Opinion
Civil Action No. 2:05-cv-2782-MBS.
October 13, 2010.
Joseph Rutledge Young, Jr., William Leroy Howard, Sr., Young, Clement, Rivers and Tisdale, Charleston, SC, James Jerome Hartzell, Hartzell and Whiteman, Thomas N. Barefoot, Thomas N. Barefoot Law Offices, Raleigh, NC, for Plaintiff.
Carmen G. McLean, John Buchanan Williams, Kevin P. Holewinski, Michael Howard Ginsberg, Jones Day, Washington, DC, William Howell Morrison, Moore and Van Allen, Charleston, SC, for Defendant/Third-Party Plaintiff.
Robert Bryan Barnes, Thomas McRoy Shelley, III, Rogers Townsend and Thomas, Alexander G. Shissias, Haynsworth Sinkler Boyd, Clarke W. Dubose, Columbia, SC, Amy Elizabeth Melvin, Timothy William Bouch, Leath, Bouch and Craw-ford, Jason Scott Luck, Seibels Law Firm, Charleston, SC, for Third-Party Defendants.
ORDER AND OPINION
This is a cost-recovery action brought under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), as amended, 42 U.S.C. §§ 9601, et seq., to recover costs incurred to remediate 33.95 acres of a 43 acre parcel of land in Charleston, South Carolina ("the Site"). On September 26, 2005, this lawsuit was filed under CERCLA § 107 ( 42 U.S.C. § 9607) by one of the Site's current owners, Ashley II of Charleston, LLC ("Ashley"), against PCS Nitrogen, Inc. ("PCS"), seeking a declaratory judgment that PCS is jointly and severally liable for the cost of remediating the Site; and a money judgment in the amount of $194,232.94 to reimburse Ashley for costs of remediation that it has already incurred. [Entry 1 at ¶¶ 28-36; Entry 209 at ¶¶ 31-37]. This court has jurisdiction pursuant to 28 U.S.C. § 1331 and CERCLA. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b) and (c), and 42 U.S.C. § 9613 because the claims arise, and the releases of hazardous substances occurred at the Site, which is located in the District of South Carolina.
PCS filed contribution claims pursuant to CERCLA § 113(f)(1) against Ashley, Ross Development Corporation ("Ross"); Koninklijke DSM N.V., and DSM Chemicals of North America, Inc. (collectively "the DSM Parties"); James H. Holcombe ("Holcombe"), J. Holcombe Enterprises, L.P. ("Holcombe Enterprises"), and J. Henry Fair, Jr. ("Fair") (collectively "The Holcombe and Fair Parties"); Allwaste Tank Cleaning (n/k/a PSC Container Services, LLC) ("Allwaste"); Robin Hood Container Express, Inc. ("RHCE"); and the City of Charleston, South Carolina ("the City"), alleging that they are potentially responsible parties ("PRPs"). [Entry 226].
To the extent any party other than Ashley alleged claims pursuant to § 107, these parties are limited to recovery under CERCLA § 113. See United States v. Atlantic Research Corp., 551 U.S. 128, 138 (2007) (explaining that § 107 actions lie when a party has itself incurred clean up costs and that § 113 actions lie when a party is reimbursing costs paid by others).
Pursuant to § 113 of CERCLA, Ross filed counterclaims against PCS and cross-claims against the Holcombe and Fair Parties, the DSM Parties, RHCE, the City, and Allwaste. [Entry 239 at 12-18]. RHCE filed § 113 counterclaims against PCS and cross claims against the DSM Parties, the Holcombe and Fair Parties, Allwaste, and the City. [Entry 231 at 8-11]. The Holcombe and Fair Parties have filed counterclaims against PCS and cross-claims against Ross and the DSM Parties pursuant to § 113. [Entry 234 at 10-12]. The City has filed a § 113 counterclaim against PCS. [Entry 228 at 7-8]. PCS, Ross, RCHE, the Holcombe and Fair Parties, and the City all seek a judicial determination of their rights to future cost recovery and contribution pursuant to 28 U.S.C. §§ 2201
and 2202. [Entry 226 ¶ 50; Entry 231 ¶ 50; Entry 234 ¶¶ 55, 63; Entry 228 at 9].
This case was bifurcated into liability and allocation phases by order of The Honorable C. Weston Houck on July 25, 2006. [Entry 56]. From February 20, 2007 to February 22, 2007, Judge Houck held a bench trial for the liability phase. [Entries 107, 108, 109 and 115]. On September 28, 2007, pursuant to Federal Rule of Civil Procedure 52, Judge Houck entered Findings of Fact and Conclusions of Law determining PCS to be the successor-in-interest to former Site owner, Columbia Nitrogen Corporation ("CNC"). [Entry 118]. On January 5, 2009, Judge Houck disqualified himself from further participation in the case. [Entries 307 and 308]. The case was reassigned to the undersigned on January 6, 2009. [Entries 307 and 308]. On August 13, 2009, this court granted summary judgment to the DSM Parties. [Entry 409].
On June 2, 2009, this court denied PCS's motion to vacate Judge Houck's orders, but permitted PCS to file motions for reconsideration of 1) Judge Houck's April 22, 2008 order denying PCS's motion to certify the Court's findings of fact and conclusions of law for interlocutory appeal (Entry 164), and 2) Judge Houck's June 13, 2008 order denying PCS leave to amend its complaint to join former shareholders of Ross Development Corporation ("Ross") to this action (Entry 194). Entry 384. On July 27, 2009, PCS filed a motion for reconsideration of the court's order denying it a certificate of appealability of the phase I ruling under § 1292(b). Entry 402. That same day, PCS filed a motion for reconsideration of the court's order denying it leave to amend its complaint to add claims against the Ross shareholders. Entry 405. On August 17, 2009, PCS also filed a motion under § 1292(b) for certification of the court's June 2, 2009 order denying PCS's motion to vacate Judge Houck's rulings. Entry 412. On October 13, 2009, the court held a hearing on PCS's various motions for reconsideration and leave to file. Entry 462. The court denied PCS's motions for reconsideration and leave to file. Id.
From October 26, 2009 to November 6, 2009 and continuing from January 19, 2010 to January 27, 2010, the court held a bench trial for the allocation phase. [Entries 472, 473, 475-478, 480, 483, and 484]. This case is currently before the court on three motions for judgment on partial findings filed during trial by Allwaste, the Holcombe and Fair Parties, and RHCE [Entries 517, 520 and 521]; as well as findings of fact and conclusions of law as to allocation pursuant to Federal Rule of Civil Procedure 52(a). On June 2, 2010, each of the parties submitted proposed findings of fact and conclusions of law. PCS's responses to the motions for judgment on partial findings were contained within its proposed findings. [Entries 556-558].
Federal Rule of Civil Procedure 52(c), which governs judgments on partial findings, provides in pertinent part:
If a party has been fully heard on an issue during a nonjury trial and the court finds against the party on that issue, the court may enter judgment against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue. The court may, however, decline to render any judgment until the close of the evidence.
Judgments entered pursuant to Rule 52(c) "must be supported by findings of fact and conclusions of law." Fed.R.Civ.P. 52(c). Under Rule 52(c), a court assesses the evidence and may enter a judgment if the evidence is insufficient to support a claim or defense. See generally Carter v. Ball, 33 F.3d 450 (4th Cir. 1994); Fed.R.Civ.P. 52. Rule 52(a) directs that when an action is tried without a jury, a court "must find the facts specially and state its conclusions of law separately." Fed.R.Civ.P. 52(a). Having carefully considered the testimony, exhibits, deposition excerpts, trial briefs, and proposed findings of fact and conclusions of law, the court makes the following findings.
I. FINDINGS OF FACT
A. Current Site Conditions
B. Remediation Plan C. Basis for Dividing up Remediation Costs D. Summary of Site Ownership E. Planters Period of Ownership (1906-1966) and Subsequent Actions by Ross see Ross Dev. Corp. v. Fireman's Fund Ins. Co., Ross Dev. Corp. v. Fireman's Fund Ins. Co, F. CNC Period of Ownership (1966-1987) G. Holcombe and Fair Parties Ownership (1987-2003) H. Allwaste Ownership Period (1989-2008) see also see also I. RHCE Tenancy J. City of Charleston Ownership Period (1991-present) See K. Ashley's Ownership (2002 — present)
CERCLA defineds a brownfields property as "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant." 42 U.S.C. § 9601(39)(A).
II. CONCLUSIONS OF LAW
A. Rule 52(c) Motions
1. Allwaste's Motion for Judgment on Partial FindingsAt issue in Allwaste's Motion for Judgment on Partial Findings is whether the release and indemnity provisions of the February 19, 2007 Purchase and Sale Agreement between Allwaste and Ashley bar all actions against Allwaste. The parties do not dispute that Ashley has indemnified Allwaste against "any and all claims" related to the Site. [Entry 517 at 2; PCS Proposed Findings ¶ 381]. PCS contends that the effect of this indemnification is to shift the financial responsibility for any environmental contamination that Allwaste is found responsible for to Ashley. [PCS Proposed Findings ¶ 388].
CERCLA permits parties to shift the burden for paying response costs through contractual indemnification and release agreements. See 42 U.S.C. § 9607(e)(1) ("Nothing in [CERCLA § 107(e)(1)] shall bar any agreement to insure, hold harmless, or indemnify a party to such agreement for any liability under [CERCLA § 107]."); see also C.P. Chem., Inc. v. Exide Corp., Inc., 14 F.3d 594 (Table), No. 93-1426, at *1 (4th Cir. Dec. 28, 1993) (stating that CERCLA liability can be allocated by contract); Dent v. Beazer, 993 F. Supp. 923, 939 (D.S.C. 1995) ("Under CERCLA, parties are free to contractually shift the burden for liability for response costs among themselves."). "A private party contract which apportions CERCLA liability must contain a provision which allocates risks of this nature to one of the parties." Dent, 993 F. Supp. at 939 (citing Rodenbeck v. Marathon Petroleum Co., 742 F. Supp. 1448, 1456 (N.D. Ind. 1990)). This is because "[s]uch agreements cannot alter or excuse the underlying liability, but can only change who ultimately pays that liability." Vill. of Fox River Grove v. Grayhill, Inc., 806 F. Supp. 785, 792 (N.D. Ill. 1992).
Federal law governs the validity of releases of federal causes of action. Pinchback v. Armistead Homes Corp., 907 F.2d 1447, 1453 (4th Cir. 1990) (citing Gamewell Mfg., Inc. v. HVAC Supply, Inc., 715 F.2d 112, 114 n. 4 (4th Cir. 1983)). Federal courts are competent to formulate a federal rule of decision that incorporates state law when making determinations related to the adjudication of federal claims. See United States v. Kimbell Foods, Inc., 440 U.S. 715, 726-27 (1979); United States v. Little Lake Misere Land Co., 412 U.S. 580, 592-95 (1973).
A joint tortfeasor may recover from another joint tortfeasor "unless the other previously had a valid settlement and release from the plaintiff." Restatement (Third) of Torts § 23(a). This means that an individual or entity that settles with the plaintiff before final judgment is not liable for contribution to others for the injury. Restatement (Third) of Torts § 23 cmt i. According to the Restatement, where a tortfeasor has settled with the plaintiff before the initiation or conclusion of a law suit, the settling tortfeasor should be dismissed even if contribution claims have been made against the settling tortfeasor, because these contribution claims are barred by law. Restatement (Third) of Torts § 24 cmt. e. South Carolina law contains a similar rule: "When a release . . . is given in good faith to one of two or more persons liable in tort for the same injury . . . [the release] discharges the tortfeasor to whom it is given from all liability for contribution to any other tortfeasor." S.C. Code Ann. § 15-38-50. Thus, if Allwaste has been released from liability by Ashley, it must be dismissed from the case as no contribution claim may be made against Allwaste.
