U.S. v. Hercules

• Decision Date: 12 June 2000
• Docket Number: Nos. 99-3684,99-3685,00-1473,s. 99-3684
• Citation: 247 F.3d 706
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: (8th Cir. 2001) UNITED STATES OF AMERICA; ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, PLAINTIFFS/APPELLEES, v. HERCULES, INC., DEFENDANT/APPELLANT, VERTAC CHEMICAL CORPORATION; DEPARTMENT OF DEFENSE; DOW CHEMICAL CORPORATION, DEFENDANTS, UNIROYAL CHEMICAL LIMITED, FORMERLY KNOWN AS UNIROYAL LIMITED, <A HREF="#fr1-1" name="fn1-1">1 DEFENDANT/APPELLEE, VELSICOL CHEMICAL CORPORATION; JOHN DOES, 1-5, DEFENDANTS. WASHINGTON LEGAL FOUNDATION; 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.; INTERNATIONAL SOCIETY OF REGULATORY TOXICOLOGY AND PHARMACOLOGY; AMERICAN COUNCIL ON SCIENCE AND HEALTH; THE ALLIED EDUCATIONAL FOUNDATION; FRANK B. CROSS; MICHAEL R. FOX, PH.D.; GARY E. MARCHANT, AMICI ON BEHALF OF APPELLANT. UNITED STATES OF AMERICA; ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, PLAINTIFFS/APPELLEES, v. HERCULES, INC., DEFENDANT/APPELLEE, VERTAC CHEMICAL CORPORATION; DEPARTMENT OF DEFENSE; DOW CHEMICAL CORPORATION, DEFENDANTS, UNIROYAL CHEMICAL LIMITED, FORMERLY KNOWN AS UNIROYAL LIMITED, DEFENDANT/APPELLANT, VELSICOL CHEMICAL CORPORATION; JOHN DOES, 1-5, DEFENDANTS. ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, PLAINTIFF/APPELLEE, v. VERTAC CHEMICAL CORPORATION; HERCULES, INC., A CORPORATION, DEFENDANTS. WASHINGTON LEGAL FOUNDATION; 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.; INTERNATIONAL SOCIETY OF REGULATORY TOXICOLOGY AND PHARMACOLOGY; AMERICAN COUNCIL ON SCIENCE AND HEALTH; THE ALLIED EDUCATIONAL FOUNDATION; FRANK B. CROSS; MICHAEL R. FOX, PH.D.; GARY E. MARCHANT, AMICI ON BEHALF OF APPELLANT, UNITED STATES OF AMERICA, PLAINTIFF/APPELLEE, VERTAC CHEMICAL CORPORATION, DEFENDANT, HERCULES, INC., DEFENDANT/APPELLEE, DOW CHEMICAL CORPORATION, DEFENDANT, UNIROYAL CHE

Page 706

247 F.3d 706 (8th Cir. 2001)

UNITED STATES OF AMERICA; ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, PLAINTIFFS/APPELLEES, v. HERCULES, INC., DEFENDANT/APPELLANT, VERTAC CHEMICAL CORPORATION; DEPARTMENT OF DEFENSE; DOW CHEMICAL CORPORATION, DEFENDANTS, UNIROYAL CHEMICAL LIMITED, FORMERLY KNOWN AS UNIROYAL LIMITED,¹ DEFENDANT/APPELLEE, VELSICOL CHEMICAL CORPORATION; JOHN DOES, 1-5, DEFENDANTS.

WASHINGTON LEGAL FOUNDATION; 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.; INTERNATIONAL SOCIETY OF REGULATORY TOXICOLOGY AND PHARMACOLOGY; AMERICAN COUNCIL ON SCIENCE AND HEALTH; THE ALLIED EDUCATIONAL FOUNDATION; FRANK B. CROSS; MICHAEL R. FOX, PH.D.; GARY E. MARCHANT, AMICI ON BEHALF OF APPELLANT.

UNITED STATES OF AMERICA; ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, PLAINTIFFS/APPELLEES, v. HERCULES, INC., DEFENDANT/APPELLEE, VERTAC CHEMICAL CORPORATION; DEPARTMENT OF DEFENSE; DOW CHEMICAL CORPORATION, DEFENDANTS, UNIROYAL CHEMICAL LIMITED, FORMERLY KNOWN AS UNIROYAL LIMITED, DEFENDANT/APPELLANT, VELSICOL CHEMICAL CORPORATION; JOHN DOES, 1-5, DEFENDANTS.

ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, PLAINTIFF/APPELLEE, v. VERTAC CHEMICAL CORPORATION; HERCULES, INC., A CORPORATION, DEFENDANTS.

WASHINGTON LEGAL FOUNDATION; 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.; INTERNATIONAL SOCIETY OF REGULATORY TOXICOLOGY AND PHARMACOLOGY; AMERICAN COUNCIL ON SCIENCE AND HEALTH; THE ALLIED EDUCATIONAL FOUNDATION; FRANK B. CROSS; MICHAEL R. FOX, PH.D.; GARY E. MARCHANT, AMICI ON BEHALF OF APPELLANT,

UNITED STATES OF AMERICA, PLAINTIFF/APPELLEE,

VERTAC CHEMICAL CORPORATION, DEFENDANT,

HERCULES, INC., DEFENDANT/APPELLEE,

DOW CHEMICAL CORPORATION, DEFENDANT,

UNIROYAL CHEMICAL LIMITED, FORMERLY KNOWN AS UNIROYAL LIMITED, DEFENDANT/APPELLANT.

