EPA v. RESERVE MINING

Case summary

U.S. EPA MAY FILE A PROOF CLAIM IN THE RESERVE MINING BANKRUPTCY PROCEEDING IN THE SOUTHERN DISTRICT OF NEW YORK. EPA IS SEEKING TO RECOVER MONIES EXPENDED WHILE CONDUCTING A RI/FS AND DEVELOPING A ROD AT A SITE WHERE RESERVE WAS A MA- JOR GENERATOR. THE PROOF OF CLAIM ALSO SEEKS THE COST OF IMPLEMENTING THE ROD. RESERVE MINING FROM ABOUT 1960 TO 1976 SENT 600,000 GALLONS OF WASTE OIL TO ARROWHEAD REFINERY IN GERMANTOWN, MN. FOR RECYCLING. THE RECYCLING PROCESS USED ACIDS TO REMOVE THE METALS IN THE USED OIL. THE RESID- UALS OF THIS PROCESS WERE SPREAD OVER THE AVERAGE BELONGING TO THE RECYCLER. OVER THE PERIOD, 1961 TO 1976, RESERVE MINING COMPANY SHIPPED WASTE OIL FROM ITS HEAVY EQUIPMENT AND ELECTRICAL TRANSFORMERS TO THE ARROWHEAD REFINERY COMPANY (ARROWHEAD) FOR RECLAMATION. RESERVE MINING WAS THE SOURCE FOR MORE THAN 50% OF THE WASTE OIL RECEIVED BY ARROWHEAD DURING THE LATTER'S OPERA6ING LIFE. AS PART OF ITS RECLAMATION PROCESS, ARROWHEAD DISPOSED OF HIGHLY ACIDIC, METAL LADEN SLUDGE IN AN UNLINED 2 ACRE LAGOON ON ITS OWN PROPERTY. BECAUSE OF CONTAMINATION RESULT ING FROM THIS DIPOSAL PRACTICE, ARROWHEAD'S PROPERTY WAS LISTED ON THE NPL IN SEPTEMBR 1983. A REMEDIAL INVESTIGA- TION CONDUCTED BY EPA HAS SHOWN THAT THE SLUDGE FROM THE LAGOON CONTAINS ABOUT 4,600 CUBIC YARDS OF PETROLEUM BASED OILY SLUDGE, CONTAMINATED WITH VARIOUS ORGANIC COMPOUNDS IN THE LOW PART PER MILLION (PPM) RANGE, HIGH CONCENTRATIONS OF HEAVY METALS, AND POLYCHLORINATED BIPHENY (PCB) CONCENTRA- TIONS RANGING FROM 2.4 PPM TO AS HIGH AS 45 PPM. THE RE- MEDIAL INVESTIGATION ALSO DETERMINED THAT THERE ARE 14,300 CUBIC YARDS OF CONTAMINATED SOILS THAT EXCEED THE 10- 6 EXCESS LIFETIME CANCER RISK. FIANLLY, THE REMEDIAL INVEST IGATION SHOWED THAT CONTAMINENTS HAD REACHED THE GROUND- WATER. ON 30 SEPTEMBER 1986, REGION V ISSUED A RECORD DECISION AND ORDER FOR THE ARROWHEAD SITE WHICH CALLS FOR EXCAVATION AND INCINERATION OF THE CONTAMINATED SLUDGE AND SOILS, IN- STALLATION OF A PUMP AND TREAT SYSTEM FOR THE GROUNDWATER, AND EXTENSION OF A NEARBY MUNICIPAL WATER SYSTEM TO REPLACE THOSE PRIVATE WELLS MOST LIKELY TO BE AFFECTED. THE COST OF THIS REMEDY IS ESTIMATED TO BE $22 MILLION. ON 7 AUGUST 1986, RESERVE MINING FILED FOR CHAPTER 11 REORGANIZATION UNDER THE BANKRUPTCY CODE. AT THIS TIME, IT IS UNCLEAR WHAT ASSETS WILL BE AVAILABLE FOR DISTRIBUTION TO CREDITORS. NO BAR DATE FOR PROOF OF CLAIMS HAS BEEN SET BY THE BANKRUPTCY COURT. RECENTLY, THE TRUSTEE FILED A MOTION, ASKING THE BANK- RUPTCY COURT TO APPROVE CERTAIN SETTLEMENTS AND PROVIDE AEDEQUATE PROTECTIVE LIENS. THE SETTLEMENTS INVOLVED A COMP LEX TRANSACTION WHERE SECURED CREDITORS WERE GIVEN AEDEQUATE PROTECTION LIENS AGAINST FORTHCOMING TAX REFUNDS. REGION V WAS CONCERNED LEST SUCH AN ARRANGEMENT PREJUDICE EPA'S RIGHT TO CONTEST THE VALIDITY OF THE SECURED CREDITORS' LIENS. AFTER THE ORAL REFERRAL, THE DEPARTMENT OF JUSTICE APPEARED ON EPA'S BEHALF AND OBTAINED AN AGREEMENT FROM THE COURT THAT UNSECURED CREDITORS RETAINED THE RIGHT TO CONTEST THE SECURED CREDITORS' ORIGIONAL LIENS.

Defendants (1)

• RESERVE MININGNamed in complaint

Facilities (1)

• ARROWHEAD REFINERY CO.

  NW CORNER HWY 53 & UGSTAD ROAD, HERMANTOWN, MN, 55810

  Registry ID: 110009259113

Statutes cited

• CERCLA 107 — Superfund

Timeline (5 milestones)

• 1987-06-12Referred To Headquarters
• 1987-06-15Referred To Dept Of Justice
• 1987-11-25Complaint Filed With Court
• 1993-05-27Concluded
• 1995-04-06Enforcement Action Closed