A release is interpreted according to the general principles of contract construction. Dent, 993 F. Supp. at 939 (citing Campbell v. Beacon Mfg Co., 438 S.E.2d 271, 272 (S.C. Ct. App. 1993). If the language of the release is "clear and unambiguous, a court should interpret the release according to its plain meaning." Acstar Ins. Co. v. Harden, 16 F. App'x 213, 216 (4th Cir. 2001); see also Ecclesiastes v. Outparcel Assoc., LLC, 649 S.E.2d 494, 502 (S.C. Ct. App. 2007). However, if the terms of the release are ambiguous, a court may look to extrinsic evidence to determine the meaning of a release. Acstar, 16 F. App'x at 216; Ecclesiastes, 649 S.E.2d at 502.
The release between Ashley and Allwaste "fully and finally releases and discharges [Allwaste] from any and all Claims and Liabilities, whether for contribution or otherwise." [Ash. Ex. 177 at 22]. The word "claim" is defined in the Purchase and Sale Agreement to include: "any proceeding . . . arising out of (1) the Columbia Nitrogen CERCLA site . . . and/or (4) the pending litigation styled Ashley II of Charleston, L.L.C. v. PCS Nitrogen, Inc., Civil Action No. 2:05-2782." [Ash. Ex. 177 at 19]. The indemnity provision of the Purchase and Sale Agreement provides that Ashley shall "indemnify, defend and hold harmless" Allwaste against "any and all claims, and liabilities related to or arising in connection with claims" and specifically states that it is intended to cover CERCLA claims. [Ash. Ex. 177 at 22]. Based upon the foregoing, the court finds that the language of the February 19, 2007 Purchase and Sale Agreement between Ashley and Allwaste unambiguously releases Allwaste from any liability associated with the Site. Allwaste's Motion for Judgment on Partial Findings [Entry 517] is granted. All claims for contribution against Allwaste are dismissed and Ashley must bear any allocation assessed against Allwaste.
2. The Holcombe and Fair Parties' Motion for Judgment as a Matter of Law
The court recognizes that the Holcombe and Fair Parties' Motion for Judgment as a Matter of Law is actually a motion for judgment on partial findings made pursuant to Federal Rule of Civil Procedure 52(c) because a motion for judgment as a matter of law under Federal Rule of Civil Procedure 50 is not a proper motion in a non-jury case. In re Modanio, 413 B.R. 262, n. 5 (Bankr. Md. 2009).
At issue in the Holcombe and Fair Parties' Motion for Judgment as a Matter of Law is whether the release and indemnity provisions of the November 24, 2003, Fourth Amendment to the Contract of Sale among Holcombe Enterprises, Fair, and Ashley bar all contribution claims against the Holcombe and Fair Parties related to the Site.
As was previously stated, CERCLA permits parties to shift the burden for paying response costs through contractual indemnification and release agreements. See 42 U.S.C. § 9607(e)(1). The same legal principles that applied to the Allwaste release and indemnification agreements apply here.
The release between Ashley and the Holcombe and Fair Parties provides that:
Purchaser . . . waives, releases and discharges the Seller from any and all liabilities, actions, causes of actions, claims and demands whatsoever, whether or not well founded in fact or in law, including without limit response costs incurred under the Environmental Laws, and from any suit or controversy arising from or in any way related to the existence of Hazardous Materials in or with respect to the Property and from any Hazardous Material Claims arising from or related in any way to the Property. . . .
[Ash. Ex. 94 at 00458, ¶ 5(b) (emphasis added)].
In a separate provision, Ashley indemnified Fair and Holcombe Enterprises for any claim brought by EPA up to $2.7 million with $200,000 of the first $400,000 to be paid by the Holcombe and Fair Parties. [PCS Ex. 35 at § 5(d)]. This provision is inapplicable in this case because this case was not brought by EPA.
Prior to trial, the court denied the Holcombe and Fair Parties' motion for summary judgment based upon the release from Ashley because the scope of the release was unclear. [Entry 385]. However, Ashley does not contest that the agreement has the effect of preventing Ashley from recovering money from any of the Holcombe and Fair Parties to clean up the Site. Ashley's manager, Robert Clement, testified that the intent of the indemnity was that Ashley would not be able to sue Holcombe, Fair, or Holcombe Enterprises for any environmental contamination claims. [Trial Tr. 276:7-17, 276:21-277:2]. Counsel for Ashley stipulated on the trial record that:
Ashley does not dispute that its release of Holcombe and Fair was intended to extend to all of the Holcombe and Fair Parties, that is to Mr. Holcombe individually, as well as the Holcombe Enterprises, L.P. and to Mr. Henry Fair, and to all of the sites formerly owned by Holcombe and Fair. So our release extends to all of those parties and to all of that property.
[Tr. at 1410:24-1411:7]. PCS has no objection to Ashley bearing financial responsibility for any remediation costs allocated to the Holcombe and Fair Parties. [Trial Tr. 3220:8-10].
The court notes that in many CERCLA cases, courts have found release and indemnification agreements to shield parties from financial responsibility when the release language was much less specific than in the present case. In Dent, this court found that under South Carolina law, a lease agreement that the lessee would save the lessor harmless from "any and all claims arising from [the lessor's] use of the leased property" covered CERLCA claims even though the agreement was entered into prior to the enactment of CERCLA. 993 F. Supp. at 939-40. In Rodenbeck, the Northern District of Indiana upheld a contractual provision which provided that one of the parties would be released "from all claims and obligations of any character or nature whatsoever arising out of or in connection with said agreement" as being sufficient to indemnify against claims arising under CERCLA. 742 F. Supp. at 1448. In Village of Fox River Grove, the Northern District of Illinois held that a general release between a CERCLA plaintiff and a third-party defendant, which was entered into prior to the enactment of CERCLA, barred third-party contribution claims. 806 F. Supp. at 785. In Joslyn Mfg. Co. v. Koppers, 40 F.3d 750 (5th Cir. 1994), the Fifth Circuit found that broad language in indemnification agreements indicated that the agreements were intended to cover all forms of liability, including liability under CERCLA, even though environmental liability under CERCLA was not contemplated at the time of contracting. Id. at 754. See also Kerr-McGee Chem. Corp. v. Lefton Iron Metal Co., 14 F.3d 321, 327 (7th Cir. 1994) (recognizing that a party may contract to indemnify another for environmental liability even though CERCLA was not in existence at the time of contracting); Jones-Hamilton Co. v. Kop-Coat, Inc., 750 F. Supp. 1022, 1026-27 (N.D. Cal. 1990) (holding that an indemnification agreement that encompassed "all losses, damages and costs" resulting from any violation of law was sufficient to release the indemnitee from CERCLA liability even though the agreement was entered into prior to the enactment of CERCLA and did not specifically mention CERCLA).
The court finds that the language of the November 24, 2003, Fourth Amendment to the Contract of Sale among Holcombe Enterprises, Fair, and Ashley was intended to release all of the Holcombe and Fair Parties from liability to Ashley for CERCLA claims related to the Site. The indemnity at issue expressly states that the release includes response costs incurred by Ashley under the "Environmental Laws," which term is defined in the indemnity to include CERCLA. Because the Holcombe and Fair Parties have been released from liability by Ashley, the Holcombe and Fair Parties have been discharged "from all liability for contribution to any other tortfeasor." See S.C. Code § 15-38-50. The Holcombe and Fair Parties' Motion for Judgment as a Matter of Law [Entry 520] is granted. All claims against the Holcombe and Fair Parties for contribution are dismissed. The court finds that Ashley must bear any allocation assessed against the Holcombe and Fair Parties.
3. RHCE's Motion for Judgment on Partial Findings
At issue in RHCE's motion for judgment on partial findings is whether the RHCE parcel is contaminated and requires remediation, and whether RHCE is a PRP under CERCLA § 107.
i. Whether RHCE's Property is Contaminated and Requires Remediation
RHCE contends that because its parcel is zoned heavy industrial and is not contaminated above heavy industrial remediation levels, it need not be remediated. As a result, RHCE contends that it cannot not be held liable for response costs. The court disagrees.
Under CERLCA, EPA has the authority to create and adopt a remediation plan. See 42 U.S.C. § 9617. While EPA has not yet adopted a final remediation plan for the Site, EPA's proposed remediation plan uses the residential standards for lead and arsenic as its remediation levels. [PCS Ex. 216 at 60]. EPA's proposed remediation plan includes remediation of RHCE's parcel because it is contaminated with lead and arsenic above the residential standards. [PCS Ex. 120 at 3; PCS Ex. 226 at PCS002_002580-81; PCS Ex. 227 at A 00287, A 00292, Fig 3-3a 3-4a]. Regardless of the RHCE parcel's zoning classification, EPA has the authority to decide and has decided that RHCE's parcel requires remediation. 42 U.S.C. § 9617.
ii. Whether RHCE is a PRP
RHCE argues that it cannot be held liable for contribution under CERCLA § 113 because it does not fall into any of the four categories of PRPs listed in 42 U.S.C. § 9607(a), CERCLA § 107(a). RHCE specifically argues that 1) it is a lessee, not an owner of the property; and 2) it cannot be held liable as an operator of the property because no release of a hazardous substance occurred on its parcel during its tenancy.
In making its contribution claim against RHCE under § 113(f) of CERCLA, PCS must prove that RHCE is a responsible party under § 107(a) of CERCLA and demonstrate RHCE's equitable share of costs. Minyard Enter., Inc. v. Se. Chem. Solvent Co., 184 F.3d 373, 385 (4th Cir. 1999). The four categories of PRPs under CERCLA are:
(1) the owner and operator of a facility;
(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which 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, incineration vessels, or sites selected by such person.42 U.S.C. § 9607(a)(1)-(4) (CERCLA § 107(a)(1)-(4)). RHCE is currently a lessee of two acres of land on the Site. Thus, the issue is whether RHCE is an "owner" or "operator" under CERCLA § 107(a)(1) or (2). The statutory definition of "owner and operator" refers to "any person owning or operating [a] facility." 42 U.S.C. § 9601(20)(A).
Although § 9607(a)(1) (CERCLA § 107(a)(1)) is written in the conjunctive, it has been interpreted in the disjunctive. See, e.g., Long Beach Unified Sch. Dist. v. Dorothy B. Godwin California Living Trust, 32 F.3d 1364, 1367 (9th Cir. 1994); Commander Oil Corp. v. Barlo Equip. Corp., 215 F.3d 321, 328 (2d Cir. 2000) (stating that "owner" liability and "operator" liability are "two statutorily distinct categories of potentially responsible parties.").
Several district courts have found that lessees can be held liable as owners of facilities. See, e.g., Louisiana v. Braselman Corp., 78 F. Supp. 2d 543, 551 (E.D. La. 1999) ("Even though [defendant] did not have title to the property, [defendant] was a lessee who asserted control over the property, and, as such, was an `owner' under CERCLA § 107(a)(1)."); Burlington N. Ry. Co. v. Woods Indus., Inc., 815 F. Supp. 1384, 1391-92 (E.D. Wash. 1993) ("Since [defendant] asserted control over the use of the property, [defendant] is an `owner' for purposes of CERCLA § 107(a)(1) even though it is only a lessee."); Pape v. Great Lakes Chem. Co., No. 93 C 1585, 1993 WL 424249 (N.D. Ill. Oct. 19, 1993) (". . . the lessee of a site where a release or threatened release of hazardous substances occurred is considered the `owner' for purposes of CERCLA liability."); United States v. South Carolina Recycling and Disposal, Inc., 653 F. Supp. 984, 1003 (D.S.C. 1986) (holding that a lessee that operated a landfill was an "owner" under CERCLA because the lessee "had control over and responsibility for, the use of the property and, essentially, stood in the shoes of the property owner"). However, the Second Circuit in addressing this issue stated: "while the imposition of liability [on lessees] is surely correct, imposing owner liability instead of operator liability threatens to conflate two statutorily distinct categories of potentially responsible parties." See Barlo, 215 F.3d at 328. The court agrees with the Second Circuit that interpreting lessees as owners for the purposes of CERCLA makes CERCLA's imposition of liability on operators redundant and is contrary to the intention of the drafters of CERCLA. Thus, RHCE, as a lessee, is not an "owner" for the purpose of imposing liability under CERCLA.
