United States v. Seymour Recycling Corp.

No. IP 80-457-C (S.D. Ind. December 15, 1982)

The court approves, with minor modification, the proposed consent decree between the Environmental Protection Agency, the State of Indiana, and 24 companies that provides for the surface cleanup of the Seymour Recycling site in Indiana.The court finds that the decree is not only legal, but serves to encourage compliance with the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the Resource Conservation and Recovery Act (RCRA), and the Federal Water Pollution Control Act (FWPCA). After noting that there were no objections to the fairness of the decree with respect to the rights and obligations of the consenting parties, the court finds that the decree is not unfair to companies not parties to the decree who shipped 50 percent of the hazardous waste to the site and are being asked, in separate negotiations with the federal government, collectively to pay $15 million for groundwater cleanup at the site. The fact that the total sum of the "cash out" proposal to those companies is greater than the sum being paid by the consenting parties does not render the decree unfair to the nonconsenting companies. In addition, acceptance of the "cash out" proposal by at least 140 of the approximately 300 companies is evidence of the fairness of that proposal.

Next, the court finds that the decree is reasonable, based upon (1) the need to expeditiously abate the hazardous conditions at the site, (2) the unavailability of any other plan to accomplish a prompt surface cleanup, (3) the technical adequacy of the cleanup plan, (4) the fact that the decree furthers the goals of CERCLA, RCRA, and the FWPCA, and (5) the long-range public interest in settling hazardous waste cases. Therefore, the court approves the consent decree as proposed, subject to a modification in Paragraph XI to require the companies to preserve, "pending further Court order," records and documents relating to Seymour Recycling Corporation

Counsel are listed at 13 ELR 20192.

[13 ELR 20195]

Steckle, J.:

Memorandum

This matter comes before the Court for consideration of a proposed Consent Decree which the United States has lodged with [13 ELR 20196] the Court. The proposed Consent Decree provides for a surface cleanup of the approximately 60,000 barrels of toxic chemicals, bulk storage, and contaminated soil at the Seymour Recycling Site in Seymour, Indiana.

The United States filed the original complaint in this action on May 19, 1980, alleging violations of Section 7003 of the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6973 and Section 311 of the Clean Water Act (CWA), 33 U.S.C. § 1321 against various parties including those who owned and opperated the Seymour Recycling Site. Named defendants answered the complaint, and discovery proceeded.

On October 26, 1982, the United States filed with this Court an amended complaint adding additional allegations as to the original defendants under the Comprehensive Environmental Response, Compensation, and Liability Act (known as "CERCLA" or "Superfund"), 42 U.S.C. § 9606 and § 9607, enacted after the filing of the original complaint. In addition, the United States named in the amended complaint 24 new defendants, who are alleged to have "generated and caused to be transported solid and hazardous wastes and hazardous substances to the Seymour Site for handling, storage, treatment, or disposal." Motions to intervene were filed by the State of Indiana and the County of Jackson on October 26, 1982. On the same day the United States, the State of Indiana, the County of Jackson, Indiana, the City of Seymour, Indiana, the Board of Aviation Commissioners of Seymour, Indiana, and the 24 companies who were the new defendants added by the amended complaint filed a proposed Consent Decree with the Court.

This Consent Decree provides a mechanism by which the surface cleanup of the Seymour Recyling Site may promptly occur. The Decree provides that each of the 24 companies shall, within 15 days after the entry of the Decree, pay to the Seymour Site Trust Fund, established at a bank in Indianapolis, the sum for that company which is shown in Exhibit A to the Decree.¹ The Trustees of the Fund shall use the money in the Trust Fund to pay Chemical Waste Management, a firm specializing in hazardous waste removal, to perform the surface cleanup at the Seymour Site. The precise scope of work to be down by Chemical Waste Management is set forth in detail in Exhibit B to the Consent Decree. The Decree also provides that Chemical Waste Management shall be responsible for the completion of the work regardless of its ultimate actual cost and that Chemical Waste Management shall purchase a performance bond in the amount of $15,000,000, which bond shall further assure completion of the work. The Decree specifies the obligations of Chemical Waste Management to purchase and to maintain in force insurance policies to protect the United States, the State and the public. It is contemplated that this project shall take approximately one year to complete. The Decree provides for continuing observation and monitoring of the progress of the work by the United States and the State as well as their approval of the satifactory completion of the work.

