Niagara Mohawk Power Corp. v. Jones Chemical Inc.

• Decision Date: 07 January 2003
• Docket Number: Docket No. 01-7932.
• Citation: 315 F.3d 171
• Parties: NIAGARA MOHAWK POWER CORPORATION, Plaintiff-Counter-Defendant-Appellant, v. JONES CHEMICAL, INC., Defendant-Cross-Claimant-Counter-Claimant-Cross-Defendant, Beazer East, Inc., Defendant-Counter-Claimant-Cross-Claimant, Mohawk Valley Oil, Inc., Defendant-Cross-Defendant-Cross-Claimant-Appellee, Suit-Kote Corporation, Defendant-Cross-Defendant-Counter-Claimant-Cross-Claimant, City of Utica, Third-Party-Defendant-Cross-Claimant, Koppers Products Company, New York State Department of Transportation and New York State Thruway Authority, Defendants-Cross-Defendants, State of New York, Defendant, Texaco, Inc. and New York State Canal Corporation, Defendants-Cross-Defendants-Counter-Claimants-Cross-Claimants.
• Court: U.S. Court of Appeals — Second Circuit

315 F.3d 171

NIAGARA MOHAWK POWER CORPORATION, Plaintiff-Counter-Defendant-Appellant, v. JONES CHEMICAL, INC., Defendant-Cross-Claimant-Counter-Claimant-Cross-Defendant, Beazer East, Inc., Defendant-Counter-Claimant-Cross-Claimant, Mohawk Valley Oil, Inc., Defendant-Cross-Defendant-Cross-Claimant-Appellee, Suit-Kote Corporation, Defendant-Cross-Defendant-Counter-Claimant-Cross-Claimant,

City of Utica, Third-Party-Defendant-Cross-Claimant,

Koppers Products Company, New York State Department of Transportation and New York State Thruway Authority, Defendants-Cross-Defendants,

State of New York, Defendant,

Texaco, Inc. and New York State Canal Corporation, Defendants-Cross-Defendants-Counter-Claimants-Cross-Claimants.

Docket No. 01-7932.

United States Court of Appeals, Second Circuit.

Argued: September 13, 2002.

Decided: January 07, 2003.

Warren Anthony Fitch, Swidler, Berlin, Shereff Friedman, Washington, DC, (Jerome C. Muys, Jr., Julie A. Weisman, on the brief), for Plaintiff-Counter-Defendant-Appellant Niagara Mowhawk Power Corporation.

Harold L. Segall, Beveridge & Diamond, P.C., Washington, DC, for Defendant Cross-Defendant-Cross-Claimant-Appellee Mohawk Valley Oil, Inc.

Before VAN GRAAFEILAND, JACOBS, Circuit Judges, TRAGER, District Judge.^*

DENNIS JACOBS, Circuit Judge.

Niagara Mohawk Power Company ("NMPC"), having paid environmental costs for cleaning up the industrial peninsula and harbor at Utica Terminal, brought claims for contribution against (inter alia) Mohawk Valley Oil ("MVO") pursuant to the New York Navigation Law § 181 and the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601, et seq. ("CERCLA"). The United States District Court for the Northern District of New York (Scullin, J.) granted summary judgment in favor of MVO. We affirm.

I

This case concerns liability for contamination of the Utica Terminal Harbor, which is formed by a peninsula that juts into the Mohawk River as it flows through Utica, New York. NMPC owned and operated a gas manufacturing and power generation business for over a century on a site that occupied most of the peninsula. Three sites, two of which were formerly owned by NMPC, are at issue in this appeal.

In 1961, MVO purchased from NMPC a parcel called Niagara Flats, a part of the peninsula on which NMPC had previously operated an oil refinery and petroleum storage facility. MVO removed the refinery equipment, but used the storage tanks (and a tanker-truck loading-station) in its gasoline storage and transportation operations.

In 1965, MVO purchased another parcel on the peninsula from Texaco, Inc. (the "Texaco property"). Texaco used the property to store petroleum that it shipped via barges from an adjacent loading dock. MVO preserved and used several of the Texaco storage tanks.

Sandwiched between Niagara Flats and the Texaco property was a parcel owned by NMPC and leased during a relevant period to Tar Asphalt Services ("TAS"), a company in the business of manufacturing and laying asphalt.

MVO's operations at both Niagara Flats and the Texaco property consisted of storing No. 2 and No. 4 fuel oil, and transferring the fuel to container trucks and barges. At the height of its operation, MVO trucked and shipped tens of millions of gallons of fuel oil from these properties annually. MVO stopped using these properties in 1977, and sold them in 1987.

