United States v. Vertac Chemical Corp. , 453 F.3d 1031 ( 2006 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 05-3147
___________
United States of America, *
*
Plaintiff/Appellee, *
*
Arkansas Department of Pollution *
Control and Ecology, *
*
Plaintiff, *
*
v. *
*
Vertac Chemical Corporation, * Appeals from the United States
* District Court for the
Defendant, * Eastern District of Arkansas.
*
Hercules, Inc., *
*
Defendant/Appellant, *
*
Inter-Ag Corporation; Department of *
Defense; Dow Chemical Corporation; *
Velsicol Chemical Corporation; John *
Does, 1-5; Chemtura Corporation, *
formerly known as Crompton Co., *
formerly known as CIE, formerly *
known as Uniroyal Chemical Limited, *
*
Defendants, *
*
John Doull, Ph.D., M.D.; Karl K. *
Rozman, Ph.D.; William J. Waddell, *
M.D.; K. Roger Hornbrook, Ph.D.; *
Daniel M. Byrd, III, Ph.D., D.A.B.T.; *
Robert Golden, Ph.D.; B. Frank Vincent,*
Ph.D.; American Council on Science *
and Health, *
*
Amici on behalf of *
Appellant. *
___________
No. 05-3153
___________
United States of America, *
*
Plaintiff/Appellee, *
*
Arkansas Department of Pollution *
Control and Ecology, *
*
Plaintiff, *
*
v. *
*
Vertac Chemical Corporation; *
Hercules, Inc.; Inter-Ag Corporation; *
Department of Defense; Dow Chemical *
Corporation; Velsicol Chemical *
Corporation; John Does, 1-5; *
*
Defendants, *
*
Crompton Co./CIE, *
*
Defendant/Appellant. *
___________
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Submitted: March 13, 2006
Filed: July 13, 2006
___________
Before WOLLMAN, FAGG, and RILEY, Circuit Judges.
___________
WOLLMAN, Circuit Judge.
Hercules, Inc. (Hercules) and Crompton Co./Cie (Uniroyal)1 raise constitutional
claims and argue that the district court2 erred in assigning and apportioning liability
for environmental cleanup costs pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601-0675, as
amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA),
Pub. L. No. 99-499, 11 Stat. 1613. We affirm.
I. BACKGROUND
This case involves twenty-six years of litigation and numerous district court and
appellate opinions, both published and unpublished. At issue is the cost the United
States has incurred in its environmental cleanup efforts at the Vertac Chemical Plant
site in Jacksonville, Arkansas (the Jacksonville site or the site). The full procedural
and factual history of this case has been discussed in several previous decisions. This
opinion will address the relevant portions of each.
A. Factual History
1
As of January 30, 2001, Uniroyal Chemical Limited changed its name to
Crompton Co./Cie. For consistency, we will use Uniroyal throughout this opinion.
2
The Honorable George Howard, Jr., United States District Judge for the
Eastern District of Arkansas.
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The Jacksonville site was originally developed by the federal government in the
1930s as a munitions factory. In the late 1940s, the site was sold to Reasor-Hill
Corporation (Reasor-Hill), a now-defunct company. Reasor-Hill first manufactured
various pesticides, but began manufacturing phenoxy herbicides in 1958. These
herbicides included dichlorophenoxyacetic acid (2,4-D) and trichlorophenoxyacetic
acid (2,4,5-T), synthetic hormones that kill weeds or brush by accelerating growth to
the point of natural death. Although these herbicides biodegrade into harmless
substances, the manufacture of 2,4,5-T (but not 2,4-D) creates a toxic byproduct that
is now viewed as hazardous to humans, 2,3,7,8-tetrachlorodibenzo-p-dioxin (dioxin).
While Reasor-Hill operated the site, an unknown quantity of these and other untreated
chemical wastes from the production processes flowed through cooling ponds on the
west side of the plant into a nearby stream, Rocky Branch Creek. Other wastes were
stored in drums stacked in a field on the site.
In 1961, Hercules bought the site and continued to manufacture herbicides,
including 2,4-D and 2,4,5-T, at the plant until 1970. During this period, Hercules sold
the bulk of its product to the United States Department of Defense as the defoliant
Agent Orange, a herbicide made from a mixture of 2,4-D and 2,4,5-T that was used
in Vietnam to clear jungle undergrowth.
Soon after Hercules took over the site, it buried the deteriorating drums left by
Reasor-Hill in unlined trenches in the southeast corner of the site. Until late 1964,
Hercules continued Reasor-Hill’s practice of discharging untreated waste water
directly into Rocky Branch Creek. Hercules then constructed a waste water
pretreatment system, but the system did not remove dioxin. It consisted of a
neutralization trench designed to reduce the acidity of the water, an equalization basin
designed to stabilize the rate of flow into the City of Jacksonville’s sewage system,
and a pump and pipe to deliver the treated water to the sewage system. The system’s
equalization basin frequently overflowed during heavy rainfalls, and it leaked.
