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May 1, 2000


The opinion of the court was delivered by: McAVOY, District Judge.


I. Procedural History

On June 10, 1987, the United States of America and the State of New York (collectively "the government") initiated an action against 83 business entities to recover response costs pursuant to Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") as amended, 42 U.S.C. § 9601, et seq., in connection with the clean-up costs of a hazardous waste site formerly owned by Pollution Abatement Services of Oswego, Inc. ("PAS"). Shortly after commencement of that action, the government entered into a consent decree with 82 of the defendants, recovering approximately $9.1 million of the approximately $12.3 million in response costs incurred through April 1, 1987. The present litigation proceeded against Alcan Aluminum Corporation ("Alcan"), the only non-settling defendant.

In February 1988, Alcan commenced a third-party action against Cornell University ("Cornell"). That action sought a declaration that Cornell was jointly and severally liable for the response costs incurred by the government relative to PAS and an order directing Cornell to contribute its fair share of the costs.

In January of 1991, this Court granted summary judgment in favor of the government, holding Alcan jointly and severally liable for approximately $4 million in response costs at PAS. See United States v. Alcan, 755 F. Supp. 531 (N.D.N.Y. 1991) ("Alcan-PAS"). The Court also granted Alcan's motion against third-party defendant, Cornell, and found that a hearing was necessary to determine Cornell's fair share of response costs. See id.

On November 19 and 20, 1991, the Court held a hearing to determine Cornell's fair share of the response costs incurred by the government at PAS. The Court adopted the six-factor fair share allocation test set forth in United States v. R.W. Meyer, Inc., 932 F.2d 568 (6th Cir. 1991), and found Cornell liable for six percent of the response costs recovered from Alcan and, thus, the Court awarded Alcan $310,540.92.

On appeal, the Second Circuit affirmed the grant of summary judgment with respect to the imposition of liability against Alcan for response costs at PAS and the finding that Alcan was entitled to contribution from Cornell. See United States v. Alcan, 990 F.2d 711 (2d Cir. 1993). However, the Second Circuit reversed the Court's finding that the government was entitled to summary judgment on the issue of damages. See id. In "essentially" adopting the reasoning of the Third Circuit in United States v. Alcan Aluminum Corp., 964 F.2d 252, 267-271 (3d Cir. 1992) ("Alcan-Butler"), the court found that the common law scheme of joint and several liability applies to CERCLA. Under this rubric,

where two or more tortfeasors act independently and cause a distinct or single harm, for which there is a reasonable basis for division according to the contribution of each, then each is liable for damages only for its own portion of harm. In other words, the damages are apportioned. But where each tortfeasor causes a single indivisible harm, then damages are not apportioned and each is liable in damages for the entire harm.

990 F.2d at 722 (citing Restatement (Second) of Torts § 433(A) (1965)). The Second Circuit "candidly admitted" that its holding brought causation into CERCLA, a strict liability statute, through the back door, but limited the "special exception to the usual absence of causation" to situations where a defendant's "pollutants did not contribute more than background contamination and also cannot concentrate." Id. Thus, the court held:

Alcan may escape liability if it either succeeds in proving that its oil emulsion, when mixed with other hazardous wastes, did not contribute to the release and the clean-up costs that followed, or contributed at most to only a divisible portion of harm.

Id. (citing Alcan-Butler, 964 F.2d at 270). The court further instructed that Alcan "may present evidence relevant to establishing divisibility of harm, such as, proof disclosing the relative toxicity, migratory potential, degree of migration, and synergistic capacities of the hazardous substances at the site" to show that the harm at PAS was divisible. Id. (citing Alcan-Butler, 964 F.2d at 270 n. 29, 271; United States v. Monsanto, Co., 858 F.2d 160, 172 n. 26 (4th Cir. 1988), cert. denied, 490 U.S. 1106, 109 S.Ct. 3156, 104 L.Ed.2d 1019 (1989)). Finally, the court held that if Alcan can show divisibility of harm they must also provide a "reasonable basis for apportionment of liability." Id.

