ENVL417 - Environmental Law - SCRDI Case

SCRDI Case

ENVL417-Environmental Law
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UNITED STATES of America, Plaintiff,
and
South Carolina Department of Health and Environmental Control, Plaintiff-
Intervenor,
v.
SOUTH CAROLINA RECYCLING AND DISPOSAL, INC.
; Columbia Organic Chemical Company; Oscar Seidenberg; Harvey Hutchinson; Monsanto Company; Allied Corporation; Aquair Corporation; Eaton Corporation; and EM Industries, Inc.,
Defendants,
v.
G.D. SEARLE & CO., and Will Ross, Inc., Third-Party Defendants.
Civ. A. No. 80-1274-6.
United States District Court,
D. South Carolina,
Columbia Division.
Government brought action to recover response costs following release and threatened releases of hazardous material at storage site. The District Court, Simons, J., held that: (1) defendants were liable as owners, operators, and generators of hazardous waste; (2) harm at site was indivisible; (3) defendants were thus jointly and severally liable; (4) Comprehensive Environmental Response, Compensation, and Liability Act does not apply retroactively; (5) Act did not deprive defendants of due process; and (6) Government was entitled to recover all litigation costs, including attorney fees, and administrative and investigative costs associated with cleanup; but (7) Government was not entitled to prejudgment interest. Ordered accordingly.
ORDER

SIMONS, District Judge.

INTRODUCTION

This action was instituted by plaintiff United States pursuant to Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. s 9607, to recover costs of removing hazardous substances from the surface of the Bluff Road site, a hazardous waste site located near Columbia, South Carolina. Named as defendants in this action are four hazardous waste "generators", the two owners of the Bluff Road property, a lessee of at least a portion of the site, and the site operator. Plaintiff United States has filed for partial summary judgment on the issue of each defendant's joint and several liability for costs incurred in responding to the hazardous conditions posed by the site. The generator defendants have likewise filed motions for summary judgment against plaintiff, as has Columbia Organic Chemical Company ("COCC"), a lessee of at least a portion of the site.

THE UNDISPUTED FACTS

The undisputed facts established in the record can be summarized as follows. In 1972, Max G. Gergel, President of COCC, negotiated a verbal lease of at least a part of the Bluff Road site, a four acre piece of property located along Bluff Road near Columbia, South Carolina, on behalf of COCC with the property owners, Oscar Seidenberg ("Seidenberg") and Harvey Hutchison ("Hutchison"). COCC purportedly planned to use its leasehold for storage of raw chemicals and materials used in its manufacturing processes. COCC continued to lease at least a part of the property from the owners until 1978. In late 1973 or early 1974, several individuals associated with COCC--James Q.A. McClure, Max Gergel, and Henry Tischler--began storing hazardous wastes, including hazardous substances, at the Bluff Road site as part of a waste brokering and recycling operation. In 1976, the three individuals incorporated South Carolina Recycling and Disposal Inc. ("SCRDI") and thereafter continued hazardous waste operations at the site under auspices of the corporation. SCRDI occupied part of the site from the years 1976 to 1978, and it assumed the verbal lease in 1978. During the course of operations at the site by SCRDI and its predecessors, an environmental hazard of staggering proportions developed. Some 7,200 fifty- five gallon drums of hazardous substances, including materials which are toxic, carcinogenic, mutagenic, explosive, and highly flammable, accumulated at the site. The drums were randomly and haphazardly stacked upon one another without regard to their source or the compatibility of the substances within. Many drums deteriorated to the point that their hazardous contents were leaking and oozing onto the ground and onto other drums. The exposure of these substances to the elements, as well as to other substances with which they comingled, caused a number of fires and explosions and generated noxious and toxic fumes. Given the extremity of conditions at the site, the United States Environmental Protection Agency ("EPA") determined that the storage and disposal of hazardous substances there had resulted in releases and threatened releases of hazardous substances into the environment. EPA endeavored to remedy the hazardous conditions. An agreement was reached with twelve waste generators and one transporter associated with the site to perform 75% of the surface removal work at the site. The South Carolina Department of Health and Environmental Control ("DHEC") and several agencies of the federal government, also generators of some of the wastes at the Bluff Road site, have agreed as well to contribute funds to remedial activities at the site. Money from the Hazardous Substance Response Trust Fund established under CERCLA was used to finance the cleanup of the remaining 25% of the site's surface. Plaintiff seeks to recover costs associated with the second phase of the cleanup in this action. The generator defendants--AquAir Corporation ("AquAir"), Allied Corporation ("Allied"), Monsanto Company ("Monsanto"), and EM Industries, Inc. ("EM")--are companies that arranged with SCRDI and its predecessors for treatment or disposal of hazardous substances. Drums belonging to each of these defendants were observed at the site during and before cleanup of the site. Moreover, hazardous substances of the same type found in each of these defendant's wastes were identified in samples taken at the site during cleanup operations.

DEFENDANTS' LIABILITY UNDER CERCLA s 107

In Section 107(a)(1)-(4) of CERCLA, 42 U.S.C. s 9607(a)(1)-(4), Congress established a liability classification scheme which identifies four classes of defendants and describes the connection to a given waste site necessary for each to be held liable for response costs resulting from the release or threat of release of hazardous substances at the site. Once the requisite nexus is established, each class is strictly liable[footnote 2] unless they can prove that, under the defenses enumerated in CERCLA Section 107(b)(1)-(4), the release or threat of release of hazardous substances was caused solely by unrelated persons or events. Applying Section 107(a) to the undisputed facts, each defendant is clearly liable. Footnote 2. The standard of liability provided for in Section 107 is undoubtedly strict liability. ... Apart from the express language of the provision, the definitional section of CERCLA, 42 U.S.C. s 9601(32), makes it clear that the standard of liability that obtains under CERCLA is the same as the standard under Section 311 of the Clean Water Act, 33 U.S.C. s 1321. That section clearly imposes strict liability. ...

