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CHEM-NUCLEAR SYSTEMS INC. v. BUSH

March 26, 2001

CHEM-NUCLEAR SYSTEMS, INC., ET AL., PLAINTIFFS,
V.
GEORGE W. BUSH, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Huvelle, District Judge.

MEMORANDUM OPINION

Before the Court is plaintiffs' motion for entry of final judgment, defendant EPA's motion for final judgment, and the parties' oppositions and replies. Plaintiffs, Chem-Nuclear Systems, Inc. ("CNSI"), and its parent corporation, Chemical Waste Management, Inc. ("CWM"),*fn1 are seeking reimbursement of a portion of the costs they incurred for the cleanup of hazardous materials at the Basket Creek Drum Disposal Site ("the Site") in Douglasville, Georgia, under § 106(b)(2) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq. Both parties have moved for entry of final judgment. Plaintiffs contend that (1) as Judge Sporkin has previously ruled in this case, the doctrine of administrative exhaustion should not bar this Court from resolving the merits of their geographic divisibility claim which was not raised before the EPA; (2) plaintiffs have proven their theory of geographic divisibility by a preponderance of the evidence; and (3) defendants have not carried their burden, under a previous ruling by Judge Sporkin, of producing evidence linking any of plaintiffs' waste, other than the 80 drums discovered at the Basket Creek Site, to the Site. Defendants argue that (1) plaintiffs' failure to raise their claim of geographic divisibility at the administrative level bars them from bringing it in this Court and Judge Sporkin's ruling in this regard was incorrect; (2) Judge Sporkin erred in placing a burden on defendants to produce evidence linking additional waste from plaintiffs, beyond the 80 drums, to the Basket Creek Site; or in the alternative, (3) defendants have produced sufficient evidence to satisfy their burden. For the reasons explained herein, the Court agrees that defendants have in fact sustained their burden, as imposed by Judge Sporkin. Thus, the Court need not address the remaining arguments raised by the parties, and judgment will be entered in favor of the defendants.

I. FACTUAL BACKGROUND

The parties submitted to Magistrate Judge Kay a Joint Stipulation of Facts (hereinafter "Ex. 2"), containing 99 factual stipulations and three attachments. These agreed upon facts were adopted by Magistrate Judge Kay, and are the basis for the following description of the relevant facts.

In the 1970's, CNSI received at its Barnwell, S.C. facility, but did not generate, waste material from various industrial generators. Report of the Special Master (Sept. 2, 1999) at 6, ¶ 1 (hereinafter "Report"); Ex. 2, ¶ 1. The waste material received by CNSI contained hazardous substances as defined by CERCLA, 42 U.S.C. § 9601(14). Report at 7, ¶ 2; Ex. 2, ¶ 5. On July 5, 1973, CNSI contracted with Continental Trading Company ("Continental") to remove a number of 55-gallon drums of waste material from CNSI's Barnwell, S.C. facility. Report at 7, ¶ 3; Ex. 2, ¶ 2. In turn, Continental entered into an arrangement with Young Refining Corporation ("Young Refining"), owned and operated by Dr. C.B.F. Young ("Young"), under which Young Refining would store the waste material from CNSI's Barnwell, S.C. facility at Young Refining's Douglasville, Ga. facility until the wastes were reprocessed and resold, used as fuel, or buried. Report at 7; ¶ 4; Ex. 2, ¶ 4. Between July 1973 and February 1974, approximately 1649 drums of liquid chemical waste were transported by Continental from CNSI's facility in Barnwell, S.C. to Young Refining in Douglasville, Ga. Report at 7, ¶ 5; Ex. 2, ¶ 5.

Mr. Lee Wallace, owner of the Basket Creek Site ("the Site"), a ravine next to Basket Creek Road in Douglas County, Georgia, allowed disposal of waste materials at the Site on numerous occasions from unknown sources over an unknown period of time. Report at 7, ¶ 6; Ex. 2, ¶ 14. The Basket Creek Site is a single ravine that is aligned approximately north-south and slopes downgradient toward the south. Report at 7, ¶ 7; Ex. 2, ¶ 36. Immediately west of the ravine, Basket Creek Road approximately parallels the alignment of the ravine. Id. As the ravine deepens to the south, the ravine widens and becomes a broader, deeper valley. Id. In 1976, the southern boundary of the ravine terminated at a dam constructed primarily of tires intermixed with soil. Report at 7-8, ¶ 7; Ex. 2, ¶ 36.