The Decree contains a provision requiring the preservation of documents relating to their business transactions with Seymour Recycling Inc. by the 24 companies. It contains a provision by which the United States, the State and the local governments covenant not to sue, execute judgment or take any civil judicial or administrative action against the 24 companies.

At the time of lodging, the Court set a hearing on the Consent Decree for November 10, 1982. On October 29, 1982, pursuant to its regulations published in 28 CFR 50.7, the United States Department of Justice published notice in the Federal Register, 47 Fed. Reg. 49107, of the lodging of the Consent Decree and invited public comment on it. The public comment period which is normally thirty (30) days was shortened to ten (10) days, pursuant to these regulations, because in the judgment of the Department of Justice there was a need to begin the surface cleanup expeditiously to abate a serious public health hazard because the advent of winter in the Seymour area could adversely affect the ability of the contractor to begin work at the Site.

In response to the Federal Register notice, comments were received from sixteen corporations. No comments were received from any individual citizens. On November 10, the United States filed with the Court copies of comments which is had received as well as its Response to those comments.

At the November 10 hearing, the United States explained the background to the Decree, and all interested persons, including those who were objecting to the entry of the Decree and were not a party in the action, were provided with an opportunity to participate in the hearing and to present their various positions to the Court. At this hearing, representatives of several objecting companies made statements to the Court. At the conclusion of the hearing the Court indicated, in response to objections that the comment period was too short, that the period for public comment would be extended to November 26, 1982, and that a further hearing would be scheduled by the Court for November 30. Several additional comments were received during this period. These were filed with the Court along with the Response of the United States to the Comments.

At the hearing on November 30, the Court once again permitted all interested persons, including those who were not parties in the action, to participate and to present any objections which they might have to the Decree. Again, several objectors made statements to the Court. There were no requests made for formal intervention, notwithstanding the government's statement that it would not oppose such intervention. Those participating in the hearing on November 30 included, in addition to the United States, representatives of the City of Seymour and the Seymour Aviation Board, the State of Indiana, the Seymour Chamber of Commerce, the League of Women Voters of Seymour, representatives from companies within the group of 24, and representatives of companies opposing the decree. The United States presented sworn testimony from an official of Chemical Waste Management, from an official of the Environmental Protection Agency of the United States Government, and from two officials from the State of Indiana. An opportunity was provided for cross-examination of these witnesses. Finally, in addition to the materials submitted by the Department of Justice and the information presented at the hearings on November 10 and November 30, a number of comments about the Consent Decree were submitted directly to the Court. The United States filed its Supplemental Response to Comments as it is required to do so by its regulations. See 28 C.F.R. 50.7. After consideration of the comments, the United States continues to advocate the entry of the proposed Decree and gives its consent to the entry of the Decree.

The Court has concluded, based upon a careful review and consideration of all the information presented to it, that the Court should approve the Consent Decree. The surface cleanup authorized by this Decree is a very valuable and important part of the overall cleanup of the Seymour Site, which is in the public interest and particularly in the interest of those citizens affected by the Site. The Court is persuaded that time is of the essence in commencing this cleanup before the onset of winter. Accordingly, this cleanup should proceed as promptly as possible without any further delay.

