Seventh Circuit Allows Claims Splitting in Downers Grove Environmental Case

The U.S. Court of Appeals for the Seventh Circuit recently issued an opinion reversing the trial court's dismissal of Arrow Gear Co. v. Downers Grove Sanitary District, Nos. 90-1509 & 09-4030, which concerned the Ellsworth Industrial Park Superfund Site in Downers Grove, Illinois. 

In 2004, a class action lawsuit (Muniz v. Rexnord) was filed on behalf of area residents alleging that their groundwater had been contaminated by companies in the Ellsworth Industrial Park.  The Muniz lawsuit asked for damages, mainly for impairment of property values.  The defendants agreed with the plaintiff class to a settlement of approximately $16 million, and the defendants agreed to settle contribution actions that they had against each other.

While the Muniz case was pending, Arrow Gear filed a separate action for contribution under the Superfund statute against several companies for, among other things, payment of hooking up Downers Grove residents to Lake Michigan water.  Some of those companies were also defendants in the Muniz class action case.

Once the Muniz case was dismissed with prejudice as a result of the class action settlement, the defendants in the Arrow Gear case argued that the Muniz dismissal was res judicata because Arrow Gear arose out of the same facts as Muniz (the groundwater contamination caused by the leakage of industrial solvents at the Ellsworth Industrial Park).  The district court agreed and dismissed the case.  The Seventh Circuit reversed and ruled that the Muniz dismissal was not res judicata:

"Coming finally to the merits, we face the adamant insistence by the defendants that a dismissal with prejudice bars, by principles of res judicata, a further suit arising from the same set of facts, regardless of what the parties intended.  This is false.  Litigants who want to split a claim among different suits can do so (subject to a qualification about to be noted). . . .

"When the Muniz case was settled, the EPA, moving with the majestic deliberateness characteristic of government agencies, was still investigating contamination by the firms that had been defendants in that case (which include Arrow and Precision) and was expected to impose additional costs on them, and may continue doing so because its investigative activities have not concluded.  Already it is seeking $1 million to reimburse it for the cost of investigating.  And because the Muniz settlement did not address the contamination of the class members' water supply, the defendants in that suit have, separately from the $16 million settlement of the Muniz suit, agreed to connect the houses of the class members to another water-supply system at a cost of some $4 million.

"It would have been difficult to settle all possible claims by the cross-claiming defendants before their total liability was determined.  So claim splitting-allocation of the $16 million first, and of the additional $5 million (which will doubtless grow) second-made sense, and the district court should not have forbidden it.  True, the order dismissing Muniz had not mentioned the settlements, and some of them had postdated the dismissal.  But as parties to the settlements the defendants were bound by them regardless of when they were made and whether they were mentioned in a judicial order."

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

City of Chicago to Pay $220,380 to Settle Superfund Claims by EPA for 76th & Albany Site

The U.S. Environmental Protection Agency recently announced in a Federal Register notice that it entered into an administrative agreement with the City of Chicago concerning the 76th & Albany hazardous waste site in Chicago, Illinois.

According to this presentation from the City, the site (now known as the Gateway Park Industrial Complex) "had been the home of a drive-in theater and a flea market after the mid-1900s.  From 1980 to the mid-1990s, 600,000 cubic yards of concrete, asphalt, construction and demolition debris, soil, rubbish, and hazardous automobile shredder residue found their way into the site to form what was considered an environmental disaster."  The Greater Southwest Development Corporation and the City "dedicated themselves to finding a private partner for the redevelopment of the site.  Gateway Park, LLC, a partnership between Martha Williams of StyleMaster and other investors, together with local and federal agencies, transformed the site into a dynamic industrial park."