Contaminants common to both NMPC's gas manufacturing operations and MVO's storage and transportation operations were identified in samples of shallow soil and groundwater taken from the MVO properties. An environmental study commissioned by NMPC found BTEX and polyaromatic hydrocarbons ("PAHs") among the contaminants in the soil, groundwater and surface water — substances that are constituent elements of the No. 2 fuel oil stored by MVO as well as by-products of NMPC's manufactured gas plant operations. But there is no record evidence linking MVO's operations to the contamination of the Utica Terminal Harbor and peninsula. Thus, although No. 2 fuel oil was identified in samples drawn from the soil surrounding a bunker storage tank at Niagara Flats, a report commissioned by NMPC found that NMPC itself stored No. 2 fuel oil in that tank before it sold Niagara Flats to MVO. This was corroborated by the deposition testimony of a former MVO plant manager at Niagara Flats.

MVO offered evidence to show that its operations had caused no contamination of the harbor or peninsula. A 1990 Phase I investigation commissioned by the New York Department of Environmental Conservation noted that "[n]o allegation has been made of hazardous waste disposal or spillage" at either the Niagara Flats or Texaco properties. It concluded: "These data not only provide no direct evidence that the Mohawk Valley Oil site is the source of contamination, but virtually all measured parameters indicate that it is not."

This conclusion was corroborated by the deposition testimony of two former MVO employees, Steven Osley and Roger Munsell.

Osley, a former plant manager at Niagara Flats, testified "[n]o, [the storage tanks] didn't leak, no, no," and that as to the loading of fuel oil from the storage tanks onto tanker-trucks, "we never had any spills at the Niagara [Flats]." Osley never contradicted this testimony, though NMPC cites testimony by Osley that allows for the possibility of stray drops.

Osley did, however, testify to the discharge of hazardous substances into the harbor from truck-washing operations conducted by TAS on TAS property. Kerosene was used to remove tar from the TAS trucks and, when the trucks were rinsed, the run-off would flow downhill from the TAS property, onto Niagara Flats, and from Niagara Flats into the harbor. MVO learned of TAS's truck-washing operation when it purchased the Niagara Flats property from NMPC. At or about the time the MVO facility became operational a year later, MVO finished construction of a separator device designed to intercept the runoff from TAS before it reached the harbor, and to separate the kerosene and tar from the water. Osley testified that the purpose of the separator was to catch contaminants from TAS's truck-washing operations "[a]nd anything that leaked off our trucks or something like that." Three or four years later, MVO built a berm to prevent the TAS run-off from reaching MVO's property.

Munsell, MVO's former manager of operations, testified that he was unaware of any spill while he was employed by MVO. Although he was never stationed at Niagara Flats or the Texaco property, Munsell testified that MVO "kept close track of every gallon" of fuel, and that the MVO monitoring systems were sensitive enough to pick up, on one occasion, the theft of four gallons of fuel.

Between 1989 and 1992, NMPC entered into four consent orders with the State of New York requiring environmental remediation of the harbor and the peninsula. NMPC in turn sued MVO, several other companies that owned or operated facilities on the peninsula, and various state agencies, claiming that they all had contributed to the contamination.

At the close of discovery, NMPC moved for summary judgment against three of the defendants, including MVO; MVO cross-moved. The court denied NMPC's motion as to MVO and granted MVO's cross-motion on the grounds that NMPC had failed to satisfy its burden on the Navigation Law claim and that MVO had successfully established the third-party defense under CERCLA. NMPC settled with the other defendants, and this appeal followed.

II.

This Court reviews the district court's grant of summary judgment de novo. See Young v. County of Fulton, 160 F.3d 899, 902 (2d Cir.1998). In so doing, this Court construes the evidence in the light most favorable to the non-moving party, and drawing all reasonable inferences in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Maguire v. Citicorp Retail Servs., Inc., 147 F.3d 232, 235 (2d Cir.1998). Summary judgment is appropriate only where "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

To survive summary judgment "the nonmoving party must come forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (italics in original) (quoting Fed. R.Civ.P. 56(e)). "Conclusory allegations, conjecture, and speculation ... are insufficient to create a genuine issue of fact." Kerzer v. Kingly Mfg., 156 F.3d 396, 400 (2d Cir.1998). The "mere existence of a scintilla of evidence" supporting the non-movant's case is also insufficient to defeat summary judgment. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

III

The New York Navigation Law imposes strict liability for clean-up and remediation costs on "[a]ny person who has discharged petroleum." N.Y. Navig. L. § 181(1). The statute defines a "discharge" as "any intentional or unintentional action or omission resulting in the releasing ... of petroleum into waters of the state or onto lands from which it might flow or drain into said waters...." Id. § 172(8). The term "waters" includes both surface and groundwater. Id. § 172(18); see also Domermuth Petroleum Equip. and Maintenance Corp. v. Herzog & Hopkins, Inc., 111 A.D.2d 957 490 N.Y.S.2d 54, 56 (3d Dep't 1985) ("Judicial notice can be taken of the common knowledge that oil can seep through the ground into surface and groundwater....") (internal quotation marks and citation omitted).

The district court dismissed NMPC's New York Navigation Law claim for lack of evidence implicating MVO in the discharge of petroleum into the waters of the harbor and peninsula. The court relied on the deposition testimony of MVO's former employees, Osley and Munsell, that no spill or leak of fuel oil had occurred at Niagara Flats or the Texaco property during their...