PVO International, Inc. v. Drew Chemical Corp.

No. 87-3921 (D.N.J. June 27, 1988)

The court holds that the purchaser of contaminated property may sue the seller for response costs under § 107 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), but the plaintiff's assumption of defendant's obligationsin state consent orders may defeat its innocent purchaser status. The court holds that CERCLA § 107(a) requires it to allocate cleanup costs between the parties in an equitable manner. Although § 107(a) does not explicitly provide for apportionment of costs between liable parties, the provision should be read in conjunction with CERCLA § 113(f), which allows for equitable allocation of response costs. The court notes that a relevant equitable consideration in allocating liability could be the increase in the property's value once it is cleaned up. The court holds that the fact that the defendant seller has not incurred response costs is irrelevant to a determination of the plaintiff's liability under § 107(a). The court declines to rule at this time on plaintiff's liability. Plaintiff's assumption of the defendant's obligations in consent orders entered into with state environmental authorities provides some evidence that it had reason to know of the contamination when it purchased the property, which would negate its innocent purchaser defense, but it is not clear whether the discharges were actually sufficient to put plaintiff on notice of the contamination.

Counsel for Plaintiff
Edward A. Zunz
Riker, Danzig, Scherer, Hyland & Perretti
1 Speedwell Ave., Headquarters Plaza, Morristown NJ 07960
(201) 538-0800

Counsel for Defendant
Frederick L. Whitmer
Pitney, Hardin, Kitt & Szuch
163 Madison Ave., CN 1945, Morristown NJ 07960
(201) 267-3333

[19 ELR 20077]

Debevoise, J.:

Opinion

This action arises out of the environmental condition of a twenty-five acre industrial facility located in Boonton, New Jersey ("the Premises"). Plaintiff PVO International, Inc. ("PVO") seeks recovery of cleanup costs from PVO's predecessor in title to the Premises, defendant Drew Chemical Corporation ("Drew"), pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. sec. 9601 et seq. ("CERCLA"), and various state statutory and common law grounds. PVO contends that pollution at the site was caused primarily by Drew during the fifty years that Drew conducted Industrial Operations at the Boonton Premises. The parties have cross-moved for partial summary judgment.

[19 ELR 20078]

Facts

The following facts are undisputed except where otherwise indicated. E. F. Drew & Company, later renamed Drew Chemical Corporation, owned and operated the Premises as a chemical manufacturing facility from approximately 1917 through 1971. In the 1940's, the facility was expanded and organized into four distinct operating divisions: (1) the Process Chemical Division, (2) the Catalyst Chemical Division, (3) the Chemical Specialty Division, and (4) the Food Division. The Process Chemical Division, which is the subject of this motion, manufactured a number of products, including fuel oil treatments and various cleaners,¹ and used various chemicals as raw materials for its products. The division operated in a group of buildings located in the northwestern portion of the Premises, where raw materials were brought to the site via railroad tank cars and trucks, pumped into mixing and blending tanks, and then blended or mixed into products that were packaged and stored in drums at the site.

During the 1960's, Drew decided to concentrate its activities on the Process Chemical Division. Accordingly, Drew purchased a new facility in Kearny, New Jersey, and began to transfer the operations of the Process Chemical Division there in 1970. In 1971, Drew sold the remainder of the manufacturing operations conducted at the Boonton Premises, along with the property, to PVO. The transfer of the Process Chemical Division to Kearny, New Jersey was completed in 1971, a few months after PVO purchased the Premises. Drew rented certain facilities at the Premises to conduct interim operations during the transfer period, but once the transfer to Kearny was complete, Drew shut down the remaining Process Chemical Division operations at the Premises. PVO never operated the Process Chemical Division.

Between 1971 and 1980, PVO continued to operate the manufacturing operations of the Catalyst Chemical Division, the Chemical Specialty Division, and the Food Division. The Food Division was operated until 1975; the Catalyst Chemical Division and the Chemical Specialty Division were both closed in 1980, except for limited shipping and warehousing activities, which ceased in 1987.

