Opinion ID: 772953
Heading Depth: 2
Heading Rank: 2

Heading: Uniroyal

Text: 30 Uniroyal challenges the district court's conclusion that it fits within one of CERCLA's four categories of responsible parties-namely, that it is liable as an arranger under 42 U.S.C. 9607(a)(3). Uniroyal does not contest the other three relevant statutory elements of CERCLA liability. We review the district court's factual findings for clear error and its legal conclusions de novo. Consolidated Electical & Mechanicals, Inc. v. Biggs General Contracting, Inc., 167 F.3d 432, 434 (8th Cir. 1999). 31 In Vertac VIII, the district court noted that we have given a liberal interpretation to 'arranger liability.' Vertac VIII, 966 F. Supp. at 1501. The court made this observation in light of our decision in United States v. Aceto Agricultural Chemicals Corp., 872 F.2d 1373 (8th Cir. 1989), in which we declined to dismiss a CERCLA complaint alleging that a number of pesticide manufacturers were liable for supplying to a formulator materials used to create a final product where (1) the suppliers retained an ownership interest in the materials throughout the formulation process as well as in the finished product, (2) the generation of wastes was inherent in the formulation process, and (3) wastes were in fact generated and disposed. Id. at 1378-82. In Vertac VIII, 966 F. Supp. at 1501, the district court found that Uniroyal's toll conversion agreement to supply TCB to Vertac for formulation into 2,4,5-T closely tracked the legal standards set forth in Aceto, and on appeal the EPA argues that this case is nearly identical to Aceto. We agree. 32 Uniroyal first contends that the district court erred as a matter of law by focusing its analysis on ownership, and not on the authority to control the production and disposal process. Uniroyal argues that in Aceto, a case that considered no actual facts but only the prima facie validity of a complaint, ownership was deemed significant only insofar as it gave rise to a permissible inference of authority to control. Here, by contrast, Uniroyal suggests that the district court erroneously elevated mere ownership to the level of a sufficient basis for finding arranger liability. We conclude that this argument fails. 33 Although we stated in Aceto that it may be reasonably inferred that [defendants] had the authority to control the way in which the pesticides were formulated, id. at 1383, this observation came as part of our discussion of RCRA and was not necessary to our prior conclusion that the complaint stated a valid claim under CERCLA. Indeed, in the portion of Aceto that discussed CERCLA, we specifically rejected the defendants' contention that control is required in every circumstance. To support their argument, the defendants in Aceto quoted NEPACCO, 810 F.2d at 743, for the proposition that they should escape liability because they had no authority to control the formulation and disposal process. Aceto, 872 F.2d at 1381-82. We distinguished NEPACCO by observing that a finding of control had been necessary in that case only because ownership was lacking. Id. at 1382. The Aceto defendants, however, unlike those in NEPACCO, actually owned the hazardous substances, as well as the work in process, id., and thus an arguable absence of control did not mandate dismissal of the complaint. Control, therefore, is not a necessary factor in every case of arranger liability. See also United States v. TIC Investment Corp., 68 F.3d 1082, 1087-88 (8th Cir. 1995) (holding that a finding of arranger liability requires either control over, or some level of participation in, activities related to the arrangement of hazardous waste disposal). 34 Uniroyal also challenges the district court's factual finding that Uniroyal retained an ownership interest in its material during the processing stage and owned the 2,4,5-T that was returned. Vertac VIII, 966 F. Supp. at 1501. In reaching this determination, the district court relied heavily on the fact that Uniroyal, which purchased its TCB in Europe, imported it into the United States under a temporary import bond to avoid the payment of taxes and duties. Id. at 1498-99. Under the terms of the bond, the Customs Office required, throughout the toll agreement transaction, that Uniroyal maintain ownership of the TCB. Uniroyal agreed to have the TCB processed into 2,4,5-T for shipment to Canada within one year. Id. That Uniroyal's interactions with Vertac in fact met these demands is supported by a 1982 letter that was sent by a Uniroyal attorney to the Customs Commissioner as part of a dispute over the bond requirements. 35 On appeal, however, Uniroyal argues that the terms of the temporary import bond cannot change the real character of its interaction with Vertac, which it describes as having involved so much intermingling of materials that Uniroyal could not have owned either the work in process or the finished product throughout the entire transaction. To bolster its position, Uniroyal points to the testimony of Robert Ellis, Vertac's controller of the Jacksonville plant, in which Ellis explained that Uniroyal's supply arrangement with Vertac differed from typical toll conversion agreements in several respects. Ellis testified, for example, that TCB was only one ingredient out of a total of seven materials required to produce 2,4,5-T (albeit the key ingredient, Vertac VIII, 966 F. Supp. at 1498), and that many of the bookkeeping practices of Vertac and Uniroyal during the agreement period were compatible with the view that Vertac owned the TCB throughout the formulation process. 36 Although we find the ownership issue to be debatable, the evidence in favor of Uniroyal's position is not strong enough to convince us that the district court's resolution of this factual dispute is clearly erroneous-a conclusion that demands a definite and firm conviction on our part that a mistake has been made. Consolidated Electrical, 167 F.3d at 434. In deciding questions of arranger liability, we do not rely on bright-line rules but look to the totality of the circumstances to determine whether the facts of a given case fit within CERCLA's overwhelmingly remedial scheme. NEPACCO, 810 F.2d at 733, quoted in Aceto, 872 F.2d at 1380; see TIC Investment, 68 F.3d at 1090 (totality of the circumstances). Even were we to conclude that, on balance, Uniroyal and Vertac intended the supply of TCB to be technically considered a sale, we 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. Aceto, 872 F.2d at 1381. Here, where Uniroyal provided Vertac with the main ingredient necessary for the production of 2,4,5-T during a period of financial difficulty for Vertac, and was not charged for the TCB until the relevant amount was offset against its final purchase price, we see no basis to reverse the district court's finding that Uniroyal owned the material throughout the transaction and thus qualified as an arranger under CERCLA. Accordingly, we affirm the judgment of liability against Uniroyal (Vertac VIII).