Citations
- 386 F. Supp. 3d 688
Full opinion text
Elizabeth K. Dillon, United States District Judge
In this case, plaintiff/counter-defendant Dixon Lumber Company, Inc. (Dixon) and defendant/counter-claimant Austinville Limestone Company, Inc. (ALC), seek cost recovery, contribution, and declaratory relief under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq. The overarching issue before the court is who should be held financially responsible for environmental remediation and reclamation of Austin Meadows, a portion of real property located in Wythe County, Virginia, and owned by Dixon.
The case was tried with the court sitting as finder of fact over the course of three days. Prior to trial, the parties submitted their proposed findings of fact and conclusions of law. (Dkt. Nos. 174, 175.) The trial evidence included a significant number of exhibits, as well as testimony and exhibits from depositions, many of which were not read into the record at trial, but instead submitted after the trial for the court to review. Additionally, the parties submitted their closing arguments in writing after the trial. (Dkt. Nos. 195, 196.)
Based on the trial evidence, including the deposition testimony, the court issues this memorandum opinion, which constitutes its findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).
I. OVERVIEW
This case is fact-intensive, and the parties' arguments are heavily fact-dependent. As a result, this opinion devotes a number of pages to the court's factual findings. But without the broader context of the parties' positions, the importance of certain facts-and a reader unfamiliar with the case-likely will be lost. Accordingly, the court begins with an over-simplified sketch of the relevant events and an overview of the parties' positions, and then continues to its findings of fact.
The parties are owners of adjoining properties in Wythe County, Virginia. In 1992, there was a discharge of pollutants from the mine tailings pile on a portion of Dixon's property known as "Austin Meadows" into a nearby stream. In response, in 1993, the parties entered into an agreement whereby ALC (who is in the mining business) agreed to remove the mine tailings from Austin Meadows, and, pursuant to a separate consent order that Dixon entered into with Virginia's Department of Environmental Quality (DEQ), the land eventually would be restored to a condition acceptable to DEQ. Virginia's Department of Mines, Minerals and Energy (DMME), which issued ALC a permit to mine the tailings at Austin Meadows, also required reclamation of that portion of Austin Meadows that ALC was mining after its mining operations were completed. Among other disputes, the parties disagree about the effect and interrelation of various agreements between the parties and a critical 1993 preliminary engineering review (PER) that was prepared by ALC and submitted to environmental agencies.
ALC's removal of the mine tailings proceeded far more slowly than anyone had anticipated, although the parties dispute both the reasons for that slower pace and whether ALC was contractually obligated to complete removal at all, let alone in the five-year time frame set forth in the PER. Nonetheless, for a number of years, the two companies worked mostly cooperatively with each other and with the environmental agencies exercising oversight over the project at Austin Meadows. Over the years, the parties entered into subsequent (but largely identical) agreements, and Dixon and DEQ entered into subsequent consent orders, mostly to extend the time for completing removal of the tailings.
In June 2013, another important event occurred that is relevant to the parties' claims and the remediation of the property. After a significant rainfall, a long-existing pipe and dam, which were supposed to ensure that a stream known as Jackson Branch went around the tailings pile, failed. This failure caused water to flow over the tailings and resulted in discharges of pollutants into streams and the nearby New River, into which both Jackson Branch and Buddle Branch (another stream near the tailings pile) flowed. These discharges resulted in public complaints and sparked a renewed interest in the site by both DEQ and DMME. Thereafter, Dixon, ALC, DEQ, and DMME entered into a Letter Agreement and agreed to take certain actions to stop the discharges and prevent future discharges. This resulted in additional remediation costs, some of which related to work on the Jackson Branch pipe and dam (the Jackson Branch Costs). In the course of negotiating the specific manner in which the land should be remediated, however, significant disputes arose between the parties about who should be responsible for which costs. The relationship soured, and this lawsuit resulted.
Under CERCLA, each party seeks to recover from the other certain costs related to the remediation of the property. ALC's counterclaim also includes state law claims for breach of contract and quantum meruit. Each party suggests that the entirety (or nearly the entirety) of the CERCLA response costs should be borne by the other.
Dixon contends that response costs, and especially those related to that Jackson Branch June 2013 discharge, are ALC's responsibility. Dixon claims that the parties' initial agreement and the PER provided that Dixon would be responsible only for reseeding the land after ALC completed all other reclamation, including removal of pipes as they were uncovered. With regard to the Jackson Branch discharge, Dixon argues that ALC should have removed the tailings completely from the site long before that ever occurred, rather than keeping stockpiles of them onsite for customers to pick up from Austin Meadows without implementing precautions to prevent them being moved by water and wind. Dixon also contends that ALC repeatedly dragged its feet and failed to abide by the terms of the PER and the parties' initial contract to accomplish a timely removal. Had ALC timely removed the tailings and taken them offsite, Dixon contends, then the tailings would not have been on the property and pollutants from the tailings would not have made their way into the water.
On the Jackson Branch issue, ALC counters that the pipe and dam failed because of Dixon's negligent failure to maintain them and that Dixon knew as of at least 2011 that the pipe and dam needed repairing. But in any event, ALC contends it is not responsible for the Jackson Branch Costs, both because ALC was not an operator in the area where the pipe and dam failed (which was outside its mining permit boundaries) and because the steps taken in response were all steps that were Dixon's responsibility under the original consent order and the parties' agreements.
One provision of CERCLA, 42 U.S.C. § 9607, subjects to liability "the owner and operator of a ... facility," 9607(a)(1), and also subjects to liability "any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of," 9607(a)(2), for "(A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan; (B) any other necessary costs of response incurred by any other person consistent with the national contingency plan; (C) damages for injury to, destruction of, or loss of natural resources ..." 9607(a)(4). "To establish a prima facie case of liability under CERCLA, a plaintiff must allege that: (1) release of hazardous substances has occurred, (2) at a 'facility,'
as defined by the statute, (3) that caused the plaintiff to incur response costs, and (4) that the defendants are 'responsible parties,' again, as defined by the statute and interpretive caselaw." United States v. High Point Chem., Corp. , 7 F.Supp.2d 770, 774 (W.D. Va. 1998). "Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a)," and "[i]n resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate." 42 U.S.C. § 9613(f)(1).
