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March 20, 2001


The opinion of the court was delivered by: Henderson, District Judge.


The focus of this action is Oyster Bay Regional Park which comprises 194 acres of property fronting the San Francisco Bay in San Leandro, California. Originally used as a municipal landfill for 38 years, the site was covered and transferred to the East Bay Regional Park District ("Park District") for development into a shoreline park. Thereafter, the property became contaminated with leachate, a hazardous waste that develops when water interacts with waste. The amount of leachate at the landfill has, and will continue to, require substantial remedial efforts, which to date, have been largely borne by plaintiff, Waste Management of Alameda County, Inc. ("WMAC"), the prior owner of the site.

In 1998, WMAC brought this action against the Park District for contribution and declaratory relief pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), as amended, 42 U.S.C. § 9607, 9613, the analogous California Hazardous Substance Account Act ("HSAA"), Cal. Health & Safety Code §§ 25300 et seq., and the Declaratory Relief Act, 28 U.S.C. § 2201, 2202. The complaint also asserted a variety of state law claims that were dismissed without prejudice on April 24, 1998. In response, the Park District filed a counterclaim under CERCLA, HSAA, and the Declaratory Relief Act seeking comparable relief.

The action was tried before the Court between November 30, 1999 and January 14, 2000. Both parties contend that the evidence demonstrates that the other should be held primarily or entirely responsible for the cost of remedying the leachate contamination at the site. The parties also dispute the recoverability of costs already incurred and whether WMAC's remedial action plan for leachate control is necessary and consistent with the National Contingency Plan. Having carefully considered the testimony presented, along with the voluminous evidentiary record, and the comprehensive post-trial briefs and other submissions, the Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a).



A. Developments Leading Up to Transfer of the Landfill to the East Bay Regional Park District

Beginning in 1942, WMAC's predecessor — Oakland Scavenger Company ("OSC") — operated a 247-acre landfill at the western end of Davis Street in San Leandro, California, known as the Davis Street Landfill ("the Landfill"). The property lies on the eastern side of San Francisco Bay, approximately ¾ mile southeast of the Oakland International Airport. Most of the site is reclaimed tidal flat lands. Starting in 1949, the original landfill area was expanded by construction of a perimeter levee. The area enclosed by the levee was dewatered, and waste was placed directly on the tidal mud flats.

During its 38 years of operation — until 1980 — OSC disposed of approximately 13 million cubic yards of waste at the site, weighing approximately 6 million tons. OSC acquired the waste by providing garbage collection services for approximately 75 % of the residential and commercial population of Alameda County, California, through franchise agreements. Some industrial wastes are also deposited at the site. In 1986, WMAC acquired OSC, valued at the time at $85,400,000, and assumed all of its liabilities, including all liabilities associated with the former Davis Street Landfill.

For the years the Landfill was operational, OSC was required to obtain a use permit from the City of San Leandro ("San Leandro"). In 1970, OSC was advised that there was enough volume left in the Landfill to make it usable for another 10 to 15 years, assuming operational permits were granted. The estimate, however, was later substantially revised when the pace of dumping exceeded expectations. By the mid-70's, OSC knew the Landfill would soon reach capacity, but OSC had no ready alternative location near the Davis Street site. Instead OSC hoped to address this looming concern by building a Transfer Station on the 53 eastern acres of the site. This Station would allow OSC to crush and compact the garbage collected on local routes for transfer to the more distant Altamont landfill, thus saving the "heavy expense" of a longer direct haul of the garbage, see Def.'s Exh. 131 at 5419, with its substantially higher transportation, labor, and other costs. This plan, however, was contingent upon San Leandro agreeing to (1) re-zone the 53 acres, (2) grant a use permit for the Transfer Station, and (3) extend OSC's permit beyond its then expiration-date of 1976 so that it could continue dumping at the Landfill until the Transfer Station was operational.

