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December 2008 Significant Cases

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Week of December 1, 2008

United States Environmental Protection Agency (U.S. EPA) agrees to Consent Agreement and Final Order (CAFO) with ACH Food Companies for Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 103(a) violations and Emergency Planning and Community Right-to-Know Act (EPCRA) Section 304(a) violations

On November 20, 2008, U.S. EPA filed a CAFO in the ACH Food Companies (ACH) CERCLA 103(a) and EPCRA 304(a) case. ACH, an Illinois corporation, will pay a $47,147.00 civil penalty ($15,716.00 to the Superfund and $31,431.00 to the U.S. Treasury) for failure to file timely notices of a 725 pound release of anhydrous ammonia through a pressure relief valve on the facility roof on September 28, 2005. On May 22, 2008, U.S. EPA issued a Civil Administrative Complaint to ACH. The proposed penalty in the Complaint sought was $74,537.00. ACH filed an answer to the complaint and the parties entered into Alternative Dispute Resolution in an attempt to resolve this matter. The parties carried out good faith negotiations. Based upon the facts and law presented in negotiations, the parties achieved an equitable resolution of the matter for a $47,147.00 penalty figure in consideration of ACH's cooperation, return to compliance and willingness to quickly resolve this matter.

Contact: Tom Kenney, Office of Regional Counsel, 312-886-0708; James Entzminger, Superfund Division, 312-886-4062

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Region 5 signs a Joint Complaint and Consent Agreement and Final Order (CAFO) resolving violations Section 112(r) of the Clean Air Act (CAA) by Aurora Circuits LLC.

On November 20, 2008, the Regional Administrator, United States Environmental Protection Agency (U.S. EPA) Region 5, entered a CAFO resolving an administrative complaint for violations of Section 112(r) of the CAA by Aurora Circuits LLC, Aurora, Illinois. On September 15, 2008, U.S. EPA filed an administrative complaint seeking a $20,000 penalty for violations of section 112(r) of the CAA. The settlement requires Aurora Circuits to pay $12,000 for its failure to timely submit a Risk Management Plan (RMP) as provided in 40 C.F.R. Part 68, Subpart G, and for deficiencies in the RMP it did submit in November 2004. In agreeing to the penalty, Region 5 took into account Aurora Circuit's cooperation in correcting its RMP deficiencies, its performance of an accelerated audit of its risk management program and its ability to pay.

Contact: John Tielsch, Office of Regional Counsel, 312-353-7447

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United States District Court for the Western District of Michigan Enters Consent Decree Resolving Violations of the Clean Air Act (CAA) by Merit Energy Co., LLC (Merit) and Shell Exploration & Production Co. (Shell) in Manistee, Michigan

On November 25, 2008, the United States District Court for the Western District of Michigan entered a consent decree resolving violations of the CAA by Merit and Shell, Civil Action No.1:08-cv-00917-RJJ. The consent decree was lodged on September 30, 2008 and includes injunctive relief estimated at $1.5 million, a civil penalty of $500,000 and a supplemental environmental project (SEP) that will cost $1 million. It resolves violations of the Prevention of Significant Deterioration requirements, Title V permit requirements, the Standards of Performance for Onshore Natural Gas Processing at 40 C.F.R. Part 60, Subpart LLL, and the Michigan State Implementation Plan. The alleged violations occurred at a natural gas processing plant in Manistee, Michigan that was owned and operated by Shell until December 2003 and has been owned and operated by Merit since that time.

The compliance program will obligate Merit to either install and operate an acid gas injection (AGI) system which will eliminate all sulfur dioxide (SO2) emissions or shut down the plant and cease all emissions-generating operations. Merit plans to install an AGI system. The AGI system will pipe the acid gas stream into a depleted subsurface gas reservoir and eliminate approximately 170 tons per year of SO2 and 3,800 tons per year of carbon dioxide emissions that would otherwise be emitted from a stack. Merit must also meet an interim emission standard until the AGI system is implemented. The consent decree also requires Merit to comply with the requirements of 40 C.F.R. Subpart LLL and to implement a program to minimize emissions associated with emergency flaring of acid gas. This is the first settlement of Prevention of Significant Deterioration violations by United States Environmental Protection Agency to implement an AGI system as injunctive relief.