Importantly, a number of both factual and legal matters relevant to the CERCLA claims were agreed upon prior to trial. Those agreements were memorialized by the court in its November 22, 2017 Order (Dkt. No. 171), and the court adopts them as part of its findings of fact and conclusions of law. Specifically, the parties agree that:
1. ALC qualifies as an operator under 42 U.S.C. § 9607(a)(1) ;
2. ALC is a potentially responsible party under 42 U.S.C. § 9607(a)(2), if Dixon can prove that, from 1996 to 2015, there was a disposal and not just mere passive contamination or migration;
3. at least a portion of Austin Meadows is a facility under the definition in § 9601 ;
4. there were releases and/or threatened releases at Austin Meadows during the period of 1996 to 2015;
5. compliance with the national contingency plan is not at issue in this case, i.e. , the parties agree that any response costs Dixon can show it has incurred can be presumed to be necessary and consistent with the national contingency plan; and
6. the harm at the site is not divisible for purposes of apportionment of liability but may be divisible for purposes of allocating harm and determining contribution.
(Order 2, Dkt. No. 171.)
This leaves four primary issues for the court's resolution, which the court explains in more detail in its conclusions of law. The first two bear on whether Dixon can recover from ALC at all. First, did the parties' agreement transfer all CERCLA response costs to Dixon as ALC contends? For the reasons set forth below, the court's answer is "no." Second, did the entirety of the response costs for Austin Meadows arise from events prior to ALC's becoming an operator, such that there are no discharges for which ALC could be held responsible under CERCLA? Again, the court's answer is "no." Instead, the court concludes that there were response costs caused by releases that occurred when ALC was an operator, during 1996 to 2015. Third, does ALC bear any responsibility for the Jackson Branch Costs, which arose from failures at a location near ALC's operations, but outside of its permitted area, and thus (ALC argues), out of the CERCLA "facility"? The court's answer is "yes," in part because it concludes that the Jackson Branch Costs are properly considered part of the response costs at the facility where ALC was an operator. Fourth and finally, because the court determines that ALC does bear responsibility for some portion of the remediation costs, the court considers the equities in order to determine how to allocate those costs between the parties. The court's conclusions as to the proper allocation are set forth as part of its conclusions of law.
II. DISCUSSION
A. Standard of Review
Rule 52(a)(1) of the Federal Rules of Civil Procedure requires that the court make specific findings of fact and state conclusions of law separately in any action tried without a jury. Specifically, this court must appraise the testimony and demeanor of witnesses, as well as weigh the evidence and choose among conflicting inferences and conclusions which seem most reasonable. See Burgess v. Farrell Lines, Inc. , 335 F.2d 885, 889-90 (4th Cir. 1964).
The court must do more than announce statements of ultimate fact, United States ex rel. Belcon, Inc. v. Sherman Constr. Co. , 800 F.2d 1321, 1324 (4th Cir. 1986), but is not required "to make findings on all facts presented or to make detailed evidentiary findings.... The ultimate test as to the adequacy of the findings will always be whether they are sufficiently comprehensive and pertinent to the issues to provide a basis for decision and whether they are supported by the evidence," Darter v. Greenville Cmty. Hotel Corp. , 301 F.2d 70, 75 (4th Cir. 1962).
B. Findings of Fact
The court's factual findings are as follows:
1. Background regarding deposit of tailings and parties' purchases of land
Prior to separate parcels being sold by Gulf & Western Industries (G & W) to the parties here, the properties now owned by Dixon and ALC were mined by a division of G & W called New Jersey Zinc Company (NJZ). (June 9, 2017 Mem. Op. 2-6, Dkt. No. 69.) NJZ, like many of the previous landowners of the properties, had mined the properties for lead, zinc, and limestone. As part of NJZ's mining operation, limestone tailings were stockpiled on its properties. (Day 1 Trial Tr. 65.) A "tailing" is a waste by-product of a mining operation. (Day 1 Trial Tr. 65; Day 2 Trial Tr. 27, 28 (explaining that "[t]ailings are a waste material from an effort to separate marketable lead, zinc, or other metals from the mined material"; they no longer have "a marketable concentration" of whatever is being mined, "but there is still some concentration of those metals in the limestone sand").) According to the PER, the tailings at Austin Meadows contained slightly elevated levels of lead and zinc. (Day 1 Trial Tr. 65; Pl. Ex. 147.)
In 1982, ALC, which is also a mining company, purchased NJZ's operations, equipment, and millions of tons of limestone tailings stockpiled in an area called "Bunker Hill." (Mem. Op. 4, Dkt. No. 69.) The property was purchased for the purpose of mining. (Day 1 Trial Tr. 65.)
In 1984, Dixon, a lumber company that had no interest in commercial mining, purchased the remaining adjacent acreage from NJZ for its timber value. (Day 1 Trial Tr. 65.) At the time of that purchase, there was another large stockpile of limestone tailings on that property, located in an area known as "Austin Meadows." Based on the testimony of witnesses available today, it is unknown whether the Dixon personnel involved in the acquisition of Austin Meadows knew the tailings were on the property. (Dixon 9/28/2017 Dep. 17; Day 2 Trial Tr. 188-89.) There is no evidence that anyone at Dixon knew the limestone tailings were present, and it is undisputed that the site was revegetated at the time of Dixon's purchase and that most of the tailings were below the surface. Nonetheless, due to the passage of time, Dixon cannot state definitively that the persons purchasing on its behalf did not know of the existence of the tailings.
In the years leading up to the sale of both properties, NJZ's mining operation was regulated under the Clean Water Act, which required the permitting, monitoring, and reporting of storm water discharges from multiple locations, all of which ultimately drained into the New River. Notably, the Austin Meadows portion of NJZ's property was governed by a "No-discharge" certificate which prohibited the discharge of pollutants from the Austin Meadows tailings pile into the Buddle Branch stream, a tributary of the New River. (Pl. Ex. 54; Day 1 Trial Tr. 206.)
As part of its purchase of NJZ assets and land, ALC assumed the environmental obligations governing its own property, and ALC continued to mine its own property, the Austinville site, after its purchase. ALC also agreed to "maintain its premises" and to "conduct its activities" so as not to cause NJZ to violate the Austin Meadows no-discharge certificate. (Day 1 Trial Tr. 206; Pl. Ex 54, at ¶ 9.) Thus, ALC clearly had knowledge of the Austin Meadows no-discharge certificate. By contrast, Dixon's purchase from NJZ did not include the assumption of any environmental obligations.
2. Pre-agreement releases or discharges
In the summer of 1992, Virginia's State Water Control Board inspected Austin Meadows and determined that a 36-inch concrete pipe underdrain that carried Buddle Branch under the Austin Meadows tailings was failing. (Newman Dep. 24, 28.) Thus, portions of the tailings on that property were being discharged into Buddle Branch, and those discharges constituted unpermitted discharges of pollutants coming from Austin Meadows and negatively affected the water quality of Buddle Branch. (Newman Dep. 24, 28.) In August 1992, the State Water Control Board notified Dixon that, as the owner of Austin Meadows, it was responsible for the environmental problems existing on the property. (Def. Ex. 2.) By that time, the Austin Meadows tailings pile had been inactive for approximately twenty years, and, as explained above, the area was revegetated, such that the tailings were largely below the surface. (Day 1 Trial Tr. 71.)
