# Appendix — Beazer East, Inc. v. Mead Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_0375%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 2006 - **Citation:** 546 U.S. 1091 ## Text 10a through December 31, 1999, were recoverable CERCLA response costs. In August 2002 the District Court issued a thorough opinion largely rejecting Mead’s challenges to Beazer’s costs. The court determined that Beazer had incurred recoverable response costs of $4,805,137.60 through the end of 1999 and entered judgment against Mead for 67.5% of this amoumt, or $ 3,243,467.80. Pursuant to the parties’ stipulation, in September 2002, the Court further ordered Mead to pay pre-judgment interest in the amount of $1 ,538,164.03. Finally, in October 2002, the District Court entered a declaratory judgment requiring Mead to pay 67.5% of Beazer’s ongoing response costs associated with implementing the AOC. The order also provided a framework for resolution of disputes over the necessity and NCP- consistency of such costs. Mead timely appealed these orders. In December 2002, we assigned the case for mediation pursuant to the Third Circuit's Appellate Mediation Program, L.A.R. 33. The parties strenuously dispute what transpired at the February 26, 2003, mediation session. Beazer claims that the parties reached an oral agreement while Mead claims that the tentative agreement reached at mediation was conditioned on further management approval which was ultimately denied. In May 2003, Beazer moved this Court to enforce the alleged oral settlement and dismiss Mead’s appeal with prejudice. The motion was referred to this panel and we decide it here along with Mead’s appeals. III .Jurisdiction The District Court had jurisdiction over this case under 42 U.S.C. § 9613(b), which vests exclusive jurisdiction of CERCLA claims in the federal courts, as well as under 28 U.S.C. §§ 1331 and 1332. Horsehead Industries, Inc. v. lla Paramount Communications, Inc., 258 F.3d 132, 140 (3d Cir. 2001); Beazer 1, 34 F.3d at 210. We have appellate jurisdiction over the appeal from the District Court's final orders described above pursuant to 28 U.S.C. § 1291. Horsehead Industries, 258 F.3d at 140. Finally, we have original jurisdiction over Beazer’s motion to enforce the alleged settlement agreement. See Fed. R. App. Pro. 33 (“The court may, as a result of the [mediation], enter an order controlling the course of the proceedings or implementing any settlement agreement.”). See aiso Herrnreiter v. Chi. Hous. Auth. , 281 F.3d 634, 637 (7th Cir. 2002). V. Discussion A. Enforcement of the alleged oral settlement. Beazer’s motion to specifically enforce the alleged oral settlement reached at the appellate mediation and to dismiss this appeal with prejudice must be rejected. Both Local Appellate Rule (LAR) 33.5 and sound judicial policy compel the conclusion that parties to an appellate mediation session are not bound by anything short of a written settlement. Any otlier rule would seriously undermine the efficacy of the Appellate Mediation Program by compromising the confidentiality of settlement negotiations.‘ * Federal Rule of Appellate Procedure 33 gives appellate courts the power to order settlement conferences and to “implement{]} any s>ttlement agreement” reached as a result of such conferences. Fed. R. App. P. 33. The Third Circuit has established an Appellate Mediation Program to implement this general directive. Local Appellate Rule 33.0. The program is subject to the rules and procedures provided in the Local Appellate Rules. /d. 12a Beazer requests enforcement of the alleged oral settlement but admits that there are genuine factual disputes regarding whether the parties actually reached an agreement.’ Mead correctly argues that we cannot resolve these disputes without violating the confidentiality rule, LAR 33.S(c). With exceptions not relevant here, Rule 33.5( The court agrees with Mead as to two particular costs placed in this category by Dr; Ball. It is well settled that RCRA does not in itself provide for the recovery of past costs incurred in the treatment, storage and disposal of hazardous wastes. See Meghrig vy. KFC Western, Inc., 516 U.S. 479, 484 (1996). Consequently, recovery is appropriate under a RCRA-based program only where recovery of the claimed costs is warranted under CERCLA. Id. at 487-88. The $6,000.00 post-closure application fee paid to ADEM reflects a purely administrative RCRA cost and the cost itself lacks any potential to contribute to the characterization of the site or the evaluation of potential remedial measures. Thus, it will be 89a Mead’s contention that its CERCLA liability was extinguished by Beazer’s submission of a risk assessment to the environmental agencies on March 3, 1997, also is Unavailing. At the completion of Phase I and II of the RFI Beazer submitted a risk assessment to ADEM as an appendix to its report on those phases. The risk assessment was excluded. In addition, Beazer agreed that a deduction is appropriate for the costs of installing and monitoring the wells for one of the post- closure units because one unit was created exclusively by Beazer’s operations at the site. Beazer deducted $365,299.00 from its Claimed costs as reflective of installing and monitoring four RCRA ground wells at a hypothetical RCRA regulated unit. This calculation was made based on the estimated costs which would have been required by the K060 regulated unit at the site. Testimony from Beazer’s environmental project manager indicated that the unit had five wells associated with it, not four. Based On Beazer’s average cost for each of the four wells, an additional deduction of $91,324.75 is appropriate. The remaining costs placed in the “C-1” category by Dr. Ball are recoverable. Dr. Ball reviewed Beazer’s invoices to determine whether on their face the invoices reflected activities that “were referenced in the risk assessment or were reasonably necessary to produce the risk assessment.” TT of February 5, 2002 (Ball) at 94; see also id. at 95. If the invoice did not demonstrate its purpose in this process, Dr. Ball placed it in “C-1.” Id. at 95. This approach is contrary to the substantial compliance standard mandated by the 1990 NCP. Furthermore, the court has reviewed the remaining invoices in this category and is satisfied that they reflect monitoring and data-gathering activities that are essential to characterizing and understanding the site as a whole in conjunction with assessing the nature of the release, understanding its potential risks and evaluating feasible remedial measures. 90a prepared by Beazer’s contractor, Ogden, and provided in pertinent part: Estimated non-cancer risks resulting from potential exposures to site related constituents are all below the U.S. EPA’s target Hazard Index of 1.0, for all receptors in all media at all exposure areas. Similarly all estimated excess lifetime cancer risks are within the U.S. EPA’s target risk range of 1 x 10° (1 in 1,000,000) and 1 x 10° (1 in 10,000). Defendant’s Exhibit M-14 at p. ES-2. Mead notes that “the entire Ogden risk assessment is extremely conservative” and expressly indicates that conservative assumptions have been employed in developing it. Mead’s Post-Trial Brief in Support Of Judgment (Document 341) at 21 (citing Defendant's Exhibit M-14 at p. 7-1). Mead further contends that the risk assessment has been accepted by ADEM because it has approved Beazer’s report on the Phase I & II RFI activities and has not indicated any disagreement with the risk assessment.‘ Based on the above, Mead argues that “the primary focus of CERCLA and the NCP is the elimination of unacceptable risk to human health and the environment” and because a determination of no unace “table risk has been made through Beazer’s risk assessment, no further action would be required under CERCLA. From Mead’s perspective all activities at the site subsequent to the submission of the risk assessment * Mead bolsters this argument by asserting that “from the CERCLA perspective, Beazer is the ‘lead agency’” and as a result a determination has been made that no further remedial action within the meaning of CERCLA will be necessary at the site. 9la were undertaken to comply with the regulatory requirements of RCRA and any costs Beazer incurred after that date “were ‘on its own nickel’ because the costs would no longer be necessary costs of response pursuant to CERCLA, since they no longer were incurred in response to a threat to human health or the environment.” Id. at 21. Because the risk assessment purportedly established that no further action was required under CERCLA, Mead contends that all costs incurred after May 3, 1997, are not recoverable response costs. Mead’s contention that the risk assessment extinguished its liability under CCRCLA is specious. First, while Beazer is “the lead agency” under various provisions of the NCP, the determination of whether further corrective measures and/or additional activities leading to remediation of the site will be required under the AOC is a determination that remains with the environmental agencies. No provision of the AOC explicitly or implicitly grants Beazer the authority to decide that its obligations to perform a corrective measure study and implement any remedies selected by the agencies have been extinguished by its assessment of the risk posed by the site. Second, ADEM’s letter of August 24, 2000 - indicating the draft Phase I & II RFI and groundwater assessment reports prepared by Beazer’s contractor have been “approved” - cannot be read to support Mead’s contention that the conclusions advanced in the risk assessment have been accepted by ADEM and therefore no further response actions or remedial measures under CERCLA will be necessary. See Defendant's Exhibit M-15. The letter merely indicates that the reports have been approved, which can only be understood to mean that Beazer has fulfilled the requirements of the work plan governing Phase I & Il investigation activities and developed a risk assessment. See TT of February 6, 2002 92a (Vandeven) at 56. In other words, the letter simply means that Beazer met the requirements of Phase I and Phase II of the RIF work plan and has developed the risk assessment as required by the terms of the AOC-id- And ADEM’s intent to further investigate and characterize the potential migration of hazardous substances before substantively approving the risk assessment and moving to the corrective measures component of the AOC is evident by the reference in the letter to the “Phase III RFI work plan” under negotiation between ADEM and Beazer. It also is evident that the need for the Phase III work arose as a result of areas of concern generated from the submitted reports. Defendant's Exhibit M-15; TT of February 6, 2002 (Vandeven) at 55-56; TT of February 5, 2002 (Vandeven) at 7, 29-30. Third, it is a well-accepted premise that the risk assessment is only one step in the CERCLA decision-making process. See Rebuttal Expert Report of October 2000 at pp. 13-14; TT of February 6, 2002 at 28-31. It is merely one piece of information that will be used by the environmental agencies along with all other available information in making their own assessment of the acceptable and unacceptable risks that remain at the site. Id. The author of the Ogden risk assessment, Dr. Magee, also expressed the same view. In conjunction with questioning regarding Ogden’s decisions to include or exclude particular chemicals in a risk assessment presented to an environmental agency, Dr. Magee provided the following insight as to how a risk assessment is prepared and presented: As is typical in the work that I do for clients, I view my job to put a realistic defensible risk assessment on the table first time through that’s consistent with the law and the regulations and the guidance but that 93a wears the client’s hat rather than the agency’s hat because I’m working for the client. We know full well that the agency may often, and usually does, disagree with many of the assumptions and approaches that we take. So that the numbers of this report, which is the favorable report to start the negotiation with the agency, concludes simply that nothing has to be done anywhere. But I don’t believe for a minute that nothing will have to be done anywhere. Because I believe that they’re going to say, up in the ponds, you have shown that if a trespasser gets in there and touches some of the sediment, it won’t hurt them. But you didn’t say a darn thing about the ecology, the ecological receptors. Or you assume that if trespassers get on the site and contact the average of all the soil across one or two areas, that there won’t be a problem. But you didn’t consider that they might go preferentially to this very small, what we would call, hot spot; what would be the answer if they went just there? On groundwater, you assume no use of the groundwater directly beneath the site. While we might, all agree that it’s unlikely that someone would drop a well there and make that their drinking water, they could use the water for industrial process water. Again, not atypical of any site, the negotiation that goes on between the PRP and the agency is just that, and we haven't seen how they responded to this yet. So from my general experience on sites that have these kinds of chemicals in them at these levels, I am 94a sure that some remediation will be required. And it will be my job then, if I’m asked to continue working on it, to focus it in and make it be reasonable and cost effective, selective removal in just this area, capping and so forth. Deposition testimony of Dr. Magee at pp. 48-50. In other words, the initial risk assessment submitted by Beazer is anticipated to be a mere first step in the bargaining process between the EPA/ADEM and Beazer with regard to what additional response/remediation activities will be required at the site. Absent written notice from the EPA/ADEM indicating Beazer has complied with all of its obligations under the AOC, there is no factual or legal basis for this court to conclude that subsequent response and remediation activities at the site will fall outside the “necessary” and “consistency” requirements of CERCLA. Furthermore, to extrapolate the proposition that no unacceptable risk remains at the site and therefore no further remedial measures will be required from the siatements made in the risk assessment fails to acknowledge the role of the EPA in evaluating the information generated from agency- directed investigations. Ogden’s risk assessment did not purport to render a conclusion on whether the site continues to present an acceptable or unacceptable risk. The assessment merely advances an objective proposition regarding general, site-wide estimated non-cancer and excess lifetime cancer risks. The assessment is based upon numerous assumptions about the hazardous substances present, the likely pathways of exposure, the likely receptors and future expected land and water use. It docs not purport to address the need or lack thereof for future remedial action. 