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Travelers Indemenity Co. v. Northrop Grumman Corp.

United States District Court, S.D. New York

March 6, 2014

TRAVELERS INDEMNITY CO., et al., Plaintiffs,
v.
NORTHROP GRUMMAN CORP., et al., Defendants, and CENTURY INDEMNITY CO., eventual successor in interest to INSURANCE CO. OF NORTH AMERICA, Nominal Defendant

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For Travelers Indemnity Company of Connecticut, formerly known as Travelers Indemnity Company of Rhode Island, Plaintiff: Andrew Stuart Amer, Lynn Katherine Neuner, Mary Beth Forshaw, LEAD ATTORNEYS, Bryce Allan Pashler, Ian Ronald Dattner, Rae Caroline Adams, Simpson Thacher & Bartlett LLP (NY), New York, NY; Meghan E. Cannella, Rita Kathleen Maxwell, Simpson Thacher & Bartlett LLP, New York, NY.

For Northrop Grumman Corporation, Northrop Grumman Systems Corporation, Defendants: Edward H. Rippey, Shelli Li Calland, PRO HAC VICE, Covington & Burling, Washington, DC; Eric Christian Bosset, Georgia Kazakis, Joshua David Asher, Jamar Kentrell Walker, Kevin Robert Glandon, Laura Elizabeth Mellis, Thomas Leon Cubbage, III, PRO HAC VICE, Covington & Burling LLP, Washington, DC; James A. Goold, Richard Laird Hart, PRO HAC VICE, Timothy Dezso Greszler, Covington & Burling, L.L.P. (DC), Washington, DC; William F. Greaney, PRO HAC VICE, Covington and Burling LLP, Washington, DC.

For Century Indemnity Company, eventual successor in interest to Insurance Company of North America, Nominal Defendant: Seth Goodman Park, LEAD ATTORNEY, Melvin R. Shuster, PRO HAC VICE, Siegal & Park, Mt. Laurel, NJ; Brian C. Vance, PRO HAC VICE, Havertown, PA; David Chaffin, White and Williams LLP, Boston, MA; Guy A. Cellucci, PRO HAC VICE, White and Williams LLP, Philadelphia, PA; Lynn Katherine Neuner, Mary Beth Forshaw, Simpson Thacher & Bartlett LLP (NY), New York, NY; Robert F. Walsh, Shane R. Heskin, White and Williams LLP(Philadelphia), Philadelphia, PA.

For United States Of America, Interested Party: Farzin Franklin Amanat, LEAD ATTORNEY, Us Attorney Edny, Brooklyn, NY.

For Northrop Grumman Corporation, Cross Claimant: Georgia Kazakis, Jamar Kentrell Walker, Joshua David Asher, Kevin Robert Glandon, Thomas Leon Cubbage, III, PRO HAC VICE, Covington & Burling LLP, Washington, DC; Shelli Li Calland, PRO HAC VICE, Covington & Burling, Washington, DC; William F. Greaney, PRO HAC VICE, Covington and Burling LLP, Washington, DC.

For Northrop Grumman Systems Corporation, Cross Claimant: Eric Christian Bosset, Georgia Kazakis, Jamar Kentrell Walker, Joshua David Asher, Kevin Robert Glandon, PRO HAC VICE, Covington & Burling LLP, Washington, DC; Shelli Li Calland, PRO HAC VICE, Covington & Burling, Washington, DC; William F. Greaney, PRO HAC VICE, Covington and Burling LLP, Washington, DC.

For Century Indemnity Company, eventual successor in interest to Insurance Company of North America, Cross Defendant: Seth Goodman Park, LEAD ATTORNEY, Melvin R. Shuster, Siegal & Park, Mt. Laurel, NJ; Brian C. Vance, PRO HAC VICE, Havertown, PA; Lynn Katherine Neuner, Mary Beth Forshaw, Simpson Thacher & Bartlett LLP (NY), New York, NY.

