Edward Hines Lumber Co. v. Vulcan Materials Co.

• Decision Date: 02 February 1988
• Docket Number: No. 85 C 1142.,85 C 1142.
• Citation: 685 F. Supp. 651
• Court: U.S. District Court — Northern District of Illinois
• Parties: EDWARD HINES LUMBER COMPANY, Plaintiff, v. VULCAN MATERIALS COMPANY, Defendant and Third-Party Plaintiff, v. REILLY TAR & CHEMICAL CORP.; Bernuth Lembcke; Allied Corporation; USX Corporation (formerly known as United States Steel Corporations); Koppers Company, Inc.; Crown Zellerbach Corporation; Joc Oil Exploration Co., Inc.; Monsanto Company; and Osmose Wood Preserving Co. of America, Inc., Third-Party Defendants.

685 F. Supp. 651

EDWARD HINES LUMBER COMPANY, Plaintiff, v. VULCAN MATERIALS COMPANY, Defendant and Third-Party Plaintiff, v. REILLY TAR & CHEMICAL CORP.; Bernuth Lembcke; Allied Corporation; USX Corporation (formerly known as United States Steel Corporations); Koppers Company, Inc.; Crown Zellerbach Corporation; Joc Oil Exploration Co., Inc.; Monsanto Company; and Osmose Wood Preserving Co. of America, Inc., Third-Party Defendants.

No. 85 C 1142.

United States District Court, N.D. Illinois, E.D.

February 2, 1988.

Robin R. Lunn, Robert K. Neiman, Maureen Martin, Keck Mahin & Cate, Chicago, Ill., for plaintiff.

Algimantas Kezelis, James M. Hofert, French, Rogers, Kezelis & Kominiarek, Chicago, Ill., for Vulcan Materials Co.

Robert L. Shuftan, Wildman, Harrold, Allen & Dixon, Chicago, Ill., for Koppers Co., Inc.

James H. Schink, John W. Roberts, Kirkland & Ellis, Chicago, Ill., for Monsanto Co.

Robert M. Burke, Steven M. Mahoney, Heineke, Burke & Healy, Chicago, Ill., for Osmose Wood Preserving.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Edward Hines Lumber Company ("Hines") brought this action to determine who should be held responsible for the costs of removing contaminants from a wood treatment facility in Mena, Arkansas. In this decision, we address defendants Reilly Tar & Chemical Corp., Bernuth Lembcke Co., Inc., Allied Corp. and Koppers Company, Inc. (collectively "Creosote Defendants") and Osmose Wood Preserving Co. of America, Inc.'s ("Osmose") motions to dismiss or, alternatively, for summary judgment. For the following reasons, we grant the motions for summary judgment.

I Material Undisputed Facts

From 1967 to 1978, Hines owned and operated a wood treatment facility in Mena, Arkansas ("Mena site") at which Hines treated wood with various chemicals including pentachlorophenol ("PCP") supplied by the Vulcan Materials Company and the Monsanto Company, creosote supplied by the Creosote Defendants and chromated copper arsenate ("CCA") supplied by Osmose. The Creosote Defendants' relationship with Hines at the Mena site went no further than manufacturing and selling to Hines the creosote for wood treatment.

Osmose's relationship with Hines was more extensive. Pursuant to an agreement ("Hines-Osmose Agreement"), Osmose advised and consulted with Hines on the selection of the appropriate location for the CCA treatment system, designed, constructed and installed the system at the Mena site, trained personnel to run the system and supplied the CCA for the system. Osmose provided technical information and marketing assistance to Hines and authorized Hines to use the Osmose trademark. Hines exercised sole responsibility for the "operation, maintenance, upkeep and control of its plant or any part of its products with local, State and Federal regulations or requirements or OSMOSE standards." Hines-Osmose Agreement, ¶ III(g). Osmose retained the right to "full and immediate access to the plant and to all chemical processes and products located thereon or produced thereby for the purposes of insuring quality control according to OSMOSE standards...." Id., ¶ III(i). No Osmose employees attended to the Mena site on a regular basis.

Hines stored run-off from the wood treatment process in a holding pond at the site. In March of 1982, the United States Environmental Protection Agency ("EPA") notified Hines that the chemicals in the holding pond created a potential environmental risk and identified PCP, creosote and CCA as the offending substances. Hines was later named as a defendant in litigation alleging personal injury and property damage resulting from the Mena site contamination.

II Case History

Hines brought this action to establish liability for past and future damages caused by the contaminants in the Mena site holding pond. Hines initially filed this action against Vulcan Materials Company. Other defendants were named as third-party defendants and later as direct defendants. Several were voluntarily dismissed from this action. In a previous decision, we dismissed the state law damages counts against all defendants, expressly reserving judgment on the remaining counts. Edward Hines Lumber Co. v. Vulcan Materials Co., 669 F.Supp. 854 (N.D.Ill.1987). In another decision, we entered the Agreed Orders that dismissed with prejudice Vulcan and Monsanto Company. Hines v. Vulcan, No. 85 C 1142, slip op. (N.D.Ill. Dec. 2, 1987) available on WESTLAW, 1987 WL 27368.

