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SOUTHLAND CORP. v. ASHLAND OIL

October 6, 1988

THE SOUTHLAND CORPORATION, Plaintiff,
v.
ASHLAND OIL, INC., et al., Defendants



The opinion of the court was delivered by: FISHER

 Before the court are cross-motions for partial summary judgment by plaintiff The Southland Corporation ["Southland"] and defendants Ashland Oil, Inc. and Ashland Chemical Co. ["Ashland"]. Southland seeks partial summary judgment and a declaration of liability against Ashland on the First, Second and Fourteenth Counts of its Complaint. Ashland opposes Southland's motion and, in addition, seeks partial summary judgment dismissing Counts One, Two, Four and Fourteen of Southland's Complaint.

 The subject of these motions addresses that part of Southland's suit against Ashland which requests a declaratory judgment with regard to Ashland's liability for past and future response costs incurred by Southland, pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ["CERCLA"], 42 U.S.C. §§ 9601 et seq., as well as its breach of contract claim. In short, Southland seeks a declaration, under CERCLA, that Ashland is strictly liable to Southland in contribution or indemnity for that part of the cleanup costs incurred by Southland to correct over three decades of dumping hazardous and toxic waste at the Great Meadows chemical manufacturing plant which is attributable to that period of time which Ashland owned and operated the plant. *fn1" Ashland seeks a determination that the Agreement of Sale and Purchase (the "Agreement") entered into between the parties bars any recovery by Southland under CERCLA as well as any claim for indemnification under the contract.

 The following facts are undisputed. In 1966, Ashland purchased the Great Meadows chemical plant and its surrounding real property when it acquired all of the stock of Fisher/Gamma. Fisher/Gamma had owned and operated the plant as a chemical manufacturing unit since 1950. Subsequent to its acquisition in December 1966 and until the sale to Southland in May 1978, Ashland operated the Independence Township facility as a "fine" chemical manufacturing plant, specializing in synthetic organic chemicals and hair dye intermediates which it produced in small quantities on a custom-made basis.

 During the time Ashland owned and operated the chemical plant, hazardous waste from its manufacturing processes, in the form of toxic chemicals, were routinely disposed of at various disposal sites on plant property. Ashland does not dispute this and, in fact, informed the United States Environmental Protection Agency ["EPA"] of its status as a "past owner" of a hazardous waste site in a report filed, pursuant to section 103(c) of CERCLA, 42 U.S.C. § 9603(c), on June 8, 1981. *fn2" The sites designated for waste disposal included a limefield; a solid waste dump, known as the landfill; a chemical dump; Fisher Pond and other unlined ponds; and spray fields. Numbered among the hazardous wastes discharged or buried at the various sites were the following chemicals: benzene, toluene, xylene, chlorobenzene, trichlorethane, methylene chloride, and chlorinated benzene compounds.

 Problems at the facility were recognized as early as 1968 when Ashland, under a court order to halt the release of heavy metals into the Pequest River, constructed a waste water treatment plant. On April 23, 1975, Ashland entered into a Consent Judgment with the New Jersey Department of Environmental Protection ["NJDEP"] which targeted the correction of air pollution and odor problems, the removal of waste drums, improvements in maintenance procedures, and required the hiring of a full-time process/environment engineer. Ashland ceased using the limefield, landfill, chemical dump and the spray fields for waste disposal.

 As a result of these efforts, some improvement was made; however, the NJDEP was still voicing concern over the environmental conditions at the plant in 1977 -- in particular, the problem of groundwater contamination. By mid-1977, Ashland began a search for a buyer for the plant. After two unsuccessful attempts with different prospective purchasers, negotiations with Southland culminated in the sale of the Great Meadows plant in May 1978.

 At the direction of the NJDEP, Southland began an in-depth study of the environmental conditions at the plant in the early 1980s. A request made to Ashland for assistance was denied. These studies revealed severe groundwater contamination and in February 1986, Southland entered into an Administrative Consent Order with the NJDEP, requiring Southland to conduct a Remedial Investigation and Feasibility Study ["RI/FS"] at the plant. Once again, Ashland rejected a demand by Southland to participate in the cleanup. Southland subsequently entered into a second Administrative Consent Order with the NJDEP, in August 1987, which requires Southland to implement a NJDEP-approved cleanup of the contaminated facility pursuant to the Environmental Cleanup Responsibility Act ["ECRA"], N.J. Stat. Ann. §§ 13:1K-6 to 13:1K-14 (West Supp. 1988).