Under the proposed agreement, the City will pay $220,380 to EPA to resolve EPA’s claims against it for response costs incurred by EPA for investigating and performing response actions to mitigate potential imminent and substantial endangerments to human health or the environment presented or threatened by hazardous substances present at the Site.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

Environmental Trust Fund Established in GM Bankruptcy to Clean Up 89 Sites, Including Illinois Site

The Department of Justice recently published in the Federal Register a notice concerning a consent decree and settlement agreement to be lodged in the GM bankruptcy case, In re: Motors Liquidation Corp, et al., f/k/a General Motors Corp., et al., Jointly Administered Case No. 09–50026 (REG).  The settlement agreement resolves claims and causes of action of the Environmental Protection Agency under the Comprehensive Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery Act with respect to 89 sites, including the GMPT—Danville Landfill Site in Illinois.

Under the terms of the settlement agreement, a environmental response trust will be set up in the amount of $499,434,945 to clean up these 89 sites.  An additional payment of $142 million will be made and certain personalty and title of 88 real properties will be transferred to the environmental response trust to fund administrative expenses.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

U.S. EPA Settles Superfund Claims With Potentially Responsible Parties at Gilberts/Kedzie Site

The U.S. Environmental Protection Agency recently provided notice in the Federal Register of an administrative settlement for recovery of past response costs concerning the Gilberts/Kedzie Site in the Village of Gilberts, Illinois with the following settling parties: Glen J. Kedzie, Big Timber Landscape Company, Inc., and GTCS Corp. 

The site is the location of a former battery cracking and recycling operation.  The main site is located immediately north of the intersection of Railroad and Mill Streets bounded by Galligan Road on the east and the Chicago and Northwestern Railway on the west.  Lead acid batteries were cracked open to recover the lead.  Some of the lead seeped into the ground along with the acid contained in the batteries.  Extensive environmental sampling last summer identified a six-acre area of gross contamination (mainly lead).  Later, a second area of contamination was discovered to the southwest, where the Village of Gilberts Public Works building is now located, west of the railroad tracks - this is known as the Tower Hill Road site.

The settlement requires the settling parties to pay $3,000.00 to the Hazardous Substance Superfund and additional payments when the Site is sold.  The settlement includes a covenant not to sue the settling parties pursuant to Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9607(a).

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

Court Rules Insurer Had Duty To Defend Against Superfund Action Filed By Federal Government

The United States District Court for the Northern District of Illinois recently issued an opinion granting summary judgment against an insurance company based on a duty to defend in United States v. Clark, No. 08-CV-4158, which concerned the South Green Plating Superfund Site in Chicago, Illinois. 

The federal government sought reimbursement for response costs incurred while cleaning up the site.  According to the complaint, heat-treating operations, a thermal process for strengthening metals, were conducted on site.  Some of the defendants filed a third-party complaint against several insurance companies seeking a declaratory judgment that the insurers have a duty to defend and indemnify the defendants in the case.  The defendants and the insurers filed cross motions for summary judgment on the duty to defend issue.

The Court granted the defendants' motion for summary judgment and denied the the insurers' motion.  There was no dispute that Comprehensive General Liability policies established the insurers’ duty to defend certain suits.  The policies provided for defense and indemnity of suits alleging property damage:

“The company [Liberty] will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of . . . property damage to which this policy applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such . . . property damage, even if any of the allegations of the suit are groundless, false or fraudulent . . . .”

The Court first held that the government's complaint adequately alleged "property damage" within the terms of the policies, because the allegations indicated the potential of environmental contamination through releases of hazardous substances.

The Court then held that the complaint alleges an "occurrence," which was defined in the policies as "“an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured.”

Finally, the Court held that the allegations of the complaint did not fall under one of the policies' exclusions, which excluded coverage for "property damage to property owned or occupied by or rented to the insured."  The complaint sufficiently alleged that there may have been exposure to the environment outside of the property owned by the defendants.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

Proposed Superfund Consent Decree Calls for $3.6 Million Payment for Past and Future Response Costs

On August 16, 2010, the U.S. Department of Justice provided notice in the Federal Register that a proposed consent decree was filed in United States v. Central Rubber Co., Case No. 3:10-cv-50193 (Northern District of Illinois), which is a Superfund lawsuit filed by the federal government to recover response costs incurred or to be incurred by the United States as a result of releases and threatened releases of hazardous substances from the manufacturing facilities owned or operated by Central Rubber Company, Woodhead Industries, Inc., Textron, Inc., Camcar LLC, and Johns Manville.  The facilities are located at the Parsons Casket Hardware Superfund Site, in Belvidere, Boone County, Illinois.

