NYS Electric & Gas v. FirstEnergy Corp.
AMENDED DECISION & ORDER: This order amends the # 363 Decision & Order, it is ordered that defendant FirstEnergy Corporation's # 360 Motion for Reconsideration is DENIED, the Clerk is directed to enter judgment in this action substantially i n the form of that attached as Exhibit B to NYSEG's # 359 August 5, 2011 submission, with interest brought forward to today's date, and to include the following three additional provisions a) ID Booth, Inc., ("ID Booth") shall p ay $160,089 to FirstEnergy, constituting the sum of I.D. Booth's equitable share of past response costs incurred through December 31, 2009 with respect to the Cortland-Homer Site, b) I.D. Booth shall also pay $19,033 in prejudgment int erest on past costs incurred through December 31, 2001, calculated through September 2, 2011 at the applicable Superfund interest rate for each fiscal year and accruing on that later date of the filing of the action or date of expenditure, c) FirstEn ergy is entitled to a declaratory judgment that I.D. Booth is liable to pay FirstEnergy the amount of 6.72% of all response costs incurred by NYSEG at the Cortland-Homer Site after December 31, 2009, with prejudgment interest for those expenses incurred after that date but prior to the entry of judgment. Signed by Magistrate Judge David E. Peebles on 9/7/2011. (jmb)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF NEW YORK
NEW YORK STATE ELECTRIC & GAS
Civil Action No.
I.D. BOOTH, INC.,
DICKSTEIN SHAPIRO LLP
1825 Eye St., NW
Washington, D.C. 20037
DAVID L. ELKIND, ESQ.
KEISHA A. GARY, ESQ.
GEOFFREY M. LONG, ESQ.
KRISTIN C. DAVIS, ESQ.
HINMAN, HOWARD LAW FIRM
P.O. Box 5250
80 Exchange Street
700 Security Mutual Building
Binghamton, NY 13902-5250
JAMES S. GLEASON, ESQ.
FOR DEFENDANT/THIRDPARTY PLAINTIFF:
SAUL EWING LLP
1500 Market Street, 38th Floor
Philadelphia, PA 19102
JOHN F. STOVIAK, ESQ.
CATHLEEN M. DEVLIN, ESQ.
CHRISTINA D. RIGGS, ESQ.
AMY L. PICCOLA, ESQ.
COSTELLO, COONEY LAW FIRM
205 South Salina Street
Syracuse, NY 13202-1307
PAUL G. FERRARA, ESQ.
FOR THIRD-PARTY DEFENDANT
I.D. BOOTH, INC.:
DAVIDSON & O'MARA, P.C.
243 Lake Street
Elmira, NY 14901
DONALD S. THOMSON, ESQ.
DAVID E. PEEBLES
U.S. MAGISTRATE JUDGE
AMENDED DECISION AND ORDER
Plaintiff New York State Electric & Gas Corporation (“NYSEG”)
commenced this action against defendant FirstEnergy Corporation
(“FirstEnergy”) in April of 2003, asserting various claims including those
pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (“CERCLA”), as amended, 42 U.S.C. § 9601 et
seq., seeking to recover a portion of the past and future costs of
investigating and remediating several hazardous waste sites throughout
Upstate New York formerly associated with manufactured gas plant
(“MGP”) operations of NYSEG and its predecessor utility companies.
Defendant FirstEnergy, in turn, has interposed a counterclaim against
NYSEG for contribution, essentially seeking equitable apportionment of
the response costs incurred at the MGP sites, and additionally has
asserted a third-party claim for contribution against I.D. Booth, Inc. (“I.D.
Booth”), the current owner of portions of two of the sixteen MGP sites in
On July 11, 2011, after conducting a non-jury trial, I issued a written
decision addressing the claims in the action. While noting in both its
principal and reply briefs that other errors of law also taint that
determination, FirstEnergy now seeks reconsideration of three findings
contained within my decision. For the reasons set forth below
FirstEnergy’s request for reconsideration is denied, and judgment in the
action will now be entered.
In my bench decision I found that FirstEnergy is liable for a portion
of past and future necessary costs related to the clean-up of the sites in
question finding, based upon a veil piercing theory, that its predecessor,
the Associated Gas & Electric Company (“AGECO”), is properly regarded
as having been an owner and operator of the sixteen sites in issue during
all or portions of the period from 1922 through 1940. Based upon that
finding I allocated liability as between the two principal parties in the action
in proportion to the amounts of manufactured gas produced at the
facilities during their relevant periods of ownership and operation,
concluding based upon the evidence adduced at trial that hazardous
waste likely generated at those facilities can properly be assumed to have
been roughly proportional to the quantities of gas produced.