The court next considers whether RHCE is an "operator" for the purpose of imposing liability under CERCLA. In United States v. Bestfoods, 524 U.S. 51 (1998), the Supreme Court addressed the issue of whether parent corporations could be held liable under CERCLA for operating facilities that appeared to be under the control of subsidiaries, and clarified when a party can be held liable as an "operator" under CERCLA § 9607(a)(2). See id. at 65-67. The Court stated: "under CERCLA, an operator is simply someone who directs the workings of, manages, or conducts the affairs of a facility." Bestfoods, 524 U.S. at 66. The Court went on to state that because of "CERCLA's concern with environmental contamination, an operator must manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations." Id. at 66-67.
The Bestfoods decision does not make clear whether the requirement that an operator must conduct operations related to pollution applies also to § 9607(a)(1). At least two federal courts have interpreted Bestfoods to require that all operators held liable for response costs under CERCLA must have conducted operations related to pollution. See Barlo, 215 F.3d at n. 3 (stating that under no version of facts could the defendant be an operator under § 9607(a)(1) [CERCLA § 107(a)(1)] because it did not manage, direct or conduct operations specifically related to pollution); United States v. Newmont U.S.A. Ltd., No. CV-05-020-JLQ, 2007 WL 2477361, at *2 (E.D. Wash. Aug. 28, 2007) (finding that the Bestfoods interpretation of operator liability applies to both CERCLA § 107(a)(1) and (2)).
The District Court of Maryland, however, found that operators under § 9607(a)(1) need not conduct operations related to pollution, stating: "As a current owner and operator of the site where hazardous substances have been released, [the plaintiff] is itself a potentially responsible party (PRP), even if [the plaintiff] did not own the property at the time the hazardous waste disposal occurred." Sherwin-Williams Co. v. ARTRA Grp., Inc., 125 F. Supp. 2d 739, 745 (D. Md. 2001) (citing 42 U.S.C. § 9607(a)(1); Trinity Amer. Corp. v. EPA, 150 F.3d 389, 395 (4th Cir. 1998)); see also New Jersey Turnpike Auth. v. PPG Indus., Inc., 16 F. Supp. 2d 460 (D.N.J. 1998) ("Compare CERCLA, 42 U.S.C. § 9607(a)(1) and (2) (including in its definition of PRP both the person who owned or operated the facility at the time of the disposal of a hazardous substance and the current owner or operator of a facility, regardless of when the disposal took place).") (decided prior to Bestfoods).
The Fourth Circuit's ruling in Trinity Amer. Corp. v. EPA, 150 F.3d 389, 395 (4th Cir. 1998), indicates that CERCLA § 107(a)(1) does not require a disposal of hazardous materials by a current operator for liability to be imposed. In Trinity, a case decided after the Bestfoods decision, the Fourth Circuit stated that current owners need not have owned the property when pollution took place. Id. at 395. This implies that the same is true of current operators because they are listed in the same statutory category, § 9607(a)(1). There is no reason to distinguish between current owners and current operators when it comes to the extent of liability. The court finds that current operators of a CERCLA facility need not direct operations related to pollution to be held liable for response costs under CERCLA § 107(a)(1). See § 9607(a)(1). The court's conclusion is consistent with the mandate that courts construe CERCLA's provisions broadly to avoid frustrating the remedial purpose of the statute. See Westfarm Assoc. Ltd. P'ship v. Washington Suburban Sanitary Comm'n, 66 F.3d 669, 677 (4th Cir. 1995) ("CERCLA is a comprehensive remedial statutory scheme, and [] the courts must construe its provisions liberally to avoid frustrating the legislature's purpose.").
Pursuant to Bestfoods, CERCLA § 107(a)(2), unlike § 107(a)(1), requires that a former operator direct operations related to pollution. 524 U.S. at 66-67. This distinction from § 107(a)(1) conforms with the text of CERCLA because in order for a party to be liable for response costs under § 107(a)(2), it must have owned or operated the facility "at the time of disposal of any hazardous substance." 42 U.S.C. § 9607(a)(2); see also Nurad, Inc. v. William E. Hooper Sons Co., 966 F.2d 837, 842 (4th Cir. 1992) (a tenant can be held liable as "operator" under CERCLA § 107(a)(2) if it had "authority to control operations or decisions involving the disposal of hazardous substances at the Site" whether or not it exercised that authority).
The court turns to the issue of whether RHCE is a current "operator" of the Site and therefore a PRP. The record indicates that RHCE operates a drop yard on the Site. Because RHCE directs the day-to-day workings of the parcel it leases, RHCE is a current operator of the Site pursuant to CERCLA § 107(a)(1) and is a PRP.
In addition, under CERCLA § 107(a)(2), RHCE can be held liable as an operator of the Site at a time when the disposal of hazardous wastes occurred. The term "disposal" means the
discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.42 U.S.C. § 6903(3); 42 U.S.C. § 9601(29). The Fourth Circuit has ruled that "§ 9607(a)(2) imposes liability not only for active involvement in the `dumping' or `placing' of hazardous waste at the facility, but for ownership of the facility at a time that hazardous waste was `spilling' or `leaking.'" Nurad, 966 F.2d at 846. Disposals are not limited to one-time occurrences, but instead include times when hazardous materials are moved or dispersed. See Tanglewood E. Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1573 (5th Cir. 1988); Kaiser Aluminum Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1342 (9th Cir. 1992). Specifically, "a `disposal' may occur when a party disperses contaminated soil during the course of grading and filling a construction site." Redwing Carriers, Inc. v. Saraland Apartments, 94 F.3d 1489, 1511-12 (11th Cir. 1996).
The RHCE parcel is currently contaminated with lead and arsenic above EPA's proposed residential remediation levels. [PCS Ex. 120 at 3; PCS Ex. 216 at A 00861; PCS Ex. 226 at PCS002_002580-81; PCS Ex. 227 at A 00287, A 00292, Fig 3-3a 3-4a; Trial Tr. 672:17-673:2, 1875, 1879:20-1880:24, 1597:4-9]. Black and Veatch's final feasability study indicates that most of the RHCE property will need to be remediated due to arsenic contamination. [PCS Ex. 226 at PCS002_002580-81]. In 1991, RCHE commissioned the construction of a detention pond, two asphalt driveways, and grading and proof rolling of the parcel. Because the majority of the RHCE parcel is currently contaminated, the court finds that the construction work commissioned by RHCE spread the contamination on the Site and that such action constitutes a "disposal" under CERCLA. Thus, RHCE is a PRP pursuant to CERCLA § 107(a)(2). RHCE's Motion for Judgment on Partial Findings [Entry 521] is denied.
B. Ashley's CERCLA § 107(a) Claim
"Congress enacted CERCLA to protect public health and the environment from inactive hazardous waste sites." Westfarm Assoc. Ltd. P'ship v. Washington Suburban Sanitary Comm'n, 66 F.3d 669, 677 (4th Cir. 1995) (citing H.R. Rep. No. 1016(I), 96th Cong., 2d Sess. 1 (1980), reprinted in 1980 U.S.C.C.A.N. 6119, 6119). "CERCLA is a comprehensive remedial statutory scheme, and [] the courts must construe its provisions liberally to avoid frustrating the legislature's purpose." Westfarm, 66 F.3d 669, 677 (4th Cir. 1995). CERCLA actions can be brought by the government or by private parties. See 42 U.S.C. § 9607(a).
To succeed in its claim against PCS under § 107(a) of CERCLA, Ashley must prove the following: 1) that the defendant [PCS] falls within one of the four classes of persons subject to CERCLA liability, 42 U.S.C. § 9607(a); 2) that a CERCLA "facility" exists, 42 U.S.C. § 9601(9); 3) that a "hazardous substance" has been "released" (or threatens to be released) from the defendant's facility, 42 U.S.C. §§ 9601(14), (22); 42 U.S.C. § 9607(a)(4); and 4) that the release or threatened release has caused the plaintiff to incur response costs that are "`necessary' and `consistent with the national contingency plan,'" 42 U.S.C. § 9607(a)(4).
The term "hazardous substance" is defined in the Act as any substance that appears on any one of six statutory lists of substances. See 42 U.S.C. § 9601(14). Based on sampling and analysis conducted by Ashley, PCS, and EPA, "hazardous substances," as defined pursuant to § 101(14) of CERCLA, 42 U.S.C. § 9601(14), including but not limited to, arsenic and lead, are present in the soil and groundwater at the Site. 40 C.F.R. § 302.4, Table at 50. A "facility" is "any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located." 42 U.S.C. § 9601(9). Because there are hazardous materials on the Site, the Site is a "facility" as defined by CERCLA.
As was previously noted, the list of PRPs includes "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." 42 U.S.C. § 9607(a)(2). The record makes clear that CNC, predecessor to PCS, released arsenic and lead on the Site. Thus, PCS is a "person" subject to CERCLA liability because it is the successor of a corporation that owned and operated the facility when hazardous substances were disposed of. Entry 118 (PCS found to be successor to CNC; United States v. Carolina Transformer Co., 978 F.2d 832, 837 (4th Cir. 1992).
To recover response costs, Ashley must show that its claimed response costs were "necessary" and "consistent with the national contingency plan [NCP]." 42 U.S.C. § 9607(a)(4)(B). "Costs are `necessary' if incurred in response to a threat to human health or the environment." IIIT Indus., Inc. v. Borgwarner, Inc., File No. 1:05-CV-674, 2010 WL 1172533, at *26 (W.D. Mich. Mar. 24, 2010) (citing Reg'l Airport Auth. of Louisville v. LFG, LLC, 460 F.3d 697, 703 (6th Cir. 2006)). Ashley's response costs in this case, which involved conducting Site assessments and submitting a remediation plan to EPA, were necessary to protect human health and the environment. The record demonstrates that the acidic conditions on the property and the presence of arsenic and lead are harmful to the environment and pose a danger to human health.
A response action is "consistent with the NCP" if the action is in "substantial compliance" with 40 C.F.R. § 300.700(c)(5)-(6), and results in a "CERCLA-quality cleanup." 40 C.F.R. § 300.700(c)(3)(I). "An `immaterial or insubstantial' deviation, however, will not result in a cleanup that is `not consistent' with the NCP." IIIT Indus., 2010 WL 1172533, at * 26 (citing 40 C.F.R. § 300.700 (c)(4)).
Litigation-related costs are not recoverable under CERCLA. Young v. United States, 394 F.3d 858, 865 (10th Cir. 2005); Ellis v. Gallatin Steel Co., 390 F.3d 461, 482 (6th Cir. 2004); Dedham Water Co. v. Cumberland Farms Dairy, Inc., 972 F.2d 453, 461 (1st Cir. 1992). "Costs otherwise necessary and consistent with the NCP may be unrecoverable if the steps taken were extravagant or otherwise unreasonably costly." Nw. Mut. Life Ins. Co. v. Atl. Research Corp., 847 F. Supp. 389, 401 (E.D. Va. 1994).