Shortly after PVO purchased the Premises from Drew in 1971, the New Jersey Department of Environmental Protection ("NJDEP") advised PVO that the discharge of waste water by the Catalyst Chemical Division had been contaminating a surface stream that ran through the Premises. Accordingly, PVO ceased the practice of stream discharges carried on by Drew and entered into a Consent Order with NJDEP in 1973. Under this consent order, PVO also agreed to monitor the streams.

PVO was acquired by the Kay Corporation in 1980. Shortly thereafter, it decided to sell the Premises. In preparation for the sale, PVO retained Langan Environmental Services, Inc. ("Langan") as a consultant to address the environmental issues raised as a result of the closure, dismantling and planned sale of the Premises.

PVO does not dispute that it has committed environmental violations. The papers draw only a rough outline of PVO's environmental practices. DEP cited PVO for unlawful wastewater and other effluent discharges in 1978. The NJDEP inspected the Boonton property in early 1982, and found "the PVO had carelessly dumped pollutants, such as waste products and spent nickel catalyst, throughout the plant site[,]" and that these practices had "caused a deterioration of water quality in nearby streams. . . ." In view of these findings, DEP determined that PVO was discharging pollutants into a stream running through the property in violation of the terms of a consent order dated November 1972 between PVO and DEP. DEP also ordered PVO immediately to clean up spillages of chemicals found on the Premises.

In compliance with a series of directives issued by the NJDEP, PVO commenced a hydrogeologic investigation and soil sampling program in November 1983. This initial environmental investigation was intended, in part, to follow up the 1973 consent order into which PVO had entered with NJDEP.

The initial investigation, which included the installation of monitoring wells and the collection and analysis of groundwater and soil samples, revealed that soil and groundwater in the area surrounding the facilities of the former Catalyst Chemical Division were contaminated, primarily with nickel. The environmental questions raised by this initial investigation made it difficult for PVO to market the Premises. In accordance with the requirements of the New Jersey Environmental Cleanup Responsibility Act, N.J.S.A. 13:1K-6 et seq. ("ECRA"), which requires a full environmental investigation and cleanup upon the closure or sale of industrial property, PVO initiated a more intensive investigation of the Premises in 1985 in conjunction with NJDEP.

The investigation was conducted in two phases, each of which involved the installation of additional wells and the analysis of additional samples. The data generated by the investigations establishes that numerous hazardous substances are present in the soil, surface water, groundwater, and stream sediments at the Premises. Langan estimates that soil, surface streams and pockets of groundwater are contaminated with heavy metals, primarily nickel, in the vicinity of the Catalyst Chemical Division and in other locations on the Premises. Langan also estimates that groundwater and soil surrounding and down gradient of the Process Chemical Division facilities are contaminated with dichlorobenzene and related organic compounds.

PVO contends that to a significant degree, remediation of each problem area can be performed independently of the remediation of the other, because each area contains different hazardous substances and is located in a different area of the Premises. Cost estimates for the cleanup of the groundwater and soil contaminated principally by dichlorobenzene — that is, the area surrounding and down gradient of the former Process Chemical Division's facilities — range between $ 2.5 million and $ 4 million. PVO estimates that the total cleanup cost for the Premises will be between $ 8 million and $ 12 million.

PVO also asserts that Drew is responsible for the disposal of the overwhelming majority of the hazardous substances found throughout the Premises, and that all of the hazardous substances requiring remediation found in the groundwater and soil surrounding and down gradient of the Process Chemical Division are traceable to chemicals and raw materials used by that division while it was in operation. In support of the latter contention, which is the basis of the present motion, PVO has submitted certifications by three former Drew employees and the President of Langan. Those certifications state that of the twenty-five hazardous substances found in the area surrounding and down gradient of the process chemical division, seven were used by Drew in its operation of the Process Chemical Division, seventeen are chemically related to and have similar distribution to the seven documented substances, and only one was not identical or related to substances used by Drew during its operation of the division. Certification of Donald J. Murphy ("Murphy Certif."), paragraph 29. PVO contends that the one remaining substance — styrene — was detected in low concentrations in only one portion of the area in question, and is not a factor influencing remediation.

