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September 23, 1993

City of New York, Plaintiff,
Chemical Waste Disposal Corp. et alia, Defendants.


The opinion of the court was delivered by: CHARLES P. SIFTON

SIFTON, District Judge.

 Plaintiff, the City of New York (the "City"), seeks an order granting summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure, against defendants Chemical Waste Disposal Corporation ("Chemical Waste"), Chemical Solvents and Distillers Company ("Chemical Solvents"), Diane Levy and Harvey Licht, as co-executors of the estate of Morris Levy ("Levy"), and Ben LaBarbera ("LaBarbera"), holding them jointly and severally liable under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. §§ 9601 et seq., for response costs incurred by the City to date in the amount of $ 1,088,368.90, and declaring defendants jointly and severally liable under CERCLA for all future response costs incurred by the City. *fn1"

 The City contends that the defendants are responsible for the release of toxic and dangerous chemicals into the environment between 1963 and 1983 at a facility in Astoria, Queens, jointly operated by Chemical Waste and Chemical Solvents located at 42-14 19th Avenue in Astoria, New York (the "facility"). *fn2" The City's motion for summary judgment is granted in part and denied in part.

 Procedural History

 The City commenced this action on or about June 18, 1990, naming as defendants Chemical Waste, Chemical Solvents, and Morris Levy seeking a permanent injunction under New York State common law of nuisance and recovery of its response costs under CERCLA. Based upon a Suggest ion of Death Upon The Record filed by counsel for defendant Levy on or about January 15, 1991, and information obtained during the first stage of discovery, including a June 1991 deposition of Ben LaBarbera, the City filed an amended complaint on August 27, 1991. The amended complaint added Ben LaBarbera as a defendant and substituted Diane Levy and Harvey Licht, as Co-Executors of the Estate of Morris Levy, for defendant Morris Levy. In addition, the amended complaint alleged that neither Chemical Waste nor Chemical Solvents had maintained separate corporate identities and that they had been operated as a single entity.

 Fourteen months after the City filed its original complaint, the United States Environmental Protection Agency ("EPA") commenced an administrative enforcement proceeding pursuant to section 3008(h) of the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. § 6928(h), against the two corporate defendants. The EPA proceeding was initiated in large part on the basis of scientific data developed during an investigation conducted by the City's Department of Environmental Protection ("DEP") which the City made available to the EPA. Administrative proceeding was commenced by EPA's issuance of an "Initial Administrative Order" requiring defendants to undertake a remedial action at the facility. Negotiations then began on the terms of an Administrative Order on Consent ("consent order").

 After an extended period of negotiation, Diane Levy executed a consent order with the EPA, pursuant to section 3008(h) of RCRA, which directs defendant Chemical Waste to undertake a number of actions under the direction of the EPA to investigate, monitor and take corrective measures to contain and remove the hazardous substances released at the facility.

 CERCLA Statutory Scheme

 Congress enacted CERCLA in 1980 to provide a comprehensive response to the release of hazardous substances *fn3" into the environment. The act provides two mechanisms, one public and one private, which together provide for cleanup, compensation, and liability where there is a threat from hazardous substances. The statute distinguishes between two types of responses: remedial actions (generally long-term or permanent containment or disposal programs, 42 U.S.C. § 9601(24)) and removal efforts (typically short-term cleanup arrangements, 42 U.S.C. § 9601(23)).

 Congress pursued two purposes in enacting this legislation: first, to give the federal government the tools necessary to respond promptly and effectively to releases of hazardous substances and, second, to ensure that those responsible for the release of toxic substances into the environment are liable for the cost of cleaning them up. See generally Pennsylvania v. Union Gas Co., 491 U.S. 1, 105 L. Ed. 2d 1, 109 S. Ct. 2273 (1989).

 Section 107(a) of CERCLA authorizes federal, state, or local governments or private parties to sue for the recovery of the costs of response actions taken by them from the persons responsible for the release or threatened release of hazardous substances. 42 U.S.C. § 9607(a); see also State of New York v. Shore Realty Corp., 759 F.2d 1032, 1041-1042 (2d Cir. 1985). The federal and state governments can recover remedial and removal costs from responsible parties if such efforts are "not inconsistent with the National Contingency Plan ("NCP")." 42 U.S.C. § 9607(a)(4)(A). Any other person who is acting consistent with the NCP may recover any necessary response costs from responsible parties. 42 U.S.C. § 9607(a)(4)(B), Shore Realty, 759 F.2d at 1041-1042. A responsible party is also liable for "damages for injury to, destruction of, or loss of natural resources," and "the cost of any health assessment or health effects study. . . ." 42 U.S.C. § 9607(a)(4)(C) & (D). In addition to providing for recovery of response costs already incurred, CERCLA provides for declaratory relief imposing liability for future response costs where some response costs have already been incurred by the party seeking such declaratory relief.

 Section 107(a) of CERCLA establishes four classes of responsible persons liable for the costs of responding to releases of hazardous substances form a facility. See 42 U.S.C. § 9607(a), B.F. Goodrich Company v. Murtha, 958 F.2d 1192, 1198 (2d Cir. 1992). "These include past and present owners or operators of facilities, transporters of hazardous substances, and those . . . who generate or arrange for the treatment or disposal of hazardous substances." Id.; Shore Realty, 759 F.2d at 1044.

 CERCLA imposes strict liability on responsible persons, that is, liability without regard for fault. See Murtha, 958 F.2d at 1198; Shore Realty, 759 F.2d at 1042. Where, as here, the environmental harm is indivisible, CERCLA liability is joint and several. See Murtha, 958 F.2d at 1198.