At the same time, both OSC and San Leandro were aware that the residents of Mulford Gardens, a development just southeast of the site, were strongly opposed to the continued operation of the Landfill because of its odors, attraction of flies, and similar nuisances. The residents argued that the best use of the land would be for recreational purposes, emphasizing that "[h]istory shows that San Leandro's long-range development plans call for a park on that site." Def.'s Exh. 76 at 18381. OSC also knew that San Leandro was considering not extending OSC's permit, thus putting OSC in a "survival mode" according to OSC's then board member, Ronald Proto. Tr. 1654.

In mid-1976, the City of San Leandro proposed that OSC turn over 194 acres of the Landfill to the Park District for development into a shoreline park. OSC understood that such a donation was a prerequisite to San Leandro favorably viewing its plans for the Transfer Station, although the two were never officially linked. As OSC plainly acknowledged in correspondence to the Regional Water Quality Control Board ("Water Board"), "The San Leandro City Council has required, as a condition to granting a Use Permit for the Transfer Station, that Oakland Scavenger Company dedicate the 194-acre parcel for park purposes to East Bay Regional Park District, or some other park agency." Def's Exh. 131 at 5418; see also Proto Tr. 1652-53 (San Leandro "condition[ed]" permission to build Transfer Station upon donation of 194 acres). OSC also understood that, in return, San Leandro would extend OSC's permit to dump at the Landfill beyond 1976, which would alleviate its immediate dilemma. At the same time, OSC's commercial options for the landfill were limited, particularly given the permitting requirements enforced by the Bay Conservation and Development Commission.

Given OSC's predicament and the Park District's interest in making more shore-line publicly accessible, both agreed to pursue San Leandro's proposal, and the two parties jointly submitted, on July 28, 1976, a proposed letter of intent to this effect to San Leandro. The letter stated inter alia that the parties had agreed that OSC would be permitted to use solid waste as fill material to meet surface drainage and contour conditions as might be required by the Water Board and that OSC would cover the site with cover materials consistent with Water Board requirements Additional fill would also be used to build up contours needed to make the site desirable as a park. As a result of the letter of intent, San Leandro granted OSC multiple permit extensions, enabling it to continue dumping garbage at the Landfill for over four additional years, from September 1976 until December 1980. Nearby residents reluctantly agreed not to oppose the permit extensions with the understanding that the property would ultimately be developed into a park by the Park District. OSC also obtained a use permit for the Transfer Station which continues in operation to this day.

After lengthy negotiations, the Park District and OSC entered into an Option Agreement in April 1979, which provided the framework for transferring ownership of 194 acres of the Landfill to the Park District in three phases over a ten year period. See Pl's Exh. B-1 ("Agreement"). The first phase would transfer Parcels 1 and 1-A, consisting of the outer perimeter of the Site (approximately 67 acres), and the southeast portion of the Site (approximately 21 acres); the second phase would transfer Parcels II and II-A, consisting of the southern, internal portion of the Site (approximately 65.5 acres) and a small area for a service yard on the northern, internal portion of the Site (approximately 2.5 acres); and the final phase would transfer Parcel III, consisting of the northern, internal portion of the Site (approximately 37.4 acres). The Park District was not required to pay OSC any financial consideration for the property. See Agreement ¶ 2.8(a).

The Agreement further provided that OSC would take the necessary measures to cover up and "close" each of these parcels, consistent with requirements of the Water Board. See Agreement ¶ 2.3 ("OSC shall provide . . . the `cover materials' required by `the Closure Plan and in the site closure plan finally approved by the Water Board. . . .'"). The transfer of the parcels was to follow OSC's completion of these closure obligations. See Agreement ¶ 2.8. The Agreement further provided that if the Park District elected to not exercise its right to acquire any of the parcels, ownership of the entire Site would transfer to San Leandro, and if not accepted by the City, would revert to OSC. See Agreement ¶ 2.8(c). The Park District, however, exercised its option to accept ownership of all three parcels. It assumed ownership of parcel 1 in December 1982 and May 1983, Parcel 2 in August 1985, and parcel 3 in July 1990.

