OmCE OE ENFORCEMENT
COST RECOVERY
   NOTEBOOK
   VOLUME V
             Printed on KacycleH Paper

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                 TABLE   OF   CONTENTS


I.   CASE DEVELOPMENT ANDaREFERRALS         ;
     A    Guidance on Pursuing Cost Recovery Actions Under CERCLA,
          August 26,  1983  (Prlce/OECM; Thomas /OSWER) •>- OSWER '#98-32*. 1
                 -'••.'••    .  • •   '      '    '  ...,'r-V-":  •;     '
     B    Cost Recovery Referrals,. September > 6,; 1983 (Sniff /OEC) ,
          OSWER #9832.0
           .••-••.  ;/r  • ...„ -o""'t. i'-j'.  •         ...  ,._;.   ..   . -,   ...    ,.
     C    Guidance Regarding CERCLA Enforcement-* Against Bankrupt
          Parties, May 24, 1984, (Price/OECM) ,  OSWER # 9832.7
          .-.-. .-..•'.-'.  .  • -   -- -    "    •«.-•.->   .: .     .  '  - -  •
     D    Small Cost  Recovery Referrals, July*  12.-,.  1985,' (Stiehl/OECM,
          Lucero/OWPE)

     E    Revised Hazardous Waste Bankruptcy Guidance, May 23; 1986
          (Mays/OECM) ,  OSWER #9832. 7-la
               £..,:.. I,.'     -.. '   .         '•'•         .                  ' -•
     F    The Superfund Cost Recovery Strategy,  July 29,  1988.-, .. . i;
          ( Porter/ OSWER) ,  OSWER #9832.13
                                -             -    ••--:•-.•.
     G    Model Litigation Report for CERCLA Sections 106 and 107 and
          RCRA. Section 7003-,c June 21, 1989>. .(Reich/OEGM),; .
          OSWER #9835.11-1                             '     .,     ..o

     H    Guidance on Documenting Decisions Not to Take Cost Recovery
          Actions, June 7, 1988 (Cannon/OSWER) , OSWER #9832.11
        _ ...   -..'  - .. .    '•:-,..  .-: .1 /' .'•...'•     •                  '
     I    Introduction to Cost Recovery :r What Do  You Need To Know
          To Prepare  a Cost Recovery Case, March 28,  1990
          (Marchetta/DOJ) . .. , ;-I-.T                   ,,                   £
                               r
     J    Tactics for- Removal- Cost. Recovery Actions,  March 19, 1990
          (Unterberger/OECM,  Diamond/ OWPE)            '  -  ...

     II'-o - COST DOCUMENTATION  :     •>.= ..'         .    :     '. .         '•.
                               •'.,.?•'     ....           •     ^ i     ..•..•
     A    Superfund Time Accounting Procedures,  December 16,  1982
          (Perry/OLC)^  -.- ••-- t-.       .   ;              -  -c  .* ..,-.-•-     %

     B    Evidence Needed to Support CERCLA Cost Recovery Actions ,
       -   April- 8, '1983.- (Bielefeld/OEC)  •      ..-        :   -.v 4  --  ,
                                                                   '
     C    Superfund  Cost Recovery Actions, April 21,  1983 (Sniff /OEC)

     D    Providing  Cost Documentation to Support EPA Hazardous Waste
          Clean-up Cost Recovery Claims, October 19,  1984 (Buente/DOJ)

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VI.  STATE COST DOCUMENTATION

TAB

A    Treatment of State Recoveries from Responsible Parties,
     December 15, 1982 .(Hedeman/OERR)

B    Coordination of EPA and State Actions in Cost Recovery,
     August 29, 1983,  (Price/OCEM), OSWER #9832.2

C    Draft Appendix U-Cost Documentation, October 15, 1985
     (Wine/OSWER)

D    -State Superfund Financial Management and Recordkeeping
     Guidance, November 1987 (FMD)  '           .

E    Interim Final Guidance Package on Funding CERCLA State
     Enforcement Actions at NPL Sites, April 7, "1988
     (Porter/OSWER), OSWER #9831.6        .  :

VII. MISCELLANEOUS DOCUMENTS (alpabetical order)

A    Arbitration Procedures for Small Superfund Cost Recovery
   -  Claims, May 22, 1989, (Linett/OECM), OSWER # 9832.17,
     Federal Register Vol. 54, No. 102, May 30, 1989

B    * Contractor Cost Allocation Methodology, August 21r,  1984  (Van
     Slyke/OECM)         .                 "          •

C    Contracts: Historic Site-Specific Cost Reports for  Superfund
     Contracts Active Prior to October 1, 1985, June 26,  1989
     (Katz/FMD)                        .        -

D    Leaking Underground Storage Tanks (LUST):  Allocation of
     Agency FTEs and PC&B Costs Among the Salaries and Expenses,
     Superfund and LUST Appropriations, November 6, 1987, No.  88-
     01                            '      -i .  - •"

E    LUST Trust Fund Cost Recovery Policy and  Special Conditions,
     October 7, 1988 (Porter/OSWER)', OSWER # 9610.10      ,  . •

F  .  OSC Reporting Requirements under the NCP  — Definition of
     "Resources Committed," June 1, 1989, (Dunmire/Region V)

G    Statute, of Limitations: Cost Recovery Actions, June 12,
     1987,  (Lucero/OWPE), OSWER #9832.3-la  '

H    Superfund Cost Recovery and Debt Collection Alternatives,
     September 3, 1991, (Harper/FMD)

I    Timing of CERCLA Cost Recovery Actions, October 7,  1985
     (Price/OECM) •     '•  •    '  I

                                           .

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VIII.COST RECOVERY DECISIONS WITH ATTACHED MOTIONS AND BRIEFS

TAB                   •                      •           -4

A    United States v. Northeastern Pharmaceutical and Chemical
     Co. Inc.; 579 F.Supp 823 (W.D. Mo. 1984), rev'd in part. 810
     F.2d 726 (8th Cir. 1986)

     United States v. Northeastern Pharmaceutical and Chemical
     Co. Inc.. 810 F.2d 726  (8th Cir. 1986) (reversing district
     court on denial of pre-enactment CERCLA costs and affirming
     the district court's holding that governmental response
     costs are presumed reasonable and recoverable     unless
     defendants prove those costs are inconsistent- with the NCP)

B    United States v. Northernaire Plating Co.. 685 'F. Supp. 1410
     (W.D, Mich. 1988) aff'd sub nom. United States v. Mever. 889
     F.2d 1497 (6th Cir. 1989) (cost documentation need only be
     sufficient to provide accurate accounting of Federal costs
     incurred, including documentation detailing source and.
     computation of each cost item requested)

          1.   United States' Motion for Summary Judgment on
               Costs  (with attached Documentation and
               Declarations)                    .      -

          2.   R.W. Meyer Inc.'s Brief in Opposition to United
               States Motion for Summary Judgment on costs

     United States v. Mever. 889 F.2d 1497  (6th Cir. 1989)  (EPA
     can recover indirect costs because costs represented that
     portion of EPA's overhead expenses that supported the
     government's response action at the Meyer property)

          1.   Brief of Defendant-Appellant,'R.W. Meyer

          2.   Brief of Amici Curiae. Chemical Manufacturers
               Association, et al                   ;

          3.   Brief-for the Plaintiff-Appellee, United States of
               America.

          4.   Reply Brief of Defendant Appellant, R.W. Meyer

C    O'Neil v. Picillo. 682 F.Supp. 706, (D. R.I. 1988)
     (defendants have burden of demonstrating that clean-up,
     because of some variance from the plan, resulted in
     demonstrably excess costs for which they should not be
     responsible)        -        - .      ' •' '   .

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     COST RECOVERY DECISIONS (continued)

TAB

D    United States v. Ottati & Goss. 694 F.Supp. 977  (D.N.'H.
     1988), affd in part. 900 F.2d 429 (1st Cir. 1990)

     United States v. Ottati & Goss. 900 F.2d 429 (1st Cir. 1990)
     (remanded to the district court for further explanation of
     its denial of EPA's indirect costs)

E    United States v. Hardaae.  et al.. 733 F. Supp. 1424  (W.D.
     okla. 1989) (EPA awarded "all" direct and indirect costs and
     prejudgment interest)

          1.   United States' Motion for Partial Summary Judgment
               on Response Cost Issues  (with attached
               declarations)

          2.   United States' Supplemental Report on Revised.
               Prejudgment Interest Calculation on Response Costs

          3.   United states' Second Supplemental Report on
               Revised Prejudgment Interest Calculation on
               Response Costs

F    UnitedStates v. Bell Petroleum Services. Inc.. et al.,
     734 F. Supp. 771 (W.D.Tex. 1990)  (the court held EPA
     response costs were consistent with NCP, including indirect
     costs, and that the Government was entitled to
     prejudgment interest)

G    UnitedStates v. Thomas Solvent Co.. 21 Chem. Waste Lit.
     Rep. 185 (December 1990) (the court held the government does
     not have to prove reasonableness of its response action nor
     does the fact that the selected action was not effective
     imply that its selection was arbitrary and capricious)

          1.   United States' Memorandum in Support of its Motion
               in Limine to Exclude Evidence

          2.   Thomas' Supplemental Brief in Opposition to
               the United States Motion in Limine
                                VI

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706
                 682 FEDERAL SUPPLEMENT
ment is executed by all of the principals or
a  final judgment  is  rendered  as to the
rights of all  parties to this money.
  So  Ordered.
            25.5<5.5)
                                     Company, whose chemicals were found
                                 at hazardous waste site at  which  leakage
                                 had occurred, was liable under Comprehen-
                                 sive Environmental Response, Compensa-
                                 tion, and  Liability Act for response costs,
                                 regardless of its degree of diligence in han-
                                 dling  hazardous  waste.   Comprehensive
                                 Environmental  Response,   Compensation,
                                 and Liability Act of 1980, || 101-405, as
                                 amended, 42 U.S.C.A.  « 9601-9675.
Act of 1980,  §§  101-405, as amended,  42
U.S.C.A.  §§ 9601-9675.
5. Health and Environment *»2
    Strict liability  scheme of Comprehen-
sive Environmental Response, Compensa-
tion, and Liability Act  imposes liability
upon generators, even though  they may
have taken precautions in selecting what
appeared  to  be responsible  transporter.
Comprehensive  Environmental  Response,
Compensation, and  Liability Act of 1980,
|§ 101-405,   as  amended,  42  U.S.C.A.
|| 9601-9675.
6. Health and Environment *»25.5<5.5)
    Generator of hazardous waste was not
liable  for  response  costs;   generator
presented expert testimony that chemicals
found at hazardous waste site did not con-

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                                VJ .>C.IL, T.
                             dt**««*2 F.S«pp.
  stitute hazardous substance.  Comprehen-
  sive Environmental Response. Compensa-
  tion, and Liability Act of 1980, §} 101-405.
  101(14), as amended, 42 U.S.C.A. §§ 9601-
  9675. 9601(14).
  7. Health and Environment «=25.5(5.5)
      Generator of sodium aluminum hydride
  was liable. for .response costs under Com-
  prehensive Environmental Response, Com-
  pensation,  and  Liability Act;  barrels  of
  chemical found at  hazardous  waste site
  posed threatened release of hazardous sub-
  stance they contained. Comprehensive En-
  vironmental Response, Compensation, and
  Liability  Act  of  1980,  §§ 101-105,   as
  amended, 42 U.S.C.A. 55 9601-9675.
  8.  Health and Environment «=>25.5(5.5)
      If injury due to hazardous waste  is
  indivisible, then each defendant is respon-
  sible for entire response costs-under Com-
.  prehensive Environmental Response, Com-
  pensation, and Liability Act;  however,  if
  injury is divisible or there is nonetheless a
  reasonable basis  for division according  to
  contribution of each  generator, then liabflt*
  ty  will be apportioned accordingly.  Com-
  prehensive Environmental Response, Com-
  pensation,  and   Liability  Act  of  1980,
  §§  101-406,  as  amended,   42  U.S.C.A.
  M  9601-9675.
  9. Health and Environment *=»25.5<5^)
      Defendant being held  liable  for  re-
  sponse costs under  Comprehensive  Envi-
  ronmental Response, Compensation, and Li-
  ability Act carries burden of demonstrating
  that injury is divisible or otherwise subject
  to  apportionment  among several genera-
  tors of hazardous waste.  Comprehensive
  Environmental  Response,  Compensation,
  and Liability Art of 1980, }§ 101-405, as
  amended, 42 U.S.C.A. $§.,9601-9675.
  10. Health and  Environment «=»25.5<5.5)
     Injury at hazardous waste site was
  indivisible  and generators  of  hazardous
  waste were jointly and severally liable for
  cleanup  costs,  although  generators con-
  tended that liability  should  have been ap-
  portioned  according to different phases of
 cleanup or on basis of number of drums of
 chemicals  belonging  to  each  generator
  found at site; it was impossible to deter-
 70* (PRJ. !**•)
 mine which  defendant's waste contributed
 in  what specific manner to releases  and
 continuing   threat  of further  releases.
•Comprehensive  Environmental  Response,
 Compensation, and  Liability Act of 1980,
 $§  101-405.   as  amended,  42  U.S.C.A.
 §5  9601-9675.
 11. Equity
     Fact that first stage of cleanup of haz-
 ardous  waste site  may  have been  mis-
 handled by state did not bar state, under
 doctrine of unclean hands, from recovering
 response costs of cleanup from generators
 of hazardous waste found at site.  Compre-
 hensive  Environmental Response, Compen-
 sation, and Liability Act of 1980, f§  101-
 405,  as amended.  42  U.S.C.A.  §§ 9601-
 9675.

 12. Indemnity *=13.2(4)
    Generators of  hazardous waste were
 not entitled to third-party defense in action
 to  recover  response   costs;   generators
 failed to meet initial showing that release
 of hazardous waste was caused solely by a
 party  that did  not .have either 'direct  or
 indirect contractual relationship to genera-
 ton.   Comprehensive  Environmental Re-
 sponse, Compensation, and Liability Act of
 1980,  {} 101-405,  107{b), (bXSXa,  b),  aa
 amended,   42  U.S.CA.   }} 9601-9675,
 9607(b),  (bXSXa, b).
IX Health and Environment «=25.15(5.1)
    When  state  government is pursuing
response costs, burden of proving that haz-
ardous waste cleanup was inconsistent with
National Contingency Plan so as to prevent
recovery by state rests with generator of
hazardous waste.  Comprehensive Environ-
mental  Response, Compensation, and Lia-
bility Art  of  1980.  §§ 101-405,   105(7),
107(a), as amended. 42 U.S.C.A. §§ 9601-
9675, 9605(7),  9607(a).
14. Health and Environment <^25. 15(5.1)
    Generators of hazardous waste failed
to prove that certain response costs  were
inconsistent with  National  Contingency
Plan so as  to bar  state from recovering
those costs;  while generators presented ev-
idence  that use of barrel grapplers or em-
ployment of different compensation scheme

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 i\JO
 for contractor would have prevented some
 of spillage that occurred, they  failed to
 present evidence addressing how much re-
 covery costs incurred by state as a result
 should have been precluded.  Comprehen-
 sive  Environmental Response, Compensa-
 tion, and  Liability Act of 1980, §§ 101-405.
 105(7), 107,  as  amended,  42  U.S.C.A.
 §§ 9601-9675, 9605(7), 9607(a).

 15. Constitutional Law «=278.1
     Liability for response costs for releas-
 es of hazardous waste which occurred prior
 to   Comprehensive   Environmental   Re-
 sponse, Compensation, and  Liability  Act
 does not  offend due process.  Comprehen-
 sive  Environmental Response, Compensa-
 tion, and  Liability Act of 1980, J§ 101-405,
 as amended, 42 U.S.C.A. §§ 9601-9675;
 U.S.C.A.  ConsLAmend. 14.

 16. Health and  Environment «=»25.5<5.5)
     Total liability for past response costs
 had to be reduced by amount state received
 in cash settlement from other generators
 of hazardous waste.  Comprehensive Envi-
 ronmental Response, Compensation, and Li-
 ability Act of 1980. §§ 101-405,  113
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      ;-                          0-NEIL v.
                              OUMttZ F-Supp.
  thirty-seven  dollars   and  thirty   cents
  ($1,613,437.30) it expended in cleaning up a
  hazardous  waste site in Coventry,  Rhode
  Island known as the  Picillo Pig Farm;  it
  also asks  this  Court to declare  that the
  defendants must respond in damages for
  all remedial costs it may incur in the future
  in  the  investigation  and  remediation  of
  damages to the State's natural  resources
  allegedly resulting from the waste disposal
  by  these defendants at said site.
    The action is brought pursuant  to the
  Comprehensive  Environmental  Response
  Compensation and  Liability Act of  1980
  ("CERCLA") as amended by the Superfund
  Amendments and Reauthorization Act  of
  1986  ("SARA")  42 U.S.C.  sections  9601-
  9675.
    The complaint  originally  named  thirty-
  five defendants who were either owner/op-
  erators of  the site, parties  who allegedly
  transported waste there, parties alleged  to
  have arranged for their waste to be trans-
  ported to the site,  and parties alleged  to
  have produced waste deposited at the site.
  However, on the  day designated for trial,
  the State and the United States  Environ-
,  mental Protection Agency ("EPA"), a non-
i  party,  settled with, all the defendants ex-
1  cept  Olin  Corporation ("Olin"), Hydron
  Laboratories, Inc.  ("Hydron"),  American
  Cyanamid  Company ("American Cyanam-
  id"),  Exxon  Research and Engineering
  Company ("Exxon"),  and Rohm  ft  Haas
  Company ("Rohm A  Haas").  The settle-
  ments totaled 5.8  million dollars and includ-
  ed various  agreements to perform specific
  remedial action.  The State has represented
  that H will  receive 25 percent of the settle
  ment  with  the remaining 75 percent  going
  to the federal agency.
    These remaining defendants claim that
  the State has failed to prove that the  mate-
  rials in question were hazardous;  they also
  argue that  joint and several liabCity which
  the State seeks to impose is not appropriate
  in this case, and that they have the right to
  interpose several defenses,  equitable and
  legal,   which  preclude  recovery  against
  them.
    For the reasons which follow,  I find for
  the plaintiff.
PICILLO                           709
70* (DJLL I«M>
  Prolixity is not a commendable hallmark
of a legal opinion;  the extent of the  foot-
notes here indicate this paper deserves just
such an unenviable stamp.  In the margin I
have substantially quoted from prior  opin-
ions rendered in this case;  I do so because
they set forth  the dispositive law of  vital
legal issues and so ! incorporate the same
as part of this ruling.  Colloquy took place
throughout  the trial as though certain of
these issues had  not been  rendered:  none
of it was meaningful enough to cause me
to change my position.

I.  FACTUAL  BACKGROUND
  As  an overall, with greater  specificity
being recited at appropriate points in the
discussion of the legal issues, I repeat  what
I stated in  my Opinion and Order  of No-
vember  20, 1986,  Violet  v. Picillo,  648
F.Supp.  1283 (D.R.I.1986) ruling on Olin's
Motion  for  Summary Judgment:
    This case arises from the chemica] ca-
  tastrophe of  the Picfllo pig farm in Cov-
  entry, Rhode Island. State environmen-
  tal  authorities  discovered  this chemical
  wasteland in  1977 after  combustible
  chemicals caused a dramatic  explosion
  and towering flames to rip through the
  waste disposal site.  After the fire,  state
  investigators discovered large trenches
  and pita filled with free-flowing, multi-
  colored, pungent liquid wastes; they also
  excavated approximately  10,000  barrels
  and containers in varying states of decay
  containing hazardous chemical wastes.
Id.  at  1286.
  In this case,  the  plaintiff claims the fol-
lowing  materials found at the site  were
specifically  traced to the  defendants:  303
five-gallon  cans  and  49  fifty-five  gallon
drums to Rohm & Haas;  21 fifty-five gal-
lon drums to Hydron; 15 fifty-five gallon
drums  to Exxon;  3 fifty-five gallon lab
packs  and  11  fifty-five  gallon drums to
Olin;  and  10  fifty-five  gallon  drums to
American Cyanamid.

II.  JURISDICTION
  In the pre-trial stages of this action, de-
fendants Exxon and Hydron filed motions
for  dismissal  pursuant  to Fed.R.Civ.P.

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 718
682 FEDERAL SUPPLEMENT
   in providing a forum for actions concern*
   ing injury to land within its borders, and
   for actions which seek recovery of public
   monies  expended to  protect such land.
 •613  F.Supp. at  1579 (citations  omitted).
 Enhancing this interest is the fact that we
 are not here dealing with an ordinary prod-
 uct   The  defendants dispatched  volatile
 and inherently dangerous toxic substances.
 "Injuries caused by inherently dangerous
 articles imported through independent dis-
 tributors certainly fail within  that class of
 litigation with which the forum state has a
 deep interest in adjudicating." Poyner v.
 Emu Werke GMBH, 618  F.2d 1186, 1192
 (6th Cir.), cert, denied, 449 U.S. 841, 101
 S.CL 121, 66 LE
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                                     CTNEIL y.  PICILLO
                                    u » *Q FAipp. 706 (DJU. I9M)
                                         719
Note 2—Continued
      (3) any person who by contract, agreement.
    or otherwise arranged for disposal or treat-
    ment, or  arranged  with  a  transporter for
    transport for disposal or treatment, of hazard-
    ous substances owned  or  possessed by such
    person, by any other party or entity, at  any
    facility owned or operated by another party
    or entity and containing such hazardous sub-
    stances ...
      (4) ... 'from which there is a  release, or a
    threatened  release which  causes  the  incur-
    rence of response costs, of a hazardous sub-
    stance, shall be liable for—
      (A) all costs of removal  or  remedial action
    incurred by  the United Stales Government or
    a Slate not inconsistent with the national con-
    tingency plan:
      (B) any  other necessary costs of response
    incurred by  any other person consistent with
    the national contingency plan:  and
      (C) damages for injury to, destruction of, or
    loss resulting from such a release.
  42 U.S.C. section 7607(a)<3)  (1982).
    The ambiguity of this  provision is apparent
  upon close inspection.  As one court  has noted.
  the literal terms of the statute could be, inter-
  preted to impose liability on a wane generator
  who arranges for waste disposal by contract or
  agreement, but who never actually delivers the
  waste to a disposal facility.  See United Stoles v.
  Wade.  577  F-Supp. 1326. 1332 (E-D.Pa.1983).
  CERCLA  is a  hastily-drawn  statute  quickly
  passed through a lame-duck  Congressional ses-
  sion.  Set Developments, Taac Waste Litigation.
  99 Harv.LRcv. 145f 14*5 4  n. 1 (1986); U.S.  v.
  Wee, 577 F.Supp. 1103,1107  (D.NJ.1983):  Unit-
  ed States v.  Manolo, 605 F-Supp, 898. 902 (D.N.
  H.198S) ("CERCLA has  acquired a well-deserved
  notoriety for vaguely-drafted provision* and an
  indefinite, if not contradictory, legislative histo-
  ry.').  Nonetheless. Congress intended broad ju-
  dicial interpretation of CERCLA in order to give
  full effect to two important legislative purposes:
  to give the federal government  the tools  neces-
  sary for •  prompt  and  effective  response  to
  hazardous waste problems and to force those
  responsible  for creating hazardous waste prob-
  lems to bear  the cost of their actions.  See
  S.Rep. No. 848. 96th Cong.. 2d Sess.  13 (1980).
  reprinted in 1 A Legislative History of the Com-
  prehensive Environmental Response. Compen-
  sation, and Liability Act of 1980 (Superfund),  at
  320 (1983):  H.R.Rep. No. 1016. 96th Cong.. 2d
  Sess. pt. 1, 25 (1980), reprinted in 2 A Legislative
  History of  the Comprehensive  Environmental
  Response.  Compensation and  Liability  An  of
  19SO (Superfund). at 56 (1983):  United'States  v.
  ReiJlv Tar & Chemical  Corp.. 546 F.Supp. 1100.
  1122 (D.Minn.1982).

    After stripping section  107(a)(3)  of its excess
  verbiage. Courts have generally held that liabili-
  ty under section l07(aX3) requires proof of four
  basic elements:  1) that the generator disposed
  of hazardous substances;  2)  at a facility which
  contains at the  time   of discovery .hazardous
 substances of the kind the generator disposed:
 3) (here is a release or a threatened release of
 that or any hazardous substance:  4) which trig-
 gers the incurrence of response costs.  See Unit-
 ed Statei Y.  Wade, 577 FSupp. 1326. 1333 (E.D.
 Pa. 1983):  United States v. Conservation Chemi-
 cal Co.. 619 FSupp.  162.  190 '(W-D.Mo.1985);
 United Slates v. South Carolina Recycling and
 Disposal, Inc.. CSCRDl")  14 Envtl.L-Rep. (Envtl.
 Llnst.) 20272, 20274  1980 (Superfund).  at  341  (1983)
 (S.I480—the CERCLA bill in the Senate—repre-
 sents an attempt to fill gaps left by other federal
 strict liability statutes—including section 311 of
 CWA—which respond  to  and compensate vic-
 tims of hazardous substance release);  126 Cong.
 Rec. SI4964 (daily ed. Nov. 24, 1980) (remarks
 of Sen. Randolph) <"(W]e have kept stria liabili-
 ty in the compromise, specifying the standard of
 liability under section 311  of the (CWA); that is.
 stria liability.*). Thus, if the plaintiff is able to
 prove at trial the statutory elements of section
 107(aX3), Olin may be held liable without proof
of knowledge or intent;  CERCLA section 107 is
a stria liability  scheme.

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720
682 FEDERAL SUPPLEMENT
Rohm  & Haas Company
  [21   It is clear that  this major chemical
company took  every precaution in the dis-
posal of its wastes;  it was separated  into
categories,  packed  into  58  gallon metal,
open-head drums  ("lab packs")1  cushioned
with vermiculite and absorbent  materials,
and disposed of through  a licensed trans-
porter.  During 197&-1977,  the pertinent
period here, it contracted with Jonas Waste
Removal ("Jonas"), to  transport its waste
exclusively  to   licensed  disposal sites in
Pennsylvania  and  New  Jersey  with  di-
rections stating, "[djisposal of these waste
materials  is not to  be in violation of an
ordinance, regulation or law of responsibili-
ty  for  safe delivery and  disposal of the
material after leaving   (the  premises)."
And as the defendant states, it is uncontra-
dicted that  at  no  time was any material
consigned to Rhode Island.  However, dar-
ing  this period approximately 4,800 fifty-
five gallon  lab packs  were consigned to
Jonas and the  state  claims 303 five-gallon

Note 2— Continued

    C  Defenses  to Liability  under CERCH Sec-
  tion 107
             I,  Statutory Defenses
    CERCLA section 107(b) enumerates the o&ly
  defense* to GEROLA liability provided  within
  the statute itielf. Only three statutory defenses
  are available to a  defendant otherwise  liable
  under CERCLA.  Section I07(b) provides:
    There shall be no liability under sub-tecrioo
    (a)  are
                    very narrow defenses;  they require that the
                    release and damage be caused toUfy by acts of-
                    God, war, or acts of omissions of a third parry.
                    These  affirmative dcfmin essentially serve to
                    shift the burden of the proof of causation to the
                    defendants. This causation scheme encourages
                    defendants to mark and dispose of their hazard-
                    ous wastes with the greatest care; the defenses
                    discourage defendants from carelessly allowing
                    their wastes to run into one large, unidentifiable
                    morass at the waste site, confident in the knowl-
                    edge that  the 'government must identify the
                             d prove causation.  See  uL at 1544.
 ".*
.•<«
 >

-1
                  3.  Laboratory packs (lab pack*") are 55 gallon
                    drums packed with smaller containers (e-g.. vi-
                    als, jars) surrounded and cushioned by an ab-
                    sorbent material such as vermiculite or "speedy
                    dry."

-------
                               O*NEIL
 removed."  The defendant did not 'go far
 enough  because Mr.  Leo also  stated, in
 answer to a question as to what was left,
 "[w]hich  left the  contaminated  soil .from
 the broken bottles that had leaked out into
 the pit  from  their lab packs.   That,  of
 course, was  lost in the environment which
 would have added to the contamination in
 the ground water."  He further said that he
 personally saw removed from the  pit  "at
 least four or five drums" containing liquid
 which was spilled because the drum heads
 were crushed  and  had holes  on the side
 caused by the bulldozer.  "They were even-
 tually shown to be  Rohm & Haas material
 ...  [tjhose  drums  were Rohm & Haas
 drums."  One of the drums contained allyl
 alcohol, which is a  flammable,  extremely
 poisonous material;  "[TJhey  [representa-
 tives from Rohm & Haas] were shown the
 barrel that contained nothing but this ally]
 alcohol ... this material is extremely poi-
 sonous ... a class B poison  and by DOT
 regulations as class B poison is  extremely
 dangerous material."
  The material spDled.into the ground was
 removed  as  contaminated  soil.   Mr. Leo
 could not state what quantum of sou* was
 contaminated by this defendant;  though he
 did know  the total amount of soil removed;
 but, "[h]ow much is actually responsible
 from Rohm & Haas or whatever other com-
 panies are involved I can't tell you.  I mean
.we didn't proportion out the  soil'/
 ' I  accept the State's estimate  as  to  the
 quantum  of  material found at  the dump
 and  that it was toxic hazardous waste. Ac-
 cordingly,  this defendant is  liable  to  the
 state as set forth, infra.
 Exxon Research and Engineering Compa-
 ny
  [3]  The State contends  that  15  Exxon
 drums were excavated;  Mr. Leo so testi-
 fied;  however,. he also acknowledged that
 the  number was based  on his recollection
 and  not his records, which identified only
 one  Exxon "lab pack";  this  single drum
 was rusted and dented  without  any evi-
 dence  of  spillage.   When  pressed  for
 records corroborating his testimony of 15
 drums, he stated, "I  cannot point to any
one  record.   It's made  up of  film,  photo-
       is r
 PICILLO                           721
 70* (OJU. IMS)
 graphs, my own visible ...  seeing barrels
 at the site, and everything else.  No record
 was made ... I was asked by the Attorney
 General's office to put together an estima-
 tion  of the  number of  barrels  found.
 That's what ! did, and that was based on
 my  records, the amount of material, my
 own recollection as being there on site for
 the  number of barrels that were there."
 The culmination of his testimony was the
 acknowledgement that there were no cor-
 roborating  records;  the number 15 was
 based on his best recollection.  The defend-
 ant developed, as it states in its Memoran-
 dum  at 32,  that  "[ijndeed.  during his
 [Leo's] deposition in March  1985, Mr. Leo
 himself testified that he saw only one drum
 ... the contents of which were identifiable
 to Exxon."  Another witness,  Alan Brodd,
 testified for the State.  He was the site
 supervisor who  was on the site  on a  daily
 basis during the excavation  in  question.
 He had "overall responsibility for the site
 safety and  the day-to-day  operation  and
 activities at the site."  His duties required
 him to sample,  analyze, and interpret re-
 sults of such samplings and make  judg-
 ments as  to whether or not the materials
 were hazardous.  He testified he saw twen-
 ty or thirty half pint or pint bottles that
 bore  Exxon labels.
  The State's  reply to the foregoing is:
 "Although  Mr.  Brodd saw  only one lab
 pack attributable to Exxon ... Mr. Brodd's
.managerial  position did not  permit him to
 have  the  type  of direct, regular involve-
 ment in the excavation activities over which
 John   Leo  had  primary  responsibility."
 Plaintiffs Reply Memorandum at 18.
  Exxon utilized the services of a trans-
 porter licensed by the State of New Jersey
 and the Federal Government;  in addition,
 Exxon personnel visited the disposal  sites
 of its transporters to be assured of  their
 adequacy.   At  one of the sites  the trans-
 porter insured  that  the wastes  were re-
 moved from their lab packs  and incinerat-
 ed; at this same site, procedures were em-
 ployed to verify receipt of all the waste to
be disposed of and incinerated.  Exxon nev-
er deliberately  sent any of its material to

-------
 722
682 FEDERAL SUPPLEMENT
 the Pirillo site nor did it ever utilize any of
 the transporters  who used the site.
   I find Exxon employed every precaution
 to prevent the illegal and/or improper dis-
 posal of its waste.  Nevertheless,  I must
 also find that twenty or thirty bottles, as
 described supra, were  found at the site.
 However, although there was testimony at
 trial that the Exxon materials were "proba-
 bly flammable," no further proof of toxici-
 ty was offered.  Accordingly, I  find that
 the State has not met its burden of proving
 the material allegedly found by Brodd was
 hazardous within the meaning of CERCLA.
 Judgment must be entered for this defend-
 ant
 American  Cyanamid
  [41  Mr. Leo testified that he believed or
 recalled  that, "there were ten drums from
 American  Cyanamid  based   on  going
 through  the records and  personally being
 there and seeing the drums."  He copied
 the data recorded on the labeb of contain-
 ers found  at  the site and  contacted  Dr.
 Ralph Wainwright, supervisor of waste dis-
 posal at American  Cyanamid, who, using
 the code numbers found on the labels, iden-
 tified the material as coming from their
 Agricultural Division,  whkh "makes  poi-
 sons and pesticides in New Jersey."   Mr.
 Leo then talked to a Dr. Luke of American
 Cyanamid and, based upon that conversa-
 tion  and conversations  with Dr. Wain-
 wright, testified  that, "based on what  I
 had—based on the code numbers that t was
 giving them the  material was poison  TJ",
 again, very toxic  material [such as] experi-
 mental pesticides and  toxins used  in  .'..
 veterinarian supplies for worms and  so
 forth and cows and pigs and that the other
 material  was a catalytic resin."  A partial'
 record was made of the day and date of
 these phone calls as well as of  the code
 numbers. These  records were made avail-
able  to the defendants.
  The plaintiff does not dispute the follow-
ing facts:
  During 1977, Ralph Wainwright was su-
pervisor of industrial hygiene and safety at
 American Cyanamid and  was responsible
 for disposal of wastes generated at its labo-
ratory.  All wastes were  labeled  with code
                names and generic descriptions.   Wastes
                were  sorted into categories at each labo-
                ratory and a form prepared accurately de-
                scribing each waste and the container in
                which it was placed.  Mr. Wainwright re-
                viewed copies of these forms to assure that
                they were completed and the waste proper-
                ly  described.   Once he  was satisfied, the
                materials were  collected and brought  to a
                storage area where they were packed into
                55 gallon  steel drums to form lab packs,
                using  vermicuiite as an absorbent material.
                Each  drum contained  sheets showing  pre-
                cisely  what materials were packed therein.
                Each drum contained compatible materials,
                e.g. flammables, liquids,  solids,  poisons,
                corrosives, etc.  Each drum was labeled on
                the outside with information relating to the
                company and location, a bright symbol and
                writing to indicate the type of hazardous
                material, and the number of the drum. In
                sum,  every effort was  made  to properly
                label  and  identify these drums and their
                contents.  The drums were then manifest-
                ed and picked up by a transporter.
                  During the period 1970-1977, American
                Cyanamid  used  one transporter extensively
                for lab  pack material.  Chemical  Control
                Corporation of Elizabeth, New Jersey, and
                two others on certain occasions (water-reac-
                tive wastes and PCBs were handled special-
                ly).   Pursuant  to  company policy,  Mr.
                Wainwright  visited the Chemical  Control
                facility to make sure that wastes were han-
                dled properly.  He visited the site on three
                occasions  between  1972 and  1977.   Lab
                packs  were to be incinerated. He inspected.
                the incinerator.   He inspected the licenses.
                He was satisfied that the facility was a
                proper one for the disposal of American
                Cyanamid  wastes.
                 (5]  The state does not  take issue with
                American Cyanamid's claimed diligence in
                the selection  of its transporter.  Nor, in
                fact, do I.  Unfortunately for American
                Cyanamid, however, this line of argument
                gets it nowhere. As I ruled in Violet, 648
                F.Supp. at 1290-93, and as I reaffirm in-
               fro, the strict liability scheme of CERCLA
                imposes  liability upon  generators  even
                though they may have taken precautions in
                selecting what appeared to be a responsible

-------
      F                          Q'NEIL *.
                             at*"m«a FSapf-
 transporter.  Moreover, as a purely factual
 matter, it is not at all clear that American
 Cyanamid was as vigilant as it contends.
 American Cyanamid had an exclusive con-
 tract with the Chemical Control  facility to
 handle all of its hazardous waste, including
 its PCB waste.  It continued to utilize the
 services  of  this  organization despite the
 presence of  an excessive number of drums
 on the Chemical Corporation site, which in
 the words of Ralph Wainwright who, as an
 American Cyanamid Company's  supervisor
 of Industrial hygiene and safety, was re-
 sponsible for disposal of wastes, "bothered
 everybody".  In addition, American Cyan-
 amid Company made no  further inquiries
 concerning  Chemical Control despite the
 fact  that Mr. 'Wainwright was aware of an
 incident in  which Chemical Control  was
 linked to barrels of waste which had been
 improperly disposed of on a vacant lot in
 Newark, New Jersey.
   I find that this defendant is responsible -
| for ten drums of toxic hazardous material
• found at  the  site.  Accordingly, this de-
fendant is liable to the State aa  set forth,
 infra.
 Olin Corporation
   The following facts are undisputed:

   [6] Richard S.  Henley, manager of re-
 gional environmental affairs for Olin, visit-
 ed the Pkallo site on June 22,1982.  At this
 time, Mr. .Leo showed him five  55-gallon .
 drums as having come from Olin.  All but
 one of these drums either had a label of a
 product manufacturer addressing the drum
 to Olin, or the marking "Poly-G." an Olin
 trade name.  Mr.  Henley was also shown a
 five  gallon  pail with  a label designation
 "fatty acid"  and a small cardboard contain-
 er which contained four 4-inch vials—intact
 and not leaking.  Mr. Henley did not iden-
 tify the contents of other drums or contain-
 4.  I  do  not find the reasoning, and indeed the
   briefs, without confusion as to precisely what
   amount of material can be attributed to Olin.
   In  addition1  to the  5  Fifty-five gallon drums.
   there appears to have been another barrel desig-
   nated as barrel 115 which contained a one gal-
   lon container  a cardboard box and a o..e quart
   container—all  intact  and contents unknown.
 .  There is reference also to a one pint container—
PICILLO                           723
706 
-------
 TZf
68Z FKUEKAL. SUPPLEMENT
 the Olin  materials were hazardous  sab-
 stances under CERCLA.
   Judgment must be entered for this de-
 fendant
 Hydron Laboratories, Inc.
   [7]   This defendant generated a sodium
 aluminum hydride product  known  as Vi-
 tride which is a hazardous toxic  material.
 In all of 1977, this defendant had a totai of
 28 barrels of its sodium aluminum hydride
 waste delivered to Chemical Waste Remov-
 al, Inc., a transporter for disposal.  Twen-
 ty-one  of these barrels were found at the
 site in question.  The testimony is quite
 clear that nineteen of the barrels were in-
 tact, i.e., not leaking, and that two had pin
 holes which caused miniscule leaking of a
 few drops.  The plaintiff argues that "sev-
 eral of the Hydron barrels suffered perfor-
 ations ranging in size from  pin hole-leaks
 to a hole the diameter of a dime" but offers
 no  transcript  reference supporting  this
 statement.  Mr. Leo's cross-examination is
 of no help to the plaintiff, rather it corrob-
 orates  the  defendant's  contention  of no
 leakage excepting for the pin  holes.  And
 the  testimony  established that "emission
 through small 'pinhole' leaks in drop quan-
 tities would result in evaporation so quickly
 that it  could not pose any threat"  I find
 that twenty-one  barrels  of  Hydron toxk
 hazardous  waste  with  miniscule  leaking
 were found at the site.
  I find this defendant did not contribute to
 the Picillo dump contamination but that the
 Hydron barrels posed a threatened release
 of the hazardous substance they contained.
 I find  them liable.

 IV.  SCOPE OF LIABILITY
  [8.9]  It is now quite welt settled  that
 liability under CERCLA is joint and sever-
 al  See, e.g.. United State* v. South Car-
 olina Recycling  and  Disposal, Inc.,  653
 F.Supp. 984, 992  (D.S.C.1986); Idaho  v.
 Bunker Hill  Co.,  635 F.Supp. 665,  676
 (D.Ind.1986).   If  the injury  is indivisible,
 then each defendant is responsible for the
entire cost.  United States v. Chem-Dyne
 Corp.,   572 F.Supp.  802. 811 (S.D.Ohio
 1983).   If,  however, the  injury-is divisible
or there is nonetheless a reasonable basis
                for division according to the contribution of
                each, then liability will be apportioned ac-
                cordingly.  Restatement (Second) of Torts
                sections 433A & 881 (1976).  The def
                carries the burden of demonstrating
                the injury is  divisible or otherwise subject
                to apportionment   United States v. Dick-
                erson, 640 F.Supp. 448, 450 (D.Md.1986).
                  The defendants assert that there are two
                supportable  ways  to apportion liability.
                The  first  involves segregating the Picillo
                site essentially  into four separate and dis-
                tinct  harms  correlating with  the  four
                stages of the  clean  up.  The second in-
                volves focusing on the volumetric contribu-
                tion of each defendant as indicated by the
                number of drums  attributable  to  each
                found at the site.
                  The cleanup of the Picillo site began in
                1979 and lasted until  1982.  As this litiga-
                tion proceeded, the four years of excava-
                tion became known as four separate "phas-
                es":  phase 0 represented the  work com-
                pleted  in  1979, phase I  represented  the
                work completed in 1980,  and so on.  Each
                phase, moreover, involved work on differ-
                ent areas of the site.  During phase I, for
                example,  which spanned  1980, a trench in
                the northeast area of the site was excavat-
                ed.   Phases  II  and  III.  which follow
                involved  excavation  of  trenches  in
                northwestern, western, and southern areas
                of the site.   The state retained different
                contractors for  each phase.

                  [10]  The defendants now urge that lia-
                bility  should  be apportioned according to
                these four separate phases. They contend,
                for example, that because neither Rohm £
                Haas nor American Cymnamid drums were
                discovered during phases 0 or I, the costs
                of cleanup during  these phases should be
                excluded from any liability calculation and
                the  actual  liability to  these  defendants
                should be reduced  accordingly.
                  I have trouble with  this argument  The
                fact that the cleanup of the  Picillo site
                proceeded in four stages does not necessar-
                ily render  the underlying injury divisible.
                In  fact, the  manner  in  which the  state
                conducted the cleanup, whether in one, two,
                or a hundred stages, is practically and theo-

-------
    »•*"                           O74EIL w.
                              QlcutC F-5«pp.
   retically  immaterial  to  the  question of
   whether the devastated state of the Piciilo
   property can be divided into distinct harms.
     In fact, the defendants acknowledge in
   their brief that this is an untenable basis
;   for apportioning liability.   After suggest-
   ing that dividing liability among the phases
   is a rational way to apportion costs, they in
   fact reject this method when they describe
   its  application.   For example, defendants
   refer  to  phase  III,  during  which 3300
   drums of toxic waste were discovered, and
   contend that of that number, only 24 are
   attributable to Rohm  & Haas.  They con-
   tend  that   since  that  number   consti- ,
   tutes  .07%  of the  total.  Rohm &  Haas
   should  be liable  for ,07% of the costs of
   Phase III.  It is clear from this that the
   various phases of the cleanup are virtually
   irrelevant to the preferred apportionment
   calculation and the defendants seek to ap-
   portion liability solely on the basis  of the
   number of drums found at the site.
     Finally, dividing the costs solely on the
   basis of which phase the defendant's waste
   was discovered is inconsistent with  recent
   decisions  concerning the scope of liability
   under CERCLA. As one court held:
    A CERCLA defendant's liability  under
    section  107(a)  is  not restricted  to the
    cleanup of those  hazardous substances
    directly attributable to it  Rather, once •
    the Government has proven that a de-
    fendant's  waste is present at a site and
    that the waste contains hazardous sub-
    stances, One defendant may be held joint-
    ly and severally liable for the entire cost
    of removal and remedial actions required
    at the site not inconsistent with the Na-
    tional Contingency Plan.
   United States  r. New Castle County, 642
   F.Supp. 1270, 1276 (D.Del. 1986).  The de-
   fendant's  second proffered basis for appor-
   tionment,  which, it appears, is  implicit in
   the first,  is to divide liability according to
   the number of drums found at the site that
   can be attributed to  the defendants.  They
   argue that a defendant who has  contribut-
   ed, say, one per cent of the total number of
   drums should be liable for one per cent of
   the costs  of cleanup.
PICILLO                           725
706 (D.JU. I9MI
  There is no question that the number of
drums may be an appropriate criterion for
apportioning  liability if all of  the drums
contained identical  wastes.   See  Develop-
ments,  Toxic Waste Litigation, 99 Harv.L
Rev.  L458. 152S (1936).   In  such a case,
there is "the reasonable  assumption that
the respective harm done is  proportionate
to that  number."  Restatement (Second) of
Torts section 433A, comm. d  (1976).  How-
ever, "the volume of waste of a particular
generator  is  not an accurate predictor of
the risk associated with the waste because
the  toxicity  or migratory potential of a
particular substance generally varies inde-
pendently  of the  volume."  Chem-Dyne
Corp., 572 F.Supp. at 811.
  Thousands of dented and corroded drums
containing a veritable potpourri of toxic
fluids were discovered at the Piciilo site.
Many were found intact but many had rup-
tured spilling chemicals into the sou.  Some
were discovered empty, having already dis-
charged their contents.   I find that it is
simply  impossible  to determine  which de-
fendant's waste contributed in what specif-
ic manner to the releases and continuing1
threat of  further  releases.  Under these
circumstances, where different substances
possessing different qualities  of toxicity
and  migratory potential commingle, there
is a synergistic impact upon the environ-
ment that necessitates a  finding that the
consequent injury is indivisible.  See Unit-
ed  States v. Strinqfellow,  661  F.Supp.
1053, 1060 
-------
726
682 FEDERAL SUPPLEMENT
ly addressed in a subsequent contribution
action, which apparently Rohm & Haas and
American Cyanamid have  already  begun.
See  Restatement (Second) of Torts  section
881(1) &. (2) ("equitable shares of the liabili-
ty with respect to an indivisible injury are
appropriately resolved in an action for con-
tribution").
  This is consistent with CERCLA's key
objective  of  "facilitat(ing]- the  prompt
cleanup of hazardous dumpsites by  provid-
ing a means of financing both governmen-
tal and private responses,  and by placing
the  ultimate financial  burden upon those
responsible for the danger."  City of Phil-
adelphia, v. Stephan  Chemical  Co., 544
F.Supp. 1135, 1142-43 (E.D.Pa.1982).  By
delaying thorny considerations of equitable
apportionment to a later contribution pro-
ceeding, the government is provided imme-
diate funds after the initial liability hearing
to take prompt remedial action at the earli-
est  opportunity.   Garber,  Federal  Com-
mon Law of Contribution Under the 1986
CERCLA Amendment*. 14 Eco.LQ. 365,
369  (1987).  In most instances, immediate
response to potential disasters caused by
seepage  and migration can forestall the
accrual  of considerably higher compensa-
tion  costs.  Note, Allocating the Cottt of
Hazardous  Watte Dirposai,  94 Harv.L.
Rev. 584, 587  (1980).  As one court has
observed:
  It  is helpful to note that the purpose of
  CERCLA is environmental protection, in-
  cluding protection of public  health and
  safety.  Imposing joint and several liabil-
  ity carries out the legislative intent by
  ensuring that responsible parties wiB ful-
  fill their obligations to clean up the haz-
  ardous waste facility.  The court has dis-
  cretion to use equitable factors in appor-
  tioning damages in order to mitigate the
  hardships of imposing joint and several
  liability upon defendants who have only
  contributed a  small amount to  a  poten-
  tially  large indivisible harm.  However,
  the court's  discretion  in  apportioning
  damages among the defendants  during
  the contribution phase does not  effect
  the defendant's  liability.
Stringfellov, 661 F.Supp. at 1060; tee alto
United State* v. New Cattle, 642 F.Supp.
                1258, 1277 (D.Del. 1986) C'CERCLA places
                the burden of apportioning blame on the
                defendants by way of actions for contribu-
                tion and apportionment").
                V.  DEFENSES
                Unclean Hands
                  [11]  In  Violet,  I  held  that because
                plaintiffs in CERCLA actions seek the eq-
                uitable  remedy of restitution,  defendants
                were entitled  to raise equitable defenses.
                648 F.Supp. at 1294-95.  The  defendants
                argue in their post-trial brief that the first
                stage of the PicQlo cleanup was  mishandled
                and that the doctrine of unclean hands con-
                sequently ban the state  from recovering
                the cost of the cleanup.
                  The evidence presented during trial re-
                vealed that the so-called phase I excavation
                was characterized by inadequate record-
                keeping and  possibly improper removal
                methods, which resulted in excess spillage.
                Testimony indicated that  the  state's con-
                tractor  for phase I, Jet Line Services, Inc.
                (Jet Line), a novice at this sort  of venture,
                used  backhoes with teeth to excavate the
                drums,  often  puncturing  the  drums and
                causing their contents to spill onto  the
                ground. Testimony by one of the defend-
                ant's  experts indicated that more appropri-
                ate methods, including the  use of barrel
                gnpplen,  which have been available for
                decades, could have prevented much of the
                spillage. There was also evidence that Jet
                Line  was initially compensated on a per-
                drum basis, encouraging haste  without re-
                gard  to. safety and conservation.  Only af-
                ter many drums had been destroyed in the
                process did the State finally  amend  the
                contract to force Jet  Line to employ less
                destructive  methods.   Finally,  if records
                were  kept during phase I,  and it is conceiv-
                able that as a result, some generators are
                not now before this court
                  In defense, the state points to testimony
                that spillage is inevitable in any cleanup
                project One of the state's employees testi-
                fied  that such hazardous waste  cleanup
                projects were  just beginning at  the  time
                phase I  was conducted and thus the "state-
                of-the-art was  at a fledgling level." As to
                this contract with Jet Line,  the state con-
I

-------
                                ;0*NEIL v.
  tends—and testimony supports its conten-
  tion—that it agreed to Jet Line's per-drum
  compensation scheme because an indepen-
  dent consulting corporation had estimated
  that there were only a few hundred barrels
  of  waste to be removed.  Later, when  it
  became  clear that there were  thousands
  more 'barrels than anticipated,  the  state
  amended the compensation schedule  and
  threatened to close down the project unless
  Jet' Line improved its methods.
   The doctrine of unclean hands is a recog-
F  nition of the maxim that "he who seeks
  equity must do equity."   Rather than con-
  stituting a defense to liability in the tradi-
  tional sense, the doctrine is applied in the
  public interest and to protect the integrity
  of the court by foreclosing the possibility
  that the court will assist a wrongdoer.  As
  one court described the  doctrine:
   In the interests  of right and justice the
   court should not automatically condone
   the defendant's  infractions because the
   plaintiff is  also blameworthy, thereby
   leaving two wrongs unremedied and in-
   creasing the injury to the public.  Rather
   the court must  weigh the substance of
   the right asserted by the plaintiff against
   the transgression, which, it is contended,
   serves to foreclose that right  The  rela-
   tive extent of each party's wrong upon
   the other and upon the public should be
   taken into account and an equitable bal-
   ance struck.
 Republic Molding Corp.. v.  B.W. Photo
 Utilities, 319 F.2d 347, 350 (9th  Cir. 1963).
 Evidence of some misconduct by  the plain-
 tiff, therefore, is  not an automatic bar to
 recovery;  rather, a district coon has "wide
 latitude  to compare the  cleanliness of  the
 parties 'hands'."  United States v. Zenon,
 711  F.2d 476, 478 (1st  Cir.1983)  see  also
 Precision Instrument Mfg. Co. v. Automo-
 tive Maintenance Machinery Co., 324  U.S.
 806, 815, 65 S.Ct 993. 997, 89 L.Ed.  1381
 (1945) (the  unclean hands doctrine "neces-
 sarily gives wide range to the equity courts
 use  of discretion  in  refusing  to aid  the
 unclean  litigant  It is not bound by formu-
 la or restrained by any limitation that tends
 to trammel  the free  and just exercise of
 discretion.").
 PICILLO                          727
 70* (D.RJ. I«M)
   After carefully  considering the state's
 conduct during  the early  stages of the
 cleanup, I conclude that it does not so soil
 the state's hands that recovery is barred in
 this action.  My conclusion is informed not
 only by a balancing of the equities in this
 case, but also by the simple fact that courts
 have uniformly held that mere negligence
 on the pan of the plaintiff is insufficient to
 bar relief under  the unclean hands doc-
 trine.  See Shearson/American- Express,
 Inc.  v. Mann, 814 F.2d 301,  307  (6th Cir.
 1987); Pfizer, Inc.  v. Int'l Rectifier Corp.,
 685 F.2d 357, 359  (9th Cir.1982),  cert de-
 nied, 459 U.S. 1172, 103 S.Ct 818, 74 LEd.
 2d 1016 (1983); International Union, Etc.
 v. Local Union No. 589, 693 F.2d 666, 672
 (7th  Cir.1982);  Bresh  v. Braeeklein,  133
 F.2d 12,  14  (10th  Cir. 1943).  Therefore,
 even if I were to conclude that the state
 was  negligent during the initial stage of
 the cleanup, that conclusion would be insuf-
 ficient to trigger application of the doctrine
 of unclean hands.
 Third-Party  Defense
   CERCLA section 107(b), in relevant part,
 provides:
   There shall be DO liability under subsec-
   tion (a) of this section for a person other-
   wise liable who  can establish that the
   release or threat of release of a hazard-
   ous substance and the damages resulting
   therefrom were caused solely by—

   (3) an act or omission of a third party
   other than an employee or agent of the
   defendant  or  than one  whose  act  or
   omission occurs in connection with a con-
   tractual relationship, existing directly or
   indirectly, with the defendant—
 42 U.S.C.  section  9607(b).   A defendant
 may invoke this defense if he can also show
 that he "exercised due care with respect to
 the  hazardous substances concerned and
 took precautions against any acts or omis-
 sions of the  third  party and  any conse-
 quences  foreseeably  flowing  from  those
.acts or omissions."   Violet, 648 F.Supp. at
 1293; see 42 U.S.C. section 9607(bK3KaHb).
  [12]  The  defendants argue  that  they
 are entitled to this  defense because  they
 consigned their wastes to licensed waste

-------
                          5BZ FUJI
transporters tod there u no evidence that
these transporters had any contact with the
PicflJo  site.   Therefore,   they   contend,
"whatever party was responsible for trans-
porting the [defendants'] waste to the Pidl-
lo site had no direct relationship with [the
defendants] and there is no evidence of any
other relationship,  indirect or otherwise."
  ! find that the defendants have  failed to
meet the initial showing that the release
was caused solely by a party that did not
have either a direct or indirect contractual
relationship to the defendants. The simple
fact is that daring the time the defendants
consigned their waste to licensed disposers,
some of that waste, in identifiable contain-
ers, came to rest at the Picillo site.  The
defendant's argument that there  was  no
evidence unking the disposers  to the site or
that the defendants had any  relationship
with  whomever actually   deposited  the
waste there simply confuses the nature of
its  burden under the third-party  defense.
As  I stated  in Violet, the  third-party de-
fense "essentially servefs] to shift  the bur-
den of  proof of  causation  to  the defend-
ants."   648 F.Supp. at 1293.  The defend-
ants must demonstrate by a preponderance
of the evidence that "a totally unrelated
third party is the sole cause of  the re-
lease."  Stringfellov, 661 F.Supp.  at  1053;
tee Dedham  Water  Co.  v. Cumberland
Farm* Dairy, Inc., 805 F.2d 1074, 1079 n.
10  (1st Cir.1986).  Absent any evidence
along these hoes, I  must conclude that it is
equally Ukety that either the licensed dispo-
sers or a  subcontractor of the disposers
deposited  the waste at  the site.
  The defendant's argument appears  to be
a repackaging of the argument that a gen-
erator can escape liability merely by show-
ing that it had in fact arranged to have its
waste dumped elsewhere.  This argument,
however, was not only  rejected in Violet,
tee 648 F.Supp. at 1291, but by other courts
as well.  See, e.g.. United States r. Ward,
618 F.Supp.  884, 895 (E.D.N.C.1985) (sec-
tion 107 does not require that  the arrange-
ment include knowledge of  the  ultimate
disposal site); Missouri v. Independent Pe-
trochemical Corp., 610 F.Supp. 4,  5  (E.D.
Mo.1985)  (generators  may be liable for
costs at site though it expressly arranged
to have its  wastes delivered  to another
facility);  United State* v. Contermtion
Chemical Co., 619 F.Supp. 162, 234 (W.D.
Mo.1985) (same).
National Contingency Plan
  Persons held liable under section 107(a)
of CERCLA  are responsible for "all costs
of removal or remedial action incurred ...
not inconsistent with the National  Contin-
gency Plan."  42 U.S.C. 9607(a).  The Plan
is  set out in 40 C.F.R.  Part  300,  and in
effect requires that the clean-up measures
be cost effective.   42 U.S.C. 9605(7);  40
C.F.R. section 300.68(j); see J.V. Peters &
Co.,  Inc.  v.  Adminittrator,  E.P.A.,  767
F.2d 263, 266 (6th Cir.1985); United States
v.  United Nuclear  Corp., 610 F.Supp. 527,
529 (D.N.M.1985).
  Defendants argue  that the  state  has
failed to prove that its actions were consist-
ent with the  Plan.   Specifically, they allege
that  Phase I  of the cleanup was character-
ized by sloppy and inefficient practices that
were not cost effective.

  [13]  As an initial matter,  I bold that
when a state government  is pursuing re-
sponse costs  under CERCLA, the burden of
proving that the cleanup was inconsistent
with the Plan rests  with the defendant
one  district  court  persuasively  reaso
  Defendants  argue  that the plaintiff
  failed to prove  that the costs incurred
  were  reasonable and  "not  inconsistent
  with the national contingency plan."  Ini-
  tially, the Court finds that the burden of
  proving inconsistency  with the national
  contingency plan was that of the  defend-
  ants.   This conclusion is evidence from
  the language of the statute.  To give
  meaning to every term in the statute, the
  Court  reads the insertion of  the word
  "not" immediately prior to "inconsistent"
  to  mean that the  defendants are pre-
  sumed liable  for all  response costs  in-
  curred  unless they can overcome this
  presumption by  presenting  evidence of
  inconsistency.  The content  of  section
  107(aX4K6) lends support to this conclu-
  sion in stating  that responsible  parties
  are liable  for "any other costs  of re-
  sponse incurred by any other person con-

-------
       V          '              0?«EIL
                             en. •* MI
   tiatent  with the  national contingency
   plan."   (emphasis. added)   On  its face,
   section 107(aM4XB) intends that a  differ-
   ent  standard apply to cost recovery by
   non-governmental entities and  that such
   entities  must affirmatively show  that
   their actions  were consistent	
 United States  v. Northeastern  Pharma-
 ceutical and Chemical Co.,  579 F.Supp.
 823, 850-51 (D.Mo.1984); see United  States
 v. South Carolina Recycling and Dispos-
 al, Inc.. 653 F.Supp. 984, 1009 (D.S.C.1986).
   It is also clear from the  statute  that
 variance from the Plan does  not  provide a
 complete defense to  liability.  By its  own
 terms. Section  107(a) bars "costs" that are
 inconsistent with  the  Plan, not "actions."
 See, e.g..  Lone Pine  Steering Comm, v.
 United States,  600  FSupp.  1487, 1499
 (D.NJ.), ajfd 777 F.2d 882  (3d  Cir.1985).
 Therefore, the defendants have the burden
 of  demonstrating that  the  clean-up, be-
 cause of some  variance from the Plan, re-
 sulted  in  demonstrable excess  costs for
 which  they should not be  responsible.
  [14]   The trouble with the defendant's
 claim in this regard is that while they have
 presented evidence that the use  of  barrel
 grapplera,  for example, or the employment
 of a different compensation scheme for the
 contractor, would have prevented some of
 the spillage that occurred during Phase I,
 they have  not presented any  evidence ad*
 dressing bow much  of the recovery costs
 incurred by the state, as a result, should be
 precluded.  WhOe I am not unsympathetic
 to the defendants' plight, I refuse to spec-
 ulate as to  how much recovery is too  much.
 Accordingly,  I   find that the defendants
 have failed to prove that certain costs were
 inconsistent with the National  Contingency
 Plan.

 Retroactive Application of CERCLA
  {15]   The defendants argue that the re-
 leases for which they are now being held to
answer occurred prior to 1980, the effective
date of CERCLA.  They contend that to
hold them  liable for  such  conduct consti-
5.  The  state used the  figure I56S.62S.OO.in its
  brief.   1 assume thai  this is a typographical
PiCiLiib                           729
7O6 (DOLL tMI)
tutes retroactive application of a statute in
violation of due process.  This argument
has been thoughtfully analyzed and reject-
ed by numerous courts. See United States
v: South Carolina Recycling and Dispos-
al,  Inc.. 653  F.Supp.  984, 996-98 (D.S.C.
1986);  United States v. Shell Oil Co., 605
F.Supp. 1064.  1072-73 (D.Col.1985); United
States  v.  Northeastern  Pharmaceutical
and Chemical Co., Inc.,  579  F.Supp. 823,
839-43 (D.Mo.1984); State ex rcL Brown v.
Georgeoff, 562  F.Supp.  1300, 1309-1314
(N.D.Ohio  1983).  I adopt  the reasoning
and  conclusion  of  these  courts and  hold
that  liability  for  response  costs  under
CERCLA for releases which occurred prior
to 1980 does  not offend due process.

VI.  SETTLEMENTS AND FUTURE  LIA-
     BILITY

Effect of Settlements
  [16]  On the day designated for trial, the
State and the  United States Environmental
Protection  Agency, a non-party, settled
with numerous potential defendants.   That
settlement included a $2J mOnon cash set-
tlement to be applied to the  past costs of
the entire clean-up, as well as commitments
from  the settling defendants to perform
future remedial work valued at $3.5  mil-
lion.  Of this,  the State was to receive
twenty-five per cent of the caah settlement,
or $575,000.00.*  The  State, also indepen-
dently settled with  other defendants for
$46,500, bringing the total amount of set-
tlement proceeds  to  the state to $621,-
500.00.
  A  provision of the 1986 SARA amend-
ments provides:
  A person who has resolved its liability to
  the United States or a State in an admin-
  istrative  or judicially approved  settle-
  ment  shall  not be liable for claims for
  contribution   regarding  matters   ad-
  dressed in the settlement   Such settle-
  ment does not discharge any of the other
  potentially liable persons unless its terms
  so  provide,  but it reduces  the potential
  error since 25% of 2J  million is 1575.000.00.

-------
730
682 FEDERAL SUPPLEMENT
  liability of the others by  the amount of
  the settlement
42 U.S.C. section 9613
-------
                    TOTTON >. NEW YORK LIFE INS. CO.
                          Cltcwta F-Supp. 731 (D.CocuL IW7)
                                   731
ants are jointly and severally liable for the
Picillp disaster,  it follows  that  they  are
liable for all response costs associated with
it.  See New Castle County, 642 F.Supp. at
1319 (a CERCLA defendant's liability, once
it is found that the injury is indivisible, "is
not restricted to  the cleanup of those haz-
ardous substances directly attributable to
if).

VII.  CONCLUSION
  In conclusion, I hold that Rohm &  Haas,
American Cyanamid, and Hydron  are joint-
ly  and severally liable for past  response
costs totaling $991,937.30.  I also  hold that
these defendants are jointly and  severally
liable for  all future  costs of  removal or
remedial action incurred by the state rela-
tive to the Picillo  site that are not inconsist-
ent with  the National Contingency  Plan;
this includes any costs associated with  the
removal of the contaminated soil  piles, su-
pra Section VI, which the state may incur
despite commitments by the settling parties
to  remove the piles.
  The  plaintiff will prepare an  order in
accordance with  this  opinion.
        Robert TOTTON, et al
                   T.
  XEW YORK UFE INSURANCE CO.
       Clr No. N-87-244 (PCD).

      Doited States District Court,
            D. Connecticut.

             Nov. 4, 1987.
         Opinion  On Grant  of
      Reconsideration March 3, 1988.


    Former  employees  brought wrongful
discharge action against former employer.
On  motion to dismiss, the. District Court,
Dorsey, J., 'held that: (1) complaint stated
cause of action for wrongful discharge, and
(2) ERISA did not preempt claims for loss
of pension benefits  as a  result of  the
wrongful termination.
    Motion denied.
1.  Master and Servant «=»39<1)
    Complaint in which former employees
alleged that they were covered by employ-
ment contracts which required them to pro-
duce a minimum amount in insurance poli-
cies per year, that they would be compen-
sated in accordance with the amount of the
premiums, and that they had been prom-
ised employment for so long  as  they met
their minimum production levels but that
they had  been  terminated  without cause
stated claim for breach of employment con-
tract.

2.  Muter and Serrant *=34
   State* «= 18.51
   ' Employer did not show that employees'
claims for breach of employment contracts
by wrongful  termination  were preempted
by ERISA.  Employee Retirement Income
Security Act  of 1974,  }}  502(aXlXB), 514,
29 U.S.C.A. }§  H32(aXlXB). 1144.

     On Motion for Reconsideration
3.  Master and Serrant *»34
   State* *=I8.51
    Claim for loss of  pension rights as a
result of  breach of employment  contract
through  wrongful  termination  was  not
preempted by ERISA.  Employee Retire-
ment   Income  Security   Act  of  1974,
{§ 502(aXlXB).     514.    29     U.S.C.A.
}$ 1132(aXlKB),  1144.
  David N.  Rosen, Michael 0.  Sheehan.
Sheehan & Solomon, New  Haven, Conn.,
for plaintiff.
  Felix Springer, Day, Berry & Howard,
Hartford, Conn., for defendant

  RULING ON  MOTION TO DISMISS

  DORSEY, District Judge.
  Plaintiffs claim that defendant breached
their employment contracts by wrongfully

-------

-------
    j                          U.S. v. OTTATl & GOSS
    j.                         C!U as 694 F.Supp. 977 (O..V.JI. 19S8)
    '•pjchird 5. Hackel, Monheiner and Hack-   on May 27, IflSS.
    ! BcfWWi Mass., for defendant Brunswick
    km? Corp.
  I
            MEMORANDUM
   CAKFREY, Senior District Judge.
  tp!:-.b:iff Kichard  E.  Lyng, as Secretarj'
  f ih^  jJt-.^iirlsatnt of  Agriculture,  has
  /ou|ht this action  under section 5 of the
  '.Kishable Agricultural Commodities Act,
   ACA)..  7  U.S.C.  § 499e.  Section  5 of
  AGA was enacted  to  insure that produce
  twers are  paid  for the produce they sell
 b dealers,  merchants  and brokers.  To
 xhleve  this  goal, PACA  imposes a trust
 ht the benefit of  unpaid sellers on produce
 ^id produce-related  assets held by produce
 !z»rchants, dealtrs and  brokers.  This trust
 %)r.tinues until  the  suppliers are paid.  7
 S.S.C. § 499e.  An  unpaid seller perfects
 5.s interest in thie trust by filing a timely
 aotice of his claim with the Secretary and
 •'S.-ith the debtor-broker. 7 U.S.C. 499e.
 !;  PACA authorizes the Secretary to pre-
 y*t:t dissipation of the  assets in a trust by
 bringing suit against a broker  in the U.S.
 i District Courts.   In  addition, the Secretary
   ,y bring an action to  recover trust assets
 •U-hich have  been transferred  to  a third
Jjarty.  Sec In Re G & L Packing Co., 41
•2.R. SOS, 915  (N.D.N.Y.19S4);  Matter of
         11  B.R.  1G2, 166 (Bankr.N.D.Tcx.
-.'• Iri the  j.-rosent  oas*, the Secretary has
'c::Vr-:d evkk-ncf that defendant A.  IVilk-
l-gr.r.o & Sons, Inc. purchased and failed to
j-Py for $l5?'/it>S.G3 worth of produce from
j^six  Arh..;.r.a shippers.  Al least two of the
;  jn:?'.,Trs preserved their, claims to the trust
:.a«*Ui liy filing the appropriate notices in a
-v-re'.y fushion.1  The plaintiff also offered
\  r^s'.-;r.«:.j  that during  the period in  which
;.  '•->  trust was  in effect the corporation
••" -a^r  vr>.\ r.i'-nts  totalling  $10,000  to  its
       oldiir, Joseph Pellegrino, the sole  re-
     :.iri« (k-fcmlnrr. herein.  It is these pay-
       that  tii» Secretary now seeks to  re-
.:.  :"3;:.
    The- Secretary moved for summary judg-
   "^"'. '^jinst defendant Joseph IMtegrino
                                            no opposition to the  motion and  there  is
                                            therefore  no genuine  issue  of fact.
                                            virtue of his authority to prevent dissipa
                                            tion of the  assets of a  PACA
                                            Secretary is  entitled to recover trust assets
                                            which are transferred to stockholders.
                                            these reasons, summary judgment will be
                                            granted in favor of the  plaintiff.
                                              Order accordingly.
                                              UNITED STATES of America, et al.
                                                                v.
                                                    OTTATl  & GOSS, et al.
                                                         No. C-80-225-L.

                                                   United States District Court,
                                                       D. New  Hampshire.

                                                          Aug. 19, 1988.
                                                Damages hearing  was held following
                                            determination that defendants  were liable
                                            for environmental cleanup costs at hazard-
                                            ous waste site.  The District Court, Lough
                                            lin, J., determined costs for which defend-
                                            ants were liable.
                                                Ordered accordingly.
                                           I.  Health and Environment ©=25.5(5.5)
                                               Owner's clean  up of hazardous waste
                                           site met statutory  standards to maximum
                                           extent practicable where PCB levels in soil
                                           were  lowered to 50 parts per million  and
                                           volatile organic compounds were substan-
                                           tially  cleaned up.  Toxic Subs!
                                           §§ 2'-30, If) U.S.C.A. §§ 2601-2629;
                                           source Conservation and Recovery Act of
                                           1976,  § 1002 et seq., as amended, 42 U.S.C.
                                           A. §  6901  et seq.;  N.H. RSA  147-A:1 et
                                           scq.
     ^'•'•- c!:;i:r:S of these two shippers totalk-d over    $48,000,
           ^^^aS&.fiSvvA-/:*'«»*.i^>««&
v
977

as filed
here is
:t. By
dissipa-
st, the
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-------
: t
                   978
694 FEDERAL SUPPLEMENT
ftp
w
                   2.  Health and  Environment <3=>25.15(3.2)
                       District Court was without jurisdiction
                   to  hear challenge from  hazardous waste
                   site owners to Environmental  Protection
                   Agency's selection of site as single site on
                   National  Priorities List.  Resource Conser-
                   vation  and Recovery Act of 1976, §§ 105,
                   113(a),  as amended. 42 U.S.C.A.  §§  9605.
                   9613(a).

                   3.  Health and Environment «=25.5(5.5)
                       Defendants found liable  for  environ-
                   mental clean up costs at hazardous waste
                   site would be required to perform  Environ-
                   mental   Protection   Agency's   selected
                   groundwater remedy,  requiring reduction
                   of  contaminants to levels promulgated by
                   Agency pursuant  to Safe Drinking Water
                   Act, in that such standards were not arbi-
                   trary or capricious.  Public  Health Service
                   Act, §  1411  et  seq., as amended, 42 U.S.
                   OA. §  300f et seq.

                   4. Health  and  Environment «=»25.5<5.5)
                       Cost  of demolishing contaminated cin-
                   derblock building  at hazardous waste site
                   would be  assessed against parties  found
                   liable for  environmental  cleanup  costs at
                   site.

                   5. Health  and  Environment «=25.5(5.5)
                       Defendants found  liable  for  environ-
                   ment cleanup costs at hazardous waste site
                   were liable  for Environmental  Protection
                   Agency payroll  expenses, as well as other
                   response  costs, including site  and  labo-
                   ratory testing services, emergency servic-
                   es,  documentation and trial preparation ser-
                   vices,  trial costs,  and  survey and  study
                   costs.   Resource Conservation and Recov-
                   ery Act of 1976, §  107(a)(4XA), as amended,
                   42  U.S.C.A.  § 9607(a)(4HA).

                   6. Interest «=39<2.20)
                       Environmental Protection  Agency was
                   not entitled to prejudgment  interest on en-
                   vironmental cleanup costs incurred at haz-
                   ardous  waste site  in that Government had
                   on  many occasions  ignored court orders,
                   delayed progress of case, and had attempt-
                   ed  to recoup amount of sanctions  imposed
                   for such delay.    .  .
                7. Health and Environment ®=25.5(5.5)
                    Defendant found  liable for  environ-
                mental  cleanup costs at hazardous waste
                site was not entitled to equitable offset for
                funds expended in voluntary cleanup effort
                where cleanup effort was unsuccessful and
                there was no  evidence substantiating al-
                leged cost of effort.
                8. Health and Environment «='25.15(5.1)
                    Propriety of Environmental Protection
                Agency's  selection of response action un-
                der CERCLA would be governed by pre-
                ponderance of evidence standard in that it
                would be  manifestly unjust to rely solely
                on administrative  record, as required by
                statute which became effective after liabili-
                ty phase of trial had ended and little more
                than three months before damage phase of
                trial  had  begun.   Resource  Conservation
                and Recovery Act of 1976, § 11130X2), as
                amended,  42  U.S.C-A. § 96l3(jK2).
                9. Health  and Environment «=>25.7<24)
                    Defendant found  liable for environ-
                mental  cleanup cost  at  hazardous
                site would be assessed $5,000 civil
                for a violation of Clean Water Act
                ment  that it obtain  state  pollutant dis-
                charge  permit, where it  was  determined
                that defendant's actions  were  not willful.
                Federal   Water  Pollution  Control  Act
                Amendments  of 1972, § 309, as amended.
                33 U.S.C.A. § 1319.
                  David Hird, Land  & Natural Resources
                Div., Dept. of Justice, Environmental £"'
                forcement,  Jon  Fleuchaus,  U.S.  Environ-
                mental  Protection   Agency,  Joyce  R^
                chtschaffen, Michael 0. Hill. Environmen-
                tal  Enforcement, U.S.  Dept. of Justice.
                Washington,  D.C.,  Jeremy  F.  Korzenik.
                Asst.  Atty. Gen., Richard  V. Weibusch.
                U.S. Atty.. Concord, N.H., Erica Dolgin and
                William D. Evans,  Jr., Land & Natur*!
                Resources Div., Dept. of Justice, Sheila D
                Jones,  U.S. Dept. of Justice, Washington.
                D.C., for the  U.S., et ai.
                  Mark S. Gearreald. Engel, Morse & Gear-
                reald, Exeter, K.H., for Town of Kingston-
                  David M. Copithorne, Copithorne & CoP"
                ithorne, Laconia, K.H., for Ottati and GOS&.
                Inc., Ottati and  Goss.

-------
                                   U.S. v. OTTATI & GOSS
                                  Q»u«M F-Stipp.
          Theodore Wadleigh. Wadleigh, Starr. Pe-
        ters. Dunn & Chiesa, Manchester, N.H., for
        Great  Lakes Container Corp.
          John E.  Peltonen, Stark  &  Peltonen,
        Manchester. K.H., for KJ. Quinn.
          Christopher P. Davis, and Paul F. Ware.
        Goodwin.  Proctor &. Hoar, Boston,  Mass.,
        for  Lilly Indus. Coatings, Inc.
          James  Stewart,   Lowenstein.   Sandier,
        Brochin. Kohl  & Boylan, Roseland, KJ.,
        for  Solvents.
          Claudia  C.  Damon. Sheehan,  Phinney,
        Bass &. Green,  P-A., Manchester,  N.H., for
        Lewis  Chemical Corp.
          Paul J.  Lambert, Bingham,  Dana  &
        Gould, Washington, D.C., for General Elec-
        tric  Co.
          Stanley M. Brown, Brown & Nixon, Man-
        chester, N.H., and Howard E. Post, Inter-
        national Minerals & Chemical Corp., North-
        brook, HI, for International  Minerals &
        Chemicals  Corp.  •
          Robert  P. Cheney, Jr.,  Asst. Atty. G«n.,
        Environmental  Protection  Div..  Concord,
        N.H..  for State of  K.H.  intervenor.
          Sumner  F. Kalman, Plaistow, N.H., and
        Bracken & Baram. Thomas  B.  Bracken,
        Boston, Mass..  for Senter Trans.  Co., Con-
        cord Realty Trust, Bernard Senter and Sal-
        ly Senter.
          Devine.  Millimet, Stahl  & Branch, Rich-
        ard  C. Kelson,  Manchester. K.H., for Gen-
        eral Elec.  Co..  Paint Products Plant
          Guterman, Horvitz. Rubin  &  Rudman.
        Stanley  H.  Rudman, Boston, Mass., for
        Great  Lakes Container Corp.
          Hamblett &  Kerrigan. PA.  John  V.
        Dwyer, Jr.. Nashua. N.H., for Solvent Re-
        covery Service of New England.

               TABLE OF CONTENTS *

            Amended Memorandum  Opinion.
                    Damages Phase
        Cleanup of the IMC Site         9S1-983
        Ottati k  Goss Soil Remedy          983
        Groundwater                    983-985
        Groundwater Contamination at
          Ottati & Goss  site                985

        "Throughout the following  opinion  defendants
          Great Lakes Container Corporation (GLCC) and
                                   979
977 (D.K.H. 19M)
 Wetlands Contamination          985-986
 Pump &. Treat Method           986-987
 Demolition of  the GLCC Build-
  ing                               987
 Kingston Fire Dept' Costs            987
 Mason & Hangar—Silas Mason
  Co., Inc. Costs                    9S7
 I.T. Corp. Costs                     987
 EPA Payroll Costs During Ot-
  tati  & Goss drum  removal     987-988
 Fencing                            988
 KUS Corporation                    988
 Techlaw                        988-989
 GCA Technology Div. Costs          989
 Arthur D. Uttle, Inc. Costs      989-990
 IT  Analytical  Services  Costs         990
 Ecology- &.  Environment, Inc.    990-991
 Subcontractors Costs Charge-
  able to GLCC                     991
 £  &  E Costs Chargeable  to
  GLCC                        991-992
 Total E  & E Costs Chargeable
  to GLCC                          992
 Total E  & E Costs Chargeable
  Ottati & Goss defs.                992
 Viar & Co.  Costs                    992
 Peabody Clean Industries            992
 Bionetics                       992-993
 PRC  Environmental  Manage-
  ment,  Inc.                    993-994
 Dept  of Interior Costs              994
 EPA Costs                      994-995
 Cooperative Agreement Costs,
  Goldberg-Zoino & Associates
  Inc. and State of New Hamp-
  shire                         995-997
 Dept  of Justice Costs               997
 Prejudgment Interest            997-998
 IMC Equitable Off-Set         998-iOOO
 Remedy and Future of the Site       1000
 Monitoring                    1000-1001
 Standard of Review                 1001
 Cost of Groundwater Remedy  1001-1002
 State of K.H. Claims       '       1002
 Town of Kingston            1002-1003
 Civil Penalty  Assessed              1003
 In  Re: Order on Motion to  Al-
   ter, Amend and Clarify
 EPA's Liability             .        1003
 IMC Finding  123    '               1003
 Dept. of Justice Costs              1003
 EPA Costs                         1003
 EPA's Indirect Costs and DOJ  .
   Employee Bnfs              1003-1004
 Ruling on Fifty-Fifty  Division
  of Costs    '                     1004
 Calculation  of Credits               1004
 KUS Corp.  Costs                   1004

  International  Minerals  Corporation (IMC)  in
  some instances are interchangeable.
V:''.*.''!--

-------
ill

980
694 FEDERAL SUPPLEMENT
                           Geochem Costs                1004-1005
                           Calculation of Interest              1005
                           In Re: Order on Money Judg-
                             ment
                           Ottati & Goss Defendants Lia-
                             bility                             1005
                           IMC & GLCC Defendants Lia-
                             bility           -                  1005
                           Ottati & Goss Defendants and
                             IMC Joint Uab.              1005-1006
                           In Re: Order on Motion Per-
                             taining to Future Reponsii-
                             bilities of the Defendants
                           Work to be performed on and
                             under the Ottati & Goss Por-
                             tion of the  Site                   1006
                           Work to be performed (GLCC
                             site and  the Marsh)               1006
                           Extraction System              1006-1007
                           Treatment System                   1007
                           Schedule                            1007
                           Remedial Design/Remedial Ac-
                             tion Involving Removal and
                             Disposal of  PCB Sediments 1007-1008
                           Treaubility Study                   1008
                           Rededial    Designs/ Remedial
                             Action Involving  Groundwa-
                             ter                         1008-1009
                           General Provisions                  1009
                           Requests                           1009
                           Conclusion                         1010
                           AMENDED MEMORANDUM OPINION,
                                     DAMAGES PHASE

                             LOUGHLIN, District Judge.
                             This case was bifurcated.   The liability
                           phase has ended and is reported in U.S. v.
                           Ottati £ Goss, 630 F.Supp.  1361 (D.N.H.
                           1985).
                             The plaintiffs have settled  their cases
                          against the following generators who were
                          defendants in  the  liability trial:  Solvents
                           Recovery  Sen-ice of New England, Inc.,
                          General  Electric,  KJ.  Quinn Co., Lilly
                          Chemical Products, Inc., a/k/a Lilly Indus-
                          trial Coatings,  Inc.
                             In order to  avoid confusion  the liability
                          part of the trial is alluded to as Phase 1
                          and the damage aspect as Phase 2.
                            After the generator defendants  settled
                          with the plaintiffs which was near the  end
                          of the Phase 2 trial, the only actual defend-
                          ant participating  in  this suit was IMC.
                          There are defendants who either defaulted
                          during Phase  1 or gave  up  the  ghost in
                          Phase 2, namely, Lewis Chemical, Ottati &
                                         Goss. Inc., Louis Ottati, Wellington Goss,
                                         Senter Transportation Co., Concord Realty
                                         Trust, Bernard Senter. Richard French and
                                         French Processing Inc.
                                           The  opinion in Phase  1  at page  1406
                                         briefly alludes to the fact that both IMC
                                         and GLCC attempted to clean up their area
                                       • of the site.  The court held in abeyance any
                                         detailed comment on this issue because it
                                         was  particularly germane to Phase 2.
                                           To briefly recapitulate the findings of the
                                         court relative to liability,
                                           The State of New Hampshire under state
                                         law procured judgments as follows:
                                           International Minerals & Chemical Corp.
                                           (IMC).  Great  Lakes  Container  Corp.
                                           (GLCC), General Electric  Co. (GE), Sol-
                                           vents Recovery Service. Inc. (SRS), Lilly
                                           Industrial Coatings,  Inc.  (Lilly).  KJ.
                                           Quinn Co., and Lewis Chemical  Co. were
                                           found liable for nuisance.
                                           IMC  and GLCC  were found  liable  for
                                         • having discharged waste to protected wa-
                                           ters of the State in violation of the New
                                           Hampshire Water Pollution Contract Act,
                                           RSA  149:8, III(a).
                                           GLCC,  Lewis'Chemical, Bernard Senter.
                                           Sally Senter  and  the  Concord Realty
                                           Trust were found  liable under  the New
                                           Hampshire  Hazardous  Waste  Manage-
                                           ment Act, RSA 147-A.
                                           The Town of Kingston is a plaintiff inter-
                                         venor.  The court found the  following pa^
                                         ties liable to .the Selectmen of the Town of
                                         Kingston:
                                           Great Lakes Container Corporation, un-
                                         der the Resource Conservation and Recov-
                                         ery Act (RCRA) (for both the Ottati & Goss
                                         and GLCC sites),  the Clean Water Act 
-------
                              U.S. v. OTTATI & GOSS
                            Clle»«94 F.Supp. 977 (D.N.H. 1988)
                                                                            981
 ery Service, Lilly Industrial Coatings, Inc.,
 KJ. Quinn, Lewis Chemical, Ottati & Goss,
 Inc., Lewis Ottati, Wellington Goss, Senter
 Transportation  Co.,  Concord Realty Trust,
 Bernard Senior,  Richard  French, French
 Processing,  Inc., GreaJ_LakfiS«_CQiilainer
 Corg., and International Minerals & Chemi-
 cal Corp.  The  court also found defendant
 GLCC liable for one  violation of Section 309
 of the Clean Water Act
  With  so many issues involved, the court
 in order to preserve some kind of continui-
 ty will  attempt to isolate  and treat them
 separately.  Some overlapping will be nec-
 essary because of  the complexity of the
 issues.

' -    CLEANUP OF THE  IMC  SITE
  Since the outset of this litigation on May
 15, 1980 GLCC and IMC werg the  onjg.
 defendants who undertook any remediajj
   IMC sent a petition to this court on April
  19, 1984 after IMC and GLCC had settled
 ^laims__agajpstL ear>1 "**<"•-  The petition
           foan  "P th^_fi9^ acres of the
  GLCC site.
   Permission to clean up the premises was
  granted on  May 24, 1984 by  the  court.
   The State of New Hampshire and EPA
  under the terms of the order had the right
 •to monitor the work being done by IMC
  during the • cleanup period,  which  com-
  menced in June, 1934,  and terminated for
  all  practical  purposes  in  the  fall of the
• -.same  year.   Some  material had to wait
.-•until  the  early spring of 1985  to be re-
••• moved.
I  '•'. The cleanup was to proceed with federal
!  RCRA  and   state RSA 147-A statutes.
f.,EPA  anc!  Ihp State had on-scepc.coordins-
p'tors to monitor  the  work.  They had the
 'privilege  of  making suggestions  and  if
 • need be, to seek the aid of the court:  They
  also had  the authority if need be, to  do
  their own sampling, check the actual clean-
 up  work  and investigate any.  area they
  deemed needed it:
   The cleanup work revealed  that  there
 •were   many  buried  drums  in  the  area.
  Many had been present prior to IMG's own-
                                           ership, going back to Conway and the KSD
                                           operations.  Some drums were also buried
                                           during the IMC tenure,  1973-1976.
                                             The State and EPA both  had knowledge-
                                           able and  competent personnel on-site dur-
                                           ing the cleanup period.  IMC also had its
                                           own on site coordinator  present.
                                             IMC spent $2,650.028.13  according; to its
                                                              '    SlteTn 1984-85.
Design of the job plans, and specifications
cost S56,829.38tj5upervision by its contrac-
tor CDM $124,200.15, on site supervision of
Guelzow _$46,779.64 and  SCA was paid
$2,442,208.96 for its cleanup contract
  The jidjrice for the contract was $917,-
360.20, but with a cost overrun of $1.524.-
848.76.  ..
  Reasons for the  cost overrun were that
more contamination was encountered than
expected.  Over 3,000  drums were found.
It was estimated that  not more  than  300
drums were there.  Most of the drums
were  found in the  so-called  Kingston
Swamp.
  In Phase  I,  the  court  found  that  site
conditions on the Ottati & Goss sites have
presented an imminent and substantial en-
dangerment,  while  conditions  in  Country
Pond  do not present  such an endanger-
ment  Ottati & Goss, 630 F.Supp. at 1373,
1385,  1394.
  The court  did find that high  levels of
concentrations  of   hazardous  substances
were still present
  During the course of the cleanup, sug-
gestions  were  made and apparently  fol-
lowed.  At no time was the work  halted or
interrupted because of allegations of non-
compJiance by IMC.
  The cleanup included preparation of the
decontamination pad, scarification  and  test
pitting.  The incinerator was also removed.
  TSCA, 15 U.S.C.,  §§ 2601-2629 et seq.
relates to standards with respect to toxic
substances.  (PCBs) or polyehlorir.ated bi-
phenyls are  included.  TSCA requires at a
minimum  that  PCB  contaminated  soils
above 50 parts per million.(ppm) be inciner-
ated or landfiiled. 40 C.F.R. § 76L.GO(a){4).
This issue was and is a bone of contention
between  the EPA  and IMC.   When IMC

-------
 S82
694 FEDERAL SUPPLEMENT
 commenced its cleanup in 1984 their efforts
 were to remediate to 50 ppm on the PCBs.
 Later EPA wanted the standard to be more
 stringent or 20 ppm.  The court rules that
 the standard in this case is 50 ppm, not 20
 ppm.
   Procedurally,  trenches  were dug any-
 where from four to ten feet deep.  If mate-
 rials were found, efforts were made to dig
. at least another foot  until the area was
 cleared or water obviated further digging.
 The  trenches generally  were  18 feet in
 width  and  were  started in the  Kingston
 Swamp area.  So-called hot spots were ex-
 cavated and noxious material was removed.
 Approximately  one-third of the  site was
 excavated.   Hot spots were  identified  by
 using  GPR  and  magnetometry  work.
 There was  also test  pitting done.
   The cleanup commenced June 26, 1984
 and terminated on October 31, 1984.
   Contaminated soil was placed on a poly-
 ethylene liner to avoid further contamina-
 tion  and was subsequently  removed  off
 site.   Excavated  soil  was aerated.  The
 purpose of aerating the soil was to remove
 the VOCs.  Aeration was done by churn-
 ing;  the aerated  soil was also trucked in
 from off-site as a, filler. Groundwater lev-
 els at times  would  prohibit any further
 digging.
   HNU meters and  magnetometers were
 used  for measurement  and  safety  pur-
 poses.
   Soils  with  PCB contamination  over  50
 ppm   were  shipped  off-site  for  disposal,
 soils with less than 50 ppm were aerated,
 tested and  used for  backfill.
   Approximately  300  plus  "full" drums
 were staged and removed off-site, and ap-
 proximately 3,500 drums including the full
 drums, were counted, staged and removed.
 Additionally approximately 4,000  tons  of
 soils containing PCBs at concentrations of
 greater than  50 ppm were stockpiled and
 removed off-site as were approximately
 3,000  additional  tons of soils  excessively
 contaminated with volatile  organic com-
 pounds but which did not have PCBs .great-
 er than 50  ppm.
                  Leaking drums were overpacked.  Little,
                if any credence was given by the court to
               . the testimony of Paul Lawrence.
                  It is true, as this court found in Phase 1,
                that there were organic contaminants to a
                depth of 19 feet  The court also found that
                the GLCC lagoon area condition was exac-
                erbated by conditions at the Ottati & Goss
                                                          '•'*!'•••'•
contributed most of the contaminants.
  Subtitle III of RCRA (see also 40 C.F.R.
Parts 264 and 265) regulates the manage-
ment of hazardous waste in order to pro-
tect human health and environment.
  Reference has been made to RCRA "clo-
sure" regulations.  50 Fed. Reg. at 47923.
For all practical purposes both the Ottati &
Goss and GLCC sites have been closed and
non-operative  since   1981.   Remedying
many CERCLA sites is similar to closing a
RCRA facility.  50 Fed.Reg. 47923; 40 C.F.
R. §§ 264.111, 264.112.
  In addition to meeting ARARS, Section
121(b)  requires that EPA  select a remedy
that utilizes permanent solutions and alter-
native treatment  technologies or resource
recovery technologies to t:ie maximum ex-
tent practicable.   Pursuant to this require-
ment, EPA must  select a remedy that uti-
lizes treatment solutions that will perma-
nently and significantly reduce the toxicity,
mobility or volume of the  hazardous sub-
stances, to the maximum extent practica-
ble.   Section  121(b) lists  several factors
which EPA must consider in evaluating the
advantages of permanent remedies rather
than interim remedies:                 '
  a.   the long-term uncertainties associat-  . ...;.2-^:
  ed with  land disposal; (§ 121(b)(lKA))     .",-;jf:f
  b.  the  goals   and  requirements  of  ..-v-V.i
  RCRA;  (§ 121(b)(l)(B))                  ':$&%
  c.  the persistence, toxicity, mobility and   ';.?;£•*;?
, propensities  to bioac'cumulate of the haz-   ;."' ; ,.|
  ardous  substances   and  constituents;  -^/?,;^|

  d.  the short and long term potential for  - ;i;;-rj
  adverse health effects from human expo-/- ..';"'.•;•.*
  sure; (§ 121(b)(l){D))              v'fev^l
  e.   long-term
  (§
                                   maintenance    costs;
   K-  '
   and
   cava
   or c<
 S.'Ctinr
 for ret
.ajiproa-
 stances
 brist'd i
 the ma:
 § 962K
 Hohma
  Ther<
 ,«uhstar.
 ,
-------

costs;
                                                      U.S. v. OTTATI & GOSS
                                                     Cite »* 694 F.Supp. 977 (DJV.H. 19&8)
                            f.  the potential for future remedial ac-   acres of the GLCC site.
                                                                              983
   tion costs if the alternative remedial ac-
   tion   in   question   were   to   fail;
   (§ l2l(b)(l)(F)) and
   g.  the potential threat to human health
   and the environment associated with ex-
'   cavation, transportation, and redisposat,
   or containment  (§ 121(b)(l)(G)).  -
 Section 121(b) apparently has  a preference
 for remedies that use treatment or other
 approaches to  destroy the hazardous sub-
 stances,  requiring that such treatment-
 based or permanent remedies be used  to
 the maximum extent practicable.  42 U.S.C.
 § 9621(b); U.S. Exhibit 375 (pp. 31-35, 39);
 Hohman, Tr. Day 38 pp. 62-63, 68-69.
   There is little question  that hazardous
 substances which have been or now are on
 site are drawn down to whatever level the
 groundwater may be at that particular time
 or season.  In some instances, substances
 hazardous or  non-hazardous  go  into the
 .groundwater from the  surface and later
 resurface* again, or they may be in  sedi-
 ments.             .
   One of-the issues to be decided by the
 court is whether or not the IMC cleanup of
 1984  was efficacious or  just an expensive
 lesson in futility.
   Everyone was represented at the clean-
 up.  Suggestions that were made to IMC's
 supervisors from the evidence presented to
 this court were acted upon.  PCBs for the
 most part were lowered  to  the 50  ppm
 level.
   [1J  There is evidence that the site is not
 100% cleaned up {never  could be) but the
 court  finds  that it  is reasonably  well
 cleaned up. It is the further finding of this
 court that it would be unfair to allow the
 plaintiffs to.change their standards of com-
 pliance after IMC has cleaned up within the
 standards -extant when they started  to
 clean up in' 1984.  The court thus  grants
 IMC's requests  numbered 130  and  123.
 The cleanup meets the standards  as to the
 maximum extent practicable.
   The 50 ppm was an  acceptable limit in
 1934  in this Region.  52 F.Reg.  10688.
   GZA conducted studies  to  evaluate the
 effectiveness of IMC's cleanup of the 5.88
                        It3 findings that
IMC in its  cleanup did  not significantly
change  the  high  concentrations of VOCs
remaining in the  soil is not supported by
the evidence.  While there is evidence  in
some areas that ppms total of VOC levels
exceeded substantially the  norm, overall
the findings of the court are:  the IMC
cleanup of the soil contamination substan-
tially cleaned up  the VOCs.
       Ottati & Goss Soil Remedy  .
  As part of the settlement by the genera-
tors, three of the Ottati & Goss generators,
General  Electric, SRS,  and  Lilly  have
agreed  to implement EPA's  selected soil
remedy for the Ottati & Goss portion of the
site, and to  contribute towards the cost  of
the groundwater  remedy for the Ottati  &
Goss portipn of the site. These generators
have also agreed to reimburse the United
States and the State for a portion  of their
past costs.  Due to this  settlement,, the
court has been informed that it need not
address the soil remedy for the Ottati  &
Goss site. Through a separate settlement,
KJ. Quinn  has agreed to pay a  total  of
$300,000 to the government.  As  considera-
tion for these  commitments by the four
defendants, as is reflected above, the Unit-
ed States has agreed to seek to have the
remaining portion of the Ottati &  Goss
groundwater remedy performed by the the
Ottati & Goss  defendants:  GLCC, Lewis
Chemical  Co.,  Louis  Ottati,  Wellington
Goss, Ottati & Goss, Inc.,  Bernard Sentcr,
Senter Transportation Co., Concord Realty
Trust, Richard French and French Process-
ing, Inc. IMC, of course, has assumed the
liabilities of GLCC.
             Groundwater
  The facts relative to the groundwater are
quite complex, when considering the reme-
dy proposed.
  A concantenation  of   events  evolved
around   the  groundwater  controversy.
There is the initial  dumping of hazardous
waste  on the Kingston  Steel Drum site
going back  in  time  to the  1950s.  This
continued until 1980.  In 1979 the Ottati &
Goss business venture flowered and short-
ly withered  with  dire results.  The situa-
tion was further  exacerbated by the EPA


-------
984
694 FEDERAL SUPPLEMENT
                                                                                  >.£«&
cleanup of the Ottati  & Goss  site which
dumped  more  hazardous waste  on site,
which in time percolated into the ground-
water.
 -Then occurred the merging of the Ottati
&  Goss and GLCC plumes eventually head-
ing generally eastward under  kout',* 125
towards the marsh.  The marsh, a separate
entity, is a story in itself. After the litiga-
tion  ensued,  IMC witlr remarkable fore-
sight had  the acumen to  purchase the
marsh.  To some the marsh is considered a
savior, to others  a  temporary holding ac-
tion.  AH agree  it is  a wetlands  and  a
valuable  one.