 By August 1987, the studies conducted by the RI/FS consultants, Geraghty & Miller, were complete. Their report showed high levels of volatile organic compounds *fn3" ["VOC"], base-neutral extractable and acid extractable organic compounds, PCBs and heavy metals in the groundwater, surface water, and soil around the facility. A study of the groundwater and surface waters also showed a concentration of totally dissolved solids ["TDS"], consisting of ammonia, calcium, sodium, sulfates, fluoride, magnesium, potassium and nitrates. The highest concentration of these compounds were found around the sites utilized for waste disposal.

 Ordered by the NJDEP to remedy the pollution problem at the plant, Southland instituted this action to compel Ashland to contribute to the costs already incurred in assessing the environmental conditions as well as that amount necessary to rid the facility of the contamination. *fn4" Southland's Complaint also alleges fraud, breach of contract, nuisance and various state and federal statutory claims; however, in this motion, it requests summary judgment on its CERCLA claims only and seeks a declaration that Ashland is liable under sections 107(a) and 113(f) for cleanup costs at the plant.

 Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56; Brown v. Hilton, 492 F. Supp. 771, 774 (D.N.J. 1980). The burden of showing that no genuine issue of material fact exists rests initially on the moving party. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977). This "burden . . . may be discharged by 'showing' . . . that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Nonetheless, in deciding a motion for summary judgment, the facts and inferences therefrom are construed in a light most favorable to the nonmoving party. Pollock v. American Telephone & Telegraph Long Lines, 794 F.2d 860, 864 (3d Cir. 1986).

 CERCLA was first enacted in 1980 to provide a solution to the growing number of "uncontrolled 'inactive hazardous waste sites'" and to remedy the severe environmental problems caused by extensive negligent hazardous waste disposal practices. United States v. Price, 577 F. Supp. 1103, 1109 (D.N.J. 1983). Through the original enactment and its subsequent amendment in 1986, Congress has provided a number of mechanisms for recovery of costs for hazardous waste cleanups. In asserting its CERCLA claims against Ashland, Southland relies on two sections which are of particular relevance to private party actions -- sections 107(a) and 113(f). Both sections reflect a Congressional intent to allocate the financial burden of cleaning up hazardous waste sites between those parties responsible for causing the contamination. Chemical Waste Management, Inc. v. Armstrong World Indus., Inc., 669 F. Supp. 1285, 1290 n.6 (E.D. Pa. 1987).

 Section 107(a) of CERCLA authorizes a private party to bring suit against any person who owned or operated a facility at a time when hazardous waste was disposed of to recover those costs expended in response to the environmental crisis. *fn5" Cadillac Fairview/California v. Dow Chemical Co., 840 F.2d 691, 693 (9th Cir. 1988); T & E Indus., Inc. v. Safety Light Corp., 680 F. Supp. 696, 705 (D.N.J. 1988). To be granted a declaratory judgment on the issue of liability, Southland, as plaintiff, must establish four factors to satisfy the requirements of section 107(a): (1) that the Great Meadows chemical plant is a "facility"; (2) that Ashland is a "covered party" as defined by the Act; (3) that a "release" or "threatened release" of a hazardous substance from the plant has occurred; and (4) that, as a result, Southland has incurred response costs. T & E Indus., Inc. v. Safety Light Corp., 680 F. Supp. at 708.

 Southland also asserts a claim for contribution under section 113(f) of CERCLA, as amended under the Superfund Amendments and Reauthorization Act of 1986 ["SARA"], Pub.L. No. 99-499, 100 Stat. 1647 (1986). This section provides an express right to seek contribution from "any other person who is liable or potentially liable under section 107(a)." Prior to the SARA amendments, a number of courts held that while CERCLA did not expressly provide for a private right of contribution, the inclusion of section 107(e)(2) *fn6" in the statute preserved claims for contribution under the federal common law. See United States v. New Castle County, 642 F. Supp. 1258, 1265 (D. Del. 1986); Colorado v. Asarco, Inc., 608 F. Supp. 1484, 1491-92 (D. Colo. 1985). Now, under ...


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