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U.S. v. ALCAN ALUMINUM CORP.
May 1, 2000
UNITED STATES OF AMERICA, AND THE STATE OF NEW YORK, PLAINTIFFS,
ALCAN ALUMINUM CORPORATION, ET AL., DEFENDANTS.
The opinion of the court was delivered by: McAVOY, District Judge.
MEMORANDUM — DECISION & ORDER
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
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.
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
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.
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
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
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.
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.
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
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
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 ...