New York State Elec. & Gas Corp. v. Firstenergy Corp., Civil Action No. 3:03–CV–0438 (DEP).
| Court | United States District Courts. 2nd Circuit. United States District Court of Northern District of New York |
| Writing for the Court | DAVID E. PEEBLES |
| Citation | 808 F.Supp.2d 417 |
| Parties | NEW YORK STATE ELECTRIC & GAS CORPORATION, Plaintiff, v. FIRSTENERGY CORPORATION, Defendant.FirstEnergy Corporation, Third–Party Plaintiff, v. I.D. Booth, Inc., Third–Party Defendant. |
| Decision Date | 07 September 2011 |
| Docket Number | Civil Action No. 3:03–CV–0438 (DEP). |
808 F.Supp.2d 417
NEW YORK STATE ELECTRIC & GAS CORPORATION, Plaintiff,
v.
FIRSTENERGY CORPORATION, Defendant.FirstEnergy Corporation, Third–Party Plaintiff,
v.
I.D. Booth, Inc., Third–Party Defendant.
Civil Action No. 3:03–CV–0438 (DEP).
United States District Court, N.D. New York.
July 11, 2011.Decision Denying Reconsideration Sept. 7, 2011.
[808 F.Supp.2d 425]
Dickstein Shapiro LLP, of Counsel: David L. Elkind, Esq., Keisha A. Gary, Esq., Geoffrey M. Long, Esq., Kristin C. Davis, Esq., Washington, D.C., Hinman, Howard Law Firm, of Counsel: James S. Gleason, Esq., Binghamton, NY, for Plaintiff.
Saul Ewing LLP, of Counsel: John F. Stoviak, Esq., Cathleen M. Devlin, Esq., Christina D. Riggs, Esq., Amy L. Piccola, Esq., Philadelphia, PA, Costello, Cooney Law Firm, of Counsel: Paul G. Ferrara, Esq., Syracuse, NY, for Defendant/Third-party Plaintiff.
Davidson & O'Mara, P.C., of Counsel: Donald S. Thomson, Esq., Elmira, NY, for Third–Party Defendant I.D. Booth, Inc.+-------------------+
¦TABLE OF CONTENTS ¦
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Page No.
I. FINDINGS OF FACT 429
A. Corporate Histories 429
1. NYSEG 429
2. AGECO 430
3. FirstEnergy 434
B. Facts Related to Veil–Piercing Analysis 434
1. 1906–1922 434
2. 1922–1940 436
3. 1940–1942 444
Environmental Concerns Associated with MGP Operations
C. Generally 444
D. Summary of NYSEG'S MGP Investigations and Remedial Responses 446
E. NYSEG's Responses at the Sixteen Sites in Dispute 452
1. Corning 452
a. Ownership and Operation 452
b. Investigation and Remediation 453
2. Cortland–Homer 453
a. Ownership and Operation 453
b. Investigation and Remediation 455
3. Dansville 457
a. Ownership and Operation 457
b. Investigation and Remediation 458
4. Elmira–Madison Avenue 459
a. Ownership and Operation 459
b. Investigation and Remediation 461
5. Geneva–Border City 462
a. Ownership and Operation 462
b. Investigation and Remediation 462
6. Goshen 463
a. Ownership and Operation 463
b. Investigation and Remediation 464
7. Granville 464
a. Ownership and Operation 464
b. Investigation and Remediation 465
8. Ithaca—Court 465
a. Ownership and Operation 465
b. Investigation and Remediation 466
9. Ithaca—First Street 468
a. Ownership and Operation 468
b. Investigation and Remedial 468
10. Mechanicville—Central Avenue 469
a. Ownership and Operation 469
b. Investigation and Remediation 470
11. Newark 471
a. Ownership and Operation 471
b. Investigation and Remediation 472
12. Norwich 472
a. Ownership and Operation 472
b. Investigation and Remediation 473
13. Oneonta 474
a. Ownership and Operation 474
b. Investigation and Remediation 475
14. Owego 477
a. Ownership and Operation 477
b. Investigation and Remediation 477
15. Penn Yan–Water Street 479
a. Ownership and Operation 479
b. Investigation and Remediation 480
16. Plattsburgh–Saranac Street 480
a. Ownership and Operation 480
b. Investigation and Remediation 481
F. Cost Recovery and Allocation 484
II. PROCEDURAL HISTORY 485
III. DISCUSSION 486
A. CERCLA Liability Generally 486
B. Summary of NYSEG Claims and FirstEnergy Defenses 489
C. Analysis of FirstEnergy's Liability Under CERCLA 491
1. Direct Owner Liability 491
2. Direct Operator Liability 491
3. Indirect Liability as an Owner and/or Operator 494
a. Pre–1922 498
b. 1922–1940 498
c. 1940–1942 502
D. Affirmative Defenses 502
1. Bankruptcy Discharge 502
2. 1945 Covenant Not to Sue 503
3. Statute of Limitations 504
a. Plattsburgh 508
b. Owego 511
c. Ithaca–Court Street 511
d. Norwich 512
E. Analysis of I.D. Booth's CERCLA Liability 514
F. Compensable Response Costs 519
1. Certainty of Damages 520
2. NCP Compliance 521
3. Necessity of Cost 522
4. Offset for Recovery From Collateral Sources 525
a. Insurance Recovery 526
b. Rate Recovery 528
G. Allocation 529