  [2] The court agrees with the plaintiffs'
contention that the court has no jurisdiction
to consider a challenge to the listing on the
National  Priorities List.
  Under  Section  113(a) of  CERCLA,  42
U.S.C. §  9613(a),  this court  lacks jurisdic-
tion to hear any challenge from the defend-
ants  to EPA's decision to select a unified
remedy for the Ottati &  Goss/GLCC site.
Section 113(a) provides:
  Review of  any regulation promulgated
  under this Act may be had upon applica-
  tion by any interested person  only in the
  Circuit Court of Appeals  of  the United
  States for the District of Columbia. Any
 'such application  shall  be made  within
  ninety-days from the  date  of promul-
  gation  of such regulations. Any matter
  with respect to which review  could have
  been obtained under this subsection shall
  not be subject to judicial  review,  in any
  civil or criminal proceeding.
  In October, 19S1, EPA listed the Ottati &.
Goss/Kingston Steel Drum site  as a single
site on the National Priorities  List (NPL)
established under Section 105 of CERCLA,
42 U.S.C. § 9605.  See Tinkham  v. Rea-
gan,  19  Env't Rep.Cas. 1742, 1743 (BNA
19S3), No. 83-140-L, slip op. (D.N.H. April
14, 1983);  U.S. Ecology,  Inc.,  v. Carlson,
21 Env't Rep.Cas.  2009 {BXA  1984), No.
84-33S7, slip  op. (C.D.I11.  Oct. 3, 1984), dis-
missed for lack of jurisdiction, 638 F.Supp.
513  (C.D.IH.  1986);  Eagle-Picker  Indus-
tries v.  EPA, 759. F.2d 905, 911  (D.C.Cir.
1985).
                  At the risk of reiteration, the following is
                excerpted  from Ottati &  Goss:
                    Groundwater  contamination  occurs
                  when contaminants are released and en-
                  ter  the  groundwater system.  Organic
                  contaminants on the land surface go into
                  the  unsaturated zone.  In time, the con-,
                  taminants due  to precipitation such  as
                  rain or snow ir^lt and are washed down
                  through the unsaturaUd zun« and into
                  the   saturated  zone.  On entering the
                  groundwater system, the contaminants
                  will move with it in  whichever direction
                  the  groundwater is  moving.    .  . .. ;1.
                                                  *"• -,*-»* t
                    The  entry   of  chemicals  into • the '.''.^;^vtv/-x>
                  groundwater is intermittent  In the sat^  •;:<"?<^r
                  urated zone, the contaminants mix with  •-:• v^j^j
                  the  groundwater in. the aquifer and be- :..  - '1^ ';'•.
                  come dissolved in it       ,   .      .".*-_• :.";^H-w"'i^
                630 F.Supp. at 1383. New Hampshire has -./,;:o.&-';
                relatively small aquifer systems in compari- ~ .-•; £^>^-^
                son to other parts of the country.  It does «-.'.";;^:v-.-*
                have relatively high water tables..   --j-~  .^^r;-;-^
                  Under RCRA, EPA is  charged with en-   '•.---'•^ '
                suring  and  protecting   the  quality- of .  ^ilS^J
                groundwater.  Contaminated groundwater    ,.\4.- f
                which has the potential of being usable or  .  ;.•'.;/.-.' •
                potable must be cleaned up to the greatest . - (' i; '
                extent that  is feasible.            .  . ^ (•
                  The water on the GLCC site has not been  ~
                used  for  drinking purposes  for the last
                twenty years or so.  It is also very evident
                that the aquifer  in the site  area is very .
                important to the Town  of Kingston and
                contiguous or surrounding areas.. The so-
                called  southern  tier  of southern  New
                Hampshire  has  shown and  continues to
                show  a phenomenal  growth.  With  this
                growth and increase  in  population is  an
                ever increasing demand for water.  King-
                ston does  not have a municipal water sup-
                ply and is  dependent upon dug wells for its
                water.                             "' '*-'
                  47  Fed.Reg. 32283  in essence states:
                groundwater is a fragile resource and has
                unique  characteristics.   It is difficult to
                clean  up  a  polluted aquifer.  There is a
                priority to clean up contaminated water to
                its  highest potential use.  There are  three
                classes of groundwater.   Class  I ground-
                water is irreplaceable or ecologically vital.
                Class II groundwater includes current and -
^..


-------
 U.S. v.  OTTATI & GOSS
Crcc«i694 F-Supp. 977 (D.N.H. 19SS)
                                                                               9S5
   potential sources of drinking water. Class
•  .III groundwater is  not considered  to be a
   potential source of drinking water because
   of naturally  high salinity or widespread
   contamination beyond levels that could be
  •cleaned up using methods reasonably em-
'  jjloyed in treating public water.
'. . ..  [A]  response  to  contaminated ground-
     water  generally  would be required to
   '.,  achieve a level of pollutants less than the
':.' f  maximum  drinking water  contaminant
   ..  levels  established  under  SDWA,  40
; .;  C.F.R. §§  141.11-141.16  (1986),  of the
     groundwater concentration  limits estab-
• .-'":  lished under RCRA, id. § 264.94.  See 50
'  "'  Fed.Reg. 47922 (Nov. 20, 1985).
   Artesian  Water  Co. v. Government of
   New  Castle  County,  659 F.Supp. 1269,
.  1296 (D.DeU987).'
  '„'.  Levels for  arsenic, chromium, lead  and
•   nickel found in well 11 all exceed drinking
   water standards.  In all probability  well 11
„ ..is  a background well.
   "  Evidence was adduced that nickel  up-gra-
.  dient of the Ottati & Goss and GLCC site
   exceeded  groundwater  standards  before
•   the surface water entered the site.
,,;,,  There is no evidence that continuous be-
   drock users of wells have sustained  any
.  risk to their  wells.   There isn't any  evi-
   dence that anyone drank contaminated wa-
   ter from either of the sites.
  , .The  top  four  indicator compounds  are
   benzene, tetrachloroethylene, trichloroethy-
   lene and 1,2  dichloroethane.
;. .•  Groundwater should meet drinking water
  standards including  standards for  metals.
  •- -  Groundwater underneath the site is con-
-   taminated with pollutants which arc in ex-
  cess of permissible  levels. "It has to  be
   remediated.  The presence of contaminants
  .renders the aquifer and site unusable for
  -future generations until  it is cleaned up.
  '• -  There were drinking wells on site before
  'the water became so contaminated  by the
   operations on the GLCC site and for the
   short period of Ume  that the Ottati  & Goss
   site was operational.
'  -:  The  groundwater treatment  remedy's
— target goal is 5 ppb for three of the four
   indicator compounds. They are benzene,
               trichloroethylene,  and 1,2 dichloroethane.
               The Maximum Contaminant Level (MCL)
               for these hazardous substances is 5 ppb.
               52 Fed.Reg. 25,691, 25,694  (July 8, 1987).
               These levels are proposed and may not be
               enforceable.
                 MCLs are national standards which have
               been promulgated by EPA pursuant to the
               Safe  Drinking. Water Act.  52  Fed.Reg.
               25,691, 25,694 (July 8, 1987).
                 Other hazardous substances present in
               the groundwater  will  also  be treated to
               drinking water quality:  They include com-
               pounds (e.g.t acetone and methyl ethyl ke-
               tone)  phenols,  and  metals  (e.g.,  arsenic,
               nickel, iron, and manganese).  Of the met-
               als, arsenic will be treated to 50 ppb (an
               MCL), nickel will be treated to 150 ppm (an
               EPA  Health Advisory, which is a guide-
               line), and iron and manganese will be treat-
               ed to 300 ppb and 50 ppb, respectively.  40
               C.F.R. § 143.3;  40 C.F.R. § 141.11.
                 It is the court's ruling: the three indica-
               tor compounds, benzene, trichloroethylene,
               and 1,2 dichloroethane shall be remediated
               to 5 ppb.   :

                GROUNDWATER CONTAMINATION
                     AT OTTATI & GOSS SITE
                 1987 sampling shows that the groundwa-
               ter under  the Ottati &  Goss site is still
               contaminated with levels of VOCs above
               EPA's target goals.
                 1987 sampling shows the following at the
               Ottati & Goss site: Trichloroethylene (TGE)
               is present in the  groundwater under the
               Ottati & Goss site at levels as high as 1,410
               ppb, l,2,dichloroethane at levels as high as
               610 ppb, benzene at levels at least as high
               as 11 ppb, tetrachloroethylene at le%'els as
               high as 90 ppb and PCB at levels  above 5
               ppb.  EPA's target goal  of 5 ppb must be
               met for the four indicator compounds: ben-
               zene, trichloroethylene (TCE), l,2,dichloroe-
               thane  and  tetrachloroethylene (PCE).

                 . WETLANDS  CONTAMINATION
                 1987 sampling  rounds show  that  the
               groundwater under the marsh or wetlands
               remains  contaminated with levels of VOCs
               above  EPA's target goals.

-------
  TCE is present in the groundwater under
the wetlands above 5  ppb and in another
area at 60 ppb, 1,2 dichloroethylene above 5
ppb and as high as 29 ppb, benzene above 5
ppb and as high as 58 ppb, PCE at levels
above 5 ppb and in other areas as high as
447 ppb.
  Nickel is present  in the wetlands ground-
water at levels as high as 380 ppb; arsenic
as high as 148 ppb.  There is contamination
of the peat in the wetlands by the ground-
water.

     PUMP AND TREAT METHOD
  The pump and treat system proposed as-
sumes a pumping rate of 100 gallons per
minute, 60 minutes every  hour,  24  hours
every day,  365 days  every  year.   Any
factor which reduces the pumping rate re-
duces the anticipated efficacy of the pump
and treat  alternative in  removing TVPPs
from  the groundwater.
  A  pump  and treat system  reduces the
overall mass quickly until  a time elapses
where the overall groundwater concentra-
tions are the same throughout the area of
evaluation.
  Upon  installation.greater effects should
be seen during the early  period of installa-
tion.
  EPA under Section 121(b) has to select a
remedy which significantly and permanent-
ly reduces the mobility and the toxicity of
hazardous substances to  the maximum ex-
tent practicable.  It has determined that
pumping and  treating is the manner  of
achieving this goal. 42  U.S.C.  § 9621(b).
  The public has expressed an intense in-
terest in EPA's selection of a remedy. The
local  citizens  group, WASTE, has  great
concerns about  the groundwater and its
potential use for a  drinking water source.
  Groundwater  contamination   will  not
clean itself up in the  near term through
natural attentuation.
  There would be significant long-term un-
certainties associated with natural attenua-
tion.  Pumping and treating will clean up
the groundwater with more celerity.  The
goals of RCRA will .be considered.  PCBs
are highly toxic, predisposed to bioaccumu-
 late, the VOCs are toxic and motile.  There
 is both a short and long term potential for
 adverse health effects from human expo-
 sure.   There is  the potential for future
 remedial action costs if the alternative re-
 medial action were to fail.  That is  if the
 court assumed from the evidence that natu-
 ral  attentuation  would just  as  efficiently
 alleviate the groundwater  problem.  42
 U.S.C. § 9621(b).  The remedial action shall
 according  to 42 U.S.C. § 9621{c)  be re-
 viewed no less often than  each 5  years
 after the initiation of such remedial  action
 to insure that human health and the envi-
 ronment are  being protected by the remedi-
 al action being implemented.
  . A problem with the pump and treat sys-
 tem which concerns the court is its installa-
 tion in the marsh area.  The  marsh area is
 east of Route 125 and groundwater flows
 from the site under Route 125 then into the
 marsh.
  The court  is in agreement with former
 Administrator Ruckelshaus'  policy  state-
 ment with regard to the protection of the
 nation's wetlands. "Wetlands represent an
 ecosystem of unique and major importance
 to  the citizens of  this Nation  and, as a
 result,  they  require extraordinary protec-
 tion."   38  Fed.Reg. 10834 (May 2,  1973).
  In the court's opinion installing and oper-
 ating a groundwater pump and treat sys-
 tem in the wetlands or marsh would have
 an  impact on  the marsh. The construction
 of  a road is  not  a feasible alternative.
 There  would  be  an  impact on animal life,
 vegetation, but more importantly on  the
 submerged peat in the marsh which has the
 ability to attenuate  contaminants.
  With some  reluctance the court rules as
 follows: Installation of the wells presents
 two feasible  alternatives.  If the wells are
 installed in  the winter  time  when  the
 ground is frozen, skid mounted bombardier
 equipment should be used.   At any other
 time the decking system should be used.
  The Ottati &  Goss plume does,  in its
 travels, deposit contaminants into and un-
 der the GLCC site.  The defendants  found
jiable  for_ contaminating Ottati &
"
         _
"which~ incogs JbJr'A are liable in damages
    «~
      P
     ss
clean up
  There
plume at
sawdust
Mixing o
began  a
Route 12.
easterly <
  GLCC ,
eralFy liai
and the J
  Regard
did not at
ter.  Sair
ary, 1987
the GLCC
levels whi
  EPA's t
four  indie
chloroethj
benzene a
  All  indi
in Jhe grc
       PP
      To
ordered to
water rerc
pricious.
met.

     DEM

  MJ  The
the GLCC :
There is n
sections of
be demolis
between $f.
been sufam
finds that
building is
against  th<
         D,
  15}  The
vided  emer{
curtain,  ne

-------
                            U.S. v. OTTATI & GOSS
                          C(r«»«94 F-Supp. 977 (D.N.H. J988)
                                   987
/"
for EPA's  response costs  related to the
GLCC problems with ground water.  This
includes  any remediations  necessary  to
clean up the groundwater at the GLCC site.
.  There was a mixing of the crushing pit
plume and the plume from the caustic pit
sawdust pile area which increased toxicity.
Mixing of groundwater from the two sites
began approximately 900  feet  west  of
Route 125 and substantially mixed 400 feet
easterly  of  the 900 feet.
  .GLCC and IMCjire,also jointly and sev-
erallvJiable with the
                            •.Regarding the groundwater on site, IMC
                            did not attempt to clean up the groundwa-
                            ter.  Sampling of groundwater  in Febru-
                            •ary, 1987 shows that groundwater under
                            the GLCC site remains contaminated with
                            Jevels which are above EPA's target goals.
                            -  EPA's target goals are 5 ppb for each of
                            four indicator hazardous  substances:  tri-
                            chloroethylene  (TCE),  1,2  dicloroethane,
                            •benzene and tetrachloroethylene (PCE).
                              AH indicator compounds concentrations
                            in the groundwater at the GLCC site ex-
                            ceed 5 ppb.
                              (3] To summarize, the defendants  are
                            ordered to perform EPA's selected ground-
                            water remedy.   It is not  arbitrary and ca-
                           ;.pridous.  target goals  of EPA shall be.
                            met  "

                            ?'"'• ' DEMOLITION  OF THE GLCC
                           '-_  •'.   .      BUILDING
                            "".[4] There is a cinder block building on
                            • the GLCC site which the court has viewed.
                            'There is no question that the  building or
                           *• sections of it are contaminated.  It has to
                            be demolished.  A cost estimate ranging
                            between $57,000 and $74,800 plus 257= has
                            been submitted  to the court   The court
                            finds that  the  costs of  demolition of  the
                            building is SS2.375.  Thisjx>st  is assessed
                            •against the GLCC and IMC defendants.

                                      KINGSTON  FIRE
                           ;.  .      DEPARTMENT COSTS
                           "'- 15] The Kingston Fire Department pro-
                           < vided emergency services such as a water
                           :-curtain,  neutralization  water,  ambulance
and fire prevention sen-ices.  This was to
aid  EPA  in  February,  19S2 in  reducing
vapor emissions at the Ottati & Goss site
during the drum removal operations. EPA .
spent §1,694.80 according to the terms of a *-"*
contract that it had with the Kingston Fire
Department   These coglg are reimbursa-
  MASON & HANGER-SILAS MASON
            CO. INC. COSTS
  Mason &  Hanger transported,  main-
tained and operated asmobile laboratory at
the Ottati & Goss  site. during  the  drum
removal. They performed r.nalyses of sub-
stances  from the  drums.  Additionally,
they conducted background screening for
air monitoring.
  EPA spent $17,601.83 under and SEmer-
gency Environmental Response  Unit Con-
tract for these services with Mason & Han-
ger.  These  costs are reimbursable.

      LT. CORPORATION COSTS
  I.T. Corporation operated a mobile labo-
ratory at the Ottati & Goss site from Octo-
ber, 1981 through March, 1982 during the
drum  removal period.  EPA paid LT. $16,-
334.20 for its labor, materials and expenses
which are jeimbursable.
                                           EPA PAYROLL COSTS DURING
                                               OTTATI & GOSS DRUM
                                                      REMOVAL    .
                                          Reimbursable are E£4 payroll expenses
                                       jof $22.971.39.,  TfiliTis ^o7~EPA~personnel
                                        wHo~worked at the Ottati & Goss site dur-
                                        ing the drum removal operations.  This
                                        was  during the period from June, 1981
                                        until  April,  1982.
                                          Ottati &  Goss, Louis  Ottati, Richard
                                        French and  Bernard Senter were given the
                                        opportunity to remove contaminated mate-
                                        rials from the Ottati & Goss site by August
                                        5,  1979.  None of these defendants re-
                                        moved  any contaminated materials . from
                                        the site prior to the  EPA drum removal
                                        operation.
                                          The
                                        tunity by EPA to undertake the drum re-
                                                                             - \

-------
 988
694 FEDERAL SUPPLEMENT
 moval.  -This issue is  somewhat moot  in
 view of the settlement albeit that it was
 post trial between the plaintiffs and the
 generators.
                i
                FENCING
   The CLCC site and the IMC marsh shall
 be fenced.  It will be^J_IiIC^s expense, and
 shall be a  six foot high chauTTin kfence.
 See exhibit IM-D-182.
   If the plaintiffs at their voluntary option
 deem it feasible,  the  Ottati  &  Goss site
 shall  be fenced at their expense.   With
 respect  to the easement with  Hampton
 Power & Electric Company, a gate opening
' can be made and a key given to the power
 company.

    .   OTHER RESPONSE COSTS
         NUS Corporation Costs
   NUS performed work for the EPA at the .
 Ottati & Goss/GLCC site under the  Field
 'nvestigation Team (FIT) contract in 1983
 and 1984.  NUS  was  paidS35,2l2.0y  former Ecology  & Environment, Inc.
 employees for in_vfi&tkative_w.o.rk at both
. sites. After subtracting the costs relating
 ij the September 9, 1983 incident, the bal-
 ance shall be divided equally.
.-.  $281.00 spent bv XUS for disposnWeoro-
           •      -         -**i^ * ^> ' - •  •*•• ^
 tective clothing, providing of air monitoring
 and  arranging for the December 6, 1983
 view by the court is chargeable to  all  de-
 fendants.
   NUS  spent  $2,141.00 to  oversee  work
 performed by Roy F. Weston on the GLCC
 5.88 acres in 1984.  $8,973.00 was also
 spent for NUS to oversee IMC excavation
 work done  at  the  GLCC  site in  1984.
                $850.00 was spent by NUS in preparation  -.^5-^?K'«
                for a cost recovery report for this, litiga-  «,
                results  in the  sum  of $11,180.50  being :*}*p3
                charged  against  IMC.   $12,851.00 •:is tgjg*
                charged solely  against the GLCC defend- •'££§
                ants, for a total  sum  against the
                defendants of $24,031.50.  With regard
                the $24,031.50 figure, IMC shall be credited ",3^
                with the costs relating to the September 9,- ''•'!$
                1983 incident as heretofore sta
           TECHLAW, INC.
  Techlaw became involved in the Ottati &. /4"'.
Goss cleanup sometime in January, 1983."••^^•'S'i
Its involvement with the sites ended
time in January,  1984.
  The duties of Techlaw pertaining to the ;---.-:^i^f ^
cleanup were  twofold.   It was  charged ..;
with on-site organization of case files and
preparation of evidence profile samples.
Tecjjlaw's total cost for work  performed  i
was  |23,27jyj(L.  Techlaw  representatives ..
expressed opinions that, at this  point u. • V
time, it would be  nearly impossible to alio- (
cate the work which was performed on the •
Ottati & Goss and the IMC sites.     .,,  j.
  Although IMC  does not specifically dis-
pute the response cost attributable to Tech-
law individually, IMC does  refute the allo-
cation  of all  response costs  which  the
government is attempting to  levy upon ..
IMC,  in  which there is no substantiated^
                                                             •Sr
                                                          1!
               ^
                or tfiegovernment's failure to ensure such
                allotment.       .            .'       •
                  There is testimony from Duba, the Tech-
                law  representative  which  indicates  that,
                had Techlaw been informed of the

-------
                               US. v.  OTTATI & GOSS
                              Cl(« if 694 F.Supj». 977 (D.N.H. 1988)
  -tion of the Ottati & Goss site from the IMC
  site, and that both  were to be dealt with
  separately in allotting work charges, such
  a billable breakdown would have been pro-
  vided.  (Tr.  day, 4,  p. 41-42).
    The  actual figures  presented  by the
:  government concerning Techlaw,  are sub-
  stantiated.  The costs are divided equally.
  ^11,639.05 fQg-«arh site,

      GCA  TECHNOLOGY DIVISION,
-. '••-             INC. COSTS
    EPA  spent $233,682.00  for  work per-
  formed by GCA Technology Division, Inc.
  (or subcontractors to GZA) under the Tech- •
•  nical Enforcement Support Contract from
  .1983 until 1985.
    $65,904.00' accordirrg   to  the  EPA  is
  chargeable only to the Ottati & Goss de-
:  fendants.
••'  yOi27jJjQ0 pertained to the case against
•  Geochem for depositing metals.  The court'
\ijia* piUH in favorj)(_GeQchem and this sum
  eannotHBe charged  by EPA against any
.-. defendant
:  '  $107,472.00  was spent to develop two
  computer  data bases for use  by govern-
•'• •inentjtrial attorneysLand exjaerts. The first
  data base  was wit
-  &  Goss site.
                                               The
          billed EPA $j20.00 in order to get
'-  Roy F. Weston to prepare its cost recovery
•v  data foc^which_ it_<*harfrpd fifiA-g-Tng^
•i-Ktv
;"-' /  GCA charged for 38 hours to contact two
-  witnesses to testify in Phase II of the trial.
• , EPA was billed in the approximate sum of
:': $1,600.00.   Both witnesses had testified in
£1 Phase I.
V    The bills  of Doctors Meyer and GosseKn
• '••' are reduced from $12,168.00 to $10,568.00.
;..  .Recovery here is sought by EPA  only
•••:'  against
                                     989

                              for GCA to
 obtain the sen-ices of an expert hydrogeol-
 ogist for Phase I of the trial is disallowed. *
   The sum  of $337.00 spent for GCA to
 obtain the services of an expert lexicologist
 for Phase I of the trial is disallowed.  Their
 work assignments were subsequently can-
 celled.             /
   $2,625.00  paid to Greg Morley for testi-
 mony in Phase I and  other GZA personnel
 to assist in  trial preparation js chargeable
   " The court finds that one half of the ef-
   fort concerned the first data base and one
   half concerned the second data base.  With
   regard to the second data base, it would be
 •  difficult to distinguish between  sites for
 .•the time spent for design, programming,
 --testing and supervising work  relating to a
  •'Particular well.
   $27;142.00 paid to Dr. John Guswa and
 Geotrans to aid EPA's attorneys injrep^-_
 ration for the testynany^of defendants' ex-
 •perts in  Phase I of the triajjs chargeable
-.against all defendants.
   $62,708.00 was spent when Dr. John Gus-
 wa was  with  Roy F.  Weston, Inc.  He
 testified as an expert in Phase I of the trial
 for the plaintiffs and to aid in preparation.
 for the testimony of defendants' experts.
   This was  testimony pertaining to hydro-
 geology  and contaminant in groundwater
 and is chargeable against all defendants.
   $8,966.00  was spent for ,GCA to oversee
 the IMC operation at the GLCC site. This
 was from July, 1984  until May, 1985.
   The sum of $160.00 spent for Ecology &
 Environment, Inc. to providecost_recoj£iy
 documentalioit-£or work it had performed
"^tThToltati & GossTtlLCC site ischargc-
 able to ^alLjdefcndants.
   Allocation of GCA costs are required.  In
 summary, the total GCA costs chargeable
 to the Ottati & Goss defendants is  $137,-
 489.50. The total GCA costs chargeable to
 the GLCC defendants is $32,151.50.

    ARTHUR D. LITTLE, INC.  COSTS
   Arthur jj^Ljttle Company _was employed,.
 by the government toagsist in preparation.
^fnr trials  ft V"-'*»»y-pf jssiieg relatfriff to
 the OttatP & Goss site and the GLCC site.
 The employment of A.D. Little consisted
 primarily of the expertise of Doctors John
 Guswa and Joan Berkowicz, who collective- .
 ly authored_a report for use in triaj^ prejia-
 ratioirby th
-------
  990
                           694 FEDERAL SUPPLEMENT
 Guswa additionally testified during Phase I
 of the litigation.
   The work performed by these individuals
 as  employees  of A.D.  Little concerned
 groundwater contamination at both the Ot:
 tati & Goss site and the GLCC site.  The
 total  fharfro siihmit.tj»H by  A.D.  Little for
 performance of these services amounted to
^S8,1J7 fi7,  Na effort was made to allocate
 the^cost air"ntrfit **"* ^itg;, however, since
 the subject of the work performed involved
 groundwater (its condition and.flow pat-
 terns) on the Ottati & Goss site, the IMC
 site, and on the surrounding areas, an at-
 tempt to allocate the amount of work per-
 formed on  the various ^sites would not be
 reasonable.  The  government sup-pfpat^ an
 equal division of the A.D. Little costs, since
 the work involved ^H  the parties and con-
 cerned groundwater contamination.   The
 court agrees with this allocation.
   The total A.D. Little charge shall be di-
1 vided equally with $4,058.84 attributable to
 the GLCC site and $4,058.84 attributable to
 Ottati & Goss.         ,.,  .

    IT ANALYTIC SERVICES COSTS
   EPA spei.'< $35,284.88 fQr^ejcpertiestimo-
 ny of employees  of
 during
                                           This figure is computed by multiplying the
                                           total LOE hours 5,991, by an average labor
                                           cost of $40.60  per hour.  This work was
                                           performed at the Ottati  & Goss/GLCC site
                                           under  the Field Investigation Team
                                           tract  The government claims that, of
                                           total, $13,993.11 is chargeable only to Otta-
                                           ti  &  Goss  defendants and  $9,992.58
                                             The  government claims the breakdown i*
                                           for E & E costs is as follows:
                                             a.  $5,157.40 was spent for subcontracr^-V
                                           tor Western Geophysical Corp., to conduct
                                          , subservice investigation through the use of
                                           seismic  refraction  data.   This  sum-"
                                           chargeablfctobotb, sets of defendants since
                                           the work concerned  th^sjte as a
                                             b.  $1,490.00 was spent for subcontract
                                           tor Parker Survey Associates, to perform a- •
                                           boundary  survey and develop a base map
                                           of the site. This sum is chargeable to both
                                           sets of defendants since the survey
                                           cerned the entice^sifcp  involving GLCC's 7c
                                           5.88 acres find Ottati & Goss's 1 acre.
                                             c.  $800.00 was spent for subcontractor-^
                                           Detection Services  Group to perform -a
                                           ground  penetration  radar survey.  This
                                           sum is chargeable to both sets of defend-
       Phase I  of  the triat  Chemical
analyses  were made  of groundwater sam-
          ,             "                   *»**"# t*^ v'Bt ^«»4a>ih«*^ vu tswt* *»%>fcH> v*. %*%»»^P»«^» •  •- -.T .4*,,-., ,•-. *
pies-taken in May, 1980 from the Ottati &   ants since the work^oMeTnedJ^thjroBef-: ^J^¥H
Goss and GLCC properties.  They seek to   »;„           	——	~~	..   •LJ,3£&&'i:.
have this sum of money chargeable against
all defendants.
  IMC had agreed to obviate this expense
b}'_stijiujatinj^tg this evidence.  Originally,
  y stmuatng to
 nTe"government took the position that all
 costs related solely to the Ottati &. Goss
 site.  Thtjenerafnr .A»fpnHants refused to
 stipulate and the witnesses had traveled to
- Concord  prepared to testify.   The  court
 rules that it would be unjust to penalize
 IMC under these circumstances.  The $35,-
 234.83 is chargeable against the Ottati_£_
 G_ossdefendants,  not  the  GLCC  defend-
 ants.
                                      X .1
                                           ties.
                                             d.  $13,270.10 was spent for subcontrac-
                                           tor  Clarence Welti Assoc.,  to install  16
                                           monitoring wells at the site.  The govern-
                                           ment contends that since 12 of the 16 wells
                                           relate exclusively to GLCC and 4 of the 16
                                           relate  exclusively  to  Ottati  &   Goss,
                                           $9,952.58 is chargeable  to the GLCC.de-^
                                           fendants.                          . •  !-^-
                                             e.  $10,675.53 was spent for E & Ei.to••'.
                                           perform a magnetometer scan to search for'
                                           buried metals to the west northwest of th<
                                           Ottati & Goss property.  However, thi*
                                           sum  is  chargeable  onlyto^ tjie Ottati &
                                           Goss  defe^ilalrnTs^^incethT work  related  v^-i.Vi.^
   ECOLOGY & ENVIRONMENT, INC. ^solely to the Ottati & Goss site.    .:.J..^S^-^
   The government claims EPA spent $264,-   » 'f.  $187,018.37 was spent for E & E to^|££;-;At
 075.52  for work performed by Ecology &   implement a groundwater investigaUonaiw ^^^:;.|
 Environment,  Inc. (hereinafter  E &  E).   monitoring system.  This sum  is "harc-e—r•:,...•  5

-------
            Re
            r
            s
           ,the

 "his  »OTK was
 oss/GLCC site
 on Team Con-
 ns that, of that
 e only to Otta-
U $9,992.58  is
 The remaining
It contends,  is
Defendants.
 he breakdown
 ws:
 )r subcontrac-
 ;p.,  to conduct
 ugh the use of
 H'his  sum   is
 fendants since
   as a whole.
    subcontrac-
 |, to perform a
   a base map
  jeable to both
   survey con-
  ving GLCC's
o  per for in  a
turvey.   This
    of defend-
  both proper-

lr subcontrac-
|to install 16
  The govern-
 ' the 16 wells
Id 4 of the ll>
Iti   &   Goss,
lie GLCC dc-

 or E & E to
  to search for
 thwest of th«-
 owever, this
 the  Ottati  A
 [vork rclatol
 lite.
  or E & E lo •
                                                              U.S. v. OTTATI & GOSS
                                                            Clle 1*694 F.Supp. 977 (O..V.H. 1988)
                                                                                                                 991

  n is chanie-

      abie to both sets of defendants since  the.
      study  included bollL properties.
      .  g.  $9,781.30  was  spent for E & E to
      collect water and sediment samples in  the
      marsh, Country  Pond and residences sur-
      rounding the pond. This sum is chargeable
     .to both sets of defendants.
        h.  $35,883.38  was spent for E & E to
      draft a Remedial Action Master Plan. This
      was a preliminary assessment which identi-
      fied the additional work needed to  under-
      take the RI/FS.  This sum is chargeable to
      both sets of defendants  since the plan  ad,-.
      dressed the remedial action for the entire
      site.
        The government further  contends that, if
      allocation of all  costs is required, of  the
      $240',129.S3 E & E costs chargeable to both
      sets of defendants j^gOjJM!),^*. is charge-
      able to the GLCC o'efcndants.
        GLCC, however, contends that E & E
      spent approximately 25^ of their time per-
      'forming  miscellaneous- non^iie»_s4ificif>c
      tasks.  These miscelianTCus tasks are at-
      tributed  to  training,  equipment mainte-
      nance  and reviewing  technical literature.
      GLCC  claims that this time factor was  not
      allocated to any particular site and may
      have related to equipment not even used at
      the site  and  to  reviewing literature  un-
      related to the site.  Taking into account the
      1.376  multiplier  factor—which  increased
      the LOE hours  from 4,354 to 5,991—de-
      fendants -contend 37.5f»  of E  & E's total
      charges  excluding  subcontractors'  costs
      represent miscellaneous costs.   Thus, mis-
      cellaneous  costs equal $91,257.90 ($243,354
 v    Jx.375)..
•""   •••• GLCC further contends that the added-on
  -••.  miscellaneous charge for non-site specific
      tasks represents  time in  which E & E was
 . '•  Jiot engaged in TDD's.  However, E & E
 X;   .charges the same loaded rate of $40.62  for
      equipment  maintenance as they do for actu-
        field work.
        Finally,  GLCC contends  that the  fully-
      loaded hourly rate for E  & E work in 1981
      and 1982  was $35.00  per hour.   GLCC
      claims it was adjusted upward  to $40.62 in
      1984.  During  testimony,  it was revealed
      that in 1981 when  E &  E was  actually
      doing the work at the site,  its cost analysis
 indicated that the appropriate rate was ap-
 proximately $35. per direct labor hour.  See
 Tr. 8, p. 101.  After reanalyzing its total
 billings to the EPA two years later, E  & E
 arrived at a different hourly rate of $40.62. v
 E  & E  claims  that the $35.00 rate didn't  \
 represent all costs associated with the  pro-
 gram.     <^
   The court makes the following findings
 of fact  with regard to the  E & E costs
 chargeable to GLCC:

          Subcontractors' Costs
           Chargeable to GLCC               %
   It is undisputed  that the  total E  &  E
 subcontractor costs are  320,717.50.   Ac-   *
 cording " to  the • Welti Well  distribution,
 $9,952.58 is directly attributable ^GLC(>-
 this figure  represents 12 of theTlTWelti
 Wells.  As for the remaining $7,447.40 sub-
 contractor costs, the court adopts a 50/50
 ratio allocation  distribution and finds that
 $3.723.70 is attributable to GLCC.  There-
 fore, total subcontractor costs chargeable
 to  GLCC equals $13,676.28.

           E &  E Labor Costs
           Chargeable to GLCC
   In assessing the directjabqr costs .attrib-
 uted to both sets of defendants, the court
 opines that  a 535/hour rate accurately re-
 flects the fully-loaded  hourly rate charge-
 able by E & E for work performed in 1981
 and 1982. The  record  as a whole contains
^substantial evidence as to why_the hourly
 rate was raised to  $40.62 in 1984.
   In applying the 1.376 multiplier factor, E
 & "E expended  a total of 5,991 labor of
 effort hours. The charge attributable to E
 & E direct labor, therefore, is $209,685.00
 ($35/hour X 5991    hours).      However,
 $9,198.35 (262.81 hours x $35/hour, see Tr.
 Day 6, p. 156)  was spent for E & E tf—>
 perform a magnetometer scan which was  /
 directly   attributable  to  Ottati  &  Goss./
 Therefore,  $200,486.65 must  be allocated
 between both sets of defendants according
 to  the court's 50/50 ratio.
   In applying the 50/50 ratio, $100,243.32
 is directly attributable to GLCC.  The court
 agrees with  defendant, GLCC that 37.5% of

-------
     992
694 FEDERAL SUPPLEMENT
     E &  E's total  charges, excluding subcon-
     tractors'  costs,  represent  miscellaneous
     costs  which this  court refuses  to  hold
    vhprppahle  to   dLCC.   Therefore^$62,-
     652.08 is  the appropriate allocation of di-
     rect E & E labor costs chargeable to GLCC.

            TOTAL  E  & E COSTS
            CHARGEABLE to GLCC
      In applying the  above numerated totals,
     the court concludes  that the total E  & E
     costs chargeable to GLCC is  $76,328.36.
'V^This  figure is  arrived  at  by adding the
   7 $13,676.28 subcontractor costs attributed to
  / GLCC with the $62,652.08 E &. E. direct
  /  labor costs  attributed to GLCC.

     Total E & E Costs  Chargeable to Ottati
               & Goss Defendants
      Reference is  made to pages 33 and 34 of
     the March  17, 1988 opinion and the follow-
     ing is incorporated.  Total E & E subcon-
     tractor costs chargeable to the  Ottati &
     Goss   defendants   equals'   $3,723.70.'
     $9,198.35   represents  magnometer  scan
     costs and  is directly attributable to the
     Ottati & Goss defendants.  Finally, E & E
     direct labor costs of $62,652.08  are as-
     sessed against  the Ottati & Goss defend-
     ants.  Thus, $75,574.13  represents total E
    , & E costs chargeable to the Ottati &  Goss
     defendants.               .
       \          •         .-..'.'••
         VIAR  AND COMPANY  COSTS"
      EPA spent  $75,538.13  for  work  per-
     formed by Viar & Company and National
     Contract Laboratory Analytical Laborato-
     ries under the  Sample Management Office
     Contract from  19S1 until 1984.  Costs of
     $9,270.14 are not charged to any defendant
     because there is insufficient data to conchy
                                          &
       The plaintiffs seek to charge the Ottati &
     Goss defendants $11,501.10, the GLCC de-
     fendants  $25,785.78 and  $28,981.11 to all
     other defendants.
       Costs are based on sample  "traffic re-
  S\ ports" and chain of custody reports indicat-
   \ ing the well locations where samples were
    \aken.                    ' •
                  Of the total cost of the Viar contract to^i
                EPA  of $75,538.13,  $67,984.39 was^
                alytical work and $7,553.73 was
                management costs.          . .
                  Metals analyses were conducted by Ver-r i^
                sar and RocJcjLJic«iJTtam~ltna4yt5cal Labora- lv
                tories. Tfoi total cost of metajs>nalysis b'i-<*
                $9,059.99 which is* not Chargeable — - - - -' ':*'
                anyone.
                  In summary, $9,270.14 isjlisallowed
                in''•!  (-.-.
                       - Peabody Clean  Industries :-^i
                  EPA paid $1,076,862.00 to Peabody Clean ||
                Industries, Inc.  for removal  of drums on <••£
                the Ottati &  Goss site;  EPA also reim-^
                bursed the  U.S. Coast Guard for another .K
                $484,000.00 paid to Peabody Clean  Indus^T-
                tries.  Evidence of these costs was present-^,:,-.
                ed at Phase II of this trial. See Tr.  Day 2^-4l
                pp. 9-11 & 17-18.  $1,560,862.00, therefore^
                is assessed against the Ottati & Goss A^-^
                fendants.        ;    —•—:	"*.
                            •BIONETICS     : •::-;
                   Bionetics participated in the Ottati
                 Goss cleanup, on behalf of the government,^
                           November,  1984.   A
                 representative provided testimony in Phase/


-------

bnducted by Vtr-
nalytica) Labora-
petals analysis is
krgeable agair,.-t

Is disallowed frr
P.99 is also disa!-
    metals. This
 .  the  $75,53?. I :<

 pre chared  f»r
 jlysis and a.«?wi-
 ork for sr.rr;;:!.--
 ItbeGLCCjim;-
  Country ' Po/;.?>.
  lid  for the c'^:.-
  ackground uv:l
   samples,  ai;-!
  lof $9,059.!>» -,

  gainst Ottati A
   I1 a shortfall «>f

   listries
   Peabody O:>"
     of drums <•-
   PA also  ri'iin
      for another
   I Clean Indu<-
     was pres-mt-
    See.Tr. Day S.
   E.OO,
     i &
     he Otttti  X
     .' governnu'!"-
     photogr:«j'J>

&
                            . U.S. v. OTTATI & GOSS
                            Cite M 694 F.Supp. 977 (D.N.H. 1988)
 L regarding work done on  the  Ottati &  tween both the
 Goss site and on the GLCC caustic lagoon.
   Bionetics incurred a  total cost of $10,-
 509.99 for the sendees provided.  The par-
 ties stipulated to the total cost, and further
 stipulated that the total cost would be allo-
• eated proportionately  between   Ottati  &
 Goss and GLCC based  upon the amount of
.-time spent by Bionetics on each site.  The
•allocation was determined  by ascertaining
•the amount of time spent on the site.  The
 stipulated allocation of  costs assessed is1
•$6,770.83 to Ottati &'Go?s and $3,738.17 to
 GLCC.   (Tr. day 7, pp. 50-52).
   IMC acknowledges the. stipulation to the
 allocation of Bionetics' costs in  their Re-
 quest -No. 610.  They  agree with the fig-
 nres, but note only tha^the costs incurred
- irpj-e-fCT-pfwieg;
                                                                              993

                                                          Ottati & Goss defendants
                                           and the GLCC defendants, since Dr. Gus-
                                           wa's work concerned ground water contam-
                                           ination at both sites.  The  court agrees
                                           with this assessment and holds GLCC de-
                                           fendants accountable for $14,089.24 for_ex-
                                           penses incurred by  PRC's employ of Roy
                                           Weston, Inc.
                                             PRC's employ of Life Systems, Inc. was
                                           for the purposes of identifying and listing
                                           five (5)je.vBgrjs_to testify in thc^ field.fi a£-
                                           toxicology,  quantitative  risk assessment,
                                           and environmental transport.  The govern-
                                           ment attributes a total  of  122 hours ex-
                                           pended in performance of this  task, at a
                                           totalcost^f $7,522.65. jMC_disp»ted the
                                            flSbnableriess  b't1"  this  cost,l since  the
 ••' Therefore,'$3,738.17 is charged to IMC
 for costs  incurred with regard to work
 performed by Bionetics.

        PRC ENVIRONMENTAL
          MANAGEMENT,  INC.
   EPA employed the sen-ices of PRC,  Inc.
 under a Technical Enforcement  Contract.
 PRC in turn, incurred costs as a result of
 fts employment of several subcontractors.
 These various  expenditures  may be best
 addressed through individual analysis of
 costs allocated to each subcontractor.  The
 subcontractors under PRC employ included
 Roy Weston,  Inc.,  Life Systems,  Inc.,
 Goldberg-Zoino  & Associates, Inc.,  Geo-
 Trans,  Inc.,  Cambridge  Analytical Associ-
.> ates, and Arthur  D. Little,  Inc.
 "*' The utilization of Roy Weston, Inc., pri-
- mariJy  involved the services of  Dr. John.
 Gaswa who served as an expert^witngas on
 -behalf of the government^HurmgPhase I.
 -Dr..Guswa was employed by a number of
 •ttbcontractors throughout  the litigation.
 Although his work remained consistent for
 • ibe purpose of this  case,  his employers
 ••Tuned  at  particular  intervals  during  the
 -case.  Dr. Guswa's employment with Roy
 •R'eston, Inc. began in December, 1984  and
 «>ded in May. 1986. The total expenditure
 •to Roy Weston, Inc. for sen-ices provided
 "-*y Dr. Guswa amounted  to  $28,178.49.
     EPA proposes to split this charge be-
                                                   overnmenUfladaTrcady rctaJBed_5t  least
                                                 four  (4) individuals who collectively pos-
                                                 sessed vast amounts of knowledge in the
                                                 areas requested of Life Systems, Inc.  The
                                                 work  performed  by  Life  Systems  was
                                                 apmewjiat excessive in light of the existing
                                                 witnesses retained by EPA.  Therefore, fif-
                                                 ty percent (50/t) is disallowed. $3,701.33 is ^
                                                 chargeable to Ottati &  Goss and $3,761.33
                                                 to GLCC defendants.
                                                   GZA  was employed by PRC  to provide
                                                 assistance  in  preparation of the Phase II
                                                 litigation which included expert  testimony.
                                                 The government asserts that expenditures
                                                 of $187,101.01 are directly  attributable to-
                                                 work performed by GZA as a subcontractor
                                                 for PRC.  Such assertion is supported  by
                                                 the post-trial  affidavit of Robert Van Os-
                                                 ten.
                                                   Since  the work performed by GZA  in-
                                                 volved both the Ottati & Goss site and the
                                                 GLCC site, and since no allocation of work
                                                 to the individual sites was performed, the
                                                 government suggests an equal division of
                                                 the GZA costs between the defendants. |
                                                 Therefore,  GLCC is chargeable with these 1
                                                 costs  for GZA in the amount of  $93,550.50 j
                                                 and $93,550.50 chargeable to Ottati & Goss.
                                                   GeoTrans, Inc. was employed by PRC.
                                                 The work performed by GeoTrans included
                                                 trial preparation by none other than the
                                                 very capable Dr. John Guswa. Once again
                                                 Dr. Guswa's work concernedj)ast>_pQisent
                                                 and future  conditions of~thegroundwater

-------
994
                            694 FEDERAL SUPPLEMENT
  at the Ottati & Goss and GLCC sites.  The
  government claims that §158,025.09  was
  paid to GeoTrans in return for the services
  of Dr. Guswa  during the period from Sep-
  tember, -19S6 through April, 1987.  The tes-
  timony of Dr. Guswa, however, indicated
  that his  contractual employ with GeoTrans
  terminated in February,  1987 and that sub-
  sequent to  this termination,  he was  em-
  ployed under a contract with the Justice
  Department.  The  work that  Dr. Guswa
  performed related to groundwater and the
  costs areto be divided equf>i|y' "»• £7(V
  012.54 apiecT-for-tne Utta£r& Goss and
  GLCC defendants.
  :  Another subcontractor retained by PRC
  for  the purpose of trial preparation was
  Cambridge  Analytical  Associates  '(Cam-
  bridge). ' Cambridge procured  several  ex-
  perts to testify as  to  chemical  analyses
  performed upon soil  samples  taken  from
  both the  Ottati & Goss site and the GLCC
  site.  No allocation was made concerning
  the  amount of work performed on  each
  site.  The government purports to  have
  spent $21,513.83 for  work performed  by
  Cambridge  Analytical  Associates.  How-
^eyer.^jhe^evidencg r^vpals a total expend)'-
•^rrof$20^61;91.^ $I07430!95 is assessed
 against the Ottati & Goss defendants and
 $10,430.95 against  the GLCC  defendants.
   Another subcontractor employed by PRC
 in  preparation of Phase  II litigation was
 Arthur D.'Little, Inc. (Little).   Little pro-
 vided experts to testify on matters of risk
 assessment  and  groundwater  analysis.
 The government asserts a total expenditure
 of  §28,704.25 for services provided by Lit-
 tle, and again suggests an equal division of
 this cost among the defendants.
  IMG's greatest objection to these expend-
 itures concerns  the manner of  contracting
 and_sufeoj}tractjng~bv^E£A.  According to
 f.MC, EPA doubled their expenses by hiring
 "prime contractors"  who  would hire "sub-
 contractors"  to. perform  work  which the
 prinu^jnntritpfnr Cf.uld dircftly have  per-
 formed.
  In accomplishing a particular task, prime
 contractor fees would be paid in addition to
 subcontractor fees,
 ing the cost.
                                           Little's total bill of $28,704.25
                                                      Pursuant to the
                                         mission,  the  United  States submitted
                                         post-trial affidavit of Robert Van Osten of '
                                         PRC who discussed  the  costs relative to-1'"^'
                                         PRC and its subcontractors.  See Tr Day-- -*£•?
                                         69, p.  17.  The affidavit, as well aa-aa^^
                                         attached  letter to EPA and work assign vv^£
                                         ment  summary,  demonstrates  that.
                                         amount paid to Arthur D.  Little, Inc.
                                                  testify on matters of risk
                                               and groundwater analysis.   	
                                         fore, $14,352.12 is assessed against the
                                         tad & Goss defendants and $14,352.12
                                         against the GLCC defendants.  .

                                          DEPARTMENT OF INTERIOR
                                           The EPA claims to have paid $2,373.79
                                         the %»partTnc,r-*_gf Interior to conduct
                                         liminary natural resource surveys at
                                         Ottati &  Goss  and GLCC  sites. -
                                        Of the total expense attributed to
                                        partment of  Interior, W7«  or  $1,899.03 i<
                                        allocated to the GLCC site.  This figure b~-
                                        derived from the total allocation of efforts -'
                                        expended as a part of the Remedial
                                        gation/FeasibiHry Study, of which the
                                        ral resource  surveys are  included.
                                        court accepts this, allocation
                                        $1,899.03 to work performed on the
                                        site  paid  to  the Department  of Interior
                                        $474.76 is thus allocated to the Ottati 2
                                        Goss defendants.

                                                      EPA COSTS
                                          EPA claims it incurred costs of         _^..,.
                                        412.62 for payroll, travel and indirect costs ,-v't&;:;.:_.;
                                        in  this case.   Of this sum,  $22,971.39 B-^/C:^^
                                        chargeable to Ottati & Goss for drum re- -J^g'^ '..
                                        moval costs from June, 1981 to April 19S2::.:£^££c
                                        526,400.84 is  chargeable  to  Louis Ottati. :,!?^-:|'/
                                        Wellington Goss, Ottati & Goss, Bernard.;,^t;^-.i:
                                        Senter, Senter Transportation Co., Conconi -' 3,^- >
                                        Realty Trust,  Richard French, French Pro- >v££^,
                                        cessing, Inc.,  and  GLCC.   §1,955.00 »".'.9?j££|

-------
   EPA claims:
   a.  $261,648.54 was spent on sakries_for
 EPA personnel in Region  I and in  Head-
 juarters.  The evid^pcc is that payroll and
  alaries were "$213,219. GO.
   b.  $31,842.03 was spent for travel by
  JPA personnel and relates to  the  entire
  ije asawhole.
 j  c.  $336,922.00 are indirect costs  which
 (include expenses  for  rent, utilities, sup-
 .'plies, clerical staff and other overhead ex-
 ipenses.  These indirect costs necessary to
 (operate the Superfund program cannot be
 .Attributed  directly ^to  the 0  &.  G/GLCC
 • Sites, and arc therefore disallowed.
   The total of salaries, travel and indirect
 costs is $245,061.68; $26,400.84 in non-re-
 moval costs were • incurred  prior to  the
 amended and supplemental complaint filed
 in January,  1983 and is chargeable to Louis
 Ottati,  Wellington  Goss,  Ottati  &  Goss,
 Bernard Senter, Senter Transportation Co.,
 Concord Realty  Trust,  Richard  French,
 Inc.,  French Processing  Inc.,  and  Great
 Lakes Container .Corporation.
   This reduces the amount to $218,660.84.
 EPA Region I_payro.ll_is 31.308-00-too high
 and the further reduction amounts to the
 sum of $217,352.84.
   This figure  should therefore be divided
 50ft to Ottati & Goss defendants and 50f»
 to the GLCC defendants, or $108,676.42 for
 each  site.    Therefore,  $108,676.42  is
 chargeable to the Ottati & Goss defendants
 and taking into account $1,955.00, the pre-
 viously allocated sum of GLCC costs,  $110,-
 ;63U2 is chargeable to the GLCC defend-
 ant's.
 COOPERATIVE  AGREEMENT COSTS—
v  • • GOLDBERG-ZOINO & ASSOCIATES,
 •• •  INC. AND STATE OF NEW HAMP-
>•  SHIRE
 ?' In March, 19S3,  EPA and the State of
 'New Hampshire entered into a Cooperative
- Agreement under which the State was the
 • lead agency to .oversee the development of
-"the Remedial  Investigation and Feasibility
 study at the Ottati  & Goss/GLCC site and
 EPA reimbursed the State for the costs
 •associated with the RI/FS, laboratory ser-
 U.S. v. OTTATI & GOSS                         935
Cite M «94 F.Supp. 977 (D.fC.H. 19SS)
               vices, on-sceiie coordination, equipment, ad-
               ministrative costs, and other costs for the
               development of  the RI/FS.  The Coopera-
              tive Agreement was amended several times
               to reflect additional work to be undertaken
               by GZA and the State in the completion of
               the  RI/FS.
                 EPA gave a grant award to the  State.
                 The State of New Hampshire, out of
               many  firms which were interviewed con-
               sidered Goldberg-Zoino  Associates  (GZA)
               to  be  the  most qualified  to  perform the
               work.   A  contract was entered' into be-
              'tween the State and GZA for the perform-
               ance of the RI/FS.
                 GZA subsequently proposed amendments
               for additional work to complete the project
              The State  approved  the amendments.
               .  GZA submitted progress reports and in-
               voices to the  State.  The  State paid the
               invoices after  reviewing them.  The State
               found  that the work met the requirements
               in the  contract and the United States reim-
               bursed the State.           .  •
                The State was billed for labor costs, over-
               head costs, supplies  and other expenses,
               subcontractor  costs and  profit
                 EPA spent  $603,460.72  rounded out to
               $603,461.00 for GZA to prepare the Reme-
              dial Investigation and Feasibility Study for
               the  Ottati  & Goss/GLCC site.
                 All costs' for supervision of the IMC re-
               moval operations and the supplemental test
               pit  operations on  the GLCC  site  were
               charged  to GLCC.
                'Wells located  on the Ottati & Goss site
               and down-gradient are chargeable to that
               site.  Wells located on the GLCC site and
               down-gradient  are chargeable  to GLCC.
               Background and upgradient wells are allo-
               cated  in cost equally to  all defendants.
              This also  pertains   to  seismic surveys,
               ground penetrating  radar,  magnetometer
               surveys and test pits.
                 Certain costs  arc  not differentiated  by
               site because the work required considera-
               tion of  both  sites.   Costs  for scientific
               analysis, engineering, dati interpretation,
               meetings, management and report prepara-
               tions are grouped together.

-------
996
691 FEDERAL SUPPLEMENT
  Allocation  of costs are required.   The
Ottati & Goss defendants are chargeable in
the sum of $122,542.00 and $480,919.00 is
chargeable to the GLCC defendants.  This
is based upon 20% allocation to Ottati  &
Goss defendants and 807° to GLCC defend-
ants.
  In  its  Remedial Investigation,  GZA and
its subcontractors reviewed prior data and
performed analyses on the Ottati & Goss,
GLCC marsh and Country Pond area.  Af-
ter the  field  investigation  GZA compiled
more data to determine the extent of con-
tamination and threat to the public health.
  GZA and its subcontractor developed a
risk  and exposure assessment to ascertain
whether there  were any threats to public
health or the environment.  This focused
on the need for remedial action.
  In its feasibility study, GZA and its sub-
contractors reviewed prior work in assess-
ing available technologies.  The remedial
investigation is percursory to carrying out
the feasibility study.
  GZA developed 18 remedial alternatives
fitting into five different categories.  Al-
ternatives included disposal at an off-site
facility;  alternatives which attained appli-
cable or relevant and appropriate Federal
public health  and environmental  require-
ments;  alternatives  which exceeded  such
requirements;  alternatives  which would
not attain, such requirements, but would
approach the level of protection provided
by such  requirements; and  a  no-action al-
ternative.
  After  consultation  with  the State  and
EPA, GZA culled the number to six alterna-
tives  which were  evaluated for their relia-
bility, feasibility, degree of protection, and  '
environmental impacts.
  GZA's  RI/FS has a section devoted to a
wetlands assessment.   GZA's assessment
described possible alternatives for abating
the contamination  in the wetlands and the
potential impact on the wetlands.
  \Vork on the Remedial Investigation com-
menced  in  September,  19S3.   The  Fea-
sibility Study started in the spring of 1985.
Initially,  the  19S2 National Contingency
Plan  was  relied  upon  in  developing the
                RI/FS.  Subsequently  the  1986 National
                Contingency Plan was relied upon.
                  The observed case represented what
                most likely  to happen at the site and
                worst case  is just. what the term implies.
                At the time when the Remedial Investiga-
                tion  began, the only guidance on the devel-
                opment of RI/FS was the National Contin-
                gency Plan.  The project manager had his
                own  discretion.   The Record  of Decisiotf
                was  done by the EPA.  Remedial Invest*. •
                gation/Feasibility Study  data from the Ot-
                tati & Goss/GLCC site was used in making
                the ROD.      "
                                                                                  -p.v-
                                                                                   '
                  It was  more efficient and  feasible for
                GZA to utilize one RI/FS for the two sites
                rather than doing them  separately. -
                  The  RI/FS do  contain  much material'.!
                which' can be viewed as arbitrary. ' For
                example, data and the court's findings that
                there was lack of evidence that there was-
                any  risk to  residential  wells or Country-
                Pond was blithely ignored.  This area will
                be discussed later in this opinion.      .„:
                  The  "worst-case" is qualitative and not
                quantitative.  It   is  not likely that the
                "worst-case" scenario will occur.    .  ; -T
                  The State of New Hampshire in its co
                tract \vith EPA did not separate the cos
                between the sites.   It was found  to be:
                more efficient  for GZA to maintain one-
                accounting  system  for the  entire site ^
                PrPJect.                             .V;
                  In the Cooperative Agreement  budget,
                the biggest category was for the Remedial
                Investigation Feasibility  study,  laboratory
                supplies, peraajinel, equip.me.nt leasing and
                administrative costs.   This amounted .to
                $5727412^0^1
                  EPA  seeks the  recovery
                under the^flDperativejlgreement with the
                State.  This is for overseeing-the develop-
                ment, of the RI/FS and associated  tasks
                from 1933 to the present time.  Expenses
                are broken down as follows:  $15,693.91 far
                office_jexp_endituces;  $1,996.84  for  office
                               Jturnituw*- $195,162.32 on
                                                                                 '
                                                                                   ";~"*t*j
                                                                                   • «'>,;•"».'••
                                                                                   •'* •iS?"
                                                                                   i----ji-T.
                                                                                   ••:•.--?£:'
                                                                                   .-,<. 2~t*-. •
                                          salariesfor^State employees in the .
                                          Supply andPollution Control Commission
                                          and the Department of Environmental S*r-
                                          vices;  $30.496.95  for employee_bgnggts .'
                                                    ~                           '*'

-------
        	 'National
    i._a  upon.
presented what was,
 at the  site and the
it the term implies.
Remedial Investiga-
idance on the devel-
the National Contin-
'ct manager had his
Record  of Decision
  Remedial Investi-
  data from the Ot-
was used in making

it and  feasible for
   for the two sites
i separately.
am much  material
as  arbitrary.   For
ourt's findings that
nee that there was
  wells  or  Country
•ed.  This area will
lis opinion.
   '"' -*ive  and  not
               the
impshire in its con-
: separate the costs
 was  found to be
i to maintain one
r the  entire  sit.?

Agreement  budget.
s for the Remedial
 study, laboratory .
ipment leasing and
Diis amounted to.

ery  of $298,028.37
greement with the
eeing the develop
I associated ta.-ees in the Water
ihtrol  Commission
Invironmental SIT-
                                                               U.S. v. OTTATI  & GOSS
                                                              CIle»s«94 F-Supp. 977  (D.N.H. 198S)
                                                                              997
 such  as insurance;  $4,710.43 for in-state
 travel by State employees;  $2,787.99 for.
 out-of-state travel  by  State  employees;
 $23,165.80 for indirect costs based on  a
 percentage basis, ranging from 6.4 to 11.06
 percent of costs  incurred on the Ottati &
 Goss/GLCC  project;  $14,797.68  for  the
 lease purchase and  maintenance of  a  gas
 chromatograph/mass spectometer used on
 the Ottati & Goss/GLCC sites;  $8,500 for
 the purchase of a computer; $711.45 for an
.audit
  The $298,023.37 under the Cooperative
 Agreement ^chargeable against both sets
 of defendants or §149,014.19 each.,

  DEPARTMENT OF JUSTICE  COSTS
  EPA  is claiming SI. -170.383. 13  for work
 performed by the  United States Depart-
 ment of Jusltce in the litigation of this case
 from  1980 until the  present time.
  $756,701.40 is.sputfht |or_salarics for De-
 partment of Justice  attorneys and parale-
 gals for their time spent on this case.
  In United Slates v. Northeastern  Phar-
 maceutical & Chemical  Co., 579 F.Supp.
 823   (W.D.Mo.1984),  rev'd  on   other
 grounds, 810 F.2d 726 (8th Cir.l9S6)  {here-
 inafter NEPACCO),  the court while recog-
 nizing that  it is  well settled law that a
 part}' cannot recover attorney fees unless
 provided by contract or  statute, did  allow
 recovery. The court found specifically that
 under  CEKCLA,  Section  107(a)(4)(A), 42
 U.S.C. § 9607(a)(4.)(A), responsible parties
 are liable for "all costs of removal or  reme-
 dial action."
  This court does not quarrel with the find-
 ing of the Missouri Court under the circum-
 stances of that case.  The ruling concern-
 ing attorneys fees  was  a?firmed_Jiy_ihe
                       ~
        Circuit in  19SG.  See NEPACCO,
 810 F.2d at 747-48.  The facts in this case
 are unique. The court has already alluded
 to the  conduct of the EPA and  United
 States counsel with regard to the conduct
 of both(phases of this trial.  To allow full
 attorneys fees wouH no* h^ pqmt.iMo n'e i»
       appear to be a condonation of un-
                  ArrnrHingly  tho omirt
~*'hile not disallowing the fees  in toto, re-
 duces them by 507* to $378,350.70.
   The plaintiffs  spent  $103,408.27 for ex-
 pert  witnesses during  Phases I and II of
 trial and for trial preparation.  The sum of
 $25,856.54 paid to the law firm of Brown &
 Nixon is disajjflyd  The balance or re-
 mainder of  the  witness costs, $77,551.73
 covering  the payn}fnt  nf  yn'fnpsspa  who
 testified on beHalfof the United States
 chargeable to both  sets of defendants.
.   The bill  of $89,529.78  allegedly spent for
 employee,  benefits, such as insurance and
 retirement contributions for paralegal time
 spent on this case is disallowed.
   $106,811.80. is charged  for  Justice  De-.
 partment attorneys  and paralegals to trav-
 el on matters relating  to the case.  Being
 consistent in allowing  only 5Q7o of attor-
 ncys fees, the travel Expense is similarly
 reduced to $53,405.90.
   $641.97 for freight, $1,332.67 for printing
 and $80.00 for  supplies for this case  are
 equally chargeable to both sets of defend-
 ants.
   In  summary,  $3,433.68 is chargeable to
 all of the  Ottati & Goss defendants; $23,-
 981.03 is'chargeable to  Louis Ottati, Well-
 ington Goss, Ottati  & Goss, Inc., Bernard
 Senter, Senter Transportation Co., Concord
 Realty Trust, Richard French,  French Pro-
 cessing, Inc., and Great Lakes  Container
"Corporation.  Additionally, 3511,362.97 is •
 chargeable against the Ottati & Goss and
 GLCC defendants or $255,681.49 each.  If
 legal  fees  were  charged by  the United
 States for work involving  Geochom, they
 shall be subtracted from the sum of $378,-
 350.78 (Tr.p.95,d.27, Phase II).


       PREJUDGMENT INTEREST
   The United States seeks interest on costs
 incurred as of October 10, 1986, the date of
 its filing and updated cost summary.  The
 State of New Hampshire has joined in the"
 findings of fact which  the United  States
 has filed.
   In  NEPACCO, 579 F.Supp! at 852,  the
 court  held that the United States  could
 recover prejudgment interest under Section
 107 of CERCLA. .The  court  stated that,
 "[i]n the absence of  statutory provision the

-------
                    998
                          694  FEDERAL SUPPLEMENT
.4*
                    granting of prejudgement interest lies with-
                    in  the discretion of the Court."  Id. (cita-
                    tions omitted).
                      The decision to award prejudgment inter-
                    est was based on what the court deemed to
                    be the intent of Congress that CERCLA  be
                    given a  broad interpretation so as  not  to
                    restrict the liability of  responsible parties.
                      There is law to the contrary.  See United
                    States v. South Carolina Recycling & Dis-
                    posal Inc., 20 Env'tRep.Cas. (BNA) (D.S.C.
                    1984) now on appeal in the Fourth Circuit
                    where EPA's  prejudgment interest  claim
                    was denied.
                     16]  The court in this case, however, de-
                    nies prejudgment interest.  Interest shall
                    accrue on or after December 9,  1985, the
                    date of the judgment on the liability phase
                    of  this action.
                     The court's  decision  is based  upon the
                    following  reasons  because of  what has
                    transpired in this case.  Some of these rea-
                    sons have been alluded to in other areas  of
                    this opinion.     . •
                     The United States has on many occasions
                    since it commenced litigation on May  15,
                    19SO  done the following: ignored
                   ders, delayed the progress  o7~Jhis  case.
                   twtnltinfr in snnrtinrjs beingjrnposed in the
                   liability ' phase,  attempted  to  reeatijp the
                                            in this phase of
the trial,  led Jhe court to assume it _had
authority to settle whej it had none, at the
time' making^* ,mocker£__ofa settlement
conference,  when former defendant,  Geo-
chem's motion to dismiss was granted, at-
tempted to recover sums expended in that
segment of'Th^lffTgSfTorragainst the re-
maiiiing'Tlcrfefil!aats~and a general insouci-
ance about judicial time with general oblivi-
on to  the  demands of time on the defend-
ants.
 . West Virginia v. United Slates, 479 U.S.
305, 107 S.Ct. 702, 93 L.Ed.2d 639 (1987) is
not apposite. In that case the State argued '
that it should be  exempt from paying pre-
judgment  interest to the United States be--
cause,  under its  own law, it  may not be
held  liable for  interest unless  it has con-
sented to  be.  It  is  interesting to note the
following:
      The District Court held that
    interest had to be paid depended
    balancing  of equities  between the parT
    ties;  the Court of Appeals rejected such
    an approach, as do we.  This is not to say
    that  an equitable consideration such  as
    laches  cannot  bar  an otherwise* valid
    claim for interest, see Board'o/Comm'rs • '••
    of-Jackson County v. United States, 308
    U.S.  343, 352-353, 60  S.Ct. 285, 289,  84 -...
    LEd. 313  (1939).                     . ^i
  107 S.Ct. at 706  n. 3.                 ; ]. £ *

     THE  IMC EQUITABLE  OFF-SET  V .^
    [7]  Another issue for the court's consid-- ."•''
  eration is IMC's requested equitable off-set "•'•
  against the court's ultimate levy of  dam- .
  ages.   The  requested off-set pertains  to 4
  IMC's  expenditure of $1,500.000.00  on_ a-::^
^voluntary  cleanup of the IMC/GLCC site ••
  from 1981 through IffSfi  In discussing ll
  this issue, reiteration is  necessary of find-  •
  ings already made by the court           ~.
    On April 19, 1984, IMC filed  a motion  -  -
  requesting leave of this court to immediate-
  ly proceed in a voluntary cleanup effort at
  the Kingston Steel Drum site, in order
  remove and dispose of 'all buried drums j
.  the site, and to clean up the soil at the si:
  See Doc.  ~ 629.  This court granted IMC
  permission to begin voluntary cleanup  of
  the site on  May 24, 1984, provided that
  such cleanup operations were performed ia
__accordance with  the  requirements of the
  Resou1fce~C6"ns¥r\'atidn~and Recovery "Act,
  42 U.S.C.  §  6901,  and RSA 147-A.  The
  court candidly ,was pleased thatjsamaoc-g^
r-wasTaCing.affirmative actjpn ijOKTs^case^) .
    In addressing  IMC's request for an eq-
  uitable  offset, the government asserts that
  IMC is  not entitled to any offsetting credit-
  See Doc. £ 1382, p. 52 (L.212).  The govern-
  ment cites the inadequacy of IMC's cleanup
  operation and^ajUireJtoproduce evidence
  subsumti^tinglhe_ aJJeged3o3t_oT3Jie_at^-
f^emetgd~cieanup.  Id.  at  52-53.   (The
  government claims that ^he_ documentation^
                                  _
—up — operation___was  insufficient for
                                                                                                  the
                                                                           __
                                                              amount requested^
                                                              .  There is no question, that IMC expended
                                                              a good deal of time, money and effort in an

-------

           whether
paid  depended on a
  between the par-
[jpeals. rejected such
   This is not to say
  sideration such as
bn  otherwise valid
 'Board ofComm'rs
  United States,  308
  S.Ct  285, 289, 8-1
  3LE OFF-SET
  I the court's consid-
  fd equitable off-sot
  nate levy of dam-
  ff-set pertains  to
  1,500,000.00 on a
    IMC/GLCC site
   .  In discussing
  pecessary of find-
  e court
  C filed a motion
  iurt *- immediate-
   c     ^Bbrt at
    s.    ^^Ber to
    buried drums on
   ;i? soil at the sit*1.
   Jrt granted  IMC
   itary cleanup  of
    1, provided  that
    ere performed in
    irements  of. the
    d Recovery Act;
    3A 147-A.  The
    d that someone
    ion, in this case.
     uest for an «*q-
     ent asserts thai
     ffsetting credit.
     2).  The govern-
     f IMG's cleanup
     •oduce evidence
     cost of the at-
      52-53.   (Th,-
      documentation
     ning the clean-
      cient for  tho
                                                                                                                999
                              U.S. v. OTTATI & GOSS
                            Cite u 694 F.Supp. 977 (DJV.H. I9SS)
  Attempt to cleanupthe GLCCsite.  The   contaminants.  However, the surveys could
  real issue^1s'"one"of effectiveness. ^ The   not, and did not, reveaJ_areas of contamina-

  cleanup amounted to a  somewhat lacklus-                                        ~~
  ter effort achieving wholly
Tnls'precludeTdiscovery of_VOCV stpredjn

deed, there is evidence substantiating post-
  results.  IMC alternatively argues that the
  deanup was performed in accordance with   excavation  discovery of plastic containers, j
                                           '                                "
  £PA and state standards and that contin-
  ued monitoring by government employees
  insured a successful cleaning of the site.
    In reviewing the evidence, it is clear that
  IMC's attempted cleanup was not a para-
  gon of excellence.  Tests performed subse-
  quent to the cleanup excavation reveal the
  continued presence ofjmyns and contami-
                                     the
 "GLCC site.   This  is not to say  that  the
  attempted cleanup^ was  entirely without
  success.                              "*
  ..The government contends that  the IMC
  excavation involved only one-third {'/>) of
  the entire site.  Although statistically cor-
  rect, this contention is somewhat mislead-
  ing.   The GLCC site encompasses 256,132
  square  feet   The evidence  reveals that
  only 75,000  square feet of the site' was
  excavated.
   The numbers are misleading in that they
  do not reveal the mariner or mode of the
  attempted cleanup.  IMC did not remove a
  land mass measuring 256,132 square fett,
  and six (6) to eight (S) feet deep.  Rather,
  the attempted cleanup consisted of a series
  •of »maJIgr_trgnch-like  excavations travers-
  _c£iiifL£nt.ire area. Sophisticated technolo-
  gy was (JhenUised to
  md floor in Order ta.dptor-t art-a<; gnd/«an.
•_ rpnfrarinn loji-In of uncovered
  tion.  This technology included use of mag-
  Detoroeter surveys and ground-penetrating
 , «dar,
 ' •  Measurements were taken,  surveys re-
  corded, and scannings were performed, pri-
 - or to, during, and after the IMC excavation
  •«  completed.   Although  effective  in
  awny respects, the advanced methods em-
 . ployed in excavating  tho site, were some-
  what limited.  For instance,  the use  of
                surveys  revealed  areas  in
       Jarpe numbers  of toxin-filled drums
  As previously noted, the excavation was
not successful in purging the area of toxin-
filled receptacles.   This, however,  should
not  deprecate  or  diminish   the   large
amounts of toxins which  were -removed
from the site,  as a result of. IMC's excava-
tion efforts.
  The contamination present in the ground-
water on  the  GLCC site appears to have
been a  subordinate concern during IMC's
cleanup attempt.  The evidence 'is replete
with  instances  of  toxins seeping  into
ground water during the excavation.   An
effort was made to aerate excavated soil
and to  test aerated soil for HI.U 'levels.
The efficacy  of  this effort, however,  is
somewhat questionable.
  Nonetheless, IMC undertook an attempt-
ed cleanup of the GLCC site. It is axiomat-
ic  in light of the foregoing to  summarize
that this  cleanup was  not successful  in
scouring the  GLCC  area  of  artificially
stored contaminants.  However, according
IMC no credit .for the cleanup effort im?
pugns basic equitable dogma.
  IMC claims  that SI ,500,000.00 was ex-
pended  in  its attempted  cleanup of the
GLCC site.  IMC requests that  it be given
an'oTniettin.g credit of this _entire amount
against ~any amount of damages for which
this court may deem it liable.  An offset  of
this nature is entirely excessive.  IMC has
produced very -little evidence pertaining  to
expenses incurred as a result  of the at-
tempted cleanup, to support this.request
  While denying  any off-set to IMC, the
court does grant IMC alfjndirect creiSfe  or
off-set.  If EPA is adamant about aerating
or incinerating the 5.88 acres it does so  at
its  own expense.   In one of its post 1984
IMC views, the  court noted the
                                                                __       _   work and present almost<£er.dant	
                                                  'his.jHvelatTon provideTTor.;  of the site. At the same time, the court is
                                                 ap^oach^Qithg^rfcrnoval of   fully cognizant  that  in its subterranean


-------

 10UO
694 FEDERAL SUPPLEMENT
 depths, there is noxious ground water under
 the site,

      REMEDY  AND THE  FUTURE
             OF THE  SITE
   CERCLA, as  amended by SARA vests.
 the President with, the  exclusive authority
jto select  remedies for Superfund  sites.
 The President has  delegated his authority
 to select remedies at sites listed on  the
 National Priorities  List to EPA.
   Section 121(a) of SARA provides:
   Selection of Remedial Action—The Presi-
 dent shall select appropriate remedial ac-
 tions determined to be necessary to be car-
 ried out under Section 104 or secured under
 Section 106.
   Merrill  Hohman, Director of the Waste
 Management Division, Region 1, U.S. Envi-
 ronmental Protection Agency is responsible
 for administering the  Superfund,  RCRA
 and Underground Storage Tank Programs
 in New England.
   CERCLA and  the NCP outline the steps
 that must be taken prior to the cleanup of a
 site.  EPA  selects  a remedy which  is set
 forth in a Record of Decision (ROD).
   In regior. 1 of EPA, which includes New
 Hampshire, Hohman has the final responsi-
 bility for insuring that the ROD meets all
 appropriate technical  and  legal  require-
 ments.    \
   EPA  issued a preferred remedy for the
 site on October 29,  19S6 and sent it out for
 public  comment.   The  public  had five
 weeks in which to comment and that period
 expired on  December 5, I'JSo.  .
   On January 16, 19S7,  EPA issued a final
 remedy decision for  the site  in  a  ROD
 signed by  the Region 1, EPA Administra-
 tor.  The  government  -responded to  the
 comments  that it received.
   EPA's selected remedy comprises three
 types of  treatment.  The treatments  are
 designed to extirpate hazardous substances
 at the site. This the EPA proposes to do
 by the following remedies:  incineration of
 PCB contaminated soil and sediments, ther-
 mal aeration  of  VOC-contaminated soil,
 treatment  of groundwater.
                                                          sfff--:-;
                                                          £&£;
   The source control method has a two-fold
 purpose.  It reduces direct contact with the^
 chemicals and it removes chemicals so thad
 they will not leach  into the groundwater'
 thus exacerbating the  groundwater con-*- •'- ^.' -
 lamination.                           - -.y^X-.
   EPA also proposes  to incinerate sedi- - • ;V%-~V
 ments which contain PCBs  greater than 1 • &£}'& ,
 ppm.  This  court has  already ruled that ; :-H>rv^5 •
 IMC complied with standards then extant
 when they  reduced  PCBs to  50 ppm.  - If
 this is now EPA's desire, they do it without
 IMC being  liable for this cost.      .  -"^
   The site is zoned rural residential accord-
 ing  to the  Kingston  Zoning Ordinance..:. iV^iJE !-
 The knowledgable Senator Bartlett, a real- ',:.•'''f|pj
 tor and a legislator  for the  Kingston area ^^SH
 testified.  A rural residential area  means
 that  you can build  a single  family or a
 two-family dsvelling or a commercial build-
 ing,  provided you have the  vote of  the
 community.  The court is  of the. opinion
 that  inJhp n°ar fuljiir? uf fjv? \n ten ynan
 this area would not ha"° ° g"^1
 potential  because of this
"Storing of the site.
              MONITORING          . ;-
   With respect to the groundwater remedy,
 there is no question that it will have to be
 monitored in  the  future.  How long?  It
 can't be stated with accuracy at this time.
   Practically, the onus of this chore will be
 borne by  the State of New Hampshire
 The eventual decision  is left to the collec-
 tive judgment of the United States and the
 State of New Hampshire.  The monitoring
 wells will have to be sampled on an annual  .
 basis.  Any party interested can indicate to
 the monitoring plaintiff that they would
 like to  be so advised sufficient  time in  .
 advance in order to participate, observe, or
 split samples.  Laboratory results shall be ,
 made  available to  all parties who partic-
 ipate.   Costs of the  sampling  and labo-  ,
 ratory  testing shall be allocated equally
 between the  parties.                  ;  •:••
   If sampling discloses  any untoward re-
 sult and the  parties are unable  to  resolve.
 the issue  then  and only then shall it be
 submitted to the attention  of the court
                                                           •vt

-------
                            U.S. Y. OTTATI & GOSS
                           CHe •• 694 F-Supp. 977 (D.N.H. I9S8)
                                                                                                                1001
          tt'O-foM:
          Hth the
 o.  , .^is so that
i the  groundwater.
groundwater con-

   incinerate  sedi-
 3s greater than 1
jlready ruled that
iards then extant
 s to 50  ppm.  If
 they do it without
  cost. •
[residential accord-
 oning Ordinance.
 |r Bartlett, a real-
 he Kingston area
 ntial area means
 ngle family or a
 commercial bui!d-
 |the vote of the
   of the opinion
  five to  ten years
   a  good saleable
  tigation and mon-
CC
-.dwater remedy.
 will have to he
,How  long?   It
icy at  this time.
his chore will 1-e
 e%v Hampshire.
 ft  to the colfcc-
  States and the
 The monitoring
  d on  an annual
  can indicate to
  at they would
  ficient time  in
 ate, observe, or
  results shall  I'-'
  ies who partic-
  ling  and bK»-
  ocated equally

    untoward  ra-
  bble  to rcsolvt-
  hen shall it  b«-
    of  the court.

                         fe-
  Even the most confirmed optimist after
viewing the history of this case would have
to agree to  the following.  Monitoring  is
inevitable.  There will be issues in the fu-
ture concerning the wetlands  and develop-
ment of the site: Hopefully,  the  Town of
Kingston ordinances and the statutes of
the State of New Hampshire if  apposite
can control
  The  PCBs  in South Brook shall  be re-
moved.  The cost of removal shall be borng_
by all  defendants.  In this instance PCB
contamination shall  be reduced to 20 ppm.
The imposition of a 20 ppm level applies to
both soils and sediment
       STANDARD OF REVIEW
  IS]  The court agrees  with plaintiffs'
contention that the  standard of review of
EPA's selection  of  response action under
CERCLA is governed by the arbitrary and
capricious standard, but not in this  case.
The court did not limit its findings to the
administrative  record.
  42 U.S.C.  §  96130X2) was amended by
SARA on October 17, 1986 and it provides:
"(2) Standard.   In  considering objections
raised in any judicial action under this act,
the court shall uphold the President's deci-
sion in selecting the response action unless
the objecting party can demonstrate, on the
administrative record, that the decision was
arbitrary and capricious or otherwise not in
accordance with  law."
  The court followed the preponderance of
the evidence standard.  Zellers v. Chase,
105 N'.H.  2G6, 268,  197 A.2d  206 (1964).
  This issue was ruled on prior to  the com-
mencement of the  damage phase of this
trial on February 2,  1987. The  court based
its  ruling on  the  following quote  from
Bradley v. Richmond School  Board, 416
U.S. 696, 711, 94 S.Ct. 2006, 201-6,  40 L.Ed.
3d 476 (1974):  "We anchor our holding in
:this case on the principle that a court is to
fcpply the law in effect atlhe  time7t rerT
•ders its decision, unless doing so would
resultTn mantfestlnjustice or there is stat^
            n or legislative history to the
   In Dedham Water Company v. Cumber-
 land farms Dairy, 805 F.2d 1074, 1084
 (1st Cir.1986) the Bradley case was cited,
 in the following context: "The rule that a
 court must apply the  law in effect at .the
 time it renders a decision is not, of course,
 an absolute mandate.  The rule does not
 a'pply if it would result in manifest injustice
 or if there is statutory direction or legisla-
 tive history directing  otherwise."  In this
-case suit was commenced on May 15, 1980,
 the  liability phase of the trial has ended
 and the amendment known as SARA had
 become effective  a little more than three
•rnonths before  the damage phase'  of the
 trial.  To allow the damage  phase to be
 decided at this  point in time solely on the
 administrative record would_really be mani-
 fest injustice.

             COST OF THE  V
       GROUNDWATER REMEDY
   The groundwater remedy as projected by
 the  plaintiffs  is  approximately   $5,812,-
 500.00.  This consists of an initial1
 cost of $2,562,500 and operation and main-
 tenance costs of $3,250,000.00.  It also as-
 sumes  treatment  at a  rate of 100 gallons
 per  minute for five years.
   Extraction wells capital costs are §80,-
 000.00 for purchase and installation of the
 wells.  $180,000.00 for purchase and instal-
 lation of pumps and piping. The estimated
 number of wells is 22, with average depths
 of 25  feet.  The concept of a  roadway
 through the marsh is not viable if it contra-
 venes the court's ruling. See page 986 of
 this opinion.  Costs for treatability and air
 quality monitoring are associated  with the
 groundwater treatment. Treatability stud-
 ies are $50,000.00  and air quality  monitor-
 ing  $5,000.00.
   Direct  capjtaj[ costs including the road
 through the swa~mp amount to $2,050,000.
^Indirect' capital  costs  were computed at
 25% for a total capital cost for the ground-
 water extraction and  treatment system in
 the  sum  of $2,562,500.00.
   The estimated annual cost
 and. maintenance  amounts <£o $855,000.00.
   Discounted at a 10% rate_
 present worth figure
                                                                                                              _4jiye a

-------
m
                1002
                           694 FEDERAL SUPPLEIVIENT
                  The exact amount cannot be calculated
                until there is  a reasonable cost estimate
                regarding-the marsh.  As stated, the court
                does not approve the roadway as proposed.
                The  cost  'of  skid  mounted  bombardier
                equipment or  a decking system  may be
                more or less than the proposed roadway.
                  The court has also found that none of the
                defendants arejzx-anywaiyresponsible for
                 '
                                           the years 1979, 19SO and 1981
                                           ed by the Attorney General's Office-
                                           not charged.  This involved a great
                                           of attorney  time for _which
                                          ,_£!!HS§-       *
                                             The State  incurred costs to the
                                           Hampshire Division
                                          _yices, Office
                jn'etals In  the
                             If that is 'a
 factor in the cost estimate it should also be
 discounted  in the overall cost.