-4-
After it learned of the toxicity of dioxin in 1965, Hercules instituted a toluene
extraction process designed to remove organic impurities from 2,4,5-T products. This
process yielded residue (stillbottoms) containing extremely high levels of dioxin.
Hercules placed this residue in drums, some of which it buried at the site and some of
which it disposed of at a nearby landfill. Hercules acknowledges that numerous leaks
and spills occurred during its operation of the site. When the drums leaked in the
process area before being transported to the drum burial pit, Hercules’s practice was
to place any contaminated soil into the drum.
In 1970, Hercules ceased production at the site. Hercules cleaned out all of its
equipment and production vessels, buried its waste, and shipped empty drums off-site.
In 1971, it leased the facility to Transvaal, Inc., which later became Vertac Chemical
Corp. (Vertac).3
Vertac continued to manufacture 2,4-D and 2,4,5-T and followed Hercules’s
practice of burying most of the waste. In 1975, however, Vertac began shipping its
2,4-D waste to off-site landfills and began to store its 2,4,5-T stillbottoms above
ground with the hope that the waste would someday be recycled. In 1976, Vertac
purchased the site from Hercules. Vertac voluntarily ceased manufacturing 2,4,5-T
and 2,4,5-TP on March 15, 1979.
On February 26, 1980, the United States Environmental Protection Agency
(EPA) issued a proposed rule under the Toxic Substances Control Act to prevent
Vertac from disposing of the dioxin from the Jacksonville site. This rule, known as
the Vertac Rule, became final later that year and prohibited the off-site disposal of
2,4-D wastes that contained dioxin. If Vertac could show that a batch of 2,4-D
3
Transvaal reorganized as Vertac in 1976. In this opinion, we will refer to both
corporations as Vertac.
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produced waste that was free of dioxins, it could dispose of that waste and all
subsequent 2,4-D waste off-site.
According to testimony at the hearing on the proposed rule, Vertac had
approximately 3200 drums of wastes resulting from the production of 2,4-D. The first
set of samples taken from seven hundred drums of waste resulting from the initial
production of 2,4-D revealed dioxin levels of approximately twenty parts per billion
(ppb). The samples were later sent to Wright State University and Monsanto
Company for testing. Monsanto could not detect any dioxin with its analytical
equipment, but Wright State detected .7 ppb. In a second sampling of 1000 drums,
it detected .5 ppb and the next sampling showed .3 ppb. Because the 2,4-D waste
contained dioxin, Vertac stopped analyzing samples of the waste and allowed the
drums to accumulate. Later testing by the State of Arkansas, as well as the results of
trial burns, revealed the presence of dioxin in the drums.
Vertac continued its operations until 1986. In 1987, it abandoned the site, and
the site went into receivership. By then, there were nearly 29,000 drums at the site
that contained waste materials including 2,4-D, 2,4,5-T, and dioxin. Some drums
were labeled T waste, some D waste, some were marked T and D, and some were not
marked at all. Many of these markings were indistinguishable or unreadable. More
than 15,000 drums were stored outside and exposed to the elements. The drums were
stacked three high on deteriorating pallets and were failing at a rate of between five
to three hundred drums per week.
Many of the drums had corroded and leaked, contaminating the soil,
groundwater, and buildings at the site. Contamination was found in other areas of the
site, at the landfills, in nearby neighborhoods, and in the grounds adjacent to the site.
After Vertac abandoned the plant, the EPA took over the site, closed down all
operations, and assumed cleanup responsibilities that have cost well over $110 million
to date.
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To carry out its response measures, the EPA divided the site into five units: off-
site areas, operable units 1, 2, and 3, and the incineration response action. Several
removal actions addressed the immediate threat posed by the drummed waste left on
the site when it was abandoned. Four remedial actions addressed the long term
solutions for the rest of the site and the surrounding area affected by the site. For each
of the remedial actions, the National Contingency Plan required the EPA to (1)
conduct a remedial investigation of the site conditions, including an endangerment
assessment of the threats posed by the contamination at the site; (2) perform a
feasibility study examining the various technical alternatives for remediating the site;
(3) take public comment on the EPA’s proposed remedial action plan based on the
alternatives discussed in the feasibility study; (4) compile an administrative record for
remedial action decision making; and (5) issue a written record of decision (ROD)
explaining the Regional Administrator’s reasoning in selecting the final remedial
action plan and responding to the public comments received.
Uniroyal was one of Vertac’s customers and purchased 2,4,5-T and other
products from Vertac in the 1970s. In 1978, Vertac informed Uniroyal that it lacked
the funds to purchase enough 1,2,4,5-tetrachlorobenzene (TCB), a key ingredient in
the manufacture of 2,4,5-T, to fulfill its contractual obligations to Uniroyal. Uniroyal
agreed to supply Vertac with enough TCB to create some 1.3 million pounds of 2,4,5-
T that was to be shipped back to Uniroyal. Vertac did not purchase the TCB directly
from Uniroyal, but instead reduced the amount it charged Uniroyal for the 2,4,5-T to
reflect the value of the TCB that Uniroyal had supplied. This arrangement was
embodied in two separate contracts and was carried out between March 1978 and
March 1979. The 2,4,5-T that was produced with Uniroyal’s TCB represents less than
one percent of the more than 150 million pounds of 2,4-D and 2,4,5-T that were
manufactured at the site over the course of its operation.