95a Guidance documents from the EPA indicate clearly that mere objective findings reflecting the presence of hazardous wastes within an acceptable target range does not mean that a CERCLA-quality remedial measure will not subsequently be required by the EPA at the site. In a memorandum providing guidance on the use of a risk assessment in the CERCLA decision-making process, the EPA has emphasized that a finding within the agency’s acceptable target range will not eliminate the agency’s discretion to require further remedial action based on other pertinent factors. EPA’s Office of Solid Waste and Emergency Response advises that “the EPA uses the general 10(-4) to 10(-6) risk range as a ‘target range’ within which the Agency strives to manage risks as part of a Superfund clean-up,” but further emphasizes: (a) A risk manager may also decide that a baseline risk level less than 10“ is unacceptable due to-site specific- reasons and that remedial action is warranted [and similarly} EPA may determine that risks less than | x 10% are not sufficiently protective and warrant remedial action. (b) Other chemical-specific ARARS [applicable regulations and applicable requirements] may also be used to determine whether a site warrants remediation. (c) The upper boundary of the risk range is not a discreet line at 1 x 10*.... Role of the Baseline Risk Assessment in the Superfund Remedy Selection Decisions, EPA Office of Selid Waste and Emergency Response (OSWER), 1991, Base 9355.3-30; see also Rebuttal Expert Report by Jay Vandeven at pp. 12-13; TT of February 6, 2002 (Vandeven) at 30-31. 96a The AOC incorporates the EPA’s authority to evaluate as a whole all risks presented by the site. All of Beazer’s work under the AOC is submitted for agency review. The EPA and ADEM retain the express right to require additional investigation, characterization; monitoring or remedial action whenever in the agencies’ judgment the data submitted by Beazer requires such measures and the EPA reserves the right to select and require the implementation of corrective measures. See, e.g., AOC at pp. 7-8. The EPA and ADEM have not substantively approved the Ogden risk assessment or released Beazer from any further obligations under the AOC; to the contrary, they have required additional RFI work pertaining to deep and off-site groundwater flow. Under these circumstances Mead’s contention that the Ogden risk assessment eliminated any further basis for cost recovery under CERCLA lacks sufficient evidentiary support and Beazer’s post March 7, 1997, response costs are recoverable to the extent they are not otherwise precluded by the court’s -—_——Tulings. Mead’s assertion that Beazer engaged in inefficient and excessive sampling at the site, thereby rendering a substantial portion of the data collected “unnecessary” for the purposes of assessing risk and selecting a remedial action, also is without merit. Mead argues that in accordance with the NCP, “(t]he purpose of the remedial investigation (“RI”) is to collect data necessary to characterize adequately the site for the purpose of developing and evaluating effective remedial alternatives.” 42 C.F.R. §300.430(d). It then notes that a number of the samples collected during Phases I & II of the RFI were not used by Ogden in formulating the risk assessment. It reasons “that the risk assessment is the essential document for identifying and evaluating effective remedial alternatives and therefore “only those data necessary to support a risk assessment for the Woodward Coke Site are 97a recoverable under the NCP.” Mead’s Post-Trial Brief in Support of Judgment at p. 23. Mead reduces its “unnecessary” sampling arguments to a set of mathematical formulas. The total number of samples made available to Ogden for formulating the risk assessment was 662. Ogden used a maximum number of 368 investigative samples in evaluating the mediums of concern (soil, groundwater, sediment and surface water) and thus from Mead’s perspective a total of 294 samples were not used in calculating the risk. Mead’s expert then tabulated the estimated cost of gathering the 662 samples and subtracted 44% from this total (i.e., 294/662 equals .44). As a further refinement of this requested reduction Mead notes that while 368 samples represent the maximum number used by Ogden for an individual contaminant of concern, in certain of the medium of concern Ogden used far fewer samples to calculate the risk. For example, to calculate the risk for some contaminants of concern in the soil, Ogden needed only 34 samples and for others Ogden used the maximum number of samples available, 93. From these premises Mead reasons: Thus, although Ogden used the additional data, they were clearly not necessary to complete the risk assessment, as the minimum number was used for many of the [contaminants of concern]. In aggregate, the minimum number of samples used by Ogden is 166, as opposed to the maximum aggregate of 368. Therefore, as further refinement of the percentage listed above, the investigation and laboratory costs that are not recoverable under CERCLA and the NCP 98a equal approximately 74% - (662 minus 167)/662 - of the total sampling related costs claimed by Beazer. The deduction from Beazer’s costs that should be made if one looks solely at the data used in the risk assessment is $1 ,154,018.67 (44% of $2,622,769.71 - the “total E/F costs” ...; if the deduction is based upon the efficient data needs (that is the number of samples-which would have satisfied the risk assessment needs) the deduction is $1 ,964,976.07 .... Mead is willing to “split the difference” with Beazer between the deduction based upon the “inefficient” risk assessment number and the deduction based upon the efficient risk assessment number; thus, the deduction Mead proposes for this item is $1,559,497.37 ($1,964,978 + $1,154,018 = $3,118,994 +2). Id. at 25-26. In other words, Mead advocates that only the minimum amount of data samples needed to formulate the risk assessment, as calculated after the fact, can be found to be necessary costs of response incurred consistent with the NCP. Mead’s mathematical efficiency arguments are flawed on many levels. First, the court already has considered and rejected Mead’s contention that Beazer engaged in inefficient and/or ineffective methods of gathering and processing the information used in characterizing the site. In the previous phase of the litigation Mead argued that there was evidence of “over testing” by Beazer in that it did more testing under RCRA than would have been “necessary” under CERCLA, pointing to purported over sampling during Phase II of the RFI work plan as an example. See Findings of Fact and Conclusions of Law of November 24, 1999 at p. 52. Mead also challenged Beazer’s methods of sampling as inefficient 99a and lacking quality control. Id. After considering these matters, the court rejected Mead’s challenges on the grounds that there was nothing “suspect” in the manner in which Beazer proceeded with its sampling programs under Phase I & Il of the RFI and Dr. Ball’s criticisms merely reflected “the type of difference in professional opinion referred to by the USEPA in guidance documents, and which is to be expected from site to site.” Id. at 53. The court explained that identifying the most efficient approach to investigating a site under CERCLA was not grounds for excluding additional costs as unnecessary because such a rigid approach “leaves no room for the accepted notion that professional judgment might vary from site to site.” Id. at 54, 74. It then made the following finding: 54. Dr. Ball’s criticisms of the manner in which the site was addressed under RCRA do not suffice to establish that any of the actions taken are inconsistent with the national contingency plan. The manner in which a site is addressed under RCRA or CERCLA differs from site to site, and a certain amount of professional style (for lack of a better word) or judgment is inherent in the system. Dr. Ball has established only that he would have conducted the site inspection and remediation differently: he has not established that anything actually done at the site was inconsistent with the NCP. Id. at p. 78, 454. Indeed, the court rejected the proposition that efficiency arguments based upon hindsight are a proper means of identifying necessary costs of response incurred consistent with the NCP. The court opined: 100a 15. Recovery of costs pursuant to CERCLA requires that actions taken be “consistent with” the NCP. There is no requirement that the actions be no more than are necessary. There is no authority for viewing the consistency of actions taken in hindsight, i.e., by arguing that certain actions may not have been necessary. In short, there is no requirement that a remedial investigation [be] “perfect” before costs expended will be found to be consistent with the “NCP” and, therefore, recoverable in a CERCLA action. 16. Mead, through the testimony of Dr. Ball, seems to assert that any action which would not be forced upon a PRP under CERCLA would not be “consistent” with the NCP. The court disagrees. Again, the NCP vests discretion in individual professionals involved in the investigation and remediation of a particular site to select from a range of options. There is no support in the law for Dr. Ball’s hypothesis, and the expert testimony offered by Beazer concerning the practices in the field is entirely to the contrary. Id. at p. 98, 44 15, 16. Thus, the court already has ruled that the necessity and consistency requirements under CERCLA are not limited to the minimal means of investigating and characterizing the risk posed by a site as measured with hindsight. Second, Mead’s attempt to reduce the necessity and consistency requirements of CERCLA to encompass only those tasks undertaken to gather data directly used in formulating a risk assessment reflects a_ significant misapprehension of the CERCLA decision-making process and the information needed to perform that process efficiently 10la and effectively. The applicabie regulation does indicate that “the purpose of the remedial investigation is to collect data necessary to adequately characterize the site for the purpose of developing and evaluating effective remedial alternatives.” 42 C.F.R. §300.430(d). But, it does not follow from that proposition that only the gathering of the data actually used to support a risk assessment constitutes recoverable costs under the NCP. The AOC obligated Beazer to collect data to characterize the site, delineate the nature and extent of the contamination present, and perform a baseline risk assessment. Beazer has gathered the data to characterize the site and published a draft Phase I & II RFI report. All of the data collected was used in formulating the RFI report, and the risk assessment was but one component part of that report. Rebuttal Expert Report of Jay Vandeven at p. 23. ADEM reviewed the report and mandated additional investigation above and beyond the data collected during the first two phases of the RFI investigation prior to requiring Beazer to undertake the process of completing a corrective measures study. Thus, the steps Beazer has been required to take in implementing the AOC demonstrate clearly that collecting the data necessary to evaluate remedial alternatives effectively encompasses far more than a “private party’s formulation of a risk assessment.” > A review of the persuasive expert testimony of record more than adequately supports this proposition. As Jay Vandeven highlighted in his rebuttal expert report: Data collected during the course of an investigation have many purposes and uses. These data are used to develop conceptual models of the site, to delineate the nature and extent of contamination, to evaluate groundwater flow and 102a Third Beazer’s obligation to perform the RFI Phase III contaminant transport, to document site conditions for evaluation of remedial alternatives, and to assess risk. The risk assessment, which is only one component of the RFI, does use all. the data available in a qualitative manner and a subset of the data in a quantitative manner to evaluate exposure pathways and calculate an excess lifetime cancer risk and hazard index. All of the information from the various phases of the RFI, including the risk assessment, when complete, will be considered by ADEM when they ultimately select a remedy at the site. Rebuttal Expert Report of Jay Vandeven at p. 22. At trial he reiterated the multifaceted use of data in conducting an initial CERCLA or RCRA investigation, emphasizing that the basic objectives under both RCRA and CERCLA are to characterize the nature and extent of the contamination at the site and then to develop remedies to address the risk posed to human health and the environment. TT of February 6, 2002 (Vandeven) at 8. Dr. Magee, the vice president and principal toxicologist of Ogden Environmental and chief architect of the risk assessment, similarly emphasized the multi-purposes for collecting data during the course of a CERCLA site investigation. He repeatedly emphasized that the entire data selection and evaluation process leading to the formulation of a risk assessment has a bearing on and informs the decision-making process concerning the assumptions underlying the risk assessment and the selection of the data used to formulate the assessment. Deposition Testimony of Dr. Magee (Document 331) at pp. 25-30. For example, all of the groundwater samples were entered into a database and initially considered before strategic decisions were made “about what to put in the first report to send off to the State and EPA.” Thus, while all the groundwater- data was evaluated, only a few samples actually were quantitatively used from very specific locations as a result of a “strategic decision as to how to treat a very complex subject.” Id. at 36-37. 