In August 1993, DEQ issued Dixon, as owner of the property, a Notice of Violation (NOV) for the unpermitted discharges to Buddle Branch. As several DEQ witnesses testified, a NOV is not a finding that there has been a violation, but it is an allegation of a possible violation. (Bazyk Dep. 28, 30, 193; Davenport Dep. 22.)
3. The parties' agreement, the PER, and the 1994 consent order
a. The Parties' Agreement
After the NOV was issued, DEQ worked with ALC and Dixon to help them reach an agreement about how to deal with the discharges related to the tailings on Austin Meadows and how to remediate the site. (Pl. Exs. 214, 215.)
The Agreement entered into between the parties (Pl. Ex. 146), dated August 1993, was drafted before the PER; ALC drafted both. (Day 1 Trial Tr. 53-54.) This agreement (the 1993/1995 Agreement) contains the following language concerning the parties' obligations and responsibilities:
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter contained, the parties hereto agree as follows:
1. Austinville Limestone shall prepare the Preliminary Engineering Review ("PER") required by the Department, on behalf of Dixon, and in connection therewith shall conduct such tests and maintain such equipment as may be necessary in connection with the PER.
2. Dixon shall reimburse Austinville Limestone for direct costs incurred by it samplings and other services performed by other parties at the direction of Austinville Limestone in connection with its performing as provided in Paragraph 1 above, payable within thirty (30) days after receipt of invoices therefor from Austinville Limestone, provided, however, that such reimbursements shall not exceed a total of Two Thousand Dollars ($ 2,000.00).
3. Austinville Limestone shall remove the tailings located on the property owned by Dixon described upon Exhibit A attached hereto ("Property") over a period not to exceed ten (10) years from the date hereof, in connection with the conduct of its business of selling limestone products from Austinville Limestone's adjoining property. The tailings removed by Austinville Limestone shall become its property for handling in such manner as it may determine and the manner in which such tailings are removed shall be at the discretion of Austinville Limestone, subject to direction of the Department.
4. Austinville Limestone's activities on the Property shall be conducted in a manner that complies with standards acceptable to the Department.
5. All activities conducted on the property by Austinville Limestone shall be considered to be remedial actions on behalf of Dixon for purposes of alleviating or reducing possible contamination of the waters and Austinville Limestone shall not be considered to be an "owner" or "operator" for purposes of laws and regulations enforceable by the Department.
6. After removal of the tailings, it shall be Dixon's responsibility for all reclamation and revegetation of the Property as provided in the PER.
7. At any time after Austinville Limestone has completed and submitted the PER to Dixon, Austinville Limestone may at any time, in its discretion, terminate this Agreement and cease its activities related thereto....
(Pl. Ex. 146.)
The parties dispute the significance and meaning of several of these paragraphs, and the court's resolution of those disputes is set forth in its conclusions of law. One of the disputes concerns the discrepancy between, on the one hand, the ten-year term for removal in Paragraph 3 of the Agreement and, on the other, both the PER, which states that the tailings could be removed in five years (Pl. Ex. 147, at 4-5), and the Consent Order, which requires that removal be completed within five years (Pl. Ex. 150). As to the ten-year term, Garner testified that the term was in the Agreement before the PER was ever prepared. Pursuant to the later-prepared PER, Dixon contends, the removal was to occur over a period of five years. (Day 2 Trial Tr. 292.) Garner testified that the two time-frames were "consistent" because five years is a term "not to exceed" ten years (Day 2 Trial Tr. 293-94). It appears that the Agreement was re-signed in 1995, however, after approval of the PER and after entry of Dixon's Consent Order with DEQ, and it nonetheless continued to provide a ten-year term for removal. At the same time, Paragraph 3 states that the "manner" of removal is "subject to direction of the [DEQ]," which arguably incorporates the Consent Order, or at least subjects ALC to some direction and control by DEQ.
b. The Preliminary Engineering Review (PER)
Consistent with the requirement in Paragraph 1 of the Agreement, ALC prepared the PER, which it submitted to DEQ on October 12, 1993. (Pl. Ex. 147.) The Agreement itself references the PER, and as noted, the Agreement appears to have been signed another time after the PER was completed and approved by DEQ. (Day 1 Trial Tr. 103); see also supra note 6.
The PER itself is a relatively short document. It contains several sections giving background about the site and its current conditions, which includes background about how ALC had mined the Bunker Hill site and the statement that ALC "plans to use techniques developed at its Bunker Hill site to remove the Austin Meadows tailings without creating an additional adverse effect on water discharge from the site." (PER at 3, Pl. Ex. 147.)
The PER contains two sections that detail the proposed work to be done. The first is titled "Extraction Procedures," and the second is titled "Reclamation of the Site." (PER at 4-5, Pl. Ex. 147.) The "Extraction Procedures" section includes the following statements and activities:
Limestone tailings will be removed from the site using techniques successfully employed at the adjacent Bunker Hill site for the past ten years. Work will generally proceed from south to north. All material could be removed within five years from start of the project.... Uncovered sections of 36" drain pipe will be moved as extraction activities proceed to the north.
Fabric filter fences will be erected to filter surface drainage before entry into the drain system. Neither Jackson Branch nor Buddle Branch will be re-routed during the course of the project. When tailings extraction is completed, both Jackson and Buddle branches will flow in their original stream channels.
Water discharge samples will be collected on a monthly basis from the pile underdrain discharge (location # 4) .... If the water discharge ever exceeds 125% of zinc levels shown in Attachment C, activities will be suspended until zinc levels are again under control. Excursions above 125% of present zinc levels will be reported immediately to DEQ. Results of monthly water monitoring samples will be supplied to [DEQ] on a quarterly basis.
(Id. )
The entirety of the PER section titled "Reclamation" states: "Upon completion of the removal of the material by [ALC], [Dixon] will reseed the area with suitable vegetation and control erosion as needed. [Dixon] will replant any areas disturbed by the mining process in accordance with any agreement with the Virginia Department of Forestry. Dixon intends that, once reclaimed, this land will be reforested as well." (Id. at 5.)
According to Susie Dixon Garner, the current president of Dixon, Dixon agreed to the arrangement because it was told that ALC desired to mine and sell the tailings from Austin Meadows as agricultural lime, and, pursuant to the proposed Agreement, she believed that all that Dixon would have to do was to reseed and revegetate the areas that ALC reclaimed upon completion of ALC's work. (Day 2 Trial Tr. 167-68.) Dixon's belief about the respective obligations was based on her review of the 1993/1995 Agreement, the PER, the Consent Order, and related documents. Id. Of course, ALC also stood to benefit from the Agreement because it already engaged in the mining and sale of limestone tailings. As it had anticipated, ALC was able to sell many tons of the tailings to its customers over the years it mined the tailings, and it earned more than five million dollars in gross sales.
