California v. Neville Chemical Co., CIV.00-10205 CAS(Ex).

• Decision Date: 26 March 2002
• Docket Number: No. CIV.00-10205 CAS(Ex).,CIV.00-10205 CAS(Ex).
• Citation: 213 F.Supp.2d 1115
• Parties: State of CALIFORNIA, on behalf of the CALIFORNIA DEPARTMENT OF TOXIC SERVICES, Plaintiff, v. NEVILLE CHEMICAL COMPANY, a corporation; and DOES 1-10, Defendants.
• Court: U.S. District Court — Central District of California

213 F.Supp.2d 1115

State of CALIFORNIA, on behalf of the CALIFORNIA DEPARTMENT OF TOXIC SERVICES, Plaintiff, v. NEVILLE CHEMICAL COMPANY, a corporation; and DOES 1-10, Defendants.

No. CIV.00-10205 CAS(Ex).

United States District Court, C.D. California, Western Division.

March 26, 2002.

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Bill Lockyer, Attorney General, Theodora Berger, Senior Assistant Attorney General, Donald Robinson, Supervising Deputy Attorney General, Laurie Pearlman, Deputy Attorney General, Harrison Pollak, Deputy Attorney General, Office of Attorney General of California, Los Angeles, CA, for Plaintiff.

Thomas H. Clarke, Jr., Dennis J. Byrne, Ropers, Majeski, Kohn & Bentley, LLP, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT OR IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT

SNYDER, District Judge.

I. INTRODUCTION

This case is a cost-recovery action brought by plaintiff State of California on behalf of the Department of Toxic Substances Control ("DTSC")¹ under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601 et seq. DTSC seeks to recover costs associated with the cleanup of hazardous substances at a chemical manufacturing plant owned and operated by defendant Neville Chemical Company ("Neville"). The parties are now before the Court on DTSC's motion for summary judgment.

II. FACTS

A. Background

Neville is the owner and operator of a 3.5 acre industrial facility in Santa Fe Springs, California (the "site"). Compl. ¶ 6. From 1952 to approximately 1987, Neville manufactured chemical compounds for use in insecticides, solvents, metalworking lubricants and flame retardants at the site. Id. ¶ 8. Investigations at the site found that the soil and groundwater were significantly contaminated with hazardous substances from Neville's past handling, storage and disposal practices. Id. ¶ 11. In 1986, DTSC² ordered Neville to clean up the site pursuant to a Remedial Action Order ("RAO"). Declaration of Harlan Jeche in Support of Pl's. Mot. for Summ. Judg. ("Jeche Decl.") ¶ 9. The RAO required Neville to prepare a remedial investigation and feasibility study ("RI/FS"), and a remedial action proposal ("RAP"), both in accordance with the National Contingency Plan ("NCP"). Id., Ex. B at 174 (RI/FS), 181(RAP). According to the terms of the RAO, Neville would then have to implement the RAP, and would be responsible for all operation and maintenance requirements of the RAP until the remediation goals of the RAP were met. Id., Ex. B at 182. The RAO contains a provision for recovery of certain costs pursuant to state law. Id., Ex. B at 188.

DTSC alleges that its employees have spent thousands of hours since 1985 responding to releases and threatened releases of hazardous substances at the Neville facility, and overseeing Neville's own response measures. Jeche Decl. ¶ 10. The response measures undertaken at the Neville facility include: the removal of twenty one drums containing dichlorobenzenes, carbon tetrachloride, and chlorinated paraffins that had been illegally buried at the site; recontouring the soil and capping it with asphalt; installing a groundwater extraction-and-treatment system; and recording a deed restriction to prevent future uses of the site which would be harmful to humans and the environment. Id. ¶ 11. DTSC alleges that as of September 30, 2001, its response costs for the Neville facility total $759,368.29, exclusive of interest and attorneys' fees.³

B. Cost Recovery

In April 1985, DTSC filed suit against Neville in Superior Court for the County of Los Angeles. The relief sought in that action included the recovery of costs pursuant to California Health and Safety Code Section 25360 ("Section 25360"). Declaration of Dennis J. Byrne in support of Neville's Opp'n to Mot. for Summ. Judg. ("Byrne Decl."), Ex. A. Section 25360 provides:

Any costs incurred and payable from the state account [the Hazardous Substance Account] shall be recovered by the department from the liable person or persons. In addition, such person or persons shall be liable to the department for administrative costs actually incurred, or five hundred dollars ($500), whichever is greater. The amount of costs determined pursuant to this section shall be recoverable in a civil action.

