872 F.2d 1373 (8th Cir. 1989), 88-1580, United States v. Aceto Agr. Chemicals Corp.

Docket Nº:88-1580 to 88-1583.
Citation:872 F.2d 1373
Party Name:UNITED STATES of America, and State of Iowa, ex rel., Iowa Department of Natural Resources, Appellees, v. ACETO AGRICULTURAL CHEMICALS CORP., The Dow Chemical Company, Farnam Companies, Inc., Mobay Corporation, and Velsicol Chemical Corporation, Appellants, CIBA-GEIGY Corporation, Mobil Oil Corporation, and Platte Chemical Corporation, UNITED STATE
Case Date:April 25, 1989
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1373

872 F.2d 1373 (8th Cir. 1989)

UNITED STATES of America, and State of Iowa, ex rel., Iowa

Department of Natural Resources, Appellees,

v.

ACETO AGRICULTURAL CHEMICALS CORP., The Dow Chemical

Company, Farnam Companies, Inc., Mobay

Corporation, and Velsicol Chemical

Corporation, Appellants,

CIBA-GEIGY Corporation, Mobil Oil Corporation, and Platte

Chemical Corporation,

UNITED STATES of America, Appellant,

and State of Iowa, ex rel., Iowa Department of Natural Resources,

v.

ACETO AGRICULTURAL CHEMICALS CORP., The Dow Chemical

Company, Farnam Companies, Inc., Mobay Corporation, Velsicol

Chemical Corporation, CIBA-GEIGY Corporation, Mobil Oil

Corporation, and Platte Chemical Corporation, Appellees,

UNITED STATES of America, and State of Iowa, ex rel., Iowa

Department of Natural Resources, Appellees,

v.

ACETO AGRICULTURAL CHEMICALS CORP., The Dow Chemical

Company, Farnam Companies, Inc., Mobay Corporation, Velsicol

Chemical Corporation, CIBA-GEIGY Corporation, Mobil Oil

Corporation, and Platte Chemical Corporation, Appellant,

UNITED STATES of America, and State of Iowa, ex rel., Iowa

Department of Natural Resources, Appellant,

v.

ACETO AGRICULTURAL CHEMICALS CORP., The Dow Chemical

Company, Farnam Companies, Inc., Mobay Corporation, Velsicol

Chemical Corporation, CIBA-GEIGY Corporation, Mobil Oil

Corporation, and Platte Chemical Corporation, Appellees.

Nos. 88-1580 to 88-1583.

United States Court of Appeals, Eighth Circuit

April 25, 1989

Submitted Nov. 18, 1988.

Rehearing and Rehearing En Banc Denied July 19, 1989.

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[Copyrighted Material Omitted]

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Theodore L. Garrett, Washington, D.C., for appellants Aceto Agr. Chemicals Corp., The Dow Chemical Co., Farnam Companies, Inc., Mobay Corp., Velsicol Chemical Corp., CIBA-GEIGY Corp., and Mobil Oil Corp.

William F. Hargens, Omaha, Neb., for appellant Platte Chemical Corp.

Sarah P. Robinson, Washington, D.C., for appellee U.S. of America.

Before HEANEY [*] and BEAM, Circuit Judges, and LARSON, [**] Senior District Judge.

LARSON, Senior District Judge.

This case arises from efforts by the Environmental Protection Agency (EPA) and the State of Iowa to recover over $10 million dollars in response costs incurred in the clean up of a pesticide formulation facility operated by the Aidex Corporation in Mills County, Iowa. Aidex operated the facility from 1974 through 1981, when it was declared bankrupt. Investigations by the EPA in the early 1980s revealed a highly contaminated site. Hazardous substances were found in deteriorating containers, in the surface soil, in fauna samples, and in the shallow zone of the groundwater, threatening the source of irrigation and drinking water for area residents. Using funds from the "Hazardous Substance Superfund," see 26 U.S.C. Sec. 9507, the EPA, in cooperation with the State of Iowa, undertook various remedial actions to clean up the site.

The EPA now seeks to recover its response costs from eight pesticide manufacturers who did business with Aidex, in particular, who hired Aidex to formulate their technical grade pesticides into commercial grade pesticides. The complaint 1 alleges it is a common practice in the pesticide industry for manufacturers of active pesticide ingredients to contract with formulators such as Aidex to produce a commercial grade product which may then be sold to farmers and other consumers. Complaint paragraph 46. Formulators mix the manufacturer's active ingredients with inert materials using the specifications provided by the manufacturer. The resulting commercial grade product is then packaged by the formulator and either shipped back to the manufacturer or shipped directly to customers of the manufacturer. Complaint paragraphs 5-12, 46, 48.

The complaint alleges that although Aidex performed the actual mixing or formulation process, the defendants owned the technical grade pesticide, the work in process, and the commercial grade pesticide while the pesticide was in Aidex's possession. Complaint paragraphs 50, 68. The complaint also alleges the generation of pesticide-containing wastes through spills, cleaning of equipment, mixing and grinding operations, and production of batches

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which do not meet specifications is an "inherent" part of the formulation process. Complaint paragraph 47.

