U.S. v. Nalco
UNITED STATES OF AMERICA, Plaintiff, v. NALCO CHEMICAL
COMPANY, et al., Defendants.

No. 91 C 4482
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS, EASTERN DIVISION

1996 U.S. Dist. LEXIS 13089

September 4, 1996, Decided
September 6, 1996, DOCKETED

DISPOSITION: [*1] Defendant Commonwealth Edison's Motion for Partial Summary Judgment Dismissing the Government's Claim for Approximately $ 3.7 Million in Response Costs denied. United States' Motion for Entry of First Six Partial Consent Decrees granted, in part, and denied, in part.

COUNSEL: For UNITED STATES OF AMERICA, plaintiff: Linda A. Wawzenski, Matthew David Tanner, United States Attorney's Office, Chicago, IL.

For GENERAL MOTORS CORPORATION, defendant: Joseph C. Basta, Dykema Gossett, Detroit, MI.

For COMMONWEALTH EDISON COMPANY, defendant: James Michael Newton, Nalco Chemical Corporation, Naperville, IL. John Thomas Hundley, James D. Brusslan, Hundley & Brusslan, Chicago, IL.

For AMEROCK CORPORATION, third-party defendant: Sheldon A. Zabel, Stephen John Bonebrake, Schiff, Hardin & Waite, Chicago, IL.

For LAWRENCE BROTHERS, INC., third-party defendant: Ole Bly Pace, Iii, Ward, Murray, Pace & Johnson, P. C., Sterling, IL.

For SUNDSTRAND CORPORATION, third-party defendant: Patrick J. Winn, Sundstrand Corporation, Rockford, IL.

For COLTEC INDUSTRIES, cross-defendant: Leo Patrick Dombrowski, Wildman, Harrold, Allen & Dixon, Chicago, Il.

For LAWRENCE BROTHERS, INC., [*2] cross-defendant: Ole Bly Pace, Iii, (See above).

For LAWRENCE BROTHERS, INC., cross-defendant: Ole Bly Pace, Iii, (See above).

For LAWRENCE BROTHERS, INC., cross-defendant: Ole Bly Pace, Iii, (See above). Richard A. Palmer, Ward, Murray, Pace & Johnson, P. C., Sterling, IL.

For GENERAL MOTORS CORPORATION, third-party plaintiff: Joseph C. Basta, Dykema Gossett, Detroit, MI.

For PIERCE CHEMICAL CO, third-party defendant: Richard P Fahey, R Stacy Lane, Arter & Hadden, Columbus, OH.

JUDGES: ARLANDER KEYS, United States Magistrate Judge. THE HONORABLE CHARLES R. NORGLE, SR., UNITED STATES DISTRICT COURT JUDGE

OPINIONBY: ARLANDER KEYS

OPINION:

TO: THE HONORABLE CHARLES R. NORGLE, SR. UNITED STATES DISTRICT COURT JUDGE

REPORT AND RECOMMENDATION

This matter is before the Court on Defendant Commonwealth Edison's Motion for Partial Summary Judgment Dismissing the Government's Claim for Approximately $ 3.7 Million in Response Costs, and United States' Motion for Entry of First Six Partial Consent Decrees. For the following reasons, this Court recommends that Defendant's motion be denied, and that the United States' motion be granted, in part, and denied, in part.

[*3] FACTS

The United States brought this civil action, pursuant to @@ 104 and 107 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. @@ 9601, 9604, 9607 ("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499, 100 Stat. 1613. The United States seeks to recover response costs in connection with the release or threat of release of hazardous substances from two adjacent properties n1 located in northern Illinois: Byron Salvage Yard and Dirks Farm (collectively, the "Site"). Both properties in the Site are located in Ogle County: Dirks Farm is immediately west of Byron Salvage Yard -- Razorville Road separates the two properties. The two properties in the Site encompass twenty acres and, at least, one hundred and twenty acres, n2 respectively.

