Opinion ID: 521932
Heading Depth: 1
Heading Rank: 4

Heading: liability under cercla

Text: 22 To establish a prima facie case of liability under CERCLA, plaintiffs must establish(1) the Aidex site is a facility; 23 (2) a release or threatened release of a hazardous substance from the Aidex site has occurred; 24 (3) the release or threatened release has caused the United States to incur response costs; and 25 (4) the defendants fall within at least one of the four classes of responsible persons described in section 9607(a). 26 Bliss, 667 F.Supp. at 1304; Conservation Chemical Co., 619 F.Supp. at 184. 27 The complaint adequately alleges facts which would establish the first three elements, and defendants do not challenge these allegations for purposes of this appeal. At issue in this appeal is whether the defendants arranged for the disposal of hazardous substances under the Act, and thus fall within the class of responsible persons described in section 9607(a)(3). In finding plaintiffs' allegations sufficient to hold defendants liable as responsible persons, the district court relied on the principle that CERCLA should be broadly interpreted and took guidance from common law rules regarding vicarious liability. In particular, the district court found that defendants could be liable under common law for the abnormally dangerous activities of Aidex acting as an independent contractor, see Restatement (Second) of Torts Sec. 427A (1965), holding that the common law was an appropriate source of guidance when the statutory language and legislative history of CERCLA prove inconclusive. 28 The six CERCLA defendants challenge the district court's decision on appeal, arguing the court's hazardous activity analogy is inapplicable to the facts of this case, and that Aidex, not they, owned the hazardous waste and made the crucial decision how it would be disposed of or treated, and by whom. United States v. A & F Materials Co., 582 F.Supp. 842, 845 (S.D.Ill.1984). They argue Aidex was hired to formulate, not to dispose, and that imposition of liability under CERCLA on these facts would lead to limitless liability. Finally, defendants assert the plain meaning of the statute requires an intent to dispose of some waste, or, at the very least, the authority to control the disposal process, and that neither are alleged by plaintiffs here. 29 The plaintiffs counter that defendants' ownership of the technical grade pesticide, the work in process, and the commercial grade product establishes the requisite authority to control Aidex's operations. Plaintiffs argue that because the generation of pesticide-containing wastes is inherent in the pesticide formulation process, Aidex could not formulate defendants' pesticides without wasting and disposing of some portion of them. Thus, plaintiffs argue, defendants could not have hired Aidex to formulate their pesticides without also arranging for the disposal of the waste. 30 We begin our analysis with the language of the CERCLA statute. Section 9607(a)(3) provides in relevant part: 31 Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section-- 32 .... 33 (3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, 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 ... 34 ... from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for-- 35 (A) all costs of removal or remedial action incurred by the United States Government or a State ... not inconsistent with the national contingency plan. 36 42 U.S.C. Sec. 9607(a). 37 Arrange for is not defined by the statute, but disposal is. Disposal includes the discharge, deposit, injection, dumping, spilling, leaking, or placing of any hazardous substance such that the substance may enter the environment. 42 U.S.C. Sec. 6903(3). See 42 U.S.C. Sec. 9601(29). 38 Citing dictionary definitions of the word arrange, 7 defendants argue they can be liable under section 9607(a)(3) only if they intended to dispose of a waste. Defendants argue further the complaint alleges only an intent to arrange for formulation of a valuable product, and no intent to arrange for the disposal of a waste can be inferred from these allegations. We reject defendants' narrow reading of both the complaint and the statute. 39 Congress used broad language in providing for liability for persons who by contract, agreement, or otherwise arranged for  the disposal of hazardous substances. See A & F Materials, 582 F.Supp. at 845. While the legislative history of CERCLA sheds little light on the intended meaning of this phrase, 8 courts have concluded that a liberal judicial interpretation is consistent with CERCLA's overwhelmingly remedial statutory scheme. NEPACCO, 810 F.2d at 733. See Dedham Water Co., 805 F.2d at 1081; Conservation Chemical Co., 619 F.Supp. at 192; United States v. Mottolo, 605 F.Supp. 898, 902 (D.N.H.1985). 40 Both the First and Second Circuits have declared they will not interpret section 9607(a) in any way that apparently frustrates the statute's goals, in the absence of a specific congressional intent otherwise. Dedham Water Co., 805 F.2d at 1081; New York v. Shore Realty Corp., 759 F.2d 1032, 1045 (2d Cir.1985). We thus interpret the phrase otherwise arranged for in view of the two essential purposes of CERCLA: 41 First, Congress intended that the federal government be immediately given the tools necessary for a prompt and effective response to the problems of national magnitude resulting from hazardous waste disposal. Second, Congress intended that those responsible for problems caused by the disposal of chemical poisons bear the costs and responsibility for remedying the harmful conditions they created. 42 Dedham Water Co., 805 F.2d at 1081 (citing United States v. Reilly Tar & Chemical Corp., 546 F.Supp. 1100, 1112 (D.Minn.1982)). 