Reichhold, Inc. v. United States Metals Refining Co. (655 F. Supp. 2d 400, 2009)

OPINION

DEBEVOISE, Senior District Judge.

CONTENTS

I. Background..............................................................404

II. The Parties’ Contentions...................................................408

III. Preliminary Rulings.......................................................410

A. Treatment Increased Costs............................................410

B. Inclusion of Investigation Costs.........................................411

C. Aerial Deposition Evidence ............................................412

D. Admissibility of Evidence Establishing Costs.............................416

IV. Negotiation of the of the Cleanup Plan with N JDEP...........................423

V. New Environmental Obligations ............................................426

A. General .............................................................426

B. Site-Wide Analytical Delineation .......................................427

C. CVOCs..............................................................431

D. Capping the Staflex Parcel.............................................432

E. BTL Cap............................................................433

F. BTL Baseline Ecological Evaluation.....................................433

G. Delta Costs..........................................................433

VI. Source of Contamination...................................................434

A. General .............................................................434

B. Site-Wide Analytical Delineation .......................................436

C. Staflex Parcel Cap....................................................438

D. BTL Cap............................................................440

E. BTL Baseline Ecological Evaluation.....................................443

VII. Discussion...............................................................444

VIII. Conclusion...............................................................449

Plaintiff, Reichhold, Inc. (“Reichhold”), commenced this action on January 31, 2003, requesting legal and declaratory relief against United States Metals Refining Company (“USMRC”) pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601-9675, as amended by the Superfund Amendments and Reauthorization Act of 1986, Pub. L. 99-499, 100 Stat. 1613 (1986); and the New Jersey Spill Compensation and Control Act (the “Spill Act”), N.J. Stat. Ann. §§ 58:10-23.11 to 23.11(2). Reichhold later filed an amended complaint, adding CyprusAMAX Minerals Company and related entities as defendants

Reichhold seeks damages from USMRC for its past and future costs to address and remediate metals and chlorinated volatile organic compounds (“CVOCs”) contamination at the approximately 40-acre property formerly owned by Reichhold in Carteret, New Jersey (the “Site”). Reichhold also seeks a declaratory judgment for future investigation and remediation costs both on the Site and adjacent areas in and around the Arthur Kill that Reichhold has been directed by the New Jersey Department of Environmental Protection (“NJDEP”) to investigate and address.

During the period January 22 to March 4, 2009, the case was tried without a jury. This opinion constitutes the court’s findings of fact and conclusions of law.

I. Background

USMRC was incorporated as the Delmar Cooper Refining Company in November, 1903. The name was changed to USMRC in November, 1906. Between 1901 and 1986, USMRC conducted metals refining operations on property out of which the Site was carved when USMRC sold it to Reichhold in June, 1960. (See accompanying map of Site — Appendix A.)

USMRC performed primarily three operations on its property adjacent to the Site: (1) smelting and refining copper-bearing materials, including high and low grade scrap, (2) production of standard and unconventional coppers, and (3) smelting and refining of scrap materials bearing precious metals. More than 500,000 tons of scrap per year were typically charged to the smelter. A variety of materials containing metal components were processed at the USMRC facility to recover copper and precious metals, including telephone and electronic scrap, automotive parts, electric motors and insulated wires.

USMRC’s smelting operations produced slag as a residual. The slag was transported from the cupola by rail car or by truck to slag storage areas including, in particular, a large slag pile on the BTL Parcel. (See Appendix A.)

In 1930 USMRC constructed a lead plant on what became the Reichhold Site. It began operations in 1931 and was used to refine lead and tin. The USMRC lead plant was dismantled in or before 1952. The lead plant was housed in the building which will be referred to as Building 401.

By letter dated November 13, 1950, USMRC agreed to sell approximately 400,-000 cubic yards of granulated slag to the Villa Contracting Company. That company intended to use this slag in connection with its contract with the New Jersey Turnpike Authority. Slag was placed on the Staflex Parcel (See Appendix A) to form a base for a haul road over which slag was trucked to the Turnpike.

In 1956 Anchor Abrasives Co. commenced producing slag grit. Slag, which USMRC sold to Anchor Abrasives, was run through screens to eliminate fine and large particles to create a product of uniform size. The product was bagged and sold for sandblasting. These screens were operated on top of the slag pile on the BTL Parcel.

In 1960, USMRC sold the 40-acre portion of its property in Carteret constituting the Site to Reichhold pursuant to a Purchase Agreement dated June 27, 1960 (the “Purchase Agreement”). The Site included a southern parcel (the “BTL Parcel”) located between the Arthur Kill and a parcel of land owned by the Central Railroad Co. of New Jersey (the “Jersey Central Railroad”), and another parcel located north of the railroad property (the “Staflex Parcel”). The Staflex Parcel consisted of a Northwest Field and a Southwest Field, to which reference is made in some of the relevant documents in this case.

The Purchase Agreement included a provision which allowed USMRC one year to remove “Stockpiled Materials” from the Site:

Seller shall have the right during a period of one year from the date of closing hereunder to enter the premises at any time and from time to time to remove therefrom any of that part of the Business Property constituting bulk materials stored on the premises and listed on a list entitled “Stockpiled Materials” attached hereto as Annex “B” ... Seller shall not be under any obligation to remove any of such materials and shall not be under any obligation to grade or resurface in any manner any areas from which any such materials are removed. At the expiration of one year from the date hereof, all such materials not so removed shall become the property of the Purchaser.

Annex B of the Purchase Agreement listed the following as “Stockpiled Materials:”

Zinc Oxide 5400 T

Insulated Wire 500 T

Anode Ashes 760 T

Misc. Cu Bearing 1930 T

Smelter Insulation Ashes 1900 T

Sea Sand 1050 T

Disputada Concentrates 1075 T

Anode Slag 660 T

Coke 1200 T

Reservoir Mud-Mould Wash 100 T

Granulated Slag Approx. 300 T

At about the same time it acquired USMRC’s property, Reichhold also acquired the Jersey Central Railroad property lying between the BTL Parcel and the Staflex Parcel.

