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March 1, 1994

W.R. GRACE & CO. - CONN., Defendant, Third-Party Plaintiff, v. ALLSTATE INSURANCE CO., et al., Third-Party Defendants.

The opinion of the court was delivered by: ALFRED M. WOLIN

 Table of Contents


A. The Parties
B. The Property
C. Plant History
1. Ownership
2. Manufacturing
3. Waste Treatment
4. Location of Site Facilities
D. Contamination Overview
1. Sampling
2. Contaminants
E. Remediation by Hatco
1. DEP Involvement at the Fords Property
2. The PA Disposal Area
a. The Manufacturing of Phthalic Anhydride
b. Disposal of the PA and Naphthalene Still Bottoms
c. Investigation, Sampling and Testing of the PA Disposal Area
d. The Decision to Excavate
(1) Assessment
(2) The Need for a Response Action
(3) The Potential Sale to Exxon
(4) The EPA Land Ban of KO24
(5) Alternatives and Costs
(6) The Excavation
3. Project 50
a. Television Camera Inspection of Hatco's Sewer System
b. The Ester I and West Road Sewer Lines
c. Isolation and Capping of the Lagoons
d. Elimination of Ester II Swale Discharge
e. Ester I Tank Farm Construction Projects
4. Project 51
F. Response Costs Incurred by Hatco
1. Cleanup of the PA Disposal Area
2. Project 50
3. Project 51
4. Groundwater Monitoring: 1982-86
5. Laboratory Work: 1991-93
6. Disposal of PCB-Contaminated Waste
7. Cleanup of M Tanks
8. Management Time and Attorneys' Fees
9. DRAI Fees


A. Count I - Hatco's Claim Under CERCLA
1. Elements of Hatco's Prima Facie Case.
2. The NCP
a. Removal or Remedial Actions?
b. The PA Response Action
(1) Motives and Intent
(2) Questions of Compliance--1985 NCP Removal Provisions
(A) Propriety of a Removal Action--Assessment
(B) Alternatives and Costs
(C) Community Relations, ARARs and Cost Documentation
c. Projects 50 and 51
3. Necessary Response Costs
B. Count Four - Hatco's Claim for Contribution Under the New Jersey Spill Act
C. Allocation of Response Costs
1. PA Response Action
2. Project
a. Replacement of Ester I and West Road Sewer Lines
b. Television Camera Inspection of the Sewer System
c. Isolation and Capping of the Lagoons
d. Diverting Ester II Swale Discharge from the East Lagoon to the EPT Plant
e. Ester I Tank Farm Construction Projects
3. Project 51
4. Groundwater Monitoring: 1982-86
5. Laboratory Work: 1991-93
6. Disposal of PCB-Contaminated Waste
7. Cleanup of M Tanks
8. Management Time and Attorneys' Fees
9. DRAI Fees
D. Prejudgment Interest
E. Punitive Damages


 Wolin, District Judge


 The dawn of reckoning has arrived. After nearly five years, six opinions, *fn1" two trials, reams of trial and deposition testimony, and thousands of exhibits, the Court enters the long awaited damages phase in this complex environmental litigation arising from prolonged hazardous waste discharges at an industrial property located in Fords, New Jersey (the "Fords property"). While this Opinion undertakes the first allocation of damages between plaintiff Hatco Corporation ("Hatco"), the current owner of the Fords property, and W.R. Grace & Co. -- Conn. ("Grace"), the previous owner, it also marks a definitive point of closure -- at least with respect to this forum -- in the ongoing legal contest between Hatco and Grace, each seeking to devolve upon the other the costs of remediating this property.

 Previous opinions issued by this Court have touched upon the cruel dilemma of modern society -- the insatiable quest for corporate growth and its economic rewards, paradoxically purchased at the expense of ecological and human resources. The Court will not revisit that theme today, but it is not forgotten, upon reaching this watershed in the struggle to place responsibility where responsibility is due for the contamination and cleanup of the Fords property.