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B. Procedural History4
On October 12, 1993, the district court granted the government’s motion for
summary judgment, holding that Hercules was jointly and severally liable under
CERCLA sections 107(a)(2) and (3) for the response costs incurred by the United
States with regard to the Jacksonville site. 42 U.S.C. § 9607(a)(2) and (3); United
States v. Vertac Chem. Corp., 841 F. Supp. 884 (E.D. Ark. 1993). Hercules moved
for reconsideration, arguing that disputed issues of fact existed regarding divisibility.
On November 1, 1993, the district court denied Hercules’s motion, finding that
Hercules had failed to present evidence in support of its divisibility of harm defense.
Hercules appealed that decision, and we reversed and remanded the case to the
district court to reconsider Hercules’s claim of divisibility in light of the legal
standards enunciated in our April 11, 2001, opinion.5 United States v. Hercules, Inc.,
247 F.3d 706 (8th Cir. 2001) (Vertac XI). In October and December 2001, the district
court held an evidentiary hearing on Hercules’s divisibility of harm defense, resulting
in a transcript of some 2300 pages in length. The parties submitted post-hearing
briefs, together with a voluminous record that included documents, exhibits,
transcripts, depositions, and the administrative record. The district court considered
the entire record, applied the law as stated in Vertac XI, and held that Hercules had
failed to establish its divisibility of harm defense, with the exception of one off-site
landfill, the Rogers Road landfill (a divisibility finding that the government does not
4
Litigation began in 1980. For a description of the early procedural history, see
United States v. Hercules, Inc., 247 F.3d 706 (8th Cir. 2001) and United States v.
Vertac Chem. Corp., 966 F. Supp. 1491 (E.D. Ark. 1997).
5
In its most recent opinion, the district court noted an inconsistency in our April
11, 2001, opinion. In that opinion, we meant to vacate: (1) the unpublished opinion
issued on October 12, 1993, and (2) the denial of the motion to reconsider issued on
November 1, 1993.
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challenge). United States v. Vertac Chem. Corp., 364 F. Supp. 2d 941 (E.D. Ark.
2005) (Vertac XII).
In its final judgment following its March 30, 2005, memorandum opinion and
order, the district court held that Hercules and Uniroyal were jointly and severally
liable to the United States for the following amounts: (1) Hercules, in the amount of
$119,318,504, plus any additional response costs, and (2) Uniroyal, in the amount of
$110,410,161, plus any additional costs. The district court had previously allocated
the amount of contribution of the total response costs for which each entity was jointly
and severally liable. To the extent that the United States enforces its judgment,
Hercules is entitled to contribution from Uniroyal in an amount equal to 2.6 percent
of $110,410,161, and Uniroyal is entitled to contribution from Hercules in an amount
equal to 97.4 percent of $110,410,161.
On appeal, Hercules argues that the district court erred in apportioning liability.
Uniroyal argues that we should overturn our holding in Vertac XI that affirmed the
district court’s holding that Uniroyal was liable. Hercules and Uniroyal further argue
that the district court’s imposition of retroactive liability was unconstitutional.
II. HERCULES’S LIABILITY
Hercules challenges the district court’s liability determination on both legal and
factual grounds. We will first address Hercules’s contention that the district court
applied the wrong legal standard in determining whether Hercules established its
divisibility of harm defense. We will then turn to Hercules’s argument that the
drummed waste, the stillbottoms, Operable Unit 1 (OU-1), the Jacksonville Landfill,
the soils, and the groundwater are each separate sites capable of further
apportionment.
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We review de novo the district court’s legal conclusions. Richardson v. Sugg,
448 F.3d 1046, 1052 (8th Cir. 2006). We review its factual findings for clear error.
Id. “Using this standard, we will overturn a factual finding only if it is not supported
by substantial evidence in the record, if it is based on an erroneous view of the law,
or if we are left with the definite and firm conviction that an error was made.” Id. We
give due regard to the district court’s opportunity to judge the credibility of the
witnesses. Id. “A district court’s choice between two permissible views of evidence
cannot be clearly erroneous.” Tadlock v. Powell, 291 F.3d 541, 546 (8th Cir. 2002).
A. Legal Standard
Hercules contends that the district court erred in concluding that the site could
not be separated into divisible geographic units. As to the drums, Hercules argues that
the district court failed to consider whether there existed a single, divisible harm and
addressed only whether there existed distinct harms. The thrust of Hercules’s
arguments is factual, however, and the district court applied the appropriate legal
standard.
In Vertac XI, we held that a defendant must prove by a preponderance of the
evidence that there exists a reasonable basis for divisibility. Vertac XI, 247 F.3d at
717.
The proper standard for determining divisibility . . . is that the defendant show
either distinct harms or a reasonable basis for apportioning causation for a
single harm. A defendant need not prove that its waste did not, or could not,
contribute to any of the harm at a CERCLA site in order to establish
divisibility, because it is also possible to prove divisibility of single harms
based on volumetric, chronological or other types of evidence. A site may also
be divisible if a defendant can establish that it consists of non-contiguous areas
of contamination.
