State v. Westwood-Squibb Pharmaceutical Co., Inc.

Full title: STATE OF NEW YORK and THOMAS C. JORLING, Commissioner of the New York…

Court: United States District Court, W.D. New York

Date published: May 24, 2004

No. 90-CV-1324C (W.D.N.Y. May. 24, 2004)

Opinion

No. 90-CV-1324C.

May 25, 2004

BUCHANAN INGERSOLL PROFESSIONAL CORPORATION (DANIEL M. DARRAGH, ESQ., and MARTHA M. HARRIS, ESQ., of Counsel), Pittsburgh, PA, for Defendant Westwood-Squibb Pharmaceutical Co., Inc.

PHILLIPS, LYTLE, BLAINE, HITCHCOCK HUBER (ROBERT E. GLANVILLE, ESQ., and KEVIN M. HOGAN, ESQ., of Counsel), Buffalo, NY, for Defendant National Fuel Gas Distribution Corporation.

JOHN CURTIN, Senior District Judge

On December 3-7, 2001, the court conducted a non-jury trial of issues pertaining to allocation of response costs, pursuant to Section 113(f)(1) of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9613(f)(1), incurred in connection with the investigation and remediation of environmental contamination at a facility and property currently owned by Westwood-Squibb Pharmaceutical Co., Inc. ("Westwood"), and formerly owned by National Fuel Gas Distribution Corporation ("National Fuel"). The parties subsequently engaged in settlement negotiations, which proved unfruitful, followed by extensive post-trial submissions, including briefing and argument on the admissibility of disputed allocation trial exhibits. On October 25, 2002, the court issued its ruling on admissibility (Item 278), and on January 17, 2003, the court heard the parties' summations and oral arguments on the allocation issues. The following constitutes the court's findings of fact and conclusions of law with regard to allocation, pursuant to Rule 52 of the Federal Rules of Civil Procedure, based on the trial testimony and exhibits, the parties' post-trial submissions, and the court's prior rulings.

FINDINGS OF FACT

I. The Facility

The "facility," as that term is defined in 42 U.S.C. § 9601(9),¹ includes an 8.8 acre parcel of property owned by Westwood (the "Westwood Property," or the "Property"), and the eastern bank of Scajaquada Creek and approximately 1,600 linear feet of the sediments in the creek both adjacent to, upstream and downstream of the Westwood Property (the "Creek Property"). Westwood acquired the Property from Iroquois Gas Corporation ("Iroquois"), corporate predecessor to National Fuel, in 1972, and constructed improvements, including two buildings, each approximately 100,000 square feet (2/2/94 Remedial Investigation Report, Vol. I [WW Ex. 83; NF Ex. 54], p. 1-1).² The Westwood Property is bordered on the north by Buffalo Structural Steel and on the west by Scajaquada Creek. Residential properties are located along Dart Street and Bradley Street on the east and south respectively ( id. at p. 1-2). Land use in the area is mixed industrial and residential (3/94 Record of Decision [WW Ex. 85; NF Ex. 55], p. 1).

1 42 U.S.C. § 9601(9) provides:

The term "facility" means (A) any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or any vessel.

2 References to "WW Ex." are to the allocation trial exhibits submitted by Westwood; references to "NF Ex." are to the allocation trial exhibits submitted by National Fuel.

The two Westwood buildings are used for storing skin care products, bottle manufacturing activities, offices, and storage areas (the southern building, or Building No. 6), and for product quality control and materials testing facilities, shipping, receiving, and warehouse storage (the northern building, or Building No. 9) (WW Ex. 83 (NF Ex. 54), p. 1-2).

Scajaquada Creek, located west of the Westwood Property, is approximately 40 to 100 feet wide in the section adjacent to the Property and drains into Black Rock Canal and, ultimately, to the Niagara River, which is located approximately one-half mile southwest of the Property ( id.).

The terrain at the Property is relatively flat and has a maximum relief of approximately 5 feet across the Property, with the exception of the land adjacent to the creek bank, which drops 20 to 25 feet from the elevation of the Property to the elevation of the creek ( id. at pp. 1-4 and 3-1). The two Westwood buildings cover approximately 5 acres (60 percent) of the Property; the remainder of the Property is covered primarily by asphalt and gravel ( id. at pp. 1-4 and 3-3). Based on the survey data collected during the site investigation, surface water is expected to flow toward the creek from the western portion of the Property; from the northeast and southeast quadrants of the Property, surface water is expected to flow in a northeast and southeast direction, respectively ( id. at p. 1-4).

Site geology, as evidenced by the numerous soil borings installed during the site investigation, consists of a layer of fill (0 to 32 feet thick) underlain by a silty clay layer (20 to 58 feet thick), a sand layer (3 to 28 feet thick), and fractured shale and gypsum-containing dolomite and argillaceous limestone bedrock ( id.). The fill layer, which consists of a mixture of gravel, sand, silt, clay, rubble, cinders, wood chips, and slag, is thickest in the northwest portion of the Property, where Building No. 9 is located ( id.). Historical site maps show that a large water inlet originally existed in that area of the Property ( see, e.g., appendices to WW Ex. 70 (1884 and 1891 Site Maps); WW Ex. 83 (NF Ex. 54), Fig. 3-1, p. 3-5). By 1897, when People's Gas Light Coke Company ("People's Gas") purchased the Property, the inlet area had been substantially reduced in size ( see, e.g., NF Ex. 1; WW Ex. 47). However, aerial photographs and site maps show that a significant portion of the inlet was still present in 1926 (WW Exs. 47-51, 105). By 1938, the inlet was almost completely filled (WW Ex. 52), and by 1953 the creek no longer flowed onto any part of the Property (WW Ex. 53).

II. Gas Manufacturing Operations

Prior to its purchase in 1897 by People's Gas, the Property had been put to various industrial and commercial uses such as a sawmill (which may have included ship building activities), an iron products manufacturing plant, a carriage and sleigh works, and a carriage top manufacturing company (WW Ex. 83 [NF Ex. 54], p. 1-4). When People's Gas bought the land in 1897, it constructed a manufactured gas plant ("MGP"), which was operated on the Property by a succession of entities at various levels of productivity from approximately 1898 until 1951. During the course of its operation, the MGP³ employed both the "carburetted water gas" process and the "oil gas" process (Tr. 712-13 [Nakles]; WW Exs. 4S, 43).⁴

3 Sometimes referred to herein as the "Bradley Street MPG."

4 References preceded by "Tr." are to pages of the transcript of the December 2001 allocation trial, entered on the court's docket as Items 250-54. In some instances, the reference will contain in brackets the name of the witness whose testimony is reported.

According to the testimony of Dr. David Nakles, National Fuel's MGP expert and environmental consultant, the Bradley Street MGP began operations as a carburetted water gas facility with a rated capacity of approximately 1.6 million cubic feet per day (Tr. 711-12 [Nakles]). Original surface facilities included an office building, a boiler house, a generator house, a compressor house, a purifying house, a 1.75 million gallon gas storage holder, a relief holder, an oil tank, and a tar separating tank (Tr. 712; see NF Ex. 1; WW Ex. 2E). A second water gas set was added in 1917, which increased the daily production capacity to approximately 5.1 million cubic feet (Tr. 712; WW Ex. 2B; NF Ex. 15). By 1921, manufactured gas production had reached approximately 7.5 million cubic feet per day (Tr. 712; WW Ex. 3A; NF Ex. 19). The tar separator was modified twice, first in 1917 and again in 1925, to accommodate the increased production capacity (WW Exs. 34, 44). A second tar separator was added in 1942 (WW Ex. 37), and a third was added in 1948 (WW Ex. 42), after one of the carburetted water gas sets was converted to an oil gas set (Tr. 713).

The tar separator evidence is important because of the nature of the contaminants which necessitated the environmental remediation at issue in this case, i.e., the chemical constituents of waste tars generated by the carburetted water gas and oil gas manufacturing processes — primarily, monocyclic aromatic hydrocarbons, including benzene, toluene, ethylbenzene, and xylene ("BTEX"), and polycyclic aromatic hydrocarbons ("PAHs"), such as naphthalene, anthracene, phenanthrene, fluorene, and chrysene (WW Ex. 7, pp. 13-14; Ex. 8, p. 267; Ex. 9, p. 120). Other wastes or by-products generated as part of those processes included oxide box wastes (consisting of wood chips contaminated with cyanide), wood chips contaminated with tar, ash and clinker (the residue from the coal fired generators), and process wastewaters (Tr. 707-08 [Nakles]; WW Ex. 9, pp. 118-53).

As explained in the pertinent literature admitted into evidence, the raw gas produced from both the carburetted water gas and oil gas processes contained a number of impurities that had to be removed prior to sale. Tar was removed by cooling the raw gas with water, producing a tar-water condensate which was collected and pumped into receptacles known as tar separators. Additional tar was removed in the shavings scrubber, which used wood shavings to absorb tar remaining in the raw gas. The tar-contaminated shavings were periodically discarded ( see WW Ex. 9, pp. 59-69). The raw gas was also passed through a series of large boxes containing wood chips treated with iron oxide to remove substances such as hydrogen sulfide and cyanide. The spent wood chips from the oxide boxes were also removed periodically for disposal and replaced with fresh wood chips ( id. at pp. 90-92, 99-101; see also WW Ex. 7, p. 6).

The tar separators were rectangular basins constructed of concrete, with internal wooden baffles and an outlet or overflow pipe. The separators were 7 to 12 feet deep, and were set into excavations in the ground, with 2 to 3 feet of concrete extending above grade ( see WW Exs. 34, 37, 42; NF Exs. 69, 70, 74). In the separators, the tar-water condensate would separate by gravity into three phases: (1) an oily layer of low density hydrocarbons, which would float to the surface, and could be removed by skimming; (2) a middle "water" phase, consisting of a water/oil/tar mixture which typically was removed from the separator by way of an outlet or overflow pipe connected to a drain line; and (3) a layer of high density tars, which would sink to the bottom and could be removed through the use of a submersible pump (WW Ex. 9, pp. 65-69; see also WW Exs. 35, 36, 39). Tar pumped from the bottom of the tar separators was collected in tar storage tanks where the volume could be measured and recorded.

Depending on the density of the oil used in the carburetion step, the tar/oil/water mixture in the tar separator often formed an emulsion that could not readily be broken down into its component parts (WW Ex. 7, pp. 136-39). While nuisances associated with the discharge of emulsions into lakes and streams were recognized early in the twentieth century ( see WW Ex. 10, tab 3), significant problems with emulsion formation did not develop until approximately the period between 1910 and 1915, with the advent of larger capacity water gas sets operating at lower temperatures and the use of heavier oils in the carburetion process (WW Ex. 9, pp. 136-37; see also WW Exs. 12, 13, 14).

Commencing in 1907, MGP owners and operators in New York State were required by statute to submit annual reports to the New York State Public Service Commission ("PSC") detailing the MGP's financial and operational performance. The PSC records for the years 1907 through 1951 (WW Exs. 1-4; NF Exs. 2-49), filed successively by the Buffalo Gas Company ("Buffalo Gas," 1907-Sept. 1917), William J. Judge ("Judge," Oct. 1917-Sept. 1921), the Niagara Gas Corporation ("Niagara Gas," Oct. 1921-Dec. 1922), and the Iroquois Gas Company ("Iroquois," 1923-1951), as well as internal records of gas and tar production kept by National Fuel for the period from 1941 to 1951 (WW Ex. 73), provide data regarding the quantity of gas produced and, for some years, the quantity of tar actually recovered from the gas manufacturing process and sold at the Bradley Street MGP. National Fuel's predecessors kept no records reporting the total volume of tar generated by MGP operations at the Bradley Street plant ( see Kyle Dep. [11/21/90], pp. 56-57 (Item 265, tab 18); see also Tr. 731-32 [Nakles]).

Because no specific records are available for the operating period prior to 1907, much of the dispute in this case has centered on the amount of manufactured gas and waste tars produced between the years 1898 and 1907 (when Buffalo Gas operated the MGP), and what became of the wastes. The 1907 annual report to the PSC submitted by Buffalo Gas indicates that water gas had been produced at the MGP "intermittently since 1898" (WW Ex. 1A, p. 22; see also NF Exs. 2, 3). Dr. Nakles testified that, based on the gas production amounts reported to the PSC, it was reasonable to infer that the plant was operated intermittently for the entire 1898-1917 period. Accordingly, Dr. Nakles applied the 1907-1917 average annual production rate to the years 1898 through 1906, and then applied a tar production rate of 0.37 gallons of tar per Mcf⁵ of gas produced which, based on the available literature, he determined would be a reasonable rate for a carburetted water gas plant the size of the Bradley Street MGP (Tr. 725 [Nakles]; see also Nakles Dep. [5/23/00], pp. 28-29 (Item 265, tab 12)). As the result of these calculations, and because tar is an inevitable by-product of the carburetted water gas process ( see Tr. 706-07), Dr. Nakles estimated that approximately 192,000 gallons to 214,000 gallons of tar were produced between 1898 and 1917 (Tr. 724-25; NF Ex. 84).⁶

5 Mcf = thousand cubic feet.

6 Although Dr. Nakles' testimony and expert submissions were challenged in several respects on both direct and cross-examination ( see, e.g., Tr. 750-801), his tar production estimates remain essentially undisputed.

