needless financial disaster for smaller, readily available, and solvent generators who might be forced to pay the full cleanup cost upfront. Furthermore, the plain language of 42 U.S.C. § 9613(f)(1) states that "any person may seek contribution... during or following any civil action." This statutory provision, in conjunction with the principles of equity, means that if the issue of contribution is brought before the district court, it has no discretion but to decide that question, rather than deferring it to a separate suit. Judicial economy and the interests of justice are best served by deciding these matters in the same action.
Analysis:
This case significantly clarifies and strengthens CERCLA's enforcement framework. By establishing strict liability for both owners and generators, rejecting the need to trace specific waste, and affirming joint and several liability for indivisible harm, the court lowered the burden of proof for the government in hazardous waste cleanup cases. The ruling incentivizes responsible parties to proactively address environmental contamination or face broad liability. While acknowledging concerns about disproportionate liability, the court channeled these concerns into subsequent contribution actions, thereby ensuring prompt government recovery of cleanup costs.
