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NEW YORK v. SOLVENT CHEM. CO.

October 8, 1997

THE STATE OF NEW YORK, Plaintiff, -vs- SOLVENT CHEMICAL COMPANY, INC., ICC INDUSTRIES, INC., MADER CAPITAL CORPORATION, 3163 BUFFALO AVENUE CORPORATION, and CORIGAN SANOIAN, Individually and d/b/a/ QUAD TECHNOLOGIES, INC., Defendants. SOLVENT CHEMICAL COMPANY, INC., ICC INDUSTRIES, INC., and MADER CAPITAL CORPORATION, Defendants and Third-Party Plaintiffs, -vs- THE UNITED STATES OF AMERICA, E.I. DUPONT DE NEMOURS AND COMPANY, OCCIDENTAL CHEMICAL CORPORATION, and THE CITY OF NIAGARA FALLS, NEW YORK, FRONTENAC ENVIRONMENTAL SERVICES, INC., LAIDLAW TRANSPORTATION COMPANY, LTD., CONSOLIDATED RAIL CORPORATION, BEMA COMPANY, LTD., EASTMAN KODAK COMPANY, and GENERAL MOTORS CORPORATION, AND RELATED THIRD-PARTY ACTIONS


The opinion of the court was delivered by: CURTIN

 By motions filed on April 25, 1997, and May 13, 1997, the State of New York (the "State") seeks approval of a total of six consent decrees (Items 570 and 580). The order sought would resolve this CERCLA action against certain defendants and third-party defendants. However, even if the decrees are approved, many claims by defendant Solvent Chemical Company, Inc. ("Solvent") against other third-party defendants remain open, as well as Solvent's motion to file a third-party complaint against additional third-party defendants (Item 549) and its motion for attorney's fees from its formal counsel, Damon & Morey.

 BACKGROUND

 I. The Site and the Parties

 The site at issue is located at 3163 Buffalo Avenue in the City of Niagara Falls, New York, (also known as Inactive Hazardous Waste Disposal Site No. 932096), in the heart of the chemical manufacturing section of the city. During World War II, the United States contracted with E.I. duPont de Nemours & Company ("DuPont") to construct a facility to manufacture impregnite. The United States, through the Army Chemical Warfare Service, owned the site from approximately 1941 until 1972. DuPont was at the site until the end of the war. In 1945, the United States moth-balled the plant until 1951.

 During the Korean War, the United States entered into a contract with Hooker Chemical Corporation, now known as Occidental Chemical Corporation ("Occidental"), to continue the manufacturing operations on the site. The site was inactive for several years from 1964 until 1972, when it was transferred to the City of Niagara Falls. The City immediately conveyed substantially all of the property to Solvent, which manufactured chlorobenzene and other chlorinated benzene compounds on the site until 1979. During Solvent's period of operation, certain third-party defendants transported various chemical materials to Solvent.

 In 1973, Solvent was acquired by ICC Industries Inc. ("ICC"). In 1978, Solvent sold the site to Transit Holding Company ("Transit"), a predecessor of Mader Capital Corporation ("Mader"), and Solvent leased the site back and finally ceased operations in 1979. Mader and its predecessors owned the site from 1978 through November 1980, when it was transferred to 3163 Buffalo Avenue Corporation ("3163 Buffalo"), which leased the property to Frontenac Environmental Services, Inc. ("Frontenac"). Frontenac had a corporate relationship with Laidlaw Transportation Company Ltd. ("Laidlaw"). In May 1983, the stock in 3183 Buffalo was sold to Corigan Sanoian, who has owned the site since that time.

 On December 9, 1983, the State brought this action against Solvent, ICC, Mader, 3163 Buffalo, and Corrigan Sanoian, individually and doing business as Quad Technologies, Inc. At that time, Frontenac was still present on the site. In 1986, Solvent joined the United States, DuPont, Occidental, and the City of Niagara Falls as third-party defendants. In 1994, ICC, Solvent, and Mader filed third-party complaints against Frontenac, Laidlaw, Consolidated Rail Corporation, General Motors Corporation ("GMC"), and several others seeking contribution and indemnification.

 On December 1,1995, Solvent filed an amended third-party complaint against AlliedSignal, Inc. ("AlliedSignal") and seventeen other companies which had supplied Solvent with materials (Item 390). Currently pending is Solvent's motion to file a fifth amended third-party complaint naming Olin Corporation ("Olin") and over fifty additional third-party defendants (Item 549).

 In 1989, Solvent, Mader, the United States, DuPont, and Occidental conducted a preliminary environmental investigation of the site. In 1992, these parties submitted a report to the State. Between 1992 and 1995, the New York State Department of Environmental Conservation ("DEC") conducted a remedial investigation/feasibility study ("RI/FS") at the site. These studies confirmed that many of the substances present at the site were "hazardous substances," as defined in section 101(14) of CERCLA, 42 U.S.C. § 9601(14).