Reichhold constructed and operated a Polyol Plant in the south-center portion of the BTL Parcel, and it constructed a Phenolic Resin Plant, a Phenolic Molding Compound Plant and a Plasticizer Plant along the eastern side of the BTL Parcel. Phenolic resins were created by the condensation reaction of phenol with formaldelyde in the presence of various catalysts and minor additives. Phenolic molding compounds were produced by blending and extruding phenolic and/or polyester resins with filters, initiators, inhibitors and minor additives.

In the southwestern portion of the Sta-flex Parcel Reichhold constructed and operated a Batch Esters Plant. Speciality esters were produced by reacting acids and anhydrides with low to medium weight alcohols and glycols in the presence of catalysts and minor additives.

On June 27, 1986, Reichhold sold the BTL Parcel, containing its Specialty Phenolics Division, which consisted of a Phenolic Resin Plant, a Phenolic Molding Compound Plant, and a Polyol Plant (as well as most of the southern portion of the Site) to Bakelite Thermoset Limited, Inc. (“BTL”).

Reichhold sold the remainder of its operations (including the Staflex Parcel) to Staflex Specialty Batch Esters, Inc., a subsidiary of Denka Chemical Corp., on March 23, 1987. This sale included the Esters Plant and title to the remainder of the Site. The property sold to Denka Chemical Corp. consisted of the portion of the property north of the Jersey Central Railroad parcel, the railroad property, and a portion south of the former railroad parcel containing auxiliary structures, including a Boiler House just south of the former railroad parcel.

In 1994 the Staflex Parcel was sold first to Bayer Corporation and then to C.P.H. Sub. II, Inc., a subsidiary of C.P. Hall Company (“Hall”). In May 2003, PorhReading Carteret, LLC (“PRC”) purchased the approximately 23.6-acre Staflex Parcel. PRC was wholly owned by Catellus Development Corporation (“Catellus”).

These real estate transactions triggered obligations under New Jersey State law, formerly known as the Environmental Cleanup Responsibility Act (“ECRA”), now known as the Industrial Site Recovery Act (“ISRA”). N.J. Stat. Ann. § 13HK-6 et seq. Reichhold became obligated to investigate possible environmental contamination at the Site and to remediate such contamination. Reichhold’s 1986 sale to BTL triggered ECRA, and ECRA Case No. 86099 was opened. NJDEP and Reichhold agreed to an Administrative Consent Order dated June 11, 1986. By Amendment to Administrative Consent Order dated March 30,1987, ECRA Case No. 86099 was amended to include the Staflex Parcel to address environmental remediation following the Staflex Parcel sale.

Having retained the firm of O’Brien & Gere, Reichhold began its investigation and evaluation of the Site with the submission of a General Information Statement and Site Evaluation Statement in 1986, as required by ISRA. NJDEP investigated the site itself and engaged in a lengthy dialogue with Reichhold, which included many iterations of the plan to remediate the contamination at the Site.

There resulted from these discussions a June, 1991, cleanup plan that throughout this litigation has been referred to as the “Cleanup Plan.” The Cleanup Plan is encompassed in a number of documents. Reichhold contends the Plan is set forth in six documents. USMRC contends that a seventh document is included in the Plan. The seven documents, about which there is agreement except for the seventh, are as follows:

1) O’Brien & Gere, Proposed Cleanup Plan (June 1991);

2) NJDEP, Proposed Cleanup Plan Disapproval and Deficiency Letter (Dec. 30, 1991)

3) O’Brien & Gere, Proposed Cleanup Plan Addendum (Feb. 3,1992);

4) NJDEP, Cleanup Plan Disapproval and Deficiency/Draft Cleanup Plan Approval (May 15,1992);

5) O’Brien & Gere, Response to Draft Cleanup Plan Approval Letter (June 10, 1992) ;

6) NJDEP, Conditional Cleanup Plan Approval (Aug. 21,1992); and

7) O’Brien & Gere, Additional Response to Conditional Cleanup Plan Approval Letter (Oct. 9,1992).

Among numerous other provisions, the Cleanup Plan proposed relocating visible slag from five existing areas of concern to the slag pile on the BTL Parcel and capping it. The cap was approximately 125,-000 square feet-almost the entire southeastern portion of the BTL Parcel. The Cleanup Plan proposed to monitor groundwater for benzene, toluene, xylene and phenol. There was no proposal to monitor for CVOCs, ammonia or metals in the groundwater in the first draft of the cleanup plan, and such monitoring was not added in the six subsequent communications forming a part of the Cleanup Plan.

After the NJDEP approved the Cleanup Plan, Reichhold approached USMRC seeking financial contribution for cleanup of the Site. Reichhold and Cyprus-AMAX, USMRC’s then-parent corporation, entered into a settlement agreement and release with an effective date of May 25, 1994 (the “Settlement Agreement”). Under the Settlement Agreement, CyprusAMAX (defined to include its subsidiaries, and thus USMRC) paid Reichhold $325,000 in exchange for, among other things, Reichhold’s covenant not to sue Cyprus-AMAX “with regard to the Site or Hazardous Substances at or beneath the Site.” (Settlement Agreement ¶ 2.)

The Settlement Agreement, however, did not foreclose every possible claim by Reichhold against USMRC related to cleanup of the Site. It contained a Re-Opener Provision, which described the claims from which Reichhold did not release USMRC. The parties defined “New Environmental Obligations” as “new legal obligations (including, but not limited to directives or orders) to investigate, remediate or otherwise address Hazardous Substances at, beneath or migrating from the Site imposed upon Reichhold or to which Reichhold first becomes subject subsequent to the Effective Date.” (Settlement Agreement ¶ 1(c).) The Effective Date was the date Reichhold received the settlement funds, namely, May 25, 1994. The Re-Opener Provision defines with particularity the New Environmental Obligations that were subject to reopening. It states, in relevant part:

3. Re-Opener or Nan-Released Matters

Reichhold does not release CyprusAMAX from any claims, of any kind or any nature, arising from the following circumstances:

A. Material New Environmental Obligations imposed by federal, state or local governmental authorities to the extent arising out of: (1) Material changes in law (including federal, state or local laws, statutes, codes, regulations, mandatory governmental guidelines or enforcement policies) promulgated subsequent to the Effective Date, including, but not limited to: (i) Material new cleanup standards imposed by governmental authorities subsequent to the Effective Date: (ii) Material new regulations and requirements promulgated subsequent to the Effective Date pursuant to New Jersey’s Industrial Site Recovery Act, P.L. 1993, c. 139 (formerly known as ECRA) or the Spill Act; (2) A Material amendment or revision to the Cleanup Plan which requires Reich-hold to further remediate groundwater or soils at the Site contaminated by Cyprus-AMAX’s former or current operations, but not including requirements to remediate groundwater or soil contamination at the Site to the extent the contamination was caused by Slag in the area depicted on Figure 6.05 of the June 1991 Cleanup Plan for the Site ... A New Environmental Obligation will not be considered “Material” unless its satisfaction will result in an Increased Cost to Reichhold of $200,000. An “Increased Cost to Reichhold” means an actual out-of-pocket cost to Reichhold over and above the out-of-pocket costs that Reichhold would have incurred if the New Environmental Obligation had not been imposed on Reichhold.