A. Liability of Generator Defendants
Section 107(a) of CERCLA provides in part that Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section-- * * * (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 owned or operated by another party or entity and containing such hazardous substances ... from which there is a release, or threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for-- (A) all costs of removal or remedial action incurred by the United States Government or a State not inconsistent with the national contingency plan.... 42 U.S.C. s 9607(a). Stripping away the excess language of the statute, a generator may be held liable under Section 107(a)(3) of CERCLA if the government can prove that:

a. The generator's hazardous substances were, at some point in the past, shipped to a facility; b. The generator's hazardous substances or hazardous substances like those of the generator were present at the site; c. There was a release or threatened release of a or any hazardous substance at the site; d. The release or threatened release causes the incurrence of response costs.

Under CERCLA's express terms, plaintiff need prove nothing more. See United States v. Wade, 577 F.Supp. 1326 (E.D.Pa.1983). [4] Generator defendants would nonetheless have this court require plaintiff to prove that hazardous substances traceable to each generator were released at the Bluff Road site or that their specific substances were more than a de minimis factor in a release or threatened release. Significantly, similar "causation" arguments were recently expressly rejected by the Eastern District of Pennsylvania in United States v. Wade, supra, a case on all fours factually with this one. In Wade, the court held that to require specific proof of causation would not only be at odds with the express language of the statute, but also would effectively "eviscerate the statute" because of the technological infeasibility of "fingerprinting" a given generator's substances at a site. Id. at 1332. In support of its conclusion, the court noted that Congress considered and rejected language imposing liability on "any person who caused or contributed to the release" in favor of CERCLA's present liability classification scheme, which clearly does not include comparable language. Id. at 1333. Concluding that Congress had not intended to saddle the government with an impossible causation burden, the court held that "[t]he only required nexus between the defendant and the site is that the defendant have dumped his waste there and that the hazardous substances found in the defendant's waste are also found at the site." Id. at 1333. Footnote 3. The generator defendants in Wade, like the generator defendants in this case, read CERCLA Section 107(a)(3) to require a showing that a generator's substances were shipped to a site and that there was a release or threatened release of such hazardous substances. The statute, however, requires only that there be a release or threatened release of a or any hazardous substance at the site. Notably, provisions of CERCLA's legislative history cited by generator defendants for the proposition that specific causation must be shown under Section 107(a)(3) relate either to the original causation language in H.R. 7020 or to a personal injury remedy that was also dropped from the Act. These provisions are, therefore, unpersuasive. This court agrees with the conclusions reached in Wade and therefore rejects defendants' causation arguments. Plaintiff's burden of proof is defined by and limited to the express terms of the statute. Applying those terms to the undisputed facts, it is clear that each of the generator defendants made arrangements with SCRDI or its predecessors for disposal or treatment of wastes containing hazardous substances and that, as evidenced *993 by the identification of each generator's drums at the Bluff Road site, such wastes were shipped to the site. It is further undisputed that hazardous substances like those of each of the generator defendants were present at the site at the time of cleanup, as shown by samples taken at the site; [FN6] that there were releases and threatened releases of hazardous substances at the site; and that the government incurred costs in responding to those releases and threatened releases. Thus, based on the undisputed facts, each of these generator defendants is subject to liability under Section 107 of CERCLA.

Footnote 5. The statute takes into account the synergistic potential of improperly managed hazardous substances and essentially presumes a contributory "causal" relationship between each of the hazardous substances disposed of at a site and the hazardous conditions existing at the site. This presumption may be rebutted under Section 107(b) of CERCLA if a defendant can show that the conditions at the site were caused solely by a person unrelated contractually to that defendant. While some of the defendants stated Section 107(b) defenses in their answers, none of them have supported that defense by way of affidavits or otherwise. Under summary judgment procedure, a party "may not rest upon the mere allegations or denials of his pleading but ..., by affidavits or otherwise provided in this rule, must set forth specific facts showing that is a genuine issue for trial." Fed.R.Civ.P. 56(e).

Footnote 6. This court does not mean to suggest that because the government was able to show by way of chemical analysis in this case that each generator's substances or substances like those of each generator were at the site, it must undertake extensive sampling and analysis in performing cleanups. As the government pointed out in its affidavits, it would have cost in the range of $2.5 million to attempt through analytical means to identify all waste types in the conglomerate of materials stored at the Bluff Road site, approximately five times the cost of surface removal itself. Less resource exhaustive means of showing that a generator's waste or similar wastes are at a site, such as by identification of a generator's drum at the site during cleanup or by way of documentary or circumstantial proof that the wastes were hauled to the site absent proof that they were subsequently taken away, should also be sufficient to satisfy this element of proof.

B. Liability of the Landowners
Under Section 107(a)(2) of CERCLA, "any person who at the time of disposal of any hazardous substance owned or operated any facility at which hazardous substances were disposed of" and at which there has been a release or threatened release of hazardous substances, is liable for response costs incurred at the site. 42 U.S.C. s 9607(a)(2). The landowners Hutchinson and Seidenberg do not dispute their ownership of the Bluff Road property or that hazardous substances were disposed on the property during their period of ownership. They also have not disputed that there were releases and threatened releases of hazardous substances at the site which caused the incurrence of response costs. Consequently, there are no material issues with respect to these defendants' liability. In this connection, the court notes that after the summary judgment hearing, the landowners sought to amend their Answer, which the court permitted with plaintiff's consent. The landowners urge that their Answer, as amended, raises disputed issues of fact concerning the affirmative defense to liability provided by 42 U.S.C. s 9607(b)(3). The court does not agree that the amended Answer and the landowners' affidavits raise such genuine issues of fact. The s 9607(b)(3) defense would require the landowners to prove inter alia that "the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by ... (3) an act or omission of a third party other than ... one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly with the defendant...." (emphasis added). Because there is no question of the contractual link between the landowners and SCRDI, whose liability is admitted, the landowners cannot under any circumstances prove that the release was caused "solely" by a third party which did not share a contractual relationship with them. Thus, because the s 9607(b)(3) defense is unavailable to them from the outset, the landowners cannot rely on disputed factual issues concerning its other requirements to bar the summary judgment against them.