Notably, the PER contains some assertions by ALC that ALC has now admitted either were inaccurate when made, or were otherwise speculative. (Day 1 Trial Tr. 66-68, 75.) These include the estimated amount of tailings at Austin Meadows (600,000 tons), where the actual number exceeded 900,000 tons (Day Trial Tr. 238); the annual amounts that ALC had successfully removed from its own property at Bunker Hill; and the statement that the tailings at Austin Meadows could be removed within five years. (Id. )
c. The 1994 Consent Order
After approval of the PER by DEQ, Dixon and DEQ entered into a 1994 Special Order on Consent (the 1994 Consent Order), to which ALC is not a party. (Pl. Ex. 150.) The 1994 Consent Order incorporates the PER by reference (Day 1 Trial Tr. 104; Pl. Ex. 153), and it contemplates that tailings removal will be completed within five years (Day 1 Trial Tr. 92). ALC has admitted that DEQ was relying on both the PER and the Consent Order in its oversight and enforcement roles. (Id. at 93.)
The Consent Order sets forth relevant background and notes that Dixon agrees to comply with the schedule set forth in the attached Appendix. (Pl. Ex. 150.) It further notes that the schedule allows Dixon to enter into an agreement with ALC, which will serve as a contractor for Dixon to remediate the Austin Meadows site through the removal of the limestone tailings pile. (Id. at 1.) The schedule directed Dixon to begin removal of the tailings pile by June 1, 1994, submit monthly water quality monitoring reports, submit annual reports to DEQ, and complete removal of the tailings pile by June 1, 1999. (Id. at 3, Appendix.) The Appendix also expressly provides that Dixon "shall operate this project in accordance with the PER." (Id. at 3.)
d. The DMME Mining Permit
After entry of the Consent Order, ALC submitted a permit application to DMME, seeking to amend its current permit for its own property to include the retrieval of tailings at Austin Meadows. (DMME Permit Appl., Pl. Tr. Ex. 149.) The permit was required for ALC to remove the tailings from Austin Meadows. That application was submitted on November 27, 1995 (Day 1 Trial Tr. 94), and it included the PER as an attachment. (Id. ) After ALC's submission of additional information, DMME issued ALC a mining permit. (Day 1 Trial Tr. 102.) Once ALC obtained the permit, it then had the exclusive right to mine tailings on Austin Meadows. (Day 1 Trial Tr. 95.) ALC did not begin removing tailings, though, until 1998.
4. Timing of tailing removal and timeline of events from 1993 to 2013
As noted above, under the 1994 Consent Order, tailings removal was supposed to begin by June 1, 1994. (Day 1 Trial Tr. 105, 109-10.) Almost a year later, in May 1995, ALC wrote to Mr. Allen Newman of DEQ; ALC's letter essentially apologized for the delay in starting tailings removal and explained that ALC had been conducting chemical testing to make sure the tailings would be acceptable to ALC's customers. (Pl. Ex. 145.) The letter advised that ALC intended to start the removal during 1995 and that ALC still believed it could meet the 1994 Consent Order's June 1, 1999 deadline. (Id. )
In fact, though, ALC did not begin removal until 1998, and, even then, the removal progressed slowly. The number of tons that ALC removed from Austin Meadows during the relevant time period is shown below, along with relevant notes:
1998: Removal begins: 18,676 tons of tailings removed 1999: 99,752 tons of tailings removed
2000: 15,012 tons of tailings removed
2001: 42,649 tons of tailings removed
2002: 31,947 tons of tailings removed
2003: No tailings removed
2004: 2,797 tons of tailings removed
2005: 2,552 tons of tailings removed
2006: 5,799 tons of tailings removed
2007: 33,291 tons of tailings removed
2008: 101,227 tons of tailings removed
2009: 66,826 tons of tailings removed
2010: 45,229 tons of tailings removed
2011: 18,372 tons of tailings removed
2012: 65,316 tons of tailings removed
2013: 63,511 tons of tailings removed
2014 : 27,993 tons of tailings removed
2015 : 21,493 tons of tailings removed
As the removal occurred, DEQ granted several extensions to complete the removal process, and the parties entered into several renewed agreements extending the time-frame for removal. First, in 1999, there was an amendment to the 1994 Consent Order, in which Dixon sought and received an extension of the deadline to remove tailings from 1999 to June 1, 2008. (Day 1 Trial Tr. 114; Pl. Ex. 155.) This 1999 Consent Order notes that the "contractor [ALC] has experienced numerous problems due to wet weather, chemistry of products[,] and market availability." (Day 1 Trial Tr. 114, Pl. Ex. 155.) Notably, though, and despite the fact that in 1995 ALC had said that it would keep DEQ apprised of any changes to the schedule, (Day 1 Trial Tr. 109, Pl. Ex. 145), there was no correspondence from ALC to DEQ concerning the schedule between ALC's assurance in May 1995 and 1999. ALC president Kevin Mann's explanation for this absence of correspondence was that ALC was "communicating through Ms. Garner at Dixon Lumber." (Day 1 Trial Tr. 126.)
Mann testified about the conditions that were causing the delay, including the wetness of the tailings pile and the lack of proper equipment or personnel to deal with it, and he conceded that a lack of effort by ALC could have been a factor. (Day 1 Trial Tr. 122-23.) Mann testified in general terms about the many problems ALC had in mining Austin Meadows and that "a lot of trial and error" was involved in figuring out how best to remove the tailings. (Day 1 Trial Tr. 236.)
During the initial years after removal began, Garner was responsible for submitting annual reports to DEQ and-consistent with Mann's testimony-she testified that ALC would give her the information for certain sections of the report and she would pass that along to DEQ. That information included operational and field observation data, and many of the annual reports referenced the same problems about which Mann testified. (Day 2 Trial Tr. 170-71; Day 1 Trial Tr. 226-27, 233-41; Def. Ex. 11; Def. Ex. 51 (annual reports for years 1998 through 2014).) These included weather-related issues and "slow development of a market," and a reference to ALC's estimate, in 1998, that the removal process "could easily take another ten years." (Day 2 Trial Tr. 207-09.) Thus, although Dixon did not-for the most part-have independent knowledge of what was causing the delays, Dixon certainly was aware of the problems as conveyed by ALC.
