U.S. v. Monsanto Co.
| Decision Date | 07 September 1988 |
| Docket Number | 86-1263 and 86-1265,Nos. 86-1261,s. 86-1261 |
| Parties | , 57 USLW 2170, 19 Envtl. L. Rep. 20,085 UNITED STATES of America; South Carolina Department of Health and Environmental Control, Plaintiffs-Appellees, v. MONSANTO COMPANY; Allied Corporation; E.M. Industries, Inc.; Defendants- Appellants, American Insurance Association; Chemical Manufacturers Association Amici Curiae. and SOUTH CAROLINA RECYCLING AND DISPOSAL, INC.; Columbia Organic Chemical Company; Oscar Seidenberg; Harvey Hutchinson; Eaton Corporation; Rad Services, Inc.; Aquair Corporation; Defendants, v. G.D. SEARLE & COMPANY; Will Ross, Inc., Third Party Defendants. UNITED STATES of America; South Carolina Department of Health and Environmental Control, Plaintiffs-Appellees, v. Oscar SEIDENBERG; Harvey Hutchinson; Defendants-Appellants, American Insurance Association; Chemical Manufacturers Association, Amici Curiae. and MONSANTO COMPANY; Allied Corporation; Aquair Corporation; E.M. Industries, Inc.; South Carolina Recycling and Disposal, Inc.; Columbia Organic Chemical Company; Eaton Corporation; Rad Services, Inc., Defendants, v. G.D. SEARLE & COMPANY; Will Ross, Inc., Third Party Defendants. UNITED STATES of America Plaintiff-Appellant, and South Carolina Department of Health and Environmental Control, Plaintiff, v. MONSANTO COMPANY; Allied Corporation; E.M. Industries Inc.; South Carolina Recycling and Disposal, Inc.; Oscar Seidenberg; Harvey Hutchinson; Defendants-Appellees, American Insurance Association; Chemical Manufacturers Association, Amici Curiae. and COLUMBIA ORGANIC CHEMICAL COMPANY; Eaton Corporation; Rad Services, Inc.; Aquair Corporation, Defendants, v. G.D. SEARLE & COMPANY; Will Ross, Inc., Third Party Defendants. |
| Court | U.S. Court of Appeals — Fourth Circuit |
George Clemon Freeman, Jr. (William F. Kennedy, Alfred R. Light, Thomas E. Knauer, Hunton & Williams, Richmond, Va., on brief), Isadore S. Bernstein (Hammer & Bernstein, Columbia, S.C. on brief), for defendants-appellants.
David Carlisle Shilton, Dept. of Justice (F. Henry Habicht, II, Asst. Atty. Gen., Myles E. Flint, Deputy Asst. Atty. Gen., Washington, D.C., Vinton D. Lide, U.S. Atty., Mary G. Slocum, Asst. U.S. Atty., Columbia, S.C., Jacques B. Gelin, Dept. of Justice, Washington, D.C., Walton J. McLeod, III, Gen. Counsel, Walterboro, S.C., William T. Lavender, Jr., Dennis N. Cannon, Jr., Staff Counsel, South Carolina Dept. of Health & Environmental Control, Columbia, S.C., Charles De Saillan, Dov Weitman, E.P.A., Washington, D.C., on brief), for plaintiffs-appellees.
(Edward W. Warren, David G. Norrell, Amy R. Sabrin, Kirkland & Ellis, David F. Zoll, Washington, D.C., Barbara A. Hindin, Los Angeles, Cal., on brief), for amicus curiae Chemical Mfrs. Ass'n.
(Thomas W. Brunner, Laura A. Foggan, Piper & Marbury, Washington, D.C., on brief) for amicus curiae American Ins. Ass'n.
Before WIDENER, SPROUSE and ERVIN, Circuit Judges.
Oscar Seidenberg and Harvey Hutchinson (the site-owners) and Allied Corporation, Monsanto Company, and EM Industries Inc. (the generator defendants), 1 appeal from the district court's entry of summary judgment holding them liable to the United States and the State of South Carolina (the governments) under section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). 42 U.S.C.A. Sec. 9607(a) (West Supp.1987). The court determined that the defendants were liable jointly and severally for $1,813,624 in response costs accrued from the partial removal of hazardous waste from a disposal facility located near Columbia, South Carolina. The court declined, however, to assess prejudgment interest against the defendants. We affirm the district court's liability holdings, but we vacate and remand for reconsideration its denial of prejudgment interest.