At that time, the case United States v. Alcan Aluminum, 91-CV-1132 ("Alcan-Fulton"), involving clean-up costs at a superfund site in Fulton, New York was also pending before the Court. On December 1, 1993, the Court consolidated Alcan-Fulton with the PAS case.

In May of 1996, the government moved for summary judgment against Alcan on two issues: (1) liability in the Alcan-Fulton case and (2) divisibility of harm and apportionment of costs in Alcan-PAS. Alcan opposed this motion, cross-moved for summary judgment on the same issues, and moved to dismiss for lack of subject matter jurisdiction, claiming that CERCLA (1) cannot be applied retroactively and (2) is violative of the Commerce Clause. On October 28, 1996, the Court granted the government's motion for summary judgment with respect to liability at the Alcan-Fulton site*fn1, denied Alcan's motion to dismiss for lack of subject matter jurisdiction, and reserved decision pending rebriefing on the issues of divisibility and apportionment of harm. See United States v. Alcan Aluminum Corp., 1996 WL 637559 (N.D.N.Y. Oct. 28, 1996).

After considering the supplemental briefing submitted by both parties, the Court denied the government's motion for summary judgment; finding that genuine issues of fact existed with respect to the constituents of Alcan's emulsion;*fn2 whether the emulsion contributed to the response costs and clean-up; and whether the metals in Alcan's emulsion could have concentrated and, thus, posed an environmental threat. See United States v. Alcan, 1997 WL 727506, at *4 (N.D.N.Y. Aug. 20, 1997).

On October 29, 1998, Alcan moved to dismiss the Complaint pursuant to FED. R. Civ. P. 12(b)(6), asserting that the retroactive application of CERCLA is unconstitutional in light of the Supreme Court's decision in Eastern Enter. v. Kenneth S. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998). The Court denied this motion in a Memorandum-Decision & Order dated May 11, 1999. See United States v. Alcan Aluminum Corp., 49 F. Supp.2d 96 (1999).

Cornell was released from this case by a stipulation signed September 29, 1999.

The Court held a bench trial in this action during October 4 — 8, 1999 to determine whether Alcan could avoid or limit liability.*fn3 At trial, the government argued that Alcan could not avoid liability because: (1) Alcan could not prove that its emulsion, when mixed with hazardous substances, did not contribute to the release or clean-up costs or contributed to a divisible portion of the harm; (2) Alcan's emulsion contained polychlorinated biphenyls ("PCBs"), Volatile Organic Compounds ("VOCs"), and above background levels of metals, which contributed to the release and clean-up costs; and (3) the metals in Alcan's emulsion were capable of concentrating. Alcan, on the other hand, argued that: (1) its emulsion did not contain PCBs, VOCs, or above background levels of metals; (2) the metals did not concentrate; (3) that the legal standard adopted by this Court is incorrect; and (4) it could establish divisibility of harm by looking at the relative toxicity of hazardous substances at the PAS and Fulton Sites and demonstrating that the emulsion contained only background metals that did not concentrate. Alcan did not address the effect of its emulsion as a whole on the response costs at PAS and Fulton; instead, it focused on the individual constituents of its emulsion.

II. Findings of Fact

A. Alcan's Plant and the Hot Rolling Process

Alcan operates a hot mill, including a hot rolling line which processes aluminum ingots*fn4 into sheets of aluminum. The process uses an oil and water emulsion to lubricate and cool the ingot and the steel rolls used to reduce the ingot's width. The emulsion picks up fragments of the ingots during the rolling process. Although the emulsion is filtered before disposal, the filtration process does not remove all of the metal fragments. As a result, Alcan's emulsion contains aluminum as well as the impurities in the ingot, cadmium, chromium, copper, lead, nickel, and zinc.