The court finds that some of these problems-for example, the weather-certainly contributed to the delays but were not the fault of ALC; however, the court also finds that ALC should have known about some of the issues, such as on-site conditions, before it ever agreed to undertake the work and before it ever told DEQ (and Dixon) that the removal could be accomplished within a five-year time frame. It is clear to the court that ALC prioritized its profitability over timeliness in tailings removal. Regardless of whether ALC's foot-dragging constituted a breach of the technical terms of its agreements with Dixon, ALC certainly did not act in a manner that showed diligent care of the hazardous substances with which it was working.
In December 2003, Dixon and ALC signed a "Limestone Removal Agreement," which mirrors the 1993/1995 Agreement in all significant respects. (Def. Ex. 13.) In the Limestone Removal Agreement, ALC again promised to "make commercially reasonable efforts to remove the tailings ... over a period of five (5) years." (Id. ¶ 1.) The document provided ALC with the option of renewing it for an additional five years after the termination of the initial five-year period. (Id. ) The parties also agreed in that document that one of the reclamation tasks, the regrading of Austin Meadows after tailings removal, should be done by ALC. (Id. )
On June 21, 2004, DEQ issued a NOV to Dixon for the delay in tailings removal at Austin Meadows. (Day 1 Trial Tr. 117-18; Pl. Ex. 156.) In March 2006, DEQ sent another warning letter to Dixon concerning the delay. (Day 1 Trial Tr. 124; Pl. Ex. 157.)
On December 28, 2007, Mann sent an email to DEQ in which he apologized for ALC's "negligence" in getting drainage established, admitted that ALC had a "poor" track record in timely removing the tailings, and assured DEQ that ALC's new management would place a renewed focus on handling the removal at Austin Meadows. (Pl. Ex. 158.) Mann testified that the letter was sent to DEQ in order to help Dixon get an extension of the Consent Order deadline for tailings removal from DEQ. (Day 1 Trial Tr. 185.) Nonetheless, while attempting to backtrack from his use of the word "negligence" in his email to DEQ, Mann agreed during trial that the pace of removal had been slow and that ALC had largely been mining Bunker Hill and allowing Austin Meadows to "lie fallow." (Day 1 Trial Tr. 129-36.) Mann also was forthright in his testimony about failures subsequent to that letter. For example, the letter told DEQ that ALC would begin removing tailings on a year-round basis, and Mann admitted that was ALC's intent, but that did not happen. (Day 1 Trial Tr. 172-73.)
The June 1, 2008 removal deadline under the 1999 Consent order passed without completion of removal. In fact, only about half of the estimated 600,000 tons of tailings had been removed by that point. (Pl.
Ex. 165 at 2.) Soon thereafter, in October 2008, Dixon and DEQ entered into yet another consent order. (Dkt. No. 183-84; Pl. Ex. 165.) That order (the 2008 Consent Order) set a June 1, 2015 deadline for the complete removal of all tailings. (Day 1 Trial Tr. 183-84.) The order also fined Dixon $ 16,109 for not meeting the June 1, 2008 removal deadline from the second consent order and required payment within 30 days. (Day 1 Trial Tr. 184.) In order to reimburse Dixon for that fine (in an attempt to "make it right" and because Mann felt morally obligated to do so (Day 1 Trial Tr. 142, 186)), ALC and Dixon agreed that the royalty paid to Dixon from each ton of tailings sold would increase from 20 cents per ton to 30 cents. This was reflected in the First Amendment to the Limestone Removal Agreement. (Def. Ex. 19.) Over a period of about two years, the increased royalty generated approximately $ 15,000 in revenue to Dixon, which was designed to repay Dixon for the fine. (Day 1 Trial Tr. 185-88; Day 2 Trial Tr. 177-78.)
As is evidenced from the numbers set forth above, removal continued to occur from 2008 until 2013, albeit still at a slower pace than suggested in the PER.
5. Discharges related to the failure of Jackson Branch pipe and dam
In June 2013, DEQ received public complaints concerning sediment traveling from the Austin Meadows site and a resulting sediment bar that had appeared in the New River. In response to these complaints, both DEQ and DMME investigated. DEQ's investigation showed that the pipe carrying Jackson Branch around the tailings on Austin Meadows and the impoundment protecting it had failed after a significant rain event, causing water to flood the tailings pile and release sediment into Jackson Branch. This failure caused a loss of sediment from Austin Meadows and elevated readings of contaminants in Buddle Branch. (Def. Ex. 22 at 2.) The following month, "the piping was reinstalled and the diversion reestablished," but sediment loss "continue[d] to occur, again affected by rainfall events." (Id. )
Following the June 2013 discharge, DMME issued a number of special orders to ALC directing it to take certain steps at Austin Meadows, and other orders giving extensions to complete those steps. Three August 2013 orders required ALC to: (1) provide an engineering plan that detailed how ALC would meet DMME regulations on installing drainage controls and controlling sediment into Austin Meadows' site; (2) work with Dixon to provide a final reclamation plan for the site; and (3) install temporary sediment basins and filtration structures. (Day 3 Trial Tr. 173-77.) DMME also issued orders in September and October 2013, extending the time to finalize the reclamation plan and start implementation. (Day 3 Trial Tr. 177-78, 184-85.) The actions required by these orders included controlling sediment and fixing holes in pipes in areas ALC had disturbed. (Pl. Exs. 166-74.) Although DMME directed these orders to ALC, Mann testified that several of these orders were related to the November 2013 Letter of Agreement (LOA), discussed next, and both companies were required to comply with certain of the orders' requirements pursuant to the terms of the LOA. (Day 3 Trial Tr. 174-76.)
According to Philip Skorupa, who works for DMME, the special orders were issued to ALC as the permit holder to address the uncontrolled discharge at the mining site. As Skorupa testified, even though the Jackson Branch pipe that failed was not within ALC's permit area, the water from that pipe came into the permit area and was interacting with tailings and causing the loss of sediment. Thus, DMME still wanted to ensure that the permit's requirements about sediment control on the mine site itself were met. (Skorupa Dep. 115.) Skorupa also explained that, as the entity holding the DMME mining permit, ALC had the obligation of reclamation of the land within its permit boundaries once mining was complete. (Skorupa Dep. 37.) Notably, ALC did not contest and complied with those special orders. (Skorupa Dep. 90-91, 147.)