C. Liability of SCRDI
SCRDI has not contested any facts material to its liability as operator of the Bluff Road site. Furthermore, SCRDI's counsel consented to the entry of summary judgment against SCRDI at oral argument on this matter.

D. Liability of COCC

COCC has attempted to show a factual dispute with respect to its responsibility for the Bluff Road site by way of affidavits written in July of 1980 by its President, Steven Reichlyn and its former President, Max Gergel. Portions of both affidavits state that COCC was never involved in hazardous waste disposal or storage activities. The Reichlyn affidavit further suggests that COCC leased only a fraction of the Bluff Road site from the landowners. Plaintiff has moved to strike these assertions in the affidavits, arguing that they fail to raise a genuine issue of fact because they are grossly inconsistent with the rest of the record in the case. Plaintiff further contends that the statements in the Reichlyn affidavit are not based on personal knowledge. While the court recognizes that other aspects of the record sharply conflict with the affidavits offered by COCC, it concludes that such credibility determinations should be made at trial, and not on a motion for summary judgment.

JOINT AND SEVERAL LIABILITY OF DEFENDANTS

Having determined that each of the defendants except, at this point, COCC, are liable for response costs under Section 107(a) of CERCLA, the extent of their liability must now be determined. Several courts have recently addressed this issue and have reached the conclusion that joint and several liability is appropriate under CERCLA in circumstances of indivisible injury. See, e.g., United States v. Wade, supra, at 1337-1338; United States v. Chem-Dyne, 572 F.Supp. 802 (S.D.Ohio 1983). This court finds particularly persuasive the conclusions reached in the Chem-Dyne decision and adopts the analysis and standard employed by the court in that case. [Footnote 7] In Chem-Dyne, the court made the following conclusions:

FN7. After this court's bench ruling on the issue of each defendants' joint and several liability under CERCLA s 107, an opinion was rendered by the Southern District of Illinois, in United States v. A & F Materials Company, Inc., 578 F.Supp. 1249 (1984), on the same issue. The A & F decision could be considered at odds in some respects with the Chem-Dyne decision. This court finds the Chem-Dyne decision more in keeping with Congress' intention that evolving and traditional principles of common law and prior statutory law govern the courts' imposition of joint and several liability under CERCLA and, accordingly, follows the analysis employed in that case. I reject the analysis of A & F to the extent that it is inconsistent with Chief Judge Rubin's opinion in Chem-Dyne.
This case, as do most pollution cases, turns on the issue of whether the harm ... is "divisible" or "indivisible." If the harm is divisible and there is a reasonable basis for apportionment of damages, each defendant is liable only for the portion of the harm he himself caused.... In this situation, the burden of proof as to apportionment is upon each defendant.... On the other hand, if the defendants caused an entire indivisible harm, each is subject to liability for the entire harm. Id. at 811 (citations omitted and emphasis added). Under the Chem-Dyne standard, this court's initial focus should be on whether the harm at the Bluff Road site was divisible, an issue upon which defendants bear the burden of proof. If the harm was indivisible, the court's inquiry is complete for purposes of this action. This court concludes that, based on undisputed facts, the harm at the Bluff Road site was indivisible. Because of the deleterious condition of the site at the time of cleanup, it is impossible to divide the harm in any meaningful way. There were thousands of corroded, leaking drums at the site not segregated by source or waste type. Unknown, incompatible materials comingled to cause fires, fumes, and explosions. Because of the constant threat of further fires, explosions, and other reactions, all of the materials at the site were, if not actually oozing out, in danger of being released. Thus, while all of the substances at the site contributed synergistically to the threatening condition at the site, it is impossible to ascertain the degree of relative contribution of each substance. Clearly, the harm was indivisible, and defendants have failed to meet their burden of proving otherwise.

Generator defendants have argued that there may be a means of roughly apportioning the costs of cleanup among responsible parties by calculating their relative volumetric contributions from shipping documents, and that, therefore, the harm is divisible. But, as noted by the court in Chem-Dyne, "the volume of waste of a particular generator is not an accurate predictor of the risk associated with the waste because the toxicity or migratory potential of a particular hazardous substance generally varies independently of the volume." Chem-Dyne, supra, at 811. Such arbitrary or theoretical means of cost apportionment do not diminish the indivisibility of the underlying harm, and are matters more appropriately considered in an action for contribution between responsible parties after plaintiff has been made whole.