The United States and the State of Iowa allege all eight defendants are liable for the response costs incurred at the Aidex site pursuant to section 7003 of the Resource Conservation and Recovery Act (RCRA) because by virtue of their relationships with Aidex they "contributed to" the handling, storage, treatment, or disposal of hazardous wastes. Complaint paragraph 70. See 42 U.S.C. Sec. 6973(a). Plaintiffs further allege that six of the eight companies are liable under section 9607(a)(3) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), because by virtue of their relationships with Aidex they "arranged for" the disposal of hazardous substances. Complaint paragraph 52. See 42 U.S.C. Sec. 9607(a)(3).

The defendants have moved to dismiss the action under Fed.R.Civ.P. 12(b)(6), arguing that they contracted with Aidex for the processing of a valuable product, not the disposal of a waste, and that Aidex alone controlled the processes used in formulating their technical grade pesticides into commercial grade pesticides, as well as any waste disposal that resulted therefrom. The district court granted defendants' motion under RCRA, holding the absence of an allegation that defendants had authority to control how Aidex handled or disposed of the wastes precluded recovery under section 7003. The court denied the motion under CERCLA, however, holding that principles of common law in conjunction with the liberal construction required under CERCLA could support liability under section 9607(a)(3). 699 F.Supp. 1384.

We granted all parties leave to file interlocutory appeals, and the case is now before us for decision. For the reasons discussed below, we hold plaintiffs' allegations are sufficient to withstand defendants' motion to dismiss under both CERCLA and RCRA, and, accordingly, we affirm the district court's decision in part, reverse in part, and remand this case for further proceedings.

I. STANDARD OF REVIEW

We review the district court's order under the well-established standards for deciding a motion to dismiss for failure to state a claim. See Fed.R.Civ.P. 12(b)(6). A complaint should not be dismissed for failure to state a claim unless it appears beyond a doubt that plaintiffs can prove no set of facts in support of their claim which would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); May v. Commissioner of Internal Revenue, 752 F.2d 1301, 1303 (8th Cir.1985); Fusco v. Xerox Corp., 676 F.2d 332, 334 (8th Cir.1982).

The allegations of plaintiffs' complaint must be assumed to be true, and further, must be construed in their favor. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); May, 752 F.2d at 1303; Wright v. Anthony, 733 F.2d 575, 577 (8th Cir.1984). The issue is not whether plaintiffs will ultimately prevail, but rather whether they are entitled to offer evidence in support of their claims. Scheuer, 416 U.S. at 236, 94 S.Ct. at 1686. Thus, it is only in the "unusual case" where the complaint on its face reveals some insuperable bar to relief that a dismissal under Rule 12(b)(6) is warranted. Fusco, 676 F.2d at 334 (and authorities cited therein).

II. THE STATUTES

The Resource Conservation and Recovery Act was initially enacted in 1976. Pub.L. No. 94-580, 1976 U.S.Code Cong. & Admin.News (90 Stat.) 2795. The Act represented an attempt by Congress to deal with problems posed by the general disposal of wastes in this country, as well as the particular problems associated with the disposal of hazardous substances. See generally H.R.Rep. No. 1491, Part I, 94th Cong., 2d Sess. 9-11, reprinted in 1976 U.S.Code Cong. & Admin.News 6238, 6246-49. The statute has been amended three times since enactment, 2 and provides what Congress

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has called a "prospective cradle-to-grave regulatory regime governing the movement of hazardous waste in our society." H.R.Rep. No. 1016, Part I, 96th Cong., 2d Sess. 17, reprinted in 1980 U.S.Code Cong. & Admin.News 6119, 6120.

The statute authorizes the EPA to identify hazardous wastes; to promulgate standards for transporters of hazardous wastes and operators of hazardous waste facilities; and to issue permits for the operation of hazardous waste disposal facilities. See 42 U.S.C. Secs. 6921-25. In addition, section 7003 of the statute, 42 U.S.C. Sec. 6973, authorizes suit when "the past or present handling, storage, treatment, transportation or disposal of any solid waste or hazardous waste may present an imminent and substantial endangerment to health or the environment." Suit may be brought against "any person ... who has contributed or who is contributing to such handling, storage, treatment, transportation, or disposal to restrain such person [or] to order such person to take such other action as may be necessary, or both." 42 U.S.C. Sec. 6973(a).

Section 7003 has been interpreted to impose strict liability and to apply to persons who in the past "contributed to" the handling, storage, treatment, transportation, or disposal of solid or hazardous waste. United States v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726, 737-42 (8th Cir.1986), cert. denied, --- U.S. ----, 108 S.Ct. 146, 98 L.Ed.2d 102 (1987) (NEPACCO ); United States v. Bliss, 667 F.Supp. 1298, 1313 (E.D.Mo.1987); United...

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