 For the past decade, the property has been the subject of extensive scrutiny and study by New Jersey's Department of Environmental Protection ("DEP") and private environmental consultants, generating an enormous wealth of historical information about the facility's thirty-three year operation and its current environmental condition. Because of this vast historical record, past speculative financial exposure gives way to the sobering receipt of the first invoice.

 To date, Hatco has expended over ten million dollars responding to the environmental conditions at the Fords property. If nothing else, this action has proven that the cleanup of an industrial site may not only be expensive, but may involve a range of actors, from state regulatory agents to private consultants, engaging in a variety of activities, which may include negotiating settlements, testing for contamination, contracting with disposal companies, excavating materials and replacing or cleaning contaminated equipment. The list of potentially required tasks is endless, so too are the potential costs.

 Hatco has undertaken four different remediation activities since its purchase of the property. Instituted by Hatco in early 1991, and completed by end of that summer, Project 50 involved various construction projects designed to limit the migration of contaminants via the flow of surface water over certain areas of the property. Project 51, which is ongoing, involves activities taken in response to groundwater contamination found at specific locations at the site. Hatco also undertook the offsite disposal of certain contaminated liquids from the facility. And last, but significantly, one of these four projects involved a distinct area of the Fords property which Grace had used as a depository for the byproducts of its phthalic anhydride manufacturing processes. The predominant byproduct has been designated as a hazardous waste by the United States Environmental Protection Agency ("EPA"). In August 1988, Hatco excavated the area (the "PA Disposal Area") and disposed of the materials at an offsite landfill.

 Hatco now seeks to recover from Grace the expenses associated with these four projects, in addition to the costs incurred as a result of DEP's oversight of the remedial efforts at the property. In pursuit of its response costs, Hatco has invoked both federal and state statutory mechanisms for recovery: the Comprehensive Environmental Response and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601, et seq. ; and the New Jersey Spill Compensation and Control Act ("Spill Act"), N.J.S.A. 58:23-11, et seq. To recover under CERCLA, Hatco must prove that the remediation projects were selected and implemented in accordance with the National Contingency Plan ("NCP"), a rule promulgated by EPA which provides a framework for responding to the release of hazardous substances into the environment.

 Grace challenges the propriety of awarding to Hatco any costs arising from Projects 50 and 51 and the excavation of the PA Disposal Area, alleging that Hatco failed to comply with NCP requirements. With respect to Projects 50 and 51 and the question of NCP compliance, the Court relies solely on the record created in the Hatco III trial and additional stipulations submitted after this trial.

 Grace also vigorously opposes Hatco's recovery of response costs associated with the PA Disposal Area, which exceed five million dollars. Grace's objection is grounded upon two allegations. First, Hatco never considered the NCP prior to undertaking the excavation. Second, Hatco excavated the area only to meet a precondition of an agreement to sell the property, not to remedy any significant threat to human health or the environment. In September of 1993, the Court conducted a bench trial to determine whether Hatco had complied with the NCP when implementing the excavation of the PA Disposal Area.

 To assist the Court with this decision, Hatco presented one expert witness, Mr. Kenneth Siet, currently associated with Dan Raviv Associates Incorporated ("DRAI"), the environmental consulting firm hired by Hatco to address the problems that spawned this litigation. Prior to his position with DRAI, Mr. Siet worked at DEP for approximately eight years, overseeing the remediation of over eighty sites, a few of which involved the implementation of NCP-related tasks. Based upon a review of the documentary evidence, Mr. Siet offered the opinion that Hatco had substantially complied with the NCP in excavating the PA Disposal Area.