On March 5, 1976, Georgia EPA ordered Lee Wallace to cease receipt of waste materials at the Site. Report at 8, ¶ 8; Ex. 2, ¶ 14. Approximately two weeks prior to March 17, 1976, Young arranged with Bartlett Hulsey ("Hulsey") to transfer hazardous substances from Young Refining to an unspecified location or locations for disposal. Report at 8, 9; Ex. 2, ¶ 25. Young had only one conversation with Hulsey about the removal and disposal of the drums of waste. Report at 8, ¶ 10; Ex. 2, 25; Ex. 81 (Young Dep. at 36, 60).*fn2 Young admitted Hulsey had picked up two trailer loads of drums from Young Refining. Report at 8, ¶ 11; Ex. 2, ¶ 25. In March 1976, aside from drums of boiler compound that Young Refining used in its business, Young Refining did not have any drums other than the ones that originated from CNSI. Report at 8, ¶ 12; Ex. 81 at 65-67.*fn3

On March 17, 1976, two tractor trailer rigs owned by Hulsey transported approximately 160 drums (approximately 80 per trailer) the twenty miles from Young Refining to the Basket Creek Site. Report at 8, ¶ 13; Ex. 2, ¶ 15; Ex. 72. At approximately 9:45 p.m. on March 17, 1976, Douglas W. Daniell ("Daniell"), the Douglas County Supervisor of Environmental Health, arrived at the Basket Creek Site in response to a complaint from a nearby resident. Report at 8, ¶ 14; Ex. 2, ¶ 16. At the Site, Mr. Daniell saw two tractor-trailer rigs, one of which was empty, and four men, including Bartlett Hulsey. Report at 8, ¶ 15; Ex. 2, ¶ 17. Mr. Daniell observed approximately 80 drums in the ravine beside the road, some of which had burst open in the ravine. Report at 8-9, ¶ 16; Ex. 2, ¶ 17. A bulldozer was covering and crushing drums in the ravine, and liquid was spilling out of the drums into the ravine. Report at 9, ¶ 17; Ex. 2, ¶ 17.*fn4 On March 18, 1976, officials from the Georgia Environmental Protection Division inspected the Site and confirmed that approximately 80 partially covered drums were at the bottom of the ravine. Report at 9, ¶ 18; Ex. 2, 120.

In 1990, EPA began investigations of the Site to determine whether any response was needed. Report at 9, 1 19; Ex. 2, ¶ 38. Various soil and waste samples were taken and analyzed. Id. On April 11, 1991, EPA determined that the conditions at the Site may have presented an imminent and substantial endangerment to the public health or welfare, or the environment due to the release or threat of release of hazardous substances, and issued an Administrative Order pursuant to CERCLA § 106(a), 42 U.S.C. § 9606(a). Report at 9, ¶ 20; Ex. 2, ¶ 39. The Administrative Order named Young Refining Corporation, Continental Trading Company, Chem-Nuclear Systems, Inc., and B.B. Hulsey d/b/a/ Hulsey Grading Company as Respondents. Report at 9, ¶ 21; Ex. 22 at 1. In the Administrative Order, EPA directed the Respondents to, inter alia, excavate overlying soils and remove buried drums, sample and analyze drum contents, arrange for the proper disposal of drum contents, sample soils in the drum burial area, properly treat and/or dispose of any contaminated soil, and restore the Site to its original condition. Report at 9, ¶ 22; Ex. 2, ¶ 41. Hulsey denied liability on April 17, 1991, and stated that he was unable to perform any of the required actions. Report at 9, ¶ 23; Ex. 2, ¶ 42. Continental denied liability on April 22, 1991, and offered on May 10, 1991, to contribute to the actions required by the Administrative Order, but ultimately failed to do so. Report at 10, ¶ 24; Ex. 2, ¶ 43. Young Refining denied liability on April 25, 1991, and refused to participate in performing any of the actions required by the Administrative Order. Report at 10, ¶ 25; Ex. 2, ¶ 44. On April 26, 1991, CNSI denied liability for the Site but notified EPA of its intent to cooperate with EPA Region IV in the performance of reasonable removal actions at the Site. Report at 10, ¶ 26; Ex. 2, ¶ 25. CNSI also noted certain reservations. Id.