As noted above, PVO contends that it never operated the Process Chemical Division. PVO also asserts that with the possible exception of minor uses of certain of these substances in maintenance or laboratories, it never used dichlorobenzene or any of the other hazardous substances found in the area surrounding the former Process Chemical Division's facilities in any of the manufacturing operations which it acquired from Drew. (However, PVO does not specify which of its minor uses of substances may have contributed to the pollution at the site.)

The certifications also purport to establish the means by which the materials used by the Process Chemical Division entered the environment. Those "pathways" allegedly included drum ruptures, cross-threading of tank couplings, tank overflows, plugged or frozen discharge pipes, ruptured hoses, rusting drums, loose bungs, valve leaks and pump line breaks.

In response to PVO's contention that Drew is responsible for all of the contamination surrounding and downgradient of the Process Chemical Division site, Drew contends that there has been insufficient discovery to enable it to dispute PVO's affidavits, and that it cannot respond to PVO's motion until it has an opportunity to review PVO's records and the Drew records in PVO's possession, and to test the recollections of PVO's witnesses by deposition. Drew argues that the need for discovery is evidenced by PVO's [19 ELR 20079] failure to explain how many of the chemicals identified in its motion originated in Drew's operations, by PVO's admission that it used an unspecified but "minimal" amount of chemicals at issues in its plants, and by NJDEP's observations of PVO's dumping of hazardous substances on the property.

PVO states that to date, it has incurred almost one million dollars of expenses in investigating environmental conditions at the Premises, exclusive of attorneys fees and litigation expenses and inclusive only of the actual costs billed to PVO by Langan. Of this amount, PVO contends that $ 353,975.84 constitutes investigatory costs incurred in areas contaminated during the operation of the Process Chemical Division. Although Drew does not dispute the cost of the work done by the environmental consultant, it asserts that it has "no way" of knowing whether the work was either necessary or efficiently performed at reasonable costs, or whether the consultant's conclusions are valid.

In September 1986, before filing the complaint in this action, PVO commenced an action against Drew in the Superior Court of New Jersey to compel Drew to reimburse PVO's cleanup costs. PVO's complaint contained seven counts asserting various common law causes of action sounding in breach of contract, fraud, misrepresentation, breach of deed convenants, and violation of various statutes. After PVO substituted counsel in Spring 1987, the parties exchanged interrogatories and documents in the state court action in the Summer of 1987. In September 1987, PVO constituted this action. Following Drew's answer in December, the parties dismissed PVO's state court action by consent in February 1988.

PVO has moved for partial summary judgment seeking (1) a declaratory judgment that defendant Drew is liable for the response costs PVO will incur in the future in investigating and remedying that portion of the hazardous condition at the Boonton Premises which is solely attributable to the activities of Drew (known as the Process Chemical Division), and (2) a judgment for the response costs PVO has already incurred in investigating the portion of the environmental contamination which is solely attributable to Drew. Drew has cross-moved for partial summary judgment declaring PVO a liable party under 42 U.S.C. sec. 9607(a) for the costs of cleaning up the contaminants attributable to the Process Chemical Division.

Summary Judgment Standards

In order to prevail on a motion for summary judgment, the moving party must establish that "there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c).

[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes demonstrate the absence of a genuine issue of material fact.

Celotex Corp. v. Catrott, U.S. , 106 S. Ct. 2548, 2553 (1986). Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., U.S. , 104 S. Ct. 1348, 1356 (1986), rev'g, 723 F.2d 238 (3d Cir. 1983). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. Sound Ship Building Co. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir.), cert. denied, 429 U.S. 860 (1976). The Supreme Court recently explained that in evaluating the evidence presented, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no 'genuine issue for trial.'" Matsushita, 106 S. Ct. at 1356. All evidence submitted must be viewed in a light most favorable to the party opposing the motion. Wahl v. Rexnord, 624 F.2d 1169, 1181 (3d Cir. 1980).