103a work after the completion and submission of the risk assessment as well as its compilation of conceptual models such as the site conceptual model for groundwater flow further demonstrate the breadth of data and information needed by the environmental agencies to move toward the development of alternative remedial measures. The environmental agencies decision to conduct further gruundwater testing and analysis before completing the RFI process demonstrates quite clearly that the selective process employed in formulating the risk assessment might prove to be too narrowly confined and the use of data not contained in the risk assessment might be required in the environmental agencies’ subsequent evaluation and decision-making process. The use of this vast array of information in the decision- making process in itself demonstrates the inappropriateness of confining the CERCLA’s cost recovery mechanisms to the minimal amount of data necessary to conduct a risk assessment is determined with the benefit of hindsight. It follows that limiting the recovery of response costs to only the data used in a private party’s formulation of a risk assessment thus would inappropriately eliminate the costs of some of the data actually used to assess and characterize a release or threaten release, formulate various assumptions employed in the risk assessment, and effectively evaluate feasible remedial alternatives. It likewise would create an improper motive for private parties to minimize the amount of data made available for an environmental agency’s decision- making process from sources other than the risk assessment and/or incorporate extraneous data into the risk assessments. Mead’s contention that recoverable response costs should be limited to the actual and/or minimal amount of data needed to complete the risk assessment effectively was considered and resolved during the preceding phase of this litigation. Mead 104a has advanced no authority or reason for reexamining this aspect of the prior litigation. But even assuming arquendo that there is some ground for reexamining the prior findings and rulings, the record adequately demonstrates that the entire sampling undertaken to investigate and characterize the site constitutes a necessary cost of response incurred consistent with the NCP. Accordingly, Mead’s mathematical efficiency arguments cannot be accepted by the Court. The parties dispute whether Beazer is entitled to prejudgment interest on its recoverable response costs, and if so, when any such interest began to accrue. Beazer contends prejudgment interest properly is recoverable in a contribution proceeding and asserts it has met all statutory requirements governing a private party's entitlement to it. Mead contends that prejudgment interest is not available in a contribution action and even if it is, Beazer has not demonstrated entitlement to it. A private party is entitled to prejudgment interest on recoverable response costs ina CERCLA contribution action. Mead’s argument that only the government has the right to prejudgment interest is unpersuasive. The courts that have considered whether prejudgment interest is available in a private party contribution action have concluded that the contribution provisions of 42 U.S.C. §9613 (f) incorporate the prejudgment interest provisions of 42 U.S.C. §9607(a)(4), and thus prejudgment interest is available in a contribution action. See, e.g., Bancamerica Commercial Corp. v. Mosher Steel of Kansas, Inc., 100 F.3d 792, 799 (10th Cir. 1996) (“We hold prejudgment interest should be granted in §113(f) actions in the same fashion as it ts granted in §107 actions.”); Boeing Co. v. Cascade Corp., 920 F. Supp. 1121, 1132, 1140 (D. Ore. 1996) (awarding prejudgment interest in §113(f) contribution action); Dow Chemical Co. v. Sinclair Oil Corp., 10Sa 3 F.Supp.2d 1252, 1254(D.Wyo. 1998) (prejudgment interest recoverable in private party contribution action); Browning- Ferris Industries v. Ter Maat, No. 92 C 20259, 1996 WL 67216 at *4 - *5 (N.D.Il. Feb. 16, 1996) (same). In holding that prejudgment interest is available in a private party contribution action, the courts have reasoned that although a cost apportionment action must be brought pursuant to §9613(f), that section does not in itself create, independent rights for establishing liability. Instead, §9613(f) simply confirms a responsible person’s rights under §9607 to obtain a proportional recovery from other potentially responsible persons. See Bancamerica, 100 F. 3d at 800. Thus, because CERCLA’s contribution provision is only a mechanism for apportioning established CERCLA-defined costs, by necessity it incorporates the elements and measures of liability set forth in §9607. Id. (collecting cases). The United States Court of Appeals for the Third Circuit similarly has recognized that §113(f) of CERCLA incorporates the liability provisions of §107. See New Castle County, 111 F.3d at 1122 (“[S]ection 113 does not in itself create any new liabilities; rather, it confirms the right of a [PRP] under section 107 to obtain contribution from other [PRPs].”). And because the purpose of CERCLA’s contribution provision is to apportion equitably §107 response costs among responsible parties, the courts generally have recognized that the failure to grant prejudgment interest on contribution awards would result in inequitable apportionment, i.e., the parties that paid more than their fair share in complying with government mandates would lose the time value of the money they spent on behalf of other responsible persons. Disallowing prejudgment interest under such circumstances would frustrate CERCLA’s incentive for prompt, voluntary cleanup action by private parties under government oversight. 106a As the Bancamerica court recognized, “[iJndeed, it would create a perverse incentive for responsible parties to delay involvement in cleanups, because as they delay, they gain the time value of funds they should be investing in the cleanup.” Bancamerica, 100 F.3d at 801. CERCLA provides that prejudgment interest begins to “accrue from the latter of (1) the date payment of a specified amount is demanded in writing or (ii) the date of the expenditure concerned “ 42 U.S.C. §6907(a)(4). “The statute plainly requires a written demand for specified response costs as a prerequisite to an award of prejudgment interest.” Matter of Bell Petroleum Services, Inc., 3 F.3d 889, 908 (Sth Cir. 1993). To satisfy these requirements a party must make a written demand for payment of specific response costs that have been incurred. Notices that do not satisfy both requirements are insufficient. Id. see also The Dow Chemical Co. v. Sinclair Oil Corp., 3 F.Supp.2d 1252, 1253 (D. Wyo. 1998) (“Courts have fleshed out this seemingly clear statutory language by assuming (1) that both demand and expenditure are required (despite the disjunctive), and (2) that the demand must be made by the party seeking the interest.”) (citations omitted)). For example, a notice from the EPA simply advising a potentially responsible party that it is considered to be responsible for response costs and/or informing the party of an unspecified demand for future reimbursement are insufficient. Id. In contrast, the filing of a complaint seeking the recovery of incurred response costs satisfies the statutory requirement even if it does not specify an exact amount. In Matter of Bell Petroleum Services, Inc., 3 F.3d at 908 (“Although the complaint does not specify an exact amount, we conclude that it constitutes a sufficient written demand for payment.”); Bancamerica, 100 F.3d at 108 (complaint indicating party had incurred response costs “in excess of $1 million” and seeking reimbursement and interest triggered the 107a right to prejudgment, interest from the date the complaint was filed); Dow Chemical Co., 3 F.Supp.2d at 1254 (complaint along with simultaneously filed computation of damages indicating expenditures in excess of a specified amount constituted a sufficient written demand). Beazer’s letter of September 18, 1986, failed to satisfy the statutory requirements for prejudgment interest. The letter merely advised Mead of ongoing investigations by the EPA and ADEM, noted the possibility that corrective action might be required at specific locations within the site and invited Mead to participate in negotiations with the environmenial agencies pursuant to an agreed upon method of sharing costs. The letter thus was not a written demand requesting payment for a specified amount of incurred response costs. Mead’s follow-up letters fall short of the mark for the same reasons. Beazer’s amended complaint constituted the first demand that satisfied the statutory requirements for prejudgment interest. Beazer’s June 14, 1991, amended complaint was in writing, demanded contribution for incurred response costs in excess of $180,000.00, and provided Mead with notice that Beazer would be seeking recovery for all future response costs incurred in cleaning up the site. See Amended Complaint (Document 15) at 44 32, 35. Accordingly, Beazer is entitled to prejudgment interest from June 14, 1991, forward with regard to the recoverable response costs incurred prior to that date and prejudgment interest from the date Beazer paid any subsequently incurred response costs.° ° Mead’s contention that the accrual of prejudgment interest should be tolled until Beazer served its cost documents on Mead pursuant to the case management order of April 5, 2000, is unconvincing. The amended complaint provided Mead with notice that Beazer was seeking contribution for recoverable costs of response that had been 108a Based on the above, the court calculates Beazer’s response costs for activities through December 31, 1999, as follows: Submitted Invoices: $4,993 488.00 Less Resampling Costs (55,984.76) Less D-I Invoices (35,041.09) Less Post-Closure Application Fee (6,000.00) Less Additional Well Deduction (91,324.75) Total Costs $4 805,137.60 Mead's Share @ 67.5% $3,243 ,467.80 Accordingly, the court will enter judgment in Beazer's favor and against Mead in the amount of $3,243,467.80. The award will be subject to the addition of prejudgment interest as calculated in accordance with the court's rulings. Counsel for the parties will be directed to stipulate to the applicable prejudgment interest within a reasonable period of time. An appropriate order will follow.’ and would be incurred at the site. The statutory prerequisites were thus satisfied at that point and abse a prevailing defense an award of prejudgment interest as specified above is warranted under the circumstances. ” At the pretrial conferences in January and February of this year both parties indicated Beazer’s obligations under the AOC would likely be ongoing for years. Mead indicated that any remedial measures may take decades to complete. Both counsel implied that this action would have to remain open in order to provide the parties with an appropriate forum for resolving any subsequent disputes. 109a /s/ Gustave Diamond United States District Judge From the court’s perspective the destruction of the plant and the ongoing supervision of Beazer’s implementation of the AOC by the environmental agencies indicate that any future response costs can be allocated in accordance with the comprehensive disposition of Mead’s challenges set forth above. Accordingly, the court believes that the entry of a declaratory judgment on Mead’s liability for Beazer’s future response and remediation costs consistent with the court's findings and rulings to date would provide Beazer with appropriate and complete relief. Congress provided for declaratory relief under CERCLA to ensure that a responsible party’s established liability would not have to be relitigated. CERCLA provides in pertinent part: In any such action ... the court shall enter a declaratory judgment on liability for response costs or damages that will be binding on any subsequem action or actions to recover future response costs or damages. 42 U.S.C. §961%g)(2). The mere possibility that future costs are somewhat speculative does not present a “bar to a present declaration of liability.” Kelley v. E.1. du Pont De Nemours & Co., 17 F.3d 836, 844 (6th Cir. 1994) (quoting United States v. Fairchild industries, inc., 766 F.Supp. 405, 415 (D.Md. 1991)). In light of the above, the parties will be directed to show cause why a declaration binding Mead to pay all incurred and future costs of implementing the AOC in accordance with the court's findings and rulings will not provide the parties with adequate relief under the circumstances. 110a Mark D. Shepard, Esq. D. Matthew Jamison III, Esq. Melissa L. Evans, Esq. Babst, Calland, Clements & Zomnir Two Gateway Center, Eighth Floor Pittsburgh, PA 15222 George P. Faines, Esq. John H. Bingler Jr., Esq. Thorp, Reed & Armstrong One Oxford Centre, 14" Floor Pittsburgh, PA 15219-2402 Alan M. Wiseman, Esq. Thomas A. Isaacson, Esq. Howrey & Simon 299 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2402 Van Carson, Esq. Charles R. McElwee, II, Esq. Squire, Sanders & Dempsey 127 Public Square 4900 Key Tower Cleveland, OH 44114-1304 John E. Frey, Esq. Wildman, Harrold, Allen & Dixon 225 West Wacker Drive 30" Floor Chicago, IL 60606-1225 llla IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA Civil Action No. 91-408 [Filed March 7, 2000] BEAZER EAST, INC., Plaintiff, Vv. THE MEAD CORPORATION, Defendant, Vv. KOPPERS INDUSTRIES, INC., Third-Party Defendant. ee ~~ 1i2a MEMORANDUM AND ORDER OF COURT DIAMOND, D.J. Beazer East, Inc. (“Beazer”) commenced this action under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) seeking contribution for expenses that have been and will in the future be incurred in cleaning up the Woodward Coke Plant, an industrial site near Dolomite, Alabama. Coke used in the steelmaking industry has been produced at the site since 1911. Beazer seeks recovery against the Mead Corporation (“Mead”) as a prior owner and operator of the site from 1911 to 1974. Mead asserted a counterclaim against Beazer as prior owner and operator of the site (1974 to 1988) and joined the current owner and operator of the site, Koppers Industries, Inc. (“KII"). Presently before the court are KII and Mead’s objections to the Magistrate Judge’s report of November 24, 1999, (Document No. 303), recommending equitable allocation percentages for each party. After de novo review of the record, together with the (1) proposed findings of fact and conclusions of law, (2) comprehensive allocation briefs, (3) recommendations for equitable allocation set forth in the report, and (4) objections to the report and responses thereto, the report and recommendation will be adapted by the court as modified hereiw. and further proceedings will be ordered accordingly. Following the United States Court of Appeals for the Third Circuit's remand of December 9, 1994, this action was referred to the Magistrate Judge on December 22, 1994, for further proceedings consistent with the Third Circuit's opinion at Beazer East, Inc. v. Mead Corp., 34 F.3d 206 (3d Cir. 1994), cert. denied, 514 U.S. 1065 (1995). After the resolution of several pretrial matters, this court entered a 113a memorandum order on July 9, 1996, grantine in part and denying in part Mead’s motion for partial summary judgment. The order further provided: It further appearing that a determination of the eyuitable factors to be considered in the parties’ claims for contribution [has] not yet been [made] and that a report and recommendation identifying such appropriate factors as well as setting forth a comprehensive allocation of Beazer’s clean-up costs among the parties is appropriate at this juncture, IT IS ORDERED that a scheduling conference shall be held before the Magistrate Judge wherein timeframes shall be established for (1) proposing the equitable factors to be considered under §9613(f), (2) submitting briefs in support of an allocation of Beazer’s clean-up costs among the parties, and, after a hearing if necessary, (3) the submission of a report addressing the same. Memorandum Order of July 8, 1996 (Document No. 193). On August 29, 1996, the Magistrate Judge entered an order scheduling implementation of the July 8, 1996, directives. On September 16, 1996, Mead filed an objection to the Magistrate Judge’s order of August 29, 1996, contending that the scheduling order was inconsistent with the grant of authority set forth in the Magistrates Act, 28 U.S.C. §636, because the identification of the equitable factors might require the Magistrate Judge to make credibility assessments regarding the testimony of fact and expert witnesses and thus the hearing essentially constituted a trial of the parties dispute without Mead’s assent. On April 30, 1997, this court overruled Mead’s objection and denied Mead’s supplemental motion to stay further proceedings on the grounds that the identification of the equitable factors was not a dispositive 114a undertaking in itself, particularly in light of the Magistrate Judge’s requirement to issue a report and recommendation to which Mead could file timely objections. The court additionally noted that given the complex nature of the dispute, the court’s ability to evaluate any specific objections to the report in a concrete context would conserve judicial resources. The Magistrate Judge held a hearing on May 6, 1997, through May 21, 1997.' The parties introduced approximately 1300 exhibits contained in more than 47 ring binders and called 14 witnesses. On November 24, 1999, the Magistrate Judge issued a report recommending proposed findings of fact and conclusions of law. The parties filed their respective objections and responses thereto, with the final pleading being filed on December 28, 1999. The report and KII and Mead’s objections were forwarded to this court for consideration on January 4, 2000.’ KII objects to the first recommendation made by the Magistrate Judge: “that KII be deemed a [responsible party], and that it be considered such as the court fashions the ultimate allocation in this matter.” Report of November 24, ' The heating consumed twelve days and has been transcribed in its entirety. See Document Nos. 276-77, 284 and 286-97. ? On December 18, 1997, the Magistrate Judge issued a report recommending that KII’s motion for judgment on the pleadings be denied and this court entered a memorandum order that same day denying the motion. Also, the Magistrate Judge issued a memorandum and order on June 16, 1999, ruling on the parties’ evidentiary objections made during the hearing. The parties do not contest the Magistrate Judge’s June 16, 1999, memorandum and order. 11Sa 1999 (Document No. 303) at p.4. KII objects for the reasons set forth in its motion for judgment on the pleadings as to Count | of Mead's amended third-party complaint and emphasizes that it should not be part of an equitable allocation in this litigation because Beazer is the party seeking an equitable allocation of its response costs against Mead, and thus the only relevant inquiry should be the percentage of Beazer’s response costs to be allocated to Mead. This objection is misplaced for a number of reasons. First, as noted in the memorandum and order of September 8, 1995, granting defendant's motion for leave to serve a third-party complaint on KII, KII statutorily is a responsible person under 42 U.S.C. §9706 and the Third Circuit specifically noted that upon remand “the trial court will have to revisit the parties’ contribution claims and correspondingly apportion liability for the attendant CERCLA response costs.” Beazer East, 34 F.3d at 219 n.10 (emphasis added). Joinder of KII to Mead’s counterclaim was proper under these Circumstances pursuant to Fed.R.Civ. P. 13h) and 20 as well as for the reasons set forth in the Magistrate Judge's report of February 21, 1995. In addition, as a reading of the Magistrate Judge’s Novermber 24, 1999, report as a whole makes clear, a fair assessment of plaintiff and defendant's equitable shares of the response costs necessarily involves consideration of factors bearing on KII's current ownership and operation of the site and the value bestowed upon KII by the ultimate remediation, as well as other poter tial benefits which may inure to the site owner. These are factors which courts repeatedly have recognized as potentially relevant equitable factors in a 42 U.S.C. §9316(f) analysis. See, ¢.g., Hatco v. W.R. Grace & Co., 836 F.Supp. 1049, 1084 (D.N.J. 1993) (“the financial benefit derived from remediation is a factor that must be considered in determining the equitable contribution of each party to the remediation of the site”), vacated and remanded on other grounds, 59 F.3d 400 (3d Cir. 1995); Weyerhaeuser Co. v. Koppers Co., 771 1 16a F.Supp. 1420, 1427 (D.Md. 1991) (recognizing benefit remediation bestows on ultimate owner of environmentally safe property) (citing in support BCW Associates, Lid. v. Occidental Chemical Corp., 1988 WL 102641 (E.D.Pa. Sept. 29, 1988)).’ KII's objection that an allocation of 2.5% to it is (1) inconsistent with CERCLA’s underlying “polluter pays” policy and (2) not based on any volumetric or statistical analysis likewise is unavailing. Although the “polluter pays” policy is an important guide post in analyzing CERCLA matters, §9613(f) assigns to the court the obligation of determining in any particular case the appropriate equitable factors to be considered in the allocation process. The fact that the percentage assigned to KII is not based on principles which are typically employed in assessing the responsibility of parties who have contributed substantially to the environmental conditions requiring remediation does not restrict the court’s identification and evaluation of the case- * These authorities likewise demonstrate the lack of merit in the first prong of KII's second objection, which challenges the conclusion that after remediation KII will “own property which is more valuable than it was pre-remediation.” In the context of this case the conclusion is well supported by Ar. Graham's evaluation and testimony. The other prong of KII's second objection likewise is without merit. The Magistrate Judge merely recognized that KI would have an opportunity to recoup ary costs imposed upon it through the further sales of coke (as a cost » € doing business spread out over time). He also acknowledged, that the remediation would not permit KII to reap unanticipated profits due to the overall effects of environmental regulation/remediation on the domestic coke market. KII's prediction that it will be unable to recoup such costs through future sales does not climinate its general opportunity to do so as recognized by the Magistrate Judge. 117a specific factors to be used in making a comprehensive equitable allocation among the parties. See Discussion of Court’s Discretion, infra, at pp.8-9. With one exception, Mead’s objections also are unavailing. Mead’s core objections are threefold: the Magistrate Judge erred (1) by failing to assign a greater percentage to Beazer based upon Beazer’s pre-sale connection to and knowledge of the site and its willingness to bear the risks of various environmental costs in the future; (2) in assessing the weight to be given to the parties’ expert/historical fact witnesses and discounting certain aspects, of Mead’s evidence bearing on Beazer and Mead’s contributions to the condition of the site and the attendant response/remediation costs of those contributions; and (3) in failing to assign responsibility for Beazer’s history of noncooperation, delay and non-compliance with regulatory agencies and the potential dual purposes of some of the monitoring and corrective actions taken or to be taken at the site. “Congress enacted CERCLA, a complex piece of legislation ... to force polluters to pay for costs associated with remedying their pollution.” Beazer East, 34 F.3d at 219 (quoting United States v. Alcan Aluminum Corp., 964 F.2d 252, 258 (3d Cir. 1992)). CERCLA is a remedial statute which is to be construed liberally to effectuate its goals and one of its principal concerns is assuring that those who are responsible for environmental conditions hear the costs of remedying those conditions. Id. (citing, Inter alia, B.F. Goodrich v. Murtha, 958 F.2d 1192, 1197 (2™ Cir. 1992)). Generally, CERCLA initially imposes strict liability on potentialiy responsible parties. The liability is joint and several with regard to response or remediation costs incurred by the United States or innocent third parties. New Castle 118a County v. Halliburton NUS Corp., 111 F.3d 1116, 1120-21 (3d Cir. 1997). With limited exception, a potentially responsible party who has incurred costs associated with hazardous waste clean-up and site remediation may recoup that portion of its expenditures which exceed its fair share of the overall liability through the contribution and equitable apportion mechanism engrafted into CERCLA by the Superfund Amendments and Re-authorization Act, 42 U.S.C. §9613(f). Section 9613(f) provides that any person may seek “contribution from any other person who is liable or potentially liable under section 9607(a) of this title ....” 42 U.S.C. §9613(f) (1). The Third Circuit has held that the term “contribution” as used in §9613 (f) refers to a claim “by and between jointly and severally liable parties for an appropriate division of the payment one of them has been compelled to make. “ In re Matter of Reading Co., 115 F.3d 1111, 1120 (3d Cir. 1997) (quoting Akzo Coatings, lnc, v. Aigner Corp.. 30 F.3d 761, 764 (7th Cir. 1994)). A primary consideration in allocating such costs is the concept of relative fault. Envi IT ion S ENSCO, Inc... 969 F.2d 503, 508-09 (7th Cir. 1992) (“courts should equitably allocate casts of clean-up according to the relative culpability of the parties rather than an automatic equal shares rule”); United States v. Monsanto Co., 858 F.2d 160, 173 n.29 (4th Cir. 1988), ceri. denied, 490 U.S. 1106 (1989) (“the language of CERCLA’s new contribution provisions reveals Congress’ concern that the relative culpability of each responsible party be considered in determining the proportionate share of costs each must bear”). Section 9613(f) provides that “the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate.” 42 U.S.C. 119a $9613 (f); Halliburton NUS Corp., 111 F.3d at 1121; Gould, Inc. v. A&M Battery & Tire Service, 987 F.Supp. 353, 367 (M.D.Pa. 1997). Factors which appropriately are considered include the relative fault of the parties, whether the parties have contractually allocated responsibility for the cleanup costs, and the “Gore factors.” Kerr-McGee Chemical Corp. y. Lefton Iron & Metal Co,, 14 F.3d 321, 326 (7th Cir. 1994); United States v. Colorado & Eastern Railroad Co.. 50 F.3d 1530, 1536 n.5 (10th Cir. 1995).* In 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.” Colorado & Eastern, 50 F.3d at 1536 (quoting Environmental Transportation Systems, Inc. v. ENSCO, Inc., 969 F.2d 503, 509 (7th Cir. 1992)); AL. Tech Specialty Steel Corp. v. Allegheny International Credit Corp., 104 F.3d 601, 608 (3d Cir. 1997) (it is within the court's discretion to rely on a single factor). * 4. The “Gore factors” are a non-exclusive list of relevant factors proposed by then Senator Albert Gore: (i) The ability of the parties to demonstrate that their contribution to a discharge, release or disposal of a hazardous waste can be distinguished, (it) The amount of the hazardous waste involved, (iii) The degree of toxicity of the hazardous waste, (iv) The degree of involvement by the parties in the generation, transportation, treatment, storage or disposal of the hazardous waste , (v) The degree of care exercised by the parties, taking into account the characteristics of the hazardous waste, and (vi) The degree of cooperation by the parties with the federal, state, or local officials to prevent any harm to the public health or the environment. 120a The parties devoted considerable effort and resources in thoroughly developing the record on their respective positions regarding the factors which should command this court's attention and the Magistrate Judge's November 24, 1999, report identifies the appropriate equitable factors to be considered in this case. Mead contends that although the Magistrate Judge correctly found or concluded that “Reasonable parties negotiating the sale of an industrial site in Alabama in 1974 would expect that the seller would not be held liable for any future environmental costs” (Finding of Fact 65); “Beazer performed a full inspection of the Woodward Plant prior to its purchase, and was well aware of the environmental condition of the site” (Finding of Fact 68); “The parties in fact intended that Mead be able to ‘walk away’ from the site, i.e. that Mead would not indemnify Beazer for any future costs at the site for any reason, including environmental response costs” (Finding of Fact 66); “Beazer was in at least as good a position as was Mead, and was probably in a more informed position to assess the potential environmental problems at the site at the time of the 1974 sale” (Finding of Fact 67); “Beazer purchased the property from Mead pursuant to the doctrine of caveat emptor and with full knowledge of the contamination, or potential contamination, on site” (Conclusion of Law 27); “Beazer purchased the property ‘as is’ and with knowledge that the property had been contaminated by its 12la decades of use as a coking facility. Beazer also had intimate knowledge of the site in terms of the manner and extent of the contamination on site” (Conclusion of Law 28); and “Mead is entitled to a reduction in its ‘polluter pays’ allocation due to its reasonable expectation, and Beazer’s intent, to accept responsibility for all environmental regulation at the site ‘post-sale’” (Conclusion of Law 29); the Magistrate Judge failed to give proper weight to the intent of the parties and seriously understated the significance of these (and related) factors when he assigned only 15% to them in the allocation process. Mead further argues: [iJn effect, the Magistrate Judge assigned 12.5% of the liability to post-sale factors (10% to Beazer and 2.5% to KIT) and 87.5% to pre-sale factors. In allocating the pre-sale liability, he assigned more than 70% to Mead because of its contamination but only 15% to Beazer for its agreement to bear the costs associated with its obligation to remediate that same pre-sale contamination. Given Mead’s historic role more than four times the weight assigned to Beazer’s agreement to bear the costs of those historic practices is neither equitable nor just. A large, highly sophisticated purchaser such as Beazer must bear the consequences of its decision to assume these liabilities. Yet, the Magistrate Judge virtually absolved Beazer of its considered decision to assume these costs. In a free market economy, the parties to arms-length corporate transactions must accept both the rewards and the risks of their 122a decisions. CERCLA did not alter that fundamental premise. Mead’s Objections (Document No. 305) at p. 8. Mead asserts that a higher percentage is appropriate here, particularly where Beazer’s pre-sale involvement with and knowledge of considered as a single, overlapping factor in order to avoid Possible “double counting.” Se« Conclusion of Law 31. The court agrees that 15% understates the various factors which are combined in Conclusion of Law 31. Accordingly, the court will exercise its discretion and increase the percentage to 20%. In addition, because Beazer did not assert a claim for contribution against KII and the court finds that 2.5% appropriately represents KII's proportional share solely as to Mead’s equitable allocation, the court will amend Conclusion of Law 33 to provide: The final equitable allocation amounts in this case are: Mead (90% of the waste, minus 2.5% for KII's share and minus 20% shifted to Beazer due to all circumstances surrounding the 1974 sale) - 67.5%; Beazer - 32.5%. As modified the above allocation strikes an appropriate equitable balance between the factors surrounding the 1974 sale of the site to Beazer, Beazer and KII’s ownership and ongoing operation of the site since 1974, the factors pertaining to each party's contributions to the current condition of the site, and the remaining equitable factors, identified in the report. Mead's general contention that these factors warrant an even greater percentage being assigned to Beazer is unpersuasive for the reasons noted in the report and addressed below. 