Finally, Merit will perform a SEP which consists of replacing three natural gas fired internal combustion compressor engines with electric compressor drives at three of Merit's other facilities in Michigan. Replacement of the natural gas compressor engines with electric compressor drives will reduce emissions by a total of 179 tons per year of nitrogen oxides, 12 tons per year of carbon monoxide, 1.76 tons per year of volatile organic compounds, 0.02 tons per year of SO2 and 1.1 tons per year of particulate matter.

Contacts: Christine Liszewski, Office of Regional counsel, 312-886-4670 and Manoj Patel, Air and Radiation Division, 312-353-3565

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United States District Court for the Southern District of Indiana Enters Modification to Amended Consent Decree in United States Environmental Protection Agency's (U.S. EPA) Clean Water Act (CWA) Case Against the City of New Albany.

On November 19, 2008, Federal District Court Judge Sarah Evans Barker of the Southern District of Indiana entered a modification to the amended consent decree between U.S. EPA and the City of New Albany, Indiana. The modifications change: 1) the conditions of the demonstration period, during which the City documents the performance of its sewer system to support termination of the Amended Consent Decree; and 2) the way the parties calculate reductions in rainfall induced infiltration required to allow new sewage sources to be added to the system. U.S. EPA first filed a complaint against the City in 1990 for alleged violations of the CWA and the City's National Pollutant Discharge Elimination System permit arising from unpermitted discharges of sewage into the waters of the United States. The parties' first 1993 settlement was documented in a Consent Decree. The original Consent Decree was amended in 2002 to resolve a dispute over the City's compliance with the terms of the Decree. Between 2002 and 2005, the City constructed a large addition to its sewage treatment plant pursuant to the Amended Consent Decree. While the upgraded treatment facility has largely eliminated bypasses of untreated sewage discharging directly into the Ohio River, the City must still complete significant repairs to its sewage system to eliminate sanitary sewer overflows upstream of the plant and to terminate the Amended Consent Decree, which includes, among other things, limitations on new connections to the sewer system, and stipulated penalties for capacity related overflows.

Contacts: Erik Olson, Office of Regional Counsel, 312-886-6829 and Barbara VanTil, Water Division, 312-886-3164

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Week of December 8, 2008

Criminal Conviction and Sentence of Indiana Business and its President Affirmed by Seventh Circuit

On December 5, 2008, the United States Court of Appeals for the Seventh Circuit affirmed the criminal conviction and sentence of Derrik Hagerman and Wabash Environmental Technologies, LLC of Terre Haute, Indiana. Hagerman and Wabash were convicted of ten felonies for making false statements under the Clean Water Act in a scheme to disguise from regulators ongoing discharge violations from its centralized waste treatment facility directly into the Wabash River. The United States District Court, Southern District of Indiana sentenced Hagerman to 60 months in prison in 2007 and ordered Hagerman and Wabash to make restitution to the United States Environmental Protection Agency, Region 5 Superfund Division for $237,680.74. In its sentencing order the district court recognized that "Managers of those businesses need to understand that if they make the choice that [defendant] made - to lie and cover up the violations on this scale - they face more than fines and civil penalties as a cost of doing business. They face prison." U.S. v Hagerman, 525 F. Supp 2d 1058, 1067 (S.D. Ind., 2007). On appeal, the Seventh Circuit held in relevant part that electronic spreadsheets introduced at trial corroborating Hagerman's false statements were not prohibited 404(b) evidence even if they included data supporting uncharged false statements, nor did this evidence constructively amend the indictment by expanding the number of crimes charged. Also, the Court found that the jury instruction given at trial which interpreted the certification language found on state and federal reports consistent with the permit and regulations was a proper interpretation of the law. Finally, the Court held that the sentence was lawful and appropriate as the district court took into consideration all of the relevant factors under 18 U.S.C. § 3553(a) including the federal sentencing guidelines.