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n1 Magistrate Judge Bobrick found that Byron Salvage Yard and Dirks Farm are "two distinct potential facilities." (Report and Recommendation, March 16, 1995, at 7.)

n2 Apparently, in its Complaint, as well as the First and Second Partial Consent Decrees, the United States claims that Dirks Farm consists of four hundred and eighty acres. In the Third through Sixth Partial Consent Decrees, the property is described as covering one hundred and twenty acres. The United States agrees that there is no dispute as to the identity of the parcel of land known as Dirks Farm.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*4]

Byron Salvage Yard was owned and/or operated during the relevant time period by Wilford Johnson. Dirks Farm was owned by Diedrich and Gertrude Dirks (both now deceased) until its sale to Commonwealth Edison Company ("Commonwealth Edison") in 1973. Commonwealth Edison never owned or operated Byron Salvage Yard, nor is there any evidence that it caused hazardous discharge onto that property.

In the past, both properties in the Site were used for disposal of various hazardous wastes; the government alleges that both properties were also contaminated by those same wastes. In 1974, Illinois officials tested private wells in the vicinity of the Site and found elevated levels of mercury and lead. Also in 1974, cattle grazing on Dirks Farm died from apparent cyanide poisoning. Commonwealth Edison quickly and voluntarily undertook an investigation and clean-up of Dirks Farm that same year. n3 Commonwealth Edison did a commendable n4 job of cleaning up the contamination at an expense of approximately $ 1.1 million. The parties dispute whether or not Commonwealth Edison cleaned up the underlying soil and groundwater contamination. n5

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n3 The Court notes that CERCLA had not been enacted at that time. [*5]

n4 Commonwealth Edison received accolades from the Illinois Environmental Protection Agency (EPA), as well as the U.S. EPA. (Commonwealth Edison's Memorandum in Opposition to the Motion for Entry of First Six Partial Consent Decrees [Def.'s Mem. Opp.] at Ex. 4.)

n5 Apparently, even now, more than twenty years after Commonwealth Edison conducted its initial cleanup, no government entity has removed any additional waste from Dirks Farm. (Def.'s Mem. Opp. at 2 n.2.)

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

It does not appear that anything happened with regard to Byron Salvage Yard until 1982, when it was placed on the National Priorities List. In 1984, the Remedial Investigation ("RI") and Feasibility Study ("FS") was arranged and, in 1985, the investigation of groundwater and well contamination was expanded to areas surrounding Byron Salvage Yard. Around June of 1991, the RI/FS was expanded to include Dirks Farm. Surface cleanup of Byron Salvage Yard was completed in January of 1987.

On May 31, 1988, the United States filed suit under CERCLA against Wilford E. Johnson, the owner and operator of Byron Salvage Yard, seeking to recover [*6] certain response costs incurred in connection with the release or threat of release of hazardous substances from Byron Salvage Yard. United States v. Johnson, No. 88 C 20185 (N.D. Ill. 1988). On January 14, 1991, the United States was awarded summary judgment against Mr. Johnson, in the amount of $ 3,773,881.34, for response costs at Byron Salvage Yard. United States v. Johnson, No. 88 C 20185, 1991 U.S. Dist. LEXIS 12108, at *2 (N.D. Ill. Jan. 14, 1991).

The Complaint in the lawsuit at bar was filed on July 17, 1991. n6 The Dirks Farm RI was completed in April of 1994. It concluded that Dirks Farm's soil and groundwater were contaminated with substances similar to those that had been discovered at Byron Salvage Yard. Commonwealth Edison denies the RI's conclusion that Dirks Farm is contributing to a trichloroethene groundwater plume. Nonetheless, part of what the United States seeks, in this suit, are response costs due to groundwater contamination, which it claims was caused by commingling of contaminants from both properties in the Site.

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n6 Commonwealth Edison affirmatively defends on the grounds that it is an "innocent landowner", under 42 U.S.C. @ 9607(b).

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*7]

As of April 30, 1994, the United States had incurred approximately $ 6.9 million in response costs, plus $ 800,000 in prejudgment interest, for a total of $ 7.7 million. Future response costs for the Site are estimated to be $ 17.5 million.

On March 16, 1995, Magistrate Judge Bobrick recommended that "Commonwealth Edison's Motion for Partial Summary Judgement be granted, and all claims against Commonwealth Edison for response cost[s] attributable solely to the release or threat of release of hazardous substances from the Byron Salvage Yard facility be dismissed." (Report and Recommendation, March 16, 1995, at 8-9)(emphasis added.) Judge Norgle adopted this Report and Recommendation on May 2, 1995. The Report and Recommendation made clear that there had not yet been a determination as to which cleanup costs were solely related to Byron Salvage Yard (i.e. those costs having absolutely nothing to do with any alleged release of substances from Dirks Farm). (Report and Recommendation, March 16, 1995, at 3.)