Thus, in order for Reichhold to prevail on any of its claims against USMRC for the cost of cleanup at the Site (assuming it has established liability under CERCLA or the Spill Act), Reichhold must establish (1) that the claim is due to a “material change” in the law promulgated subsequent to May 25, 1994, or due to a “Material amendment or revision to the Cleanup Plan which requires Reichhold to further remediate groundwater or soils at the Site contaminated by” USMRC; and (2) that the satisfaction of the new obligation will result in an Increased Cost to Reichhold, as defined above, of $200,000.

The parties also included a provision on “Tolling of Non-Released Claims.” Under that provision, the statute of limitations on any Non-Released claims that Reichhold may have against USMRC is tolled “until that time that Reichhold is obligated to initiate physical on-site construction of a remedy to address the Hazardous Substances which are the subject of the Non-Released claims contained in Paragraph 3 of this agreement.” This tolling provision in the Settlement Agreement mirrors the tolling provision of the statute of limitations for a claim for a remedial action under CERCLA § 107. See 42 U.S.C. § 9613(g)(2)(B).

II. The Parties’ Contentions

Reichhold has spent large sums of money investigating and remediating the Site. Although it received $325,000 from USMRC for its covenant not to sue USMRC “with regard to the Site or Hazardous Substances at or beneath the Site,” it contends that substantial portions of its expenditures were within the Settlement Agreement’s Re-Opener provision, constituting New Environmental Obligations in that they resulted from a “Material amendment or revision of the Cleanup Plan which requires Reichhold to further remediate groundwater or soils at the Site contaminated by [USMRC’s] former or current operations.”

Under the Settlement Agreement a New Environmental Obligation is “material” if satisfaction of the new obligation will result in an increased cost to Reichhold of $200,000. It is Reichhold’s contention that the $200,000 requirement is met once it has expended that amount on New Environmental Obligations, and that every such expenditure thereafter is material. The court held in its November 20, 2008, 2008 WL 5046780, opinion addressing the parties’ summary judgment motions that “[e]ach individual claim made by Reichhold must independently satisfy this monetary threshold in order to qualify as a Material New Environmental Obligation. The costs of several different claims may not be aggregated to reach the monetary threshold for materiality.” (Slip Op. at 30.) The court will reexamine this ruling in light of the evidence submitted at the trial.

Reichhold defines what it asserts are the relevant parameters of the Cleanup Plan. The Cleanup Plan, including the seven documents referred to above, imposes numerous obligations on Reichhold, most of which are not the subject of claims that Reichhold advances in this case. These relevant Cleanup Plan requirements, according to Reichhold, are that: (1) Reich-hold cap the approximately 125,000 square foot slag pile on the BTL Parcel depicted in Figure 6.05 of the Cleanup Plan; (2) Reichhold delineate visual slag in the May, 1994, Areas of Environmental Concern and relocate it to the slag pile for capping; and (3) Reichhold remediate the Site to NonResidential standards.

Reichhold now seeks costs that it asserts are based on six New Environmental Obligations under the Settlement Agreement. These New Environmental Obligations are said to arise from material amendments or revisions of the Cleanup Plan that required Reichhold to: (1) perform site-wide analytical delineation of slag and related metal contamination; (2) cap the Staflex Parcel; (3) perform ecological evaluation on the BTL Parcel; (4) expand the cap on the BTL Parcel; (5) remediate CVOCs (chlorinated volatile organic compounds); and (6) incur increased disposal costs due to lead or other hazardous contamination (referred to as “Delta Costs”). As to each claim Reichhold alleges that the remediation required was not part of the Cleanup Plan; each contamination was caused by USMRC’s former operations; and each remediation exceeded $200,000 in cost.

USMRC advances numerous defenses to Reichhold’s claims. It starts with the undeniable contention that subject to the Re-Opener provision of the Settlement Agreement, Reichhold fully released USMRC of all claims against USMRC with regard to the Site or hazardous substances at or beneath the Site. Thus, the burden is on Reichhold to prove that each claim is a non-released claim under the Settlement Agreement.

USMRC’s defenses to Reichhold’s claims based on amendment or revision of the Cleanup Plan are: (1) a material amendment or revision of the Cleanup Plan that requires Reichhold to “further remediate” groundwater or soils at the Site does not include investigative costs, thus excluding costs that Reichhold seeks to include to render the amendment or revision material; (2) with or without the investigative costs exclusion, Reichhold has failed to prove that any amendment or revision of the Cleanup Plan meets the materiality requirement of increased costs of at least $200,000 over and above the out-of-pocket costs that Reichhold would have incurred if the New Environmental Obligation had not been imposed on Reichhold; (3) Reichhold has failed to prove two elements required to establish USMRC’s liability under § 107 of CERCLA, namely, (i) that USMRC released or disposed of hazardous substances at the Site and (ii) that Reichhold incurred “necessary costs of response” as a result of USMRC’s actions; (4) Reichhold has failed to prove that the response costs it incurred were consistent with the national contingency plan; (5) even if Reichhold proves all of the elements of a § 107 claim, if USMRC can prove that there is a reasonable basis for division of the harm according to the contribution of USMRC and Reichhold, each is subject to liability only for the portion of the total harm it has caused; (6) Reichhold has failed to establish a claim against USMRC under the Spill Act; (7) Reich-hold has failed to prove an essential element of its claim under the Re-Opener provision of the Settlement Agreement, namely, that USMRC’s operations caused the contamination of the groundwater or soils for which Reichhold seeks to be compensated; and (8) the six years statute of limitations under CERCLA and the Spill Act bars one or more of Reichhold’s individual claims.