         THE  STATE  OF  NEW
          HAMPSHIRE CLAIMS
   The State of  New  Hampshire has  in-
 curred a total  of $200,078.00 in past costs
 with respect to the Ottati  & Goss/GLCC
 site.
   The State has  recovered $80,000.00 in
 settlements made with the  Generator De-
 fendants,  namely,  General  Electric, Sol-
" vents Recovery- Service, Lilly  Industrial
 Coatings and KJ, Quinn. Thus, «
^rejuCfs  thfjimount of pastcosts for which
, it seeks  r^mbj^rsementTroni the remaining
  efgrrtEuntsbv  580,000.00.  The remaining
 defendants  are alluded to on page one of
 this opinion.
   Mr. Labelle  of the New Hampshire Air
 Resources  Agency  spent  from ten  to
 twelve daysVesponding to  interrogatories
 propounded by the generators and the then
 third-party 'plaintiff GLCC.  The court as-
 sesses damages against the generator de-
 fendants and   GLCC  in  the  sum  of
 $1,200.00.
   The Attorney General's Office cost per
 hour of attorney  time  ranged between
 $20.31 in 1932  and $33.50 in 19S7.   These
 are  very_rcaj>on:ibte hourly  jates.
   A total-cost  to the New Hampshire At-
 torney  General's Office  for litigation  of
 this case from  January 1, 1987 to July 22,
 1937 in  the sum  o^ $45,293.04 is assessed
 against  all  defendants!
   The further  sum  of §106,721.84  is as-
 sessed against all defendants commencing
 from the date  the  State  appeared  in this
 c;:se through December, 1986.  The court is
 cognizant .of the fact  that  timesheets for
             division of Public Health"'Se^3g3&&f
              of Waste Management"•••.?-i"-i>Ji.5*-<;§:i'
                                   -. ..«^jf svtv#o'-i
   Mr. Gordon of that agency spent time V»-v--^'*''*':s
 the site monitoring the IMC and GLCC;
 and drum removal  operation in  1984
 1985.   $5,228.39  of expenses which-'
 State  incurred through Gordon is
 able and assessed against IMC and
   Additionally all parties privy to
 ond phase of the trial stipulated as to
 following:  that  the agency had incurred "§*
 $7,806.34 in expenses  for work performed;
 in connection with the Ottati & Goss/GLCCJU.,,,.
 site by a Mr. John Liptak. $7,063.49 of tha $jJ£it
 sum is chargeable solely against ""**I#*^?'
 $592.26 against all  liable parties;
 against all liable parties.
   Personnel from the New Hampshire
-ter Supply & Pollution Control (
 monitored groundwater at and
 to the  Ottati & Goss/GLCC site.
 penses ofS33r778.44 is reasonable^and'a
"chargeaDle~a^gainst all  defendants.  '::J^j

     TOWN OF KINGSTON CLAIMS
   The attorneys representing the Town
 Kingston have submitted a bill to the to*. :t.j.A-^:.
 in the sum rr «'"" =co "' — •* —*-f-~v*-*- '?•**:* •*
 expenses amounting
 of $107,956.29.                 .  .. s^^.,^.
                                   * ' * ^"^• £ & V " ^_- •
   The Town  of  Kingston is  a
 party under RCRA  [33  U.S.C- §
 amended.
   Attorneys fees prior to October 10r',
 were $73,182.25 and from October 10,
 through July 1, 1987 were $29,387.50
 are reasonable.
   Expenses through October 10, 1986
 $4,234.90  and  to  July  1,   1987  :*«*,•
 $1,151.64 or a total of $5,386.54.  -  • --^% .;;j: I
  • GLCC
 N.H. RSA
 and the State can seek jrelief for
 nuisancjx_ii_createa on  the'GLCC site.
                                                                    of $102,569.75 and out-of-pocket ^-^T
                                                                   imounting to J5.386.54 or a total.-J^';"--'-'
                                                                                           . . - • jjtri ^AS***... ."•,, *.
                                                                                 ,..
                                                                 has been found liable for violatinjf V-^i.
                                                                 A § M9:8(IHXa) (1977).  KicgsWfl'^^
                                                                                                   J-

-------
and iaSl were discard-
 General's Office and
volved a great amount
if which  there  is  no

d costs to the  New
>f Public Health Ser-
 e Management
.agency spent time at
 e IMC and GLCC soil
peration  in 1984 and
 expenses which  the
 ;h Gordon is reason-
 itnst IMC and GLCC.
[ties privy to the sec-
  stipulated as to the
[igency  had incurred
  for work performed
 [Ottati & Goss/GLCC
 ak.  $7,063.49 of this
 olely  against  IMC;
 ble  parties; $150.59
 OS.
                                                                U.S.  v. OTTATI & GOSS
                                                               Cite « 694 F.Supp. 977 (D.N.H. 1988)
                                                                            1003
|r at and contiguous
JGLCC  site.  Its  ex-
  reasonable and is
 defendants.
 $TON CLAIMS
 lenting the Town of
 [d a bill to the town
 fo and out-of-pockot
 I$5,3S6.54 or a tola!

 on is a prevailing
  U.S.C. § 13G5], a*

 o October 10, l9Mi
 TI October 10, 19S('>
 ere $29,387.50 and

 ober 10, 19S6 wm-
 »•  1,   1937   were
 jS.386.54: ,
  liable for violating
  (1977).  Kingston
  -lief
              Ad-
  ditionally, GLCC has been found liable to
•  the Town of Kingston under RCRA § 7003
  and the Clean Water Act 33 U.S.C. § 1365.
  United States v. Otlati & Goss, Inc.,  630
  F.Supp.  1361,   1416-1418  (D.N.H.1985).
  IMC  has  agreed  to indemnify   GLCC
  against any judgment that might be ren-
  dered against GLCC with respect to con-
  tamination of the GLCC site or down gradi-
  ent contamination.  See the ex parte report
  filed with the court dated March 14, 1984
  entitled stipulations disposing of third-par-
  ty complaints between  GLCC and IMC.
   The Town of Kingston and or its select-
  men are entitled to an award jointly and
  severally against the Ottati & Goss defend-
  ants, and GLCC for expenses and attorneys
  fees.  This does not include the generators
  or IMC individually, that is sans its indem-
  nity agreement

      CIVIL PENALTY ASSESSED
            AGAINST GLCC
   19]   This court in Phase  I  of the trial
  found that  neither GLCC or its predeces-
  sors were issued a National Pollutant Dis-
  charge Elimination System ("NPDES") per-
  mit by the State of New Hampshire.  Unit-
  ed States  v. Ottati  £  Goss,  Inc., 630
  F.Supp. at 1401.  This was  in violation of
  Section 309  of the  Clean Water Act, 33
  U.S.C.   § 1319.    See  Chesapeake  Bay
  foundation v. Gawaltney of Smithfield,
  611 F.Supp. 1342 (E.D.Va.1985), affd, 791
  F.2d 304 (4th Cir.19861), cert, granted, 479
  US.  1029, 107 S.Ct 872, 93  L.Ed.2d 827
 -(1987).
   The  court does impose a total fine of
  $5,000.00 for the violation on December 1,
  .1982.   A violator's willfulness or  negli-
  gence,  or lack thereof, is  one factor to
-  consider  in  arriving at  a  final  penalty
  amount  Considering the events then ex-
  tent at the time  or times of the violation
  the court does not find that GLCC's actions
  *»e willful.  Cf. Chesapeake Bay Foun-
  dation,  611 F.Supp. at 1561.
 "•' Some of  the  pollutants discharged by
  GLCC  were hazardous substances  as  de-
  fined by CERCLA, hazardous wastes under
       and toxic pollutants under the Clean
        Act
                                                                                IN RE: .ORDER ON MOTION TO
                                                                                ALTER, AMEND AND CLARIFY
                                                                                          (DOC. # 1401)
                                                                               Subsequent to this  court's March  17,
                                                                             1988 opinion with regard to-Phasc II of this
                                                                             case, all parties submitted motions to alter,
                                                                             amend and clarify.   This court issued its
                                                                             order amending its Phase  II findings on
                                                                             July 22,  1988.  To  believe  that the order
                                                                             will put an end to  this long  and arduous
                                                                            . case is just plain hyperbole.  Sections of
                                                                             that order have been incorporated into the *
                                                                             amended damage phase opinion.   Other ap-
                                                                             posite sections of the order are as follows:
                                                                                         EPA'S Liability
                                                                               The  court's  findings  with  regard
                                                                             EPA's  liability will  not be altered.
                                      to
            IMC rinding 123
   If IMC Finding 123 is  inconsistent with
 the court's  Phase I finding at 630 F.Supp.
 1377,  wherein the court  stated, "[djrums
 were buried during Kingston Steel Drum's,
 IMC's  and  GLCC's  ownership"  then  it
 should be  changed to conform  to  such
 Phase I finding.

       Department of Justice Costs
   The court will  not  alter or  afriend  its
 decision with regard to Department of Jus-
 tice Costs.  Contrary to the  government's
 position,  certain  Department of Justice
_costs were  not omitted  for lack  'of indaga-
 tion.  Costs for rent and  transcripts were
 intentionally omitted and are disallowed.

              EPA COSTS
   With regard  to the  payroll amount of
 $213,219.00 reference is  made  to Day 9,
 page 22 (Tr).  The court's ruling of March
 17,  1988 stands.

     EPA's Indirect Costs and DOJ
            Employee Benefits
   There is  ample  evidence of record why
 this court allowed  the State of New Hamp-
 shire's indirect  costs and disallowed indi-
 rect costs  of the  United  States.  To add
 further fuel to the fire, the United States

-------
 1004
631 FEDERAL  SUPPLEMENT
 has the temerity to state there is no reason
 for its ustulation by the court.
   Without reiterating what is self-evident,
 the cavalier and hubristic actions of EPA in
 this litigation warrant  the use'of  punitive
 measures by the court.  This litigation ap-
 pears to be interminable  and this ruling
 may be considered  a harbinger if future
 court hearings are necessitated relative to
 monitoring.

 Ruling  on Fifty-Fifty Division of Costs
   This court  is  mindful of  the  joint and
 several  liability  already imposed.   In as-
 sessing distribution of costs, however, equi-
 ty plays a significant role.  The  age-old
 maxim that "one who seeks equity  must do
 equity"  applies__W|'fh  oqn^L  fnrpo tn  thfl.
•government.  Throughout  this  trial,  the
 EPA has refused to allocate costs betwe'en
 the two sites even  after they knew  IMC
 could not be held liable for any costs asso-
 ciated with the  Ottati  & Goss site  and
 altogether failed to advise their contractors.
 of IMC's non-liability for Ottati & Goss.
 Furthermore,  IMC  and other defendants
 introduced evidence  to show that allocation
 was beyond peradventure.  Finally, refer-
 ence is  made to this court's reasons for
 denying  EPA's indirect costs, infra.
   This court  stands by its   prior  rulings
 with regard to cost allocation.
          \
         Calculation of Credits
   This order pertains to calculation" of two
 credits which were  assessed  against  the
 United States' recovery in the court's deci-
 sion of  March 21,  19S8.  Specifically,  at
 page 24 of the opinion the court  ordered
 IMC credited  with the  NUS costs  relating
 to events of September 9,  19S3.  On page
 50, the court  ordered a credit against the
 legal fees incurred by the United  States for
 its litigation against the dismissed  defend-
 ant Geochem.  The United States has calcu-
 lated the credits (Docs.1 £ 1447 & 1448) and
 IMC has responded  (Docs. * 1435 & 1444).

      NUS CORPORATION  COSTS
   The United  Stales has submitted its cal-
 culation  of  the  credit for  NUS "costs.
 $54-1.61  represents the cost for  NUS per-
                sonnel on September 9, 10S3.  $319.30
                resents the  costs expended by
                drum removal  in the weeks of
                16 and 23, 1933.  Additionally, $1,737.00 a
                attributable  to subcontractor costs for a
                subcontractor to haul the drums to a differ-
                ent location.  (See Tr. day 6, at 81 (Phase -'•"
                2»-                        .         -^
                  The United States' calculation of credits •'*.-}:
                for NUS costs  is adopted by the court and.:'3-~
                incorporated  bv reference. _ IMC is 'entitled::"?}
                to a credit of $2,660.91 for the work per- 4 -
                formed by the NUS contractors and subon--V.:^
                tractors relating to the drum puncture of •- ,
                September 9, 1983.                  xr3%jg
                                                 • . -._ ;<$£&
                             Geochem Costs         ."rj-^fi
                                                       . -"' ? "•
                  The United States  has submitted a calco- ••"il-
                lation of the  attorney salaries spent by the.. •••". '.',
                Department of Justice in  litigating
                Geochem.  $7,890.10 represents salaries' of -'
                Attorneys Sheila Jones, Lloyd Guerci and
                Michael Hill, supported by time sheets and
                affidavits.   $457.20 represents the salary
                of EPA  Attorney  Philip Boxell for three
                eight-hour days involved in matters relat- -
                ing to Geochem.  $105.78 represents Attor-
                ney William Evans' presentation of tesjfMJh
                ny  involving  metals from  Dr. KhiflB
                The  government's breakdown of 34 hours;
                multiplied by $24.89/hr., divided by 8  (one-
                eighth of testimony related to metals), is
                reasonable.  Also $633.17 represents  legal
                fees  in presenting  the  testimony of the
                Versar  witnesses concerning analysis of
                metal samples.  Thus, $9,086.25 represents
                the government's calculated Geochem  cred-
                it-                             •     •=-.'J
                  The government's figure for total  time
                attributable to the Geochem case does not
                include any itemized figure for Attorneys
                Motrke or Cook!  The evidence filed  with
                the  court  shows that  Attorney  Moerke
                billed a total of 185 hours to this case with
                115.9 hours ofThaTBtatTTme, or 63?« of his
                biliable time,_charged  to. the case  between
                November  1,^1982 and February 29,  19S4-
                40.57 hours are attributable  to  the  Geo1-
                cfierrt case.'   fTTSO" hours are charged to
                the case by^Uorney'Cbokr Thus, calculat-
                ing  these  additional  hours  at  Attorney
                Jones' and Attorney Hill's prevailing  bill*

-------
[,                     -*^*ac^pv,jiw«:
       ^Wl!
                                                                        U.S. v. OTTAT(  & GOSS
                                                                       Clle u 694 RSupp. 977  (D.NMI. I9SS)
           19.30 rep-
jended  by NUS  for
f-vecks of September
 tionally, $1,737.00 is
 tractor costs for a
he drums to a differ-
 day 6, at 81 (Phase

Calculation of credits
:ed by the court and
Lee.  IMC is entitled
1  for the work per-
ntractors and subon-
e drum puncture of
  Costs
  s submitted a calcu-
  alaries spent by the
  in litigating agains-t
  presents salaries of
  ,  Lloyd Guerci and
  by time sheets and
  >resents the salary
     P-      or thrt-e
                relat-
               Attr-r-
  entation of testimo-
  rom Dr.  Klaussen.
  cdown of 34 hours
  , divided by S (orn.'-
  ated to metals),  is
   .7  represents Ifnul
    testimony  of iho
   ?rning analysis i>f
   9,086.25 represent*
   ited Geochem cmi-

   ure for  total time
    icm case does nut
    ure for Attorneys
   :videjjce filed with
    Attorney Moerke
    s  to this case with
   time, or G3/~ of hi*
    the case betw«.n :i
    •ebruary 29,  19«.
    table  to the Goo-
    •s are charged  to
    k.  Thus, calculai-
    >urs
    's pr
                                 t  ":.:
I-?'
                                {;;;,
                                rv^;:
.ble rales results in  additional charges at-
tributable  to   the   Geochem   case  of
$3,249.77.
  The total legal cost figure for the Geo-
chem litigation is $12,336.02.  Applying the
-50/50 percentage basis allocation, IMC and
GLCC are |fialitkdjo_a_credit of $6,168.01.
and the  nonsettling Ottati &  Goss defend-
ahts are entitled to a credit ot !jti,I68.Ql for
          litigation costs.         ~~"	
         Calculation of Interest
 . Interest rates shall be calculated by the
Cierk of Court as he  does in  the usual
course of court business.  This  will be at
the prevailing rates commencing from De-
cember 9, 19S5. The calculation of interest
owed shall be within CO days of the court's
ruling on the cost issues.
               IN RE: ORDER ON MONEY
                       JUDGMENT
           This order on Money Judgment is to be
         incorporated into the court's memorandum
         opinion of March 17, 19SS, United States v.
         Ottati &  Goss,  Inc.,  No. 80-225, slip op.
         P.N'.H. March 17,  1988).  For the purpose
         of this judgment the term "Ottati & Goss
         defendants" shall include the following de-
         fendants:  Louis Ottati,  Wellington  Goss,
         Ottati  &  Goss,   Inc.,   Richard  French,
         French  Processing, Inc.,  Lewis Chemical
         Company, Bernard Senter, Senter  Trans-
         portation Company, Concord Realty  Trust
         and  Great  Lakes  Container Corporation
         (GLCC).  The term GLCC defendants shall
         mean GLCC and International  Minerals &
         Chemical (I.MCj.
         ;' 1.   The Ottati & Goss  defendants  are
         hereby adjudged jointly and severally liable
         to the  United  States for the  following
         amounts:
         »•  Peatody Clean  Industries  Co>ts
         b-  Kingston Fire Department  Costs
         «•  U&kon 4 Hanger-Silas Mason Co.
              Costs
         •*  I-T. Corp. Costs
         *•  EPA Payroll during drum remov-
              al
            KUS Costs
            Techlaw Costs
            CCA Costs
            Arthur D. Little Costs
            IT Atlantic Services Costs
            Ecology •& Environment Costs:
                                        •I

                                        "b.'
                                 1.560,862.00
                                    1,694.00

                                   17.601.83
                                   16.33.4.20

                                   22.971.39
                                   11.180.50
                                   11.639.05
                                   137,489.50
                                    4.058.84
                                   35.KS4.S8
                                              Labor
                                                                            r,2.t;52.08
    Subcontractors
1.   Viar Costs
m.  Bionctics
n.  PRC Costs:
    (i)   Roy F. We>lon Costs
    (ii)  Life Systems, Fnc. Costs
    (in)  GZA Costs
    (iv)  Geo Trans Costs
    (v)  Cambridge Analytical Costs
    (vi)  Arthur D. Little Costa
o.  Department of Interior Costs
p.  EPA Costa
q.  RI/FS Costs
r.  Cooperative Aereement Costs
I.  Department of Justice Costs
    (i)   payroll predating amended
          complaint
Total
                                                                                           1005
                                                                                          12,522.05
                                                                                          It.nOl.IO
                                                                                                                           U.069.24
                                                                                                                           3,761.33
                                                                                                                           93.550.50
                                                                                                                           /y.012.54
                                                                                                                           UU30.&5
                                                                                                                           14.352.12
                                                                                                                             474.7S
                                                                                                                         •10?.676.42
                                                                                                                          149.014.19
                                                                                                                          259,115.17

                                                                                                                         ••23.g31.03

                                                                                                                        2,791.S62.5t) "*
  2.  IMC and GLCC are adjudged jointly
and severally liable to the United States for
the following amounts:
a.   PenvJition of the Building           52,373.00
    NITS Costs: Less
      NTS Credit ($2,660.91)      \      21,370.53
    Tech law Costs                     11,639.05
    GCA Costs              .         Sil.51.SO
    Arthur D.  Little Costs
    Ecology & Environment  Costs:
      Labor
    Subcontractors
g.   Viar Costs
h.   Bionctics Costs
i.   PRC Costi:
    (i)   Roy F. WrsUm Costs
    
-------
tun! plans are being devised between Ir-iC
and the Stale of New Hampshire.  IMC has
submitted, a  cost  estimate of  530,100.00.

IN  HE: ORDER ON MOTION  PERTAIN-
    ING  TO  FUTURE  RESPONSIBILI-
    TIES OF THE DEFENDANTS
  This Order sets  forth the respective re-
sponsibilities  of the parties, including EPA,
pursuant to the Opinion  and the Consent
Decree between Plaintiffs and the Settling
Ottati & Goss defendants.

 WORK TO BE  PERFORMED  ON AND
   UNDER THE OTTATI AND GOSS
        PORTION OF THE SITE
  Under the Consent Decree, General Elec-
tric, SRS and Lilly are currently perform-
ing EPA's soil remedy for the Ottati  &.
Goss portion of the site under the state and
federal governments (plaintiffs') oversight
and  subject  to plaintiffs'  approval.  Set-
tlors also have contributed towards cleanup
of the groundwater under the Ottati  &
Goss portion  of the site.
  The groundwater cleanup under the Ot-
tati & Goss  portion  of  the  site will  be
performed  by the non-settling Ottati  &
Goss  defendants  (Great  Lakes Container
Corp., Louis Ottati, Wellington Goss, Ottati
& Goss, Senter Transp. Co./ Bernard Sen-
ter,  Concord  Realty Trust,  Inc.,  Lewis
Chemical, Richard French, French Process-
ing, Inc.).' EPA's target goal of 5 ppb for
the four indicator compounds will be met.
The extraction system will be designed  in
accordance with Paul Sanborn's testimony.
(Day 15, pp.  50-66 and United  States Ex-
hibit 623).
  In the event the non-settling  defendants
are not able to perform the'remedial action,
plaintiffs, pursuant to the Consent Decree, '
will  clean up the  groundwater under the
Ottaii fi'Gciss portion of  the site.
  The  court  is  of the opinion thut soil
remediation on any site has not commenced
at  the  date  of this order excepting  of
course,  the  soil remediation  of IMC and
GLCC on the 5.83 acres of hind.  Accord-
ingly, a  detailed  order setting forth the
timing of implementation is not appropriate
at this tirr.e.  Within thirty days after com-
pletion of the soil  remedy,  plaintiffs shall
submit a detailed order governing the de-
sign,  construction  and operation of  the
groundwater system.


  WORK TO BE PERFORMED (GLCC
       SITE AND THE MARSH)
  That defendants GLCC and  IMC (in its
own capacity and pursuant to the indemni-
ty agreement with GLCC) (hereinafter col-
lectively referred to  as IMC) conduct the.
work  relating to the GLCC site and  IMC
also perform  the  work relating to  the
marsh as detailed  in the EPA Record of.
Decision ("ROD")  (U.S. Exhibit 375} and .
set forth below:'              -   •'-" :'*f;-.^
  Remove sediments in South Brook and
the marsh to a level of 20 ppm of PCBs and
properly dispose of them;
  Design and construct a groundtoater ex- .
traction and  treatment  system for  the '
GLCC site and the marsh which will clean
up groundwater underneath the GLCC site -
and the marsh to a level of 5  ppb for the
following compounds: benzene, 1.2 dichlo-
roethane, trichloroethyiene and tetrachloro-
ethylene.  Achievement  of target levels
will be defined as continuously  meeting the
levels for the indicator compounds for a.
period of  three  years  at Route 125
other monitoring wells to be identified by
Plaintiffs (U.S. Exhibit 375 at p. 28).. ..;-;v.
                               •  :..:: '^r:':?*:.
          Extraction  System      .-<-'./
  The groundwater extraction  and reinjec-
tion system  shall  be installed  as soon as
possible.                            " "•  • •••_'•
  The extraction system for the marsh is to   :
be  designed  and constructed  as follows:
  If  the  wells  are  installed  when  the
  ground is frozen,  a  skid-mounted bom- •  •
  bardier system, as described  generally is
  the testimony  of Mr. John Sullivan, Tr.
  Day 59, pp. "lOS-110, 128, 132, shaii be
  used;                             S '•...'-;'
    If the wells are  installed when the
  ground is not frozen,  a decking system to
  be supported cither by piling or a floo-   .
  tion system, as described generally injr
  testimonies of  Mr. John Sullivan, Tr.

-------
•
.jratioi
                                                                 U.S.  v. OTTATI & GOSS
                                                                Clle ** 694 F.Supp. 977 (D.N.H. 19SS)
                                                                             1007
          fiffs shall
           g the de-
             of  the
RFORMED (GLCC
HE MARSH)
 ,CC and IMC (in its
suant to the indemni-
 ,CC) (hereinafter col-
as IMC) conduct the
 GLCC site and  IMC
ork  relating to the
 the EPA Record of
.S.  Exhibit 375) and

 in South  Brook and
 20 ppm of PCBs ami
hem;
j:t a groundwater ex-
•nt  system  for the
irsh which will clean
-neath the GLCC sla-
 ve! of 5 ppb for the
 benzene, 1.2 dichlo-
rr    ^^P^t levels
inuo_..,y meeting the
)T • compounds for a
  at"Route  125  and
v to be identified by
t 375 at p.  2S).
                   j

  System
 traction and rc-injrc-
mstalled as soon as


n for the marsh  is to
:tructed as follows:
installed  when  the
  skid-mounted bom-
 Ascribed generally in
 . John Sullivan, Tr.
 , 128,  132, shall l«-

 installed' when  tho
 a decking system t<>
 by  piling or a flvW-
 !bed generally in th«"
 hn Sullivan, Tr.  Day
                            +..-fj- "
                            f ^:-
  59, pp- 107-110, and Mr. Michael Powers,
  Tr. Day 59, pp.  35-38, shall be  used.
  Extraction wells shall be installed  in ar-
 eas designated as D,» E and F in the U.S.
 Exhibit 451 (a chalk drawn by Mr. San-
 born), and in Sketch B of U.S. Exhibit 693
 (report of Michael Powers), unless the par-
 ties agree that the  wells  should be other-
 wise located.


         TREATMENT SYSTEM •
  Conduct treatability studies to determine
 the final  treatment system necessary  to
 meet EPA's target  goals.


              SCHEDULE
  Within 60 days of this Order,  IMC shall
 issue Requests for Proposals ("RFP") for a
 reputable, qualified contractor to conduct
 the work.
 ' All work performed by IMC shall be per-
 formed by qualified contractors  in accord-
 ance with the following  schedule and the
 Scope of Work.
  Within 120 days of the date of this order,
 IMC shall submit  to plaintiffs  a  Draft
 Scope of Work.  The Scope  of Work shall
 include: (a) a narrative describing the work
 to be accomplished  under Scope of  Work
 paragraphs (1)—(4) below; (b) the develop-
 ment and submittal  of the plans described
 under Scope of Work paragraph (5Hi) be-
 low.
  Plaintiffs  will either approve the  Draft
 Scope of Work or require modifications and
 will notify IMC in writing of such approval
 or required  modifications.
  Should plaintiffs require modifications to'
 tie SOW, IMC shall have 20  days from the
 date of  receipt  of  plaintiffs'  written re-
 quirement of  modifications  to make such
 modifications and submit the revised  Draft
 Scope of Work.
  The Scope of Work shall include the fol-
 lowing components:
  Removal and proper disposal of contam-
 inated  sediments in South Brook and the
 marsh  containing  greater  than  20  ppm
-PCBs;
  Design, construction, operation and main-
tenance of a groundwater extraction and
reinjection system  for  GLCC  and  the
marsh;
  A treatability study to refine the parame-
ters of  the treatment system;
  Design, construction, operation and main-
tenance of a treatment system to meet
EPA's target goals for the four indicator
compounds;
  Quality Assurance Project Plan including
(i) quality assurance/quality control plan;
(ii) health  and safety plan; (iii) spill/volatile
organic release contingency plan; (iv) sam-
pling plan;
  Field  Operation Plan, including (i) opera-
tions  and maintenance plan;  (ii) project
coordination and management plan; (iii) ex-
cavation plan; (iv) air monitoring plan; (v)
full scale pilot procedural  plan; (vi) Com-
munity-Relations Support  Plan;  (vii) Re-
porting  Plan.

   Remedial Design/Remedial Action  .
    Involving Removal and Disposal
           of PCB Sediments
  Within  sixty days of plaintiffs' written
approval of the Scope of Work, IMC shall
issue an RFP for the rejnoval  and proper
disposal of PCB sediments  in South Brook
and the marsh.
  Within  thirty days  of plaintiffs' written
approval of the Scope of Work, IMC shall
select a contractor to conduct the PCB re-
moval and disposal and submit the name to
plaintiffs.
  Within  sixty  days of plaintiffs' written
approval of the Scope of Work, IMC shall
submit a Remedial Design for PCB Remov-
al and Disposal of Sediments which shall
include plans, specifications, schedules and
other pertinent information as set forth in
EPA QSWER Directive 9355.0-4A, entitled
"Superfund Remedial Design and Remedial
Action Guidance."
  Plaintiffs will either approve the Remedi-
al Design or require modifications and noti-
fy IMC in writing of such  approval or re-
quired modifications.
  Should plaintiffs require modifications to
the Remedial Design  for PCBs, IMC shall

-------
 1008
691 FEDERAL SUPPLEMENT
 have thirty days from the date of plaintiffs'
 written notification  to  make the required
 modifications and submit the revised Reme-
 dial Design.
   Within  thirty days of plaintiffs' written
 approval  of the  Remedial  Design,  IMC
 shall initiate removal and disposal of the
 PCB sediments under plaintiffs' oversight.
   IMC shall  complete the removal and dis-
 posal in accordance with the schedule set
 forth in the  Remedial Design approved by
 plaintiffs.
   Within  thirty days of completion of the
 PCB component of the Work, IMC  shall
 submit  a  Remedial Action Report to plain-
 tiffs which includes a Notice of Completion
 that all components of the  removal  have
 been completed in accordance with the Re-
 medial Design and the ROD.
   Plaintiffs will either approve the Remedi-
 al Action Report or notify IMC in writing
 that modifications are required.'
   Should plaintiffs require modifications to
 the  Remedial  Action  Report,  IMC  shail
 have fifteen days from notification to make
 the modifications including performing any
 additional  work.

           Treatability Study
   Within 30 days of EPA's written, approv-
 al of the Scope of Work, IMC shall issue
 RFPs f?r  the TreaUbiiity Study.
   Within  thirty days of plaintiffs' written
'approval of the Scope of Work, IMC shall
 select a contractor to conduct the Treatabil-
 ity Study and suhmit the name to plaintiffs.
   Within  sixty days of plaintiffs' written
 approval of the Scope of Work, IMC shall
 submit  a  Treatability Work  Plan to plain-
 tiffs.
   Plaintiffs will either approve  the Work
 Plan or require modifications and  notify
 IMC in  writing  of such  approval or re-
 quired modifications.
   Should  plaintiffs require modifications to
 the  Work Plan, IMC shall have  ten days
 from the date of plaintiffs' written notifica-
 tion to make the required modifications and
 submit the revised Work Plan.
                   The Work Plan shall include, but not b«.v^'tfi
                 limited to the following elements: (i).'^""". "t;"
                 view of existing data;  (ii) sampling andjfljjk
                 analysis of groundwater;  (iii)  treatabi]icy^^P:
                 process design for groundwater; (jv») con- ^: "-
                 ceptual design based on laboratory results;   '"•• -:'.-
                 (v) reporting; (vi) schedule for completion..'- .>£•"•'
                   The Treatability Study shall be complet- n:--"V
                 ed in accordance with the schedule for. per-"••:'•-•'-;•
                 formance set forth  in the Work Plan, a- UXlV.
                 approved by plaintiffs.               , vjiAyji'
                   Within twenty days of completion of the -•?£;"*£,
                 Study, IMC shall submit a Report to plain- ;;:V:T
                 tiffs which shall set forth  the parameters :s-!e"- •
                 of the treatment system to meet EPA's ""=  :.
                 target levels for the four indicator com-'- '£.''(';-
                 pounds.        .                     .V'jJj^S^'v
                   Plaintiffs will  either approve the Report--•iu''-;'
                 or require modifications and notify IMC of.:•,'•£•?
                 such approval or required modifications. •.;'>;.;-:.
                   Should plaintiffs require modifications to V^
                 the Report, IMC shall have ten days from ' ^
                 the date of plaintiffs' written notification to ;.i-.'. ••
                 make the modifications  and submit the re-.;;:: ;
                 vised report.                        . :-i-i^3>-:

                    Remedial Design/Remedial Action-^,
                         Regarding Groundwater
                   Within ten days of plaintiffs' approval of
                 the Treatability Report, IMC shall issue
                 RFPs for the groundwater extraction treat-
                 ment system for the  GLCC site and  the-
                 marsh, (hereinafter  "system").    .    .....'
                   Within thirty days of plaintiffs' approval
                 of the Treatability Report, IMC shall s
-------
               not be
          •nts: (i) re-
ta;  (ii)  sampling and
ater; (iii) treatability
roundwater; (iv) con-
on laboratory results;
bedule" for completion.
udy shall be compltt-
 the schedule for per-
n  the Work Plan, as

s  of completion of the
mit a Report to plain-
forth the parameters
stem to meet EPA's
>  four indicator com-

r approve the Report
ms and notify IMC of
quired  modifications.
quire modifications lo
!I have ten days from
written notification to
•is and submit the rc-
//
1 roundwater
plaintiffs' approval of
ort,  IMC shall issue
vater extraction treat-
:• GLCC site and  thi-
system").
of plaintiffs' approval
port, IMC shall sckt-t
gn,  construct,  imp^'
intain the system and
plaintiffs.
>f plaintiffs' approval
idy/IMC shall submit
or the system  which
specifications, schi-d-
mt information as set
  Directive 9355.0-iA
 • approve the Rcmc-ii-
 lodifications and noti-
 such approval or re-

 quire modification u>
  IMC shall have  ten
 of plaices'  written
 r.r..:-'-v ;.T^ v-
^E&.v-_*.ii3&
      m
      m
      i :• .'•:
       f • '.-
                                                                                 ^
                                                                   U.S. v. OTTATI & GOSS
                                                                  Clleu«94 F.Supp. 977 (D.N.H. 1988)
                                                                             1009
notification to make the required modifica-
tions and submit the revised Remedial De-
sign.
  Within thirty days of plaintiffs' written
approval of  the Remedial  Design,  IMC
shall initiate on-site remedial action for de-
sign,  construction operation and mainte-
riance of the system under plaintiffs' over-
sight
  IMC shall comply with the schedule for
completion  set forth in the Remedial  De-
sign approved by plaintiffs.
  Within thirty days of completion of the
groundwater pump and treat component of
the remedial  action, IMC  shall submit  a
Remedial action  Report to  plaintiffs.   The
Report shall include, but not be limited to,
a demonstration that  the treatment goals
of 5 ppb for the four  indicator compounds
have been met for three years at Route 125
and other monitoring  wells designated by
plaintiffs on  the GLCC site and  in  the
marsh.
  Plaintiffs will  either approve the report
or require  modifications  and  will notify
IMC in writing  of such  approval or re-
quired modifications.
 .Should plaintiffs require modifications to
the Report, IMC shall have the timer period
specified by plaintiffs  in- the notification to
make the  modifications and perform  any
additional work.

           General Provisions
  IMC shall submit monthly progress re-
ports, by the tenth day of every calendar
month, to  plaintiffs describing the actions
taken during the previous  month towards
compliance  with this Order, results of sam-
pling  and  testing  analyses  (including  the
data itself), difficulties encountered  with
schedules and the work  anticipated to be
performed  in the upcoming  month.   IMC
shall provide copies of all analytical results
•and field results to plaintiffs.
  EPA and the State each  shall, within 30
days of this order designate a project coor-
dinator ("project coordinator") who shall be
responsible for the receipt of all written
matters required by this  order review of
documents  submitted  pursuant to this or-
   6SWP.Supp.-23
                                                         dor  and approval  or disapproval of the
                                                         progress of the work.  The EPA project
                                                         coordinator or any consultant EPA retains
                                                         shall be responsible for the observation and
                                                         monitoring of  the  work.   EPA  and the
                                                         State shall  submit the names and addresses
                                                         of the project coordinators] in writing to
                                                         IMC.
                                                           The  EPA project coordinator shall have
                                                         the authority vested by 40 C.F.R. Part 300,
                                                         as  amended.   If activities conducted  by
                                                         IMC in implementing this  order and the
                                                         work cause circumstances which present or
                                                         may present an  imminent  danger to theN
                                                         public  health or welfare  or  to the environ-
                                                         ment,  the  EPA project  coordinator  shall
                                                         have  authority  to  stop  activities  and to
                                                         direct IMC to perform the work in a man-
                                                         ner which  avoids or  mitigates the endan-
                                                         germent and to submit a plan  to the EPA
                                                         project coordinator  describing in detail the
                                                         actions  that  are necessary to abate the
                                                         endangerment,  including  a schedule accord-
                                                         ing to which the actions shall be implement-
                                                         ed.  Thereafter, IMC  shall  implement the
                                                         response plan  according to the  approved
                                                         schedule.

                                                                        REQUESTS
                                                           A plethora of requests  have been filed by
                                                         the parties in this  case.   Some of the re-
                                                         quests include within the alleged context of
                                                         one request as  many, in some instances, as
                                                         three or more  separate  issues.
                                                           Some of  the requests have been answer-
                                                         ed, in  the  court's  memorandum opinion,
                                                         some candidly have been  ignored, others in
                                                         view of the court's ultimate findings may
                                                         be moot.   Rule 52  Fed.R.Civ.P.   Findings
                                                         should represent the judge's own determi-
                                                         nation  and  not  the  long,  often  argumenta-
                                                         tive,  statements of  successful   counsel.
                                                         United States v. Forness, 125 F.2d 928 (2d
                                                         Cir,1942) cert,  'denied,  316 U.S. 694,  62
                                                         S.Ct.  1293, 86  L.Ed.  1764.   See Concord
                                                         General Mutual Insurance Co. v. Haynes,
                                                         110 X.H. 76, 260 A.2d 99 (1969); Fortier v.
                                                         Olin Corporation, 840 F.2d 98, 99 {1st Cir.
                                                         Feb. 18, 1988).  The court's duty is to "find
                                                         the facts specially and state separately its
                                                         conclusions of law thereon." Fed.R.Civ.P.
                                                         52(a).                     '

-------
                                           1010
                         694  FEDERAL SUPPLEMENT
\
             CONCLUSION
  More filings have  been made since the
last hearing and the court has endeavored
to respond to most of them.
  IMC has indicated  that it intends to ap-
peal the court's order pertaining to ground-
water. The plaintiffs are equally unhappy.
Outside of the fencing proposal, nothing of
a remedial nature  is  being done.
  The  case  is ripe for appeal and "some
finality has  to be obtained. .
                                             K-MART CORPORATION, Plaintiff.
                                                             v.
                                            ORIENTAL PLAZA, INC., Defendant.
                                                -   Civ. No. 88-1137(JP).

                                                 United States District Court,
                                                       D.  Puerto Rico.

                                                        Aug. 4, 1988.
                                              Tenant brought action to enjoin land-
                                           lord from constructing additional buildings
                                           in Chopping center.  The  District Court,
                                           Pieras, J.,  held that:   (1)  landlord  had
                                           breached  lease  by  beginning construction
                                           of buildings of a size and in a location other
                                           thiin that pe/tnittcd under lease; (2) tenant
                                           would suffer irreparable hurm; but (3)  ten-
                                           ant was not entitled to injunction requiring
                                           raising of all of the buildings.
                                              Ordered accordingly.
                                           1. Landlord and Tenant ©=48
                                               Shopping  center landlord  breached
                                           lease agreement by  proceeding with con-
                                           struction of additional buildings whose site-
                                           exceeded that ?.llo\ved by lease with major
                                           tenant by 800 square  feet and by construct-
                                           ing  the  buildings  in  area other than that
                                           designated on  exhibit attached to lease.
2. Injunction «=138.30
    Harm being done to
shopping center by  construciof at
tional buildings by the landlord of a s
and  in an  area  not  permitted  under t
lease and in a manner likely to cause injt
to the good will of the tenant, was irrepa:
ble, entitling defendant  to  preliminary
junction.
3. Landlord and  Tenant «=>48
    Failure of shopping  center tenant
object when informed of landlord's plans
build additional buildings of a size and in
location not permitted under the lease d
not amount to consent
4. Injunction «=IS9        '    '   ••   •
    Tenant which showed that landlord h:
breached lease by manner in which it pr
posed to construct additional  building
shopping center was  entitled to injunctic
requiring the  removal of those building
which were most offending but  not requL
ing removal of all buildings where the tet
ant:  knew   that  additional  constructio
would take place and had approved som
additional construction.
                                            Jorge I. Peirats and Edward TUPBorg*
                                          O'Neill  & Borges,  Hato  Key,  P.R.,  fo
                                          plaintiff.
                                            Carlos G. Latimer, San Juan, P.R., Eidi.
                                          M. Diaz Oltno, Hato Rey, P.R., for defend
                                          ant.                        i

                                                 OPINION,  ORDER,  AND
                                                PERMANENT INJUNCTION
                                            PIERAS. District Judge.
                                            This action arises from  a  disagreement
                                          over the terms and conditions of plaintiff
                                          K-Mart's lease at defendant Oriental Plaza
                                          Inc.'s shopping center outside  Humacao,
                                          Puerto Rico.   The  Court's jurisdiction is
                                          based upon the complete diversity  of  citi-
                                          zenship of the parties plus the  amount ID
                                          controversy.  28 U.S.C.  §  1332.
                                            The plaintiff seeks to raze construction
                                          now in progress in the parking lot of Orien-
                                          tal  Plaza.  K-Mart avers  that  the struc-
                                          tures going  up were not contemplated by
                                          the original lease,  that K-Mart has  not

-------
                    U.S. v. UTTAT1 &  GOSS.
                       Oltu-MX) FJU 429 (IMClr. 1*40)
                                    viipnmental
UNITED STATES of America.
     Plaintiff. Appellant.
                                                                            4Z9
                   Y.
     OTTATI  & COSS. INC.. et al..
         Defendants. Appellees.

     UNITED STATES of America.
           Plaintiff. Appellee.
                   v.
     OTTATI  & GOSS. INC.. et al..
         Defendants. Appellees.

   Appeal of STATE OF NEW HAMP-
      SHIRE. Intervenor/Plaintiff.
         Nos. 39-1063. 89-1065.

     L'nited States Court of Appeals.
              First Circuit.

          Heard Oct. 3, 1989.
         Decided April  4. 1990.
    Hearing on damages  was held after
determination that companies were liable to
Environmental Protection  Agency (EPA)
for environmental clean up costs at hazard-
ous waste site.  The District Court for the
District  of  New  Hampshire.  .Martin  F.
Loughlin. J.. 694 F.Supp. 977,  determined
damages for which companies were liable.,
and appeals were  taken.   The Court  of
Appeals, Breyer. Circuit Judge, held that:
(1) in deciding whether to grant  relief re-
quested  by EPA, Court was not bound by
administrative  law's "arbitrary, capricious
or abuse of discretion" standard; (2) record
did not  support finding  that company re-
duced level of volatile organic  compounds
in soil to required level of five to ten parts
per million; and (3) remand was necessary
so that denial of EP.Vs indirect costs could
be explained.
    Affirmed in part,  vacated in part, and
remanded.
1.  Health and Environment e=25.15(2)
    Court  is  not bound  by  administrative
law's "arbitrary, capricious or abuse of dis-
cretion standard" in  deciding whether 10
enter remedial injunction requested by En-
             Protection   Agency   (EPA)
when EPA brings action under section of
Comprehensive  Environmental Response.
Compensation and Liability Act (CERCLA)
authorizing court "to grant such relief as
public interest and equities of the case may
require";' court is free to make own deter-
minations of fact and to exercise own judg-
ment in fashioning relief.   Comprehensive
Environmental   Response,  Compensation,
and  Liability  Act  of  1980.  § 106(a),  as
amended, 42  U.S.C.A.  § 9606,  107(a),  as amended,  42 U.S.C.A.
§§ 9601  et  seq.,  9606
-------
 430
900 FEDERAL REPORTER. 2d SERIES
 Waste Disposal Act. § 7003.  as  amended.
 42 U.S.C.A.  §  6972.
 5. Health and Environment  <£=25.5<5.5>
     District  court was not required to con-
 clude  that public interest and equities of
 case required it to adopt a "one" instead of
 "five to ten" part per million standard gov-
 erning volatile organic compounds in soil,
 despite Environmental Protection Agency's
 ; Solid Waste  Disposal
 Act,  § 7003,  as  amended,  42   U-S.C.A.
 § 6973.
 6. Health and Environment  «=25.15(12)
     Record did not  support district  court
 finding that  company had reduced  levels of
 volatile  organic compound  in soil to re-
 quired "five  to ten parts per million"  stan-
 dard,  even if  allowances were made for
 occasional "hot spot" departure, and.  thus,
 remand  was  necessary-  to district  court so
 that court could devise further volatile or-
 ganic  compound  clean  up remedy.   Com-
 prehensive Environmental Response,  Com-
 pensation, and  Liability   Act of   19?0,
 § 106(a>,  as   amended,   42   U.S.C.A.
 § 9606(a).
 7. Health  and  Environment c=25.5<5.5)
     Determination  by district court  that
 company had met clean up  standard of 5'i
 parts per million  for polychlorinated biphe-
 nyl (PCBt in  soil concentration  and  determi-
 nation that company must  meet  standard
 of 20 parts per million PCB's  for sediment
 concentration was adequately supported by
 record and  public interest  in -equities  of
 case  did  not  require  stricter standard.
 Comprehensive  Environmental  Response,
 Compensation,  and Liability Act  of  1980.
 §§  101 et seq.,  106(a), as amended. 42 U.S.
 C.A. "§§  %01 et seq-, 9606(al.
 8. Health  and  Environment s=>25.5(5.5>
     District  court's conclusion thai compa-
 ny's clean up of hazardous  waste  site met
 with soil standard for PCB's was not clear-
                     ly erroneous;  areas  of  hazardous waste
                     site in which  company was in noncompli-
                     ance with 50  parts per million polychlori-
                     nated biphenyl (PCBl standard were suffi-
                     ciently small in number to warrant conclu-
                     sion  that  likelihood  that child would  eat
                     soil, consistently over period of many days
                     or years,  was virtually  nonexistent, and
                     very occasional patches  of below-surface
                     noncomplying soil seemed sufficiently scat-
                     tered  to warrant conclusion of no signifi-
                     cant risk.  Comprehensive Environmental
                     Response, Compensation, and Liability Act
                     of 1980, §§ 101 et seq., 106{a),  as amended,
                     42 U.S.C.A.  §§ 9601  et seq., 9606.

                     9. Health and Environment «=25.5(5.5)
                         District  court's choice of 20 parts per
                     million standard for  PCB's in  sediment  as
                     requirement to be met by company clean-
                     ing up marsh and  brook on hazardous
                     waste site was not unreasonable or clearly
                     erroneous.   Comprehensive Environmental
                     Response. Compensation, and Liability Act
                     of 1980, §§ 101 et seq.. 10625.5(5.5!
                         Environmental   Protection   Agency
                     (EPA) is ordinarily allowed to recover indi-
                     rect costs of  administrative  overhead  in
                     litigation  for  hazardous  waste clean up.
                     Fed.Rules  Civ.Proc.Rulep  16(f).  37(bj,  2£
                     U.S.C.A.

                     12. Health and Environment  3=25.5(5.5)
                         District  court ordinarily has  legal au-
                     thority to  deny government agency  recov-
                     ery of indirect costs as sanction for improp-
                     er behavior  where Environmental Protec-
                     tion Agency has engaged in questionable
                     practices in enforcing clean up of hazard-
                     ous waste site.
.£3*1
                                                                                           <--f

-------
                          U.S. v.  OTTATI  & GOSS. INC.
                             Cllc u 900 f.24 429 UilCir. I«W)
                                    431
 13. Health and Environment e=25.15(12)
    Remand  was  necessary in  order for
 district court to state specific factual and
 legal  basis upon which  it denied Environ-
 mental Protection Agency recovery  of indi-
 rect costs in litigation involving clean up of
 hazardous  waste sites, and.  if denial of
 indirect costs is sanction for improper be-
 havior, court wil! discuss basis for sanction.
•  William B. Lazarus, with whom David B.
Bird, Michael 0. Hill, Anne S. Almy, Depl.
of Justice. Lands  Div., Appellate Section.
Donald  A. Carr. Acting  Asst  Atty. Gen.,
Peter E. Papps, U.S. Atty.. Joseph Freed-
man and Nancy Elizabeth Caldwell, U.S. E.
P.A., were on brief  for appellant
  Keith A. Jones, with whom Carol Bar-
thel,  J.B.  Ruhl  Fulbright  & Jaworski,
Frank E. Kenison,  Nixon, Hall & Hess, and
Howard E. Post, were on brief for appellee.
Intern. Minerals & Chemical Corp.

  Before CAMPBELL. Chief Judge.
BROWN,* Circuit  Judge, and  BREYER.
Circuit Judge.

  BREYER,  Circuit  Judge.
  Nearly ten years ago the Environmental
Protection Agency  ("EPA"I began this law-
suit  by  asking  :> court to  require several
companies  to clean  up a thirty-four acre
hazardous waste silt near Kingston, New
Hampshire.  The suit eventually consisted
of two claims thai are relevant here, both
made under  the  Comprehensive  Environ-
mental Response. Compensation and Liabil-
ity Aa of 19SO rCERCLA").   First.  EPA
said  thai "actual or  threatened release[s]"
of "hazardous substance[s]" from the site
posed "an imminent and substantial endan-
germeni to the  public health or welfare or
the environment."  It therefore asked the
district court, in light of the problem, "to
gram such relief as the public interest and
the equities of the case may  require."  4'2
L'.S.C. §  9606ia) (first sentence).   Second,
EPA pointed out that it had spent  consider-
able  government money beginning to clean
up the sit*.   It  asked the coun to require
* Of the Filth Circuit, sitting by designation.
defendants in the case, various owners, op-
erators, and handlers, to repay the govern-
ment for "all costs of removal or remedial
action incurred by the  United States ...
not  inconsistent with the national  contin-
gency plan."  42 U.S.C. § 9607(a).
  The suit was complicated.  The  United
States originally brought suit under § 7003
of the Resource Conservation and  Recov-
er,- Act (RCRA), 42 U.S.C.  §  6973. but later
amended its complaint to  allege causes of
action under CERCLA, 42 U.S.C. §§ 9601-
9657.  By  1983 the  State of New  Hamp-
shire and the Town of Kingston had joined
as plaintiffs, many of the defendants had
filed third-party  claims and  crossclaims,
and  a total of seventeen individuals and
firms  (present or previous owners, han-
dlers, or operators) had become defendants.
The  site itself consisted of several different
areas, including a one-acre  site leased to
defendant Ottati & Goss,  Inc. (the "0 & G
site"), and  a six-acre site  owned by defen-
dant Great Lakes Container  Corporation
(the  "GLCC site").   On or near the site
were two brooks, a pond, and a marsh area.
  While the litigation proceeded. EPA itself
began to clean up part  of the site,  adding
to the costs it intended to  recover, and two
of the defendants also began to help clean
up.  In the meantime, the  court divided the
trial itself into two phases. The first phase
would determine which defendants the law
required to help clean up and to pay costs.
The  second phase would determine precise-
ly what further cleanup actions the law (42
U.S.C. § 9606(a) (first sentence))  required,
and  how much  the liable firms should pay
EPA  142 U.S.C. § 9607).
  The court began the first phase of trial
on December 5, 19S3. concluded the trial on
June 13, 1985, and found  that the law re-
quired fifteen defendants  either to engage
in further  cleanup or to  pay  part  of the
costs, or both.  Sec. United States v. Ottati
& Goss.  Inc., 630 F.Supp.  1361 (D.N.H.
1985).  The second phase of  trial began on
February 2, 1987, concluded on  July 1C,
1987, and  culminated in injunctive  orders
requiring particular defendants to engage
in certain specified additional cleanup, and

-------
                                          432
                     900 FEDERAL REPORTER. 2d SERIES
 -?&3£^
   ^m
     ' "**?' *"•
|i?:i^frr'#«A I
J.TSs-JsSV «.«• I
$*£?.s
 rr?;f^;--v-  -4
r^4?^^' ';'^
pm*^m
 '  '£&&': v&
 ••JfS-~ :^-.^--y
 *r    ..vj""- - 1 »- - •
        --  •..
to pay certain specified costs.  See United
States v. Ottati &  Goss. 694 F.Supp. 977
(D..YH.1966).  Before, during, or just after
the trial,  all  but one  of the defendants
agreed to settle their  dispute with  EPA.
One of the defendants. International Miner-
als &  Chemical  Corporation (IMC), which
had owned and operated the GLCC portion
of the site  for about three years  between
1973 and 1976, would not settle. The EPA
has appealed  the court's final injunctive
order insofar  as it  applies to that single
remaining defendant.
  EPA raises three sorts of legal issues on
this appeal.  First, its appeal raises a gen-
eral question of statutory interpretation—a
question, with  implications for  other  cases
as  well as this  one.  It asks what  legal
standard a  court should use  in  deciding
whether to grant the particular relief EPA
requests when EPA  brings an action under
the first sentence of -12  U.5.C. § 9606.
Must a court simply  grant EPA's requested
injunctive  relief  unless it determines that
EPA's request is "arbitrary, capricious, an
abuse of discretion?" 5 L'.S.C. § 706(2XA).
Or is the district court free to make its own
determinations of fact  and  to  exercise its
own judgment in fashioning relief?   We
conclude that the 'court, acting  pursuant to
that statutory' sentence,  is not bound  by-
administrative law's  "arbitrary, capricious"
standard.
  Second. EPA argues that the record does
not adequately support the relief  determi-
nations  that  the district court made.  It
believes that the  record required that  court
to order IMC to clean up the site somewhat
more  thoroughly.   EPA's arguments are
highly fact-specific  and  evidence-related.
We have examined  those portions of the
record (compiled  over  ten  years   and
amounting to more than 40.000 pages I that
the parties have cited in their briefs.  Hav-
ing done so. we  conclude that the district
court's determinations of fact and  of  prop-
er  relief are  adequately supported,  with
one exception.  The exception consists of
the cleanup  ordered in respect to volatile
organic compounds  iVOCsi.
  Third. EPA  raises two "miscellaneous"
arguments,  one  dealing with  a   district
                                                                                   court statement about liability,  the  other
                                                                                   dealing with that court's refusal to award
                                                                                   EPA certain indirect costs, a refusal ap
                                                                                   ently  meant as  a kind of "sanction"
                                                                                   improper  behavior.   We  have  re.
                                                                                   EPA's "liability" related argument as not
                                                                                   now properly before us.  We have decided
                                                                                   to remand the case for further explanation
                                                                                   about the "sanction."
                                                                                     In sum,  we have affirmed the district
                                                                                   court's decision  with two exceptions, each
                                                                                   of which requires further district court pro-
                                                                                   ceedings.   .The  first  exception  concerns
                                                                                   VOC-relatedi relief;   the second  concerns
                                                                                   sanctions.
                                                                                     We  shall now explain  how  we  have
                                                                                   reached these  legal conclusions.
                                                                                                      I
                                                                                APA "Arbitrary/Capricious" Review
                                                                                    and a  CERCLA Injunction
                                                                                The EPA's initial  argument — an  argu-
                                                                              ment with implications beyond the confines
                                                                              of this case— concerns application  of the
                                                                              Administrative  Procedure   Act's   "arbi-
                                                                              trary/capricious/'abuse of discretion" stan-
                                                                              dard in  determining a  proper  injunctivg
                                                                              remedy.  The issue arises because, wh
                                                                              the court was in the midst of the liabili
                                                                              phase of the trial. EPA began an adminis-
                                                                              trative proceeding to determine an appro-
                                                                              priate cleanup remedy.   This proceeding
                                                                              lasted about two years, it involved the cre-
                                                                              ation  of  a  seven-volume administrative
                                                                              record, and it led to an EPA  document
                                                                              called the  "Record of  Decision" (ROD),
                                                                              U.S. Exh. 375 (Phase II). which said, among
                                                                              other  things,  that  IMC  should undertake
                                                                              the very kind of  cleanup for which  EPA
                                                                              later argued in  court.   Once it produced
                                                                              this document. EPA's lawyers told the dis-
                                                                              trict court  judge that, when  he ordered a
                                                                              cleanup remedy,  the  law required  him to
                                                                              order just what  the ROD set forth, unless
                                                                              he found the ROD to be "arbitrary and
                                                                              capricious or otherwise -not in accordance
                                                                              with law."  42 U.S.C. § 9613(jX2l.  The dis-
                                                                              trict court rejected this EPA claim; and the
                                                                              EPA now argues that the district court was
                                                                              wrong in doing  so.

-------
liability, the other
s re£nsajjo award
                                                               U.S.    how we   have
 us ions.
 cious" Review
injunction
Jment — an argu-
rond the confines
pplication  of the
    Act's   "arbi-
 dis=— ition" stan-
 f-
t of the liability
  n an adminis-
rmine  an appro-
This proceeding
nvolved the ere?..
  administrative
 EPA document
ecision" (ROD),
lich said, among
lould  undertake
for which EPA
ice it  produced
ers told the dis-
n  he  ordered a
equired him to
et forth, unless
 "arbitrary and
  in accordance
J(jW2).   The dis-
 claim;  and the
>trict court was
                    V  -;
  To understand our evaluation of this ar-
gument, the reader must keep two sets of
background circumstances  in  mind.   The
first set concerns the statute here at issue,
the  Comprehensive  Environmental   Re-
sponse.  Compensation and  Liability  Act
<--CERCLA").  42  U.S.C.   §§ 9601-9657.
That statute  is^ designed to  help clean up
hazardous waste sites.  It gives necessary
enforcement powers to EPA.  It provides.
roughly speaking,  four separate  statutory
paths  that  EPA  might follow:
  1,  EPA  clean up/private party reim-
  bursement,  42  U.S.C.  §§9604, 9607.
  EPA itself can  clean  up a hazardous
  waste site, use  money from a  "Super-
  fund" to  pay the cost of clean up,  and
  then  obtain  reimbursement from   the
  site's owners or operators (and  various
  other    private    persons).     Section
  9604(aMl) authorizes EPA "to act ...  to
  remove or  arrange  for the  removal of,
  and  provide for remedial action relating
  to such hazardous substance...."   Sec-
  tion  9607(a) makes relevant  private  par-
  ties "liable for  ... all costs of removal or
  remedial  action incurred by the United
  States Government...."
  2.  EPA  seeks  court injunction.  42
  U.S.C,    §  9606(a)  '(first  sentence).
  Where there is an  "imminent  and  sub-
  stantial  endangerment  to  the   public
  health or welfare or the environment,"
  the  EPA  may ask  the  Department of
  Justice "to secure such relief as  may be
  necessary"  and the "district court   ...
  shall have jurisdiction to grant such re-
  lief as the public interest and  the equi-
  ties of the case shall require."  (Empha-
  sis added.)
  3:  EPA  order/court enforcement.  4J
  C.S.C. # 9606(a) (second sentence) and
  § 9606(b).   The second sentence of 42
  U.S.C. § 9606(a) gives EPA the power to
  "take other action ... including .. .'issu-
  ing such orders as may be necessary to
  protect public health and welfare and the
  environment."   Subsection (b)  provides
  that EPA  may bring an action in "district
  court to enforce such order" (and to ob-
  tain  a  fine  for its violation).
  4. EPA  order/EPA clean  up/private
  party  reimbursement/treble damages.
  42 U.S.C. § 9606(a) (second sentence);
  $ 9604(a); § 9607(a).  fejfj).  The  EPA
  could issue an "order" under §  9606
  (second sentence), but, instead of asking
  a court to enforce  the order, the  EPA
  could  conduct a cleanup  itself  under
  § 9604(a).   It  could then  obtain  reim-
  bursement from  relevant  private  parties
  under § 9607;  but. this time the  private
  parties  would be liable for treble  dam-
  ages, for § 9607(cK3) says, when a per-
  son  "fails without sufficient cause" to
  follow a remedial "order." he "may be
  liable  ...  for punitive damages  in  an
  amount ... not  more than three times
  ... any costs  incurred by  the  Fund...."
See Developments in  the  Lou*—Toxic
Waste  Litigation.  99  Harv.LRey.  1458,
1485-96 (1986).  See also In  re Acushnet
River & New Bedford  Harbor, 722 F.Supp.
888, 890 (D.Mass.1989) (listing  first three
options);  United States v.  Hardage. 663
F.Supp. 1280, 1284 (W.D.Okl.1987)  (same).
  The  second set  of  background circum-
stances, relevant only  to this case,  is that
EPA has here pursued  a combination of the
first and  second  courses of action. ' Its
claim for money rests upon its own cleanup
expenditures and the  reimbursement  pro-
vided by § 9607.  Its request for an injunc-
tion rests solely  (as far as  this appeal is
concerned) upon the authority of the first
sentence of § 9606(a).  Indeed, in the rele-
vant brief it filed in the trial court,  EPA
expressly  said  that it  had  not issued  an
"order" and, in asking the  court to model
its  injunctive remedy on EPA's "Record of
Decision." it was not  asking  the court to
"enforce an order." It stated:
  In this case, the United States has not
  issued an  administrative  order to  any
  defendant and is not seeking treble  dam-
  ages  or civil penalties....   The  defen-
  dants in this case will have an opportuni-
  ty to challenge EPA's selection of a rem-
  edy without seeking  additional penalties
  or treble damages.
Memorandum of the United  States in Sup-
port of  its Motion for  Pretriai Ruling (dis-
trict court record, no.  1064) at 26.  More-
over, the "Record of Decision" refers only.
to future action that EPA wants the defen-

-------
   *Vi
r.fe-|si|v^ty^v. ; >*
'^fesfe*
 434
900. FEDERAL REPORTER, 2d  SERIES
 dant (and other? t to take:  it does not refer
 to the recoupment of costs that EPA previ-
 ously  incurred in  helping to clean  up the
 site.
  (I]  These  background  circumstances
 make  clear that  the  specific  legal issue
 before  us is  not  whether  the  courts, in
 some general  or abstract  sense, can over-
 turn  EPA decisions where they are  not
 arbitrary, capricious,  an  abuse of  discre-
 tion, or otherwise  unlawful: obviously, the
 answer to this general question is "general-
 ly no."  When the EPA asks a court, for
 example, to enforce a lawful Inonarbitrary)
 EPA order, the court must enforce it.   See
 Acusknet. 122 F.Supp. at 892:  Hardage,
 663 F.Supp. at 1284.   Rather, the specific
 legal question is whether a court, in enter-
 ing an  injunction under the first sentence
 of §  9606 (in
enforcement proceeding under Emergency
                     Price  Control Act district court has broad
                     and flexible equitable powers
                     ute clearly  restricts court's eq
                     diction).  The statutory sentence
                     here nowhere uses the words  "arbitrary"
                     or "capricious" or any other word implying
                     court  revierc of an  agency decision, the
                    • context in which those revieu-ing standards
                     typically  govern.
                       Second, when 'the Administrative Proce-
                     dure Act uses the words "arbitrary, capri-
                     cious,  abuse of discretion,"  it does so in
                     speaking of the powers of  a  "reviewing
                     court" to "set  aside  agency action,  find-
                     ings, and conclusions found to be" unlaw-
                     ful. 5 U.S.C. §  706.  The first sentence of
                     § 9606;-.'*I.-"'.V"".' ••'••'.•'*'; »*«?S»

-------
pre
5 96l3(j):  5  U.S.C. § 706.
issue such an order here, however: nor did
it ask the court to enforce any such order.
And its decision not to do so is understand-
able.  tfiven  tne enormous  investment  of
     and  energy  in  judicial  proceedings
  emised  (as  the  district  court  believed)
upon the court's independent evaluation of
ine judicial  record. • (Thus, .we  need  not
decide  whether issuance of an  "order" at
so late  a  stage of the  proceedings would
have  amounted  to an  "abuse of  discre-
tion.")
  Fourth,  it is not unusual for a regulatory
statute  to provide both for an agency to
enter an order,  after  fairly lengthy pro-
ceedings. and also for the agency to ask a
court for preliminary relief (say, an injunc-
tion) where circumstances  require.   See,
e.g..  Federal  Trade  Commission  Act,  15
U.S.C. § 53;  Federal Food, Drug,  and Cos-
metic Act, 21 U.S.C.  §332;  Interstate
Commerce Act, 49 U.S.C. $ 11703. In such
cases, particularly where there has been no
administrative hearing, the court would
seem properly to make its determination on
the basis of facts the parties bring before
it, not simply on the basis of formal "arbi-
trary/capricious"  review  of a record  of
agency  proceedings.   See,  e.g.,  FTC v.
Southwest  Sunsitts,  Inc..  665 F.2d  711.
717-19  (5th  Cir.) (district court  has  full
traditional equitable powers under statu-
tory provision allowing FTC  to "seek prelim-
inary  injunction), cerL  denied,   456  U.S.
973," 102 S.CL  2236, 72 LEd.2d 846 (1982);
cf. Lore r. Thomas. 858 F.2d 1347. 1356-57
(9th  Cir. 1988)  (under Federal insecticide.
Fungicide,  'and  Rodenticide Act.  where
farmers  sought   preliminary  injunction
against  EPA's emergency  suspension  of
pesticide, district court  could consider  evi-
dence outside  administrative record), cert.
denied,  — U.S. - ,  109 S.Cl.  1932.  104
LEd.2d 403 (1989).
  Fifth, the authority cited by EPA to the
contrary is not persuasive.   The legislative
history it cites does not  specifically discuss
the first sentence  of §  9606;   it . seems,
rather, to  refer to cases involving agency
orders  or  cost determinations, which  are
not here at  issue.  EPA  argues  that  the
Superfund Amendments and Reauthoriza-
U.S. ». OTTATI & GOSS. INC.                      435
   Cite« «W FJd 429 (In Cir. IW01
 EPA  did  not  tion Act of 1986. called "SARA,"  makes a
                difference.  After the amendments became
                law. a new section. § 9621(a), said that the
                "President  [which,  in  effect,  means the
                EPA] shall  select appropriate remedial  ac-
                tions determined to be necessary to be car-
                ried out under section 9604 or secured un-
                der  section 9606 ...;"  and § 9613
-------

 436
900 FEDERAL REPORTER, 2d SERIES
 ... do not divest federal district courts of
equity  jurisdiction  in  CERCLA Section
 10ti(a) actions."  661 F.Supp. at  1417. The
court suggested that EPA could have dis-
missed its § 9606(al  injuncuve action in or-
der  to  pursue an administrative remedy.
but could not continue the injunctive  action
while reducing the court's  role  to merely
reviewing EPA's decision.   661  F.Supp. at
 1424  n.  11.   The Hardage  court similarly
differentiated between  judicial  review  of
remedial actions  taken  or  ordered by the
President and "judicial review of proposed
remedies ...  which  EPA asks a court to
require  defendants  to  implement."   663
F.Supp.  at 1284.
  We are  not persuaded  by other  cases
that have held that an "arbitrary and capri-
cious" standard applies in  a § 9606(a> ac-
tion for injunctive relief.  Only one of these
cases. United States v. Seymour  Recy-
cling Co.. 679 F.Supp.  859 (S.D.Ind.1987),
actually  involved an  action originating un-
der § 9606.  Both  In  re Acusknet  River
& Sew Bedford Harbor, 722 F.Supp. 888
(D.Mass.1989),  and United  States v. Bell
Petroleum Services. Inc., 718 F.Supp. 588

-------
  •
      respect i
  2) volatile 6
  d 3) chemical, ;'3
 •eviewing a,
 ine
  has
 :tical
   Reeognianj
lull opportunity ^
 length  in  th**'
 ct court is be*.'
 ve such issue*,
 before us eot> ;
  I be cleaned
   who should I*'*
\g it extremely.
fA and IMC tb
r briefs.   Taai"
 the  particular I
m their briefs,  ";
« whether,  ia  ;
eater familiar  :
ant. EPA, ha*  '
                                                            U.S. ». OTTATl & GOSS.  INC.
                                                               Cite u WO FJd 4» llMClr. I9M1
                                                                                437
 ions 'have ade- •;"«

fclaims  brie£|f;'
 explain to tfat
 iclusions.  •:
 district court
 sible for, and
 raits  of  four
 el. and arsen-
 district court
 dent reasons.
 ognized  that
?d five specif-
ontributed to
tion.  but had
  court  also
dequately in-
  formed IMC that EPA would claim contam-
  ination by metals: it thought that EPA had
  not pressed a "metals" claim untii after the
  fiftieth day of trial: and it concluded that
  EPA's efforts  to raise the  "metals"  issue
  took  IMC   unfairly by surprise.   Conse-
  quently, when, on the fifty-sixth  day. of
  trial.  IMC asked it to restrict EPA's proof
  to proof of contamination by the five chem-
  icals listed  in paragraph 42 of EPA's origi-
  nal complaint,  the court granted that mo-
.  tion.
   Second, the  district court  nonetheless al-
  lowed  EPA to introduce its "metals  con-
  tamination" evidence conditionally, so  that
  it could make a finding in case this appeals
  court  reversed  its "proof limitation" order.
  After the parties introduced evidence, the
  district court concluded that EPA  had not
  proved any  "metals contamination" on the
  site.   Rather,  it  concluded  that the site,
  even  before any contaminating  activity
  took  place,  contained natural deposits of
  these metals.  It found that EPA had failed
  to show any concentration of metals higher
  than  the natural  metal deposits  that al-
  ready  existed.
   We  believe  the record adequately sup-
 ports both these  conclusions.
   I.  The proof-limiting  order.  As we
 have just said,  the court  granted IMC's
 proof-limiting motion  because it believed
 that to permit EPA to read its complaint to
 include a charge of "metals contamination"
 would unfairly  surprise IMC.  EPA attacks
 the, lawfulness of the court's "proof-limit-
 ing" order by  pointing to:  1) language in
 its complaint (other than in  paragraph -12)
 which  stales in general  terms  that  IMC
 land others for whom it is responsible) re-
 leased  "hazardous" materials:   2)  an in-
 stance, prior to  Day 56 of trial, in which it
 introduced evidence of  metal contamina-'
 tion;  and 3t an effort by IMC's counsel.
 prior to Day 56 of trial, to cross-examine a
 witness  about  metal contamination.   The
 first of these matters,  the presence of gen-
 eral "contamination" language in the com-
 plaint, is  beside the point.   IMC's  "proof-
 limitation" motion did  not  rest  upon  the
 literal  language of the complaint.  Rather,
 it rested upon the fact that a) the  specific
 list of five chemicals in the complaint, plus
 b) almost four years of pre-trial  activity
 and fifty-five trial days without significant
 mention of its potential liability for  metal
 contamination, plus  ci the absence of any
 reason why the government failed to men-
 tion metals earlier, taken together, made it
 unfair to read the complaint to include met-
 als or to permit a "metal-related" complaint
 amendment.
   The second and third matters show little.
 The earlier instance  in which the EPA told
 IMC about  metals consists of its effort on
 day $J of trial to introduce evidence that a
 different defendant.  Geochem (for whose
 actions  IMC is not  responsible), contam-
 inated a different site, the 0 &  G site (for
 which IMC  is not responsible), with metal
 deposits—a claim that the court eventually
 rejected when  it dismissed Geochem from
 the suit on the ground that no one (at that
 other site) had released metals.   The earli-
 er instance of cross  examination by  IMC
 consisted of its cross examination on day
 55 of trial, the  day before it made its "sur-
 prise-based" motion.
   [3]  The  district court has adequate le-
 gal power to interpret general language in
 a  complaint in  light of what four years
 worth of legal activity indicates the parties
 mean by that language:  and it can refuse
 to permit an amendment  where such an
 amendment would unfairly surprise a par-
 ty. See. e.g., Isaac v. Harvard University,
 769  F.2d 817, 829 (1st Cir.1985); Johnson
 v.  Truebtood, 629 F.2d 287, 294-95 (3d Cir.
 1980), cert, denied, 450 U.S. 999. 101  S.Ct
 1704. 68 L.Ed.2d 200 (1981).  Thus EPA's
 arguments  fail  to show that the district
 court here acted unreasonably or outside
 its lawful power.
  {4]  2.  \o metal  contamination.  In
 any  event the record adequately supports
 the district  court's substantive conclusion
 that there was no metals  contamination.
That conclusion rested upon its finding that
a  particular  well dug on  the land,  well
 W-ll. is a  "background well,"  that  is to
say.  a well that has not been contaminated
 by the  waste site and  thus  reflects the
natural state of the water.  Well W-ll had
water with high concentrations of several

-------
438
900 FEDERAL REPORTER. 2d SERIES
      '•?:
fev&®
r^sfs-"^-
 : ii'rffc
of the relevant metals—concentrations that
significantly exceeded drinking water stan-
dards.   Thus, if W-il is a "background"
well, nature, not man. is likeiy responsible
for high metal  concentrations throughout
the site.
  EPA challenges only the first step of this.
reasoning.  It denies that the  district court
could find  that well  W-ll was a "back-
ground" well.   It points to what  several
documents introduced at trial show  as very
high metal concentrations,  particularly of
iron  and arsenic, in weil W-ll.   It says
that these concentrations are  much higher
than those  present  at  wells outside the
dump sites  but they are about the same as
wells on the dump sites.  See U.3.Exh.
634A (Ph. II).  EPA also points  to testimo-
ny of its expert. Dr. San born,  to the effect
that  well W-ll was not a background well,
but rather  was drilled for a special "be-
drock test" purpose:  although the slope of
the ground is such that one might expect
water to flow from the spot where well
W-ll was  drilled toward  the  dump site
(thus suggesting  that well  W-ll's site  is
"background"), if bedrock below well W-ll
is  lower than bedrock at the  dump site,
water may flow backwards along  the be-
drock, bringing contamination to well W-
11.  Dr. Sanborn also said he  thought that
well  W-ll's concentrations do  in  fact  re-
flect such contamination, not background.
See Tr.  Day 22 (Ph. II) at  80-84.
  The problem for EPA is that IMC points
to other evidence that suggests the  oppo-
site.  For example,  U.S.Exhibit  448H.3 ap-
parently compares  levels of  iron, nickel.
arsenic  and manganese at well  W-ll with
levels in wells  W-16. W-17. and W-23 (all
background wells), and also with levels  in
wells W-13 and W-14 (all dump site wells)
and with various  other wells.   Some wells
seem to have  high concentrations of the
metals;  others  have low concentrations—
all without  any obvious pattern.  IMC also
quotes a study done by an EPA  contractor.
which says that the "arsenic is more  likely
indicative of  natural  conditions  in -the
area."   U.S.Exh. 659 (Ph. 11} at  5-12.  The
very report that  speaks of well W-ll as
having been dug to test bedrock levels con-
cludes that "subsequent analysis ... does
                     not indicate"  any flow of water from the
                     dump site  towards well W-ll, U.S.Exh.
                     659 at 4-2: and maps  of bedrock levels do
                     not show  the  level  differential for which
                     EPA argues.  Indeed, the very expert upon
                     whom  EPA  relies  testified  earlier,  and
                     more vigorously,  that well W-ll was to-
                     deed a background  well.
                       We have read the hundreds of pages of
                     tables of numbers to which EPA and IMC
                     have referred us. with such guidance as the
                     parties have provided in their briefs, keep-
                     ing in mind the legal fact that EPA has the
                     burden of persuading us that the district
                     court's conclusion is "clearly erroneous."
                     It  has  not done  so.  Thus, .we  find the
                     district court's conclusions about metals to
                     be lawful for  this second, substantive, as
                     well as  for the  first, procedural,  reason.

                                        B

                       Volatile Organic  Compounds (VOCs)
                       The EPA ciaims that the district court
                     should  have ordered IMC to clean up the
                     soil on the 5.88 acre GLCC site further in
                     order to reduce the concentration of sever-
                     al volatile organic compounds (VOCs).  The
                     district  court  concluded  that IMC's 1984
                     cleanup efforts reduced VOC concentration
                     sufficiently, and that EPA itself should pay
                     for any  further  VOC  reduction  efforts.
                     EPA says  1)  that the court should have
                     measured  IMC's efforts against  EPA's
                     "one part per  million" VOC soil concentra-
                     tion standard, and 2) that, in  any event,
                     IMC failed to meet even the more generous
                     "five to  ten. parts  per million" standard
                     that the court approved.
                       151   I.  The standard.  After reviewing
                     the briefs and the record pages cited, we
                     cannot say that  the district court had to
                     conclude that  "the public interest and the
                     equities of the case."  42 U.3.C. § 9606(a),
                     required  it to adopt a "one"  instead of a
                     "five to ten" part per million standard gov-
                     erning VOCs  in the soil.  On the one hand.
                     EPA points to the remedial conclusions of
                     its own administrative proceedings and the
                     expert evidence that underlay them.  That
                     evidence  suggests that a • "one part per
                     million" standard  would reduce  the risk of

-------
                     "'1
 ow of water  from. thi •'?
  well  W-li.  U.S.Eifc,^
              levels d* ':%**'>S
., u. ..ery expert upon  ^W
 testified  earlier,  and '-ifegg§
at well W-ll was m- -^R*
well.                 .  »il
 hundreds  of pages of
i which EPA and IMC
h such guidance as the
i in their briefs, keep.
 fact that EPA has the
g us  that  the district
  "clearly erroneous,?
  Thus, we find  the
isions about metals to
>cond. substantive, as .
  procedural, reason.
 J

 Compounds (VOCs)
 tat the district court
 IMC  to clean up the
 GLCC site further  in
 >ncentration of sever-
 ipounds (VOCsK The  ;}$&
 ed '^attiMC's 1984
          should pay
C  reduction efforts.
e  court  should  have
orts  against  EPA'»
 VOC soil concentri!'
 that, in any tven^
ln the more  generous
er million"  standard
ed.

rd.  After reviewing
*ord pages  cited, we
 istrict court had to
blic interest and the
 42 U.S.C. § 9606(a),
 "one" instead  of a
million standard  gov-
il.  On the one hand,
nedial conclusions of
proceedings and the
nderlay them.  That
it  a  "one part  per
d reduce the risk of
>,.Ki
                       .   U.S. T. OTTATI
                            Cllc**m FJd 4
human cancer (from lifetime exposure)  to
close  to one in a million.   It would prove
fairly easy to monitor compliance with such
a standard.   And applying so stringent a
standard to the soil would also  reduce the
cancer  risk  caused  by  water  running
through  the" soil,  picking  up VOCs,  and
later entering a drinking water system.
 -On  the other hand, IMC  points  out  that
the very  report and expert study on which
EPA reiies says that a VOC level of 7 parts
per million in the soil would reduce lifetime
exposure cancer risks to one in a  hundred
thousand, a level that, in various  contexts
(including EPA's basic  studies), EPA as-
serts to be its "goal."  U.S.Exh. 375 at 21.
Moreover, EPA  monitored  IMC's cleanup
efforts. EPA was  fully, aware that IMC's
method would reduce VOC soil concentra-
tions  to  levels of  five to  ten parts per
million, yet, at that time, EPA did  not urge
further cleanup.  (See Tr. Day 59 (Ph.  I)  at
55;  and EPA contractor note saying  that
the "clean excavated soil  was  effectively
aerated." Tr.  Day 63 (Ph. II) at 48.>   IMC
meets  EPA's  argument that lower  VOC
soil concentrations are now needed to pro-
tect against higher tea ter concentrations by
noting that  the  district court separately
ordered run-off water cleanup to appropri-
ately low levels.  And it also says that the
the special additional cleanup method  (dig-
ging up,  heating in a special machine, and
then replacing about 14.000 cubic  yards  of
soil) will cost an added several million dol-  .
lars (IMC has already spent about  $2.6
million), all for very  little  purpose (since
one part  per  million is not significantly
safer  than five or ten).
  There is simply no way for us to say, on
the basis of  this kind of general evidence,
or on  the basis of other  highly  general.
tangentially   related  record  material  to
which EPA refers,  that the district court
was wrong in its choice  of standard.  EPA
must convince us of fact-related error, and
it has failed .to do so.
  [6]   2.  Compliance  irith  the  "fire  to
ten parts per million" VOC standard.
The district court concluded that "there is
evidence  in some areas  that ppms total  of
VOC  levels  exceeded  substantially  the
 & GOSS. INC.                      439
19 (IrtClr. 19901
 norm." but "overall ... the IMC cleanup of
 the soil contamination substantially cleared
 up the VOCs."  We take as the "norm"  the
 "five  to ten parts  per million" that IMC
 says was its "goal."  IMC's brief adds that
 "it is  evident that the court  accepted  the
 propriety of IMC's target.range  of 5-10
 ppm when it found  that "IMC ...  substan-
 tially  cleaned  up  the  VOCs.'"   And  we
 shall hold IMC to its stated arguments, just
 as we have done with EPA.  We therefore
 understand EPA to argue that  the record
 does not permit the district court to find
 that IMC  reduced  VOC levels,  overall, to
 "five, to ten parts per million." even allow-
 ing for an occasional "hot spot" departure.
 We agree.
   EPA points to two studies in the record.
 one conducted by an EPA contractor,  the
 other  representing an  IMC contractor's
 "check" of the EPA contractor's sampling.
 After IMC  finished cleaning up its site,  the
 EPA contractor tested the results by dig-
 ging a series of "test  pits."  It randomly
 dug 62 test pits, each about eight feet long,
 three feet wide, and eight feet deep, evenly
 spaced throughout an area somewhat larg-
 er than a  football  field.  The  contractor
 then took soil samples from different levels
 within each pit.  It found  that soil in over
 thirty of the sixty-two pits contained VOCs
 concentrated at levels higher than ten parts
 per million.  Many samples were  much
 higher than ten parts per million, and  the
 high concentration samples appeared at  dif-
 ferent levels in many pits.
   !MC makes two  arguments in its effort
 to support the  district court's conclusion.
 First,  it says that EPA's contractor did  not
 test the soil  in a  fair way.  Rather,  the
 contractor would use a meter to detect just
 where  in  the pit  concentration  was  the
 highest; then, the  contractor would take
 soil from that place.  IMC's contractor tes-
 .tified  that such a "hot spot" might be  the
• size of "a softball."  Tr. Day  46 (Ph. II) at
 47.. Since other evidence in the record sug-
 gests  that  a lifetime of exposure to VOC
 concentration of,  say,  seventy parts  per
 million would produce a cancer risk of one
 in ten thousand, one might ask just how a
 scattering of such  "softballs" throughout

-------
 440
900 FEDERAL REPORTER, 2d SERIES
 the area could hurt.  No one seems likely
 to suffer much from occasionally digging
 up some dirt mixed with a tiny amount of
 something like gasoline or benzene or tur-
 pentine:  the court's other remedies should
 make certain that the groundwater flowing
 through the area  stays clean; and, even if
 someone builds a house in the area and
 sinks a well, the small size of the "softball"
 would  help  assure  that  no  significant
 amount of  gasoline-like liquid mixes with
 the water.
   The difficulty with this argument is that
 we cannot read the record as showing no
 more than the occasional "softball."  IMC's
 contractor's own report indicates that thir-
 ty-three of the sixty-iwo wells  have VOC
 concentrations that exceed ten parts per
 million  (and. again, many of them exceed it
 by len  times or more).  Although  that  re-
 port indicates, in respect to a few pits (pit
 117, for example)  that the "hot" area'does
 not comprise the  whole pit. the very fact
 that the contractor made notes  stating,  in
 respect to some pits, that the high concen-
 tration  is found in  only part of the pit.
 suggests that, where  no such note exists.
 the high concentration area is fairly wide-
 spread  within the  pit.  (The contractor tes-
 tified that he. would indicate in his notes
 whenever the "hot" area was significantly
 limited  within a single pit.  Tr. Day 46 (Ph.
 II) at 58-59.)  The report suggests that
 high  concentrations were  limited  to very
 small areas in only a few instances; indeed.
 nowhere does it indicate "softball-sized"  ar-
 eas;  and in some instances (pit  121. for
 example) the report specifically  notes that
 high  concentrations exist  throughout the
 pit (e.g., 350 ppm at two feet deep,  340 ppm
 also at  two feet, 400 ppm at four feet in
 one pan of the pit and 606 ppm at four feet
 in another part).  The contractor also testi-
 fied that  "in other cases (the "hot  spot"]
 ... could be half a test pit." Tr.  Day  46
 (Ph. II)  at 47;  and he seems to have accept-
 ed a characterization of an "average" level
of 87 parts per million as reasonable, id. at
 112.  Having read through both the "IMC"
and "EPA"  reports,  and finding little con-
 flict in ihis respect between them, we have
a  firm conviction  that one cannot  reason-
ably characterize the "over ten  parts per
                     million"  VOC concentrations as "few" or
                     "far between."   Rather,  the  studies  and
                     related testimony indicate that such "oveji
                     standard" concentrations  are  widespre;
                     and in significant amounts, within the to
                     test area.
                       IMC also points to testimony suggesting
                     that it would be wasteful to require IMC to
                     dig up the several acre site again to  pro-
                     cess  14.000 or so cubic yards  of soil.  An
                     IMC expert  testified thac, even  if nothing
                     further is done, by the year 2000 probably
                     more  than half  of the VOCs  in  the  soil
                     would have  diffused into the  atmosphere.
                     Tr. Day  48  (Ph.  II)  at 43-44.   Moreover,
                     VOCs released into  the  groundwater  will
                     be taken care of by the groundwater treat-
                     ment ordered by the court.  Since IMC's
                     $2.6 million dollar expenditure  has brought
                     us so near absolute  safety,  why force ex-
                     penditure of millions of dollars  more to  buy
                     so little?
                       The problem with  this second argument
                     is  that the court  expressed no view about
                     its validity or direct relevance.  Rather, the
                     court's opinion assumes (as IMC and EPA
                     both  read it) that "five to  ten  parts  per
                     million" is the appropriate standard, and it
                     goes on to say that IMC has substantialJy
                     complied.  We. too.  therefore, express
                     view about.this second kind of argumeoj
                     except to note that the district court did not
                     adopt it.  Thus,  we remand this aspect of
                     the case to the district court so that it can
                     devise  a  further  VOC  cleanup remedy,
                     which, in light of its findings about danger
                     to  the public health, will adequately satisfy
                     "the public interest."  42 U.S.C.  §  9606(a).
                                      PCBs
                       EPA also asked the district court to or-
                     der a cleanup of soil and sediments at the
                     waste site to reduce to safe levels the con-
                     centration of a carcinogenic chemical, PCB.
                     The court applied a  standard of 50  parts
                     per million for soil concentration, which it
                     determined IMC's 1984  cleanup had  met,
                     and a standard of 20 parts per  million for
                     sediment concentration,  which  it ordered
                     IMC  to  meet.   EPA  now argues  that the

-------
                                                               U.S. ». OTTATI  & COSS. INC.
                                                                 Cite u 400 F-ld 429 (luClr. 1990) '
                                                                              441
ts, within the total  i'v

timony suggesting
 to require IMC to
site  again to pro-
  rds of soil  An
t, even if nothing
ear 2000 probably
VOCs  in  the toi
)  the atmosphere.
13-44.   Moreover.
groundwater wfl|
roundwater treat.
irt.  Since IMC'a
iture has brought
ty, why force ex- ;
illars more to bay

second argument
id no view about
nee.  Rather, the
is IMC and EPA
to ten parts per
  tp-^^c^and it

foV    ^^^ress no
nd of argument
net court did not'
id this aspect of ^
irt so that it csi
:!eanup remedy,...
gs about danger V'^
lequately satisfy '""
U.S.C.  § 9606
-------
442
900 FEDERAL REPORTER. 2d SERIES
other areas of "discolored" soils, he did not
make clear  how many there were,  where
they were, whether they were outside the
five test pits from  which the. samples were
taken, or whether they  more likely re-
flected the "more than 50 ppm" present in
the three noncomplying "discolored soil"
samples, or the "less than 50 ppm" present
in the two other "discolored  soil" samples.)
In our view, the areas of noncompliance are
sufficiently small in  number to warrant a
conclusion that the likelihood that a child
would eat this soil, consistently over a peri-
od of many days or years, is virtually non-
existent; and. the  very occasional patches
of below-surface noncomplying soil  would
seem  sufficiently  scattered  to  warrant a
conclusion of no significant  risk.  We can-
not say that the district court was "clearly
erroneous"  or unreasonable in  reaching
such a conclusion, and we therefore find no
legal  error.
  3.  PCB "sediment "standard.  The dis-
trict court required IMC to clean the marsh
and the  south brook to the point  where
PCB concentration in the  sediments would
not exceed 20 parts per million.  EPA ar-
gues  that the standard is too lenient.  It
says that the court should have imposed a
standard of  one part per  million  PCBs.
  The EPA supports its argument with ci-
tations to only  a  handful of  statements.
Its  own administrative report simply  says
in  highly general language  that   there
should be a standard of one part per million
in order  to protect birds, fish,  and mam-
mals,  as well as human beings.  U.S. Exh.
375 (Ph.  II> at 25.  The study  upon which
the EPA based its report offered several
alternative remedies, only one of which rec-
ommended  that same standard  for  that
same  reason.  U.S. Exh. 450A  (Ph. II) at
22,  And Dr. Tsai  testified that she chose
that same standard, again,  for the  same
reason.
  IMC correctly points out.  however,  that
the study upon which EPA b'ased its  report
also, in another alternative remedy, recom-
mended a sediment  PCB standard  of 50
ppm-  U.S. Exh. 450A at 63.  It points to a
discussion in  the record,of  a federal fish
and wildlife study that finds no "significant
                     health risk" at the pond, despite the poten-
                     tial 20 ppm PCB  sediment concentrations.
                     And it adds  that EPA has n
                     plained how,  or why. animal and
                     protection requires a more stringent stan-
                     dard.   Indeed,  out  of the entire  record,
                     EPA mentions  only  a handful of highly
                     general,  conclusory  sentences  about  the
                     PCB sediment standard.  (E.g..  the EPA's
                     basic study simply  says without elabora-
                     tion, that the  "action level of 1 ppm for
                     PCB's in  sediments was selected after dis-
                     cussions  with  State  and federal officials
                     because of the potential for bioaccumula-
                     tion  of  these  PCB's by wetland  biota."
                     U.S. Exh.  450A at  22.)  The only more
                     concrete  explanation given  is that of Dr.
                     Tsai. who, after repeating the same general
                     conclusory sentence,- added  that EPA con-
                     sidered a "two parts per million" standard
                     for concentration in  fish. • But Dr. Tsai did
                     not explain the relation between PCB con-
                     centration in the sediment at the bottom of
                     a pond  and concentration  within  a  fish.
                       In our  view, the district court was enti-
                     tled to hold EPA to somewhat higher stan-
                     dards of  detailed  proof than those met in
                     the pages we have cited.  And, in  the ab-
                     sence of  that proof,  given the ot
                     skimpy) indications in the record
                     stringent  "alternatives" would
                     quate, we believe the court could  reason-
                     ably choose a 20 parts per million standard.
                     That is to say, we cannot find that such a
                     standard   is  "clearly erroneous"  or  its
                     choice unreasonable.

                                       Ill
                                   Other Issues
                       1.  EPA "joint and several"'liability.
                     The district court  specifically ordered IMC
                     to carry out "EPA's selected groundwater
                     remedy." i.e..  the  work necessary to clean
                     up the groundwater  at the GLCC site.  694
                     F.Supp. at 987, 1006.  At the same time,
                     the district court wrote that water, contam-
                     inated with waste at the 0 & G site a  few
                     hundred yards northwest, flowed under the
                     GLCC site to  the  southeast, and mixed at
                     some point with water from the GLCC site.
                     Because (in the district court's view) EPA's
                     own "cleanup" operation at the northern 0

-------
»nd. despite the potet»'"!
[idiment concentrating ^
                                                                   U.S. ».  OTTATI & GOSS. INC.
                                                                      ClUuTCO F-M 429 (In Clr. 1990)
                                            G site played a major role in contaminat-   under section 9607 court could reaaoor
 per million standard* ,j
 jnnot find that
   erroneous"  or
                >
                 i

 I
                   ?»* ;
 Issues             (per curiam)
 (party  cannot appeal from dicta).
  EPA also wants to appeal a statement in.
 the district court's liability  opinion  that
 "IMC  is not responsible for  or liable  for
 any releases into the environment or ef-
 fects upon  the public health or-environment
 from 1955 until May, 1973" (when it bought
 the GLCC site from a company called King-
 ston Steel  Drum).   630 F.Supp. at  1374.
 We cannot decide this EPA claim  for the
 same  reason:  EPA  does  not  explain  how
 this statement  makes  any  practical differ-
 ence to the judgment under review, or how
 it is in any sense necessary to the district
 court's judgment.
  2.   Liability for EPA $ "indirect costs. "
 The district court awarded, to EPA, to the
 State  of New  Hampshire, and  to others,
 costs that they incurred in  helping to clean
 up the sites—costs for which IMC,  in part,
 was responsible.  42 U.S.C. § 9607(a).  In
 awarding costs to EPA. the district court
 specifically disallowed $336,922, stating:
  $336.922.00 are indirect  costs which in-
  clude expenses for rent, utilities, sup-
  plies, clerical  staff and  other  overhead
  expenses.  These  indirect  costs  neces-
  sary to operate the  Superfund program
  cannot be attributed directly to the 0 &
  G/GLCC sites, and  are  therefore disal-
  lowed.
694 F.Supp. at  995.   Subsequently,  re-
sponding to EPA's motion to reconsider the
point,  the court wrote:
  There is  ample evidence of record why
  this  court allowed  the  State  of  New
  Hampshire's  indirect costs  and disal-
  lowed indirect costs of the United States.
  To add further fuel to the fire,  the Unit-
  ed States has the  temerity to state there
  is no reason for its ustulation [i.e., being

-------
444
                                                               900 FEDERAL REPORTER. 2d SERIES
^*S5
 L*'-vX-JJ
 *••• t f ^?-r ••*:»» «•* '*y^
&-•••*•* •('&£&>
%'--••--..'.-,- .-.'Ajflftif,
  CVlMg^
^.^sa^^ia
L .• -v t>..C:*j»-" • 
-------
rmrding  govern. $
r  Clean Water 4!
           •rilg
                                                     ASSEO V. CENTRO MEDICO  DEL TTRABO
                                                               CIUMfOO FJd MS llnClr, I WO)
                                                                             445
oper behavior, a
its the court to
.  l«n,   37(b);
Piper, 447 U.S.
483, 65 LEd.2d
rent power" to
to "abusive liti-
•kton   Savings
 'itchell & Co.,
 •.1985) (court's
entry of default
r abuse of  dis-
nied,  475  U.S.
,d.2d 317 U986).