Before the ingot is placed on the hot rolling line, it is heated in "pusher furnaces" (also called homogenizing furnaces or soaking pits). In the 1970s, Alcan cleaned the ingot with 1,1,1, Trichloroethane ("TCA") before placing it in these furnaces. After it is heated, the ingot is placed on the hot rolling line where it passes through an edging mill, two rolling mills, and various shears.

The first rolling mill, the 120 inch reversing mill (the "120 inch mill"), reduces the thickness of the ingot by approximately one half inch each time the ingot passes through. Alcan uses a two to three percent oil*fn5 and water emulsion as a lubricant and coolant in this mill (the "120 inch mill emulsion"). After the ends are sheared, the ingot travels to the 100 inch mill (also called the finishing mill or tandem mill) (the "100 inch mill"), which further reduces its thickness. An emulsion composed of about six percent oil in water is used to cool and lubricate the rolls in the 100 inch mill (the "100 inch mill emulsion").

The used emulsion is collected in sumps underneath each of the mills. The scumlike top layer of the emulsion is removed with a skimming system before the bulk of the emulsion is pumped into the system's "dirty compartment" for storage. The emulsion is then sent through a belt type skimmer, and next, to a recirculation system. See Government Ex. 36, at p. 1. Distilled water is added to the emulsion to keep the concentration of oil and water constant. The emulsion is recirculated for up to one year before it is deposited in a waste emulsion collection system in the hot mill area and pumped to a central storage facility for processing and disposal. The sumps underneath the rolling mill are not continuous. There are walls or other barriers separating the 100 inch mill emulsion from the 120 inch mill emulsion. When the emulsions are sent to waste, however, they are combined. See Lagoe Testimony, Tr. at 168. At the time of disposal, the waste emulsion was composed of approximately eighty percent emulsion from the 100 inch mill, ten percent emulsion from the 120 inch mill, and ten percent hydraulic, lubricating, and bearing oils. See id. at 149.

The floor and wall areas underneath the roll table and shear pits are cleaned only once per year; thus, the areas are not subject to a constant flushing of coolant during production. See Government Ex. 24.

Until the mid-1980s, in addition to the hot rolling line, the hot mill area contained a plate mill (also called the flat sheet line and cut-to-length line). The plate mill converted the rolls of aluminum created by the hot mill into flat sheets of aluminum. Alcan used rags soaked with TCA to clean the rollers on this line. See Lagoe Testimony, Tr. at 52.

Other than the discontinuation of use of certain materials like TCA and fluid containing PCBs, there were no major changes on the hot rolling line from 1970 to 1989. In 1978, however, Alcan installed an ultra filtration unit. The ultra filtration unit processes the emulsion so that less material is sent out for disposal and more is recycled in house. See Lagoe Testimony, Tr. at 18. In the ultra filtration process, the emulsion is circulated through a membrane system, yielding two by-products: "the ultra filtration concentrate which is subsequently used as a fuel and a permeate which then flows to an on-site lagoon for further treatment." See Government Ex. 36, at p. 2. Sometime in 1978, the ultra filtration unit was connected to outfall 002, which discharged treated permeate into Lake Ontario. See Lagoe Testimony, Tr. at 187; Government Ex. 3.


From 1970 to 1977, Pollution Abatement Services operated PAS, a high temperature liquid chemical waste incineration facility on fifteen acres in the City of Oswego, New York. Lake Ontario lies almost directly North of PAS and the entire site area slopes toward Lake Ontario. The site lies between two creeks (Wine Creek and No Name Creek), which intersect. The creeks collect surface water and carry it to Lake Ontario. See Appendix 1. A million gallon lagoon was located in the southern portion of the site, at the highest level of elevation. Leakage from the lagoon's North side and overflow flowed North toward Lake Ontario. The middle area of PAS contained thousands of drums of "various chemicals in various conditions." MacDonald Testimony, Tr. at 586. The lower portion of PAS contained a number of storage tanks and an incinerator. The incinerator stopped working at some point during PAS's operation and waste that was meant to be incinerated was combined and stored in on-site lagoons. See MacDonald Testimony, Tr. at 585.