In addition to its defenses, USMRC has asserted a counterclaim for contribution from Reichhold under CERCLA § 113 and allocation under equitable principles.

These claims and defenses raised factual issues that were addressed at trial. Before and during the trial evidential issues arose the resolution of which was reserved for disposition after the conclusion of the trial.

III. Preliminary Rulings

There are four issues that should be resolved at the outset: (1) whether the increased cost of $200,000 required to qualify a Reichhold claim as “Material” must be met as to each New Environmental Obligation or whether the costs attributed to New Environmental Obligations may be aggregated to arrive- at the $200,000 threshold; (2) whether remediation costs include costs of investigation or whether remediation costs are limited to the costs of physically removing, capping or otherwise disposing of a contaminant; (3) whether the second report of Reich-hold’s expert, Dr. Robert L. Pearson, and the testimony reflecting it purporting to calculate the quantity of smelter dust falling upon the Site is admissible; and (4) whether Reichhold’s evidence calculating the costs it incurred remediating each of the areas on which it bases its claims is admissible.

A. Treatment of Increased Costs: The Settlement Agreement provides that a New Environmental Obligation will not be considered Material unless its satisfaction will result in an Increased Cost to Reichhold of $200,000. An Increased Cost to Reichhold means an actual out-of-pocket cost to Reichhold over and above the out-of-pocket costs that Reichhold would have incurred if the New Environmental Obligation had not been imposed on Reichhold.

In the court’s opinion addressing the parties’ summary judgment motions it held that: “Each individual claim made by Reichhold must independently satisfy this monetary threshold in order to qualify as a Material New Environmental Obligation. The costs of several different claims may not be aggregated in order to reach the monetary threshold for materiality.” (Slip Op. at 30.) Reichhold challenges this conclusion. Apart from the law of the case doctrine, the unambiguous language of the Settlement Agreement requires this interpretation.

Paragraph 1C defines New Environmental Obligations as “new legal obligations ... to investigate, remediate or otherwise address Hazardous Substances at, beneath or migrating from the Site imposed upon Reichhold or to which Reichhold first becomes subject subsequent to the Effective Date.” This suggests the imposition of more than one new obligation imposed at different times after the Effective Date.

In ¶ 2B Reichhold released all claims against USMRC with regard to the Site or Hazardous Substances at or beneath the Site except for the material New Environmental Obligations described in ¶ 3A (and private third party claims not relevant in this case). The only ¶3A New Environmental Obligations upon which Reichhold relies are “Material Amendments] or revision[s] to the Cleanup Plan which require Reichhold to further remediate groundwater or soils at the Site contaminated by USMRC’s former or current operations.” (Settlement Agreement ¶ 3A(2).)

The definition of Material makes sense only if it refers to each New Environmental Obligation individually and not to the New Environmental Obligations in the aggregate: “A New Environmental Obligation will not be considered ‘Material’ unless its satisfaction will result in an Increased Cost to Reichhold of $200,000. An ‘Increased Cost to Reichhold’ means an actual out-of-pocket cost to Reichhold over and above the out-of-pocket costs that Reichhold would have incurred if the New Environmental Obligation had not been imposed on Reichhold.” (Id. ¶ 3A(3) (emphasis added).) Totally different language would have been used if the costs of the several different claims were to be aggregated in order to reach the monetary threshold for materiality. The case was tried on this theory, and Reichhold has attempted to prove that each amendment or revision of the Cleanup Plan met the Materiality requirement.

The provisions of ¶ 5 concerning tolling of non-released claims confirms that claims are to be considered individually and not in the aggregate. “The statute of limitations for any Non-Released claims ... shall be tolled until that time that Reichhold is obligated to initiate physical on-site construction of a remedy....” (Id. ¶ 5 (emphasis added).)

B. Inclusion of Investigation Costs: The parties disagree about the meaning of the word “remediate.” USMRC contends that remediation costs do not include costs of site investigation and include only the costs of removing, capping or otherwise neutralizing the contaminated materials. Reichhold seeks, and has provided evidence of, the very extensive investigative costs that it incurred in preparation for the physical remediation of the six requirements upon which it bases its claims, asserting that these costs are included among those for which it is entitled to be paid.

USMRC argues that the Settlement Agreement treats the terms “remediate” and “investigate” as two distinct concepts. It notes that both terms are used throughout the Settlement Agreement (a) when listing the various tasks Reichhold was being required to undertake pursuant to ECRA and (b) to define the concept of New Environmental Obligations. It notes, on the other hand, that only the term “remediate” is used in specifying the types of amendment or revision of the Cleanup Plan that would trigger an exemption from the release clause: “[a] Material amendment or revision to the Cleanup Plan which requires Reichhold to further remediate groundwater or soils at the Site ...” (Settlement Agreement ¶ 3(A)(2) (emphasis added).)

Apart from the fact that “remediation,” as generally used, incorporates the investigative tasks that precede the physical decontamination process, USMRC misconstrues ¶ 3 of the Settlement Agreement. The word “remediate” as used in the clause upon which it relies is not the measure of the compensation to which Reich-hold is entitled. It is simply used as part of one of the triggering events that give rise to entitlement to compensation.

To determine the amount of the compensation to which Reichhold is entitled one must start at the very beginning of the somewhat complex paragraph. There it is provided that “Reichhold does not release USMRC from any claims, of any kind or any nature arising from the following circumstances.” (Settlement Agreement ¶ 3.) Tracing the language through the paragraph, one of these circumstances is the material amendment or revision of the Cleanup Plan. If there is such an amendment or revision, regardless whether “remediate” as used in this triggering clause does or does not include investigation, investigation costs are a basis for claims because they are “arising from” the material amendment or revision to the Cleanup Plan.

C. Aerial Deposition Evidence: According to Reichhold, USMRC contaminated the Reichhold 40 acre tract in two principal ways. First, through airborne deposition, it deposited on the Site enormous quantities of chemical pollutants; second, USMRC dumped throughout the Site huge amounts of slag and lesser amounts of other chemical-bearing materials. This section of the Opinion will first address airborne pollutants.