EPA  that ordi-
   recovery  of
llso agree with
It  denied  these
 district courts
uthority to  im-
idway Express,
 raises serious
ecrive adminis-
'S O>* V
Why  has  the
y to express its
sh (e.g., "small
ts of dirt wnem^.
-ead of  relying"-^
ross-references
s, and "expert
rnment  itself
, of contamina-
>anup efforts?
ct. spent enor-
  judicial)  re-
  improvement
  VOC.  and 50
in." at three to
n" costs?  In-
ken account of
iefs  and  then
 work through
i forty or fifty
s considerable
time that its lawyers might devote to other
cases, or the courts to other litigants, and
has it consciously  decided that  determina-
tion of this  primarily site-, case- and fact-
specific appeal is significant enough to war-
rant such calls upon public resources?
  To  find a case  worrying,  however, to
believe that  "there must be a better way,"
to wonder about the government's priori-
ties in the face of other, apparently more
serious, environmental demands  for "clean-
up" time and effort—is not to find the type
of governmental activity that may  call for
sanctions.  And the parties  hotly  contest
the existence and the unreasonableness of
each specific instance of  misconduct that
arguably calls for sanctions.   (The  govern-
ment, for example, says that IMC's claim
that it "was barred from discussing settle-
ment  with  the  government" is  "false;"
while  IMC replies that its  claim "is true."
and "it is wrong for EPA to label as false a
statement that some of its own lawyers
know  to be  true.")

  [13)  We simply cannot determine from
this vast record just what it is that  EPA or
its lawyers may have done that is wrong
and warrants the sanction  of  denying indi-
rect costs: and, we do not want to guess, in
so serious a matter,  just  what is in the
district court's mind.   We  therefore re-
mand the case on this issue for the court to
redetermine  the "sanctions" matter, after
which, if it assesses sanctions, it will state
the specific  factual, and legal, basis  upon
which they  rest,  including the reason to
equate the amount of the sanction with the
amount of the indirect costs.

               Conclusion
  For the  reasons  stated, we  order the
district court to do the following:  1)  The
court will reconsider its order in respect to
VOC cleanup: it will amend that  order to
require IMC to clean up VOCs in the soil at
the GLCC site to a level that  it determines
"public health" and the "public interest"
require.   2)  The court will reconsider the
matter of "indirect costs." explaining, as
we have 'set- forth above, any denial of
those  costs  as a  sanction.   In all other
                                                                            respects the judgment of the district court
                                                                            is  affirmed.
                                                                              Affirmed in part, vacated in part, find
                                                                            remanded  for further  proceedings indi-
                                                                            cated in this opinion.
                                                                            Mary Zelma ASSEO. Regional Director of
                                                                              the Twenty Fourth  Region of the Na-
                                                                              tional  Labor Relations Board, for and
                                                                              on  Behalf of the National Labor  Rela-
                                                                              tions Board. Petitioners, Appellees.
                                                                                               v.
                                                                            CENTRO MEDICO DEL TURABO. INC.
                                                                              and Joaqutn Rodriguez d/b/a Turabo
                                                                              Medical  Center  Limited  Partnership
                                                                              d/b/a   Hospital   Interamericano  De
                                                                              Medicina Avanzada, Respondents. Ap-
                                                                              pellants.
                                                                                          No. 89-1874.

                                                                                 United States Court  of Appeals,
                                                                                          First Circuit.

                                                                                          April 5,  1990. -
                                                                                Hospital corporation appealed from or-
                                                                            der of the United States District Court for
                                                                            the District of Puerto Rico,  Carmen  Con-
                                                                            suelo Cerezo.  J., granting National Labor
                                                                            Relations Board's petition for temporary
                                                                            injunctive relief in  connection with unfair
                                                                            labor  practice charges  against  hospital.
                                                                            The  Court  of  Appeals,  Torruella. Circuit
                                                                            Judge, held  that: (1) regional director's de-
                                                                            termination  that hospital  had committed
                                                                            unfair labor practice was supported by rea-
                                                                            sonable cause, and (2) injunctive relief was
                                                                            warranted.
                                                                                Affirmed.
                                                                            1. Labor  Relations «=518
                                                                                Under  statute   authorizing  district
                                                                            court to grant interim injunctive relief to
                                                                            restore and preserve status quo pending

-------

-------
 1424
733 FEDERAL SUPPLEMENT
 of the automobile. Since the policy did not
 explicitly exclude injuries arising from the
 entrustment of  the  insured's  automobile.
 the court held  that  coverage extended to
 such injuries.
   The defendants' reliance on .Vop/ is  thus
 inappropriate since the Bensons do not al-
 lege in  the  state litigation  that Jennie
 Heltsley  negligently  entrusted her car to
 anyone.  Rather, they allege that she  was
 negligent in failing to use seat  belts  and
 car seats appropriate  for children, failing to
 maintain control of the children in the car.
 and placing the infant Joseph on the  floor
 board of the  car without appropriate  pro-
 tection.  All of  these directly relate to the
 use, loading, and unloading of the insured's
 car.  In any event, of course,  even if the
 plaintiffs in  the  state litigation did allege
 negligent entrustment  by  Hentley. Noel
 still would have no application since, unlike
 the policy in that case, the policy .here
 contains  an  explicit  exclusion  of injuries
 arising from  "the entrustment by an in-
 sured of  -a. motor vehicle."
   IT IS  ACCORDINGLY ORDERED  this
 30th day of March. 1990.  that the plaintiffs
 motion for  summary judgment is hereby
 granted.
 UNITED STATES of America. Plaintiff,
                   v.
 Royal N. HARDAGE. et al.. Defendants.
 ADVANCE CHEMICAL COMPANY,  et
  al.. Hardage Steering Committee Defen-
  dants  and Third-Party Plaintiffs.
                   v.
          ABCO.  INC.. et  al.,
        Third-Party  Defendants.
           No. CIV-86-1401-P.
      United  States District Court.
            W.D.  Oklahoma.
              Dec. £. 1989.
    United States brought action under the
Comprehensive Environmental  Response,
                Compensation, and Liability Act (CERCLA)
                to recover response costs it  incurred at
                disposal site from owners and operators of
                disposal  site  and  from  generators  and
                transporters of hazardous waste.  On the
                motion of  the  United States for partial
                summary  judgment,  the  District Court.
                Phillips, J., held that: (1) the United States
                made prima facie showing  that it was enti-
                tled to recovery of direct  response costs:
                (2) no showing was made  that claimed re-
                sponse costs were inconsistent with nation-
                al  contingency  program or were  not in-
                curred  at site: (3) the United States could
                recover indirect costs;  and (4) the United
                States  was  entitled  to  declaratory judg-
                ment of future liabiiitv.
                    Motion granted in pan and denied in
               part.
                1. Federal Civil  Procedure «=2470.1
                   Summary judgment is  appropriate if
                there can be but one reasonable conclusion
                as to material facts:  only genuine disputes
                over  fact which might  affect outcome of
                suit under governing law will properly pre-
                clude entry of summary judgment.   Fed.
                Rules Civ.Proc.Rule  562543
                   Court determining whether nonmovant
                has  submitted  evidence of essential ele-
                ments of claim, so as to withstand motion
                for summary judgment,  is only required to
               draw  reasonable inferences from evidence:
               implausible  inferences  can  be rejected.
               Fed.Rules Civ.Proc.Rule 56
-------

-------
                                 U.S. v. HARDAGE
                           Cite u 731 F.Supp. 1424 IW.D.OU. 1WI
                                    1425
 5. Federal Civil Procedure «=2546
     Conclusionarv opinions of experts that
 fail to provide specific facts are insufficient
 to  defeat summary judgment-  Fed. Rules
 Civ.Proc.Rule 56(e(. 28  U.S.C.A.
 6. Health and Environment e=25.5<5.5i
     Defendants attempting to meet burden
 of  proving that response costs  sought by
 the  United States are inconsistent with the
-national contingency plan, and thus  unre-
 coverable, must demonstrate that agency's
 choices of response  costs  were arbitrary
 and capricious.  Comprehensive  Environ-
 mental Response,  Compensation, and Lia-
 bility Act of 1980.  §§ 105.  107(aX4«A). as
 amended,    42    U.S.C.A.     §§  9605. .
 9607
-------
 1426
733 FEDERAL SUPPLEMENT
 sive  Environmental Response, Compensa-
 tion,  and Liability Act of 1980. §  107(a). as
 amended, 42 U.S.C.A, § 9607(a).

 13. Federal Civil Procedure  <3=2481
    Party potentially liable under CERCLA
 for response costs incurred by the United
 States had obligation, if it intended to chal-
 lenge response costs, to  take apropnate
 action to obtain necessary  evidence and to
 present evidence in response to motion for
 summary judgment;  having  failed to  do
 that,  it could not avoid entry of  summary
 judment by asserting  that  the  United
 States failed to produce adequate  documen-
 tation for it to determine what portion of
 costs were  response  activities at disposal,
 site at issue, which documentation had  al-
 ready been  found to  establish prima  facie
 case.   Fed.Rules Civ.Proc.Rule 56. 28 U.S.
 C.A.:   Comprehensive Environmental  Re-
 sponse, Compensation, and  Liability Act of
 1980.  §  107(a),  as  amended!  42  U.S.C.A.
 § 9607(a>.

 14. Federal Civil Procedure «=»2481  .
    Allegedly  pending affirmative defens-
 es to  liability under CERCLA  for response
 cost did  not bar entry of  summary judg-
 ment, though in stipulation potentially lia-
 ble parties  reserved right to contest costs,
 where  those   parties  wholly failed  to
 present materials or evidence in support of
 affirmative defenses in opposing summary
judgment; time for parties  to contest costs
 was  in  response to motion for summary
judgment..  Fed.Rules Civ.Proc.Rule 56. 2?
 U.S.C.A.;  Comprehensive   Environmental
 Response. Compensation, and Liability Act
of 1980, § 107|ai, as amended. 42  U.S.C.A.
§ 9607(a).

 15. Health  and  Environment «=25.5(5.5)
    Parties potentially liable under CERC-
LA for response costs incurred by  the Unit-
ed Stales failed to establish  they were enti-
tled to recoupment, in that nexus or com-
mon denominator between relief sought by
the United  States and precise nature of
recoupment  claim  was not  demonstrated.
Comprehensive  Environmental Response.
Compensation,  and  Liability Act  of 1980.
§ 10725.5(5.5)
                    Standard level users charges incurred
               ' by the United States  Government, includ-
               . ing  rent  and property-  management fees
                paid by the Department of Justice (DOJ) to
                the General Sen-ices Administration 
                   Indirect costs incurred  by the United
                States in connection with  disposal site could
                be  recovered  as response   costs under
                CERCLA.   Comprehensive Environmental
                Response. Compensation, and  Liability Act
                of 1980, § 107iaM4«A), as amended, 42 U.S.
                C.A. § 9607(a)(4MA).

                19. Federal Civil Procedure «=>2481
                   Genuine issues of material fact existed
                as to whether indirect labor costs attributa-
                ble to disposal site were excessive,  preclud-
                ing summary  judgment  on  claim  of the
                United States that it was entitled to recov-
               er those  costs as  response  costs under
                CERCLA,  where expert challenged one-to-
               one ratio  of indirect labor costs to direct
               labor costs and asserted that charges were
               being made to  disposal  site  for work un-
               related to  site.   Fed.Rules  Civ.Proc.Rule
               56, 28  U.S.C.A.;  Comprehensive  Environ-
               mental Response. Compensation, and  Lia-
               bility Act of 1980. § 107iaM4MAl. as amend-
               ed. 42  U.S.C.A. § 9607(aX4MA).

-------
                                 L.S. v. HARDAGE
                            Cite ** 733 FSupp. 1424 (W.D.OU. 19891
                                    1427
20. Declarator?- Judgment «=>82
    District court could determine by way
of declaratory judgment future liability un-
der CERCLA of owners and operators of
disposal site and generators and transport-
ers of hazardous waste for response costs
incurred by the United  States, though the
court could not actually award costs  until
they were incurred.  Comprehensive Envi-
ronmental Response. Compensation, and Li-
ability  Act  of  1980.  § 107  of   CERCLA1,   42   U.S.C.
 § 960"iaM4MA). for response costs incurred
 by the  United States  in conjunction with
 the Hardage site. The amount of response
 costs requested by the United States in this
 motion  for  partial summary judgment  is
 $6.292.065.25.    In  addition,  the   United
 States also seeks  a declaration  that the
 defendants are liable for the United States'
 future response costs  at the Hardage site.
 Six individual  defendants or groups of de-
 fendants  responded in  opposition.2   With
 this  Court's  approval, the  United  States
 filed a joint reply to all the  responses on
 November 6,  1989.   For  the reasons set

  CXTO cites to  its pending motion for summary-
  judgment on CERCLA'i  constitutionality to ar-
  gue this Court should deny  the United States'
  motion  for partial summary judgment on re-
  sponse costs or postpone ruling on the govern-
  ment's motion  until CATO's motion is  decided.
  This Court denied CATO's motion for summary-
  judgment on November 28, 1989.
    L'.S.  Pollution  Control, Inc.  rtlSPCI") op-
  posed the United  States',  motion on October 6.
  1989  stating USPCJ has a pending motion for
 •summary judgment based upon its status as a
  common  carrier.  This  Court  denied  USPCI's
  motion  for summary judgmeni  on October 3,
  19g9.  However. I'SPCl  has strongly defended
  against  the  United States'  motion for partial
  summary judgmeni on I'SPCI's liability which is
.  still  pending.
    JOC Oil Exploration Company. Inc.  ("JOC")
  filed a motion  in  opposition on September 27,
  1989. JOC argues there  has been no finding of
  liability against JOC.  therefore JOC cannot be
  found  liable for  the United  Stales' response
  costs.

-------
 1428
733 FEDERAL SUPPLEMENT
 forth below, the United States" motion for
 partial  summary judgment  for response
 costs is GRANTED, with the exception of
 the request for indirect costs of the Depart-
 ment of  Justice ("DOJ"), against  defen-
 dants who  have stipulated to  liability or
 been found  liable.3  In addition, the United
 States' request for a declaratory judgment
 finding the defendants liable for the United
 States'  future   response  costs  is   also
 GRANTED against these same defendants,
 with the exception  of the indirect costs of
 DOJ.'
          I.  STANDARD  FOR
        SUMMARY JUDGMENT
  [1] The  facts presented  to  the  court
 upon a motion for summary judgment must
 be construed in a light most  favorable to
 the nonmoving party.  Board of Educ. v.
 Pico. 457 U.S.  853.' 864. 102  S.Ct.  2799,
 2806. 73 L.Ed.2d 435 (1982):  United States
 v. Diebold. Inc.. 369 U.S. 654, 82 S.Ct  993,
 8 L.£d.2d 176 (19621.   If there can be but
 one reasonable conclusion as to the materi-
 al facts, summary judgment is appropriate.
 Only genuine  disputes over  facts  which
 might affect the outcome of the suit  under
 the governing  law will properly preclude
 the   entry   of   summary-    judgment.
 Anderson r. Liberty Lobby, Inc.. 477 U.S.
 242.  106 S.Ct.  2505. 91 L.Ed.2d 202 (1986).
 Finally, the  movant must show entitlement
 to judgment as a matter of law.  Ellis r. El
 Pasa \atural Gas Co.. 754 F.2d 884.  885
 (10th Cir.1985);  Fed.R.Civ.P. 56.
  Although  the Court must view the facts
 and inferences to be drawn from the record
 in the light  most favorable to  the nonmov-
 ing party, "even under this standard there
 are cases  where the evidence  is so  weak
 that  the case does not raise a genuine issue
 of fact."   Burnette i\ Dow Chem.  Co.,  849
 F.2d 1269. 1273 (10th Cir.1988).  As stated
 by the Supreme  Court, "[s)ummary judg-
 ment procedure is properly regarded not as
 a disfavored procedural shortcut, but rath-
 er as an integral part of the Federal  Rules
 as a whole,  which are designed  'to secure
 the'just, speedy and inexpensive determina-
 tion  of every  action.'"   Celotex Corp. r.
 Catrett. 477"U.S. 317. 327.  106 S.Ct.  254S.
 2555. 91 L.Ed.2d 265 (1986) (quoting Fed.R.
 Civ.P. 1).
  The Supreme Court articulated the stan-
 dard to be used in  summary  judgment

3.  Certain  of the defendants, including but  not
  limned 10 CATO.. USPC1. JOC. Stock Yards,  and
  Rockwell  International have noi stipulated to
  Iiabiiitv nor been found liable  under sections
  106  &  107(a> of  CERCLA.  42  L.S.C.
  §§ 060613) & %07(a)  Should these defendants
                cases,  emphasizing  the  "requirement  is
                that there be no genuine issue of material
                fact,"  Anderson  i: Liberty Lobby. Inc..
                477 U.S. at 248, 106 S.Ct. at 2510 (emphasis
                in original).  A dispute is "genuine" "if a
                reasonable jury could return a verdict for
                the  nonmoving  party."   Id. at  248, 106
                S.CL at 2510.  The Court stated that the
                question is "whether the evidence presents
                a sufficient disagreement to require sub-
                mission to a jury or whether it is so one-sid-
                ed that one party must prevail as a matter
                of law."  Id.  at 251-52.  106 S.Ct. at 2512.
                "The mere existence of  a scintilla  of evi-
                dence  in  support of the [party's] position
                will be insufficient;  there must be evidence
                on which the jury could reasonably find for
                the [party]."  Id. at 252.  106 S.Ct. at 2512.
                "The very  mission of  the  summary  judg-
                ment procedure is to pierce the pleadings
                and  to assess the  proof in  order  to see
                whether there is a genuine need for trial."
                Matsushita Etec. Indus.  Co. v. Zenith Ra-
                dio  Corp.. 475  U.S.  574, 587,  106  S.Ct.
                1348. 1356. 89 L.Ed.2d  53? (1986) (quoting
                Advisory Committee Note  to-Fed.R.Civ.P.
                56)e)).

                  [2]  The  Court determines whether the
                nonmovam  has submitted evidence  of the
                essential elements of the claim by viewing
                "the evidence presented through the prism
                of the  substantive evidentiary burden" so
                that a reasonable  factfinder could find for
                the nonmovant. Anderson v.  Liberty Lob-
                by. Inc.. 477 U.S. at 254.  106 S.Ct. at 2513.
                The Court is only required to draw reason-
                able  inferences from the  evidence.  See
                Lucas  r.  Dover Corp..  \orris Dir., 857
                F.2d  1397,  1400  (10th  Cir,1988)  (J.N.O.V.
                standard).   Implausible inferences can be
                rejected.  Cf.  Matsushita Elec. Indus. Co.
                r. Zenith Radio Corp., 475 U.S. at  585-
                598.  106 S.Ct.  at 1355-1362 (rejecting im-
                plausible inference of  intent in antitrust
                conspiracy).

                  [3-5]. A  party resisting a  motion for
                summary  judgment "must  do more  than
                make conclusionary allegations, it  "must
                set  forth facts showing that there  is a
                genuine issue  for  trial."   Fed.R.Civ.P.
              '  56le):   Dart Indus,  r.  Plunkett  Co. of
                Okla..  Inc.. 704  F.2d 496, 498 (10th Cir.
                1983): see  Lake Hefner Open Space Alli-
                ance r. Dole.  871  F.2d  943. 945-46 (10th

                 be found liable in the future, they would  also be
                 jointly  and  severally liable for these response
                 costi

               4.  See footnote  3.
                                                                                      J

-------
                                            U.S.  v. HARDAGE
                                      Cite «» 733 F.Supp. 1424 (W.D.OU. 1989)
                                                                                 1429
I
          Cir.1989) (Plaintiff did not "by affidavits or
          as  otherwise  ...  set  forth  specific facts
          showing that there is  a genuine issue for
          trial."}-  The Court will not grant summary
          judgment  based on  a  battle  of affidavits
          that raise genuine material  disputes.  De
          Vargas  v. Mason  & Hanger-Silas Mason
          Co..  844  F.2d 714, 719 (10th  Cir.1988).
          However,  affidavits must be submitted in
          good faith.  Fed.R.Civ.P. 56.  And, con-
         . clusionary affidavits are insufficient to de-
          feat summary judgment.  Luckett r. Beth-
          lehem Steel 'Corp.. 61? F.2d 1373, 1380 &
          n.  7  (10th  Cir.19801  Conclusionary opin-
          ions of experts that fail to provide specific
          facts  are  insufficient  as well.  Erers v.
          General Motors Corp.. 770 F.2d 984. 986-
          87  (llth Cir.1985).
        11.  UNDISPUTED  FACTS
  Rule 14(B) of  the Western District  of
Oklahoma provides a framework  for deter-
mining undisputed facts  at  the  summary
judgment stage.  The Rule provides:

  The brief in support  of a  motion for
  summary judgment (or  partial  summary
  judgment) shall begin with a section  that
  contains a concise  statement of material
  facts as  to which movant contends no
  genuine issue exists.  The facts shall be
  numbered and shall refer with particular-
  ity  to those portions of the record upon
  which movant relies.  Tht brief  in opposi-
  tion to a  motion for  summary judgment
  (or  partial summary  judgment) shall be-
  gin with a section  which contains a  con-
  cise statement  of  material facts  as to
  which the party contends a genuine issue
  exists.   Each  fact in  dispute  shall be
  numbered, shall refer with particularity
  to  those  portions  of the  record upon

5.  The Lnned States statement of material  facts
  as to which there is no  genuine issue contains
  33 undisputed facts. Facts nos. 30 and 31 relate
  to  indirect costs of  response activities  per-
  formed by  DOJ personnel' at the  Hardage site
  and  the amount of those  costs.  Because the
  Court finds genuine issues of material fact  as to
  IJniled Slates' listed facts 30 and 31, these two
  facts are not included in tht Court's statement
  of undisputed facts, and  the Court's undisputed
  facts hax-e been renumbered
6.  Stock Yards stipulated  to undisputed facts no.
  1. 2, and 5 in its stipulation on issues relating to
  liability on May 10,
         7.  HSC. L & S Bearing by reference, and L'SPCl
           either do not  contest, or are willing that the
           above-listed factual allegations  nos. 1-4  be
           deemed admitted, for purposes of this summary
   which the opposing party relies, and. if
   applicable, shall state the number of the
   movant's fact that is disputed.  All mate-
   rial  facts set forth in the statement of
   the movant shall be deemed admitted for
   the  purpose of summary judgment un-
   less   specifically  controverted  by  the
   statement of the opposing party.
 W.D.Okla.R. 14(B).
   An analysis of the United States' motion
 and reply and the responses of HSC. L & S
 Bearing by  reference.  Stock  Yards, and
 USPCI reveal the following facts are undis-
 puted within the meaning of Rule 14-33. 31 of
  which are listed here and are incorporated here-
  in as the Court's findings  of undisputed facts.
  As  discussed in Section V of this  Order, the
  Court finds genuine, issues of material fact only
  as to the Department of Justice's indirect costs.
  United States' proposed undisputed facts nos. 30
  & 31.

-------
 1430
733 FEDERAL SUPPLEMENT
   7.  The United States has incurred costs
 for the response activities performed at the
 Hardage site by EPA Headquarters' em-
 ployees, in the form of payroll expenses of
 those employees, in the amount of at least
 S49.795.S1.  "
   8.  The United States has incurred costs
 of at least 59.273.71 for the travel expenses
 of EPA  Headquarters employees traveling
 to perform response activities at the Hard-
 age site.
   9.   EPA Region VI  employees have per-
 formed response activities at the Hardage
 site.
   10.  The  United States  has  incurred
 costs for the response activities performed
 by Region VI  employees at the Hardage
 site of at least $288.160.95 in payroll  ex-
 penses for those employees.
   11.  The  United  States  has incurred
 costs of  at least  $4.158.65 in amounts paid
 by Region VI to  private vendors (exclusive
 of travel expenses of Region VI personnel)
 in connection  with  response activities of
 Region VI personnel at the Hardage site.
   12.  Region VI personnel have traveled
 to perform response activities at the Hard-
 age  site.
   13.  The  United  States   has  incurred
 costs of  at least S3S.92&.24 in paying the
 travel  expenses of Region  VI  employees
 traveling  to perform response activities at
 the  Hardage site.
   1-4.  CH2M Hill has  conducted response
 activities at the Hardage site pursuant to
 EPA Contract No. 6Mil-669i.  Work  As-
 signment  No. 31-06M08.0.
   15.  The  United  States  has  incurred
 costs of at leas i SS46.956.80  in payments to
 CH2M Hill  for   the  response  activities
 CH2.M Hill conducted at the Hardage site
 pursuant  to  Contract No.  68-01-6692,
 Work Assignment Nc.  31-06MOS.
  16.  CH2M Hili has  performed response
activities  at  the  Hardage site pursuant to
 EPA Contract No. 68-01-7251,  Work As-
   L'SPC! dispuies the L niicd Stales' listed facts
  6-33 alleging "noi all costs asserted are response
  costs o: response activities which are not incon-
  sistent with t'nt  National Contingency Plan.
                 signments Nos. 106-6608.0, 142-6N08.0. &
                 167-6L08.0.
                   17.  The  United  States  has  incurred
                 costs of at least $1.326.308.25 in payments
                 to CH2M Hill for response activities at the
                 Hardage  site  conducted pursuant to EPA
                 Contract  No.  68-01-7251,  Work Assign-
                 ment Nos. 106-6608.0. 142-6N08.0. & 167-
                 6L08.0.
                   18.  Techlaw, Inc. ("TechLaw") (former-
                 ly known as  Interat  has  performed  re-
                 sponse activities at the Hardage site pursu-
                 ant to EPA Contract No. 68-01-6838.
                   19.  The  United  States   has  incurred
                 costs of at least $13.955.38 in payments to
                TechLaw  for  response  activities  at   the
                 Hardage  site  conducted pursuant to Con-
                tract  No. 68-01-6838.
                  20.   TechLaw has  performed response
                activities at the Hardage site pursuant to
                EPA  Contract No. 68-01-7104.
                  21.   The  United   States  has incurred
                costs  of at least $105.552.38 in payments to
                TechLaw  for response  activities conducted
                pursuant to Contract No. 68-01-7104.
                  22.   TechLaw has  performed response
                activities at the Hardage site pursuant to
                EPA  Contract No. 68-01-7369.
                  23.   The  United  States  has  incurred
                costs of at least $162.458.57 in payments to
                TechLaw for response activities conducted
                pursuant to Contract No. 68-01-7369.
                  24.  Jacobs   Engineering   Group.  Inc.
                ("Jacobs") has  performed response activi-
                ties at the Hardage site  pursuant to EPA
                Contract No.  68-01-7351,  Work  Assign-
                ment  No.  172.
                  25.  The  United  States  has  incurred
                costs of at least $313,554.00 in payments to
                Jacobs for response activities  conducted
                pursuant  to   Contract   No.  68-01-7351.
                Work  Assignment No.  172.
                  26.  Viar and Company ("Viar") and con-
                tract   laboratories participating  in EPA's
                Contract  Laboratory  Program  have per-
                formed response activities at the  Hardage
                site.
                 and/or to the  extent the\  are indirect costs."
                 USPCI's Response at 2.  However. t'SPCI pro-
                 vided no affidavits or evidence to  support this
                 assertion as required b> Fed.R.Civ.P. 56(e}.

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                                                     Bfrfe"'- ••'•
                                                     s-sfw--,- -
                                                                         ,'*•
                                                                         *
  21.  The  United
costs of at least $433.425.87 in payments to
Viar and contract laboratories participating
in EPA's Contract Laboratory Program for
response activities conducted at the Hard-
age site.   „
  28.  DOJ personnel have performed re
sponse activities at the Hardage site.
  29.  The  United  States has   incurred
costs of at least $405.035.00 in payroll ex-
penses for the response activities  conduct-
ed at the  Hardage site by DOJ personnel.
  30.  DOJ has contracted with  private
vendors to perform  response activities at
the Hardage site.10
  31.   The United States  has  incurred at
least  $1.438.638.00 in payments to private
vendors which have performed response ac-
tivities at  the  Hardage site under  contract
with DOJ."
United States'  Brief at  2-8:  HSC's Re-
sponse Brief at 2-24: USPCI's Response
Brief at 2: Stock Yards'  Brief at 2.

"  III.  AUTHORITY  FOR AWARDING
           RESPONSE COSTS
  In December of 1980. Congress enacted
CERCLA. 42 U.S.C. §§ 9601-9675.  "to initi-
ate and establish a comprehensive response
and financing mechanism to abate  and con-
trol  the  vast  problems  associated  with
abandoned  and  inactive  hazardous  waste
disposal sites."  H.R.Rep.  No.  1016(1). 96th
Cong.. 2d Sess. 22. reprinted in, 19*0 U.S.
Code  Cong. &  Admin.News  6119, 6125:
L'nited States r.  R. H'. Meyer. Inc..  869
F.2d 1497. 1500 (6th  Cir.1989).  CERCLA
was  intended  " 'primarily w> facilitate the
prompt cleanup  of  hazardous waste sites
by placing the ultimate financial responsi-
bility  for cleanup on those responsible for
hazardous wastes.'"   Walls i: Waste Re-
source Corp,,  823 F.2d 977. 981 (6th Cir.
198"i  (citation omittedi.
  Under  Section 104ia)  of CERCLA.  42
U.S.C. § 9604la). tht" President of tht Unit-
ed States is  authorized to respond with
"remedial" or  other  "removal"   actions
against any actua! or'threatened release of
10.  Formerly United States' undisputed fact no.
  32.
            U.S. v.  HARDAGE                           1431
       Che M 733 F-Supp. 1424 (W.D.OU. 1*89)
States  has  incurred   any .hazardous substance that poses an im-
                       minent and substantial threat to the public
                       health and welfare.  United States i: R. W.
                       Meyer. Inc.. 889 F.2d at  1500.   In  large
                       measure, the President  has' delegated  his
                       authority under CERCLA  to  the Adminis-
                       trator of EPA. id.  at 1500 n. 7; see Execu-
                       tive Order  No. 12.580,  52 Fed.Reg. 2923
                       (Jan.  23. 1987),  reprinted  in  42  U.S.C.
                       § 9615 note. pp.  168-72 (1989).
                        Section 107(a)  of CERCLA.  42  U.S.C.
                       § 9607(a), imposes liability on four catego-
                       ries of persons, including owners,  "genera-
                       tors."  and "transporters" who selected haz-
                       ardous waste sites, 'for  costs including:
                        (A) all costs of removal or remedial  ac-
                        tion  incurred  by  the  United  States
                        Government or a  State or an Indian tribe
                        not inconsistent with the national contin-
                      .  gency plan;
                       42  U.S.C. § 9607(aX4XA).  This section  au-
                       thorizes the  government  to recover  all
                      costs of removal  or remedial response  ac-
                       tions.  United States v.  R.W. Meyer, Inc..
                       889 F.2d at 1500.
                        Crucial terms within  this cost  provision
                       have been  broadly  defined  elsewhere in
                       CERCLA.  The terms "remove" or "remov-
                      al"  are  defined  in  definitional  section
                      9601(23) as  follows:  •
                          The terms  "remove"  or "removal"
                        means [sic] the cleanup or removal  of
                        released hazardous substances  from the
                        environment, such actions as may be nec-
                        essary |sic]  taken  in  the'event of the
                        threat  of release  of hazardous  sub-
                        stances into the  environment,  such  ac-
                        tions as may be necessary to  monitor.
                        assess, and evaluate the release or threat
                        of release of hazardous  substances, the
                        disposal of removed material, or the tak-
                        ing of such other actions as may be nec-
                        essary to prevent, minimize, or mitigate
                        damages 10 the public  health or welfare
                        or to the environment, which may other-
                        wise result  from  a release  or threat  of
                        release..  The term includes, in addition,
                        without being limited to ...  action taken
                        under  section  9604(b) of this  title....
                      tl.  Formerly United States' undisputed fact  no.
                        33.

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 1432
733 FEDERAL  SUPPLEMENT
 42 U.S.C.  §  9601<23t (footnote omitted).
 The section %04.  See State of.\'.Y. r. General Elec.
                Co.. 592 F.Supp. 291. 298 (N.D.N.Y.1984)
                ("initial response costs ... are clearly au-
                thorized as costs of response under section
                101(23).  42  U.S.C. § 9601(23).");  United
                States v. Wade, 577 F.Supp. 1326. 1333 n. 4
                (E.D.Pa.1983) (cost of "investigating, moni-
                toring, testing, and evaluating the situation
                at the Wade site  ... is recoverable as a
                cost of removal."); United States r.  Con-
                servation Chem.  Co..  619 F.Supp.  162, 186
                (W.D.Mo.1985).
                  Courts have also held Section 104(b) en-
                titles the United States to recover its litiga-
                tion costs from liable panics.  SEPACCO.
                579 F.Supp. at 851 ("the Court  finds that
                under CERCLA. the defendants  are jointly
                and severally liabk for. and the plaintiff is
                entitled to recover, all litigation costs, in-
                cluding attorney  fees, incurred by  plain-
                tiff.");   United States r. South Carolina
                Recycling £• Disposal. Inc. ("SCRPD. 653
                F.Supp. 984, 1009 (D.S.C.1984) (holding the
                United  States  can recover litigation ex-
                penses), affd in part  and vacated in part
                in  United States r. Monsanto Co.. 85? F.2d
                160 (4th Cir.1988).  cert,  denied. — U.S.
                	,  10R S.Ct.  3156. 104  L.Ed.2d  1019
                (1989);   United  States  i:  Conservation
                Chem.  Co.,  619 F.Supp. at 186  (following
                \EPACCO).
                  Courts have emphasized that liability ex-
                tends  to  ALL response  costs.   United
                States  r.  R.W. Meyer. Inc.. 889  F.2d  at
                1504   These costs also include enforce
               .ment costs  and administrative  expenses.
                SCRDl. 653  F.Supp. at 1009.  In addition.
                the United  States  has also been awarded
                indirect costs.  United States r. R. H'. Mey-
                er, Inc. 889 F.2d 1497, 1501 (6th Cir.1989).

                    IV.  BURDEN OF PROOF ON
                          RESPONSE COSTS
                 (61  As staled above, pursuant to section
                107(aH4XA> of CERCLA. defendants found

-------
                                               m
                                 U.S. v. HARD AGE
                           Cite u 713 F-Supp. 1424 (W.D.Okl. 1W9)
                                    1433
liable  must pay  "all  costs of  removal or
remedial  actions  incurred  by  the  United
States  Government  ...  not  inconsistent
with  the  national  contingency  plan."  42
U.S.C.  f 9607(aX4HAl (emphasis  added).
The National Contingency Plan ("N.C.P."),
40  C.F.R. Part  300-300.71,  was  promul-
gated  pursuant to Section 9605 of  CERC-
LA. 42 U.S.C.  § 9605.  The N.C.P.  is the
EPA  regulation  which  establishes  proce-
dures  for selection  of, response  actions.
"As long as  the actions  taken  by the
government  were  in  harmony with the
N.C.P.. the  costs incurred  pursuant  to
those actions are presumed  to  be reason-
able and therefore are recoverable."  \'EP-
A CCO. 579 F.Supp. at 851.
  Courts  have  determined that the defen-
dants bear the  burden of proving that the
response costs sought  by the United States
are inconsistent with  the N.C.P. \EPAC-
CO. 810  F.2d  at 747.  In attempting to
establish  the United  States'  response ac-
tion? are  inconsistent  with the N.C.P.. the
defendants  must  demonstrate  that  the
agency's choices  of response  actions  wen?
arbitrary and capricious.  Id. at 746:  Unit-
ed  States r.  Ward. 618 F.Supp. 884. 900
.
  Where  appropriate,  courts  have upheld
summary   judgment   on  response   cost
claims.  United States r. R. H'. Meyer. Inc.
889 F.2d 1497, 1505 (6th Cir.l9S9):'.SCV?£>/,
653 F.Supp. at 984.

  V.   ANALYSIS  AND RESOLUTION

A.  Response  Costs.  Excluding Depart-
    ment of Justice  Indirect Costs
 that the  defendants  owe  $5,441,201.25 in
 EPA direct  payroll  and travel costs for
 both  EPA headquarters and Regional  VI
 staffs. DOJ's direct enforcement costs and
 vendor  costs,  and contract costs.15   The
 documentation includes  affidavits  of vari-
 ous EPA  and DOJ employees charged with
 accumulating the cost data.  See, e.g.. Affi-
 davits  of  Willimiria Pipkin  and  Nellie
 Boone. United States' Brief at Exs. A & B.
 The  affidavits are supported by summaries
 of cost data accumulated in connection with
 the  Hardage site,  and the  source of the
 data.  For instance,  the payroll for EPA
 headquarters is kept based  on  time cards
 and  time  sheets  which were coded  into a
 computer  program designed specifically for
 Hardage.   See United Stales' Brief at Ex.
 A.   For  the contract  costs,  the  United
 States also  provided affidavits and cost
 summaries  which refer to  paid  invoices,
 cancelled  checks and  letter reports of con-
 tractors to  support  the contract  cost  re-
 quests."  The Court has  reviewed  all of
 the documentation offered  in   support of
 the United States' response cost claim and
 finds that the United States has presented
 a prima facie case of its entitlement to
 response  costs in the amount  of  $5.441.-
 201.25.
  Once  the  United States  presented this
 prima facie case, under Fed.R.Civ.P. 56 the
 burden  then shifted  to the  defendants to
 show -the  United States'  response  costs
 were inconsistent with the  N.C.P..  or were
 not response or remedial costs incurred in
connection with the  Hardage site.   \EP-
ACCO.  810 F.2d  at 747.
  [7]  The United States submitted exten-      HSC  attempted to create fact disputes
sive  documentation ir. support of it? claim   concerning each category of United States'
12.  The categories of costs included payroll and
  travel, expenses for the EPA headquarters staff.
  payroll and travel expenses for the EPA Region
  VI staff, site sampling and inspection, installa-
  tion of groundwater monitoring wells, prelimi-
  nary assessment and site investigation, remedial
  investigation and feasibility  study,  sampling..
  aeria! photography, evidence audits. DOJ litiga-
  tion support, document production, and techni-
  cal assistance.  See affidavit of Wiliimma Pip-
  km.  Untied States Brief ai Ex. A.
13.  Up until 1985. the EPA did not require the
  contractors lo submit site-specific invoices. The
  contractors submitted letter reports.  However.
  in further support of the contract cost' figures
  prior to 1985. the United Stales submitted affi-
  davits of the project managers at Hardage who
  detailed exactly what the job assignments were
  for the contractors, and that the project manag-
  ers personally, reviewed all of the progress re-
  ports by these contractors.  See affidavits  of
  Alan Tavenner and Barry  Simmons. United
  Staie>  Brief at  Exs. D & F.

•'*   f?
^»

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 -". ''•r'r-*'£ '.*-^ r-'-,.1^; i
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        Mm

-------
 1434
733 FEDERAL  SUPPLEMENT
 response costs.  HSC  asserted  anywhere
 from  three to  seven reasons why liability
 for each cost category was disputed, giving
 a-total of ten separate reasons.  A legend
 of the alleged reasons  and a  grid  sheet
 showing  which of the  ten  reasons were
 asserted  as  to each cost category are at-
 tached to this Order as Appendices A & B.
 In support of its position, HSC attached the
 affidavits of Richard Bost and Thomas Ma-
 tunas.  HSC Response Brief at Exs. A & B.
 The affidavits of Bost and Matunas create
 no genuine issues of material fact  relating
 to  the award of response costs,  other than
 the DOJ  indirect  costs.   For the  reasons
 set forth  below the affidavits raise no gen-
 uine issues of material fact as to whether
 (a) United  States'  costs are inconsistent
 with the N.C.P., or (b) such costs constitute
 response or remedial costs incurred in con-
junction with the Hardage site.

  [8]  HSC first  alleges the United States
should  be denied  the right to recover cer-
tain cost categories because the costs were
incurred during a period when HSC was
excluded  from  knowledge  or participation
in response or remedial activities at Hard-
ape."   In United States r.  .Vottolo.  695
F.Supp.   615   ID.N.H. 19881.   defendants
raised  a similar argument urging the Unit-
ed States should be barred from recovering
any response  costs.   There  the  district
court rejected the argument stating "the
government has no affirmative duty to con-
sult with  private  panics before undertak-
ing response  actions."   Id. at 629.  The
Court finds as a matter of law  the United
States  was under no duty to consult with
these parties  before  undertaking response
actions.  Even if the facts alleged in HSC's
14.  USPCI makes, (his  same argument  but  rea-
  sons ii to be a showing lhai the government's
  response action? were capricious.  L'SPCt's Re-
  sponse'ai f^-7.  The Court rejects this contention
  for the reasons set forth in this paragraph.
15.  I'SPCJ argues the United Slates selected and
  pursued a remedy which is inconsistent  with the
  N.C.P  USPCI's Response at 7-S. USPCI alleges
  the United Slates failed to conduct  a  remedial
  investigation as required by 40 C.F.R. 300.68td).
  In addition, USPCI contends the United States
  failed  to follow appropriate procedures in per-
  forming its feasibility stud}  and selection  of
                 affidavits  are true, this  would  not be  a
                 valid basis for denying cost recover,'.

                  19]  HSC next  challenges  certain  cost
                 categories, claiming certain tasks were un-
                 necessary  or  improperly  performed,  the
                 data was unacceptable or unusable, or the
                 results were  not  useful to remediation of
                 Hardage.   HSC also argues  that certain
                 costs were incurred for tasks that did  not
                 contribute additional data  at  the  site,  did
                 not advance the evaluation of remedial al-
                 ternatives,  nor  yield  information . upon
                 which  EPA could  make its response deci-
                 sions.   For those  reasons,  HSC claims  the
                 United States should be denied cost recov-
                 ery. As stated earlier, the  United States is
                 entitled to recover all response costs at the
                 Hardage  site  not  inconsistent with  the
                 N.C.P. United States v. R. W.  Meyer. Inc.,
                889 F.2d at 1504.   HSC has the burden of
                showing the challenged costs are inconsist-
                ent with the N.C.P., or were not incurred in
                connection with the Hardage site.   To suc-
                cessfully establish that the United States'
                response actions are inconsistent with  the
                N.C.P..  HSC must demonstrate the United
                States' choice of response actions were ar-
                bitrary  and  capricious.   NEPACCO,  810
                F.2d at 748.  HSC failed  to produce  any
                evidence in response to the summary judg-
                ment  motion  demonstrating  the  United
                States', actions were inconsistent with the
                N.C.P.   Nor did the conclusionary affida-
                vits filed by HSC adequately challenge the
                United  States' assertions  that  the  costs in
                question were incurred in  connection with
                the  Hardage site.13  HSC's arguments  re-
                garding the efficiency or redundant effica-
                cy of the United States' actions do not bar
                summary judgment.
                 remedy.  USPCI presents no  affidavits or evi-
                 dentiary materials to support these arguments.
                 USPCI merely argues that EPA's abandonment
                 of  the selected remedy supports an inference
                 that the remedy is "both technically and proce-
                 durally flawed."  USPCI s Response at 8.  USP-
                 CI  had the burden  of presenting evidence to
                 show these actions were inconsistent  with the
                 N.C.P.  Dan India, v. Piunken Co.  of Okla., Inc..
                 704 F.2d  496. 498 OOth Cir.I9S3t;  see  Lake
                 Hefner Open Space Alliance  v. Dole. 871 F.2d
                 943, 945-46 (10th Cir.1989).  li failed to do  so '
                                                                                          J

-------
   [10]
                         U.S. v. HARDAGE                           1435
                    Clie •» 733 FAupp. 1424 (W.D.Okl. 1989)
'HSC also attempts to create a fact   ument that the purposes of some of these
 dispute claiming certain contract costs may
 not represent the final, audited amounts
 the United States  will actually incur with
 respect to the contract tasks performed."
 The  United States responds  that it  has
 agreed with HSC to refund any subsequent
 reimbursements from contractors, based on
 later audits or negotiations.  See  United
 States' Reply Brief at Ex.  C,  T 5.  The
 United States agiees  the  granting of any
 summary  judgment  on  response  costs
 should be  subject to this agreement.   For
 that reason, the Court finds HSC has failed
 to  create  a genuine fact  dispute on this
 issue that  might bar the granting of sum-
 mary  judgment, and  that any  order  for
 recovery of response  costs  will  direct  re-
 funds" if appropriate.

  [11J  HSC next opposes summary judg-
 ment by contending a fact dispute exists as
 to whether certain costs were incurred in
 compliance with federal procurement laws
 and regulations.   HSC provides  the Court
 no authority showing that  this factor is to
 be  considered in  awarding response costs.
 Nor does  HSC provide any  evidence that
 there was  any violation of  federal procure-
 ment laws  in connection with the Hardage
 site.  It is  not this CourtV  role to make  an
 independent review of the United States'
 procurement processes  at the Hardage site
 when  awarding  response   costs.   The
 Court's consideration is limited to whether
 the costs were in fact  incurred in connec-
 tion with  the Hardage  sitt.  and whether
the costs were inconsistent with the K.C.P.
The Court  finds this contention of HSC is
 without merit.

  (12)  HSC urges  a  fact dispute is cre-
ated and summary judgment is  improper.
because the United States failed  to  doc-

 16.  The United States clarified this issue in-its
  repK brief b> explaining that  some EPA pa>- .
  ments 10 certain contractors are "provisional"
  payments,  subject to subsequent revision based
  on audits  or subsequent negotiations between
  the contractor and EPA's contracting  officer.
  United Slates' Reply Brief at 32.
17.  On November 22. 198$ this Court entered  an
  Order denying HSC's motion  to compel the pro-
  duction of certain government cost documents.
  Order. No. CIV-8C-1401-P (W.D.Okia. Nov 22.
                                    costs were  for  response activities  at the
                                    Hardage site.  The Court has reviewed the
                                    affidavits filed by  the  United States, and
                                    finds the United. States  has presented  a
                                    prima  facie case that  the  response costs
                                    were incurred at the Hardage site.  Pursu-
                                    ant  to  Fed.R.Civ.P.  56 and the caselaw
                                    interpreting CERCLA response costs, the
                                    burden then shifted to the HSC to show the
                                    costs were  not  incurred at the  Hardage
                                    site, and the costs were  inconsistent  with
                                    the N.C.P.   HSC failed  to produce any evi-
                                    dence to meet this  burden.  The affidavits
                                    supporting HSC's  contention  were merely
                                    conclusionary, raising no genuine issue of
                                    material fact within the meaning of fed.R.
                                    Civ.P.  56.   Luekett  v.  Bethlehem Steel
                                    Corp..  618  F.2d 1373,  1380 &  n. 7 (10th
                                    Cir.1980).  The Court thus  finds that this
                                    contention is also  without merit.
                                      1131   Finally, HSC  argues a fact dispute
                                    is created because the United States failed
                                    to produce  adequate  documentation   for
                                    HSC to determine  what  portion of these
                                    costs were Hardage site response activities.
                                    HSC continues to argue  here, as it did in its
                                    motion to compel,  that it has inadequate
                                    documentation due to  the  United States'
                                    failure  to supply  certain requested  doc-
                                    uments.  The Court has  reviewed the docu-
                                    mentation provided  by the United States in
                                    support of this motion for summary judg-
                                    ment.  As earlier  stated, the Court find?
                                    the United States  has  presented  a  prima
                                    facie case.  There was ar.  obligation on the
                                    part  of  HSC,  if it intended to challenge
                                    these response costs, to  take appropriate
                                    action to obtain the  necessary evidence.  It
                                    was  also incumbent upon HSC to present
                                    the evidence in response to this motion for
                                    summary judgment.  HSC failed to do  that
                                    here.17  The  Court finds HSC failed to  pro-
                                      |98«. docket no. 2261). The Order recognized
                                     thai HSC had had notice that the United States
                                     was seeking reimbursement from the  defen-
                                     dants for "all  investigatory, enforcement,  and
                                     other response costs."  Complaint at  T 1 * C.
                                     No. CIV-86-I401-P  (\V.D.Okla. June 25. 1986).
                                     The Order further noted HSC waited until one
                                     month before the commencement of this trial to
                                     try to compei the United States to comph  with
                                     HSC's production requests.  HSC failed  to file
                                     any Fed.R.Civ.P.  S6(f) request.  This Court's


-------
 1436
733 FEDERAL SUPPLEMENT
 duce any evidence to sustain its burden on
 this issue.
   Lastly, both  Stock Yards and HSC con-
 tend  summary  judgment  on  the  United
 States'  response cost claim  is precluded
 because  of the defendants'  counterclaims
 and/or affirmative defenses which are still
 pending.  Stock Yards'  Response at 2-3;
 HSC's Response at  25.   Stock Yards  ar-
 gues the  response  costs  sought by  the
 United  States  are  included  in the  Slock
 Yards'   counterclaim  for   contribution.
 Stock Yards' Response at 2.  On November
 22, 1989, this Court  entered  an Order dis-
 missing:  the  defendants'  (including  Stock
 Yards') third and fourth counterclaims for
 contribution and indemnity.  Order Grant-
 ing United  States' Motion to Dismiss Third
 and Fourth Counterclaims for Contribution
 and Indemnity. No.  CIV^6-1401-P  (W.D.
 O'kla.  Nov.  22.  1989).   Because  Stock
 Yards' counterclaim  for contribution is  no
 longer pending, the  Court finds the Stock
 Yards' contention to  l>e without merit.
  [14]   In  considering HSC's contention
 concerning   its  affirmative  defenses,  the
 Court thoroughly reviewed the stipulation
 between  the United States and the majority
of the  HSC defendants filed  September 2,
 1989. .Stipulation for Entry  of Judgment
of  Liability ("Stipulation"),  No.  CIV-8S-
 1401-P (W^D.Okla. Sept. 2. 1988. docket no.
 1428).  The participating defendants  stipu-
 lated as  follows:
    The  Participating  Defendants reserve
  their  right to  assert  all defenses and
  counterclaims that  may be used to estab-
  lish Plaintiff's liability. Such reservation
  of defenses does  not include reserving
  the right to assert any defenses as af-
  firmative defenses  to avoid the liability
  stipulated herein.
Stipulation  at 3. T 2.
  However, the participating  defendants
reserved certain rights in the Stipulation  as
follows:
 -To conies:  the entitlement  to any costs.
  including without  limitation, the amount
  and types thereof, and damages or other
  January 20, IW scheduling order specifically '
  noted tha: agreed discovers  extensions would
  not be permitted to adverseK  impact dispositive
                  monetary relief that  may  be recovered
                  from  the Participating  Defendants, and
                  to pursue an opportunity for mixed  fund-
                  ing	
                Stipulation at 3, H Sa-
                in response to HSC's argument that  their
                affirmative defenses bar the entry of sum-
                man- judgment, the United States contends
                that those defendants  which have  stipu-
                lated to  section 107 liability in this  case
                have waived any affirmative defenses they
                may have  had to liability for  the United
                States' response costs.   United States' Re-
                ply Brief at 24.
                  It is clear from the Stipulation that HSC
                reserved the right to  contest  the United
                States' entitlement to these response costs.
                However, as reasoned above, the time for
                HSC to contest these costs was in response
                to  this  motion  for summary judgment.
                Once the United States  presented  a prima
                facie case for its response costs claim, pur-
                suant to  Fed.R.Civ.P. 56, the burden  shift-
                ed to HSC to  present affidavits and docu-
                mentation to substantiate  HSC's affirma-
                tive  defenses.   HSC   wholly   failed  to
                present such materials or evidence.  HSC's
                Response Brief  at  25-26.  Accordingly.
                HSC's  allegedly  pending  affirmative de-
                fenses do not bar the entry of this  sumrmi-
                ry judgment.
                  As to the pending counterclaims, as  stat-
                ed above, the Court dismissed  the defen-
                dants' counterclaims for contribution and
                indemnity on November 22,  1989.  Order
                Granting United  States'  Motion  to Dismiss
                Third and Fourth Counterclaims for Contri-
                bution and  Indemnity. No. CIV-86-1401-P
                (W.D.Okla.  Nov. 22! 1989).  Accordingly,
                because  these two counterclaims  are no
                longer pending, they provide no basis for
                denying  summary judgment.

                  [15]  Also, on November 22.  1989. the
                Court entered an Order denying the United
                States'  motion to dismiss  the defendants'
                fifth counterclaim for recoupment.  Order
                Denying United States' Motion to Dismiss
                Fifth Counterclaim  for  Recoupment.  No.
                 motions. Order at S, No. C!V-St>-1401-P (W.D-
                 Okla. Jan. 20. 1989).

-------
                                          U.S. v. HARDAGE
                                    Ctle u 733 F-Supp. 1424 (W.D.OU. IW)
                                                                            1437
I*'-

 I
CIV-86-1401-P (W.D.Okla. Nov. 22. 1989).
However, the Order expressed this Court's
concern  regarding the "alleged nexus  or
common  denominator  between  the  relief
sought by the government and the precise
nature  of  the   defendants'  recoupment
claim."   Id. at 3.  Despite the continued
viability  of HSC's  recoupment counter-
claim,  to  successfully defeat  summary
judgment for the United  States' response
cost presented herein. HSC had the burden
under Fed.R.Civ.P. 56 to present evidentia-
ry materials to prove the existence of fact
disputes  relating  to the recoupment coun^ f gQ-21
terciaim.   HSC's  brief provides neither a
citation to evidentiary affidavits nor other
materials required  to  meet  this burden.
HSC's Response Brief at  25-26. Accord-
ingly. HSC's pending recoupment counter-
claim does not bar the entry of this summa-
ry judgment.
  For the above reasons,  the Court  finds
the L'nited States presented a prima  facie
case for-partial summary judgment on the
response  costs incurred  by  the  United
States in  connection with the  Hardage site
in the amount'of $5.441.201.25.  The bur-
den then  shifted to the defendants to show
these costs were inconsistent  with  the
N.C.P.. \EPACCO. 810 F.2d  at 747. or to
prove the costs were not  incurred at the
Hardage  site.  As shown above, the defen-
dant; totally failed to meet  this burden.
Accordingly, the United States'  motion for
partial  summary  judgment  should   be
GRANTED on the response costs incurred
by the United States in connection with the
Hardage  site  in  the  amount of So.441.-
201.2-5
                                                    rect costs also include indirect labor costs
                                                    (for example, attorney and paralegal ad-
                                                    ministrative time, secretarial  support, ac-
                                                    counting support, record keeping and time
                                                    keeping), compensated absences (for exam-
                                                    ple, vacation, holiday, and sick  time), fringe
                                                    benefits,  and  training.   United  States'
                                                    Brief at Ex. K. p. 3.  In support of this cost
                                                    request the United States attached the affi-
                                                    davit of C.P.A. Patrick  McGeehin. which
                                                    describes the. methodology used to allocate
                                                    these indirect costs  to the  Hardage  site.
                                                    United States' Brief at Ex. K, p. 3; Brief at
          B.  Department  of  Justice's  Indirect'
            The United States also seeks an award of
          response costs for the DOJ's indirect costs
          in the amount of $850,864.00.  These indi-
          rect  costs are costs  which are generally
          necessary  to support the functioning  of
          DOJ Land and Natural Resources  Division
          professional  personnel in their case work.
          but which are not allocated directly to spe-
          cific cases.  Those costs include the cost of
          office space,  utilities,  and supplies.  United
          State?  Brief a: 20.  In  addition, the indi-
   M6)  HSC's response concerning  DOJ's
 indirect costs is supported by the affidavit
 of Thomas  Matunas.   HSC's Response
 Brief at Ex. A.  The response raises four
 points.  Matunas asserts that approximate-
 ly $149.000.00 of DOJ's indirect costs are
 Standard  Level  Users  Charges  (SLUG).
 Matunas  argues these SLUG  charges  in-
 clude rent  paid  by DOJ on government-
 owned buildings and an internal "phantom
 profit"  amount for the General Sen-ices
 Administration  ("GSA").   Matunas  con-
 cludes it is unreasonable to charge the HSC
 for such  "phantom rental" charges.
   In response  to the SLUC  assertion, the
 United  States attaches the  affidavit  of
 Manfred Van der Walde.   See  affidavit of
 Van der Walde, United States* Reply.  Van
 der  Walde's affidavit  indicates that  Con-
 gress has authorized GSA to  finance the
 property management activities for govern-
 ment agencies, including DOJ.   The  agen-
 cies  then  pay the GSA  for these activities
 which include- rent,  heat and other utilities.
 cleaning,  and  maintenance.   The United
 States argues  these  are actual costs  to
 DOJ. The Court agrees.  The  Court finds
 that as to  the SLUC charges, HSC has
 failed to create a genuine issue of material
 fact  concerning the United States' right  to
 these costs.

  [IT].  HSC next  argues  DOJ's  indirect
costs violate interagency agreements be-
tween DOJ  and the EPA.  Matunas  con-
tends the  inieragency agreements between
DOJ and EPA provide only for recovery of
direct charges.  Matunas  asserts  $329.-
                                                                                                                            .•:£
                                                                                                                             v»
                                                                                                                     •' '••'  '1
                                                                                                                   t-MUji'x?
                                                                                                                   ^£&8f£$3&

-------
1438
733 FEDERAL SUPPLEMENT
000.00 of the  1987  indirect costs for DOJ
were allocated to the Hardage site in viola-
tion of these  agreements, and such costs
are not reimbursable.  The  United States
responds these interagency agreements are
irrelevant.  Further, the  United States ar-
gues as long as these  indirect costs were,
in fact,  incurred,  they  should  be reim-
bursed.  The  Court  finds  these indirect
costs  were, in  fact,  costs to the DOJ. The
interagency  agreements  only  determine
whose budget, whether EPA  or  DOJ, ini-
tially  absorbs  the costs.   The agreements
in no way affect the right  of the United
States to obtain reimbursement  for these
response costs.  The Court finds HSC has
also  failed to create a  genuine issue  of
material fact concerning these interagency
agreements.
  [18.191  HSC  next  contends,  through
Matunas' affidavit.  DOJ's indirect costs of
$850.864.00 for 1987 and 1988 include indi-
rect labor costs at a ratio of  1 to 1 to direct
labor  costs.  Matunas asserts the Hardage
site has been assessed  almost twice the
hourly rat*  of DOJ  employees when they
work  at the Hardage site.  Matunas argues
this results in  an allocation to the Hardage
site of $370,000.00  in  indirect  labor costs
for activities thai have no direct benefit to
the Hardapt site.  Matunas states in his
expert opinion, this-  high proportion of non-
productive labor costs  is  excessive, and  in-
dicates charges are  being  made  to the
Hurdage site  for  work  unrelated  to the
Hardape site.   HSC Brief at  Ex. A. p. 9.
Matunas further points out. in documents
attached u> his affidavit, that over time, the
United  States'   witness  McGeehin has
changed the  factor for  additional super-
fund overhead rate  from 48.027' to o'7' for
the same lime period.   HSC  argues that
McGeehin, in his affidavit supporting sum-
man1  judgment for response costs, makes
no  mention of this additional  superfund
overhead, although  he includes  it in the
indirect costs allocated to the Hardage site.
HSC  Brief at  Ex. A, p. 9.
  The United  States responds by  stating
McGeehin's affidavit makes clear this addi-
tional  superfund overhead rate represents
" 'non-case specific charges related  only to
                 Superfund cases' (i.e.,  charges which  are
                 nqt assigned to individual cases, but which
                 do relate only to Superfund cases, rather
                 than  to all cases in the Lands Division)."
                 United States' Reply Brief at 22.  The Unit-
                 ed States' only response to the "excessive"
                 statements  of  Matunas  is  to say these
                 statements  are  conclusionary.
                   Finally, HSC  points out  from  a legal
                 standpoint that the cases are divided on the
                 issue of indirect costs.  Relying on  United .
                 States T. Ottati & Goss. 694  F.Supp.  977
                 (O.K.H.1988). HSC urges the Court to deny
                 the United  States' request for DOJ's indi-
                 rect costs.
                   The Court has  thoroughly reviewed the
                 few cases which have considered the indi-
                 rect cost issue and finds the cases allowing
                 recovery of indirect costs to  be persuasive.
                 In United  States i:  Ottati & Goss,  694
                 F.Supp. 977, the court denied EPA's recov-
                 ery of indirect costs for rent, utilities, sup-
                 plies,  clerical support, and other overhead
                 expenses.  There, the  court   determined
                 that indirect costs included expenses
                 sary  to  operate  the  Superfund
                 generally, and could  not be attributed
                 rectly to a particular site.  For that  reason,
                 the court awarded no indirect  costs to the
                 United States.  However, because the Ot-
                • tati £  Goss court offered  no  additional
                 explanation for its decision, the Court finds
                 the case to  be  of limited value.   In con-
                 trast,  the Sixth Circuit recently addressed
                 the indirect cost issue, allowing the United
                 States  to recover  indirect costs.   United
                 States r. fl.H'. Meyer,  Inc., 889  F.2d at
                 1503.  The  Sixth Circuit held that indirect
                 costs are attributable to response efforts.
                 because they represent  a portion of over-
                 head   expenses  needed  to  . support  the
                 government's  direct  response  activities.
                 Id. at 1503.
                   The Court concurs with the reasoning of
                 Meyer, and  finds that the United  States'
                 indirect costs associated with the Hardage
                 site may be recovered  as response costs
                 under Section  107(a«4)(A).   However,  on
                 the basis of the current record before the
                 Court on the motion for'partial summary
                 judgment,  the   Court   cannot
                 whether the United States' requested

-------
                              .   U.S. v. HARDAGE
                           Cite u 733 FSupp. 1424 fW-D.OU. 1989)
                                  1439
 indirect costs, particularly in  the area of
 indirect labor costs,  should  be awarded.
 As with the direct costs, the United States
 has presented documentation establishing a
 prima  facie case for an award of DOJ's
 indirect costs in the amount of S850.86-l.00.
 !n  response to  this,  HSC  filed Matunas'
 affidavit attempting to contest the  validity
 of the United States' indirect cost  alloca-
 tion.  Matunas questions the excessiveness
 of the indirect labor costs attributed to the
 Hardage site demonstrated by the ratio of
 direct to indirect labor costs.  In Matunas'
 expert  opinion, this ratio shows an improp-
 erly high  amount of indirect costs have
 been allocated to the Hardage site which
 should  not  be recoverable  from the defen-
 dants  including  HSC.  While  the  Court
 views this as a close case, the factual objec-
 tions based on  Matunas' expert  opinion
 raise a  genuine issue of material fact which
 precludes the granting of summary judg-
 ment on this issue.  Accordingly, the Unit-
 ed  States'  motion  for  partial  summary
 judgment on DOJ's indirect costs in  the
 amount of $850.864.00 should be DENIED.

 VI.  DECLARATORY JUDGMENT FOR
      FUTURE RESPONSE COSTS
   f20]  The United States seeks a declara-
 tory judgment of the  liability of these de-
 fendants for future response costs associ-
 ated with  the 'Hardage site.   HSC  -re-
 sponds, at present, tht amount of the costs
 is  purely  speculative.   HSC then asserts,
 without authority, that  declaratory, sum-
 man- judgment is not an  appropriate ve-
 hicle  for   deciding  unliquidated,  future
 claims.  In .\'EPACCO, 579 F.Supp. at 852.
 the District Court  of Missouri held that
 although the court could not  award costs
 until they are incurred, the court can pres-
 ently determine  liability for future  costs.
•   Accordingly, the  United States'  motion
 for a declaratory judgment for liability for
 future  response costs associated with  the
 Hardage sit* except the DOJ indirect costs
 shall aiso be GRANTED.

          VII.  CONCLUSION
   For tht reasons stated above, the  United
 States  motion  for partial summary judg-
 ment for response costs in connection with
 the Hardage site in the amount of $5.441,-
 201.25 is GRANTED as to all defendants
 who have already stipulated to liability or
 have been found liable.   Should other de-
 fendants  later be found  liable,  they also
 would be jointly and  severally  liable for
 these same response costs. ' Should  later
 final, audited  figures for contract work at
 the Hardage site result  in  a reduction of
 the figures in this Order, the United States
 is ordered to  refund such amounts.  The
 United States' motion  for summary judg-
 ment  for  DOJ's indirect  costs  in  the
 amount of 2850,864.00 is  DENIED.
  The United  States' motion for declarato-
 ry  judgment  for  liability for  future re-
 sponse costs is also GRANTED except for
 DOJ's indirect costs.
  IT  IS SO ORDERED.

             APPENDIX A
  LEGEND OF HSC OBJECTIONS TO
    UNITED STATES' RESPONSE
                 COSTS
  Hardage asserted liability for each cost
 category was  disputed for the  'following
 reasons:
  1.  The government incurred some  of
 these costs for tasks performed in a  time
 period during which it excluded HSC defen-
 dants from  knowledge of and/or partic-
 ipation in activities at  the site.  (HSC ex-
 cluded i
  2.   The government incurred some of
 these costs for tasks performed which, be-
 cause they were unnecessary or improperly
 performed, produced data which was unac-
 ceptable or unusable, or results which were
 not useful to remediation  of the Hardage
 site.   < unnecessary (
  3.   The government incurred  some of
 these  costs for tasks  performed which nei-
 ther contributed additional data regarding
 site conditions, advanced the evaluation of
 remedial  alternatives, nor yielded informa-
 tion upon which EPA  has made or could
make  its response decisions, (didn't  con-
tribute)
  4.  The government  has failed to  doc-
ument that the purposes for which some of
these  costs were incurred  were  response
"-^Pr-  1

 ;f V;/-,-..-.:,  >

-------
1440
733 FEDERAL SUPPLEMENT
        APPENDIX A—Continued
activities at the Hardage  site,  (failed to
document at Hardage)
  5.   The government has failed to pro-
duce  adequate documentation  to  enable
HSC defendants to determine what portion
of these costs  were for response activities
at the Hardage site, (not enough documen-
tation)
  6.   The government has failed to doc-
ument that these costs represent the final.
audited amounts it actually will  incur with
respect to the  tasks performed,  (not final
figures)
  7.   The government incurred some  of
these costs in a manner which is  not in
                compliance  with its  contracting  require-
                ments and/or applicable laws and regula-
                tions,  (not in compliance)
                  8.  A  portion  of the amount claimed in-
                cludes items which result in no actual cost
                to the  government,  (not actual  cost to
                U.S.)
                  9.  The amount claimed includes  costs
                which are not in  accordance with EPA/DOJ
                interagency  agreements,  (violate  inter-
                agency agreements)
                  10.  The  amount claimed includes costs
                for work and expenses which neither were
                caused by nor benefit response activities at
                the Hardage site,  (no benefit to Hardage)

-------
    U.S. v. HARD AGE
Cite-733 F-Supp. 1424 (W.D.OU. I»W»
1441
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-------
1442
                 733 FEDERAL SUPPLEMENT
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                                       U.S. v. HARDAGE

                                  Cite •* 733 F-Supp 1424 (W.D.OkJ. IW)
                                                   1443
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                          ST  H  6
                 XIT THE UNITED STATES DISTRICT COURT FOR THX
                    W1STIWJ DISTRICT OP OKLAHOMA
  UNITED STATZS Of AMERICA,

         Plaintiff,

                      V.

 ROYAL K. HAADAQI, «t •!.,
 AfiVAKCZ CKEKICAL COMPANY ,
      •t Ai.,
        Xard*g« Storing
        and  Third-Party
        Plaintiffs,
     v.
Aico, INC., at al.,

       fhird-Party
       Dafandanta.
)
)
)  Civil Action No. CIV-Stf-1401-P
             PLAIKTIPP'S MOTION FOR PARTIAL SUMMARY
                JTJfVSIfBvf*" «" «f«*.*-."--	

-------

-------
     jnarauant to Hula 5S(a) of tha Fadaral ftulaa of Civil
Procedure, th* Unitad Stttas novas for suaaary judgaant againat
aach of tha dafandanta harain on the iaaua of thair liability
undar saction 107(a)(4)(A) of the Coaprahanaiva Znvironaantal
                                                 •
Baaponaa, Coapana*tion and liability Act of 1910 (*tha Act*), 42
D.fl.c. | 9607(a)(4)(A) for raaponaa ooata incurrad by tha Unitad
fitataa aa daaorlbad  in Attachment 1 to tha Unitad stataa'
Maaorandua In Support of tftia Notion. Tha Unitad Stataa fubalt*
that for tha raaaona atatad in tha aoooapanyiag Maaorandua in
Support of thia Notion, and on tha basil of that Naaorandua and
tha daclarationa aubalttad aa attachaanta tharato, auaaary
judgaant should ba grar.tad againat aaoh of tha dafandanta, and an
ordar iaauad atating that aach of aaid dafandanta it jointly and
aavarally liabla for all coata liatad in Attaohaant 1, which
total $ 6,292,065.33.

     Zn addition, for tha raaaona atatad in tha Haaorandua in
Support of thia Notion, tha Unitad stataa aovaa tha Court for an
ordar granting a daclaratory judgaant pursuant to Xula S? of tha
fadaral Rulaa of Civil Prooadura that dafandanta ara liabla to
tha Unitad Stataa for ita futura raaponaa eoata aaaociatad vith
tha Rardaga aita,

-------

-------
                    RICHARD B. STEWART
                    Ataiftant Attorney Ganartl
                    Land and Natural Raaourcaa
                    Division
               lyt
                    ROBSRT I. MYDAHS
                    United Stataa A^tornay
                    STIVIN KULLZNS
                    Aaaiatant Unitad Stataa Attorney
                    4434 U.I. Courthoui*
                    Oklahoma City, Oklahoma 73102
                    JOHW R. BARX2R, Sanlor counaal
                    AKWA W01X3AST, Junior Attorney
                    8T8VEK HOVICX,Trial Attomay
                    Znvirohaantal Znforoaaant faction
                    Unitad Stataa Oapartaant of
                    Juatloa
                    P.O. Sox 7611
                    Ban Franklin Station
                    waahington, D.C. 20044
07 COUNfiSLl

VICXJ PATTOK-HUtCB
U.S. Environmental Protaetion
  Aganey - Ragion VI
1201 Zla Straat
Dallaa, Taxaa 75370

CKARLI6 da SAILZAK
U.S. Znviron&antal Protaetion
  Aganoy
401 M straat, S.v.
fraahington, D.C. 20460

-------

-------
                        MAILING CERTIFIGATE
This is to  certify  that  a true copy of the foregoing pleading was
served on each of  the  parties hereto by mailing the  same  to  them
or to their  attorneys  of record on the 8th day of September 1989.
                                assistant U.  S.  Attorney

-------

-------
               IN THE UNITED STATES DISTRICT COURT FOR THE
                   WESTERN DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA,      )
                               )
       Plaintiff,              )
                               ) Civil Action No. CIV-86-1401-P
                    v.         )
                               )
ROYAL N. HARDAGE, -et al.,      )
                               )
       Defendants,             )
                               )
ADVANCE CHEMICAL COMPANY,      )
     et al.,                   )
                               )
       Hardage Steering  .      )
       Committee Defendants    }
       and Third-Party         }
       Plaintiffs,             )
                               )
     v.                        )
                               )
ABCO, INC. , et al.,            )   .                    '
                               )
       Third-Party             )
       Defendants.             )
          UNITED STATES'  MEMORANDUM IN SUPPORT OF MOTION
       FOR PARTIAL SUMMARY JUDGMENT ON RESPONSE COST ISSUES

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I

-------
STATEMENT OF MATERIAL FACTS"AS TO
WHICH THERE IS NO GENUIHZ ISSUE	. . 2

INTRODUCTION . 	 ......  8

ARGUMENT 	 	 ........ 10

A.   The Statute And The Caselaw Establish That The
     United States Is Entitled To Racover All Costs
     Incurred In Carrying Out Its Response Actions
      	10


B.   The Response Costs Which The United States Seeks By
     This Motion Are Within The Categories Of Costs For
     Which The Statute And The Caselaw Authorize Recovery
     	II

     (1)  EPA Costs 	
            \
                    	15


      (ii)  DOJ Costs	19


 C.    The United  States  Is  Entitled  To  Recover All  Response Costs
      Unless  Defendants  Can Demonstrate That  The  Response Actions
      For Which The United  States  Seeks Costs Are Inconsistent
      with  The National  Contingency  Plan



 D,    There is No Genuine Issue of Material Fact  Regarding the
      Costs Incurred by  the  Government  at the Hardage Site
      	 26

 E.    The Liability Of The Defendants For The United
      States Response Costs  is Joint and Several
    		  29


CONCLUSION AND PRAYER FOR JUDGMENT 	 .....  29

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                      TABLE  OF AUTHORITIES
                              CASES

Citv of Neu Vnr* v. Exxon Corp..
     633 F, Supp. 609 (S.D.N.Y. 1986)	14

New York v. General Electric Co..
     592 F. Supp. 291 (N.D.N.Y. 1984)	14

Union Petroleum CQ^- v. United States.
     651 F.2d 734  (Ct. Cl. 1981)	24

United States v. Conservation Chenieal Co..
     619 F. Supp. 162 (W.D. MO. 1985)	14, 23

qnited stataa v.Northeastern Pharmaceutical
     and Chemical Co. r*NEPACCO*l,
     579 F. Supp. 823 (W.D. Mo. 1984),
     aff'd 810 F.2d 726  (8th Cir.  1986),
     eert. denied. 108 S. Ct.  146  (1987)	passim

United S^ateq v. N.orthernaIrji  Platiqq Co. .
     685 F. Supp.  1410  (W.D. Mich.  1988),
     appeal pending. No. 88-2074  (6th Cir.)  	  2

United StatesV^ Shell Oil Co..
     60S F. Supp.  1064  (D. Colo.  1965}  ............   23

United p.tate* V^. ^outh Carjalirra Recycling
     and Diapagal. Inc.  tfSCRDI*),
     653 F. Supp.  984 (D.S.C,  1986),
     aff'd ir^part. vacated  in part
     in United Stateq v. Moneanto Co..
     858 F.2d 160  (4th Cir.  1988),
     petition for  eert.  filed.
     57 U.S.L.W. 3603
     (U.S. Feb.  24, 1989)  (No.  88-1404)  	  .  .  14,  28,  29

United States v. Wade.
     577 F. Supp.  1326  (E.D. Pa.  1983)  ....  ^  ......   14

United States v. Ward. 618 F.  Supp.  884,'                 .
     (E.D.N.C.  1985)	   23,  24

Proehaska v. Mareoux.
     632 F.2d 848
     (10th Cir.  1980)	  26

Retail Clerks Cnion Local 648
     V^ Hufc Pha^npagy. Ing. .
     707 F.2d 1030  (9th  Cir. 1983)	26

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                   UNITED STATffS COpF SECTIONS

Federal water Pollution control Act  (FWPCA), 33 U.S.c. § 1251 et
seq.:                                              .
section 311 (f)	24, 25

Comprehensive Environmental Response, Compensation and Liability
Act of 1980  CCERCLA*), 42 u.s.c. §  9601 et. seq.:
Section 101(23)  (i.9. 42 U.S.C. § 9601(23)]  	  .  . 12, 14
Section 101(24)	12
scetion 101(25)	13
Section 104	  .	12
Section 104 (b)	12, 14
Section 105	 23
Section 107  ....................... passim
107(a) .	14
107(a)(l) through  (a)(4)  	  11
section l07(a)(4)(A)	  passim

                     ADMINISTRATIVE^ DOCUMENTS
EPA Record of Decision  (November 14,  1986)	  16


EPA Technical Assistance Team  (*TAT*) Report:
     "Battle Creek Croundwater Survey*,
      June 1982  .	   9

                    CONGRESSIQVA^ ^EgTfiJATIPF
S. Rep. No. 96-848, 96th Cong. 2d Sess. 13,"  98  (1980)  .... 10
132 Cong. Rec, S14903 (daily ed. Oct. 3, 198_6)	11

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 132  Cong.  Rec.  S14935 (daily ed. Oct 3, 1986)	, 1
                    CODE OF FEDERAL RECUTATTOfls
National Contingency Plan  (NCP) ,
     40 C.F.R. Part 300 fit «ag
                                                           passim
                     FEDEBAT. HTTTJS  ft?
RULE 100«, red. R. Evid
                                                               28
                 EEDERAL RULES OF CIVIL
RULE 57, Fed. R. Civ. Proc
                                                               30

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                   STATEMENT OF MATERIAL FACTS AS TO
                  WHICH THERE IS NO GENUINE
      1.  Hazardous substances are located at the  Hardage site.
 See Affidavit of Alan Tavenner,  Exhibit A to Plaintiff's Motion
 for Partial Summary Judgment on  Liability filed on June 1,  1989 "
 ("Liability Motion*).
      2.  Hazardous substances have been released  from the Hardage
 site into the soil and groundwater at,  around and beneath the
 Hardage site.   See Affidavit of  Alan Tavenner, Liability Motion
 Exhibit A;  Affidavit  of Kirk W.  Brown,  Liability  Motion Exhibit
 B.
      3.   Hazardous substances from the  Hardage site  have migrated
 from the site  and have contaminated or  threaten to contaminate
 the  criner  Creek/North Criner Creek alluvial aquifer.  Affidavit
 of. Kirk W.  Brown,  Liability  Motion Exhibit B.
      4.   The hazardous substances at the Hardage  site are
 commingled.  Affidavit of  Kirk W.  Brown,  Liability Motion Exhibit
 B.
      5.   Each  of  the  defendants  to this action is an owner  or
 operator of the Hardage site,  a  person  who disposed  of or
 arranged for the  disposal  of hazardous  substances at the Hardage
 site, or a person  who  transported  hazardous substances to the
Hardage  site for disposal  and  selected  the Hardage site as  the
site  for disposal  of  such  hazardous  substances.   See generally
Liability Motion and Exhibits  thereto;  see this Court's Order of
November  10, 1988, entering  stipulations  of liability.
                                 2

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      6.  Environmental Protection Agency ("EPA") Headquarters
 employees performed response activities  at  the Hardage site.1
 Declarations of wilhelmina Pipkin (f  8)  and Nellie Boone  (1 8),
 submitted herewith,  and attachments thereto.
      7.  The United States has incurred  costs for the response
 activities performed at the Hardage site by EPA Headquarters
 employees^ in the form of payroll expenses  of those employees, in
 the amount of at. least $49,795.81.  Declarations of Wilhelmina
 Pipkin  (  1 8)  and Nellie Boone (1 8)  ("Pipkin Declaration,*
 "Boone  Declaration"),   and attachments thereto.
      8.   The United States has incurred  costs of at least
 $9,273.71 for the travel expenses of  EPA Headquarters employees
 travelling to perform response activities at the Hardage  site.
 Boone Declaration,  1  9.
     9.   EPA Region  VI employees  have performed response
 activities at the Hardage site.   Declaration of Bonita King
 ("King  Declaration"),  submitted herewith, and attachments
 thereto.
     1 Throughout this brief and accompanying Attachments, the
United States shall use "at the Hardage site* as shorthand for
"in response to conditions at the Hardage site."  The United
States acknowledges that not all of the response activities
conducted by the United states and its contractors and described
herein were actually conducted on location at the Hardage site
(Q.a^,m. analysis of samples taken from the site was performed at
off-site laboratories).
        "Response activities* shall be used as shorthand for
"removal and remedial activities."

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      10.   The United States has incurred costs  for the  response
 activities performed by Region VI employees  at  the Hardage .site
 of .at least $288,160..95 in payroll expenses  for those employees.
 King Declaration and attachments thereto.
      11.    The United States has incurred costs of at least
 $4,158.65 in amounts paid by Region VI  to private  vendors
 (exclusive of travel expenses of Region VI personnel) in
                         \
 connection with response activities of  Region VI personnel at the
 Hardage site.   King Declaration and attachments thereto.
      12.   Region VI personnel have travelled to perform response
 activities at  the Hardage site.   King Declaration  and attachments
 thereto.
      13.   The  United States has incurred costs  of  at least
 $38,928.24  in  paying the travel expenses of  Region VI employees
 traveling  to perform response activities at  the Hardage site.
 King  Declaration and attachments thereto.
      14.   CH2M Hill has  conducted response activities at the
 Hardage site pursuant to EPA Contract No.  68-01-6692, Work
 Assignment No.  31-06M08.0.   Declarations of  Alan Tavenner  (H 8-
 10), Stephen Phillips (11  7-11),  Barry  Simmons  (11 7, 8), and
 Bonnie Devos  (11  7,  8).
     15.  The  United States  has  incurred costs  of  at least
 $ 846,956.80 in payments  to  CH2M Hill for  the response  activities
 CH2M Hill conducted at the Hardage site pursuant to Contract No.
 68-01-6692, Work Assignment  No.  31-06M08.  Boone Declaration (1
27),  Pipkin Declaration  (1. 28),  and  attachments thereto.

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      16.   CH2M Hill has performed  response activities at the
 Hardage site pursuant to EPA Contract  No. 68-01-7251, Work
 Assignments Nos.   106-6608.0,  142-6N08.0, and  167-6L08.0.
 Tavenner Declaration,  11 8,  11-13.
      17.   The United States  has  incurred costs of at least
 $  1,326,308.25 in payments to CH2M Hill for response activities
 at the Hardage site conducted pursuant to EPA  Contract No. 68-01-
 7251,  Work Assignment Nos. 106-6608.0, 142-6N08.0, and 167-
 6L08.0.   Boone Declaration,  1 28,  and  attachment 1 thereto;
 Pipkin Declaration,  1  29.
      18.  TechLaw,  Inc.  ("TechLaw")  (formerly known as Intera) has
 performed response activities at the Hardage site pursuant to EPA
 Contract  No.  68-01-6838.  Declaration  of Robert H. Laidlaw
 ('Laidlaw Declaration*)  submitted  herewith, 11 4-7.
     19.   The United States  has  incurred costs of at least
 $  18,955.38  in payments to TechLaw for response, activities at the
 Hardage site  conducted  pursuant to Contract No. 68-01-6838.
 Laidlaw Declaration,  1  20A;  Pipkin Declaration, 1 22 and
 attachments thereto;  Boone Declaration, 121 and attachments
 thereto.
     20.   TechLaw  has performed response activities at the
 Hardage site  pursuant to EPA Contract  No. 68-01-7104.  Laidlaw
 Declaration,  H 4-7.
     21.   The  United States  has incurred costs of at least
 $ 105,552.38  in payments to  Techlaw for response activities
conducted  pursuant to Contract No. 68-01-7104.  Laidlaw

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 Declaration,  1  2OB;  Pipkin Declaration, 1 23 and attachments
 thereto;  Boone  Declaration,  1  22 and attachments thereto.
      22.  TechLaw has performed response activities at the
 Hardage site  pursuant to EPA Contract No. 68-01-7369.  Laidlaw
 Declaration,  11 4-19.
      23.  The United States  has incurred costs of at least
 S  162,458.57  in payments to  TechLaw for response activities
 conducted pursuant to Contract No. 68-01-7369. Laidlaw
 Declaration,  1  20C;  Pipkin Declaration, 1 24 and attachments
 thereto;  Boone  Declaration,  1  23 and attachments thereto.
      24.  Jacobs Engineering Group, Inc.  ('Jacobs') has performed
 response  activities  at the' Hardage site pursuant to EPA Contract
 No. 68-01-7351, Work Assignment No. 172.  Tavenner Declaration,
 1  15.
      25.  The United States  has incurred costs of at least
 $  313,554.00  in payments to  Jacobs for response activities
 conducted pursuant to Contract No. 68-01-7351, Work Assignment
 No. 172.  Declaration of Wiley R. Wright, III, submitted
 herewith,  and attachment thereto; Boone Declaration, 1 33, and
 attachment thereto;  Pipkin Declaration, 1 34, and attachments
 thereto.
   -   26.  Viar  and Company (*Viar*) and contract laboratories
participating in EPA's Contract Laboratory Program have performed
 response activities  at the Hardage site.  Declaration of  Pamela
Werntz Simons ("Simons Declaration"), submitted herewith, 11 12-
 16, and Exhibits thereto; Tavenner Declaration, 1 16.

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      27.  The  United  States  has  incurred costs of at least
 $  433,425.87  in  payments  to Viar and contract laboratories
 participating in EPA's  Contract Laboratory Program for response
 activities  conducted at the Hardage site.  Simons Declaration, 1.
 13,  and Exhibits thereto; Boone Declaration, 1 14, and attachment
 thereto;  Pipkin  Declaration,  1  14, and attachments thereto.
                                   •-*
      28.  United States Department of Justice (*DOJ*) personnel
 have performed response activities at the Hardage site.
 Declaration of Patrick  A. McGeehin, submitted herewith (*McGeehin
 Declaration*), 11 7-10; see also Declarations of Anne Hoke-
                                                             *
 Witherspoon ("Hoke-Witherspoon  Declaration*) and Lisa Polisar
 ("Polisar Declaration*).
      29.  The  United States has incurred costs of at least
 $ 405,035 in payroll expenses for the response activities
 conducted at the  Hardage  site by DOJ personnel.  McGeehin
 Declaration, 11  6-9,  and Attachment 1 thereto.
      30.  The  United States has incurred indirect costs of the
 response  activities  performed by DOJ personnel at the Hardage
 site.  McGeehin  Declaration,  11 6-9, and Attachment 1 thereto.
      31.  The United States has incurred at  least
 $ 850,864 in indirect costs of  the response  activities performed
by DOJ personnel  at  the Hardage site.  McGeehin Declaration, 1 6-
9,  and Attachment 1  thereto.
      32.  DOJ has  contracted  with private vendors to perform
response activities  at  the  Hardage site.  Hoke-Witherspoon

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 Declaration;  Polisar  Declaration; McGeehin Declaration, n 6-9
 and Attachments  2  and 3  thereto.
      33.   The United  States has  incurred at least $ 1,438,638 in
 payments  to private vendors which have performed response
 activities at the  Hardage  site under contract with DOJ.  McGeehin
 Declaration,  11  6-9,  and Attachments 1, 2 and 3 thereto.

                           INTRODUCTION.
           Plaintiff United States of>America, on behalf of the
 United States Environmental Protection Agency ("EPA"), submits
 this  memorandum  in support of its motion for partial summary
 judgment  against each of the defendants herein.  In a prior
 motion, filed on June 1, 1989, the United States has sought
 summary judgment against several of the defendants in this action
 on issues  of  their liability under Section 107 of the
 Comprehensive Environmental Response, Compensation and Liability^
 Act of 1980 (TERCLA*) ,  42 U.S.C. § 9607.  The remaining
 defendants herein  have'stipulated that they are liable under
 Section 107.

     The pending motion  for summary judgment and the stipulations
of liability  establish,  based on the undisputed facts, the
 liability of  all defendants in this action under Section 107 of
CERCLA, 42 U»S.C.  § 9607,  to reimburse response costs incurred by
the United States  in  responding to the release and threatened
                                8

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 release of hazardous substances in and  about  the Hardage site
 ("the site*),  located in Criner,  Oklahoma.

      By this motion, the United States  seeks  summary judgment on
 a number of issues relating to the specific costs  for which
 defendants are liable.   Specifically, the United States asks this
 Court to rule that,  as  to each of the items of  cost described in
 Attachment 1 to this brief,  the undisputed facts establish the
 United States' entitlement to recover those monies, and thus the
 United States  is entitled to summary judgment and  payment of
 those costs.
                           *

    The United  States does not now seek  summary  judgment against
 Defendants as  to all the costs for which the  United States seeks
 reimbursement  under  CERCLA.   This case  is proceeding to trial set
 for November 27,  1989.   The United States has limited the issues
 upon which it  seeks  summary judgment in order to present clear
 and straightforward  issues upon which there is  no  colorable
 dispute as to  facts  or  law and upon which the Court could enter a
 ruling prior to the  November 27,  1989,  trial  date.

      There is  a basis for summary judgment as to the remaining
•costs;  however, 'the  United States has determined that it would be
 more efficient to  attempt to narrow the issues  between the
 parties with respect to  these costs by  further  discussions with
 defendants  prior to  trial than to seek  a summary adjudication of

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those  issues at this time/ Accordingly, the United states will

reserve  its claim to those remaining costs for trial (to the

extent that defendants and the United States cannot reach

agreement on that claim prior to trial).
                             ARGUMENT



          A.   The Statute And The Caselaw Establish That The
               United States Is Entitled To Recover All Costs
               Incurred In Carrying Out Its Response Actions


          From the inception of the Superfund program. Congress

sought to place the financial burden of hazardous waste cleanups

and associated investigation and enforcement costs directly on

those who created the threat to the environment posed by

uncontrolled hazardous waste sites.  Congress intended that the l\

parties who benefited from the creation of a hazardous waste

site, rather than the public, should bear all costs incurred by

the government in actions taken in response to.conditions at such

sites.  See, e.g...   S. Rep. No. 96-848, 96th Cong. 2d Sess. 13,

98 (1980):                         '

          [Sjociety should not bear the costs of
          protecting the public from hazards produced
          in the past by a generator, transporter,
          consumer,  or dumpsite owner or operator who
          has profited or otherwise benefited from
          commerce involving these substances and now
          wishes to be insulated from any continuing
          responsibilities from the present hazards to
          society that have been created.
                                10

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      To achieve its purpose,  Congress,  among  other things,
 enacted the Section 107  strict  liability  and  cost recovery
.provisions.   In the words of  Senator  Stafford:        "  -
           The theory underlying Superfund's liability
           scheme was and is,  that  the Government should
           obtain the full costs of cleanup  ...
 132  Cong.  Rec.  S14903 (daily  ed. Oct. 3,  1986)  (emphasis  added).
 See  also  132 Cong.  Rec.  S14935 (daily  ed. Oct  3, 1986).