The court has reviewed the submissions of Ashley in pursuing the remediation of the property. Ashley has separated out its litigation costs and does not seek recovery of these expenditures. [ See Ash. Ex. 247]. The court finds that the past response costs incurred by Ashley were consistent with the NCP and were reasonable. [Ash Ex. 227; Trial Tr. 176:18-24, 584:25-587:2, 611:7-615:3, 1295:11-1296:7]. The court finds that Ashley is entitled to recover its past response costs. With regard to future response costs, the court notes that there is no final remediation plan for the Site that has been approved by EPA. However, a government-approved remediation plan is not a prerequisite for the court's entry of an order allocating liability allocation. Dent, 993 F. Supp. at 949. To the extent that it later becomes disputed whether the final remediation plan for the Site is consistent with the NCP, the court will retain jurisdiction over the case to decide this issue.
C. Divisibility of Harm
Liability under CERCLA § 107(a) is joint and several if the harm is indivisible. United States v. Monsanto Co., 858 F.2d 160, 171 (4th Cir. 1988). Divisibility is a legal defense to joint and several liability under CERCLA in which a party makes "a causation-based argument that the cleanup costs at a single CERCLA facility should be divided between [a defendant] and another responsible party." IIIT Indus., 2010 WL 1172533, at *24. PCS seeks a court finding that the harm at the Site is divisible. The burden is on PCS in seeking to avoid joint and several liability to prove that a reasonable basis for apportionment of the remediation costs exists. Burlington Northern, 129 S.ct. 1870, 1880-81 (2009).
The scope of liability under CERCLA § 107, 42 U.S.C. § 9607, is determined from "traditional and evolving principles of common law." United States v. Chem-Dyne Corp., 572 F. Supp. 802, 808 (S.D. Ohio 1983); see also Burlington Northern, 129 S.ct. at 1881. "The universal starting point for divisibility of harm analyses in CERCLA cases is § 433A of the Restatement (Second) of Torts." Burlington Northern, 129 S.ct. at 1881 (internal citations omitted).
Under the Restatement, "when two or more persons acting independently caus[e] a distinct or single harm for which there is a reasonable basis for division according to the contribution of each, each is subject to liability only for the portion of the total harm that he has himself caused. . . . But where two or more persons cause a single and indivisible harm, each is subject to liability for the entire harm.Burlington Northern, 129 S.ct. at 1881 (citing Restatement (Second) of Torts, §§ 433A, 881 (1976)). Comment d to § 433A of the Restatement (Second) of Torts indicates that some harms are capable of division on a reasonable and rational basis when the evidence provides a divisor over which the harm can be divided. Steve C. Gold, Dis-Jointed? Several Approaches to Divisibility After Burlington Northern, 11 VT. J. ENVTL. L. 307, 332 (2009) (Restatement (Second) of Torts, § 433A cmt. d).
While comment c to § 875 of the Restatement indicates that a plaintiff must prove that each defendant was a "substantial factor" in causing a single harm in order for joint and several liability to attach, courts have not imposed this requirement in CERCLA cases due to "inconsistency with CERCLA's relaxed causation requirement." See United States v. Atchison, Topeka Santa Fe Ry. Co., Nos. CV-F-92-5068 OWW, CV-F-96-6226 OWW, CV-F-96-6228, 2003 WL 25518047, at *82 (E.D. Cal. July 15, 2003).
Section 443 A, comment d states:
There are other kinds of harm which, while not so clearly marked out as severable into distinct parts, are still capable of division upon a reasonable and rational basis, and of fair apportionment among the causes responsible. Thus where the cattle of two or more owners trespass upon the plaintiff's land and destroy his crop, the aggregate harm is a lost crop, but it may nevertheless be apportioned among the owners of the cattle, on the basis of the number owned by each, and the reasonable assumption that the respective harm done is proportionate to that number. Where such apportionment can be made without injustice to any of the parties, the court may require it to be made. Such apportionment is commonly made in cases of private nuisance, where the pollution of a stream, or flooding, or smoke or dust or noise, from different sources, has interfered with the plaintiff's use or enjoyment of his land. Thus where two or more factories independently pollute a stream, the interference with the plaintiff's use of the water may be treated as divisible in terms of degree, and may be apportioned among the owners of the factories, on the basis of evidence of the respective quantities of pollution discharged into the stream.
Restatement (Second) of Torts § 433A cmt. d
Not all harms can be apportioned. Burlington Northern, 129 S.ct. at 1881. A party invoking the doctrine of divisibility is required to show that "(a) there are distinct harms, or (b) there is a reasonable basis for determining the contribution of each cause to a single harm." IIIT Indus., 2010 WL 1172533, at *24; see also Burlington Northern, 129 S.ct. at 1881 (citing Restatement (Second) of Torts § 433A(1)(b) at 434 (1963-1964)).
Proving divisibility of harm at a CERCLA site in accordance with the Restatement approach can be difficult because of "the commingling of wastes, the migration of contamination over time, and other complex fact patterns." 8 Bus. Com. Litig. Fed. Cts. § 95:24 (2d ed.) (citing United States v. Ottati Goss, Inc., 630 F. Supp. 1361 (D.N.H. 1985)). "Where causation is unclear, courts should not hasten to `split the difference' in an attempt to achieve equity. Courts lacking a reasonable basis for dividing causation should avoid apportionment altogether by imposing joint and several liability." Atchison, 2003 WL 25518047, at *84 (citing United States v. Hercules, Inc., 247 F.3d 706, 718-19 (8th Cir. 2001); United States v. Township of Brighton, 153 F.3d 307, 319 (6th Cir. 1998)); see also Burlington Northern, 129 S.ct. at 1881 (citing Restatement (Second) of Torts § 433A, cmt i. at 440 (1963-1964)) (when two or more causes produce a single, indivisible harm, "courts have refused to make an arbitrary apportionment for its own sake, and each of the causes is charged with responsibility for the entire harm.").
Comment i to § 433A indicates that certain kind of harms are incapable of reasonable division and that courts should not make arbitrary apportionments in such cases. Restatement (Second) of Torts, § 433A, cmt. i. As examples of such harms, Comment i lists death, a broken leg, the destruction of a house by fire, and the sinking of a barge.
The divisibility issue presents an intensely factual analysis. See Alcan, 964 F.2d at 269. Divisibility can be based on a variety of factors including volumetric, chronological, or geographic considerations, as well as contaminant-specific considerations. IIIT Indus., 2010 WL 1172533. (citing Burlington Northern, 129 S.ct. at 1883). Equitable considerations are not taken into account in the apportionment analysis. Burlington Northern, 129 S.ct. at 1882 n. 9.
Prior to the Supreme Court's ruling in Burlington Northern, the burden of proving divisibility was considered high and defendants were rarely successful establishing this defense. See, e.g., United States v. Capital Tax Corp., 545 F.3d 525, 535 n. 9 (7th Cir. 2008) ("[D]ivisibility is a `rare scenario.'"); Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 934 n. 4 (8th Cir. 1995) (stating that it is difficult to establish that harm is divisible); Matter of Bell Petroleum Servs., Inc., 3 F.3d 889, 901 (5th Cir. 1993) (defendants "rarely succeed" in proving a reasonable basis for apportionment); Alcan, 964 F.2d at 269 ("Alcan's burden in attempting to prove the divisibility of harm . . . is substantial, and the analysis will be factually complex. . . ."); O'Neil v. Picillo, 883 F.2d 176, 178-79 (1st Cir. 1989) ("[P]ractical effect of placing the burden on defendants has been that responsible parties rarely escape joint and several liability. . . ."); United States v. Washington State Dep't of Transp., No. C05-5447RJB, 2007 WL 445972, at *26 (W.D. Wash. 2007) (burden of providing a reasonable basis for apportioning harm is high). In May of 2009, however, the Supreme Court reinstated a district court's finding of divisibility after a reversal by the Ninth Circuit on this issue. Burlington Northern, 129 S.ct. at 1882-83. The Supreme Court found that a "rough calculation" based on percentages of land area, time of ownership, and types and amounts of hazardous materials requiring remediation, including a fifty percent margin of error was supported by the record and sufficiently reasonable to provide a reasonable basis for apportionment. Id. at 1882-83.
Some legal commentary and case law have interpreted Burlington Northern to lessen the burden on defendants seeking to avoid joint and several liability by demonstrating a reasonable basis for apportionment. See Superfund and Natural Res. Damages Litig, 2009 ABA Env't Energy Resources L.: Year in Rev. 132; ABA Envtl, Energy, and Res. Law: The Year in Review, Environmental Committee, at 138 (2009) ( Burlington Northern "essentially lowered the evidentiary standard for divisibility."); Kevin A. Gaynor, Benjamin S. Lippard, Sean M. Lohnquist, Unresolved CERCLA Issues After Atlantic Research and Burlington Northern, SR053 ALI-ABA 77, 91 (2010) (stating that the Supreme Court in Burlington Northern rejected the approach making it nearly impossible for a CERCLA PRP to demonstrate divisibility and expanded the situations in which divisibility will allow CERCLA litigants to avoid joint and several liability); Reichhold, Inc. v. United States Metals Ref. Co., No. 03-453 (DRD), 2009 U.S. Dist. LEXIS 52471, at *131-33 (D.N.J. 2009) (apportioning liability for the single harm of metals contamination on a portion of property when two causes of the contamination were both sufficient to require the proposed remediation).
In United States v. Iron Mountain Mines, Inc., No. 91-0768-JAM-JFM, 2010 WL 1854118 (E.D. Cal. May 6, 2010), however, the District Court for the Eastern District of California found that Burlington Northern was not a change in the law, but simply a reiteration of established law applied to the specific facts of the case before the Court. Id. at 3. The Iron Mountain court also stated that Burlington Northern did not mandate that district courts apportion harm. Id. The court concurs with the Iron Mountain Mines court that Burlington Northern did not change the law with regard to
divisibility, but merely recognized a reasonable basis for apportionment based on the facts of a particular case.
The court finds that the contamination of the Site, which has caused the need for remediation constitutes a single harm. See United States v. Monsanto Co., 858 F.2d 160, 172-73 (4th Cir. 1988) (finding that environmental contamination on a piece of property requiring remediation constitutes a single harm). The remedy selected by EPA to clean up the contaminated soil and sediments at the Site involves excavation and off-site disposal. The volume of contaminated soil is directly related to how much the remediation is going to cost. [Trial Tr. 701:6-11]. The predominant factors that contribute to the volume of contaminated soil and thus drive the cost of the remediation are the volume of hazardous materials and the spread of these hazardous materials throughout the Site. [Ash. Ex. 162 at 12; Trial Tr. 812:6-11, 1587:9-15, 1943:11-15]. The question becomes, then, whether the harm at the Site is divisible based upon how much contamination each party contributed to the Site and how much soil each party caused to be included in the remediation by spreading the contamination throughout the Site. In an attempt to meet its burden of demonstrating divisibility, PCS presented the court with a total of five proposed methods of apportionment. In determining whether the harm at the Site is divisible, the court will address each of PCS's proposals and will consider any other possible bases for apportionment contained in the record.
1. Method 1
PCS's first method of apportionment is based upon the amount of fill or other material added to the Site during each ownership period. PCS's expert Grip used aerial photography to calculate the amount of material added to the Site as of certain dates and used these calculations to allocate shares of the remediation cost to Ross, PCS, and the Holcombe and Fair Parties. Grip then allocated shares of responsibility to RHCE and Allwaste based upon the size of their parcels and the amount of ROC to be removed.
The court finds that this method does not provide a reasonable basis for apportionment. PCS has not shown a reasonable relationship between the addition of material to the Site and the spread of contamination on the Site. No evidence has been presented to the court indicating that all new material identified in aerial photography was contaminated. Furthermore, the aerial photography presented to the court does not detect contamination. This method also fails to take into account the spread of contamination already present on the Site to new areas of the Site, which is one of the main factors contributing to the cost of the remediation. A method that does not take both of the main factors that have contributed to the cost of the remediation into account does not reasonably account for the harm at the Site.