 Grace, in opposition, presented two expert witnesses, Dr. James Mercer and Dr. L. Anthony Wolfskill. Dr. Mercer is the president and principal hydrogeologist at GeoTrans, Inc., an environmental consulting firm. Based upon a review of the documentary evidence and the benefit of hindsight, Dr. Mercer concluded that the PA Disposal Area did pose a threat to the environment in 1988. In his view, however, Hatco inadequately investigated the area and thus could not have discovered any threat to the environment prior to the excavation. He concluded that Hatco had not substantially complied with the NCP.

 Dr. Wolfskill is associated with Woodward-Clyde Consultants, a consulting firm specializing in civil and environmental engineering and science. Based upon documentary evidence, he testified on the technical issues considered by Hatco prior to the excavation. It was his opinion that Hatco failed to weigh adequately the alternatives to excavation and hence had not substantially complied with the NCP.

 Subsequent to the trial, the parties submitted proposed findings of fact on the issue of NCP compliance for Projects 50 and 51 and for the excavation of the PA Disposal Area. In addition, the parties filed numerous stipulations in an effort to assess the response costs for which Hatco now seeks recovery.

 In addressing the question of causation in Hatco III, the Court lamented the difficulties inherent in assigning liability in a complex environmental case, likening the task to crossing a mine field with a faded map as a guide. The Court has survived that journey and now ventures into a different, but no less daunting, mine field. Whether it be causation, cost allocation or NCP compliance, the arenas of environmental legislation, remediation and jurisprudence are fraught with impediments to exacting precision and defy patent standards of simple application. In this case-by-case world of environmental litigation, the Court will apply the dictates of common sense and reality in assessing responsibility and allocating the sizable costs for the remediation of the environmentally affected sites. With this goal in mind, the Court today converts legal and scientific concepts into the currency of the marketplace -- real dollars. Through findings of fact and conclusions of law, the Court fulfills the warrant for its existence.


  A. The Parties

  1.* Plaintiff Hatco Corporation ("Hatco"), a New Jersey corporation, is the present owner of the property at issue in this case.

  2.* Defendant W.R. Grace & Co. - Conn. ("Grace"), a Connecticut corporation, is the prior owner of the property at issue in this case and a wholly owned subsidiary of W.R. Grace & Company, a New York Corporation. (Stipulation No. 46) *fn3"

  B. The Property

  3.* The property at issue in this litigation is an eighty-acre parcel of land located in Fords, New Jersey (the "Fords property"). (Stipulation No. 1) The Fords Property is situated approximately 4,000 feet from the Raritan River, (47:19 (Raviv)), *fn4" and is bounded to the north by King George Post Road, to the east by Sling Tail Creek, to the south by Industrial Highway and to the west by Crows Mill Creek. (DE002)

  4.* The slope of the Hatco site is generally south-southwest. Groundwater flow and surface drainage events follow the site's surface topography, which is high in the center (34:13 (Raviv)), and run toward and are collected by Sling Tail Brook and Crows Mill Creek. (Stipulation No. 9)

  5.* The soil profile of the Hatco site, moving from the surface to the underlying soils, changes from fill with clay to light to dark gray clay to clay mixed with sand to clay to poorly sorted sand and finally to dark gray clay. (357:6 (Raviv)) The natural dark clay layer is significant because its lower permeability prevents the movement of contamination. (357:21 (Raviv))

  C. Plant History

  1. Ownership

  6.* In the early 1950s, a brick and tile manufacturer used the Fords property as a clay pit. (Stipulation No. 2)

  7.* In approximately 1954, Mr. William Hackman ("Hackman"), the owner of the Hatco Chemical Company, purchased the Fords property and relocated his chemical manufacturing business there. (Stipulation No. 3) The Hatco Chemical Company previously was located in Kearny, New Jersey, where it manufactured plasticizers, synthetic lubricants and napalm. (Stipulation No. 4)

  8.* From approximately 1954 until 1959, Hackman owned and operated the Hatco Chemical Company on the Fords property (the "Fords facility"). (Stipulation No. 5)