In deciding whether to approve a proposed decree, a court must inquire whether the decree is consistent both with the Constitution and with the mandate of Congress. See United States v. Ketchikan Pulp Co., 430 F. Supp. 83, 86 [7 ELR 20369] (D. Alaska 1977); United States v. Hooker Chemicals and Plastics Corp., 540 F. Supp. 1067, 1072 [12 ELR 20701] (W.D.N.Y. 1982). Second, the court "must assure itself that the terms of the decree are fair and adequate." See United States v. Hooker Chemicals and Plastics Corp., 540 F. Supp. at 1072. Finally, the court must inquire whether the settlement is a reasonable one. See In re Corrugated [13 ELR 20197] Container Antitrust Litigation, 659 F.2d 1322, 1325 (5th Cir. 1981), cert. denied, 102 S. Ct. 2283 (1982), cert. denied, 102 S. Ct. 2308 (1982). The underlying purpose of the court in making these inquiries is to determine whether the decree adequately protects the public interest. United States v. Ketchikan Pulp Co., supra, 430 F. Supp. at 86. The court "must eschew any rubber stamp approval in favor of an independent evaluation," United States v. Hooker Chemicals and Plastics Corp., supra, 540 F. Supp. at 1072, but because of the clear public policy favoring settlements the court must not substitute its judgment for that of the parties. See Airline Stewards v. American Airlines, 573 F.2d 960, 963 (7th Cir.), cert. denied, 439 U.S. 876 (1978).

(1) Legality. With regard to the factors of legality and constitutionality, no objection has been raised to the entry of the Decree. Those statutes under which the amended complaint has been filed empower the United States to bring enforcement actions. See 42 U.S.C. § 9606, 42 U.S.C. § 6928, 42 U.S.C. § 1321(e). Furthermore, the authority of the United States and the Attorney General to compromise during litigation is well established. United States v. Hooker Chemicals and Plastics Corp., supra, United States v. Ketchikan Pulp Co., supra. Here the Consent Decree is not violative of any law; indeed, if furthers compliance with the statutes under which the action was brought, most particularly with Superfund. In addition, all of the parties to the Decree have consented to the jurisdiction of the Court for the purpose of this Decree.

(2) Fairness. With respect to the rights and obligations of the parties consenting to the Decree, there is no objection as to fairness. All of these parties have urged its entry. This Court has, however, looked beyond the parties consenting thereto and considered the arguments raised by non-parties, both in comments filed with the Department of Justice and in arguments presented to this Court that the entry of the Decree is unfair to them. However, no objecting party requested an opportunity to intervene in this action to offer any evidence of alleged unfairness nor asked to cross-examine any witness.

No citizen of Seymour has objected to the entry of the Decree. However, the unfairness issue has been raised by companies who also generated and/or caused to be transported hazardous waste to the Seymour Site, but who are not included within the group of 24 companies who are a party to the Consent Decree. These objecting companies argued to this Court that the 24 companies who are parties to the Consent Decree and who shipped approximately 50% of the waste to the Site will be paying $7.7 million for the surface cleanup, while the remaining more than 300 companies who shipped the other 50% of the waste to the Site are being asked to pay in separate settlement negotiations with the United States, which are unrelated to this Consent Decree, the sum of $15 million for groundwater cleanup at the Site. The Court has considered carefully and in detail the arguments being advanced by these objectors. It has decided, however, to reject these arguments on the basis of the evidence presented to the Court and arguments by counsel for the United States and for one of the 24 companies.

These facts show that the United States, mindful of its responsibility to clean up the Seymour Site in an expeditious manner in the public interest, decided to split the task into two separate parts, each of which the United States estimates comprises approximately one-half of the work required to achieve a total clean-up of the Site. The first of these parts is the cleanup of the surface at the Site. The evidence presented demonstrated that this surface cleanup must necessarily proceed before any subsurface or groundwater cleanup because only when the barrels have been removed from the Site will it be possible to clean-up the subsurface. Moreover, the evidence showed that the continued presence of leaking barrels of waste on the surface will exacerbate any groundwater contamination.

The group of 24 companies came to the United States with a proposal by which they would arrange with a contractor to perform the surface cleanup in accordance with specifications agreed to by the companies, the United States and the State, regardless of the cost of that work and regardless of cost overruns. Specifically, the Consent Decree provides a $7.7 million cash fund plus a $15 million completion bond for a total cash fund of $22.5 million to pay for completion of the work described in Exhibit B to the Consent Decree. In addition the United States may look to the contractor's assets to require completion of the work, and the contractor is obligated by the terms of the Decree to complete the surface cleanup set forth in Exhibit B to the Decree regardless of its ultimate cost.