Leachate is a hazardous waste liquid that is formed when water infiltrates into, and interacts with, the solid and liquid waste in a landfill.*fn1 Thus, the purpose of "closing" a landfill is to provide a barrier between the waste and any water with which it might come into contact. While refuse itself has a large capacity to hold water before generating leachate, the risk of developing leachate is common in municipal landfills. In this case, the immediate proximity of the San Francisco Bay made the need for proper containment of leachate particularly critical.

Both parties were aware, during negotiations of the Agreement, that there was a risk of leachate problems developing at the site, notwithstanding the "closure" process contemplated by the Agreement. Both sides, however, refused to accept contractual responsibility for long term environmental risks. Instead, the parties dodged the issue, and essentially left it to the Water Board — which had not yet approved a closure plan at the time the Agreement was signed — to approve an appropriate closure plan and utilize its enforcement powers as it saw fit.*fn2 As detailed more fully below, the parties' concerns regarding the risk of contamination were well founded, as leachate problems began to unfold by the mid-1980s.*fn3

B. OSC's Closure Plan for the Landfill

As noted above, OSC agreed to develop and implement a closure plan at the site. At the time, such closures were governed by Water Board Resolution No. 77-7, which provided "minimum criteria" for proper "closure" of landfills, including a 3% slope requirement as well as the following standards:

1. All completed disposal areas shall be compacted and provided with a final cover of at least three feet of clean soil. A lesser thickness of final cover may be allowed upon a demonstration that, due to thorough compaction of refuse or other factors, differential settlement is likely to be minimal. At least one foot of the final cover shall be compacted to attain a permeability no greater than 10-6 cm/sec. Exceptions to this requirement may be granted upon a demonstration that equivalent protection against water penetration may be provided by other means.
4. All necessary facilities shall be provided to ensure that leachate from group 2 waste and ponded water containing leachate or in contact with refuse is not discharged to surface waters of the State.

Def's. Exh.105 (emphasis added). As OSC's site closure consultant, Richard Karn made clear, "I'm sure that [OSC][was] aware of [these requirements]." Tr. 1324. OSC also agreed to implement one of two additional "Closure Plans" (denominated Plan "A" or "B") that were designed solely for the purpose of creating a rolling topography for the park. See Agreement ¶¶ 2.3, 3.

On August 12, 1977, OSC submitted to the Water Board its proposed closure plan for the Site. In accordance with Resolution No. 77-7, the draft called for a three foot soil "cap" or "cover" which included a layer of compacted soil with a very low-permeability of 10-6 (commonly referred to as a clay cap or lining) to be topped by 12-30 inches of non-compacted, permeable soil that would provide the basic planting area for the park development. OSC also proposed to build 13 leachate monitoring wells at various locations around the Site. The proposal further noted that there was no evidence at that time of any leachate leaking. "Since the landfill is constructed on very tight Bay muds, there has been no evidence of leachate seeping into useable ground water basins beneath the site." Pl.'s Exh. C-7 at 3630.

On December 6, 1977, the same date the Park District formally endorsed this plan, OSC wrote to the Park District informing it that OSC was now proposing an alternative "water balance" method of closure. "[T]hereafter, [OSC] refused to seriously consider again the impermeable barrier plan that the [Park District] board had approved." Black Tr. 1837.

Instead of relying on an impermeable clay layer to prevent water from infiltrating into the landfill, the water balance method depends on the absorptive capacity of the soil used to cover the landfill to soak up rain and moisture and prevent leachate from building up and leaking out. As OSC explained in its revised closure proposal:

For a specific type and thickness of soil, a specific storage capacity can be determined. When that capacity is exceeded, water will percolate into the refuse beneath the earth cover. In the dry months, evapotranspiration will exceed the precipitation and water will be withdrawn from the soil. The ideal situation exists when the amount of soil cover is sufficient to store the maximum amount of precipitation without allowing percolation [of rain] into the refuse.