123a Mead’s specific contention that the Magistrate Judge misread the import of Beazer East is without merit. The Third Circuit examined the various provisions of the asset purchase agreement, determined that it contained contradictory provisions and recognizec that although the parties did contemplate a division of specific environmental obligations, they did not legally effectuate a transfer of the stringent obligations and requirements which CERCLA ultimately imposed on Beazer. The court’s refusal to construe the agreement as effectuating an indemnity agreement governing “CERCLA response costs leaves both Beazer and Mead responsible for their fair share of the clean-up costs associated with the coke plant,” a result which reinforces CERCLA policy. Beazer East, 34 F.3d at 219. Against this backdrop the Magistrate Judge aptly observed that the context of the appeal did not foreclose Mead’s ability to establish (1) the parties’ factual intent to create a sweeping transfer of environmental liability and (2) the impact any such failed attempt should have on the matter at hand. Report at pp. 6- 11. The various contractual provisions of the asset purchase agreement and the attendant circumstances surrounding the sale of the Woodward Coke plant have been carefully considered from an equitable perspective and, after placing those factors within the comext of CERCLA’s primary policy and fundamental principles, the court finds that 20% is the appropriate weight to be assigned to them. Furthermore, Alcan-Toyo America v. Northern Illinois Gas, 881 F.Supp. 342 (N.D.Ill. 1995), does provide persuasive support for assigning this weight to the factors of caveat emptor, Beazer’s purchase of the property “as is” and with full knowledge of its condition, and Beazer’s intent to accept responsibility at the site for environmental regulation, because Alcan-Toyo emphasizes the importance of similar factors where a sophisticated purchaser acquired environmentally contaminated property prior to the enactment of CERCLA and 124a a significant portion of the contamination had been placed on the site by the previous owner. In the instant action an even higher percentage has been assigned to Beazer in arriving at a fair and equitable assessment of the similar factors. Under all of the circumstances Mead’s contention that the contractual/condition of-the-site factors should warrant an even greater percentage of the total allocation is unavailing. Mead’s attempt to rehash all of the arguments advanced as to why its witnesses’ testimony and proposed assessments should be elevated over Beazer’s is misplaced. The substantive strengths and weaknesses of the witnesses’ testimony/opinions are thoroughly examined and explained in the report, and while Mead’s reasons to disagree with the evaluations are apparent, the record does not warrant the substantial shift in emphasis advocated by Mead. Mead’s numerous objections contending that the Magistrate Judge erred in evaluating whether in general * The review and assessment of the testimony in this manner and the expressed merit-based reasons for adopting certain portions of the witnesses’ testimony and opinions also renders moot Mead’ s objection that the allocation hearing/report and recommendation transcends the boundaries of the Magistrates Act. It similarly reveals the lack of merit in Mead’s insistence that a trial de novo with live witness presentations be conducted before this court on the same issues presented to the Magistrate Judge in order for the court to judge for itself the credibility of witnesses. The report assigns relative weight on such factors as the methodology employed, the thoroughness of the expert’s analysis, the number of potential relevant factors considered, the internal consistency of the testimony and assessments made, and so forth. It does not discredit any testimony on the basis of the demeanor or character of the witness. 125a various investigation costs and actions to be taken at the site under the Resource, Conservation and Recovery Act (“RCRA”) constitute recoverable costs under CERCLA are curious. It was Mead’s expert, Dr. Ball, who squarely raised the issue of whether various investigation costs, monitoring activities and projected remediation costs should be considered as an equitable allocation factor to Beazer’s detriment. Mead’s contentions in this regard were thoroughly developed by Dr. Bali in both his testimony and expert report. Beazer presented substantial expert testimony through (A) Dr. Harris and Mr. Vandeven of ENVIRON Corporation and (B) Dr. Jones to counter Dr. Ball's opinions and assessments, much of which pertained to whether the corrective actions being undertaken pursuant to the current RCRA action program are substantially similar to the investigation and remediation guidelines of CERCLA and the hypothetical program that would have been developed thereunder. These experts also referenced memoranda by the EPA expressing that agency's view that acceptable investigation/remedial action under the RCRA should be presumed to be acceptable and meet the standards of CERCLA and vice versa. Dr. Ball’s methodology also raised the issue of whether an assessment of recoverable costs should be influenced substantially by his proposed on- site operable units (as opposed to addressing the costs for the entire site). The evidence of record demonstrated that while Dr. Ball’s proposal was one way of assessing the need for and conducting the incremental steps toward obtaining regulatory compliance, the record in its entirety fell far short of demonstrating that the method pursued by Beazer (prior to and later at the insistence of the EPA) involved undertakings which were wasteful, duplicative or otherwise beyond the realm of actions necessary to respond to the threatened release of hazardous wastes and consistent with the National Contingency Plan. Mead’s evidence failed to warrant a finding that Beazer’s costs in general were not recoverable in 126a a CERCLA contribution proceeding. The Magistrate Judge correctly observed that recoverable costs are not limited to those believed to be the least necessary in the range of acceptable professional judgments regarding investigation and remediation action. The record has been developed thoroughly with regard to these general contentions and proposed findings of fret 51 through 55 (pertaining to the shortcomings of Dr. B4dt’s testimony and opinions) are well supported. To the extent these matters may preclude Mead from objecting to specific costs yet to be identified, any such consequences are a natural outcome of the issues Mead chose to raise. Finally, the Magistrate Judge did not ignore or fail to consider Mead’s contention that Beazer engaged in a course of non-cooperation and non-compliance which contributed to the costs sought to be allocated among the parties. The testimony and opinions of Dr. Harris and Mr. Vanderview of ENVIRON Corporation and Dr. Jones clearly established that Beazer did not create the need for additional action by its chosen course of investigation. Their testimony also made clear that given the nature of site and the substances created in the coking process, the twenty-three solid waste management units identified in the EPA’s RCRA Facility Assessment of May 1988 and the three regulated hazardous waste units would have required the same investigation/remediation actions in any event. The Magistrate Judge considered similar contentions in assessing Dr. Ball’s opinions and conclusions. It readily is apparent that the record did not support the proposition that any such alleged conduct increased the overall costs at issue. Mead’s objections on these various points suffer from similar shortcomings in that they fail to demonstrate that the referenced factors had any impact which should factor into the equitable apportionment analysis at hand. In addition, even assuming that some undettakings may coincidently serve a dual purpose for 127a Beazer, this factor in itself does not make such undertakings unnecessary for proper monitoring and remediation of the site. The parties agree that Beazer and the EPA are parties to a 1991 administrative order on consent issued under the RCRA and that an investigation of the site has been undertaken by Beazer in accordance with that administrative order. See Joint Stipulations (Document No. 270) at $47). Various investigations and monitoring reports also have been completed and submitted to the EPA and its state counterpart. Id. at 51 & 52. The parties further agree: Some of the costs which Beazer has incurred to date pursuant to the RCRA order at Woodward Coke are recoverable response costs which are necessary and incurred consistent with the National Contingency Plan. Id. at 55. In light of this stipulation, the parties elected to present their materials on a comprehensive allocation formula and did not seek to have the Magistrite Judge determine whether any specific costs incurred to date by Beazor are recoverable, reserving the question of the recoverability of specific costs until a later phase of the allocation proceeding. See Report at p.17, n.6 (citing Transcript of May 13,1997 (Document 292) at pp. 24-25). Meads general contention that substantial portions of the undertakings aimed at complying with the RCRA and the 1991 admin‘strative order on consent are not recoverable costs under CERCLA has been resolved sufficiently in the report’s assessment of Dr. Ball’s opinions and recommendations. Beyond this general dispute the parties have not indicated in the record their remaining disputes, if any, regarding the recoverability of any specific costs incurred or to be incurred in cleaning up the site. 128a Accordingly, the court will schedule a status conference to ascertain the appropriate procedure for resolving this remaining aspect of the litigation. For the reasons set forth above, KII’s objections will be overruled and Mead’s objections will be granted in part and denied in part. The Magistrate Judge’s report and recommendation of November 24, 1999, as modified herein will be adopted as the findings of fact and conclusions of law of the court. In light of the above, the following, order is appropriate. ORDER AND NOW, this 7" day of March, 2000, for the reasons set forth in the above memorandum, IT IS ORDERED that Koppers Industries, Inc.’s objections to the report and recommendation of November 24, 1999, be, and the same hereby are, overruled and the Mead Corporation’s objections be, and the same hereby are, granted in part and denied in part as reflected in the memorandum. The report as modified in the memorandum is adopted as the findings of fact and conclusions of law of the court. The final costs found recoverable in this action shall be allocated as follows: The Mead Corporation - 67.5%; and Beazer East, Inc. - 32.5%. IT FURTHER IS ORDERED that a status conference be, and the same hereby is, scheduled before this member, of the court for Tuesday, March 21, 2000, at 10:30 a.m., in Courtroom No. 2, Eighth Floor, United States Post Office and Courthouse, Pittsburgh, Pennsylvania. Trial counsel must be present. The parties shall be prepared to report to the court in detail on the settlement posture of the case. Counsel shall have their clients present at the conference or immediately available for consultation. In the event the parties are unable to resolve 129a the remaining aspects of this litigation, the parties shall be prepared to discuss the most efficient procedures for identifying and resolving their remaining disagreements. /s/ Gustave Diamond United States District Judge ce: Honorable Kenneth J. Benson Chief, U.S. Magistrate Judge Robert A. King, Esq. Kenneth R. Bruce, Esq. Albert Bates, Jr., [V, Esq. Timothy C. Wolfson, Esq. Babst, Calland, Clements & Zomnir, P.C. Two Gateway Center Eighth Floor Pittsburgh, PA 15222 John J. Bingler, Jr., Esq. George P. Faines, Esq. Thorp, Reed & Armstrong One Riverfront Center Pittsburgh, PA 15222 Alan M. Wiseman, Esq. Thomas A. Isaacson, Esq. Howrey & Simon 1299 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2402 130a Van Carson, Esq. Charles R. McElwee, II, Esq. Squire, Sanders & Dempsey 127 Public Square 4900 Society Center Cleveland, OH 44114-1304 John E. Frey, Esq. Wildman, Harrold, Allen & Dixon 225 West Wacker Drive, 30th Floor Chicago, IL 60606-1225 l3la IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA Civil Action No. 91-408 [Dated November 24, 1999] BEAZER EAST, INC. , Plaintiff, Vv. THE MEAD CORPORATION, Defendant, Vv. KOPPERS INDUSTRIES, INC., Third-Party Defendant, ed JUDGE GUSTAVE DIAMOND MAGISTRATE JUDGE BENSON 132a PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW 1. Procedural History. This is an action commenced by Beazer East, Incorporated, (Beazer) seeking contribution from The Mead Corporation (Mead), for present and future expenses that have been and will be incurred in the clean-up of an industrial site near Dolomite, Alabama, referred to as the “Woodward Coke Plant”. The sole claim remaining from the initial complaint is a claim for contribution under to the Comprehensive Environmental Response, Compensation and Liability Act, as amended (CERCLA), 42 U.S.C. §9607. There is also a third- party claim for contribution which is asserted by Mead against the present owner of the Woodward Coke Plant, Koppers Industries, Inc. (KIN). The procedural history of this case is long and tortured, and need not be recounted in full here, except for more recem events. The court has determined that Mead is a potentially responsible party (PRP) under CERCLA, and, hence, liability has been established pursuant to that statute. Beazer is also a PRP, having owned and operated the site from 1974 through 1988, and having already expended funds for investigation and remediation at the site. Finally, there is no dispute that KII, as the present owner and operator of the facility, and of about half of the land in question, is also a PRP. 42 U.S.C. §9607(a). There is, however, dispute concerning whether KIl should be assigned a separate allocable share of clean-up costs. This question will be addressed preliminary to proceediag with the proposed findings of fact and conciusions of law drawn from the hearing in this matter. 