Under the proposed consent decree, the Settling Defendants will pay $3.6 million to the United States in reimbursement of past and future response costs.  The decree will also require "Owner Settling Defendants" (those defendants who own real property within the Superfund Site), to provide access to their properties to the U.S. Environmental Protection Agency, which will be performing the remedial action at the site, to cooperate with U.S. EPA in its performance of the remedy, and to prepare and record Environmental Restrictive Covenants which grant certain Proprietary Controls to the State of Illinois and U.S. EPA to facilitate performance of the remedial action.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

Contamination Claims Against Dry Cleaner Allowed to Proceed in Federal Court

The U.S. District Court for the Northern District of Illinois recently issued an opinion in Tinaglia Family L.P. v. North Shore Cleaners, Inc., No. 09 C 6031, which concerned the Plaintiff's commercial and residential property in Glencoe, Illinois.  The Plaintiff's property is adjacent to property owned by the Defendants, who operate a dry cleaning establishment on site.

According to the complaint, there has been and continues to be a release of hazardous substances on the dry cleaning property and that the hazardous substances have migrated to adjacent properties including the Plaintiff's property.  In 2002, Defendants allegedly hired an environmental consultant to investigate a possible contamination problem.  The Plaintiff allegedly signed an agreement providing consent for Defendants’ consultant to test the Plaintiff's property.  Pursuant to that agreement, Defendants were also required to provide Plaintiff with the results of all tests.  According to Plaintiff, Defendants falsely reported to the Plaintiff both orally and in writing that there was no contamination on the Plaintiff's property.  The Plaintiff allegedly believed the representations, relied on them, and took no further action to investigate the issue.  In February 2008, the Plaintiff allegedly attempted to sell its property, and as part of the sale, the lender required an environmental assessment.  The assessment allegedly showed that the Plaintiff's property was contaminated by the hazardous substances that had migrated from the dry cleaning property.

The Defendants moved to dismiss the complaint, which was based on the Comprehensive Environmental Response, Compensation, and Liability Act (more commonly known as Superfund), the Resource Conservation and Recovery Act, negligence, trespass, private nuisance, breach of contract, intentional misrepresentation, and negligent misrepresentation.  The Court denied the motion to dismiss and ruled that the Plaintiff had alleged enough facts in the complaint to proceed with its claims.
 
There have been several instances where claims have been made against dry cleaners for contamination, because of the use of hazardous chemicals, including perchloroethylene (perc), by those establishments.  As dry cleaners become "greener" and use less hazardous chemicals, we expect less claims to be made against those establishments.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

U.S. EPA Settles Enforcement Action Concerning Anhydrous Ammonia Release

On April 2nd, U.S. EPA announced that it settled a federal enforcement action against Handy Fertilizer Inc. in Millstadt, Illinois.  EPA alleged that the defendant failed to provide immediate notification to the National Response Center of a 4,096-pound release of anhydrous ammonia on Sept. 23, 2008 at its plant located at 5959 Floraville Road.  The defendant also failed to update the accident history as required by its Risk Management Plan.  According to EPA, the release was caused by persons stealing the anhydrous ammonia for illegal methamphetamine production.

Under the terms of the settlement, the defendant paid a $5,500 penalty and has installed a $22,855 site security system.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

City of Ottawa, IL Agrees to Pay $150,000 to Settle Superfund Case

On March 25th, a consent decree was agreed to by the parties in United States vs. City of Ottawa, Civil Action No. 10-1887, which concerned facilities at the Ottawa Radiation Areas Superfund Site in Ottawa, LaSalle County, Illinois.  The site consists of 16 areas polluted by radioactive materials. 

