Matter of Environmental Waste Control, Inc.

• Decision Date: 29 March 1991
• Docket Number: No. S90-561 (RLM).,S90-561 (RLM).
• Parties: In the Matter of ENVIRONMENTAL WASTE CONTROL, INC., d/b/a Four County Landfill, Inc., Debtor.
• Court: U.S. District Court — Northern District of Indiana

125 B.R. 546 (1991)

In the Matter of ENVIRONMENTAL WASTE CONTROL, INC., d/b/a Four County Landfill, Inc., Debtor.

No. S90-561 (RLM).

United States District Court, N.D. Indiana, South Bend Division.

March 29, 1991.

Henry A. Efroymson, Indianapolis, Ind., for debtor.

Robert H. Oakley, U.S. Dept. of Justice, Washington, D.C., Thomas Candow Jacobs, U.S.E.P.A., Chicago, Ill., for creditor # 1.

John C. Hamilton, South Bend, Ind., for creditor # 2.

Alexander Edgar, South Bend, Ind., for creditor # 3.

Michael Shaefer, Deputy Atty. Gen., Indianapolis, Ind., on behalf of Ind. Dept. of Environmental Management.

James M. Matthews, South Bend, Ind., for creditor Resources Unlimited, Inc.

MEMORANDUM AND ORDER

MILLER, District Judge.

This cause is before the court following withdrawal of reference to the bankruptcy court of two motions. In one motion, debtor-in-possession Environmental Waste Control, Inc., d/b/a Four County Landfill ("EWC"), seeks a determination of the propriety of its payment of groundwater monitoring and related expenses. In the other, EWC seeks a determination of the payment of other corrective action expenses. Through both motions, EWC seeks to foreclose or delay federal and state governmental authorities from enforcing its legal obligations resulting from environmental litigation in this court.

The obligations at issue arise from this court's judgment in a suit against EWC under the Resource Conservation and Recovery Act ("RCRA"), United States v. Environmental Waste Control, 710 F.Supp. 1172 (N.D.Ind.1989), which judgment was affirmed on appeal, 917 F.2d 327 (7th Cir.1990). The dwindling assets that would be used to pay for these obligations are subject to the secured claims of creditor Resources Unlimited, Inc. ("RUI").

This court held an evidentiary hearing on the debtor's motion on February 27, 1991 and heard argument from the parties on March 12, 1991. For those reasons stated below, the court now declines to grant the debtor's requested relief.

I.

EWC filed its Chapter 11 petition shortly after the decree was entered in the RCRA case. At the time of filing of the bankruptcy case, EWC had slightly more than $2 million in cash. It now has approximately $400,000.00. The balance of the funds has been spent on studies required by the corrective action portion of the RCRA decree, limited salaries allowed by the bankruptcy court, wages paid to a bookkeeper and workers at the landfill, consultant fees, equipment, leachate treatment, and attorney fees. Workers at the landfill have collected leachate, controlled erosion, maintained the site's integrity, and on one occasion removed silt from the main drainage control basin.

The Indiana Department of Environmental Management ("IDEM") is pressing EWC to begin implementation of an extensive groundwater monitoring system that entails installation of new monitoring wells and testing requirements. IDEM sought implementation by October 26, 1990, but the bankruptcy court stayed implementation. The United States Environmental Protection Agency ("EPA") is pressing EWC to commence implementation of a revised Resource Conservation and Recovery Act Facility Investigation work plan; the EPA agreed to forego pursuit of enforcement of that work plan pending resolution of the motions now before the court. EWC presented testimony that the IDEM and EPA plans, while not incompatible, are not wholly consistent, either. EWC contends, and no other parties seem to dispute, that it will run out of money before completing either of these tasks sought by environmental authorities.

The landfill contains deposits of hazardous waste. No shipments of waste have been received during the bankruptcy; the RCRA decree forbade such operation. Accordingly, the landfill has no income apart from accounts receivable, an anticipated $500,000.00 tax refund, and the $400,000.00 cash on hand. EWC has petitioned the United States Supreme Court for certiorari in the RCRA case, hoping to overturn the injunction against its operation of the landfill. If the Supreme Court grants no relief, EWC will run out of money at some point.

EWC pins its future hopes on the Supreme Court and, alternatively, upon a group of potentially responsible parties ("PRPs") from whom EWC is seeking financial contribution. A law firm was retained in September, 1990 to organize those efforts. One of the attorneys handling those efforts, John Houlihan, testified that about one hundred companies were represented at the first meeting of PRPs, on December 18, and they agreed in principle to investigate group funding of the voluntary closure of the landfill. Interested companies were to contribute $300.00 to an administrative fund. A second meeting was held with a smaller group on January 21, and an ad hoc steering committee was formed to contact the EPA and decide whether the group would go forward and, if so, how. The PRPs seek the sort of protection against liability that is available under CERCLA, 42 U.S.C. § 9607, but is not as easily available under RCRA.