133a A. Is Koppers a party to this allocation? Beazer maintains that the sole question to be answered in this proceeding concerns Mead’s allocable share. This is so, in Beazer’s view, since Beazer may only seek through this contribution action to have Mead found responsible for Mead’s equitable share of the response costs. See, Pinal Creek Group v. Newmont Min. Corp., 118 F.3d 1298 (9th Cir. 1997), cert. denied 118 S.Ct. 2340 (1998) (contribution liability limited to a potentially responsible party's (PRP) equitable share). Beazer also points to an agreement it has with KII pursuant to which Beazer is responsible for all costs incurred by KII with respect to environmental liabilities at the site. (Indeed, Beazer and KII have been represented jointly in this proceeding.) Thus, in Beazer's view, this is truly a two- party proceeding, since whatever percentage of the response costs is attributed to Mead, the remaining costs will be borne by Beazer in any event. Mead responds that any agreement between KII and Beaz t is not properly before the court. What is at issue, in Mead’s view, is the responsibility of all PRPs for the response costs in this matter. Thus, since KII is a PRP, its responsibility for contribution should be litigated in this proceeding, and, indeed, must be litigated in order to properly determine the allocable shares of Beazer and Mead. A PRP may seek contribution from another PRP pursuant to §9613(f). A PRP may make a claim for contribution for either costs already incurred, or for costs to be incurred in the future. In fact, Beazer seeks contribution for both expenses already incurred, and for future expenses. Here, Mead has made a claim for contribution under §9613(f) against KII. Mead, as a PRP, is entitled to make such a claim, regardless 134a of the fact that it has not, to date, incurred any response costs. ' This court has already held, in ruling upon the motion to dismiss Mead’s third party complaint, that consideration of the allocable share o* all PRPs, including KII, is necessary. It is not persuaded by Beazer’s argument that this conclusion should change. While it is true that an agreement exists between Beazer and KII, this will result only in KII’s share of the response costs, whatever that is found to be (and it is at least possible that the share may be 0%), being ultimately paid by Beazer. In any event, the court cannot properly pass upon Mead’s allocable share without considering the responsibility of all PRPs for the contamination at the Woodward Plant. Thus, the first recommendation offered to the court is that KI] be deemed a PRP, and that it be considered such as the court fashions the ultimate allocation in this matter. B. The court’s obligations. This writer’s responsibilities with respect to the nexi step to be taken in this matter were explained by Judge Diamond in his order of July 8, 1996: It further appearing that a determination of the equitable factors to be considered in the parties’ claims for contribution have not yet been determined and that a report and recommendation identifying such ' That Mead will be assessed some portion of the response costs is a foregone conclusion. The parties here merely dispute the extent of Mead’s contribution. 135a appropriate factors as well as setting forth a comprehensive allocation of Beazer’s clean-up costs among the parties is appropriate at this juncture, IT IS ORDERED that a scheduling conference shall be held before the magistrate judge wherein time frames shall be established for (1) proposing the equitable factors to be considered under §9613(f), (2) submitting briefs in support of an allocation of Beazer’s clean-up costs among the parties and, after a hearing if necessary, (3) the submission of a report addressing same. (Docket #193 at 3). A scheduling order was entered on August 29, 1996 (Docket #201). Proposed equitable allocation factors were filed by the parties (Docket #s 202, 203, 204). Comprehensive allocation briefs, with appendices, were also filed by the parties (Docket #s 227-229 and 231-235), as were supplemental, reply and surreply allocation briefs and appendices (Docket #s 236, 237, 238, 239 and 240). The parties then submitted proposed findings of fact and conclusions of law (Docket #s 247, 260). Expert reports and rebuttal expert reports were filed at various times (Docket #s 207, 208, 216, 218, 219, 224). A hearing was held in this matter over a period of twelve days, beginning on May 6, 1997, and ending on May 21, 1997 (Docket #272). During that hearing, the parties introduced more than forty-seven ring binders of exhibits, as well as numerous demonstrative exhibits, along with the testimony of fourteen witnesses. Although some of the exhibits were adit = into evidence, rulings on others were withheld pending —e submission of final exhibit lists by each party and any objections thereto. ‘. On June 12, 1997, Beazer and KII filed a joint, final exhibit list (Docket #274), referencing 748 separate exhibits. 136a Of these, 700 were offered into evidence. Mead filed objections to the admission of all or portions of 133 of the exhibits offered by Beazer and KII (Docket #278). Mead also provided a final exhibit list which sought admission of 493 separate exhibits (Docket #279). Beazer and KII objected to the admission of all or part of 5 of these exhibits. Both parties’ objections to the other’s exhibit list were filed on June 27, 1997.’ Many of the exhibits offered by Mead, and two of those offered byBeazer and KII, were admitted into evidence during the hearing (Docket #272). Rulings on the admissibility of the 138 exhibits (or portions thereof) to which objections were raised post-hearing were made in an order filed on July 21, 1997 (Docket #282). The parties also filed designations and cross-designations from numerous depositions, which fill six additional ring binders. Objections to the designations and cross-designations of each party were filed on June 5 and 12, 1997 (Docket #s 273 and 275). These objections often proceeded line-by-line through the deposition excerpts. Mead’s objections are more than 50 pages in length, and Beazer’s a relatively svelte 19 pages. Again, rulings on the objections to the specific designations were made and entered in the record on June 15, 1999 (Docket #302). Thus, after great pains, the record has been finalized. * The undersigned represented to the parties that a report and recommendation would be forthcoming by June 30, 1997. Obviously, having received the final submissions of the parties on June 27, 1997, and with a multitude of evidentiary rulings to be made, the projected dated became somewhat unrealistic. The delay in making these rulings has, for other reasons which are the court’s responsibility alone, stretched on far beyond what it ought. For this the court offers its apologies. 137a C. The Third Circuit’s Opinion. The court is not writing upon a clean slate in this case. Hence, prior to setting forth proposed findings of fact and conclusions of law, it will first be nevessary to review the opinion accompanying the order of remand in this matter. This matter was remanded from the Court of Appeals, which reversed this court’s entry of summary judgment in favor of Mead. Summary judgment was granted on the basis of the indemnification provision contained in the 1974 Asset Purchase Agreement (APA) between Mead and Beazer. The parties now contest, and the court must decide, what impact the appellate court’s ruling has upon the allocation proceeding. Beazer takes the position tha: the opinion of the Court of Appeals prevents consideration of the APA’s indemnification provision as a factor in equitable allocation. Mead, on the other hand, asserts that the Court of Appeals’ decision was addressed to the marrower issue of whether the indemnification provision in the agreement was legally sufficient to transfer liability. Mead argues further that the present inquiry is whether the parties intended to transfer such liabilities, a question not addressed by the Court of Appeals, not whether they actually succeeded in so doing under Alabama law, the question which was answered by the court. Mead asserts that the record establishes the parties’ intention to have a legally enforceable indemnification agreement, and that this should be considered by the ourt in making an equitable allocation between the parties. Having thus framed the issue before the court, a careful reading of the opinion of the Court of Appeals is in order. 138a Early ip its opinion, the Court of Appeals framed the issue before it as follows: Thus, Beazer could have lawfully agreed to indemnify Mead for its CERCLA liability or, conversely, Mead could have lawfully agreed to indemnify Beazer. The issue is whether either did so. 34 F.3d at 211. As framed by the Court of Appeals, then, the issue on appeal was whether either party “lawfully” agreed to indemnify the other. After determining that Alabama law should apply to the construction and effect of the contract provisions, the court refined its statement of the issue as follows: We conclude that Alabama law requires a plain . _and unambiguous expression of intent to cover the cost of the liability in question. Using this standard, we now consider whether Paragraph 4(c) unambiguously expresses Beazer’s intent to indemnify Mead against CERCLA liability. 34 F.3d at 217. The court went on to hold that the language in question was subject to more than one reasonable interpretation, i.e., it could mean that the parties intended indemnification for all liabilities, including CERCLA, or it could mean that the parties intended to encompass a lesser range of liabilities, not including CERCLA liability. The court concluded: “Under applicable principles of Alabama law, the parties failed to express the intent to indemnify with the requisite clarity. We hold, therefore, that Paragraph 4(c) is not specific enough to impose on Beazer a duty to indemnify Mead for their CERCLA response costs.” 34 F.3d at 218. 139a Accordingly, the Court of Appeals did not rule, as Beazer would have it, that no indemnity was intended by the parties. The Court of Appeals held instead that the expression of the parties’ intent contained in the contract was not possessed of “the requisite clarity” to permit a conclusion concerning that intent as a matter of law. Viewed in this fashion, there is no inherent inconsistency in the ruling made on appeal and a decision by this court that, as a matter of equity, the parties’ intentions concerning indemnity, to the extent they can be divined from both the document and any other evidence offered by the parties, should be considered in equitable allocation. If, as Mead argues, parol evidence plainly establishes that the parties intended a sweeping indemnity provision, a decision by this court to consider this fact in equitable allocation would not be inconsistent with the ruling made by the Court of Appeals. This is so since the Court of Appeals was not faced with this question and, hence, did not rule upon it. The question the appellate court decided was a legal one addressed to the sufficiency of the contract language, under applicable state law, to transfer all environmental liability for the site. Here, the court is faced with making a factual determination concerning the parties’ actual intent. It will then be the court’s duty to determine what effect, if any, the parties’ intent should have upon the equitable allocation of response costs between the parties. Other courts have drawn similar distinctions between the legal sufficiency of an indemnity provision, and the consideration of the intent of the parties in an equitable allocation of response costs. In Kerr-McGee Chemical Corp. v. Lefton Iron & Metal Co., 14 F.3d 321 (7th Cir. 1994), the Court of Appeals for the Seventh Circuit found that a contractual indemnity agreement, entered into in 1972 before 140a the passage of CERCLA, was sufficient to shift the responsibility for CERCLA response costs. In this respect, the Seventh Circuit reversed the lower court's finding. Prior to reaching this question, however, the appellate court found error in the district court failing to consider the indemnity agreement in the context of allocation, even though it had concluded that the indemnity agreement was insufficient to shift responsibility for CERCLA response costs. Since the district court did not believe the indemnification agreement applied to the cleanup costs at issue, the court ignored the agreement when allocating responsibility for cleanup costs. This was an error. Although contractual arrangements between parties are not necessarily determinative of statutory liability, Lefton’s intent to indemnify Kerr-McGee should be considered in the allocation of cleanup costs. In determining the relative contribution of the parties, courts must look to the “totality of circumstances.” Environmental Transportation Systems, 969 F.2d [503,] at 509 [(7th Cir. 1992)]. That Lefton - with knowledge of the creosote on site - agreed that it took the property “as is” and would assume all future liabilities resulting from that pollution is certainly a significant circumstance. The fact that Kerr-McGee’s predecessor Moss-American was the source of most of the pollution at the site may also weigh in the court’s analysis; this, however, is not reason to ignore other relevant considerations. 