           Section 107(a)(4)(A)  of  CERCLA  states that the  parties
 described  in Section 107(a)(l)  through  (a)(4) are liable  for  'all
 costs of removal or remedial  action incurred  by the United  States
 ...  not inconsistent with the national  contingency plan.*  42
 U.S.C.  § 9607(a)(4)(A).   As the court stated  in United  States v.
 Northeastern Pharmaceutical and Chemical  Co.  f"NEPACQO* 1 , 579 F.
 Supp. 823,  850  (W.-D.  Mo.  1984) ,  aff'd in  part and rev'd  in  part
 on other grounds.  810 F.2d 726  (8th Cir.  1986), cert.den. —  U.S.
 —,  108 S.Ct.  146 (1987),  "removal or remedial  action[s]* include
 the.  following:
           (a)  Investigations, monitoring  and  testing to
           identify the extent of danger to the  public
           health or welfare or  the environment.
           (b)  Investigations, monitoring  and  testing to
           identify the extent of the  release  or
           threatened release  of hazardous substances.
           (c)  Planning and implementation of  a  remedial
           action.
           (d)  Recovery of the costs associated  with the
           above  actions,  and  to enforce the provisions
           of CERCLA,  including.the costs.incurred for
           the staffs of  the EPA and the Department of
           Justice.
                                11

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          The NEPACCO court's description of the types of

 response  costs  the Government is entitled to recover is firmly

 based on  the plain language of the statute.  CERCLA explicitly

 authorizes the  United States to recover its investigative,

 administrative  and enforcement costs, as well as the costs of the

 actual  implementation of a remedial action.  As noted above,

 Section 107, 42 U.S.C. § 9607, allows for the recovery of 'all

 costs of  removal or remedial action ..."  Section 104 of CERCLA,

 42 U.S.C. § 9604, authorizes EPA to take "removal* or "remedial*

 actions whenever there is a release or substantial threat of

 release of a hazardous substance.  "Remove* or "removal* is

defined in the Act to include, among other items, investigative

costs,  described as:

          .  . .  such actions as may be necessary to
          monitor, assess, and evaluate the release or
          threat of release of hazardous substances
          .  . .   The term includes, in addition,
          without being limited to ... action taken
          under Section 9604(b)  of this title . . .

42.U.S.C.  §  9601(23).2  In addition,  as noted above, Section

104(b)  of CERCLA provides that:
         "Remedy* or 'remedial action* is defined as:

          .  .  .  those actions consistent with permanent
          remedy taken instead of or in addition to
          removal actions in the event of a release or
          threatened release of a hazardous substance
          into the environment ....  The term
          includes,  but is not limited to, such actions
          at the location of the release as ... any
          monitoring reasonably required to assure that
          such actions protect the public health and
          welfare and the environment ...

          42 U.S.C.  § 9601(24).

                               12

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           the  President may undertake such planning,
           legal,  fiscal,  economic, engineering,
           architectural,  and other studies or investi-
           gations as  he may deem necessary or appro-
           priate  to plan  and direct response actions,
           to recover  the  .costs thereof, and to enforce
           the  provisions  of this Act.
The definition  of  "respond* or  "response" includes "remove,
removal,  remedy, and  remedial action, all such terms  (including
the terms 'removal' and  'remedial action') including  enforcement
activities related thereto."  42 U.S.C.  § 9601(25).

            Under  the explicit  language  of the statute, then, the
United States is entitled to recover the costs of investigating
and monitoring  releases  of hazardous substances  ("such actions as
may be necessary to monitor, assess and  evaluate the  release
. . . of  hazardous substances"), the costs of designing a remedy
("the President may undertake such planning  . .  . engineering,
architectural,  and other studies or investigations ... to plan •
and direct response }actions"),  and the legal and enforcement
expenses  incurred  in  seeking to recover  its costs from a
responsible party  ("the  President may undertake  such  planning,
legal . . . and other studies and investigations to plan and
direct response actions, to recover the  costs thereof, and to
enforce the provisions of the Act" (emphasis added).
          In accordance with these statutory provisions, numerous
Federal courts have held that the United States  is entitled to

                                13

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recover its investigative costs from parties liable under Section

107(a).3  Similarly, courts have held that Section 104(b)

explicitly entitles the United States to-recover its

costs from liable parties.4  Costs of administration

with cleanups and related enforcement efforts are also

recoverable.5
     3   See C j..fry__of New York v .Exxon Corp. . 633 F.. Supp. 609
 (S.D.N.Y. 1986)  (recoverable response costs  include  costs of
collecting and analyzing ground water samples, hydrogeological
studies and remediation study);  State of New York v. General
Electric Co.'. 592 F. Supp. 291, 298  (N.D.N.Y. 1984)
 (investigation and initial "response costs*  are clearly
authorized as costs of response under section 101(23), 42 U.S.C
§ 9601(23)); United States v. Wade.  577 F. Supp. 1326, 1333 n.4
 (E.D. Pa. 1983)  (cost of "investigating, monitoring, testing, a:
evaluating the situation at the Wade site ... is recoverable .
a cost of removal.*); United States  v. Conservation  Chemical Co..
619 F. Supp. 162, 186  (W.D. Mo. 1985).

     4   NEPACCO. 579 F. Supp. at 851 (*the  Court finds that
under CERCLA, the defendants are jointly and severally liable
for, and the plaintiff is entitled to recover, all litigation
costs, including attorney fees, incurred by  plaintiff.*); United
States v. South Carolina Recycling and Disposal. Inc.  ("SCRDI*),
653 F. Supp. 984, 1009 (D.S.C. 1986), aff'd  in part, vacated in
part in United States v. Monsanto Co.. 858 F.2d 160  (4th Cir.
1988), petition for cert, filed. 57  U.S.L.W. 3603 (U.S. Feb. 24,
1989) (No. 88-1404)  (holding that Government can recover
litigation expenses from liable parties); UnJ.ted states v.
Conservation Chemical Cot. 619 F. Supp. at 186 (following
NEPACCQ).

     5   NEPACCO. 579 F. Supp. at 851-52  (finding defendants
liable "for all costs, including salaries and expenses, incurred
by plaintiff associated with such activities as monitoring,
assessing and evaluating the release of contaminants .  .  .  .*);
SCRDI. 653 F. Supp. at 1009 (holding that Government can recover
administrative and investigative costs from  liable parties).

                                14

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            B.    The Response Costs  Which The United states
                 Seeks By This Motion  Are Within The
                 Categories Of Costs For Which The Statute And
                 The Caselaw Authorize Recovery  	._
           .All of the costs for which  the United States seeks
       reimbursement in this motion clearly  fall within the  four
       categories of recoverable costs  described by the NEPACCO court.
      .The costs described in Attachment  1 hereto include both EPA and
       Department of Justice costs.

                      (i)  EPA Costs
m
     The EPA costs, summarized in attachments to the affidavits
of willimina Pipkin and Nellie Boone of EPA Headquarters and .
Bonita King of EPA Region VI, include: the salary expenses of EPA
Regional and Headquarters employees who worked on Hardage site
response actions; travel and other costs for services provided by
private vendors (i.e., court reporters) associated with the work
performed by these employees; and the payments by EPA to several
EPA which,have performed response activities at the site.6
            6  EPA  has  incurred costs  for.response actions  at the site
      performed by  a  number of contractors  whose costs are not
      addressed by  this  Motion.   Costs  for  these contractors are
      described in  Attachments to the Pipkin and Boone Declarations.
      The United  States  reserves  the right  to claim these costs at
      trial.             .
                                      15

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      The  EPA contractors  listed  in Attachment A are CH2M Hill,
 TechLaw,  Jacobs,  and Viar.   CH2M Hill, as described in the
 accompanying Affidavits of  Bonnie bevos, Stephen Phillips, Barry
 Simmons and  Alan  Tavenner,  has been engaged in a variety of
 investigative,  enforcement  and remedial activities at the Hardage
•site  since June of  1983.  Pursuant to EPA Contract No. 68-01-
 6692, Work Assignment No. 31-06M08.0, CH2M Hill reviewed
 previously compiled data  regarding contamination at the site,
                                          *
 performed additional field  investigations, and conducted a
 feasibility  study (*FS")  developing and evaluating alternative
methods for  remediation of  the source areas of the site.
 Pursuant  to  EPA Contract  No.  68-01-7251, Work Assignment No.
 142-6N08.0,  CH2M  Hill prepared a design for the remedial action
 for the source  areas of the site selected by EPA pursuant to the
                                                                   •V
                                                                   1
Declaration,  1  12.

     CH2M Hill  provided technical enforcement support and
performed additional investigations at the site under two other
Contract  68-01-7251 Work Assignments.  Pursuant to Work
Assignment No.  106-6608.0,  CH2M  Hill participated in negotiations
with defendants,  provided technical assistance in the course of
litigation over the appropriate  source control remedy for the
site,  and provided oversight of  site investigations.  Tavenner
Declaration,  1  11.  And pursuant to Work Assignment No. 167-
6L08.0,  CH2M Hill provided  oversight of the Hardage Steering

                                16         ".

-------
 Committee's field investigation for the second operable  unit

 remedial investigation and continued to provide technical
                 t
 assistance in litigation.   Tavenner Declaration,  1  13.



      All of the work performed by CH2M Hill  falls within the

 statutory and caselaw definitions of response  actions  for which

 the Government is  entitled to recover its  costs.  CH2M Kill's

 work consisted of  investigation,  monitoring  and testing  of  site

 conditions,  planning remedial action for the site,  and assisting

 in enforcement efforts.  The Government is entitled to recover
                 /
 its'costs for these activities.7   See' NEPACCQ.  579  F.  Supp. at

 850.



      Costs incurred by EPA for the services  of Viar, the company

 which operates EPA's Sample Management Office  and provides

 administrative support to  EPA's Contract Laboratory Program and

 for the  services of the contract  laboratories  in the program

 which have analyzed field  samples taken from the Hardage site,

 are also recoverable costs.   EPA  requested analysis of samples

 from  the Hardage site as necessary for investigation and

 monitoring of  site  conditions,  remediation planning, and

 preparation  for  litigation (i.e.  enforcement).   Tavenner

 Declaration, 1  16;  Simons  Declaration,  11  12-16.  The  United
     7 Through this Motion, the United States, only  seeks costs
incurred for work performed by CH2M Hill through approximately
December 31, 1988.  Boone Declaration, 1 28.  The United States
reserves the right to. claim at trial costs subsequently incurred
by EPA for work performed by CH2M Hill.
                                17

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 States is  entitled  to  recover the costs of work so essential to
 evaluating the  nature  and extent of contamination at the site.8

      As detailed  in the attached Declaration of Robert H.
 Laidlaw, contractor TechLaw provided support for EPA's
 enforcement effort.  TechLaw, inter alia, created a computerized
 database of waste transactions at the site, conducted field
 sampling audits and provided othe'r support with regard to field
 sampling,  and provided support on various issues involved in the
 de minimis settlement  effort.

      Finally, EPA contractor Jacobs arranged for the services of
 a number of expert  witnesses who contributed to EPA's and the .
 Department of Justice's investigative, enforcement, and
 remediation planning efforts.  As explained in the accompanying
 Declaration of  Alan Tavenner, services provided by these experts
 included,  inter alia,  evaluating the potential for transport of
 contaminants at the site through groundwater; evaluating the
 risks  presented by  both EPA's and the Hardage Steering
 Committee's remediation proposals; and review and evaluation of
 sampling data and sampling procedures.
     8 Again, the United States, through this Motion, only seeks
reimbursement of costs incurred for work performed by Viar and
the contract laboratories through approximately December  31,
1988.  Boone Declaration, 1 14.  The United States reserves the
right to seek at trial reimbursement for costs incurred for work
performed by Viar and the contract labs after that date.
                                18

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     Sirjce each of the EPA contractors listed in Attachment 1
provided services which clearly  fall within the definition of
response actions for which costs are recoverable under -CERCLA,
the United States is entitled to recover the costs it has
incurred for those services.
                (ii) DOJ Costs

     The costs  incurred by the Department of Justice in this
action, as explained  in the accompanying Declaration of Patrick
A. McGeehin, fall into three categories: direct labor costs,
indirect costs, and other direct costs  (*ODC's*).  Direct labor
costs are the salary  expenses of Department of Justice Land and
Natural Resources Division ("LNRD") professional employees
(including attorneys  and paralegals) for work performed by such
employees on the Hardage case.  Rubino  & McGeehin  (an accounting
firm employed by LNRD) calculates an effective hourly rate for
each such professional employee for each month by dividing the
employee's monthly salary figure by the total number of hours
accounted for (including non-case hours and both Superfund and
non-Superfund case hours) by that employee for that month.  The
cost of an employee's work on the Hardage litigation is then
computed by multiplying the hours the employee worked on the
Hardage litigation by the employee's effective hourly rate.
McGeehin Declaration, 16.
                                19

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      The  Dfcpartment of Justice indirect costs  listed on
 Attachment  1  are  computed through an  indirect  cost  allocation
 system  designed for the LNRD  by Rubino  & McGeehin.   Indirect
 costs are costs which are generally necessary  to  support the
 functioning of LNRD professional personnel  in  their case work,
 but  which are not allocated directly  to specific  cases - such as
 the  costs of  office space, utilities, and supplies.
              •
      Rubino and McGeehin calculates an  indirect cost rate  for
 LNRD by the following process:  computing LNRD's total indirect
 costs for. a fiscal  year;  computing LNRD's total direct labor
 costs for that fiscal year (i.e.,  the cost  of  attorney and
 paralegal labor for both Superfund and  non-Superfund cases); and
 dividing  the  "indirect* figure  by the "direct* figure to produce
 the  indirect  cost rate for the  fiscal>year.  The  indirect  costs
 for  a particular case are  computed by multiplying the direct
 labor costs for that case  by  the indirect cost rate.  Under this
 system, the percentage of  LNRD  indirect costs  allocated to a case
 is the  same as the  percentage of LNRD direct costs  incurred for
 that  case (i.e., if a case represents 0.25% of LNRD's direct
 labor costs for a fiscal year,  0.25% of LNRD's indirect costs
will  be allocated to  that case).

     Rubino & McGeehin  has computed average effective direct .
hourly rates  for the  attorneys  and paralegals who have charged
time to the Hardage case for the period  for which LNRD costs are

                                20        -

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 sought in this Motion.9  AS set out in Attachment 4  of the
 McGeehin Declaration,  the weighted average effective direct  labor
 rates are $19.38 per hour and $13.47 per hour,  respectively.
 Rubino & McGeehin have also computed  average  "fully loaded
 rates* for attorneys and paralegals who have worked  on the
 Hardage case (i.e.,  a  rate which adds indirect  labor costs
 allocated to the case  to the direct labor costs).  The "fully
 loaded rates* are $59.99 and 41.98 per hour for attorneys  and
 paralegals,  respectively.   McGeehin Declaration,  1 10.

      The "fully loaded rates" computed by Rubino & McGeehin
 represent both the direct  and indirect costs of attorney and
 paralegal time.   In  this respect,  they are somewhat  similar to
 the hourly billing rates of attorneys and paralegals in the
 private  sector.   When  a  private  firm bills its  clients $120 an
 hour  for the  time of an  associate  who makes $60,000  a year, the
 firm  recovers  not only the associate's salary,  but also a  portion
 of the  firm's  costs  for  rent,  supplies,  administration, et al.  -
 plus, presumably,  a  profit element.   Rubino & McGeehin's "fully
 loaded rates*  incorporate  such indirect  costs as rent  and
 supplies,  but  do  not,  of course, include  a  profit element.
     9 The United States seeks Department of Justice costs for
fiscal years 1987 and 1988 (October 1, 1986 through September 30,
1988) by this Motion, reserving the right to seek DOJ costs for
earlier years and for fiscal years 1989 and 1990 at trial.
                                21

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      "Other direct  costs*  represent  the  third  component  of the

Department of Justice  costs  listed in Attachment  1  and in

attachments to  the  McGeehin  Declaration.  These are the  costs o

services  of outside vendors  provided to  support the enforcement

efforts of the  Department  of Justice in  the Hardage case*  As

explained in the McGeehin  Declaration and the  Declarations of
                                                           *•*• -
Anne  Hoke-witherspoon,   Lisa Polisar and Phillip  B. stiness,

these costs include costs  for  expert witnesses, microfilming,

litigation support,  court  reporting  services,  and travel expenses

of  LNRD personnel,  all  of  which  are  recorded on a case-specific

basis.
     C.   The United States  Is  Entitled  To Recover All  Response
          Costs Unless  Defendants  Can  Demonstrate That  The
          Response Actions For  Which The United  States  Seeks
          Costs Are Inconsistent With  The National Contingency
        .  Plan	
     Pursuant  to  Section  107(a)(4)(A)  of  CERCLA,  defendants  are

liable  for  "all costs  of  removal  or  remedial  action  incurred by

'the United  States Government  or a state not inconsistent with  the

national contingencyplan." 42  U.S.C § 9607(a)(4)(A)  (emphasis

added).  Defendants bear  the  burden  of proving that  response

costs  for which the Government  seeks reimbursement are

inconsistent with the  National  Contingency Plan (*NCP*), 40

C.F.R.  Part 300 et seq.   See, e.g..  United States v.  NEPACCO.  810

F.2d at 747 (8th  Cir.  1986)  ("the parties claiming the  benefit of

the exception  [that response  costs inconsistent with the NCP are

not recoverable]  have the burden of proving  that certain  costs

                                22

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 are inconsistent with the NCP and,  therefore, not recoverable.*
 See also United States v. Ward.  618 F.  Supp. 884, 899  (E.D.N.C.
 1985) ;  United states v.  Conservation Chemical Co..  619 F. Supp.
 162,  186 (W.D.  Mo.  1985).

      The NCP is an  EPA regulation which establishes procedures
 for the selection of response actions.   It. was  enacted pursuant
 to Section 105  of CERCLA, 42  U.S.C. § 9605, which requires that
 the NCP include,  i,n£er _alj.a..t
           (1) methods for discovering and  investigating
           facilities at  which hazardous substances  have
           been  disposed  of or otherwise come to be
           located;
           (2) methods for evaluating, including
           analyses  of relative cost,  and remedying  any
           releases  or threats of releases  from
           facilities which pose  substantial danger  to
           the public health or the  environment;
           (3) methods and criteria  for  determining  the
           appropriate extent  of  removal, remedy, and
           other measures .authorized by  this chapter.

     Since the  NCP  governs the selection of response actions,  in
order to demonstrate that the government's costs are
''inconsistent with  the NCP" the  defendants must demonstrate that
the response actions taken by the Government were inconsistent
with the NCP.   "As  long as.the actions  taken by the government
were in harmony with the  national contingency plan,  the costs
incurred pursuant to those actions  are  presumed to  be reasonable
and therefore recoverable.*  NEPACCO. 579  F; Supp.  at 851.  See
also United States  v.  Shell Oil  Co..  605 F. Supp. 1064, 1074  (D.
                                23

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Colo. 1985): "the  [NCP] consistency requirement of Section

107(a)(4)(A) addresses the nature of- the response actions for

which costs can be recovered."
     In attempting to establish that the Government's response

actions are inconsistent with the NCP, defendants bear a heavy

burden: they must demonstrate that the agency's choice of

response action was arbitrary and capricious.  "Because

determining the appropriate removal and remedial action involves

specialized knowledge and expertise ... [t]he applicable standard

of review is whether the agency's choice is arbitrary and

capricious.*  United States v. NEPACCQ. 810 F.2d at 748, citing

United States v. Ward. 618 F. Supp 884, 900  (E.D.N.C. 1985).



     The Court of Appeals in NEPACCO also affirmed the District

Court's conclusion that as long as the response actions taken by

the Government are not inconsistent with the NCP, defendants

cannot challenge the Government's cost claim on grounds of

"reasonableness*:

          The statutory language also supports the
          district court's reasoning that under CERCLA
          § 107{a)(4)(A), 42 U.S.C. § 9607(a)(4)(A),
          "all costs* incurred by the government that
          are not inconsistent with the NCP are
          conclusively presumed to be reasonable.
          CERCLA does not refer to "all reasonable
          costs* but simply to "all costs.*  Cf.
          Federal Water Pollution Control Act § 311(f)
          (FWPCA), 33 U.S.C. § 1321(f) (responsible
          parties are liable for "actual costs
          incurred* by the government for cleanup);
          see,  e.g..  Union Petroleum Corp. v. United
          States.  228 Ct.Cl. 54, 651 F.2d 734,  744

                                24         '-      ..."

-------
           (1981)  (construing "actual costs incurred"  in
           33 U.S.C.  §1321(f)  to. apply conclusive
           presumption of reasonableness).   Case law
           interpreting the FWPCA is relevant  because
           CERCLA defines the NCP by referring to the
           NCP mandated by the FWPCA.	
 810 F.2d at 747-48.

      Congress' decision that the Government is entitled to
 recover all costs,  rather than all  reasonable costs,  of response
 actions reflects  one of the fundamental  purposes of CERCLA: to
 encourage swift and  effective response actions.  By refusing to
 permit  defendants to defend against cost recovery  actions by
 engaging in detailed attacks on the "reasonableness*  of
 individual  Government cost items. Congress provided an incentive
 to  those defendants  to conduct the  necessary  response actions
 themselves.   In cases where defendants refuse to conduct
 appropriate  response actions,  Congress'  decision frees the
 Government  to undertake the response actions  it deems necessary
 and appropriate without being constrained  by  the possibility that
 each line item of the costs of these actions  will  be  challenged
 in cost  recovery*  The message to defendants  is, essentially, *if
 you want detailed control  over the  cost  of response actions,
perform them yourself."

     In the  present  case,  as  explained abov,e,  the  response
actions the  costs of  which  the United  States  seeks are those
investigative,  remedial  and enforcement  actions which Congress
intended the Government  to  perform.  Accordingly,  defendants are
                                25

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liable to the Government for all costs incurred by the Government
in performing those response actions.
          D.   There is No Genuine Issue of Material
               Fact Regarding the Costs Incurred by the
               Government at the.Hardaae Site 	.
     Rule 56 of the Federal Rules of Civil Procedure provides
that summary judgment
          shall be rendered forthwith if the pleadings,
          depositions, answers to interrogatories and
          admissions on file, together with affidavits,
          if any, show that there is no genuine issue
          of material fact and that the moving party is
          entitled to summary judgment as a matter of
          law.
     The party seeking summary judgment has the burden of
demonstrating the absence of any material factual issue that is
genuinely in dispute.  Retail Clerks Union .I^ocal 648 v. Hub
Pharmacy. Inc.. 707 F.2d 1030, 1033  (9th Cir. 1983).. Once the
moving party has discharged this burden, however, the adverse
party "cannot rest on mere allegations or denials, but must, by
affirmative response in affidavits or otherwise, set forth
specific facts showing that there is a genuine issue for trial."
Prochaska v. Marcoux. 632 F.2d 848,  851  (10th Cir. 1980).
     In the present case, there are no genuine issues  for trial.
There is no question that the United States has  incurred response
costs at the Hardage site.  The declarations and verified cost
                                26

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 summaries attached hereto establish the amounts  cf- the response
 costs for which plaintiff now seeks summary judgment.

           The declarations of Willimina Pipkin and Nellie Boone
 state that they investigated and reviewed each of  the national
 contract vouchers,  treasury schedules  and other  appropriate
 records to verify that the costs listed on EPA's cost summaries
 were actually incurred.   Ms.  Pipkin and Ms.  Boone  reviewed these
 records to determine that EPA was invoiced for work  at the
 Hardage site,  that  payment was authorized by EPA and that EPA
 authorized the Treasury to pay the costs invoiced.   They then
 prepared the  cost summaries attached to their Declarations.

           The  declaration of Patrick A.  McGeehin states that
 Rubino  & McGeehin has reviewed the time sheets,  vendor invoices,
 and travel  vouchers  reflecting Department of Justice "costs on the
 Hardage  case  for  fiscal  years 1987 and 1988  and  prepared the
 summaries  provided  in Attachments to the Declaration on the basis
 of that  review and  the application of  Rubino & McGeehin's
 procedures  for calculating direct labor costs and  indirect costs.
 for LNRD cases.   The  declaration of Philip B. Stiness states that
 the records which -the Division provides to Rubino  &  McGeehin,
 upon which  Rubino & McGeehin's summary is based, are records of
costs which have  been paid by the Division.
                                27

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          The  facts concerning the amount of the United States'
costs cannot reasonably be disputed by the defendant.  The United
States has unquestionably incurred those costs, in the amounts
stated in the  supporting affidavits and cost summaries,10 in
response to the release or threat of releases in the vicinity of
the Hardage site.

          In UnitecL States v.Northernaire Plating Co.. 685 F.
Supp. 1410 (W.D. Mich. 1988), appeal pending. No. 88-2.074 (6th
Cir.), the Court granted summary judgment for the United States
on its claim for EPA and DOJ response costs under Section 107 of
CERCLA, on the basis of summary evidence similar to that
presented here: an EPA cost summary prepared by Ms. Pipkin, id.
at 1417,  and an affidavit regarding DOJ costs prepared by Philip
Stiness.   Similarly, in SCRDI. 653 F. Supp. at 1007-1009, the
court granted  summary judgment on the government's claim for
response costs on the basis of the government's cost summary.
The United States submits t'hat the undisputed facts demonstrate
that the same  result is appropriate in the instant case.
     1°   .Summaries of voluminous records, such as the  accounting
records here, are admissible in lieu of all the underlying
documents where: all the underlying documents cannot be
conveniently examined by the Court, the underlying records  have
been made available to all parties for examination, and a witness
testifies that he prepared the summary and is familiar  with the
underlying documents and records.  Rule 1006, Fed. R. Evid.
                                28         '

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           E.    The Liability Of The Defendants  For The United
                States'  Response Costs  Is  Joint  And Several
      Liability under Section 107  of 'CERCLA  is  joint  and several

 unless defendants can demonstrate.that the  harm  caused by their

 respective conduct is divisible.   SCRDI.  653 F.  Supp. at 994.

 Where, as here,  a combination of  hazardous  substances contributed

 by a number of generators are thoroughly  commingled, see

 Affidavit of Kirk w.  Brown in support  of  the United  States'

 Motion For Partial summary Judgment On Liability,  filed herein on

 June 1,  1989,  the harm caused by  conditions at the site is not

 divisible.   SCRDI at  994.   Accordingly, the liability of

 defendants herein for the United  States'  response  costs is joint

 and  several.


                           •
                CONCLUSION AND 'PRAYER FOR JUDGMENT



      For  the  foregoing reasons, Plaintiff submits  that summary

 judgment  should  be granted against  defendants  herein, and an

 Order  issued  stating  that  defendants are  jointly and severally

 liable for  the costs  described in the  Statement  of Material Facts

 herein and  listed in  Attachment 1 hereto.   The United States

 reserves  the  right to claim at trial any  response .costs incurred

 or to be  incurred by  the United States which are not listed in

Attachment  1.  The total -of the amounts listed in  Attachment  1 is

 $ 6,292,065.25.
                                29

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     In addition, the United States respectfully requests that

the Court grant a declaratory judgment pursuant to Rule 57 of the,

Federal Rules of Civil Procedure that defendants are liable to

the United States for its future response costs associated with

the Hardage site.  Such a declaratory judgment is appropriate

where, as here, the United States is continuing to incur respnse
              •r*

costs.  MEPACCQ, 579 F. Supp. at 852 (granting motion for

declaratory judgment that defendants were liable for the United

States' future response costs).
                    Respectfully submitted,
               By:
                    RICHARD B. STEWART
                    Assistant Attorney General
                    Land and Natural Resources Division
                    ROBERT E. MYDANS
                    United States Attorney
                    STEVEN MULLINS
                    Assistant United States Attorney
                    4434 U.S. Courthouse.
                    Oklahoma City, Oklahoma 73102
                    JOHN R. BARKER, Senior Counsel
                    ANNA WOLGAST, Senior Attorney
                    STEVEN NOVICK,Trial Attorney
                    Environmental Enforcement Section
                    United States Department of Justice
                    Washington, D.C. 20044
                    (202)633-1200
                                30

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OF COUNSEL:

VICKI PATTON-HULCE
U.S. Environmental Protection
  Agency - Region VI
1201 Elm Street
Dallas, Texas 75270
CHAHLES de SAILLAN
U.S. Environmental Protection
  Agency
401 M Street, S.W.
Washington, D.C. 20460
                               31

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                      ATTACHMENT 1
I.   ENVIRONMENTAL PROTECTION AGENCY RESPONSE COSTS CLAIMED
1.   EPA Headquarters Payroll Expenses — $ 49,795.81.
     This figure represents Environmental Protection Agency
     ('EPA') Headquarters payroll expenses incurred
     through December 31, 1988.
                                   t
2.   EPA Headquarter* Travel Expenses — 9 9,273.71.
     This figure represents EPA Headquarters travel
     expenses incurred through December 31, 1988.

3.   EPA Region VI payroll Expenses -- $ 288,160.95.
     This figure represents EPA Region VI payroll expenses
     incurred through December 31, 1988.

4.   EPA Region VI Travel Expenses — $ 38,928.24.
     This figure represents EPA Region VI travel expenses
     incurred through December 31, 1988.
5.   EPA Region VI Other Private Vendor Expenses —-
     $ 4,158.65.
     This figure represents EPA Region VI payments to
     private vendors for Hardage site activity (exclusive of
     travel expanses)  through December 31, 1988.

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                 6.    CH2M Hill  Expenses,  Contract No.   68-01-6692, Work
                      Assignment No.  31-06M08.  — $  846,956.80.
                      This* figure  represents  all payments made by EPA to CH2M
                      Kill for work performed under  Contract No. 68-01-6692,
                      Work Assignment No.  31-06M08.

                 7.    CH2M Hill  Expenses,  contract No. 68-01-7251, Work
                      Assignments  Nos. 106-6608.0, 142-6N08.0, and 167-6L08.0
                      — S 1,326,308.25.    .
                      This figure  represents  payments made by EPA to CH2M
                      Kill for work performed under  Contract No. 68-01-7251,
                      work Assignments Nos. 106-6608.0,  142-6N08.0, and 167-
                      6L08.0 through.  October  30, 1988.
    \
IV .-'                                                    '
                8..    TeehLaw Expenses, Contract No. 68-01-6838 —
                      $ 18,955.38.
                      This figure .represents  payments made by EPA to TechLav
                      for work performed under Contract No. 68-01-6838 from
                     October, 1985 .to the present.

                9.   TechLaw Expenses, Contract No. 68-01-7104 —
                      $ 105,552.38.
                     This figure represents payments made by EPA to TechLaw
                   .  for work performed under Contract No.  68-01-7104 for
                     work performed under contract No.  68-01-7104 from
                     October,  1985 to the present.

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 10.  TachLaw Expanses, Contract No.  68-01-7369 —
      $ 162,458.57.
      This figure represents payments made by EPA to TechLaw
      for work performed under. Contract No.  68*01-7369  for
      work performed through October  31,  19S8.

 11.   Jacobs  Engineering Expenses,.Contract- No.  68-01-7351,-
    .  Work Assignment No.  172  —  $ 313,554.00.
      This figure represents payments made by SPA to Jacobs
      Engineering for work performed under Contract  No.
      68-01-7351, Work Assignment No. 172, for which Jacobs
     Engineering billed EPA through August  31,  1986.

12.  Viar and Contract Laboratory Program Expenses  ~
     $ 433,425.87.
     This figure represents payments made by EPA to Viar and
     laboratories in the Contract Laboratory Program for
    work performed  through April,  1988.

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                     II.  DEPARTMENT OF JUSTICE RESPONSE COSTS CLAIMED

             1.   Direct Labor Costs — $ 405,033.00
                  This figure represents payroll expenses of the
                  Department of Justice (*DOJ*) for work performed by
                  Department of Justice employees frsm October 1, 1986
                  through September 30, 1988.

             2'.  Indirect Costs — $ 850,864.00.
                  This figure represents indirect coats incurred and paid
                  by DOJ for work performed by Department of Justice
                  employees from October 1,  1986 through September 30,
/                 1988.
             3.    Other Direct Costs — $ 1,438,638.00.
                  This figure represents payments made by DOJ between
                  October 1,  1986 and September 30,  1988 to private
                  vendors for services performed.

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           IN THE UNITED STATES DISTRICT COURT FOR THE
                   WESTERN  DISTRICT  OF  OKLAHOMA
UNITED STATES OF AMERICA,

          Plaintiff,

     v.

ROYAL N. HARDAGE, et al..

          Defendants,

ADVANCE CHEMICAL COMPANY,
     et al. ,

          Hardage Steering
          committee Defendants
          and Third-Party
          Plaintiffs,

     v.

ABCO, INC., et al. ,

          Third-Party
          Defendants.
                                   Civil Action No. CIV-86-1401-P
                   DECLARATION OF NELLIE BQQNE

     I, Nellie Boone, hereby depose and say: .

    . 1.   That I am employed by the United states Environmental
                  •
Protection Agency (EPA), 401 M street, S.W.  Washington, D.C.

20460, as a Program Analyst in the Cost Recovery Operations and

Analysis Section in the Office of Waste Programs Enforcement

(OWPE).  I have been employed by OWPE for eight years.

     2.   Pursuant to section 221 of the Comprehensive

Environmental Response, Compensation, and Liability Act of 1980

("CERCLA"), 42 U.S.C. s 9631, enacted on December 11, 1980, the

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                              - 2 -
Hazardous Substance Response Trust Fund (the "Fund")  was
established.  This Fund originally consisted of 1.6 billion
dollars to be appropriated to EPA over a period of five years.
Subsequently, congress enacted the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), codified at 42 U.S.C. S
9601 e_t sea.. on October 17, 1986.  Section lll(a) of SARA
provided for an additional 8.5 billion dollars for the Fund,
                                        *
renamed the Hazardous Substances Superfund.  The Fund has been
used to pay various government response costs associated with the
Hardage site.
     3.   One purpose of the Cost Recovery Operations and
Analysis Section of OWPE is to review and compile documentation
of response costs incurred by EPA in connection with Superfund
sites.  One such site is the Hardage site, located in Criner,
Oklahoma.  Responsibility for reviewing and compiling
documentation of response costs for the Hardage site has
generally^been assigned to Willimina Pipkin, another Program
Analyst in  the Cost Recovery Operations and Analysis Section of
OWPE.  However, due to Ms. Pipkin's absence from the office
during part of April 1989, this responsibility was assigned to
me.  In the course of my duties,  I personally compiled the
updated Cost Summary for the Hardage site dated May 5, 1989.
This Cost Summary is attached hereto as Exhibit 1 to my
Declaration.
     4.   In preparing the updated.Cost Summary for the Hardage

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                               - 3 -
 site, I compiled the supporting documents from the EPA
 Headquarters Financial Management Offices.
      5.   These documents or records are all kept in the course
 of the regularly conducted activities of the various EPA and the
 EPA contractor offices involved.  These records are kept pursuant
 to EPA's duties under section 111 of CERCLA, 42 U.S.C. S 9611.
 These records include employee timesheets,  time cards, and travel
 vouchers, as well as contractor invoices and treasury schedules.
      6.   After collecting the above-mentioned documentation, I
 personally compiled.the updated information found in the Cost
 Summary.   This updated information was added to the cost summary
 that Ms.  Pipkin initially prepared in May 1985 and updated on
 nine previous occasions.   To the best of my knowledge, based on
 my review of the employee timecards, timesheets, and treasury
 schedules, the contractor vouchers, and the treasury schedules,
 the updated costs listed in the Cost Summary have been paid by
 EPA.
      7.   The Cost Summary lists by category the response costs
 incurred by EPA in connection with the Hardage site.  It contains
 summaries of costs incurred by EPA for employee salary and travel
 expenditures and under interagency agreements and contracts with
 private firms.  These summaries were compiled in the following
 manner:
           A.   On or about March 21, 1989,  Willimina Pipkin sent
 a memorandum to George Alapas of the-EPA Financial Management
.Division (FMD) requesting a Software Package for Unique Reports

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                              - 4 -
(SPUR) for the Hardage site, and requesting the corresponding
employee payroll timesheets, travel vouchers, contractor
vouchers, and treasury schedules.  The SPUR is. a computer  .
printout which lists the site-specific expenditures made by EPA.
OWPE received the Hardage SPUR and corresponding documents from
FMD on or about May 2, 1989.       •
          B.   Upon receipt of the Hardage SPUR and supporting
documents, I reviewed the records for accuracy and prepared
summaries of the costs by category, as described in more detail
below.
     8.   The Cost Summary contains a summary of costs incurred
by EPA for Headquarters payroll expenditures.  I personally
compiled this updated summary.  Upon receipt of the Hardage SPUR
and supporting documents,. I reviewed the records for accuracy and
updated the summary of the Headquarters payroll expenditures by
employee name and total salary charged to the Hardage account.
Those costs totaled $49,795.81.  This figure includes costs
incurred as of approximately December 31, 1988. .
     9,   The Cost Summary contains a summary of costs incurred
by EPA for Headquarters travel expenditures.  I personally
compiled this updated summary.  Upon receipt of the Hardage SPUR
and supporting documents, I reviewed the records for accuracy and
updated the summary of the Headquarters travel expenditures by
employee name and total travel costs charged to the Hardage
account.  Those costs totaled $9,273.71.  This figure includes
costs incurred as of approximately December 31, 1988.

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                              - 5 -
     10.  EPA has also incurred costs for Region 6 payroll
expenditures.  These costs have been documented separately by EPA
Region 6.
     11.  EPA has also incurred costs for Region 6 travel
expenditures.  These costs have been documented separately by EPA
                                                 **
Region 6.
     12.  EPA has also incurred indirect costs.  These costs have
been documented separately by EPA Region 6.
     13.  EPA has also incurred other Regional costs.  These
costs have been documented separately by EPA Region 6.
     14.  The cost Summary contains a summary of costs incurred
by EPA under the National Lab Contract with VIAR.  The
documentation received from FMD indicated that no additional
costs had been incurred under this contract since the previous
cost update.  I therefore relied on the summary of costs prepared
by Wiliimina Pipkin for the previous cost update, which I
incorporated into the Cost Summary.   The summary lists the costs
incurred by EPA .under the National Lab Contract by contractor
name, contract number, and total contract costs.  Those costs
totaled 3443,425.87.  This figure includes costs incurred as of
approximately December 31, 1988.
     15.  The Cost Summary contains a summary of costs incurred
by EPA under the Field Investigation Team (FIT) contract with
Ecology and Environment,  Inc. for a site sampling inspection and
the installation of groundwater monitoring wells (contract #68-
01-6056).  I personally compiled this updated summary.  Upon

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                              - 6 -
receipt of the SPUR and corresponding documents, I reviewed the
records for accuracy and updated the summary of the costs
incurred by EPA under this FIT contract by contractor name,
contract number, "and total contract costs.  Those costs totaled
$158,877.71.  This figure includes costs incurred as of
approximately December 31, 1988.
     16.  The Cost Summary contains a summary of costs incurred
by EPA under the Field Investigation Team (FIT) contract with
CH2M Hill and with Ecology and Environment, Inc. for a title
search, a preliminary assessment and site investigation, and
sampling of residential water wells (contract #68-01-6692).  The
documentation received from FMD indicated that no additional
costs had been incurred under this contract since the previous
cost update.  I therefore relied on the summary of costs
prepared by Willimina Pipkin for,the previous cost update, which
I incorporated into the Cost Summary.   The summary lists the
costs incurred by EPA under this FIT contract by contractor name,
contract number, and total contract costs.  Those costs totaled
$29,076.29.  This figure includes costs incurred as of
approximately December 31, 1988.
     17.  The Cost Summary contains a summary of costs incurred
by EPA under the Field Investigation Team (FIT) contract with
Ecology and Environment, Inc. for oversight of sampling
conducted by the Hardage Steering Committee (68-01-7347).  I
personally compiled this updated summary.  Upon receipt of the
SPUR and corresponding documents, I reviewed the records for

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                              - 7 -
accuracy and updated the summary of the costs incurred by EPA
under this FIT contract by contractor name, contract number, and
total contract costs.  Those costs totaled $119,134.92.  This
figure includes costs incurred as of approximately December 31,
1988.
     18.  The Cost Summary contains a summary of costs incurred
by EPA under an interagency agreement with the Department of
Interior for a preliminary natural resources survey (IAG
#DW14038201>.   The documentation received from FMD indicated that
no additional costs had been incurred under this interagency
agreement since the previous cost update..  I therefore relied on
the summary of costs prepared by Willimina Pipkin for the
previous cost update, which. I incorporated into the Cost Summary.
The summary lists the costs incurred by EPA under the Interagency
Agreement with the Department of Interi'or by agency, IAG number,
and total costs..  Those costs totaled $4882.82.  This figure
includes costs incurred as of approximately December 31, 1988.
     19.  EPA has incurred costs under an interagency agreement
with the Department of Justice for litigation support.  These
costs have been documented separately by the Department of
Justice.
     20.  The Cost Summary contains a summary of costs incurred
by EPA under'the National Enforcement Investigation Center  (NEIC)
contract with Intera/TechLaw for evidence audits (contract  #68-
01-6215).  The documentation received from FMD indicated that no
additional costs had been incurred under this contract since the

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                              - 8 -
previous cost update.  I therefore relied on the summary of costs
prepared by Willimina Pipkin for the previous cost update, which
I incorporated  into the Cost Summary.  The summary lists the
costs incurred by EPA under this NEIC contract by contractor,
contract number, and total contract costs.  Those costs totaled
                      0*
S2090.80.  This figure includes costs incurred as of
approximately December 31, 1988.
     21.  The Cost Summary contains a summary of costs incurred
by EPA under the NEIC contract with TechLaw for evidence audits
(contract #68-01-6838 ) . .  I personally compiled this updated
summary.  Upon receipt of the SPUR and corresponding documents, I
updated the summary of costs incurred by EPA under this NEIC
contract by contractor,  contract number, and total contract
costs.   Those costs totaled $40,972.00.   This figure includes
costs incurred as of approximately December 31, 1988.
     22.  The Cost Summary contains a summary of costs incurred
by EPA under the NEIC Regional Evidence Audit Team contract with
TechLaw for the preparation of a computerized database and
computerized document inventory (contract #68-01-7104).  The
documentation received from FMD indicated that ho additional
costs had been incurred under this contract since the previous
cost update.  I therefore relied on the summary of costs
prepared by Willimina Pipkin for the previous cost update, which
I incorporated into the Cost Summary.  The summary lists the
costs incurred by EPA under : this NEIC contract by contractor,
contract number, and total contract costs.  Those costs totaled

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                              - 9 -
$122,918.05.  This figure includes costs incurred as of
approximately December 31, 1988.
     23. -The Cost Summary contains a summary of costs incurred
by EPA under the NEIC contract with TechLaw for field evidence
audits and document productions (contract #68-01-7369).  I
personally compiled this updated summary.  Upon receipt of the
SPUR and corresponding documents, I updated the summary of costs
incurred by EPA--under this NEIC contract by contractor, contract
number, and total contract costs.  Those costs totaled
$162,458.57.  This figure includes costs incurred as of
approximately December 31, 1988.
     24.  The Cost Summary contain a summary of costs Incurred
by EPA under a contract with Midwest; Research Institute for
litigation support (contract #68-01-7287).  The documentation
received from FMD indicated that, no additional costs had been
incurred under this contract since the previous cost update.   I
therefore relied on the summary of costs prepared by willimina
Pipkin for the previous cost update, which I incorporated into
the Cost Summary.  The summary lists the costs incurred by EPA
under the Midwest Research Institute contract by contractor,
contract number, and total contract costs.  Those costs totaled
$96,952.00.  This figure includes costs incurred as of
approximately December 31, 1988.
     25.  The Cost Summary contains a summary of costs incurred
by EPA under a contract with Lockheed Engineering and Management
Service for aerial photography"(contract #68-03-3245).  I

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                              - 10 -
personally compiled this updated summary.  Upon receipt of the
SPUR and corresponding documents, I reviewed the records for -
accuracy and updated the summary of costs incurred by EPA under
the Lockheed Engineering and Management Service contract by
contractor, contract number, and total contract costs.  Those
costs totaled $7500.00.  This figure includes costs incurred as
of approximately December 31, 1988.
     26.  The Cost Summary contains a summary of costs incurred
by EPA under the overflight contract with EMS-Lockheed for aerial
photography, analysis, and expert witness support.  The
documentation, received from FMD indicated that no additional
costs had been incurred under this contract since the previous
cost update.  I therefore relied on the summary of costs
prepared by Willimina Pipkin for the previous cost update, which
I incorporated into the Cost Summary.   The summary lists the
costs incurred ,by EPA under the overflight contract by
contractor, contract number, and total contract costs.  Those
costs totaled $3263.27.  This figure includes costs incurred as
of approximately December 31, 1988.
     27.  The Cost Summary contains a summary of costs incurred
by EPA under the Remedial (REM) contract with CH2M Hill for a
Remedial Investigation and Feasibility Study and community
relations (contract #68-01-6692).   The documentation received
from FMD indicated that no additional costs had been incurred
under this contract since the previous cost update.  I therefore
relied on the summary of costs prepared by Willimina Pipkin for

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   ttie previous cost update, which I incorporated into the Cost
   Summary.  The summary lists the costs incurred by EPA under this
   REM contract by contractor name, contract number, and total
   contract costs.  Those costs totaled $846,956.80.  This figure
   includes costs incurred as of approximately December 31, 198.8.
        28.  The Cost Summary contains a summary of costs incurred
   by EPA under the Remedial (REM) contract with CH2M Hill for a
   Remedial Design and litigation support (contract #68-01-7251).  I
   personally compiled this updated summary.  Upon receipt of the
   SPUR and corresponding documents, I reviewed the records for
   accuracy and updated the summary of the costs incurred by EPA
   under the REM contract by contractor name, contract number, and
   total contract costs.  Those costs totaled $1,326,308.25.  This
   figure includes costs, incurred as of approximately December 31,
•Cx
   1988.
        29.  The Cost Summary contains a summary of costs incurred
   by EPA under the. Technical Assistance Team (TAT) contract with  -
   Roy F. Weston for technical assistance contract (#68-01-6669).
   The documentation received from FMD indicated that no additional
   costs had been incurred under this contract since the previous
   cost update.  I therefore relied on the summary of costs
   prepared by Willimina Pipkin for the previous cost update, which
   I incorporated into the Cost Summary.  The summary lists the
   costs incurred by EPA under this TAT contract by contractor name,
   contract number, and total contract costs.  Those costs totaled

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                              - 12 -
$4272.96.  This figure includes costs incurred as of
approximately December 31, 1988.
     30.  The Cost Summary contains a summary of costs incurred
by EPA under the Technical Assistance Team (TAT) contract with
Ecology and Environment for technical assistance (contract #68-
01-7368).  I personally compiled this updated summary.  Upon
receipt of the SPUR and corresponding documents, I reviewed the
records for accuracy and updated the summary of the costs
incurred by EPA under this TAT contract by contractor name,
contract number, and total contract costs.  Those costs totaled
$17,276.60.  This figure includes costs incurred as of
approximately December 31, 1988.
     31.   The Cost Summary contains a summary of costs incurred
by EPA under the Technical Enforcement Support (TES) contract
with Alliance/GCA for technical support (contract #68-01-6769).
The documentation received from FMD indicated that no additional
costs had been incurred under this contract since the previous
cost update.  I therefore relied on the summary of costs
prepared by Willimina Pipkin for the previous cost update, which
I incorporated into the Cost Summary.  The summary lists the
costs incurred by EPA under this TES contract by contractor name,
contract number, and total contract costs.  Those costs totaled
$12,063.14.  This figure includes costs incurred as of
approximately December 31, 1988.
     32.   The Cost Summary contains a summary of costs incurred
by EPA under the Technical Enforcement Support (TES) contract

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                                 - 13 -
    with Planning Research Corporation for  technical  support
    (contract f68-01-7037>.   I  personally compiled  this updated
    summary.   Upon receipt of the SPUR and  corresponding  documents,  I
    reviewed  the records for accuracy and updated the summary  of  the
    costs incurred by EPA under this  TES  contract by  contractor name,
    contract  number,  and. total  contract costs.   Those costs totaled
    $42,141.78.   This figure includes costs incurred  as of
    approximately December 31,  1988.
        . 33.   The Cost Summary  contains a summary of  costs  incurred
    by SPA under the  Technical  Enforcement  Support  (TES)  contract
    with Jacobs  Engineering for technical support  (contract #68-01-
    7351).  I personally compiled this updated summary.   Upon  receipt
    of the SPUR  and corresponding documents,  I reviewed the records
A.   for accuracy and  updated the summary  of the costs incurred, by EPA
    under this TES contract by  contractor name, contract  number,  and
    total contract costs.   Those costs totaled $839,952.60.  This
    figure includes costs incurred as of  approximately" December  31,
           •,*•••
    19881
         34.   As of May 5, 1989, EPA  had  incurred at  least
    $4,339,593.95 in  response costs associated with the Hardage  site
    for Headquarters  employee payroll and Headquarters travel, arid
    pursuant  to  the interagency agreement with the  Department  of
    Interior  an<3 various contracts with private firms, as summarized
    in the Cost  Summary.  This  figure does  not include costs  incurred
    by EPA for Regional employee payroll, Regional  travel,  and

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                              - 14 -
indirect costs, and pursuant to the interagency agreement with
the Department of Justice, which have been documented separately.
     35.  All the records documenting the costs incurred for the-
Hardage site and authorizing payment of CERCLA funds are kept and
maintained in the Financial Management Office at EPA
Headquarters, the Financial Management Office at EPA Region 6,
and at the Financial Management Field Offices in Cincinnati,
Ohio, Research Triangle' Park, North Carolina, and Las Vegas,
Nevada, as part of the regular course of business of these EPA
Offices.
     I declare under penalty of perjury that the foregoing is
true and correct to the best of my knowledge.
Date: September     '....___• 1989
                            NELLIE^ BOONE
                            U.S. Environmental Protection Agency
                            Washington, D.C.  20460

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ATTMSMENT I

-------

-------
I
                                   WASHINGTON, O.C. 20460

                                             05/05/89
   ^^M
                                                                  OFFICE OP
           MEMORANDUM                                    SOMO WASTE AND EME«CENCV
SUBJECT:  Cost Recovery Documentation  for  Superfund Site No.  6 08,
          Hardage/Criner
           FROM:     Nellie Boon*
                     Office of Haste Programs Enforcement
           TO:        Elizabeth Lovery
                     EPA Region 6

                This is in response to your request for cost documented
           through the period of 12/31/88.  Attached are the following
           documents for the Hardage/Criner site.
                                                   DOCUMENTS
           1.   Payroll (Headquarters)
           2.   Travel (Headquarters)
           3.   FIT Contract
           4.   Contract Lab Report
           5.   TAT Contract
           6.   REM Contract
           7.   OSC Contract
           8.   Expert Witness
           9.   Overflights
           10.   NEIC  7/0V
           11.   TES Contract
           12.   ERT Contract

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                               -2-


                                        DOCUMENTS
13.  Miscellaneous Contracts

14.  lAGs
     Please be advised that this material has not been reviewed
for confidential business information or Privacy Act
considerations.  If you have any questions, please contact ae at
475-9782

     Please sign, date and return copy of receipt to:
                                Nellie Boone
                                U.S.  EPA
                                OWPE  (OS-510) ,  Room 2709
                                401 M Street,  SW
                                Washington,  D.C. 20460

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               IN-THE UNITED STATES DISTRICT COURT FOR THE
                   WESTERN DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA,

       Plaintiff,

                    v.

ROYAL N. HARDAGE, et al.,

       Defendants,

ADVANCE CHEMICAL COMPANY,
     et al.,

       Hardage Steering
       Committee Defendants
       and Third-Party
       Plaintiffs,

     v.

ABCO, INC., et al.,

       Third-Party
       Defendants.
)  Civil Action No.  CIV-86-1401-P
                   DECLARATION OF BONNIE DEVOS
     I, Bonnie Devos, declare under penalty of perjury as

follows:                    --*


-------
     I, Bonnie Devos, declare under penalty of perjury as
 follows:
      1.  I  am a  former employee of the Superfund Branch of the
Air and Waste Management Division of the Environmental Protection
Agency and was assigned to the Superfund Branch office in Region
VI as an environmental engineer and I have personal knowledge of
the matters stated herein.

      2.  The Superfund Branch was the office within EPA
                 «
responsible for investigative, enforcement and remedial
activities at uncontrolled hazardous waste sites on the National
Priorities List.
     3.  The statements made in this affidavit are based upon
information contained in the records and files of the Superfund
Enforcement Branch" ~of the Hazardous Waste Management Division,
created and maintained in the ordinary course of its business and
activities.  (Through a reorganization, the responsibilities of
the Superfund Branch of the Air and Waste Management Division
have been transferred to the Superfund Program Branch and the
Superfund Enforcement Branch of the Hazardous Waste Management
Division of EPA.  The Superfund Enforcement Branch assumed
responsibility for the Hardage site.)

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      4.   From 1982  to April,  1984,  I was Remedial Site Project
 Officer  for the Hardage site,  which is  a site on the National
 Priorities List.
                                                      •
      5.   As RSPO, my responsibilities included the technical
 oversight of response activities  at the Hardage site.

      6.   As part of my duties,  I  reviewed the Work Assignment
 pursuant to which EPA contractor  CH2M Hill performed response
 activities at the Hardage  site  between  June,  1983,  and April,
 1984.  I reviewed each of  the Monthly Work Assignment Progress
 Reports  submitted to EPA by CH2M  Hill during  that period.  These
 Monthly  Work Assignment Progress  Reports reflect the* work
 performed under a specific work assignment by the contractor
 during the month preceding the  submission of  the Report.

     7.   While I was RSPO  for the Hardage site,  CH2M Hill
 performed response  activities at the  Hardage  site  under the
 REM/FIT  contract, EPA Contract  No.  68-01-6692,  EPA Work
 Assignment  No. 31-06M08.0.

     8.   Between June,  1983 and my  replacement  as RSPO  (by
Stephen  Phillips) in April, 1984, CH2M Hill prepared a work plan
 for performance of a  feasibility study of remedial alternatives
for the Hardage site, reviewed data from previous field

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investigations at the site, and began preparation for additional
field investigations.

     I declare under penalty of perjury that the foregoing is
 true and correct.
     Executed on  ^ Q&sjLkt/u 7     1989.

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           IN THE UNITED STATES DISTRICT COURT FOR THE
                   WESTERN  DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA,

          P,laintiff,

     v.

ROYAL N. HARDAGE, et al.,

          Defendants,

•ADVANCE CHEMICAL COMPANY,
     et al.,

          Hardage Steering
          Committee Defendants
          and Third-Party
          Plaintiffs,

     v.

ABCO, INC., et al.,

          Third-Party
          Defendants.
                                   Civil- Action No. CIV-86-1401-P
                 DECLARATION OF  ROBERT H.  LAIDLAK

     I, Robert H. Laidlaw, hereby depose and say:

     1.  That I am employed by the United States Environmental

Protection Agency (EPA), National Enforcement Investigations

Center (NEIC), Box 25227, Building 53, Denver Federal Center,

Denver, Colorado  802250, as Chief of the Information Management

Branch, Office of Planning and Management.  My job title is

Program Manager.  I have been employed at NEIC for nineteen

years.  I have served as a project officer for eight years,  i am

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                              - 2 -
currently project officer for NEIC's Evidence Audit and
Litigation Support contract.
     2.  The purpose of NEIC's Evidence Audit and Litigation
Support contract is to provide assistance to EPA regional and
headquarters staff in the development of enforcement cases.   The
contractor is assigned to provide document management and
information summary services.  The contractor submits monthly
bills to EPA for these services in the form of contractor
vouchers.  Since October 1985, the contractor vouchers include a
site-specific breakdown of charges.  The incumbent Evidence Audit
and Litigation Support contractor is1TechLaw, Inc (-formerly known
as Intera).
     3.   As project officer, I am responsible for the
administration and management of the Evidence Audit and
Litigation Support contract.  My duties include providing
technical direction for contract work; reviewing project progress
and deliverables; inspecting project work; and reviewing
contractor invoices and recommending payment.
     4.   At the request of Jim Turner, Office of Regional
Counsel, EPA Region.6, TechLaw has provided assistance to EPA and
Department of Justice staff in the development of the Hardaoe
case under the Evidence Audit and Litigation Support contract.
TechLaw support for the Hardage case began in 1982 and has
continued to date under four Evidence Audit and Litigation
Support contracts: contract numbers  68-01-6215; 68-01-6838; 68-
01-7104; and 68-01-7369.  TechLaw has worked on five projects in

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                              - 3 -
support of the Hardaoe case under these contracts.   I served as
the project officer for each of these projects.
     5.   The first project assigned to TechLaw in support of the
Hardaae case was to organize case documents into separate files,
to create a computerized -inventory of the case documents, and to
create a computerized waste transaction database.  An additional
task in this project was to prepare sample profiles to
demonstrate chain-of-custody for water and/or soil samples.   As
project officer, I directed initiation of the work for this
project, and approved the contractor's work plan.
     6.   TechLaw submitted the following deliverables to EPA
under this first project:  sample profiles for 69 samples
collected in March and April of 1982, Dun & Bradstreet reports
for certain companies, a summary printout of daily,shipments,
summary printouts of the transactional database, summary
printouts of the Hardage monthly logs, an address list, a
document inventory, a list of TechLaw personnel who worked on the
case, a draft printout of daily waste transactions for generators
and transporters, a printout of one party's daily transactions, a
drum transactions summary, documents in response to a discovery
request, documents containing confidential business information,
a waste summary report for selected generators, draft generator
and transporter lists, a generator summary report, and a
corporate affiliations report.  As project officer, I reviewed .
each of these deliverables.

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                              - 4 -
     7.   This first project was initiated under contract number
68-01-6215.  Work on this project continued under contract
numbers 68-01-6838 and 68-01-7104, and is continuing under
contract number 68-01-7369.  From October 1985 through October
1988, TechLaw billed EPA for work on this project by the
following vouchers:
          A.   Voucher numbers 44 through 58 under contract
     number 69-01-6838;
                           *                               •
          B.   Voucher numbers 15 through 30 under contract
     number 68-01-7104; and
          C.   Voucher numbers 1 through 12, 14, 15, and 17
     through 23 under contract number 68-01-7369.
As project officer, I reviewed each of these vouchers and
recommended payment.
     8.   The second project assigned to TechLaw was to prepare
sample profiles to demonstrate chain-of-custody for water and/or
soil samples, to update previously prepared sample profiles, and
to conduct field sampling audits.  As project officer, I
directed initiation of the work for this project, and approved
the contractor's work plan.
     9.   TechLaw submitted the following deliverables to EPA
under this second project:  photocopies of sample tags, a field
audit report, nine sample profiles and eleven boxes of supporting
documents, and documents in. response to discovery requests.  As.
project officer, I reviewed each of these deliverables.

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                                - 5  -


     '  10..  This second project was  initiated and completed under


  contract number 68-01-7369.   From  October 1985  through October


  1988,  TechLaw trilled EPA for work  on this project  by voucher


  numbers 1 through 22 under contract number 68-01-7369.   As
                                   ,*
  project officer,  I reviewed each of these vouchers and


  recommended payment.


       11.  The third project assigned to TechLaw was to continue


  the preparation of sample profiles.to demonstrate  chain-of-


  custody for water and/or soil samples and to prepare requests for


  admission regarding sample custody.  As project officer, 1


  directed initiation of the work for this project,  and approved


  thejj contractor's  work plan.


       12.  TechLaw submitted the following deliverables to EPA


  under  this third  project:  11 boxes of laboratory  files, and 234


  sample files.  Preparation of requests for admission was
     !!

  postponed• after certain preliminary tasks on this  project were:'


  completed.   As project officer, I  reviewed each of these  ,


  deliverables.
     I

       13.  This third project was initiated and completed.under


  contract number 68-01-7369.  From  October 1985 through October
     i

  1988,  TechLaw billed EPA for work  on this project  by voucher


  numbers 15 through 23 under contract number 68-01-7369.  As
     .' '
  prdject officer,  I reviewed each of these vouchers and


  recpmmended payment.                                    .


     i  14.  The fourth project assigned to TechLaw was to audit the


.  previously prepared transactional  database' and to  otherwise

-------
                              - 6 -
assist EPA in putting together a de minimis settlement.   As
project officer, I directed initiation of the work for this
project, and approved the contractor's work plan.
     15.  TechLaw submitted the following deliverables to EPA
under this fourth project:  -a draft de minimis generator summary,
an audit of de minimis parties, a de minimis generator summary
report, a case preparation assistance report (in three volumes),
an Index of documents contained in the de minimis Settlement
Record  (subsequently revised) and a Supplemental Index,, a de
minimis settlement calculation, a printout of the transactional
database for specific parties, draft responses to certain
comments of the Hardage Steering Committee on the proposed de
minimis settlement, a list of responsible parties and their
waste-in volumes, Attachments 1 and 2 to the de minimis Consent
Decree  (subsequently revised), a list of transporters, and an
address list..  As project officer, I reviewed each of these
deliverables.
     16.  This fourth project was initiated and is continuing
under contract number 6o-Ci-7Jia.  From October 1935 tnrouc.^
October 1988, TechLaw billed EPA for work on this project by
voucher numbers 22 and 23 under contract number 68-01-7369.  As
project officer, I reviewed each of these vouchers and
recommended payment.
     17.  The fifth project assigned to TechLaw was to continue
the preparation of requests for admission regarding sample

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                              - 7 -
custody.  As project officer, I directed initiation of the work
for this project, and approved the contractor's work plan.
     18.  TechLaw submitted the following deliverables to EPA
under this fifth project:  a list of sample numbers, a chart of
laboratory case numbers and sample numbers, two boxes of
laboratory documents, and cost documentation.  Preparation of
requests for admission was postponed after certain preliminary
tasks on this project were completed, and was ultimately
cancelled.  As project officer, I reviewed each of these
deliverables.
     19.  This fifth project was initiated and completed under
contract number 68-01-7369.  From October 1985 through October
1988, TechLaw billed EPA for work on this project by voucher
number 23 under contract number 68-01-7369.  As project officer,
I reviewed this voucher and recommended payment.
     20.  From October 1985, when TechLaw began itemizing site-
specific charges in its vouchers, through October 1988, EPA has
incurred at least the following costs for work on the projects
described above, each in support of the Hardaoe case, under the
Evidence Audit and .Litigation Support contract:
          A.    $18,955.38 under contract number 68-01-6838;
          B.    $105,552.38 under contract number 68-01-7104; and
          C.    $162,458.57 under contract number 68-01-7369.
EPA has continued to incur additional costs in support of the
Hardaoe case under contract number 68-01-7369.
     I declare under penalty for perjury that the foregoing is

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                              - 8 -

true and correct to-the best of my knowledge,
Date:  September
,  1989
                         ROBERT H. LAIDLAW
                         U.S. Environmental Protection Agency
                         National Enforcement Investigations Center
                         Denver, Colorado  802250

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                  IN THE UNITED STATES DISTRICT COURT
                FOR THE WESTERN DISTRICT OF OKLAHOMA
 UNITED STATES OF AMERICA,              )
           Plaintiff,                          )      No. CIV-86-1401-P
      v.                                     )      DECLARATION OF
 ROYAL N. HARDAGE, et al.,                 )      PATRICK A. McGEEHIN
           Defendants,                       )
 ADVANCE CHEMICAL COMPANY, et al.,      )
           Hardage Steering                  )
           Committee Defendants              )
           and Third-Party                    )
           Plaintiffs,                    .     )
      v.                                     )
ABCO, INC, et al.,                            )
          . Third-Party                        )
           Defendants.                       )
                 DECLARATION OF PATRICK A. McGEEHIN

      I, Patrick A. McGeehin, depose and state the following:
      1.    I am Patrick A. McGeehin and I am a Certified Public Accountant and a
co-founder and shareholder in the certified public accounting firm of Rubino &
McGeehin, Chartered ("RAM").
      2.    R&M is under contract with the Department of Justice, Land and Natural
Resources Division ("LNRD"), to assist in the accumulation, processing and reporting of
information relating to costs incurred by LNRD in the prosecution of cases under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"). The contract commenced with the accumulation of costs for Fiscal Year
1987 (beginning October 1, 1986) and continues through the present.

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      3.    I am the officer/shareholder responsible for the work performed by R&M
on behalf of LNRD. All work performed by members of R&M relating to the
aforementioned contract is performed under my supervision and control, and I have
knowledge of all procedures undertaken by our Firm in recording and calculating costs of
attorneys and paralegals,  as well as other related costs incurred by LNRD relating to
CERCLA cases.
      4.    In the  course of our accumulation of LNRD- Superfund costs, we summarize
the direct labor, other direct costs and related indirect charges incurred by LNRD under
each CERCLA case.
      5.    R&M  assisted in the design of the procedures used to accumulate the costs
relating to CERCLA cases.  The procedures used to assign and allocate costs to specific
cases are based on generally accepted accounting principles, including references to cost
allocation guidelines outlined in Federal Acquisition Regulations and Cost Accounting
Standards.
      6.    R&M  has accumulated, summarized and reported costs for all  Superfund
cases up to and including the end of fiscal  year 1988. The costs which LNRD has
incurred and paid are segregated into three areas.  The areas are Direct Labor Costs,
Other Direct Costs  and Indirect Costs, as more fully discussed below.
      Direct Labor Costs of attorneys and paralegals are calculated using information
summarized from weekly timesheets prepared by LNRD employees and bi-weekly salary
information supplied to R&M by LNRD. R&M  uses all hours (including  non-case hours
and both Superfund and non-Superfund case hours) accounted for by a particular
employee  for the month and the employee's monthly salary cost to calculate an effective
hourly rate for the month. Thus, e.g., if an attorney's monthly salary was $4,000 and the
attorney accounted  for 200 hours that month, the effective hourly rate would be S20.
This hourly rate is then multiplied by the hours the employee worked on a case to
calculate the cost of direct labor for that case for that month.
      Other Direct  Costs are expenses specifically identified to a case  through DOJ's
accounting system.  These items include, but are  not limited to, costs paid for travel,
expert witnesses, special masters, deposition and trial transcripts, and litigation support
costs.
                                       '  2

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       In addition to the directly identifiable costs associated with Superfund and other
 LNRD cases, there  are other Indirect Costs incurred by LNRD which support all LNRD
 cases - both Superfund and non-Superfund. The indirect costs are the types of costs
 which are incurred to support the functioning of LNRD attorneys in their performance
 on individual cases.   Specifically, these indirect costs include, but are not limited to,
                               f
 indirect labor (e.g., attorney and paralegal administrative time, secretarial support,
 accounting support,  record keeping and time keeping), compensated absences (e.g.,
 vacation, holiday, and sick time), fringe benefits, office space and utilities, supplies, and
 training.
       The indirect costs are allocated to ail individual cases through the use of an
 indirect cost allocation system designed by R&M.  The indirect cost rate is calculated by
 dividing the total of the aforementioned indirect costs for a fiscal year by a base
 consisting of the total LNRD direct labor costs for that fiscal year (i.e.,  the cost of
 attorney and paralegal labor costs for both Superfund and non-Superfund cases) to
 produce a division-wide indirect cost rate by fiscal year. Thus, if .5% of the total LNRD
 direct labor costs are incurred on a particular case, then .5% of the total LNRD indirect
 costs would be allocated to the case.
      Through the development and  application of the indirect cost rate, only a fraction
 of LNRD's indirect costs are allocated to Superfund cases.  In fiscal year 1987,
 $15,501,371, or 73.37% of the total indirect costs were allocated to non-Superfund cases.
 Similarly, in fiscal year 1988, 516,628,074, or 70.92% of the total indirect costs were
 allocated to non-Superfund cases.
      7.     The accumulation and reporting of the  costs  relating to the case of U.S. v.
 Royal N. Hardage, et al. were performed in the normal course of our contract with
 LNRD.
      8.     We have reviewed  the supporting documentation for the case of the U.S. v.
 Royal N. Hardage, et al. for costs incurred during  fiscal years  1987 and  1988. The
documentation reviewed by us include, but are not limited to, timesheets, vendor
invoices, and travel vouchers.
      9.     Based on the  R&M system of accumulating costs as  described above on
behalf of LNRD, and our specific review of the supporting documentation for this case,

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we have prepared a summary of LNRD's costs relating to the case of U.S. v. Royal N.
Hardage, et al. for the period October 1, 1986 through September 30, 1988.  A copy of
this summary is attached as Attachment 1.  Supporting schedules identifying other direct
costs by vendor or category for fiscal years  1987 and 1988 are attached as Attachments 2
and 3. These summaries were prepared under my supervision.
      10.    We have calculated the average effective direct and indirect attorney and
paralegal hourly rates for ail individuals charging time to the case of U.S. vs. Royal N.
Hardage, et al. for the periods summarized in Attachment 1.  As presented in
Attachment 4, the weighted average effective direct labor rates for fiscal years  1987 and
1988 for all attorneys and paralegals are S19.38 and $13.47 per hour, respectively, and the
fully loaded rates (i.e., direct labor plus all  indirect costs allocated to the case) are S59.99
and S41.98 per hour for the attorneys and paralegals, respectively.

      I do affirm under penalties of perjury and upon personal knowledge that the
contents of the foregoing are true.
    .  Executed this   ^^  day of     **t.   . 1989, at Bethesda, Maryland.
                                               McGeehin, C.P.A.
                                          4

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                                                                 Attachment 1
                          SUMMARY OF DOJ COSTS
                            ROYAL N. HARDAGE
                         FISCAL YEARS 1987 and 1988
                                     Other
                          Direct      Direct
                          Labor      Costs*     Indirect      Total

Fiscal Year
                •
  1987                  S  149,812   S  357,153   $ 329,126.  $ 836,091

  1988                     255.223   1.081.485     521.738    1.858.446

    Total                S  405.035   S 1.438.638   S 850.864   S2.694.537
'See Attachments 2 and 3.

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                                                                   Attachment 2
                   SUMMARY OF DOJ COSTS BY VENDOR
                             ROYAL N. HARDAGE
                              FISCAL YEAR 1987
Category

Special
Master

Court Reporters
Litigation
Support

Travel

    Total
Vendor

Alex H. Danzberger
United American
Viola J. Lundberg
Bailey Court Reporting
Lynn Hilton, CSR, RPR/CP
Maynard Peterson & Associates
Stanley, Harris, Rice, etc.
Frank L. Peterson & Associates
Peterson Reporting Co.
Howard W. Henry & Co.
CSR
Jim Blee
Lillian  Z. Johnson
Fuller & Partners
Nogora Reporting Services
Bossard & Associates, Inc.
Allegro Reporting Services

Acumenics
Miscellaneous
 Amount

$ 35,000
     612
   2,252
   2,319
      43
   13,614
     223
   1,528
   1,885
   1,424
     933
     497
     253
   1,177
     731
     421
   1,193

 267,314
  25.734
                                                  S357.153

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 Category

 Expen
 Witnesses

 Court Reporters
Litigation
Support

Microfilming
Travel

    Total
   5UMMAKI Uf UUJ COSTS BY  VfcNDOR
            ROYAL N. HARDAGE.
             FISCAL YEAR 1988
                       4
 Vendor                                             Amount

 Meyer Environmental  Consultants                    $  91,852
 Rubino & McGeehin,  Chartered                        22,551

 Bossard Associates          -                          13,488
 Miller Reporting                                       2,398
 Frank L. Peterson                                     11,193
 Maynard Peterson                        .             45,654
 United America                                        9,217
 Fuller and Parkes                                      9,207
 Geiger and Loria             '                          570
 Bobbie Ames                              .            3,950
 Esteb and Associates                                    182
 Gibson Sheirod                                         363
 Dean Moburg                                          153
 Allegro Reporting                                      4,023
 Viola J. Lundberg                                       600
 Popl Court Reporting                .                     99
 Pamela Meade Court Reporter                          2,037
 A. William Roberts                                      559
 Southern District Reporters                             -1,982
 Bushman Court Reporters                                472
 Jim Blee                                               968
 Victory Verbatim                                      4,560
 Laurie H. Webbe                                       529
 Lillian Z. John                                          650
 Midtpwn Reporting                                     1,291
 Hamilton, Legato & Assoc., Inc.                           447
 Petre's Stenographers                                     72
 Elliot & Brow                                        2,603
 Tri City Court Reporters                                 159
 Affiliated Court Reporters                                156
 Lanes Court Reporting                                  247
Austin Court Reporting                                  316
 Freelance Reporting                                     146
 Powers & Garri                                         287
 Walls Reporting                                          66

 Acumenics                                           763,422
Data Films                ,                           13,174
OCTO                            '                   9,626

Miscellaneous                                         62.216

                                                 S1.081.48S

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                                                                  Attachment 4
                       SUMMARY OF HOURLY RATES
                             ROYAL N. HARDAGE
                        HSCAL YEARS 1987 AND 1988
Total direct labor

Total hours

Direct labor hourly rate

Total indirect costs

Total hours

Indirect hourly rate

Total direct labor and
  indirect costs

Total hours

Fully loaded direct labor rate
Attorneys

$308,285

  15.910

  S 19.38

$646,129 '

  15.910

  S40.61
Paralegals

 S 96,749

   7.181

  S13.47

 $204,735

   7.181

  S28.51
$954,414
15.910
$301,485
7.181
                   $41.98
Note: All amounts presented represent totals for fiscal years 1987-and 1988.


                                       8

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               IN THE UNITED STATES DISTRICT COURT FOR THE
                   WESTERN DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA,
       Plaintiff,
                    v.
ROYAL N. KARDAGE, et al.,
       Defendants,
ADVANCE CHEMICAL COMPANY,
     et al.,
       Hardage steering
       Committee Defendants
       and Third-Party
       Plaintiffs,
     v,
ABCO, INC., et al.,
       Third-Party
       Defendants.
)  Civil Action No.  CIV-86-1401-P
                   DECLARATION OF LISA POLISAR

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     I, Lisa Polisar, hereby depose and say:

     1.  I am the Chief of the Litigation Support Group of the
Land and Natural Resources Division of the Department of Justice,
and have held that position since November of 1986.  Z am the
contracting officer's technical representative on the contract
between the Land and Natural Resources Division and Acumenics
Research & Technology, Inc. <'Acumenics*), a litigation support.
contractor which.provides litigation support services to the Land
and Natural Resources Division under contract to the Division,
and have held that position since August of 1984.

     2.  From September 1986 to January, 1987, Z acted as the
Litigation Support Croup's Case Manager for the Hardage
litigation.
     3.  My responsibilities as Case Manager included arranging
for private vendors to provide support services necessary to the
Department of Justice's enforcement efforts in the Hardage
litigation.  One of my responsibilities was arranging for
Acumenics to provide litigation support services to the Hardage
litigation team.

   .  4.  Acting as Case Manager for the Hardage litigation, I was
responsible for reviewing bills submitted to DOJ by Acumenics and
other private vendors.  I reviewed these bills to determine

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 whether the bills properly reflected work that had been performed
 for the Hardage litigation team and whether the vendors had
 billed the Department for services at the rates agreed upon by
 the vendors and the Department.  If a private vendor's bill
 properly reflected work performed at the agreed rate, I would
 forward the bill to the Division's Financial Management Group
 (except in the case of bills for microfilming services provided
 by microfilming contractors OCTO and Datafilms, which were
 forwarded to the Department of Justice's Justice Management
 Division)   with my recommendation that the bill should be paid.

 5.  After Anne Hoke-Witherspoon became Case Manager for the
 Hardage litigation in January 1987,  I continued, and have
 continued to the present day,  to review bills submitted for work
 performed for the Hardage litigation team by microfilming
-contractors OCTO and Datafilms and by Acumenics (and forward such
 bills  to the Financial Management Group or the Justice Management
 Division,  as appropriate,  with my recommendation for payment,  if
 appropriate).   In the case of  Acumenics,  however,  Ms. Hoke-
 witherspoon,  during  her tenure as Case Manager,  would conduct  an
 initial  review of the bills submitted and make an  initial
 recommendation as to payment.

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r
    I declare under penalty of perjury that the foregoing is
true and correct.
                  Executed on
                                  ., 1989.

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                IN THE UNITED STATES DISTRICT COURT
               FOR THE WESTERN DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA,
     Plaintiff,
V.
ROYAL P. HARDAGE, et al.,
          Defendants,
ADVANCE CHEMICAL COMPANY, et al.,
          Hardage Steering
          Committee Defendants
          and Third-Party
          Plaintiffs,
     v.
A8CO, INC., et al.,
          Third-Party
          Defendants.
                                            NO. CIV-86-1401-P

                                            DECLARATION OF

                                            WILEY  R. WRIGHT, III
               DECLARATION OF
                                        WRIGHT.  Ill
     I, Wiley R. Wright, III, depose and state the following:
     1.   I am Wiley R. Wright,  III, and I am a Certified Public
Accountant and a shareholder in the certified public accounting
firm of Rub i no & McGeehin, chartered (."R&M") .
     2.   R&M is under contract with the Department of Justice,
Land and Natural Resource Division  ("LNRD") to provide
professional accounting services under which R&M has reviewed
copies of vouchers submitted by Jacobs Engineering Group, Inc.
("Jacobs") for billing the Environmental Protection Agency
("EPA") for work performed by Jacobs pursuant to EPA contract
#68-01-7351.

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     3.    I  am the officer/shareholder'responsible for the
aforementioned work performed by R&M on behalf of LNRD.  All work
performed by members of R&M relating to the aforementioned work
is performed under my supervision and control, and I have
knowledge of all procedures undertaken by our Firm.
     4.    R&M reviewed copies of the Jacobs vouchers for purposes
of identifying the expenditures billed by Jacobs under work
assignment No. 172, through August 31, 1988.
     5.    The amount billed to EPA by Jacobs under work assignment
No. 172, through August 31, 1988, is $ 313,554.00, as itemized on
                           •
Attachment 1.
        I do affirm under penalties of perjury and upon personal
knowledge that the contents of the foregoing are true.
     Executed this 7th day of September, 1989, at Washington,
D.C.
                                    Wiley Rj^JIright, <£*!, C.P.A.

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                        ROYAL N.  HARDAGE
                        SUMMARY OF WORK
                        ASSIGNMENT '1172
                FOR JACOBS ENGINEERING VOUCHERS
Voucher
Number
   Hardage
    Site
   Amount
                              Work
                           Assignment
                              #172
  007
  008
  009
  01
  11
  12
  13
  14
  15
  16
  18
  20
  22
  24
  26
  28
  30
  32
  33
  34
    593.21
    375.50
    253.88
    190.13
    845.51
    756.75
     31.16
  1,370.86
    476.08
  1,264.43
  1,694.54
 33,503.38
  6,910.45
 32,945.52
 77,896.82
120,000.61
210,226.31
167,056.44
    309.24
115.221.63
                              593.21
                              375.50
                              253.88
                              190.13
                              543.73
                              361.10
                               13.72
                              899.00
                              476.08
                           1,175.99
                           1,367.96
                           9,749.34
                           5,969.12
                          13,143.18
                          48,224.87
                          48,406.34
                          37,286.50
                          57,429.97
                              309.24
                          86.785.14
   Totals
S771 .
        AS

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                    IN THE UNITED  STATES DISTRICT COURT FOR THE
                           WESTERN DISTRICT OF OKLAHOMA
         UNITED STATES OF AMERICA,         }
                                          )
                  Plaintiff,              )
                                          ) Civil Action No. CIV-86-1401-P
             v.                           )
                                          )
         ROYAL N. HARDAGE, et al.,         )
                                          )
                  Defendants ,             )
                                          )
         ADVANCE CHEMICAL COMPANY,         )
             et al. ,                      )
                                          )
                  Hardage Steering        )
                  Committee Defendants    )
                  and Third-Party         )             .
                  Plaintiffs,             )
                  ..-.....-              )
             v.                           )
                                          J
         ABCO, INC. , et al. ,               )
                                          )      .
                  Third-Party             )
                  Defendants.             )
                          DECLARATION OF ROBERT ALLHEIN            .  .

             I, Robert Allwein, hereby depose and say:

             l.  That I am employed by the United States Environmental

        Protection- Agency (EPA), 401 M Street, S.w. Washington, D.C.

        20460, as a Supervisory Operating Accountant in the Superfund

        Accounting Branch, Financial Management Division (FMD) of the

        Office of the Comptroller.  I have been employed in FMD .for 18

        years.

             2.  Pursuant to section 111 of the Comprehensive

        Environmental Response, compensation, and Liability Act (CERCLA) ,

        42 U.S.C. § 9611, EPA maintains on file records documenting all
L.

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                                      -  2  -        "
        response  costs  incurred  by  EPA pursuant  to  section  104 of CERCLA.
\  /    Except  for  the  documents described in  Paragraph 3 below, FMD
        serves  as the custodian  of  these documents, which include
        employee  timesheet  and travel  vouchers,  contractor  invoices,
        treasury  schedules,  and  interagency  agreement vouchers.  FMD
        receives  these  documents from  the  various  EPA Headquarters
        offices in  charge of implementing  section  104 of CERCLA and from
        the  Financial Management Field Offices in  charge of disbursing
        CERCLA  funds under  the various EPA contracts, and interagency
        agreements.  FMD keeps these documents on  file  in the course of -
        its  regularly conducted  activity.
             3.   However, FMD does  not maintain, and does not serve as
        the  custodian for,  those documents pertaining to Region employee
   ~\    payroll and travel  expenditures, which are maintained in the
 •  -•'     Regional  Financial  Management  Offices.  Nor does FMD maintain, or
        serve as  the custodian  for, those  documents pertaining to certain
        EPA  contractor  costs which  are not site-specific, which are
        maintained  in the Financial Management Field Offices and by the
        respective  EPA  contractors.
             4.  Upon receipt of all such  documents described  in
        Paragraph 2 above,  the  Superfund Accounting Branch  of FMD
        verifies  the accuracy of the documents against  the  site-specific
        Financial Management System reports, known as the Software
        Package for Unique  Reports  (SPUR).'  The SPUR  lists  each  item  of
        response  costs  incurred by  EPA,  broken down by  site;  it  includes
        the  cost  category of the expenditure (i.e., the type of

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                                       - 3 -
         expenditure), the amount of the expenditure,  and reference
         numbers for the corresponding supporting documents.   These  data
         are entered into the Financial Management System by  .the Financial
         Management Office at EPA Headquarters,  the Financial Management
         Office at EPA Region 6, and the Financial Management Field
         Offices in Cincinnati,  Ohio, Research Triangle Park, North
         Carolina, and Las Vegas, Nevada, which  make the actual
         disbursements.
              5.  FMD has maintained, and continues to maintain, records
         documenting the response costs incurred by EPA pursuant to
         section 104 of  CERCLA for the Hardage site, except for
         those documents described in Paragraph  3 above.
              6.  Between February 1985 and March 1989, George Alapas of
         FMD received from the EPA Office of Waste Programs Enforcement
        .(OWPE)  several  requests for the SPUR on Hardage and  for all
         supporting documents.   These requests were dated February 1985,
         February 3, 1986, May 15, 1987, December 3, 1987,  June 10,  1988,
         and March 21,  1989.   As part of my duties as  Supervisory
         Operating Accountant,  I was responsible for responding to these
         requests.
              7.   In response to each of OWPE's requests,  on February 23,
         1985, February  24, 1986, June 24,  1987, January 15,  1988, July
         19, 1988,  and April  27, 1989, I sent to the CERCLA Cost
         Documentation Section-of OWPE the SPUR  for Hardage,  and all
         supporting documents,  except for those  documents described  in
         Paragraph 3 above.  To  the best of my knowledge., the SPUR and
L

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/
I
                              - 4 -
supporting documents sent to OWPE represent an accurate and
complete documentation — with the exception of those documents
described in Paragraph 3 above — of the response costs incurred
by EPA for the Hardage site as of approximately December 31,
1988.
     8.  In further response to each of OWPE's requests, on
February 2, 1986, May 18, 1987, December 10, 1987, June 16, 1988,
and March 28, 1989, I sent to the EPA Region 6 Financial
Management Office that portion of the SPUR for Hardage which
lists response costs incurred by Region 6 for the Hardage site.
.{The supporting documents.for these costs are maintained in the
Region 6 Office.)
     I. declare under penalty for perjury that the foregoing is
true and correct to the best of my knowledge.
Date:  September  (£      1989
                         A-..
                         ROBERT ALLWEIN
                         U.S. Environmental Protection Agency
                         Washington, D.C.  10460

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                                             FILED
                                               JUL - 3 1990
                                          liS.DJST.COURT,W£STB?NDtST.OFOKL
                                             ** -- DEPUTY

               IN THE UNITED STATES DISTRICT COURT FOR THE
                   WESTERN DISTRICT OF OKLAHOMA
UNITED STATES OF AMERICA,

       Plaintiff,

                    v.

ROYAL N. HARDAGE, et,al.,

       Defendants,

ADVANCE CHEMICAL COMPANY,
     et al.,

       Hardage Steering
       Committee Defendants
       and Third-Party
       Plaintiffs,
)  Civil  Action No. CIV-86-1401-P
ABCO, INC.,  et al.,

       Third-Party
       Defendants.
              UNITED STATES'  SUPPLEMENTAL REPORT ON
                       REVISED  PREJUDGMENT
              INTEREST CALCULATION ON RESPONSE  COSTS
     Attached herewith is  a  revised prejudgment interest

calculation for EPA response costs prepared by Rubino & McGeehin.

(The calculation for DOJ response costs has not changed, and the

amount of prejudgment interest on DOJ response costs, as stated

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in the November 16, 1989 Supplemental Declaration of Patrick A.
McGeehin, remains $267,989.18.)  The United States apologizes t
the Court1 for its failure to submit this calculation prior to t
June 27, 1990 date by which the United States had previously
indicated this report could be submitted.  The Hardage Steering
Committee has not yet had an opportunity to review the
calculation, and requests leave to file comments if its
accountants discover any error in the calculation.
     Also attached herewith is a summary document prepared by the
Hardage Steering Committee which details the Environmental
Protection Agency costs (other than indirect costs) reflected in
the EPA cost summary presented at trial as Exhibit 2571.  As the
document reflects, the United States has withdrawn its claim for
all Environmental Protection Agency costs reflected in this
summary other than (1) those costs which were included in the
United States' Motion for Summary Judgment and (2) EPA indirect *
costs.  Some of these "withdrawn* costs were reflected in
paragraphs 135-158 of the Plaintiff's Contested Facts at trial,
but the United States agreed to withdraw its claim for those
costs, as reflected in the June 11, 1990 Supplemental Report?
these costs are listed as "Costs Dropped By the Government Per
     1 Exhibit 257 also contains line items for Department of .
Justice and Department of Interior costs.  The Court may ignore
those figures, however.  The Department of Justice costs have
been computed separately, as reflected in the summaries attached
to the affidavit of Patrick McGeehin, and the United states does
not rely on the Exhibit 257 Department of Justice figure for any
purpose.  The United states does not seek the Department of
Interior costs listed in Exhibit 257.

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Paragraphs No. 135-158 of the Plaintiff's Contested Facts.*
Others of these "withdrawn* costs are not reflected in the
Contested Facts because the United States decided before trial
not to pursue them; these costs are listed as "Additional Costs
the Government Agreed to Drop.*
     The revised pre-judgment interest calculation for EPA costs
reflects interest only on (1) EPA indirect costs and  (2) the
costs included in the summary judgment motion
     Thus, the costs sought by the Government at trial, as
revised by the Government's agreement to withdraw its claim for
certain EPA direct costs and by the revised pre-judgment interest
schedule, are as follows: (1) EPA indirect costs of $473,756.50
(Contested Facts, #133); (2) DOJ fiscal year 1989 payroll costs
of $93,934.00 (Contested Facts, #160); (3) DOJ indirect costs of
$1,042,489.00 (Contested Facts, #164); (4) DOJ fiscal year 1989
private vendor costs of .$831,750.00 (Contested Facts, #167); (5)
prejudgment interest of $470,849.42 (EPA) plus $267,898.18 (DOJ)
= $738,747.60, for a total of $3,180,677.10.

                    Respectfully submitted,
                    RICHARD B. STEWART
                    Assistant Attorney General
                    Land and Natural Resources Division
                    ROBERT E. MYDANS
                    United States Attorney

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               By:
                    STEVEN MULLINS
                    Assistant United States Attorney
                    4434 U.S. Courthouse
                    Oklahoma City, Oklahoma 73102
                                 ,-•* /'
                    KALYN C. FREE, Trial Attorney
                    .STEVEN NOVICK,Trial Attorney
                    Environmental Enforcement Section
                    United States Department of Justice
                    Washington, D.C. 20044
                    (202)514-1200
OF COUNSEL:
CHARLES de SAILLAN
U.S. Environmental Protection
  Agency
401 M Street, S.W.
Washington, O.C. 20460

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                        MAILING CERTIFICATE
This is  to  certify  that a true copy of the foregoing pleading was
served on each  of  the parties hereto by mailing  the  same  to them
or to their attorneys of record on the 3rd-day of July 1990.
                                Assistant U. S. Attorney

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* RECIQI VI
IWIfKT COST . KCSIGK VI
£?A TJUVfl. - KAOOUtfTEfis'
- «SICN VI
one COSTS • SESION vr
m covnucT - 001 KILL (6692)
• «2J» HILL (72S1)
TEJ WTIIACT • CCA (67*9)
•PRC (7837)
.'WiN mm
NATIONAL LAI CONTRACT
uxatB asm. i K»T sew.
wnoNAi Of. IXVESTIWTION conn?
TfOUK (64-01-6838)
TSJIAJf (64-01-7104)
•IT CWTIUCT - m (wn\
• «£ (M54)
• £l£ (7347J
'AT CONTRACT - Uwton (6841-6669)
- VI (M41-7368J
nOTION FOft
. TOTAL f ARTIAL SUltUY
«9, 795.81 (1) 149,795.31
2IS.160.9S (2) 288.160.95
47}. 756.50 12)
J1.92S.24 (2} J8.92i.24
J0,17:.74 (1) Uii.65
U6.956.80 (1) 846.956.ffl
U26.J3I.25 (13 1.326.308.25
12.06J.14 (1)
42, 141. 7! (1)
SJ9.9S2.&0 ID JU.5i4.00
96.952.00 (1)
44J.i25.J7 (!) iJJ.42S,j7
7.50C.OO (1)
40.972.00 (1) 18.9S5.J4
122.9U.CS 1U 105.S52.J3
2.MO.S? til
29.076.29 (1)
1S8.JH.71 (1J
119,1X92 (1)
4.272.% (1)
17,276.40 (1)
ADDITIONAL
COSTS
REflJESTTO
W SOVERMOT'S
6-11-90 REPOitT
10.00
0.00
473. 756. SO
0.00
B.OO
0.00
0.00
0.00
0.00
0.00 -
0.00
0.00
0.00
0.00
0.00
0.00
_ c.x
0.00
0.00
0.00
0.00
BKJWCCOF
TOTAL CLAIfl
tt.OO
0.00
0.00
0.00
0.00
26.014.09
0.00
0.00
12.063.14-
42,141.71
526,391.60
96.952.00
10.000.00
7, &90.00
22.01t.62
17,365.67
2,990.80
0.00 .
29,076.29
1SU77.71
119.134.92
4,272.96
17,276.60
COSTS OHOfTO
!YT«
wusttxi Ftf *£~ •'•'
NO. 135-1SB PWSHfn
v ne a*wriFF'$ (SFesw
CONTESTED FACTS MIKRS
. •


,
•
U.380.49 . 1J9
25, 253.25 142
75,566.94 136


7,500.00 145

12.1J6.69 148
. II9.1J4.92 Ut
4,272.96 157
17.276.60 154
ADDITIONAL
COSTS TIC
covewcff
ACRES) TO DROP



t26.014.Q9 (J.i

3.682.65
'16,48t.£3
450,831.66
96,952.00
10.000.00 (3;

22.016.62
17.J6S.67
2.0%. 60
• 16,939.60
15S, 877.71

VUfUSHTS • EflSL
         AOEBWTS -
  Oeprtaent of Interior
J,?U.27 (II
4,f!2.«2 (I)
                                                                         0.00
0.00
            J.263.27
                                                                                     4,882.82
                                                                                                3,263.27
                                                                                                4,882.82

-------
(1)
(2)

(3)
 taunt trees to 5/5/39 Cost Smaary.  AH Mounts,  except  Other Costs - Region VI (on
 which NtUir. Bocft/did not testify), also agrees to  11/9/89 Declaration of government cost
 witness Nellie Boor*,  for costs through 12/31/84.
 Amount agrees to 11/1Q/89 Declaration of government  cost witness Sonita King, for costs
 through 12/31/88.
 In its June 11,  1990 resort  the government agreed to withdraw fn» its cost claifl
 certain EPA direct  response  costs  totalling 1269,521.25, which are addressed
 in Paragraph Nos. 13S-IM  of the Plaintiff's Contested Facts.  In  addition  to withdrawing
 these costs froa its claim,  the government has agreed to recalculate the prejutoent
 interest amount based on this reduction in its cost  claia.   ^government has
 alreadx excluded froa tne base  for calculating prejudgtent  interest  the aiounts shown in the
 column entitled 'Additional Costs the Sflvernaent Agreed to Oroo', with the exception of
 the ftegion VI Other Costs of t2i.OU.C9 (Houston Lab  costs)  and  tte  National Lab Contract
 aiount of J10.000.00 (a typographical error in the aaount rwuested  in tne governnent's •
 •otion for oartial sumary judMent vs.  the amount included-in the governaent's cost claia).
 The base stount on which the  government  is recalculating prejuogaent interest snould
be further reduced by the  J26.0H.C9  and the 110,000.00, naking the total additional
wount to be excluded froi  the base 1305,535.94.