For the period between 1907 and 1951, the PSC records indicate that there were years ( e.g., from 1929 through 1940) when little or no gas was produced at the MPG, and other years ( e.g., 1947 and 1949) when gas production exceeded 500,000 Mcf ( i.e., 500,000,000 cu. ft.). More specifically, the PSC reports and other evidence submitted at trial, including expert trial and deposition testimony, indicate that a total of more than 3,650,000 Mcf of manufactured gas were produced at the Bradley Street MGP during the years 1907 through 1951. The PSC records prior to 1941 do not consistently report the amounts of tar produced, recovered, or sold on an annual basis. However, using Dr. Nakles' tar recovery rate of 0.37 gallons tar per Mcf gas, the estimated volume of recoverable tar produced during the years 1907 through 1941 is more than 550,000 gallons. Combined with the actual reported amounts of tar produced during the years 1942 through 1951 (after partial conversion to the oil gas process), as well as Dr. Nakles' estimates for the years 1898 through 1906, the approximate total volume of recoverable tar produced at the Bradley Street MGP during its years of operation is over 4 million gallons.

With respect to the recovery and sale of tar produced by the manufactured gas process, historical evidence and expert testimony indicate that the market for tar was relatively undeveloped during the early years of operation of the Bradley Street plant ( see WW Ex. 9, p. 102; NF. Ex. 84, p. 2; Tr. 708-10 [Nakles]). Accordingly, "[e]arly plant operators disposed of tars rather than make attempts at recovery." (WW Ex. 9, p. 131). This is confirmed by the PSC reports filed by Buffalo Gas for the years 1907-1917 (WW Exs. 1B-1L; NF Exs. 3-13), in which no tar sales are reported until 1912. These records further indicate that approximately 222,000 Mcf of gas (and, under Dr. Nakles' formula, approximately 82,000 gallons of tar) were produced during this period, yet only some 23,000 gallons of tar were reported as sold, and only some 4,200 gallons of tar were reported as "recovered." When considered in conjunction with Dr. Nakles' calculations and testimony, it is reasonable to infer that anywhere between 160,000 and 190,000 gallons of tar were produced but not recovered or sold between 1898 and 1917.

The PSC records for the period between October 1917 and September 1921 indicate that all tar reported as having been recovered, as well as 1,807 gallons reported to have been "on hand" at the close of 1917, was sold (WW Exs. 2A-2E; NF Exs. 14-18). Using the 0.37 gal. recoverable tar/Mcf gas produced ratio, between October 1917 and September 1921, the Bradley Street MGP produced approximately 422,000 gallons of recoverable tar and sold approximately 399,000 gallons — a difference of approximately 23,000 gallons.

In 1924, Iroquois' Mineral Spring water gas plant went on-line and continued in operation during the time period that the Bradley Street MGP was operational. From 1924 through 1951, tar sales data from these two plants was reported (if at all) in the aggregate, and no information is available that would permit attribution of those sales to one plant or the other. However, the information contained in the PSC reports and in National Fuel's internal records reveals that, during the ten-year peak production period from 1942-1951, approximately 5.6 million gallons of tar were produced at the two water gas plants, while the reported total tar sales from those plants was approximately 4.8 million gallons — a difference of 800,000 gallons ( see WW Exs. 4T-CC, 73; NF Exs. 40-49). This evidence suggests that the Bradley Street MGP accounts for approximately 62 percent of the total tar production reported for the two plants from 1942 to 1951. Using this percentage, it can be estimated that approximately 496,000 gallons of tar were produced but not recovered or sold at the Bradley Street Plant between 1942 and 1951 ( see WW Ex. 73).

These overall production figures, measurements, calculations, and estimates suggest that of the more than 4 million gallons of recoverable tar produced at the Bradley Street MGP during its years of operation, over 650,000 gallons — at least 16.25 percent of all the tar produced — were disposed of other than by sale. Yet, no contemporary records manifest any tar disposal activity, either onsite or offsite. Dr. Nakles testified that, at least with respect to the early period of operation (between 1898 and 1917), the waste tars were most likely mixed with the oxide box wastes and disposed of onsite in the area of the former lagoon, where substantial filling activity was occurring at the time (Tr. 715, 739-41). In addition, a 337-foot, six-inch tile sewer pipe was installed in 1919 to carry water overflow discharge from the tar separator to Scajaquada Creek ( see WW Ex. 76, Appx. IV). According to Dr. Nakles, prior to the installation of this pipe, any overflow discharge from the tar separator would have gone "somewhere other than the creek" (Tr. 715).

Dr. Nakles also testified that it was unlikely the tar separators at the Bradley Street MGP would have been able to separate 100 percent of the tar from the water entering the separators (Tr. 784). While there is no available site-specific data regarding the efficiency of the separators, Dr. Nakles opined that approximately 90 to 95 percent of the tars going into the separators would have been removed by gravity separation (Nakles Dep. [5/23/00], pp. 42; Nakles Dep. [11/6/00], pp. 161-63 (Item 265, tab 20)). Applying this estimate to the total estimated volume of recoverable tar produced at the Bradley Street MGP during its years of operation, as reflected in the evidence discussed above — i.e., approximately 4 million gallons — the quantity of tar that would have been separated from the water discharged to the creek would range from 80,000 gallons (at 98 percent removal efficiency) to 400,000 gallons (at 90 percent removal efficiency). According to expert trial and deposition testimony, at least until the installation of a filter bed at the Bradley Street plant in December 1947, any tars not separated from the water would have been discharged to the creek along with the water phase from the tar separators (Tr. 794-95 [Nakles]; see also Nakles Dep. [11/6/00], pp. 163-64 (Item 265, tab 20); Kyle Dep. [11/21/90], pp. 40-41 (Item 265, tab 19)).

The historical evidence in the record suggests that as early as 1905, there was industry-wide acknowledgment that the disposal of wastewater from manufactured gas plants created a nuisance. As reported in a May 1905 article in the American Gas Light Journal (WW Ex. 10), while separation of the heavy tars could be accomplished using a separator fitted with baffles, and lighter oils could be skimmed from the surface of the separators, the separation of tars or oils having densities comparable to that of water was difficult because these materials had a tendency to form emulsions that would not readily separate and, when discharged to rivers and harbors, resulted in a nuisance. The same 1905 article advocated the use of a filter bed consisting of "coke breeze" as a means of removing oils and tars from the wastewater prior to discharge to a stream or river ( id.). According to Dr. Nakles, the use of this type of filter bed was considered to be state-of-the-art throughout the early years of the carburetted water gas industry (Tr. 720). However, as already alluded to, the Bradley Street MGP did not have a filter bed until Iroquois installed one in late 1947 (WW Ex. 40; NF Ex. 72).

In a 1994 article co-authored by Dr. Nakles, it was reported that:

Tar contamination along river banks and in the shallow sediments of rivers and lakes has . . . been found near MGP sites. These observations primarily reflect the discharge of tars directly into the adjacent water bodies through site sewers or ditches. Much of the tar that escaped the plants in this manner did so as incidental carryover of hydrocarbon — water emulsions from the tar separators. Migration from tar wells and subgrade gas holder tanks also contaminated some streams.

(WW Ex. 8, p. 267A; see also WW Ex. 7, pp. 30, 48; WW Ex. 9, pp. 136-39).

Investigation of former MGP sites has also revealed tar contamination of soils resulting from leaks and spills from various production or containment vessels and pipe lines, incomplete separation of tar from the process wastewater, and tar storage operations ( see WW Ex. 7, pp. 47-48, 63; WW Ex. 8, p. 267A). In addition, it was not uncommon for tar to be mixed with other wastes and used as fill in low-lying areas of the plant site ( id.).

A November 1921 report of the American Gas Association ("AGA") Waste Disposal Committee⁷ recommended that a manufactured gas plant having the production capacity of 2,000 Mcf per day or higher use three tar separators⁸ and two filter beds (WW Ex. 14, p. 566). It was further recommended that the separators be arranged so that one may be taken off-line for cleaning while the others are kept in operation ( id.). In 1919, the Bradley Street MGP had three water gas sets, having a total rated capacity of 7,100 Mcf per day, and an actual capacity of 5,600 to 5,800 Mcf per day (WW Ex. 2C; NF Ex. 16). In 1922, the rated capacity was 7,500 Mcf per day (WW Ex. 3B; NF Ex. 20).

7 The waste disposal committee was formed at the AGA`s first annual meeting in 1919 to address water pollution problems caused by the disposal of MGP wastes into rivers and streams which had been occurring since early in the twentieth century (WW Ex. 8, p. 266A).

8 The AGA report recommended tar separator "static capacity" at 6 gallons per Mcf gas produced per 24 hours, a depth of 8 feet, and a total length of 3-5 times the width (WW Ex. 14, p. 566). "Static capacity" is defined as "the volume of liquid that the clean separator system . . . will contain at the minimum liquid level" ( id.). The AGA article does not indicate how the minimum liquid level of a tar separator is determined.

As discussed above, the first tar separator at the Bradley Street MGP (tar separator No. 1) was constructed in 1898 ( see WW Ex. 1B). It was replaced or modified some time prior to 1917, and in 1925 it was expanded to more than twice its original size ( see WW Exs. 34, 44, 54). A second tar separator (No. 2) was not added to the MGP until late 1942 (WW Ex. 37).

The first documented drain line from a tar separator to Scajaquada Creek appears in 1918 ( see WW Ex. 76, Appx. IV). In 1942, the existing drain lines from tar separator No. 1 to the creek, and from the relief holder to the creek, were replaced by new drain lines ( id.; see also WW Ex. 36). The new lines were routed to a sump, or "manhole," prior to discharging to the creek. The bottom of the sump consisted of loose bricks placed on loose gravel, which would have allowed contaminants in the wastewater discharges from the tar separator to seep into the ground (WW Ex. 36; Tr. 323-24 [Faust]; Nakles Dep. [9/30/93], pp. 50-53). The drain line from tar separator No. 2 was also connected to the sump and to the drain line going to the creek (WW Ex. 36).

In June 1941, the Buffalo Sewer Authority ("BSA") issued a report on its investigation of "continued pollution by heavy oil wastes of the waters of lower Scajaquada Creek between Grant Street and the junction with the Black Rock Harbor" (NF Ex. 83, p. 1). The report concluded that the pollution was due primarily to the discharge of industrial wastes from several companies located on "the north side of the lower end of the Creek . . .," including Pratt Letchworth Co. (steel), Ushco Manufacturing Co. (metal products), Pratt Lambert Co. (paint varnish), and Fedders Manufacturing Co. (sheet metal) ( id. at p. 6). The report indicated that the BSA investigated the Bradley Street MGP as a potential source of the oil pollution, but concluded that any discharges to the creek from the MGP were not "of a polluting nature" ( id.) since, at the time the investigation was conducted, the MGP had not been operated for the previous eight years ( id. at p. 4).⁹

9 The PSC reports and plant records indicate that 1,433 Mcf gas were produced at the Bradley Street MGP in 1934, and 3,300 Mcf were produced there in 1941.

On November 4, 1947, the Buffalo Courier Express reported that Iroquois had engaged a pumping crew to remove a "heavy oil-tar substance" from the bottom of Scajaquada Creek (WW Ex. 6). The article indicated that the cleanup of the creek had been going on for several weeks, and that during summer months "the stuff rises to the top of the water forming a thick oily scum" ( id.; see also Tr. 721 [Nakles]).

Around the same time, in the fall of 1947, Iroquois installed a filter bed at the MGP as a method of removing tarry materials from the waters discharged from the tar separators and the relief holder ( see WW Ex. 40; see also Tr. 773 [Nakles]; Becker Dep. [1/12/93], p. 48). The filter bed measured 40 ft. by 50 ft. and was filled with coke and breeze. The drain line carrying the discharge from the sump downstream of the tar separators and the relief holder was also rearranged so that the sump discharge passed through the filter basin before it entered the creek (WW Exs. 32, 40).

Between October and December 1948, a third tar separator (No. 3) was added to the Bradley Street MGP. The wastewater discharge line from tar separator No. 3 was connected to tar separator No. 2. The discharge line from tar separator No. 2 went first to the brick sump, then to the filter bed, then to the creek (WW Exs. 29, 30, 41, 42).

Gas manufacturing operations at the Bradley Street MGP ceased at the end of 1951. In 1968, Iroquois retained a demolition contractor to dismantle the manufactured gas production facilities, including generator Nos. 1 and 2, the 1,750 Mcf holder, the 150 Mcf relief holder, the purifier building, four purifiers, three condensers, three tar separators, three oil tanks, and six tar tanks (WW Ex. 46). Operation of the 10,000 Mcf holder and the mixed gas compressor was discontinued, and that equipment was placed on standby ( id.). The large holder, a brick building, the boiler house and stack, a railroad trestle, and a coal pile were all that remained on the Property's surface at the time it was purchased by Westwood in September 1972 (WW Exs. 59, 61).

II. Creek Filling Operations at the Property

As already mentioned, site maps produced from National Fuel's engineering records reveal that Scajaquada Creek originally flowed well onto the northwest section of the Westwood Property, forming a substantial inlet or lagoon ( see WW Exs. 47-50).¹⁰ Although there are no contemporaneous records depicting actual site activity during the period, the preponderance of the expert testimony and documentary evidence suggests that the inlet was significantly reduced in size by filling operations which occurred prior to 1897, when Peoples Gas purchased the Property and built the Bradley Street MGP ( see, e.g., Tr. 370-72 [Faust]; compare WW Ex. 83 (NF Ex. 54), Fig. 3-1, with NF Ex. 1 and WW Ex. 47).

10 The site maps depicting the continuing encroachment of the creek onto the Property (WW Exs. 47 and 49) are undated. However, both documents are inscribed "Iroquois Gas Corporation," and can be presumed to post-date December 31, 1922, when Iroquois took over the operation of the MGP. In addition, a 10 million cubic foot gas storage holder was erected in the southwest portion of the Property in 1926 ( see WW Exs. 4D, 33). Thus, it is reasonable to conclude that WW Ex. 47, on which the storage holder is not depicted, pre-dates 1926, and that WW Ex. 49, which shows the proposed location for the holder, is likely to be from 1925.