1. Allocation Generally 529
2. Allocation as Between NYSEG and FirstEnergy 530
3. Allocation as Between FirstEnergy and I.D. Booth 532
IV. CONCLUSIONS OF LAW 533
V. SUMMARY AND ORDER 535
[808 F.Supp.2d 427]
Plaintiff New York State Electric & Gas Corporation (“NYSEG”) commenced this action in April of 2003 seeking to recover from defendant FirstEnergy Corporation (“FirstEnergy”) expenses incurred to remediate twenty-four hazardous waste sites throughout Upstate New York formerly associated with manufactured gas plant (“MGP”) operations of NYSEG and its predecessor utility companies. The MGP operations conducted at those locations were typical of those carried out by many public utilities during the 1800s and the first half of the twentieth century to produce gas, manufactured principally through processes employing coal as raw material, for commercial and residential usage. By their nature, MGP facilities generated significant quantities of byproducts, including coal tar and oils, containing what have come to be regarded as hazardous substances. Those byproducts were typically stored on-site and often released into the soil and groundwater at and near the MGP sites, on occasion migrating off-site and into nearby waterways.
NYSEG's complaint, as amended in October 2004, at one time asserted a combination
[808 F.Supp.2d 428]
of federal and state law causes of action including, inter alia, under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), as amended, 42 U.S.C. § 9601 et seq. Its claims, however, have been materially reshaped as a result of the ongoing refinement of CERCLA jurisprudence. Given the rapid and robust development of environmental caselaw, coupled with rejection by the court of plaintiff's contribution cause of action under § 113(f) of CERCLA, and dismissal of plaintiff's New York Navigation Law and common law indemnification counts, on stipulation of the parties, all that now remains is NYSEG's cost recovery claim against FirstEnergy under § 107(a) of CERCLA, together with FirstEnergy's contribution counterclaim and a third-party claim for contribution against I.D. Booth, Inc. (“I.D. Booth”), the current owner of portions of two of the sites in issue, both of which are asserted under § 113(f).
The action was tried to the court beginning on December 6, 2010.1 For a variety of reasons, by the time of trial the number of former MGP sites implicated were winnowed from twenty-four to seventeen and, with the dismissal at trial of claims related to one site, now stands at sixteen. NYSEG claims to have paid more than $94 million through the end of 2009 to address contamination at the sixteen remaining MGP sites in issue, with the expectation that the expenditure of upwards of an additional $144 million will be required in order to complete the cleanup process. Those remedial efforts have been conducted in large part pursuant to an administrative order issued in 1994 by the New York State Department of Environmental Conservation (“DEC”), on consent, addressing remediation efforts at several former MGP sites including all but one of those now in issue.
In addition to the issues normally associated with a typical environmental cost recovery action, NYSEG's claims present complex threshold questions regarding the interplay between a number of related corporations, revolving around events dating back to the early twentieth century. Resolution of the CERCLA claims now presented turns, in the first instance, on an exceedingly labyrinthine set of facts surrounding the corporate history of NYSEG and its predecessor utility companies as well as the relationship of NYSEG and its affiliates with their former parent company, the Associated Gas & Electric Company (“AGECO”)—a predecessor of defendant FirstEnergy. NYSEG contends that AGECO, although in title a mere holding company, in reality ran the MGP facilities falling under its umbrella and is therefore directly liable under CERCLA as an operator of the sites involved at the time of the hazardous releases in issue. Alternatively, NYSEG argues that the facts justify piercing its corporate veil, and those of its related utility operating companies, in order to find derivative liability on the part of AGECO, the parent corporation, for the environmental liabilities at issue, based upon AGECO's overwhelming domination of those subsidiaries.
