16 ELR 20763 | Environmental Law Reporter | copyright © 1986 | All rights reserved

United States v. Ottati & Goss, Inc.

No. C80-225-L (630 F. Supp. 1361, 23 ERC 1705) (D.N.H. December 9, 1985)

ELR Digest

The court holds that hazardous waste site owners, operators, and generators are liable for cleanup costs in an action brought by federal, state, and local governments under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA), the Federal Water Pollution Control Act (FWPCA), state water pollution and nuisance law, and municipal ordinances. Defendants Ottati and Goss were in the business of processing hazardous waste by mixing the waste with sawdust and lime. The processing was done at a leased site and the waste would later be shipped off site and the empty drums sold. Spillage of sawdust and waste mixtures was not uncommon at the site. Evidence also indicated that many drums were not properly contained and leaked onto the ground.

In 1980, the Environmental Protection Agency (EPA) initiated remedial activities, which included tests to determine reactivity of the waste, construction of filter fences to contain leaks, and removal of drums. EPA's use of a drum crushing pit also caused soil contamination. At the other major waste site involved in this litigation, incinerators were used to burn waste. Waste materials and sludge accumulated in the vicinity of the incinerator. Operators of this site later began purchasing contaminated sawdust from Ottati and Goss and stored it at their site. A private party conducted a partial cleanup of this site. Evidence indicates, however, that wastes from the site have migrated into the groundwater.

This suit was originally brought by EPA in 1980 under RCRA to require the cleanup of hazardous waste sites in New Hampshire. New Hampshire and the town of Kingston intervened as plaintiffs, asserting claims under state statutory and nuisance law. EPA later added CERCLA claims in this action against the current and former operators of the drum-reconditioning businesses, owners of the properties, and generators of waste at the sites. EPA has incurred response costs in inspecting the site; testing for groundwater, surface water, and sediment contamination; monitoring the contamination; conducting a remedial investigation/feasibilty study; and in removing drums and other hazardous materials. This decision resolves the liability issues in this case, which the court bifurcated into liability and damage phases. The court initially holds that a defendant that brought leaking drums to the site, and has defaulted, is liable, and finds that the owners of the site acted reasonably during their dealings with the drum reconditioning business.

The court rules that the standard of liability under CERCLA § 106(a) is the standard under § 107. The court adopts the reasoning in United States v. Price, 13 ELR 20843 (D.N.J. 1983) and United States v. Outboard Marine Corp., 12 ELR 21153 (N.D. Ill. 1982) that Congress intended the standard of liability in § 107, which is labeled "Liability" in the Act and does not contain any qualifying language, to define liability for the entire Act. The court next sets out the elements for a claim under RCRA § 7003 and CERCLA § 106(a), the imminent hazard provisions of those Acts. The court notes that § 7003 authorizes the cleanup of inactive sites and does not require proof of actual harm, and finds that the hazardous waste sites at issue have presented an imminent and substantial endangerment under these provisions. The court rules that defendants have the burden of proof in a CERCLA § 107 suit to show that the response costs incurred by EPA are inconsistent with the national contingency plan.

The court holds that defendants are jointly and severally liable under CERCLA § 107 because they failed to meet their burden of proof to establish a reasonable basis for apportioning the harm. Although several defendants established the number of drums they shipped to the site, the exact amount of hazardous waste found at the site and its resulting harm to surface and groundwater cannot be accurately apportioned. The court next holds that EPA's failure to provide defendants with prior notice or the chance to conduct their own cleanup before initiating its response activities does not preclude EPA from recovering its response costs. Although EPA should have given the generators a chance to perform the cleanup, defendants became potentially liable for EPA's response costs once the response action was carried out. The court rules that the retroactive application of CERCLA § 107 and § 106 to preenactment activities does not violate due process. The court adopts the reasoning in United States v. Shell Oil Co., 15 ELR 20337 (D. Colo. 1985) that CERCLA's backward-looking nature and Congress' decision to impose cleanup costs on responsible parties rather than taxpayers indicates Congress' intent to hold responsible parties liable for preenactment costs.