  9.* In June 1959, Grace purchased the Hatco Chemical Company from Hackman for approximately $ 5.4 million. (E10 at WRG 06767) The business became a division of Grace known as the Hatco Chemical Division. *fn5" (Stipulation No. 6)

  10.* Hackman remained at the helm of the Hatco Chemical Division until 1962 when Mr. Alex Kaufman ("Kaufman") became president of the Hatco Chemical Division. Kaufman held this position until his resignation in 1978. (Stipulation No. 85)

  12.* On September 1, 1978, Farben changed its name to the Hatco Chemical Corporation. On September 30, 1978, Fuss merged into the Hatco Chemical Corporation. On October 28, 1986, the Hatco Chemical Corporation was renamed the Hatco Corporation. (Stipulation No. 8)

  2. Manufacturing

  13.* Upon arrival at the Fords property in 1954, the Hatco Chemical Company had one reactor, one stripper, one refiner, a filter press and tanks. (1878:5 (Kaufman))

  14.* From approximately 1954 until 1959, two plants were in operation at the Hatco Chemical Company: (1) an esterification plant (Ester I) where plasticizers and synthetic lubricants, including dioctyl phthalate, dibutyl phthalate and diisooctyl phthalate, were manufactured from acids and alcohols; and (2) a sebacic acid plant where raw materials were generated to make aviation turbine oils. (Stipulation No. 5; (1882:9 (Kaufman))

  15.* During this period, alcohols, sebacic acid and phthalic anhydride were stored at the site and the railroad siding was used to load and unload tankers. (1989:22 (Kaufman)) Other raw materials brought to the site included octyl alcohol, butyl alcohol, 2-ethylhexyl alcohol and castor oil. (E10 at WRG06810; Hackman Dep. 52:12)

  16.* Grace's 1959 purchase brought the necessary capital for expansion. (1884:20 (Kaufman)) Besides continuing to produce various phthalate esters in the Ester I plant, during the 1960s, additional manufacturing facilities were built at the site.

  17.* In 1960, the Hatco Chemical Division constructed and began operating a benzyl chloride plant. The plant manufactured benzyl chloride which in turn was combined with phthalic anhydride to produce butyl benzyl phthalate ("BBP"), a plasticizer. (Stipulation No. 15) The benzyl chloride plant operated until 1965. (37:8 (Raviv); Stipulation Nos. 15, 60) Plaintiff Hatco never has manufactured butyl benzyl phthalate. (Stipulation No. 35)

  18.* In 1961 and 1963, the Hatco Chemical Division built two plants on the eastern portion of the Fords property, known as PA-1 and PA-2. These plants manufactured phthalic anhydride from naphthalene. (Stipulation No. 10) George Napack was hired to oversee the construction and operation of the PA plants. (Napack Dep. 18, 217-18)

  19.* The Hatco Chemical Division began the manufacturing operations of PA-1 in 1961 and PA-2 in 1963. (Stipulation No. 11) Production of phthalic anhydride at the two PA plants ceased in 1971. (Stipulation No. 12)

  20.* The Hatco Chemical Division continued to use phthalic anhydride in its operations, purchasing quantities from outside suppliers to manufacture Various esters. The use of purchased phthalic anhydride at the Fords facility continues to the present day. (Stipulation No. 13)

  21.* While the PA plants were in operation, still bottoms from the [phthalic anhydride] production were deposited in an area to the east of the PA plants referred to as the "PA Disposal Area." (Napack Dep. 47-48)

  22.* In 1961, the Hatco Chemical Division installed a molecular still in the Ester I tank farm to separate by-products manufactured in the sebacic acid plant. The molecular still was closed in 1965. (Stipulation Nos. 16, 60; 1066:2-11 (Trela))

  23.* In or around 1960, the Hatco Chemical Division installed two thermal units ("SH-1 and SH-2") to provide heat for a new reactor added in the Ester I plant. (E22, 23, 29) From approximately 1961 to 1966 aroclor was used as a heat transfer fluid in the hydrotherm units. (Stipulation No. 27)

  24.* In 1970, Grace constructed a second esterification plant ("Ester II") to manufacture DOP and other phthalate esters. (1239:21 (Reid)) The Ester II plant remains in operation today at the Fords facility.