Contact: David Mucha, Office of Regional Counsel, 312-886-9032

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United States Environmental Protection Agency (U.S. EPA) Region 5 files Consent Agreement and Final Order (CAFO) with Aretha Marshall

On December 3, 2008, U.S. EPA Region 5 and Aretha Marshall, entered into a CAFO resolving U.S. EPA's claims alleging that Aretha Marshall violated the Residential Lead-Based Paint Hazard Reduction Act of 1992 (the Lead-Based Paint Hazard Reduction Act), 42 U.S.C. ' 4852d et seq., and Sections 409 and 16 of Toxic Substances Control Act, 15 U.S.C. '' 2689, 2615, and 40 C.F.R. ' 745.113(b)(1), (b)(2), (b)(3), (b)(4), and (b)(6) by failing to make certain required disclosures in the leasing of 11 contracts to lease target housing. The complaint in this matter was filed on April 7, 2008, and requested a penalty of $84,830. The parties have agreed to settle this matter with payment of a total penalty of $5,000. The penalty settlement amount is based on, among other things, Aretha Marshall's inability to pay a larger penalty.

Contacts: Jeffrey A. Cahn, Office of Regional Counsel 312-886-6670; Pamela Grace, Land and Chemical Division 312-353-2833

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United States District Court for the Southern District of Indiana Enters Modification to Amended Consent Decree in United States Environmental Protection Agency's (EPA) Clean Water Act (CWA) Case Against the City of New Albany.

On November 19, 2008, Federal District Court Judge Sarah Evans Barker of the Southern District of Indiana entered a modification to the amended consent decree between EPA and the City of New Albany, Indiana. The modifications change: 1) the conditions of the demonstration period, during which the City documents the performance of its sewer system to support termination of the Amended Consent Decree; and 2) the way the parties calculate reductions in rainfall induced infiltration required to allow new sewage sources to be added to the system.

EPA first filed a complaint against the City in 1990 for alleged violations of the CWA and the City's National Pollution Discharge Elimination System permit arising from unpermitted discharges of sewage into the waters of the United States. The parties' first 1993 settlement was documented in a Consent Decree. The original Consent Decree was amended in 2002 to resolve a dispute over the City's compliance with the terms of the Decree. Between 2002 and 2005, the City constructed a large addition to its sewage treatment plant pursuant to the Amended Consent Decree. While the upgraded treatment facility has largely eliminated bypasses of untreated sewage discharging directly into the Ohio River, the City must still complete significant repairs to its sewage system to eliminate sanitary sewer overflows upstream of the plant and to terminate the Amended Consent Decree, which includes, among other things, limitations on new connections to the sewer system, and stipulated penalties for capacity related overflows.

Contacts: Erik Olson, Office of Regional Counsel 312-886-6829; Barbara VanTil, Water Division 312-886-3164

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Week of December 15, 2008

Region 5 signs a Consent Agreement and Final Order with Gateway Regional Medical Center.

On December, 12, 2008, Region 5 signed a Consent Agreement and Final Order (CAFO) with Gateway Regional Medical Center (Gateway) that both initiates and fully resolves the Emergency Planning and Community Right-to-Know Act (EPCRA) Section 325(c), 42U.S.C.§11045(c), administrative action. In July of 2008, United States Environmental Protection Agency (EPA), Region 5 sent Gateway a pre-filing notice letter informing Gateway that it violated Section 312 of EPCRA. Gateway contacted Region 5 in response to the letter and negotiated a settlement with EPA. EPA planned to file a complaint for $141,520 for violations which originated when Respondent failed to timely submit emergency and hazardous chemical inventory forms for fuel oil #2 to the state emergency response commission, the community coordinator for the local emergency planning committee, and the fire department for calendar years 2003-2007. In consideration of Gateway's cooperation and good faith efforts to comply with EPCRA, Region 5 agreed to accept a supplemental environmental project valued at just over $48,000 and a cash penalty of $12,900 in settlement of the case.