On December 10, 1986, DTSC issued the RAO to Neville, instructing it to conduct an RI/FS, and prepare and implement an RAP. Section III of the RAO stated a number of conclusions of law, which were based upon the application of California law. Byrne Decl., Ex. C at 16. Section 8.16 of the RAO, entitled "Cost Recovery," provided that

Failure or refusal of [Neville] to comply with this Order may make [Neville] liable for any government costs incurred, including those payable from the Hazardous Substance Cleanup Fund for any remedial action at the site, as provided in Section 25360 of the Health and Safety Code and other applicable provisions of law. These costs include DHS's direct costs and DHS's administrative overhead costs in an amount equal to 10 percent of the reasonable costs actually incurred, or five hundred dollars ($500), whichever is greater. In addition, [Neville] may be liable for the costs of oversight by DHS of [Neville's] activities at the site as provided in Section 25360 of the Health and Safety Code. Respondents may also be liable to the Department for punitive damages up to three times the amount of any costs incurred by the state account pursuant to Section 25359 of the Health and Safety Code.

Id., Ex. C at 32.

On January 30, 1987, Angelo Bellomo, Chief of the Southern California Section of DTSC, wrote to Neville informing it that the Neville facility had been listed on the Hazardous Substance Cleanup Bond Act Expenditure Plan as a site requiring assessment and cleanup action. Id., Ex. D. Attached to the correspondence was a document entitled "Detailed Site Expenditure Plan Neville Chemical Company." In a section entitled "Projected Revenue Sources," the document lists Neville as a responsible party, and then states that "it appears at this time that it may be necessary to utilize bond funds to remediate this site. If bond funds are expended, the Department will undertake cost recovery action." Id. The document then sets forth estimated costs for DTSC's cleanup of the site, to be "funded from bond sale proceeds (to the extent that Federal Superfund or responsible party funding in not available)." Id. The estimated costs are listed as $265,000 for site characterization, $60,000 for remedial action plan, and $1,110,000 for remedial action. Id.

In January 1987, Neville's Vice President and General Counsel, Thomas McKnight, attended a meeting with representatives of DTSC to discuss the RAO. According to McKnight:

At this meeting DTSC threatened legal action against Neville pursuant to Sections 8.15 and 8.16 of the RAO if Neville failed to fully comply with the RAO. At this meeting, DTSC specifically represented to Neville that it would not be subject to cost recovery litigation if it agreed to voluntarily and fully comply with the RAO. DTSC indicated that they were prepared to perform the site assessment required under the RAO if Neville refused to cooperate.

Byrne Decl., Ex. E, McKnight Decl. ¶ 6.

In September 1987, DTSC approved the workplan Neville submitted for the remedial investigation of the site. McKnight Decl. ¶ 13. On February 19, 1988, DTSC dismissed its pending cost recovery claim against Neville in the Superior Court for the County of Los Angeles. Byrne Decl., Ex. G.

In 1989, the California legislature enacted Chapter 269, 1989 Cal. Stats. Ch. 269, which amended portions of the Health and Safety Code to restructure state funding of the cleanup of hazardous waste sites. Chapter 29 did not amend the cost recovery provisions of Section 25360. However, pursuant to the new legislation, DTSC initiated a program whereby it assessed an "activity fee" program intended to partially cover DTSC's oversight costs in circumstances where a responsible party such as Neville was conducting the actual investigation and remedial activity at a site.

On September 29, 1989, Dennis Dickerson, Regional Administrator for DTSC, sent Neville a letter explaining the activity fee program and assessing an initial activity fee of $46,636.38 for the RI/FS phase of the project. Jeche Decl., Ex. C. The letter reads in relevant part:

The Department of Health Services (Department) has identified you as the party primarily responsible for taking action to characterize and remedy the public health and/or environmental threats posed by the uncontrolled release of hazardous substances at [the Neville site]. Pursuant to legislation (Chapter 269, Statutes of 1989) which was recently signed into law by the Governor, you are obligated to pay activity fees beginning July 1, 1989, to partially cover the Department's cost of overseeing your action to characterize and satisfactorily remediate this site.

Chapter 269 sets out specific fees for the various phases of activity associated with characterizing and abating hazardous substance release sites as based on the relative size of each site as estimated by the Department.... For purposes of establishing a fee for the current phase of activity being conducted at the Neville Chemical Company, the Department has made a preliminary determination that the site is a large as defined by Chapter 269. However, the law does provide for a separate fee ($5,000) to have the Department undertake a study to more accurately determine site size. If you wish to have the Department undertake such a study and pay the additional $5,000 fee you should advise me immediately. In making this decision you should be aware that the law does allow the Department to make adjustments to initial site size determinations so that fee levels may be raised or lowered for subsequent phases of activity based...