We now address Osmose's and the Creosote Defendants' motions for summary judgment¹ on the remaining counts, Counts VI and IX. In these counts, Hines seeks a declaratory judgment that the Creosote Defendants and Osmose are liable for those portions of any future liability that Hines may incur "as a result of allegations of environmental harm at the Mena site" that are attributable to the creosote and CCA. Hines states in its responsive pleadings that the future liability to which it refers are response costs (the costs of removing the contaminants from the Mena site) incurred under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S. C. § 9601 et seq. Hines further states that these counts arise under CERCLA or, alternatively, state law. In their motions, defendants contend that the declaratory judgment counts for response costs can be brought only under CERCLA, not state law, and that defendants' involvement at the Mena site was insufficient to warrant CERCLA liability.

III Liability Under CERCLA

Under a 1986 amendment to CERCLA, "any person may seek contribution from any other person who is liable or potentially liable" under CERCLA. 42 U.S.C. § 9613(f)(1). This provision codifies the federal common law principle, recognized by the courts in the context of CERCLA, that contribution can be obtained only from parties liable under the governing law. Colorado v. ASARCO, Inc., 608 F.Supp. 1484, 1492 (D.Colo.1985); U.S. v. Ward, 22 Env't Rep.Cas. (BNA) 1235, 1238 (E.D.N.C. 1984). Hines can succeed in its quest for declaratory relief only if it can establish that Osmose and the Creosote Defendants are independently liable under CERCLA for the Mena site contamination attributable to the CCA and creosote. We conclude that the undisputed facts demonstrate that the defendants are not responsible parties as defined in CERCLA and therefore cannot be liable for contribution under that statute.

A. Liability of Osmose and the Creosote Defendants Under Section 9607(a)(3)

In responding to defendants' motions, Hines contends that defendants are responsible parties since they are

persons who by contract, agreement, or otherwise arranged for disposal or treatment, of hazardous substances owned or possessed by such persons, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances....

42 U.S.C. § 9607(a)(3). Hines argues that this provision reaches all chemical manufacturers, such as the defendants, who sell a hazardous substance to a party who uses the substance in its manufacturing or commercial process and then disposes of process run-off containing the substance in a holding pond at the same site. For Hines, the key phrase is "hazardous substance." Because primary products as well as waste products sold to manufacturers can be hazardous substances as defined by CERCLA, Hines argues, CERCLA liability attaches to any transaction in a hazardous substance that later contaminates a facility.

We do not share Hines' expansive interpretation of § 9607(a)(3). While Hines is correct that hazardous substances encompass more than "wastes" and may include "primary products," 42 U.S.C. § 9601(14), United States v. Conservation Chemical Co., 619 F.Supp. 162, 239 (W.D. Mo.1985) ("Conservation Chemical"), Hines' interpretation avoids the phrase "arranged for disposal or treatment." That phrase clearly circumscribes the types of transactions in hazardous substances to which liability attaches, narrowing liability to transactions in the disposal or treatment of such substances. Adopting Hines' position would be tantamount to carving from § 9607(a)(3) the language limiting liability to those who "arranged for disposal or treatment" of a substance.² We find no support in the legislative history or decisional law for this surgical removal of statutory language, and accordingly hold that liability for environmental damage under § 9607(a)(3) attaches only to parties who transact in a hazardous substance in order to dispose of or treat the substance.

Case law interpreting and applying § 9607(a)(3) supports our holding. In a proceeding similar to this action, the court held that a defendant who sold a hazardous substance to another for use in a manufacturing process and not for disposal is not a responsible party even if the chemical is found in the effluent from that manufacturing process. U.S. v. Westinghouse Electric Corp., 22 Env't Rep.Cas. (BNA) 1230 (S.D.Ind.1983). In that case, the United States filed an action against Westinghouse for response costs resulting from the cleanup of a landfill containing polychlorinated biphenyls ("PCBs"). Monsanto had sold the PCBs to Westinghouse who used them in manufacturing and then deposited the run-off that contained PCBs in the landfill. The court dismissed Westinghouse's third-party complaint seeking contribution from Monsanto because Monsanto sold the PCBs to Westinghouse for use in a manufacturing process. The court found it significant that Westinghouse did not allege that Monsanto made the deal in order to dispose of its own wastes or manufacturing by-products and Monsanto had no control over how Westinghouse disposed of the contaminated effluent. Id. at 1233.³Compare United States v. Ward, 618 F.Supp. 884 (E.D.N.C.1985).

In United States v. A & F Materials Co., Inc., 582 F.Supp. 842 (S.D.Ill.1984), the court found McDonnell Douglas Corporation ("MDC"), who sold a...