The pollution came from the Radium Dial Co. (from 1918 to 1936) and Luminous Processes, Inc. (from 1937 to 1978), which made glow-in-the-dark dials for clocks and watches using radium-based paint.  Building demolition material and soil, polluted with radioactive waste, were used as fill material in the Ottawa area.  The federal government sued the City of Ottawa, which owned part of the site and operated a dump on another part of the site, for costs that were incurred and will be incurred for cleaning up the site.

Under the terms of the consent decree, the City of Ottawa will pay $150,000 and also provide approximately $4.35 million in in-kind services, primarily through the provision of clean fill and top soil.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

U.S. Adds Two Illinois Sites to National Priorities List

The U.S. Environmental Protection Agency announced that two sites in Illinois--the Chemetco site in Hartford and the Lake Calumet Cluster site in Chicago--to the Superfund National Priorities List ("NPL").  The National Priorities List is a list of the most serious sites identified for possible long-term cleanup.

Here's how U.S. EPA described the two sites:

"The Chemetco site is on Illinois Route 3 in Madison County, about two miles south of Hartford.  It was a secondary copper smelter from 1969 to 2001 before filing Chapter 7 bankruptcy.  More than 500,000 cubic yards of processing slag, sludge and other hazardous materials were left on portions of the 41-acre site. Elevated levels of the heavy metals copper, cadmium, lead and zinc have been found in adjacent wetlands and in the sediment of nearby Long Lake.  Chemetco was proposed for addition to the NPL in September 2009.  Now that the site is on the list, Chemetco is eligible for further analysis and development of cleanup options by EPA in partnership with Illinois EPA.

"The 87-acre Lake Calumet Cluster site, on Chicago’s southeast side, is composed of four separate parcels. The Cluster site is bounded by the Land and Lakes Landfill to the west, 122nd Street to the south, the Norfolk Southern Railroad right-of-way and Indian Ridge Marsh to the east, and the Paxton I & II Landfills to the north.  The site was originally a wetland that was used for disposal of steel mill slag and industrial, chemical and municipal waste from the 1940s to 1970s.  Environmental concerns include contaminated soil and contaminated surface water runoff from the site into the adjacent wetland areas.  These wetlands are used by at least 14 federal or state endangered or threatened species.  From 1983 to 1985, and in 1990, EPA performed limited-scope cleanups including drum removals.  The Cluster site was proposed for addition to the NPL in September 2005. In 2007 – 2008, Illinois EPA began construction of a landfill cap. Now that the Cluster site is on the NPL, Illinois EPA can use federal money to complete the cap and investigate the full extent of contaminated groundwater at the site."

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

Court Finds Owner of Facility's Equipment Liable in Cost-Recovery Case

In United States v. Saporito, Case No. 07 C 3169, the United States District Court for the Northern District of Illinois recently ruled that the federal government could recover its environmental cleanup costs against the current owner of a facility's equipment.

Beginning in the 1970s, Crescent Plating operated a facility on the northwest side of Chicago that plated steel and brass objects with various metals such as zinc, chromium, and copper.  In addition to those metals, the plating process also used, among other potentially hazardous chemicals, sodium cyanide, hexavalent chromium, and trichloroethene.  Very simply explained, the electroplating process involved dipping the item to be plated into a series of chemical baths through which electrical current is run.

In December 2003, U.S. EPA began removal activities at the site and in February 2004, the EPA authorized funding for the removal action based on its determination that the conditions at Crescent Plating presented “an imminent and substantial endangerment to the public health, welfare, and the environment.”  The first EPA site assessment found 58 vats and tanks and 464 containers holding various liquids and sludges as well as a 20-cubic-yard box filled with plating sludge.  Some containers had deteriorated and spilled, the building and equipment were coated with plating sludge, and the building had no heat or electricity.  During the cleanup, the government found two large areas of concrete floor that had corroded to expose the soil below. In all, the EPA spent more than $1.5 million to clean up tens of thousands of gallons of hazardous liquids and sludge.  After cleaning up the site, the government sued to recover the costs incurred.
 