Rule 56(f) provides that a court may deny a motion for summary judgment where it "appear[s] from the affidavits of a party opposing the motion that the party opposing the motion that the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition. . . ."

Discussion

The Statute

CERCLA was designed "to bring order to the array of partly redundant, partly inadequate federal hazardous substances cleanup and compensation laws." State of New York v. Shore Realty Corp., 759 F.2d 1032, 1040 [15 ELR 20358] (2d Cir. 1985) (quoting F. Anderson, D. Mandelker, and A. Tarlock, Environmental Protection: Law and Policy 568 (1984)). It applies "primarily to the cleanup of leaking inactive or abandoned sites and to emergency responses to spills." Id. CERCLA establishes a variety of mechanisms for recovery of costs of hazardous waste cleanups. Of particular relevance to this case, CERCLA section 107(a) designates four classes of persons liable for the costs of remediating or cleaning up hazardous substances. In relevant part, that section provides:

(a) Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section

(1) the owner and operator of a vessel or a facility,

(2) 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,

(3) . . .

(4) . . ., shall be liable 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 natinal contingency plan;

(B) any other necessary costs of response incurred by any other persons consistent with the national contingency plan.²

Courts have held that the statute imposes strict liability, subject to the three defenses set forth in section 107(b). That section provides that a party cannot be held liable where it establishes by a preponderance of the evidence that the release of a hazardous substance was caused solely by an act of God, an act of war, or an act or omission of a third party with whom the liable party had no contractual relationship. See 42 U.S.C. sec. 9607(b); New York v. Shore Realty Corp., 759 F.2d at 1042.

CERCLA also contains an explicit contribution provision. Section 113(f) provides that "[a]ny person may seek contribution from any other person who is liable or potentially liable under section 107(a)." This section of the statute permits the district court "to allocate response costs among the liable parties using such equitable factors as the court determines are appropriate." 42 U.S.C. sec. 9613. Section 113(f) also provides that "[n]othing in this section shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 106 or section 107 of this title." The House Report for the 1986 CERCLA amendments explains that section 113 "provides contribution protection for those who enter into administrative settlement agreements with the government, as well as those who enter into consent decrees for settlements." H.R. Rep. No. 253, 99th Cong., 2d Sess., at 222, reprinted in 1986 U.S. Code Cong. & Admin. News 3124, 3315.

Preliminary Issues

Courts have identified four factors that must be satisfied to enable a party to recover response costs under CERCLA section 107(a): (1) that the defendant is a "person" as defined by CERCLA; (2) that the property involved is a facility;" (3) that the "release" or "threatened release" of "hazardous substances" from the property has occurred; and (4) that the release or threatened release has caused the plaintiff to incur response costs. See, e.g., United States v. Stringfellow, 661 F. Supp. 1053, 1059 [17 ELR 21134] (C.D. Cal. 1987); United States v. Northernaire Plating Co., 14 Chem Waste Lit. Rptr. 599, 603 [18 ELR 20712] (W.D. Mich. 1987). The statute explicitly provides that a plaintiff's response must be performed [19 ELR 20080] consistent with the National Contingency Plan promulgated by EPA pursuant to section 105. 42 U.S.C. sec. 9605, 9607(b).

Drew does not dispute PVO's contentions that Drew is a "person" under section 107(a) (see 42 U.S.C. sec. 9601(21)), that the Premises constitute a "facility," (see 42 U.S.C. sec. 9601(9)), that the requirement of "release" of "hazardous substances" is satisfied (see 42 U.S.C. sec. 9601(22)), and that PVO's costs to date in investigating and cleaning up the property constitute "response costs" (see 42 U.S.C. sec. 9601(23)-(25)). PVO also contends that, as required by section 107(a), the investigation it has performed to date has been consistent with the National Contingency Plan promulgated by the U.S. Environmental Protection Agency ("EPA") pursuant to CERCLA section 105, 42 U.S.C. sec. 9605. Drew does not specifically dispute this point in its papers.