DISCUSSION

I. COMMONWEALTH EDISON'S MOTION FOR PARTIAL SUMMARY JUDGMENT

A. Standard for Summary Judgment

Under the Federal Rules of Civil Procedure, [*8] summary judgment is appropriate if "there is no genuine issue as to any material fact, and . . . the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). This standard places the initial burden on the moving party to identify "those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)(quoting FED. R. CIV. P. 56(c)).

In deciding a motion for summary judgment, the Court must view all facts in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254-55, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Griffin v. Thomas, 929 F.2d 1210, 1212 (7th Cir. 1991). A dispute about a material issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson, 477 U.S. at 248. Any doubt as to the existence of a genuine issue of material fact is resolved against the movant. Id. at 255.

The impact of granting a summary [*9] judgment motion is drastic, and should be cautiously invoked since it goes to the merits. Hartford Accident and Indem. Co. v. Crider, 392 F. Supp. 162, 167 (N.D. Ill. 1974); see International Ass'n of Machinists and Aerospace Workers v. J.L. Clark Co., 471 F.2d 694, 697 (7th Cir. 1972). Thus, summary judgment should be granted only when the movant is entitled to judgment "beyond all doubt." Mitchell v. Pilgrim Holiness Church Corp., 210 F.2d 879, 881 (7th Cir. 1954), cert. denied, 347 U.S. 1013, 98 L. Ed. 1136, 74 S. Ct. 867 (1954).

B. Commonwealth Edison's Arguments

Commonwealth Edison claims that it is entitled to partial summary judgment dismissing the government's claim for $ 3,773,881.34 in response costs, because of the 1991 ruling in United States v. Johnson, and because the government is collaterally and judicially estopped by its own statements in the Johnson case.

Both estoppel arguments are unpersuasive. For collateral estoppel to apply: (1) the issue sought to be precluded must be the same as that involved in the prior action; (2) the issue must actually have been litigated; (3) the determination of the issue must have been essential [*10] to the final judgment; and (4) the party against whom estoppel is invoked must have been fully represented in the prior action. People Who Care v. Rockford Bd. of Educ., 68 F.3d 172, 178 (7th Cir. 1995); Levinson v. United States, 969 F.2d 260, 264 (7th Cir.), cert. denied, 506 U.S. 989, 121 L. Ed. 2d 441, 113 S. Ct. 505 (1992). There is no collateral estoppel here because the issue in this case is different than that in Johnson. At issue in Johnson was the amount of the response cost for cleanup of Byron Salvage Yard, and whether the facility's owner/operator was a responsible party. n7 Here, with respect to Commonwealth Edison, the issue is whether some part of those response costs determined in Johnson, as well as additional costs, were attributable to Dirks Farm. The issue is whether Commonwealth Edison is also a responsible party for cleanup at Byron Salvage Yard.

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n7 Although the amount incurred was for response costs at Byron Salvage Yard, that does not mean that the prior proceedings determined that the cause of those response costs was solely Byron Salvage Yard.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*11]

Likewise, judicial estoppel is unavailing here. Under the judicial estoppel doctrine, "[a] litigant is forbidden to obtain a victory on one ground and then repudiate that ground in a different case in order to win a second victory." Chaveriat v. Williams Pipe Line Co., 11 F.3d 1420, 1427 (7th Cir. 1993). The United States' position here is not inconsistent with its position in Johnson; it is entirely possible for two or more facilities to contribute to the pollution of a single site, such that the multiple potentially responsible parties ("PRPs") from each facility become jointly and severally liable for the cleanup at the single site. Thus, one cleanup could have been carried out in response to two (or more) separate, but interrelated, problems. In this case, it is conceivable that some of the Byron Salvage Yard cleanup costs were in response to hazards originating from Dirks Farm. n8

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n8 Magistrate Judge Bobrick noted, on page three of his March 16, 1995 Report and Recommendation, that he did not "reach any issues dealing with response costs incurred as a result of commingling of wastes from the two separate properties."

