A case history of EPA overkill.

• Author: Wiener, Norman J.
• Position: EPA case against Taylor Lumber and Treating Inc.

1. Introduction

   In July 1993, Environmental Protection Agency (EPA) Chief Carol Browner announced that EPA, through the Department of Justice (DOJ), had filed twenty-four civil lawsuits throughout the United States, demanding millions of dollars in penalties for violations of federal environmental statutes and regulations. In her words, "We're not going to tolerate that kind of behavior. We continue to have companies that think environmental laws don't apply to them, and that is unacceptable."(1)

   This is the case history of one of those twenty-four lawsuits.

   It also is a story of environmental overkill, one that cries for a reduction in federal regulation of localized environmental problems.

   2. BACKGROUND

      Taylor Lumber and Treating, Inc. (Taylor), the government's ostensible target, is a small, closely held Oregon corporation (the only two stockholders are sisters) that owns and operates a sawmill and wood treating plant in Sheridan, Oregon. Sheridan is more than a wide stop on a rural road, but not much more. Optimistically, it has a population of 7500; the nearest city of any size is the state capital of Salem, some 30 miles to the east as the crow flies. Sheridan's main claims to fame are that the community hosts an annual Phil Sheridan festival and is the site of a major federal correctional institution.

      Taylor began its sawmill operation in the late 1940s and its wood treating plant operation in the 1960s. Its labor force was and is small by national standards, ranging from 115 to 135, depending upon the time of year and the status of the market for its products.

      Taylor had long been environmentally conscious, even before that attitude was influenced by such federal laws as NEPA,(2) RCRA,(3) CERCLA Superfund),(4) the Clean Air Act,(5) and the Clean Water Act.(6) It consistently and conscientiously followed the rules and regulations of the Oregon Department of Environmental Quality (DEQ) and for many years was regulated solely by that state agency. Under DEQ, Taylor had begun the process of environmental cleanup at its Sheridan facility, addressing surface contamination from its wood treating operation.

      However, Taylor's progress halted when EPA became active in the early 1980s, and particularly in 1988 and 1989 when EPA began making threatening moves to place Taylor on its Superfund list. New EPA rules promulgated in 1990 under RCRA regulating the use of chemicals in wood treating plants further complicated Taylor's progress toward cleanup.(7) One complication was that the new EPA rules had no relationship whatsoever to EPA's Superfund process, which was established to clean up the nation's worst abandoned sites.(8) Taylor's facility was still operating, and Taylor's express goal was to clean up the site and comply with environmental regulations.

      To add fuel to the coals kindled by EPA involvement, an incident occurred in 1990 that was to have far reaching effect on the regulatory process then under way.

      In August 1990, DEQ received an anonymous report that some eight years earlier Taylor had buried a number of barrels containing toxic wastes in an abandoned, concrete-lined, water storage area (the "vault" at its treating plant. Investigation by the current plant manager disclosed that the report was partially correct. Taylor immediately employed an environmental cleanup firm to reopen the vault and remove and properly dispose of any toxic material. Numerous barrels containing waste (sludge) as well as wood and other debris from the treating plant yard were discovered and removed. After decontaminating the vault, Taylor's experts were satisfied that none of the toxic material in the vault had entered the environment.(9) In ordinary English--no harm, no damage.(10)

      Taylor, however, did not stop at just cleaning the vault. To comply with the new EPA wood treating rules, Taylor spent over $1.2 million in 1991 to build a state-of-the-art "drip pad" at its treating plant.(11)

      In addition, Taylor ordered its experts to perform an environmental survey of its entire treating plant, prepare a Work Plan to determine the environmental status of the plant, and correct any problems that were found. Taylor submitted the Work Plan, similar to one given to DEQ in 1986,(12) to both DEQ and EPA in November 1991. Taylor was prepared to implement the plan as soon as it was approved.

      But that was not to be.

      The agencies neither approved nor disapproved Taylor's Work Plan. As a consequence, Taylor's attempts to resolve its environmental problems without further legal problems or litigation were not successful.

      Believing it had a hammer to use against a suspected polluter that had engaged in a "coverup"--in this case, the dumping of toxic waste in a vault which then was sealed--EPA sought the help of DOJ without responding to Taylor's November 1991 Work Plan. Without further investigation, DOJ launched its missiles. On June 10, 1993, DOJ notified Taylor that it had violated federal and state laws and regulations in numerous ways, that the penalty for each of the many violations dating back to September 1982 (when the vault was filled and sealed) was $25,000 per day, and that a federal lawsuit would be filed urless Taylor paid a settlement penalty of $1.7 million by June 24, 1993 (fourteen days from the date of notice) and agreed to clean up its Sheridan site.(13)

      Like any small company whose net worth is less than $8 million, Taylor felt overwhelmed by a sense of impending financial disaster. Taylor's management was at a loss to understand how its status had changed from an environmentally conscious company to an environmental villain worthy of such a substantial "pound of flesh." Pleas to postpone, negotiate, discuss, and meet with DOJ were of no avail. The fact that Taylor had already spent $1.2 million on its new drip pad and over $130,000 for legal and environmental consultants to clean up the vault made no impact on DOJ's thinking or actions.

      And so, on July 15, 1993, a case was filed in the United States District Court of Oregon(14)--one of twenty-four cases filed by DOJ nationwide. DOJ's principal contention was that the former cooling water pond--the vault--was intentionally and surreptitiously used as an unpermitted hazardous waste disposal facility.

      In August 1993, the first meeting between DOJ, EPA, and Taylor occurred in Seattle, Washington. It was there that the government representatives learned that their hammer--an intentional dumping and cover-up of polluted material in a concrete-sealed vault-might not have the thrust that led the government to bring this lawsuit. The disclosed facts...