National Fuel concedes that the fill placed at the Property prior to 1897 did not contain MGP wastes, although this material may have included tar, oil, and other wastes similar in chemical composition to wastes associated with MGP operations. According to National Fuel, pre-1897 filling activity accounts for most of the fill material placed in the area of the former inlet. However, the preponderance of the evidence presented at trial shows that a substantial amount of fill material was placed in that area after the commencement of MGP operations.

For example, the first available aerial photograph of the area, dated 1926 (WW Exs. 51, 94A), shows the inlet still present on the Property, though substantially reduced in size from the depictions in the 1884 and 1891 site maps ( see appendices to WW Ex. 70). An aerial photograph taken in 1938 shows a significant narrowing of that portion of the creek, as compared to 1926, indicating that filling had occurred along the creek bank in the northwest section of the Property between 1926 and 1938, when the Property was owned by Iroquois (WW Ex. 52). By November 1953, Scajaquada Creek no longer flowed onto any portion of the Property (WW Ex. 53).

Wayne Grip, Westwood's aerial photography interpretation expert, testified at the allocation trial. Based on his interpretation of the aerial photographs of the Westwood Property taken in 1926, 1938, 1942, 1951, and 1989 (using both monoscopic and stereoscopic images), Mr. Grip estimated that approximately 14,600 cubic yards of fill material were placed on the east bank of the creek in the northwest section of the Property between 1926 and August 1938 (Tr. 518-19); approximately 2,800 cubic yards were placed there between August 1938 and April 1942 ( id. at 520); and that approximately 1,800 cubic yards were placed there between April 1942 and September 1951 ( id. at 522-23). As a result, between 1926 and 1951 a total of approximately 19,200 cubic yards of fill were deposited in the area of the former inlet, and the eastern bank of Scajaquada Creek in the vicinity of the Westwood Property advanced approximately 100 feet to the west ( id. at 601-02; see also WW Ex. 105).

Mr. Grip's testimony also confirmed that a significant proportion of the filling activity in the northwest section of the Property — as much as 70 percent — occurred prior to 1926 ( id. at 540-42; see also WW Exs. 47-50; 105; NF Ex. 1). Mr. Grip found it "possible, but not likely" that all of the fill material in this area was placed there prior to 1917 (Tr. 546).

III. The Sale of the Property to Westwood

In April 1971, Iroquois estimated that it would cost approximately $40,000 to prepare the Property for sale, exclusive of the cost for demolition of the remaining structures (WW Exs. 56, 63). The State University College at Buffalo had earlier expressed an interest in leasing approximately 2.8 acres of the Bradley Street property for use as a student parking lot ( see WW Ex. 62), and in June 1971, the Assistant Secretary of Iroquois, John Fox, scheduled a meeting with college officials to discuss the property. As viewed by Mr. Fox, the meeting presented "a rare opportunity for [Iroquois] to unload a white elephant" (WW Ex. 64). Discussions between Iroquois and the college explored the possibility of selling the property for $130,000, but the sale never materialized because the State of New York ultimately could not come up with the necessary funds ( see WW Exs. 65, 67). Buffalo Structural Steel, an adjacent landowner, had also expressed an interest in the Property, but was unwilling to assume the obligation of demolishing the remaining structures, which was estimated to be $100,000 (WW Ex. 67).

In July 1972, Iroquois agreed to sell the Property to Westwood for $60,100 (WW Ex. 58; NF Ex. 57). Westwood had occupied an adjacent parcel since at least 1942, and had expressed an interest in acquiring the Property to expand its manufacturing and warehousing facilities. Westwood also agreed to assume the demolition costs ( see WW Ex. 67). The sales contract provided Westwood the right to pre-closing access to the Property to "(a) inspect the Premises upon reasonable notice to the Seller; (b) enter the Premises for purposes of inspection and planning for Purchaser's occupancy and for the demolition of buildings and improvements; and (c) commence the demolition of buildings and improvements situated upon the Premises" (WW Ex. 58, p. 3). The contract further provided:

Seller understands that Purchaser intends to demolish the buildings, tanks, pipelines (including those above and beneath the surface of the ground) and other improvements situated on the Premises. Such demolition will require the use of cutting torches and other tools and equipment which may produce flame, heat or sparks. Seller represents and warrants that all buildings, tanks, pipelines (both above and beneath the surface of the ground) and other improvements situated on the Premises have been purged (with an inert gas) of natural gas and other chemicals used by Seller in connection with its business. The Seller has advised Purchaser and Purchaser's demolition contractor that any such purging may, nevertheless, leave residual amounts of natural gas and other chemicals which would require use of due care and constant testing and surveillance if cutting tools, cutting torches and other tools and equipment which may produce flame, heat or sparks are used during demolition.

( Id. at pp. 6-7). The sale was closed, and Westwood took title to the Property on September 1, 1972 (WW Exs. 58, 67, 68). The total transaction amount of $106,338.68 reflected the purchase price of $60,100 and tax adjustments in the amount of $46,238.68 (WW Ex. 68). On August 29, 1972, Westwood entered into a contract with Northern Demolition, Inc., for the demolition and removal of the remaining structures from the Property for the sum of $85,070 (WW Ex. 59).

IV. Westwood's Construction Activity

In 1973, after its contractor had completed the demolition of the large gas holder and remaining buildings, Westwood constructed a 100,000 square foot warehouse on the southern section of the Property. This warehouse is known as Building No. 6. The northern section of the Property was left vacant and unused until 1985.

Geotechnical borings conducted prior to the 1973 construction of Building No. 6 revealed large amounts of industrial fill and an area of black or oily materials ( see WW Ex. 70, Appx. C-1). However, Dr. Charles Faust, one of Westwood's hydrogeological experts, testified that such findings were unremarkable in view of the industrial history of the site and would not, at the time, have warranted any type of environmental response (Tr. 253-56). In addition, these borings were drilled on the southern portion of the Property where Building No. 6 was constructed to assess the load-bearing capabilities of the subsurface materials, not as part of an environmental investigation (Tr. 204; 237-38 [Dauria]).

In late 1984, Westwood began to develop plans for the construction of Building No. 9, a 100,000 square foot addition to Building No. 6, to be located on the northern section of the Property. At the time Building No. 9 was designed, Westwood did not have any of the National Fuel engineering documents showing the locations of the former MGP structures that were demolished in 1968 (Radens Dep. [4/27/89], p. 14 (Item 265, tab 55)). In late 1984 and early 1985, geotechnical borings were drilled in the northern section of the Property to obtain information regarding the suitability of the subsurface as structural support for the proposed addition (WW Ex. 70, Appx. B-2). The borings disclosed a substantial amount of mixed fill underlying the northern section of the Property, along with the presence of "petroleum product saturated" materials and "petroleum product odors" ( id. at Log TB-2). Dr. Faust testified that these borings in the northern part of the Property went quite a bit deeper than the 1973 borings on the southern portion, and provided more information on the geology of the site, but — like the earlier borings — would not have suggested an environmental response (Tr. 257, 440-41). As the result of this subsurface testing program, the foundation design for Building No. 9 contemplated the use of shallow footers constructed by excavation of a 5' wide by 5' deep trench around the perimeter, compaction of the trench, partially filling the hole with pea gravel, and then pouring the concrete footer (Tr. 169-70 [Dauria]).

In late November 1985, during the excavation work for the Building No. 9 foundation and utilities, Westwood's building contractor (Siegfried Construction Company) encountered several subsurface structures, including the remains of at least one tar separator which was filled with tar, bricks, a metal drum, and other debris; a concrete dike surrounding the former oil storage tank in the northeastern portion of the Property; pipes containing hardened "tar-type" material on the inside; and various foundations. In some locations, what appeared to be fill contaminated with a black/brown organic liquid, cinders, oil/tar saturated wood chips, ash, breeze, and other oily material were also encountered at depths of no more than 5 feet. Upon encountering the tar separator, construction was halted (Tr. 174-183, 188 [Dauria]).

Westwood contacted an environmental consultant, Termini Associates, to assist with evaluation and removal of the debris. On November 25, 1985, preliminary test results were available which indicated that the debris may be considered industrial waste rather than construction debris, and the New York State Department of Environmental Conservation ("DEC") was notified (NF Ex. 58, pp 1-2; Tr. 189 [Dauria]). Westwood also contacted National Fuel to inform the company of the subsurface conditions that had been encountered and to obtain information regarding what else might be buried on the Property. National Fuel provided Westwood with certain information, including an aerial photograph and other drawings depicting the various MGP structures that had been located on the Property (Radens Dep. [4/27/89], pp. 14, 75-78, 153-56). However, National Fuel took the position that it had no financial or legal responsibility for the condition of the Property, that the materials encountered were not hazardous substances, and that the only reason for remediation of the site was to facilitate Westwood's construction program ( see WW Ex. 90).

In December 1985, at the request of the DEC, Westwood and Termini developed a "Resumption of Construction Activities Plan" to allow Building No. 9 construction work to resume and proceed concurrently with its implementation of the site investigation program to characterize the nature and extent of the contamination discovered during the course of the excavation work ( see NF Ex. 58). The plan was reviewed and approved by DEC, and Building No. 9 construction work resumed in April 1986 (Tr. 184-86, 224-25, 231-32 [Dauria]). Building No. 9 was completed in the fall of 1986 ( id. at 189-90). V. Site Investigation

In accordance with the Resumption of Construction Activities plan, in late 1985 and early 1986 Westwood installed six monitoring wells: B-3, located at the extreme eastern edge of the Property; B-5, located at the extreme southern edge of the Property; B-6, B-7 and B-8, located along the eastern bank of Scajaquada Creek, west of proposed Building No. 9; and B-19, located on the western side of the Property, just north of Building No. 6 (WW Ex. 83 (NF Ex. 54), p. 2-3, Fig. 2-1). The logs of the borings into which wells B-6, B-7 and B-8 were installed revealed the presence of oil-soaked fill materials starting at depths of approximately 2 to 3 feet, 17 to 21 feet, and 19 to 22 feet, respectively (WW Ex. 70, Appx. A-1). An organic vapor analysis of the soil cores from these borings also confirm the presence of aromatic hydrocarbons at the time of installation at the depths where the logs showed evidence of petroleum contamination (WW Ex. 74). Monitoring wells B-6, B-7 and B-8 were installed in fill material that was placed along the bank of Scajaquada Creek between 1926 and 1942 (Tr. 326-27 [Faust]; 532-33 [Grip]). Well B-8 penetrates only fill material that was placed on the Property after 1926 (Tr. 538-39 [Grip]).

In March 1986, twelve test pits were excavated on the northern section of the Westwood Property. The observations regarding the nature of the soils and other materials encountered were logged, and the results were reported to the DEC. The logs for these pits reveal widespread contamination with petroleum/oil, as well as other wastes associated with MGP operations (WW Ex. 70, Appx. A-2).

In early 1987, when it became apparent that the site investigation would require expertise in geology and hydrogeology, Westwood retained GeoTrans, Inc. ("GeoTrans") to replace Termini as its environmental consultant (Tr. 194 [Dauria]; 251-52 [Faust]). GeoTrans developed a proposed work plan for continued groundwater investigation and remediation at the site, specifically addressing National Fuel's concerns regarding the impact of Westwood's excavation for foundation construction and installation of utilities on contaminant migration ( see WW Ex. 101). Westwood invited National Fuel to participate in the development and implementation of the site study plan on a cost-sharing basis. In a letter dated January 25, 1989, National Fuel declined the invitation, responding that it viewed Westwood's plan as "unnecessarily costly" and ineffective "to address what National Fuel believes is the predominant, if not the exclusive, cause of any chemical migration that may be occurring on or off the site" (WW Ex. 99).

In the same letter, National Fuel requested permission to enter the Westwood Property for the purpose of implementing a June 13, 1988 field investigation plan proposed by its consultant, Ecology Environment ("EE"). However, as set forth in a letter dated March 23, 1989, DEC determined that the National Fuel/EE study plan was "inadequate in addressing the problems associated with the site" (WW Ex. 103). Accordingly, on March 30, 1989, Westwood's counsel wrote to National Fuel's counsel advising that Westwood would not permit access to the Property to conduct the proposed study that DEC had rejected (WW Ex. 100).

By letter dated November 13, 1989, DEC notified Westwood that the Property had been listed as "an inactive hazardous waste disposal site which constitutes a significant threat to public health and the environment and that a remedial program is necessary at the site" (WW Ex. 92). This determination was based on "evidence of contamination of the soil and groundwater at the Site" ( id.). The letter served as notice of the State's CERCLA claim against Westwood, and outlined Westwood's obligations under state and federal law as a party responsible for the costs of investigation and remediation. The letter also provided Westwood the opportunity to undertake the development and implementation of a remedial program in accordance with guidelines developed by the United States Environmental Protection Agency ("EPA") for conducting a CERCLA-type Remedial Investigation/Feasibility Study ("RI/FS") ( id.; Tr. 252 [Faust]). Finally, the letter advised that a similar "claim letter" had been sent to National Fuel ( id.).

