Summary of a Recent
Judicial Development in
Environmental Law

CERCLA Liability May Be Imposed on Those Who Owned
or Operated Facilities at Time of Disposal

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In K.C.1986 Limited Partnership v. Reade Manufacturing Co., 472 F.3d 1009 (8th Cir. 2007), the United States Eighth Circuit Court of Appeals affirmed in part and reversed in part the decision of the district court, which had required the defendants to pay 90 percent of past and future costs to cleanup a Missouri superfund site. The plaintiff, a property owner, brought a Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) action against the defendants, which were companies that had previously blended and packaged herbicides on the property. The court held that an individual with an ownership in a company that mixes and repackages herbicides on property could be held liable as an "operator" under CERCLA.

Background

In the 1920s, the Reade Manufacturing Company (Reade) blended and packaged herbicides at its Armour Road Site located in Kansas City, Missouri. Id. at 1013. Its operations included "using substantial amounts of arsenic, among other hazardous chemicals, and offering herbicide spraying services to railroad companies across the country, including [Burlington Northern Santa Fe] and its predecessors." Id. While Reade owned and conducted operations at the Armour Road Site, it significantly contaminated that site with arsenic. Id. In 1963, Reade sold the site to U.S. Borax Inc. (Borax), which continued to contaminate the site with arsenic until it sold the site to Habco, Inc. in 1968. Id. Habco, principally owned by Donald Horne, continued the same mixing and blending operations as conducted by the other owners until it sold the Site to K.C.1986 Limited Partnership (K.C. 1986). Id. at 1014. Shortly thereafter, K.C. 1986 sought buyers and lessees for the site. Id. at 1015. Hardees, a potential lessee, hired a third party, Terracon, to perform environmental testing at the site. Id. The testing revealed that the property was heavily contaminated with arsenic and other hazardous substances. Id. In response to its findings, Terracon reported the contamination to the State of Missouri. Id. In 2002, K.C. 1986 filed the instant CERCLA litigation "seeking a determination of liability for the cleanup costs between and among the various parties." Id. After a bench trial, the district court entered an allocation order, and this appeal followed. Id.

Arguments

Defendant Donald Horn argued that the "district court erred in its summary judgment ruling that [he] was liable as an operator during the Habco Era, from 1968 to 1986." Id. at 1019.

Analysis and Holdings

The court stated that "[l]iability for the release of hazardous substances may be imposed on '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." Id. at 1020 (quoting 42 U.S.C. § 9607(a)(2)). The court previously held:

[A]n individual may be liable as an operator if he "(1) had authority to determine whether hazardous wastes would be disposed of and to determine the method of disposal and (2) actually exercised that authority, either by personally performing the tasks necessary to dispose of the hazardous wastes or by directing others to perform those tasks."
Id. (quoting United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726 (8th Cir.1986)).

Additionally, the Supreme Court previously held that "an operator is simply someone who directs the workings of, manages, or conducts the affairs of a facility,' as long as this management includes 'operations specifically related to pollution . . . or decisions about compliance with environmental regulations." Id. (quoting United States v. Bestfoods, 524 U.S. 51 (1998)).

In the instant case, the following undisputed facts supported the district court's conclusion that Donald Horne was liable as an operator of the facility: (1) the defendants' conceded that Horne was "directly responsible for devising the procedures for the use and disposal of hazardous waste, as well as for directing Victor Horne to carry out those procedures"; (2) "Horne did not dispute that his approval was necessary for any decisions involving large expenditures"; (3) "he had approved procedures such as rinsing out truck tanks containing herbicides"; and (4) "he was responsible for making decisions regarding compliance with environmental laws." Id. For these reasons, the court held that Horne was "liable as an operator of the facility, including those operations having to do with the leakage or disposal of hazardous waste and decisions about complying with environmental regulations." Id.

The case was decided on January 4, 2007.