For Northrop Grumman Corporation, Counter Claimant: Georgia Kazakis, Jamar Kentrell Walker, Joshua David Asher, Kevin Robert Glandon, Thomas Leon Cubbage, III, PRO HAC VICE, Covington & Burling LLP, Washington, DC; Shelli Li Calland, PRO HAC VICE, Covington & Burling, Washington, DC; William F. Greaney, PRO HAC VICE, Covington and Burling LLP, Washington, DC.

For Northrop Grumman Systems Corporation, Counter Claimant: Eric Christian Bosset, Georgia Kazakis, Joshua David Asher, Jamar Kentrell Walker, Kevin Robert Glandon, PRO HAC VICE, Covington & Burling LLP, Washington, DC; Shelli Li Calland, PRO HAC VICE, Covington & Burling, Washington, DC; William F. Greaney, PRO HAC VICE, Covington and Burling LLP, Washington, DC.

For Travelers Indemnity Company of Connecticut, Counter Defendant: Andrew Stuart Amer, Lynn Katherine Neuner, Mary Beth Forshaw, LEAD ATTORNEYS, Bryce Allan Pashler, Simpson Thacher & Bartlett LLP (NY), New York, NY; Rita Kathleen Maxwell, Simpson Thacher & Bartlett LLP, New York, NY.

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CORRECTED OPINION & ORDER

KATHERINE B. FORREST, United States District Judge.

This environmental insurance coverage action was commenced in April 2012 by Travelers Indemnity Co. and various affiliated companies (together, " Travelers" ) against Northrop Grumman Corp. and Northrop Grumman Systems Corp. (together, " Northrop" or, during discussions of historical points, " Grumman" ), and Century Indemnity Co. (" Century" ), eventual successor in interest to Insurance Company of North America (" INA" ), as nominal defendant. Together, Travelers and Century issued insurance policies to Northrop spanning a period from 1950 to 1985.

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Pending before the Court are various motions for summary judgment by Travelers and Century. This Opinion relates to Travelers' motion for summary judgment with respect to an area that it refers to as the Bethpage Facility (" BF" ) (ECF No. 358). The Court deals with the other motions in separate Opinions.

In this motion, Travelers argues that the statutory pollution exclusions effective for its policies issued between 1972 and January 1, 1983, along with pollution exclusions included in policies it issued between 1983 and 1985, are applicable to precisely the type of coverage claims that Northrop asserts with respect to the Bethpage Facility.

In addition, Travelers argues that summary judgment is separately warranted based on both late notice and violation of the so-called " voluntary payments" provisions in each of the policies at issue.

For the reasons set forth below, Travelers' motion as to the Bethpage Facility is GRANTED.

I. FACTS[1]

The area known here as the Bethpage Facility encompasses a 600-acre parcel of land on which Grumman commenced manufacturing operations in the 1930s. (Northrop Grumman's Response to Travelers' " Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 in Supp. of Travelers' Mot. for Summ. J. Regarding Bethpage Facility" (" NGC 56.1" ) ¶ 4.) For purposes of this motion, it does not include the 18-acre parcel that Grumman donated to the Town of Oyster Bay in 1962. The Bethpage Naval Weapons Industrial Reserve Plant (" NWIRP" ) was located on the grounds of the Bethpage Facility but operated by Grumman.

Grumman manufactured and tested airplanes, weapons and satellites at the Bethpage Facility. In connection with its operations, it used and stored contaminants such as trichloroethylene (" TCE" ), a liquid used as a degreaser for metal parts. (Id. ¶ 5.) TCE is " toxic by inhalation, by prolonged or repeated contact with the skin or mucous membrane, or when taken by mouth." (Calland Decl. Ex. 39, at Feenstra 005746; see also Calland Decl. Ex. 60, at Feenstra 005828.)

There is a large plume of groundwater contamination below the Bethpage Facility, and now extending beyond its boundaries. (NGC 56.1 ¶ 2.) More than 2000 acres on Long Island are now impacted. (Id.) This lawsuit concerns whether insurance policies issued by Travelers and Century (or Century's predecessor, INA), cover liabilities that Northrop has and may have relating to clean-up and remediation.