The Court agreed with the government’s motion for summary judgment, which relied on the theory that Saporito was a facility owner at the time of the cleanup based on his undisputed ownership of equipment used in the plating process.  In so doing, the Court held that the government did not need to present evidence showing that any specific piece of equipment he owned was responsible for specific releases of hazardous chemicals or specific cleanup costs.
 
This is another example of the government, with approval of the courts, going after individuals to recover environmental cleanup costs.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

President Obama Requests $10 Billion for EPA for 2011

Today, the Obama administration issued its 2011 budget proposal, which included $10.020 billion in discretionary budget authority for the U.S. Environmental Protection Agency.  Highlights of EPA's budget include:

--$1.3 billion "to address Superfund sites that may be releasing harmful or toxic substances into the surrounding community."

--$215 million "to clean up abandoned or underused industrial and commercial sites that are available for alternative uses but where redevelopment may be complicated by the presence of environmental contaminants."

--$27 million for EPA’s new Healthy Communities Initiative, which "will address community water priorities; promote clean, green, and healthy schools; improve air toxics monitoring in at-risk communities; and encourage sustainability by helping to ensure that policies and spending at the national level do not adversely affect the environment and public health or disproportionally harm disadvantaged communities."

--$60 million "to support state efforts to implement updated National Ambient Air Quality Standards (NAAQS)."

--$1.3 billion for state and tribal grants to help "implement new and expanded requirements under the Clean Air Act and Clean Water Act."

--"$43 million for additional efforts to address climate change and work toward a clean energy future.  EPA will implement the greenhouse gas reporting rule; provide technical assistance to ensure that any permitting under the Clean Air Act will be manageable; perform regulatory work for the largest stationary sources of greenhouse gas emissions; develop standards for mobile sources such as cars and trucks; and continue research of carbon capture and sequestration technologies."

--$300 million for the Great Lakes Restoration Initiative "for programs and projects strategically chosen to target the most significant environmental problems in the Great Lakes ecosystem."

--$3.3 billion "to maintain and improve outdated water infrastructure and keep our wastewater and drinking water clean and safe."

--$56 million "for chemical assessment and risk review to ensure that no unreasonable risks are posed by new or existing chemicals."

--$8 million "for environmental justice programs.  It targets increased brownfields investments to under-served and economically disadvantaged neighborhoods, and proposes $9 million for community water priorities in the Healthy Communities Initiative, funds that will help under-served communities restore urban waterways and address water quality challenges."

EPA's $10.020 billion request for 2011 is down from the $10.5 billion requested for 2010.  Congress enacted a $10.3 billion budget for EPA for FY2010.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

Cleanup at Waukegan Lakefront Superfund Site to Continue

According to a recent article in the Lake County News-Sun, the U.S. EPA and the State of Illinois are set to invest tens of millions of dollars to continue cleanup at the Outboard Marine Corporation ("OMC") Superfund Site.

Here is how U.S. EPA describes the OMC Site: It "is located on Lake Michigan around the northern Waukegan Harbor area in Waukegan, Illinois.  The site contains four cleanup parcels, called "operable units" (OU).  The Waukegan Harbor (WH) site is OU #1.  The Waukegan Manufactured Gas and Coke Plant (WCP) site is OU #2.  The PCB containment cells that were created when the harbor was cleaned up in 1990-1993 comprise OU #3, and the OMC Plant 2 site is OU #4.

"Waukegan Harbor is a federally-authorized harbor that was constructed in the late 1800s. . . . From approximately 1948 to 1971, OMC purchased an estimated 8 million gallons of hydraulic fluid that contained PCBs and used it in its OMC Plant 2 building in its die casting process to make outboard motors.  The fluids containing PCBs were sometimes discharged through floor drains onto the OMC Plant 2 property and also into Waukegan Harbor.  As a result, 700,000 pounds of PCBs were estimated to be present in the soil on the OMC Plant 2 site and 300,000 pounds of PCBs were in the sediment in Waukegan Harbor.  OMC cleaned up PCB-contaminated northern harbor sediment and some of the OMC Plant 2 soils in 1990-1993.