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                        IN THE UNITED STATES DISTRICT COURT FOR THE
                            WESTERN DISTRICT OF OKLAHOMA
         UNITED STATES OF AMERICA,     )
                                       )
                Plaintiff,             )
                                       )  Civil Action No. CIV-86-1401-P
                             v.        )
                                       )  '
         ROYAL N. HARDAGE, et al.,     )
                                       )
                Defendants,            }
                                       )
         ADVANCE CHEMICAL COMPANY,     )
              et al . ,                  )
                                       )
                Hardage Steering       }
                Committee Defendants   )
                and Third-Party        )
                Plaintiffs,            )
                                       )
              v.                       )
                                       )
         ABCO, INC., et al.,           )
                                       )
                Third-Party            )
                Defendants.            )
                   UNITED STATES'  SECOND SUPPLEMENTAL REPORT ON
                                REVISED PREJUDGMENT
                       INTEREST  CALCULATION  ON RESPONSE COSTS
              Attached herewith is a revised prejudgment interest

         calculation for EPA response costs prepared by Rubino & McGeehin.

         The Hardage Steering Committee, after reviewing the United

         States' prejudgment interest calculation attached to the United
L

-------
States' first Supplemental Report on Revised Prejudgment Interest
Calculation, discovered that $12,136.69 which the United States
had dropped from its claim for EPA direct costs was still
included in the prejudgment interest calculation..  Rubino &
McGeehin removed this amount from the calculation, re-performed
the calcxulation, and arrived at a figure of $469,825.23 for EPA
prejudgment interest.  This is $1,024.19 less than the
prejudgment interest figure of $470,849..42 previously claimed, for
EPA, bringing the total of the United States' trial-time costs
claim from $3,180,677.10 to a revised figure of $3,179,652.91.
     The United States notes that the prejudgment interest
calculations performed by Rubino 6 McGeehin to date calculates
prejudgment interest only through May 1989.  In addition, the
costs for which the pre-judgment interest calculation was
performed are EPA costs through December 31, 1988 and DOJ costs
incurred through March 31, 1989.  See the trial Affidavit of
Patrick A. McGeehin at 6,8.  The United States will submit an
updated interest calculation when,  in accordance with the Court's
December 8, 1989 order granting the United States a declaratory
judgment for future response costs, it submits updated EPA and
DOJ cost summaries.  Therefore, the Court's Order in this action
should require defendants to pay response costs of $3,179.652.91
to the United States, and reiterate defendants' obligation to pay
future response costs.

-------
                    Respectfully submitted,
                    RICHARD B. STEWART   ,
                    Assistant Attorney General
                    Land and Natural Resources Division

                    ROBERT E. MYDANS
                    United States Attorney
               By:
                    STEVEN MULLINS
                    Assistant United states Attorney
                    4434.U.S. Courthouse
                    Oklahoma City, Oklahoma 73102
                    KALYN C. FREE, Trial Attorney
                    STEVEN NOVICK,Trial Attorney
                    Environmental Enforcement Section
                    United States Department of Justice
                    Washington, D.C, 20044
                    (202)514-1200
OF COUNSEL:
CHARLES de SAILLAN
U.S. Environmental Protection
  Agency
401 M Street, S.W.
Washington, D.C. 20460

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                        MAILING CERTIFICATE
This is  to  certify  that a true copy of the foregoing pleading was
served on each  of  the parties hereto by mailing the  same  to them
or  to. their  attorneys  of  record  on the  25th  day of  July  1990.
                                Assistant U.S.  Attorney

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                    l.S.
       UNITED STATES of America
      ,J             V.
           BELL  PETROLEUM
          SERVICES. INC.. et al.
            No. MO-88-CA-fl.i.
       United  States District  Court,
               W.D. Texas.
       •  Midland-Odessa Division.
              March 8. 1990.
     Government brought action to recover
 certs under Comprehensive Environmental
 Papons*?. Compensation, and Liability Act
 iCERCLA)  for its ciean  up of aquifer con-
 taminated with chromium.   On cross  mo-
 tions for summary judgment, the District
 Court, Bunton. Chief Judge,  held that: II)
 Government's decision to connect citizens
 affected by contaminated aquifer to alter-
 nate water source was rational: i2l process
 followed by Government in deciding to im-
 plement  alternate water system was  not
 improper: (3) recovery- costs incurn>d were
 consistent with national  contingency plan;
 14) indirect  costs  were recoverable under
 CERCLA; and (5) Government was entitled
   prejudirment interest.
  •  So ordered.


 I. Health and  Environment  «=>25.5<5.5)
    In order for court to disallow recovery
 of Government's claimed  response costs un-
 der Comprehensive Response,  Compensa-
 tion, and Liability Act. operator bears bur-
 den of demonstrating  that agency's choices
 of response  actions .were arbitrary  and  ca-
 ;>ncious.   Comprehensive  Environmental
BELL  PETROLEUM  SERVICES.  INC.             771
 ClicaiTM F.Supp. 771 IW.D.Tcx. l*»t
                ganiless of number of residents who said
                they  did not  drink  contaminated  water.
                Government had  no  guaranty that  those
                who  moved into area  in future would not
                consume water or that citizens did not use
                tap water  for cooking, bathing and  other
                activities which could bring  contaminated
                water into  their  bodies.   Comprehensive
                Environmental  Response.  Compensation;
                and Liability Act of 1980. § 101 et  seq.. as
                amended. 42 U.S.C.A. § 9601  et seq.
                3. Health and Environment  «»25.5t5.5>
                   Government's  decision, under Compre-
                hensive Environmental Response. Compen-
                sation, and Liability Act, not to supply bot-
                tled water to citizens who used aquifer that
                was contaminated by  chromium1 was not
                arbitrary or capricious, despite operators'
                contention that no  one drank ground water
                affected  by chromium: supplying  bottled
                wat«r would be labor and cost intensive
                and Government could correctly decide to
                take.even1 precaution  to prevent  contam-
                ination.   Comprehensive   Environmental
                Response, Compensation, and  Liability Act
                of  1980. § 101  et seq., as amended.  42
                U.S.C.A.  §  9601 et seq.
of liteU. §101  et  seq..  as amended.  42
t.'.S.C.A. §  9601  et  seq.
'L  Health and Environment €=25.5(5.5)
    Government's decision,  under Compre-
hensive' Environmental Response. Compen-
sation. and  Liability  Act. to connect citizens
affected  by chromium contaminated aqui-
fer to city water lines was rational, despite
operators' contention that  no  one drank
ground  water  affected by  chromium: - re-
               J.  Health and Environment e=>25.5<5.5»
                   When considering action to be  taken,
               under  Comprehensive Environmental  Re-
               sponse. Compensation,  and Liability Act,
               with regard to aquifer  that was  contam-
               inated  with chromium. Government proper-
               ly  used maximum concentration limits for
               chromium set, forth in Safe Drinking Water
               Act.   Comprehensive  Environmental  Re-
               sponse. Compensation, and Liability Act of
               I960. § 101  et seq., as  amended.  42 U.S.
               C.A. §  9601 et seq.: Public Health Service
               Act. 5  1401  et <«-n.. a?  amended.  42 U.S.
               L.A. S  -MOl  el ie^.

               5.  Health and Environment <=>-;5.5<5.5i
               . • That aquifers contaminated by chromi-
               um had previously produced single reading
               of  elevated  nitrates did not make  Govern-
               ment's  decision under Comprehensive Envi-
               ronmental Response. Compensation, and Li-
               ability  Act  to  install  alternative water
               source  arbitrary  or capricious.'  Comprer
               hensive Environmental Response, Compen-
               sation,  and  Liability Act  of 1980. § 101'et

-------
5801
                                       772
734 FEDERAL SUPPLEMENT
                                       seq..  as  amended.: 42  U.S.C.A.  §  9601  et
                                       seq.
                                       6. Health and  Environment 25.5<5.5i
                                           Recovery costs  incurred by Govern-
                                       ment  in  its  initial  response to chromium
                                       contamination found  in aquifer were con-
                                       sistent with national contingency plan and.
                                       thus,  wert  recoverable  under Comprehen-
                                       sive  Environments! Response. Compensa-
                                       tion, and  Liability Act.  Comprehensive En-
                vironmental Response. Compensation, and
                Liability Act  of  1980,  §§ 101  et seq..
                107ia)(4MA),  as  amended,   42'  U.S.C.A.
                §§ 9601 et seq., 960725.5(5.5i
                    Government's indirect costs connected
                with cleanup of aquifer  were recoverable
                under  Comprehensive  Environmental Re-
                sponse. Compensation, and  Liability Act.
                Comprehensive  Environmental Response.
                Compensation, and  Liability Act  of 1980.
                § 101  et seq.,  as  amended. 42  U.S.C.A.
                § 9601 et seq.

                12. Health  and  Environment <5=»25.5<5.5»
                    Under  Comprehensive  Environments.
                Response. Compensation,  and Liability Act.
                indirect costs incurred by  Environmental
                Protection  Agency  (EPAI   in  connectior
                •.<.:::. jieir, u;  •:•:" a^-i;:.r were ;»<..;  r .-.--"'•'•
                to be  equal,  percentage-wise, to  indirect
                costs documented by other agency involved
                in cleanup.  Comprehensive Environmental
                Response. Compensation,  and Liability Act
                of 1980.  § 101  et- seq.,  as amended.  4-
                U.S.C.A.  § 9601 et seq.

                13. Health  and Environment <£=>25.5<5.5>
                    Under  Comprehensive  Environmental
                Response. Compensation, and Liability Act.
                Government's legal expenses were recover-
                able as part of total cost  Government
                forced to undertake due to responsible
                ties' inaction regarding clean up:  however.
                Government's litigation expenses would be
                apportioned among  responsible parties to
                reflect  ont- responsible party's initial bank-
                ruptcy  action, which was removed to dis-

-------
                   U.S. v. BELL PETROLEUM SERVICES. INC.
                           Cite u 734 F.Supp. 771 (W.D.Tu. 1*901
                                    773
 trict court, and Government's suit against
 potentially  responsible  parties which was
 later consolidated with  bankruptcy remov-
 al.   Comprehensive  Environmental  Re-
 sponse. Compensation, and Liability Act of
 1980.  § 101  et seq..  as amended. 42 U.S.
 C.A. § 9601 et set).

 14.  Health  and  Environment 025.5(5.51
     Entire  amount of  Government's fea-
 sibility study costs was recoverable  under
 Comprehensive  Environmental ' Response.
 Compensation, and Liability Act as part of
 remedial action: feasability study was con-
 sistent with  national contingency plan and
 plan contemplated study of  ultimate reme-
 dy to be implemented at site.  Comprehen-
 sive Environmental  Response, Compensa-
 tion, and  Liability Act of 1980. §§ 101  et
 seq.. 101124). 107, as amended. 42 U.S.C.A.
 §§. 9601 et seq.. 9601(241.  9607.

 15. Health  and' Environment <£=25.5(5.5i
     Indirect costs incurred by Texas Water
i Commission in  cleaning up  chromium-con-
 taminated aquifer were recoverable under
 Comprehensive  Environmental  Response,
 Compensation, and Liability  Act.  Compre-
 hensive Environmental Response. Compen-
 sation, and Liability Act of 1980. §£ 101  et
 seq.. 107, as amended. 4;.' I'.S.C.A. §§ %01
 et seq.. 9607.

 16. Interest C=66
     Under Comprehensive  Environmental
 R<-?p"We. Compensation, and Liability Act.
 (jiivvriirvieJii v.'u^ jiu'. r-.-qu'.mi !>.'  iiiiif.i- f\'r-
 cific demand for  payment before prejudp-
 ment interest was allowed.  Comprehensive
 Environmental  Response.  Compensation.
 and  Liability Act of 19K». §§  101 et seq.,,
 lOTlai. as amended. -1'J U.S.C.A. §£ 9601  et
 seq.. %07
-------

 774
734 FEDERAL SUPPLEMENT
   Marc A. Sheiness and Jose A. Berlanga.
 Hirsch.  Glover,  Robinson  &  Sheiness,
 Houston. Tex.,  for Southland Royalty Co.
   Max  Edwin  Wright. Cotton.  Bledsoe.
 Tighe & Dawson. P.C.. Midland. Tex., for
 Phillips Petroleum Co.
   Timothy D. Yeats and Richard L. Palmer,
 Little.  Palmer  &  Williams. Big  Spring,
 Tex., for Pacific Indem. Co. and Chubb and
 Son.  Inc.
   William  M.  Kerr. Kerr. Fitzperald  &
 Kerr, Midland. Tex., and John G. Niles and
 Ralph W.  Dau.  O'Melveny & Myers. Los
 Angeles. Cal., for Cipna Property Cas. Ins.
 Co.
   Russell S. Johnson.  Donald D.  Gavlick
 and Man,  T.  Mishtal.  Sawtelle.  Goode.
 Davidson & Troilo. San Antonio. Tex., for
 U.S. Fire Ins. Co.
   George V. Basham. III. Lloyd. Gosselink.
 Ryan & Fowler. Austin. 'Tex., and Thomas
 Butler Alleman, Niewaid.  Waldeck. Norris
 & Brown. Houston. Tex., for Granite  State
 Ins. Co.
   Donald  Warner Griff is. Griffi* & Griffis.
 San Angelo. Tex.,  for  Republic  Ins. Co.

 MEMORANDUM OPINION ON  CROSS
       MOTIONS FOR  SUMMARY
              JUDGMENT
   BUNTON. Chief Judge.
   BEFORE THIS  COURT are  cross M*v
I'lamuff ami i>\ tviit-tiivt'
qua  and Chromailoy (hereinafter  referred
to as "Sequa"). The issue before the Court
is  whether the recovery costs  incurred by
the Government in its initial response to
the chromium contamination found in the
Trinity Aquifer underlyinp -the  "Chromium
I Site" in Odessa. Texas are consistent with
the  National  Continpency  Plan.   This
Court, on September l!0,  WW and Novem-
ber 9.  WW found  Defendants  Bell. Sequa
and John Leiph liable for tht- Government's
Response Costs under §  107 of the Com-
prehensive Environmental Response. Com-
pensation. and  Liability Act ("CERCLA").
42 U.3.C § Will el wg.  The question now
l*>fore the Court was  reserved  for "Phase
II" of  the proceedinps.   Havinp reviewed
                the voluminous Motions of the parties and
                the various responses thereto, the Court is
                of the opinion that the response costs in-
                curred by the Government in this case were
                jn fact consistent with the National Contin
                gency Plan and Summary Judgment should
                be planted for the  Plaintiff.  The  Court
                shall reserve its rulinp. however, on the
                exact  amounts  of some  of  the Govern-
                ment's costs pending the filing of affidavits
                by the Government. Sequa. Bell and.Leigh.


                        .    BACKGROUND
                  This suit originated in the  United States
                Bankruptcy Court as a bankruptcy petition
                styled In re Bel! Petroleum Services. Inc.
                The Government filed as a creditor and Belt
                objected to its alleged liability for response
                costs incurred by the  Government  at the
                Chromium I Site (the "Site"), Odessa. Tex-
                as.  A joint  Motion for  Withdrawal of
                Bankruptcy  Reference  was  signed  by
                Judge Glen  Avers in  June  of  IS'PS.  In
                December  of 1988. this Court granted the
                Government's Motion v> bring into the ac-
                tion all of  the Potentially Responsible Par-
                ties.
                 The controversy at bar  involves the ini-
                tial response of the State  of  Texas to citi-
                zen complaints of discolored water around
                the Site in Odessa. Texas.   The State com-
                missioned  studies of the  area and  deter-
                mined thu*. th- Trmitv Aauift-r which fl«w-c
               tial source of  contamination..
                 In September of 19K4. the Environmental
               Protection Agency (the "EPA") authorized
               a response action at the Site pursuant to it?
               authority under Section 1U4IO of CERCLA.
               42 U.S.C. Section %04
-------
U.S. v. BELL PETROLEUM SERVICES, INC.              775
        Cite u 714 F.Supp. 771 (W.D.Te*. 1940)
businesses  beyond the   Liberty Lobby,  Inc.. 477 U.S. 242, 247-48,
                        106 S.Ci.  2505.  2509-10. 91  L.Ed.2d 202
                        (19861: Phillips Oil Co. r. OKC Corp.. 812
                        F.2d 265. 272 (5th Cir.1987). cert,  denied.
                        484 U.S. Sol. 108 S.Ct. 152.  98 LEd.2d 107
                        <1£)87). and the  cases cited  therein.
 to  residences and
 Odessa City  Limits, with chromium.  The
 contaminants now extend north and north-
 west from 4318 Brazos Street because of
 the  flow of the groundwater in  the area.
 Chromium is a "hazardous substance"  as
 that  term is  defined  in CERCLA.   42
 U.S.C. Section  960iil4).
  EPA. as  required  by  CERCLA.  main-
 tained a position of oversight, but still par-
 ticipated in planning the State's studies and
 remedial design of the alternate water sys-
 tem at the Site.  EPA then reviewed these
 activities and memorialized them  in reach-
 ing its Record of Decision which  approved
 the State  selected alternate water system
 response.   Finally,  as per the agreement.
 EPA  reimbursed 'the State's costs  t>y  a
 letter of credit  with the State of  Texas  on
 August 27. 1987.  Section  107 of CERCLA.
 42 U.S.C.  Section 9607. authorizes EPA  to
 seek  reimbursement  of  these  payments
 from persons responsible for contamination
 at the Site.
  On December 1.  !9S8  and with permis-
 ion of the Court, the Government filed a
 Complaint against, among others. Bell. Se-
qua  anc Leigh  based on  Section 107  of
 CERCLA.

     STANDARD ON MOTION  FOR
        SUMMARY JUDGMENT
  Rule .VMCI of thv Federal Rules of Civil
 Procedure provides-  for summary judgment
 "if  the pleadings,  depositions, answers  to
 interrogatories, and admissions on file, to-
 j:r;:,•.: \s.i:. tin-  aff:auv;u-. if u::y.  .-i.v\\
 thai the moving party is entitled to a judg-
 ment as a matter of law."  Rule 56tei pro-
 vides:
  When a  motion for summary judgment is
  made and  supported as provided in this
  rule, an  adverse party  may not rest upon
  the mere allegations  or denials of the
  adverse  party's  pleading,  but  ...  roust
  set' forth  specific  facts  showing  that
  there is  a genuine issue for trial.
  Thus, the  focu:-  of this Court is  upon
disputes over  material  facts; facts that
might affect  the  outcome of the lawsuit
under tht-  governing substantive  law  will
 reciude summary judgment.  Anderson  t: .
                          The  Supreme  Court's  1986  trilogy- of
                        summary judgment cases clarified the test
                        for  granting  summary   judgment.   In
                        Anderson r. Liberty Lobby, the Court stat-
                        ed that the  trial court must  consider the
                        substantive burden of proof imposed on the
                        party making the claim. In  the case before
                        this Court, the Government  has  the burden
                        with respect to its claims:  the Defendants
                        have the burden  with respect  to  certain
                        defenses  they 'raise.   The  Court  in
                        Anderson i: Liberty Lobby defined "mate-
                        rial" as  involving  a  "dispute  over facts
                        which may affect the  outcome of the suit
                        under the governing law."  Anderson t:
                        Liberty Lobby requires this Court  to sub-
                        stantiveiy evaluate the evidence offered by
                        the moving and non-moving parties to de-
                        termine whether the evidence raises a "ma-
                        terial"  fact question  which is  "genuine."
                          In a second case,  the Supreme  Court
                        reiterated that  where the party moving for
                        summary judgment has established prima
                       facit that there is no  genuine issue  as to
                        any material  fact,  the non-moving party
                        mus: then  come  forward  with "specific
                        fact*" showing a gf nuine issue for trial.  It
                        must be "more than simply ...  that there
                        is some metaphysical doubt as to the mate-
                        rial fart:-.."  Maljtufhilr. Flc'-trir Industri-
                        al  <.'v..-Lid.  r. zcHji/. hudiu Cor^.. +','.,
                        U.S.  57-i. 106 S.Ct. 1S48. 89  L.Ed.2d 538
                        (1986).  A third case. Celotrr Corp.  r. Ca-
                        trett. 477  U.S. 317.   106  S.Ct.  2548.  91
                        L.Ed.2d  265  (1986) held  that where the
                        moving party shows that the opposing par-
                        ty is una'tiie to produce evidence  in support
                        of iui ca?t-. sum man- judgment is appropri-
                        ate.  In Cclotcr  Corp.. it was  not  neces-
                        sary for the motion for summary judgment
                        to bt supported by affidavits or other ma-
                        terial specifically  negating the non-moving
                        party's  claim so long as the District  Court
                        was- satisfied that there was an absence of
                        evidence to support it.  At  that point the
                        burden  shifted  to the non-moving party to

-------
    776
734 FEDERAL SUPPLEMENT
    produce 'evidence in support of its claims:
    if it  did not produce any. summary  judg-
    ment was required.
      This Court has demonstrated its willing-
    ness  to allow non-moving parties  their day
    in court in borderline cases where  under
    governing  law  or reasonable extensions of
    existing  law. the hearing of some testimo-
    ny  would  be  helpful  to understand the
    proper application of the law.  Such is not
    the case  in the suit subjudice.  According-
    ly, the Court shall grant  the Government's
   Motion ir. and allow for additional briefing
   where necessary.
                DISCUSSION
     In itfs Motion, the Government supplies
   this Court  with the a figure of $1.628,-
   142.89. representing the costs incurred by
   the  Government in responding to the  con-
   tamination found  under the 24-block  site
   known as the Chromium I Site (the "Site").
   Persons  found to be an owner or operator
   of a site where hazardous substances have
   been deposited  are  statutorily liable  for:
      (A) all costs of removal or  remedial
    action  incurred  by  the  United  States
    Government or a State or an Indian tribe
    not inconsistent with the national contin-
    gency plain:
       any.  other  necessary cost.*  of  re-
    sponse  incurred by any other person con-
    sistent  with  the  national contingency
 .   plan: and
     i'0' camaL'--  f-T  injury :<  fit-:-'.rue-Jo:.
    of.  or loss of natural resources, including
    the reasonable cost* of  assessing such
    injury, destruction, or los> resulting from
    such a  release:  ....
   The amounts  recoverable  in an action
   under this  section shall include  interest
   on  the amounts recoverable under sub-
   paragraphs (Ai  through (Di. Such inter-
   est  shall accrue from the later of (it the
   date payment of  a  specified amount  is
   demanded in writing, or liii the date of
   the  expenditure concerned.
Superfund Amendments and  Reauthoriza-
tion Act ("SARA").  42 L':S.C. -5 f»607(a)(4)
.(Supp.l9*9).  Ser  also:  SARA.  4i  U.S.C.
§  9601(9* (Supp.lf»s#i.  SARA  further pro-
vides:
                  (1) Limitation
                    In any judicial action under this chap-
                  ter, judicial review of any issues concern-
                  ing the adequacy of any response action
                  taken or ordered by the President shall
                  be limited to the administrative record
                  Otherwise applicable principles of admin-
                  istrative law  shall  govern  whether any
                  supplemental   materials  may  be con-
                  sidered by the court.
                  (2) Standard
                    In considering objections raised in any
                 judicial action under this  chapter, the
                 court shall uphold  the President's deci-
                 sion in  selecting the response action un-
                 less the objecting party can demonstrate.
                 on  the  administrative  record, that the
                 decision was arbitrary and capricious  or
                 otherwise not in accordance  with  law.
                 (3) Remedy
                   If the court  finds  that the selection  of
                 the response action  was arbitrary and
                 capricious or otherwise not in accordance
                 with law. the court shall award tA>  o
                 the response costs or damages that a
                 not consistent  with  the national contin-
                 gency plan (sio. and  (B) such other relief
                 as is consistent with  the National Contin-
                 gency Plan.
                (4(  Procedural errors
                  In reviewing alleged procedural errors.
                the court may disallow costs or damage-4-
                only if the errors were so  serious and
                related to matters of such central
                     10 t;tr aClK'.'. II
                have been significantly changed had such
                errors not been made.
             42 U.S.C. §  9613(jt (Supp.l9S9(.  In discuss-
             ing the costs incurred,  the Court shali  re-
             view each of the objections made by Sequa
             in its Motion and Responses and by Bell m
             its Response to the Government's  Motion
             for Summary Judgment.

                  DEFENDANTS' OBJECTIONS
               In  Sequa s Motion  for  Summary  Judg-
             ment as to the  Invalidity of EPA's Imple-
             mentation of an Alternate Water Supply-
             Sequa argues:
               1.  EPA>  decision'to implement an alter
             nate  water  supply must  be set aside be-'
             cause  of the failure of EPA  to consider

-------
                   U.S. v. BELL PETROLEUM SERVICES. INC.
                           Cll«**734 F.5vpp. 771 (W.D.Tcx. IWOt
                                    777
 certain relevant factors, and because there
 is no rational connection between the facts
 found and the decision made.
   2.  The decision  to  implement an alter-
 nate  water  system  is not  cost effective in
 comparison  to the "no action" alternative.
   3.  EPA's decision to implement  the ex-
 tension of city water is invalid because the
 focused feasibility study failed to consider
 the alternative of supplying bottled water
 to users of welis producing groundwater
 affected by chromium.
   4.  The process followed by EPA in de-
 ciding to implement an  alternate water sys-
 tem  was fundamentally  flawed and  re-
 quires EPA's decision  to be set aside.
   Additionally,  the  following arguments
 are found in Sequa's Reply to the  United
 States' Motion for Summary Judgment on
 Costs:
   5.  A  determination of  the   response
 costs, if any. EPA can recover from  Defen-
 dants  must  be  based on,- the  evidence
 presented to the  Court in  a  de  novo pro-
 ceeding.-
  6.  EPA's  Motion for Summary Judg-
 ment incorrectly suggests the standard for
 reviewing whether the  agency selected  the
 proper  remedy  also serves  to establish
 whether the costs of reaching and  imi)lt>-
 menting that decision  are  consistent with
 the National Contingency  Plan  ("NCP").
  7   Th1" rr:-!'."1!'.,1 •,  I'-'-.-".- KPA .-"—"k:" "  .*>--
cover in this action  are not consistent with
 the NCP because of the absence of  ade-
 quate  accounting or documentation  con-
 cerning such costs.
  S.  CERCLA does not provide  EPA with
 the authority to recover its indirect costs or
 those  of  the Texas  Water Commission
rTWC">.
  9.   The costs associated  with the  DOJ's
involvement at this  site either should be
denied in toto or  apportioned between the
two cases joined  in this consolidated  pro-
ceeding.
   10.   A variety  of disputed facts exist
with respect  to'the"actual cost?  incurred
that  prevent the granting  of a Motion for
Summary Judgment
   11.  EPA's request for pre-judgment in-
 terest must be denied because EPA failed
 to observe the procedural prerequisite  es-
 tablished  by Congress.
   Each point shall be discussed seriatim.

       THE ALTERNATE WATER
          SUPPLY DECISION
  The first  issue  raised by  Sequa is  the
 decision to connect the citizens affected by
 the chromium plumes  to an alternate water
 source, namely an extension of water from
 the City of  Odessa lines was not rational
 for two reasons:  (a) no  one drank  the
 ground water affected by chromium and (bl
 no health threat was  posed by the chromi-
 um in the groundwater.   Defendant Bell
 Petroleum   Services.   Inc.  ("Bell")  also
 raised this  issue  in  its  Response  to  the
 United States' Motion for Summary Judg-
 ment and included the argument that with
 or without the chromium levels, the water
 was  not  fit  for human consumption.

  [1]  In  order for this  Court to disallow
 recovery of  the Government's  claimed- re-
 sponse costs, the Defendant bears the bur-
 den  of demonstrating that  the  agency's
 choices of response actions were arbitrary
 and  capricious.  United  States v. .\orth-
 eastern  Pharmaceutical  and  Chemical
 Co. rS'EPACCO"). 579 F.Supp. 823 (W.D,
 Mo. 198-1).  affd in  part and rer'd  in part
 u>i other grounds. 810 F.2d  726 (Sir. Cir.
 li^v . ccr:. d--;:ifd. -5S4 U.S. ?•',:. iUf T '"•..
 146.  9t- L.Ed.2d 102 (1987);  L'.S.  r. Hard-
 aye. 733 F.Supp. 1424 (W.D.Okla.1989) (or-
 der granting Plaintiffs motion for partial
 summary  judgment on  response cost  is-
 sues,  denying summary judgment  for De-
 partment of Justice's (the "DOJ's") indirect
 costs, ordering refund, if appropriate, and
 declaring  liability  for   future response
costs i; l',S.   t: Mot tola.  695 F.Supp. 615
(D.N.H.1988);   O'AVi'/  r,  Picillo,   682
 F.Supp. 706  (D.R.l.iaSSi.

  [2. 3] The Court is of the opinion Defen-
dants have not met their burden. As point-
ed out by the Government, regardless  of
the number of residents who said they  did
not drink the contaminated  water,  the
Government  had  no  guaranty  that those

-------

  778
734 FEDERAL SUPPLEMENT
  who move into the area in the future will
  not  consume  the  water.   Nor does the
  Government have any guaranty that those
  citizens who claim to hot  drink the water
  do not use tap water for cooking,  bathing
  and other activities  which could bring the
  contaminated water into their bodies. Fur-
  ther, this Court is of.the opinion  that the
  Government's  decision  not  to supply  bot-
  tled water to the residence  within the con-
  taminated area was not arbitrary or capri-
  cious.  The  Government found that "Sup-
  ply inp bottled water, over a 15 year design
  life,  would  be  labor  and   cost intensive:
  therefore, [it] was not considered a viable
  alternative."    Administrative  Record  at
  page 3168.  For these reasons, this Court is
  not convinced that the mere fact those citi-
  zens  who could be reached for comment
 responded they did  not drink the  water
 proves the Government's actions arbitrary
 and capricious.  To the contrary, the Court
 is of the opinion the  Government was cor-
 rect  in deciding to take every precaution
 lest an unwary citizen suffer some ill effect
 from the contamination  for  which the De-
 fendants are  responsible.
  [4]  Defendants next claim an alternate
 water source  was an  arbitrary and capri-
 cious decision because chromium does not
 pose  a threat to human life.   Again,  this
 Court finds Defendant Sequa's reasoning
 unappealing.  In making its assessments of
 the situation in l»*m}>»iie'i hy thv NCP  in effec: ^; ;h<- t:rm
to follow the standard? set  in -the Safe
Drinking  Water  Act   (the  "SDWA"l.  42
l.'.S.C. § 300f et srq.   Chromium  is one
element for  which maximum concentration
limits ("MCLs") were set under the SDWA.
Further. Section 9G21 of SARA  states:
  With  respect  10  any hazardous sub-
  stance, pollutant or contaminant that will
  remain  on site,  if—
   (ii any standard, requirement, criteria.
  or limitation  under any Federal environ-
  mental  law. including, but  not limited to
  ...  the Safe Drinking Water Act  ...  is
  legally  applicable to the  hazardous sub-
  stance or pollutant or amiaminam con-
  cerned  ... • the remedial  action  selected
  under section 960-J of this title or secured
                  under section 9606 of this  title shall re-
                  quire, at the completion of the remedial
                  action, a level or standard of control for
                  such hazardous  substance or pollutant or
                  contaminant which at least attains such
                  legally applicable or relevant and appro-
                  priate standard, requirement, criteria or
               •   limitation. Such remedial action shall re-
                  quire a level or standard of control which
                  at  least  attains Maximum  Contaminant
                  Level  Goals  established under the Safe
                  Drinking Water Act   ...  where  such
                  goals or  criteria are relevant and appro-
                  priate  under the circumstances  of the
                  release or threatened release.
               42 L'.S.C. § 9621 nitrate as
              nitrogen,  which  conversion  demonstrates
              the  nitrate readings for two of the three
              wells tested for  general quality  are belo»"
              the  MCL  found  in the  SDWA'   One well
              tested  above  the MCL  for nitrate.   This
             Court agrees with the Government's  posi-
             tion  a  single  reading of elevated  nitrates

-------

                   U.S. v.  BELL PETROLEUM  SERVICES.
                           CKc u 734 rSupp. 771 (W.D.Tc*. IWOt
 does not make the Government's decision
 to install an alternative water source arbi-
 trary or capricious.
                  INC.
779
     COST OF ALTERNATE  WATER
         SYSTEM V. NO ACTION
   16].  The second  argument  championed
 by Sequa is a comparison of the alternate
 water system and the "no action" alterna-
 tives sheds light on the ineffectiveness of
 the alternate water system. In light of the
 reason? stated above. thi.« Court does not
 agree.   Naturally a  "no action' alternative
 will always prove to be the more cost effec-
 tive of two choices where  the other  choice
 involves  incurring costs.  Although resi-
 dents in  the affected area denied drinking
 the contaminated water, these responses
 must be viewed in light of the  fact many of
 the residents were  opposed to being an-
 nexed to the City of Odessa and extension
 of Odessa's water wells- would prompt such
' a result.  As discussed  above, this  Court
 agrees with the  Government that reliance
 on the  residents' affirmation  they  would
 not drink the water gave the Government
 no comfort that in fact contaminated water
 would not be ingested in the next 12 to 15
 years,  whether  by  mistake,  necessity or
 through other means such as use of water
 in cooking,  for  bathing, etc.  Therefore.
 this Cnurt is of the opinscin the selection of
 int- alU'rnate water  source "Vtr IIH-. "IK>
 action" option was prudent and neither ar-
 bitrary nor capricious.


         THE BOTTLED  WATER
             ALTERNATIVE
   Sequa's third  argument is  the focused
 feasibility study failed to consider the alter-
 native of supplying  bottled water to users
 of wells  producing ground water affected
 by chromium.  Again, as noted above, the
 administrative record reflects consideration
 of supplying bottled water to the residents
 of the affected area, but the bot;ied  water
 option was  tabled because it was labor and
 cost intensive over the expected 15 year life
 of the project.  This Court therefore finds
 Sequa's third poin:  not well taken.
  EPA'S DECISION MAKING  PROCESS
   [7]  Sequa next  argues the  process fol-
 lowed by the EPA in deciding to implement
 an alternate water system was fundamen-
 tally flawed and therefore should be set
 aside.  Sequa opines  EPA violated the re-
 quirements of the NCP by selecting a rem-
 edy in advance of completion of the Reme-
 dial  Investigation  and  EPA's  failure  to
 properly consider and evaluate  public com-
 ments requires its decision to be set aside.
 This'Court disagrees.
   As outlined by the Government and doc-
 umented  in  the  Administrative  Record.
 EPA solicited public  comment  on the Fo-
"cused Feasibility Study from "July 30, 1986
 to August 27, 1986.  {Record at 3115). Nu-
 merous responses were received (Record at
 3107-3128). including memoranda from Se-
 qua (Record at 3113. 3190) and Bell (Record
 at 3125).  On August 13. 1986.  EPA called
 a public meeting in Odessa. Texas, at which
 time EPA  explained the findings  of the
 study and took oral comments.  The tran-
 script of such meeting is part of the Admin-
 istrative Record at 3031-3096.   In the in-
 vestigation  by ERM Southwest. Inc. autho-
 rized by Bell and Sequa, ERM  suggested
 that  a  three-inch main water line (as op-
 posed to the EPA's  proposed eight-inch
 mainl  from  the  Odessa  water  system
 "would be the most easily implemented and
 most cost effective alternative."  Record at
 31-3.  The conclusions of EhM  Southwest,
 Inc. were submitted to the EPA by Sequa.
 In  the  EPA's Record  of Decision of Sep-
 tember 8. 1986. the EPA responded to the
 various questions raised in  responses and
 comments   at  the  August  13  meeting.
 Record at 3129-3170.   In response to the
 3-inch pipeline suggestion, the  EPA  noted
 that  the  City of  Odessa requires  £-inch
 lines unless otherwise  negotiated.  Record
 at 3165*.  See also Record at 2566.   Thus,
 this Court is of the opinion that the record
 reflects adequate solicitation by the EPA
 of public comment  as  well as a concerted
 effort, to respond  to  questions and con-
 cerns.  To  fault  the  EPA  for  missing  a
 question or two doe? not comport with this
 Court's sole task of reviewing  the record
 for arbitrary or capricious conduct.

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                             734 FEDERAL SUPPLEMENT

     A? for Sequa's complaint about1 the deci-
   sion to implement the alternate water sys-
   tem,  this Court is of the opinion Sequa's
   point  is not  well  taken.  The fact EPA
   began negotiations with the State of Texas
   for a cooperation agreement does not con-
   vince thi5 Court the EPA had in fact made
   a  final decision to implement the alterna-
   tive water  source option.   Any  decision
   making process is.  by the nature of the
   action, fluid and malleable.  Regardless of
   any preliminary actions on the part of the
   EPA.  the Court notes from the record ef-
   forts were made to contact the public, an-
  swer their questions and  make these ac-
  tions  a pan of the  record.  This  Court
  refuses to go  through each date and each
  action of the EPA with a fine-toothed comb
  since Sequa was given the opportunity to
  conduct the  Remedial  Investigation and
  Feasibility Study itself, .which it declined to
  do.  From  that point. CERCLA dictates
  this Court review EPA's  actions under an
  arbitrary or capricious standard.  Alleged
  procedural errors trigger  disallowance of
  cost* "only if  the errors were  so  serious
  and related to matters of such central rele-
  vance u< the action  that the action would
  have been  significantly changed  had  such
 errors   not  been   made."   42  U.S.C.
  § %lftjM-ti.  Thi? Court finds no evidence
 that had the EPA started the initial  negoti-
 ations ai a  later date, the  selection  of a
 remedial option would have keen any other
 than the alternate  water source remedy.
    STANDARD OF REVIEW FOR COSTS
     Sequa  next  seeks to  distinguish thf
   EPA's costs of decision (i.e. the Remedial
   Investigation  and Feasibility Study  Costs i
   and costs of implementation (i.e. costs assi-
   ciated with  installation of the water lines i.
   As pointed  out by Sequa. in order for the
   Government to recover its decision and im-
   plementation costs, the underlying decision
   on the appropriate  remedy must not  be
   arbitrary    or   capricious.     42   U.S.C
   §  9613(jK2l.  This Court found  the decision
   to implement  the alternate water supply
   was  neither arbitrary nor capricious.  Se-
   qua then points to the language of Section
   107 which holds responsible, parties   such
   as Bell, Sequa and  John Leigh, liable for
      (A) all costs  of removal or remedial
    action  incurred  by the   United  State?
    Government or a State ... not inconsist-
    ent with the  national  contingency  plan:
     (B> any  other  necessary costs of re-
    sponse incurred by any other person con-
    sistent  with  the   national contingency
    plan
  42  U.S.C.  § 9607. Sequa then
  argues the process that led to the decision
  to  implement an alternative  water source
  must  be consistent with the NCP. the costs
  of the decision-making process must be rea-
  sonable and necessary and the costs mu>:
  have been incurred due to the release from
  the Odessa 1
     DE NOVO  REVIEW OF EPA'S
           RESPONSE COSTS
   Sequa next argues, and the Government
 concurs, the  standard for review of wheth-
 er the EPA actually incurred certain  costs
 i? dc rtoro rather than arbitrary- and capri-
 cious.  This Court agrees. Sequa does not,
 however, contend certain costs were not in
 fact  incurred. Instead. Sequa argues  costs
 incurred should not have been so incurred
 or are  not'  recoverable  under CERCLA.
 Thusi the dc noro standard of review, al-
 though  applicable to  "actual  costs"  chal-
 lenges,  fails'"  to stave off summary judg-
 ment when the challenge goe? to the "rea-
sonableness"  of the costs incurred.
   |8J  This Court  disagrees  with  Sequa'.*
 premise the Government's costs  must t>e
 shown  to be  reasonable and  necessary.
 Subsection  B  of Section 9607  refer? to
 costs incurred "by any other person." Thi-c
 Court  reads such  language  to apply w
 costs incurred consequent to private party
 cleanup actions,  not  EPA response costs
 Thus, the Government need only maintain
 consistency  with the NCP to recover  it*
 costs under a CERCLA  action.
  Taking  a  broader look at  the purposes
 behind CERCLA, the Court does not find
 therein Congress' desire to allow a respon-
 sible  party  to  sit  back  and  watch  the
 Government sift  through the  rubble of a
 polluted site, formulate a remedial solution
and uke action and then  attack even- cost

-------
                         U.S. v.  BELL PETROLEUM  SERVICES. INC.
                                  Cite «* 7J4 F.Supp. 771 (W.D.Tei. 19901
                                    781
VTsTP-
•V. * '
>=v.<:i--.
*?r>.
  it*'
       associated therewith.  This Court is of the
       opinion gross misconduct on the part of the
       Government could bar recovery.  Yet  the
       Court keeps in mind  the  fact the wrong-
       doers herein  had the  option of taking re-
       sponsibility for their  own actions at  the
       outset, which,  had they  done so.  would
       unquestionably have limited certain costs.
       Our  Government. God bless her. is a  bu-
       reaucratic monster which,  by definition,
       runs inefficiently.  Forcing  the Govern:
       ment's hand at the Chromium  I Site  natu-
       rally increased costs because the EPA had
       to gear up its various support staffs and
       offices, reconstruct  the entire scenario of
       the chromium dumping and then begin  the
       arduous process toward recovery including
       the  infamous study, comment  period, etc.
       Many, many costs would have  been unnec-
       essary  had the  Defendants shouldered the
       burden and sought to quickly and efficient-
       ly clean up the mess they made.  Instead.
       their free ride has increased costs exponen-
       tially, including all the  bureaucratic  ex-
       penses typical of a large Government, costs
       of discovery  and trial. Court costi-  ..  the
       list  is unending.  For the Defendants to
       come to the  Court now with white gloves
       and  complain  of  dust  is.-in  this Court's
       opinion, unbecoming of any member of this
       society.  In a free country  such as ours, al!
       citizens owe a duty to' take responsibility
       for their  actions.
        19]  The Court  reiterates  the  Govern-
       ment is not free from  sin.  Yet. as Section
       113  of CERCLA indicates, it is only when
       inequities  rise to a. level of gross miscon-
       duct  that  a Court should  consider taking
       away the Government's right to reimburse-
       ment.  Defendants chose to pay the piper
       after the dance and. the dance now conclud-
       ed, they seek to extricate  every sour, note
       along the  way  from the fee.  This "Court
      'finds that Defendants have not  shown arbi-
       trary or capricious decisions or pointed to
       specific costs  that are not  in keeping with
       the NCP.

       ABSENCE OF ADEQUATE ACCOUNT-
             - ING DOCUMENTATION
        Sequa next argues absence of proper ac-
      "*onnting documentation should bar any re-
 covery by the Government for its response
 costs.   In discussing this point, the Court
 turns to the NCP. 40 C.F.R. § 300. et seq.,
 which  states:
  la) During all phases of response, docu-
  mentation shall be collected and main-
  tained to support all actions taken under
  this  Plan, and to form  the basis of cost
  recovery.    In   general,  documentation
  shall  be sufficient to provide the source
  and  circumstances of the condition, the
  identity of the  responsible parties, accu-
  rate accounting of Federal or private par-
  ty costs incurred and impacts and poten-
  tial impacts  to the public health and wel-
  fare and the environment.
 40  C.F.R. § 300.69.  Sequa points to the
 fact that time sheets maintained  by the
 contractors. EPA personnel and TWC per-
 sonnel lack a  description of the  tasks per-
 formed and the tasks described in  the con-
 tractual  scope of the work between the
 T\VC and International Technologies Cor-
 poration ("IT  Corporation") do not corre-
 spond to the description in IT Corporation's
 invoices.  The Court notes the extensive
 accounting documentation attached to the
 affidavit of Randy Cunningham, which affi-
 davit supplements  the  Government's Mo-
 tion for Sum man- Judgment.  The account-
 ing  summaries used by  the  Government
 reflect the man hours  expended and the
 rate per hour and were submitted in lieu of
 extensive documentation as requested  by
 Sequa.   The   Court  notes  the  underlying
 record?  have  been made  available  to  the
 Defendants by the Government  and thus,
 forcing  the Government to go to the addi-
 tional expense of compiling more detailed
 summaries would  only  increase  costs un-
 necessarily.
  [10]   Further, failure to provide  descrip-
 tive documentation  does  not  make the
 Government's  accounting  inaccurate even
 if 'it did. disallowance  of costs for  that
 reason  is too harsh a sanction for the omis-
sion, if any. involved. Sequa is at liberty to
 inspect  the Government's records  at any
time for  flaws in  the figuring but  the un-
derlying  remedy has been found  by this
Court to bt  consistent with the  NCP and
"reasonableness"  is not a factor.  As for

-------
    r82
734 FEDERAL SUPPLEMENT

   specific instances  of  incongruity between
   the scope of work 10 be performed by  IT
   Corporation for TWC and the description of
   work  in the invoices  submitted by IT Cor-
   poration, this Court is of the opinion Sequa
   and the Government  shall submit a joint
   work  sheet  of  those  expense  items upon
   which they can agree and those .items  in
   dispute  with  reasoning  for each  of their
   respective positions within thirty (30) days
   of the date below. The Court shall with-
   hold its ruling on the  issue until that time.

             INDIRECT COSTS
     [11]  Sequa  then argues indirect costs
   are not recoverable under CERCLA.  Indi-
   rect costs are those costs generally neces-
   sary to support the work  performed by the
   EPA and the DOJ on  Superfund sites,  but
   which  are not directly allocated to specific
  cases.  The Court finds  disingenuous  Se-
  qua's position CERCLA's silence on indi-
  rect costs is dispositive.  In order for  the
  Government to promptly remedy hazardous
  situations discovered across the  country', it
  must necessarily maintain offices and sup-
  port staff on a continuous basis.  To create
  staffing and  offices for  each  Superfund
  site would unnecessarily increase costs for
  each  site.   Further, the Government- con-
  tracted  with the accounting firm of Ernst
  & Whinney  to provide an accounting meth-
  od  for  computing those indirect costs re-
  flecting administrative  costs proportional
  to sen-ices  rendered to a specific  Super-
  fund  site.   That  method  is  described  in
 detail in iht- affidavit  of  William  Cooke
 attached to  the Government's Motion for
 Summary Judgment.
   Several courts have upheld the Govern-
 ment's claim for indirect costs, citing the
 broad remedial purposes of CERCLA as
 well  as  the  language of  Section 9(>04(bl
 allowing recovery of "all of the costs  in-
 curred in a  remedial or removal action."
 United  Stolen i:  R.W.  Meyer.  Inc.. 889
 F.2d  1497, 1503 (6th  Cir.1989).  See also:
 United States i:  South Carolina Recy-
cling £• Disposal.  Inc. <"SCRDI"), 653
F.Supp. 984 (D.S.C.). affd in part, vacated
in part  and remanded. I'nited States t.
Monsanto Co.. 858 F.2d  160 (4th Cir.l9S8|.
rrrt. denied.  — U.S.	.  109 S.Ct. 3156..
                104 L.Ed.2d 1019 (19891: United States r.
                .Northeastern  Pharmaceutical &• Chemi-
                cal Co.  ("NEPACCO"), 579 F.Supp. 823
                (W.D.Mo.1984), affd in  part,   rer'd in
                part,  and  remanded.  810  F.2d  726 
-------
                    U.S.  v. BELL PETROLEUM SERVICES, INC.
                            Cite u 7J4 F-Supp. 771 (W.D.Tex. 1MO)
                                    783
 um I site.  In addition, or in the alternative.
 one agency's indirect costs has no bearing
 on  another agency's, as  the tasks per-
 formed by each are as varied as the agen-
 cies themselves.  The imposition of  an  in-
 variable percentage  structure would  un-
 duly limit the responsive actions of  the
 EPA and  the  state  agencies with  which
 they work and would not serve the  broad
 remedial purposes of CERCLA.  For thi?
 reason, the Court is of the opinion  Sequa'?
 argument- indirect costs should be tied  to
 one agency's percentage  is  without  merit
 and improper  under CERCLA.

   APPORTIONMENT OF LEGAL  FEES
   [13]   Sequa also challenge? the Govern-
 ment's  claim for litigation expenses.  This
 Court is of the opinion legal expenses, like
 indirect costs, are recoverable as  pan  of
. the total cost  the Government was forced
 to undertake due to the responsible parties'
 inaction regarding cleanup.   Other courts
 found   likewise.   Sec:   SCKDf.  supra:
 XEPACCO, supra.  Sequa then argues the
 Government's litigation expenses should  be
 apportioned among the responsible parties
 to reflect Bell's initial bankruptcy action.
 which was  removed to this Court, and the
 suit filed against the potentially  respon-
 sible parties in Ian- 19S?  which  was later
 consolidated with the  bankruptcy removal.
 This  Court agrees the litigation expenses
 should  be so apportioned,   in acco.-dar:;-v
 therewith, the  Government shall file an af-
 fidavit  reflecting those costs incurred prior
 to the filing of case no. MO-88-CA-300 and
 those costs incurred thereafter.within thir-
 ty (30)  days of the date  below.  Costs in-
 curred  following the filing of MO-St-CA-
 300 shall  be  divided  equally among Bel!.
 Sequa  and John Leigh.

    QUESTION OF  FACT RE: COSTS
   Sequa further  points  to  the  fact doc-
 umented costs and claimed  costs of the
 £:'A and DOJ  do  not correspond.   The
 Court  is • of the  opinion  the  Government
 shall submit an affidavit detailing  exactly
 those costs claimed including a breakdown
 of thr type of cost (indirect, legal. RL>. RA.
 state-funded, etc.i within thim (30i dav~  of
the date below for edification of the Court
and  opposing  counsel.

  [14]  As  for the  costs associated with
the  remaining portion  of the  feasibility
study, this Court finds the entire amount of
feasibility study costs are recoverable un-
der  CERCLA  as  part of  the remedial ac-
tion.  42 U.S.C.  §  9607 
  removal actions in the event of a release
  or threatened release of a hazardous sub-
  stance into the environment, to  prevent
  or  minimize  the   release  of hazardous
  substances so that they do not migrate to
  cause substantial  danger  to  present or
  future public health  or welfare or  the
  environment.
42 U.S.C. § 9601(241.   Further., the NCP
makes the following reference to the Reme-
dial     Investigation/Feasibility     Study
(RI/FS):
  An RI/FS shall, as appropriate, be under-
  taken by the lead agency conducting the
  remedial action  to determine  the nature
  and extent of the threat  presented by the
  release and  to  evaluate proposed  reme-
  dies.  This includes samiiling.  monitor-
  :nr. and exposure  assessment, as neces-
  sary, and includes the  gathering of suffi-
.  cient information to determine the neces-
  sity for and  proposed  extent of remedial
  action.  Part of the Rl/FS may  involve
  assessing  whether the threat can be pre-
  vented or minimized  by controlling the
  source of the contamination at  or near
  the area where the hazardous substances
  were  originally located (source  control
  measures) and/or whether additional ac-
  tions .will  be necessary because the haz-
  ardous substances  have migrated from
  the area of or near their, original  location
  (management of  migration).   Planning
  for remedial action  at these  releases
  shall,  as  appropriate, also  assess the
  need for removals.  During the remedial
  investigation, the original scoping of the

-------
 784
734 FEDERAL SUPPLEMENT
   project may be modified based on factors
   in § 300.68ie|.
 40 C.-F.R. § 300.68(d). It is clear the RI/FS
 is consistent with the NCP and the  NCP
 contemplates a study of the ultimate reme-
 dy to be implemented at the site.
   As for the  differential between  the  IT
 Corporation estimates and  the  IT actual
 costs,  the  Court previously opined costs
 incurred need  not be "reasonable and nec-
 essary" so lonp as they are consistent with
 the  NCP.   SEPACCO.  supra,  at  851.
 Keeping in mind the Court's finding the
 alternate water supply system is consistent
 with the NCP. this  Court is once again of
 the  opinion Sequa  and  the Government
 shall submit a joint work sheet of those
 items upon which they can agree and those
 items in  dispute regarding the IT Corpora-
 tion's cost overruns and the reasons there-
 for within thirty  (30) days of the date be-
 low. The Court shall withhold its ruling on
 the issue until that time.
  [ 15]   Sequa also claims the indirect costs
 of the TWC are  no: properly recoverable.
 In light of the  language of § 9607. as previ-
 ously cited, and of  this  Court's  discussion
 of the EPA's indirect costs, the Court  is of
 the opinion those indirect costs proportion-
 ately i attributable to time  spent  on the
 Chromium 1 site art properly reimbursable.

     PRE-JVPGMENT  INTEREST
  (56]   fc- .-•>•  h- ;.«ir.:  i- !:,., <"k-v— -
 ment  faiiea to follow statutory prerequi-
 sites in order  to  recover pre-judgment in-
 terest on the  response  costs.    Sequa ar-
 gues because the Government did not make
a demand for  payment to the Defendants,
 the Government is barred from  recovering
pre-judgment interest.  The cases cited by
Sequa.  General  Electric. Co.   r.  Litton
Business Systems.  Inc..  715 F.Supp.  949.
963 (W.D.Mo.lSSW):  I'nittd States r. Mot-
 tolo 695 F.Supp. CIS.  631 (D.N.H.1988).
show  pre-judgment  interest  is in  fact
awardable in CERCLA  actions.   Further.
as Sequa points out. both cases involve an
action wherein a demand for payment  was
 in fact made upon the Defendants i by the
Plaintiff.  Neither Court  dealt with the di-
rect issue of whether' pit-judgment interest
                was awardable in cases where the Plaintiff
                failed to make a demand for pre-judgment
                interest.
                  Having reviewed the statutory  language
                in light of the  broad remedial purpose un-
                derlying CERCLA  and SARA, this Court is
                not inclined to accept  Sequa's reading of
                § 9607 as requiring a specific demand for
                payment  before pre-judgment interesj is
                allowed.   Instead, this Court reads the stat-
                utory language as a guideline for the Court
                to  follow  in determining  the date from
                which pre-judgment interest  begin?  to ac-
                crue should a conflict arise, as opposed to a
                strict requirement which, if  not  followed.
                would result in a bar to the Government's
                claim of pre-judgment interest.  Accorcfing-
                iy.  this  Court  finds prejudgment interest
                shall be recoverable by the Government as
                of the date the cost accrued.
                  The operative SARA language  is  as  fol-
                lows:
                  The amounts recoverable  in an  action
                  under  this section shall include inures;
                  on the  amounts  recoverable under sut>-
                  paragraphs (A) through (Di.  Such inter-
                  est shall accrue from the later  of (il  the
                  date payment of a  specified amount i?
                  demanded in  writing, or  iii) the dale of
                  the expenditure concerned.
                42 U.S.C. § %07)ai.
                  In light  thereof.  :he  Court direct?  the
                1'>v"rr.^i*"i' ''i >'"' ' ''•  'a  lire-judgment in-
                terest ngurr ii- the umrt within thirty (Jtl'i
                days of  the date below justifying  the datf
                upon which the Government claims  the in-
                terest begins  to accrue.
                  Having made the above findings,
                  IT IS  ORDERED the Government shall
                recover  those  costs outlined in the fore-
                going, opinion.
                  IT IS'FURTHER ORDERED the parties
                shall submit the following affidavits  within
                thirty (30) days of  the date below in keep-
                ing  with  the directives  listed above:
                  (Da joint worksheet detailing specific
                incidence?  of   incongruity  between  the
                scope of  the work  to be performed  by IT
                Corporation for TWC and the description of
                work in  the invoices submitted by IT Cor-

-------
                      ENVY LTD. v.  CITY OF LOUISVILLE
                            CltruTM F-Supp. 785 (W.D.Kt. 1940)
 poration upon  which the parties  can and   2.  Licenses ®=>7(I)
                                     785
cannot agree:
  (2) an affidavit by the Government show-
ing  those  legal costs incurred prior and
subsequent to  the  filing of case no. MO-
8&-CA-300:
  (3) a joint work sheet showing the differ-
ences between the IT Corporation cos: esti-
mates and actual costs including the  tasks
performed and  the reasons for the cosi
overruns:  and
  <4' the Government's pre-judgment  inter-
est  figure anc  justification  for the date
upon which interest begins to  run.
      ENVY  LIMITED, a  Kentucky
         Corporation. Plaintiff.
                   v.
     The CITY OF LOUISVILLE,  a
        Municipality, Defendant.
      Civ.  A. No. C-87-006ft-L( M).

      United States District Court.
             \V.D. Kentucky,
              at  Louisville.

             Jan. 1J-.  1990


    Adult   entertainment   establishment
challenged  ordinance regulating  location
and operation of such establishments.  On
plaintiff's motion for summary judgment,
the District Court.  Meredith. J., held that
ordinance was rationally related to reduc-
tion  in  secondary effects  resulting from
adult entertainment businesses and. thus.
was  constitutional.  •
    Motion denied.
1.  Constitutional Law 
    State  may use content of sexually ex-
plin: matem: a> basis- for- differentiating it
from other maieriai without violating Con-
stitution.  L.S.C.A.  Const.Amenc.  1.
     Ordinance prohibiting adult entertain-
 ment  establishments from displaying  any
 form  of entertainment in  any medium be-
 tween hours of 12 midnight and 6 a.m.  and
 requiring disclosure of information regard-
 ing ownership of such  establishments was
 rationally related to reduction in secondary
 effects resulting from  adult entertainment
 businesses  and. thus,  was  constitutional.
 U.S.C.A. Const.Amends. 1. 14.
   Stephen  P.  Durham  and  Benjamin  C.
 Johnson. Louisville. Ky.. for plaintiff.
   F.  David Banks. Louisville,  Ky.. for de-
 fendant.
              •]

        MEMORANDUM  OPINION
              AND ORDER

   MEREDITH.  District  Judge.
   F'ending before the Court is the motion
 of the plaintiff. Envy Limited, for summary-
 judgment  under Rule  56 of  the  Federal
 finite of Civil Procedure.  Federal jurisdic-
 tion is properly invoked in that plaintiffs
 claim  for relief is  under 42  U.S.C. § 1983
 thereby invoking the jurisdiction  of this
 Court under l£ U.S.C. § 1343la)<3).
   ThL- action seeks  declaratory relief re-
 garding the Constitutionality of City Ordi-
 :::»:ice N"  320. Series li^'T.  The ordinance
 »-...• •.•i.a-.-ied as  law on Noven:; • - :":  '!••?•
 LIV trit defendant,  the City  of Louisville.
 Tije ordir.anffr regulates  the location and
 operation of adult entertainment establish-
 ments including "cabarets"  which  feature
 nude dancing. The plaintiff operates a cab-
 are:.
   The  ordinance prohibits  any  establish-
•ment licensed to engage  in adult entertain-
 ment  from  displaying any form of enter-
 tainment in any  medium between the hours
 of 12:00 midnight and 6:00 A.M. Ordinance
 Ss'ction in.OOSiEi.  The ordinance provides
 as- a  prerequisite to  the  issuance of a  li-
 cense u> engage  in adult entertainment that
 any  applicant for such a license to make
 disclosures as to the  name, address, social
 security number,  age,  photograph,  and

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                   UNITED  STATES DISTRICT COURT
                   WESTERN DISTRICT OF MICHIGAN
UNITED STATES OF AMERICA,

          Plaintiff,

v.

THOMAS SOLVENT COMPANY; et al.

          Defendants.
                                        Civil No. K86-167 CAS
                                        Hon. Richard A. Enslen
FRANK J. KELLEY, Attorney
General of the State of
Michigan and THE STATE OF
MICHIGAN,

          Plaintiffs,

v.

THOMAS SOLVENT COMPANY; et al.

          Defendants.
                                        Civil NO. K86-164 CAS
          MEMORANDUM OF THE UNITED STATES IN SUPPORT OF
            ITS MOTION IN LIMINE TO EXCLUDE EVIDENCE

                              ROGER J. MARZULLA
                              Assistant Attorney General
                              Land, arid Natural Resources Division

                              JOEL M. GROSS
                              NANCY BOYLAND COLLINS
                              MICHAEL J. McNULTY
                              THOMAS A. MARIAXI, JR.
                              SAMUEL BOXERMAN
                              Environmental Enforcement Section
                              Land and Natural Resources Division
                              U.S. Department of Justice
                              Washington, D.C.  20530
                              (202) 633-1307

OF COUNSEL:

ROGER GRIMES
Regional Counsel
Environmental Protection Agency
Region V
230 South Dearborn Street
Chicago, Illinois  60604

-------

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INTRODUCTION	2

     A.  PROCEDURAL POSTURE OF THIS CASE	2

     -B.  SUMMARY OF ARGUMENT	4

     C.  STATUTORY BACKGROUND	7

ARGUMENT   	9

     I.  Introduction	9

     II.  The United States is Entitled to Recover
          Its Actual Costs Incurred in Carrying Out the
          Response Actions Unless the Defendant Proves that
          the Response Actions Were Inconsistent with the
          NCP	  13

          A*    The Plain Language of the statute Provides
               that the United States Shall Recover All
               Costs Incurred in Carrying out Its Response
               Actions	•	13

          B.    If Resort to Materials Beyond the Text of
               CERCLA Section 107(a)(4)(A) Is Needed, Then
               The Structure, and Legislative History of
               CERCLA Also Demonstrate that the United
               States is Entitled to Recover the Actual
               Costs Incurred in Carrying Out
               Its Response Actions	16

               1.   CERCLA Delegates to EPA Broad Discretion
                    to Select and Take Response Actions; the
                    Only Limitation on Recovery of Costs is
                    thi- the Response Action hot Jc-e
                    Inconsistent with the NCP.	17

               2.   The NCP Governs the Selection of
                    Response Actions; It Does Not Govern the
                    Incurrence of Costs in Implementing
                    Response Actions ....... 	  20
                                             \
               3.   Costs are Inconsistent with the NCP under
                    Section 107(a)(4)(A) Only If They were Spent
                    for a Response Action Which Itself was
                    Inconsistent with the National Contingency
                    Plan		27

               4.   Defendants' Challenge to EPA's Implementation
                    Decisions Is Foreclosed By The Different


                              - i -

-------
5.
                    Statutory Standards That Apply to Recovery of
                    Costs Under Other Provisions of CERCLA   . 29
                    Judicial Review of EPA Decision-making
                    is Limited to the Administrative Record
                    for Selection of the Response Action
          III. Construing CERCLA to Preclude Review of
               Implementation Decisions Comports With the
               Response Scheme Established By the Statute
               and With Federal Contract and Procurement
               Law	33

          IV.  Judicial Review of the Response Action Taken
               is Governed by the Provisions of CERCLA and
               not by the Administrative Procedure Act .... 41

          V.   If this Court Determines that Some Review of  •
               Implementation Decisions is Permissible, EPA's
               Decisions Regarding Response Activities are
               Entitled to Great Deference and Should Not Be
               Overturned Unless Arbitrary and Capricious  .  .42

CONCLUSION	49
                              - ii -

-------
                   ,•    ft.        '
                  TABLE OF CASES AND AUTHORITIES
American Paper Institute. Inc . v. American
Electric Power Service Corp. . 461 U.S. 402
(1983)  ..................... ..... 44

Angelina Holly Corp. v. Clark r 587 F. Supp. 1152
(D.C. Cir. 1984)  ....  ................. 46

Baltimore Gas & Electric  Co. v. NRDC,
462 U.S. 87  (1983)  .................... 46

Block v. CoT^pupitv Nut^rJ^tion Institute.
467 U.S. 340 (1984)  ..............  .....  33
                                                •
Camp v. Pitts. 411 U.S. 138 (1973)
(per curiaa) .......  .......  ......  ... 44, 49

Chrysler Corp. v. Brown.  441 U.S. 281  (1979) .......  45

Citizens to Preserve Overton Park v. Voice .
401 U.S. 402 (1971)  .............  ......  43, 44
                                                           45, 49

Compensation Dep't of Dist. Five v. Marshall.
667 F.2d 336 (3d  Cir. 1981) ........ .......  41

Dedham Water Co.  v. Cumberland Farms Dairy. Inc..
805 F.2d 1074 (1st Cir. 1986)  ....... .  .....  .  8,  13

Donaldson. Hoffman & Goldstein v. Gaudio. 260  F.2d  333
(10th Cir. 1958)  .........  .........  ... 31
                                   *

Dov Chemical v. Csstle.
480 F. Supp. 315  (E.D. Mich. 1978),
aff'd. 659 F.2d 724  (6th  Cir.  1981)  .... .......  27

Dunloo v. BachovsV.i. 421  U.S.  560  (1S75)  ......... 4 =

Eaole-Picher Industries.  Inc. v.
United States Environmental Protection Aaencv.
759 F.2d 905 (D.C. Ci-  1985)  ...... . ........  27
                                                             tt
Environmental Defense^Fund. Inc. v. Costle.
657 F.2d 275 (D.C. Cir. 1981)  ......  ......  .  . 49

Ethyl Corp. v. EPA. 541 F.2d 1 (D.C. Cir.)
fen bane) . cert,  denied.  426 U.S. 941  (1976)  ....... 42, 45
                                                           46
                             -  iii -

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Falzarano v. Unitedgrates.
607 F.2d 506 (1st Cir. 1979)	33


EloridaPower & LiahtCo. v.'Lorion.
470 U.S. 729 (1985)	44

Hahn v. Gottlieb.
430 F.2d 1243 (1st Cir. 1970)	33

Heckler v. Chanev.
470 U.S. 821 (1985)	-.	33

J.V. Peters S Co. v. Ruckelshaus.
767 F.2d 263 (6th Cir. 1985)	16

Kellev v. Thomas Solvent Co..
146 Mich. .App% 55 (1985)	  12

Lead Industries Association v.
Environmental Protection Aoencv. 647 F.2d  1130
(D.C. Cir.)» cem. denied. 449 U.S. 1042  (1980)  .....  42

Lone Pine Steering Comm. v. EPA. 777 F.2d  882
(3d Cir. 1985), cert, denied. 476 U.S.  1115  (1986)	8

Louisville and Nashville Railroad Co. v. Donovan.
713 F.2d 1243 (6th Cir. 1983), cert, denied.
466 U.S. 936 (1984)	41
                                                                 •~

455 F.2d 1289 (D.C. Cir. 1971)	47

New York v. General Electric Co^f
5?2 F. S'-pp. 231  JN.S.N.v. 1964; .  . . <	  ..... 15    .

New York v. Shore Realty Corp..
759 F.2d 1032 (2d Cir. 1985)	13

NL Industries. Inc. v. Kaplan.
792 F.2d 896 (9th Cir. 1986)	 20

Panama Canal Co. v. Grace Li •*.  Inc..
356 U.S. 309 (1958) . . . .   	,  .33

Rochester v. Bond. 603 F.2d 927
(D.C. Cir. 1979)	41

Rural Electrification Administration v.
Northern States Power Co.. 373 F.2d 686
(8th Cir. 1967), cert, denied.
387 U.S. 945 (1967) .	33

                              -  IV  -

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SCA Services of Indiana v. Thomas.
634 F. Supp. 1355  (N.D. Ind. 1986)  ............ 27

Sehalk v. Thomas. No. IP 88-344-C
(5.0. Ind. Dec. 6, 1988) .........  ........ 41

Sierra Club v. Costle. 657 F.2d 298
(D.C. Cir. 1981) ..................... 42

Small Refiner Lead Phase-Down Task  Force v.
U.S.E.P.A. . 705 F.2d 506 (D.C. Cir. 1983)  ........  42

Southern Railway Co . v. Seaboard Allied Milling Corp. .
442 U.S. 444 (1979) ...................  33

Sunshine State Bank v. Federal Deposits Ins. Corn. .
  783 F.2d 1580 (llth Cir. 1986) ............. 45

Textron. Inc.. Bell Helicopter Textron
Division v. Adams. 493 F. Supp. 824 (D.D.C. 1980)  ....  40
Town or Orange town v. Gorsuch. 718 F.2d 29
(2d Cir. 1983), cert, denied 465 U.S. 1099  (1984)  ....   49

Union Petroleum Corp. v. United States.
651 F.2d 734  (Ct. Cl. 1981) ................ 14

United States v. Beatty Incorporated. 401 F. Supp.  1040
(W.D. Ky. 1975) .....................   14

United States v. Carlo Bianchi & Co.
373 U.S. 709  (1963)  .............  ......   44

I'T.lts* Ftst?- v. Clark. 454. U.S. 555  (IScI)  .......   .13
United States v. Conservation Chemj.ca| Co..
619 F. Supp. 162 (W.D. Mo. 1985)  .............  16

United States v. Ethvl Ccrs..
761 F.2d 1153 (5th Cir.  1985), cert, denied.
474 U.S. 1070 (1986)  ...................  27

United States v. Menasche. 348 U.S.  »?8  (1955)  ......  31

United States v. Northeastern Pharmaceutical  &
Chemical CO. . "NEPACCO*  810 F.2d  726
(8th Cir. 1986), cert, denied. 108 S.Ct.  146
(1987) .................  ........  passim

United States v. Northernaire Plating Co..
685 F. SUpp. 1410 (W.D.  Mich. 1988),

                              - v -

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appeal docketed. No. 88-2074 (6th Cir. Nov. 1, 1988).

United States v. Shell Oil Co..
605 F. Supp. 1064  (D.Colo. 1985) 	
United States v. Ward.
618 F. Supp. 884 (E.D.N.C. 1985)
16, 23
27
28, 43
United States v. Western Processing.
No. 83-252M (W.D. Hash. Feb. 19, 1986)	,  .  28, 43

Walls v. Waste Resource Corp.,
761 F.2d 311 (6th Cir. 1985)	  8

Wheelabrator Corp. v. Chafee. 455 F.2d 1306
(D.C. Cir. 1971) . .	47

Wickland Oil Terminals v. ASARCO. Inc..
792 F.2d 887 (9th Cir. 1986)	13
                              - vi -

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 STATUTE?

 Administrative  Procedures Act  (APA),
      5  U.S.C. §551  et  sea.	41,44

 Brooks  Architect-Engineers  Act  ('Brooks Bill*),
      40 U.S.C.  f§541-54.4	  .  35

 Clean Water Act,  42 U.S.C.  §7607(d)	42

 Competition in  Contracting  Act  of  1984  (Small  Business and
 Federal Procurement Competition Enhancement Act of 1984),
 41 U.S.C.  §§251 et sea.	35,37

 Comprehensive Environmental Response,
 Compensation, and Liability Act ('CERCLA*), 42 U.S.C. §9601
 et seq^, as amended by the  Superfund Amendment and
 Reauthorization Act
      Section 104, 42 U.S.C. §9604	 7,18
      Section 104(a), 42 U.S.C.  §9604(a) 	 ;  ... 17
      Section 104 (b) , 42 U.S.C.  §9604 (b)	 .  1  . . 17
      Section 104(c)(4), 42  U.S.C.  §9604(c)  .  . 	  .  is
      Section 104 (f) and  '(g) , 42 U.S.C.  §9604(f) and  (g)  .   34,38
      Section 105, 42 U.S.C. §9605  	  ...  .19,21
      Section 105(a), 42 U.S.C.  §9605(a) ......  	 20
      Section 105(a),(7), 42 U.S.C.  §9605(a),  (7)  	  22,23
      Section 106, 42 U.S.C. §9606  ......  	   10
      Section 106(a), 42 U.S.C.  §9606(a) 	   30
      Section 106(b)(2)(D),  42 U.S.C. §9606(b)(2)(D)  . ... .30
      Section 107, 42 U.S.C. §9607	10,14
      Section 107(a), 42 U.S.C.  §9607(a) 	   27
      Section 107(a)(4)(A),  42 U.S.C. §9607(a)(4)(A).  .  .   passim
      Section 107(a)(4)(B),  42 U.S.C. §9607(a)(4)(B)  . .  .  .29,30
      Section 110(32),42 U.S.C.  §9610(32)  	  15
      Section 111, 42 U.S.C. §9611  	   7
      Section lll(k), 42 U.S.C.  §9611(k) 	.39,40
      Section 113(a), 42 U.S.C.  §9613(a) 	 27.
      Section 113(h), 42 U.S.C.  §9613(h) .  . .	41
      Section 113(j)(l), 42  U.S.C.  §9613 (j)(l) 	  9
      Section 113(j)(2), 42  U.S.C.  §9613 (j)(2)	9,31
      Section 113(j)(3), 42  U.S.C.  §9613 (j) (3) .  .....  28,29
      Section 119, 42 U.S.C. §9619	34
      Section 119(f), 42 U.S.C.  §6919(f) .  . .  .•	36
      Section 121, 42 U.S.C. §9621  .  .	32
      Section 122, 42 U.S.C. §9622	 10
      Section 122(h)(2), 42  U.S.C.  §6922(h)(2)  	 47
      Section 310, 42 U.S.C. §9659	.32

Davis Bacon Act,  40 U.S.C.  §276a .	  .36

Oeepwater Port. Act Amendments of 1984,
      33 U.S.C.   §§1501, 1517	 . 14

                             -  vii  -

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Federal Mine Health and Safety Act of 1977, 30 U.S.C. §§801, 931
  30 U.S.C. § 931 si sea.	14

Federal Property and Administrative Services Act of 1949, 40
U.S.C. §§471 et sea.	  35

Federal Water Pollution Control Act, (Clean Water Act),
     33 U.S.C. §1251 et seq.
     Section 311, 33 U.S.C. §1321	14,15

Outer Continental Shelf Lands Act Amendments of 1978, 43 U.S.C.
§§1801, 1814	'.	  14

Truth in Negotiating Act, 10 U.S.C. §2306(f)	36



It£clfrTfATIVE HATTiRTftTn?         ,              •          "

S. Rep. No. 848, 96th Cong., 2d Sess. (1980)	passim
H. R. Rep. No. 1016, 96th Cong., 2d Sess., Part I  (1980)  ...  8
S.-Rep. No. 11, 99th Cong., 1st Sess. (1985)	32
H. R. Rep. NO. 962, 99th Cong., 2d Sess.  (1986)	19,24
126 Cong. Rec. S33834 (daily ed. Dec. 12,  1980)	20
126 Cong. Rec. 30,933 (1980)	15
132 Cong. Rec. S14900 (daily ed. Oct. 3,  1986)	34
132 Cong. Rec. S14903 (daily ed. Oct. 3,  1986)	11
132 Cong. Rec. S14909 (daily ed. Oct. 3,  1986)	10
132 Cong. Rec. S14922 (daily ed. Oct. 3,  1986)	11
132 Cong. Rec. S14935 (daily ed. Oct 3,  1986)  ........
132 Cong. Rec. H9564 (daily ed. Oct. 8,  1986)  	
132 Cong. Rec. H9624 (daily ed. Oct. 8,  1986)	11



REGULATIONS               .

1980 National Contingency Plan, 40 C.F.R.  Part 1510
     40 C.F.R. §1510.1  (1980) 	   21
     40 C.F.R. §1510.45  (193C)  .	22
     40 C.F.R. §1510.51  (1980)	'.	21
     40 C.F.R. §1510.52  (1980)  	  	  22
     40 C.F.R. §1510.53  (1980)  	  22
     40 C.F.R. §1510.54  (1980)  	  22

National Contingency Plan, 40 C.F.R. Part 300  	  21,25
     40 C.F.R. §300.64  (1982),  (1985) .	21,22
     40 C.F.R. §300.65  (1982J,  (1985) 	'.  .   22
     40 C.F.R. §300.66  (1982)	   22
     40 C.F.R. §300.66  (1985) 	   22
     40 C.F.R. §300.67  (1982)	   22
                             -•Vlll -

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     40 C.F.R. §300.67  (1985)	22
     40 C.F.R. §300.68  (1982),  (1985)	. 22,23,25
     40 C.F.R. §300.68(j)	  19
     40 C.F.R. §300.69  (1982),  (1985) 	 22,23

Federal Acquisition Regulation  (FAR), 48 C.F.R. §1, et sea.
     48 C.F.R. §15.804-2(b)  	  37
     48 C.F.R. §15.904(3)		38
     48 C.F.R. §15.904(d)	37
     48 C.F.R. §16.301.1-3.	37
     48 C.F.R. §16.305	 37
     48 C.F.R. §30.101(b)  	  38
     48 C.F.R. §31.201-2  	 38
     48 C.F.R. §31.201-4  	 38
     48 C;F.R. §31.205	38
     48 C.F.R. §31.203(d)  	  38

Environmental Protection  Agency Acquisition Regulations  (EFAAR),
     48 C.F.R. §1500, et  sea.  (1987)	.37
     48 C.F.R. §1516.404-272  	  ...... 37
     48 C.F.R. §1552.212-70  	  37
MISCELLANEOUS

Exec. Order 12316, §2e, 42 Fed. Reg. 42237  (1981),  reprinted  in
42 U.S.C.A. §9615 app. at 544-48, as amended by  Exec.  Order No.
12418, 48 Fed. Reg. 20891 (1983).  After passage of SARA,
Executive Order No. 12316 was revoked by Exec. Order 12580, 52
Fed. Reg. 2923 (1987), reprinted in 42 U.S.C.A.  §9615  app. art 153
(West Supp. 1988)	9
5 Mezines, Stein, & Gruff, Administrative Law.
     §51.04 (1987) . 	
1 K. Davis, Administrative Lav Treatise.  §1:4  (2d ed.  1978)
                                               44,49
                                                  44
44 Fed. Fea. 31181-311S2  (1982)	*  .  .   25
44 Fed. Reg<
47 Fed. Reg.
47 Fed. Reg.
50 Fed. Reg.
53 Fed. Reg.
21184 (1982)	23,25
31180 (1982)	20,21
55488 (1982) . . .	21
47951 (1985)	21
29428 (1988)	47,48

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                   UNITED STATES DISTRICT COURT
                   WESTERN DISTRICT OF MICHIGAN
UNITED STATES OF.AMERICA,

          Plaintiff,

v.

THOMAS SOLVENT COMPANY;  et  al.

          Defendants.
)     Civil No. K86-167 CAS
     Hon.  Richard A. Enslen
FRANK J. KELLEY, Attorney
General of the State of
Michigan and THE STATE OF
MICHIGAN,
          Plaintiffs,
V.
     Civil No. K86-164 CAS
THOMAS SOLVENT COMPANY;  et  al.      )

          Defendants.               )



          MEMORANDUM OF  THE UNITED STATES' IN SUPPORT OF
            ITS MOTION IN LIMINE  TO EXCLUDE EVIDENCE

          The United States by  this motion seeks to have this

Court rule on the/'S^cope^of  judlr:;! rwie.v of. j^3_tjie_b•.:rd_er-_g_c_f _

procf r&_i.&tLiva tof  decisions made by the. United States

Environmental Protection Agency (*EPA*)  ^n imnlemen'tina clean-up
actions at the Verona  Well  Field site _and of the qiean-up costs

.incurred by the Unitprf g^at«»g aja a
Further, the United  States  seeks a ruling excluding evidence of

certain issues at  the  time  of trial.

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                           INTRODUCTION
                A.   PROCEDURAL  POSTURE OF THIS CASE
           In this  action,  the  United States seeks to recover
 costs  incurred by  EPA in carrying  out clean-up actions at the
 Verona Well  Field  site in  Battle Creek, Michigan.  A proposed
 partial Consent Decree has been lodged with the Court which.
 would,  if  approved,  resolve  the claims of the United States and
 the  State  of Michigan against  Defendant Grand Trunk Western
 Railroad Company for most  costs already incurred at the Verona
 Well Field site.   All claims,  however, against the other
 defendants,  Richard  Thomas,  Thomas Solvent Company and related
 Thcnas  companies,  (collectively the 'Thomas Defendants"), remain.
 The  United states  and Michigan have filed, and briefing is
 completed  on,  two  summary  judgment motions with respect to
 liability.   One  motion would establish the liability of the
 Thomas  Defendants  under the  Comprehensive Environmental ResponseJfe
 Compensation and Liability Act.  The second motion, which has
 been granted by  this Court,  established the liability of the so-
 called  Thomas Solvent spin-offs on fraudulent conveyance ffTV*
.successor  corporation claims.  See this Court's opinion dated
 Dece-iber 2,  1988.  If the  former motion is also granted, the
 remaining  issue  will be the  amount of costs which the United
 States  and the State of Michigan are entitled to recover.  All
 discovery  is completed with  the exception of certain depositions
 of expert  witnesses  on issues  of costs.

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                       ..              .
           The United  States previously filed a motion for a

 ruling as to the  appropriate standard and scope of judicial

 review of EPA's selection  of clean-up actions for the Verona Well

 Field  site,  and defendants filed responsive briefs, as well as

 motions for  a declaration  of the standard of review.1  As set

 forth  in the United States' Memorandum in Support of its Motion

 for a  Ruling as to the  Appropriate Standard and Scope of Review

 of  Agency Action  (hereinafter  'U.S. Brief on Standard and Scope

 of  Review*),  explicit statutory language establishes that

 judicial review of EPA's ^electioiyof clean-up actions2 is

 limited to the administrative  Record of Decision and subject to

 an  arbitrary and  car^g|r»u« Bfranrfin-rt Of review.3  This motion in
     \ The .United States' filed a Memorandum in Support of its
Motion for a Ruling as to the Appropriate Standard and Scope of
Review of Agency Action.  ("U.S. Brief on Standard and Scope of
Review").  Grand Trunk filed a Motion for Declaration on Standard
of Review and supporting brief which incorporates its opposition
to the United States' Motion.  Defendants Richard Thomas and
Thomas Solvent Company joined in the Grand Trunk Motion by a
separate filing.  The United States filed a Reply Memorandum in
Support cf Motion for a Ruling as to the Appropriate Scope and
Standard of Review and in Opposition to Defendants' Motion for
Declaration of Standard of Review (hereinafter 'United States'
Reply Brief*).

     2 This case involves a number cf clean-up ri.e.. 'removal*
and 'remedial') actions at the Verona Well Field site.  EPA has
undertaken, and is undertaking, removal and remedial actions at
both the Well Field itself, and at the identified sources of
contamination, including the Thomas Solvent Raymond Road facility
and the Annex operated by Thomas Solvent.  Clean-up .actions are
called 'response actions* and as that term is used in this brief,
it includes all response actions at both the Well Field and the
identified sources.

     3 v  The United States' Reply Brief discussed very generally
the scope of review of implementation decisions made by EPA in
carrying out the Record of Decision ('ROD') and indicated its
                                                 (continued...)
                                3

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 limine focuses on the reviewability of EPA activities that

 follow the selection of tha ramarty	thA jmplgTOgntalH

 selected clean-upy^respojise* actions and the costs inenT-refj in

 doing so.              '

           The United States has recently filed a motion for

 partial summary judgment on certain actual incurred costs.

 Through that motion, as well as this one, the United States seeks

 to narrow substantially, in accordance with the provisions and

 policies of CERCLA, the issues remaining for trial.

                      B.  SUMMARY OF ARGUMENT

           The United States expects defendants in this case to

 argue at trial for de novo. micro-review of the myriad of

                                  :al ludoments made by EPA in
rimplementinqlresnanse actions.
it  and  around the Verona Well
 Field site.  The Thomas Defendants seek jludicial review of the

jsosts incurred for .the j-gsponso »<~t- ir.no purportedly to
 if the project was prudently effectively a** rff 1r1 mifly manr>grr!

 by EPA and its contractors ._, See Supplemental Designation of Cost

 Expert Opinions of Defendants Thomas Solvent Company and Richard

 Thomas, February 12, 198? (*Surp. Desic.*)? Deposition of Thosas

 Dakar {'Dekar'), pp. 237 to 288.  Per exacpie, tne Inooas
      ^(...continued)
 intention to file this motion and brief.  Reply Brief pp. 13-16.
 In addition, in their brief the defendants touched upon but did
 not directly address the standard of review to be applied to
 costs incurred by the United States in carrying out the remedial
 and removal actions in this case.  Opposition of Defendants'
 Thomas Solvent Company and Richard Thomas to United States'
 Motion for a Ruling as to the Appropriate Standard and Scope of
 Review.

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 Defendants question 'whether cost efficiencies were realized  from
 the project management and control,* including questioning the
 scheduling of work and its impact on cost effectiveness.   Supp.
 Desig.  1 2.  Defendants seek judicial review of the prudency  and
 efficiency of contractors' use of their employees.   Supp.  Desig.
 12.   In addition,  defendants have asked that the court review the
 prudency of terms  of cen^yaefca under WH^VI ^fae. ^^"pTnse— acfe-i-errs
 were carriedL^ut.  Jjl^l^J.^jJ^hfL^"*1?."^ rtf._r^''^t1-*'h^r"7 ""*"* r*TLti*"
jnarg.in  in those contracts and whether the fee structure selected
     a disincentive to efficiency. . Supp. Desig. 12.  The detailed
 judicial  review defendants seek would even extend to the
  *                          "
 appropriateness of the number of contractor staff who worked on
 the  response actions and the amount of time each employee worked
 on the  project to determine whether each was sufficiently
 dedicated or efficient. Dekar, pp. 330 to 335. 4  In short, the
 Thomas  Defendants would ask this Court to become an after-the-
 fact auditor,  efficiency consultant and contract manager,
 substituting its judgment for EPA's .in determining how the Agency
 went about fulfilling its task of protecting public health and
 the  environment in Battle Creek.
           But defendants' position is flatly inconsistent with
 the  exp-^ss .terms of CERCLA and, if adopted, would frustrate the
 principal objectives of the statute:  (1) to place the ultimate
 financial burden of hazardous waste cleanup on those parties
 responsible for the problem, and (2) to assure prompt
           See Section III,  p. 40 infra.
                                 5

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 replenishment of the Superfund so that monies can be rededicated
 to response work at the thousands of other hazardous waste  sites
 in the country that remain unaddressed.   See,  e_.g..  S. Rep.  No.
 848,  96th Cong.,  2d Sess.  98  (1980).   With these  objectives in
 mind,  Congress has  strictly limited  judicial  review  in cost
 cases.   As discussed in the U.S.  Brief on Standard of Scope of
 Review,  judicial review of EPA'a/selection of remedial actions^
                                /^^	  -x   -~^   	.	'
 is quite limited.   Review  of  thte^imBleroentatiQn^ieeisiQns is even
 more  limited.   Unless theCJselectio.nVgt response action is
 determined to be /arbitrary and
violation  of  lav.  EPA is  entitled to  recover its  actual  easts
implementation;  technical •^dermenfcg »«s  veil .as  managerial  »r>rt
                                             --»»-"°
^rm*T-a,-t: decisions  mAJe  during  the course of^^plementatlorgfrre
committed to the  discretion  of  the Aoencv.   Judicial, review of
(Implementation decisions and cost^ is  confined to proof that the
implemented cleanup wasConsistent with the respons^ action
selected by EPA,  that  the (response action^was performed and that
the claimed (costs/were Actually incurred^  This reading of the
statute is compelled by  the  language of CERCLA,  its legislative
history, the relevant  case law  under CERCLA,  and general
principles of federal  contract  and procurement law.
          Alth ~igh  Congress  has removed the thousands of
implementation decisions from the  purview of judicial review,
this does not suggest  that EPA  does, or may,  incur costs in an
unreasonable or imprudent manner.   To  the contrary, we contend
that EPA incurred costs  at these sites in a reasonable and

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  prudent manner. ,However,  in order to ensure the Superfund  is
  replenished expeditiously and not bogged down in needless
  litigation Congress created a system which limited judicial
  review, but required various non-judicial safeguards.   It
  provided judicial review of the remedy selection decision,
                                            requiring the exacting
C^scrutiny of federal contract law^yicluding its audit
  requirements,  and required regular audits of the Superfund
  program as a whole.  This system^in lieu of judicial  reviev^ of
  each of the thousands of implementation decisions, -protects the
  interests of the public as well as those of responsible parties.
            Given the obvious and substantial implications that
  determination of the standard of review issue has for the nature
  and scope of the evidence to be presented at trial, the United
  States is filing this motion so that the Court can decide these
  issues in advance of trial.
                      C.  STATUTORY  BACKGROUND
            Congress established through CERCLA, and reauthorized
  through the Superfund Amendment and Reauthorization Act, ("SARA")
  the Hazardous Substances Response Trust Fund ("Superfund*}  to
  provide a pool of working capital that would enable EPA to
  address expeditiously >he hazards at problem .waste site's.   42
  U.S.C. § 9611.  CERCLA authorizes the EPA to conduct such
  investigations as it believes necessary to evaluate potential
  hazards and to take appropriate removal and remedial actions
  where necessary.  42 U.S.C. § 9604.