Def.'s Exh. 122 at 15208. OSC learned of the water balance approach, through its consultants, from a 1975 EPA publication entitled "Use of the Water Balance Method for Predicting Leachate Generation from Solid Waste Disposal Sites." OSC knew that this method was then new and largely untested in the field. And while OSC's consultants, Bissell & Karn, told OSC that this new approach looked logical, they never guaranteed to OSC that their particular water balance proposal would work. Nor did they have any prior experience with this approach.

WMAC suggests that OSC's decision to switch from a clay cap to a water balance approach was motived solely by a desire to accommodate the Park District's planting needs. Read fairly as a whole, however, the record reflects only that the Park District wanted to make sure that, if a clay cap was used, that sufficient top soil be available for planting as needed. WMAC's alleged motive is further belied by the fact that while the Park District approved OSC's original clay cap plan, it never approved the water balance plan. Indeed, based on its own review, the Park District's concerns were so serious that the two parties were "at absolute loggerheads about that, the change in the proposal for the cover." Black Tr. 1838.*fn4 While the Park District ultimately agreed to go forward, it never endorsed the water balance method and instead agreed to simply stay "neutral," with the expectation that the Water Board would adequately handle all issues relating to the closure.*fn5 Given the above, WMAC's explanation for its cover choice is simply not credible. Rather, while the evidence is indirect, the Court concludes that OSC's decision to pursue the water balance plan was driven more by its cheaper price tag rather than a desire to accommodate the Park District.

On October 17, 1978, the Water Board issued its first order relating to closure of the site, No. 78-84. The Order, directed to OSC, stated in part that "The discharger shall submit a site closure plan to the Board which shall conform to Resolution No. 77-7 . . ." Def.'s Exh. 137 at 7564. The Order further reiterated that "leachate from Group 2 wastes and ponded water containing leachate or in contact with refuse shall not be discharged to waters of the State." Def.'s Exh. 137 at 7563.

Shortly thereafter, on January 31, 1979, OSC submitted its revised closure plan to the Water Board based on the water balance method. Since this method violated the specific requirements of Resolution 77-7, given the absence of a low-permeability (10-6) cap, OSC relied on the provision that "[e]xceptions to [the requirements] may be granted upon a demonstration that equivalent protection against water penetration may be provided by other means." Def.'s Exh. 105 at 180.

OSC's proposal called for 3 feet of cover (consisting of 6 inches of "daily cover placed during daily operations, topped with 2 feet-6 inches of soil wheel-rolled for compaction"). Assuming the use of sandy or silty loam soils, the proposal represented that "[t]he basic three feet of cover has been determined to be adequate to prevent the infiltration of excessive rainfall and the build-up of leachate in accordance with the water balance method." Def.'s Exh. 146 at 1144. The proposal also anticipated that the Park District would place additional fill in certain areas to accommodate park planting needs. OSC's representation regarding the adequacy of their plan assumed both a 3 percent slope (to promote runoff), and average rainfall at the site. Notably, however, the EPA publication that discussed the water balance approach warned that reliance on average rainfall may be risky:

[W]hile the average year might indicate a relatively minor leachate problem requiring little or no leachate control measures, an above average year may result in an entirely different assessment of the problem. Therefore, the engineer may wish to base his design on monthly precipitation values higher than the average values in order to provide a factor of safety in the estimation of leachate flow.

Def.'s Exh. 71 at 23. OSC, through its consultants, Bissell and Karn, suggested to the Water Board, however, that using average rainfall data in this instance would not be risky, despite the fact that the San Francisco Bay Area periodically experiences intensely rainy years, commonly referred to as "El Nino" years.*fn6 Thus, its proposal to the Board stated only that:

Naturally . . . climatic factors vary each year so it was decided to design the landfill cover to meet the average conditions as specified by the [Water Board] staff. In the event that more precipitation occurs, some small amount of water may percolate into the refuse. However, the refuse itself has a large capacity to hold water before generating leachate. The intent of this design is to prevent the increase in the amount of leachate already in existence in the landfill.