Several liquid waste spills and lagoon overflows occurred while PAS operated the site. The combination of high rain fall and overflowing and leaking lagoons led to three oil spills in 1976. In April, the United States Coast Guard ("USCG") responded to PAS to investigate an oil spill. Commander MacDonald, the investigating officer, found that the site was significantly contaminated. "Some of [the] drums were holding liquids. Some of the drums had completely disintegrated, leaving a jelly type of consistency that was intact. The ground was covered. The ground was — there were pools of contamination on the grounds. There was oil on the grounds. This facility had become a dumping ground." MacDonald Testimony, Tr. at 586; see also Freestone Testimony, Tr. at 659; Yezzi Testimony, Tr. at 673; Government Exs. 86-54, 86-65 to 86-69, 86-84, 86-85. In response to the April 1976 spill, the USCG constructed a secondary lagoon (the "Coast Guard Lagoon") on the Northern portion of the site to contain spilled waste, instituted a recycling system that returned run off to the million gallon lagoon, and employed absorbent beams to collect oil from the surface of the adjacent creeks. See Government Exs. 85, 125.

In June of 1976, a second oil/chemical spill resulted from a combination of heavy rains, surface run-off, leaching from the lagoons, and spillage from the million gallon lagoon. The EPA's testing confirmed a USCG report that the oil/chemical mixture included PCBs. See Government Ex. 85, at p. 2.

In December 1976, a third spill occurred after which the EPA took control of the site and built a tertiary lagoon (the "EPA lagoon") in a further attempt to contain run-off.

The State of New York constructed a drainage ditch to divert uncontaminated surface run-off to Wine Creek. However, the pollutant saturated ground contaminated the ditch and further contaminated Wine Creek.

Reducing the level of the million gallon lagoon was a primary concern, see Government Ex. 015, because its leakage contributed to the hazardous run-off and oily spills. See Yezzi Testimony, Tr. at 672. (The million gallon lagoon overflowed and material continuously leaked through the lagoon's base and walls.); see also Government Ex. 62-004; 62-010; 62-011; 62-013; 62-030. The overflow and leakage from the lagoon flowed down through the barrel storage area prior to reaching the Coast Guard Lagoon. See MacDonald Testimony, Tr. at 610; Yezzi Testimony, Tr. at 688 ("Any material from the lagoon would come down what we, in this case, named the valley of the drums. You have the drums that were leaking and deteriorating and it would commingle with the waste coming down [from the million gallon] lagoon. We tried to put in some drainage ditches around to kind of control the — the spread of contamination [] along the surface of the site. . . .")

Portions of the ground at the site contained so much contamination that "walking on the site was [to some degree like walking] on a wet sponge, a very wet sponge. To the North side of the lagoon wall, the area there was very, very saturated with contaminated materials." Yezzi Testimony, Tr. at 678. Recovery wells dug to collect material flowing through the underground soil filled up rapidly with contaminated liquids. See Yezzi Testimony, Tr. at 690. Once the contaminants commingled, they could not be separated such that you could identify or treat an individual generator's waste. See id. at 691.