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*12]

Prior rulings in this matter make clear that Commonwealth Edison will not be liable for any response costs for Byron Salvage Yard unless the United States can show that such costs can be attributed in some way to Dirks Farm. This, however, is far different from Commonwealth Edison's interpretation, that the previous holdings somehow declared that no cleanup at Byron Salvage Yard could be attributed to any other facility. No court has made that determination yet. If Commonwealth Edison successfully proves at trial that the response costs for Byron Salvage Yard were not, in any way, connected with Dirks Farm, then it will not have to pay any part of the cleanup costs for Byron Salvage Yard.

C. Court's Findings

Commonwealth Edison has not met its burden as movant. There remain genuine issues of material fact, since Commonwealth Edison has failed to show that the $ 3,773,881.34 in question can in no way be attributed to it. Thus, Commonwealth Edison is not entitled to partial summary judgment.

II. GOVERNMENT'S MOTION FOR ENTRY OF SIX PARTIAL CONSENT DECREES

A. CERCLA Background

Congress enacted CERCLA in response to widespread concern over the dangers posed [*13] by hazardous waste sites. See generally In re Chicago, Milwaukee, St. Paul & Pacific R.R. Co., 974 F.2d 775, (7th Cir. 1992); In re CMC Heartland Partners, 966 F.2d 1143 (7th Cir. 1992); Bethlehem Steel Corp. v. Bush, 918 F.2d 1323 (7th Cir. 1990); Schalk v. Reilly, 900 F.2d 1091 (7th Cir.), cert. denied, 498 U.S. 981 (1990). CERCLA's goals are to protect public health, and the environment, by facilitating the cleanup of environmental contamination and imposing costs on the responsible parties. See Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417, 420-21 (7th Cir. 1994). CERCLA enables prompt cleanup, because when the EPA determines that response action is necessary for a particular site, it may undertake the response action by utilizing funds from the Superfund, then sue the responsible parties for reimbursement. 42 U.S.C. @@ 9604, 9607. Parties subject to liability for costs and damages include the owners and operators of hazardous waste facilities, n9 as well as those who arranged for disposal of, or transported, the hazardous waste. 42 U.S.C. @ 9607(a).

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n9 For CERCLA's definition of "facility", see 42 U.S.C. @ 9601(9). It has not been determined that Dirks Farm is a "facility".

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*14]

Liability is strict, joint and several, unless a responsible party can demonstrate divisibility of harm. See In re Chicago, 974 F.2d at 779; see generally 1 ALLAN J. TOPOL & REBECCA SNOW, SUPERFUND LAW AND PROCEDURE @ 4.4 (1992). Additionally, Congress expressed a strong preference that the United States settle with responsible parties in order to avoid spending resources on litigation rather than cleanup. See generally United States v. Akzo Coatings of Am., Inc., 949 F.2d 1409, 1436 (6th Cir. 1991); H.R. Rep. No. 253, 99th Cong., 1st Sess., pt. 1, at 80 (1985), reprinted in 1986 U.S.C.C.A.N. 2862. One CERCLA incentive protects settling parties against contribution claims for all "matters addressed" in the settlement agreement: "A person who has resolved its liability to the United States . . . in an administrative or judicially approved settlement shall not be liable for claims of contribution regarding matters addressed in settlement." n10 42 U.S.C. @ 9613(f)(2). Thus, Congress provided the government with the power to "extinguish the contribution rights" of other parties. Akzo Coatings, Inc. v. Aigner Corp., 30 F.3d 761, 768 (7th Cir. 1994).

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n10 Congress also provided that the EPA "shall as promptly as possible reach a final settlement" with de minimis PRPs. 42 U.S.C. @ 9622(g)(1).

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*15]

B. The Proposed Partial Consent Decrees

1. Allocation Percentages

The EPA allocated a total of 33.37% to "direct evidence defendants". (Memorandum in Support of United States' Motion for Entry of First Six Partial Consent Decrees [Pl.'s Mem. Supp.], at App. A.) The direct evidence defendants are those for whom there was direct evidence that they arranged for disposal of hazardous substances that were discarded at the Site. (Id. at 14.) The direct evidence defendants and their respective allocations include: General Motors Corporation, 8.96%; Valspar Corporation, 8.96%; National Lock, 8.96%; and Quality Metals, 6.49%. (Id. at App. A.)