  25.* After Hatco purchased the facility in 1978, it continued to manufacture a variety of plasticizers, including di-n-butyl phthalate ("DBP"), bis (2-ethylhexyl) phthalate ("DEHP"), diisodecyl phthalate and DOP. (E1043 at A301887; 186:25-187:2 (Raviv) (Hatco and Grace made same use of Ester I complex)); 2170:18-21 (Staples) (same))

  26.* Other chemicals that have been used and stored at the site since 1978 include benzene ("BZ"), 1,1,1-TCA ("TCA"), methylene chloride, styrene, xylene and toluene. (E968, 1241, 1737)

  27.* In the post-1978 period, Hatco began the manufacture of phenyl xylyl ethane ("PXE"), which required the use of xylene and styrene. (E1043 at A301975, 1410 at A301646; 1243:5 (Reid) (PXE manufacture began in early 1980s))

  28.* Since 1978, Hatco has used the Ester II plant to manufacture various phthalate esters, including DOP, DEHP and DIDP, and to distill PXE and TCA bottoms. (2179:22-2180:11, 2905:4-23 (Staples); Lynch Stipulation PP 6, 7; Maimon Stipulation P 34; E1404)

  29.* In 1983, Hatco modified existing facilities and constructed a new plant at the Fords site to manufacture Z-Aspartic Acid ("ZAA"). (Maimon Stipulation PP 1-3; Napack Dep. 45:20-46:9; 152:8 (Raviv)) These facilities are located in the area of the former benzyl chloride plant. (146:16 (Raviv)) By June 1984, the ZAA facility was in the semi-commercial startup phase. (1339:15 (Chryss))

  30.* In 1986, plaintiff Hatco dismantled the two PA plants at the Fords facility. (Stipulation No. 72)

  3. Waste Treatment

  31.* Between 1954 and 1959, Hackman dug at least one settling pond at the Fords facility that was designed to handle waste by allowing product to separate from water. (1881:14 (Kaufman); 33:10-19 (Raviv); E10 at WRG06830; DE001) During this period, liquid wastes flowed into the pond system. (E10 at WRG06830) After settling, the effluent was released from the pond and flowed through marsh land into the Raritan River. Id.; (1891:19 (Kaufman))

  32.* By 1961, Grace had expanded the pond system, adding additional ponds, one of which subsequently was divided into two ponds, for a total of four ponds at the site. (E12, 15; Stipulation No. 59)

  33.* With the settling pond system, Grace sought to minimize the amount of process waste discharged and to recover suspended solids containing product. To accomplish these goals, Grace skimmed the esters and other organic matter that floated to the surface of the ponds and neutralized the remaining liquid effluent with lime slurry. The recovered product was returned to the plant to manufacture off-color plasticizer ("OCP") to sell as a Grace product. (Stipulation No. 18)

  34.* While in operation, semi-solid matter accumulated in the ponds, thereby necessitating periodic cleaning. (Stipulation No. 17) Known as "demucking," this process involved scooping solid material from the bottom of the ponds. (Stipulation No. 19) The dredged material was deposited in an area west of ponds three and four known as the "muck storage area." (40:16-43:5 (Raviv))

  35.* From 1959 until 1971, Grace discharged waste products from the various plant operations into the ponds system. Aroclor leaks, liquid waste effluent from the Ester I and benzyl chloride plants and Ester I leaks and spills of phthalates and raw materials were discharged to the ponds. (Stipulations Nos. 31-34)

  36.* In 1966, Grace completed the construction of sewer lines at the site to connect the Fords facility to the Middlesex County Sewerage Authority ("MCSA"). The MCSA later changed its name to the Middlesex County Utilities Authority ("MCUA"). (Stipulation No. 20)