Def.'s Exh. 146 at 1152.

On August 5, 1980, the Water Board issued Order 80-37, amending but not replacing Order No. 78-84. That order found that OSC's closure plan did not conform to Resolution 77-7, as required, because it "[did] not call for an impermeable cover . . ." Def.'s Exh. 178 at 3697. The Water Board concluded, however, that OSC could "mitigat[e]" this non-compliance "with the installation of a leachate monitoring and collection system." Def.'s Exh. 178 at 3697. Accordingly, the Water Board ordered OSC to "install a leachate monitoring and collecting system in accordance with plans contained in the Closure Plan Supplement of June and July 1980." Def.'s Exh. 178 at 3698. The 1980 Order also stated that with respect to non-drip irrigation, OSC must, at least 120 days prior to the start of irrigation, submit a report evaluating the available leachate monitoring well data. "This report should address the need for additional leachate monitoring wells." Finally, the Order required that OSC "complete site closure" by December 1, 1981. Def.'s Exh. 178 at 3698.

OSC's plan for mitigating the lack of an impermeable cover for the site — referred to above as the "Closure Plan Supplement" — consisted of two letters, dated June 6, 1980 and July 11, 1980, that had been submitted in response to specific Water Board concerns that the non-drip irrigation needs of the Park would require additional precautionary measures. However, as Karn testified at trial, he knew that leachate buildup was a possibility even in the absence of any special Park District irrigation and that was why he developed the supplemental system, "that, and that [] of course, was the concern of the [Water Board] also. So for those reasons we put in the monitoring system [into the proposal] . . . [in case] anything went wrong." Tr. 1350-51. In short, Karn explained, if the water balance calculations proved wrong, one of the backup solutions would be a leachate control system.*fn7

In its mitigation plan, OSC represented that it had chosen to "build[] a leachate collection and disposal system" which would consist of additional wells placed at 1,000 foot intervals that would be "used for pumping purposes as well as monitoring." Pl.'s Exh. C-17 at 3684 (emphasis added). While OSC did not explicitly discuss the method of disposal of any pumped leachate, it attached a rough illustration that showed, along with locations for the proposed seven new wells, two bold lines that appear to be pipelines that would allow excess leachate to be pumped out of the site. The notations on the drawing state "possible discharge to sanitary system in Neptune Drive" and "Possible portable pump discharge line to sanitary system in Davis Street." Pl.'s Exh C-17 at 3686. As Karn explained, "I think that probably what we were showing or what was attempted to be shown here was a method of disposing of the leachate. Yes, because it's going to a sanitary sewer system." Tr. 1350.

The mitigation plan was somewhat vague on when pumping would commence. Karns testified, however, that he had advised OSC that "leachate collection should begin" once leachate reached 8 feet mean sea level ("MSL"). Tr. 1354, and that OSC "accepted" this suggestion "as a general matter." Tr. 1356. This is consistent with the mitigation plan's assertion that the existing dike has "a safe containment elevation of 8 feet MSL." Pl.'s Exh. C-17 at 3685. A 1988 OSC internal memo interpreted the closure plan slightly differently — as requiring implementation of "leachate control (i.e. evacuation) if leachate levels in the site's leachate wells exceed 7.5 feet MSL." Def.'s Exh. 257 at 43769. In any event, at trial Karns eventually confirmed, despite his often evasive testimony, that he had advised OSC that it was "their responsibility . . . [] to protect the waters of the state," and that "the closure plan would have to provide for leachate pumping if monitoring showed that was necessary," and "leachate disposal if monitoring showed that was necessary." Tr. 1351-52. In short, "if the water balance was wrong, and leachate built up" OSC would have "to take care of it." Karns Tr. 1351. Indeed such understanding was fully consistent with the Water Board's 1978 order to OSC that "Leachate from Group 2 wastes and ponded water containing leachate or in contact with refuse shall not be discharged to waters of the State." Def.'s Exh. 137 at 7563.