By 1992, GeoTrans (in consultation with DEC) had developed a work plan for a full-blown RI/FS (Tr. 258-60 [Faust]). The objectives of the remedial investigation included:

(a) Characterizing the horizontal and vertical extent, the qualitative nature, and the quantitative levels of groundwater, soil, and nonaqueous phase liquid ("NAPL") contamination;

(b) Evaluating the potential for contaminated groundwater to move offsite, particularly to Scajaquada Creek;

(c) Evaluating the potential for non-aqueous phase contaminants to move off-site, particularly to Scajaquada Creek;

(d) Determining the rate of contaminant loading to Scajaquada Creek from the Westwood Property;

(e) Further identifying where on the Westwood Property hazardous substances were located;

(f) Further determining the types, quantities, and extent of buried wastes;

(g) Collecting sediment samples from Scajaquada Creek, and determining the extent of contamination derived from the site;

(h) Expanding the groundwater monitoring network of wells and piezometers;

(i) Collecting sufficient data to prepare a baseline risk assessment; and

(j) Proposing remedial action objectives for each contaminated environmental medium. (WW Ex. 83, pp. 2-1 to 2-2). The remedial investigation work was conducted between April 1992 and May 1993, and included additional well/piezometer installation, geotechnical testing, chemical analysis of soils, creek sediment sampling and analysis, seep and storm sewer discharge sampling and analysis, NAPL sampling and analysis, a utility bedding investigation, hydraulic testing, groundwater sampling and analysis, development of remedial action objectives, and preparation of a risk assessment ( see generally WW Ex. 83). The purpose of the feasibility study was to provide a preliminary engineering study for the selection and evaluation of the remedial alternatives ( see generally WW Ex. 84).

The final RI/FS report, as approved by DEC, was submitted in February 1994 (WW Exs. 83, 84). The RI "identified the primary source of contamination as waste materials related to the former MGP. The main source materials include free DNAPL¹¹ and soils coated with tarry substances and oily liquid. Purifier wood chips were also identified" (WW Ex. 83, p. 7-1).

11 "DNAPL" is the acronym for "dense non-aqueous phase liquid."

The contaminants detected most frequently and at highest concentrations, both on the Westwood Property and the Creek Property, were PAH and BTEX compounds, which are associated with wastes of MGP operations ( id.; Tr. 283 [Faust]). Other MGP-related contaminants, such as cyanide and various metals, were also detected ( id.). While DNAPL was present in some of the groundwater monitoring wells and piezometers, no continuous pool of DNAPL was observed on the Westwood Property; free DNAPL was observed only in the fill material at isolated locations in the northern and northwestern portions of the Westwood Property (WW Ex. 83, p. 7-1). Numerous samples of the fill material and creek sediments indicated the presence of DNAPL at residual saturation ( id. at p. 7-2). Although widespread, DNAPL contamination of the subsurface occurred in isolated and discontinuous pockets (Tr. 283-84, 285, 287 [Faust]).

The majority of the Westwood Property is covered by buildings, asphalt paving, or road gravel (WW Ex. 83, p. 7-2). The estimated volume of contaminated soil present on the Westwood Property is 156,000 cubic yards, approximately 45 percent of which lies beneath existing buildings (WW Ex. 84, p. 9-5).

The highest concentrations of contaminants were found in the northern and eastern portions of the Property (WW Ex. 83, Figures 3-1, 4-1, 4-11; p. 7-2). Like the DNAPL, the soil contamination also appeared predominantly in the fill that lies above the silty clay layer. The fill increased in thickness from south to north and from east to west and was 28 to 32 feet thick in the northwestern portion of the Property ( id. at Figure 3-12; p. 7-2). The groundwater in the fill beneath the Property was also found to be contaminated with PAHs and BTEX, similar to the contamination found in the fill itself ( id. at pp. 7-2 to 7-3; Figures 4-17, 4-19).

The FS Report documents the development of various approaches for achieving the remedial action objectives, i.e., the protection of human health and the environment, and remediation of contaminated environmental media ( see WW Ex. 84, p. 9-1). In developing the remedial approaches, a number of site specific factors were taken into consideration, including the following:

• The depth to the water table ranges from nine to 18 feet, and is less than 15 feet over much of the Site. Based on this information, the average depth for potential excavation activities is approximately 12 feet.

• Buildings cover approximately two-thirds of the Site and most of the contaminant source areas. The buildings are active facilities, and demolition is not expected in the near future. The buildings act as an effective cap on the contaminants, preventing exposure and infiltration. Based on the risk associated with this Site, no remedial technology or alternative will consider demolition of the buildings.

• The target chemicals of concern identified in the risk assessment are PAHs, benzene, toluene, ethylbenzene, and xylenes (BTEX). BTEX and PAHs also are target chemicals of concern in the groundwater. In developing RAOs [remedial action objectives] for the groundwater, benzene has been selected as the indicator chemical for evaluating the extent of contaminated groundwater at the Site due to its relative mobility and toxicity.

• The hydrogeologic and contaminant characteristics of the shallow groundwater system render groundwater restoration infeasible within any reasonable time frame. The important limiting characteristics include fill heterogeneity and the presence of a viscous DNAPL. . . .

• In cases of significant risk, the goal of the groundwater cleanup is to use the best available technology and best management practices as long as it is reasonable and practical to prevent migration and to remove contaminants until water contamination remains below the action level of any contaminant. . . .

(WW Ex. 84, p. 9-2).

In February 1994, the DEC issued a proposed remedial action plan ("PRAP") describing the remedial alternatives for the facility and identifying the preferred remedial alternative, based on the findings contained in the final RI/FS ( see WW. Ex. 82, p. 2). In connection with the PRAP, the DEC solicited public comments and held a public hearing, and on March 28, 1994, issued its Record of Decision ("ROD") establishing the remedial action to be taken at the facility (WW Ex. 85). In July 1995, Westwood entered a consent decree, with the DEC obligating Westwood to perform the "Terrestrial Component" of the remedy described in the ROD, which included all areas of the facility except the eastern bank of the creek and the sediments in the creek ( i.e., the Creek Property) (WW Ex. 82).

Meanwhile, in August 1993, the State sought to compel National Fuel to participate in the investigation and remediation of the site by bringing National Fuel into this action as a defendant. On November 15, 1994, the State moved for summary judgment against National Fuel, seeking an order requiring National Fuel to conduct the "Riparian Component" of the remedy addressing the Creek Property ( i.e., the areas of the eastern bank of Scajaquada Creek and the creek sediments believed to be contaminated with hazardous substances from the former MGP operations), as set forth in the ROD. In lieu of adjudication of the motion, National Fuel agreed to the entry of a consent decree with the State to perform the Riparian Component (Item 106; see WW Ex. 82, pp. 2-3).

VII. The Remedial Work

As required by its Consent Decree, National Fuel conducted a supplemental predesign investigation of the sediments in Scajaquada Creek. The results of that investigation were reported in a document entitled "Phase II Design Investigation Report" prepared by National Fuel's consultant, Remediation Technologies, Inc. ("RETEC"), dated January 1996 (WW Ex. 77; NF Ex. 98). RETEC's report indicates that the contamination present in the creek sediments was widespread but heterogeneous in nature. The sediments, which overlay a stiff lower clay layer, ranged from 3.5 feet to 14.6 feet in depth and reflected the heterogeneity associated with fluvial deposition and the rechanneling episodes that had occurred in the study area. The sediments were found to consist of a combination of silts, gravels, clays, and fill (such as bricks, slag, and concrete). A brown NAPL was observed in 51 of 116 borings in the sediments, predominantly in areas where the sediments consisted primarily of gravel layers. Elevated levels of PAHs ( i.e., above the background concentration of 50 ppm total PAHs) were found at various locations in the sediments throughout the entire length of the Creek Property, including sediments several hundred feet upstream and several hundred feet downstream of the Westwood Property ( id., Executive Summary and § 3.3).

The Terrestrial Component of the selected remedy, as set forth in the ROD, consisted of the following:

• Placement of a clay cap over the contaminated area of the Property.

• An impermeable sheet piling barrier wall for hydraulic gradient control.

• Extraction wells for contaminated groundwater.

• Groundwater and NAPL treatment before disposal.

• On-site biotreatment of soil and groundwater, subject to a successful treatability study.

• Long-term monitoring, land use restriction, and fencing.

(WW Ex. 85, p. ii). The Riparian Component of the remedy consisted of the following:

• Excavation of contaminated sediments originating from the Site.

• Fencing and use restriction in the stretch of creek under excavation for the duration of the work.

• Construction of a temporary on-site storage and de-watering facility for the excavated sediments.

• Pre-treatment and disposal of waste water from the de-watering operation.

• Off-site transport of the de-watered sediments for thermal destruction or disposal by other approved and suitable methods consistent with federal/state regulations.

• Post-sediment removal confirmatory sampling.

( Id.).

In 1996, Westwood and National Fuel jointly funded the installation of the sheet pile wall, which spanned a distance of approximately 400 feet along the high water mark on the eastern creek bank. The purpose of the sheet pile wall was to prevent creek water from being drawn into the groundwater recovery wells on the Westwood Property, to contain the contaminants within the creek bank, and to enhance the effectiveness of the groundwater pump and treat system to be installed on the downgradient side of the Property near the crest of the eastern creek bank (Tr. 305-06 [Faust]; 623-24 [Finn]).

Westwood completed installation of the clay cap, the groundwater extraction wells, and the treatment system in late 1997. Because the treatability study was not successful, the on-site soil bioremediation system was not implemented. However, Westwood is required to reassess the available bioremediation technologies every five years (WW Ex. 86, p. 41). The groundwater pump and treat system has been in operation since its installation, and ongoing monitoring and maintenance has been conducted in accordance with the Consent Decree. Those activities are expected to continue for at least another 25 years ( see WW Exs. 86, 88; Tr. 306-307 [Faust]).

The groundwater pump and treat system required as part of the Terrestrial Component of the remedy being implemented by Westwood consists of the extraction wells, an oil/water separator, two bag filters, an organoclay adsorber, two activated granular carbon filters, and a flowmeter (WW Ex. 86, pp. 9-11). This system is designed to extract contaminated groundwater and NAPL from the Property and to remove contaminants to levels acceptable for discharge to the Buffalo Sewer Authority under permit (Tr. 307-11 [Faust]).

The oil/water separator component of the groundwater treatment system is designed to separate, by gravity, the DNAPL from the water being pumped from beneath the Property. Its function and physical operation is similar to that of the tar separators at the former MGP. The remainder of the on-site treatment system serves a purpose similar to that of the MGP filter bed in that it removes tar/oil/water emulsions, particulates, and dissolved contaminants discharged from the separator. The groundwater/NAPL extracted from the Property must pass through all four stages of the treatment system in order to meet the discharge limits specified in the Buffalo Sewer Authority permit. The discharge from the system is then subject to further treatment at the Buffalo Sewer Authority prior to being discharged to the Niagara River (Tr. 308-11 [Faust]).

Following completion of National Fuel's Phase II supplemental investigation of Scajaquada Creek, and subsequent negotiations with the DEC regarding proposed revisions to the Riparian Component suggested by the investigation, National Fuel's contractor undertook to complete the revised Riparian Component remedial work which consisted of the following:

• Excavation of approximately 19,000 cubic yards of contaminated sediments to a maximum depth of 6 feet.¹²

• Placement of a protective cap over the remaining contaminated sediments.

• Handling, transportation, and off-site disposal of dredged contaminated sediments and water resulting from the dredging operations.

• Installation of two DNAPL recovery systems, one near the West Avenue bridge and one near the railroad bridge.

• Site restoration, including replanting all disturbed areas and restoration of aquatic vegetation.

12 In some areas, the contaminated sediments were 14 feet deep.

(WW Ex. 79, pp. 1-4 through 1-5). Field work began in June 1998 and was completed in June 1999. A total of 18,976 cubic yards of contaminated sediments and debris, made up of approximately 13,000 tons of material considered non-hazardous under RCRA (Resource Conservation and Recovery Act) and 15,000 tons of RCRA hazardous waste, were excavated and taken off-site for disposal. The cap was placed over a 1,600-foot reach of the creek bed. A DNAPL recovery system was installed near the West Avenue bridge. Site restoration work was completed in 2000 ( see WW Ex. 79).

The parties have stipulated (for the purposes of the allocation phase only) that as of December 31, 2000, Westwood had incurred $4,187,038.35 in past response costs, and National Fuel had incurred $5,805,177.91 in past response costs, for a total of $9,992,216.26 in past response costs relating to both the Terrestrial and Riparian Components of the site investigation and remedial work.

CONCLUSIONS OF LAW

I. Prior Determinations

As a result of the court's resolution of various motions for summary judgment in this action and in No. 88-CV-1122, see Westwood Pharm. Inc. v. National Fuel Gas Dist. Corp., 737 F. Supp. 1272 (W.D.N.Y. May 21, 1990) (" Westwood I"), reconsideration denied, 767 F. Supp. 456 (W.D.N.Y. June 19, 1991) (" Westwood II"), aff'd, 964 F.2d 85 (2d Cir. March 11, 1992) (" Westwood III"); State of New York v. Westwood-Squibb Pharm. Co., Inc., 138 F. Supp.2d 372 (W.D.N.Y. December 12, 2000) (" Westwood VI" [Item 195]); Item 225, June 25, 2001 Decision and Order (" Westwood VII," amending Westwood I and Westwood VI), and its resolution of the successor liability issues following the Phase I trial in this action, see State of New York v. Westwood-Squibb Pharm. Co., Inc., 981 F. Supp. 768 (W.D.N.Y. September 25, 1997) (" Westwood IV" [Item 147]), motion to amend denied, 62 F. Supp.2d 1035, 1047 (W.D.N.Y. July 28, 1999) (" Westwood V" [Item 166]), the court has already made the following determinations:

Westwood, as the current owner of the Westwood Property constituting a part of the facility, is strictly and severally liable under CERCLA for its equitable share of the response costs incurred and to be incurred at the facility. Westwood VII, Item 225, p. 2 (amending Westwood I, 737 F. Supp. at 1285, and Westwood VI, 138 F. Supp.2d at 375). National Fuel, as the successor in interest to Iroquois, Niagara Gas, and People's Gas, and by its agreement to assume any liabilities attributable to its parent, National Fuel Gas Corporation (based upon the conduct of its agent, William J. Judge), is likewise strictly and severally liable under CERCLA for its equitable share of the response costs incurred and to be incurred at the facility, by virtue of its status as an owner and/or operator of the MGP at a time when hazardous substances were disposed of at the facility. Westwood V, 62 F. Supp.2d at 1047; see also Westwood VI, 138 F. Supp.2d at 388, 391-92.