The court also notes that Grip changed his methodology in the middle of his analysis to assign shares of the allocation to RHCE and Allwaste. [Cf. PCS Ex. 4A; Trial Tr. 2369:12-15]. This change in methodology appears to hold more than one party accountable for the some of the same remediation costs. Because Grip's change in methodology results in double counting of some remediation costs, the court does not accord great weight to Grip's calculations. PCS's first method of apportionment is not reasonable.
2. Method 2
PCS's second method of apportionment is based upon the volume of contaminants introduced to the Site. PCS argues that data in the record allows the court to determine the approximate amount of arsenic and lead Ross and CNC each contributed to the Site. The court finds, however, that this method of apportionment is not a reasonable basis for apportionment in this case for three reasons. First, the record indicates that much of the remediation in this case is necessary because of the spread of the contamination throughout the Site through earthmoving and other development activities. As previously stated, an apportionment that fails to take into account the spread of contamination is not reasonable on the facts of this case. Second, the presence of other phosphate fertilizer plants operating in the area of the Site before Planters began operations indicates that volumetric calculations may overstate the amount of pyrite slag Planters introduced to the Site. The record shows that pyrite slag was used as fill and for road stabilization around the turn of the century, indicating that pyrite slag may have been present on the Site prior to Planters' ownership. Third, Grip withdrew his volumetric calculations at trial because they were inaccurate. [Trial Tr. 2118:1-13].
3. Method 3
PCS's third method of apportionment is based upon the period of time Planters and CNC each operated the fertilizer plant. The court finds that although this method of apportionment was part of the court's analysis in Burlington Northern, it is not reasonable based upon the facts in this case. First, apportioning the amount of contaminants based upon years of operations without data on the approximate production levels of the fertilizer plant during these years could result in an apportionment that is not reasonably accurate. While the record makes clear that Planters operated the fertilizer plant for many more years than CNC, Planters owned the plant during the Great Depression, indicating that productions levels may have been low during some years. Apportioning harm based upon years of operation without data on the approximate production levels throughout the years would be unreasonable.
Second, while this method takes into account the introduction of lead, arsenic, and acid to the Site, it fails to take into account the subsequent spread of the contamination at the Site. Because the spread of the contamination is a major factor driving the remediation, the failure to take this factor into account makes this method of apportionment is unreasonable.
4. Method 4
PCS's fourth method of apportionment is based upon an analysis of the parties who first physically disturbed the different portions of the remediation area. Grip used aerial photography to determine which party first engaged in filling, grading, or other development activities on the Site. Grip then used this information to determine the percent of the remediation area attributable to each party. [PCS Ex. 4A].
The court finds that PCS's fourth method of apportionment also fails to provide a reasonable basis for apportionment. First, this method fails to take into account the original sources of the contaminants, which is one of the driving factors of the remediation. Second, the use of aerial photography to determine when areas of the Site were first impacted by contamination is problematic because aerial photography cannot show when contaminants were moved across the Site; it can only show when earthmoving activities took place. Third, analyzing areas of first impact does not take into account the volume of soil affected by earthmoving activities. Subsequent, more invasive, earthmoving activities in an area where earthmoving has already occurred may disturb a greater volume of soil, which would not be taken into account in this calculation. The court finds that PCS's fourth method of apportionment is not reasonable.
5. Method 5
At trial, PCS argued that the court could apportion liability using Kristen Stout's ("Stout") analysis in which she identified all of the contaminated soil samples at the Site she believed were potentially impacted by CNC. [Ash. Ex. 226; Trial Tr. 1136:6-9]. The court finds that this method is not a reasonable basis for apportionment because the number of contaminated soil samples that Stout attributes to CNC is not reasonably related to the volume of contaminated soil on the Site. No evidence has been presented to the court as to why the number of soil samples taken on the Site is a reasonable proxy for the total volume of contaminated soil.
6. Conclusions With Regard to Divisibility
While the harm at the Site is theoretically divisible based upon: 1) how much contamination each party contributed to the Site, and 2) how much soil each party caused to be included in the remediation area by spreading the contamination throughout the Site, the court finds that the record does not provide the court with a reasonable basis for apportioning this harm.
Although PCS attempted to provide the court with a reasonable basis for determining the volume of contaminants introduced to the Site by Planters and CNC, these calculations were withdrawn at trial because they were inaccurate. [Trial Re. 2118:1-2119:8]. However, even if the court had reasonably accurate calculations of the volume of contaminants released on the Site by Planters and CNC, this is only half of the equation; the other main factor contributing to the cost of the remediation is the spread of contamination across the Site. PCS has attempted to provide the court with a basis for determining the spread of contamination by calculating the amount of new material added to the Site by each party and by analyzing when each part of the Site was first impacted by earthmoving activities. Neither of these calculations, however, provides a reasonable estimate of the additional volume of soil contaminated by earthmoving and development activities. First, there is no way of knowing whether the new material added to the Site, which was identified through aerial photography, was contaminated. Second, looking only at areas of first impact does not take into account subsequent, more invasive impacts that increased the depth of contamination at the Site.
While the record reveals that construction and earthmoving activities occurred throughout the history of the Site, the information in the record provides the court with no reasonable basis for determining how much each party contributed to the volume of contaminated soil through such activities. Without a divisor over which to apportion the spread of contamination across the Site, the court cannot reasonably apportion the cost of remediating the Site among the parties. In addition, evidence in the record suggests that the acidic (low pH) conditions on the Site led to the migration of lead and arsenic through the soil. This consequence of commingling contaminants on the Site indicates that the volume of hazardous materials and the amount of earthmoving and construction activities on the Site do not have a direct cause/effect relationship with the amount of harm at the site. See Monsanto Co., 858 F.2d at 172-73 (finding that the volume of contaminants deposited on a site was not a reasonable basis for apportionment when no evidence of the characteristics of the contaminants and how they might interact was introduced). The court finds that there is no reasonable basis for apportioning the harm at the Site and that therefore the harm at the Site is indivisible. Thus, the court will address the parties' contribution claims.
D. Contribution
1. Introduction
Title 42, United States Code, Section 9613(f) enables "[a]ny person [to] seek contribution from any other person who is liable or potentially liable under section 9607(a) [CERCLA § 107(a)] of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title." 42 U.S.C. § 9613(f) (CERCLA § 113(f)). A party making a claim under CERCLA § 113(f) bears the burden of proving: 1) that the defendant is a responsible party under § 107(a) of CERCLA; and 2) the defendant's equitable share of costs. Minyard, 184 F.3d at 385. With regard to responsibility under § 107(a), the Court has already determined that the Site is a "facility," that there has been a release of a hazardous substance at the facility, and that the releases have caused Ashley to incur response costs. Thus, PCS need only prove that each party being sued for contribution is a PRP. IIIT Indus., 2010 WL 1172533, at *35.
Contribution claims require courts to make an equitable allocation of responsibility among the liable parties. IIIT Indus., 2010 WL 1172533, at 37. In enacting the contribution section of CERCLA, Congress was concerned "that the relative culpability of each responsible party be considered in determining the proportionate share of costs each must bear." Monsanto, 858 F.2d at 173 n. 29.
In resolving a contribution claim, the court allocates response costs among the liable parties using such equitable factors as it deems appropriate. 42 U.S.C. § 9613(f); see also Weyerhaeuser Co. v. Koppers Co., Inc., 771 F. Supp. 1420, 1426 (D. Md. 1991); Dent, 993 F. Supp. 923. The Gore Factors are six equitable factors derived from the legislative history of CERCLA that are relevant in most CERCLA cases. Dent, 993 F. Supp. at 950. The Gore Factors are: 1) the ability of the parties to demonstrate that their contribution to a discharge, release, or disposal of a hazardous waste can be distinguished; 2) the amount of hazardous waste involved; 3) the toxicity of the hazardous waste involved; 4) the degree of involvement by the parties in the generation, transportation, treatment, storage, or disposal of the hazardous waste, especially waste driving the remediation; 5) the degree of care exercised by the parties with respect to the hazardous waste concerned, taking into account the characteristics of such hazardous waste; and 6) the degree of cooperation by the parties with Federal, State, or local officials to prevent harm to the public health or the environment. Dent, 993 F. Supp. at 950. Other courts have also considered: 1) the economic benefit to each party associated with releases of hazardous wastes, and 2) each party's ability to pay its share of the cost. See Weyerhaeuser, 771 F. Supp. at 1427; United States v. Davis, 31 F. Supp. 2d 45, 63 (D.R.I. 1998). Liability under § 113(f) is several, not joint and several. Minyard, 184 F.3d at 385. The court will proceed by considering the defenses raised by each party and weighing the equitable factors it deems relevant with respect to each liable party's equitable share. Then, taking all of this information into account, the court will allocate the past and future response costs for the remediation among the liable parties.
2. Ross
PCS must demonstrate that Ross is a PRP under § 107(a) of CERCLA and prove Ross's equitable share of costs. Minyard, 184 F.3d at 385. As was previously noted, the categories of responsible parties include "any [party] who at the time of disposal of any hazardous substance owned or operated any facility at which hazardous substances were disposed of." 42 U.S.C. § 9607(a)(2). Planters was the owner and operator of the fertilizer plant on the Site from 1906-1966. The evidence in this case shows that Planters disposed of hazardous wastes on the Site when it dumped pyrite slag on the Site and cleaned out the lead acid chambers. As the successor to Planters, Ross is subject to CERCLA liability under 42 U.S.C. § 9607(a)(2). See Carolina Transformer Co., 978 F.2d at 832.
Ross urges the court to take into account its alleged inability to pay a judgment in determining its equitable share of the response costs. Ross argues that as a dissolved corporation, it has no readily-available assets.
An orphan share is created when a party otherwise qualifying as a responsible party under CERCLA is "defunct, bankrupt, uninsured, or otherwise lacks[] the resources to bear its ideal measure of responsibility in monetary terms." Newmont, 2008 WL 4621566, at *62 (quoting United States v. Kramer, 953 F. Supp. 592, 595 (D.N.J. 1997)). When a so-called orphan share exists, a court may take this fact into account to increase the equitable share of others. Id. However, when the record does not make clear that a party is defunct, bankrupt, uninsured, or otherwise lacking of resources, courts have declined to take ability to pay into account in determining the equitable allocation among the parties. See id. The court concludes that it is not clear from the record that Ross will be unable to pay any share allocated to it. Ross has a case pending against its insurers, for coverage of any liability imposed in this suit. See Ross Dev. Corp. v. Firemans Fund Ins. Co., 2:08-CV-03672-MBS. Also, there are cases pending against the Ross Directors and shareholders that seek to disgorge distributions made by Ross prior to dissolution. These cases may make funds available to pay any judgment entered against Ross. In addition, the court finds that the existence of any orphan share is irrelevant for the purposes of allocation in light of evidence that Ross took steps to make itself judgment proof. See supra ¶¶ 44-48. The court will not take Ross's alleged inability to pay into account in making an equitable allocation. Should Ross later be determined to be defunct, each liable party will be responsible for its proportional share of Ross's allocated amount. See 42 U.S.C. § 9613(f); see also Newmont, 2008 WL 4621566, at *62.
In PCS Nitrogen, Inc. v. Buhrmaster et al., 2008-CP-10-5269, S.C. Court of Common Pleas, PCS has sued the Ross shareholders under South Carolina's dissolution statute for disgorgement of assets distributed by Ross. In PCS Nitrogen, Inc. v. Ross Dev. Corp., 2:09-CV-03171-MBS, PCS has sued the Ross Directors alleging claims for fraudulent conveyance, civil conspiracy, and breach of fiduciary duty.