The EPA allocated a total of 16.85% to Interstate Pollution Control ("IPC") customers -- 14.63% to "non-de minimis IPC customers" and 2.22% to "de minimis IPC customers (combined)". n11 (Pl.'s Mem. Supp. at App. A.) IPC customers were those parties linked to the Site because they were customers of IPC during the period when IPC was disposing of waste at the Site. (Id. at 10.) The non-de minimis IPC customers and their respective allocations include: Sundstrand, 2.79%; Woodward Governor, 1.69%; RB&W, 1.49%; Lawrence Brothers, 0.81%; Atwood [*16] Industries, 1.68%; Amerock, 4.55%; and Raco, 1.62%. (Id. at App. A.)

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n11 De minimis status was accorded to those customers whose volumetric portion of IPC's pickups was less than 2.5%. (Id. at 11.)

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

The "de minimis drum parties (combined)" were allocated 0.50%. (Id.) These parties were linked to the Site by discovery of drums bearing their names. (Id. at 10.) De minimis status was accorded these drum defendants because none of them accounted for more than seven of the over two thousand drums found on the Site. (Id. at 11.)

Commonwealth Edison, the only "owner", was allocated 12.34%. (Id. at App. A.) The EPA also allocated 36.94% to "litigation risk/orphan share", which "reflects what the United States would have absorbed had all the parties accepted their allocations. . . ." (Id.)

2. The Parties to Each Partial Consent Decree

The First Partial Consent Decree is a de minimis settlement with nine drum parties for approximately $ 94,000. (Id. at 10.) The Second Partial Consent Decree is a de minimis settlement [*17] with six IPC customers for approximately $ 429,000. (Id. at 11.) The Third Partial Consent Decree is a de minimis settlement with Barber-Colman Company, an IPC customer, for approximately $ 56,000. (Id.) The Fourth Partial Consent Decree is a de minimis settlement with a drum defendant, Ecolab, Incorporated, for approximately $ 34,000. (Id.) The Fifth Partial Consent Decree is a past response costs only settlement with National Lock, Valspar Corporation, General Motors Corporation and Sundstrand Corporation for approximately $ 2.3 million (Pl.'s Mem. Supp. at 11.) The Sixth Partial Consent Decree is a past response cost only settlement with Woodward Governor Company, RB&W Corporation, Lawrence Brothers, Inc. and Atwood Industries, Inc. for approximately $ 400,000. (Id.) Together, all six Partial Consent Decrees provide approximately $ 3.3 million to the United States. (Id.)

3. Contribution Bar

In the First through Fourth Partial Consent Decrees, the definition of "matters addressed" includes "all response costs incurred and to be incurred directly or indirectly by the U.S. EPA, the Department of Justice on behalf of the U.S. EPA, or any potentially responsible party at or in [*18] connection with the Site including but not limited to all removal and remedial costs. . . ." In the Sixth Partial Consent Decree, "matters addressed" include "all response costs incurred and paid through April 30, 1994, directly or indirectly by the U.S. EPA, the Department of Justice on behalf of the U.S. EPA, or any potentially responsible party at or in connection with the Site including but not limited to all removal and remedial costs. . . ."

In the Fifth Partial Consent Decree, the "matters addressed" definition includes "all response costs incurred and paid through April 30, 1994, directly or indirectly by the U.S. EPA or the Department of Justice on behalf of the U.S. EPA, at or in connection with the Site including but not limited to all removal and remedial costs. . . ."

The effect of the language in the First through Fourth and Sixth Partial Consent Decrees is to protect the settling parties from any attempt by Commonwealth Edison to recoup its cleanup costs for Dirks Farm. In contrast, the language in the Fifth Partial Consent Decree would allow Commonwealth Edison to sue the settlors to recover the costs associated with its voluntarily cleanup.

C. Standard of Review [*19]

In order to enter a consent decree, the Court must find that it is fair, reasonable, and consistent with the purposes of CERCLA. United States v. Cannons Eng'g, 899 F.2d 79, 84 (1st Cir. 1990). The Court's discretion should be exercised in a limited and deferential manner. Id. at 84.