The Creek Property and the Westwood Property (including the 8.8 acres of land as well as the MGP and its various underground structures) constitute a single CERCLA facility because the contaminants found on both the Westwood Property and the Creek Property were generated by the MGP operations conducted at the Westwood Property between 1898 and 1951. Westwood VI, 138 F. Supp.2d at 375-83.

All of the investigations and remedial work at the facility have related to contamination attributable to the MGP operations conducted at the Westwood Property between 1898 and 1951. Id. at 374.

The substances found at the facility during Westwood's 1985-1986 construction activities and the subsequent investigations, including the remedial investigation conducted by Westwood and the supplemental creek sediment investigation conducted by National Fuel, included PAHs, BTEX, cyanide, and sulfide. These substances are typical constituents of wastes generated from MGP operations of the type conducted at the Westwood Property by National Fuel's predecessors, and are considered "hazardous substances" as that term is defined in CERCLA § 101(14), 42 U.S.C. § 9601(14) (WW Ex. 15). See Westwood VI, 138 F. Supp. at 384-85.

No MGP wastes were deposited at the facility prior to 1897 or subsequent to Westwood's 1972 purchase of the Property. The disposal of MGP-related wastes occurred at various times when National Fuel was the responsible owner of the Property — i.e., between 1898 and September 1, 1972 — and when it was the responsible operator of the MGP — i.e., between 1898 and 1901, and from 1917 through 1972. Westwood VI, 138 F. Supp.2d at 385, 391-92.

National Fuel bears successor liability for the entire period of the MGP operations at the Westwood Property, including the period from 1901 through 1917 during which the MGP was operated by Buffalo Gas, by virtue of the contractual relationship between Buffalo Gas and People's Gas under which Buffalo Gas conducted its manufactured gas operations on the Westwood Property. Id. at 387-88; see 42 U.S.C. §§ 9607(b)(3), 9601(35)(A). National Fuel is liable as the successor "owner" of the Property from 1898 through 1925, by virtue of the 1925 foreclosure sale which resulted in the de facto merger of People's Gas into Iroquois. See Westwood V, 62 F. Supp.2d at 1037-42. National Fuel is also liable as the successor "operator" of the facility from 1898 through 1901, by virtue of Iroquois' assumption of People's liabilities as the result of the de facto merger, see id. at 1045-46, and from 1917 through 1921, by virtue of William Judge's actions as an undisclosed agent for National Fuel Gas Corporation when he purchased the assets of Buffalo Gas in 1917 and operated the facility from 1917-21. Id. at 1043-45.

In a post-trial motion filed on February 23, 2004 (Item 292), National Fuel once again challenges this court's findings with respect to successor liability under CERCLA. National Fuel argues that the Second Circuit's intervening decision in State of New York v. National Services Industries, Inc., 352 F.3d 682 (2d Cir. 2003), has expressly overruled its prior holding in B.F. Goodrich v. Betkoski, 99 F.3d 505 (2d Cir. 1996), upon which this court relied in ruling on the successor liability issue in both its September 1997 ( Westwood IV) and July 1999 ( Westwood V) opinions.

In Betkoski, the Second Circuit recognized that CERCLA's broad remedial purposes required successor corporations to be held liable for the acts of their predecessors under certain circumstances, notwithstanding the absence of any explicit statutory provision addressing the matter. Betkoski, 99 F.3d at 518. In attempting to formulate a test for deciding when successor liability exists, the circuit court first noted the "traditional common law rule" that a corporation acquiring the assets of another corporation generally does not also take on its liabilities, unless one of the following limited exceptions apply: (1) the successor expressly or impliedly agrees to assume them, (2) the transaction may be viewed as a de facto merger or consolidation, (3) the successor is a "mere continuation" of the predecessor, or (4) the transaction is fraudulent. Id. at 519 (citing United States v. Carolina Transformer Co., 978 F.2d 832, 838 (4^th Cir. 1992), and cases from the 8^th and 9^th Circuits). The circuit court then found that, when determining whether to impose successor liability under the "mere continuation" exception, courts should use the "substantial continuity" approach (asking if the successor maintains the same business, with the same employees doing the same jobs, under the same supervisors, working conditions, and production processes, and produces the same products for the same customers) rather than the common law "identity" test (which requires the existence of a single corporation after the transfer of assets, with an identity of stock, stockholders, and directors between the successor and predecessor corporations). The Second Circuit saw the "substantial continuity" approach as more consistent with CERCLA's broad remedial goals than "the older and more inflexible `identity' rule." Betkoski, 99 F.3d at 519.

In National Services Industries, the Second Circuit found that the substantial continuity test could no longer be applied to determine CERCLA successor liability in light of the Supreme Court's decision in United States v. Bestfoods, 524 U.S. 51 (1998). Bestfoods held that CERCLA's failure to directly address a matter as fundamental as corporate successor liability "demands application of the rule that `in order to abrogate a common-law principle, the statute must speak directly to the question addressed by the common law.'" Bestfoods, 524 U.S. at 63 (quoting United States v. Texas, 507 U.S. 529, 534 (1993)). Because the substantial continuity test adopted in Betkoski was "not a sufficiently well established part of the common law of corporate liability to satisfy Bestfoods' dictate . . .," National Services Industries, 352 F.3d at 686, and in fact resulted in a "special rule for use in CERCLA cases" that departed from the common law rules of successor liability, id., the Second Circuit deemed it "no longer good law." Id. at 687. However, the circuit court took care to note that its abrogation of the substantial continuity rule affected only the "mere continuation" exception to the traditional common law rule that a corporation acquiring the assets of another corporation does not take on its liabilities. Id. at 685.

In its September 1997 decision, this court carefully considered the facts presented on the record at the Phase I trial as applied to the " de facto merger" exception, and found that National Fuel succeeded to the liabilities of People's Gas by virtue of the de facto merger between People's and Iroquois as the result of the November 1925 foreclosure sale. The court did not engage in a "substantial continuity" analysis, but took particular note of the Second Circuit's Betkoski decision, quite properly concluding that Betkoski primarily stood for two propositions: "that federal common law applies to CERCLA liability in this circuit and that the substantial continuity test applies to an analysis of the `mere continuation' exception." Westwood IV, 981 F. Supp. at 787. The court found "nothing in Betkoski which upsets the de facto merger test [of Arnold Graphics Indus. v. Independent Agent Ctr., 775 F.2d 38, 42 (2d Cir. 1985)] widely employed in this circuit." Id. Then, after finding a de facto merger of People's into Iroquois upon application of the Arnold Graphics factors, id. at 790-93, the court again remarked that Betkoski "applied the substantial continuity doctrine to the `mere continuation' exception only." Id. at 793. The court "decline[d] to modify the Arnold Graphics test based on the substantial continuity doctrine." Id.

In its July 1999 ruling on National Fuel's Rule 52(b) motion to amend Westwood IV's findings of fact and conclusions of law, this court did engage in the substantial continuity analysis embraced by Betkoski in reaching the determination that Iroquois was the corporate successor to People's for the purposes of CERCLA ownership liability. Westwood V, 62 F. Supp.2d at 1038-40. However, the court also reiterated its previous finding that Iroquois succeeded to People's corporate liabilities based upon the de facto merger analysis, once again applying the Arnold Graphics factors. Id. at 1041-43.

National Fuel contends that the National Services Industries and Bestfoods decisions require this court to reconsider its "liberal, relaxed" application of the Arnold Graphics test, and to once again engage in an analysis of the de facto merger issue using traditional common law principles. This contention is rejected. In this court's view, neither National Services Industries nor Bestfoods has upset the longstanding de facto merger analysis under Arnold Graphics, which this court has consistently applied in its prior decisions. Accordingly, the court declines National Fuel's invitation to once again revisit the ruling that National Fuel is liable under CERCLA as the owner of the Property from 1898 through 1925, by virtue of the 1925 foreclosure sale which resulted in the de facto merger of People's Gas into Iroquois.

II. Allocation of Response Costs in a CERCLA Contribution Action

CERCLA Section 113(f)(1) provides:

Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate. Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 9606 of this title or section 9607 of this title.

42 U.S.C. § 9613(f)(1). Unlike the joint and several liability imposed on responsible parties in a recovery action governed by § 107, liability for contribution under § 113 is several only, with the result that each party is responsible only for their proportionate equitable share of the harm caused at the site. Kalamazoo River Study Gr. v. Menasha Corp., 228 F.3d 648, 653 (6^th Cir. 2000); Seneca Meadows, Inc. v. ECI Liquidating, Inc., 16 F. Supp.2d 255, 258 (W.D.N.Y. 1998).

Section 113(f)(1) does not limit the court to any particular list of factors in allocating response costs among responsible parties. Instead, it affords a district court broad discretion to balance the equities in the interests of justice. Bedford Affiliates v. Sills, 156 F.3d 416, 429 (2d Cir. 1998) (citing Environmental Transp. Systems, Inc. v. ENSCO, Inc., 969 F.2d 503, 509 (7^th Cir. 1992) ("[T]he language of [CERCLA § 113(f)] clearly indicates Congress's intent to allow courts to determine what factors should be considered in their own discretion without requiring a court to consider any particular list of factors.")). In enacting this provision, Congress did not intend to require meticulous findings of the precise causative contribution that each of the parties made to the site. Rather, the intent was to have the court deal with each situation by creative means, considering all of the equities and balancing them in the interests of justice. See United States v. R.W. Meyer, Inc., 932 F.2d 568, 573 (6^th Cir. 1991).

The following are among the equitable factors that have been considered by the courts in allocating response costs under § 113(f)(1):

(a) The ability of the parties to demonstrate that their contribution to a discharge release or disposal of hazardous wastes can be distinguished;

(b) The amount of hazardous wastes involved;

(c) The degree of toxicity of the wastes involved;

(d) The degree of involvement by the parties in the generation, transportation, treatment, storage, or disposal of the wastes;

(e) The degree of care exercised by the parties with regard to the wastes involved, taking into account the hazardous characteristics of such wastes;

(f) The degree of cooperation by the parties with federal, state, or local officials to prevent harm to the public health or the environment;

(g) The benefits received by the parties from the contaminating activities; and

(h) The relative fault of the parties.

R.W. Meyer, 932 F.2d at 571-73.

In addition to these factors, courts have also considered such issues as: (i) equitable defenses, including the doctrine of caveat emptor, as mitigating factors, see Smith Land Improv. Corp. v. Celotex Corp., 851 F.2d 86 (3d Cir. 1988), cert. denied, 488 U.S. 1029 (1989); (j) the circumstances and conditions involved in the property's conveyance, including the price paid and discount granted, see Amoco Oil Co. v. Borden. Inc., 889 F.2d 664 (5^th Cir. 1989); (k) the relationship of the wastes sent to the remedy, see Control Data Corp v. S.C.S.C., 53 F.3d 930 (8^th Cir. 1995); (l) the benefit of any increase in the value of property resulting from its being cleaned up, see United States v. Consolidation Coal Co., 184 F. Supp.2d 723, 744 n. 21 (S.D.Ohio 2002), aff'd in part, vacated in part on other grounds, 345 F.3d 409 (6^th Cir. 2003); and, (m) the portion of the liability attributable to "orphan shares."¹³ United States v. Kramer, 953 F. Supp. 592, 598 (D.N.J. 1997). "In a nutshell, allocation is a highly fact-intensive process that depends upon the particular circumstances of each case." United States v. Davis, 31 F. Supp.2d 45, 63 (D.R.I. 1998) (citing Environmental Trans. Systems, Inc. v. ENSCO, Inc., 969 F.2d 503, 509 (7^th Cir. 1992) ("[I]n any given case, a court may consider several factors, a few factors, or only one determining factor . . . depending on the totality of the circumstances presented to the court."), aff'd, 261 F.3d 1 (1^st Cir. 2001).

13 An "orphan share" is that portion of the liability otherwise attributable to identifiable parties that are liable, but are defunct, insolvent, judgment proof, or are otherwise unable to pay; or to identifiable wastes for which no responsible party is known. As with other response costs, orphan shares are properly allocated among the viable liable parties as equity dictates. See Centerior Serv. Co. v. Acme Scrap Iron Metal Corp., 153 F.3d 344, 354 n. 12 (6^th Cir. 1998); Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1303 (9^th Cir. 1997).

Unlike most reported allocation cases, in this case the primary source of the hazardous waste problem which required remediation is relatively clear: the disposal or discharge of MGP-related wastes at various times between 1898 and 1951 by National Fuel's corporate predecessors and/or other entities for which National Fuel bears CERCLA successor liability. It is also clear that the operation of the manufactured gas plant was central to National Fuel's commercial interests. Westwood, on the other hand, bears CERCLA liability arising solely from its status as titleholder of the Property. Thus, before considering any of the litany of factors set forth above, "basic principles of equity" would suggest that the party that profited for 53 years from the creation and operation of a wasteproducing enterprise "should bear primary responsibility for the hazardous byproducts of its activity." Waste Mgt. v. East Bay Regional Park Distr., 135 F. Supp.2d 1071, 1090 (N.D. Cal. 2001) (citing Pinal Creek Group v. Newmont Mining Corp., 118 F.3d 1298, 1300 (9^th Cir. 1997) (purpose of CERCLA is to ensure that party responsible for hazardous substance bears cost of remedying conditions)); Amland Props. Corp. v. Aluminum Co. of America, 711 F. Supp. 784, 789 (D.N.J. 1989) (overarching goal of CERCLA is to place cost of cleanup on parties responsible for creating the hazardous condition).