Grumman's use and storage of volatile organic compounds (" VOCs" ), including TCE, at the Bethpage Facility, occurred particularly at plants #1, #2, #3, #5, and #12. (Id. ¶ ¶ 5, 8, 214, 215.) Grumman concedes that it began using TCE at the BF in the 1940s. (Id. ¶ 9.)[2] Grumman used TCE primarily as a cleaning solvent for metal parts. (Id. ¶ 10.) In particular, plants #1, #2, and #3 each contained

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vapor degreasers that used TCE. (Id. ¶ 12.)

At least eight TCE degreasers operated in plant #2 from the 1960s through the mid-1990s. (Id.) At least six TCE degreasers operated at plant #3 at various times spanning the 1960s through the 1980s. (Id.) Plant #5 had at least one TCE degreaser between the 1960s and had two in the 1970s. (Id. ¶ 14.) In addition, plant #2 also used degreasers outfitted with spray wands that used TCE. (Id. ¶ 13.) Spray wands were used to degrease large parts, such as wings of planes. (Id.) To perform his task with a spray wand, a Grumman operator would stand on a platform along the side of the degreaser. (Id.)

Grumman's operations included painting airplanes. It had paint shops on the grounds of the Bethpage Facility for this purpose. (Id. ¶ 15.) TCE was used to clean the paint guns used in the paint booths. (Id.) To do this, the paint gun would be aimed at the paint curtain and discharged. (Id.) A " waterfall" in a paint shop was intended to keep sprayed paint from escaping. (Id. ¶ 16.) Water circulated through a closed system and cascaded down the sides of the paint shop to catch paint overspray; water also circulated through troughs on the floor of the paint shop and then back through the waterfalls. (Id. ¶ 17; see also Calland Decl. Ex. 3, at 146:04-21.) The paint shop consisted of one room and three waterfalls. (NGC 56.1 ¶ 17.) Grumman's practice was to clean each spray booth re-circulating tank weekly; the water residue would be pumped to the tank truck and taken to Grumman's on-site waste treatment plant. (Calland Decl. Ex. 42, at Feenstra 000101; Calland Decl. Ex. 48, at Feenstra 000113.) Sludges collected in the bottom of the tank were pumped into big vats. (NGC 56.1 ¶ 18.)

Sludges from both the paint booths and the paint shop were treated in plant #2; " remaining sludge" was cleaned from the floor of the paint booths using rags. (Id. ¶ 18.) Smaller parts were also cleaned at plant #2 using rags and TCE. (Id. ¶ 20.)

John Cofman, a Northrop Grumman employee, testified that plant #2 had a system to distill TCE, which was dirty with oil because it had been used in degreasers and for cleaning, so that the company could reuse the TCE. (Calland Decl. Ex. 4, at 372:20-373:08.) According to a schematic, Grumman used concrete foundations for TCE storage tanks. (Calland Decl. Ex. 63.)

On September 8, 1948, Fred J. Biele of Grumman received a letter " recommend[ing] that tests be made of [sludge] to determine whether same is in fact insoluble in water such as rain water and therefore will not pollute the ground water of the Island." (Calland Decl. Ex. 43, at Dewling 000946.) On November 5, 1949, Biele sent a letter to Stanley T. Barker of NYSDOH notifying him that Grumman was " having tests made to determine the chromium strength of the discolored paint liquor," and that samples had been taken for analysis. (Calland Decl. Ex. 48, at Feenstra 000113.) On November 21, 1949, Grumman received a permit to discharge sewage or wastes into New York state waters " in a manner which will not contaminate any ground or surface water supplies or injure fish life." (Calland Decl. Ex. 49, at Feenstra 000116.)

Grumman dug " recharge basins" directly into the ground throughout the Bethpage Facility, which it used at least in part to dispose of wastewaters. (NGC 56.1 ¶ 21.) The discharge basins were designed to allow the wastewater to infiltrate back into the ground and return it to groundwater. (Id. ¶ 22.) There were at least a dozen recharge basins across the Bethpage Facility at various points in its operational history. (Id. ¶ 23.)