At the same time, the United States has set in motion, through negotiation, a procedure by which each of those companies who sent waste to the Site, but are not parties to the Consent Decree may pay a fixed sum of money, based upon the volume of material which they sent to the Site, and thereby obtain a covenant not to sue by the United States. This is a "cash out" proposal which does not require these parties to arrange for the performance of any work. While in total the sum being asked from those who are not a party to the Consent Degree is greater than the sum being paid by the 24 who are parties to the Decree, this does not render the government's approach unfair to any parties. Those who are parties to the Consent Decree took upon themselves the obligation to hire the contractor and to develop a work proposal by which the surface cleanup is to be completed without active management (but with monitoring) by the United States and without respect to cost. Those companies who are not parties to the Decree have a number of choices. They may accept the government's offer for a cash settlement in return for a covenant not to sue; they may try to form a group of their own to deal with the groundwater cleanup in a manner comparable to that dealt with by the 24 companies with respect to the surface; or they may choose to litigate with the United States in which case they may end up with a smaller payment on a proportional basis than those who are in the group of 24.

One of the factors that the Court found persuasive on this issue of unfairness is that by the time of the November 30 hearing approximately 140 companies of those not part of the group of 24 decided to accept the government's "cash out" offer. Their total sum of payment will be in excess of $3 million. To the Court, the large number of acceptances of the government's "cash out" offer indicates that this offer was not unfair and that the government was dealing fairly with those who were not parties to the Consent Decree.

There is a public interest in encouraging parties to come forward first in an effort to settle enforcement cases. This is consistent with the general policy favoring the compromise of claims.

Finally, with respect to the fairness issue, no evidence, such as sworn testimony (as opposed to written statements or arguments of counsel) was ever presented to the Court on this issue by the objectors. Based upon the record before the Court as a whole, the Court finds that the United States has not dealt unfairly with those companies who are not parties to the Consent Decree.

(3) Reasonableness. In considering the reasonableness of the Consent Decree, the Court has considering five factors: (1) the nature and extent of the potential hazards at the site; 2) the availability and likelihood of alternatives to the Consent Decree which would result in cleanup of the surface of the site; 3) the adequacy of the technical proposal of the work which will be undertaken; 4) the extent to which the Consent Decree furthers the goals of the statutes which form the basis for this litigation; 5) the extent to which the Court's approval of the Consent Decree is in the public interest.

At the hearing on the Consent Decree, the United States presented the testimony of Beverly Kush, employed as on-scene coordinator for the Seymour Site by the United States Environmental Protection Agency, James Hunt, Division of Land Pollution Control of the Board of Health of the State of Indiana, David Lamb, Director of the Division of Land Pollution Control of the Board of Health of the State of Indiana and Raymond W. Bock, Director of Sales and project supervisor for Chemical Waste Management, Inc. which will perform the actual cleanup work at the Seymour Site. No other evidence was presented by any other party or participant in the hearing. No one chose to cross-examine the government's witnesses.

The unrebutted testimony of Kush, Hunt and Bock established that there are approximately 60,000 barrels of hazardous chemicals, numerous bulk storage tanks and laboratory chemicals present at the Seymour site. Although fenced, the site is relatively unsecure [13 ELR 20198] and is susceptible of vandalism or easy entry. The site is located within one-half mile of a residential area which depends on wells for drinking water. The runoff of rainwater from the site flows into a drainage ditch which leads off the site and ultimately connects with the East Fork of the White River. Beverly Kush testified that the flow of underground water in the aquifer beneath the site is away from the site towards the residential drinking water wells and the White River.