From its outset in 1903 until its operation ceased in 1983, USMRC’s copper smelter spewed vast pollutant-bearing clouds of material into the atmosphere. The nature of the spewing changed somewhat in 1948 when a 400 foot stack was erected and attempts were begun, and continued thereafter, to introduce controls of the residue of the smelting process through dispersing the outgoing materials from a much higher level and ensuring that its fallout would take place in less concentrated form at a greater distance from the smelter.

The Site was generally west of the retained USMRC property. The Staflex parcel is somewhat to the northwest of the smelter and the BTL parcel is somewhat to the southwest of the smelter. The particulate matter in the smelter’s charge material included lead, copper, zinc, chromium, and cadmium, traces of which would be found in the plant’s emissions. In Carteret, the winds blow generally from the west, the southwest or the northwest, thus away from the Site and towards the smelter. However, on occasion the winds come from the east, northeast or southeast. A critical issue in this case is the extent to which there was dumped upon the Site particles coming from the smelter bearing pollutants, lead in particular. Testimony of the parties’ experts differ to an extraordinary degree.

Reichhold’s expert was Robert L. Pearson, Ph.D., P.E., who is Vice President of CH2M Hill. He has more than 36 years of experience in environmental and technical engineering, regulatory review and assessment, preparation of industrial compliance policies, and environmental consulting. He prepared two reports in this case. In the first, dated February 28, 2006, he was unable to give an opinion about the quantity of deposition material flowing from the smelter onto the Site. He stated, on the basis of data available to him, particularly a modeling report of USMRC’s environmental engineer, Richard Dunk, that over the years significant amounts of metals were deposited on the Reichhold property and that the depositions accounted for a significant portion of the soil contamination that is detected on the Site.

Dr. Pearson issued a second report dated May 30, 2007. First developed by the EPA in 1979, the Industrial Source Complex Model (“ISC”) is a computer program that is designed to calculate the concentrations of air pollutants that would result from a given source of emissions. A great deal of information about the source of the pollutant, the meteorology of the location, the terrain and other variables is fed into a computer and the model estimates the increase in the air pollutant at another location. Using a team from CH2M Hill, Dr. Pearson applied the ISC model to the pollutants emanating from the USMRC smelter to determine the depositions from that source on the Reichhold Site. Dr. Pearson himself was insufficiently familiar with the ISC model to make the appropriate entries into the computer, and an associate at CH2M Hill, working with him, performed that function.

Dr. Pearson followed similar procedures that Dunk had previously used when applying the ISC model. He modeled for only a 38 year period during which the 400 foot stack was in use, and he assumed that the emissions were controlled, that is, that protective control devices were in place and fully effective. He entered emissions derived from the smelter only and not from other sources, such as the lead plant. He treated separately the depositions caused by wind scouring of the piles of slag located at various places on the Site or on USMRC property adjacent to the Site.

The conclusion at which Dr. Pearson arrived was that, during the 38 year operating history, from the smelter alone there was deposition on the Site of 57 tons of lead. This did not include lead deposition resulting from smelter operations prior to the 38 year period, nor did it include lead depositions resulting from slag pile scouring or such activities as road building, slag hauling, slag crushing or slag dumping.

USMRC’s expert, Kirk Winges, is a principal consultant at the environmental consulting firm Environ International Corporation. His primary area of expertise for 31 years has been atmospheric modeling studies involving use of computer models. He has run air quantity models thousands of times. USMRC retained him for a limited purpose — to critique Dr. Pearson’s opinion based upon Dr. Pearson’s use of the ISC model. He was not retained to provide his own opinion about the quantity of lead depositions on the Site resulting from the operations of the USMRC smelter.

Mr. Winges’s critique of Dr. Pearson’s application of the ISC model was devastating. The first error he noted was a mathematical error in which Dr. Pearson was off by a factor of 3, finding 1.5 tons per year instead of the mathematically called for 0.56 tons per year. Correcting this error would result in his ultimate conclusion becoming 1/3 of 57 tons of lead deposition.

The next error cited by Mr. Winges is Dr. Pearson’s misapplication of the friction velocity factor that is critical in determining deposition. Friction velocity is the wind speed at the surface of the ground. It is calculated using an EPA computer program — RAMMET. Dr. Pearson, or his associate, did not use RAMMET and arrived at velocities ranging from .65 to 1.2. One half were higher than the wind speed, which is physically impossible, and even the low point was not physically possible.

Mr. Winges, using RAMMET, obtained friction velocities of a factor 100 lower than that used by Dr. Pearson. Mr. Winges also found that Dr. Pearson’s particle density figures threw his results off by a factor of three. Further, two of the wind directions shown in Dr. Pearson’s diagrams did not carry the ambient air flow over the Reichhold site.

Mr. Winges re-ran Dr. Pearson’s ISC calculation, correcting all of his errors. He arrived at a 38 year deposition on the Site of 95 pounds instead of 57 tons. The amount of the deposition, he testified, could not cause 400 parts per million of lead in the soil and thus lead to an environmental violation. Further, not finding an even distribution of lead over the surface of the Site, Mr. Winges concluded that contamination on the Site is unconnected with airborne distribution.

Mr. Winges’s analysis of Dr. Pearson’s calculations is highly persuasive, leading to rejection of Dr. Pearson’s second report to the extent that it is based on his attempted utilization of the ISC model. That is not to say, however, that Mr. Winges’s use of Dr. Pearson’s ISC model as corrected is evidence that deposition from the smelter during the 38 year period was a mere 95 pounds. In the first place, it became obvious that there'is not sufficient data to run an ISC model. Further, while Mr. Wing-es, in running his calculations, corrected all of Dr. Pearson’s errors that pointed to a higher deposition rate, he failed to include the significant factors that Dr. Pearson did not include in his calculation that pointed to a higher deposition rate. Dr. Pearson relied on the models that Dunk submitted to NJDEP. Those models omitted various sources of emissions.

Equally important, Mr. Dunk, Dr. Pearson, and Mr. Winges assumed in their calculations that the smelter emissions were controlled. The evidence established that the USMRC smelter operations were virtually uncontrolled. Devices that were installed were defective or not working, and many of the devices were projected but not yet installed. The EPA has established a ratio between controlled and uncontrolled emissions in smelters and cupolas. With respect to insulated copper wire, a factor of 120 is attributed to uncontrolled emissions and a factor of 5 to controlled — 24 times greater if uncontrolled. With respect to scrap copper and brass, a factor of 120 is attributed to uncontrolled emissions and a factor of 1.2 to controlled — 35 times greater if uncontrolled. Use of these factors would have greatly affected Mr. Winges’s calculation (as well as Dr. Pearson’s).