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Id. at 719 (internal quotations and citations omitted). We noted that proving
divisibility is a “very difficult proposition” and that where the harms are incapable of
division, the district court should not make an arbitrary apportionment. Id. at 717.
In its opinion, the district court applied the standard for determining divisibility
as set forth in Vertac XI. The district court first considered whether Hercules
established a reasonable basis for divisibility by proving by a preponderance of the
evidence that the site could be divisible on a geographical basis.6 Under its
geographical apportionment theory, Hercules argued that each operable unit within
the Jacksonville site is a separate site for purposes of divisibility. In considering and
ultimately rejecting Hercules’s argument, the district court found that the EPA divided
the site into operable units for the purposes of remediation and that the “operable units
did not solely address geographical portions of the Site.” Vertac XII, 364 F. Supp. 2d
at 951.
With regard to the drums, Hercules argues that the district court erroneously
held that cross-contamination and commingling of dioxin prevented Hercules from
establishing a reasonable basis for divisibility. In Vertac XI, we held that a single
harm may be treated as divisible when it is possible to discern the degree to which
different parties contributed to the damage. “Single harms may also be treated as
divisible in terms of degree, based, for example on the relative quantities of waste
discharged into the stream. Divisibility of this type may be provable even where
wastes have become cross-contaminated and commingled.” 247 F.3d at 718 (internal
quotations omitted). Hercules, however, did not argue that the drums caused a single,
divisible harm that could be apportioned based on relative quantities of waste or
6
We have considered Hercules’s argument concerning the information
contained in one of the government’s exhibits (Exhibit K). Because the district court
expressly stated at the time it granted the government’s motion to withdraw the exhibit
that it would not rely on the exhibit in ruling on Hercules’s divisibility defense, we
conclude that this argument is without merit.
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volumetric evidence. As the government points out, this argument would have been
inconsistent with Hercules’s argument that it should not be held liable for any of the
drummed waste.
B. Drummed Waste
The 28,500 drums contained 2,4-D and 2,4,5-T stillbottom wastes, dioxin, and
other hazardous and toxic substances. When the site went into receivership, the drums
were leaking, corroding, and failing. By February 1989, the failed drums had been
placed inside new, larger drums (overpacked). Because the drums contained corrosive
materials, maintenance of the drums was an ongoing process. The EPA determined
that the wastes on the site posed a threat to public health and welfare and the
environment. The drummed material was considered acutely hazardous waste, and
the EPA chose to dispose of the wastes by incineration. The Arkansas Department of
Pollution Control and Ecology (ADPC&E) managed the incineration from 1989 until
June 1993, when the EPA took over the on-site incineration of the drums.
Hercules argues that the district court clearly erred in finding the following: (1)
the EPA and the ADPC&E decided to incinerate the 2,4-D waste drums because of the
dioxin contained therein; (2) Hercules was responsible for the cross-contamination of
the plant equipment causing 2,4-D waste drums to contain dioxin; and (3) Hercules
was responsible for the commingling of the 2,4-D waste and the dioxin contaminated
soil, causing the drums to contain dioxin.
Hercules first argues that it should not be held liable for the cost of incinerating
the 2,4-D waste drums because those drums would have been incinerated regardless
of whether they were contaminated with dioxin. The district court concluded that
Hercules’s argument did not “withstand scrutiny” and found that the EPA and
Arkansas were concerned that a potential fire, explosion, or tornado could spread
dioxin into the environment. Vertac XII, 364 F. Supp. 2d at 953. Thus, the district
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court determined that “[i]t was not, as Hercules argues, the dirt in the drums that drove
the incineration; rather it was the dioxin in the dirt that drove the incineration of the
drums.” Id.
As the district court noted in the factual background of the case, the Vertac Rule
permitted Vertac to landfill the 2,4-D waste drums only after showing that the drums
contained no dioxin. This was never shown, and Phyllis Moore, Ph.D., the former
director of the ADPC&E, and Randall Mathis, her successor, testified (1) that time
was of the essence, (2) that further testing was expensive and time consuming, (3) that
the 2,4-D drums were corroding and failing, and (4) that the drums posed an imminent
risk of fire and explosion.
Dr. Moore was involved in the initial decision to incinerate the 2,4-D waste
drums. Although she stated that the “issue of dirt” did not influence her decision, Dr.
Moore testified that a primary concern was the presence of dioxin in the 2,4-D waste
drums, regardless of whether it was transmitted to the drums by cross-contamination
at the production facility or by the overpacking of the drums with contaminated soil.
J.A. at 26433-34. She further testified that it was important that the method of
incineration satisfy the requirements of the ADPC&E and the EPA for destruction of
dioxin. Regarding the ultimate decision to incinerate, Dr. Moore testified that the
state “would have looked at other options” if there had been no dioxin in any of the
drums. J.A. at 26445. We thus reject Hercules’s argument that the incineration of the
2,4-D drums was in no way attributable to dioxin.