43 The second goal--that those responsible should pay for clean up--would be thwarted by acceptance of defendants' argument that the allegations in plaintiffs' complaint do not sufficiently allege they arranged for disposal of their hazardous substances. While defendants characterize their relationship with Aidex as pertaining solely to formulation of a useful product, courts have not hesitated to look beyond defendants' characterizations to determine whether a transaction in fact involves an arrangement for the disposal of a hazardous substance. In Conservation Chemical, for example, the court found defendants' sale of lime slurry and fly ash byproducts to neutralize and treat other hazardous substances at a hazardous waste site could constitute arranging for disposal of the lime slurry and fly ash. 619 F.Supp. at 237-41. Denying defendants' motions for summary judgment, the court reasoned that defendants contracted with the owner of the site for deposit or placement of their hazardous substances on the site, and thus could be found liable under the statute. Id. at 241. 44 Other courts have imposed CERCLA liability where defendants sought to characterize their arrangement with another party who disposed of their hazardous substances as a sale rather than a disposal. See New York v. General Electric Co., 592 F.Supp. 291, 297 (N.D.N.Y.1984); A & F Materials, 582 F.Supp. at 845. In the G.E. case, General Electric had sold used transformer oil to a dragstrip, which used the oil for dust control. The oil contained PCBs and other hazardous substances, and the State of New York sought to recover costs for clean up of the site from G.E. G.E., 592 F.Supp. at 293-94. In denying G.E.'s motion to dismiss, the court emphasized G.E. allegedly arranged for the dragstrip to take away its used transformer oil with knowledge or imputed knowledge that the oil would be deposited on the land surrounding the dragstrip. Id. at 297. Stating that CERCLA liability could not be facilely circumvented by characterizing arrangements as sales, the G.E. Court cited CERCLA's legislative history: [P]ersons cannot escape liability by 'contracting away' their responsibility or alleging that the incident was caused by the act or omission of a third party. Id. at 297 (and authorities cited therein). See A & F Materials, 582 F.Supp. at 845. 45 Courts have also held defendants arranged for disposal of wastes at a particular site even when defendants did not know the substances would be deposited at that site or in fact believed they would be deposited elsewhere. See Ward, 618 F.Supp. at 895; State of Missouri v. Independent Petrochemical Corp., 610 F.Supp. 4, 5 (E.D.Mo.1985); United States v. Wade, 577 F.Supp. 1326, 1333 n. 3 (E.D.Pa.1983). 46 Courts have, however, refused to impose liability where a useful substance is sold to another party, who then incorporates it into a product, which is later disposed of. E.g., Florida Power & Light Co. v. Allis Chalmers Corp., 27 Env't Rep.Cas. (BNA) 1558 (S.D.Fla.1988); United States v. Westinghouse Electric Corp., 22 Env't Rep.Cas. 1230 (BNA) (S.D.Ind.1983). See also Edward Hines Lumber Co. v. Vulcan Materials Co., 685 F.Supp. 651, 654-57 (N.D.Ill.), aff'd on other grounds, 861 F.2d 155 (7th Cir.1988). Defendants attempt to analogize the present case to those cited above, but the analogy fails. Not only is there no transfer of ownership of the hazardous substances in this case (defendants retain ownership throughout), but the activity undertaken by Aidex is significantly different from the activity undertaken by, for example, Florida Power & Light. Aidex is performing a process on products owned by defendants for defendants' benefit and at their direction; waste is generated and disposed of contemporaneously with the process. Florida Power & Light, on the other hand, purchased electrical transformers containing mineral oil with PCBs from defendant Allis Chalmers, used the transformers for approximately 40 years, and then made the decision to dispose of them at the site in question. Florida Power & Light, 27 Env't Rep.Cas. (BNA) at 1558-60. Allis Chalmers was thus far more removed from the disposal than the defendants are in this case. 47 Defendants nonetheless contend they should escape liability because they had no authority to control Aidex's operations, and our NEPACCO decision states [i]t is the authority to control the handling and disposal of hazardous substances that is critical under the statutory scheme. NEPACCO, 810 F.2d at 743. In NEPACCO, we were confronted with the argument that only individuals who owned or possessed hazardous substances could be liable under CERCLA. We rejected that notion and imposed liability, in addition, on those who had the authority to control the disposal, even without ownership or possession. Id. at 743-44. Defendants in this case, of course, actually owned the hazardous substances, as well as the work in process. NEPACCO does not mandate dismissal of plaintiffs' complaint under these circumstances. 48 Finally, defendants' contention that the district court erred in looking to the common law must also be rejected. As the Seventh Circuit has recently held, the sponsors of CERCLA anticipated that the common law would provide guidance in interpreting CERCLA. Edward Hines Lumber Co. v. Vulcan Materials Co., 861 F.2d 155, 157 (7th Cir.1988). See Colorado v. ASARCO, Inc., 608 F.Supp. 1484, 1488-89 (D.Colo.1985) (citing legislative history); United States v. Chem-Dyne, 572 F.Supp. 802, 808 (S.D.Ohio 1983). While the Edward Hines Court refused to find a company was an operator of a facility when the common law did not provide for liability, 861 F.2d at 157-58, in this case, the common law supports the imposition of liability on defendants. See Restatement (Second) of Torts Secs. 413, 416, 427 and 427A (1965). 49 For all of the reasons discussed above, accepting plaintiffs' allegations in this case as true and giving them the benefit of all reasonable inferences therefrom, we agree with the district court that the complaint states a claim upon which relief can be granted under CERCLA. Any other decision, under the circumstances of this case, would allow defendants to simply close their eyes to the method of disposal of their hazardous substances, a result contrary to the policies underlying CERCLA. See Ward, 618 F.Supp. at 895. Accordingly, we affirm the court's judgment denying defendants' motion to dismiss for failure to state a claim upon which relief can be granted.