Because the harm at the Bluff Road site is indivisible, each defendant against whom summary judgment is granted is jointly and severally liable for costs incurred at the site.
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CONSTITUTIONAL ISSUES
Environmental statutes like CERCLA which regulate and adjust the benefits and burdens of economic life come before the Court with a strong presumption of constitutionality. Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 83-84, 98 S.Ct. 2620, 2635-2636, 57 L.Ed.2d 595 (1978). The generator defendants in this case nevertheless urge this court to find that liability under CERCLA is unconstitutionally retroactive and, further, that CERCLA violates the Contract Clause of the United States Constitution. These arguments are without force. Defendant's Contract Clause argument is particularly transparent. Article I, s 10 of the Constitution provides that "[n]o State shall ... pass any ... law impairing the obligation of contracts." (Emphasis added). Thus, by its express terms, the Contract Clause applies only to State legislation, not federal laws like CERCLA. Moreover, even if the Contract Clause were construed to apply to CERCLA, the Act has not operated substantially to impair these defendants' waste disposal contracts with SCRDI. To the contrary, the contracts remain valid and enforceable between the parties. There is nothing to prevent a generator defendant held liable here from seeking indemnity from SCRDI under their contract. While somewhat more substantial, defendants' argument that CERCLA is so impermissibly retroactive that it violates due process also fails. Although liability under CERCLA is premised in part upon conduct which occurred prior to CERCLA's enactment in 1980, this court does not consider CERCLA "retroactive" in the constitutional sense as applied to the facts of this case. The plain language of Section 107 of CERCLA makes it quite clear that CERCLA is a broad remedial statute premised upon present and future effects of defendants' past actions--a "release" or a "threatened release" of a hazardous substance must occur before any liability attaches. A statute that attaches liability to present conditions stemming from past acts does not necessarily have retroactive effects that are subject to due process limitations. As noted by the Supreme Court in Reynolds v. United States, 292 U.S. 443, 54 S.Ct. 800, 78 L.Ed. 1353 (1934), "A statute is not rendered retroactive merely because the facts or requisites upon which its subsequent action depends, or some of them, are drawn from a time antecedent to the enactment." Id. at 449, 54 S.Ct. at 803. Recent decisions under Section 7003 of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. s 6973, a statutory provision analogous to Section 107 of CERCLA, are persuasive on this point. Section 7003 authorizes the United States to bring suit to secure such relief as is necessary to abate an imminent and substantial endangerment to health or the environment caused by hazardous wastes. Courts interpreting Section 7003 have held that it is not "retroactive" in nature because its objective is to obtain relief to abate current and future hazardous conditions, notwithstanding the fact that the conditions might be attributable to past acts. See United States v. Price, 523 F.Supp. 1055, 1071-1072 (D.N.J.1981), aff'd, 688 F.2d 204 (3d Cir.1982); United States v. Diamond Shamrock Corporation, C.A. No. 80- 1857, 17 E.R.C. 1329 (N.D. Ohio, May 29, 1981). As stated in United States v. Price, Defendants ... observe that Section 7003 was not adopted and did not become effective until 1976, and they argue that the statute was not meant to apply retroactively to acts that preceded that date. Hence, because the dumping of toxic wastes at Price's Landfill ceased in 1972, defendants argue that the statute cannot be used to impose liability on them. We find this argument unpersuasive.... The gravamen of a Section 7003 action, as we have construed it, is not defendants' dumping practices, which admittedly ceased with respect to toxic wastes in 1972, but the present imminent hazard posed by the continuing disposal (i.e., leaking) of contaminants into the groundwater. Thus, the statute neither punishes past wrongdoing nor imposes liability for past acts. Rather, as defendants themselves argue, its orientation is essentially prospective. When construed in this matter, the statute simply is not retroactive. It merely relates to current and future conditions. ... Thus, it is this court's view that CERCLA is not retroactive as applied in this case. Such a construction avoids a constitutional question and is therefore preferred. Lorrillard v. Pons, 434 U.S. 575, 577, 98 S.Ct. 866, 868, 55 L.Ed.2d 40 (1978); Crowell v. Benson, 285 U.S. 22, 62, 52 S.Ct. 285, 296, 76 L.Ed. 598 (1932). It should be noted, however, that even if CERCLA were considered retroactive it would clearly satisfy the requirements of due process. The fact that a statute has retroactive application that may upset settled expectations does not necessarily make it unconstitutional. ... "This is true even though the effect of the legislation is to impose a new duty or liability based on past acts." ... In Turner Elkhorn, the leading case on the constitutionality of retroactive statutes, the Supreme Court made clear the standard to be employed in the instant case: in the area of economic regulation, legislation that operates retroactively does not violate due process if it is rationally related to a valid Congressional purpose. 428 U.S. at 15-16, 96 S.Ct. at 2892-93. In Turner Elkhorn, the Supreme Court upheld the Black Lung Act of 1972, 30 U.S.C. s 901, against a challenge that it violated due process because it applied retroactively. The Act required coal mine operators to compensate past and present miners, as well as minors' survivors, for total disability or death due to black lung disease. Notably, miners who left employment before the effective date of the Act were eligible for benefits. The mine operators argued that "to impose liability upon them for former employees' disabilities is impermissibly to charge them with an unexpected liability for past, completed acts that were legally proper and, at least, in part, unknown to be dangerous at the time." 428 U.S. at 15, 96 S.Ct. at 2892. Rejecting the operators' challenge to the statute, the Court noted that It is by now well established that legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, that the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way. Id. These principles, the Court elaborated, apply to retrospective, as well as prospective, legislation: [O]ur cases are clear that legislation readjusting rights and burdens is not unlawful solely because it upsets otherwise settled expectations. This is true even though the effect of the legislation is to impose a new duty or liability on past acts. Id. at 16, 96 S.Ct. at 2893 (citations omitted). The Court concluded that Congress had acted rationally in enacting the Black Lung Act: [T]he imposition of liability for the effects of disabilities bred in the past is justified as a rational measure to spread the costs of the employees' disabilities to those who have profited from the fruits of their labor--the operators and the coal consumers. Id. at 18, 96 S.Ct. at 2893. To the extent that CERCLA is considered retroactive, it clearly satisfies the Turner Elkhorn standard. Like the statute at issue in Turner Elkhorn, CERCLA was enacted in response to the threat perceived by Congress to be caused by inactive and abandoned hazardous waste sites, a problem described as the most serious health and environmental problem of the decade. See S.Rep. No. 96-848, 96th Cong., 2d Sess. 2 (1980). As with the Black Lung Act, Congress intended through CERCLA to create a broad remedial statute which allocates to those persons responsible for creating dangerous conditions, and who profited from such activities, the true costs of their enterprise. An overriding objective in enacting CERCLA to spread the economic costs of cleanup operations among "those responsible for any damage, environmental harm, or injury [resulting from] chemical poisons...." S.Rep. No. 96-848, 96th Cong., 2d Sess. 12 (1980). The liability scheme established under CERCLA is clearly a rational means of achieving this objective. Whether some other approach to spread these costs would have been wiser or more practical is not a question of constitutional dimensions but is rather a policy question which must be left to the Congress and not to the courts. Turner Elkhorn, 428 U.S. at 19, 96 S.Ct. at 2894. Having recognized a rational relationship between Congress' goals and the means chosen to implement them, this court concludes that, if considered retroactive, CERCLA is not unconstitutionally retroactive.

TIMELINESS OF ACTION

As a final matter, several of the defendants have urged that because the government had not yet incurred all response costs associated with surface removal activities at the Bluff Road site at the time its amended complaint was filed, and Section 107(a) of CERCLA limits the government's recovery to costs "incurred," plaintiff's action was prematurely instituted. As a practical matter, this issue is now moot, since surface removal activities at the site were completed in July of 1983. In any event, the government need not have incurred all costs related to a site before initiating a cost recovery action under Section 107(a) of CERCLA. See United States v. Wade, supra, at 1334- 1335; United States v. A & F Materials, supra, at 1258-1259.