Since the issuance of my post-trial opinion FirstEnergy has moved
seeking reconsideration of portions of that decision, challenging three
specific findings, arguing that 1) the court’s findings regarding the
application of the governing CERCLA statute of limitations in connection
with the Plattsburgh Site are erroneous, in that they fail to recognize that
the actions taken at that site during the 1980s were remedial in nature,
thereby triggering the applicable statute of limitations which would have
run prior to commencement of this action and barred all of NYSEG’s cost
recovery claims with regard to that site; 2) the court inappropriately
extended FirstEnergy’s liability through the end of 1940 despite the filing
of bankruptcy by AGECO in January of that year; and 3) the court unjustly
allocated cleanup costs as between the parties without appreciating and
giving effect to the distinction between owner and operator liability.
FirstEnergy’s motion implicates Rule 60(b) of the Federal Rules of
Civil Procedure, which provides in relevant part, that
[o]n motion and just terms, the court may relieve a party...from
a final judgment, order, or proceeding for the following
reasons: (1) mistake, inadvertence, surprise, or excusable
neglect; (2) newly discovered evidence that, with reasonable
diligence, could not have been discovered in time to move for
a new trial under Rule 59(b); (3) fraud (whether previously
called intrinsic or extrinsic), misrepresentation, or misconduct
by an opposing party; (4) the judgment is void; (5) the
judgment has been satisfied, released, or discharged; it is
based on an earlier judgment that has been reversed or
vacated; or applying it prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b).1
In this district, reconsideration of an order entered by the court is
appropriate upon a showing of “(1) an intervening change in controlling
law, (2) the availability of new evidence not previously available, or (3) the
need to correct a clear error of law or prevent manifest injustice.” In re CTC 9th Ave. P’ship, 182 B.R.1, 3 (N.D.N.Y. 1995) (McAvoy, C.J.); see also
Cayuga Indian Nation of New York v. Pataki, 188 F. Supp. 2d 223, 244
(N.D.N.Y. 2002) (McCurn, S.J.) (citing Sumner v. McCall, 103 F. Supp. 2d
555, 558 (N.D.N.Y. 2000) (Kahn, J.)). Applications for reconsideration are
also subject to an overarching “clearly erroneous” gauge. Sumner, 103 F.
Supp. 2d at 558.
The benchmark for seeking reconsideration of a court’s order has
been described as “demanding[.]” Id. A motion for reconsideration is not
a vehicle through which a losing party may raise arguments that could
have been presented earlier but for neglect, nor is it a device “‘intended to
FirstEnergy’s motion purports to be brought pursuant to Rule 59(e) of the
Federal Rules of Civil Procedure, which governs motions to alter or amend judgments.
See Fed. R. Civ. P. 59(e); see also Ruscavage v. Zurratt, 831 F. Supp. 417, 418 (E.D.
Pa. 1993) (citing Harsco Corp. V. Ziotnicke, 779 F.2d 906, 909 (3d Cir. 1985)).
Because judgment has not yet been entered in this case, however, the application is
more appropriately regarded as implicating Rule 60(b) of the Federal Rules of Civil
Procedure as well as Northern District of New York Local Rule 7.1(g), the latter of
which details a procedure to govern motions for reconsideration without setting out a
standard to be applied in deciding such applications.
give an unhappy litigant one additional chance to sway the judge.’” Brown
v. City of Oneonta, New York, 858 F. Supp. 340, 342 (N.D.N.Y. 1994)
(McAvoy, C.J.) (quoting Durkin v. Taylor, 444 F. Supp. 879, 889 (E.D.Va.
1977)). To qualify for reconsideration, “[t]he moving party [must] point to
controlling decisions or data that the court overlooked – matters, in other
words, that might reasonably be expected to alter the conclusion reached
by the court.” Shrader v. CSX Transp., Inc., 70 F. 3d 255, 257 (2d Cir.
1995) (citations omitted).
Statute of Limitations: The Plattsburgh Site
The circumstances surrounding the early response actions
undertaken by NSYEG at the Plattsburgh–Saranac Street Site were
exhaustively detailed in my initial decision and order, and need not be
recounted in this decision. See Decision and Order Dated 7/11/11 (Dkt.
No. 354) at pp. 154-162. To summarize, spurred by observation of coal
tar seepage into the Saranac River, in 1975 NYSEG retained consultants
and undertook an investigation into the migration of coal tar from the site
to the river. A report was generated in December 1979 – prior to the
enactment CERCLA – outlining nine alternatives for addressing the issue.
