New York State Elec. & Gas Corp. v. Firstenergy Corp.

Citation808 F.Supp.2d 417
Decision Date07 September 2011
Docket NumberCivil Action No. 3:03–CV–0438 (DEP).
PartiesNEW YORK STATE ELECTRIC & GAS CORPORATION, Plaintiff, v. FIRSTENERGY CORPORATION, Defendant.FirstEnergy Corporation, Third–Party Plaintiff, v. I.D. Booth, Inc., Third–Party Defendant.
CourtU.S. District Court — Northern District of New York

OPINION TEXT STARTS HERE

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.

DECISION AND ORDER

DAVID E. PEEBLES, United States Magistrate Judge.

+-------------------+
                ¦TABLE OF CONTENTS  ¦
                +-------------------¦
                ¦                   ¦
                +-------------------+
                
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
                

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 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 plain...

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