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The volume of discharge water was significant. For instance, during the period before 1974, there were five million gallons of wastewater per week coming out of plant #3. (Id. ¶ 25.)

When the discharge basins became clogged and water could no longer percolate into the ground, Grumman would use bulldozers to scrape the basins. (Id. ¶ 28.) The scrapings obtained from these discharge basins were then used to fill in other low-lying areas on the premises of the Bethpage Facility. (Id. ¶ 29.)

Until 1949, Grumman also used wastewaters containing chromium, a contaminant, generated through manufacturing operations at the Bethpage Facility, in recharge basins. (Id. ¶ ¶ 30, 198-200.) In December 1947, the New York State Department of Health (" NYSDOH" ) contacted Grumman regarding a detection of chromium in the local municipal water supply well. (Id. ¶ 31.) In its letter, the NYSDOH stated that it required Grumman to take action to prevent chromium wastes from being discharged into the waters of the State without proper treatment for the removal of chromium. (Id.) Three off-site wells were subsequently and permanently closed--one at which the chromium had been detected and two others. (Id. ¶ 32.)

In 1949, Grumman built an Industrial Wastewater Treatment Facility (" IWTF" ) or Industrial Wastewater Treatment Plant (" IWTP" ) at plant #2 to remove chromic acid wastes from industrial wastewater. (Id. ¶ 33.) The IWTF did not treat wastewater for TCE contamination. (Id. ¶ 34.) Before 1981, water treated at the IWTF to remove chromium was directed to plant #2 recharge basins. (Id. ¶ 35.)

One byproduct of the water treatment at the IWTF was sludge containing hexavalent chromium, which was further treated to become trivalent chromium; the sludge containing the trivalent chromium was then pumped into covered holding tanks outside of the IWTF. (Id. ¶ ¶ 36, 37.) This sludge was then further transported to areas within the 18-acre parcel that was transferred to the Town of Oyster Bay in 1962 and that became the Bethpage Community Park. (Id. ¶ 38.)

Grumman contends that state and county regulators were aware of and had approved its sludge drying process and the location of its sludge disposal areas. (Id.) Grumman also contends that regulators considered the sludge non-toxic. (Id. ¶ 39.)

Starting in 1970, Grumman used a 4,000-gallon aboveground tank at plant #2 to store TCE. (Id. ¶ 43.) At some point, Grumman discovered that the tank was leaking and replaced the tank. (Id. ¶ ¶ 44, 48.) Grumman does not know the number of years that TCE had been leaking before it was discovered, but Grumman knew that it had unexplained " loss" of TCE for an estimated two or three years prior to discovery of the leak. (Id. ¶ ¶ 44-46.) Grumman replaced that leaking tank after it had already discharged " a lot" of TCE. (Id. ¶ 48.) A former Grumman employee testified that when the tank was removed, the tank was " rotted out on the bottom." (Travelers' Reply to Grumman's Response to Travelers' Rule 56.1 Statement (" Travelers' Reply 56.1" ) ¶ 3; Cannella Decl. Ex. 77, at 62:25-63:2.)[3]

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Grumman sprayed waste oil on dirt roads within the Bethpage Facility in order to control dust. (NGC 56.1 ¶ 49.) The Town of Oyster Bay also sprayed oil for dust control purposes during the same period. (Id.) " There could have been any number of contaminants in" the waste oil. (Id. ¶ 50 (emphasis removed).)

Starting in the early 1950s and continuing to 1982, Grumman maintained a drum marshaling area east of plant #3. (Id. ¶ 51.) Various solvents, including cyanide wastes and cadmium, were in these drums. (Id. ¶ 52.) The ground under the drums was cinder-covered. (Id.) Grumman kept the drums on the site until they could be treated or disposed of, including off-site. (Id.) By 1981, Grumman had added a " bermed concrete pad" and stored " drums on skids." (Id. ¶ 53.)