Through the testimony of Hunt, Bock and Kush the government established that the drums on the site were in an extremely deteriorated condition. The witnesses estimated that between 35-75% of all drums on site were corroded and rusting and were leaking materials into the ground. Government's exhibits 1-27 (a video-tape and twenty-six slide photographs of the site) graphically depicted the dilapidated condition of the barrels on the site.Through the testimony of Hunt and Bock the government showed that the conditions of the barrels had significantly deteriorated during each of the past two years. Kush and Hunt testified that, in their opinions, the site presented an immediate, substantial endangerment to public health and the environment and that fire, explosion and groundwater contamination were possible hazards which the conditions at the site could cause.

In the opinion of Kush, Hunt and Bock it is essential that the surface cleanup of the site begin as expeditiously as possible. Bock testified that delaying the beginning of the project until the on-set of winter would make timely completion substantially more difficult if not impossible. He further testified that if frozen ground conditions occurred before the initial site preparation (such as road grading and construction of barrel crushing facilities) was completed, the cleanup activities would in all likelihood not be able to begin until Spring of 1983. Hunt, Kush and Bock all testified that many of the barrels might not withstand another winter at the site and that the condition of the barrels was continuing to deteriorate and would do so if allowed to remain on site.

The Court is persuaded that clean-up of the surface of the site must start as soon as possible to protect against the potential hazards testified to by Kush, Hunt and Bock. The court is very concerned that delay in clean-up will exacerbate the potential for groundwater contamination from the leakage and spillage of chemicals and other substances onto the surface of the site. The government's evidence showed that chemicals and substances which are spilled on the ground at the site may and are getting into groundwater under the site. The Court believes that a prompt cleanup of the surface coupled with analysis of the potential groundwater contamination is essential to the protection of public health and the environment. Kush and Hunt testified that both the federal and state governments place high priority on the determination of the existence and scope of groundwater contamination and the undertaking of the appropriate remedy for it. Both testified that completion of groundwater studies and implementation of a groundwater remedy cannot take place until the surface cleanup is completed. Accordingly, the Court finds the hazardous conditions at the site require an expeditious cleanup of the surface of the Seymour site.

Through the testimony of David Lamb from the Board of Health of the State of Indiana the government established that the State of Indiana lacks any fund with which to match federal expenditures at the site which could come from the Hazardous Response Trust Fund (or "Superfund"). Matching funds are required under Section 104(c)(3) of the Statute, 42 U.S.C. 6904(c)(3). Mr. Lamb testified that the earliest time the State could realistically expect to provide as much as $1 million in matching funds would be the summer or fall of 1983. Matching funds in the amount of $3.5 million would, in Mr. Lamb's opinion, be available no sooner than the summer of 1984. Ms. Kush from EPA testified that no Superfund monies were available to undertake the surface clean-up. Thus, it appears to the Court that the expenditure of funds under authority of Superfund is not a viable alternative to the Consent Decree as a method of insuring expeditious cleanup of the surface of the site.

The Court judicially notices, and it is the unrebutted testimony of Kush and Hunt, that prior to the clean-up plan embodied in the Consent Decree, no plan insuring full cleanup of the surface had been forthcoming from any party to the litigation or any other persons, other than a temporary, emergency action by EPA. No objecting party could assure the Court that the surface clean-up could promptly be accomplished through any other mechanism that the Consent Decree. Government counsel represented to the Court that previous negotiations for cleanup had proved unfruitful. The oral and written representations of counsel for both objecting parties and counsel for one of the defendants which are parties to the decree confirm the past failure of negotiations.

No party disputes the technical adequacy of the plan for surface cleanup. The testimony offered by the government from Kush, Hunt and Bock convinces the Court that the plan submitted to the Court is acceptable to the state and federal agencies charged in the first instance with assuring that the proposal is adequate to protect public health and the environment. The Court has satisfied itself through expert testimony that the plan is adequate to accomplish the surface cleanup of the site consistent with the protection of public health and the environment which are the goals of the Resource Conservation and Recovery Act (RCRA); Comprehensive Environmental Response, Compensation and Liability Act and the Clean Water Act.

