Wagner: Who will pay to clean up Indiana’s polluted deep aquifers?

Wagner

By Bill Wagner

Two recent comments about future enforcement actions from William Brighton, the assistant chief of the Environmental Enforcement Section for the U.S. Department of Justice, concerned me. First, he said the Justice Department and the Environmental Protection Agency would no longer be reluctant to use the Superfund program to tackle large-scale contaminated sites, that is, the ones that cost a billion dollars or more to remediate. Second, with fewer taxpayer dollars to fund the program, the responsible parties left standing would have to bear the costs for others that have either gone out of business or filed for bankruptcy.

EPA has proposed and listed several new Superfund sites in Indiana in the last three years involving large-scale contamination to deep aquifers that serve as sources for drinking water.

1. The Keystone corridor ground water contamination site. This site is located along North Keystone Avenue in Indianapolis. The groundwater plume contains chlorinated solvents, including tetrachlorethene, trichloroethene, cis-1,2-dichloroethene, and vinyl chloride. Five municipal drinking water wells that serve 14,000 people have had detections of volatile organic compounds, with one well having concentrations of vinyl chloride above the Safe Drinking Water Act Maximum Contaminant Level.

EPA listed this site on the National Priorities List after IDEM could not determine any specific source or sources for the contamination. EPA believes the well field pulled contaminated groundwater from upper aquifers down through the complex karst geology and contaminated the deep aquifer. To identify potential responsible parties, EPA drew a circle around the well field showing the two-year time of travel for groundwater to reach the impacted wells. There were 40 businesses in or near the circle that used solvents. EPA identified the 40 businesses as PRPs. EPA also said individual contaminant plumes from some of these sources are comingled and cannot be distinguished from one another among contaminants or sorted for attribution.

2. The Kokomo contaminated ground water plume. The Kokomo ground water plume covers 294 acres and impacts several municipal wells that serve 55,000 people. In 2007, vinyl chloride exceeded the maximum contaminant level in four of the municipal wells. IDEM identified 14 facilities that used solvents as PRPs. While some of the potential sources were being managed, EPA said there was no cleanup approach focusing on the groundwater plume. A water treatment system has been removing the vinyl chloride from the finished drinking water, but EPA claims this is not a permanent solution to address the contaminated groundwater plume.

3. The West Vermont drinking water contamination (proposed). This site involves a comingled-groundwater plume impacted by chlorinated solvents. The plume covers 18 acres and is contaminating drinking water wells in a mixed residential and commercial neighborhood on the west side of Indianapolis. Vinyl chloride was found above MCL in three residential wells, and 40 homes that rely on private wells are within one mile of the plume. IDEM identified two nearby facilities as being responsible for the contamination. The plume has the potential to migrate four miles to where two separate municipal well fields serve 18,000 people.

4. The Riverside ground water contamination (proposed). This site consists of a chlorinated solvent plume near the Fall Creek/White River confluence in Indianapolis. This plume is contaminating five wells in two municipal well fields. In 2013, site investigations confirmed vinyl chloride and TCE at levels approaching the MCL at two municipal wells. IDEM identified more than 160 PRPs that could be contributing to the contamination, of which 12 have had documented chlorinated solvent releases. The contaminated well fields serve 55,000 people. According to recent news reports, IDEM canceled its request for federal assistance to address this site because the test results were outdated and recent contamination levels were down. EPA, however, is accepting comments through Dec. 5 on whether this site should be listed as a Superfund site.

The first billion-dollar cleanup question is how will EPA clean up contaminated aquifers hundreds of feet below the surface? For comparison, the New York Department of Environmental Conservation just released a report providing options for remediating a contaminated deep aquifer in Long Island. There, the state is seeking compensation from Northrop Grumman Corp. and the U.S. Navy for a massive groundwater plume that poses risks to a sole-source aquifer supplying drinking water for 2.6 million people.

The New York plume is 600 acres in size and the aquifer is 800 feet below ground surface. The technologies to remove VOCs from groundwater include air stripping and granular activated carbon filters. The primary options for disposal include discharge to surface water or transport to an offsite location (e.g., the local wastewater treatment plant) for treatment and disposal.

In accordance with Superfund guidance for estimating remedial costs, the state assumed all of the remedial options would be implemented over 30 years. The net present value cost for the treatment options (for the 30-year period allowed by the regulations) ranged from $268 million to $587 million. However, the wells are expected to be in operation for more than 200 years and result in the loss of 730 billion gallons of water resources from a sole source aquifer that serves as the residents’ drinking water, which the state said is especially troublesome given the unknown effects of climate change.

While the Indiana deep aquifers are only 400 feet deep, the cleanup will still cost billions of dollars. Will the remedy take hundreds of years to achieve its goals? Who will be left to pay for this project? Some of the PRPs have gone out of business or filed for bankruptcy leaving the last businesses standing to face joint and several liability unless they can prove their contamination did not reach the deep aquifer or a definitive share of the contamination that would justify not finding them jointly and severally liable for the entire cleanup.

What should businesses do to prepare? Companies receiving PRP notices should find their old insurance policies and put the insurers on notice of the EPA claims in order to seek recovery of defense costs and damages, and consider legal mechanisms to reduce liability exposure such as spin-offs and sign purpose corporations.

What does the future hold? We anticipate fierce insurance coverage litigation between PRPs and their insurers, years of litigation contesting EPA’s liability and damages claims, and more due diligence by real estate purchasers to qualify for bona fide prospective purchaser status to avoid Superfund liability for prior owners and operators.•

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• Bill Wagner is a partner in the Indianapolis office of Taft Stettinius & Hollister LLP. His practice focuses on complex commercial, environmental, insurance recovery, and white collar litigation. He may be contacted at [email protected]. The opinions expressed are those of the author.