Contacts: Leslie Kirby-Miles, Office of Regional Counsel 312-353-9443; James Entzminger, Superfund Division 312-886-4062

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Week of December 22, 2008

Dayton Company Pleads Guilty to Making Illegal Discharges Into The Sewer System; UnitedStatesv.Techmetals, Inc.

On December 18, 2008, Techmetals, Inc. (Techmetals) pleaded guilty to making illegal discharges into the City of Dayton sewer system.

Techmetals is a metal finishing company located in Dayton, Ohio. To reduce the amount of pollutants discharged into the sewer system Techmetals processes its wastewater using a pretreatment system. Bypassing the pretreatment system is prohibited by Dayton's ordinance which governs usage of the sewer system.

Beginning on or about September 13, 2003, and continuing through on or about January 31, 2004, the pretreatment system would occasionally not operate properly. Instead of reporting these problems to Techmetals management, the pretreatment operators would bypass the pretreatment system in order to continue production. These discharges were in violation of Dayton's approved pretreatment program.

This case was investigated, in a joint investigation, by the Ohio Bureau of Criminal Identification and Investigation, the Ohio Environmental Protection Agency, the City of Dayton, and the United States Environmental Protection Agency Criminal Investigation Division, all members of the Southwest Ohio Environmental Crimes Task Force.

Contact: Brad Beeson, Office of Regional Counsel, CID 440-250-1761

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Brothers Are Sentenced To Jail For Making Illegal Discharges Into Sewer System; UnitedStatesv.James W. Morrow and Larry J. Morrow

On December 8, 2008, James W. Morrow and Larry J. Morrow were sentenced for making illegal discharges into the City of Toledo sewer system during 2005 and 2006. Both were sentenced to five months of custody to be followed by 12 months of supervised release, the first five months of which will be served as home confinement. In addition, both brothers were ordered to pay of $5,000 each.

The Morrows were the operators of Morrow Plating, a metal finishing company located in Toledo, Ohio. While the Morrow Plating facility was connected to the City of Toledo sewer system, Morrow Plating was not allowed to discharge industrial wastewater into the sewer system.

The indictment charged that on numerous occasions between July 1, 2005, and July 28, 2006, that the Morrows pumped, and directed Morrow Plating employees to pump, industrial wastewater into the sewer system. These discharges were in violation of Toledo's approved pretreatment program.

This case was investigated, in a joint investigation, by the Ohio Bureau of Criminal Identification and Investigation, the Ohio Environmental Protection Agency, and the United States Environmental Protection Agency Criminal Investigation Division, all members of the Northwest Ohio Environmental Crimes Task Force.

Contact: Brad Beeson, Office of Regional Counsel, CID 440-250-1761

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Week of December 29, 2008

On December 30, 2008, the U.S. District Court for the District of Minnesota entered a consent decree concerning the Naval Industrial Reserve Ordnance Plant (NIROP) in Fridley, Minnesota (U.S. v. FMC Corporation et al.). Under the decree, United States Environmental Protection Agency (EPA) will recover $460,000 of its past CERCLA response costs from a contractor who operated NIROP. NIROP is a National Priorities List site which, until recently, was owned by the Navy. The Navy and EPA signed a Federal Facility Agreement (FFA) for NIROP under CERCLA § 120 in 1991. Because the FFA does not require the Navy to reimburse EPA, EPA has incurred oversight and other response costs at NIROP which it could not recover from the Navy. However, two years ago, Region 5 learned that the Navy and Department of Justice were pursuing cost recovery of Navy response costs from a former contractor at the NIROP site. Region 5 was able to have EPA costs included in the suit.

Contact: Timothy Thurlow, Office of Regional Counsel, 312-886-6623

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