 Throughout 1995 and 1996, many of the principal parties met in order to try to work out a settlement. The DEC submitted a supplement to the RI/FS. In February 1996, the court granted a stay of discovery, at the request of Solvent and the State, to permit unimpeded settlement negotiations. Under this stay, third-party defendants were entitled to access to completed discovery, but they could not seek discovery on their own until the end of January 1997, when the stay was lifted. Although the State made some contact with some third-party defendants, the main focus of these negotiations was between the State and Solvent, DuPont, Occidental, Mader, the United States, and the City of Niagara Falls. Even though the State made overtures to the third-party defendants to settle, no earnest effort was made to get them to participate in settlement negotiations.

 During these negotiations, the State offered the principal parties an early opportunity to review the draft RI/FS and allowed these parties to provide technical input into the RI/FS. The State also invited non-party Olin to attend or to submit comments with regard to any possible approaches to remediation. Finally, in the fall of 1996, the negotiations resulted in an understanding covering the broad terms of possible settlements, and the record of decision ("ROD") was issued on December 31, 1996 (Item 619). Although the State, Solvent, and the other settling parties had reached agreement by the end of 1996, the State agreed to delay seeking court approval until March 7, 1997, to give Solvent an opportunity to resolve certain issues with its insurance carrier and to attempt to settle with the third-party defendants. The March date was extended to April 1997, and the State ultimately filed its motions to approve the consent decrees on April, 25, 1997, and May 13, 1997. During this holding period, Solvent was able to agree to a few minor settlements with third-party defendants; however, Solvent was not able to come to terms with the third-party defendants who now object to this court's approval of the proposed consent decrees.

 Robert Hernan, Esq., attorney for the State, estimates the total cost of the remedy, including the cost of the State's investigation, covered by the consent decrees to be $ 8,650,000 (Item 571). This figure, he says, represents ninety-eight percent of the amount needed for clean-up of the site (Item 625, p.7).

 II. The Consent Decrees

 On April 25, 1997, the State lodged five proposed consent decrees with the court. These decrees are between the State and (1) Solvent; (2) ICC; (3) Mader; (4) the United States, DuPont, and Occidental; and (5) Cerro Metal Products Company ("Cerro"), Union Carbide Corporation ("Union Carbide"), Minnesota Mining and Manufacturing Company ("3M"), Ciba-Geigy Corporation ("Ciba"), and Merck & Co., Inc. ("Merck"). On May 13, 1997, the State and the City of Niagara Falls submitted a proposed consent decree which provides that the City use its best efforts to foreclose on the subject site for failure to pay taxes, in return for a release from the State for certain potential liability and full contribution protection (Item 580). Several non-settling parties then submitted objections to the consent decrees.

 Pursuant to the decrees, the settling defendants have agreed to either pay certain amounts for response costs or to undertake remedial actions on the property at and near 3163 Buffalo Avenue. The effect of the decrees will be to reimburse the State for the costs of investigating the site and to provide for complete remediation as set forth in the ROD (Item 619). Assuming that the total past and future costs incurred and to be incurred at the site exceed $ 8 million, the State submits that the value of the settlement represents approximately ninety-eight percent of all past and potential costs.

 The Solvent consent decree sets out a detailed schedule for the design of the remedial plan, with initial work beginning within sixty days of the entry of the proposed decree (Id., PP 9-13). The decree also imposes on Solvent detailed and frequent reporting requirements (Id., PP 14-22). The DEC will review and approve all work plans, and disagreements will be reviewed under an arbitrary and capricious standard. A force majeure provision excuses Solvent from completion of activities during time periods reasonably attributable to an act of God, war, riot, accident, or labor dispute (Id., P 40).

 Solvent will exercise good faith efforts to obtain whatever authorization is necessary to perform its obligations under the decree. Where Solvent is unable to gain such authorization, the State will use its authority to gain access (Id., P 26). Solvent will pay all reasonable oversight costs incurred by the State in the enforcement and monitoring of the remediation activities (Id., P 28). The parties have stipulated to monetary penalties for each day Solvent is late in the completion of remedial work and reports (Id., PP 29-35).

 The decree includes a covenant not to sue subject to reopeners, where the State elects to institute proceedings for additional costs if unknown conditions at the site are uncovered or if the State receives previously unknown information (Id., PP 41-43). Solvent is protected from any claims for contribution by any other parties (Id., P 49). The State has agreed not to pursue any of the non-settling third-party defendants for the portion of past costs not recovered. Consequently, the ...


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