Although thousands of documents were received into evidence at trial, comprising an estimated 90,000 pages, evidence related to the intricate corporate histories associated with ownership of the various sites in question as well as the relationship between
[808 F.Supp.2d 429]
NYSEG and its predecessor utilities on the one hand and FirstEnergy's predecessor, AGECO, on the other is somewhat scant. Having considered the available evidence, I conclude that there is a basis upon which to pierce the corporate veil of NYSEG and its sister utility operating companies during the period between 1922 and 1940, though not prior to or after that time period, and accordingly to attribute their environmental liabilities to AGECO, and that FirstEnergy therefore bears responsibility for hazardous waste releases occurring during that time interval as an owner and operator of the facilities in issue. I will therefore allocate the response costs incurred by NYSEG based upon that finding. I also conclude that while NYSEG is entitled to reimbursement from FirstEnergy of a proportionate share of the vast majority of the expenses now claimed, recovery of the costs associated with two of the sites in issue is precluded, based upon the governing statute of limitations. Finally, I find that FirstEnergy is entitled to contribution from I.D. Booth with regard to one of the sites involved based upon its status as an owner of the site. The following decision incorporates within it my findings of fact and legal conclusions regarding the matter.
I. FINDINGS OF FACTA. Corporate Histories1. Ithaca Gas Light Company, which as will be seen is one of NYSEG's...
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...subject to their own distinct statute of limitations. Accord [866 F.Supp.2d 895]New York State Elec. & Gas Corp. v. FirstEnergy Corp., 808 F.Supp.2d 417, 511 (N.D.N.Y.2011) (finding “persuasive those cases in which courts have concluded that regardless of the number of operating units at a ......
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...based on a veil-piercing theory, but limiting that recovery to certain sites. New York State Elec. & Gas Corp. v. FirstEnergy Corp., 808 F.Supp.2d 417, 499–502 (N.D.N.Y.2011) (“ NYSEG ”).1 The district court also found I.D. Booth liable for a portion of the cleanup costs at one site. Id. at......
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Exxon Mobil Corp. v. United States, Civil Action Nos. H-10-2386
...represent the actual plant conditions." (Exxon MSJ at 335 F.Supp.3d 93653); see New York State Elec. & Gas Corp. v. FirstEnergy Corp. , 808 F.Supp.2d 417, 530-31 (N.D.N.Y. 2011) (applying production-based approach in CERCLA case). Exxon also argues that a production-based approach best refl......
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Brooklyn Union Gas Co. v. Exxon Mobil Corp., 17-CV-45 (MKB)
...v. Kemira Water Sols., Inc. , 999 F. Supp. 2d 590, 619–20 (S.D.N.Y. 2014) (quoting N.Y.S. Elec. & Gas Corp. v. FirstEnergy Corp. , 808 F. Supp. 2d 417, 522 (N.D.N.Y. 2011) ). "[C]ourts in this Circuit have found that ‘because initial monitoring, assessment, and evaluation expenses are recov......
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Am. Premier Underwriters Inc. v. Gen. Elec. Co., Case No. 1:05cv437.
...subject to their own distinct statute of limitations. Accord [866 F.Supp.2d 895]New York State Elec. & Gas Corp. v. FirstEnergy Corp., 808 F.Supp.2d 417, 511 (N.D.N.Y.2011) (finding “persuasive those cases in which courts have concluded that regardless of the number of operating units at a ......
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Brooklyn Union Gas Co. v. Exxon Mobil Corp., 17-CV-45 (MKB)
...v. Kemira Water Sols., Inc. , 999 F. Supp. 2d 590, 619–20 (S.D.N.Y. 2014) (quoting N.Y.S. Elec. & Gas Corp. v. FirstEnergy Corp. , 808 F. Supp. 2d 417, 522 (N.D.N.Y. 2011) ). "[C]ourts in this Circuit have found that ‘because initial monitoring, assessment, and evaluation expenses are recov......
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N.Y. State Elec. v. Firstenergy Corp., Docket Nos. 11–4143–cv(L); 11–4146–cv(XAP); 11–4149–cv(XAP).
...based on a veil-piercing theory, but limiting that recovery to certain sites. New York State Elec. & Gas Corp. v. FirstEnergy Corp., 808 F.Supp.2d 417, 499–502 (N.D.N.Y.2011) (“ NYSEG ”).1 The district court also found I.D. Booth liable for a portion of the cleanup costs at one site. Id. at......
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Exxon Mobil Corp. v. United States, Civil Action Nos. H-10-2386
...represent the actual plant conditions." (Exxon MSJ at 335 F.Supp.3d 93653); see New York State Elec. & Gas Corp. v. FirstEnergy Corp. , 808 F.Supp.2d 417, 530-31 (N.D.N.Y. 2011) (applying production-based approach in CERCLA case). Exxon also argues that a production-based approach best refl......
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Defenses and Exceptions to Liability
...Gen. Elec. Co. v. AAMCO Transmissions, Inc., 962 F.2d 281, 285 (2d Cir. 1992); N.Y. State Elec. & Gas Corp. v. FirstEnergy Corp., 808 F. Supp. 2d 417, 487 (N.D.N.Y. 2011). 4. See, e.g. , United States v. Capital Tax Corp., 545 F.3d 525, 530 (7th Cir. 2008) (“CERCLA is strict liability statu......