  38.* When Grace's gravity-based settling pond system and the clay-lined lagoons were in operation between 1966 and 1971, process effluent flowed from the settling ponds to the clay-lined lagoons to sewers connected to MCSA. (Stipulation Nos. 22, 36) Liquid waste from the [PA] plants was released to the lagoons and ultimately to the MCUA. (Stipulation No. 37)

  39.* In 1969, [DEP] directed the Hatco Chemical Division of W.R. Grace to eliminate the ponds because of odor problems. (Stipulation No. 24) The Hatco Chemical Division completed the pond elimination program in March 1971. (Stipulation No. 25) Plaintiff Hatco never operated the settling pond system or the muck storage areas. (Stipulation No. 26)

  40.* In 1990, plaintiff Hatco began operating an effluent pretreatment plant (the "EPT plant") at the Fords site. (Stipulation No. 13) The main purpose of the EPT plant was to reduce the organics in Hatco's effluent prior to its discharge to the MCUA. (715:7-14 (Raviv))

  4. Location of Site Facilities *fn6"

  41.* Throughout the history of the site, the manufacturing and waste disposal facilities largely have been situated in the central portion of the site. In aerial photographs, this concentration of buildings and other artificial structures forms a capital letter "T" with the vertical structures traveling north to south and the horizontal improvements running east to west.

  42.* During Grace's ownership, the Ester I complex served as the industrial center and was bounded on the west by the Ester I tank farm and to the east by the two PA plants. To the south of the PA plants four large tanks, known as the "M tanks," were installed to store the naphthalene used in PA production. Continuing south from the M tanks, the Ester II building appears. West of Ester II, two railroad sidings, one serving each ester plant, run north from the southern boundary of the property.

  43.* Directly to the south of the Ester I complex two ponds were located, pond number one to the west and pond number two to the east. Two larger ponds were found further to the south, pond number three to the east and pond number four to the west. The sebacic acid plant was situated to the east of ponds one and two. East of ponds three and four, the benzyl chloride plant was located. A muck storage area was created southwest of ponds three and four. At the southern boundary of the property, just west of the railroad sidings, the two lagoons were constructed.

  44.* Due north of these manufacturing and waste structures, a pilot plant, the quality control laboratory, the alcohol tank farm and drum storage areas were located.

  45.* Many of these structures remained unchanged following Hatco's purchase of the site. During the pond elimination program, Grace reclaimed the areas of the site the ponds and muck storage areas had occupied. Hatco constructed the EPT plant in the area of former pond four. Hatco also added the ZAA facility, converting the former benzyl chloride plant and constructing a new building just south of former ponds one and two.

  D. Contamination Overview

  1. sampling

  46.* In August 1979, the DEP visited the Hatco site and took a single sample from the surface of each of the two lagoons. (1220:3-1221:10 (Reid); E699) In March 1980, DEP officials returned to the Hatco site and gathered soil samples. (1229:7-17 (Reid))

  48.* Subsequent DEP spot sampling of the lagoons and other portions of the site occurred in 1981 (876:23 (Trela); E720), 1984 (879:6 (Trela); E825) and 1985. (883:1 (Trela); E881) The MCUA drew samples of Hatco's sewer waste water in 1986. (886:19 (Trela); E1040)

  49.* As a result of the DEP's continued interest in the site, in 1986 Hatco hired DRAI to provide advice with respect to the DEP's demands. (1443:3-10 (Chryss)) DRAI installed additional groundwater monitoring wells in 1987, 1990 and 1992, (65:23-66:22, 214:15-23 (Raviv)), and performed surface and subsurface soil investigations in various areas throughout the site in 1987, 1988, 1991 and 1992. (E2253) The DEP specified the groups of chemicals to be tested as well as the testing methods. (97:7-21 (Raviv))