CNSI and Young Refining Co. solicited bids from ENSITE/Law Environmental, Inc., Kiber Associates, and the Environmental Remedial Action Division of Chemical Waste Management ("ENRAC") to perform the clean-up tasks associated with the Administrative Order. Report at 10, ¶ 27; Ex. 2, ¶ 38. ENRAC submitted the lowest bid for a removal action consistent with the Administrative Order, and CNSI selected it to serve as the Removal Action Coordinator/Constructor for the Site. Report at 10, ¶ 28; Ex. 2, ¶¶ 40, 46. CNSI submitted its Removal Action Plan ("RAP") to EPA on May 16, 1991, and EPA approved the RAP on May 21, 1991. Report at 10, ¶ 29; Ex. 2, ¶¶ 47, 48. On July 12, 1991 CNSI revised the RAP to include information submitted to EPA at a June 27, 1991 meeting, and EPA approved the revised RAP on July 16, 1991. Report at 10, ¶ 30; Ex. 2, ¶¶ 49, 51.

During the cleanup, CNSI removed the wastes, contaminated soil, tires, drums and debris from the ravine in three phases, beginning with the north end of the ravine ("Area 1"), continuing with the south portion of the ravine ("Area 3"), and concluding with the middle portion of the ravine ("Area 2"). Report at 10-11, ¶ 31; Ex. 2, ¶ 53; Ex. 30. Area 2 was subdivided into three stockpiles. Report at 11, ¶ 32; Ex 2, ¶ 66. Soil samples from all three areas contained materials that are listed as hazardous substances under CERCLA. Report at 11, ¶ 33; Ex. 2, ¶¶ 30, 31, 32, 55, 57, 58. Drummed waste in Area 1 also contained materials that are listed CERCLA hazardous substances. Report at 11, ¶ 34; Ex. 2, ¶¶ 30, 31, 32, 56. During the remediation process, 1,881.44 tons of contaminated materials were removed from Area 1; 9,427.69 tons of contaminated materials were removed from Area 2; and 9,934.18 tons of contaminated materials were removed from Area 3. Report at 11, ¶ 35; Ex 2. ¶¶ 64, 69, 73; Ex. 52. Stockpile 1 in Area 2 consisted of 2,884.45 tons of contaminated material. Report at 11, ¶ 36; Ex 2, ¶ 76; Ex. 52. Based on the opinion of CNSI's expert regarding the limited area of the Site that could have been contaminated by the 80 drums which Hulsey had dumped on March 17, 1976, CNSI has agreed to assume responsibility for all cleanup costs associated with contamination of the Site by those 80 drums. Report at 11, ¶ 37; Pl. Open. Br. (10/6/97) at 5 n. 3.*fn5 However, plaintiffs argue that they are entitled to $2,557,989 in reimbursement, plus pre-judgment interest, for those clean-up costs that could not be associated with the 80 drums.

II. PROCEDURAL BACKGROUND

This case has had a long and tortured history and is unduly complicated by the passage of time and unavailability of evidence. While the relevant events occurred in the mid-seventies, the legal wrangling began in 1991 at the administrative level and continued in 1996 in the courts. Thus, the partinent procedural history defies simple recitation.

Pursuant to the order issued by EPA on April 11, 1991, under § 106(a) of CERCLA, plaintiffs remediated the Site, incurring costs of $7,660,315. Although plaintiffs subsequently sued other entities for contribution under CERCLA, they still had to cover most of the remediation costs.*fn6 Plaintiffs then filed a timely petition with the EPA for reimbursement from the Superfund of the expended response costs for which it disavowed responsibility, pursuant to CERCLA § 106(b)(2)(A).*fn7 On April 29, 1996, EPA's Environmental Appeals Board ("EAB") rejected plaintiffs' administrative petition for reimbursement, finding that plaintiffs were jointly and severally liable for the entire harm caused at the Basket Creek Site. Within thirty days of receipt of the EAB's decision, plaintiffs filed a timely action in this Court in accordance with CERCLA § 106(b)(2)(B), seeking reimbursement from the Superfund.*fn8 This case was initially assigned to the Honorable Stanley Sporkin.*fn9 Judge Sporkin referred the matter to Magistrate Judge Alan Kay on January 9, 1998, appointing him as a Special Master pursuant to Fed.R.Civ.P. 53 and 28 U.S.C. ...


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