After settling on one of the nine proposals NYSEG consented to the entry
of an order by the New York State Department of Environmental
Conservation (“DEC”) in 1981, pursuant to which it agreed to “voluntarily
undertake a remedial project that is acceptable to DEC.” Under the terms
of that order NYSEG was directed to take certain specified measures to
prevent coal tar from reaching the Saranac River from a tar lagoon located
on the premises, and to remove coal tar from the river.
In my decision I concluded that while the project was uniformly
referred to within NYSEG as being remedial in nature, that reference is
contextual, the goal being to address the discharge of coal tar into the
Saranac River and to clean up the contaminated areas of that body of
water. The evidence at trial reflected that neither the DEC nor NYSEG
envisioned the project as encompassing a CERCLA-quality clean-up of
the entire MGP site. This conclusion is buttressed, inter alia, by the fact
that the 1981 DEC consent order was not issued pursuant to CERCLA or
parallel state provisions, but instead was entered under authority of a
state law prohibiting certain discharges into state waters. See N. Y. Env.
Conserv. L. § 17-501. I therefore concluded that the work performed was
not the type of site-wide hazardous waste response envisioned under
CERCLA, and thus did not trigger the applicable statute of limitations.2
Relying heavily upon another district court’s decision in Yankee Gas
Servs. Co. v. Utils., Inc., 616 F. Supp. 2d 229, 269 (D. Conn. 2009), First
Energy passionately argues that my determination ignores the realities of
the actions taken at Plattsburgh pursuant to the 1981 consent order as
well as my own factual findings. Yankee Gas, however, presented a
distinctly different situation, requiring the court in that action to designate
what clearly was a hazardous waste clean-up effort conducted pursuant to
CERCLA as either a remedial or a removal response. To inform that
analysis the court identified four controlling factors which, FirstEnergy
asserts, favor a finding of a CERCLA remedial action in this case.
FirstEnergy’s argument ignores the realities of the 1981 consent
order. That order did not require a CERCLA investigation and clean up of
the Plattsburgh site. Indeed, while there admittedly was some testing
performed in the area where the former MGP plant was located, the focus
of the consent order was upon the nearby tar lagoon and the migration of
tar from that point to the Saranac River. The thrust of the DEC’s consent
As an alternative basis for my statute of limitations finding, I noted that if
required to choose between regarding the work performed at the site as remedial in
nature or instead a removal action, I would settle on the latter.
order and of NYSEG’s efforts was to address the presence of coal tar in
the Saranac River and prevent further coal tar migration to that body of
water, and not to mandate a full-blown investigation and remediation of
the entire Plattsburgh Site under CERCLA. For that reason I concluded
that the actions taken pursuant to the 1981 DEC consent order, as well as
those prior to its issuance, did not constitute a remedial action under
CERCLA sufficient to trigger the governing statute of limitations. For the
reasons set forth in my original decision, I find no basis to reconsider and
alter that determination.
Extension of Liability Through 1940
On January 10, 1940 AGECO and its top holding company
subsidiary, Associated Gas & Electric Corporation (“AGECORP”), filed for
bankruptcy protection under Chapter X of the Bankruptcy Code then in
existence. In conjunction with that bankruptcy trustees were appointed for
both companies, although unfortunately the record does not disclose – or
at least neither NYSEG nor FirstEnergy has pointed to where among the
hundreds of exhibits received in evidence this information can be found –
precisely when those trustees were appointed. At trial NYSEG argued
that despite the filing of that bankruptcy and the subsequent appointment
of bankruptcy trustees for both AGECO and AGECORP, the domination of
those corporations over their subsidiary operating utility companies
extended for up to two more years, contending that it was not until 1942
that the trustees were fully able to gain control of the service contracts
through which AGECO and AGECORP pillaged their subsidiaries.
In urging January 10, 1940 as a cutoff for its liability, FirstEnergy
apparently contends that immediately upon filing of bankruptcy for
AGECO and AGECORP the trustees, if they were even appointed on that
date, were able to untangle the web woven over the years during which
the AGECO empire flourished and halt the chronicled abuses associated
with the pyramidal system. In addition to defying logic, that contention
lacks support from the record. At trial Professor Jonathan Macey,
NYSEG’s corporate history expert, testified that based upon his extensive
review of available historical documents, in his opinion the control and
dominance of AGECO over its subsidiaries extended well into 1941 and,
in his view, potentially beyond. Based upon Professor Macey’s testimony
I chose to utilize December 31, 1940 as an appropriate liability cut-off
date, and will adhere to that ruling.3
Unfortunately, while marked as an exhibit, the December 31, 1941 yearend annual report of the bankruptcy trustees for AGECO and AGECORP, which could
Owner and Operator Allocation
FirstEnergy next argues that despite my finding of veil piercing and
corresponding assignment of liability against it, as both an owner and
operator, for hazardous discharges occurring between 1922 and the end
of 1940, I erred by not separating out, for allocation purposes, owner and
In assigning liability I followed the methodology employed by my
learned colleague, United States Magistrate Judge Jonathan Feldman, in
Rochester Gas & Electric Corp. v. GPU, Inc., No. 00-CV-6369 (W.D.N.Y.