CONCLUSION

In summary, each of the defendants falls within one of the classes of persons identified in Section 107(a) of CERCLA as liable for response costs associated with the Bluff Road site. Because the harm at the site was indivisible, their liability is joint and several. Therefore, this court, finding no constitutional impediments to its conclusions, denies defendants' motions and grants summary judgment in favor of plaintiff on the issue of the joint and several liability of each defendant except COCC for surface removal costs incurred by plaintiff at the Bluff Road site. Summary judgment against COCC is denied. The liability of COCC and the amount of recovery to which plaintiff is entitled will be resolved in subsequent proceedings. AND IT IS SO ORDERED.

ON LIABILITY
STATEMENT OF THE CASE

This action was brought by the United States of America to recover costs incurred in removing hazardous substances from the surface of a site located along Bluff Road near Columbia, South Carolina (hereafter "the Bluff Road site"). Named as defendants in the case were four hazardous waste generators, the two current property owners, the operator of the site--South Carolina Recycling and Disposal, Inc. (hereafter "SCRDI"), and Columbia Organic Chemical Company (hereafter "COCC"). In an order dated February 23, 1984, this court granted summary judgment against all defendants, except COCC, on the issue of their joint and several liability for the government's cleanup costs under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (hereafter "CERCLA"), 42 U.S.C. s 9607(a). Because there appeared to be a factual dispute with respect to COCC's involvement at the Bluff Road site, plaintiff's motion against COCC was denied and trial was set on the outstanding issue of COCC's liability. Proceedings to determine the amount of plaintiff's recovery from liable defendants will be set for a later date. As a result of the summary judgment proceedings, the issues with respect to COCC's liability have been substantially narrowed. It was established within the context of those proceedings that hazardous substances were disposed of at the Bluff Road site during the years 1972 to 1983 and that there were releases and threatened releases of hazardous substances into the environment from the site. Thus, succinctly stated, the question presently before this court is whether COCC was sufficiently related to the hazardous waste disposal activities at the Bluff Road site to subject the company to liability under Section 107(a) of CERCLA, 42 U.S.C. s 9607(a), for response costs incurred in cleaning up the site's surface. Plaintiff contends that COCC is liable under CERCLA as a site "owner" and as an "operator" under Section 107(a)(2), as a person who arranged for disposal of hazardous substances under Section 107(a)(3), and as a "transporter" under Section 107(a)(4). This court agrees.

FINDINGS OF FACT

In a trial without jury on March 19-21, 1984, the court made the following findings of fact: 1. Plaintiff is the United States of America, acting on behalf of the Administrator of the United States Environmental Protection Agency ("EPA"), and the defendant is COCC, a South Carolina corporation.

2. The subject of this litigation is a hazardous waste storage and disposal facility (the "Bluff Road site"), located along South Carolina State Road 48 ("Bluff Road") near Columbia, South Carolina. The Bluff Road site is approximately four acres in size.

3. COCC is a corporation engaged primarily in the manufacture of chemicals. COCC's offices and main manufacturing facility are located at 912 Drake Street in Columbia, South Carolina (hereafter the "Cedar Terrace plant"). The company was founded in 1944 by Max Gergel, who served as its president until July 26, 1977, and as its Chairman of the Board until approximately 1978. Gergel was the chief executive officer of COCC and had substantial authority over the operations of the company. During his presidency, Gergel and the Board of Directors did not always adhere to COCC's by-laws.

4. In or around late 1972, Max Gergel, by oral agreement with the owners of the property, leased the Bluff Road site on behalf of COCC, initially for the purpose of storing chemicals used in COCC's manufacturing processes. COCC maintained a month-to-month leasehold interest in the site from 1972 through August of 1978.

5. In approximately late 1973, James O.A. McClure and COCC entered into a business relationship for the purpose of reclaiming and recycling saleable materials from the waste products of other concerns. Pursuant to their arrangement, McClure solicited potential customers on behalf of and in conjunction with COCC. McClure discussed the potential offers with Gergel, who could veto any transactions that he believed were not beneficial to COCC's new enterprise. Initially, Gergel often confirmed McClure's offers to potential customers under his own signature on COCC stationary.

6. Approximately 150 fifty-five gallon drums of waste chemicals and hazardous substances gradually accumulated at the parking lot for COCC's Cedar Terrace plant during this early period. Because this storage activity was using too much space at the Cedar Terrace plant, it was decided that the Bluff Road property, which COCC was using at that time to store chemicals used in its manufacturing processes, could be used for such storage. After investigating the site's facilities and physical layout, McClure arranged for the transfer of the waste materials from COCC's parking lot to the Bluff Road property.

7. The business relationship between COCC and McClure was formalized on July 26, 1974 in a written contract signed by Gergel on behalf of COCC and by McClure. Pursuant to the contract, McClure located materials and customers and negotiated contracts with customers for the purchase, sale, recycling and/or disposal of industrial chemical wastes; COCC provided office space, secretarial service, and approved McClure's contracts. Gergel did, at times, refuse to approve a prospective contract, but he approved the vast majority of McClure's proposals. McClure paid COCC $50.00 a month for the rental of the Bluff Road site, where waste chemicals and hazardous substances procured pursuant to the contract were stored. Net profits were divided fifty-fifty between COCC and McClure.

8. Sometime during the first half of 1974, Gergel appointed McClure as a vice president of COCC. He was put in charge of a new division of COCC which was, with Gergel's approval, named the Solvents and Bulk Chemicals Division. McClure purchased 10 shares of COCC stock in 1974 and regularly attended shareholder's meetings. In early 1976, he was elected to the Board of Directors on an interim basis, and in August of that year he was elected as a permanent member. COCC officers and directors, as well as COCC shareholders, were aware that McClure was acting as a vice president of COCC. COCC correspondence in which McClure was represented as a vice president of the company included memoranda to board members, officers, and shareholders, as well as external communications to the South Carolina Department of Health and Environmental Control, the Bankruptcy Court, Western Union, potential customers, and the public at large. Copies of external correspondence on COCC stationary signed by McClure as vice president of COCC, were, at one time or another, given to Gergel, Reichlyn, and various other corporate officers. McClure made reports concerning the activities of his division at numerous shareholders and directors meetings. No one at COCC, including members of the Board of Directors, officers, and shareholders, ever took action to prevent McClure from representing himself as a vice president or agent of COCC.