Each party asserts that the other falls within the definition of a liable party under CERCLA section 107(a) with respect to the Process Chemical Division site. Drew does not dispute that it is a liable party. Indeed, it owned the site at the time of disposal and there is no indication that the contamination was caused by an act of God or war, or that it was caused by a third party with whom Drew had no contractual relationship.

As noted above, section 107(a) holds current owners liable if they are not shielded by any of the defenses in section 107(b). PVO acknowledges that it is not shielded by the act of God or war defenses in section 107(b), and acknowledges that there are factual issues concerning whether it is entitled to the "innocent purchaser" defense in section 107(b), thus conceding the issue or the purpose of this motion.³

Apportionment of Liability Between PVO and Drew

A plaintiff is not required to share the costs of cleanup in a section 107(a) action simply because it falls within the definition of a "liable party." Such a classification is relevant to apportionment, but it is not determinative. However, Drew contends that the relevant equitable factors require that PVO share the cleanup costs for the Premises, including the site surrounding the Process Chemical Division.

Section 107(a) states that a liable party shall be held responsible for "any . . . necessary costs of response incurred by any other person . . ." (emphasis added). The section does not explicitly provide for apportionment of costs between liable parties. However, section 107(a) should be read in conjunction with the contribution provision in section 113(f)(1), which does provide for allocation of response costs "among liable parties using such equitable factors as the court determines are appropriate." 42 U.S.C. sec. 9613. Congress clearly intended courts to allocate cleanup costs between liable parties, and it would be anomalous to allocate such responsibility in contribution actions but to allow it to fall only on defendants in section 107(a) actions, regardless of any partial responsibility of the plaintiff in contaminating the property or any other factors that would make it unfair to burden the defendant with the entire cost of cleanup. Thus, I conclude that section 107(a) requires me to allocate cleanup costs between PVO and Drew according to relevant equitable factors.

PVO does not dispute that CERCLA allows equitable allocation of costs among parties in section 107(a) actions. However, it contends that Drew should be held liable for 100% of the cleanup costs related to the Process Chemical Division because the undisputed facts show that Drew is responsible for all of the contamination at the site. As noted above, PVO alleges that all but one of the substances surrounding or downgradient of the Process Chemical Division site are either identical or chemically related to chemicals used by Drew at that site, that PVO never operated the Process Chemical Division or any other division on the Process Chemical Division site, and that, "with the possible exception of minor uses of certain of these substances in maintenance or laboratories, PVO never used dichlorobenzene or any or [sic] the hazardous substances found in the area surrounding the former Process Chemical Division's facilities in any of the manufacturing operations which it acquired from Drew."

Summary judgment is inappropriate at this time for two reasons. First, PVO's papers do not address one of the relevant equitable considerations in allocating liability between the parties: the increase in the value of the property which will result if it is rid of hazardous wastes. It is possible that PVO paid a low purchase price for the property in 1971 to reflect the fact that the property was or might be contaminated with hazardous wastes, and would therefore be difficult to sell at a later date for other uses. In such a case, it may be appropriate for the amount of cleanup costs allocated to Drew to reflect the fact that Drew will not reap the benefit of the increased value of the property resulting from its being cleaned up. This issue may or may not be capable of resolution on a motion for summary judgment; however, it cannot be resolved now because it has not been adequately addressed.

PVO cites a number of cases in which court have granted summary judgment in actions under section 107(a), implicitly arguing that the property's possible improved value after the cleanup is irrelevant to the apportionment of liability. However, the only case discussed by the parties that addresses the situation presented here — apportionment of liability where both plaintiff and defendant are liable parties and possibly should share the costs of cleanup — is Wickland Oil Terminals v. Asarco Inc., No. C-83-5096-SC (N.D. Cal. Feb. 23, 1988). There, the court denied the plaintiff's motion for partial summary judgment although the defendant was responsible for all of the contamination on the property, because it found that the plaintiff, the current owner of the property, was a "liable party" under section 107(a) and "[t]he allocation of costs necessarily involves the consideration of a number of questions with respect to which there are genuine issues of fact." Slip op. at 11 and n.2.