In determining Ross's equitable share of the response costs, the court deems the following facts important:
i. Planters manufactured fertilizer on the Site for sixty of the sixty-six years the fertilizer plant was in operation. See supra ¶ 20.
ii. As the only property owner that burned pyrite slag, Planters generated the vast majority of arsenic that is found on the property today. See supra ¶ 34.
iii. Planters introduced much of the lead contamination to the Site. See supra ¶ 34.
iv. Planters constructed several buildings on the Site during its ownership period. See supra ¶¶ 30, 32, 37, 38, and 39.
v. Planters owned and operated the site prior to the enactment of CERCLA when the issue of environmental contamination was not well known. There is no evidence that Planters' actions were illegal or contrary to industry standards at the time. See supra ¶¶ 20 and 78.
vi. Planters benefitted economically from its operations that caused the contamination. See supra ¶ 32.
vii. The evidence suggests that the Ross Directors knew that Ross might be held liable for contamination at the Site and took action to make the company judgment proof. See supra ¶¶ 44-48.
3. PCS
The court found above that PCS is subject to liability as the successor to CNC under CERCLA § 107(a)(1). The court deems the following factors important in determining PCS's equitable share of the response costs:
i. CNC conducted manufacturing operations on the Site for six out of the sixty years the fertilizer plant was in operation. See supra ¶ 54.
ii. CNC generated no pyrite slag. See supra ¶ 57.
iii. All of the lead and arsenic on the Site that was not introduced by Planters, was introduced by CNC.
iv. When CNC ceased operations, it demolished all of the structures on the Site. This demolition was highly disruptive to the Site and took place over several years, leaving contaminants open to the elements. See supra ¶¶ 69-76.
v. Prior to selling the property to the Holcombe and Fair Parties, CNC graded the Site. See supra ¶ 79.
vi. CNC knew that its manufacturing operations contaminated the Site and yet did not notify the Holcombe and Fair Parties or EPA of the contamination. See supra ¶¶ 77 and 80.
vii. CNC took more steps to protect the environment than did Planters, but it did not follow the more stringent environmental standards it imposed at its Moultrie, Georgia plant. See supra ¶ 62 and 77.
viii. CNC left lead sheeting discarded on the Site. See supra ¶ 60.
ix. CNC benefitted economically from manufacturing fertilizer on the Site. See supra ¶ 54.
x. PCS's predecessor, Arcadian reported the contamination of the Site to EPA. See supra ¶ 105.
4. Holcombe and Fair Parties
i. Whether the Holcombe and Fair Parties are PRPs
As previously noted, a PRP includes "any person who, at the time of disposal of a hazardous substance, owned or operated any facility at which such hazardous substances were disposed." 42 U.S.C. § 9607 (a)(2). Title 42, United States Code, Section 6903(a) defines "disposal" as "the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters." The Fourth Circuit has ruled that "§ 9607(a)(2) imposes liability not only for active involvement in placing hazardous waste on a facility, but for ownership of a facility at a time that hazardous waste was `spilling' or `leaking.'" Nurad, 966 F.2d at 846. Hazardous materials can be disposed of multiple times such as when hazardous materials are moved or dispersed. See Tanglewood, 849 F.2d at 1573; Kaiser, 976 F.2d at 1342. "[A] `disposal' may occur when a party
disperses contaminated soil during the course of grading and filling a construction site." Redwing, 94 F.3d at 1511-12.
The record establishes that at the time the Holcombe and Fair Parties purchased the Site, it was already contaminated with lead and arsenic from the operations of the fertilizer plant. In constructing the Milford Street extension and extending water and sewer lines through the area where the fertilizer plant was once located, the Holcombe and Fair Parties engaged in earthmoving activities that caused the disposal of hazardous wastes on the property. The Holcombe and Fair Parties are subject to CERCLA liability under 42 U.S.C. § 9607(a)(2) as owners of the Site at a time when a disposal of hazardous substances occurred.
Holcombe, Holcombe Enterprises and Fair are not liable under CERCLA § 107(a)(1) as current owners and operators of the facility because they did not own any portion of the Site at the time this action was commenced. Courts in this circuit have held that CERCLA § 107(a)(1) applies only to the owner and operator at the time the enforcement action or complaint for response costs is filed. See Trinity, 150 F.3d at 395 (CERCLA imposes strict liability on the owner of a site "at the time of the enforcement action"); see also United States v. Fleet Factors Corp., 901 F.2d 1550, 1554 (11th Cir. 1990) ("Within the meaning of Section 107(a)(1) of CERCLA, the current owner means the owner at the time of filing of the complaint.").
ii. Innocent Landowner Defense
The Holcombe and Fair Parties seek to avoid liability for response costs associated with the Site by establishing CERCLA's innocent landowner defense. See 42 U.S.C.A. § 9607(b)(3). To establish the innocent landowner defense, a property owner must demonstrate "(1) that another party was the `sole cause' of the release of hazardous substances and the damages caused thereby; (2) that the other, responsible party did not cause the release in connection with a contractual, employment, or agency relationship with the [property owner]; and (3) that the [property owner] exercised due care and guarded against the foreseeable acts or omissions of the responsible party." Trinity, 150 F.3d at 396 (quoting Westfarm, 66 F.3d at 682 (quoting 42 U.S.C.A. § 9607(b)(3))).
In United States v. Honeywell Int'l, Inc., 542 F. Supp. 2d 1188, 1200 (E.D. Cal. 2008), the District Court for the Eastern District of California denied a party the innocent landowner defense because the party's affirmative steps in grading and excavating the property agitated the soil and caused the release of contaminants during the party's ownership period. The record indicates that the Holcombe and Fair Parties constructed the Milford Street extension and extended water and sewer lines through contaminated soil. These actions agitated the soil, causing new releases of hazardous substances. Therefore, the Holcombe and Fair Parties did not meet the first element of the innocent landowner exception.
The Holcombe and Fair Parties also cannot establish the due care element of the innocent landowner defense. The due care requirement is satisfied by taking precautionary action against the foreseeable actions of third parties responsible for the hazardous substances in question. See Monsanto, 858 F.2d at 169. The record discloses the after discovering the contaminated state of the Site, the Holcombe and Fair parties made no effort to inform environmental authorities of the contamination. Although the placement of ROC on the Site by the Holcombe and Fair parties was an environmental benefit to the Site, the Holcombe and Fair Parties only placed ROC on parcels of the Site as they were leased. Due care would have involved the Holcombe and Fair Parties capping the entire Site with ROC upon learning of the contamination in order to prevent air dispersion and human contact with contaminants. In addition, after environmental authorities became involved with the Site, the Holcombe and Fair Parties failed to follow their instructions. For example, instead of submitting a plan to control surface water runoff to EPA as agreed, the Holcombe and Fair Parties began the construction of detention ponds without approval. The Holcombe and Fair Parties also exhibited a lack of due care by failing to maintain the detention ponds on the Site. The court finds that the Holcombe and Fair Parties have not established the innocent landowner defense and will be allocated an equitable share of response costs for the remediation of the Site.
iii. Allocation
The court deems the following factors important in determining the equitable share of the response costs to be allocated to the Holcombe and Fair Parties:
a. The Holcombe and Fair Parties did not know of the contamination at the time they purchased the Site. See supra ¶ 86.
b. There is no evidence that the Holcombe and Fair Parties introduced any hazardous substances to the Site. See supra ¶ 135.
c. The Holcombe and Fair Parties contributed to the spread of the contamination on the Site by constructing the Milford Street extension and extending utility lines. See supra ¶¶ 91-92.
d. The addition of water and sewer lines on the Site prevented the use of contaminated groundwater thereby protecting human health. See supra ¶ 93.
e. The Holcombe and Fair Parties did not disclose the contamination of the Site to the City prior to deeding it the Milford Street extension despite knowledge of the contamination. See supra ¶¶ 98-101, and 109.
f. After learning of the contamination, the Holcombe and Fair Parties left the contaminated soil exposed to the elements until each parcel of property was leased and capped with ROC. See supra ¶¶ 95, 98, 102, 111, 112, 114, 117, 120, and 129.
g. The ROC covering the majority of the Site provided important benefits to the Site. See supra ¶ 131.
h. The Holcombe and Fair Parties did not commission additional soil sampling despite GEL's advice that additional testing was appropriate. See supra ¶ 103.
i. The Holcombe and Fair Parties' actions in response to requests from EPA and DHEC were not fully compliant. See supra ¶¶ 123, 125, and 131.
j. The Holcombe and Fair Parties profited from leasing out and later selling the Site despite knowing of the contamination and doing little to fix it. See supra ¶ 142.
5. RHCE
i. Innocent Landowner Defense
The court ruled above that RHCE is a PRP under §§ 107(a)(1) and (2) of CERCLA. RCHE seeks to avoid liability for response costs associated with the Site by invoking the innocent landowner defense. See 42 U.S.C.A. § 9607(b)(3). The record indicates that RHCE commissioned the following construction on its parcel: 1) the excavation of a 1380 cubic foot pond, 2) the installation of two fifty-foot asphalt driveways, 3) the stripping of six inches of topsoil and storing of this soil on an adjacent parcel, and 4) grading and proof rolling of the parcel. These actions agitated the soil, causing new releases of hazardous substances. Therefore, RHCE cannot meet the first element of the innocent landowner defense.
The second prong of the innocent landowner defense requires that RHCE not know and have no reason to know that any hazardous substance had been released at that facility. See United States v. A N Cleaners and Launderers, Inc., 788 F. Supp. 1317, 1329-30 (S.D.N.Y. 1992) (citing 42 U.S.C. § 9601(35)(A)). The record indicates that the Holcombe and Fair Parties disclosed at least some of the contamination to RHCE before the parcel was conveyed to Hood, President of RHCE. In addition, the grading and proof rolling of the parcel indicates a lack of due care on the part of RHCE when it had knowledge of the contamination. RHCE has not established the innocent landowner defense and will be allocated an equitable share of response costs for the remediation of the Site.
ii. Allocation
The court deems the following factors important in determining the equitable share of RHCE:
a. RHCE did not introduce any lead, arsenic or cPAHs to the Site. See supra ¶ 161.
b. RHCE only leases a two-acre parcel on the Site, which amounts to at most, 5.9% (2.00 acres/33.94 acres = 5.9%) of the remediation area. See supra ¶¶ 28 and 158.
c. If releases of motor oil or gear oil occurred on RHCE's parcel, such releases are not driving the remediation and will not affect the cost of remediation. See supra ¶¶ 159 and 161.
d. RHCE engaged in some construction on its parcel. See supra ¶¶ 157 and 160.
e. The placement of ROC and construction of a detention pond on the RHCE parcel were of some benefit to the environment. See supra ¶¶ 131 and 157.
f. EPA is aware of RHCE's dropyard operation and has not requested that RHCE cease operations. See supra ¶ 159.
6. Allwaste
i. Whether Allwaste is a PRP
Current owners and operators of a facility are covered persons under CERCLA. 42 U.S.C. § 9607(a)(1). Ownership status in CERCLA cases is determined at the time of the filing of the complaint. See Trinity, 150 F.3d at 395 ("Generally, CERCLA imposes strict liability on the owner of the property at the time an enforcement action is brought, even if that party did not own the property when the pollution took place."); see also United States v. Fleet Factors Corp., 901 F.2d 1550, 1554 (11th Cir. 1990) ("Within the meaning of Section 107(a)(1) of CERCLA, the current owner means the owner at the time of filing of the complaint."). This action was filed in 2005. Allwaste did not sell its parcel to Ashley until 2008. Thus, Allwaste is potentially responsible for response costs as a current owner of the Site. See 42 U.S.C. §§ 9613(g), 9607(a)(1).
ii. Allocation
The court deems the following factors important in determining the equitable share of Allwaste:
a. Allwaste did not introduce any lead, arsenic or cPAHs to the Site. See supra ¶¶ 143-154
b. Allwaste only owned a three-acre parcel and leased a two-acre parcel on the Site, which amounts to at most, 14.7% (5.00 acres/33.94 acres = 14.7%) of the remediation area. See supra ¶ 144.
c. If releases of motor oil or gear oil occurred on Allwaste's parcel, such releases are not driving the cost of remediation. See supra ¶ 154.
d. During its ownership period, Allwaste constructed a new building on its property, expanded existing structures, and modified the underground components of its wastewater collection system. See supra ¶ 147.
e. Stained cement indicates that some leaks of cleaning solvents occurred during Allwaste's operations. If any leaks occurred from Allwaste's business activities, however, those releases contributed little to the need for environmental remediation. See supra ¶ 149.
f. Allwaste allowed the sumps and pads in its facility to deteriorate to the point where they were identified as RECs. See supra ¶ 149.