9. As part of its recycling, reclamation, and disposal enterprise, and with its own trucks or trailers, COCC transported chemical and industrial waste materials of other companies to the Bluff Road site. For the benefit of the enterprise, McClure, representing himself to be a vice president of COCC, obtained a South Carolina Waste Haulers' Permit for exclusive use by COCC. COCC employees were used to pick up waste materials from generating facilities and unload such materials from vehicles at the Bluff Road site. Occasionally, common carriers or a generator's vehicles were used to haul waste to the site.

10. During the period that the Solvents and Bulk Chemicals Division was under McClure's direct supervision the enterprise was profitable for COCC. Through the work of the Division, COCC, using its own trucks, picked up and transported to the Bluff Road site industrial chemical wastes from various companies, including Allied Corporation, General Electric Company, and Arapahoe Chemicals, Inc. These wastes contained such substances as 1,1,1-trichloroethane, acetone, and pyridine, all hazardous wastes listed in 40 C.F.R. s 261.31, and, accordingly, hazardous substances under Section 101(14) of CERCLA 42 U.S.C. s 9601(14). The wastes also contained cyclohexylamine, a hazardous substance because it exhibits the characteristic of ignitability under 40 C.F.R. s 261.21. Waste which could not be reclaimed, recycled, and sold were stored and disposed of on the Bluff Road site. Payments by customers for these services were made to COCC, not McClure.

11. During the winter of 1974--1975, COCC cleaned up an abandoned hazardous waste site owned by the Southeastern Pollution Control Company (hereafter "SEPCO") and located near Clover, South Carolina. The People's National Bank of Chester, which held the mortgage on the Clover property, paid COCC $3,800 for the cleanup. Three to four COCC employees worked several days a week over a four to six month period to clean up the site. COCC also used its own equipment, including a special forklift, and leased a tractor and flat bed trailers to assist in the operation. COCC took possession of the waste at the Clover site for sale and disposal.

12. COCC transported four to five flatbed truckloads--approximately 400 fifty- five gallon drums--of wastes from the Clover site to the Bluff Road site. Many of these materials had no immediate market value and were contained in decaying drums. McClure was authorized to move these drums to Bluff Road on behalf of COCC, and Gergel had been aware of the possibility of moving the wastes to Bluff Road before the Clover operation was initiated. The drums of chemical waste from Clover were stored on the Bluff Road site, both inside and outside the warehouses located on the property, and remained there, along with unuseable and unsaleable wastes from other generators, until the time of the cleanup.

13. During the Clover cleanup, McClure was able to identify, by their distinctive odor, acetic acid and butyric acid, both hazardous substances listed pursuant to Section 311 of the Clean Water Act and incorporated into CERCLA under Section 101(14). At Bluff Road, McClure again recognized acetic acid and butyric acid amongst the material brought from Clover. The unrebutted testimony of Dr. Eugene Meyer, a government expert qualified in the field of physical chemistry, was that acetic acid and butyric acid are among the few hazardous substances that can be readily identified by their distinctive odor. General testing at the Clover site by COCC also identified chlorinated solvents, acetone, organic and inorganic acids, caustics, solvents and glycols--all hazardous substances under Section 101(14) of CERCLA. 14. In June of 1976, Gergel, McClure, and Henry Tischler, another vice president of COCC, formed South Carolina Recycling and Disposal, Inc., a defendant previously found jointly and severally liable in this case. This corporation assumed all of the activities of recycling, reclamation, and disposal formerly performed under the auspices of COCC. Gergel, McClure, and Tischler were the sole stockholders and officers of SCRDI. McClure served as President, Tischler as Vice President, and Gergel as Secretary-Treasurer. 15. In July of 1976, SCRDI, by oral agreement, subleased on a month-to-month basis from COCC that portion of the Bluff Road property which COCC was not using to store materials for use in its manufacturing processes. SCRDI paid rent to COCC, which then paid the total rental to the landowners. The sublease continued until August of 1978, when SCRDI assumed the entire leasehold interest and paid the landowners directly.

16. After COCC's primary leasehold interest terminated in 1978, COCC continued to manufacture chemicals, including organo-iodine and organo-bromine compounds, some of which were flammable. COCC used water to clean equipment used in the production of organic compounds. This wastewater was contaminated with such substances as methyl iodide, a volatile organic chemical, and was drummed for disposal. According to the unrebutted testimony of Dr. Meyer, methyl iodide is a member of the class of halomethanes, which are hazardous substances listed pursuant to Section 307 of the Clean Water Act and incorporated into CERCLA under Section 101(14).

17. COCC contracted with SCRDI for disposal of COCC's drummed wastewater at the Bluff Road site during the period of time following termination of COCC's primary leasehold interest in 1978. On occasion during this time frame, COCC itself transported the wastes to the Bluff Road site, where it would dump the materials. These wastes were not removed from the site prior to the cleanup.

CONCLUSIONS OF LAW

************************************************************** Section 107(a) of CERCLA provides, in pertinent part, as follows: (a) Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section-- * * * (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of, (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 owned or operated by another party or entity and containing such hazardous substances, and (4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities or sites selected by such person, 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-- (A) all costs of removal or remedial action incurred by the United States Government or a State not inconsistent with the national contingency plan.... 42 U.S.C. s 9607(a). At the outset, it must be noted that COCC is a "person" and that the Bluff Road site is a "facility" at which "hazardous substances" were "disposed" and "released," within the broad meanings ascribed those terms in Section 101 of CERCLA. With these preliminary determinations aside, the court will evaluate COCC's liability under the above subsections of Section 107(a).