Grumman also stored halogenated and non-halogenated waste solvents on a 100-foot-by-100-foot storage area from the early 1950s through 1969. (Id. ¶ 60.)[4]

Three autoclaves for heating and hardening parts were installed before the mid-1960s; at least one was installed as early as 1955. (Id. ¶ 61.) Two of the three autoclaves used Therminol as a heat transfer fluid; 97-98% of Therminol consisted of PCBs. (Id. ¶ 62; Amended Statement of Undisputed Material Facts Pursuant to Local Rule 56.1 (" Travelers 56.1" ) ¶ 62.)[5] PCB-containing fluid was released into the storm water system via floor drains in plant #3; the piping in the floor drains led to releases to the storm drains, which led to leaching pools that Grumman had constructed, and which ultimately led to the recharge basins. (NGC 56.1 ¶ 63.)

In 1962, Grumman transferred an 18-acre parcel of land to the Town of Oyster Bay. (Id. ¶ ¶ 64, 65.) After 1962, Grumman therefore no longer owned the 18-acre parcel and performed no operations on the parcel.[6] Grumman then created four new sludge-drying beds at plant #3. (Id.) It dug these new drying beds directly in the ground. (Id. ¶ 65.)

In approximately 1973, Grumman's manager of environmental protection, John Ohlmann, learned of taste and odor problems at a newly-opened well at the Bethpage Facility, and reported these issues to NCDOH. (Id. ¶ 71.) One former Grumman employee testified that after he would drink the water he would burp, and that his burp smelled like TCE. (Travelers 56.1 ¶ 68; NGC 56.1 ¶ 68.) This employee reported his experience to his supervisor in the 1970s. (Id. ¶ 69.)

In 1975, Grumman detected " in their own analysis [of the groundwater on-site] . . . the presence of three hydrocarbons . . . methane, ethylene and either methyle propane or propadiene." (Id. ¶ 72; Cannella Decl. Ex. 43, at NGINS000210674.)

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Samples collected by the Bureau of Water Resources from wells 8 and 14 in August 1975 contained TCE, tetra-chloroethylene, dichlorethylene, and vinyl chloride. (NGC 56.1 ¶ 74.) The NCDOH made a preliminary determination that the " discharge of sanitary and industrial wastes at and in the vicinity of the Grumman Corporation is considered responsible for the degradation in quality of Grumman Corporation wells." (Id. ¶ 77.)

In May 1975, the Bureau of Water Resources for the NCDOH prepared a " Preliminary Report, Groundwater Contamination, Grumman Aerospace Corporation." (Cannella Decl. Ex. 1.) In the " Summary and Conclusions," the report states:

Water quality at the Grumman Aerospace Corporation has continued to decline to the extent that the most serious and severe instance of Magothy aquifer[7] contamination in Nassau County is now evident. . . .
The discharge of sanitary and industrial wastes at and in the vicinity of the Grumman Corporation is considered responsible for the degradation in quality of the Grumman Corporation wells. . . .

(Id. at NCDOH-0011455. A portion of the report labeled " Sources of Contamination" states:

Grumman Aerospace Corporation wells are located within the large, as yet unsewered portion of Sewer District No. 3 in the Town of Oyster Bay. As a result, all industrial and domestic wastes in the vicinity are discharged after treatment on site to surface or subsurface disposal systems which are considered potential sources of pollution to the groundwater.

(Id. at NCDOH-0011463.) In its " Discussion of Results," the report states:

Probable contamination of groundwater by industrial sites is indicated with the detection of the Environmental Protection Agency of organic contaminants in the Hooker Chemical Corporation lagoons and sewer recharge basins of the Grumman Corporation.

(Id. at NCDOH-0011464.) This report was shared with Grumman. (See, e.g., NGC 56.1 ¶ 76.)

Hooker Chemical Corp. was a business unrelated to Grumman and had a facility adjacent to the northwest piece of the Bethpage Facility. In 1975 and 1976, Hooker Chemical Corp. was also considered a source of the groundwater contamination. (Cannella Ex. 1, at NCDOH-0011464; NGC 56.1 ¶ 77.)

A November 5, 1975 " Summary of Groundwater Quality" states that a " most serious instance of Magothy aquifer contamination is now evident at the Grumman Aerospace Corporation." (Calland Decl. Ex. 86, at NGINS000619195.)