Settlement is considered to be substantively fair, under CERCLA, when the United States has provided a plausible explanation for allocating liability between the settlors and the non-settlors. Cannons Eng'g, 899 F.2d at 87; In re Energy Coop., Inc., 173 Bankr. 363 (N.D. Ill. 1994). This is an important consideration because the non-settlors' contribution claims against the settlors will be extinguished by 42 U.S.C. @@ 9613(f)(2) and 9622(g)(5). Thus, the EPA's formula for allocating liability among potentially responsible parties ("PRPs") will be upheld if the agency provides "a plausible explanation for it, welding some reasonable linkage between the factors it includes in its formula or scheme and the proportionate shares of the settling PRPs." Cannons Eng'g, 899 F.2d at 87.

Additionally, "given the [EPA's] sweeping power . . . to extinguish the contribution rights third parties [*20] would otherwise enjoy under [@ 9613](f)(2)," settling parties are required "to be more explicit when they intend to bar contribution for work . . . not clearly a 'matter addressed' by the agreement." Akzo Coatings, 30 F.3d at 768.

D. The Fifth Partial Consent Decree Should be Approved

The percentages allocated here are fair, reasonable and consistent with the purposes of CERCLA. Since there is no contribution bar affecting it, Commonwealth Edison is only apportioned 12.34% liability. Although the Court finds that percentage to be slightly high for an "owner", it does fall within the range of owners' liability as evidenced in lodged consent decrees and reported cases, (Def.'s Mem. Opp. at Exs. 15, 19), n12 and the EPA has discretion in apportioning percentages of liability. See Cannons Eng'g, 899 F.2d at 87. The percentage allocation, as applied to the Fifth Partial Consent Decree, is not so unreasonable as to warrant the Court's interference. n13

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n12 The landowner allocated percentages, reported for lodged consent decrees, ranged from zero to "minor" for most sites. (Def.'s Mem. Opp. at Ex. 15.) There was one site with 4% allocation of liability and another with "less than 10"%. (Id.)

The landowner allocations, for reported cases, ranged from zero to 65%. (Id. at Ex. 19.) In those cases where the allocation was greater than 12.5%, it appears that the landowners: were aware of waste disposal and/or contamination; participated in some waste disposal operations; owned the property during waste disposal operations; received some benefit from waste disposal operations; did not assist in cleanup or refused to cleanup; and/or knew of contamination prior to purchase. (Id. at Ex. 15.) There is no evidence that any of these factors are present here. [*21]

n13 The United States undercut another of its arguments -- that the allocation is fair in light of the fact that cleanup increased the value of Dirks Farm -- when it stated that "present owners of contaminated facilities reap the benefit of any increase in the value of their property due to cleanup by U.S. EPA." (Pl.'s Mem. Supp. at 19) (emphasis added). Here, it appears that Commonwealth Edison paid for all the cleanup costs that increase the value of Dirks Farm.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

E. The First Through Fourth and Sixth Proposed Partial Consent Decrees Should Not be Approved

The First, Second, Third, Fourth, and Sixth Proposed Partial Consent Decrees unfairly and unreasonably bar Commonwealth Edison from seeking contribution. The contribution bars are also inconsistent with the goals of CERCLA: that those responsible for problems caused by disposal of hazardous substances bear the costs and the responsibility for remedying them, see Cannons Eng'g, 899 F.2d at 91, and that voluntary cleanup of hazardous waste sites be encouraged. Bethlehem Steel, 918 F.2d at 1326; Kelley v. Wagner, 930 [*22] F. Supp. 293, 299 (E.D. Mich 1996); see also Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837, 845-46 (4th Cir.), cert. denied, 506 U.S. 940 (1992).