National Fuel contends, however, that a number of factors warrant shifting primary (if not total) responsibility for remediation costs to Westwood in this case. For example, National Fuel argues that its responsibility for the discharge, release, or disposal of MGP wastes can be distinguished on the basis of pre-1898 industrial activity, non-MGP-related activity, and Buffalo Gas's disposal activity during its operation of the MGP. National Fuel also argues that under the 1972 contract for the transfer of the Property, Westwood effectively took the Property "as is" and should be charged with responsibility for all conditions on the site pursuant to the doctrine of caveat emptor. National Fuel also contends that Westwood failed to exercise reasonable care during construction of Building No. 9, thereby exacerbating the loading of contaminants to Scajaquada Creek, and failed to fully cooperate with the DEC upon discovery of the need to remediate the hazardous waste problem at the Property

Accordingly, based on the parties' presentations at trial and in their written submissions, and in light of the court's findings of fact and prior rulings, the critical factors to be considered in the apportionment inquiry in this case may be grouped into the following categories:

A. The ability of the parties to demonstrate that their contribution to the discharge, release, or disposal of MGP wastes can be distinguished.

B. Caveat emptor and other circumstances of the 1972 conveyance of the Property to Westwood.

C. The degree of care exercised by the parties with regard to the wastes involved.

D. The degree of cooperation by the parties with federal, state, or local officials, and each party's demonstrated willingness to accept responsibility for remediation.

The court now turns to an assessment of these factors, based on the findings set forth above and the weight of the extensive evidence presented by the parties at the allocation trial.

A. The Ability of the Parties to Demonstrate That Their Contribution to the Discharge, Release, or Disposal of MGP Wastes Can Be Distinguished

It is beyond dispute in this case that the vast majority of the hazardous substances requiring remediation at the facility are derived from or related to the discharge, release, or disposal of MGP wastes at the Westwood Property during a time when one or more of National Fuel's predecessors was the owner and/or operator of the facility. As demonstrated by the court's findings of fact, the preponderance of the evidence is that over 3,650,000 Mcf of manufactured gas were produced at the Bradley Street MGP during its years of operation, resulting in by-production of more than 4 million gallons of recoverable tar, of which more than 650,000 gallons were disposed of other than by sale, and anywhere between 80,000 and 400,000 gallons were discharged to the Scajaquada Creek.

Logs of the various soil borings and excavations performed during the course of construction activity, corroborated by expert aerial photography interpretation, indicate that significant filling of low-lying areas with wastes generated by gas manufacturing operations occurred at the Westwood Property throughout the operational history of the MGP ( see WW Ex. 70, Appx. B-1, B-2; see also WW Exs. 94A, 105). More specifically, boring logs from the program conducted by Westwood in 1984 and 1985 to assess the load bearing characteristics of the soil and fill materials in the area of the planned construction of Building No. 9 indicate the presence of widespread, discontinuous pockets of MGP-related contamination at various depths across the northern half of the Property pre-dating any construction activity in the area by Westwood (WW Ex. 70, Appx. B-1, B-2). In addition, leaks, drips, and spills typically occurred from the pipelines, pumps, valves, and storage vessels used to manage the tar produced from MGP operations (WW Ex. 7, pp. 47, 63; WW Ex. 8; WW Ex. 9, pp. 119, 153; Nakles Dep. [9/30/93], pp. 30-32, 42; Nakles Dep. [5/23/00], pp. 90-91).

To counter these facts, National Fuel first argues that circumstantial evidence in the case, including the history of industrial and commercial activity at the Property antedating its purchase by People's Gas in 1897, shows that pre-MGP activities resulted in the presence of hydrocarbon contaminants on the Property and in the Creek. While there is some support in the record for finding that a substantial amount of the filling of the former creek inlet or lagoon on the Property occurred prior to 1897, there is insufficient credible evidence to establish that the pre-1897 fill materials were contaminated, or that any hazardous substances containing PAHs or BTEX were disposed of at the Property prior to its purchase by People's Gas. On the other hand, Westwood's expert, Dr. Faust, relied upon the findings of the RI, prior site investigation work reports, and aerial photography analysis to conclude that the fill in the northern and northwestern sections of the Property (which was up to 32 feet thick in some places and consisted of a heterogeneous mixture of slag, cinders, bricks, concrete, rubble, wood chips, and various earthen materials) contained tar and oily liquid wastes characteristic, both physically and chemically, of wastes that would have been produced by the MGP ( see, e.g., Tr. 269, 273-275, 277, 339-41 [Faust]). Significantly, there is no direct evidence of any other source of these wastes. Accordingly, I find no basis to allocate any share of response cost liability to either party based on pre-1897 activities at or in the vicinity of the facility.

National Fuel's principal argument in terms of attempting to distinguish its contribution to the disposal of hazardous substances at the facility is that it should not be charged with responsibility for any disposal activity which might have occurred during the years Buffalo Gas operated the MGP. Again relying entirely on circumstantial evidence, National Fuel contends that the bulk of MGP waste disposal most likely occurred during the Buffalo Gas operating period, when there was no apparent market for recovered tar, and the industry had yet to recognize the need for better waste disposal practices. According to National Fuel, when considered along with the facts pertaining to Buffalo Gas's domination of the affairs of People's Gas so as to effectively deprive People's of the ability to control Buffalo Gas' activities on the Property, this record provides a sufficient basis for the court to conclude that it would be inequitable to apportion responsibility for this period to National Fuel as an "orphan share."

This argument is emphatically rejected. As discussed above, this court has previously found that National Fuel bears successor owner and/or operator liability under CERCLA for the entire period of the MGP operations at the Westwood Property — including the period from 1901 through 1917 during which the MGP was operated by Buffalo Gas. See, e.g., Westwood VI, 138 F. Supp.2d at 387-88. In doing so, the court has considered and rejected on several occasions the same "control" and "domination" argument now rehashed by National Fuel in the apportionment context.

In addition, in its October 23, 2002 ruling on the admissibility of certain allocation trial exhibits, this court specifically found that the issues pertaining to Buffalo Gas's corporate domination and control of the affairs of People's Gas are "irrelevant to the court's allocation determination" (Item 278, p. 5). To reiterate, the court stated its fundamental reason for this ruling as follows:

In light of prior proceedings in this case with respect to the issue of successor liability, and this court's decisions and orders finding National Fuel liable under CERCLA as a matter of law for contamination resulting from all gas manufacturing operations at the site from 1898 until Westwood purchased the site in 1972, . . . the question as to whether a share of the response costs should be allocated based on the relationship between People's and BGC is academic.

( Id. at p. 6).

With respect to National Fuel's "orphan share" argument, the holding in United States v. Davis is instructive. There, the district court rejected the contention that the liability allocated to the former owners/operators of a hazardous waste disposal site, and to the transporters of the wastes, should be treated as orphan shares and re-allocated among viable co-defendants because the owners/operators and the transporters were insolvent. The court explained: "An `orphan share' is that portion of response cost liability for which no known and solvent party amenable to suit bears responsibility. The mere fact that a party bearing responsibility is not before the Court does not make its share of liability an `orphan share.'" Davis, 31 F. Supp.2d at 68 (citations omitted).

In this case, the court has determined that National Fuel, amenable to suit as the viable corporate successor to People's Gas, Niagara Gas, and Iroquois, is responsible for the costs associated with the disposal of MGP wastes during the entire period of MGP operations at the Westwood Property. Under these circumstances, any share allocated to the operations of Buffalo Gas under its "lease" with People's Gas would not be an "orphan share."

In any event, National Fuel has made no showing to convince the court that, even if the share is treated as an orphan, the equities of the case require the burden of the costs associated with the operations of Buffalo Gas to be shifted from National Fuel, the corporate successor, to Westwood, which has no connection whatsoever to the disposal activities of Buffalo Gas. While Westwood is strictly liable for the contamination at the facility, its liability is based solely on its status as the current owner of a portion of the facility. It would be inequitable to allocate to Westwood any portion of the liability otherwise attributable to Buffalo Gas, given that Westwood acquired ownership of its portion of the facility several decades after Buffalo Gas ceased its operation of the MGP, and given that the corporate successor to one of the two parties who share CERCLA liability for that time period is financially viable and present before the court. Cf. Waste Management of Alameda County, Inc. v. East Bay Regional Park District, 135 F. Supp.2d 1071, 1091 N.D.Ca. 2001) (unless current owner is responsible for contamination, owned the land during disposal of the waste, or played some other contributory role, mere fact of current ownership is not usually considered significant factor in allocation analysis); see also Gopher Oil Co. v. Union Oil Co. of California, 955 F.2d 519, 523, 527 (8^th Cir. 1992) (where prior owner responsible for contamination, current owner allocated zero liability); Foster v. United States, 130 F. Supp.2d 68, 77 (D.D.C. 2001) (same).

National Fuel also contends that numerous other sources of creek sediment contamination, unrelated to MGP operations, were discovered during the course of the Riparian Component remedial work which accounted for a significant portion of the total amount of material removed during the creek remediation. John Finn, who supervised the creek remediation project, testified on behalf of National Fuel that various seeps of NAPL were found discharging from both the east and west banks, and a discharge pipe was found in the west bank, upstream of the railroad bridge (Tr. 629-39, 642; NF Ex. 102, Appx. H-2). Most significantly, a large deposit of heavy oil, not MGP waste, was found approximately 300 feet upstream of the railroad bridge, on the far side of the creek (Tr. 639-40). Approximately 100 tons of NAPL was removed from this location, and another 3,000 to 5,000 tons of contaminated sediments were removed from the creek bed adjacent to this deposit (Tr. 639-41). This represented from 10 to 15 percent of all of the material removed during the creek remediation project (Tr. 640-41). According to Mr. Finn, the non-MGP material "could have contributed to the PAHs that were found throughout" the excavated creek sediments (Tr. 641).

National Fuel argues that this evidence provides a basis for allocating liability for response costs related to non-MGP contaminated creek sediment as an orphan share, attributable to Westwood. The court agrees with this contention to a certain extent. Although this contamination is not related to any MGP disposal activities, it is present on a CERCLA site of which Westwood is the partial current owner. Since a former owner generally is liable under CERCLA § 107(a)(2) only for disposal occurring at the time of its ownership, and there is no evidence that National Fuel's predecessors did or failed to do anything that encouraged or permitted such third-party disposal at the site, see CERCLA § 107(b)(3), Westwood is chargeable as the party responsible under CERCLA § 107(a)(1) for that portion of response cost liability for which no known and solvent party amenable to suit has been identified. See Davis, 31 F. Supp.2d at 68; see also Bestfoods, 524 U.S. at 64 ("If the Act rested liability entirely on ownership of a polluting facility, this opinion might end here; but CERCLA liability may turn on operation as well as ownership. . . ."); Commander Oil Corp. v. Barlo Equipment Corp., 215 F.3d 321, 328 (2d Cir.) ("It is settled in this circuit that owner and operator liability should be treated separately."), cert. denied, 531 U.S. 979 (2000). This finding is tempered by the absence of any indication in the record to suggest that the sources of the non-MGP wastes were positively identified, or that National Fuel made any effort to determine whether those sources were traceable to an identifiable responsible party amenable to suit. Cf. Davis, 31 F. Supp.2d at 68.

Based on this analysis, I find that National Fuel has sufficiently demonstrated that its contribution to the discharge, release, or disposal of MGP wastes at the Property can be distinguished from the total amount of contaminated sediments removed during the creek remediation so as to provide a reasonable basis for equitable apportionment of some share of the responsibility for response costs to Westwood. Unfortunately, despite the extensive trial testimony and exhibits, as well as the voluminous court record accumulated over the long course of this litigation, neither National Fuel nor Westwood can point to evidence upon which any precise quantification of responsibility can be based. Instead, each party simply contends that the other is fully liable. The court is therefore left to its own discretion to determine reasonable allocable shares, depending on the totality of the circumstances presented.

B. Caveat Emptor and Other Conditions Involved in the Property's Conveyance

Central to National Fuel's allocation argument is the contention that, under the 1972 contract between Iroquois and Westwood for the sale of the Property, Westwood effectively took the Property "as is" and should be charged with responsibility for all of the response costs pursuant to the doctrine of caveat emptor. In this regard, the courts have recognized that the common law equitable defense of caveat emptor, while not a total bar to CERCLA liability, may be considered as a mitigating factor in determining response cost liability during the allocation phase of a private party contribution action. See, e.g., Smith Land Improvement Corp. v. Celotex Corp., 851 F.2d 86, 89-90 (3d Cir. 1988), cert. denied, 488 U.S. 1029 (1989); Alcan-Toyo America, Inc. v. Northern Illinois Gas Co., 881 F. Supp. 342, 347 (N.D. Ill., E.D., 1995); see also Steven B. Russo, Contribution Under CERCLA: Judicial Treatment After SARA, 14 COL.J.ENV.L. 267, 286 (1989). Under New York's caveat emptor doctrine in effect at the time of the 1972 transaction, a seller had no general duty to disclose or to remedy dangerous conditions on its property "except to disclose latent defects or material information about which it had superior knowledge." United States v. Hooker Chems. Plastics. Corp., 850 F. Supp. 993, 1059 (W.D.N.Y. 1994) (citing Kilmer v. White, 254 N.Y. 64 (1930)). Even with respect to latent defects, "the seller's duty terminated when a new owner discovered or should reasonably have discovered and had a reasonable opportunity to abate the condition." Id.