UNITED STATES OF AMERICA; ARKANSAS DEPARTMENT OF POLLUTION CONTROL AND ECOLOGY, PLAINTIFFS,

HERCULES, INC., DEFENDANT/APPELLANT,

VERTAC CHEMICAL CORPORATION; DEPARTMENT OF DEFENSE; DOW CHEMICAL CORPORATION, DEFENDANTS,

UNIROYAL CHEMICAL LIMITED, FORMERLY KNOWN AS UNIROYAL LIMITED, DEFENDANT/APPELLEE,

VELSICOL CHEMICAL CORPORATION; JOHN DOES, 1-5, DEFENDANTS.

Nos. 99-3684, 99-3685,00-1473

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: June 12, 2000

Filed: April 10, 2001

Appeals from the United States District Court for the Eastern District of Arkansas. [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Wollman, Chief Judge, McMILLIAN, and Bye, Circuit Judges.

Wollman, Chief Judge.

Hercules, Inc. (Hercules) and Uniroyal Chemical Co. (Uniroyal) raise various claims arising from a series of decisions made by the district court over the past decade finding them jointly and severally liable to the United States for environmental cleanup costs and allocating such costs between them pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. 9601-9675 (1995 & Supp. 2000), as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), Pub. L. No. 99-499, 11 Stat. 1613. We affirm in part and reverse and remand in part.

I. BACKGROUND

A. Factual History

This case involves the Vertac Chemical Plant site, a ninety-three acre tract of land in Jacksonville, Arkansas (the Jacksonville site or the site), that was originally developed by the federal government in the 1930s as a munitions factory. In the late 1940s the site was sold to a now-defunct company called Reasor-Hill Corporation (Reasor-Hill), which at first manufactured various pesticides but in 1958 began to make herbicides including 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 rapidly biodegrade into harmless substances, the manufacture of 2,4,5-T (but not of 2,4-D) creates a byproduct, 2,3,7,8-tetrachlorodibenzo-p-dioxin (dioxin), that is now viewed as hazardous to humans. While Reasor-Hill operated the site, an unknown quantity of these and other untreated chemical wastes from the production process flowed through cooling ponds on the west side of the plant into a nearby stream. Other wastes were stored in numerous drums stacked in a field on the site.

Hercules bought the site from Reasor-Hill in 1961 and continued to manufacture herbicides, including 2,4-D and 2,4,5-T, at the plant until 1971. During this period Hercules sold the bulk of its product to the United States Department of Defense as the defoliant Agent Orange, a herbicide used in Vietnam to clear jungle undergrowth. ² Soon after Hercules took over the site it buried the deteriorating drums of chemical waste left by Reasor-Hill in unlined trenches on the site. Hercules did not learn of the toxicity of dioxin until March of 1965, when a scientific study found that it could cause chloracne, a particularly persistent and disfiguring form of acne that typically affects the face, neck, and shoulders. Dioxin was subsequently linked to cancer.

Later 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 two nearby landfills. Although Hercules has acknowledged numerous leaks and spills during its operation of the site, the record indicates that Hercules generally improved the safety and cleanliness of the site and complied with environmental regulations between 1961 and 1971.

In 1971, Hercules ceased production at the site and leased the facility to Transvaal, Inc., which later became Vertac Chemical Corp. (Vertac). When Hercules ceased operations at the cite, it cleaned out all of its equipment and production vessels, buried its waste, and shipped empty drums off-site.

Initially, Vertac continued the production of 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 at the site with the hope that the waste might someday be recycled. In 1976, Hercules sold the site to Vertac, which continued its operations until 1986 and abandoned the site altogether when it went into receivership in 1987. By then there were nearly 29,000 waste-filled drums at the site that contained waste materials including 2,4-D, 2,4,5-T, and dioxin. Many of these drums had corroded and leaked, contaminating more soil, groundwater, and buildings at the site. Contamination was also found in other areas of the site, at the landfills, in nearby neighborhoods, and in grounds adjacent to the site.

Uniroyal was a customer of Vertac's and purchased 2,4,5-T and other products from Vertac during 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 regular contractual obligations to Uniroyal. Uniroyal consequently 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 from Uniroyal, but rather reduced the amount it ultimately charged Uniroyal for the 2,4,5-T to reflect the value of the TCB that Uniroyal had supplied. This arrangement (a "toll conversion agreement") 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.

Vertac was the last operator of the Jacksonville site. After it abandoned the plant, the United States Environmental Protection Agency (EPA) took over the site, closed down all operations, and assumed cleanup responsibilities that have cost well over $100 million to date.

B. Procedural History

The environmental cleanup undertaken at the site has resulted in extensive litigation over the past 20 years. ³ In 1980, the EPA sued Vertac and Hercules under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. 6973 et seq., the Clean Water Act, 33 U.S.C. 1312 et seq., and the Refuse Act, 33 U.S.C. 407, seeking to enjoin the continuing discharge of hazardous waste at the site. The Arkansas Department of Pollution Control and Ecology (Arkansas) sought similar relief under state law. After consolidating the cases, the district court granted a preliminary injunction ordering Vertac to stop the chemical leakage from various disposal areas but denied relief against Hercules, which was not in possession or control of the site at the time. United States v. Vertac Chemical Corp., 489 F. Supp. 870, 888 (E.D. Ark. 1980) (Vertac I). Several years later, the court approved consent decrees representing a negotiated remedial plan to address the containment and monitoring of waste. United States v. Vertac Chemical Corp., 588 F. Supp. 1294, 1296-97 (E.D. Ark. 1984) (Vertac II). The lawsuit was later converted into a CERCLA action.

Although Vertac stipulated that it was an owner and operator of the site liable to the government for response costs under CERCLA, it ultimately failed to comply with the consent decrees and eventually sold its assets to third parties, forcing the court in 1987 to appoint a receiver to handle the company's affairs. United States v. Vertac Chemical Corp., 671 F. Supp. 595, 623-24 (E.D. Ark. 1987) (Vertac...