Hercules next argues that the district court clearly erred in finding that the
equipment at the plant contaminated 2,4-D waste with dioxin after Hercules had
cleaned the production vessels in 1970. The district court found that “the cleanup of
the equipment was not as thorough as portrayed by Hercules, and that the plant
equipment was cross-contaminated with 2,4-D, 2,4,5-T, and dioxin.” Vertac XII, 364
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F. Supp. 2d at 952. The district court rejected Hercules’s theory that Vertac’s
chemical production flushed the dioxin out of the production vessels.
In its brief, Hercules recites portions of Arthur Treisback’s affidavit, which was
excluded as hearsay at trial and is not part of the record on appeal, and relies primarily
on Treisback’s deposition testimony, portions of which were read into evidence by
Richard Karkkainen during his testimony. Treisback was Hercules’s plant manager
in charge of the 1970 plant cleanup, and Karkkainen was Vertac’s director of
environment and safety from 1979 to 1986. Karkkainen testified that Treisback’s
deposition testimony described the common practice of cleaning plant equipment and,
although Karkkainen had no personal knowledge of the cleaning, that it was likely that
Hercules followed the common practice. J.A. at 26458. Karkkainen further testified
that there was no indication that the cleaning process was successful. J.A. at 26562.
The district court also heard the testimony of Reeddie Ray and Stephen
Quigley. Ray worked for Hercules from 1964 to 1970 and was involved in the plant
cleanup. Ray testified extensively about how the equipment was cleaned. To clean
the tanks, “[w]e washed them out with a water hose. . . . Only time we heated the
water if there was sediment in the bottom of the tank.” Regarding the process lines,
“Process lines were cleaned with steam. . . . We had to disassemble the lines to get
water out of the tank.” Ray did not recall using any solvents: “The only time we used
solvent is where we wanted to take the sediment and circulate and dissolve something
in it, but I don’t think we used solvent. I think we just used water and steam, that’s
all.” J.A. at 27522-23. Quigley, Uniroyal’s expert, testified that it was unlikely that
solvents were used to clean the equipment and even if they were, it is likely that some
contamination would remain in the equipment. J.A. at 28089-90. Given the evidence
before the district court, we conclude that it did not err in finding that dioxin remained
in the plant after Hercules’s 1970 cleaning.
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Hercules contends that the district court clearly erred in rejecting its flushing
theory. According to this theory, after Vertac shifted plant production exclusively to
products that do not generate dioxin, about ten production runs would have flushed
out any significant amount of dioxin remaining in the plant equipment. Because
Vertac stopped producing 2,4,5-T in March 1979, three years after Hercules sold the
plant to Vertac, Hercules argued that there could be no detectable dioxin in the 2,4-D
waste in late 1979, when Vertac began to accumulate the 2,4-D waste drums. The
district court disregarded the flushing theory as, “just that–a theory” and noted that
“[a]fter nearly eight years of only 2,4-D production, dioxin and 2,4,5-T were present
in plant equipment.” Vertac XII, 364 F. Supp. 2d at 952.
We conclude that the district court did not err in rejecting Hercules’s flushing
theory.7 The district court stated that, because the plant equipment contained dioxin
and 2,4,5-T after nearly eight years of 2,4-D production, “the evidence basically
disproves the theory.” The finding that dioxin was present in the plant equipment is
supported by the evidence. An EPA inventory of the process vessels and tanks in the
central process area of the Jacksonville site showed that 140 of the 213 process vessels
contained chemical material including 2,4-D, 2,4,5-T, and dioxin. J.A. at 19779-80.
Of the ninety-six vessels sampled, more than half were contaminated with dioxin at
levels greater than 0.3 ppb. J.A. at 19780. Hercules argues that the data showing
contamination of the plant equipment was untrustworthy, but Hercules has failed to
show that the EPA or the district court relied on that evidence. Hercules’s expert
witness, Randal Maud, Ph.D., served as the project manager for Hercules at the
Jacksonville site to assess the environmental consequences of the site. He testified
that the unreliable data, “would likely not be used because of the quality assurance
problems.” J.A. at 28256.
7
Hercules argues that the government’s attorney made a judicial admission
supporting Hercules’s flushing theory. Having reviewed the record, we conclude that
the statements in question did not rise to the level of a binding judicial admission.
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Finally, with regard to the drummed waste, Hercules argues that the district
court erred in holding Hercules liable for the waste that was placed in the drums
during overpacking. Hercules contends that either the placement of the dioxin-
contaminated soil into the 2,4-D drums constituted a second disposal under CERCLA,
for which it is not liable, or that the overpacking by Vertac or the EPA constituted a
superseding cause, thereby relieving Hercules of liability. Hercules does not dispute,
however, that it contaminated the soil with dioxin at the Jacksonville site.