The court rules that RCRA § 7003 may be applied to remedial action at inactive sites that continue to present a threat to public health or the environment since RCRA's definition of disposal is quite broad and Congress has indicated that § 7003 applies to present and past handlings of hazardous waste. The court declines to rule at this time on defendant generators' claim that the federal government cannot receive reimbursement under § 7003. The court next rules that past off-site generators and prior owners of waste sites may be liable under § 7003, adopting the reasoning of Jones v. Inmont Corp., 14 ELR 20485 (S.D. Ohio 1984) and United States v. Price, 11 ELR 21047 (D.N.J. 1981). The court rules that liability under § 7003 is strict and, like CERCLA, joint and several where the harm is indivisible. The court holds that discharges from the site into a ditch that flowed into navigable waters without a national pollutant discharge elimination system permit violated FWPCA § 301(a).

The court, ruling that specific proof of causation is not required for liability under CERCLA § 107, holds that defendant generators are liable under § 107. The government has proven the elements necessary for liability under § 107: the generators' hazardous waste was shipped to the site, the hazardous substance found in the generators' waste was found at the site, and there was a release or threatened release of a hazardous substance that caused response costs to be incurred. Defendantsfailed to raise any of the defenses available under CERCLA § 107(b) and failed to prove that all their drums were removed before EPA incurred its response costs. The court rejects defendants' arguments that the standard of liability under FWPCA § 311 as applied in CERCLA § 107(a) is determined by common law principles and that proof that defendants' hazardous waste caused the injury is required. The court also holds that defendant owners/operators are liable under CERCLA § 107(a)(2).

Turning to New Hampshire's claims, the court initially holds that the state Attorney General has the authority to enforce the state nuisance statutes. The court then holds that defendant owners/operators of the Great Lakes site are liable under the nuisance statutes because the harm resulting from the groundwater contamination at the site outweighs any economic benefit to the defendants. Defendants may not avoid liability by conveying the land. Further, defendants knew that a public nuisance existed and had control over the activities on the property. The court holds that the state is not estopped from obtaining relief from the generators. While defendants claim that they relied on the state's acquiescence in their activities, the state's involvement was minimal and a state employee informed some of the generator defendants to deal with the site operator at their own risk. The court holds that defendant generators are liable under state nuisance law for negligently selecting an independent contractor to dispose of their waste. In addition, these generators are vicariously liable for the torts of their independent contractor because they knew that severe harm could result from improper handling of the waste, the local residents theatened with harm could reasonably expect defendants to exercise care for their safety, and it was not reasonable for the generators to rely on the independent contractor in light of the inherently dangerous nature of hazardous waste disposal. The court, deferring to the law of New Hampshire, which has enunciated a pristine policy in nuisance law, holds that landowner defendants are not liable for a public nuisance under state common law because they did not know or have reason to know that a public nuisance existed on their land.

The court holds that defendant generators are liable under New Hampshire's water pollution statute prohibiting the discharge of waste into the state's surface or groundwater without a permit. The statute does not, however, apply to landowners who did not authorize or participate in the discharge. The court rules that this statute may not be applied retroactively. The court next rules that the New Hampshire hazardous waste management statute may not be applied retroactively against defendants because, under New Hampshire law, courts will not retroactively apply statutes affecting substantive rights absent a legislative intent to the contrary. There is no evidence of an intent to solve past pollution problems from the language or legislative history of the statute.

Addressing the claims of the town of Kingston, the court holds that the defendants held liable to the federal or state plaintiffs are also liable to the town under RCRA § 7003, the state water pollution statute, state nuisance law, and the FWPCA. The court holds that the landowner defendants did not violate the town's zoning ordinances covering waste water disposal, gravel removal, and industrial development, nor did they violate an ordinance requiring a permit for gravel removal. However, the operator defendants are liable for zoning ordinance violations.

The full text of the opinion is available from ELR (58 pp., $9.50, ELR Order No. C-1353).

Counsel for Plaintiff
Richard V. Wiebusch, U.S. Attorney
55 Pleasant St., 4th Fl., James Cleveland Federal Bldg. & Cthse., Concord NH 03301
(603) 225-5588

William D. Evans Jr.
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-4170

Counsel for Defendants
David M. Copithorne
Copithorne & Copithorne
734 N. Main St., Laconia NH 03246
(603) 524-8320

Sumner F. Kalman
147 Main St., P.O. Box 850, Plaistow NH 03865
(603) 382-4003

Thomas B. Bracken
Bracken & Baram
33 Mount Vernon St., Boston MA 02108
(617) 742-4950

Loughlin, J.


16 ELR 20763 | Environmental Law Reporter | copyright © 1986 | All rights reserved