The mass production of food has become an important industry both in the United States and internationally with concentrated animal feeding operations or CAFOs serving as factories for the production of meat products.  Undoubtedly, efficient agricultural operations benefit society by providing necessary food products.  While CAFOs make meat production more efficient, they also cause concentrated environmental impacts on fresh water resources. As human population densities increase, conflicts between the interests of CAFO operators and managers of municipal water supplies will also increase.

 

            In one recent example, the City of Tulsa, Oklahoma, filed suit in the United States District Court for the Northern District of Oklahoma against six poultry-producing companies for degradation of a municipal water supply that provided the residents of Tulsa and several nearby communities with drinking water.  Tulsa also sued Decatur, Arkansas, another municipality in a neighboring state, for degradation resulting from the operation of Decatur’s wastewater treatment plant.  In the lawsuit, Tulsa alleged that defendants had released harmful amounts of phosphorus that resulted in algae blooms in the lakes that supply drinking water for approximately 500,000 people.  Tulsa requested damages and injunctive relief to prevent further damage to the water supply.  Tulsa’s tort claims were based both on common law theories of nuisance and trespass, and violations of the Comprehensive Environmental Response, Compensation, and Liability Act, more commonly referred to as CERCLA.[1]  Tulsa alleged that phosphorus in poultry litter was a “hazardous substance” under CERCLA, and the release of phosphorus by farmers under contract to grow poultry for defendants gave rise to defendants’ liability.     

 

            Defendants denied liability on several grounds.  Most importantly for the case and for the purposes of this discussion, they denied responsibility for the poultry litter itself, claiming that the litter was not owned by them, but by the farmers who actually grow the poultry.  After a lengthy round of Motions for Summary Judgment in the District Court for the Northern District of Oklahoma, the Court determined the issues of ownership of litter and the hazardous nature of phosphorus in poultry litter in favor of the plaintiffs. 

 

            The Court held “Poultry Defendants” in this case conduct “integrated” poultry-raising operations, which were summarized by the Court as follows:

 

(a) each integrator contracts with growers to raise poultry; (b) it delivers small birds to the growers and retains ownership of the birds at all times; (c) it pays the growers a contract rate to grow the poultry; (d) it provides feed and medication to the growers to care for the birds; and (e) it picks up the birds when they mature and processes them at the integrators' processing plants.  The vertically integrated poultry operation allows the integrator to control the genetics and the breeding stock that goes into the chickens that are processed; to have consistency in the final product; and to produce the highest quality finished product possible.[2]

 

Integrated farming operations are becoming the normal means of meat production in this country.  They are replacing the independent farming operations that once predominated here.  One of the threshold questions before the Court was whether an integrated farming operation subjects the integrator to liability either under common law theories of nuisance and trespass or under CERCLA as one who has “arranged for” the disposal of hazardous waste. 

 

            The Court ruled that poultry waste is an inevitable consequence of raising poultry and that in the ordinary course of growing poultry, a trespass or nuisance was likely:

 

[Poultry Defendants] admit in their response brief that they were aware in the 1990s that "phosphorus presented potential problems to the Watershed" and, therefore, attempted to address the problem by educating their growers regarding better litter management.  Given these admissions, the Court finds Poultry Defendants had "reason to recognize that, in the ordinary course of [the growers] doing the work in the usual or prescribed manner, the trespass or nuisance is likely to result." Restatement (Second) Torts §  427B, cmt. b (1965);  Tankersley, 243 P. at 747.[3]  As the Court concludes that the § 427B exception applies herein, the factual questions regarding the Poultry Defendants' degree of control over their growers need not be addressed at the jury trial. Accordingly, the Court grants plaintiffs' motion for partial summary judgment on the issue of the Poultry Defendants' vicarious liability for any trespass or nuisance created by their growers because they were aware that in the ordinary course of doing the contract work, a trespass or nuisance was likely to result.[4]

 

Although the Court granted summary judgment on the issue of vicarious liability, it determined that fact questions precluded a determination as a matter of law whether the integrators had “arranged for” the disposal of litter for purposes of CERCLA liability.  As for the factors that would be determinative, the Court considered and rejected approaches taken by other courts at either end of a broad continuum of possibilities.  At the most restrictive end of the continuum is the position taken by the Seventh Circuit in Amcast Indus. Corp. v. Detrex Corp.,[5] which held that the words “arranged for” require a finding of intentional action.  In that case Amcast, was held not to be liable for trichloroethylene spilled in the unloading process by the trucks owned by the common carrier with whom it had contracted to deliver the material to its customer.  The Seventh Circuit held:

 

[W]hen the shipper is not trying to arrange for the disposal of hazardous wastes, but is arranging for the delivery of a useful product, he is not a responsible person within the meaning of the statute and if a mishap occurs en route his liability is governed by other legal doctrines...[6]

 

At the other end of the spectrum is the position of the Eighth Circuit in U.S. v. Aceto Agricultural Chemicals Corp.,[7] which is based not on intent, but on result.  In that case, the Eighth Circuit ruled that pesticide manufacturers who had hired a company to mix and package pesticides for them were liable for cleaning up the formulator's site.  In that case, the defendants owned the pesticides and the generation of pesticide waste was inherent in the formulation process.   The Eighth Circuit held:

 

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.[8]

 

            Between the positions taken by the Seventh and Eighth Circuits, the Eleventh Circuit has staked out a middle ground that allows district courts a significant degree of flexibility and makes summary judgment of arranger liability unlikely.  In South Florida Water Management Dist. v. Montalvo,[9] the Eleventh Circuit rejected a per se rule for determining whether a party "arranged for" the disposal of a hazardous substance and held that the inquiry must "focus on all of the facts in a particular case."[10]  By avoiding bright-line determinations based solely on ownership of the hazardous substance or the declared intent of the supposed arranger, the Eleventh Circuit denied legalistic avoidances of the essential purposes of CERCLA:

 

(1) to provide for prompt and effective responses to the problem of hazardous wastes and (2) to insure responsible parties bear the costs and responsibility for remedying harmful conditions they caused.[11]

 

            In City of Tulsa v. Tyson, the District Court adopted the flexible approach recommended by the Eleventh Circuit and refused to grant summary judgment on the issue of arranger liability.  The court held:

 

There are fact questions regarding Poultry Defendants' arrangement with their growers, which include ownership, authority to control, and participation in the alleged disposal of poultry waste through land application of poultry litter.[12]

 

Shortly after the District Court’s ruling on the parties’ Motions for Summary Judgment, the case settled.  As a part of the order approving the settlement in the case, the Court withdrew its order on the parties’ Motions for Summary Judgment.  The fact questions of ownership, control and participation as they relate to arranger liability were superseded by the agreement of the defendants to withhold poultry from any grower that refused to follow the litter management practices defined by a court-appointed Watershed Management Team. 

 

            Ultimately, the rationale adopted by the district court is appropriate.  Vicarious liability naturally results as a consequence of damage to the environment caused by the land application of poultry litter.  Integrators may not avoid common law tort liability solely by carefully drafted contractual language designed to insulate them from liability for the release of hazardous wastes by their growers.  Although the court did not reach arranger liability under CERCLA as a matter of law, it is likely that a similar analysis would pertain based on the facts and arranger liability would attach, regardless of any contract provisions purporting to disavow such liability.

 

 

Brent Blackstock

MCKINNEY & STRINGER, P.C.

© 2004