As the district court recited in its decision, disposal under CERCLA is defined
as the “discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid
waste or hazardous waste into or on any land or water so that such . . . waste . . . may
enter the environment.” 42 U.S.C. §§ 6903(3), 9601(29). Hercules caused dioxin to
enter the environment, thereby disposing of the waste. That Vertac and the EPA
overpacked leaking drums in an effort to contain the further contamination of the site
does not absolve Hercules of CERCLA liability. Accordingly, Hercules remains
responsible for the ongoing contamination caused by the dioxin, for that
contamination was not solely caused by the act of a third party.
C. Stillbottoms
Hercules argues that the stillbottom waste was not disposed of until after
Hercules sold the plant and that thus it is not responsible for any of the costs related
to that disposal. Vertac began accumulating 2,4,5-T stillbottom drums on-site in
1975, and it bought the plant from Hercules in 1976. Hercules claims that Vertac
merely stored the waste for the purpose of later recycling, and thus did not dispose of
the waste until 1979, when the registration for 2,4,5-T was suspended. Accordingly,
Hercules claims that the 2,4,5-T stillbottom drums constituted a distinct harm and that
it should not be liable for their incineration.
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Section 103(a) of CERCLA holds liable “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.” 42 U.S.C. § 9607(a)(2). The term “facility” includes,
“any site or area where a hazardous substance has been deposited, stored, disposed of,
or placed.” 42 U.S.C. § 9601(9). Finally, as we recounted above, disposal includes
placing hazardous waste in a manner that allows the waste to enter the environment.
Simply stated, the district court found that Hercules owned a facility at which
hazardous waste was allowed to enter the environment. Specifically, it found that the
stillbottoms leaked onto the ground when Hercules owned the plant. This finding is
supported by Quigley’s expert testimony: “[W]hen the wastes [stillbottoms] were put
into drums for disposal, they were put into recycle drums, . . . and those recycle drums
did leak, some of them instantaneously upon having the waste put in them, and other
times shortly after the waste being put in them.” J.A. at 28082. Robert Fischer, a
chemist with Hercules and Vertac, also testified that the deterioration of the T drums
was one of the major sources of dioxin contamination at the site. J.A. at 27060. In
light of this testimony, we conclude that the district court did not clearly err in holding
Hercules liable for the incineration of the stillbottoms.
D. Operable Unit 1
OU-1 consisted of the above-ground media, including the process vessels (e.g.
the storage tanks, chemical reaction vessels) in the central process area. The ROD for
OU-1 required that plant equipment be dismantled and salvaged to the extent possible
and that all other nonsalvageable material be placed in an on-site landfill. Any
hazardous material not suitable for the landfill was to be incinerated. Hercules
implemented the remedy pursuant to Unilateral Administrative Order (UAO) issued
by the EPA.
Hercules argues that the district court erred in holding it liable for the cleanup
of OU-1, including the demolition, removal, and disposal of plant buildings and
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equipment, and their process waste contents. Hercules admits liability for part of the
OU-1.8 It contends that it established a reasonable basis of divisibility for further
apportioning liability. Hercules argues that the district court erred in finding (1) that
the plant buildings were demolished because they contained dioxin, (2) that Hercules
was responsible for the contamination of the equipment, the shredded trash, and the
pallets, and (3) that the EPA’s response action was not arbitrary or capricious.
The district court found that “[t]he buildings were demolished because the risk
of collapse might cause release and human exposure to herbicide process
contamination, including unacceptable levels of TCDD [dioxin].” We conclude that
the record adequately supports this finding. Maud testified that the EPA was
concerned about the buildings because they were falling into disrepair and because
“they contained large amounts of asbestos siding and roofing and asbestos interiors,
some of which also contained dioxin dust.” J.A. at 28265. The ROD states that in the
event of a catastrophe, “Based on the 2,3,7,8-TCDD (dioxin) concentrations found in
[OU-1], human exposure to concentrations in excess of those considered acceptable
. . . could occur.” J.A. at 19811.
Hercules further contends that the district court clearly erred in finding that
Hercules was responsible for the contamination of the plant equipment. In his expert
testimony, Eugene Meyer, Ph.D., affirmed the statement from his 1998 affidavit that
“[t]he presence of 2,3,7,8-TCDD [dioxin] was established through samples in all of
the following: surface and subsurface materials collected from the site sewers,
distillation bottoms, waste activated carbons, leachate from on-site buildings, trash,
shredded pallets, and the sludges generated during the treatment of waste waters.”
J.A. at 27928. Although Hercules’s project manager for EPA compliance, Douglas
Keilman, opined that Hercules did not cause the contamination, his opinion was based
8
Hercules accepted responsibility for the spent carbon wastes it generated.
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on the flushing theory. For the reasons stated above, we again conclude that the
district court did not clearly err in rejecting that theory.
The district court found that “Hercules cannot establish that it was not the
source of the contamination on the shredded trash and pallets.” Vertac XII, 364 F.
Supp. 2d at 955. The shredded trash included things like hard hats, broken tools, and
tyvex suits, and the pallets were used to store drummed waste at the site. Although
Keilman testified that the trash had been accumulating since 1980, there was no
evidence to show that Vertac, and not Hercules, caused the contamination of the trash.