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          In creating the.Superfund, however, Congress
recognized that the amount of capital in the pool would be
inadequate to accomplish the nationwide task at hand.5  CERCLA,
therefore, places the ultimate financial burden of toxic waste
cleanup on those responsible for creating the harmful conditions.
See. e.a.. Dedham Water Co. v. Cumberland Farms Dairy. Inc.. 805
F.2d 1074, 1081 (1st Cir. 1986); Lone Pine Steering Comm. v. EPA.
777 F.2d  882, 886 (3d Cir. 1985), cert, denied. 476 U.S. 1115
(1986)? Walls v. Waste Resource Corp.. 761 F.2d 311, 318 (6th
Cir. 1985).
          Since Congress sought to ensure *that those responsible
for any damage, environmental harm or injury from chemical
poisons bear the cost of their actions,*6 it authorized the
Attorney General to recover from responsible parties al\ of the
monies expended by EPA from the Superfund for site investigation,
studies, cleanup and the cost of enforcing the provisions of
CERCLA.  Specifically, Section 107(a) of the Act provides for
reimbursement from such responsible parties of "all costs of
removal or remedial action incurred by the United States
Government or a State not inconsistent with the National
Contingency Plan.*  42 U.S.C. § 9607(a)(4)(A).  EPA's regulations
in the National Contingency PI^n (*NCP*), (40 C.F.R. Part 300  et.
seo.) guides the Agency's response actions.
     5 See. S. Rep. No. 848, 96th Cong., 2d Sess.  18; H.R. Rep.
No. 1016, 96th Cong., 2d Sess., Pt. I 22 (1980).
     6 S. Rep. No. 848, 96th Cong., 2d Sess. 13.
                                8

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          .Section  113  (j)(l) of SARA explicitly provides that

 "judicial review of  any  issues concerning the adequacy of ariy

 response  action taken  or ordered by EPA7 shall be limited to the

 administrative record.*  CERCLA § 113(j)(l), 42 U.S.C. § 9613

 (j)(l)  (1986)(emphasis supplied).  Section 113(j)(2) of CERCIA

 provides  further that  •£&«. court shall uphold rthe EPA's?  .

 decision  irMselectino^fche response action unless the objecting

 party can demonstrate, on the administrative record, that the

 decision  was Arbitrary and capricious or otherwise not in

 accordance with law.*  (Emphasis, added.)  This basic statutory

 background provides  the  framework for the relief requested by the

 United States.

                            ARGUMENT

                         I.  Introduction

           From the inception of the Superfund program. Congress

 sought to  place the  financial burden of hazardous waste cleanups

directly on those who  created the toxic perils and to recover all

 response costs incurred  by the government.  Congress sought to

make certain that:
     7 The President delegated this authority, as well as
other authorities conferred upon the "resident in CERCLA, to the
Administrator of EPA.  Exec. Order 12:v.6'> §.2e, 46 Fed. Reg.
42237 (1981), reprinted in 42 U.S.C.A. § 9615 app. at 544-48, as
amended by Exec. Order No. 12418, 48 Fed. Reg. 20891  (1983)
(•Executive Order No. 12316*).  After passage of SARA, Executive
Order No. 12316 was revoked by Exec. Order 12580, 52 Fed. Reg.
2923 (9187), reprinted in 42 U.S.C.A. §9615 app. at 153  (West
Supp. 1988).  The EPA Administrator has further delegated this
authority to the EPA Regional Administrators and others via'
CERCLA delegations number 14-1-A through 14-8-B.

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          society  [w]ould not bear the costs of
          protecting the public from hazards produced
          in the past by a generator, transporter,
          consumer, or dumpsite owner or operator who
          has profited or otherwise benefited from
          commerce involving these substances and now
          Wishes to be insulated from any continuing
          responsibilities from the present hazards to
          society that have been created.

S. Rep. No. 848, 96th Cong., 2d Sess. 98.  To achieve this

purpose, Congress enacted the Section 107 strict, joint and

several liability and cost recovery provisions, as well a's

Section 106, which gives EPA a means to compel a responsible

party to perform the remedy itself, and Section 122, which

outlines procedures which facilitate settlements with potentially

responsible parties.

          Indeed, when Congress reauthorized the Superfund in

1986, it was reemphasized that Congress had re-enacted the CERCLA

strict liability and related sanctions provisions in order to

encourage responsible parties to accept their responsibilities

quickly and avoid the costly and lengthy guagmire of litigation:

          [We gave EPA] sweeping authority to respond  •
          to virtually any type of release of virtually
          any harmful substances whether it is released
          or only threatened to be released.  He put in
          piece a legal regime of strict liability
          whicr-. v*> believed vo'jld encourage responsible
          parries tc- rapidly resolve their
          responsibilities in order to avoid
          potentially enormous litigation cos^s.
          potentially large penalties associa-od with
          the failure to respond to site cleanup
          activities under a regime that largely is
.          weighted toward the Federal Government*

132 Cong. Rec. S14909, (daily ed. Oct. 3, 1986)  (remarKs.of Sen.

Bentsen) (emphasis added).  The Superfund 'was designed to be


                                10  .

-------
available to the, President to respond instantly where necessary
and to handle those situations where responsible parties were
unavailable for cleanup action.*  Id. (emphasis added).   It was
not to be expended primarily in litigation.  132 Cong. Rec.
S14922 (daily ed. Oct. 3, 1986)(remarks of Sen. Simpson) ('We
must work to have more societal resources spent on necessary and
effective cleanup of Superfund sites, and less on convoluted
litigation which merely extends any public health threat that
exists from-these sites.*).
          Finally, and most importantly, Congress left little
doubt that it intended that all costs incurred by the United
States in responding to the dangers of hazardous wastes would be
recovered.  In the words of Senator Stafford, Senate  floor
manager of SARA:
          The theory underlying Superfund's liability
          scheme was and is, that the Government should
          obtain the full costs of cleanup ....
132 Cong. Rec. S14903  (daily ed. Oct. 3, 1986)  (remarks of
Ser.atcr Stiffcrf,} (Irphasis idded).  .See alro  i:i Cong. Rec.
S14935 (daily ed. Oct  3, 1986)  ('The President can recover every
dollar of the broad-based tax  inposed by the  Act by pursuing the
poilurers in cost-recovery cases.*) (remarks of Sen. Dure.ibergsr.)
(Emphasis added); 132  Cong. Rec. H9624  (daily ed. Oct. 8,  1986)
("it is expected that  the EPA  and the Department of Justice will
vigorously pursue cost recovery actions for all moneys  expended
pursuant to the act where responsible parties can be  identified*)
(remarks of Rep. Eckart.)  (Emphasis  added).

                                11

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          At the Verona Well Field site, the issue of liability
and duty to implement cleanup of the site had initially-been
litigated by the State of Michigan, and Thomas Solvent Company
had been ordered to clean up the site in May of 1984.8  Faced
with the refusal of the Thomas Defendants to implement the
cleanup, the United States incurred all the costs of the Verona
Well Field response actions while the Thomas Defendants sat idly
by and waited.  If judicial review of thousands of<[imp 1 ementatioit)
decisions is permitted, responsible parties, like the Thomas
Defendants here, will have every incentive to sit back and wait
to be sued in a cost recovery action rather than perform the
cleanup themselves.  At the time of trial the once idle
defendants would challenge the government's response costs by
questioning each and every one of EPA's technical and n^naggrift''
             m decisions — judgments which the responsible part
                                                                i,
could have made and paid for while performing the cleanup on itj
own.  The responsible parties must be required to reimburse the
United States for its actual incurred costs.  A contrary reading
of the statute might well force the public to foot the bill for
the unwilling responsible party and undermine the intent of
Congress and jeopardize the viability of the Superfund.
     8    See Kellev v. Thomas Solvent Co.. 146 Mich. App. 55
(1985) (attached hereto)..


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          II.  The United States is Entitled to Recover
               Its Actual Costs Incurred in Carrying Out the
               Response Actions Unless the Defendant Proves that
               the Response Actions Were Inconsistent with the
               NCP      	
               A;   The Plain Language of the Statute Provides
                    that the United States Shall Recover All
                    Costs Incurred in Carrying out Its Response
                    Actions	
          Under generally accepted principles of statutory
construction, the United States is entitled to recover all of its
costs incurred in carrying out the cleanup at the Verona Well
Field site unless defendants can establish that those costs were '
incurred in a manner inconsistent with the NCP.  The language of
the statute is clear and unambiguous in this regard and it must
therefore be followed.  United States v. Clark. 454 U.S. 555, 560
(1982) (*if the statutory language is clear, it is ordinarily
conclusive*).9  Pursuant to Section 107(a)(4)(A) of CERCLA
defendants are liable for *all costs of removal or remedial
action incurred bv the United States Government or a State not
     9   Moreover, even if there were any ambiguity, the court
should construe the statute in accordance with CERCLA/s'broad
remedial purpose.  Wickland Oil Terminals v. ASARCO Int.. 792
F.2d 887, 892  (9th Cir. 1986); See also. Dedham Water Co. v.
Cumberland Farms Dairy. Inc...805 F.2d at 1081;  New York v.
Shore Realty Corp.. .759 F.2d  1032, 1045  (2d Cir. 1985)., The
general rule to be applied is that remedial statutes are to be
liberally construed to give effect to the remedial provisions.
CERCLA is no exception.  Id.
                                13

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inconsistent with the national contingency plan.*1**  (Emphasis

added.)

          This 'actual cost* standard of recovery is not unique

to CERCLA.  It is the standard of the oil spill response

provision of Section 311 of the Federal Water Pollution Control

Act  (also known as, the Clean Water Act), 33 U.S.C. § 1321,  after

which CERCLA Section 107, 42 U.S.C. § 9607, is patterned.11   As

stated by Senator Randolph, a sponsor of the amended bill that

became CERCLA: •                                  .      '

          The purposes of the bill were: ... to make those who
          release hazardous substances .strictly liable for
          cleanup costs' ....
     10  The actions of EPA in carrying out response actions and
in incurring consequent costs are presumed to be consistent with
the NCP unless otherwise shown.  United States v. Northeastern
Pharmaceutical & Chemical Co.  f'NEPACCO*!. 810 F.2d 726, 747
(8th Cir. 1986), cert, denied. 108 S.Ct. 146 (1987).
     11  See e.g. . United States v. Beatty Incorporated. 401 F.
Supp. 1040, 1045  (W.D. Ky. 1975), in that Clean Water Act case,
the court refused to entertain allegations by the defendant that
government clean-up costs were excessive.  CERCLA and the Water
Act are hardly unusual statutes.  Congress has frequently imposed
strict liability  schemes under which the United States can
recover all costs incurred in responding to hazardous materials-
released to the environment.  These include the Deepwater Port
Act Amendments of 1984, 33 U.S.C. §§ 1501, 1517, the Outer
Continental Shelf Lands Act Amendments of 1978, 43 U.S.C. § 1801,
1814,- and the Federal Nine Health and Safety Act of 1977, 30
U.S.C. §§ 801, 931; see S. Rep. No. 848, 96th Cong. 2d Session
34-35 (1980).  See also:  Union Petroleum Corp. v. United States.
651 F.2d 734, 744 (Cl. Ct. 1981) (construing *actual costs
incurred* in 33 U.S.C. § 1321 (f) to apply conclusive presumption
of reasonableness to government's clean-up costs under Section
311 of Clean Water Act).
                                14

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           Unless  otherwise  provided  in  this  act,  the  standard of
           liability is  intended  to be the  same  as that  provided
           in section 311  of the  Federal Water Pollution Control
           Act (33 U.S.C.  §  1321).

 126  Cong.  Rec.  30,933 (1980).12

           In construing the language of Section 107(a)(4)(A),

 courts  have held  that the United States is entitled to  recover

 alx/costs  incurred in implementing r«»«spr»r.c.n  »^tion6__wj[**'">'^ proof
(s^£___x,                                               _

 of the  rgJigrmafrdftTWgff Qf  t^"co '*"e^e 	In  NEPACCO, the  Eighth
""""       ~   —                             %           .
 Circuit stated:             '        ' -

                The statutory language also supports the
                district court's  reasoning  that  under
                CERCLA § 107(a)(4)(A), 42 U.S.C. §
                9607(a)(4)(A), 'all costs'  incurred by
                the government that are  not inconsistent
                with the NCP are  conclusively presumed
             •*  to be reasonable.  CERCLA does not refer
                to 'all  reasonable costs' but simply to
                'all costs.'

 810  F.2d at  747-748.13

           Moreover,  it  is well established that where the United

 States  seeks  to recover its response costs under CERCLA §

 107(a)(4)(A), 42  U.S.C. § 9607 (a; (4)(A), the burden rests upon

 the  defendant .tg^  demonstrate as  a defense  to the action that

 government response costs were incurred in a manner  ineons i

 with the^NCP.-  NEPACCO. 810 F.2d at  747; United States  v.
     1242 U.S.C.  §  9610(32)  provides  that the terms 'liable or
liability  .  .  .shall  be  construed to be that standard of
liability which obtains under Section 1321 of title 33.*


     13   In reaching  the conclusion, the Court of Appeals cited
authority interpreting Section 311 of the Clean Water Act,
emphasizing  that  'case law interpreting the [Clean Water Act] is
relevant because  CERCLA defines the NCP by referring to the NCP
mandated by  the  [Clean Water Act].'

                                15

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Northernaire Plating Co.. 685 F. Supp. 1410 (W.D. Mich. 1988),

appeal docketed. No. 88-2074 (6th Cir. Nov. 1, 1988);  United

States v. Ward. 618 F. Supp. 884, 899 (E.D.N.C. 1985)  ("The

burden of raising and proving inconsistency with the NCP is,

however, on the . . . defendants.*); United States v.

Conservation Chemical Co. . 619 F. Supp. 162, 186 (W.D. Mo. 1985)

("the burden of proving, that the costs incurred were

inconsistent with the National Contingency Plan is on the

defendants . .  . .*); J.V. Peters & Co. v. Ruckelshaus. 767 F.2d
                   *
263, 266 (6th Cir.  1985) ; New York v. General Electric Co.. 592

F. Supp. 291, 303-304 (N.D.N.Y.  1984).

          Any suggestion by defendants that the United States has

the burden of establishing as part of its case that  each dollar

of costs was reasonable and prudently incurred and that the

response actions were efficiently and cost-effectively managed by

EPA and its contractors runs counter to the express  language of

Section '107 (a) (4) (A) .  Thus the  United States  is entitled to

recover (all 'ccsts^} incurred unless defendants can meet their

burden of establishing that those costs were  incurred  in a manner

i r-rs^s i?t snt vfth ths KCP.
          B.   li" Ktsorv to Materials beyond the Text of  CEriCLA
               Section 107(a)(4)(A) Is Needed, Then The
               Structure, and Legislative History of CERCLA Also
               Demonstrate that the United States is Entitled to
               Recover the Actual Costs Incurred in Carrying Out
               Its Response Actions _

          The structure and legislative history of CERCLA confirm

that the United States is entitled to recover  all costs  incurred

in carrying out its response actions.  As will be detailed in

                                16                       .  .

-------
this subsection, the only limitation in CERCLA on the recovery of
response costs is that the response action must not be
inconsistent with the NCP. (The NCPJ however, governs the
selectioj of response actions.  Thus, costs nay be found
inconsistent with the NCP under section 107 (a) (4) (A) of CERCLA
only if they were spent for a /response actiorMwhich itself was
inconsistent with the NCP basedLon the administrative record.
Any other reading of CERCLA would be contrary to Congress'
expressed intent that the government shall recover alj its
response costs unless it acted in a manner that was arbitrary and
capricious, and would ignore the fact that Congress imposed an
  w         .
entirely different standard of scrutiny when private parties are
seeking recovery of response costs incurred.
               1.   CERCLA Delegates to EPA Broad Discretion to
                    Select and Take Response Actions; the Only
                    Limitation on Recovery of Costs is that the
                    Response Action Not be Inconsistent with the
                    NCP _

          The limited judicial review of EFA's selection of
response actions and the Agency's costs incurred for those
acticr.s finds its' origin in the discretion which Congress granted
and necessary to respond to releases or threatened releases of
h« • ardous substances.  Sections 104 (a) and  (b) of the Act, 42
U.S.C. § 9604, grant broad discretion to EPA in undertaking
response actions:
          (a) (1) (B)
               . . .,  [EPA] is authorized to act, consistent with
               the national contingency plan, to remove or
                                17

-------
          (b)
               arrange fortheremoval of.  and provide for
               remedial action relating to such hazardous
               substance, pollutant, or contaminant at any time
               . .  ., or takeany other response measure
               consistent with the nationalcontingency plan
               which fEPAl deems necessary to protect the public
               health or welfare or the environment. . .
               Whenever [EPA] is authorized to act pursuant to
               subsection (a) of this section, ...  it may
               undertake such investigations, monitoring,
               surveys, testing, and other information gathering
               as fitl mav deem necessary or appropriate to
               identify the existence and extent of the release
               or threat thereof, the source and nature of the
               hazardous substances, pollutants or contaminants
               involved, and the extent of danger to the public . '
               health or welfare or to the environment.  In
               addition, [EPA] may undertake such planning,
               legal, fiscal, economic, engineering, architec-
               tural, and other studies or investigations as
               [itl may deen necessary or appropriate to plan and
               direct response actions, to recover the costs
               thereof, and to enforce the provisions of this
               Act.  42 U.S.C. § 9604.

(Emphasis added) .

          Moreover, Congress has delegated to EPA broad

to select remedies:  Section 104 (c) (4) provides that:
shzll select arrrr-rists remedial
                                                  actions
          determinedto be necessary to carry out this section
          which are to the extent practicable-in accordance with.
          the national contingency plan and which provide for the
          cost-effective- response which provides a balance
          Fund
                         i.-± i.ie availability of amounts from the
          Under the clear language of Section 104, Congress

placed within the discretion of EPA the implementation of

response actions and conferred upon EPA extremely broad authority

to investigate, plan, contract for and direct the work of

contractors with respect to those response actions.

                                18

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 Implementation,  management and technical decisions are subsumed
 within this broad grant of authority to take and pay for response
 actions which EPA determines to be necessary,  appropriate and
 cost effective.14
           The only limitation which Congress placed on the .
 recovery of (response, cos ta bv the United States under Section
 107 (a) (4) (A) , is that the costs be^ot inconsistent with the
' National Contingency J>lan. *  The requirement for an NCP
 originates in Section 105 of CERCLA,  42 U.S.C.  § 9605, which
 requires EPA to  adopt a National Contingency Plan that provides
 more detailed guidance for responding to problems posed by
 releases of hazardous substances.  However.,  even Section 105
 builds  in a certain measure of flexibility in EPA's adherence
 with the NCP. It highlights Congress' recognition of the need
 to provide for flexibility:  "actions to minimize damages from
 hazardous substances release shall, to the greatest ...extent
 pos s ib^e ,_ b^in  accordance with _the provisions of jthe^NCP] . *  42
 U.S.C.  § 9605 (emphasis supplied).  This flexibility and emphasis
 on the^ protection of the public rather than -on blind adherence
 to the  NCP has been rerrr-ired by t^e courts,  SJP* Kl^lndustries ,
                                              ^    s~    -__
          'The requirement of ycost effectiveness isx4J.mited__t
          a'ctl'oris^ and does not ajjpl v "to "re^ov*^ agt- i on«t .   see f n
 19,  infra.   Morec-v er the "cost-effective* requirement of CERCLA
 does not mean cost-effectiveness in a lay sense, i.e. ,  spending
 money and incurring costs in an effective and economical manner.
 Rather,  cost-effective is a term defined by Congress and
 interpreted  by EPA regulation as the selection of the lowest cost
 alternative  to achieve the clean-up standards necessary to
 protect  human health and the environment.  See H.R. Rep. No. 962,
 99th Cong.,  2d Session 245 (19861 .  NEPACCO. 810 F.2d 748; 40
 C.F.R. §300.68(j).   This is discussed more fully at pp. 24-26 infra,
                                 19

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Inc. v. Kaplan. 792 F.2d 896, 898-99 (9th Cir. 1986), and is

expressly stated in the legislative history of-CERCLA, see,  e.g.

126 Cong. Rec. S33834  (daily ed. Dec. 12, 1980) (comments of

Senator Stafford); S. Rep. No. 96-848,  96th Cong., 2d Sess.  at 55

(July 13, 1980); see also 47 Fed. Reg.  31180  (1982)  (1982 NCP

states that it "does not contain unnecessarily rigid or

cumbersome provisions.*).
               2.   The^HCJvfeoverns theC^Select
                    Actions} It Does NotGuverrrthe  nCUirtmUSe of
                          ^in Implementin  Response Actions
          An examination of the statutory requirements relating

to the NCP in CERCLA and a review of the NCP itself demonstrate

that the^NCp)was intended by Congress to be almost exclusively a

regulation governing theC technical recruirementsJfor the selection

of response actions.  Section 105(a) requires that the NCP

include, inter alia;

          (1) methods for discovering and investigating
          facilities at which hazardous substances have been
          disposed of or otherwise cc=e 10 be located;

          (2) methods for evaluating, including analyses of
          relative cost, and remedying any releases or threats of
          releases from facilities which pose substantial danger
          to the public health or the environment;

          (3) methods and criteria for determining the
          appropriate extent of removal, remedy, and other
          measures autho 'ized by this Act;

                              *  *  *

          (7)  means of assuring that remedial action measures
          are cost-effective over the period of potential
          exposure to the hazardous substances or contaminated
          materials;
                                20

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           (8)(A)  criteria  for determining priorities among
           releases  or  threatened releases throughout the United
           States  for the purpose of taking remedial action, and
           to the  extent practicable taking into account the
           potential urgency  of  such action,  for the purpose of
           taking  removal action .  . .;

 Section  105  further provides' that  'the plan  shall specify

 procedures,  techniques, materials, equipment, and methods to b.e

 employed in  identifying, removing  or  remedying releases of

 hazardous .substances comparable to those required under [the

 Clean Water  Act]  .  . . .*

           The NCP adopted  pursuant to Section 105 is an EPA

 regulation.  It establishes  the procedures for selection of

 response  actions  of the 'Federal and state governments.15  Thus,

 the/NCP  sets^step-by-step  technical directions and limitations
        j^"*      ^\                              • *^M*
 for_the ^selection) of appropriate response actions,(beginning with

 the discover yt5r  hazardous.releases through  each stage of

 response  to  final cost recovery.16
     1? . The N'CP first utilizer fcy E?A under CEPCLJ". v?.s ths
'National oil and Hazardous Substances Pollution Contingency
Plan* that was developed .in compliance with the Federal Water
Pollution Control Act, as amended, 33 U.S.C. §§ 1251 et seq.  See
1980 NCP, 40 C.F.R. §1510.1 (1980).  The  revised plan was
promulgated on July 16, 1962, 47 Fed. Reg. 31180, and appears at
40 C.F.R. Part 300.  The revised plan was made effective as of
December 10, 1982.  47 Fes. P.eg. 55435..  The 1SS2 KC? was the
first NCP which specifically *effectuate[d] the new
responsibilities and powers ere.-ted by CERCLA."  47 Fed. Reg.
31180.  The NCP was again revised in 1985, 50 Fed. Reg. 47951,
and codified at 40 C.F.R. Part 300.  The  United States undertook
response.actions at this site in accordance with the NCP which
governed at the time of each action.
         -*      • •

     16  The phases in the NCP have remained very similar in  •
various versions:  Step I:  Discovery and Notification, 40 C.F.R.
§1510.51 (1980),  40 C.F.R. §300.63 . (1982) , (1985).  Step II:
Evaluation and Initiation of Action, 40 C.F.R. .§1510.52 (1980);
                                                 (continued...}
                                21

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          The courts have agreed that the^NCP^fs a regulation

which guides(technical decisionmakingp  As the Court stated in

Western Processing;

               It seems clear that the statutory scheme affords
               EPA the flexibility to proceed to address
               hazardous waste sites in a variety of ways, at its
               discretion; that it has the ability to proceed
               quickly in conjunction with the State, using
               government funds;-and that Congress contemplated
               that technical expertise repose withthe EPA to
               make cleanup decisions consistent with the
               National Contingency Plan  fNCPl.

United States v. Western Processing. No. 83-252M, slip op. at 6

(W.D. Wash. Feb.. 19, 1986) (emphasis added, attached hereto).

          TherfNCpJsets limits .on the (selection/ of technically  '

appropriate response actions, but jppt on the costs in_c_urred__fey.

EPA in executing response decisions.  Nowhere in Section  105 did

Congress suggest that the NCP include cost standards with respect

to implementation of response decisions.17  The provisions of the
     *^(...continued)
Preliminary Assessment, 40 C.F.P.. §300.64  (199?),  (1985).   Step
III:  Containment and Counter-measures, 40  C.F.R.  §1510.53  (1980);
Immediate Removal, 40 C.F.R. §300.65  (1982),  (1985).  Step  IV:
Cleanup,  Mitigation and Disposal, 40  C.F.R.  §1510.54  (1980);
Evaluation and Determination of Appropriate  Response-Planned
Removal and Remedial Action 4C C.F.R.  §300.66  (1982); Site
I-a.uc;^ic.r. F;.ase £:.u Sdticr.a- r^r r.itier List  Determination,,  40
C.F.R. §200.66 (1955).  Step V:  Planned Removal,  40  C.F.-R.
§300.67 (1982); Community Relations 40 C.F.R.  §300.67.  (1985).
Step VI:   Remedial Action 40 C.F.R. §300.68  (1982),  (1985).   Step
VII:  Documentation and Cost Recovery, 40  C.F.R.  §1510.45
(1980), 40 C.F.R. §300.69 (1982), (1985).

     17  The requirement of cost-effectivesness articulated in
§ 105 (a)(7) is not a standard.applied to  implementation
decisions.  In selecting the most cost-effective  alternative  for
remedial action, both the statute and the  NCP  require that  the
alternative be cost effective during  the entire period  from
selection through the end of the "period of  potential exposure."
                                                  (continued...)
                                22                         .

-------
NCPDelate to jsosta in only^'tao^respectst^> first, Section 300.69
                                                 -i
requires EPA to keep documentation to support cost/recovery
actions and, second, Section 300.68 requires that |cost-

effectiveness of every remedial action b«» Mng-^Hgred as a

criterion in selection of the remedial alternative, 40 C.F.R.

§300.68.

          With respect to cost documentation, §300.69 of the NCP

requires only that:

          'documentation shall be collected and
          maintained to support all actions taken under
          this Plan and to support cost recovery.  In
          general, documentation shall be sufficient to
          provide  . . . accurate accounting of Federal
            , . . costs incurred. . .18
     ^(...continued)                .         •
42 U.S.C. §9605(a)(7), 40 C.F.R..{300.68.  The sections of the
NCP relating to remedy selection were specifically adopted to
address the requirement of § 105 of cost effectiveness throughout
the implementation and operation phases:

          EPA notes tr.it., in both the initial
          screening and the detailed analysis o-f
          alternatives, the cost alternatives must be
          compared -over time and must include operation
          and maintenance costs .(§300.68(h)(1) and
          (i)(2)(ii).  This ensures that the statutory
          requirement for consideration of the Gyration
          of cos^s is satisfied.

Preamble to NCP. 44 Fed. Reg. 31184 (July 16, 3?82).
     18   In a recent decision, the Court held.that the cost
records and summaries of EPA were sufficient to withstand  a
challenge to those records under.Section 300.69 of the NCP.
United States v. Northernaire. 685 F. Supp. at 1415.  The.cost
summaries and documentation in the instant case has been  far  more
extensive than in Northernaire.

                                23

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           'Cost-effectiveness*  is a tern of art in both CERCLA
              .        «t
 and  the  NCP,  used  to.describe the means employed by EPA to

 evaluate whether or  not  alternate options  for remediation meet

 statutorily defined  clean-up goals.  Cost-effectiveness under

 CERCLA is not a measure  of whether items of cost were  incurred in

 an economical or efficient manner.  Congress clearly limited

f*cost-efffeetiyenesaJ to  theCselectipn of the reme
                                                     as a means

of assuring that after EPA chose the appropriate cleanup level,

it would select a cost-effective remedy.  It did not extend this

requirement to the thousands of implementation decisions made by

EPA and its contractors.  The Conference Report on Section 121 of

CERCLA made clear that, cost-effective was a term of art

applicable to selection of response actions:

          The provision that actions under both
          sections 104 and 106 must be cost-effective
          is a recognition of EPA's existing policy as
          embodied in the_National Contingency Plan.
          The term fcbst-effectiyB* means that in   _  .
          tjigEarTBjning.^fche ajgpZPJr 1aj^g_level Of Cleanug>
          the President first determines the*
          appropriate level of environmental and health
          protection to be achieved and then selects a
          cost-efficient means of achieving' that goal.
         /Only after the President determines, by the
         jselection of applicable or relevant and
     ^  /appropriate requirements, that adequate
         | protection of human health and the
         / environment will ce achieved, is it  '
         (appropriate to consider cost effectiveness.


See H.R. Rep. No. 962,*99th Cong., 2d Session 245 (1986)

          The NCP requires that EPA examine and weigh the cost

effectiveness of. the various alternatives as one 'criterion in

their selection of the appropriate remedial action.  40 C.F.R.
                                24

-------
t
§300.68.  Section 300.68 of the NCP is intended to implement a

process which 'will insure the cost effectiveness of remedial

action measures."  44 Fed. Reg. 31184 (July 16,  1982).19

          The Court of 'Appeals in NEPACCQ. agreed that cost

effectiveness is an issue which is subsumed within EPA's

selection of a remedial action and is not an .issue to be
  V                               .
analyzed apart .from that selection process:

          Appellants also argue, the district court
          erred in requiring them to establish that the
          government's cleanup .actions were not cost-
          effective and necessary.  This argument
          challenges the government's choice of a
          particular method.  We note, however,  that
          CERCLA § 105(3),  (7), 42 U.S.C. § 9605(3),
    i  ^     19   The NCP does not require that EPA evaluate the cost of
    *"*"> removal actions, as with respect to removals, there is no .
      / requirement of cost effectiveness.  The Preamble to the 1982 NCP
      Vpointed out:

                 ... once the Agency determines that an
                 immediate removal is necessary, the Plan
                 vests in the lead agency the authority to
                 take whatever action the lead agency deems
                 necessary to abate the emergency.  In an
           t      emergency, it is not possible to require"
                 detailed cost evaluation because of the
                 critical need to act as rapidly as possible.

       44 Fed; Reg. 31181-31182 (July 16, 1982).

                 EPA used even stronger language in the Preamble to the
       1985 NCP in eliminating ccst as an issue in removal actions:
       "Requiring costs to be considered in determining whether a threat
       necessitates a removal action. . . is neither desirable nor
       authorized by CERCLA.*  50 Fed. Reg. 47930 (Nov. 20, 1985).
       Thus,  with respect to removal actions, including, the remedial
       investigations and feasibility studies done at the Verona Well
       Field site (which are removal actions under the statutory:
       definitions), there is no requirement that the actions of EPA be
       cost effective and no inquiry into the. costs is permitted unless
       the defendant can establish that theLremoval activities were   __
       inconsistent with the NCP on some technical or scientific basisTl


                                       25

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          (7), requires the EPA, as the agency
          designated by the President, to revise the
          NCP required by §311 of the FWPCA, 33 U.S.C.
          § 1321, to include the "national hazardous
          substance response plan,4* which is specifi-
          cally required by CERCLA to include "methods
          and criteria for determining the appropriate
          extent of removal, remedy, and other
          measures," and "means of assuring that
          remedial action measures are cost-effective.*
          Consideration of whether particular action is
     ^\   "necessary" is thus factored into the "cost-
      *    I *+. £ Jf ^* jtfW^ v « » «v if «• 
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 include criteria  for evaluating  the  costs  incurred.  The
 National Contingency Plan  is  a rule  adopted under CERCLA.
 Section 113(a)  of CERCLA provides  that  any rule promulgated under
 CERCLA may be challenged only in the United States Circuit Court
 of  Appeals for the District of Columbia within ninety  days after
 the rule is  promulgated by EPA.  -The statute  further expressly
 provides that review of the rule may not thereafter be obtained
 in  a district court action under § 107  (a).   42 U.S.C.  §  9613(a),
 Eaqle-PicherIndustries. Inc. v. United States Environmental
 Protection Agency.  759  F.2d 905,  (D.C.Cir. 19851. SCA  Services of
 Indiana v. Thomas.  634  F.  Supp.  1355 .(N.D. Ind.  1986>.20  The
 time has long since passed for any defendant  to  challenge the
             •*
 scope or contents of the NCP.
                3.    Costs  are Inconsistent with  the NCP under
                     Section 107(a)(4)(A) Only If They  were Spent
                     for a.  Response Action  Which  Itself was Incon-
                     sistent with the National Contingency Plan
           As the  Court  in  the Shell  Oil case  concluded, "the
.[NCP]  consistency requirement of Section 107(a?(4)(A)  addresses
 the nature of the response actions for  which  costs  can be
 recovered."   United States v. Shell  Oil Co..  605 F. Supp. 1064,
at  735.   Thus,  in order to establish that costs are inconsistent
      20   See  generally.  United States v.  Ethvl -Corp..  761 F.2d
 1153  (5th Cir-.  1985),  cert,  denied.  474 U.-S.  1070 (1986)  (to same
 effect under  parallel  provision of Clean. Air Act);  Dow Chemical
 v. Costle.  480  F.  Supp.  315  (E.D.  Mich. 1978), aff-'d.  659 F.2d
 724  (6th  Cir.  1981)(Same).
                                27

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with the NCP, the defendants must establish that the response

action selected, because of some departure from the National

Contingency Plan, resulted in demonstrably excessive costs for

which they should not be responsible.

          Once the EPA has chosen the remedial plan,
          the Federal and State Governments may go
          ahead using their own funds to clean-up the
          site.  .No review of the remedy is available
          until clean-up costs are assessed against
          responsible parties.  Then those parties mav
          grque that the remedy is inconsistentwith
          the National Contingency Plan.  The remedy of
          the Governments will be reviewed on the basis
          of EPA's administrative record and the
          responsible parties will not have to^
          reimburse the Governments for those
          unsupported portions of a remedy.  Because
          selection of the remedy involves balancing of
          numerous complex technical factors within
          EPA's expertise, its remedy must be upheld
          unless the agency,was "arbitrary and
          capricious' in selecting it.

Western Processing, slip- op. at 5 (emphasis added).

          Moreover, the NEPACCO. Ward. 618 F. Supp. 884, and

Western Processing- decisions establish that, even prior to the

adoption of SARA, judicial review of costs was limited to

determining on the basis of the administrative record what,  if

any, portions of the selected remedy were  inconsistent with  the

NCP.  If such inconsistency were established, the  cc;-r^ say  ths:

disallow certain costs associated with those portions of the

remedy which were inconsistent with the NCP.21  As  to all parts
      -21  section  113(j}(3), enacted  in  1986, permits  the
recovery of all costs  not  inconsistent with  the NCPCjverTTj") a
portion of the selected  response  is inconsistent  with 'the  NCP.
(j)(3) provides that

                                                  (continued...)
                                28

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of the selected remedy which were not incon'sistent with the NCP,

the standard for which costs are recoverable is clear on the face

of Section 107: the United States can recover *all costs*

incurred in carrying out the response action.

               4.   Defendants' Challenge to EPA's Implementation
                    Decisions Is Foreclosed By The Different
                    Statutory Standards That Apply to Recovery of
                    Costs Under Other Provisions of CERCLA	
          The limited scope of judicial review of costs incurred

by federal and state governmental entities is further supported

by comparison with Section 107(a)(4)(B), which provides that when

private parties implement response actions, incur costs, and

attempt recovery of those costs, CERCLA mandates an entirely

different standard of review and burden of proof.  Specifically,

Section 107(a)(4)(B), 42 U.S.C. § 9607(a)(4)(B), provides that

responsible parties are liable for ^necessary costs of response

incurred by any other person consistent with the national
contingency plan
(Emphasis added.)   The language of
               REMEDY - If the court finds .that the selection of
               the response action was arbitrary and capricious
               or otherwise not in accordance with law, the court
               shall award (A) only the response costs or damages
               that are not ir.c^r.s jgtert v.ith the net, ion a 1
               ccrtinser.cv plar.. ana (£}• such other relief as is
               consistent with the National Contingency Plan.
               (emphases added)

Thus, for example, 'if remedy selected requires a barrel removal,
a protective cap, a treatment system and an air stripper, under
Section 113(j)(3), even if the court determines the agency acted
arbitrarily when it selected one of those components of the
response action, the defendants still are liable for all costs
incurred by the government which are not inconsistent with the
NCP for the remaining components.

                                29

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Section 107(a)(4)(A),  "all costs of removal or remedial action",
stands in bold contrast to the language of Section 107(a)(4)(B)-
"necessary costs of response incurred by any other person
consistent with the national contingency plan."  On its face,
CERCLA Section .107 (a) (4) (B) intends that a different, more
stringent standard apply to cost recovery by nongovernmental
entities.
          The language of § 107(a)(4)(B) is especially important
in light of the fact that when Congress meant to limit cost
recovery or damages under CERCLA to all reasonable costs, it said
so.  For example, Section 106(b)(2)(D) provides that a liable
party who performs a remedy ordered by EPA under Section 106(a),
may recover 'all reasonable response costs incurred by petitioner
pursuant to the portion of the order found to be arbitrary and
capricious or otherwise not in accordance with law.*  42 U.S.C.
§9606(b)(2)(D)  (emphasis added).  Similarly, with  respect to
natural resource damage claims, under Section 107(a)(4)(C) a
plaintiff is entitled to recover the "reasonable costs of
assessing* natural resource damages.  42 U.S.C. •§  9607(a)(4)(C).
          Accordingly,  if Congress intended to limit  the United
States' right to cost recovery to ail "pruient and reasonable"
cos^s it would have included such a limiting phrase  in Section
107(a)(4)(A).  Common sense requires this conclusion; so does the
elementary rule of statutory construction that effect must be
given every word, clause and sentence of a statute and to assume
that each was put there for'a purpose.  United States v.

                                30

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Ker.asche. 348 U.S. 528, 538-39 (1955); Donaldson. Hoffman &
Goldstein v. Gaudio. 260 F.2d 333, 336 (10th Cir. 1958).
          In sum, the scope and standard of review must be based
on the purposes and provisions of CERCLA.  Any attempt by the
Thomas Defendants to suggest a reasonableness requirement that is
foreclosed by the very terms of the statute should be rejected,
and evidence on the irrelevant issue of reasonableness should be
excluded.
               5.   Judicial Review of EPA Decision-making is
                    Limited to the Administrative Record for
                    Selection of the Response Action	
          In its earlier filed U.S. Brief on Standard ar.d Scope
•of Review, the United states discussed fully the record review
standards under CERCLA and SARA at pp. 11-17.  Section 113(j)(2)
clearly provides that the remedy selected shall  be subject to
judicial review and shall be upheld "unless' the  objecting party
can demonstrate, .on the administrative record, that the decision
was arbitrary or capricious or otherwise not in  accordance with
the law."  As discussed above, the^election^decision includes
consideration of the appropriateness and necessity of all
response actions and the ccst-effectiveness of the remedial
actions as required by Section 105 and the-KC?.  (K.ecord review
therefore ii applicable to these issues as essential elements of
response selection.
          Congress intended that a court not review the day-to-
day implementation decisions made by EPA and its contractors and
the costs incurred for those actions.  In discussing the record
                                31

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review provisions of SARA.,  the legislative history unequivocally
supports this reading of the statute:   "This amendment clarifies
and confirms that judicial  review of a response action is limite
to the administrative record and that the action shall be upheld
fand all government response costs shall be awarded)  unless the
action was arbitrary and capricious or otherwise not  in
accordance with law.*  See  S. Rep. No. 11, 99th Cong., 1st Sess.
57 (1985) (emphasis added).  No.statement of Congressional
intent could be more clearly expressed.
          This is not to say that a Court may not assure itself
the work was in fact performed; that the costs were incurred for
the response action selected in the ROD; and that all the claimed
costs were in fact paid.  However, once the court assures itself
that these elements are met, the thousands of implementation
decisions with respect to that response action are immune from
review in a cost recovery action.^2
     22   CERCLA as amended by SARA contemplates that the Agency
will undertake remedial actions that meet the 'Cleanup Standards"
specified in Section 121 of CERCLA, 42 U.S.C. § -9621.  If the
remedy selected and implemented fails to achieve those standards,
then citizens may sue pursuant to Section 310, 42 U.S.C. § 9659
to compel compliance with the requirements of Section 121.

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            III. Caasimiiis_CERCLA to Preclude  Review of
                 ^gplementatiorT)Decisions  Comports  With the
                 Response Scheme Established  By the Statute and
                 with Federal ContractandProcurement Law 23

            Congress' decision to preclude judicial review of

  EPA's implementation decisions is further evidenced by  the

*  safeguards in place that govern the implementation process.  In
       23  It is not surprising that Congress would limit judicial
  review of the detailed decisions involved in implementing a
  CERCLA remedy.  Courts have held that similar decisions are
  immune, from judicial review under the APA.   See.  e^g_. .  Heckler  v,
  Chanev. 470 U.S.  821,  831 (1985) (decisions peculiarly  within
  agency expertise are unsuitable for judicial review); Block  v.
  Community Nutrition Institute.  467 U.S.  340, 345  (1984)
  (Congressional intent to preclude judicial  review can be found
  not only in a statute's 'express language,  but also from the
  structure of the statutory scheme, its objective, its legislative
  history,  and the nature of the administrative action involved*);
  SouthernRaj,lwav Co.  v. Seaboard Allied Milling Corp..  442 U.S.
  444,  457 (1979)  (judicial review precluded where  such review
  would have 'disruptive practical consequences* for program
  involved); Panama Canal Co. v.Grace Line.  Inc..  356 U.S. 309
  (1958)  (ratezaaking procedures and tolls established for Panama
  Canal found committed to agency discretion because, "The judicial
  system is not in a position, to calculate appropriate rates of
  return and decipher from quantities of financial  data which
  charges are legitimate and which-are not ...These are matters on
  which experts may disagree; they involve nice issues of judgment
  and choice which require the exercise of informal discretion");
  Falzarano v. United States. 607 F.2d 506, 512-13  (1st Cir. 1979)
  (*[t]he judicial system is not in the position to calculate  rates
  of return and decipher from quantities of financial data which
  charges are legitimate and which are not.  This is a managerial
  function with which the Secretary [of HUD]  has been encharged and
  which is inappropriate for the courts to assume*); H»hn v.
  Gotrlie::.  430 F.2d 1243, 1249 (1st Cir. 1570) (In ruling that
  public housing tenants' challenge of HUD's approval of  increased
  rents was not reviewable, .court opined that *[c]ourts are ill
  equipped to superintend economic and managerial decisions of the
  kind included here.  This is not a case which can be resolved by
  'judicial application of canons of statutory-construction'*);
  Rural Electrification Administration v. Northern' States Power
  Co..  373.F.2d 686, 700 (8th Cir. 1967), cert, denied.  387 U.S.
  945 (1967) (agency decisions unreviewable where they entail
  engineering know-how and accounting procedures which the
  executive and legislative branches cf government are better
  equipped to handle).

                                  33

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CERCLA, Congress expected EPA to use private contractors to
perform Superfund work, e.g..  CERCLA §§ 104(f)  and (g),  42 U.S.C.
§ 9604(f).and (g),24 and required it to procure those contractor
in accordance with the network of federal contract and
                 i
procurement laws and their underlying regulations.  See 5. Rep.
No. 848, 96th Cong., 2d Sess.  62 ("Existing Federal procurement
procedures [w]ould be utilized to the greatest extent practicable
in order to preserve the.competitive bidding process*);  see also
Section 119 of CERCLA, 42 U.S.C. § 9619 (SARA confirmed the
application of federal contracting law).
          The complex network of federal procurement/contracting
statutes and regulations closely regulates an agency's right to
expend resources from the public fisc.  The laws circumscribe
EPA's contracting decisions and require a vast system of audited
cost controls.  It is this network of regulatory control which
provides the safeguards which obviate the need for judicial
review of each of the contract terms and contracting decisions
and which supplant the detailed and disruptive review that the
defendants would have this court undertake in this case.
     24    132 Cong. Rec. H95.64  (etatement of Rep. Lent) (daily
ed. Oct. 8, 1986)  ("all of the money in the world—and all of the
Congressional mandates to EPA to complete cleanups—will not
guarantee effective cleanups unless there are responsible,
skilled, cleanup contractors willing'to do the work.*)  See also
132 Cong. Rec. S14900  (daily ed. Oct 3, 1986)(statement of Sen.
Stafford)(important element of successful Superfund program is
development of a private sector to perform scientific and
technical analyses, and to design and implement the appropriate
remedy.)
                                34

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           In accordance with Congressional intent and the


requirements of  federal contract, law, EPA entered into a


nationwide system of removal, support, and remedial response


action  contracts with private contractors which establish a


hazardous  substance clean-up infrastructure.  Under the


contracts,  EPA has the ability to assign a contractor to conduct


sampling,  test the samples, perform short-term cleanups, conduct
         «

long term  investigations and studies, and perform a permanent


remedy  at  superfund sites as the need arises.  The contractors


working under these large, multi-site contracts develop the
                         a

expertise  which  Ccr.gress fc-j-d so escar.tial to the statutory


goals.   In sum,  these contracts are the fundamental building


blocks  of  the Superfund program.  They are the product of EPA's


technical,  scientific, contracting and - management judgment,


acting within the discretion specifically granted to the Agency


under CERCLA.  Here, for example, EPA incurred 'costs under


approximately twenty (20) different contracts, including removal,


remedial and national support contracts and pursuant to


cooperative agreements and interagency agreements with both the


State of Michigan and federal agencies.


         /The network of conzrsls applicable to these contracts


is exceedingly detailed.  For example, th  Competition in  •


Contracting Act  of 1984, (Small Business and Federal Procurement


Competition Enhancement Act of 1984), 41 U.S.C. §§ 251 et sea..


requires open, competitive bidding procedures in specified cases.


The Federal Property and Administrative Services Act of 1949,  40



                                35

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U.S.C. §§ 471 et seg^ 544, requires an agency to contract for
engineering services with the highest quality bidder at
compensation which the agency head determines is fair and
reasonable.  Also, here, in procuring,the later CH2M Hill
Remedial Contract, EPA had to follow the Brooks Architect-
Engineers Act ('Brooks Bill"), 40 U.S.C. § 541-544, which
requires an agency, in certain types of contracts, to use
technical merit as the key factor for selecting contractors and
to award contracts based on the qualifications if a reasonable
and fair price can be negotiated. 40 U.S.C. § 544.  .See 40
U.S.C. § 543.  Congress confirmed the application of the Brooks
Bill when it amended section 119(f) of CERCLA, 42 U.S.C. §
6919(f), in SARA.
          Further, during negotiation, the Truth  in Negotiating
Act, 10 U.S.C.'S 2306(f), requires contractors to certify that
costs or pricing data submitted are accurate, complete and
current.  In addition, the United States is required in procuring
and negotiating federal contracts to ccr.ply with  a number of
statutes and regulations which are mandated by Congress to assure
that federal contracts are consistent with important public
policy ccncer-3, including 'pclicies o'f enc=ursging fair
competition regardless of the size of the businer^ and
encouraging contracting with minority businesses.  One such
statute, the Davis Bacon Act, 40 U.S.C. § 276a, requires the
agency to agree to labor rates at a level commensurate with those
                                36

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on projects of a similar character in the locality where the
project  is located.
          These statutory safeguards are supplemented by the
Federal  Acquisition Regulation  (FAR) (see 48' C.F.R. § 1, e_£ sea.
(1987))  and the EPA regulations supplementing the FARS known as
the Environmental Protection Agency Acquisition Regulations
(EPAAR)  (48 C.F.R. § 1500,- e_t sea.  (1987)).  These regulations
closely  regulate nearly every aspect of EPA contracting from pre-
bid procedures to final audit resolution at the close of the
contract.                 ,                          •       :
   •                                                        •
         • As one of many, many examples, before procuring the
contractors for the remedial response action contracts, EPA's
contracting branch chose a "Cost-Plus-Award-Fee* contract
specified by 48 C.F.R. § 16.305.  Once EPA chose-this contract   "
type, the .terms of the contract all flowed from the  requirements
of federal contract law.  Federal statutes and the FARs and the
EPAAR provide most of the terms for a Cost Plus Award Fee
contract, see e.J. 48 C.F.R. § 1552.212^70.  -Thus, the allawed
"level of effort* clause for cost-plus-fee-award contracts, as
well as the range of fee permitted under that contract, were

C.F.R. §15.904(a); 48 C.F.R. § 16.301-3; 48 C.F.R.  §  151*.404-
272; 41 U.S.C. § 254(b).  -Any additional terms would  be tne
                                37

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product of a process of procurement negotiations outlined by

federal statute.25

          Further, the federal contract system is replete with

controls to assure that costs are accurately accounted for.  The

FAR requires a contractor to comply with relevant standards of

the Cost Accounting Standards Board (CASE), 48 C.F.R. §

30.101(b), and allocate costs in compliance either with CASB

Standards or with Generally Accepted Accounting Principles
                                    •

(GAAP). 48 C.F.R. §31.203(d).  Further, under the FARs, all

costs must be reasonable, allowable, and allocable to the

.contract.  See 40 C.F.R.  §§ 31.201-2-; 31.201-4; 31.205.

          In order to assure that contractors will satisfy these

regulations, EPA evaluates the accounting and financial systems

of contractors at every stage of the contract process.  First,

EPA's Office of Inspector General ("DIG") audits contractors'

accounting and financial management systems to assess

contractors' cost data and accounting, procurement,  and property

management, systems.  Bradley Dec. at ^10(a):  Second, OIG  or

another federal agency must annually assess whether  a

contractor's prospective or incurred indirect cost rate properly
     23   In order to assure that EPA obtains a "fair and
reasonable* price, the FAR requires that the potential contractor
furnish to EPA during the negotiations cost data which are
"accurate, complete, and current.*  48 C.F.R. § 15.804-2(b).  To
help ensure against overpricing, the EPA Washington Cost Advisory
Office analyzes the pricing data during the pre-award phase, and
determines -whether the contractor's prospective cost or pricing
data are "complete," accurate, and current.*  The relevant wage
rates are also constrained by CERCLA.  Section 104(gj of CERCLA,
42 U.S.C. § 9604(g).
                                38

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allocates costs under federal cost principles.  Bradley Dec.  at.
*10(b).  These audits allow EPA to determine whether the
contractor's management controls provide adequate assurance that
costs claimed will be reasonable, allowable and allocable to the '
contract.  Bradley Dec. <[12(a).
          Further, EPA audits contractor costs to ensure that
only allowable, reasonable, and allocable costs are charged
against the Superfund, and ultimately, the responsible parties,
Bradley Dec. at 513.  Claimed costs which are questioned by the
auditors may be disallowed by the contracting officer and payment
to the contractor withheld or future claims offset unless the
contractor submits adequate information to refute the auditor's
findings and"convinces the contracting officer that the claimed
costs are acceptable.26  The United States does not seek recovery
from a defendant of contract costs disallowed after final audit
resolution.  Should any audit of contract costs in the instant
case be disallowed after this process, the United States will
credit the disallowed amounts against future cost recovery.
          In addition to the external contractor audits, Congress
determined to keep close watch over the management of the

Under Section lll(k) of CERCLA, 42 U.S.C. § 9611(k), Congress
     26   The- audits of cooperative agreements and lAGs are
conducted in the same manner as the audits of contractors.
Cooperative agreements are audited by EPA's OIG or by independent
accountants.  Bradley Dec. at 'IS.  EPA's OIG obtains -audits of
lAGs from the Offices of Inspectors General and/or Offices of
Audit of other Federal agencies.  Bradley Dec. at ^

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required the OIG to audit the overall Superfund program.  These
annual Section lll(k) "programmatic audits* cover all EPA
payments, obligations, reimbursements, or other uses of the
Superfund, and assess whether the Fund is being properly .
administered.
          Finally, the logic to Congress' intent to rely on
federal contract law to safeguard the Superfund is highlighted by
the alternative offered by defendants:  ad hoc review by
accountants hired by responsible parties who would engage in a
battle of experts with the United States in federal court.  This
process would 'consume additional Superfund resources, result in
potentially endless litigation and delay return to the Fund of
response costs that could be dedicated to hazardous waste sites.
Further, de noyo review would contravene the strong public
interest in avoiding constant disruption in the government
procurement process which often is "vital to the functions
performed by the sovereign.*  Textron. Inc..Bell Helicopter
Textron Division' v. Adatr.s. 493 F. Supp. 824 (D.D.C. 19SO)
(quoting Blackhawk Heating and Plumbing Co. v. Driver.  433 F.2d
1137 (D.C. Cir. 1970)).  Under CERCLA these concerns taVe or.
are applicable to a large proportion of CERCLA remedial actions
in the nation.  If the terms and conditions of these contracts
were to be tested in each court where a cost recovery case  is
filed, EPA could not be expected to fulfill Congress' mandate
that the Superfund be replenished expeditiously.

                                40           .             .  .

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respect to the response actions taken operate to the exclusion of
the APA.27
          Accordingly, courts have held under analogous statutes
that Congress has precluded APA review.  Courts have recognized
that the statutory scheme for review provided by § 307(d)  of the
Clean Air Act, 42 U.S.C. § 7607(d), supplants the APA.  Small
Refiner Lead Phase-Down Task Force v. U.S.E.P.A.. 705 F.2d 506,
520-23 (D.C. Cir. 1983) ; Lead Industries Association v.
EnvironmentalProtection Agency. 647 F.2d 1130, 1145-46 (D.C.
Cir. 1980), cert, denied. 449 U.S. 1042 (1980); Sierra Club v.
Ccstle. 657 F.2d 298, 323 (D.C. Cir. 1981), Ethvl Corp. v.
Environmental Protectier. Agency. 541 F.2d 1, 37, n. 79 (D.C.
Cir.) cert, denied. 426 U.S. 941 (1976).
          V.   If this Court Determines that Some Review of
               Implementation Decisions is Permissible, EPA's
               Decisions Regarding Response Activities are
               Entitled to Great Deference and Should Hot Be
               Overturned Unless Arbitrary and Capricious	
          In the event the Court determines that implementation
decisions are subject to judicial review, it is well-settled that
the Court nay not supplant its views for that of the agency and
conduct de novo review.  Rather, the Court must afford great
deference to the expertise of the Agency and may cverrurn
         If this ccurt vere to determine that the AFA is
applicable to the implementation decisions related to EPA
response actions, the result concerning reviewability of these
decisions would remain the same.  Under the APA review of these
decisions would be precluded. See generally, Section II, supra.
and footnote 23, supra.   To the extent that any review of these
decisions were permitted, the.APA requires that great deference
be given to the Agency's decision by the Court. See Section V,
info-a.

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•s
implementation decisions and the accompanying'response costs(only}
if the decisions were arbitrary and capricious or otherwise not
in accordance with law.  See, e.g.,  Ward. 618 F. Supp. at 900
(E.D.N.C. 1935);  Western Processing, slip op. at 5.
          in Ward. the court held that in order for defendants to
prove that EPA had incurred response costs in a manner
inconsistent with the NCP, they must establish that EPA acted in
an arbitrary and capricious fashion.  618 F. Supp. at 899-901.
Relying upon Citizens to Preserve Overton Park v. Voice. 401 U.S.
402 (1971) the court held that EPA's determination of appropriate
remedial action .is "entitled to great deference* and that  its
actions are 'presumed to be consistent with the NCP unless
otherwise shown.*  Ward at 899-900.  The court  further observed:
          The statute provides liability except for costs
          'not inconsistent' with the NCP.  This language
          requires deference by this court to the judgment of
          agency professionals.  The defendants, therefore,
          may not seek to have the court substitute .its own
          judgment for that of the EPA.
                            *****
          [I]t would be an unreasonable waste of •judicial  time
          ar.j 'ocverr.re .-.t_r_es_curr££ r.rt _tc rentier, an  usurpation
          cf__agency_authority,_to require the EPAtojustify  i~s
          every action in order-to recover under  FCERCLA]
          section 107.
Ward.  at 900 (emphasis added) .
          Limited review also.comports with general principles of
administrative law which limit the scope of judicial  review of
informal agency action.  Here, the agency decisions pertaining to
the implementation of remedies at hazardous' waste sites are
                                          43

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informal agency actions.*8Indeed, the Supreme Court has made

quite clear that in the absence of an explicit statutory standard

or contrary Congressional intent,29 informal agency action must

be reviewed under the 'arbitrary and capricious" standard of

review, 5, U.S.C. § 706(2)(A), and the scope of review is limited

to the administrative record.  E.g..  Camo v. Pitts. 411 U.S.

138, 142 (1973) (per curiam)(vacated appellate court's order

requiring trial court to  conduct d$ poyo review of informal

agency decision); Citizens  to Preserve Overton Park v. Voice. 401

U.S. at 413-14, 420  (1971) ; Florida Power & Light Co. v. Lorion.

470 U.S. 729,  743  (1985); American Paper Institute^ Inc. v.

Arierican Electric Power Service, Corp. . 461 U.S. 402, 412 &  n.7

(1983)  (informal rulemaking); see also United States v.  Carlo
"                                                   »
Bianchi & Co..  373 U.S. 709, 714-15  (1963)  (if the relevant

statute does  not specify  de novo review it  is rjofr to be

presumed); 5  Mezines, Stein, & Gruff, Administrative Law.  §51.04

at 51-68 (1987).
     2®  Implementation  decisions  are not formal adjudications,
because neither  CIr.rLA ncr  SARA requires these derisiors be
cet.erir.ined  "on the  record after opportunity for an agency
hearing." 5 U.S.C.  §  554.   These decisions are also not rules,
since they  have  no  "general or particular applicability and
future effect designed to implement,  interpret or prescribe law
or policy . ..."  5  U.S.C.  §  551(4).  Therefore, agency
decisions rev.  »rding ir.pler.entation are neither a formal
'„ *•• —    .,,»..„...  >.  .  „   .  *  f.  . _ „  .,  ... ,_ * ^ .' — *; . ' ^» ,. ^» . . 4 ^ W, »•,.,--.
~. — >— M_^._ ^__.,  r . _ .  ..  »_._-, — — «.  . _ ^ M«.i.««>.*4»4»Cw* &^.M..— W» * ^,. *. **»..-— J
percent of  all government actions  as  informal agency  actions. See
1 K. Davis, Adrir.istr2t.ive  Lav Treatise. § 1:4 at 13  (2 ed.
1978) .


     29     As argued  at  Section II supra,  both explicit statutory •
language and  evidence-of Congressional intent counsel against any V,
judicial review  of  the post-ROD implementation decisions.

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managerial approaches to abate the problem and to minimize injury
to hur.an health and the environment.  The essence of the EPA
program, therefore, is the exercise concerning scientific,
technical and managerial judgment.  Where, as here, the response.
actions include innovative new technology, the role of Agency
expertise in the exercise of scientific judgment is even more
crucial.
          The deferential review which courts extend to decisions
within an agency's expertise and Congressionally delegated
authority is only one of several bases upon which the Court
should to uphold EPA's implementation decisions unless they are
proven to be arbitrary and capricious.  The appropriateness of
limited judicial review is strongly reinforced because the
technical,  managerial, and procurement decisions made by EPA and
its contractors in carrying out selected "response actions are the
types of decisions which courts have been" loathe to disturb.
Indeed, as the Supreme Court has emphasized, when' examining a
"scientific determination, as opposed to  simple findings of fact.,
a reviewing court must generally be at its most deferential."
Baltimore Gas & Electric Co. v. NRDC. 462 U.S. 87, 103  (1983).
See a'.sc Ar.=relina Hcllv Core, v. Clark. 587 F. Supp. 1152,  1155
   ^S  f* , ^  S *" ^ J V
(C . •- .  Cir.  1» c •»;
541 F.2d at 36:
                   As r-,atez tv r.-e cruri  in Ethyl Corr. v.  £?.-.
          [A]fter our careful study of the record, we.must
          take a step back from the agency decision.  We
          must look at the decision not as the chemist,
          biologist, or statistician that we are  qualified
          neither by training nor experience to be, but as  a
          reviewing court exercising our narrowly defined
                                46

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          duty of holding agencies to minimal standards of
          rationality.

          While courts routinely refuse to review the procurement

decisions of Federal agencies, in those very limited

circumstances where judicial review has been allowed, the review

is extremely deferential.  The procurement decision must be

upheld as long as the contracting officer's decision had some

rational basis and was not prejudicial or in violation of law.

E.g. M. Steinthal & Co. v. Seamar.s. 455 F.2d 1289 (D.C. Cir.

1971); Wheelabrator Corp. ;v. Chafee. 455 F.2d 1306 (D.C. Cir.

1971).  Defendants' suggestion here that .this court engage in de

novo review ignores this well-settled body of law requiring very

deferential review.31                                  -       '
     31  Limiting judicial review of costs comports with the
standard of review proposed by EPA for resolving cost recovery
claims by alternate dispute resolution.  Pursuant to its
authority under Section 122(h){2) of CERCLA, EPA recently
proposed a rule allowing liable parties to arbitrate cost
recovery claims of less than $500,000.  See 53 Fed. Reg. 29428
(1988) .  The purpose of the rule is to provide an expeditious,
less expensive alternative tc litigation..  Under the rule, EPA's
selection of the response action will be upheld unless, based on -
the administrative record compiled by EPA which formed the basis
of EPA's selection decision, defendants establish the selection
was inconsistent .with the NCP based on an arbitrary and
capricious standard of review.  For any portion of EPA's response
action which the arbitrator upholds, EPA shall be awarded all
costs incurred ur.less

          participating ??.?s car- establish rr.at all cr
          part of,-such costs were (1) Not actually
          incurred or to be incurred; or (2) not
          actually incurred or to be incurred in
          connection with the response action;, or  (3)
          clearly excessive, taking into account the
          circumstances of the response action and
          relative to acceptable government procurement
          and contracting practices in light of the
                                        (continued...)
                                47

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          Thus, if this court decides that some review of

implementation decisions is appropriate, it is clear that the

court must apply an arbitrary and capricious standard of review

and inquire only into the administrative record. • The court must

determine what constitutes the administrative record of

implementation decisions.  CERCLA neither requires nor

contemplates that EPA prepare a formal administrative record for

the thousands of implementation decisions.  Indeed to require

such a record would hinder an essential purpose of the Act:  the
                                                           «
prompt cleanup of Superfund sites.  Nor does CERCLA require EPA

to issue a formal statement of reasons justifying each of its
               31(...continued)
          circumstances of the response action.

Id. at 29430.  The proposed rule thereby allows PRPs to challenge
the implementation decisions, but places the burden of proof on ,j
the PRPs to show costs were clearly excessive under the  .
circumstances and in light of government procurement law.   The
standard of review in a judicial proceeding must be narrower, cr
at least as narrow, or a liable party would have no incentive *3
use arbitration.  That judicial review should be more limited is
recognized in EPA's preamble to the proposed rule, which states:

          In particular, the third factor, relating to
          whether EPA's costs were excessive, is not
          necessarily relevant in judicial cost recovery
          " ~' '.. L ;  7. ~ H   Scscific? 11-'. "^stalrlis^sd case ] 3v
t
                                States is entitlsd to
          recover all costs associated with anv response
          action upheld as not arbitrary and capricious.
          See United States v. NEFACCO. 810 F.2d 726, 747
          (Sth Cir. 1986) .

Id. at 29430 (emphasis added).  Although the rule is not final,
the comment period has ended .and none of the comments challenged
the "clearly excessive" standard.

                               ' 48

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decisions.32  Although EPA does not compile an administrative

record in the traditional sense for each such decision,  it does

articulate reasons for each of its major decisions.   It is

appropriate to limit review to this statement of reasons.   See

Camp v. Pitts, supra? Dunloo v. Bachowsk.i. .421 U.S.  560 (1975),

In Dunlop, the court concluded that if Secretary's decision is

reviewable, the review must be based on the Secretary's statement

of reasons.  This narrow scope of review was compelled by the

Secretary's broad discretion and the absence of any statutory

requirement to create an administrative record.  See also.

Environmental Defense Fund. Inc. v.'Costle. 657'F.2d 275  (D.C.

Cir. 1981) ;  Town of Oransetovn v. Gorsuch. 718 F.2d 29 (2d Cir.

1983), cert, denied 465 U.S. 1099 (1984).33
     3^  with respect to decisions to incur costs under remedial
contracts, for example, EPA does outline tne scope of the work to
be performed and .the cost of each task in an authorization
package that is reviewed by the regional project managet and the
contracting officer.  These authorization packages constitute an
informal record of EPA's implementation decisions and these
packages - and not every underlying document - represent a
"recori* of the agency's decisions, and if thtre is to- be any
judicial review the focus should be on these packages.


     33   If the Court determines that the available
administrative record is somehow inadequate, the court may
require agency officials to give testimony explaining a decision,
but should not go so far as to conduct de novo review.  See
Overton Park. 401 U.S. at 419-21; 5 Mezines, Stein, & Gruff,
Administrative Law. §51.03 (1937).

                                49

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                            CONCLUSION


     The entire statutory scheme of 'CERCLA was established in


order to protect the public health and welfare and the


environment by cleaning up environmentally threatening sites on


an emergency basis.  Fundamental to the statutory scheme is a


requirement that responsible parties bear the economic burden of


cleaning up the sites where hazardous substances have been or


threaten to be released into the environment.  If the responsible


parties failed or refused to implement the cleanup at sites on


.the National Priority List themselves, EPA was to do the cleanups


within the discretion granted  it by the statute, using the


resources of the Superfund.  In cases where the Superfund
            •»

financed the cleanups, all costs of the response actions were  to


be recovered by the Fund unless the responsible party could


establish by a preponderance of the evidence  that some pcrtion of


the response actions was inconsistent with the National


Contingency Plan.


          The statutcry sphere fcr  reccverirg crstr  i-r:rre- by


the Fund was intended by Congress to be swift and summary,


striking the balance in the  favor of the  government  in order to


er.ccurage the responsible .parties tr carry cut the response


activities themselves.  The  goals' of the  statute can • • ••  realized


only if cost recovery actions  are resolved rapidly,  thereby


replenishing the Fund and discouraging responsible parties  from
                                50

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 reiusing to iiripxesient cxean-up activities tnemseives.  10

end, Congress has precluded review of implementation decisions.

                              Respectfully submitted,
                              ROGER J. MARZULLA
                              Assistant Attorney General
                              Land and Natural Resources Division
                         By:
V.
                              JOEL M. GROSS
                              NANCYkBOYLAND COLLINS
                              MICHAEL J. McNULTY
                              THOMAS A. MARIANI, JR.
                              SAMUEL BOXERMAN
                              Environmental Enforcement  Section
                              Land and Natural  Resources Division
                              U.S. Department of Justice
                              Washington,  D.C.  20530
                              (202) 633-1307
OF COUNSEL:

ROGER GRIMES
Regional Counsel
Environmental Protection Agency
Region v •
230 South Dearborn Street
Chicago, Illinois  (50604

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                   UNITED STATES  DISTRICT COURT
                   WESTERN DISTRICT OF MICHIGAN
UNITED STATES OF AMERICA,

          Plaintiff,
v.
THOMAS SOLVENT COMPANY; et al.

          Defendants.
                                        Civil NO. K86-167 CAS
                                        Hon. Richard A. Enslen
FRANK J. KELLEY, Attorney
General of the State of
Michigan and THE STATE OF
MICHIGAN,

          Plaintiffs,

v.

THOMAS SOLVENT COMPANY; et al.

          Defendants.
                                        Civil No. K86-164 CAS
               DECLARATION OF ERNEST E.  BRADLEY III

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r

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                  UNITED STATES DISTRICT COURT
                   WESTERN  DISTRICT  OF MICHIGAN
                        SOUTHERN DIVISION
UNITED STATES OF AMERICA,

     Plaintiff,

v.

THOMAS SOLVENT COMPANY,
                et al.

     Defendants.
FRANK J. KELLEY, et al.,
General of the States of
Michigan, and the STATE OF
MICHIGAN,
     Plaintiffs,
v.
Civil Action No. K86-167 CAS
Honorable Richard A. Enslen
Civil Action No. K86-167 CA8
Honorable Richard A. Enslen
THOMAS SOLVENT COMPANY,
               'et al.

     Defendants.
               DECLARATION OF ERNEST E.  BRADLEY III

          I, Ernest E. Bradley III, do hereby depose and state:

          1.  I am the Assistant Inspector1 General for Audit in

the Office of Inspector General (»OIG») of the United States

Environmental Protection Agency ("EPA").  I have held this
affidavit is submitted in support of Plaintiff's Motion in Liinine

to Exclude Evidence in the above-captioned case.

          2.  In my capacity as the Assistant Inspector General

for Audit, I supervise a staff of approximately 200 employees who

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                              - 2 -

conduct audits of EPA's programs and operations or who arrange to
have independent audits of EPA's programs and operations conducted
by independent public accountants, other Federal auditing agencies,
and State auditing agencies.  I am responsible for planning,
developing, and directing a comprehensive audit program designed
to ensure that all EPA programs and operations are effectively,
efficiently, and economically administered.  The EPA/OIG issued
1,933 audits from April 1, 1987, to March 31, 1988, of which
58 were related to Superfund.  I establish standards, criteria,
and plans for the scope, frequency, and focus of audits.  I
participate with key officials in developing long-range and
current .au.di.t- policies, procedures, and standards-for conducting
complex internal and external audits of EPA programs and operations.
I coordinate with top Federal, state, and local agency  program
and audit officials in matters pertaining to EPA audit  programs.'
I advise the Inspector General and other key officials  concerning
rr.e extent of ex=r.ir.2ticr.s necessary tc adequately appraise. EPA
programs and operations.  Within the scope of delegated authority,
I.establish goals, develop plans, determine the number  and  kinds
cf staff er.^lcy?es needed, prepare staffing and program budget
:=c-j£Sts for audits, establish internal operating policies  and
procedures, allocate resources, assign and evaluate  work, provide
for training and support services, select or recommend  the
selection of staff, arrange for the performance appr-aisal of
employees, counsel employees, and carry out EPA's personnel manage-
ment and equal employment opportunity goals and objectives.

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                              _ 3 -

           3.  From 1971 to 1980, I served as the Assistant Director
of Audit and the Director of Audit Operations in EPA's Office of
Audit.  As the Assistant Director of Audit, from 1978 to 1980, I
worked with the Director of Audit to manage all audits undertaken
by the Office of Audit.' As the Director of Audit Operations from
1971 to 1978, I played a major role in the organization and
initial operation of the newly-created Office of Audit and
subsequently developed and managed program audits undertaken by
the Audit Operations Division.
          4.   From 1963 to 1971, I was an auditor and Branch
Manager at the Department of Health, Education, and Welfare
("DHEW") Audit Agency.  From 1963 to 19,67, I performed external
audits of agencies and institutions receiving Federal funds from
DREW and internal audits of DHEW field installations.  From 1967'
to 1971, i was a Branch Manager for the States of Alabama and
Mississippi,  responsible for developing, directing, and completing
external and  internal audits.  In that capacity, ,1 planned and
directed nationwide audit programs for reviews cf the Head Start
Program, the  Elementary and Secondary Education Program, and
systems reviews in universities and nonprofit organizations.
          5.   I received a Bachelor of Arts degree in accounting
from Georgia State University in 1963.  I have taken graduate
courses at the University of Georgia and Mississippi-.College.   In
1973, I was certified as an internal auditor by the American
Institute of  Internal Auditors.

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                              - 4 -

          6.  One of EPA's major programs and operations is the
cleanup of hazardous waste sites that pose threats to the public
health, welfare,- and the environment under the authority 'of the
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980  ("CERCLA"), as amended by the Superfund Amendments •
and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. SS 9601 et.
s eg .  one major aspect of this cleanup program, in the absence
of private efforts to clean up hazardous waste sites, by the
persons who are responsible for the hazardous conditions at these
waste sites, is to have EPA undertake removal and remedial cleanup
actions.  To accomplish the necessary removal and remedial cleanup
               •»
actions,- EPA enters into contracts with private contractors,
cooperative agreements with States, and interagency agreements
("lAGs") with other Federal agencies.  These response actions'
were funded by expenditures fronv the Hazardous Substance Response
Trust -Fund established under Section 221 of CERCLA, 42 U.S.C.
S S631,
                                    ex; •= - zi v J: £3. fr-~
Substance Superfund established under Section 517 of SARA,
26 U.S.C. S 9507.
          7.  Under Section UK*} of CERCLA, 42 U.S.C.  S 9611U),
t-e L"A/CIG ii inquired to audit all EPA .payments, obligations,
reimbursements, or other uses of the Fund, to assure that the
Fund is being properly administered and  that claims are  being
appropriately and expeditiously considered.  The EPA/OIG was
required to submit to Congress an interim report for fiscal year
1981 and a final report for fiscal year  1982.  Thereafter, the

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                              - 5 -

EPA/01G was to audit EPA payments, obligations, reimbursements,
or other uses of the Fund as the EPA Inspector General deemed
appropriate.
          8.  Under Section lll(g) of SARA, which amended Section
lll(k) of CERCLA, 42 U.S.C. S 9611U), the EPA/OIG is required'to
conduct an annual audit of all EPA payments, obligations,
reimbursements; or other uses of the Fund in the prior fiscal
year, to assure that'the Fund is being properly administered and
that claims are being appropriately and expeditiously considered.
Section lll(g) also r'equired the EPA/OIG to conduct an examination
of a sample of agreements with States carrying- out response
actions under CERCLA and an examination of remedial investigations
and feasibility studies prepared for remedial  actions.
          9.  As required by Section 4(b) of the Inspector General
Act Of 1978, as amended, 5 U.S.C. app., the EPA/OIG audits
described in Paragraphs 7 and 8, above, must comply with standards
established by the Corprrolle: General of the  United  States  for
audits of Federal establishments, organizations, programs,
activities, and functions.  The standards are  published  in the
c»s-. £a-»c f^r Auiitc: --•-.------_•;• - — ~ • •• - * ;:— . ? - - ~_- ^-_f_^
Activities, '..id Functions, issued by the Comptroller  General of
the United States.
        ;  10.  The EPA/OIG is responsible for  auditing all of  the
major Superfund contractors for removal actions  (e.g., PEI
Associates, OH Materials, HAZTECH, and Riedel  Environmental
Services) and, from fiscal year 1985 to the present,  for.auditing

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                              -  6  -

one of the major contractors  for remedial actions  (CH2M Hill).
Audits are performed either by my  staff, under my  direction and
supervision, or by  independent public accountants  under contracts
with  the EPA/OIG, other Federal  auditing agencies  under lAGs, and
State auditing agencies under cooperative agreements.  The various
kinds of audits performed are described as  follows:
          a.   A pre-award audit is a review and evaluation
conducted to determine whether a contractor's prospective cost or
pricing data submitted are current, accurate, and  complete.  A
review may include  an assessment of the contractor's accounting,
procurement, and property management systems.  Tr.e co-r^ted
audit report is submitted to  the Government contracting officer
for use in negotiating with prospective contractors before a
contract is awarded.
          b.   An indirect cos_t__ audit is a  review  and  evaluation
conducted to assess whether a contractor's  prospective or incurred
ir.di.rect cost rate  properly allocates costs allowable  under
Federal cost principles.  The completed audit report is suomitted
to the Government contracting officer for use in negotiating wit'h
prospective contractors before a contract is awarded and periodi-
cally curing z~:.::zz  ;•-.: :;•::•,...- ; • .
          c.   A cost audit .is a review and evaluation conducted
to assess the allowability of costs claimed or reported under a
contract and to ensure compliance  with applicable  statutes,
regulations, and terms and conditions of the award.  These audits
may include a review of incurred direct costs and  indirect costs

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                              -  7  -   •

 and  the  contractor's  policies, procedures, and practices that
 influence  and  control  contract costs.   A cost audit may be an
 interim  cost-audit  (i.^,, an audit of all costs incurred on the
 contract up  to the  cutoff date of  the audit) or a  final cost
 audit  (i.e.. an audit  of all costs claimed after the contract has
 been completed).  The  completed  audit report is submitted to the
 Government contracting officer for use  in negotiating the accept-
 ability  of contract costs incurred to date (for interim cost
 audits)  and  to close out a contract  (for final cost audits).
          11.   Ir. perf orr.ir.:: a-di'ts  of  a particular contract,
 auditors follow generally accepted auditing standards.  Auditors
 use the  applicable  statutes, regulations, guidelines, and official
 EPA policy statements as criteria'  for determining  the acceptability
 of costs claimed.   Auditors use  their professional judgment to
 apply appropriate audit procedures to meet conditions at the audit
 site to  achieve audit objectives.
          12.  The objectives of tr.e audits of contracts are:
          a.   TO determine whether the  management  controls
 exercised by the contractor through  its management, accounting,
procurement,  and property ccr.tri1! systems are acecuate to provide
assurance that costs claimed are reasonable, allowable, and
allocable to the sponsored project under the contract terms and
applicable sections of the Federal Procurement Regulations
 ("FPR"),  41 C.F.R. Chapter 1, and th6 Federal Acquisition
Regulation ("FAR"), 48 C.F.R. Chapter 1.

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                              - 8 -

          b.  To review operations and report any noncompliance
with applicable contract provisions or EPA regulations and, based
upon the  review, to provide recommendations for improvement.
          c.  To determine whether the"costs claimed under the
EPA contract are reasonable, allowable, and allocable to the
                                                  *
sponsored project.
          13.  In conducting cost audits of an EPA contract,
auditors express an opinion as to the acceptability of costs
claimed on reimbursement vouchers submitted to EPA.  Costs that
are not acceptable are questioned by auditors.  When costs are
questioned, the auditor recommends that the contracting officer
not authorize reimbursement for the costs claimed or, if
reimbursement has already occurred, offset future claims by the
questioned amount.   The acceptability of costs is examined from
several aspects:
          a.  Allowafaility:  The costs claimed are examined for
compliance with applicable statutes, regulations, Federal cost
principles (e.g., the FPR, the FAR, Office of Management'and
Budget Circulars),  and the terms of the contract.
          b.  P«>gsgr3bler;ggs!  The costs claimed are examined
to ensure that they are generally recognized as ordinary and
necessary for the performance of the contract and to determine
whether significant deviations from established practices occurred
which may have unjustifiably increased contract costs.

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                              -  9  -                    .

           c.   Allocability;   The costs  claimed are examined
 to ensure  that they  are  charged  to the  contract only  to  the
 extent  of  benefits received.
           14.   In addition  to the  contractors named in Paragraph
 10, above,  EPA uses  the  Fund  to pay  for  response actions performed
 by other major contractors  (e.g.,  Ecology  and Environment, NUS,
 Roy f.  Weston,  and Camp,  Dresser & McKee).  The Defense.Contract
 Audit Agency  {"DCAA")  is  responsible for auditing  those  contractors,
 and for CH2M  HilT'up to  and including fiscal year  1985.  The
 EPA/OIG obtains audits of those  contractors from DCAA under an
 IAG.  DCAA  examines  the  accounting records and financial operating
 procedures  of  the contractors in accordance with generally accepted
 auditing standards .and,  accordingly,  includes such tests of the
 accounting  records and other  auditing procedures considered
 necessary.
                                                              •
      " .   15.   In addition  to response  actions being  performed by
•private contractors,  EPA  uses the  Fund  to  pay for  response actions
 performed  by  States 'under cooperative agreements between EPA  and
 the States.   Cooperative  agreements  are  audited by my staff,
 under my direction and supervision,  or  by  independent public
 i zcc-ritar.is under contracts with the EPA/01.'
           16.   In addition  to response  actions being  performed
 by private  contractors,  EPA uses the Fund  to pay for  response
 actions performed by other  Federal agencies  (e.g., the  U.S. Army
 Corps of Engineers and the  U.S.  Coast Guard) under lAGs  between
 EPA.and those  acencies.   The  EPA/OIG obtains audits  of  the  lAGs

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 from the Offices  of  Inspector  General  and/or Office*?  of  Audit  of
 other Federal  agencies.
           17.   In  addition  to  all  of the external aucUts of
 contracts,  cooperative  agreements, and  IAGs, the EPA/OIG conducts
 internal audits of EPA's hazardous waste cleanup progr-.ara.  Internal
 audits  are  designed  to  determine whether desired results and
 objectives  are being achieved  effectively; resources aro managed
 and  used economically and effectively;  operating procedures are
 effective and being carried out; applicable laws and regulations
 have  been complied with; financial operations are conducted
 properly; and financial reports are presented fairly.  For: example,
               •*
 in accordance with Section  lll(k) of CERCLA, 42 U.S.C. 5  9611(k),
 the EPA/OIG conducted audits of payments, obligations, reimburse-
 ments, or other uses of the Fund for fiscal years 1981,  1982,
 1983, 1984, and, 1986 to assure that the Fund was being properly
 administered.  The Fund audits were performed by my staff, under
 my direction and supervision, or by independent public accountants
 under contracts with the EPA/CIG.  As another example, the EFA/OIG
 conducted an audit of EPA's planning,.negotiation, awarding, and
 administering of the Emergency Response Cleanup Services  { "ERCS"}
 contracts to evaluate the economy, efficiency, and effectiveness
 of the ERCS contracts.   The ERCS audit was performed by my( staff,
 under my direction and supervision.                       j
          18.  According to EPA's Financial Management Division
and CH2M -Kill's historical  contract documents, EPA expende^
 S3,415,396 at the Verona Wellfield site from November 1982' through

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                                 - JLi -
   January  1987  under  EPA  Contract  68-01-6692  with CH2M  Hill-.  .The
   EPA/OIG  has obtained  audits  of that  contract  for 1982 through
   1984  from  DCAA and  an independent public accountant.  For calendar
   year  1982, DCAA performed an interim audit  of the $386,256 in
   costs claimed by CH2M Hill under this contract and accepted all
   the costs claimed.  See EPA Audit Report 50790.   For calendar
  year 1983, DCAA performed an interim audit of the $21,801,570 in
  costs claimed  by CK2M Hill under  this contract and accepted all
  the costs claimed.   (The $21,801,570 includes $12,471,036 in
  subcontractor  costs  which CH2M  Hill  actually paid;  DCAA  did not
  examine the books  and  records of  those  subcontractors.)   See  EPA
                                       <
  Audit  Report 50892.   Finally, for calendar  year  1984,  the most
  recent year audited, an  independent  public  accountant  performed
  an  interim audit of  $37,801,208 in costs claimed by  CH2M Hill
  under this contract and accepted  all  the costs claimed.   (The
 $37,801,208 Includes $25,430,843  in subcontractor costs  which
 CH2M Hill  ?rt'j£l2" osif;  t^e ir.der
-------
 standards and are  typical of  those audits accepted by  Federal
 agencies".   Based on  the  results  of those audits, it  is my opinion
 that  $2,854,562 in costs claimed by CH2M Hill under  EPA Contract
 68-01-6692  at the  Verona Wellfield site from 1982 through 1984 is
 acceptable.   (For  1985 through 1987, CH2M Hill claimed 5560,834
 in  costs at  the Verona Wellfield site  under EPA Contract 68-01-6692.
 Those costs  have not been audited, and I express no  opinion about
 the acceptability  of such costs).
          20.  Based on all of the above information, and my
 personal knowledge of the audit  procedures used and  the audit
 results obtained,  I believe that the contracts, cooperative
 agreements,  and lAGs which EPA enters  into in support of the
 hazardous waste cleanup program  are extensively and  successfully
 audited.  I  believe that such audits ensure that all costs are
 properly incurred  in accordance  with all applicable  statutes,
 regulations, EPA policies, and Federal cost principles, and
ensure that  the hazardous waste  cleanup program is being managed
effectively  and efficiently.

     I hereby certify under pe-slty of perj-ry tr.at:  tc-  tne t-..-
of my knowledge and belief the foregoing is true and correct.
 Dated this   &
                      ERNEST E. SRADLEY^III
of
,  1988,

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                              ATTORNEYS.,- L/.'Y
O*V*fi wAM
o
                               August: 14, 1989
 Clerk of the Court-
 United States District Court
 Western District of Michigan
 410 W. Michigan Avenue
 Kalamazoo,  Michigan  49005

 Dear "ierk:

           Re:  Kelley v Thomas Solvent Company
                File No. K86-164 CA8
                United States v Thomas Solvent Company
                File No. K86-167 CAS

           Enclosed for filing please find original and two  copies
  f  Defendants'  Richard Thomas and jr_hgmas_
 Supplemental Brief in Opposition rb^tTnTted States' Motion'in
 Limine to Exclude Evidence, Motion to Exceed Page Limit  and Proof
           Thank vou.
                              Very truly yours,

                              FOSTER, SWIFT, COLLINS  &  SMITH,  P.C.
                                           •
                                        — XZ^Lh
                                   K. Richardson
LKR/CT
Enclosures
cc w/encs:   Robert P.  Reichel
             Nancy B.  Collins -''
             R.  Craig  Hupp
             James M.  Sullivan
             Hon.  Richard A. Enslen

-------

-------
                   UNITED STATES DISTRICT CODRT
               FOR THE WESTERN DISTRICT OP MICHIGAN
 FRANK J.  K2LLEY,  Attorney
 General  of  the State of
 Michigan? and THE STATE OF
 MICHIGAN,

                Plaintiffs,
THOMAS  SOLVENT COMPANY-  T"   -~
DEVELOPMENT,  INC. ;  ?'.
SOLVENT COMPANY OF  DE?RG.
THOMAS  SOLVENT J.:MPAN£ OF
MOSKEGON,  INC. ; "HOMAS SOLVENT,
INC. OF INDIANA;  TSC TRANSPORTA-
TION, INC.; RICHARD E.  ' =*OMAS ;
and GRAND  TRUNK WESTERN  RAILROAD
                                    File No.  K86-164 CAS
  MPANY,
                Defendants .
                                    Hon.  Richard A. Enslen
                                    Civil Action No. K86-167 CAS
UNITED STATES OF AMERICA,

                Plaintiff,
7* SJ ***M * O ^ »•* * * T^ 1 »-^ /^^"*^| ^ * * * V »
THwftAS DEVELOPMENT,.INC.;
THOMAS SOLVENT COMPANY OF
DETROIT, INC.,; THOMAS SOLVENT
COMPANY OF MUSKEGON, INC.;  -
THOMAS SOLVENT, INC. OP
INDIANA; TSC TRANSPORTATION
COMPANY; RICHARD E.  THOMAS;
and GRAND TRUNK WESTERN
RAILROAD COMPANY,

               Defendants.
       SUPPLEMENTAL  BRIEF  IS OPPOSITION TO UNITED STATES'
              MOTION IN  L:MIXE TO EXCLUDE EVIDENCE

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                            ARGUMENT

                                                       PAGE

                              *
 I.    SUMMARY  0?  ARGUMLKT  	  5

 II.   THE  LEGISLATIVE  HISTORY OF CERCLA IS  SKETCHY
      AND  UNRELIABLE	'	11
        *•»•
 III.  THE  GOVERNMENT'S STATUTORY ANALYSIS IS
      FATALLY  FLAWED	13

 IV.   DEFENDANTS  ARE  ENTITLED TO DE NOVO REVIEW OF
      THE .COST ISSUES  IN THIS ACTION .........  18

 V.    ASSUMING, ARGUENDO,  THAT JUDICIAL REVIEW IS
      LIMITED  TO  IHE  ADMINISTRATIVE RECORD, THIS
      ADMINISTRATIVE  RECORD  IS INSUFFICIENT FOR
      APPROPRIATE  REVIEW 3Y  THE COURT 	 '32

      A.   Summary of  Remedial Activities 	  32

      3.   Tne  Administrative Record is Insufficient .  40
yi.  ASSUMING THAT  JUDICIAL REVIEW IS LIMITED TO THE
     ADMINISTRATIVE  RECORD,  SUCH REVIEW APPLIES ONLY
     TO MATTERS OF  DISCRETION	-44
VII. FEDERAL CONTRACTING  AND PROCUREMENT REGULATIONS
     ARE INSUFFICIENT  TO  ASSURE A PROMPT, ADEQUATE AND'
     'COST-EFFECTIVE  RESPONSE	46-

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                   UNITED STATES DISTRICT COURT
               FOR THE WESTERN DISTRICT OF MICHIGAN
 FRANK J.'KELLEY, Attorney
 General of the State of
 Michigan; and THE STATE OF
 MICHIGAN,

                Plaintiffs,
 THOMAS SOLVENT COMPANY; THOMAS
 DEVELOPMENT,  ISC.   THOMAS
 SOLVENT COMPANY 0:  DETROIT    'T. ;
 THOMAS SOLVENT CC:  ANY OF
 MUSKEGON,  INC.; T:i-MAS SOLVENT,
 INC.  OF INDIANA; TSC TRANSPORTA-
 TION,  INC.;  RICHARD E. THOMAS; .
 and  GRAND  TRUNK WESTERN RAILROAD
 COMPANY,

                Defendants.
UNITED  STATES OF AMERICA,

                Plaintiff,
THOMAS  SOLVENT COMPANY;
T-::•".;.s  DEVELCPMENT,  INC.;
THOMAS  SOLVENT COMPANY OF
DETROIT,  INC.,;  THOMAS SOLVENT
COMPANY OF'MUSKEGON,  INC.;
THOMAr  SOLVENT,  INC.  OF
• I .« L. . rwv-i I  . C.'x_  i ;^-_> i jr ^r. *r. . _ - .»
COMPANY;  RICHARD E.  THOMAS;
and GRAND TRUNK WESTERN
RAILROAD  COMPANY,

                Defendants.
                                    File No. K86-164 CA8
                                    Hon. Richard A. Enslen
Civil Action No. K86-167 CA8

SUPPLEMENTAL BRIEF  IN
OPPOSITION TZ UNITED STATES'
MOTION IN LIMINE TO EXCLUDE
EVIDENCE

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 Stewart H.  Freeman  (P13692)
 Robert P.  Reichel  (P31878)
 Attorneys  for Plaintiffs  Frank
   J.  Kelley and.  State  of  Michigan

 F.  Henry Habicht,  II
 J.oel  M.  Gross
 Steven J.  Willey
 Assistant  Attorneys General
 Attorney for Plaintiff United
   States of America

 John  L.  Collins  (P12065)
 Charles  E.  Barbieri (P31793)
 Attorneys  for Defendant Thomas
   Solvent  Company and  Richard E.
   Thomas
 313 South  Washington Square
 Lansing, MI  48933
 Telephone:  (517) 372-8050

 Fredrick J.  Dindoffer  (P312?l,
 Attorney for  Leienaarits Grarv-
   Trunk  Western  Railroad

 James  M. Sullivan (P21143)
 Robert P. Hamilton  (P14575)
 Attorneys  for Defendants Thomas
  Solvent of  Detroit,  Thomas
  Solvent of  Indiana,  Thomas
   Solvent of  Muskegcn,  Thomas
   Deve-lopment  and TSC  Transportation
       CTJCCT r
                             Qppoc •"" T
              MOTION  IN LIMINE TO  EXCLUDE  EVIDENCE

          The United  States'  has moved  to exclude  evidence

challenging the costs allegedly incurred by  the  federal

government for removal and remedial  activities undertaken at the

Verona Well Field in  Battle  Creek, Michigan.  Essentially,  the

government moves to strike all defenses to the claimed costs,

arguing that because  the money was spent by  the  United States, it

was incurred not inconsistent with the National  Contingency Plan.