The testimony of Dr. Pearson and Mr. Winges relying on use of the ISC model is of no help concerning the airborne deposition on the Reichhold Site. There is other evidence that bears on that question. There were other sources of airborne depositions than the smelter, such as the slag piles, the haul road, transportation of slag, Anchor Abrasive’s crushing slag for use in sandblasting, and the lead plant operations. Both Dr. Pearson’s and Mr. Wing-es’s testimony is relevant to the extent of such depositions.

Richard Kunter, an extracting metallurgist, described the copper smelting process in detail, starting with conversion of the material to be refined into a molten state at the smelter’s cupola, retrieving the desired product and ultimately processing and disposing of the resulting slag.

There are charge doors at the top of the cupola (about 80 feet off the ground), where the raw material that is being smelted is put into the cupola with a crane. The “doors” are not actually doors; they are heavy chains. When a 30 ton charge is dropped through the chains, there is apt to be a fairly high velocity gas blow back, resulting in eight tons of lost fumes per day of operation.

At the outset, in 1903 when the smelter started, there was not much abatement. In the 1930’s, there was installed a Cottrell electrostatic device which was effective for large particles, but not so effective for flue gas. In the 1970’s, USMRC put in a bag-house which has a woven weave that takes out particles that are coarser than the weave. Covers were added surrounding the top of the cupola. The output of gas going through the baghouse goes to the stack.

Between 1980 and 1986, other pollution control devices were installed — spray chambers, after burners and in 1983 or 1984, a doghouse. A doghouse is an enclosure that covered the blast furnace with an induction fan or fans that would take fugitive emissions coming from the furnace and, rather than releasing them into the ambient air, would release the emissions through the after burner and the spray chamber and then to the baghouse.

Between 1980 and 1982 the tall stack was built. This was designed to achieve greater dispersion before the emissions reached breathing or ground level.

Of particular usefulness is Exh. C-4, the April 1961 Report of Herbert H. Kellogg which, during a five-day period, measured all substances entering and leaving the USMRC cupola (the “Kellogg Report”). Technicians measured all of the material that came out of it, including the slag and the various dusts captured in the abatement area and the eight tons per day of fugitive dust that came from the top of the cupola as described above. It identified the contamination coming out of the smelter. This included the metals cadmium, zinc, lead, copper, tin, and nickel. In addition, there was fugitive dust loss through the stack and through the louvers at ground level through which fans would push the dust. The loss of baghouse dust to the stack, plus other minor losses were estimated as four percent of the baghouse dust or 6 1/2 tons per day.

The Kellogg report essentially described conditions as they existed in 1961. USMRC’s Mr. Dunk testified that because of the installation of control equipment, conditions improved dramatically after 1980. Thus, the Kellogg Report can be considered an accurate description of emissions from the smelter’s operations at least for the period from 1961 to 1980.

Other evidence demonstrates that even in the 1980’s, fugitive dust sources resulting from the smelter’s operations were still largely uncontrolled. There were continuing state and county notices of violation of air quality standards. The State of New York brought suit against USMRC in this court, obtaining injunctive relief. Control equipment was either missing, defective or nonoperative. The violations resulted in the plant being ordered to shut down for five months that ended February 6, 1986. When the plant reopened the baghouse was not working.

Thereafter, the same kinds of fugitive emissions, including the charge door emissions described in the Kellogg Report continued to flow from the smelter. Violations of the permits and the court order occurred regularly. Dr. Philip L. Landregan, a professor at Mount Sinai Hospital Department of Community Medicine, Division of Environmental and Occupational Medicine in New York City, prepared a report dated March 6, 1986, for this court in the State of New York lawsuit. He cited the 1984 New Jersey State Implementation Plan for Lead which stated that “USMR emits 50.1 tons of lead per year from its stacks and releases another 36 tons per year in the form of fugitive emissions.” After a review of available data and after testing his many soil samples, Dr. Landregan concluded that “[t]he available data indicates clearly that large quantities of lead are released into the atmosphere from USMRC. The air sampling data from New Jersey indicate that the emission control measures which had been established by USMR through mid-1985 are not effective in reducing lead emissions from the plant to levels below the EPA’s National Ambient Air Quality Standard for Lead.”

It cannot be determined from the evidence the amount of contaminating metal that USMRC’s smelter caused to be deposited on the Site by aerial deposition from commencement of operations in 1903 until the smelter closed down in 1986. For the entire period, the smelter spewed forth enormous amounts of contaminating materials, entirely from the cupola until a stack was built and thereafter both from the cupola and the stack. Even after controls were put in place the controls were inadequate, defective and often non-functional. The wind blew this outpouring in the direction of the Site only about 14% of the time. Disregarding Dr. Pearson’s attempt to quantify the amount of contaminating material that fell on the Site from this source, the testimony of other witnesses and reports in the record establish that contaminated dust deposition on the Site was considerable. In light of the slag and other contaminants found on the Site that were placed there by USMRC, it is unnecessary to arrive at more definitive finding with respect to aerial depositions.

D. Admissibility of Evidence Establishing Costs: Under ¶ 3 of the Settlement Agreement a New Environmental Obligation is subject to the Re-Opener provision only if it is “material.” “Material” is defined as follows:

A New Environmental Obligation will not be considered “Material” unless its satisfaction will result in an Increased Cost to Reichhold of $200,000. An “Increased Cost to Reichhold” means an actual out-of-pocket cost to Reichhold over and above the out-of-pocket costs that Reichhold would have incurred if the New Environmental Obligation had not been imposed on Reichhold.

Reichhold has identified six tasks that the NJDEP imposed upon it that it claims are Material amendments or revisions to the Cleanup Plan. To qualify each for reopening Reichhold must, at the outset, establish that its implementation resulted in out-of-pocket increased costs to Reichhold of $200,000 or more, over and above the out-of-pocket costs that Reichhold would have incurred if the New Environmental Obligation had not been imposed on Reich-hold.

