U.S. v. Vertac Chemical Corp.

• Decision Date: 30 March 2005
• Docket Number: No. CIV. 4:80CV00109GH.,CIV. 4:80CV00109GH.
• Citation: 364 F.Supp.2d 941
• Parties: UNITED STATES of America, Plaintiff, v. VERTAC CHEMICAL CORP., et al., Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

364 F.Supp.2d 941

UNITED STATES of America, Plaintiff, v. VERTAC CHEMICAL CORP., et al., Defendants.

No. CIV. 4:80CV00109GH.

United States District Court, E.D. Arkansas, Western Division.

March 30, 2005.

COPYRIGHT MATERIAL OMITTED

Samuel D. Blesi, Paul Schaeffer, Kenneth G. Long, U.S. Dept. of Justice, Environmental & Natural Resources Division, Environmental Enforcement Section, Washington, DC, A. Douglas Chavis, III, U.S. Attorney's Office, Eastern District of Arkansas, Little Rock, AR, James L. Turner, U.S. Environmental Protection Agency, Dallas, TX, for Plaintiffs.

Samuel E. Ledbetter, Esq., McMath & Woods, P.A., Little Rock, Richard F. Ricci, Esq., Lowenstein, Sandler, Kohl, Fisher & Boylan, Roseland, NJ, Susan H. Shumway, Esq., Shumway & Spencer, LLC, Westport CT, John Sheehan, Esq., U.S. Department of Justice, Environment & Natural Resources Division, Washington, DC, Karl S. Bourdeau, Esq., Beveridge & Diamond, P.C., Scott J. Jordan, Esq., Barry M. Hartman, Esq., U.S. Department of Justice, Land & Natural Resources Division, Environmental Defense Section, Henry Talavera, Esq., Pension Benefit Guaranty Corporation, Office of the General Counsel, Washington, DC, Thomas David Gillespie, Jr. Esq., Attorney At Law, Dallas, TX, Connie L. Grace, Esq., Ludwig Law Firm, PLC, Steven W. Quattlebaum, Esq., Quattlebaum, Grooms, Tull & Burrow, PLLC, Little Rock, Carol A. Doyle, Esq., Sidley, Austin, Brown & Wood, Chicago, IL, Kevin A. Crass, Esq., William H. Sutton, Esq., Friday, Eldredge & Clark, Little Rock, Robert Brager, Esq., Beveridge & Diamond, P.C., Baltimore, MD, Charles R. Nestrud, Esq, Chisenhall, Nestrud & Julian, PA, Richard L. Ramsay, Esq., Eichenbaum, Liles & Heister, P.A., Little Rock, Robert R. Ross, Esq., Federal Express Corporation, Litigation Section, Memphis, TN, for Defendants.

MEMORANDUM OPINION AND ORDER

GEORGE HOWARD, JR., District Judge.

The Vertac Site in Jacksonville, Arkansas, has been the focus of litigation for 25 years. The history of the Vertac Site and Off-Site areas has been discussed in numerous prior decisions.¹ This Court previously found both Hercules Incorporated ("Hercules") and Uniroyal Chemical Limited ("Uniroyal")² jointly and severally liable under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601 et seq. for all response costs incurred and to be incurred by the United States at the Site and related areas, and entered judgment in the amount of $102,878,641.35. United States v. Vertac, 33 F.Supp.2d 769 (E.D.Ark.1998). In what was hoped to be the last decision in this matter, the Court allocated the costs between Hercules and Uniroyal. United States v. Vertac, 79 F.Supp.2d 1034 (E.D.Ark.1999).

GENESIS OF THIS DECISION

On October 12, 1993, the Court granted the United States' motion for summary judgment and found that Hercules was jointly and severally liable under Section 107(a)(2) and (3) of CERCLA, 42 U.S.C. § 9607(a)(2) and (3) for the response costs incurred by the United States with regard to the Vertac Site. Hercules moved for reconsideration, at which time it argued that disputed issues of fact existed regarding divisibility. The Court, on November 1, 1993, denied the motion for reconsideration, finding, inter alia, that Hercules had failed to present evidence in support of its divisibility of harm argument.

On December 19, 1999, Hercules appealed the Court's summary judgment ruling, arguing in part that the harm at the Site is divisible. On April 11, 2001, the Eighth Circuit Court of Appeals reversed the Court's summary judgment against Hercules on the issue of liability and remanded the case for the Court to "address evidence supporting divisibility in light of the proper legal standards." United States v. Hercules, Inc., 247 F.3d 706, 719 (8th Cir.2001).³ The Eighth Circuit also vacated the Court's judgments on response costs, United States v. Vertac Chem. Corp., 33 F.Supp.2d 769 (E.D.Ark.1998) ("Vertac IX") and allocation, United States v. Vertac Chem. Corp., 79 F.Supp.2d 1034 (E.D.Ark.1999) ("Vertac X") pending the Court's reconsideration of Hercules' claim of divisibility. 247 F.3d at 721.