1. COCC was an "owner" of the Bluff Road facility. In 1972, COCC negotiated an oral lease of the Bluff Road site with the owners of *1003 the property. COCC's leasehold interest in the property was continuous from 1972 until the latter part of 1978. During the years 1976 to 1978, COCC, by oral agreement, sublet a portion of the property to SCRDI for its waste disposal and recycling business. Without question, hazardous substances were disposed of at the Bluff Road site during the period of COCC's leasehold. Apart and distinct from its participation in the operation of the Bluff Road site, COCC, as lessee of the site, maintained control over and responsibility for the use of the property and, essentially, stood in the shoes of the property owners. As evidenced by the definitional provisions of CERCLA, site control is an important consideration in determining who qualifies as an "owner" under Section 107(a). See 42 U.S.C. s 9601(20)(A). Accordingly, site lessees like COCC should, along with the property owners themselves, be considered "owners" for purposes of imposing liability under Section 107(a). To conclude otherwise would frustrate Congress' intent that persons with responsibility for hazardous conditions bear the cost of remedying those conditions. See S.Rep. No. 96-848, 96th Cong., 2d Sess. 13 (1980). The fact that during part of its leasehold COCC sublet a portion of the site does not diminish its responsibility. If anything, it strengthens the case against COCC. As a general rule, a lessor or sublessor who allows property under his control to be used by another in a manner which endangers third parties or which creates a nuisance, is, along with the lessee or sublessee, liable for the harm. See California v. Watt, 520 F.Supp. 1359 (C.D.Cal.1981); Daigle v. Continental Oil Co., 277 F.Supp. 875 (W.D.La.1967). See also Restatement (Second) of Property s 18.1; 49 Am.Jur.2d Landlord and Tenant s 898 (1970). Thus, this court concludes that by virtue of its lessee/sublessor interest in the Bluff Road facility at a time during which hazardous substances were disposed of at the facility, COCC can be held liable as an "owner" pursuant to Section 107(a)(2) of CERCLA, 42 U.S.C. s 9607(a)(2).

2. COCC was an operator of the Bluff Road Facility. There are three separate bases for concluding that, in addition to and apart from being liable as an "owner" of the Bluff Road facility, COCC is liable as an "operator" of the facility. First, COCC was generally involved in the hazardous waste disposal business, as evidenced by COCC's cleanup of the waste disposal site in Clover, South Carolina and subsequent removal of some of the waste materials from that site to the Bluff Road facility. Second, the evidence leads this court to conclude that from 1974 to 1976, James Q.A. McClure was an employee and servant of COCC--a vice president in charge of the company's Solvents and Bulk Chemicals Division. In his official capacity as vice president, McClure supervised and directed the storage and disposal of hazardous substances at the Bluff Road site. McClure's authority to conduct these activities was either express or implied by virtue of his position as vice president. Moreover, even if these activities were not expressly or implicitly authorized by COCC, McClure clearly had the apparent authority to conduct waste storage and disposal activities. Under the principle of apparent authority, "one who holds out another, or allows him to appear as having authority to act, as his agent with respect to his business generally, or with respect to a particular matter, cannot ... deny that his apparent authority is real." Glens Falls Indemnity Bank Co. v. Palmetto Bank, 23 F.Supp. 844, 848 (W.D.S.C.1938) (emphasis added). The court in Glens Falls made the following observations: The public is compelled to rely upon the apparent authority of agents of ... corporations, especially when as managers or superintendents or executives, they are placed in control or in charge of the corporation's business. The fact that one has an office at the principal place of business of the corporation where its actual operations take place, that he apparently is in charge of the office and the work, that he supervises and gives orders to employees, that he opens the letters of the corporation, that he conducts its correspondence, that he signs the checks, handles the bank accounts, the cash, etc. and all the surrounding facts and circumstances may be considered and taken into account regardless of his title, in determining what his apparent authority is. * * * The apparent scope of an agent's authority is that authority which a reasonably prudent man, induced by the principal's acts or conduct, and in the exercise of reasonable diligence and sound discretion, under similar circumstances with the party dealing with the agent, and with like knowledge, would naturally suppose the agent to have. Id. In this case, a reasonably prudent man would naturally have concluded that McClure had the authority to conduct hazardous waste activities on behalf of COCC. Here, McClure was given office space and secretarial support by COCC, conducted correspondence relating to hazardous waste activities on COCC stationary, and held himself out to the public, to government agencies, and to potential waste disposal customers as a duly authorized agent of COCC. Because McClure had either the express, implied, or apparent authority to conduct waste storage or disposal activities, COCC is, under the doctrine of respondeat superior, bound by his acts and liable under CERCLA for the results of those acts. E.g., Johns Hopkins University v. Hutton, 422 F.2d 1124 (4th Cir.1970); Bradley v. Hullander, 272 S.C. 6, 249 S.E.2d 486 (1978). Finally, even if McClure was not an authorized official of the corporation, COCC would still be liable as an operator under the theory of joint venture. As a general rule, parties to a joint venture are mutually and vicariously liable for injuries or harms caused by their venture. Pritchett v. Kimberling Cove Company, 568 F.2d 570 (8th Cir.1978); Rowe v. Brooks, 329 F.2d 35 (4th Cir.1964); Richardson v. Walsh Construction Company, 334 F.2d 334 (3d Cir.1964); Opco, Inc. v. Scott, 321 F.2d 471 (10th Cir.1963). Application of this rule of liability to public health and safety statutes like CERCLA seems particularly appropriate. The Fourth Circuit Court of Appeals has defined a joint venture as "a special combination of two or more persons, where in some specific venture a profit is jointly sought without any actual partnership or corporate designation...." Dexter and Carpenter v. Houston, 20 F.2d 647, 651 (4th Cir.1927). The Circuit Court has since elaborated that " joint adventure may exist where persons embark in an undertaking without entering on the prosecution of the business as partners strictly, but engage in a common enterprise for their mutual benefits...." Aiken Mills v. United States, 144 F.2d 23, 25 (4th Cir.1944) (emphasis added). Accord, Spradley v. Houser, 247 S.C. 208, 146 S.E.2d 621 (1966); Gordan v. Rothberg, 213 S.C. 492, 50 S.E.2d 202 (1948). The leading Fourth Circuit case on joint venture is Rowe v. Brooks, supra. In Rowe, the court found a joint venture where there was an agreement (oral) between parties to the venture, the planned venture was for mutual advantage and profit, each party to the venture was to have a measure of control over and responsibility for the enterprise, and harm was caused by activities within the scope of the enterprise. Id. at 39. Applying the Rowe analysis to the instant case, this court finds a joint venture between COCC and McClure. Here, COCC entered into a venture with McClure in 1973 to reclaim and recycle chemical waste products. A written contract confirming the relationship was signed by the parties in July of 1974. Pursuant to their agreement, McClure solicited recyclable or reclaimable wastes from generators and COCC had the right to approve or veto transactions proposed by McClure. Moreover, COCC provided office space and secretarial service to McClure, and each party received 50% of the net profits. As a result of their venture, chemical wastes containing hazardous substances were deposited at the Bluff Road property. Under Rowe, COCC is vicariously liable for acts taken by McClure within the scope of their joint venture, including storing and disposing of chemical wastes at the Bluff Road facility, and is therefore liable under Section 107(a)(2) as an "operator" of the facility.