By 1994 Reichhold believed that it had completed the original Cleanup Plan. In 1994, however, after an inspection of the Site by a new NJDEP case manager, NJDEP began imposing new requirements upon Reichhold. Reichhold believed these constituted Material New Environmental Obligations, and during the ensuing years it sought without success to involve USMRC in the discussions with NJDEP. Reichhold recognized that there was a likelihood that it would have to pursue claims against USMRC, and beginning in 1996 took steps to document its claims.

The court has held that the $200,000 requirement is applicable to each New Environmental Obligation, and starting in 1996 Reichhold took some steps to allocate payment invoices to particular projects, but the six remedial actions upon which the present claims are based had not been identified separately, and invoices were not allocated in these six categories.

Reichhold’s attempt at this time to prove the cost attributable to each claim faces formidable difficulties. In about 1995 Reichhold began to incur costs in responding to NJDEP’s demands, but the paper copies of invoices for that year could not be located. There are about 60 missing invoices for the following years when invoices generally are available. Of these, 51 are from a single laboratory, Envirotech, three are payable to the New Jersey State Treasurer and five are payable to O’Brien & Gere. In 1996, when an effort was begun to allocate payments, the allocation was only done in a most general way. For example, metals remediation was one category, but metals remediation was the subject of several of the six projects for which Reichhold is making a claim. A number of the invoices are for work performed on more than one of the six projects, e.g., for management fees or for both metals and CVOC related work. USMRC argued that invoices for investigative work would have to be excluded, but because the court has held that investigative work is part of the remediation process, such exclusion is unnecessary.

USMRC objected to the testimony of Reichhold’s Charlotte White and to Exh. P-822 that she prepared. P-822 includes an Exhibit A consisting of summary charts, arranged by year, of all invoices received by Reichhold related to the Carteret Site from 1996 through 2008. The vendors included Reichhold’s environmental consultants, analytical laboratories, contractors and others. Accompanying each summary are copies of the invoices for the applicable year. With respect to the year 1995, Exhibit B to P-822 is a summary prepared from Reichhold’s records other than the missing 1995 invoices which detail the 1995 expenditures related to the Carteret site.

In her testimony Ms. White described how Reichhold processed invoices in the years beginning in 1996. Upon receipt, the paper invoices that related to environmental projects were distributed to the project manager for approval. Pertinent data was entered into the computer system used for accounts payable and then the invoice was paid.

Ms. White prepared the spread sheets from the computer system and then pulled the invoices (other than the missing 60) from 1996 to the present for each year, appending them to the spread sheets. For the year 1995, Ms. White referred to the Accounts Payable Distribution Report, which was an accounting of all the invoices that were entered into the computer system that was used during that year, listing the invoice number, the invoice amount, the dates and the other data keyed into the present computer system. Using similar data Ms. White was able to obtain verification of the information relating to the 60 missing invoices. The spread sheets from 1996 to 2008 list 668 payments.

Ms. White testified that Reichhold paid all 663 invoices listed in the summaries. At the conclusion of her testimony the court overruled USMRC’s objection to the testimony and Exh. P822. At USMRC’s request, Ms. White’s January 5, 2009 affidavit was included as a part of the exhibit. The requirements of Fed.R.Evid. 1006 had been met. The relevance of the exhibit was dependent upon Reichhold’s ability to establish that the individual payments reflected in the exhibit were paid on account of one or another of the projects for which Reichhold was asserting a claim against USMRC. Reichhold attempted to do this primarily through the testimony of two witnesses, Kelly Stynes and Robert Stoldt.

Reichhold hired Ms. Stynes in 1996 as a project manager for its environmental work at the Carteret Site. She continued there until 1998. When she started at Reichhold the remedial action required by the Cleanup Plan had been completed or was winding down, and Reichhold was in the process of responding to letters from the NJDEP requesting additional investigation and response action. Some of them related to metals in the northeast and northwest fields of the Staflex Parcel. This resulted in negotiations with NJDEP and, in view of the Re-Opener provision in the Settlement Agreement, communications with USMRC. Ms. Stynes understood that “any additional work not identified in the 1991 cleanup plan, specifically figure 6.05, related to metals that exceeded $200,000 would constitute a reopener.” (Stynes, 2/5/09 at 28.)

Slag had been discovered in the northwest and northeast fields, and O’Brien & Gere was in the process of proposing to NJDEP various methods of remediating it. Similar discussions were taking place concerning the entire BTL Parcel.

Ms. Stynes testified about the manner in which invoices for the project were handled. As project manager she was required to review invoices and approve or disapprove them for payment. When she took over the project there was no separation of the invoices by task, but soon it became clear that Reichhold would want to start tracking the costs by task in order to implement the Re-Opener. She asked O’Brien & Gere to begin tracking the costs separately. That began in 1996. Metals were a major concern, and O’Brien & Gere set up authorizations specifically for metals and also for quarterly groundwater monitoring and PAH sampling on the Staflex Parcel.

The final NJDEP requirements had not yet been determined, and consequently the task classifications did not correspond to what ultimately became the six remediation projects on which Reichhold bases its claims. For example, a major category that O’Brien & Gere laid out was metals. Metals, however, are now part of several of the claims.

Ms. Stynes identified several invoices to which task numbers had been assigned. Task authorization 3 reflected that the invoice was for a part of the CVOC impact investigation. Task authorization 8 reflected that the invoice related to soil and exposed slag, i.e., metals. In 1996, all invoices with the code task 8 would be slag or metal related and all invoices with the code task 3 would relate to the CVOC investigation.

Unfortunately task force code numbers changed year by year. In 1997, the number for slag and metals became 9, and 8 became associated with a different task. There must have been some reason for these changes, but they complicate allocation of invoices to the projects on which Reichhold bases its claims. Reference was made to invoices that encompassed a number of different tasks, and Ms. Stynes testified that O’Brien & Gere separated out the costs associated with the metals aspect of such invoices. She testified also that simply looking at most invoices would enable a person to determine what it was for. At the time Reichhold was particularly concerned with charges related to metals generally and to CVOCs. If the invoice lacked sufficient specificity to disclose the nature of task, its date and field notes would enable a person working on environmental concerns to determine what the invoice was for.

Ms. Stynes testified that the all-encompassing metals category related to both the Staflex Parcel and the BTL Parcel, and during her time at Reichhold nothing was done to differentiate metals used for one or the other. That could be done only by going back and determining from the records what was being done at the time for which the invoice was submitted. From that it would be possible to determine for what the invoice was submitted.