As noted above, in November 2013, both parties, in conjunction with DEQ and DMME, executed a Letter of Agreement (LOA). (Def. Ex. 22.) That LOA required certain actions in order to fix the problems at Jackson Branch and to monitor water quality in the wake of the failure and as remediation occurred. Mann testified that he believed the actions were the obligation of both Dixon and ALC. For example, the LOA required weekly reports and water testing, for which ALC took primary responsibility, although Mann testified that the cost of that testing should be borne by Dixon. (Day 3 Trial Tr. 94-96.) In general terms, the LOA required ALC and Dixon to work together in order to devise a plan to meet erosion control and drainage requirements at Austin Meadows in the immediate future. In particular, Exhibit 3 to the LOA is significant to the court's analysis. It was apparently drafted by ALC, not by DEQ, but it purports to allocate the work tasks and financial responsibility of the LOA obligations between the two parties. (Def. Ex. 22, at 9.)
Specifically, Exhibit 3 to the LOA states that ALC would perform much of the actual work with the balance being performed by contractors. (Id. ) It further states: "Any work performed or contracted by [ALC] on [Dixon's] behalf will be approved first by Dixon." (Id. ) It then notes that Dixon would "have primary financial responsibility for stream channel design" and that "reclamation (except for re-grading)" would also be Dixon's responsibility. ALC agreed to regrade the site and to be "financially responsible for implementing engineered sediment controls within areas it has disturbed during tailings removal." (Id. ) But Dixon would be financially responsible for "control of sediment and/or surface water entering tailings removal site from Jackson Branch." (Id. ) Lastly, ALC would perform required water testing, but Dixon would reimburse ALC for the laboratory costs. (Id. )
Garner admitted to signing the LOA, including Exhibit 3, although she claims Dixon did so under "duress" and because "[t]he government agencies were pressuring" it. (Day 2 Trial Tr. 260.) Garner downplayed the significance of the document at trial, noting that the LOA expired automatically in "November 2014, before any work was done" and that ALC was required to seek Dixon's approval before incurring costs. (Day 2 Trial Tr. 258-59.) It is undisputed that ALC never sought or obtained Dixon's approval for work while the document was in effect. Regardless, the court does not find Garner's claim of duress persuasive and finds the document significant in that it shows the parties' agreement as to their respective financial responsibilities.
After entering into the LOA, Dixon and ALC jointly hired civil engineer Kevin Heath to prepare the required evaluation and initial plan. That report was submitted on October 30, 2013, approved by both agencies, and made an exhibit to the LOA. (Bazyk Dep. 20 (noting that DEQ approved Exhibit 2 to the LOA, which is a sediment control plan by Kevin Heath designed to address immediate concerns at the Jackson Branch site).)
The LOA also required Dixon and ALC to submit final reclamation plans for Austin Meadows. In December 2013, the parties submitted a joint report and initial plan prepared by Heath (Def. Ex. 23), but that plan was rejected by the agencies. Eventually a revised plan prepared by Heath was submitted in August 2014 and approved by DEQ and DMME that same month, with several comments. (Def. Ex. 27-29; Newman Dep. 151, 157-58.) The approved plan included an open stream channel for both Buddle and Jackson Branches. (Def. Ex. 29.)
In December 2014, DEQ issued a NOV to both Dixon and ALC as a result of the 2013 discharges. (Def. Ex. 32.) ALC challenged the NOV as to it and engaged in DEQ's early dispute resolution process. Ultimately, that process resulted in DEQ withdrawing the NOV as to ALC, but not as to Dixon. As explained by Melanie Davenport of DEQ, who made the withdrawal decision, ALC was determined not to be responsible for those discharges because the area of the failures was not within ALC's mining permit and because ALC had not been working in the area of the failures. (Davenport Dep. 32-35 & Davenport Dep. Ex. 4 (admitted at trial as Def. Ex. 59); see also Day 3 Trial Tr. 157-58.) Thus, Davenport concluded that ALC could not be held responsible for the June 2013 discharges. This conclusion is also consistent with the testimony of another DEQ witness, Crystal Bazyk. Bazyk works for the enforcement arm of DEQ and was involved in dealing with the problems with Jackson Branch from 2013 on. She testified about emails that she authored in 2015 concerning problems at the Jackson Branch dam and that the emails indicate, at least at the time, her belief that Dixon was responsible for the Jackson Branch problems because the breach was outside of the ALC permit boundary, but on Dixon's property. (Bazyk Dep. 51-53.)
ALC faults Dixon for the problems at Austin Meadows in 2013 and 2014, accusing Dixon of failing to maintain the Jackson Branch pipe and dam, and noting that in a 2011 report prepared by Heath and submitted by Dixon to DEQ, there was evidence that portions of the pipe had been exposed due to erosion. (Def. Ex. 21.) The court finds that the evidence shows that Dixon's negligence was the primary reason for the releases. For example, Heath, offered his expert opinion that the primary cause of sediment leaving Austin Meadows was the failure of the Jackson Branch pipe and dam. (Heath Dep. 39.) Specifically, Heath opined that the majority of the sediment going to Buddle Branch at the time was due to excess water from Jackson Branch getting on the tailings area and water flowing on to those tailings from pipe leakage or seepage through the embankment. (Id. ) The court thus finds that the Jackson Branch pipe and dam problems were caused primarily by Dixon's failure to maintain that section of pipe, but it also notes that significant heavy rains contributed, for which neither party is responsible. The court further finds that other portions of the same piping system were within ALC's mining permit area. Moreover, an October 30, 2013 report by Heath determined/explained that breaks in that piping as well as at two of the standpipes in the Buddle Branch channel were allowing entry of surface water at the facility. (Ex. 2 attached to the LOA.)
In 2014, ALC removed 27,993 tons of tailings from Austin Meadows, and in 2015, it removed 21,493 tons. The parties appear to agree that the removal met the June 1, 2015 deadline under the 2008 Consent Order. (Day 3 Trial Tr. 138.) During this period, ALC altered its process for removal of the tailings from Austin Meadows. Instead of excavating them and leaving them in temporary stockpiles on site, it hauled the tailings to its own property. (Day 1 Trial Tr. 179-80; Pl. Ex. 192.)
In 2015, however, there was another problem with a breach in the Jackson Branch dam, which was causing pollutants to be discharged into Jackson Branch. There were repeated communications between Bazyk and Garner or counsel for Dixon following this event, in which Bazyk requested daily reports about Dixon's response. (Bazyk Dep. Ex. 5.) The emails characterized the situation as urgent and required an urgent response. In those emails, Dixon's counsel repeatedly referred Bazyk to ALC and DMME, despite several notifications from Bazyk that the area at issue was outside of ALC's permit area and that ALC was not considered by DEQ to be the "responsible party." (Id. ) Many of the same emails from Bazyk also requested a reclamation plan from Dixon that would address Austin Meadows, including Jackson Branch, but Dixon did not provide it in a timely fashion. Ultimately, Dixon was issued another NOV on July 2, 2015, for failing to submit an acceptable reclamation plan. (Bazyk Dep. 73-75; Ex. 6.)