1. The Proposed Partial Consent Decrees are Neither Fair Nor Reasonable

The definition of "matters addressed" in these five Partial Consent Decrees "turns an otherwise apparently reasonable settlement into one that appears to assess [Commonwealth Edison's] liability, in a non-rational manner." Kelley, 930 F. Supp. at 298. Under the terms of the First through Fourth and Sixth Partial Consent Decrees, Commonwealth Edison is assigned a liability, for purposes of settlement, of 12.34% plus the value of the claim that the government would be extinguishing. This claim is in excess of $ 1.1 million, according to Commonwealth Edison. Notwithstanding this very substantial loss to Commonwealth Edison that would result from the Partial Consent Decrees, the government failed to give any rational explanation as to how that loss was reflected in Commonwealth Edison's apportionment. Had the government reduced Commonwealth Edison's apportioned cost liability in a reasonable manner to account for the amounts that Commonwealth [*23] Edison voluntarily spent, then the contribution bar could have been fair and reasonable.

The United States admits that Commonwealth Edison is liable for no more than 12.34% of the total, yet in actuality it allocated as much as 23.2% n14 of the response costs to Commonwealth Edison by not taking into account the approximately $ 1.1 million Commonwealth Edison already voluntarily paid to clean up Dirks Farm.

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n14 To arrive at this number, Commonwealth Edison added the amount sought by the government in settlement ($ 950,000) to the risk adjusted value of Commonwealth Edison's cleanup ($ 525,000) and divided that sum by the total past costs ($ 7.7 million) minus the costs associated solely with Byron Salvage Yard facility including interest ($ 1.339 million) -- 1.475/6.361 = 23.3%. (Def.'s Mem. Opp. at 20.) The Court's own calculation, based upon the above formula, puts the percentage at 23.19, which rounds up to 23.2%, rather than 23.3%, as asserted by Commonwealth Edison.

The United States correctly points out that the 23.2% calculation is made with an implicit assumption that the contribution bar will effectively reduce Commonwealth Edison's recovery on its contribution claims to zero. This assumption, is not necessarily correct, since only approximately 8.1% of the settlement allocation is attributable to defendants in the First through Fourth, and Sixth, Partial Consent Decrees. Nonetheless, it is clear that the contribution bar will effectively reduce Commonwealth Edison's ability to recover some part (quite possibly all) of an amount in excess of $ 1.1 million that it voluntarily spent. Because the government failed, in computing the allocation percentage for Commonwealth Edison, to even take into account the reduction of Commonwealth Edison's ability to recover its response costs in a contribution action, the settlement allocations are not plausible. At a minimum, a plausible explanation would include a description of how much Commonwealth Edison's percentage allocation was decreased to account for the reduction of ability to recover through contribution actions.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*24]

The EPA argues that $ 525,000 in extra contributions from other PRPs benefit Commonwealth Edison. It is true that the extra money might reduce the total amount that Commonwealth Edison must pay, if it loses at trial. But, that does not answer the argument that, for purposes of these Partial Consent Decrees, Commonwealth Edison is being assessed a percentage which is much greater than 12.34%. The fact that Commonwealth Edison's joint and several liability might be reduced after trial, does not show how the EPA arrived at a fair and reasonable allocation for purposes of settlement.

2. The Partial Consent Decrees are Inconsistent with the Purposes of CERCLA

Barring contribution claims without providing the holder of the claims any compensation, is not consistent with the goals of CERCLA. Especially, where as here, the claims resulted from voluntary cleanup that was lauded by the EPA. There is no need "to offer a PRP total immunity from liability in order to offer a 'measure of finality.'" Kelley, 930 F. Supp. at 299 (quoting United States v. Colorado & Eastern R.R. Co., 50 F.3d 1530, 1537 (10th Cir. 1995). When the United States offers immunity from contribution [*25] for costs incurred by the government, it is indeed offering a "degree of finality"; it seems that this is the type of finality the drafters of 42 U.S.C. @ 9613 contemplated, to encourage settlement. Kelley, 930 F. Supp. at 299.

Furthermore, "it is in the public interest to encourage voluntary cleanups." Id. Thus, allowing the settlors protection against contribution claims for costs voluntarily incurred, could deter individuals from undertaking such voluntary cleanups, since those individuals would fear getting "'stuck' with the full bill" -- which is "certainly . . . not consistent with the objectives of CERCLA." Id. Here, Commonwealth Edison is, in effect, being assessed double liability. If it had not conducted any voluntary cleanup, it would still be liable for 12.34% (as an "owner"), but would not have spent a dime of its own money. n15

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n15 In light of the Partial Consent Decrees at issue here, Commonwealth Edison would be better off if it had never voluntarily cleaned up anything. Then it wouldn't be $ 1.1 million in the hole, and it could have used that money to pay off its 12.34% allocation.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*26]

3. Court's Findings

Although the EPA met the Akzo Coatings requirement of specifically describing the "matters addressed" to be barred from contributory actions, n16 that only raised the warning flag requiring this Court's close examination of the effects of those contribution bars on fairness, reasonableness, and consistency with CERCLA.

- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -

n16 The "matters addressed" in these Partial Consent Decrees include "all response costs incurred . . by . . . any potentially responsible party. . . ." The section barring contribution actions in these Partial Consent Decrees includes the following language: "protection from contribution actions or claims for matters addressed as is provided by . . . 42 U.S.C. @ 9613(f)(2) and 9622(g)(5)." (emphasis added).

It is unclear why the contribution bar provision includes this additional language. To the extent that these two provisions might be an attempt to bar a third-party direct cost action, they would violate 42 U.S.C. @ 9607(a), which provides such recovery. It is true that in Akzo Coatings, the Seventh Circuit characterized the claim of a PRP as one for contribution, rather than direct cost, (Pl.'s Mem. Supp. at 37), however, the Seventh Circuit specifically distinguished that situation from a true direct cost action in which recovery is sought by a "landowner forced to clean up hazardous materials that a third party spilled onto its property or that migrated there from adjacent lands." Akzo Coatings, 30 F.3d at 764. Interestingly, the United States did not include this portion of the Seventh Circuit's holding in its quotation.

It is entirely possible, given the facts put forth by Commonwealth Edison, that it will be able to prove that it is not a PRP with respect to Byron Salvage Yard and that some or all of its own response costs were expended to clean up pollution that migrated from Byron Salvage Yard onto Dirks Farm. Commonwealth Edison may also be successful in its "innocent landowner" defense. In that case, Commonwealth Edison would not be a PRP, and its action would be one for direct costs, similar to the specific example described in Akzo Coatings. Thus, this ambiguity concerning the types of recovery that the government is attempting to bar (Pl.'s Mem. Supp. at 37-38), provides an additional reason to not approve these Partial Consent Decrees.

As an additional note, barring the contribution claims of a non-settling private party that had voluntarily incurred costs could violate Substantive Due Process or the Takings Clause of the Fifth Amendment.

- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -

[*27]

Although the government is authorized by CERCLA to wipe out contribution claims among joint tortfeasors, Commonwealth Edison's dispute is with the United States' "right . . . to hold out, as a carrot to entice settlement of [its] claims only, protection from contribution for response costs that are not . . . associated with the [United States'] efforts" but rather with the response actions that Commonwealth Edison voluntarily undertook. Kelley, 930 F. Supp. at 295. It is clear that the First through Fourth and Sixth Proposed Partial Consent Decrees, through their "matters addressed" (and "contribution protection") sections, intend to protect the settlors from such a claim from Commonwealth Edison.

Since the effect of the contribution bar is to increase Commonwealth Edison's true liability allocation beyond 12.34%, to as much as 23.2%, and the United States has failed to offer a plausible explanation linking the contribution bar with Commonwealth Edison's allocation, the Court finds such apportionment unfair, unreasonable, and inconsistent with the purposes of CERCLA. Thus, the First through Fourth and Sixth Partial Consent Decrees' should not be approved.

CONCLUSION [*28]

This Court recommends that Defendant Commonwealth Edison's Motion for Partial Summary Judgment Dismissing the Government's Claim for Approximately $ 3.7 Million in Response Costs be denied. The Court further recommends that United States' Motion for Entry of First Six Partial Consent Decrees be granted, in part, and denied, in part.

DATED: September 4, 1996

RESPECTFULLY SUBMITTED:

ARLANDER KEYS

United States Magistrate Judge

Counsel have ten days from the date of service to file objections to this Report and Recommendation with the Honorable Charles R. Norgle, Sr. See FED. R. CIV. P. 72(b); 28 U.S.C. @ 636(b)(1). Failure to object constitutes a waiver of the right to appeal. Egert v. Connecticut Gen. Life Ins. Co., 900 F.2d 1032, 1039 (7th Cir. 1990).