2008), (“RG&E”), a similar case also involving FirstEnergy. In his decision
Judge Feldman concluded that the most equitable means of apportioning
liability under circumstances analogous to those involved in this case was
to recognize that any party’s equitable share should be primarily tied to
that party’s contribution of coal tar waste at the various MGP sites. See
RG&E, slip op. at 94-95. Judge Feldman went on to find, based upon the
parties’ agreement and expert testimony, that the amount of hazardous
waste deposited was approximately proportional to the volume of gas
produced at the relevant times, and utilized that finding at his basis for
well have shed considerable light on this issue, was not among the hundreds of
exhibits offered and received in evidence at the trial. See Exh. P-212.
apportioning both owner and operator liability as between the parties. In
doing so Judge Feldman does not appear to have distinguished between
owner and operator liability.4
In support of its argument FirstEnergy places heavy reliance upon
the Second Circuit’s decision in Commander Oil Corp. v. Barlow Equip.
Corp., 215 F.3d 321 (2d Cir.), cert. denied, 531 U.S. 979, 121 S. Ct. 427
(2000), a case which examined whether a lessee can be considered as an
owner for purposes of CERCLA. Addressing that issue the court noted in
passing the established rule in this circuit that owner and operator liability
should generally be treated separately since they involved distinct
concepts and potentially differing roles in relevant polluting activities.
Commander Oil Corp., 215 F.3d at 328 (citing Schiavone v. Pearce, 79
F.3d 248, 254 (2d Cir. 1996)). With this I agree. The underlying the facts
in Commander Oil Corp., however, are materially distinguishable, making
the case not readily susceptible to direct application in this action.
In the years for which NYSEG has been assigned liability based
upon hazardous waste disposition it or a predecessor utility operating
From the Second Circuit’s decision, which affirmed the trial court’s
judgment in all respects, it does not appear that FirstEnergy raised the owner/operator
allocation argument on appeal in that case.
company both owned and operated each of the MGP sites in question.
During the interval between 1922 and the end of 1940 AGECO,
FirstEnergy’s predecessor, was deemed to have been both an owner and
operator of the sites in question by virtue of a veil piercing finding. The
periods for which NYSEG and AGECO have been found responsible for
hazardous waste released at the MGP sites in issue cover the entire
periods of their active operation. No proof was offered at trial of any other
hazardous waste releases on the properties, aside from natural migration
of existing coal tar. Moreover, there was no proof offered at trial of any
actions taken by NYSEG, as an owner, following the culmination of gas
producing activities at the sites in question, from which one could
conclude that apportionment based upon relevant years of gas production
would lead to an inequitable and unjust result. Given these facts, I find no
basis to differentiate between owner and operator liability for allocation
In support of this argument FirstEnergy notes the court’s decision results
in apportionment of response costs as between the two parties without consideration
of the fact that there may be other potentially responsible parties (“PRPs”), including
current site owners. To the extent that in the end it may feel that it has overpaid for its
share of response costs, FirstEnergy is entitled to assert third party claims against
other PRPs pursuant to 42 U.S.C. § 9613(f), as it in fact has with regard to the current
owner of two of the MGP sites in question.
Judgment to be Entered
In my July 11, 2011 decision I directed that the parties confer and
present to the court a proposed judgment to be entered based upon my
decision. On August 1, 2011 the parties submitted counter-proposed
judgments, together with letter briefs regarding those proposals. Dkt.
Nos. 355, 356. The points of controversy centered upon the methodology
to be used in calculating interest, including the dates of accrual, with
FirstEnergy asserting that interest should accrue only from the filing of the
most recent second amended complaint in which, a CERCLA section
107(a) cause of action was asserted for the first time, and FirstEnergy’s
request that the judgment include a provision for allowing it to share in
decision-making for purposes of future costs since it will bear
responsibility for a portion of those expenditures.
Under CERCLA an award of prejudgment interest is mandated in
the circumstances now presented under both section 107(a) and section
113(f). Goodrich Corp. v. Town of Middlebury, 311 F.3d 154, 177 (2d Cir.