  50.* Based on evidence of historical activities at the Hatco site, DRAI created areas of environmental concern ("AECs"), a basic concept in any kind of environmental investigation of plants, which allowed it to examine the impact of particular operations at relevant parts of the site. See Appendix III. (54:2-23 (Raviv)) DRAI also developed a grid system to guide its soil studies. (DE013; 64:11-19 (Raviv)) In areas where contamination was found, the density of the grid was increased in order to fine-tune its delineation. (64:20-65:22 (Raviv))

  51.* In 1987 and 1988 Exxon Chemical ["Exxon"], a potential Hatco purchaser, hired Environ, an environmental consulting company, to come to the site and conduct testing. Environ examined soil and groundwater conditions at Hatco. (1472:8-20 (Chryss))

  2. Contaminants

  52.* The resulting data indicates that the Hatco site contains three principal contaminants: (1) base neutrals ("BNs"); (2) polychlorinated biphenyls ("PCBs"); and (3) volatile organic compounds ("VOCs"). (69:6 (Raviv))

  53.* BNs, also known as semivolatiles, are a subset of organic chemicals. (919:11 (Trela)) This category includes different phthalate esters, including DEHP, BBP, DEP, DBP and DOP, (93:4, 69:8, 75:21 (Raviv)), as well as petroleum products and naphthalene. (2068:2 (Staples)) BNs are the source of the greatest volume of contamination at the Hatco site. (2067:2-15 (Staples))

  54.* Two types of PCBs were found at the site, aroclor 1248 and aroclor 1254. When tracing the history of PCBs, it is important to evaluate reports of the presence or absence of PCBs carefully. (882:12 (Trela)) Obtaining accurate PCB results is difficult, because the applicable testing method is susceptible to interference by organic chemicals, such as the phthalate esters present at the Hatco site. (880:5, 881:1 (Trela)) Testing of soil borings is more accurate than testing of groundwater samples. (888:6 (Trela))

  55.* Sampling also revealed the presence of a variety of VOCs. This category of chemicals includes solvents such as toluene, xylene, TCA, TCE and benzene. (76:3 (Raviv))

  56.* These pollutants are distributed throughout the site at various depths and concentrations. To some degree, each group of contaminants is present in the soils and the groundwater. Often these chemicals are commingled in the same soil. The DEP primarily is concerned with the VOC contamination in the groundwater and the PCB soil contamination. (742:4-20 (Raviv); E2453 at A216332)

  E. Remediation By Hatco

  57. Since its purchase of the site in 1978, Hatco has undertaken four remediation projects: (a) Project 50; (b) Project 51; (c) the removal of PCB-contaminated liquid, including lagoon skimmings, from the site; and (d) the excavation of material from the PA Disposal Area. The two latter remediation activities were required by Exxon as conditions precedent to its potential purchase of the facility. (1852:19-23, 1854:17-1855:18 (Chryss); E1365 at Exxon 00135)

  58. Certain response costs sought by Hatco may be traced to involvement at the site by DEP, which directed Hatco to undertake various remediation activities. With respect to Hatco's ownership, DEP initially visited the site to investigate the discovery of oil in Crows Mill Creek. Hatco III, 836 F. Supp. 1049, 1082.

  59. In October 1979, DEP directed Hatco to begin a pollution abatement program, under which Hatco would excavate contaminated soil from the site and install monitoring wells. Id. at 1082-83.

  60. On June 16, 1981, following visual inspections and tests confirming contamination, DEP issued an Administrative Order directing Hatco to perform soil borings, install monitoring wells, cease groundwater pollution and remove contaminated soils from the site. Hatco responded by sampling the lagoons and requesting an administrative hearing. Id. at 1083.

  61. On September 28, 1982, following negotiations, DEP and Hatco executed an Administrative Consent Order ("ACO I"), under which Hatco was to install seven groundwater monitoring wells and sample the wells periodically during the following five years. Id.