In addition, the Court has determined that the approach taken here by the United States with respect to hazardous waste cases generally is reasonable from the standpoint of the longrange public interest. It is desirable to settle such cases, without the necessity for litigation.

In considering the reasonableness of the approach taken by the government, the Court has inquired of counsel as to how the group of 24 was developed. The Court is satisfied that the approach taken by the government in negotiating with this group was a reasonable one, having in mind the statutory goals of Superfund. Counsel has represented to the Court the following: As a part of the surface cleanup the 24 companies have created a Trust Fund utilizing a Trust Agreement as their legal mechanism and that IBM, General Motors, Cummins Engine and Merchants National Bank & Trust Company of Indianapolis will be the Trustees. The purpose of this Trust Agreement is to provide for the creation of the Fund which will make payments to Chemical Waste Management to perform the work described in Exhibit B to the Consent Decree. In this regard, the Trust Fund has an agreement with Chemical Waste Management to perform the work described in Exhibit B. This agreement contains a schedule for payments to Chemical Waste Management, and it establishes rights and responsibilities as between Chemical Waste Management and the Trust Fund. The purpose of both of these agreements is to create a funding mechanism to insure prompt completion of the work. Neither the United States nor the State is a party to either of these two agreements. There is a further agreement being negotiated between the United States and the City of Seymour and the Seymour Aviation Board pertaining to the covenant not to sue being given to those companies who are not a party to this group of 24. Counsel has represented to the Court that the United States has no other agreements with the 24 consenting companies listed in Exhibit A to the Consent Decree concerning the cleanup of the Seymour Site.

Under the standards enunciated above, the Court finds that the government's action in entering into this decree is reasonable and is in the public interest. In reaching this determination, the Court has particularly considered the need to abate the hazardous conditions at the site as expeditiously as possible and the unavailability of any other prompt plan to undertake the cleanup.

In its review of the Consent Decree, as originally filed with the Court, the Court observed that the Decree provided that the 24 companies were required to preserve records and documents relating to Seymour Recycling Corporation only for a six month period after the effective date of the Decree. In response to a proposal by the Court, the companies agreed to modify that provision (which is in Paragraph XI of the Decree) to require that the companies will each preserve "pending further Court order" records and documents relating to Seymour Recycling Corporation. By this modification of the Decree, the Court has insured the availability of documents and records should a discovery request be made for them in the ongoing litigation with those who are not a [13 ELR 20199] party to the Consent Decree. Of course any party to whom a request for the production of documents is made may assert any claims which he has under the Federal Rules of Civil Procedure.

In summary, for the foregoing reasons, the Court believes that the Consent Decree (as modified in Paragraph XI), is in accordance with the public interest. It satisfies the requirements of legality, fairness and reasonableness. Accordingly, the Court has this date signed and entered the Consent Decree.

1. The 24 companies and the amount which each shall pay is as follows: International Business Machines Corporation — $2,241,001; General Motors Corporation — $1,032,961; E.I. du Pont de Nemours & Company, Inc. — $682,805; General Electric Company — $665,297; Western Electric Company, Inc. — $385,172; United Technologies Corporation — $350,156; Atlantic Richfield Company on behalf of The Anaconda Company, Anaconda Wire & Cable Company, Anaconda Aluminum Company, Anaconda Industries, and Anaconda Magnet Wire — $245,109; Borg-Warner Chemicals, Inc. — $245,109; RCA Corporation — $175,078; Bemis Company, Inc. — $175,078; Ford Motor Company — $175,078; Whirlpool Corporation — $140,062; McDonnell Douglas Corporation — $105,047; Dow Corning Corporation — $105,047; Pennwalt Corporation — $100,000; Owens-Illinois, Inc. — $100,000; The Procter & Gamble Company — $100,000; General American Transportation Corporation — $100,000; American Can Company — $100,000; Olin Corporation — $100,000; AM General Corporation — $100,000; Cummins Engine Company, Inc. — $100,000; NCR, Corp. — $100,000; Waste Resources of Tennessee, Inc. (an affiliate of Chemical Waste Management, Inc.) — $100,000.