The testimony of Ms. White and Ms. Stynes and Exh. P-822 standing alone might establish in a general way the amount of money Reichhold spent remediating environmental contamination during the 1995-2008 period. Without individual allocation it does not establish the materiality of any of Reichhold’s six claims. During much of this period there were ongoing negotiations between NJDEP and Reichhold, and the precise parameters of NJDEP’s requirements were not defined until late in this process. For that reason it was impossible to allocate invoices to one or another of the six claims as they came in. The requirements forming the basis of the claims had not been established at the time the invoices were paid.

Of necessity, when these requirements became fixed, Reichhold had to go back and allocate the invoices to specific NJDEP requirements both to determine if the project involved was material and to determine the amount of its claim on account of that project. In some instances the amounts involved were so large, materiality was and is not really an issue and only the amount of damages claimed had and has to be determined. In other instances the amounts involved were so close to $200,000 that both materiality and the amount of damages were and are at issue.

Reichhold added Robert Scott Stoldt to fill the huge gap left by the White and Stynes testimony. Mr. Stoldt is a specialist in hydrogeology who started his career as a staff geologist at O’Brien & Gere in late 1994, moving to CH2M Hill in April, 2005, where he became an associate project manager and is presently working. At both of these firms Mr. Stoldt was assigned to the Reichhold facility in Carteret. At the outset of his employment he reviewed the 1991 Cleanup Plan. His understanding of Reichhold’s obligations under the Plan is the same as those described by other Reichhold witnesses.

Mr. Stoldt testified that in 1995 the BTL cap required under the Cleanup Plan had been completed. He became familiar with the November 1994 NJDEP investigation of the Site and the resulting requirement that Reichhold inspect the entire site and analytically collect samples for PP metals (proprietary pollutant metals). Wherever contaminants remained on the site above residential criteria, engineering institutional controls were required. Other NJDEP requirements were imposed thereafter.

Mr. Stoldt was asked to compute the costs Reichhold incurred in complying with NJDEP’s demands that became the subject of Reichhold’s six claims. In essence it was his assignment to review the invoices referred to in Exh. P-822’s spreadsheets and allocate them to the claims to which they related.

For each year, Mr. Stoldt set up a project number identifying the various tasks that the Reichhold Carteret project undertook in that year, such as project management, groundwater activities, and metal activities. He assigned the invoice amounts to the Reichhold claims to which they related. When the invoices were for mixed activities, such as a project management task or an invoice was for both metals and organic issues, Mr. Stoldt allocated the invoice based on the time period to which the invoice related. He was able to allocate, for example, a percentage that was related to metals and a percentage that was related to organics. Mr. Stoldt testified that because he was personally aware of the activities occurring on the project he could classify the invoices in an appropriate way. This is consistent with Ms. Stynes’s testimony. For the limited period at an earlier time when she had to allocate mixed invoices to particular tasks, she was able to do this by examining field notes relating to the dates covered by the invoices.

Mr. Stoldt conducted what he called an “analytical check” to confirm the numbers that he had arrived at by allocating mixed invoices. This determination was based on his review of the invoices and preparing a ratio of unmixed invoices and the project management invoices. The analytical check in each instance resulted in figures very close to those derived from allocation of mixed invoices.

Mr. Stoldt testified with respect to each Reichhold claim, computing in the manner described above the costs Reichhold incurred in performing the task. He started with Reichhold’s claim based on the requirement that it perform Site-wide analytical delineation of slag and related metal contamination.

By February 5, 2001, delineation of the soils contamination both on the northern Staflex Parcel and the southern BTL Parcel was complete. To determine the costs of the work to Reichhold, Mr. Stoldt first reviewed the invoices from the period of time during which the Site-wide analytical delineation was occurring. He omitted the 1995 invoices and started the review process in March 1996, continuing through the end of January, 2001. The total of these invoices was $279,512. When he performed the analytical check the figure was $252,794.

The next claim that Mr. Stoldt addressed was the Staflex Parcel Cap. After Reichhold had been instructed to remediate the Staflex Parcel, it proposed several alternative plans that had to be rejected or modified as new conditions came to light. As part of the Site-wide delineation programs it was discovered that metals affected the entire Parcel and therefore the cap had to be expanded to include almost all of it. In addition, the obligation to perform an ecological evaluation became part of the technical requirements in 1997.

Mr. Stoldt prepared estimates of the cost of constructing a cap. They ranged from $1.3 to $1.5 million. This did not include future costs that would be required to maintain the cap and certify it on a biannual basis. As events turned out, Reichhold negotiated with the new property owner, C.P. Hall, to create a Remedial Action Work Plan (“RAWP”) to spell out the cap proposal. NJDEP approved the RAWP, but the subsequent owner, Port Reading Carteret, LLC (“PRC”), found that the RAWP was inconsistent with its plans to develop the site. PRC submitted a RAWP Addendum in November 2003, and in exchange for $900,000, to be paid by Reichhold, agreed to assume Reichhold’s obligations on the Staflex Parcel. PRC executed an Environmental Responsibility Agreement (“ERA”) with Reichhold and a Memorandum of Understanding with NJDEP. Under the ERA Reichhold is obligated to pay PRC $900,000 upon presentation of a NJDEP No Further Action Letter. Mr. Stoldt testified that the $900,000 was reasonable in light of his estimates of what it would cost Reichhold to construct the Staflex Parcel cap.

USMRC contests inclusion of the $900,000 obligation to PRC as a Reichhold cost. The fact that Reichhold arranged with PRC to perform its capping obligation (paying PRC for undertaking this responsibility) does not alter Reichhold’s obligation to NJDEP to complete the capping. Upon receipt of a No Further Action letter, Reichhold’s obligation to pay the $900,000 becomes irrevocable, an obligation caused by USMRC’s metals contamination, as will be discussed in a subsequent section of this opinion.

Prior to the agreement with PRC, Reichhold had incurred additional costs in connection with remediation of the Staflex Parcel, in addition to the analytical costs. Mr. Stoldt reviewed the invoices for the period February 2001 to date and extracted those that related strictly to the Staflex capping activities and the ecological evaluation for the Parcel. Again there were invoices that were mixed for which he had to perform an allocation