 CERCLA provides for three defenses to liability under 42 U.S.C. § 9607(a). Section 107(a) states that response cost liability is "subject only to the defenses set forth in subsection (b) of this section." Subsection 107(b) provides that there shall be no liability under subsection 107(a) where the release is due to an act of God, an act of war, or the act or omission of a wholly unrelated third party. 42 U.S.C. § 9607(b). To be entitled to one of these defenses, a person otherwise liable under section 107(a), must "establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by" one or more of such acts or omissions listed above.


 The following facts are undisputed except as otherwise noted. Chemical Waste and Chemical Solvents shared common offices at the facility, had the same officers and employees, and in virtually all other respects functioned as a single entity from 1963 to 1983. Morris Levy, deceased, and defendant LaBarbera founded Chemical Waste and Chemical Solvents in 1963. For two decades, defendants Levy and LaBarbera were the sole corporate officers of these companies and were each fifty percent shareholders in Chemical Waste and Chemical Solvents. Levy was the president of Chemical Waste and treasurer of Chemical Solvents; LaBarbera was the president of Chemical Solvents and treasurer of Chemical Waste. During the relevant period, Levy and LaBarbera supervised and directed all day-to-day operations of the facility jointly, including the treatment, storage, and disposal of hazardous wastes at the facility.

 The facility is located in a mixed commercial and residential community in Astoria and occupies one-quarter acre of land two blocks south of Bowery Bay. The facility consists of a main warehouse and office building, an equipment storage building, one small masonry building for hazardous waste storage, and a solvent distillation area at its southwest corner (the "still area"). The rest of the facility is an open yard used for hazardous waste staging, loading and unloading, and storage.

 The facility also contained a subsurface drainage system during the period 1963 through 1983, which ran under the west side of the facility. The drainage system was comprised of a 4" cast iron pipe and two " separator sumps" -- small 3' X 3' dirt-bottom pits -- and was fed by a series of drains located inside and outside the still area. Liquids in the drainage system flowed north from the still area through the 4" pipe, through the two separator sumps, and discharged to a city sewer located beneath 19th Avenue.

 Chemical Waste and Chemical Solvents engaged in two types of operations at the facility during the period 1963 through 1983. One operation involved the storage and repackaging of drummed hazardous wastes. These wastes were transported to the facility by Chemical Waste in its trucks and were then repackaged and resold, if possible, or transported off-facility for disposal (the "repackaging operation"). The other operation was the distillation of waste solvents (the "distillation operation"). Waste solvents were transported to the facility from various customers and then distilled. The distilled solvents were then either returned to the customer for a fee or resold to others.

 The City alleges that defendants disposed of hazardous wastes generated from the repackaging and distillation operations into the drainage system at the facility during the relevant period. It is undisputed that the repackaging operations at the facility were conducted in the following manner. Chemical Waste sent its trucks to Pick up waste solvents from small volume hazardous waste generators, such as laboratories, schools, hospitals, and small businesses. These wastes were transported to the facility in packed "open head" 55-gallon drums -- 55-gallon drums packed with smaller jugs with one- to five-gallon capacity. The jugs in any particular drum generally came from a variety of sources and contained a variety of hazardous substances. *fn4" At the facility, an employee unloaded the 55-gallon drums using a forklift and temporarily placed them on the west side of the facility storage yard. Then an employee unpacked the drums and placed the jugs on a bench for inspection by Levy. Levy determined the contents of the jugs by smelling them or by using litmus paper. Certain jugs Levy segregated as suitable for repackaging and reshipping; the remainder of the jugs he designated as "pourable." Levy directed that these "pourables" be dumped directly into the separator sumps which comprised a part of the facility drainage system. Every working day for at least five years during the period 1963 to 1983, Levy personally instructed employees at the facility to dispose of approximately twenty of these one- to five-gallon jugs of hazardous waste into the separator sumps.

 The defendants also used the three stills at the facility to distill waste solvents. Defendant LaBarbera would contact customers who generated waste solvents. He then either sent Chemical Waste's trucks to pick up the waste solvents or arranged to have the customer deliver the solvents to the facility. Typically, the waste solvents were contained in 55-gallon drums. Unlike the drums used in the repackaging operation, the drums used for the distillation were "closed head" drums. The solvents distilled at the facility included those described in footnote 2 above.

 After each distillation run, the still operators cleaned the still chamber to remove the still bottoms remaining in the distillation chamber. The still bottoms consisted of solvents, oil, paint, debris and other substances that had been mixed with the waste solvents before distillation. Still bottoms generated from the distillation of solvents are listed hazardous wastes under 40 C.F.R. § 261.31. Relying on the deposition of Thomas Ingram, an employee of Chemical Waste and Chemical Solvents since 1976, the City contends that under LaBarbera's personal supervision the still operators cleaned the distillation chambers by connecting one end of a hose to a valve at the bottom of the still chamber and hooking the other end to a fitting on a drain feeding the facility drainage system. Amato Aff. Ex. I at 41-45. According to Ingram's deposition, the still operator then opened the valve and allowed the still bottoms to run directly from the still chamber into the drainage system. Id. Ingram stated that the still bottoms generated from the distillation of waste solvents were disposed of at the facility in this manner each day. Id.

 Defendant LaBarbera denies that he ever Supervised the improper disposal of still bottoms at the facility. He also denies that he was ever involved directly or indirectly in the release of any hazardous substances. He contends that, if hazardous substances were released at the facility, the release occurred after he ended his association with Chemical Waste and Chemical Solvents in December 1983, when he sold his interest in the companies to Levy.

 The waste solvents and still bottoms disposed of at the facility were released into the environment in two ways. First, waste solvents and still bottoms were permitted to collect in the separator sumps. Some of these wastes leached through the dirt floors and the concrete walls to the separators into the surrounding soils and groundwater. Second, the waste materials that did not leach out of the separator sumps were discharged from the facility by filling the sumps ...

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