The district court found that the pallets were contaminated by both leaking drums and
contaminated soil. Because Hercules is responsible for the contaminated soil, the
district court did not err in further holding it responsible for the pallets.
Finally, Hercules argues that the EPA’s issuance of a UAO requiring Hercules
to dismantle and to landfill the equipment and buildings at the site was arbitrary and
capricious. We disagree. Section 113(j) of CERCLA allows a defendant to avoid
paying response costs to the extent that it can show that the response action was
arbitrary and capricious. 42 U.S.C. § 9613(j). Hercules does not argue that the
disposal of the building and equipment is arbitrary and capricious, but rather that the
EPA was arbitrary and capricious in issuing a UAO. To support the issuance of a
UAO, there must be evidence that there “may be an imminent and substantial
endangerment to the public health or welfare or the environment because of an actual
or threatened release of a hazardous substance from a facility.” 42 U.S.C. § 9606(a)
(emphasis added). Because the record contains sufficient evidence to support the
EPA’s determination that the cautionary “may be” threat of imminent substantial
endangerment had been established, its decision to issue the UAO was not arbitrary
and capricious.
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E. Jacksonville Landfill
The district court found that Hercules disposed of hazardous wastes at the
Jacksonville Landfill and held Hercules liable for the cleanup costs associated with
the landfill. In its investigation, the EPA found rusting drums and piles of “white
fibrous, absorbent-type materials” at the Jacksonville Landfill. Tests confirmed the
presence of dioxin, 2,4,5-T, and other chemicals associated with the Jacksonville site.
In its ROD, the EPA called for the excavation of contaminated soils, the replacement
and capping of the excavated areas with clean soil, and the cleaning and removal of
large refuse items. The contaminated soil and drums were incinerated at the site.
Although Hercules admits that it took some nonhazardous waste to the Jacksonville
Landfill, it argues that the district court clearly erred in finding that Hercules disposed
of hazardous wastes at the Jacksonville Landfill, and it contends that the EPA’s
response was arbitrary and capricious.
We conclude that the district court’s finding is supported by substantial
evidence. Indeed, the district court cited the testimony by four Hercules employees
that they took chemical wastes to the Jacksonville Landfill. Billy Honey worked
maintenance at the plant from the time Hercules bought it until it closed. J.A. at
26291. He testified that he hauled drums filled with chemical waste to the
Jacksonville Landfill. J.A. at 26299-300. Doyce Shurley worked for Hercules in the
early 1960s, and he recalled taking a barrel of stillbottoms to the landfill. Vincent
Dodson worked for Hercules in the late 1960s, and he testified that chemical wastes
were disposed of at the landfill. When asked what type of waste was taken to the
Jacksonville landfill, Leroy Jordan replied, “We took [waste] from each trash pick-up
point. We took it from every rig and barrels. We cleaned out the incinerator and
carried that stuff over there. Anything that they needed to get rid of, and that included
benzen barrels, trash from the lunchroom, barrels of goop, acid, anything and
everything.” J.A. at 26352.
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Hercules argues that this testimony should be discredited because it presented
contradictory evidence to counter it. The short answer to this contention is to note
once again that a district court’s choice between two permissible views of the
evidence is no basis for a conclusion that its factual finding is clearly erroneous.
Tadlock, 291 F.3d at 546.
Hercules contends that the EPA’s response to the Jacksonville landfill was
inappropriate for the following reasons: (1) the cancer potency factor used by the EPA
in its risk assessment constitutes a rule under the Administrative Procedures Act
(APA) that must be overturned because it was not subject to notice and comment, and
(2) the EPA’s exposure assumptions were arbitrary and capricious. We disagree.
The cancer potency factor was used to calculate the risk and to set dioxin
cleanup standards for the soil and sediments at the Jacksonville site. To determine
whether a statement by an agency is a legislative rule or policy, we apply the two-part
test of McLouth Steel Prod. Corp. v. Thomas, 838 F.2d 1317, 1320 (D.C. Cir. 1988).
A policy statement (1) does not have a binding effect; it does not impose any rights
and obligation; and (2) a policy “genuinely leaves the agency and its decisionmakers
free to exercise discretion.” Id. (internal quotations omitted). The district court
concluded that the “Health Assessment Document which set forth the cancer potency
factor does not impose any rights [or] obligations. It is at most only a technical and
advisory report. It did not obligate the agency or public in determining acceptable
risks associated with dioxin.” United States v. Vertac Chem. Corp., 33 F. Supp. 2d
769, 779 (E.D. Ark. 1998) (Vertac IX).
This finding is adequately supported by the record. As the district court noted,
the EPA Regional Administrator considered the lower figure proposed by Hercules’s
contractor, ChemRisk, and rejected it. Indeed, in the ROD for the Jacksonville
landfill, the EPA addressed why ChemRisk’s calculations would not be used,
“Hercules Inc. submitted a report prepared by ChemRisk which provided calculations
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resulting in cleanup goals differing from EPA’s for dioxin. The report utilized certain
calculations and assumptions which were contrary to EPA guidance and resulted in
cleanup goals much less restrictive than those calculated by the EPA.” J.A. at 16407.