"OMC also operated several vapor degreasers at the OMC Plant 2 facility to clean newly made parts with trichloroethylene (TCE).  Leaking degreasers and/or TCE storage tanks have created a widespread TCE groundwater contaminant plume and an isolated dense, non-aqueous phase liquid (DNAPL) pool of TCE beneath the OMC Plant 2 site.  OMC abandoned the Plant 2 facility in December 2002.

"In the early 1900s, a wood-treating plant operated on the WCP site, followed by a manufactured gas plant in the 1920s and a coke oven gas plant in the 1940s.  The plant was purchased and disassembled by OMC in approximately 1972.  The WCP site was discovered during OMC's harbor cleanup in 1990.  It has arsenic and polyaromatic hydrocarbon (PAH) soil contamination and the groundwater is contaminated with high levels of ammonia, arsenic, benzene, and phenol."

According to the Lake County News-Sun article, the new cleanup work will include dredging of the Waukegan Harbor:

"The harbor will be dredged to reduce PCB levels in sediments to 0.2 parts per million. . . . The dredging will go as deep as 10 to 15 feet, depending on what core samples reveal about PCBs in the sediment.  After dredging, a 6-inch layer of sand will cap the harbor floor."

"The sediment will be pumped to the city-owned grounds at OMC Plant No. 2.  Eventually, the sediment will be covered with clean fill and could be turned into a park.  Water from the sediment will be returned to the harbor after meeting federal clean drinking water standards.

"The federal government is paying 90 percent of the estimated $35 million project, and the state will cover the other 10 percent. The project should be completed by 2012.

"Demolition of the final 600,000 square feet of OMC Plant No. 2 will cost about $21 million, funded by a federal economic stimulus grant.  PCBs, trichloroethylene (TCE) and asbestos must be removed before most of that building can be demolished by Tecnica Environmental Services and Brandenburg Industrial Services Co., both minority-owned businesses from Chicago.

"The remnant of Plant No. 2 that houses a decontamination unit, which is cleaning groundwater at the gas and coke plant site, will remain for another two to three years. The project to remove TCE from groundwater at the Plant No. 2 site will begin after building demolition is complete in 2010.  That work will take two months, and then the site will be monitored for a year.

"The TCE plume in the groundwater will be treated with iron filings and clay.  Iron reacts with trichloroethylene, which was used as a degreaser, rendering it harmless.  The clay will bind the sand aquifer to stop groundwater from flowing through the site.

"Environmental engineers also will inject sodium lactate, which is food for the naturally occurring bacteria that is already breaking down the TCE.  Bioremediation would take about four years."

Stay tuned to the Illinois Environmental Law Blog for more news and developments.

U.S. EPA Takes West Chicago Site Off National Priorities List

Today, U.S. EPA published in the Federal Register a direct final Notice of Deletion of the Kerr-McGee Reed-Keppler Park Superfund Site, located in West Chicago, Illinois, from the National Priorities List ("NPL").

The NPL is a statutorily-mandated list of "national priorities among the known releases or threatened releases of hazardous substances, pollutants, or contaminants throughout the United States."  EPA decided to remove the West Chicago site from the NPL after determining that all appropriate response actions have been completed.

In the early 1900's, the site was mined as a quarry to provide rock and embankment material for construction of the Chicago, Wheaton and Western Railway (now the Illinois Prairie Path embankment owned by Commonwealth Edison).  Later, the old quarry area was used for solid waste (household and commercial garbage) disposal from as early as 1939 until 1973.  Among the solid wastes found at the site were thorium mill tailings and other process wastes generated at the West Chicago Rare Earths Facility, which also operated in West Chicago from 1934 until 1973.

Today's Notice of Deletion is the culmination of a 10-year soil remediation and groundwater monitoring process by EPA.

Stay tuned to the Illinois Environmental Law Blog for more news and developments.