As discussed above in the court's findings of fact, the sales contract between Iroquois and Westwood disclosed the presence of "buildings, tanks, pipelines (including those above and beneath the surface of the ground) and other improvements" warranted to have been "purged (with an inert gas) of natural gas and other chemicals used by Seller in connection with its business" (WW Ex. 58, p. 7). The contract also stated "that any such purging may, nevertheless, leave residual amounts of natural gas and other chemicals which would require use of due care and constant testing and surveillance if cutting tools, cutting torches and other tools and equipment which may produce flame, heat or sparks are used during demolition" ( id.). National Fuel argues that this language sufficiently discharged its duty to disclose latent defects, and that in any event this duty terminated in 1973 when the geotechnical borings conducted prior to Westwood's construction of Building No. 6 revealed MGP contamination on the Property.

Several courts have recognized that an agreement executed before the advent of the statutory liabilities created by federal and state environmental laws can require one party to indemnify another for remediation costs incurred pursuant to those laws. See, e.g., Beazer East, Inc. v. Mead Corp., 34 F.3d 206, 211 (3d Cir. 1994) (citing cases), cert. denied, 514 U.S. 1065 (1995). With regard to a pre-CERCLA agreement, an indemnification provision will cover response costs if it is "either specific enough to include CERCLA liability or general enough to include any and all environmental liability. . . ." Id. As recognized by the Second Circuit, under New York law (which provides the rules to be applied in interpreting these types of agreements), indemnification provisions are strictly construed, and a court "cannot find a duty to indemnify absent manifestation of a `clear and unmistakable intent' to indemnify." Olin Corp. v. Consol. Aluminum Corp., 5 F.3d 10, 15 (2d Cir. 1993) (citing Commander Oil Corp. v. Advance Food Serv. Equip., 991 F.2d 49, 51 (2d Cir. 1993)).

In this case, it is beyond dispute that the language in the agreement between Iroquois and Westwood does not evidence the parties' "clear and unmistakable intent" that Westwood would assume all liabilities related to the purchase of the Property. The agreement simply provides that any buildings, tanks, or pipelines left on the Property (including underground facilities) may contain residual amounts of "natural gas and other chemicals" used by Iroquois in connection with its business. There is certainly nothing in the contract language to suggest that Westwood agreed to assume all future unknown liability for the cost of cleaning up environmental damage caused by the disposal of manufactured gas plant wastes, and hence no contractual basis for shifting any part of National Fuel's response cost liability to Westwood. See Olin Corp., 5 F.3d at 15-16; see also SmithKline Beecham Corp. v. Rohm and Haas Co., 89 F.3d 154, 159 (3d Cir. 1996); Purolator Prods. Corp. v. Allied-Signal, Inc., 772 F. Supp. 124, 130 (W.D.N.Y. 1991).

Likewise, the limited contract language advising Westwood of the possibility of residual amounts of "natural gas and other chemicals" in the buildings, tanks, and pipelines remaining on the Property both above and below ground, when considered in light of the evidence in the case showing widespread MGP-related contamination of the fill material, soils, groundwater, and creek sediments, cannot be deemed to be a disclosure of latent defects sufficient to accord National Fuel the full benefit of the caveat emptor doctrine as a mitigating factor in determining the equitable allocation of response cost liability. See Smith Land, 851 F.2d at 89-90. Although aware of Westwood's intent to demolish the remaining structures and to construct a plant expansion on the Property, Iroquois made no specific disclosure of the nature and location of subsurface structures or the possibility of MGP waste materials buried there.

It is true that, as a neighboring property owner for some 30 years prior to the sale, Westwood had reason to know about Iroquois' longstanding gas manufacturing and storage operations on the Property, as well as the pre-sale demolition of several buildings and aboveground structures. However, no gas manufacturing operations took place after 1951, more than 20 years prior to the sale. In any event, there is no convincing evidence in the record to suggest that Westwood had any direct knowledge of, or particular familiarity with, the nature of Iroquois' gas manufacturing and/or storage operations, the types and quantities of process wastes that may have been generated or released into the environment as a result of those operations, or the waste disposal practices of Iroquois and the preceding owners and operators of the MGP — all conditions, facts, and circumstances about which Iroquois clearly had superior knowledge.

Moreover, no reasonable inspection would have revealed the presence of the buried structures or the widespread subsurface contamination that was later discovered as a result of Westwood's construction activities in the filled area of the former lagoon. When Westwood purchased the Property in 1972, the northern section where the 1968 demolition had occurred was a flat, level surface covered with weeds and stones (Aversano Dep. [4/27/89], pp. 25-26; Radens Dep. [4/27/89], pp. 12-13 (Item 265, Tab 48)). There was no visible evidence of where the dismantled structures and buildings had been located (WW Ex. 15; Aversano Dep. [4/27/89], pp. 41-42, 45-46; Sacha Dep. [4/19/89], pp. 52-53 (Item 265, Tab 48)). The same visual conditions existed in November 1985, when Westwood's construction activities commenced (Tr. 176 [Dauria]). The contractual warning that "residual amounts of natural gas and other chemicals" might remain in unspecified surface and subsurface structures, and could create a fire or explosion hazard in the presence of flame, heat, or sparks during demolition activity, does not constitute disclosure or reasonable notice of the presence of buried vaults containing MGP waste and debris, or the presence of widespread subsurface tar contamination.

There is also nothing in the CERCLA apportionment cases to suggest that the doctrine of caveat emptor should be employed to shift cleanup cost responsibility from a polluting owner and operator to a subsequent purchaser, whose CERCLA liability is premised solely on its status as the current facility owner, and who neither benefitted from the seller's polluting activities nor itself conducted any such activities at the facility. To the contrary, courts that have considered caveat emptor as an equitable factor in the allocation equation have typically accorded it little weight. See, e.g., Gopher Oil, 955 F.2d at 523, 527 (where prior owner was responsible for contamination, current owner who purchased property "as is" allocated zero liability); Alcan-Toyo, 881 F. Supp. at 347 (current owner of former MGP site allocated 10 percent share of cleanup costs; owner benefitted from cleanup, and failed to conduct environmental due diligence prior to purchase even though tar wastes were visible on surface).

National Fuel also contends that Westwood should reasonably have discovered the condition of the Property based on the results of the soil borings obtained in 1973 in connection with the construction of Building No. 6. However, as discussed above, the proof at trial established that the 1973 borings were drilled to assess the load-bearing capabilities of the subsurface materials on the southern portion of the Property, and were not part of any environmental investigation (Tr. 204; 237-38 [Dauria]). The boring logs reported shallow fill consisting of bricks, silt, wood chips, and cinders. While four of the sixteen boring logs suggested the presence of oily materials, these findings were not uncommon in view of the long history of industrial activity at the site and would not have presented an actionable nuisance or warranted any type of environmental response at the time (Tr. 253-56 [Faust]).

Finally, National Fuel argues that the court should consider the sale price of $60,100 paid by Westwood (approximately 16 percent of $375,000, which is what Iroquois paid to acquire the Property in 1925) as evidence that Westwood knew it had obtained the Property at a discount because of the history of Iroquois' MGP operations at the site. However, the price paid by Iroquois in 1925 reflected the foreclosure purchase of all assets of People's Gas, including the MGP as an ongoing concern as well as distribution pipelines, compressors, and other equipment. The price paid by Westwood,¹⁴ on the other hand, reflected Westwood's agreement to assume the cost of demolition of the remaining structures, as well as Iroquois' desire to unload an unused piece of property after several other attempts to sell had failed ( see WW Exs. 64-67). As stated in a post-closing memo from John Fox to Bernard J. Kennedy, Iroquois' Secretary and General Counsel:

14 To reiterate, the total amount paid to Iroquois was $106,338.68, including purchase price and tax adjustments.

Frankly, we were lucky to sell this "white elephant" without further capital expenditures in the form of demolition — $100,000, and at least an estimated one-year delay in the sale, resulting in more costs of $125,000 [taxes, insurance, maintenance, etc.; see WW Exs. 65 66]. With demolition and holding costs equaling $225,000 and our proceeds of sale equaling approximately $105,000, the ultimate net sale price would need to exceed $330,000 (with no weight given to the time value of the funds) to put us in the same place we are in today. My estimate of the vacant land value is no more than $220,000.

(WW Ex. 67).

Accordingly, I find no compelling reason to shift any portion of the responsibility for the cost of remediation of the facility from the polluter to the current owner based on the doctrine of caveat emptor in effect at the time, or based on any other condition of the 1972 transaction.

C. The Degree of Care Exercised by the Parties with Regard to the Wastes Involved

National Fuel contends that, in the absence of direct proof of MGP waste disposal activity by any of its predecessors, there is likewise no proof of its predecessors' lack of care in handling the wastes, and the court should apportion responsibility to Westwood for the costs associated with both the on-site groundwater remedy and the Creek Property remedy based on Westwood's lack of care during its post-acquisition construction work. According to National Fuel, Westwood's activity at the Property — particularly the activity associated with the construction of Building No. 9 in 1985 — caused DNAPL to mobilize and migrate across the Property, accounting for the presence of MGP-related tars in the creek sediments.

This court's review of the testimony and evidence presented at the allocation trial provides no convincing basis to accept National Fuel's "mobilization and migration" theory in full, in the face of undisputed facts showing the pre-construction presence of DNAPL and groundwater contamination throughout the facility. For example, Dr. Nakles (National Fuel's expert) and Dr. Faust (Westwood's expert) both identified three potential sources of the MGP tars found in the creek: (1) direct discharge from the MGP to the creek through sewer pipes or surface water runoff; (2) direct placement of wastes in the creek as part of fill operations; and (3) migration to the creek through the subsurface, either as a pure phase tar or as dissolved constituents in groundwater (Nakles Dep. [5/23/00], p. 90; Tr. 321 [Faust]). Dr. Nakles further expressed the opinion that while all of these sources contributed to the presence of the tar in the creek, it would be impossible to determine the time period during which each source would have been operative, or to estimate the relative quantities of tar that would have been deposited into the creek as a result of each such mechanism ( see Nakles Dep. [5/23/00], pp. 110-11).

The information contained in the PSC reports, summarized above in the court's Findings of Fact, indicates that there were two periods of major gas and tar production at the MGP — first, between 1917 and 1921 when the MGP was owned by People's and operated by Judge (WW Exs. 2A-E; NF Exs. 14-18), and second, between 1942 and 1950 when the MGP was owned and operated by Iroquois (WW Exs. 4T-4BB; NF Exs. 40-48). The engineering records for the MGP show direct discharges to the creek from the tar separators and the relief holder during both of those time periods (WW Exs. 30, 35, 36, 39). Dr. Faust testified that given the volume of DNAPL determined to be present in the creek sediments, in his opinion the flow of tar to the creek as a result of end-of-pipe discharges from various MGP facilities (including the tar separators) was the primary mechanism by which tar entered the creek, considering the relative volumes of tar that could be expected to have reached the creek through groundwater migration or from direct placement of contaminated fill in the stream bed (Tr. 321-23).

Dr. Faust also testified that the subsurface conditions identified during the 1992-93 remedial investigation were essentially the same as they were before the construction on Building No. 9 began, and that the remedial action would have been required even if no construction activity had occurred (Tr. 341-43). Based on the available results of soil and creek sediment borings, contaminated groundwater had been moving through the Property long before the construction of Building No. 9 ( id.; see also Tr. 457-58).

To the extent the tar in the creek sediments resulted from subsurface migration of dissolved constituents in the groundwater, it is undisputed that this migration would have occurred from the point in time that tars were first disposed of or spilled on-site until the sheet pile wall was installed in 1996 (Tr. 882 [Aldis]). As shown in the RI Report, the migration of contaminated groundwater from the Westwood Property to the creek would have caused approximately 62 pounds of BTEX and 110 pounds of PAHs to be discharged to the creek on an annual basis (WW Ex. 83, Appx. I). Although there is no expert testimony or other evidence that would permit a quantification of the extent to which these dissolved contaminants impacted the creek sediments, it is reasonable to assume — and the parties do not dispute — that any such impact would have been de minimis at most ( see Tr. 299 [Faust]).

With regard to the subsurface migration of pure phase tar or DNAPL, Mr. Aldis, one of National Fuel's experts, testified that whatever DNAPL had been present on the Westwood Property at the time of Westwood's construction activities would have been at equilibrium for at least 40 years, such that no subsurface migration would have been occurring. He also concluded that, while he believed that subsurface migration was the primary mechanism by which DNAPL entered the creek, the vast majority of the DNAPL that would have been deposited in the creek sediments via this mechanism would already have reached the creek well before Westwood purchased the Property in 1972 (Tr. 881-82). While Mr. Aldis did state his opinion that Westwood's construction activities mobilized the DNAPL present in the subsurface, another of National Fuel's experts, Dr. Fountain, testified that to the extent Westwood's construction activities had a mobilizing effect on the DNAPL, it would be impossible to determine the extent of that impact. In fact, Dr. Fountain further testified he could not conclude that Westwood's construction activities caused the subsurface DNAPL to move more than two feet (Tr. 947-48).

As part of its remedial investigation, Westwood was also required to estimate the potential contaminant loading to the creek from the Westwood Property. The results of these calculations are set forth at Appendix I of the RI Report (WW Ex. 83). Although no evidence of subsurface NAPL migration had been observed during the RI, based on the information available at the time, Westwood's consultant determined that if NAPL were migrating through the Westwood Property and discharging to the creek, the quantity entering the creek would be approximately 440 pounds per year (WW Ex. 83, Appx. I, p. I-4). This calculation was revised in 1998, based on the amount of NAPL being recovered from the groundwater collection system installed and operating as part of the Terrestrial Component of the remedy. The revised calculation led Dr. Faust to conclude that subsurface migration of NAPL through the Westwood Property, if it had been occurring, would have caused approximately 416 pounds/year or 48 gallons/year of NAPL to be discharged to the creek (WW Ex. 76, p. 3). Significantly, this is the only expert opinion provided regarding the quantity of DNAPL in the creek sediments that could possibly be attributable to subsurface migration.