7. The City
i. Whether the City is a PRP
Current owners and operators of a facility are liable for response costs under CERCLA. 42 U.S.C. § 9607(a)(1). The City contends that it is not a current owner or operator of the Site because it owns a right-of-way and does not manage any part of the Site. To determine whether the City has a current ownership interest in the Site, the court looks to the deed transferring the Milford Street extension to the City. [PCS Ex. 69].
"The construction of a clear and unambiguous deed is a question of law for the court." Bennett v. Inv. Title Ins. Co., 635 S.E.2d 649, 655 (S.C. Ct. App. 2006). In ascertaining the meaning of a deed, the court looks to the intention of the grantor. See id. To determine the intention of the grantor, the court must construe the deed as a whole. Id. When a deed is ambiguous as to intention, extrinsic evidence may be considered to explain it. Gardner v. Mozingo, 358 S.E.2d 390, 391-92 (S.C. 1987); see Bellamy v. Bellamy, 355 S.E.2d 1, 3 (S.C. Ct. App. 1987).
In the 1991 deed, the City agreed to abandon the turnaround at the end of the Milford Street extension in exchange for "owning all of Milford Street as shown on the plat" attached to the deed. [PCS Ex. 69 at 1]. The Holcombe and Fair Parties "remised, released, and forever quit-claimed" the Extension of Millford Street to the City. [PCS Ex. 69 at 1]. The Holcombe and Fair Parties retained no interest in the premises, as the deed provided that the grantors shall not "at any time hereafter, by any way or means, have, claim, or demand any right or title to the aforesaid premises or appurtenances, or any part of parcel thereof, forever." [PCS Ex. 69 at 2]. The deed uses the term "right-of-way" numerous times to describe the Milford Street extension. [PCS Ex. 69 at 1]. The court finds that the deed is ambiguous as to whether it grants a right-of-way or a fee simple in the Milford Street extension. Therefore, the court will consider extrinsic evidence to determine the intention of the grantors, the Holcombe and Fair Parties.
The deed makes no provision for the property to revert to the Holcombe and Fair Parties, indicating that the deed transferred all ownership rights to the City. Fair testified at trial that the deed resulted in the City owning the "road and the land under it." [Trial Tr. 2658:23-2659:3]. Based upon this evidence, the court finds that the intent of the grantor was to grant to the City the Milford Street extension in fee simple. Therefore, the City is an owner of part of the Site and is a PRP pursuant to 42 U.S.C. § 9607(a)(1).
Ownership is not required by CERCLA where a party is an "operator" for purposes of the statute. See Atchison, 2003 WL 25518047, at *58-59. In order for a party to be held liable as an operator, the person must have participated in the day-to-day or operational management of the facility. Acme Fill Corp. v. Althin CD Med., Inc., 1995 WL 597300 at *7 (N.D. Cal. Aug. 22, 1995); see also United States v. Dart Indus., Inc., 847 F.2d 144 (4th Cir. 1988). The court finds that the City's ownership of the Milford Street extension does not meet the definition of "operator" because once the Milford Street extension was built, it did not require day-to-day management. In fact, there is no evidence in the record that the City performed any management activities related to the Milford Street extension. The City is not an operator for purposes of CERCLA liability. However, as found above, the City is a PRP because of its ownership status.
ii. Allocation
The court deems the following factors important in determining the equitable share of the City:
a. The City did not introduce any lead, arsenic, or cPAHs to the Site. See supra ¶ 173.
b. The City did not engage in any construction activities on the Site. See supra ¶ 167.
c. The City only owns 1.28 acres, which comprises about 3.7% (1.28 acres/33.95 acres = 3.7%) of the Site. See supra ¶ 28.
d. The asphalt road acts as a cap over some of the contamination at the Site, preventing human contact with contamination. See supra ¶ 171.
e. There is no evidence that the City was notified of the contamination at the Site prior to taking ownership of the road. See supra ¶ 169.
f. The City has taken an active role in financing the remediation by issuing bonds. See supra ¶ 175.
g. The City did not acquire the road for profit. See supra ¶ 174.
The court concludes that the City took no active part in introducing contamination to the Site or to the spread of contamination throughout the parcel. Any releases that occurred on the City's parcel during its period of ownership were due to the passive migration of chemicals or runoff, which would have occurred during all ownership periods.
8. Ashley
i. Bona Fide Prospective Purchaser Defense
To establish the bona fide prospective purchaser defense ("BFPP"), Ashley must have acquired ownership of the facility after 2002 and prove each of the following eight elements by a preponderance of the evidence:
(A) Disposal prior to acquisition
All disposal of hazardous substances at the facility occurred before the person acquired the facility.
(B) Inquiries
(i) In general
The person made all appropriate inquiries into the previous ownership and uses of the facility in accordance with generally accepted good commercial and customary standards and practices in accordance with clauses (ii) and (iii).
(ii) Standards and practices
The standards and practices referred to in clauses (ii) and (iv) of paragraph (35)(B) of this section shall be considered to satisfy the requirements of this subparagraph.
. . .
(C) Notices
The person provides all legally required notices with respect to the discovery or release of any hazardous substances at the facility.
(D) Care
The person exercises appropriate care with respect to hazardous substances found at the facility by taking reasonable steps to —
(i) stop any continuing release;
(ii) prevent any threatened future release; and
(iii) prevent or limit human, environmental, or natural resource exposure to any previously released hazardous substance.
(E) Cooperation, assistance, and access
The person provides full cooperation, assistance, and access to persons that are authorized to conduct response actions or natural resource restoration at a . . . or facility (including the cooperation and access necessary for the installation, integrity, operation, and maintenance of any complete or partial response actions or natural resource restoration at the vessel or facility).
(F) Institutional control
The person —
(i) is in compliance with any land use restrictions established or relied on in connection with the response action at a . . . facility; and
(ii) does not impede the effectiveness or integrity of any institutional control employed at the . . . facility in connection with a response action.
(G) Requests; subpoenas
The person complies with any request for information or administrative subpoena issued by the President under this chapter.
(H) No affiliation
The person is not —
(i) potentially liable, or affiliated with any other person that is potentially liable, for response costs at a facility through —
(I) any direct or indirect familial relationship; or
(II) any contractual, corporate, or financial relationship (other than a contractual, corporate, or financial relationship that is created by the instruments by which title to the facility is conveyed or financed or by a contract for the sale of goods or services); or
(ii) the result of a reorganization of a business entity that was potentially liable.42 U.S.C. § 9601(40). Ashley first acquired a portion of the Site in 2003. Therefore, Ashley is eligible for the BFPP defense if it establishes the eight elements by a preponderance of the evidence.
a. Whether All Disposals Of Hazardous Substances Occurred Before Ashley Acquired Part of the Site
This element requires Ashley to prove that all disposals of hazardous substances occurred before it acquired the Site. 42 U.S.C. § 9601(40)(A). As previously noted, "disposal" is defined as
the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.42 U.S.C. § 6903(3); 42 U.S.C. § 9601(29). The Fourth Circuit has ruled that disposals include not only active involvement in the `dumping' or `placing' of hazardous waste at the facility, but for ownership of the facility at a time that hazardous waste was `spilling' or `leaking.' Nurad, 966 F.2d at 846. As has been previously noted, disposals are not limited to one-time occurrences, but instead include times when hazardous materials are moved or dispersed. See Tanglewood, 849 F.2d at 1573; Kaiser, 976 F.2d at 1342. A "disposal" "may occur when a party disperses contaminated soil. . . ." Redwing, 94 F.3d at 1511-12.
It is likely that there were disposals on the Allwaste property after Ashley tore down the structures on the Allwaste parcel in 2008 because the sumps contained hazardous substances, were cracked, and were allowed to fill with rainwater. [Trial Tr. 760:14-761:1]. Ashley did not conduct testing to determine whether disposals occurred on the Allwaste parcel during its ownership period. Specifically, Ashley did not test under the concrete pads, sumps, or trench to see if the soil under those structures was contaminated. Ashley attempted to introduce evidence that no disposals occurred after its acquisition of the property through the testimony of Riggenbach. However, the court struck this testimony at trial because Riggenbach's opinion on this issue was not disclosed prior to trial. [Trial Tr. 1399:1-17]. The court concludes that Ashley did not prove that no disposals occurred on the Site after its acquisition of the Site.
b. All Appropriate Inquiries ("AAI")
This element requires Ashley to prove that it performed AAI prior to acquiring the Site. 42 U.S.C. § 9601(40)(B). At the time Ashley would have been performing its pre-purchase inquiry on the Holcombe and Fair Parties parcel, prior to 2003, interim standards were in place to meet the AAI standard. 42 U.S.C. § 9601(40)(B); 68 FR 24888-01. The AAI standard could be met for the Holcombe and Fair Parcel by complying with ASTM Standard E1527-00. At the time Ashley performed its pre-purchase inquiry on the Allwaste parcel, a final standard for AAI's had been promulgated, 40 C.F.R. §§ 312, et seq.; this is the standard applicable to the Allwaste parcel.
The final standard for performing all appropriate inquiries became effective on November 1, 2006. 40 C.F.R. §§ 312, et seq.
Ashley could also have satisfied the AAI standard with ASTM Standard E1527-97. However, the only ASTM Standard admitted at trial was ASTM Standard E1527-00.
Ashley acquired a portion of the Site from the Holcombe and Fair Parties on November 24, 2003. Prior to the acquisition of the Holcombe and Fair Parties parcel, Ashley hired GEL to conduct AAI. GEL prepared a September 25, 2003 Phase I Environmental Site Assessment, and certified that its inquiry was in compliance with ASTM E1527-00. [Ash. Ex. 110 at 1-2]. Ashley also hired GEL to conduct a Phase I Environmental Site Assessment on the Allwaste parcel prior to purchase. [Ash. Ex. 179]. GEL certified in its report on the Allwaste parcel that its inquiry was in compliance with ASTM E1527-05. [Ash. Ex. 179 at 4]. While PCS points to some inconsistencies between GEL's Phase I Reports and the relevant ASTM Standards, the court finds that such inconsistencies lack significance. What is important is that Ashley acted reasonably; it hired an expert to conduct an AAI and relied on that expert to perform its job properly. The court finds that Ashley properly conducted AAI.