  62. On April 15, 1985, DEP ordered Hatco to close the effluent line to the lagoons by April 18, 1985. Id.

  63. On December 16, 1985, DEP issued a draft New Jersey Pollutant Discharge Elimination Permit ("NJPDES permit") which required Hatco to submit to DEP a plan for closing the lagoons. Id.

  64. Following more negotiations, and the beginning of DRAI's work at the site, DEP issued the final NJPDES permit on April 22, 1987. Id. By November 1987, Hatco had instituted measures designed to comply with the minimum regulatory requirements of the NJPDES permit. Id.

  65. By the spring of 1991, Hatco recognized the need for an administrative consent order to finish site remediation. On October 30, 1991, the first draft consent order was issued, which directed a Remedial Investigation/Feasibility Study ("RI/FS") and the implementation of a remediation action plan for the site. Id. at 1084.

  66. On August 5, 1992, DEP issued a directive to Hatco and Grace, requesting that they arrange for the cessation of the environmental threat at the Fords site within thirty days. Hatco filed its draft RI on August 26, 1992, and signed the consent order ("ACO II") on September 9, 1992. Grace refused to sign ACO II, but submitted a timely response to DEP. Id. at 1082, 1084.

  67. Under ACO II, Hatco completed a remedial investigation and a scoping report and investigation, including a remedial investigation work plan, field work and a final report. Id. at 1084.

  2. The PA Disposal Area

  a. The Manufacturing of Phthalic Anhydride

  68. In 1961 and 1963, the Hatco Chemical Division built two plants on the eastern portion of the Fords property, known as PA-1 and PA-2. These plants manufactured phthalic anhydride. (Stipulation No. 10) George Napack was hired to oversee the construction and operation of the PA plants. (Napack Dep. 18, 217-18).

  69. Manufacturing operations began at PA-1 in 1961 and at PA-2 in 1963. (Stipulation No. 11) Production of phthalic anhydride at the two PA plants ceased in 1971. (Stipulation No. 12)

  70. The Hatco Chemical Division continued to use phthalic anhydride in its operations, through purchases from outside suppliers to manufacture various esters. The use of purchased phthalic anhydride at the facility continues to the present day. (Stipulation No. 13)

  71. In 1986, plaintiff Hatco dismantled the two PA plants at the Fords property. (Stipulation No. 72)

  72. Naphthalene and air were the raw materials used to manufacture phthalic anhydride. The manufacturing process differed between the two plants. At PA-1, naphthalene was fed directly into a stream of hot air inside a system known as a fluidized bed reactor. PA-2 utilized a fixed-bed reactor, which required the naphthalene first to be reduced to vapor in a naphthalene evaporator prior to being introduced into the reactor. (Napack Dep. 164-67; Ackelsberg Dep. 100-01; Rush Dep. 173)

  73. Naphthalene has a distinctive odor similar to the smell of moth balls. (3216:14-19, 3387:10-12 (Siet)). Raw naphthalene is amber in color. Pure phthalic anhydride is white. (Rush Dep. 191)

  74. The, phthalic anhydride manufacturing processes at PA-1 and PA-2 generated a molten distilled residue, which was poured into pie-shaped containers and cooled. In this form, the byproduct is known as a solid still bottom ("PA still bottom" or as designated under CERCLA "K024"). (Napack Dep. 47-56; Ackelsberg Dep. 100-01; Biertumempfel Dep. (Vol. 1) 56-57). The PA still bottoms were black in color and brittle in substance. (Napack Dep. 48-50; Nagiewicz Dep. 73-74)

  75. The process at PA-1 required naphthalene of a higher purity. The PA-2 system used naphthalene of a much cruder quality, which produced a still bottom with more impurities and greater contaminants. (3230:4-12 (Siet); Napack Dep. 51-52) Naphthalene is not a component of the PA still bottoms; it ...

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