14 F.3d at 326. The same analysis applies here. The Court of Appeals for the Third Circuit has, in this case, determined that the indemnification agreement is not legally sufficient to shift 14la responsibility for Mead’s CERCLA costs to Beazer. Nonetheless, if Mead can establish that there was an intent to make such an agreement, but that the intent was not realized, then that would be a factor worthy of consideration. Also, even if no such intent is established, the fact that the sale was made “as is” and that The Tar Plant is also undergoing a site-wide facility investigation pursuant to the Resource Conservation and Recovery Act (RCRA) which is not the subject of this lawsuit (Docket #287 at 61). 145a 19. In 1975, the coal washery was shut down (Beazer thereaiter . chased “pre-washed” coal). 20. In 1977, the in-ground decanter tanks were replaced, and a new ammonia stil! was installed. 21. In 1978, a wastewater treatment plant was built and put into operation. 22. By 1980, tar decanter sludge, one of the toxic wastes produced duriag the coking process (designated under RCRA as K087), was recycled into the coke ovens and “rebaked.” This was accomplished by mixing tar decanter sludge with coal on the open ground. 23. Sometime before 1986, a concrete pad was installed, and the mixing of coal tar sludge with coal was done on the pad. On May 26, 1986, a hopper was installed for the mixing of KO87 coal tar sludge so that tt could be recycled into the ovens without any leaching into the soil. 24. Beginning in November, 1985, lime was no longer used for the ammonia still, and was replaced by liquid caustic. — nt 25. KII upgraded the wastewater treatment plant in 1989, and installed additional cooling towers. KI] also upgraded the surface water containment system. 26. KII installed a benzene emissions capturing system in 1991. 27. The by-product coking process involves placing coal in an oven and heating the coal, in the absence of air, to extremely high temperatures. The coal is “baked” for between 16 and 36 hours. During this process, the “by-products” 146a associated with coal are removed. A by-product plant captures these excess products as steam, and, through various processes, captures the constituents which include tar, benzene, natural gas, and other useful products. 28. During the course of the coking process, including the by-products recovery process, various waste products are produced. The specific types of waste are, however, not relevant to the court’s allocation since the parties have stipulated to the following facts: a. The types of contaminants generated during the operations at Woodward Coke were similar for Mead, Beazer and KII. b. The unique production wastes generated by Mead were associated with the light oil refining process, and the production wastes unique to Beazer’s and KII’s operations were associated with the waste water treatment plant. c. The wastewater treatment plant solids generated from coke plant production after 1974 were no more toxic than the coke plant production wastes unique to the pre- 1974 operations. d. with respect to wastewaters, the wastewater treatment plant effluent is no more toxic than the untreated wastewaters that had historically been discharged into the Coke Plant lake or Opossum Creek. (Docket #270, stipulations of fact 56-59). 29. Beazer has conducted remediation at three sites, on the Plant property pursuant to §3008(h) of the Resource 147a Conservation and Recovery Act (RCRA), 42 U.S.C. §6928(h). 30. After discussions with State (Alabama Department of Environmental Matters, or “ADEM”) and federal (United States Environmental Protection Agency, or “USEPA”) regulatory bodies in 1985 and 1986, Beazer agreed to close three areas of the Plant which were designated by USEPA and ADEM as Hazardous Waste Management Units (HWMU’s). 31. There are now three HWMU’s which are subject to RCRA’s “post-closure” requirements. These units are designated as Solid Waste Management Units (SWMU’s): Unlined K060 waste pile (SWMU 1); Unlined KO87 (coal tar sludge) waste pile (SWMU2); and Unlined KO87 (against coal tar sludge) waste pile (SWMU 3). 32. Beazer has conducted groundwater monitoring and reporting associated with the three RCRA units since 1986 in accordance with its obligations arising from its agreement with regulatory agencies. 33. Beazer and USEPA are the only named parties to a 1991 Administrative Order on Consent pursuant to which Beazer has conducted an investigation of the Plant site. 34. Anapproved RCRA Facility Investigation (RFI) Work Plan was submitted to USEPA by Keystone Environmental Services on behalf of Beazer in September, 1991. 35. The RFI field effort was begun in February, 1992, and completed in August, 1996. 148a 36. Beazer submitted its Draft Phase I and II RFI and Groundwater Assessment Report to USEPA and ADEM on March 6, 1997. 37. In addition to the RFI requirements of the RCRA Order, the Draft RFI Report addresses ADEM’s requirements to complete a Groundwater Quality Assessment as well as the groundwater data requirements associated with post-closure permitting. 38. At least some of the costs which Beazer has incurred pursuant to the RCRA Order at Woodward Coke are recoverable response costs which were necessary and were incurred consistent with the National Contingency Plan (NCP).° B. Contested facts. The following is a summary of the testimony given at the hearing in this matter. Proposed findings of fact follow each witness’ testimony. WITNESSES Mitchell Brourman Mr. Brourman is the environmental manager for Beazer East, Inc., 2 company with which he has been employed since 6 Based upon this stipulation, which is actually as much a conclusion of law as a stipulation of fact, the parties do not, at this time, seek to determine whether any specific cost incurred to date by Beazer is recoverable. Instead, the parties agree that the question of the recoverability of specific costs will be left to a later phase of this proceeding.” (Docket #292 at 24-25). 149a 1991 (Docket #286 at 72). He has a master’s degree in hydrogeology, and has previous employment experience as a hydrogeologist. Hydrogeology is a field in which the fate, transport, movement and occurrence of groundwater and groundwater systems are studied (/d., at 76). Mr. Brourman’s position involved his participation in field projects prior to 1995. Since that time, he has been given greater authority over administrative matters, purchasing and liaison activities with respect to environmental field projects (/d., at 81). Mr. Brourman’s duties with respect to the Woodward Facility include: fiscal responsibilities; participation in the decision to hire consultants; reviewing invoices; insuring compliance with applicable environmental regulations and orders; acting as liaison between Beazer and ADEM; and technical guidance to the company consisting of assisting in review of compliance procedures and specific expertise in groundwater remediation (/d., at 82-84). He has had personal involvement in Beazer operations at the Toledo coke plant, the St. Paul coke plant and the Kearney Seaboard coke plant (/d., at 84-85). Mr. Brourman’s initial involvement at Woodward was as a project manager during field investigation activities in 1992 (Id. at 86). He has visited the plant on about six occasions during his tenure at Beazer (/d., at 87). Mr. Brourman had “intimate review responsibilities” for the RFI which was submitted to USEPA and ADEM (id., at 92). He identified the “Part A” permit application which was filed for the Woodward Facility pursuant to RCRA regulations on November 19, 1980 (/d., at 12; Plaintiff's Exhibit 346). The permit application identifies two wastes which are generated and stored on site, KO60 (ammonia still lime sludge) and KO87 (tar decanter sludge) (/d., at 13). The 150a application shows the former being stored in an equalization tank which is part of the wasie water treatment plant, and the latter located in an area by the north landfill (/d.). These were identified as “RCRA regulated units” which are areas that are subject to RCRA permitting requirements for storage, treatment or disposal of hazardous waste (/d., at 15). Beazer was notified by the EPA for the first time in 1985 or 1986 that the historic treatment and disposal of hazardous waste at the Woodward site was a concern under RCRA, as opposed to present practices, such as the operating RCRA units already identified at that time (/d., at 17-21; Plaintiff's Exhibit 369, a letter from USEPA dated March 13, 1986). This came as a result of the enactment of the HSWA amendments to RCRA which address historic disposal practices (/d., at 22). Beazer notified Mead on September 18, 1986, that historical waste disposal practices may be the subject of a RCRA §3008(h) corrective action order (/d., at 23; Plaintiff's Exhibit 382). Mead responded to the letter by denying responsibility for the questioned waste disposal practices (/d., at 24). The responsive letter from Mead references the Asset Purchase Agreement, and states Mead’s position that Beazer has assumed all liability for “solid waste matters” (Docket #288 at 2-4; Defendant's Exhibit 1). On March 22, 1988, Beazer notified Mead that a USEPA contractor was about to conduct a facility assessment of the Woodward Plant (Plaintiff's Exhibit 405). That assessment was conducted on April 11 and 12, 1988 (/d., at 27). The assessment report was prepared in May, 1988, by A.T. Kearney, Inc. (Plaintiff's Exhibit 406). The report reflects the result of a visual site inspection and the identification of “solid waste management units” (SWMUs) and “areas of concern” ISla (AOCs). The former are areas in which hazardous waste is presently being stored, and the latter are areas suspected to have been used for historical waste disposal practices (/d., at 29). The report identified 39 solid waste management units (SWMUs), including the three RCRA regulated units identified in the Part A application (/d., at 30). Four AOCs were identified. In October, 1990, Beazer received a proposed consent order pursuant to §3008(h) from the EPA (Plaintiff's Exhibit 425). On November 28, 1990, Beazer notified Mead of this proposed order, and invited Mead to participate in the negotiation of a final order on consent (Plaintiff's Exhibit 427). Mead did not participate (/d. , at 32). After negotiation with USEPA, Beazer, through Keystone Environmental Resources, Inc., submitted a RCRA facility investigation work plan (/d. , at 37; Plaintiff's Exhibit 1325). The work plan was designed to address the 39 SWMUs and 4 AOCs, but focused on the entire site for investigational purposes (/d., at 38). The reasons for this approach are set forth in the work plan: EPA identified a number of Solid Waste Management Units (SWMUs) and Areas of Concern (AOCs) at the facility in a RCRA Facility Assessment Report (A.T. Kearney, 1988). Due to the size of plant, the close proximity of SWMUs and AOCs, and the impussible task of defining the potential release from each individual unit, potential releases from the entire site will be investigated rather than investigating the potential release from each SWMU or AOC individually. 152a (Plaintiff's Exhibit 1325 at I-2; Plaintiff's D-3). The same document identifies the “specific objectives of the RFI” as follows: @ Augment data previously collected at the site; @ Identify and define the nature and extent of constituents that may have been released from SWMuUs and AOCs at the site; ®@ Identify potential migration pathways; @ Define the potential for migration of constituents at the site; ® Identify the potential environmental impact and potential risk to human health and the environment; @ Gather necessary data to support the evaluation and selection of corrective measures alternative, if necessary. (/d., at 39-40; Plaintiff's Exhibit 1325 at I-2). Mr. Brourman had some hands-on involvement in the site investigation that followed, and helped prepare the RFI report which was submitted to USEPA and ADEM in March, 1997 (Id., at 41; Plaintiff's Exhibit 1338). In that document, the reasons for choosing the whole-site approach are repeated, as are the goals of the RFI. Those goals are slightly restated as follows: 153a 1. Characterize the nature and extent of constituents of interest (COIs) within and beyond the facility boundary; 2. Determine and characterize the sources of COIs; 3. Define and characterize the potential pathways of constituents migration; 4. Identify and characterize actual and potential human and environmental receptors and assess the potential risks posed to such receptors; and 5. Gather the data necessary to support the development, evaluation, and selection of corrective measures alternatives, as necessary. (Id.) Phase I of the field work began in 1992. USEPA required a second phase of field work, which began in 1995 (Id., at 46-47). Mr. Brourman described in some detail the investigative efforts actually performed. The details of that investigation are not relevant to this report. At the time of his testimony, however, Beazer had expended over $4.3 million during the RFI portion of the investigation, and remediation was expected to begin in September, 1997, and last for 2 to 3 years (/d., at 55-56). The amount does not include the three RCRA regulated units (/d., at 64). Mr. Brourman conceded that it is at least possible that no remediation will be necessary at the site (Docket #288 at 8-9). On cross-examination, Mr. Brourman noted that some limited resampling was required with respect to the Phase I 154a sampling program due to “problems with the quality control aspects of the sampling at the laboratory.” (/d., at 9-10). No additional charge was included for this resampling, since the subcontractor was held responsible for providing quality work, and was not paid additional compensation for performing the resampling (/d., at 19). Further, costs associated with wells installed to monitor the RCRA regulated units are not included in the investigational costs sought by Beazer in this action, although information from those wells has been used in the preparation of the RFI (Docket #288 at 65-66). Landfills 1 and 2 are not identified as either primary or secondary areas of interest in the RFI report (/d., at 11). A significant amount of investigative work was done with respect to the landfills, however, including cross-section sampling (/d., at 13). Wayne M. Grip Mr. Grip is the co-founder of Aero-Data Corporation, which is an entity specializing in “aerial mapping and environmental studies using aerial photography and historic maps.” (Docket #207, Tab 5 at 1). He has previously testified as ain expert in photogrammetry and photo interpretation (/d. , at 2-5). He was qualified in this case as an expert in aerial photogrammetry and aerial photographic interpretation (Docket #288 at 92). Mr. Grip was asked by Beazer to study historical aerial photography of the Woodward site and identify “the generic or the typical environmental types of features that have resulted or typically do result