The meeting with the EPA, intended to make an initial contact to "feel out" the EPA's position on voluntary, group-funded closure, occurred in mid-February. The EPA asked for a written proposal; the PRPs submitted a proposal the following week and await the EPA's response. Mr. Houlihan testified that if the EPA is "responsive", negotiation will continue with EPA to decide what remedial actions will be taken at the landfill. He reported that timing depends on the speed of the EPA response. Mr. Houlihan said his perception, as "an optimistic guess", was that there may have been enough negotiation to produce an "agreement in principle" in the next sixty to ninety days. At this point, however, no PRPs have agreed to go forward, and more time would be required to work out details after reaching an agreement in principle.

Mr. Houlihan testified that the PRPs would be more reticent to proceed in the face of a mandatory corrective action plan, because their voluntary closure plan might differ and repetitive testing might ensue, with concomitant cost. Any inability of PRPs to take advantage of work performed under RCRA would constitute a disincentive to the PRPs, although if the work did not have to be repeated, it might constitute an advantage to the PRPs for work to be paid for by someone other than the PRPs.

There is no question but that hazardous wastes have contaminated the groundwater beneath the landfill. The court so found in the RCRA suit, and evidence made available since that time indicates that the contamination was far greater than was known then:

— Benzene, a known human carcinogen which is assigned a maximum contaminant level for safe drinking water ("MCL") of 5 parts per billion ("ppb") under the Safe Drinking Water Act, has been detected in concentrations as high as 4.6 million ppb; the series of samples submitted by the EPA, representing samples taken from November, 1988 to February, 1990, disclosed benzene concentrations averaging nearly 415,000 ppb; the mean reading in the admittedly selective series was 17,000 ppb, which is 3,400 times the MCL.

— Carbon tetrachloride, with an MCL of 5 ppb, has been detected in concentrations as high as 18,000,000. The series of samples submitted by the EPA disclosed concentrations of carbon tetrachloride averaging nearly 1,785,000 ppb; the mean reading was 44,000 ppb, which is 8,800 times the MCL.

— 1,2 dichloroethane, with an MCL of 5 ppb, has been detected in concentrations as high as 8,000,000. The samples submitted by the EPA disclosed an average concentration of nearly 462,000 ppb, and a mean reading of 11,500, which is 2,310 times the MCL.

— Trichloroethene, with an MCL of 5 ppb, has been detected in concentrations as high as 44 ppb. The samples submitted by the EPA disclosed an average concentration of 36 ppb, and a mean reading of 38, which is 7.6 times the MCL.

In addition, IDEM has submitted evidence that leaks have developed in some of the liners used to prevent the escape of hazardous waste constituents from the cells in which they were placed; EWC's president testified that at one time EWC was pumping 800 to 1,500 gallons of leachate a day from the area of well 34A.

Significant evidence also exists that the contamination has spread beyond the site through migration in the groundwater: chromium and 1,2 dichloroethane, which was found in very high concentrations on the landfill site, were detected in ground water at the Kings Lake Baptist Church and perhaps at a farm owned by Henry Ivy. EWC contests the allegation that contamination has spread off site, arguing the insufficient data supports that conclusion.

The insufficiency of the data is a theme that has long echoed about the landfill. Following the RCRA trial, the court noted the inadequacy of the knowledge EWC had acquired of the ground water beneath its site:

The design, construction, and depth of their groundwater monitoring wells have prevented EWC and its consultants from learning the extent and permeability of the uppermost aquifer, which precludes confident assessment of the groundwater flow\'s horizontal and vertical direction and velocity. One cannot design a meaningful groundwater monitoring system without knowing the location of the uppermost aquifer and the direction of the groundwater flow. EWC has not acquired that knowledge.

710 F.Supp. at 1222.

At trial, Dr. Tracy convincingly illustrated this point by overlaying several of the potentiometric maps offered by EWC\'s consultants; when overlain, those maps depicted groundwater flowing in different, and even opposite, directions. A geological study by the Department of the Interior concluded that, "On the basis of available information, no direction of horizontal flow in the till unit can be ruled out."

710 F.Supp. at 1225.

EWC bears the responsibility for generating the data necessary to evaluate the likelihood that the landfill is the source of any off-site contamination;...