ELR Citation: ELR 20757
No(s). 90-2325-GTV (D. Kan. Aug 2, 1995)

The court makes several rulings related to response costs liability and the allocation of costs in a contribution action by the current owner and the successor to a former smelter under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against steel fabricators that were thelast tenants of the facility. The court first notes that it will treat the owner's and successor's claim as one for contribution under CERCLA §113(f), even though they brought their action under both CERCLA §§107(a) and 113(f). The court holds that their cleanup actions complied with EPA orders and, therefore, were consistent with the national contingency plan. The owner and the successor submitted work plans to the U.S. Environmental Protection Agency (EPA) in accordance with EPA's CERCLA §106 orders, EPA approved the plans, the work was conducted in accordance with those plans, and EPA oversaw the work. The court next holds that the fabricators were operators of the facility for purposes of CERCLA liability because they exercised actual control over the facility's operations. The fabricators were directly involved in the day-to-day operations of the site. The court holds that the owner and the successor established that some disposal of hazardous substances occurred while defendants operated the site. The court next holds that the owner, which was a secured lender, did not participate in the management of the facility and, therefore, is within the secured creditor exception. None of the owner's activities injected it into the day-to-day operations of the facility to such a degree as to preclude application of the exception. The owner was merely monitoring the financial aspects of the facility's operations and, thus, did not participate in the management of the facility. Moreover, the owner made adequately prompt efforts to resell the property to meet the requirement of holding indicia of ownership primarily to protect its security interest.

The court next turns to the owner's response costs. The court finds that the owner incurred all the response costs it seeks to recover. Evidence established that the owner either paid the costs directly or reimbursed another party for the costs that party paid. The court holds that the owner's costs related to the assessment, evaluation, testing, and planning for removing hazardous substances found in barrels at the site are all potentially recoverable response costs under CERCLA, even though most of the barrels were ultimately found not to contain hazardous substances. The court also holds that the costs related to testing and characterizing the barrel contents are recoverable response costs, even though some of the testing paralleled that done by another firm. The testing was not strictly duplicative, because it was done for a different purpose and under different requirements. The court holds that the owner's costs of actually removing barrels that had been abandoned at the site but which were empty or contained nonhazardous trash or petroleum products, were not potentially recoverable response costs under CERCLA. The court also holds that the owner's costs associated with the removal of underground storage tanks and the surrounding soil were within CERCLA's petroleum exclusion and, thus, were not potentially recoverable as response costs. There was no evidence that any substance other than gasoline had ever been stored in the tanks or that any other substances had been mixed with the gasoline. The court next holds that the costs of asbestos removal are not CERCLA response costs, because the owner did not establish that the defendants were responsible for bringing the asbestos bricks onto the site or that a release of asbestos occurred during the time that the fabricators operated the facility. The court holds that the owner's lead removal costs were reasonable and necessary costs of response. The court holds that the owner's security costs for the site, including 24-hour guards, were reasonable and necessary response costs, even though the owner implemented security measures before EPA's administrative order requiring security measures was effective. The court next holds that attorneys fees sought in connection with identifying other potentially responsible parties (PRPs) are recoverable expenses, but that the fees related to determining the extent of defendants liability are litigation-related fees and are not recoverable CERCLA response costs. Also, the fees attributable to determining the extent of liability of the successor were not incurred to identify the successor as a PRP and, thus, were not recoverable. The court holds that the amounts the owner paid EPA pursuant to an administrative consent order for reimbursement of EPA's oversight costs were not recoverable, absent evidence describing the type of work EPA permitted in generating such charges. The court next holds that the successor could not recover costs for the portion of attorneys fees incurred primarily in negotiating the consent order with EPA, incurred in activities related to litigation, incurred before the involvement in any cleanup activities at the site, or incurred in searching for and identifying other PRPs. Also, the owner and successor are not entitled to prejudgment interest on recoverable CERCLA response costs. They failed to establish that a written demand for a specific dollar amount was made.

Addressing the allocation of liability and costs, the court first holds that the fabricators are solely liable for the costs related to testing and disposal of hazardous substances contained in the barrels at the site, but that evidence did not provide a reasonable basis to apportion liability for response costs relating to lead contamination. Thus, the successor, who is admittedly liable, and the defendants, will be held jointly and severally liable. The court holds that total lead, and not that which is bioavailable, and toxicity should be the bases for volumetric allocation of the costs of cleaning up the lead contamination. The court adjusts the equitable share of CERCLA response costs for lead contamination for the fabricators from 1 percent (based on volume) to 5 percent due to the high toxicity of lead paint compared to other forms of lead also found at the site. The court allocates to the fabricators 5 percent of the attorney fees incurred by the successor that were related to the lead remediation, and 28 percent of the owners' security guard costs and attorney fees.

The court next holds that no party is entitled to indemnification from the other under the provisions in the lease agreement, and that the fabricators did not breach the lease terms concerning wear and tear and diminution in value of the premises. But the fabricators are liable for their pro-rata share of taxes for the year in which the parties agreed to cancel the lease prematurely.

Counsel for Plaintiffs
John M. Duggan
Duggan & Shadwick
1201 Walnut St., Kansas City MO 64152
(816) 471-3536

Counsel for Defendants
Robert L. Driscoll
Stinson, Mag & Fizzell
1201 Walnut St., Ste. 2500, Kansas City MO 64106
(816) 842-8600