None of the cases cited by Drew discuss whether a property's potential for increase in value after a cleanup is a relevant equitable factor in allocating liability in a section 107(a) action between private parties. The court in Wickland Oil did not identify the factual issues it found to exist. However, Wickland provides support for the proposition that responsibility for contamination is not the only factor to be considered in allocating response costs.

Sunnen Products Co. v. Chemtech Industries, Inc., 658 F. Supp. 276 [17 ELR 20884] (E.D. Mo. 1987), cited by PVO, does not contradict the result reached here. There, the court found that a seller of contaminated property was liable under CERCLA section 107(a) to an "unwitting" purchaser for contamination that took place while the seller owned the property. Although the court did not explicitly determine whether the purchaser was a liable party under section 107(a), its description of the purchaser as ignorant of the contamination at the time of sale and its acknowledgment that the doctrine of "unclean hands" might be a defense in some section 107(a) actions imply that the purchaser was an "innocent purchaser" pursuant to 107(b)(3) and was therefore not a liable party under section 107(a). The court's discussion also implies that the improved value of the property after cleanup was not a relevant equitable factor in allocating liability because the plaintiff, an "unwitting" purchaser, paid for what it believed was uncontaminated property. Similarly, in T & E Industries, Inc. v. Safety Light Corp., Civ. No. 87-1088 [18 ELR 20926] (D.N.J. Feb. 26, 1988) (Wolin, J.), the plaintiff was not aware at the time of its purchase that the property was contaminated.

Summary judgment is also inappropriate because there has been little discovery in this case to date; the scheduling conference was scheduled to take place on May 25, 1988, after PVO filed its motion. Drew contends that its records from the operation of its facilities are long gone, and that it must therefore review the Drew records in PVO's possession and test the recollections of PVO's witnesses by deposition to learn how Drew and PVO conducted their operations and used the property. Although Drew has not submitted affidavits specifically disputing PVO's factual contentions, it contends that the need for discovery is manifested by PVO's admission that it used a small amount of the chemicals at issue on the property, and by DEP's citations of PVO's discharge violations on the property.

PVO argues that Drew had ample opportunity to conduct discovery in a state court action filed by PVO against Drew in 1986 and subsequently dismissed voluntarily. PVO asserts that in that action, Drew served and PVO fully responded to document demands, interrogatories and requests for admissions, that included among the documents produced were an the investigative reports prepared by the environmental consultants who had investigated the condition of the Boonton Premises, and that PVO's witnesses [19 ELR 20081] are equally available to Drew. PVO also points out that Drew has failed to submit any affidavits identifying specific factual issues that remain in dispute.

Given the document production that took place in the state court action, Drew's failure to come forward with affidavits lends considerable weight to PVO's contention that Drew is responsible for all of the contamination surrounding and downgradient of the Process Chemical Division site. This issue may eventually be ripe for summary judgment. However, Drew claims a need to depose PVO's witnesses, and in light of the complexity of the matter and the fact that I must also deny PVO's motion for the reasons discussed above, I will deny this portion of the motion without prejudice to PVO's right to renew it after Drew has had an opportunity to conduct necessary additional discovery.

Drew's Cross Motion For Partial Summary Judgment

Drew has cross-moved for partial summary judgment declaring that PVO is a liable party under CERCLA section 107(a). PVO opposes the cross-motion. Both parties agree that the act of God and war exceptions to section 107(a) liability have no application here, and that the relevant issue is whether PVO is entitled to "innocent purchaser" status under section 107(b). Section 107(b)(3) provides a defense where the contamination was caused solely by

an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant (except where the sole contractual arrangement arises from a published tariff and acceptance for carriage by a common carrier by rail), if the defendant establishes by a preponderance of the evidence that (a) he exercised due care with respect to the hazardous substance concerned, taking into consideration the characteristics of such hazardous substance, in light of all relevant facts and circumstances, and (b) he took precautions against foreseeable acts or omissions of any such third party and the consequences that could foreseeably result from such acts or omissions. . . .