Based on the data reported by RETEC in its Phase II Pre-Design Investigation Report, Dr. Faust estimated that there were between 56,000 and 183,000 gallons of NAPL present in the Creek Property in 1996 (WW Ex. 76, p. 4). A similar calculation led RETEC to conclude that the quantity of NAPL in the Creek Property ( i.e., downstream of the railroad bridge and upstream of the West Avenue bridge) was approximately 134,800 gallons (WW Ex. 81, p. 4). While Dr. Faust's calculation provides reasonable estimates of the minimum and maximum volume of tar in the creek bank and sediments, RETEC's single-value figure is based on actual data collected during the creek sediment investigation and remediation, and provides a reliable estimate which is not in dispute ( see Tr. 315-16 [Faust]).

Using the adjusted RI Report calculation of the rate of potential NAPL loading to the creek (48 gallons/year) and RETEC's estimate of the amount of NAPL present in the Creek Property (134,800 gallons), it is reasonable to conclude that the maximum amount of NAPL that would have discharged to the creek through subsurface migration during Westwood's period of ownership ( i.e., from September 1972 to 1996, when the sheet pile barrier wall was installed along the eastern bank of the creek) is 1,200 gallons, or less than 1 percent (0.89 percent) of the total NAPL present in the Creek Property (Tr. 318 [Faust]). Similarly, the calculated amount of NAPL possibly discharged to the creek via subsurface migration from 1898 until 1996 would be approximately 4,700 gallons, or 3.5 percent of the total. Based on these calculations, and considering the absence of evidence of any on-site DNAPL plume or trail ( see Tr. 284-87 [Faust]), it is reasonable to conclude that subsurface migration of DNAPL may have played only a minor role in contaminating the creek.

This conclusion is further supported by evidence in the record suggesting that the creek sediments were already widely contaminated with tar, DNAPL, and other MGP-related wastes when Westwood purchased the Property in 1972. For example, as part of the 1956 Scajaquada Expressway construction, the State of New York Department of Public Works, Bureau of Soil Mechanics, installed a number of borings in the creek and its western bank in the vicinity of the Property. The logs from several of those borings revealed the presence of cinders, rubble, oily industrial waste-fill, oil, and creosote, and strong odor due to oily industrial waste in both the creek sediments and its western bank (WW Ex. 70, Appx. C-2).

The November 4, 1947 newspaper article reporting on the Iroquois cleanup of tar in the creek provides additional evidence of significant contamination of the Creek Property during the time that the MGP was operational (WW Ex. 6). As noted in the article, during warm weather months, components of the tar at the bottom of the creek would float to the surface as an oily scum, which would adhere to the hulls of boats.

In addition, the results of analysis of soil borings and core samples obtained during the drilling of the "B-Series" monitoring wells in January 1986 indicated the presence of D-NAPL and aromatic vapors due to BTEX and PAHs, strongly suggesting that the soil and groundwater beneath the Building No. 9 site were contaminated with MGP-related DNAPL prior to the installation of the wells ( see WW. Ex. 74; WW Ex. 70, Appx. A-1). Both Mr. Aldis and Dr. Fountain testified that the core sample and boring log results indicated the presence of DNAPL when the monitoring wells were first drilled, suggesting that the groundwater had been contaminated with MGP-related materials for some time prior to any construction activity by Westwood (Tr. 841-42 [Aldis]; 914-16 [Fountain]).

However, the groundwater sampling evidence also reveals that, while early results indicated insignificant concentrations of BTEX and PAHs in the B-Series wells, significant concentrations of BTEX or PAHs were observed in samples obtained after Westwood's construction activity had ceased (Tr. 815-16; 818-19; NF Ex. 54, Table 4-10, p. 4-54; NF Exs. 60, 61 62). Dr. Faust testified that this sudden appearance of contamination in the B-Series wells following Westwood's construction activities "has always been a mystery" (Tr. 336). He conceded that a possible explanation for those results was that there was no PAH or BTEX contamination of the groundwater in the immediate area of these wells at the time they were initially sampled, and that the later appearance of contamination in those wells could be explained by the subsurface migration of contaminants into those wells (Tr. 416-17).

Dr. Fountain testified that the "clean" results obtained during the initial rounds of sampling would not have been possible if, as Dr. Faust suggested, the soils adjacent to the B-Series wells were contaminated with PAHs and BTEX when they were installed (Tr. 913). Dr. Fountain posited that the only plausible explanation for the sudden appearance of significant BTEX and PAH contamination in the later samples was that Westwood's construction activities had caused those contaminants to move into the B-series wells (Tr. 915-20).

Mr. Aldis also posited that the change in sampling results could only have been the result of migration of contaminants into the vicinity of the wells (Tr. 819). Both he and Dr. Fountain identified several factors associated with Westwood's construction activities as possible contributing causes for the migration, including the stripping of thousands of tons of fill materials, which "would have depressurized zones within the fill and the increase in pore space that would have resulted could have triggered NAPL movement" (Tr. 820; see also Tr. 921); heavy precipitation during the period, which may have increased infiltration, water table height and pressure (Tr. 821-22, 721); the vibration and weight of heavy machinery operating on the site (Tr. 822, 921); the "reloading" of weight caused by the addition of the building itself (Tr., pp. 822); and, the possible breach of one or more containment structures (Tr. 920-21).¹⁵

15 Indeed, Kenneth Dauria, Supervisor of the Building No. 9 construction project, testified that a diked, clay-capped containment area on the northeast side of the Property was breached during excavation work (Tr. 181-82).

Mr. Aldis found the change in detectable levels of contaminants in the B-Series wells subsequent to the completion of Westwood's construction activities to be "almost irrefutable evidence that there was movement of contamination into an area that has previously not been contaminated from somewhere else" (Tr. 839). Dr. Fountain testified: "I know of no other explanation for that pattern. It is also consistent with the appearance of the D-NAPL that actually began to accumulate in the wells at that same time" (Tr. 916).

In addition, Mr. Aldis performed a contaminant distribution analysis which involved plotting the pre- and post-construction boring logs for the site and noting each observation of contamination made by the geologists who logged the borings (NF Exs. 90, 91, 92, 93; Tr. 822-26). This analysis supports his conclusion that the distribution of contaminants across the site was much more widespread following Westwood's construction activities than before those activities commenced (Tr. 827-30).

Finally, the impact on the cost of the Terrestrial and Riparian Components of the remedy caused by Westwood's construction activities may properly be offset, at least to some degree, by the benefits resulting from the discovery of the MGP contamination at the facility, which likely would have gone undetected and unremediated for an indeterminate period of time. Additionally, the evidence suggests that the presence of Building No. 9 and associated paved driveway and parking areas has eliminated further potential exposure to the subsurface contaminants in the areas they cover, and has effectively reduced the subsurface migration of contaminants by inhibiting infiltration (Tr. 268-69[(Faust]). Since the construction of Building No. 9 and related paved areas performs essentially the same function as the cap prescribed by the Terrestrial Component of the remedy, the area of the Westwood Property that ultimately had to be capped was substantially reduced, thereby reducing the cost of the Terrestrial Component.

National Fuel counters that, as the current owner of the Property, Westwood has obviously benefitted from the enhanced marketability and increased market value that inevitably accompanies a CERCLA cleanup. However, as discussed, the Terrestrial Component of the remedial work involved containment, monitoring, and treatment of contaminated soil and groundwater, as opposed to pristine cleanup, and the preponderance of the evidence does not support a finding that Westwood's continuing liability has done anything to enhance the market value of the Property. Westwood does not own the creek or creek bank, and has derived no direct economic benefit from the $6 million spent on the creek remediation. Cf. Waste Management of Alameda County, 135 F. Supp.2d at 1091 (finding former owner/operator's argument that it would be unfair for current owner to enjoy the benefits of remediation without footing the bill "simply out of step with the CERCLA statutory scheme, which focuses not on current ownership per se but on the real world acts and contributions of all present and prior owners as well as other parties that may have created or otherwise fostered the hazardous contamination.").

Accordingly, considering the weight of the available evidence, I find that National Fuel has demonstrated reasonable grounds for allocation of at least some responsibility to Westwood for the costs associated with both the on-site groundwater remedy and the Creek Property remedy, based on the degree of care taken by Westwood during its post-acquisition construction work. As alluded to above, in the absence of evidence upon which a more precise quantification of responsibility can be based, the court is left to its own discretion to determine reasonable allocable shares based on the totality of the circumstances.

D. The Degree of Cooperation by the Parties with Federal, State, or Local Officials, and Each Party's Demonstrated Willingness to Accept Responsibility

The final set of circumstances to be considered are the parties' relative degrees of cooperation with authorities and willingness to accept responsibility with respect to cleanup efforts. In this regard, National Fuel reiterates the argument that Westwood should have taken earlier steps to address subsurface oil contamination, based on the results of the pre-construction soil borings obtained in 1973 in connection with the construction of Building No. 6, and in late 1984 and early 1985 in connection with the construction of Building No. 9. However, as discussed above, the proof at trial established that these borings were obtained to assess the load-bearing capabilities of subsurface materials and not as part of any environmental investigation, and did not contain the type of information that would have triggered any environmental response at the time.

As outlined in detail in the court's factual findings, upon encountering what appeared to be industrial wastes in the buried tar separator and other subsurface structures during excavation work for Building No. 9, Westwood immediately contacted the DEC and National Fuel. Westwood ceased construction activities and promptly began a preliminary site investigation under the auspices of the DEC. However, National Fuel refused to participate in the site investigation, taking the position that it had no financial or legal responsibility for the condition of the Property, that the materials encountered were not hazardous substances, and that the only reason for remediation of the site was to facilitate Westwood's construction program ( see WW Ex. 90).

National Fuel contends that the DEC did not receive notification of environmental problems at the Property until early December 1985, when a DEC official arrived at the site to investigate a citizen's complaint that Westwood was discharging oily water to the creek. However, the preponderance of the evidence is that Westwood contacted the DEC in November 1985, immediately upon receiving the preliminary results of testing performed on materials found in the tar separator encountered during excavation work (NF Exs. 50 58, pp 1-2; Tr. 189 [Dauria]). Based upon the results of the preliminary site investigation, DEC requested a more comprehensive RI/FS. Westwood again sought National Fuel's participation, but after some initial discussions, National Fuel declined to participate, asserting that there was no evidence of disposal of any hazardous substances on the Property during the period of its ownership, and that the remedial program proposed by DEC and Westwood was excessive.

In addition, in its communications with Westwood and the DEC, and in affidavits and memoranda filed with the court, National Fuel consistently denied that it had any relationship to any of the pre-1925 owners or operators of the MGP, and it claimed that no disposal activities occurred after the 1925 foreclosure sale to Iroquois. Even after Westwood uncovered the records disclosing National Fuel's relationships to People's, Niagara, and Judge, National Fuel continued to deny any responsibility for conditions at the facility. In spite of the evidence in the 1956 borings for the Scajaquada Expressway project showing that the creek sediments were contaminated by a tarry/oily DNAPL, and the 1984-85 pre-construction borings showing widespread, discontinuous pockets of DNAPL contamination in the subsurface soils on the northern portion of the Westwood Property, and even though National Fuel knew that groundwater traversing the site prior to Westwood's construction activities would have become contaminated as a result of the buried MGP wastes and would have discharged to the creek, National Fuel continued to assert that the release at the facility was caused solely by Westwood's construction activities.

On the other hand, when Westwood discovered the MGP contamination during its construction project, it recognized its statutory responsibility as the current owner, worked cooperatively with the DEC in investigating the facility to determine the full nature and extent of the contamination, and did so at its own expense. Meanwhile, National Fuel refused to recognize its responsibility, refused to participate in or contribute to the costs of the site investigation, and maintained that its sale of the Property should absolve it from all liability. Consequently, the State found it necessary to compel National Fuel's participation by joining it as a defendant in this action, and the State later moved for summary judgment. National Fuel finally agreed to sign a consent decree with the State to perform the Riparian Component of the remedy in lieu of adjudication of the State's summary judgment motion.

Accordingly, I find no justification for shifting any of the response costs incurred by National Fuel to Westwood based on the parties' relative degrees of cooperation with the DEC and their demonstrated degrees of willingness to accept responsibility for the remediation costs.

CONCLUSION

Considering all of the facts and circumstances presented by way of the preponderance of the evidence at the allocation trial and in the parties extensive pre- and post-trial submissions, and considering the effect of the court's prior rulings in this longstanding litigation, I find that it is fair and equitable under 42 U.S.C. § 9613(f)(1) to hold National Fuel responsible for 90 percent, and Westwood responsible for 10 percent, of all past and future response costs incurred in connection with both the Terrestrial and Riparian Components of the remediation of environmental contamination at the facility. Upon balancing the pertinent factors, and in the absence of any clear proof upon which a more precise quantification of responsibility can be based, basic principles of equity and justice require that National Fuel, as the party that profited for several years from the ownership and operation of the waste-producing enterprise, should bear primary responsibility for the hazardous byproducts of its activity. Those principles also suggest that Westwood maintain an allocable share based on the combined circumstances of its responsibility under CERCLA § 107(a)(1) for that portion of response cost liability for which no known and solvent party amenable to suit has been identified as the source of an identifiable quantity of contaminated creek sediments, and its responsibility for costs associated with both the on-site groundwater remedy and the Creek Property remedy due to the degree of care taken during its construction work on Building No. 9.

National Fuel's motion (Item 292) for reconsideration and amendment of the court's July 28, 1999 decision and order is denied.

A meeting will be held with counsel on Monday, June 21, 2004, at 11 a.m. to discuss further proceedings in the case.

So ordered.