The Court scheduled a limited evidentiary hearing on the divisibility of harm defense raised by Hercules. The hearing was held between October 9 and 19, 2001 and December 11 and 12, 2001. The parties subsequently filed post-hearing briefs. The record, needless to say, is voluminous, comprising not only the numerous filed documents, but exhibits and transcripts admitted at the evidentiary hearing, exhibits and transcripts of the various trials in this action, evidentiary and deposition testimony of other federal actions involving Hercules, and the 52,000-page Administrative Record (AR) for the Site which has been filed in this action as 8 compact discs (see docket entry 2454). The Court has worked diligently to carefully review the record in considering this case.

FACTUAL BACKGROUND

The Vertac Chemical Plant Site ("Site") consists of approximately 93 acres in Jacksonville, Arkansas. The Site was originally developed by the federal government in the 1930s as a munitions factory. Around 1948, Reasor-Hill Corporation ("Reasor-Hill"), a now defunct company, purchased the Site and first formulated finished insecticide products, primarily DDT, aldrin, dieldrin, and toxaphene. In the mid-1950s, Reasor-Hill modified the plant and began manufacturing phenoxy herbicides, primarily 2,4, dichlorophenoxyacetic acid ("2,4-D"), 2,4,5 trichlorophenoxyacetic acid ("2,4,5-T") and 2,4, 5 trichloropropionic acid ("2,4,5-TP" or "Silvex"). United States v. Vertac Chem. Corp., 489 F.Supp. 870, 873 (E.D.Ark.1980) ("Vertac I"). The chlorinated compound 2,4,5-trichlorophenol (2,4,5-TCP or TCP) was an intermediate in the 2,4,5-T manufacturing process. The manufacture of 2,4,5-T creates a highly toxic byproduct, 2,3,7,8-tetrachlorodibenzo-p-dioxin ("dioxin" or "TCDD") that is now viewed as hazardous to humans. Vertac XI at 712. All of the herbicide related compounds are listed hazardous wastes under the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6921, 40 C.F. R. § § 261.31, 261.33, and the compounds 2,4,5-T, 2,4,5-TCP, 2,4,5-TP are designated as "Acute Hazardous Wastes" under RCRA. 40 C.F.R. § 261.31. Additionally, all of the phenoxy herbicides and TCP are designated as hazardous substances under CERCLA. See 42 U.S.C. 9601(14); 40 C.F. R § 302.4.

Reasor-Hill did not have a process to treat the waste water that was produced. United States v. Vertac Chem. Corp., 966 F.Supp. 1491, 1494 (E.D.Ark.1997) ("Vertac VIII"). While Reasor-Hill operated the Site, an unknown quantity of untreated chemical wastes from the production process flowed through cooling ponds on the west side of the plant into a nearby stream. Reasor-Hill disposed of large quantities of pesticide (insecticide) and phenoxy herbicide wastes by leaving the wastes in drums on the Site. Vertac I at 874.

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. United States v. Hercules, 247 F.3d 706, 712 (8th Cir.2001)("Vertac XI"). When it commenced operations at the Plant, Hercules found and then buried on-site thousands of drums of pesticide and herbicide wastes left by Reasor-Hill. Vertac VIII at 1494-95. The southeast corner of the Site where Hercules buried the drums was known as the Reasor-Hill drum burial area.

Hazardous substances, including insecticides, phenoxy herbicides and TCDD dioxin, leached and flowed from the Reasor-Hill drum burial area into Rocky Branch Creek.

Until late 1964, Hercules continued Reasor-Hill's practice of discharging untreated wastewater directly into Rocky Branch Creek. Vertac I at 874. The waste water which resulted from the manufacturing of 2,4,5-T or 2,4,5-TP contained dioxin. Id. In 1964, Hercules constructed a waste water pretreatment system, which 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 waste water to the Jacksonville sewage system. Id. The waste water pretreatment system did not remove the dioxin. The basin frequently overflowed directly into Rocky Branch Creek during heavy rainfalls, and leaked.

Hercules manufactured formulations of 2,4,5-T, Silvex and 2,4,-D acids for commercial customers. It used some of the same equipment to manufacture both 2,4-D and 2,4,5-T products, but the equipment could not manufacture both simultaneously.

In 1964, Hercules was awarded a contract to produce Agent Orange for the U.S. Department of Defense ("DOD").⁴ It produced and supplied Agent Orange to DOD through 1968. Agent Orange was a 50/50 mixture of the butyl esters of 2,4,5-T and 2,4,-D acids; a much more concentrated form of the acids than that sold by Hercules to its commercial customers. Dioxin was formed as a by-product during the production of Agent Orange. Vertac VIII at 1494. Due to strict specifications in the Agent Orange contracts, Hercules was forced to discard as waste more significant quantities of material that did not meet specifications than was discarded during production for commercial customers. At the same time, Hercules continued manufacturing 2,4,5-T, silvex and 2,4-D for its commercial customers. As a result of the increased production, the volume of wastes generated at the Plant also increased.

In 1965, Hercules discovered that in the manufacture of 2,4,5-T, dioxin was generated in the process, specifically in the dechlorinator, also known as the "sputnik."⁵ In that same year, it began utilizing a "toluene extraction" system during which dioxin and other impurities that were extracted underwent a distillation process producing a residue (stillbottoms). The toluene stillbottoms were contaminated with TCDD and 2,3,7,8-tetr...