PAS abandoned the site in 1977, leaving approximately 12,000 drums of liquid waste and 100,000 gallons of bulk chemical waste on the site. Metals, VOCs, and PCBs were found in the lagoons and in drums removed from the site. Hazardous substances were released from the site into the soils, surface waters, stream sediments, and groundwater at and outside of the site. The results of testing at PAS indicated that contamination was significant and widespread but nonuniform across the site. The soils, surface water, and sediments at PAS were contaminated with VOCs*fn6 and metals*fn7 and the soil was contaminated with PCBs.*fn8 See Government Ex. 73. The recorded values of PCBs and VOCs found in the soil "suggest that contamination was a result of a multitude of separate sources since no clear areal distribution pattern of contamination was discovered." See Government Ex. 73, at p. 4-16; see also Government Exs. 78, 79. The high level of metals found in the soil were generally consistent with both off-site samples and background soil levels for the eastern region of the United States. See, e.g., Government Ex. 72, 78, and 79. Nickel was found in PAS's groundwater at concentrations that exceeded applicable clean-up and background levels. See Stipulated Fact No. 93; Government Ex. 79, at p. 8 (nickel appears to be the only site-related metal in the groundwater); Government Ex. 72, at pp. 58-60 (nickel was noteworthy because of its widespread appearance at high concentrations).

At least some of the 4,607,380 gallons of hazardous*fn9 liquid waste Alcan sent to PAS for treatment and disposal was stored in the million gallon lagoon. Alcan's waste constituted approximately twenty-five percent of the total volume of waste sent to PAS. See Lagoe Testimony, Tr. at 230. Numerous trial witnesses testified that the million gallon lagoon contained three distinct layers of waste: "a 10-14 in. deep 300,000 [gallon] viscous oily layer on top, a 3-5 ft. deep 500,000 [gallon] aqueous layer which contained an intense blood-red colored liquid with a high solids content, a Total Organic Carbon ("TOC") content of approximately 1.5% and high metal ion concentrations*fn10 and a bottom layer of semi-solid sludge." Government Ex. 125. Testing indicated that PCBs contaminated the lagoon's top layer. See Government Ex. 62-025; 62-033; 62-051; 62-052; and 62-136; 84; and 85, at p. 2. Hydrochloride gas, which may facilitate the breakdown of an emulsion, was also disposed of in the lagoon.

After taking control of PAS, the EPA contracted with Sealand Environmental Services to remove oil containing liquids from the million gallon lagoon and a 20,000 gallon pit. Sealand vacuumed off the oily PCB contaminated layer of the million gallon lagoon and sent the waste for incineration. After exploring numerous alternatives, the EPA brought in a Mobile Physical Chemical Treatment unit to treat the aqueous layer of the lagoon. See Government Ex. 62-052 (the only alternative left for treating liquid wastes in an environmentally acceptable manners was to pass the full contents through a column). The carbon filtration unit (the "Blue Magoo") used at PAS is a mobile physical chemical treatment system designed and built by Envirex in combination with the EPA. After conducting a "treatability study," where Envirex determined "what kinds of inoculant [the government] should use to settle out suspended solids and dissolved metals," and a "pilot plan study to determine what [the government's] carbon utilization rate [and loading] should be," the government processed waste water from the containment lagoons at PAS multiple times. See Freestone Testimony, Tr. at 652-53; see also Government Ex. 125. The government also used the Blue Magoo to treat the aqueous layer of the million gallon lagoon, which contained Alcan's emulsion. Id. The liquid was treated with a process "consisting of PH adjustment, flocculation, mixed-media filtration and carbon adsorption," Government Ex. 125, such that organics and suspended solids were removed. The organic materials included in the treated layer included oils. Id. Although the volume of organic materials in the treated layer led to a "very high carbon utilization rate," the treatment cleaned the water substantially. Id. at 656. This treatment was part of a court ordered remedy at PAS.*fn11 See Government Ex. 63.

After the aqueous layer was treated, the sludge-like layer was removed and sent to a landfill site. Approximately fifty compressed gas cylinders were discovered in the lagoon when the sludge was partially removed. See, e.g., Government Ex. 85, at p. 7. Before the cylinders were disposed of, they were examined, cleaned, and when necessary, emptied. Testing of the sludge layer revealed the presence of .50 ppm cadmium; 31.00 ppm chromium; 136.00 ppm lead; and numerous VOCs. See Government Ex. 91, at Table I; Government Ex. 98, at Table 3-3. The clean-up of PAS ...

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