In June 1976, a groundwater consulting firm hired by Grumman, Geraghty & Miller, sent Grumman a memorandum that stated that it had " interpreted from the available data the ground-water quality situation at Grumman as resulting from one of two possibilities." (Cannella Decl. Ex. 3, at NGINS001899582.) The first was a " slug" of contamination that had gathered in the shallow aquifer underlying at least part of the Bethpage Facility and that was moving southeast, " following the regional pattern of the ground-water flow." (Id.) The second possibility was " the same as the first" except that the " water has moved vertically downward and affected water quality in portions of the intermediate and deep aquifers on the site." (Id.)

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On August 6, 1976, Michael J. Alarcon of the NCDOH sent Harry F. Smith of EPA a " description of the problem of ground-water contamination at the Grumman Aerospace Corporation, accompanied by a proposal for a water quality study in the Bethpage area of Nassau County" ; that letter was intended " to determine what possible means are available to obtain Federal financing" through the EPA. (Calland Decl. Ex. 92, at NCDOH-0002710.)

On November 30, 1976, the NCDOH issued a written " Synopsis of [the] Well Contamination Problem at Grumman Aerospace Corporation Facilities in Bethpage." (Cannella Decl. Ex. 4.) The paper states that practices at both Hooker Chemical Corporation and Grumman may be contributors to the pollution:

The specific organic chemicals found in Grumman wells have been identified in the recharge basins of the Hooker Chemical Company which is located adjacent and to the east of the Grumman Plant. Some of these chemicals have also been found in the recharge basins on the Grumman property. The present preliminary indication is that the primary source of the chemicals is the Hooker waste discharges with the possible implication of Grumman discharges.

(Id. at NCDOH-0002943.) The paper also stated that sampling results showed TCE at wells no. 1, 5, 8, 14, and in a Grumman basin, and tetra chloroethylene at wells no. 5, 8, 14, and in the basin. (Calland Decl. Ex. 95, at NCDOH-028205.)

On December 13, 1976, Francis V. Padar of the NCDOH presented a comprehensive public statement on the presence of trace organic chemicals in groundwaters, in which he stated that the Hooker Chemical Company was implicated at that time " as the major, if not the total source, of the vinyl chloride and the chloroethylenes." (Calland Decl. Ex. 98, at NCDOH-0002993-NCDOH-0002994.) However, Padar stated that the " Grumman industrial operations . . . use similar chemical compounds which may be contributing to the problem." (Id. at NCDOH-0002994.) That statement also noted that the " general groundwater movement is southerly at a rate of movement in the Bethpage area of one to two feet per day." (Id. at NCDOH-0002996.)

In December 1976, Grumman attended a meeting at which 11 local, state and federal agencies were represented regarding the contamination of the well water. (NGC 56.1 ¶ 82.) NYSDOH was one of the agencies with a representative at the meeting. (Id. ¶ 83.) There were a number of news articles in November and December 1976, which Grumman clipped and maintained in its files, discussing the groundwater contamination issue at Grumman's wells. (Cannella Decl. Ex. 6.)[8]

In 1977, the New York State Department of Environmental Conservation (" NYSDEC" ) requested that Grumman test water on its site; it suggested that Grumman have the samples tested for, inter alia, TCE. (Id. ¶ 87.) Samples reflected a presence of TCE. (Id. ¶ 88.) In one instance, water that had been " recharged" and returned to the ground was

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found to have a higher level of TCE than water pumped from the ground. (Id.) Grumman's study concluded that the instance in which water that had been recharged had a higher level of TCE was derived from " housekeeping practices" and stated that the " [s]olution to the problem of excess concentrations of certain compounds in the recharge water lies in modifying selected housekeeping procedures." (Id. ¶ 90.) The same study distinguished housekeeping practices such as " spills, cleanup of equipment, etc." from Grumman's production operations. (Id.)