2002) (citing Bancamerican Comm. Corp. v. Mosher Steel, 100 F.3d 792,
800 (10th Cir. 1996)), cert. denied, 593 U.S. 937, 123 S. Ct. 2577 (2003).
Prejudgment interest accrues from the later of either a written demand for
payment or the date upon which the expenditure is incurred, and is
calculated based upon prevailing Superfund rates established by the
Environmental Protection Agency. 42 U.S.C. § 9607(a)(4); see Matter of
Bell Petroleum Servs., Inc., 3 F.3d 889, 908 (5th Cir. 1993); Goodrich
Corp., 311 F.3d at 177.
The filing of a complaint in an action such as
this is sufficient to constitute a written demand for purposes of triggering
accrual of prejudgment interest. Matter of Bell Petroleum Servs., 3 F.3d
at 908. I will therefore enter judgment authorizing recovery of
prejudgment interest to accrue from the earlier of the date of filing of this
action or when the expense was incurred.
Addressing the issue of decision-making sharing with respect to
future costs, I have found no cases, nor has FirstEnergy cited any,
standing for the proposition that a PRP sued and determined to have
potential liability for future response costs to be incurred by another PRP
should be given such control. Declaratory judgments addressed to future
costs are relatively routine in CERCLA litigation where complete
investigation and remediation has not yet occurred at a site. See, e.g.,
RG&E, slip op. at pp. 97-98; Gussack Reality Co. v. Xerox Corp., 224
F.3d 85, 92 (2d Cir. 2000); Goodrich Corp., 311 F.3d at 175; United
States v. Davis, 261 F.3d 1, 46, (1st Cir. 2001). “[W]here, as here, a
responsible party chooses to go to trial and future response costs are
likely to be incurred, but the exact amount remains unknown, a judgment
on proportional liability is an appropriate remedy.” Tosco Corp. v. Koch
Indus., 216 F.3d 886, 897 (10th Cir. 2000) (citing Kelley v. E.I. DuPont de
Nemours & Co., 17 F.3d 836, 844-45 (6th Cir. 1994)). To the extent that
FirstEnergy is concerned regarding NYSEG’s discretion in connection with
future costs, it has as a safeguard the requirement that to be recovered a
response cost must be both necessary and consistent with the National
Contingency Plan (“NCP”). I therefore decline FirstEnergy’s request for
inclusion of such a decision-sharing provision in the final judgment to be
In response to FirstEnergy’s objections regarding the methodology
employed to compute interest, NYSEG has recalculated, breaking down
the expenses monthly and applying the requisite prescribed rates.6 Dkt.
No. 359. Having reviewed NYSEG’s submission and accompanying
proposed judgment I find them to be consistent with this court’s decision
In its initial proposed judgment NYSEG grouped expenses by year and
applied interest as accruing from the first day of each year regardless of when, over
the course of the year, the particular expense was incurred.
and the applicable legal principles, and therefore will direct in this order
that judgment be entered essentially in the form proferred by NYSEG, with
interest calculated through the date of entry.
SUMMARY AND ORDER
For the reasons set forth above I find that FirstEnergy has failed to
meet its heavy burden of establishing a basis to reconsider my earlier
post-trial decision, and therefore will deny reconsideration in connection
with each fo the three arguments now raised by FirstEnergy. Turning to
the judgment to be entered, I find that plaintiff’s revised proposed
judgment and defendant’s FirstEnergy’s proposed judgment against thirdparty defendant ID Booth, Inc., are consistent with the court’s order and
controlling legal principles. Accordingly, it is hereby
ORDERED as follows:
Defendant FirstEnergy Corporation’s motion for
reconsideration is DENIED.
The clerk is directed to enter judgment in this action
substantially in the form of that attached as Exhibit B to NYSEG’s August
5, 2011 submission (Dkt. No. 359), with interest brought forward to today’s
date, and to include the following three additional provisions:
ID Booth, Inc., (“ID Booth”) shall pay $160,089 to
FirstEnergy, constituting the sum of I.D. Booth’s equitable share of past
response costs incurred through December 31, 2009 with respect to the
I.D. Booth shall also pay $19,033 in prejudgment interest
on past costs incurred through December 31, 2009, calculated through
September 2, 2011 at the applicable Superfund interest rate for each
fiscal year and accruing on the later date of the filing of this action or the
date of expenditure.
FirstEnergy is entitled to a declaratory judgment that I.D.
Booth is liable to pay FirstEnergy the amount of 6.72% of all response
costs incurred by NYSEG at the Cortland-Homer Site after December 31,
2009, with prejudgment interest for those expenses incurred after that
date but prior to the entry of judgment.
September 7, 2011
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?