6. Post-LOA events and breakdown in communications
Without delving into unnecessary detail, the court notes that the parties eventually experienced a significant breakdown in communications and cooperation. Specifically, after the August 2014 approval of Heath's revised plan, ALC and Dixon met to discuss the implementation of that plan, and disputes arose at that time over the cost of the plan. (Day 3 Trial Tr. 105-06.) According to Mann, Dixon determined that the cost seemed excessive, and so Dixon and ALC agreed to try a different route. (Day 3 Trial Tr. 106-07.)
They agreed to work with Ben Faulkner, a water quality expert, to develop an alternative plan, and he was hired by both of them. Faulkner examined the site in late 2014, and he prepared a report for submission to DEQ. (Day 2 Trial Tr. 81-84.) His plan was to keep the Buddle Branch pipe "as a way to separate Buddle Branch from the restored area and any tailings, as long as that was feasible going from south to north." (Day 2 Trial Tr. 130.) In the course of finalizing Faulkner's plan to submit to DEQ by a January 15, 2015 deadline, however, Mann raised the issue of which company was going to pay for which portions of Faulkner's reclamation plan. Thereafter, a dispute arose between the parties regarding who was supposed to pay for what throughout the entire remediation and reclamation. That was essentially the start of a near-complete breakdown in communications. (Day 3 Trial Tr. 114-16.) Continuing disputes and communications about who should pay for what followed, which ultimately led to this lawsuit.
Ultimately, Dixon, acting on its own, submitted Faulkner's plan to DEQ. DEQ disagreed with Faulkner's approach, however. (Day 3 Trial Tr. 118.) Unlike Faulkner's plan, which proposed to leave the Buddle Branch pipe in place, the agencies sought-and ultimately required-an open channel for both Buddle Branch and Jackson Branch, just as Heath had proposed. (Newman Dep. 168-69 & Dep. Ex. 40; Bazyk Dep. 42-44.) Indeed, no one has disputed that DEQ and DMME wanted an open stream channel, not a piped channel for Buddle Branch. (See Heath Dep. 58-59, 193-94.) According to Mann, ALC "scrambled" to find another engineer and hired Gordon Wright of Wright Engineering to submit a separate proposed reclamation plan, which was sent to DMME and DEQ in March 2015. (Def. Ex. 39.) Thereafter, DEQ and DMME approved a revised Wright plan (after ALC sought Dixon's input), which was designed to render the remediation costs less expensive. (Skorupa Dep. 131, Day 3 Trial Tr. 118.)
ALC then hired a contractor to perform much of the work required by Wright's plan. ALC billed Dixon for the costs it incurred, but it did not include costs for "erosion, control, grading, and ordinary limestone removal expenses." (Day 3 Trial Tr. 126-27, Def. Exs. 47, 48, 49, 50.) None of the invoiced expenses have been paid by Dixon to date. At the time of trial, not all of the expenses had been incurred because not all of the reclamation work had been completed. (Day 3 Trial Tr. 132-34.) Dixon had performed much of the reseeding, but had not contracted for or performed any of the other work required under the reclamation plan. (Day 3 Trial Tr. 131.)
7. Claimed expenses and revenues
Both parties have expended monies that they believe should be borne by the other party. The court discusses them generally here and addresses them in more detail when allocating expenses. With regard to Dixon, Garner testified that Dixon paid the entirety of Heath's fee, as well as Faulkner's, despite the fact that Heath was originally engaged by both parties. (Day 2 Trial Tr. 179-81.)
Garner also testified that she did not believe Dixon should be held responsible for water quality testing throughout the course of the tailings removal. She explained that, pursuant to the PER, she believed ALC was responsible for conducting that testing. Despite Garner's stated belief, ALC routinely deducted the cost of its water quality tests from the royalties it paid Dixon, and Dixon never objected to those deductions. (Day 2 Trial Tr. 183-84.)
Additionally, Trial Exhibit 205 contains a series of receipts paid by Dixon, and Garner testified that all of those expenses related to the response costs and remediation. (Day 2 Trial Tr. 187.) Dixon asserts that all of these expenses should be borne by ALC. ALC disagrees and, in particular, argues that any expenses related to Jackson Branch repairs or remediation should be entirely Dixon's responsibility.
For its part, ALC first notes that it had paid Dixon approximately $ 150,000 in royalties during the 2003 to 2015 period. Mann testified that it was possible, if all tailings that had been removed from Austin Meadows to ALC's property were able to be sold, that the remaining royalties would amount to about $ 50,000, although he very much doubted that those tailings would all be saleable. (Day 3 Trial Tr. 139.) ALC also contends that it has expended-and will continue to expend-a significant amount of other monies to reclaim the site and that those costs should be borne by Dixon. ALC estimates that the total cost of the approved stream redesign at the site and other reclamation costs will be approximately $ 950,000. This includes about $ 370,000 for what ALC calls its "hauling costs," which it incurred to move the tailings off-site once excavated, rather than having customers haul them from Austin Meadows. This hauling was done near the end of removal in order to meet the 2015 deadline.
8. Respective claims of the parties
Each party seeks relief from the other under nearly identical provisions of CERCLA. Specifically, in its latest complaint (Dkt. No. 85), Dixon has asserted the following claims against ALC:
Count I: CERCLA Cost Recovery under 42 U.S.C. § 9607(a)(1) and (a)(2) ;
Count II: CERCLA Contribution under 42 U.S.C. § 9613(f)(3)(B) ; and
Count III: CERCLA Declaratory Judgment under 42 U.S.C. § 9613(g)(2) and 28 U.S.C. § 2201.
In its counterclaim (Dkt. No. 9), ALC has asserted the following claims against Dixon:
Count I: CERCLA Cost Recovery under 42 U.S.C. § 9607(a)(2) ;
Count II: CERCLA Contribution under 42 U.S.C. § 9613(f)(1) ;
Count III: CERCLA Declaratory Judgment under 42 U.S.C. § 9613(g)(2) and 28 U.S.C. § 2201 ;
Count IV: Breach of Contract; and
Count V: Quantum meruit.
9. Prior legal rulings and trial proceedings
The court issued several orders in this case prior to trial. These included an opinion and order concluding that ALC was not a successor-in-interest to NJZ and thus could not be liable under § 9607(a)(1) as an "owner" (Dkt. Nos. 69, 70), and an opinion and order granting ALC's motion for partial dismissal, which dismissed an arranger liability claim in Dixon's amended complaint, asserted pursuant to § 9607(a)(3) (Dkt. Nos. 134, 135). Although that dismissal was without prejudice, Dixon did not seek to amend its complaint prior to trial.