In 1972, Seidenberg and Hutchinson leased a four-acre tract of land they owned to the Columbia Organic Chemical Company (COCC), a South Carolina chemical manufacturing corporation. The property, located along Bluff Road near Columbia, South Carolina, consisted of a small warehouse and surrounding areas. The lease was verbal, on a month-to-month basis, and according to the site-owners' deposition testimony, was executed for the sole purpose of allowing COCC to store raw materials and finished products in the warehouse. Seidenberg and Hutchinson received monthly lease payments of $200, which increased to $350 by 1980.
In the mid-1970s, COCC expanded its business to include the brokering and recycling of chemical waste generated by third parties. It used the Bluff Road site as a waste storage and disposal facility for its new operations. In 1976, COCC's principals incorporated South Carolina Recycling and Disposal Inc. (SCRDI), for the purpose of assuming COCC's waste-handling business, and the site-owners began accepting lease payments from SCRDI.
SCRDI contracted with numerous off-site waste producers for the transport, recycling, and disposal of chemical and other waste. Among these producers were agencies of the federal government and South Carolina, 2 and various private entities including the three generator defendants in this litigation. Although SCRDI operated other disposal sites, it deposited much of the waste it received at the Bluff Road facility. The waste stored at Bluff Road contained many chemical substances that federal law defines as "hazardous."
Between 1976 and 1980, SCRDI haphazardly deposited more than 7,000 fifty-five gallon drums of chemical waste on the four-acre Bluff Road site. It placed waste laden drums and containers wherever there was space, often without pallets to protect them from the damp ground. It stacked drums on top of one another without regard to the chemical compatibility of their contents. It maintained no documented safety procedures and kept no inventory of the stored chemicals. Over time many of the drums rusted, rotted, and otherwise deteriorated. Hazardous substances leaked from the decaying drums and oozed into the ground. The substances commingled with incompatible chemicals that had escaped from other containers, generating noxious fumes, fires, and explosions.
On October 26, 1977, a toxic cloud formed when chemicals leaking from rusted drums reacted with rainwater. Twelve responding firemen were hospitalized. 3 Again, on July 24, 1979, an explosion and fire resulted when chemicals stored in glass jars leaked onto drums containing incompatible substances. SCRDI'S site manager could not identify the substances that caused the explosion, making the fire difficult to extinguish.
In 1980, the Environmental Protection Agency (EPA) inspected the Bluff Road site. Its investigation revealed that the facility was filled well beyond its capacity with chemical waste. The number of drums and the reckless manner in which they were stacked precluded access to various areas in the site. Many of the drums observed were unlabeled, or their labels had become unreadable from exposure, rendering it impossible to identify their contents. The EPA concluded that the site posed "a major fire hazard."
Later that year, the United States filed suit under section 7003 of the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6973, against SCRDI, COCC, and Oscar Seidenberg. The complaint was filed before the December 11, 1980, effective date of CERCLA, and it sought only injunctive relief. Thereafter, the State of South Carolina intervened as a plaintiff in the pending action.
In the course of discovery, the governments identified a number of waste generators, including the generator defendants in this appeal, that had contracted with SCRDI for waste disposal. The governments notified the generators that they were potentially responsible for the costs of cleanup at Bluff Road under section 107(a) of the newly-enacted CERCLA. As a result of these contacts, the governments executed individual settlement agreements with twelve of the identified off-site producers. The generator defendants, however, declined to settle.
Using funds received from the settlements, the governments contracted with Triangle Resource Industries (TRI) to conduct a partial surface cleanup at the site. The contract required RAD Services, Inc., a subsidiary of TRI, to remove 75% of the drums found there and to keep a log of the removed drums. RAD completed its partial cleanup operation in October 1982. The log it prepared documented that it had removed containers and drums bearing the labels or markings of each of the three generator defendants.
The EPA reinspected the site after the first phase of the cleanup had been completed. The inspection revealed that closed drums and containers labeled with the insignia of each of the three generator defendants remained at the site. The EPA also collected samples of surface water, soil, and sediment from the site. Laboratory tests of the samples disclosed that several hazardous substances 4 contained in the waste the generator defendants had shipped to the site remained present at the site. 5
Thereafter, South Carolina completed the remaining 25% of the surface cleanup. It used federal funds from the Hazardous Substances Response Trust Fund (Superfund), 42 U.S.C. Sec. 9631, as well as state money from the South Carolina Hazardous Waste Contingency Fund, S.C.Code Ann. Sec. 44-56-160, and in-kind contribution of other state funds to match the federal contribution.
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 of the nonsettling defendants. The governments alleged that the generator defendants and site-owners were jointly and severally liable under section 107(a) for the costs expended completing the surface cleanup at Bluff Road.
In response, the site-owners contended that they...
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