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 In truth,  tne government  s cleanup operations ace expectea to

 Jouble the initial  $2.5 million estimate.  Because of the massive

 ~ost  overran,  the soil vapor extraction system and groundwater

 Extraction systems  were recently shut down while the federal and

 state governments quarreled over the contracts.  See excerpts

 from  the Battle Creek Enquirer, appended as Exhibit A.  For the

 reasons set  forth herein  as well' as in previously submitted

 briefs-. n°*r=>ndants  Thomas Solvent Company and Richard Thomas

 oppost         ernments' motion.!

                          INTRODUCTION

           ...is action is  brought by the United States pursuant to

 §  1C7* of the  Comprehensive Envircrjnental Response., Compensation  &

 Liability  Act  ("CERCLA"), 42 U.S.C. S 9607, for the recovery of

 costs  allegedly incurred  in implementing a remedial action  to

 address hazardous substances in the Verona Well Field.  As  of

 Sarch  B,  1989, the United States claimed costs totaling
 ')
 $7,199,611.82  for remedial activities allegedly undertaken  a't  the

 Verona v- ;:;•.:•••,;••••.••   -.    "'    ' :'~ .
Isee, Richard Thomas and Thames  Sclver.t  Company's  Brief in
Opposition to United States'  Motion  for  Ruling as  to Appropriate
Standard and Scope of  Review  of  Agency Action,  filed on
January 30, 1988; Richard Thomas and Thomas  Solvent Company's
Supplemental Brief in  Opposition to  United States'  Motion for
Ruling as to Appropriate Standard and Scope  of Review of Agency
Action filed on March  15,. 19-88;  Thomas Solvent Company and
Richard Thomas'.adoption by  reference of Grand Trunk'Western  .
Railroad's Briefs Regarding Appropriate  Scope and  Standard of
Review filed January 29, 1.988 and March  17,  1988,  and Thomas
Solvent Company and Richard Thomas'  Opposition to  United States'
Motion for Summary Judgment  filed December 2, 1988.

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government but has no bearing on  the  issues  addressed by the
motion ir. iimine.
          The United States  filed this  motion  on December 23,
1988. -Defendants  filed a  response and  brief in opposition to the
motion on January  17-, 1989.
also has claimed costs of $949,723 for response actions allegedly
undertaken at the site.
          Cross motions for summary judgment have be;. . t.iled on
the liability aspect of this litigation, and they presently
remain unresolved.  Although these Defendants deny that they are
liable, the United States' motion in limine assumes that these
motions will be resolved  in favor of the Plaintiffs..
          There are also  pending before the Court motions for
summary disposition regarding the recovery or disallowance of
certain costs claimed by  the federal and state governments.  The
Ccurt has entered a consent decree resolving the costs allegedly
owed by Grand Trunk Western Railroad.  The entry of the consent
decree affects the ultimate liability, if any, of the  Thomas
Defendants insofar as the government has attempted  to  attribute
certain costs to Grand Trunk western Railroad  ($5,495.75 of  the
                                                                    V'
federal costs) and ethers to the Thomas Defendants                  '^^
•'- • • .: • • ' ~* ,   ----;:: t :'. 7". ~f ~u~ TC?S motions recarciir.a

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                              ARGUMENT


  I •    SUMMARY OF ARGUMENT


            The United States  declares  that  the -purpose .of its


  motion is to delineate the "reviewability  of EPA activities that


  follow selection or the remedy:   the  implementation of selected


  cleanup/'response'  actions and the  costs incurred  in doing'so,."


  United States'  Brief,  page 4.   The  real purpose of the


  government's motion is to conceal the truth  from this Court:'


  EPA's management of the Superfund program  has  been and continues -


  to  be^questionable  and even  irresponsible.   The government


  actually is seeking suppression of  evidence  that it  sanctions  the


  tvre cf overcharges and tilling practices  for  which  the  Defense


  Department has  been so heavily"criticized.   As an  example  from


  this case, indirect costs assessed  against an  employee's time  in


  some cases exceed the dollar amount paid to that employee,  and"
**""                »

   She indirect cost rates charged by  the government  to Defendants
,

  ar"? more than ten times those  permitted to be  charged by the





  their own contractors.  See, infra, at 20-22.   Neither does the


  United  States want  its technical measures  and  associated costs


  publicized for to do so would reveal an embarassment to EPA


  equivalent to that  of the Bradley "tank."


            The government objects to criticisms of- the cost


  experts,  arguing that they constitute a postcontract audit that


  frustrates the "goals of Superfund."  According to the United


  States, one of  the  goals of Superfund is to place the financial

-------
Burden of hazardous waste cleanup on those parties'responsible
for th«  problem.  Although this, in theory, may be true the
7'.  , :"*?!• •'.,  through its motion, also would have the potentially
responsible parties (PRPs) bear the financial burden of the
government's incompetence, dilatory tactics and excesses in
contracting simply because the government did the job.  Nowhere .
in the Superfund legislation, either in CERCLA or the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), is there any
statement that the wasteful actions of the government and its
contractors should be visited on the PRPs.
         • The United States also contends that review of the cost
of remedial activities undertaken by the government would
frustrate the second goal of Superfund, that is,  the
replenishment of the fund to address other sites.  This argument
is wholly specious.  There is no danger of Superfund  petitioning
for bankruptcy.  The fund is financed by excise  taxes  levied  upon
crude oil, petroleum products, and chemicals,  as  well  as'
penalties coiiecte-, punitive damages, or.a gen«rc.i  i^. r ~~r--^ ">---•""'*'
42 U.S.C. § 9507.  Only if the unobligated balance  in the  fund
exceeds S3, 500,000,000. will no tax be  imposed.   26  U.S.C.  S 4611
et'sejg.  Hence, the sources of  funding are unlikely to dissipate
if the Superfund has obligated  its  funds  as  alleged.
          Moreover, it is doubtful  that  there  are "thousands of
other hazardous waste sites  in  the  country that remain not
addressed."  The National Priorities  List,  40  CFR Part 300, App,
B, identifies and  ranks 770  non-federal  sites  which have been

-------
 identified  for the purpose of taking remedial or removal actions.
  2 U.S.C. S 9605(a).  An additional 32 federal sites are listed.
 The Verona Well Field is rr.'ikeci 227 on this list.,  and there are
 16 sites  in Michigan ranked higher.  There is absolutely no
 evidence  to suggest that other sites have not been added to this
 list because of this cost recovery action, nor is there any
 showing that remedial actions at sites with higher priorities are
 suffering due to this cost recovery action.  Moreover, Michigan,
 like many states, has developed its own environmental response
 program, which has spent over S34 million addressing over 400
 sites already.  See MCL § 299.601 e_t seq.  In order to provide
 additional funds for the state program, Michigan voters approved
a massive $660 million bond proposal last year.  See MCL
5 299.651.
          Finally, the government argues that review of the
selected remedial actions and the governmental audit procedures
ere sufficient to safeguard Dfef sr.iarits'  interests'.  Acain,  in
 theory this may be true.  But, where,  as here, the  administrative
record is not produced for review until  December  1988,  more  than
five years after EPA became active at  the  site, after  the  close
of discovery, less than one month before  the  originally
anticipated trial date, and after more, that  $7 mill-ion of
expenditures^, one scarcely can say that  review of  the  record by
the court or any other entity provides Defendants  with any
assurances of the reasonableness of  EPA's  undertakings.  The
administrative record is notoriously silent  on  the specific costs

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of performing the various activities at the site.   Indeed,  in
support'of iti. cost recovery claims, the government provides
recci   .-!•'. r    -r\iry • cuchers totaling $20,203,807,  of which the
United Statr. claims $22,934.57 was spent specifically for
activities ac. the Thomas Solvent site.  None of these vouchers or
any other vouchers are included in the administrative record.
Defendants only have been provided with copies during discovery
in the cost recovery phase of this action.  This situation is
particularly egregious because there is no evidence of control of
the site by the federal or state project managers,  the onscene
coordinator,  or the zone contractor.
          For example, Patricia McKay assumed her responsibility
as project manager in approximately May 1984.  Prior to that
time, -she only had worked on one Superfund project and, on that
project/ she simply performed some community relations duties.
See McKay deposition, November 4,  198p, pp 21-23.  When asked  to
describe what she was required to do as project- manager on a
Superiuni site, y.s.'-x-f.*y -a,* -ni-._ -.c-_provide an answer.  ^ .
at 6,  Ms. McKay stated that she had not  received  any  instruction
in cost control or cost recovery on Superfund projects until  two
days prior to her deposition.  Id,  at  12-14.  Ms.  McKay admitted
that she never compared costs for  running water samples among the
various facilities.  Id. at 77-78.  More  importantly,  when asked
how she cou-ld monitor costs of a contractor  when invoices were
not sent until almost nine months  after the  project  was
initiated, Ms. McKay was only able  to  say that  she relied upon

-------
the contractor's  'work plan," which was made for a "hypothetical

site."  Id. at 83-85.  In fact, Ms. McKay never reviewed the

contractors'  bids prior to the time that they were accepted in.

this instance.

          Q:    As project manager at the Verona' Well
               Field, did you review the contractors'
               bids prior to the time that they were
               accepted?

          A:    No, I did not.

          Q:    So, you had no —

          A:    The bids f^r the level of effoi
            '   contract I did not.

          Q:    Who selected these contractors for the
              ..Verona Weil Field then?

          A:    It is through our department of
               management and budget, and there are a
               number of staff members on a committee
               and it's — a committee basically makes
              • decisions of the final assignment coming
               through our office or the department of
               management and budget.

          Q:    Were you ever involved or consulted to
               say, here are'six contractors -putting a
               'z I "* i" on this? rrc^-~T  ':~ 	.- i"*" ? i0***?

               -_:.= iruccet that they propose?

          A:    I was not involved in the hiring of the
               level of effort contractors.

          Q:    How did the people who are involved  in
               the hiring of the level of effort
               contractors evaluate these contractors
               as far as.their ability to complete  the
               work and stay within their proposed
               budget if you knowledge as to  how  that
               takes place?

          A:    Well I don't know exactly, but  I  know
               that they consider their ability  to
               respond to a hypothetical problem.

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 Id. at  85-86.  More disconcerting  is the fact that although Ms.
 McKciv n£u tae respo .•"'••>.'• . .  x-t a-.ji r.^rising initiation of .
 paymcjr.. o/. approval o..  L'..^.  ;. *. leer., slie simply reviewed the
                                                •
 invoice to verify that  services were performed.  Id. at 88.
 Thus, by the project manager's  own  admission, there, is no
 consideration as to the quality of  work performed at the site  and
 the cost effectiveness  of  the work  as  it proceeds.
          What the government proposes is directly analogous to
 permitting the fox to guard  the chicken coop.  The government
 protests that the challenges to its cost practices only can  be
 clone through review of  the administrative record and then  only
may be found to be inconsistent with the National Contingency..
 Plan,  if this Court finds  that  the  remedy selected was  not
 arbitrary and capricious.  Not  only is this  argument logically
 flawed,  but it also has no basis in fact or  in  law.  It  is
 Defendants'  position that  even  if  the  Superfund Amendments and

 selection of the remedy to the  administrative  record,  Defendants
 are entitled to de novo review  of  whether the  costs  claimed by
 the federal and state governments  were inconsistent  with-the
National Contingency Plan.   Alternatively,  if  this  court    .  .
concludes that review is  limited to the  administrative record,
Defendants contend that the  record in  this  case is  incomplete,
 replete with errors and omissions,  and therefore should be
 remanded to the agency  for completion  and  amplification.
                                  10

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 II-   THE LEGISLATIVE  HISTORY OF CERCLA IS SKETCHY AND UNRELIABLE

           Most  of  the arguments contained in the government's

 brief  are based upon  the  "legislative history" of CERCLA, and it

 attempts  to extrapolate excerpts to apply to this situation.

           Contrary to the  federal government's assertions., CERCLA

 is  "not  a  model of legislative draftsmanship."  Exxon Corp. v.

 Hunt,  475  U.S.  355 (1986).  Indeed, because Congress enacted

 CERCLA in  December 1980 at the er.-i of a  "lame duck" session,

 there  is  a paucity of comprehen.   • '. - -  ! »tive history.

           CERCLA or Superfund, wdi  . ._.  - '     '.he
           closing  months of the 96th Congres   ~~ a
           legislative response to the growing problem
           cf toxic  industrial wastes, many of which,
           having been disposed of before their toxic'ity
           was widely  known, had contaminated the land
           and water resources of American towns and
           cities.   CERCLA was a legislative attempt to
          create a coherent response to  the dual
           problem  of  emergency response  to releases of
           toxic  chemicals  into the environment, and
           short- and  long-term response  to the presence
          of toxic  waste in existing dump sites, many
          of which had been abandoned by any party who
          could  be  held legally or  financially
           - ' - -   - '-•  - " •   -' - -  -'-.-; - ' c. x •» •; £    7* h ci ." '"*.', 7 •; 35
           it was iinaij.y enactea was tne prcauct o£ a
           long  and tortuous process of legislative
          compromise,  and  is far from being a  model of
           statutory or syntactic clarity.   (footnotes
          omitted).                       •

Cltv cf New York v. Exxon Corp.. 633  F.  Supp.  609,  613-614

 (S.D.N.Y.  1986).

           No fewer than three major  hazardous substance response

bills*  reached the  Senate . for consideration  in  addition  to the
            * '                            /

Carter administration's bill, which died in committee.   1

Environmental Law  Institute, Superfund:  A  Legislative  History
                                  11

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 xiii,  (1983).   Of  these,  one was  challenged &s too comprehensive,



 and  the other  two., ss  v.(,.=-  v".--.-9.k.. • A s.ihstitote  Till was n-\?sed as



 an amendment- to HR '/'.:  .   •  .1 •: h orient    : ,      ' ed  , .^uud,



 financed  from  a tax ox  , .! .  and c hen i:. ale an<"  Crom general



 revenues, to support  government response to releases of haza -Jous



 substances  from inactive  hazardous waste sites.  Id .  See, also,



 Exxon Corp. v.  Hunt.  475  U.S. 355, 365, n.8.   This bill was



 enacted by  both houses  and  became effective as soon as it was



 signed into law on December 11, 1980.   Unfortunately, these



 actions dictate that  "the Committee Reports and  other legislative



materials regarding CEr.CLA  are duiicus  sources fcr  interpretation



cf- -_he statute,  which  in  its final form reflected  legislative



 judgments which differed  substantially  from those  incorporated in



the earlier House  and  Senate bills."  City of New  York v.  Exxon



Corp. .  633  F.  Supp at  613,  n.2.



          The  inexactitude  of the government's own analysis  of



the legislative histrrv i=  illustrated  bv th? Supreme Court's



                                _vrr2 .   Althouch  not  a   artv  to
the action, the United States  appeared  as  amicus curiae,  offering



the government's interpretation  cf  a  CERCLA provision.   The Court



rejected the Solicitor General's arguments,  noting that the



Solicitor's explanation of  the legislative history of all of the



proposed hazardous substance  response bills was inaccurate.  475



U.S. at 367, n. 10.   Defendants  contend that the United States'



arguments in this action  are  similarly  misplaced.  Consequently,
                                  12

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 the  reliance on  legislative  history so heavily argued by the
 United  States in its  brief 'should be disregarded.
 i ?J . .THF GOVERNMENT'S  STATUTORY ANALYSIS  IS FATALLY FLAWED
           In  its Brief,  the  government correctly states that the
 Hazardous  Substances  Response Trust Fund  (Superfund) was
 established by CERCLA  and reauthorized by SARA.  There its
 accuracy concludes.
           United States  asserts that Superfund was established
 "to provide a prol      --kir- -apital that would enable EPA to
 addr    expeditious!/  the nazards at problem waste sites" and
 relies  :pon 42 U.S.C.  §  9511 in support of its assertion.  This,
 hcwever, is the  government's characterization of the  fund,  for
 nowhere in '§  9511 is  it  stated that the fund is  for  "working
capital" to "expeditiously"  address "problem" waste  sites.   In
 fact, Superfund  is available for remedial actions when used
 "consistent with the National Contingency Plan."   42  U.S.C.
§§ 9504 (a), 9511(a)"( 1} .  There is ho-requirement that the fund  be
ucc- i;. «n.--i' -•-.". ;Y si~	__;;:._, without pl&.".r.^..-,  •;._  i-~ waste
sites considered by someone  to be a "problem."   Although  CERCLA
authorized the use of  the  fund in the event .of  an  emergency,  that
obligation discontinues  after $1,0.00,000  is  obligated or  six
months  has elapsed from  the  initial response.   SARA increased
this limitation  to $2,000,000 and  12 months  from the initial
response.  42  U.S.C..  S  9504fc)(l).
          Additionally,  the  government  contends  that Congress
 "sought to 'insure that  those responsible for  any damage,
                                  1-3

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 environmental  harm  or  injury  from chemical poisons bear the cost


 of  their  actions.'"  From  the assertion ri.«ir. respons '.ble part;es


 be  held responsible  for  the cost ox  J.. .. -  .;,,-txons, ..",•' .;.-,...


 States then concludes  that the Attorney General  is tc recovei


 "a11  of the monies  expended by EPA  from the Superfund for si t«


 investigation,  studies,  cleanup and  the cost of  enforcing the


 provisions of  CERCLA."   Not only is  this bootstrapping one's


 argument, it is directly.contrary to law.


          CERCLA provides  that liability shall attach for all


 costs of  removal or  remedial  action  incurred by  the  United  States


 Government or  a State  net  inconsistent with the  National


 Cent ir7="-"'•' "Ian ("NC?") 'and  any other necessary ccsts of


 response  incurred by any other person consistent with the


 National  Contingency Plan.  42 U.S.C. SS 9607(a),  9611(a.).  The


 fund  is also authorized  to be used  for certain peripheral


 matters,  including  the costs  of assessing injury to  natural


 resources, the cost  cf restoration  or replacement of natural


 resources, "he costs cf  epidemioJ.ogj.cal or other heaitn  studies


 and certain other limited  expenses.   42 U.S.C. S 9611(a),  (c).


 Both CERCLA and SARA specifically preclude use of the fund  for


 payment of administrative  costs or  expenses unless-they  are


 reasonably necessary for and  incidental to the implementation of


 the Act.  42 U.S.C.  S  96ll(a).


          .Consistency  with the National Contingency  Plan is not a
              i

 simple matter.  The  government implicitly assumes that  if money


was expended from the  Superfund  for actions undertaken  at a site
                                  14

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 on the National Priorities List, then ipso facto the  costs were

 .incurred consistent, with the National Contingency Plan.

           EPA's owr. regulations, however,  require more.  .Although

 the National Contingency Plan has evolved since the
         f
 implementation of Superfund, the Plan from its early  inception

 has required some form of cost benefit analysis.

           For example, the National Contingency Plan  presently

 requires EPA, in cooperation with the State of Michigan, to

 develop an analysis of certain data during the remedial

 investigation (RI) in order to develop the "scope" or type of

 resczr.se to remedy the release.  40 C.F.R. S 300.68(e).  Certain

 a 1 ~ err.21 ives are also rec'jired ts te developed and considered,
 »                                              *
 including alternatives that meet or exceed all applicable federal

 and state public health and environmental requirements, those

 that do not, and a "no action" alternative.  40 C.F.R.

1$  300.58(f).  When evaluating the alternatives  for'implementation

 as  part of the feasibility'study, one of  the three broad criteria

 i.  t-i used ~r; i.re-ar.ir.g is the cost:

           For each alternative, the cost  of
           implementing .the remedial action must  be
           considered, inclucir.g operation and
           maintenance costs.  An alternative that  far
           exceeds the costs cf other alternatives
           evaluated and that does not provide
           substantially greater public health  or
           environmental protection or technical
           reliability shall usually be excluded  from
           consideration.

 40  C.F.R.  § 300.68(g)(l). .
                                   15

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           The other two criteria are  contribution  to  the
 protection of the public health and welfare  and  env; ro.u..- - ,  and
 conformity with acceptable engineering  practices.    <•:„  ... .r-'.K.  §
 3Q0.63(g).  After the alternatives  are  narrowed,' a more detailed
 analysis  is required, including "detailed  cost estimation,
 including operation and maintenance costs, and distribution of
 costs  over time."  40 C.F.R.  § 300.68(h)(2)(i).  The  appropriate
 extent of a remedy is determined to be  the cost-effective
 remedial  alternative that  effectively, mitigates  and minimizes
 threats £.0 and  provides, adequate protection  of the public health
 and  welfare  and  the environment.  40  C.F.R.  5  300.68(i){ 1 ) .
           The  regulations  further mandate  the  accumulation of
 documentation  "to support  all  actions taken  under  this  plan."  40
 C.F.R.  §  300.69.   This  includes an  "adequate accounting"  of
 federal costs  incurred.   Id.   EPA is  authorized  to make
 interagenc-y—agreements  and to  use its existing authority  to
 expend  funds.   "The ultimate decision as to  the  apprcrrii:.^-.?^:
 of spending  funds rests  with  the agency that is  'held  accountable
 for such-expenditures."   40 C.F.R.  S  300.69(d).
           Requirements  to  maintain  a  detailed  record  of
 expenditures and  to hold an agency  responsible therefore  are
 contrary  to  the  Government's assertion  that  judicial  review of
 costs expended at  a  Superfund  site  is limited  to the
 administrative  record.   Additionally, the  Government's  assertion
that the debits  against  the fund preclude  the  Court from  specific
 review of  the claimed costs is  belied by the requirements of the
National Continaencv  Plan  that  the  remedv  be cost-effective.
                                 16

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           The  United  States  lastly asserts that because SARA



 specifically states that  judicial review of the adequacy of a



 responsive :';tlon  shall b?. -i.r.ito'." to tha record, Congress also


 intended  to  limit  judicial review cf the costs claimed in the
         jT
           I

 implementation  or  enforcement of that response to the



 administrative  record.  This assertion flies in the face of every



 principle  of statutory interpretation.  Congress, in the



 amendments,  expanded  significantly and specifically the section


 of CERCLA  relating to civil  proceedings.  It chose to include



 provisions allowing for nationwide service of process, specific



 limitations  of  actions, and  provisions defining the need  for and


 extent of  an administrative  record "on which the  President will



 base..the selection.of removal actions and on which judicial



 review of  removal  actions will be based."  42 U.S.C. S 9613(k)(2)



 Neither in the  provision  regarding judicial review, nor  in that



 pertaining to the  preparation of an administrative record is any



 mention made of cost  recovery actions brought pursuant to 42



 U.S.C. § 9607.   Had Congress chosen to lir.-it the  review  of the



costs claimed for  implementation of a response,  it certainly



 cculd have specifically done so.  'Legislation should be  left  to



 the legislature, and  it is net  the province of  the  judiciary  to



 rewrite the  law.   U.S..Const, art I, $1;  U.S. Const, art III,  §2.



 See.  e ,o^, Travelers' Insurance Co. v. Connecticut,  185  US 364,



 371 (1902),  {"The  courts  are not authorized to  substitute their



 views for  those of the legislature.")
                                  17

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          -Moreover, it is disingenuous for the government to

 assert  :!ir-t review of the cost issues is limited to the

 cd-'   L  '..rai.iv*e record where an administrative record was not

 required before October  17, 1986.  At that time, almost 70% of

 the costs presently claimed by the United States had been paid..

 Consequently, review of  the costs on the limited administrative

 record  would be a meaningless exercise.

 IV.  DEFENDANTS ARE ENTITLED TO DE NOVQ REVIEW OF THE COST
     ISSUES IN THIS ACTION

          The United States asks this Court to believe that

 review of the cost issues is circumscribed by statute and

 supported by case law.   Contrary to :..~9 government.' 5 asoer-L-o;.,

 the legislative history  is silent as to the review to be accorded

cost claims by governmental and private parties undertaking

 remedial actions.  As the court in Art es1an Water Company v.

Government of New Castle'County, 851 F.2d 643 {3rd Cir.  1988),

observed:

          CERCLA is not  a paradigm of clarity or
          precision.  It has been criticized frequently
          for inartful drafting and numerous
          ambiguities attributable to its precipitous
          passage.  Problems of interpretation  have
          arisen from the Act's use of inadequately
          defined terms, 
-------
           Carter Administration.  That bill,  however,
           did not. receive careful study by a  committee,
           and voting on tho floor was controlled by a
           procedure that permittee, no amendn-ui-ts.,  ether
           than one previo"-1^; cleared.  The legic,:i a.:-.ive
           history,  therefor-c :-  furnishes at. best a
           sparse and unreliable guide to the  statute's
          'meaning.   (citation omitted).

 851 F.2d at 648.  Accord,  BCW Associates.  Ltd.. v.  Occidental

 Chemical Corp..  1988 U.S.  Dist. Lexis il275 (E.D.  Pa.  1988).

           As discussed,  supra,  the government argues that because

 SARA limits the  judicial review of the selection of a  remedy, it
         c
 also limits judicial review of  the costs claimed by the  United

 States  in  implementing the remedy."  Defendants have already

 ~e:r". .".31 r2~ec : :.•= fl£.ws xr.  tr.is  arrurr.er.t 35 this statute  is also

 notably  silent.

           The government also  states that "cost-effectiveness.is

 a term of  art in both CERCLA and the NCP . .  . [and] is  not a

 measure  of  whether  items of"cost were incurred in an economic or

 efficient  manner."   This assertion,  without a scintilla of legal

 support, is  simply  incredulous:  There is no  reason for.anyone to

 seriously  believe  that Congress intended "cost-effectiveness" to

 have any meaning other than the commonly understood meaning,

 particularly where  no care was  taken by Congress to define the

 term. 2   The American Heritage  Dictionary, Second Col.le_qe
2CERCLA defines  32  different terms used in this statute.  42
U.S.C..S 9501.   SARA provides definitions for 38 terms.  42
U.S.C. § 9601, as amended.   The National Contingency Plan,
promulgated as .regulations  by EPA, defines 45 terms.  40
C.F.R. § 300.6.   In none of these provisions is '•cost-
effectiveness" defined.
                                  19

-------
 Edition,  (1985), provides only one definition for the term "cost-
 ef f «c t \ ve " :
           ; '   -.
-------
 be nonexistent.   This constitutes denial of due process^at i'ts



 most basic level for, if the United States  were to prevail,  it



 could undertake  remedial actions-, at a site. o--.?yare the



 "administrative  record"  years later,  exercisa i..s discretion in
         s


 determining what to include in the record,  incur millions of



 dollars  in costs,  and present the bill to someone else without



 any opportunity  for questions to be raised  at any level by the  .



 billed party.  Any one who contracts  for services is entitled to



 an accounting  and  to obtain information regarding questionable



 expenses.   If  tr.e  expenses were ill advised, they are either



 withdrawn,  from the bill,  or the amount to be paid is negotiated.



           In this  case,  the government refuses to submit to this



 eminently  reasonable procedure.  The  reasons are obvious.  For



 example, the government  does not want the public, much less this



 Court, to  know the indirect costs assessed against an employee's



 time  in  some cases exceed the dollar  amount paid to that employee,



 For example, during the  life of this  project, Gerald F. Regan,  a
                         '. *"i cl £ *- t; ** -.«*,» V N— I\ €
Verona Well  Field.   The government not only now seeks to recover



his payroll  amount  of  525.28 for that hour but also S6i of



indirect costs!  £-;•_  X -'.---. ^':.L:\ rr. r :. i .-_i : -  .":•:'-. i r : ~ : r . -.;--•-•-r:-•: ;-



Exhibit B.   This  is  not an isolated  instance.  Another example  is



provided by  Jack  Kratzmeyer's time,  claimed to be TSRR site



specific.  See McGeehin Deposition 80, appended as Exhibit  C.



The federal  government claims that it is entitled to  $15,347.59



in payroll and.an additional $43,297.23 in indirect costs.
                                  21

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 Indirect cost claims  therefore  approximate  2.8  times the direct



 costs!   So*--  also,  e.g.,  pay vol.I period  "•  cf  1986, 'where the



 Uni'•.%•-:  '.  : ;.-s olair.-is   . ."  '=  •  v>nc  '•.   <-3'-Sn paid  to Mr.



 Kratzaio:'-ki  in payroll aiic' SO"  ?0 in  indirect costs.



           The government  alsu  does not  want  the public to



 know that the indirect costs charged by the  government to



 Defendants  (on the average,  approximately 250%) are more than  ten



 times those  to be  permitted  to  be charged by the State of



 Michigan (18.75%)  and far in excess  of  those assessed by some  of
                *


 their own contractors which  are in and  of themselves excessive.



 Dekar Depositicr.,  April  15,  1538, p.  1 = 3.



          As  an illustration, CH2.M Hill billed  its  indirect  costs



 at 41%  of all  direct  costs,  including  subcontractor time and



 assessed an  additional 121*  of  this  total for general and



 administrative expenses.   The  profit was  calculated based  on this



 amount.   Dekar Deposition Exhibit 5, excerpt appended hereto as



 Exhibit  D.   Pedco  applied a  rate of  2?* to  direct labor.   The



 architectural  and  engineering  services  industry, in comparison,



 generally calculates  indirect  costs  as  a  multiple of  1.5  to 2



 times the direct costs cf rrofessier.al  employees.  Dekar



 Deposition,  April  25,  i&8b,  pp.  1S4-195.  The engineering



 industry  standard  ranges  from  4 to 9%.



          The  government  also  does not  want the ine-fficiency and



excessive waste of its contractors,  resulting  in costs  of  almost



a million dollars,  to be  questioned.   This  includes-safety



measures. . Loughney. De'water ing,  which  was excavating and
                                  22

-------
 backfilling  contaminated  soil at the site,  was reported to have
 a "lack  of control  over personnel, equipment and materials or.
 site."   Exhibit  E.  CH2M  Hill, another contractor, admitted that
 it  had a  "poor information system with .respect to subcontractors '
 and that  it  was  unable to control direct and indirect labor costs.
 Exhibit  F.   Neither does  the United States want its technical
                                    s                             *
 measures  and associated costs publicized for to do so would
 r*v-:»l that  approximately $1.75 million in improper technical
 measures  were undertax-   it      -:' •    Fxhibit G.
          It is  clear that    .JLA ^-icea ,10 restrictions on the
 natur~    extent of judicial review of costs.  This case was
 initiated before the enactment of SARA, which only defined the
extent of judicial  review of the selection of .the remedy.  As
argued previously,  SARA'S review provisions cannot and  should not
 e applied retroactively.  United States v. Hardage, No.
CIV-86-1401-W, 17 E-L.R.  20242,  25 E.R..C.  1343  (W.D. Okla.  1986}
 ' - r.r-rT.cs:. *vre-.o as Exhibit T) ,  reh'g den, 663  F. Supp.  1280
 (1987) ("EPA cannot cite  authorities which involve judicial
review after administrative decision and action has  first  been
taken and' thereby attempt to limit this court's power-  to decide
the issues in accordance  with the judicial principles  of equity
.jurisdiction".) .  EPA selectively advocates the  retroactivity
argument, a  policy  of questionable ethics.  For example, in this
case and others, EPA asks the Court to apply.the  provisions*
                   4
limiting  judicial review  and application of prejudgment interest

retroactively.   However,  EPA has contended that  the  notice

-------
 requirements and statutes of limitations set forth in CERCLA and

 SARA are prospect ivr-ly.-: nr) icable or,  in the alternative,  do not

 apply to- judicial -.- •.•••,-   !•'*>•; cost i-.      -.. ••sit.   Sfcr.  €_._£,,

 United States v. Mot.jc-i • *u.-  vOS F.  Supp.  L^S (I'.N.H. 1985).

           Nonetheless, as indicated earlier, de novo judicial

 review of the cost issues is not  precluded by either CERCLA or •

 SARA.   Even assuming,  as  the government argues, that SARA's

 provision on judicial  review is retroactive, the statute clearly

 allows  this Court to review  the costs:  •   •        .

           In 'any judicial action  under  this  chapter,
           judicial review of any  issues concerning the
           adequacy of  any response action taken or
           ordered by the  President shall be limited to
           the administrative record. Otherwise
           applicable principles of administrative law
           shall  govern whether any supplemental
           materials may be considered by the court.

42 U.S.C.  §  9613(j)(l).   This statute,  in fact, anticipates that

there will  be challenges  to  the cost of implementation of the

remedy:

           I rv T'0*.*i?v 1 **;^7 aileced Tr**T-'~r"^vir"2l er*"""""; >  tr.e
          .court  may disallow costs or damages only if
           the  errors were  so serious and related to
           matters  of  such  central relevance to the
           action that  the  action  would  have been
           significantly changed had such errors not
           been made.

42 U.S.C.  S  96L3(j)(4).   This has been  substantiated by the

decision  in  United States  v.  Rohm & Haas Co.. Inc.,  669 F. Supp.

672 (D.N.J.  1987).   Therein,  the  court  concluded that while the

selection  of  the"remedy was  limited to  the administrative record,
                                  24

-------
    defendants'were .entitled to de. novo review of  the cost issues.


    Id. at 675-676.



              Applicable principles of  administrative law'allow



    judicial review of an agency action except where statutes
             /                            '       .                 •   .


    preclude judicial review or agency  action  is committed to agency



    discretion by law.  5 U.S.C.  S 701(a).   In this case, the only



    action committed to agency discretion is the s_election of the



    remedy.   Where the .-rp.lv cr principal dispute relates to  the



    meaning of a statu       —.    e controversy presents issues  on



    which  courts,  and nc.          -raters,  are  relatively more expert.



    Bar low v.  Collins. 397  U.o.  159 (1970).,  citing with approval



    Hard in v.  Kentucky Utilities  Co., 390 U.S.  1,  1-.  (1969)  (Harlan,



    J., dissenting).   Preclusion  of judicial review of administrative



    action is  not  lightly inferred.   Barlow  v.  Collins. 397  U.S.  at



  ,  166.   Judicial  review of  administrative  action is the rule,  and


III
^^non-reviewability the exception that must  be demonstrated.   Id. ;



    Abbott Laboratories v.  Gardner,  387  U.S. 136  (1967).



              The United  States argues  against permitting such



    challenges,  claiming  that if  a court were  to allow PRPs  to



    challenge  the ccst of the response,  it would open the floodgates



    of  litigation.  The government complains that  the cleanup of



    hazardous  waste sites would be delayed by  cost recovery



    examinations such as  sought here.   Suffice ite  to  say  that this



    argument  is  frequently  raised by governmental  agencies whose



   actions are  challenged.   As the court in Abbott Laboratories



   observed,  "(t]he  short  answer to this contention  is that the -
                                     25

-------
 courts are well' equipped to deal with such eventualities."   387

 U.S. at 154-155.3

           The United States is also - •     ..-i.--i.aken ••'•.-..:•• '-.

 contends "that case law supports its esteci^ori that alj  cost.---

 regardless of how wisely spent, are recoverable from alleged FRPs.

 Contrary to the United States' assertj.cn,  this is basically a .

 ca-se of first impression.  Essentially,  only five cases have

 addressed any of the issues that have been raised by the

 Defendants regarding the government's claimed costs.  United

.States v.  South Carolina Recycling & Disposal Inc. ("SCRDI"). 653

 F.  Supp.  984 (D.S.C. 1984); United States  v. Northeastern

 Pharmaceutical & Chemical Co.. Inc. ("NEPACCO"1.  579 F. Supp. 823

 (W.D.  Mo.  1964), af£'d 810 F.2d 725 (8th Cir. 1986); United

 States v.  Northerr.aire Plating Co.. 685 F. Supp.  1410  (W.D. Mich.

 1988),  appeal docketed sub nom. United States v.  R.W. Meyer. No.

 88-2074 fSth Cir.  November 1.,   1988); United States v. Ottati &

 r:.->c-<; (  coj  p.  pur-.  C~'"J 'D.N.H. 1999; Urited Statp«= v. y^nsarrt^

 Co., 858  F.2d 160 (4th Cir. 1988).

           In only one of these cases have the defendants

 challenged the governments ' --.-rr.izici ace cunt, in-- ci response costs
             *
 3lt  is  noteworthy that the government in Abbott Laboratories was
 advocating precisely the same type of issue that the government
 raises  in this case.  "The Government relies on no explicit
 statutory authority for its argument that pre-enforcement  review
 is unavailable,  but insists instead that because the statute
 includes  a specific procedure for such review of certain
 enumerated kinds of regulations, not encompassing those of the
 kind involved  here, other types were necessarily meant to  be
 excluded  from  any pre-enforcement review."  387 U.S. at  141-.   The
 Supreme Court  rejected this argument.

-------
  as the Thonas Defendants in this action do.  The issues in SCRDI



  £;-id' Monsan'.'-P soleJy address the award of prejudgment interest.



  sCHOI. 653 F. Supp.-at K"'9; 'Monsanto. 858 F.2d at 175-176.



            The court in Northern_a_i..re Plating found that Defendants



  did not produce any evidence in most cases .to suggest that there



  were more cost-effective alternatives available.  Where such



  evidence was produced regarding a title search, the court denied



  the government's summary judgment motion.  Northernaire Plating,



  685 F. Supp. at 1416-1417..  This supports Defendants' argument



  th'i  2 deta:. =d review is necessary and justified.  Judge Hillman



  al'5?-  s^cressed the reccverv cf. indirect costs ar.d trre^udTment



'  interest in the Northernaire Plating case but purely on legal



  grounds.   Id.  at 1418-1421.   Defendants in this case challenge



  not only the legal' basis for the recovery of those costs but  also



  the methods of calculation and reasonableness of those costs,



  particularly with respect to indirect costs.



          "  In the Nll-r.-,-.1 - -iZi'i »or.-, tne appfe-i
-------
 costs by the government and that the sweeping  language  of  the

 opinions is dicta to the decision that .defendants  bear  the burden

 of proving that the costs incurred were  inconsistent  • '  '  :•'-,,»  NCP.

 At the time of the District Court's decision in  NEPACCO. the
                                                      *

 government had failed to submit an itemization of  the costs

 incurred,  and Defendants were allowed only 20  days to object to
                                *•
 the costs.

           Finally,  in Qttati & Gos.s,  the court examined the

 individual cleanup costs claimed by the  government.   While most

 of  the Court's opinion was  dedicated to  the attribution of costs.
                                                         «
 among  the  defendants,  many  costs were challenged by the

 aeier.aa.-ts anci disallowed.   For exa.ir.ple,  the ccurt. disa-liDwed

 approximately $2,000 paid by EPA to GCA  for the  services of

 expert hydrogeologists and  toxicologists,  694  F. Supp.  at  989,

 and  reduced the E&E costs chargeable to  both defendants by more

 than $88,000.   Id.  at  990-992.   Other specific costs were

 decreased,  including EPA payroll at the  regional level. The

 c~'-ir~  further disallowed the r^ccv&rv of indirect  ccs^s ciii

 prejudgrnent  interest.   Id.  at 998.

           These five cases  also are instructive  because the

 vigor  with which  the defendants contested the costs appears   . "

directly related  to the- size of the claim.  Defendants  in

Northernairs  Plating were presented with a bill  totaling

 $330,433,  inclusive of prejudgment interest and  attorney  fees and

costs.   In  Monsanto,  the government .claimed costs  of $1,800,000.

T;he government  in Ottati &  Goss claimed  costs in excess of
                                  23.

-------
 S5.8 million exclusive of prejudgment interest,  state costs  and

 future costs.   The court's review decreased  r.his  amount  by

 approxima-'-.l.y  V, . 5 million.   Altaaixrh review cf  the  claimed  costs

 may be more time-consuming,  it is required by law and justified

 as  the gsverr-T.ent  accrues increasingly larger bills.  In this

 case,  these Defendants challenge about 50  percent of the

 government's claimed costs.   See Dekar Exhibit 17, appended

 hereto ar  "xhibit  G.=-.

           The  issue of proof  of.costs is not unique  to  government

 cost recovery  issues.   For example,  in City  of New York v.  Exxon

 CHIT.- '  -u ~ r_- >  New'  Vcrk City  sought, recovery  of costs incurred  in

 the removal  of  hazardous  waste from the landfills, declaratory

 relief  for  future  costs and damages  for injury caused-to natural

 resources allegedly affected  by toxic wastes by the  landfills.

The Court observed that:

           (T]he city must demonstrate that its present
          and  future cost of  responses are "necessary,"
          ar.d  are  "consistent with the National.
        ."  ~.~ntir.r-'. :••/  Flan."   But this is  r.rt e, r?=ttrr
          or pleaaing;  it is  a matter of proof.   As
          other courts  construing this provision have
          observed,  consistency with the NCP is not  a
          matter which  can be resolved on  a  motion to
          dismiss;  11  is  a question of fact  to be
          cetermnea at a trial u^on-the merits.
          (footnote.omitted)  (emphasis added).

633 F.  Supp. at 616,  referencing Dedham Water Co. v. Cumberland

Farms Dairy. 5-88 Fr  Supp.  515,  517-518 (D. Mass.  1983); City cf

Philadelphia v. Stepan  Chemical Co..  544 F.  Supp. 1135, 1144 & n.

16 (E.D. Pa. 19.82).   Although the statute  provides that the

federal and  state  governments may recover  all costs  incurred not
                                  29

-------
inconsistent with the National Contingency Plan while others  may

rec-'V . those consistent with the National Contingency Plan,  this
        ,*
is -  "distinction without a difference,"  and the requirements of

factual proof remain.  633 F. Supp. at 616.

          In a recent amicus brief filed before the United States

Court of Appeals for the First Circuit,  the government has

asserted a position directly contrary to that advanced here.

United States' Amicus Curiae Brief, O'Neil v. Picillo, 682 F.

Supp. 706 (D.R.I. 1988), Appeal No. 88-1551, {1st Cir. argued

Feb.  21, 1989), appended hereto as Exhibit H.  In that case,

Rhode island brought a' CERCLA cost recovery action concerning the

Picilio site against Picillo, Rohm & Haas and America Cyanamid

Company.  Although EPA also had expended cost recovery money at

the site,  the federal government successfully opposed the
                     '   -
Defendants'  motion to compel their joinder.  Nonetheless, the

:--. -ril g--.--=rr-•:.'- deemed it appropriate to argue on behalf  of
                              C
the State in the appeal.

          As an amicus, the United States advised the Court:

          CEP.CLA itself prescribes the remedy for
          erroneous actions.  Section 107(a)(4)(A},  42
          U.S.C. S 9607(a)(4){A), allows the federal or
          state government to recover sums expended
          "net inconsistent with the national
          contingency plan."  Thus, the Congressional
          remedy for what defendants can demonstrate to
          be erroneous or mistaken response  actions  is
          to deny recovery of the specific ctfsts
          involved, and not to close the courthouse
          door to the government's cost recovery action.
                         * * *           '    .
          In order to demonstrate that costs are
          inconsistent with the NCP, the  appellant
          companies must show more than the  State took
                                  •30

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           actions that can be deemed  inconsistent with
           the plan.   They must demonstrate  the" State's
           inconsistent ac*_i--n \-iz  an  effect, .on  the
           costs sought to h2  recovered.   When  the
           alleged incon&if-t  .-.-.• is an erroneous
           decision on what should  to  be  done to  re;jj:ond
           to a site,  i.e.  ren.edy selection, this
           demonstration is si.mple;and prescribed, by  the
           Act itself.   Section" 113( j ), 42 U.S.C.
           §  9613(3),  requires a court to uphold  a
           decision selecting  a response  action  unless
           it is demonstrated  to be "arbitrary  and
           capricic'j-  or otherwise  not in accordance
           with law.'   42 U.S.C.  9613fj)(2).  .  .  .
           Thus,  if the government  performs  the .wrong
           response action,  such as building a  slurry
           wail tr contain the waste,  rather than
           removing the barrels,  the additional  costs
           incurred in taking  the erroneous  action  is
           not recoverable under the act.

           The appellant companies  in  the present case,
           however,  are not claiming tr.at the excavation
           of .the  drums in Phase I  was an improper
           response action in  selection;  instead they
           assert  that  there were mistakes in execution
           of  that response action.   In these
           circumstances,  the .companies have to
           demonstrate  the connection  between the
           alleged errors and  the costs to be disallowed
           For example,  if  a cleanup contractcr used
           clearly defective overpacks that  had .to  be -
           replaced, the costs of the  defective
                                         .
          TMs  is because  additional,  unnecessary cos.ts
          were  incurred  by the  clearly erroneous
          implementation of  the response action.
        ?.. at  1'214-1215.
          It therefore  is  clear  that the government has conceded,

contrary to its position  in  this case,  that Defendants must show

inconsistency with  the  National  Contingency Plan through a

factual exploration of  the costs incurred and their relevance to

the implementation  of the  remedy selec'ted by EPA.
                                  31

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ASSUMING, ARGUENDO.  THAT JUDICIAL REVIEW IS  LIMITED TO
THE ADhlK I STRATI VE RECORD.  THIS ADMINISTRATIVE  RECORD
i? -IMLLlll '-CIENT FOR APPROPRIATE REVIEW BY THE COURT
V .
           :.    r'tinc;  ::-• the government ,  the National Contingency

Plan has prs-.c, ibed a three-step administrative process for
                                i
selecting  a remedy for a site on the National Priorities List.

This administrative process includes the completion. of the

remedial investigation and feasibility, study, public notice, and

selection  of a remedy.  Indeed, the completed remedial

investigation and feasibility study must be made available to the

potentially responsible parties for comment and, prior to

selection  of the remedy, EPA must evaluate the comments and

submissions from the potentially responsible parties and then

issue a decision based upon a written  record which. includes the

completed  remedial investigation/ feasibility study, EPA reports

and data,  submissions from potentially responsible parties  and

the public, EPA's response to such comments, and other relevant

material.  See 42 U.S.C. § 96 13 ( k) ( 2 ) .. Not only has the remedial

investigation ana feasibility stuay  not Deer» completed but  also

information necessary to the evaluation of the costs and cost-

effectiveness of this project has not  been included  in  the

administrative record.

A.  Summary of Remedial Activities

           As this Court is aware, the  Calhoun County  Health

Department discovered during routine testing  in  August  1981 that

a few of the wells in the Verona Well  Field  contained. volatile

organic compounds.   In September of  1981,  the  Bureau of
                                  32

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 Environmental' and Occupational Health,  Michigan  Department of

 Natural Resources (MDNR),  transmitted  the  results of analyses for

 volatile halogenated hydrocarbons  from the vn.ijs and, aithcuuu  . :•

 increased number of  cancer deaths  later was  calculated on data

 collected in September,  the risk was felt  to be  greatly  reduced

 or eliminated due to a change  in pumping patterns.  Exhibit  I.

 On December 3,  1981,  Kellogg Company was advised that four of its

 five  wells  were  ' :nd tc rontain trie*1 -roethene (TCE),  which was

 unrelated to the contamination disc:;     •.  at the Verona  Well

 Field.   (AR,  IRM,  pp.  163-164 }.4  Keli.    immediately changed

 its water supply to  city water with the knowledge and implicit  ,

•consent  of  not  cniy  the  City of Battle Creek,  but also  the •

 Calhoun  County  Health Department and MDNR.   (AR, IRM, Vol.  1, pp.

 150-151,  196-197,  201-202).  Later that winter,  General  Foods and

 alston  Purina  were  added  as users of  the  city water  supply.

 AR,  IRM, Vol.  1,  pp.  150-151;  Vol. 2,  p.  523).  No apparent  -.

 consideration was  given  to the effect  that these large  users

 mi-g.it r.cfve  cr. the  spread cf  ccntirr.ination  through the we.l  iielr,

 even  though MDNR was  concurrently  applying for technical

 assistance  frcn the  Surer fund  rrcgrarr.  to address the  well  field

 contamination.

          Assistance  was not requested from  the  Technical

 Assistance  Team (TAT)  until  January  1982.   (AR,  IRM,  Vol.  1, p.
•^Citations are  to  the  Administrative Record,  Initial Remedial
Measure (AR,  IRK)  and  to  the  Administrative Record,  Thomas
Solvent Operable Unit  (AR,  TSOU),  filed by the.United States on
or about December  5,  1988.
                                  33

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 4).   On March 29,  1982, FcoJogy & Envi; ufMisnt (E&E) completed a
 groun.c.wc:'. r-T  nrudy to •i.depti.fv .Vot.enr . '•• #.:•  i.-^u.cces of contamination.
 Id.   : =  .. ' ;.;  the stuov.     :,.>    .-.r.ii   .-..j.in v.'.re drilled,  and
 water samples were collected.  Id.   in a two page report, E&E
 recommended  further sampling uf the groundwater, sampling of
 surface water,  and sediments at Grand Trunk Western Railroad,
 modeling to  determine the ground water movement, and evaluation
 of different methods of treatment to  determine that which was
 most  cost-effective.  Id.  This report was completed at a cos't of
 $46,369.09.   See Pretrial Order,  p.  391, TAT Contract costs
          Contamination continued to spread throughout the well
field throughout  the summer of 1982, but MDPH felt there was no
need to change  the  pumping patterns since plant tap samples
showed no presence  of chemicals.   Exhibit J.  Even so, EPA
identified the  Verona Well Field  on its interim national
r-icrities list.   (AR,  !?_".,  Vrl.  1, p.  522;.
          On August 20,  1982,  EPA Region V Administrator Valdus
A-iarr.k'js gave ThcT.as Solvent . Ccmpar.y 21  days to decide if it would
voluntarily undertake unspecified work  to abate unspecified
contamination.  {AR,  TSOU, Vol.  2, pp.  319-320).  If Defendants
did net respond within the required time, EPA indicated its
intent to ."initiate a full field  investigation" including, but
not limited 'to, hydrogeological  study,  feasibility study, and
initial remedial  action.   Id.
                                  34

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           Thomas Solvent Company did not  respond  to  EPA'-s demands.
 Consequently, EPA issued a work assignment  to  CH2M Hill, Its  zone
 contractor,  to prepare a Remedial Action  Master Plan (RAMP),  V-he
 RAMP,  also prepared in conjunction with E&E, was  intended to  be a
 plan for undertaking remedial investigation and actions  in  '
 response to  a hazardous substance release.   CH2M  Hill  defined the
 purpose of the document as development of a scope of work for
 practical remedial investiaation activities and feasibility
 studies,  as  well               *T*vltud^    -nions  of  cost for  each
 proposed  activity cr. ac-.on.    v.              2,  p.  510).   The
 cost estimates are expected to be accurate  within plus.50 percent
 and  minus 30 percent of the actual cost.   (AR,  IRM,  Vol. 2, p.
 516).
           The RAMP stopped short of recommending  specific
 remedial  actions because of the lack of information  necessary to
 conduct a feasibility-.s.tudy.   (AR,  IRM, Vol.  2, pp.  551-552,  568),
 Hcwever,  it  estimated that a  bettied water  orcgram,  as an  interim
 remedial  measure,  would cost  $33,400.   {AR, IRM,  Vol.  2, p.' 550).
The  remedial  investigation was estimated  at $524,000,  and within
this budget,  the ccst of drilling more monitoring wells (in
ad'dition  to  the  36  drilled by TAT and USGS) was proposed,  as  well
as more sampling costs.   (AR,  IRM,  Vol. 2,  pp.  552-569). A
feasibility  study was estimated to cost up  tc* $215,880.   (AR,
IRM, Vol.  2,  p.  580).   These  costs were not predicated on  any
data contained  in the report,  such as sampling costs,  drilling
costs,  actual  survey costs or epidemiological  studies that  had
                                  35

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   been completed elsewhere.   They were  not  even  "educated guesses,"


   for the government is r,c"~- claiming  $r07 ,713 . S'j  for the remedial


   investigation and. £•'"';  ""i:, •,...<  for t!   • •.   ;  •' " .'.ty s; uc
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           On October 21, 1983,  CH2M Hill  submitted the  final work"
 plan for the rrr-nedial investigation,  feasibility study, • community •
 r?'-tionr vcrk plan,  and interim treatment  facility design.   (AR,
 TSOU,  Vol.  3,  p.  672-742).   The .remedial  investigation  was
 projected to cost 5517,325.89 and the feasibility study
 $100,301.16.  (AR,  TSOU, Vol., 3, p.  704).   Again,  these numbers
 are sic-• ficantly inaccurate when compared, to  the government's
 present  *•   i.*n.
             -.hough  ot       ^ceived the focused feasibility  study
 resul^      ,er,  it wai.    -   ntil April 2-4,  1984 that Thomas
 Solvent  wds  advised by  P.      Jalbert,  EPA  Region V Assistant -
 Counsel,  that  a remedia.   .estigation 'and  feasibility  study  had
 been undertaken and that "based on preliminary data." an  interim
 remedial measure  consisting  of  new water  supply wells.and .
 construction of a barrier system would be initiated in  May of
 19-84.  (AR,  IRM,  Vol. 4, p.  1040-1041).   Thomas Solvent was given
 until close  of business  April 27,  1984, less than three days,  to
 decide if it wanted to  undertake the  $3.5 million project!   Id.
          On April.25,  1984,  an action memo requesting  an
exempticr. to the  six mcr.th time requirement of 42 U.S.C 5 104 
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 continued  to  pump,  and  an  additional  10 veils had less than 5 ppb


 of  total organic  compounds, well within .,.•• .^-.ceptable ranae.


 (AR,  IRM,  Vol.  4, p.  1035).



           The exemption was granted,  £.r..^ o>. hay 1, 19it?, only a



 week  after Thomas Solvent.was  notified of the proposed interim



 remedial measure, EPA decided  to implement the measure increasing



 the well field  capacity to 6 million  gallons per day,



 installation  of barrier wells, air'strippers, and a carbon


 adsorption system at  a  cost projected at $7.3 million.   (AR, IRM,



 Vol.  4, pp. 1051-1052).  At the time, then, that.this decision


 was reached,  the well field's  contamination had been known  for .



 almost three  years.   The precipitous  action by EPA was due  to the



 increased  demand created by General Foods, Ralston Purina and



 Kellogg Company, combined  with meteorological projections for a



 dry summer.   See, April 13, 1982 letter from Richard Wirsing to



 the City of Battle  Creek,  appended as Exhibit K and



 Administrative  Record,  Initial Remedial Measure, Vol. 4 , • r*p .



 1024-1028,   1051-1052, 1060.
 <•

           Numerous  revisions to the remedial investigation/



 feasibility study followed and, predictably, they all requested



 increases.   In  fact,  the July  3, 1984 work plan revision for the



 feasibility study requested total  increases of  133 percent  over



the original  and  "final" work  plan and budget.   (AR, TSOU,  Vol.



 3, pp. 966-967, 972-973).  In  none of these documents is there



any documentation of  the work  completed to date,  the  invoiced



amount, the cost of sampling,  the  cost of drilling,  daily  field
                                  38

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 logs, or any other information to assure  anyone  reviewing  the
 T;ccrd that, the proposed work was progressing  in a  reasonable,
 -ost-effect.;.y.fe ^ iii,-..,i»;--r.   5-rc-.  e.g.,  AR,  TSOU, Vol.  3,  pp. 951-975).
 .n fact,  the remedial investigation/feasibility  studies  and  their
 revisions,  and the records of decision  all  support  the
 Defendants'  assertion that EPA was  making "knee-jerk" decisions
 with  incomplete,  inaccurate and misleading  information.  Although
 the above-recited history is  contained  in the  administrative
 record   rPA clearly has-failed to undertake any  administrative.
 ac     '   isonably calculated  to yield'an  administrative  record
 that      .-es  any confidence  in EPA's actions  and decisions,
 especially  with  respect  to the ccsts cf the activities  undertaken
 or endorsed  by the agency.
          Thus,  although EPA  received mul-tiple page documents  and
 developed records  of  decision,  its  determination is flawed in
 more  than one  respect.   Initially,  Defendants  did not have an
 adeauate opportunity  to  review the  proposals by  EPA and evaluate
 thear alternatives  and the selection of the alternatives.
 Feasibility  studies that outline alternative remedial measures
must  be provided  to the  public for  review and  comment -for  a
period of not  less  than  21 calendar days.   40  C.F.R.  300.67(d).
Such  review  and comment  shall* precede selection  of the  remedial
 response.   Id. '  In  this  case,  Thomas Solvent had only two  days  to
three weeks  to review CH2M Hill's proposals and  agree to
undertake or reject the  proposed activity.   Thus, by virtue of
the fact that  EPA delayed any action whatsoever  for two years,
                                  39

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 and the City of Battle Creek refused to  restrict  access  tc  a



 known contaminated well field.,  Defendants  found thenseiver .



 without the opportunity to propose reasonable, and.  p  .    ..  i;s«



 costly, alternatives  to EPA's proposed remedial actions,  which



 would still be within the confines of the  National  Contingency



 Plan.



           Second,  even had Defendants been able to  timely review



 the proposals  put  forth by EPA,  no procedure  had  been established



 to  allow for input into the decision-making process prior to



 1986,  when the Superfund amendments were enacted.   In  fact, this



 option was never even provided  in  any of the  demands made upon



 Thomas  Solvent by  EPA.   Indeed,  as discussed  supra, there was no



 requirement  that an administrative record  be  developed  until  1986



 with the enactment of the amendments. Even at  the  present time,



 SARA's  procedures  for public comment and review  have not been



 implemented  as  required.



 3.   The	Adnini s t ra t ive Record is  I p. s u f f icient



           ».". li'~ Yfe^Ti^S r CI  1 ; ^ 3  ^.T vi Lr.itSd  i^^i^SS  Z^irCCUC-rZ -.vlc



 records of decision for implementation of  the 'bottled  water



 program, new wells, and the implementation of the barrier well



 system  which they  contend should be reviewed  by  the Court in



 ascertaining whether  the costs  incurred  in executing  such



measures were  consistent,with the  National Contingency Plan.



 However, these  actions are not  supported by the  administrative



 record, and  any limitation of the  Court's  review of the remedial



 activities and  the costs  incurred  in their execution  to date
                                  40

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•without fur-iVvr ; r.: - r:\ - _icr. ----»:^  'r-.  irrrrrr--:-;  ?"•-  -r rr.r -;. r-:tr  -.

 denial of due* prncess.

           -It '.-« Defendant's. po>.v:.',-!- .chat  -O..t  documents

 available, or arguably available,  to  the agency  should be  a

 portion of the  administrative record  and should  be subject to the

 judicial review suggested by Plaintiffs in this  case.   Calvert

 Cliffs'  Coordinating  Committee,  Inc.  v. United States  Atomic

 Energy Commission.  449  F.2d 1109  (D.C. Cir.  1971).   By analogy to

 an envir-.  :-•     impact  statement,  required under  the  National
                            *
 Environment.- Policy  Act of 1969  ("NEPA"),  42  U.S.C.  S 4321 et

 seq.,  the record need not be exhaustive but it must contain

 sufficient information  to permit  a reasonable  choice of

alternatives.   Natural  Resources  Defense Counsel.  Inc. v.  Morton,

458 F.  2d 827,  836  {D.C.  Cir.  1972).   An environmental impact

 tatement must  be  "succinct and examine all reasonable and'

 feasible ..alternatives,  and provide enough  information to make a

balanced,  well  reasoned  decision  as to the proposed project."



considerations  are required.

           "Environmental  amenities" will often-be  in
           conflict with  "economic  and technical
           considerations."  To "consider"  the  former
           "along with"  the latter must involve a
           balancing process.   In  some instances
           environmental  costs may outweigh economic and
           technical benefits and  in other  instances
           they  may not.   But NEPA mandates a finely
           tuned and  "systematic"  balancing analysis.in
           each  instance.   (footnote omitted).

           To ensure that the balancing analysis  is.
           carried out .and given  full  effect, Section
                                  41

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           102(2).(C)  requires .that responsible officials
           of  all  agencies prepare a  "detailed
           statement"  (the purpose of which] . .  .  is to
           aid in  the  agencies-' own decision making
           rrecess and to advise other interested
           agencies and the public of the environmental
           consequences of planned federal action.  .  .   .
           Only in that fashion is it likely that the
           most, intelligent, optimally beneficial
           decision will ultimately be made. . .  .   NEPA
           provides evidence that the mandated decision
           making process has  in fact taken place and,
           most importantly, allows those removed from
           the initial process to evaluate and balance
           the factors on their own.

Calvert Cliffs' Coordinating  Committee v. AEC, 449 F.2d at

1113-1114.

           Even  so, the review of the administrative record, as

suggested  by  plaintiffs, is not restricted to the four corners of

the administrative record.  the court must review the  entire

administrative  record, including the external documents .

incorporated  by reference into, the final document.  Id.   Indeed,

in applying the standards suggested  by plaintiffs in an action

brought pursuant to NEPA, the court  in National Cer.ter for

Preservation  Law v.  Lancrieu. 4.56 f. Su^p. 716, 724 (D.S.C.

1980), a f f ' d  635 F.2d 324 (4thiCir.  1980), defined the materials

necessary  for  review  as follows:

          The  Fourth Circuit  in Fayetteville Area
          Chamber of Commerce v. VcIpe,  515 F.2d  1021
           (4th Cir.  1975), stated that the focal point
           for  judicial review should be  the
          Administrative Record already  in existence
          and not some new record made initially  in the
           reviewing court.  Id. at 1024, citing Camp v.
          Pitts. 411 U.S. 138, 93 S. Ct. 1241,  36 L.
          Ed.  2d 106  ( 1973) .
                               *  * •  *
                                  42

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           In the case of As.arc_s.,	Inc. v. EPA, 616 F.2d
       v.    1153  (9.th Cir. L9GO), the Ninth CJ rcuit Court
           of Appeals d.i..cCv.->-:s«d in detail ccn.'iidfrr-cion
           of evidence oui.v;.•*> of the Adminictv.;:-j.-<
           Record.  in that case, the court ro:.ed thc.t
           if .an Administrative Record does not contain
           a satisfactory explanation of the federal
           agency's action, the court may require
           through affidavit or live testimony further
           explanations from the agencies involved.

 Accord,  Crosby v. .Young, supra at 1371-1372.

           The administrative record in this case does not include
                                               c
 any material necessary to evaluate the claimed costs.  The only

 cost information in the administrative record is the cost

 estimate within the RAX? and the Interim Remedial Measure and

 Focused  Feasibility Studies.   These estimates are

 "order-of-magnitude;1 .cost estimates and are expected only to be

 accurate within plus  50 percent and minus 30 percent of  the

lactual cost.   Hence,  they are not very realistic and do  not even

 provide  a good "ballpark" figure. -For example, the initial •

 re~vii-.l - •=: = i •_ - -i •	~_-...T.3tei in the :_:.__ •-•:. r.'. rlir. *.c erst

 5517,325.89.   Verona  Well Field Administrative Record,  Initial

 Remedial Measure,  Volume 3,  p 702.   The federal government  seeks

 compensation  fcr e.ctual costs expended cf 52 , 042,194 . £0  fc-r  the

 Interim  Remedial Measure.  See Pretrial Order, p 391-392.   Thus,

 the  government exceeded its  budget by 395%, not the 50%  factored

 originally.   Defendants therefore contend that judicial  review of

 the  "administrative record"  is inappropriate and that this  case

 should be remanded under the standard proposed by  plaintiffs.
                                  43

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      MVTTErtS  0.!'  DISCRETION

               •: r th- purposes of argument, one assumes that this

 Court is  limitvd in  its determination of whether the costs

 claimed, by  the United States were incurred not inconsistent with

 the  National  Contingency Plan, then such a review is limited to

 those matters where  an agency is exercising its discretion.

 Review of an  agency's action under the Administrative. Procedures

 Act  arguably  may encompass every form of agency action or

 inaction other than  rulemaking.  See, e.g., FTC v. StandardOil,

 449  U.S. 232, 238, n. 7 (1980).

          However, it would be incongruous to apply any notion of

 judicial review  limited to an administrative record to

 ministerial, day-to-day decisions made by an agency's contractors

 in the implementation of remedial actions undertaken at a  site.

Thus, day-to-day ministerial steps are not themselves  "agency

actions' for the purpose of review, if for no other reason that

they are not made "on'the record."  United States v. Thompson.
concedes as much in a brief submitted in the Love Canal Superfund

litigation where the judicia^ review of federal response  actions

at Love Canal was in dispute.  As the government stated:

          For example, the 1980 decision to relocate ,
          additional Love Canal residents was an agency
          action, and review must therefore be  limited
          to the administrative record. • However, the
          mechanics of the .relocation plan, such as
          day-to-day implementation and purchasing
          decisions, are subject to de novo review.   It
                                 44

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              is  therefore  open  to  [defendant] to pursue
              discovery  of  such  details of the relocation
              process  if it believes that would be fruitful.
              For example,  if  [defendant] could show that
              two motels were  of equal quality anc equally
              available  for temporary shelter under the
              circmstances  [sic], and that the government
              chose  the  more expensive of the two for no
              reason,  the incremental cost might be shown
             .to  be  inconsistent with the NCP [National
              Contingency Plan).  The rationality of the
              underlying relocation decision itself,
              however, is 2  natter to be determined from
              the administrative record alone.

   United States' Supplemental .Reply Memorandum in Opposition to

   Occidental Chemical  Corporation's Motion to Compel Production of

   Documents withheld by New  York on the Basis of Deliberate

   Privilege at  3,  n.4,  United  States v. Occidental Chemical Corp..

   No. 79-990 (JTC) (W.D.N.Y. memorandum filed December 20, 1985),

   copy appended  hereto  as  Exhibit L.

             It  is  precisely  these types of day-to-day decisions

Jffcthat Defendants  challenge  in the bill for costs presented by the

   United States  and the State of Michigan and the type of review '



   is inconsistent  for  the  government to argue that such  review is

   appropriate in one case  and  not in another.

             Thus,  even  if  one assumes that the ad.Tir.is*:rative

   record before  the Court  is adequate and that the Court's review

   of the agency's  actions  are  limited to the administrative record,

   in this case,   the selection of the remedy may be reviewed upon

   the record.  However, the  implementation of the remedy is subject

   to de  novo review and requires this Court to hear all  evidence
                                    45

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 incurred  in  -he execution of

'•the NrV .     ' Contingei
                                   remedy ar«* inconsistent with
 VII.   FCDERJ t CONTRACTING  AND  P ^OCURTMENT REGULATIONS
       ARE  INSUFFICIENT  TO  ASSU H a  A  PROMPT. AD EQUATE AMD
       COST-EFFECTIVE  RESPONSE

           The federal government  lastly contends that Defendants

 are assured that  no excessive  or  abusive costs were incurred

 because  "the complex  network of  federal procurement/contracting

 statutes and regulations closely  regulates an agency's right to

 expend resources  from the  public  fisc."  United States'  Brief at

 34.  This  bald assertion provides little consolation' to

 Defendants,  for the same regulations  that govern expenditures of-

 Superfund  money also  govern the  Department of Defense.   48  C. F.R.

 1501.000-1501.103.5   in truth, it is  precisely because the

 federal procurement/contracting  statutes are so complex  that a

 coffeemaker is ordered  and delivered  for $7,600 and the  Stealth

 bomber, at a cost in  excess of S500 million per plane,  is
 '".::•=  Fevers..  Acquisition  r.scuiatirr.s  comprise seven volumes.
 Those contained  in  Chapter  I are government-wide acquisition
 regulations  jointly issued  by the General Services
 Administration,  the Department of Defense,  and the National
 Aeronautics  and  Space  Administration.   The remaining chapters are
 acquisition  regulations  issued by individual agencies.  EPA's
 regulations  are  contained in Chapter  15.   Parts 150! through 1553
 in Chapter  15 implement  the general Federal Acquisition
"Regulations  in Chapter 1.   No supplemental regulations have been
 issued by EPA.

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 and their enforcement permit similar abuses  to  expenditures of

 Superfund money, albeit on a somewhat smaller scale.

           The government claims  that it  entered into a

 "nationwide system"'of "large multi-site contracts" to enable the

 contractors to allegedly "develop the expertise"  necessary to

 meet the goals of '.CERCLA.   United States'  Brief at  35,  The

 government then coi.         -"t it incurred  costs under 20

 different contracts,  incl1       .        remedial  and national

 support  contracts.  T.v.-r .--:.=.,  ine* unite'-- States recites

 regulations presumably in  place  to assure  that  the  contracts are

 managed  in a cost-effective fashion.   However,  it is obvious that

 r^g_ -i^io;.;  dzi  worthies  without  enforcement,  arid  the evidence

 at trial  will  establish  that EPA's contracts themselves are not

 cost-effective and that  the agency has failed'to use regulations

 in place  to  ensure that  the agency.is receiving a good return on-
I-
 its monev.
^It is a-certainty  that  the  United  States  will  argue that each
site, due to the differences  in  geology-and  alleged contaminants,
requires a unique approach resulting  in  increased  ccsts.   Such an
argument, in .fact,  was raised by Air  Force Systems Command
Lawrence Skantze in the  defense  of  his coffeemaker, when  he
asserted that the appliance  was  capable  of withstanding 40 times
the force of gravity.  The audacity of this  justification was
noted by a journalist who observed,  "If  the  $7,600 pot ever
endures 40 g's it will be useful mainly  for  brewing crash
investigators a hot cup  of Java  as  they  scrape  the remains of the
rest of the airplane off the  ground.  Easterbrook, Sack
Weinberger, Bankrupt General  Dynamics andiOther Procurement
Reforms, 18 Washington Monthly 33 (1987).

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through the -services of four engineering firms holding fivo large

cost-plus-award-fee =-c     •' ••. total!:.c      -.   --tely -$0''!  million

These were awarded bef*'.?s*s?  982 and 19fc5.  Four of these

contracts are  "zone" contracts covering either the eastern part

of the country  (EPA Regions I-IV) or the western {EPA Regions

V-X).  An additional nationwide contract in the approximate

amount of $167 million was awarded to accommodate program growth

and alleviate work capacity problems.  The two initial
                                           *
REM/FIT7 contracts were bid competitively.  In this case,  CH2M

Hill was awarded the Zone II contract covering Region V.  The

other contracts were classified as contracts  for architectural

and engineering services, and, pursuant to the federal

acquisition regulations, these contracts were not competitively

bid but were let on the basis of professional credentials and

abilities.  Again, the REM  IV contract was awarded to CH2M Hill

for Zone II.

        '  The REM contracts are cost-plus-award-fee  contracts

which provide for reimbursement of all allowable costs  incurred

plus  a base fee plus an award fee.  These  contracts  are

appropriate only when the uncertainties  involved  in  contract

performance do not permit ccsts to be estimated with sufficient

certainty to allow any fixed price contract.   48  C.F.R.

1516.404-272,  1516.404-273.  The base  fee  is  intended to
 'Remedial Engineering Management/Field Investigation Teams.
                                  48

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 compensate a contractor for the risk assumed  in  the contract and,
 is three percent, of the estimated cost  of  the contract,  including
  :o-f. ntrac- or coa^s.-   48 C.F.R.  1516.404-272  and 1516.404-274.
 The award fee is intended to be based on the  contractor's
 performance,  and its  purpose is to "motivate  performance
 throughout the life of  the contract where  success  breeds ,
 additional income."  48 C.F.Ri  1516.404-272.   In this  instance,  .
 the award  ae for Cr'M  Hill is  a percentage of the sum of  7% of
 the dir"     *bor,  ov  -U3ad,  travel,  ODC and G&A  costs  plus  2%-  of
 ail  sub-   cractor'costs.   Dekar Exhibit 4, appended as Exhibit M.
 The  percentage is determined periodically  by  the EPA's
 Peri'.r~ar.ce  Evaluation  Board.
           When EPA is ready to  conduct  a remedial  study  at a
 specific  Superfund'site,  it prepares a  work assignment for the
 REM contractor,  specifying the  level of effort needed  and
 providing  a general statement of the work  to  be  performed.  The
 contractor reviews  the  work assignment  and provides a  more
 precise eatililcite  Ol'Li
 necessary and  funds needed,  after which the funds  are  obligated.
 from "the general  REM contract.   Once the work plan has been
reviewed and  approved by  the project and contracting officers,
revisions can  only be made with  the approval  of  .these
 individuals.                    .
          Thus,  in  theory,  the  procurement and contracting
regulations should  provide incentives for  cost control while
prclessicndi anc. tfccr.riicc, 1
         49

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 neither of  these .occur.
          The  concept  of  zone  conti
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           me same principles appiy co  auperiuiiu  contracts.aee."
   ' ,  EPA Response Action;   Contracting  and  Cost RecoverY Under
   r.CJLA,  4 T.:...f-,.:;. ,;>-.vC (Ju.lv 25,  l?89)  (copy  appended  as Exhibit
   .   CH2M Hill  '.'as av;arded the zone contract  covering  the  Verona
 Well  Field,  with a .O'cal  contract  price of  approximately S426
 million  from September of  1982 through  September  of  1990.   As
 such,  CH2M Hill has  little or no  incentive  to control  costs,
 schedules and increase quality controls in  this eight-year time
 peri
           Where it becomes necessary to modify the study scope,
 schedule  or  budget during  a work  assignment,  the  federal
 regulations  allow EPA  to exercise  control over contractor
 requests  for work as.sigr.ment changes by scrutinizing the requests
 and negotiating possible reductions with the  contractor or by
 terminating  a work assignment.  These are,  however,  hollow
        where no competitor is available to complete the project.
           As  important is  the fact that EPA simply does not
 review a  proposed work plan for cost effectiveness and does not
exercise  these  enforcement alternatives to  keep  the  costs  of a
project down.   In a GAO report to  Congress, 43 sites with
substantially complete work assignments for remedial studies or
 focused feasibility studies were  reviewed  in  Region  III
 (Philadelphia)  and Region  V (Chicago),  the  same  region that
controls  the  Verona Well Field.   Suoerfund  Contracts:   EPA Needs
to Control Contractor  Costs (GAO/RCED-88-182}.  Of  the remedial
project managers  interviewed,  56  percent did  not  use cost  ,
                                 .51

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 reported that EPA relied on the contractors to detenuine -er-edial

 study budgets because the project managers "had no icij.  i >'.-  iv.ach

 the studies should cost."  Id. at 21.  The report concluded  that:

         .Federal procurement regulations and EPA's
          contract procurement and administration
          guidance are silent with respect to what
          information remedial project managers should
          use to review contractor work plans other
          than their best engineering judgment and
          experience on similar projects.  However,
          sound management principles dictate that
          remedial project managers use information on
          acceptable cost ranges (in both dollars and
          hours) for each remedial study task in order
          to determine the reasonableness of such-
          plans .

Id.

          Additionally, there is evidence that EPA has not taken

sufficient action to control cost increases on work assignments

already in place.  In the GAO study, inadequate contractor-or

subcontractor performance as determined by EPA increased costs on

51% of the sites in the sample.   In 82% of these sites, EPA did

not challenoe the Questionable contractor cost and hour
increases..
          Due to the lack of documentaticr.    ~?A
          files, (GAO] could quantify the
          increases resulting from inadequate
          performance for only 11 of the (22) sites.
          These increases totaled $326,000 and ranged
          from $9,800 to $55,000 per site.  Total
          remedial study costs for these 11 sites was
          $6.3 million. .  .  Contractor performance
          problems ranged from technical mistakes to
          inadequately written remedial study reports.
          For example, contractors placed groundwater
          monitoring wells in inappropriate locations,
          made errors in preparing groundwater samples,
                                 52

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           and  inadequately  supported remedial study
           reports  and  submitted the reports  iar.s.

    at p.  '.:*   Th*  report n\i-.'<,\ :ct to  inaccqi^ate p ..riortt.t.nce of the contracts.

GAO found  a prime  contractor that  subcontracted an entire

remedial study to  another firm ..that .performed poorly and

delivered  only part of the  final  study document.  EPA.paid  the

prime contractor an additional .5.40,000 to  redo the

subcontractor's substandard work  plus a base fee because of the

type of contract involved.  Id. at 25. . It therefore  is clear

that EPA does  not  use  options available to it under the federal

acquisition regulations  to  limit  the increases- associated  with

inadequate contractor  and subcontractor performance.

           Similar  illustrations abound in  the Verona  Well  Field.

For example, in a  memorandum dated October 3,  1985,  Bill  Byers,

 he project manager for  CH2M Hill, states: "It has  taken  me a  lot

of hours to determine  the causes  of  the budget problems  using  the

_..........- „ - — - •.- . \~ -»  .f £. •- -,••_-,  f.•• s: i -£' e .   it she*- Id  net  s*jrrri?s

[anyone] that, in  the  final analysis, most of  the. budget  overrun

can fee attributed  to subcontractors, or  to our  poor information

system with respect to subcontractors."   Exhibit F.   Byers

reports that Warzyn, a subcontractor, had  invoiced $42,269 over

the task order authorization  to  date.  Warzyn also went on to

complete a remedial investigation model  against  the instructions

of CH2M Hill,  thus resulting  in  cost overruns.   Exhibit F.   Byers

also noted 4 difficulty  with  another contractor:  "There  is
                                  53

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 [Ecologv ?• ?."nvironment ] has billed to a project."  Byers also
 '-.•JTf.    1-har no work plan revision requests were submitted for
 additional 'charges made by E&E.  Exhibit F.     .
          Experts retained by the Thomas Defendants have reviewed
 the Eyers memorandum and other cohtrac-t information with respect
 to the performance issues.  Mr. Dekar concluded that CH2M Hill's
 information systems were weak and did-not allow it to adequately
control subcontractor costs and that CH2M Hill did not know the
amount of past progress, expenses incurred to date or the
anticipated project outcome.  See Dekar Deposition Exhibit 5,
pertinent portions of which are appended as Exhibit 0.
          Mr. Dekar also points to problems with Black  & Veatcn,
another subcontractor, who was to complete some of the  design and
construction management activities on the  interim remedial
measures.  In a memorandum dated June 29,  1984, another CH2M Hill
project manager on the Verona Well Field,  Al Amoth, noted that
Black & Veatch was initially hired because it purportedly had •
exiiuing designs for r.ew -i^i* ~r.~ rr=v_:us ex^er.er.ce. wi^h  local.
conditions and construction requirements.  Exhibit P.   When  it
was discovered that Black & Veatch had  to  produce  the  design and
specification package  from scratrh,  CHIM  Kill  commented tr.at it.
could have completed the project within the same time  frame  and
produced a higher quality work product  assuming all  other
variables to be equal.  Exhibit  P.   Additionally,  Black & Veatch
originally.located new wells  in  a  flood plain and failed to
                                  54

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r/
•
        consider permit  requirements in locating the new wells.
        Subcontracts were awarded by Black &-Veatch for surveying and
        soil  boring, but procedure '•"• ---- r,ot follow::!  t :, .. c.--r,.poti.t i-re
                                      ,~
        bids.  Although  CH2M Hill recommended that Black & Veatch not be
        included as a subcontractor on  any future Superfund work, the >
        contract price was paid by EPA.  Exhibit P.
                 Delays were  also occasioned on this  project  due to  the
        need  to relocate wells.  CH2M Hill submitted a change  order to
        the contract for compensation  for Adamo Construction remaining  on
        standby during relocation of project wells.  Not only  did EPA
        approve the increase of approximately  $2,000 for standby service
        but also it paid CH2M  Hill a base  fee  and  an award fee or.  this
        amount.  Exhibit Q.
                 This instance,  in  fact,  highlights another problem with
        the contracting  regulation so  heavily  relied upon  by the
        government:  For virtually all  cost  overruns,  the  increases were
        approved after the  fact.   EPA. therefore, loses  control over the
                               tracted r.£i3' c^rsc.—
       Thus,  the  contractor,  and not EPA, is deciding how the funds
       should be  spent.
                                   j
             '  •   There is absolutely nc evidence ar.vvp.ere in this
       project that CH2M Hill offered to absorb the cost  incurred  due  to
       their subcontractors'  errors.  Nor is there «ny evidence  that EPA
       disallowed -these costs or negotiated with the contractor  to
       decrease the costs or -adjust the .fee accordingly.  This  is  not
       unusual.  As GAO reported, "EPA contracting officers did not
                                          55

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   m.tracts. .at. 2".              .'.• .

                 r prriolons with the  federal  procurement/

 contracting-regulations  is apparent  upon  examination of  the
                                ;  :  -          '.
 monthly invoices.   See Exhibit D.  Although contractors  submit  •

 monthly "invoices" for reimbursement  of incurred  costs and

 payment of the  base fee  and award fee, it is  virtually impossible
                                          **
 to ascertain, what  transpired at the  site.   Nonetheless,  the

 project^managers  are  required to review and certify each invoice

 to verify  that  the invoiced costs are reasonable  considering  the

 services rendered.   It is  clear tha.t  a project  manager would  need

 to be clairvoyant  to  appropriately certify  CH2M Hill's invoices.

           The GAO  also reports another problem  with invoice

 certification.  Apparently,  project managers  trained as

 environmental specialists  are reluctant to  second guess

 accounting information contained in the invoices.  id. at 34.

 This, combined with the  emphasis on expeditious .technical

 measures, suggests  that  the  remedial  activities, undertaken at a

 site were  largely  under  tne  centre! cf tr.e  ccr. tractor, who has

 little  incentive to contain  costs due to  the lax  enforcement  of

 contracting regulations..

          Complicating this  is tr.e disarray in  which most work

assignment files are  kept.   The government  in this case  asserts

 that the Federal Managers'  Financial  Integrity  Act of  1982

 (FMFIA), as well as.other  acts intended to  control the  letting of

federal  contracts, assures  potentially responsible parties .that
                                  56

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 cne contracts w*si«--w.uKif«t.Awivcx^  U.LU
 However, in a 1985 report to the  president on internal  controls   v--\
 required by the FMFIA,"EPA identified "poor record keeping air*
^material weakness in its Superfund internal controls.   Later  that
 year,  procedures'were implemented to assemble files for'the .
 purpose of cost recovery, but no  actions were undertaken  to
 address the remedial project manager's'responsibilities for
 adequate 'contract administration  record keeping.   Id.  at  36.'
 This  is further complicated by a  "high'turnover in EPA personnel,
 which  does not provide for continuity in contract administration.
 Id.  aV 39;  See Dekar deposition Exhibit 5, wherein a high
 turnover was also observed for CH2M Hill employees on the Verona
 Well  Field sites'.   Exhibit R.'
           The government also argues that the "cost-plus-award-""
 fee' contract is permitted by regulation and, thus, should not  be
.subject to question in this litigation.  The criticisms rendered
l| -
 of  this fee award by defendants'  expert have been corroborated  by
GAO  ir1  its report to Congress.  See Suoerfund Contracts, at
           Initially,  it should be noted that the fee received by.
 the  zone- contractor,  CH2M Hill, is twofold:  base-fee and  award
 fee.   The base fee is payable -without regard to performance  and
 is based on all costs of the contractor in addition to  its
 payments to subcontractors.   The award fee is based upon the
 performance of the contractor-but is still calculated as a
 percentage of  contractor and subcontractor cos.ts:  Thus, if  is ••
                                  57

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subcontract. T costs wh-=re  an  l;.;.rease  ii=  thfjse  costs  results  in
          *   • ' v               - ., .     .''-'"


ah  i'li .     .  :"«?«  to ti;          <.r.    '.. :.-e,  c-.«  here,  the



subcontract: •-• costs act:.r-Ui\t  fc:- ".'5%  oL the invoiced costs,  the



effect on the fees- is substantial.   See Dekar Exhibit 5,  relevant



portion appended  as Exhibit  S.



          The government has  also argued  that since award fees



are based on performance,  the contractor  would  not  benefit  from



encouraging subcontractor  abuse.  McGeehin deposition,
                                     '  •>             „.   '


February 16, 1989, pp.  149-150.  The fallacy in this  argument is



twofold.  First,  the performance evaluation criteria  do  not



require an evaluation of the  zone contractors'  management of the



subcontractors.   Second, the  award  fee structure allows  a



contractor with a less  than  satisfactory  performance  to  earn



approximately 45% of the available  fee.



          The award fee itself is divided into  two phases.   The



phase I fee consists of about 3% of  the contractor costs and  1%  .



of the subcontractor costs." 'Fjjrerf und^ Contracts at 44.   EPA



awards 'iCCi ci t."ij.s fe-5 if ir.e performance Lz at ieast



satisfactory.  Assuming-, in  this case, that progress was



satisfactory,.CH2M Kill.would have  earned a phase  I  fee of



$86,j85.~7.  This would' be in addition to its base fee of




$172,995!      '



          The phase II  fee is awarded at  the completion of the



remedial study and is based  on a  final evaluation  of the



contractor's overall performance,  which is not appealable..   In
                                  58

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 phase II,  a contractor performing  unsatisfactorily earns"no-aware

 'fee,  while those performing  satisfactorily earn up to  30% of tne

  i.T ance'of the award, fee.  Contractors  that  exceed expectn1; .Loess

  irn  from  31. to 65%,  while those giving'an outstanding

 performance may receive a  full  award.   •             r

           In this  case,  a  full  'award  fee would be $187,249.

 Thus,  even assuming  that CH2M Hill's  performance was deemed less

 than  satisfactory       .^ing in' no phase II  award fee, the

 contractor would still earn  46% of'the  total possible  fee.   Thus,

 the argument  that  a  per.irmance evaluation based award fee  , - •

 provides incentive for cost-effective,  high  quality  products  is

 without merit.8              '           "'                       '/•

           It  is  also  doubtful that there is  any  justification for-

 a cost-plus-award-fee contract. The  purpose of  these  contracts
 In its repor.-t, GAO. found  a  subcontractor that had .been hired to
do a remedial study" for  '$481,000.   Numerous  revisions to produce*;
an acceptable product  increased the costs by $37,000.  However,
Lr ;•? fir.al rating, the contractor was  rate'd as outstanding and
•~7£ iwariec £5% c:  tr.« s-L^o:.'_i'=._',_r.9  ;-:-i.  _ .-;	  -   :' .'•  '-""•• "•'
$518,000,)) or approximately  $9,000. Tne performance evaluation
made no mention of  subcontractor's  problems  in producing the
report.  Suoerfund  Contracts at 48.          "         -.-.-..

Similar calculations have  beer,  made for  the  Verona Well -Field and
it is this. iT.fcrri3t.ion which the government  seeks to keep from • .  •
this Court.  For example,  Mr.  Dekar has-calculated that Warzyn's.
poor performance resulted-in cost overruns of approximately
$181,078.  See Dekar Deposition,  Exhibit 11] appended hereto as ..
Exhibit G.  Assuming,  then,.that the subcontractor payments on
which CH2M Hill's fees'are based is decreased by that amount,- "the
base 'fee would be reduced  by $5,432 and  the  maximum -award fee by
$3,621 for a total  deduction of $9,053:   Even if one used Mr.  •:..
Dekar's most conservative  estimate 'of  Warzyn's cost overruns,
$101,822, CH2M Hill's  fee  would be decreased by approximately
$5,100.
                                  59

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      ,|ng the gpvernr.rn._ 1-0 evaluate  it.  Where  there  is  nc
      • |           -             •;•,":. •  . •  •      -^     '^
       gfulv evaluation.,     -r ^utracts. «v. . '  ,i ; ••   more  : hdui c

       ial, .if not actual, boondoggle fox' the  contractors.
       \                             • "'             -    .
 Although the. government will argue that thes*e contracts  are

 negotiated to compensate for.a degree of risk involved  in the

 contract^ this .element is to be compensated  by  the  base  fee  and-

 practically. ..speaking, the contractor assumes  little or  no cost

 risk.  In,fact, a contractor may only be liable under Superfund
              '                   *'"*..        * -•" ^
 for negligence, gross negligence or  intentional misconduct  that

 causes a release of a threatened release of  hazardous substances

 and,  in some cases, may.be entitled  to  receive  government

 indemnification for itsnegligence.   42  U.S.C. S 9619.  The  award

 fee does little but reward the contractor  for high  overhead and

 mismanagement.. .Although, the United  States  is certain to contend

 that ERA'S.,.decision, to negotiate a cost-plus-award-fee  contract

 was discretionary and not subject to judicial review, the abuse

 ecu-.-•=• ir.cer rv t:,;.;: :;-.-- ••;: r-.niriCt  .:hcv.c r.c". be Ear.ciirned by

 this  Court's • silence.   .

 VII.   CONCLUSION • .,   . .     ...........

           .The. .Ur.itsd State.2 ci=iriv  is  ir.  errcr when it ccr.cludes

 that this Court's review of government  expenditures at  the  Verona
                                  - •-
 Well  field is^circumscribed .by CERCLA  and  SARA and is limited  to
             •'•      •         '         '':   r,i

 the administrative  record.  The  legislative history does not.

'support this position, and, indeed,, the government in other cases

 .has argued .that_ the Court is, entitled  to review the day-to-day.
                                   60

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 activities  to determine that'/the* expenditures were  indeed"'not'
        •*            -          "    -«•-.•».„  .         • ' •- "*  - ' «•' .* *• .r" 2 • • i

 inconsistent  vfi.t.-hi it he National Contingency Plan.  The".''.'1 ~'"':


      nment--.-:  ors»«<»n,t. .position -illustrates'., the inconsistencies
               *        ~         "•  -  • * ~rn.;. .'? •          _      -.  . .


 inherent  in  "selective enforcement .'•'•"


         . DEven  assuming for the''-purpose'of argument, that the

                '*'••••      .  .  j:O5v;''T- ''-V'T~- -"i -  .         ' •
 government's1 "position" is correct^-, then, ,'i.t is clear  that, the


 administrative  record is insufficient  in this case-.  No cost


 information is  provided,"e"xceptri'or^;^6rder-6f-magnitude" estimates*

        •"  : - '  '  '-;:••• ••- -:.  -- '?^ --.>-*". ~ ,„.. ... . '      _      . __.

 in tn •  °Av  ' r--.d.'draft RI/FS .  • ;In-jf act, if "one were  to  rely-solely
         '                              *.

 on the administrative r°-~r'*  the government'.s  recovery would be


 limited to~$ji;,325 .-b.          initial"remedial measure and    ;



 S'100, jQl. 39'-fcr the  feasibility .study, reimbursements  to which


 the United States certainly would take exception.  ^Thus, it is : "'
             •-•'•» j

 sensible to review the site activities and determine why the


 remedial measures exceeded  the''prrojec'ted costs  by more than 350%.


           Defendants  have suggested", by example, several reasons


 for the massive cost  overruns,  including excessive  indirect 'cost


 :*--^3t  prefect, rr.ismanagemer-. ar.i ir.t-vrnc.1 ccr.troi  ifruv:^.  The


 existence of procurement/contracting regulations have  failed to


 remedy  thes-= abuses,  in part because EPA has  not enforced



.cc-irplianc*.   Other aspects, such as using cost-plus-award-fee

                                  ,-.'j   .     -
 contracts, are simply not justified.'   ' '•                :     •


           Simply because the federal'government- spent  money  from



.Superfund on remedial activities at the Verona  Well Field does •'• *

                                     i

 not mean that it is entitled to full reimbursement.'  This      .


 position is not only  legally unjustified but,  in this  ca-se,  is:  :
                                   61

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adi?.iSMITH, P.C..
                           Attorneys fpr-  Defendants Thomas
                             Soly  Barbieri  (P3179'3)
                                 Lynn K."  Richardson  (..P'31778)
                                      62

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