The term "contractual relationship," as used in section 107(b)(3), is defined by section 101(35)(A) (42 U.S.C. sec. 9601) to mean "land contracts, deeds or other instruments transferring title or possession. . . ." Section 101(35)(A)(i) further provides that a purchaser of "contaminated property" is entitled to the protection of section 107(b)(3) only if it "did not know and had no reason to know" that any hazardous substances were disposed on the property at the time of sale.

In order to come within the so-called "innocent purchaser" defense to liability embodied in section 107(b)(3) and 101(35)(A)(i), PVO, as the owner of a hazardous site, must prove that it made "all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability." The court, in evaluating a claim of innocent purchaser status, must consider:

any specialized knowledge or experience on the part of the defendant [i.e., purchaser], the relationship of the purchase price to the value of the property if uncontaminated, commonly known or reasonably ascertainable information, the obviousness of the presence or likely presence of contamination of the property and the ability to detect contamination by appropriate inspection.

CERCLA section 101(35)(B).

In support of its cross-motion, Drew contends that PVO was engaged in the chemical business in 1971 when it purchased the property from Drew and continued to operate the businesses thereafter; that PVO knew that Drew had owned the property since the 1920s and, by virtue of PVO's own business experience, knew or should have known that Drew had not operated its manufacturing businesses with the same degree of environmental sensitivity that has come to prevail in the chemical industry in recent years, and that PVO had actual knowledge of potential environmental problems at the property in 1971, as PVO assumed Drew's obligations under consent orders with the predecessor to DEP to abate water and air pollution.

PVO argues that Drew is not entitled to a finding that PVO is a liable party because Drew has not incurred response costs. This argument is meritless. PVO, not Drew, brought this suit. Because PVO's status under section 107(a) is relevant to the possible apportionment of cleanup costs, I should make the determination if there is adequate evidence in the record, whether or not Drew would be entitled to such a finding in the absence of an action against it under section 107(a).

Although on the present record it appears likely that PVO is a liable party under section 107, Drew has not met its burden under Rule 56 to show the absence of a factual dispute concerning PVO's possible innocent purchaser status. Although some of Drew's contentions, such as that of PVO being engaged in the chemical business in 1971 when it purchased the property from Drew, are supported by the record, others, such as the assertion that PVO should have known that Drew had not operated with the degree of "environmental sensitivity" that is currently accepted, are unsupported. PVO's assumption of Drew's obligations under consent orders with the predecessor to DEP to abate water and air pollution, which were identified in the Asset Purchase Agreement, provide evidence that PVO "had reason to know" of contamination. However, because of the minimal discovery that has taken place and the absence of affidavits to support Drew's contentions, it is unclear whether those discharges constituted "disposal" of hazardous wastes, or whether, if the discharges did not constitute disposal, they were nevertheless enough to put PVO on notice of the contamination. Thus, Drew's motion for partial summary judgment must be denied without prejudice.

Conclusion

For the reasons discussed above, both PVO's and Drew's motions for partial summary judgment are denied without prejudice. I shall sign an appropriate form of order.

1. Specifically, those product lines were (a) marine group products, consisting of fuel oil treatments, diesel fuel oil treatments, and tank cleaners used by seafaring ships, (b) products used in the treatment of sewage and other contaminated waters; (c) automotive products, consisting of various cleaners, cooling system compounds and brake fluid formulations; and (d) paper chemical products used in the pulp and paper processing industry.

2. Among the other mechanisms for cost recovery authorized by CERCLA are actions by the federal government to abate imminent dangers to the public health and the environment by securing injunctive relief in a federal district court (CERCLA section 106), and use of a public "superfund" for the cleanup of certain priority sites where private parties do not bear the entire cost of cleanup (CERCLA section 111).

3. Although PVO concedes that it is a liable party under section 107(a) for the purposes of its motion for partial summary judgment, it opposes Drew's motion for partial summary judgment declaring PVO a liable party. Drew's motion is discussed below.