The mitigation plan originally stated that OSC would design the leachate control system immediately but construct it "when and if the leachate level reaches an elevation of 7.5 feet MSL." Pl.'s Exh. C-17 at 3685 (June 6, 1980 letter). In its subsequent July 11, 1980 letter, however, OSC stated that it would install the monitoring and pumping wells "prior to December 31, 1980" without any reference to mean sea levels. Pl.'s Exh. C-19. In any event, the mitigation plan clearly represented that the monitoring and pumping wells would be installed in time to "be used to monitor the leachate level in the landfill and to assure that it did not reach elevations which would cause overtopping of the surrounding levee." Pl.'s Exh. C-19 at 3693.

C. Implementation of the Cover Requirements

OSC covered the site between 1980 and 1983, using 1 million cubic yards of soil of varying types. Given that the water balance approach relies on the moisture storage capacity of the soil, use of soil that contains the required absorptive properties is essential. As Karn acknowledged, "You had to put the right soil on." Karn Tr. 1316.

As WMAC emphasizes, Lewis Crutcher, Chief of Planning and Design at the Park District, who came out to the site "probably once a week," Bickford Tr. 1417, reported that OSC has "done a remarkable job in engineering their garbage into the contours of the District's plan and that the cover material being put on by [one source] Gallagher & Burk is the overburden from a quarry and is beautiful cover material." Pl.'s Exh. C-24 at 22939. On the other hand, the evidence shows that not all of the soil — which was brought in by dozens of truckloads each hour — was the high moisture capacity silty or sandy loam. A detailed analysis of the site commissioned by WMAC in 1996 found that the "soil materials that constitute the landfill cover are highly variable" and consist of, in addition to clays and silty sand and loam, the more porous "gravelly sand, and sandy gravel." Jt. Exh. 1 at 104 ("Rust Report"). Consistent with this finding, the Rust report also noted that "[r]ecovery [of samples] was variable due to coarse gravels and occasional cobbles in the landfill cover material which damaged the thin walled Shelby tubes, thus hampering recovery." Jt. Exh. 1 at 614-15.

Anecdotal evidence also indicates variability in the quality of the cover. Ralph Bickford, an OSC consultant, recalled that OSC employees told him that there were rocks in some of the material and that some of the soil "wasn't as good as they expected." Tr. 1408; see also id. at 1422 ("I would say it included rock[s]."). Crutcher had also previously noted that some of the material OSC had stockpiled for the cover "is observed to be filled with sharp rocks, some quite large and questionable for use. . . ." Def.'s Exh. 109 at 18589. A photogrammetry analysis of a 1983 aerial photograph of the site also shows that 52 acres, or roughly 25 percent of the site, did not meet the 3% percent slope requirement set forth in OSC's closure plan.

Water Board representatives inspected the site on July 27, 1981, January 7, 1983, and January 30, 1984 and reported no problems. In December 1983, OSC notified the Water Board that it had completed construction of the seven new leachate wells and asked for final approval of the closure. In June 1984, the Water Board notified OSC, that based on letters submitted by Bissell and Karn, and a site inspection, it had determined that compliance with closure requirements had been achieved. The Water Board's decision does not appear to consider the fact that while OSC had installed seven wells that could be used for pumping, without any conveyance structures they were pumps with no place to go, and thus the site still lacked any system for collecting or otherwise disposing of excess leachate.

Since 1983, when OSC finished covering the site, the Park District has developed 10 acres of parcel II into a park, that includes trails and picnic areas, along with a perimeter, shore-line trail along nine acres of parcel I.

D. The Development of Leachate Contamination and the Parties' Responses

(1) 1983 — November 1994

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