On January 5, 1978, Geraghty & Miller provided Grumman with the results of a three-day " intensive monitoring program" it had performed at the Bethpage Facility. (Cannella Decl. Ex. 8, at NGINS000768958.)[9] Among the chemicals for which Geraghty & Miller tested was TCE. TCE and certain other chemicals were found to be present " in greater amounts, for at least one sampling, in recharge water than in" water pumped from the wells. (Id. at NGINS000768972.) In addition, the report stated that:

There was no apparent single source in the plant as all of the outfalls yielded one or more of these constituents in greater-than-pumped quantity . . . . These occasional excess amounts suggest that these compounds are not being contributed through production operations. They are probably derived from housekeeping practices (spills, cleanup of equipment, etc.) or some intermittent activity of an unknown kind.

(Id. at NGINS000768975.) At least one of the wells with elevated levels (well no. 16) was upgradient from Hooker Chemical's plant: the water flow was southeast, but Hooker was to the west of Grumman. (See Cannella Decl. Ex. 3, at NGINS001899582; Scanlon Decl. Ex. 5 (Langseth Decl.) ¶ 4.) Thus, the contamination in that well could not have come from Hooker.

On January 26, 1979, as part of an environmental permitting process, Grumman presented the results of the three-day study to NYSDEC. (Cannella Decl. Ex. 11, at NGINS000619272.) The report " discuss[es] the control technologies by which Grumman proposes to reduce or eliminate contaminants from" certain sources, including TCE. (Id. at NGINS000619272.) Specifically, Grumman set forth various ways to reduce the listed chemicals in its " effluents." (Id. at NGINS000619273.) The report continues, " [a]s discussed in our first report, several sources of potential discharge exist in our plants. . . . The sources we listed previously are: 1. Well water supply; 2. Paint booth wastes (water curtain type); 3. Open plant drains and sinks." (Id.) In terms of paint booth wastes, the report states that

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the water curtains are " a possible source of organic chemical contamination," that Grumman had " performed several analyses of the waste waters" from the curtains, and that in al cases " the treated effluents were within discharge standards." (Calland Decl. Ex. 116, at NGINS000619273.) In terms of open plant drains and sinks, the report states:

As previously mentioned, there are times when trichloroethylene, 1,1,1-trichloroethane and methyl ethyl ketone have been found in the discharge in greater amounts than introduced. The fact that the occurrences have been temporary, rather than continuous, points to a housekeeping problem within our production plants. To correct this problem and prevent future discharges, Grumman has embarked on a comprehensive course of action designed to eliminate spills and dumps throughout the plant facilities and to restrict, through various control measures, the use of chemicals within the plant . . . .

(Cannella Decl. Ex. 11, at NGINS000619275-76.)

The report lists several courses of action, including:

1. Chemical Waste Collection System
Grumman has revised its formal chemical waste collection system throughout the major production plants and laboratories. This revision provides for an easy, more positive method of collection of waste organic materials such as solvents and cleaners. . . . Through company-wide employee training and appropriate management controls, this policy should minimize if not eliminate unauthorized dumping. . . .
2. Control of Access to Chemicals . . .
3. Training of Employees
. . . Grumman's Training Department has developed several training courses . . . . Through the application of these programs, we are confident that housekeeping problems with chemical discharges will be eliminated.

(Id. at NGINS000619276-77.) The report then summarizes, " The additional technologies described above . . . will substantially eliminate the problem of intermittent spills of chemicals within our plants." (Id. at NGINS000619278.)

In 1979, the EPA gave NYSDOH a mandate to assess water supply programs and to assess surface disposal sites, including Grumman's Bethpage Facility. (NGC 56.1 ¶ 95.) The NYSDOH found that Grumman's " ground-water pollution potential" was " slightly higher than average." (Id. ¶ 97.) The NYSDOH then took and tested sludge samples. (Id. ¶ 98.)

In 1979, Grumman agreed to perform a " sludge leachability test" for NYSDEC. (Id. ¶ 100.) By 1980, NYSDEC and NYDOH had reviewed the results of testing. (Id. ΒΆ 94.) The results were sent to the EPA, which deemed the Bethpage Facility a " low priority ...


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