in contamination of a site.” (/d., at 93). He was also asked to perform, and did perform, calculations concerning the volume of wastes in two on-site landfills relying upon aerial 155a photographs of the site from different historic dates (/d.). He did this through terrain modeling and photogrammetry. Mr. Grip’s testimony was certainly the most technologically assisted presentation in this case. He provided the court with photographs which had been modified to be viewed in three dimensions; he provided historic photographs as well as historic maps. During his testimony, he utilized a high resolution projection system attached to a computer which generated digital photographs (/d., at 94). The first step in Mr. Grip’s work was to obtain any and all historic aerial photographs of the site in question, as well as maps of the area (/d., at 98). He noted that he is, in such cases, often dealing with second or third generation film, in the sense that he is obtaining not the original negative film used, but a copy made from a positive produced from the original negative. This results in some loss of resolution (/d.). The film which is obtained is then “photo-indexed” whereby the center of each photograph is plotted on a map of the area. A set of similarly sized prints of the photographs is then made, and each is scaled, oriented and cropped in the same manner, so that one may flip from one historic photograph to the next and compare the same area or feature in one to the same area or feature in another (/d.). “Stereo” prints are then developed, which are prints of the same or of overlapping areas of the map. The difference in distance from the lens for each photograph provides a means by which the height of objects pictured may be derived, and by which terrain maps may be made (/d., at 101-02). Once all of the information is obtained, it is transferred to a stereoplotter which, in Mr. Grip’s words, “can zoom in very, very closely into the aerial photography and allow the 156a operator to see it in full stereo with very good resolution.” (/d., at 106). “Stereo pairs” of photographs are obtained, that is, pictures of the same features or area are made from overlapping photographs. The overlap in the photographs means that the same area has been photographed from two slightly different angles. This difference in “parallax” offers the photointerpreter the ability to use a mirror stereoscope, with both pictures underneath it, to see a three-dimensional image (/d., at 111-12). The writer does not wish to oversimplify the process by which photogrammetry is accomplished. The court is satisfied that methods of producing terrain maps from historic photographs were proper and that representations of the site in the three maps prepared by Mr. Grip are as accurate as the process permits. The three terrain or contour maps presented by Mr. Grip are for the years 1948, 1971 and 1993 (/d., at 124; Plaintiff's Exhibit 1100, pages entitled “Contour Map of Landfill Areas”) (it must be remembered that these dates are dictated not simply by historic dates which may have meaning in the context of this litigation, but also by the availability and quality of aerial photography of the site). The witness also testified that he mapped the terrain from a series of photographs taken in 1940 (/d., at 124-25). On each of the three maps, Mr. Grip has identified “landfill” areas. These are areas which other testimony and evidence of record, as well as Mr. Grip’s photo interpretation, identify as being the areas where wastes from the plant site were disposed. Mr. Grip, using stereo pairs for each of those dates, calculated the volumes of the landfill areas identified on the maps of the site for each date (/d.). From these calculations he reaches the conclusion that 79% of the total volume of waste placed in the 1S7a two landfills between 1940 and 1993 was placed there prior to 1971 (Plaintiff's Exhibit 1100). Mr. Grip was asked to explain the methods by which he checked the accuracy of his computations. With respect to horizontal accuracy, he used a method of overlapping the photographs in areas with fixed features, such as buildings, and producing an exhibit which showed in different colors the outlines of such features, and showed how closely they matched from photograph to photograph (Tr. 126; Plaintiff's Exhibit D-7). The exhibit is called a “composite planimetric map” (/d., at 127). With respect to the vertical accuracy of his measurements, Mr. Grip again explained the manner in which he obtained the volume of the landfills for his starting date of 1940: . . . basically I used the 1948 stereo photography with the mirror stereoscope, and I measured the height above surrounding terrain of the southern landfill at multiple locations by comparing it with the height of small vehicles in the parking lot. Aad in this way I was able to derive an average thickness for the landfill as it existed already in 1948. And I repeated that process for the 1940 date and earlier date, subtracted the 1940 thickness from the ‘48 thickness, and arrived at the increase in thickness of the landfill for that period. So this thickness times the surface area of the landfill equals the increase in volume for that period... . *** 158a Then for the 1948 to 1971 percent, as I described earlier, | used the TIN derived from the ‘48 contour map and the TIN derived from the ‘71 contour map and calculated the added volume to the southern landfill between the two dates using the terrain modeling software. (Id., at 128). Mr. Grip testified that he concluded, based upon his calculations, that 227,294 cubic yards of material were placed on the landfills on site between 1940 and 1993, and that 46,877 yards of materials were placed on those landfills after 1974 (Tr. 183-84). Mr. Grip was also asked to interpret photographs and the images which appeared thereon historically. The witness described the conclusions he drew concerning the site from his interpretation of several photographs. In comparing aerial photographs From 1940 and 1945, he noticed an increase in height in the area of the northern landfill (/ © , at 136-37). He also compared ihe condition of trenches, a sump, turbid water beyond an earthen dam, and fluid flowing in channels from a cooling pond (/d., at 137; Plaintiff's Exhibit 1100, photographs of 11/17/40 and 8/28/45). He also identified areas on which dark materials are stockpiled. The next photograph is dated 1/15/48. Mr. Grip again identified material stockpiles which are changing in shape fromm previous photographs, and an increase in the volume of the southern landfill (/d., at 138). He identifies a “braided stream ‘ effect where water from the plant is entering the plant lake, indicating the presence of sediment and particles in the water settling out into the lake. He also notes a “plume” in the 159a lake indicating the presence of something, such as an oil slick or particles in the water (/d., at 138-39). Similar interpretative work was done with respect to photographs dated 3/31/51, 1/9/56, 11/2/60, 3/66, 2/21/70, 1/27/71, 4/29/73, 1/9/76, 3/15/78, 12/18/82, 12/29/85, 3/5/90 and 3/29/93 (Plaintiff's Exhibit 1100, section entitled “Interpreted Images of the Woodward Coke Plant from 11/17/40 through 3/29/93). Mr. “rip then furnished a summary of his conclusions from the interpretation of the photographs listed above: LANDFILLS @ Southern Landfill - The Southern Landfill is visible and active in the photography of 11/17/40. By 12/1/75, the landfill is inactive. @ Northern Landfill - The Northern Landfill is first seen in the photography of 3/7/52. By 8/28/85, vegetation is returning within this inactive landfill area. ® Third Landfill - A third landfilling operation is visible in the photography of 11/17/40. This landfill is inactive by 8/28/45. WATER BODIES Prior to 1974, surface runoff from the stockpiles on the western side of the Site and discharges from the coke plant flowed directly into Pond | with little or no evidence of treatment. Plumes were detected in the surface water of Pond 1 and a large mud flat area grew in the northern portion of the pond over time. These features evidence the ongoing discharges from the plant area to the north. Plumes were much less noticeable in Pond | after 1/9/76. 160a After 1974, significant changes were made to the existing ponds, and new ponds were constructed. The new ponds received some of the discharges that formerly flowed into Pond | and appeared to be used as settling basins. Pond 2 which is also called the “cooling pond” was filled in and the area converted to a parking lot by 10/8/78. TRENCHES Trenches are visible in the photography from 11/17/40 through 2/24/81. Fluids and solids were detected in these trenches on most dates. The trenches are somewhat smailer in surface area after 2/22/73 and are no longer visible after 2/24/81. The trenches were used for the disposal of waste materials. Most, if not all, of the disposal occurred prior to 1974. DARK STAINING Dark staining was mapped in the photography on numerous dates, both before and after 1974, in the southern portion of the processing area. Drainage in this area flowed toward Pond | and Pond 5. It is my opinion that the dark staining results from ongoing leakage or spills from the area of the nearby pump houses or tanks.’ (/d., section entitled “Summary of Conclusions”; Plaintiff's Exhibit D-9; Docket #288 at 171-177). In making this report, Mr. Grip relied upon 8 maps of the area and 48 separate photographs of the site (Docket #207, Tab 5, Attachment A). ” It should be noted that, during the hearing on this matter, the court sustained an objection to Mr. Grip's testimony that the dark Staining was caused by a spill of liquid (Docket #288, at 145-148). The undersigned later noted that Mr. Grip could properly testify that the dark stain is consistent with a spilled liquid or liquid on the ground from some source (/d., at 162). l6la On cross-examination, Mr. Grip conceded that while he is a member of the American Society for Photogrammetry and Remote Sensing (ASPRS), he is not certified by that entity (Docket #288 at 185-86). Mr. Grip did not visit the Woodward Coke Plant, nor did he personally take aerial photos of the site (Docket #289 at 2). Mr. Grip also conceded that there is a subjective element involved in photo interpretation (/d., at 6). There is also a subjective element in photogrammetry, and a margin of error inherent therein (/d., at 6-7). When conducting photogrammetry, it is better to have the original film to work from. If the original film is not available, then a second generation contact film print, rather than a paper print, would be preferable (Docket #289 at 22- 23). As noted earlier, each generation of reprints results in a loss of resolution. Further, film prints have less inherent loss of resolution than would a paper print. Mr. Grip explained the manner in which he determined the vertical precision of his photogrammetry, i.e., how he determined the precision of the measurements of depth which he used in calculating the volume of he landfills on varying dates. He did this by measuring certain “control points” thirty times through using the stereoplotter and determining the standard deviation of those measurements (Docket #289 at 31). He used as control points the rooftop of a building or other feature which would not change in elevation over time (/d., at 32). 162a Gabriel Lucisano*® Mr. Lucisano was retained by Mead to review Mr. Grip’s expert report, with particular attention to the volume calculations contained therein (Docket #293 at 25). Mr. Lucisano is Manager of Photogrammetry and Environmental Services for IntraSearch, Inc. (/d., at 12). He has 20 years experience in photogrammetry, and is a Certified Photogrammetrist as recognized by the ASPRS (Docket #216, Tab D). He has participated personally in over 300 projects, including 47 ‘hich involved volumetric mapping (/d.). IntraSearch was founded in 1951, and has an extensive historical aerial photography library (Dockei #293 at 15). Mr. Lucisano has personally performed approximately 15,000 hours of photo interpretation and has been involved in about 50 historical aerial photography projects, ard about 50 projects, both current historical, involving volume calculations (/d., at 17). Mr. Lucisano was offered and found qualified as an expert in the field of mapping sciences, and in particular of all aspects of photo interpretation and photogrammetry (/d., at 24-25). Mr. Lucisano stresses in his report that aerial photography, and in particular historical aerial photography, * Mr. Lucisano testified during Mead’s case-in-chief. Although his testimony is several witnesses removed from Mr. Grip’s, Mr. Lucisano’s testimony is addressed specifically to Mr. Grip’s report and conclusions. Hence, Mr. Lucisano’s testimony is summarized in this report immediately following the summary of Mr. Grip’s reports and testimony. The undersigned will group other witnesses in like fashion where appropriate in an attempt to make this report more useful to and convenient for the court. 163a is not an exact science (/d.). Under the best of circumstances, using state-of-the-art equipment and proper procedures with new photography, computations within plus or minus 1 % of actual conditions may be attained. In his opinion, interpretation of historical photographs without control measures such as surveyed ground control cannot approach the level of accuracy claimed by Mr. Grip. Generally accepted industry standards for photogrammetry set forth maximum flying heights for photographs, maximum photo enlargement ratios and surveyed ground control. None of these elements is present with respect to the historical photography which Mr. Grip used in this case. Thus, in Mr. Lucisano’s view, the following questions are left unanswered by the Grip report: Quadrangle maps used to “scale” and “orient a work print” are only accurate horizontally within 50 feet, and vertically within 10 feet. Camera accuracy as measured by focal length and lens distortion is unknown. Mapping should be done with only the original copy negative, as each generation of reprints and copies diminishes accuracy. The earliest photograph available from which volume calculations are made does not give information concerning Virgin ground conditions (i.e., whether the material seen is filling a ditch, or covering a rock). (Docket #216, Tab D). Mr. Lucisano opines that the photographs relied upon by Mr. Grip have expected errors in elevation measurements of between 2 and 5 feet, depending 164a upon the height at which the photograph was taken, in Mr. Lucisano's view, the volumes reported by Mr. Grip could be inaccurate by as much as 50%. Mr. Lucisano testified that, in his view, Mr. Grip’s report “lacked [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_0375%3A2. Public record. Not legal advice.