3.COCC is a person who arranged for disposal or treatment of its hazardous substances at a facility owned or operated by another. In its February 23, 1984 order, this court held that the government's burden of proof under Section 107(a)(3) of CERCLA, 42 U.S.C. s 9607(a)(3), is basically two-fold. It must show (1) that a person arranged for disposal or treatment of hazardous substances at a facility owned or operated by another, and (2) that the facility in question contained that generator's substances or substances of the same type as that generator's. See also United States v. Wade, 577 F.Supp. 1326, 1332 (E.D.Pa.1983). At trial, Dr. Svoboda, a vice president of COCC in charge of production, admitted that COCC generated wastewater containing such substances as methyl iodide, a volatile organic chemical and a hazardous substance under Section 101(14) of CERCLA, 42 U.S.C. s 9601(14), and that COCC contracted with SCRDI for disposal of these wastes. McClure confirmed these disposal transactions, testifying that SCRDI disposed of COCC's wastes at the Bluff Road site during the period of time following termination of COCC's primary leasehold interest in 1978. McClure added that on occasion during this time frame COCC transported the wastes to the Bluff Road site itself, where it would dump the materials. Thus, COCC clearly arranged for disposal of a hazardous substance at the Bluff Road site at a time during which the facility was owned and operated by persons other than itself. Moreover, McClure's unrebutted testimony was that COCC wastes were not removed from the site prior to the cleanup. Thus, the site contained such hazardous substances as COCC's. Accordingly, COCC is liable under Section 107(a)(3) of CERCLA, 42 U.S.C. s 9607(a)(3).

4. COCC was a transporter of hazardous substances to the Bluff Road site.

To establish transporter liability under Section 107(a)(4) of CERCLA, the government must prove that a person accepted hazardous substances for transport to a disposal or treatment facility selected by that person. 42 U.S.C. s 9607(a)(4). As stated above, the evidence shows that in 1974 COCC cleaned up a hazardous waste dump in Clover, South Carolina. COCC trucks and personnel were used to remove chemical wastes from the site, and COCC transported four to five truckloads of the Clover wastes to the Bluff Road site. McClure testified that the wastes transported to Bluff Road contained such substances as acetic acid and butyric acid, which are hazardous substances under CERCLA. Apart from the Clover cleanup, it is clear that during the years 1974 to 1976 COCC trucks and personnel were used to pick up hazardous substances from waste generators, including Allied Corporation, General Electric Company, and Arapahoe Chemicals, Inc., and transport such substances to the Bluff Road site. Clearly, then, COCC was a person who accepted hazardous substances for transport to the Bluff Road facility. Furthermore, because McClure directed and supervised these operations, and his acts are imputable to COCC under the alternative theories of respondeat superior or joint venture, COCC participated in the selection of Bluff Road as the site for disposal of hazardous substances. Therefore, COCC is liable as a transporter under Section 107(a)(4).

5. COCC's liability is joint and several.

In its February 23, 1984 order, this court concluded that in circumstances of indivisible injury, liability under CERCLA is joint and several, and that the burden of proving divisibility appropriately rests with CERCLA defendants. Order at 15. See United States v. Chem-Dyne, 572 F.Supp. 802, 811 (S.D.Ohio 1983); United States v. Wade, supra, at 1337-1338. In the course of granting plaintiff's partial summary judgment motions against the other defendants in this case, this court concluded that the harm at the Bluff Road site was indivisible. Order at 15. COCC has not presented any evidence that would cause this court to conclude otherwise. Indeed, the evidence in the record supports the conclusion that the harm at the Bluff Road site was indivisible. There were thousands of corroded, leaking drums at the site not segregated by source or waste type. Unknown, incompatible materials comingled to cause fires, fumes, and explosions. Because of the constant threat of further fires, explosions, and other reactions, all of the materials at the site were, if not actually oozing out, in danger of being released. It is simply impossible to divide this environmental hazard in any meaningful way among waste generators, transporters, site owners, and site operators. Thus, based on the evidence in the record, this court concludes that the harm at the Bluff Road site was indivisible and that COCC is therefore jointly and severally liable for costs associated with the site.

CONCLUSION

COCC falls within several of the classes of persons identified in Section 107(a) of CERCLA as liable for response costs associated with the Bluff Road site. Specifically, the company is liable as both an owner and an operator under Section 107(a)(2), as a person who arranged for disposal of its hazardous substances under Section 107(a)(3), and as a transporter of hazardous substances under Section 107(a)(4). Because the harm at the site was indivisible, COCC's liability is joint and several. The question of the amount of recovery to which plaintiff is entitled will be resolved in subsequent proceedings.

AND IT IS SO ORDERED.

ORDER ON MOTIONS FOR SUMMARY JUDGMENT
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[balance of opinion omitted]