At the close of Dixon's evidence, ALC moved for judgment on partial findings under Federal Rule of Civil Procedure 52(c). The court, however, declined to render any judgment until the close of evidence. (Day 3 Trial Tr. 23-24, 263.)
C. Conclusions of Law
1. Overview
There is no clear answer, either from the documents or from the assessments of the government agencies, as to who should be financially responsible for what in terms of remediation or reclamation of Austin Meadows. According to DMME, ALC is responsible for reclamation of the portion of Austin Meadows it mined because of its permit. (Skorupa Dep. 75; see also, e.g. , Newman Dep. at 92 (agreeing that "as far as the Commonwealth is concerned, DEQ has jurisdiction over Dixon Lumber pursuant to the Consent Order, and DMME would have had jurisdiction over [ALC] at the property").) Skorupa, the only DMME witness whose testimony was offered, noted that the DMME permit approved the drainage plan, which included that ALC was obligated to remove the drainpipe and return Buddle Branch to its original stream channel. (Skorupa Dep. 72.) Under its permit with DMME (which included the reclamation plan set forth in the PER), ALC also agreed to provide temporary vegetative cover to prevent erosion. (Skorupa Dep. 75.)
According to DEQ, because its 1994 and 2008 Consent Orders were with Dixon, it is Dixon that is responsible to DEQ for any unpermitted discharges from the site and the related remediation of the site, although DEQ takes no position as to who is financially responsible for the remediation. (Bazyk Dep. 18 (testifying that DEQ would normally play no role in deciding as between an owner and its contractor, who pays for what, regardless of the assignment of responsibility for completing tasks in an agreement).) Bazyk also testified that she could not be sure if DEQ played any role in drafting Exhibit 3 to the 2014 LOA (which seems to place much of the financial responsibility with Dixon) or if ALC and/or Dixon submitted that Exhibit to DEQ. (Id. )
The various documents in the case, moreover, either do not address the topic at all or are inconsistent as to who bears financial responsibility for certain tasks. For example, the 1993/1995 Agreement provides that ALC "shall remove the tailings ... in connection with the conduct of its business of selling limestone products from [ALC's] adjoining property," but it does not clarify whether ALC or Dixon is to pay for hauling costs regarding such removal. (Pl. Ex. 146 ¶ 3.) And although the 1993/1995 Agreement states that "it shall be Dixon's responsibility for all reclamation and revegetation," (id. ¶ 6), what is considered "reclamation" is not entirely clear, and the Limestone Removal Agreement provides that ALC is responsible for regrading, a reclamation task, (Def. Ex. 13).
In short, much of the evidence, together with the parties' repeated reliance on the documents and on the statements of representatives from Virginia agencies, does not provide clarity and will not provide a definitive answer as to which party is financially "responsible" for any of the response costs at the site, although all of the evidence bears on the issue of proper allocation of costs. Ultimately, the inquiry of financial responsibility must be governed solely by CERCLA, which Congress enacted "to address the increasing environmental and health problems associated with inactive hazardous waste sites," Nurad Inc. v. William E. Hooper & Sons Co. , 966 F.2d 837, 841 (4th Cir. 1992), and the authority interpreting it.
Prior to addressing either party's prima facie case for liability and contribution, however, the court turns to ALC's threshold argument, which is that judgment must be entered in its favor because of what it calls an indemnification provision in the parties' Agreements.
2. The parties' Agreements do not transfer all responsibility for CERCLA response costs to Dixon.
ALC first contends that the parties' Agreements shifted all liability for CERCLA response costs to Dixon. According to ALC, Paragraph 5 of the 1993/1995 Agreement "clearly and unmistakably allocate[ ] to Dixon all CERCLA liability related to Austin Meadows" (ALC Closing Arg. 3, Dkt. No. 195), thus precluding Dixon's claims against ALC as a potentially responsible party under 42 U.S.C. § 9607(a) and preventing Dixon from seeking contribution under § 9613. Paragraph 5 states:
All activities conducted on the [Austin Meadows] property by [ALC] shall be considered to be remedial actions on behalf of Dixon for purposes of alleviating or reducing possible contamination of the waters and [ALC] shall not be considered to be an "owner" or "operator" for purposes of laws and regulations enforceable by the Department [DEQ].
(Pl. Ex. 146.)
"CERCLA permits parties to shift the burden for paying response costs through contractual indemnification and release agreements." Ashley II of Charleston, LLC v. PCS Nitrogen, Inc. , 791 F.Supp.2d 431, 472 (D.S.C. 2011) ; see also C.P. Chems., Inc. v. Exide Corp., Inc. , 14 F.3d 594 (Table), No. 93-1426, 1993 WL 535277, at *1 (4th Cir. Dec. 28, 1993) (stating that CERCLA liability can be allocated by contract); Dent v. Beazer Materials and Serv., Inc. , 993 F.Supp. 923, 939 (D.S.C. 1995), aff'd , 156 F.3d 523 (4th Cir. 1998) ("Under CERCLA, parties are free to contractually shift the burden for liability for response costs among themselves."). "A private party contract which apportions CERCLA liability must contain a provision which allocates risks of this nature to one of the parties." Ashley II , 791 F.Supp.2d at 472 (citing Dent , 993 F.Supp. at 939 ). Although "[s]uch agreements cannot alter or excuse the underlying liability," they can "change who ultimately pays that liability." Id. (citing Vill. of Fox River Grove v. Grayhill, Inc. , 806 F.Supp. 785, 792 (N.D. Ill. 1992) ).
Thus, courts will enforce a contract that allocates loss suffered by imposition of CERCLA liability "where the provisions evince a clear and unmistakable intent of the parties to do so." Keywell Corp. v. Weinstein , 33 F.3d 159, 165 (2d Cir. 1994). Federal courts determine the intent of the parties' agreements by applying rules of contract construction under state law. See PCS Nitrogen, Inc. v. Ashley II of Charleston, LLC , 714 F.3d 161, 173 (4th Cir. 2013). When contract terms are clear and unambiguous, the terms should be given their "usual, ordinary, and popular meaning." TravCo Ins. Co. v. Ward , 284 Va. 547, 736 S.E.2d 321, 325 (2012). If, however, the terms of the contract are ambiguous, the court must determine the "parties' intent based on consideration of extrinsic evidence." PCS Nitrogen , 714 F.3d at 174.
Examples in other cases shed some light on what is required to accomplish such a transfer of liability for response costs. In cases where agreements were entered into pre-CERCLA, wide breadth is required. For example, a provision that Party A will hold Party B "harmless from any and every claim arising out of the use by Party B" of the premises was deemed sufficient to encompass CERCLA liability. Dent , 993 F.Supp. at 940. Similarly, language in an agreement that "Party A agrees to com