The opinion of the court was delivered by: Lasker, District Judge.
Carlyle Piermont Corporation ("Carlyle") instituted this
action under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601
et seq. (Supp. 1987) ("CERCLA" or "Superfund"), and
under New York common law for consequential damages, punitive
damages and response costs incurred during the discovery,
investigation and ultimate clean-up by excavation and physical
removal of hazardous solvents from the soil on land which
Carlyle now owns and seeks to develop and which defendants
Federal Paper Board Co., Inc. ("Federal") and Continental Can
Co., Inc. ("Continental") formerly owned and operated. Federal
has asserted cross-claims against Continental, and has filed a
third-party complaint against other third-party defendants for
contribution and indemnification.
Federal and Continental move for partial summary judgment on
the ground that Carlyle's response costs were not consistent
with the requirements of the National Oil and Hazardous
Substances Pollution Contingency Plan ("NCP"), 40 C.F.R. §
300 (1989). Federal also moves to dismiss pursuant to Fed.R.Civ.P.
12(b)(1) for lack of subject matter jurisdiction, because the
only claim against it is based on CERCLA. Carlyle cross-moves
for partial summary judgment on liability, for initial
investigative and monitoring costs, for attorneys' fees and for
sanctions pursuant to Fed. R.Civ.P. 11.
Carlyle purchased approximately thirty acres of waterfront
property in October 1986 from defendant Clevepak Corporation
and Federal's and Continental's successors in interest. The
property is located on the Piermont Pier, in Piermont, New
York, and is bordered on the north by the Hudson River, to the
south by the Piermont Marsh, a National Estuarine Sanctuary
containing 944 acres of wetlands, and to the east by village
parkland. Between 1964 and 1984 Continental and then Federal
owned and operated a paper mill and folding carton plant on the
property. One of the buildings on the property, building 41b,
located in a 1.5 acre area ("the site"), was a printing
facility which used various solvents, including the hazardous
substances toluene, ethylbenzene and xylene, which were stored
in tanks on the site.
Between November 1986 and April 1988 the Village Board of
Piermont conducted and completed an environmental analysis of
Carlyle's proposed development of the property and request for
a zoning change, pursuant to the State Environmental Quality
Review Act ("SEQRA"), N.Y.Envtl.Conserv.L., Art. 8 (McKinney
1984). Although testing and investigation during the SEQRA
process had not revealed significant concentrations of
hazardous substances on the site, persistent allegations of the
presence of such substances there led the New York Department
of Environmental Conservation ("DEC") to inspect the property
in April and May 1988 and to request additional information
from Carlyle. Following several weeks of soil sampling and
testing by Carlyle's engineers, in conjunction with
representatives of the DEC, concentrations of toluene,
ethylbenzene and xylene were detected in the soil surrounding
building 41b, which had been recently demolished by Carlyle.
Carlyle's project manager, Gary Koehnken, cordoned off the
area and arranged for additional testing. Carlyle notified the
Village Board of its discovery and decided to reopen the SEQRA
process to file a draft supplemental environmental impact
statement (the "DSEIS"), and, following public hearings and
comment, a final supplemental environmental impact statement
(the "FSEIS").
In July 1988 Carlyle's environmental consultants proposed a
"Remedial Action Plan" to clean up the site. The consultants
had determined, following further investigation, that
unacceptably high levels of solvents were present in the soil
and groundwater near an abandoned dry well on the site. The
Remedial Action Plan proposed excavating approximately 100
cubic yards of soil in and around the site to determine whether
the actual level of contamination was so high that the soil
should be transported off-site, or whether the level was
sufficiently low that the soil could be used as backfill. The
Remedial Action Plan was included in the DSEIS, and later in
the FSEIS, which was accepted by the Village Board at the
conclusion of supplemental SEQRA proceedings.
Koehnken states in his affidavit that he and the various
consulting scientists hired by Carlyle, as well as
representatives of the DEC, considered various alternative
remedial actions including the following: on-site
encapsulation, on-site biological treatment, hog and haul
removal, on-site aeration, off-site incineration, injection
well steam recovery, and no action.*fn1
In a letter to Federal and Continental dated July 14, 1988,
Carlyle's attorney, Ronald J. Offenkrantz, informed them of the
discovery of the hazardous solvents and stated:
We have reason to believe that your firm was the
actual polluter of the material found on the site
and therefore has a liability to Carlyle as the
owner for all costs of remediation as well as for
such consequential damages as may have been
incurred as a result of your use of the property.
We suggest that you place this matter in the
hands of your attorneys and instruct them to
contact this firm on receipt so that the matter
and its resolution may be further discussed.*fn2
Counsel for the defendants replied in separate letters
requesting additional information and stating that they were
investigating whether they had indeed owned the property.*fn3
Offenkrantz responded to both letters on July 27, stating in
his letter to Federal:
What we seek is your cooperation in remediating
the problem with DEC. We wrote to you because we
intend to commence a plan of remediation and to do
it promptly since to delay would result in
increased damages to our client as the developer
and ultimately to your client as the polluter.
We would hope that Federal Paper Board will see
that it is to its advantage to cooperate in the
remediation and minimize everyone's costs and
liabilities.*fn4
On the following day Offenkrantz wrote again to Federal and
Continental to advise them that after a conference with the
DEC, remediation of the site was scheduled to begin on August
15. Federal thereafter arranged for its chief engineer to visit
the site on August 19 to discuss the situation with Carlyle's
engineers.
On September 15, 1988, Federal's counsel, John T. Flynn,
wrote to Koehnken to express Federal's concern that the speed
at which a clean-up program was being planned by Carlyle,
"obviously affords us no participation whatever in the
remediation
program. Further, implementing same in such a hasty fashion
could well result in a scientifically unsound or unnecessarily
costly program."*fn5 Flynn also explained that Federal was
still reviewing the extent of its responsibility for the
Piermont site. On September 20, 1988, Margaret Murphy, outside
counsel for Federal, wrote to Offenkrantz to confirm that
Federal was a prior owner of the site and to state that upon
receipt of additional information regarding the DEC's
involvement in the situation, Federal would "cooperate in
remediation of the property to the extent such remediation is
required by the DEC."*fn6
From September until October, when Carlyle completed
excavating the contaminated soil and shipped it to a Wayne,
Michigan hazardous substances landfill, Carlyle continued to
attempt to involve Federal and Continental in the clean-up
planning. The defendants continued to seek additional
information which they asserted was necessary for them to
evaluate the cost effectiveness of, and alternatives to, the
proposed action. The record indicates that Carlyle became
increasingly concerned with implementing its plan before
November 8, 1988, the effective date for new federal
prohibitions on land disposal of solvent-contaminated soil.
See 40 C.F.R. § 268.30 (1989). The excavation and shipment of
approximately 2600 tons of solvent-contaminated soil from the
site to a hazardous waste disposal facility/landfill in Wayne,
Michigan was completed before the November 8 deadline. Carlyle
alleges that its total response costs exceed $1 million, of
which $278,000 were spent for initial monitoring and
investigation.
One of the major objectives of the private recovery
provisions of CERCLA is to "assure an incentive for private
parties, including those who may themselves be subject to
liability under the statute, to take a leading role in cleaning
up hazardous waste facilities as rapidly and completely as
possible." City of New York v. Exxon Corp., 633 F. Supp. 609,
617 (S.D.N.Y. 1986). CERCLA section 107(a), 42 U.S.C. § 9607(a)
(Supp. 1987), provides in relevant part that:
(2) any person who at the time of disposal of any
hazardous substance owned or operated any facility
at which such hazardous ...