EPA has stated that ASTM Standard E1527-05 is consistent with the AAI final rule. Environmental Protection Agency, Comparison of the Final All Appropriate Inquiries Standard and the STM E1527-00 Environmental Site Assessment Standard, at 1 (2005), http://www.epa.gov/brownfields/aai/compare_astm.pdf.
c. All Legally Required Notices
Title 42, United States Code, Section 9603(a) requires that any person in charge of a facility immediately notify the National Response Center of any release of a hazardous substance once it has knowledge of a release. Ashley contends that there have been no releases of hazardous substances at the Site since Ashley's acquisition of the property that required notice to EPA or DHEC. The record does not establish that any releases occurred on the Site subsequent to Ashley acquiring ownership. The court finds that Ashley has met its burden of proving that it made all legally required notices.
d. Whether Ashley has Exercised Appropriate Care
To demonstrate that it has exercised appropriate care, Ashley must prove that it took reasonable steps to: 1) stop any continuing release; 2) prevent any threatened future release; and 3) prevent or limit human, environmental, or natural resource exposure to any previously released hazardous substance. 42 U.S.C. § 9601(40)(D). According to EPA, Congress intended the "reasonable steps" requirement to be "consonant with traditional common law principles and the existing CERCLA due care requirement." [Ash. Ex. 100, at 9 n. 9]. Under the CERCLA due care requirements, a party must establish by a preponderance of the evidence that it "exercised due care with respect to the hazardous substance concerned, taking into consideration the characteristics of such hazardous substance, in light of all relevant facts or circumstances." [Ash. Ex. 100 at 11]. "[E]xisting case law on due care provides a reference point for evaluating the reasonable steps requirement." [Ash. Ex. 100, at 11]. According to EPA, "doing nothing in the face of a known or suspected environmental hazard would likely be insufficient." [Ash. Ex. 100, Attachment B at 5].
EPA's Interim Guidance on BFPP status states as follows:
The pre-purchase "appropriate inquiry" by the [BFPP] will most likely inform the [BFPP] as to the nature and extent of contamination on the property and what might be considered reasonable steps regarding the contamination — how to stop continuing releases, prevent threatened future releases, and prevent or limit human, environmental and natural resource exposures. Knowledge of contamination and the opportunity to plan prior to purchase should be factors in evaluating what are reasonable steps, and could result in greater reasonable steps obligations for a [BFPP].
[Ash. Ex. 100 at 11].
The court concludes the Ashley did not exercise appropriate care with regard to hazardous substances. First, GEL identified the sumps and concrete pads at the Allwaste parcel as RECs. When Ashley demolished all of the above-ground structures on the Allwaste parcel, but failed to clean out and fill in the sumps, and leaving them exposed to the elements, it may have exacerbated these conditions. At trial, experts testified that Ashley should have capped, filled, or removed the sumps at the time it demolished the above-ground structures. [Trial Tr. 401:14-402:2, 2419:20-2421:19, 2434:18-2436:4]. Ashley's later action commissioning GEL to test, clean, and fill the sumps with concrete came too late to prevent possible releases.
Second, Ashley's failure to 1) prevent such a debris pile from accumulating on the Site, 2) investigate the contents of the debris pile, and 3) remove the debris pile for over a year indicates a lack of appropriate care. [Trial Tr. 552:8-14, 552:24-553:15; PCS Ex. 3, at 1; PCS Ex. 19 at A05_01238, A04_05365, A04_05368, A04_05370, A04_05376, A04_05380]. Third, Ashley failed to adequately maintain the ROC cover on the Site. For example, the ROC cover on the parcel Ashley leased to Allwaste from 2003 to 2008, was deteriorated in 2004. [PCS Ex. 22 at A 00283, Fig. 1-2]. Ashley has not carried its burden of proving by a preponderance of the evidence that it exercised appropriate care with respect to hazardous substances found at the facility.
e. Whether Ashley Provided Full Cooperation, Assistance and Access
This element requires that Ashley prove that it provided "full cooperation, assistance, and access to persons that are authorized to conduct response actions or natural resource restoration at a . . . facility." 42 U.S.C. § 9601(40)(E). Ashley has provided the court with sufficient evidence to meet its burden of proof on this element of the BFPP defense. When Ashley acquired the Holcombe and Fair Parties parcel, it immediately notified EPA of its ownership and asked EPA to advise Ashley if EPA desired Ashley to take specific action. [Ash. Ex. 114]. The record demonstrates that Ashley's cooperation with EPA has been ongoing since it purchased the Site. [Ash. Exs. 187 and 188].
f. Institutional Controls
This element requires that Ashley prove that it: 1) is in compliance with any land use restrictions at the facility; and 2) is not impeding any institutional control employed at the facility in connection with a response action. 42 U.S.C. § 9601(40)(F). Freeman testified at trial that there are no land use restrictions or unusual institutional controls in place at the Site and that Ashley is in compliance with any controls in place. [Trial Tr. 594:16-24]. This testimony has not been contradicted. The court finds that Ashley has met its burden of proof on this element.
g. Compliance with Requests and Subpoenas
This element requires that Ashley prove that it has complied with any request for information or administrative subpoena directed to it. 42 U.S.C. § 9601(40)(G). Freeman testified at trial that Ashley has complied with all information requests and subpoenas that it has received from EPA. [Trial Tr. 599:12-16]. Ashley's Exhibit number 116 is an example of Ashley responding to a request for information by EPA. [Ash. Ex. 116]. The court finds that Ashley has met its burden of proof on this element.
h. No Affiliation
This element requires that Ashley prove that it is not: 1) a potentially responsible party; 2) affiliated with persons that are potentially liable for response costs at the Site through: a) any direct or indirect familial relationship; b) any contractual, corporate, or financial relationship "(other than a contractual, corporate, or financial relationship that is created by the instruments by which title to the facility is conveyed or financed or by a contract for the sale of goods or services)"; or 3) "the result of a reorganization of a business entity that was potentially liable." 42 U.S.C. § 9601(40)(H). EPA has stated that in deciding what "affiliations" are prohibited by CERCLA, courts should be guided by "Congress's intent of preventing transactions structured to avoid liability." [Ash. Ex. 100 at 5]. There is no allegation in this case that Ashley is the result of a reorganization of a business entity that was potentially liable.
1. Whether Ashley is a PRP
As previously noted, current owners and operators of a facility are liable for response costs under CERCLA. 42 U.S.C. § 9607(a)(1). As the current owner of the majority of the Site on which hazardous materials are still leaching through the soil, Ashley can be held liable for response costs. Ashley has failed to meet its burden of proof on this element.
2. Affiliations with Others
Ashley has no direct or indirect familial relationship with any of the other PRPs in this case. [Trial Tr. 141:14-145:2; 181:13-182:9]. However, Ashley has released and indemnified the Holcombe and Fair Parties and Allwaste from environmental liability for contamination at the Site. [Ash. Ex. 94, 113; Allwaste Exs. 1-2]. These releases were given in connection with the purchases of parcels of property on the Site. Because of its indemnification and release of the Holcombe and Fair Parties, Ashley attempted to persuade EPA not to take enforcement action to recover for any harm at the Site caused by the Holcombe and Fair Parties. [PCS Ex. 256 at 2]. In indemnifying the Holcombe and Fair Parties, Ashley took the risk that the Holcombe and Fair Parties might be liable for response costs. Ashley's efforts to discourage EPA from recovering response costs covered by the indemnification reveals just the sort of affiliation Congress intended to discourage. The court finds that Ashley's affiliation with the Holcombe and Fair Parties precludes the application of the BFPP defense. In summary, Ashley failed to meet its burden of proving several of the elements of the BFPP defense and will be held liable for an equitable share of response costs.
ii. Allocation
The court deems the following factors important in determining the equitable share of Ashley:
a. Ashley did not engage in an manufacturing activities on the Site. See supra ¶ 205.
b. Ashley has made efforts to secure and restrict access to the Site. See supra ¶ 180.
c. Ashley performed extensive environmental testing at the Site and performed AAI. See supra ¶¶ 181, 185, 188, 191, 193, and 201; Part II.D.8.i.b.
d. Ashley has cooperated with EPA. See supra Part II.D.8.i.e.
e. Ashley's ultimate goal in remediating the Site and conducting the Magnolia Project is to cleanup the property for productive use and ultimately make a profit. See supra ¶¶ 177-178.
f. Ashley has attempted to discourage EPA from pursuing recovery for response costs caused by the Holcombe and Fair Parties. See supra ¶ 197.
g. Ashley failed to exercise appropriate care with regard to the Site. See supra Part II.D.8.i.d.
h. Ashley may have permitted additional releases of hazardous materials to occur on the Allwaste parcel. See supra Part II.D.8.i.a.
9. Equitable Shares
Taking all of the foregoing into account, the court finds that in accordance with equity, the parties shall be liable for the following percentages of the past and future response costs to clean up the Site:
i. Ross is responsible for forty-five percent (45%);
ii. PCS is responsible for thirty percent (30%);
iii. The Holcombe and Fair Parties are responsible for sixteen percent (16%);
iv. RHCE is responsible for one percent (1%);
v. Allwaste is responsible for three percent (3%);
vi. The City of Charleston is responsible for zero percent (0%); and
vii. Ashley is responsible for five percent (5%).
In accordance with the court's ruling on the Holcombe and Fair Parties' Motion for Partial Judgment on the Findings [Entry 520], Ashley is responsible for this share.
In accordance with the court's ruling on Allwaste's Motion for Partial Judgment on the Findings [Entry 517], Ashley is responsible for this share.
Based on the facts and equities, the court determines that the City should be allocated a zero percent share of liability for the cost of remediation at the Site. Alcan, 964 F.2d at 845 (a PRP can avoid liability with proof that its release of hazardous substances did not contribute to the response costs).
If it is subsequently determined that any liable party is adjudged unable to pay all or a portion of its equitable share, that share, less recovered amounts, shall be reallocated to the other liable parties on a pro rata basis in accordance with the above percentage shares. See, e.g., United States v. Stringfellow, No. CV-83-2501-JMI, 1995 WL 450856 (C.D. Cal. Jan. 24, 1995) (the court first allocates to each responsible party; if one party is later adjudicated bankrupt, the court then reallocates this share to the other parties).
E. Ross Indemnification of PCS
PCS argues that it has a valid indemnification agreement with Ross that makes Ross liable to PCS for all costs and expenses that it must incur as a result of Ross's acts and omissions. PCS contends that because of this alleged agreement, the court should impose on Ross its share of the response costs without regard for whether Ross is unable to pay. PCS further contends that Ross should be assessed with costs and expenses that PCS incurred in bringing Ross into this litigation and establishing Ross's liability.
The court concludes that this argument is without merit. The document that PCS relies upon to show the existence of the alleged indemnification agreement between Ross and CNC, PCS Ex. 167, was ruled inadmissible at trial for a lack of authentication under Fed.R.Evid. 901. [Trial Tr. 2976:7-2980:15]. Moreover, the court has already allocated Ross a share of the response costs for remediating the Site without regard to Ross's ability to pay.
III. CONCLUSION
Allwaste's Motion for Judgment on Partial Findings [Entry 517] is granted. The Holcombe and Fair Parties' Motion for Judgment as a Matter of Law [Entry 520] is granted. RHCE's Motion for Judgment on Partial Findings [Entry 521] is denied. PCS is liable to Ashley for response costs pursuant to § 107(a)(2) of CERCLA. The harm at the Site is indivisible and PCS's liability is joint and several.Judgment shall be entered for Ashley in the amount of $87,404.82 plus interest against Ross; in the amount of $58,269.88 plus interest against PCS; and in the amount of $1,942.32 plus interest against RHCE, which represents those parties' respective shares of the total past CERCLA response costs of $194,232.94 incurred by Ashley prior to this suit.
The shares of the Holcombe and Fair Parties and Allwaste have not been included as Ashley is responsible for those costs pursuant to its indemnification agreements.
Declaratory judgment shall be entered for Ashley against Ross, PCS and RHCE for future response costs at the Site in the respective percentages of 45%, 30% and 1% of the amounts incurred. The court retains jurisdiction over the case should it become necessary to determine whether the final remediation plan for the Site is consistent with the National Contingency Plan.
The shares of the Holcombe and Fair Parties and Allwaste have not been included as Ashley is responsible for those costs pursuant to its indemnification agreements.
IT IS SO ORDERED.
Columbia, South Carolina
September 30, 2010