The document goes on to discuss the discrepancies between the EPA’s and
ChemRisk’s methods of calculating site related risks and to explain that the EPA
rejected ChemRisks proposal because “ChemRisk’s proposed cleanup goals, using
EPA’s risk assessment approach, would not result in excess cancer risks (after
remediation) within the acceptable risk range.” J.A. at 16408. The EPA considered
Hercules’s comments on the EPA’s application of the cancer potency factor with
regard to the cleanup levels at the site and responded to the comments in the final
RODs.
Hercules argues that the exposure assessments used by the EPA were arbitrary
and capricious and did not justify the remedial order. Having considered the ROD and
related evidence, we conclude that this argument is without merit.
F. Soils and Groundwater
The revised ROD for Operable Unit 2 (OU-2) addressed contaminated on-site
soils, foundations, and underground utilities and off-site soils and sediments that had
been excavated from off-site areas and stored on the site. The remedy selected
required the excavation of dioxin contaminated soil, and the disposal of this soil in an
on-site containment vault. The ROD for Operable Unit 3 (OU-3) dealt with
groundwater contamination under the site. It states that “groundwater contamination
at the site is complex, resulting from past waste management and disposal practices.
Sources of contamination include on-site landfills, spills and discharges into the
central ditch, Reasor Hill well, and other parts of the central process area.” J.A. at
20136.
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Hercules argues that the soil and groundwater contamination were divisible as
successive harms based on the relative production volumes of 2,4,5-T and 2,4,5-TP
attributable to Hercules from 1961 until it sold the plant in 1976 and to Vertac from
that point until it ceased production of 2,4,5-T in 1979. Based on the estimated
production figures, Keilman determined that Hercules was responsible for 70.74% of
the EPA’s response costs. J.A. at 27177. To reach this figure, Hercules relied on the
following assumptions and evidence: (1) Hercules assumed that leaks and spills took
place at roughly the same frequency and severity during the plant’s production of
2,4,5-T and 2,4,5-TP; (2) Keilman testified that prior to 1965, most of the dioxin left
the plant with the product; (3) Hercules offered evidence that the half-life of dioxin
in soil is approximately twelve years, though it ranged from a few days to decades;
and (4) Hercules touted its housekeeping and maintenance practices as being far
superior to those of Vertac.
The district court determined that this evidence was not sufficiently concrete
and specific to apportion the harm. Most importantly, there was no evidentiary basis
for Hercules’s assumption that the release of wastes at the site was related to
production volumes, nor was there any testimony that there was any reasonably
constant ratio or direct correlation between the releases of dioxin and production of
dioxin generating products. As the district court pointed out and as the record reveals,
the production methods changed over the years, the specifications for the product
varied, Hercules and Vertac used different methods of disposal of dioxin contaminated
filter paper and cardboard drums, and each companies experienced different plant
eruptions. Although Hercules may be able to fairly estimate the production volumes
of 2,4,5-T and 2,4,5-TP from the time it owned the plant, the district court correctly
held that it cannot establish the inferences necessary to prove a reasonable basis for
apportionment of harm.
Hercules argues that the EPA’s response choices for the soils, groundwater, and
off-site areas are arbitrary and capricious and that Hercules should not be held liable
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for the corresponding response costs. Having considered the record, we conclude that
Hercules’s argument is without merit.
III. UNIROYAL’S LIABILITY
Uniroyal argues that we should hold that it is not liable as an arranger under
CERCLA, and thus overturn the panel’s decision in Vertac XI. “When a case has
been decided by this court on appeal and remanded to the district court, every question
which was before this court and disposed of by its decree is finally settled and
determined.” Klein v. Arkoma Prod. Co., 73 F.3d 779, 784 (8th Cir. 1996). Absent
intervening controlling authority, we are bound by the decision of the previous panel.
Liberty Mut. Ins. Co. v. Elgin Warehouse & Equip., 4 F.3d 567, 571 (8th Cir. 1993).
Uniroyal pointed to no new controlling authority, and thus the affirmance of the
district court’s finding of liability in Vertac XI is the law of the case. Because that
holding is not “clearly erroneous” nor does letting it stand “work a manifest injustice,”
we refuse to disturb it. Liberty Mut. Ins. Co., 4 F.3d at 570-71.
IV. RETROACTIVITY
Hercules and Uniroyal contend that the retroactive application of CERCLA to
impose liability is unconstitutional under the Supreme Court’s decision in Eastern
Enterprises v. Apfel, 524 U.S. 498 (1998). We previously resolved this exact issue
in United States v. Dico, in which we held that CERCLA’s retroactive application
remained constitutional after Eastern Enterprises. Dico, 266 F.3d 864, 879-880 (8th
Cir. 2001). We are thus bound by our Circuit’s precedent and accordingly will not
revisit the issue. See United States v. Wright, 22F.3d 787, 788 (8th Cir. 1994) ( “[A]
panel of this Court is bound by a prior Eighth Circuit decision unless that case is
overruled by the Court sitting en banc.”).
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V. CONCLUSION
The judgment is affirmed.
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