The Consequences Of A Catch 22

Do the right thing! Sound business policy, one would think. But apparently not good enough to satisfy some folks.

A landfill owner with a pending federal National Pollutant Discharge Elimination System (NPDES) permit application for stormwater discharges from its facility may still be haled into court by a citizens group for allowing runoff from the site to enter nearby streams.

Diversified Systems Inc. owns and operates a municipal solid waste landfill in Tennessee. The landfill uses two sedimentation ponds that, from time to time, discharge into creeks running across adjacent farms and residential property. A local neighborhood association sued Diversi-fied under the Clean Water Act for discharging from the two wastewater treatment ponds without a permit.

Diversified asked U.S. District Judge R. Allan Edgar to dismiss the citizen suit on the grounds that the company had filed a timely NPDES permit application under U.S. EPA's group application process for stormwater discharges. EPA simply had not finished processing the application, which would eventually be passed along to Tennessee officials for final action, the company argued. For its part, Diversified was doing what it was supposed to do in fulfilling regulatory responsibilities.

Not enough, said Judge Edgar. If Diversified were discharging pollutants without a permit, he would be able to make a decision without help from EPA or state officials. Ruling one way or the other would not disrupt EPA's or Tennessee's management of the permit application process. Diversified needed a permit in hand to defeat the citizen suit, Judge Edgar concluded. Significantly, however, he ruled that the neighborhood association's preliminary evidence on pollution from the ponds was insufficient to award the group a knock-out victory. Instead, he ordered a full trial on the merits.

But apparently neither side wanted a protracted fight, so they signed a consent order. Diversified promised to continue pursuing its NPDES permit applications with Tennessee environmental authorities, to honor agreed-upon effluent limitations and monitoring requirements until the state issued the NPDES permit, and to pay a stipulated penalty of $500 for future violations of the discharge limits or sampling conditions.

Cleanup Liability. Robert W. Meyer Jr., president of R.W. Meyer Inc., is caught in a Superfund suit filed by the state of Michigan. The state wants Meyer, his business and other parties to share cleanup costs at the Cadillac Industrial Park. Meyer's company is allegedly the source of hexavalent chromium contamination in the area.

Believing Meyer had no personal liability for the contamination, his lawyers asked the U.S. District Court for the Western District of Michigan to excuse him from the suit. The corporation acted as a business, they argued. Meyer, though a key officer, was nevertheless only an agent acting on behalf of the firm's interests, they said.

But the district court turned thumbs down on Meyer's plea. The complaint, as the court saw it, contained enough allegations about Meyer to create a debatable issue of his personal responsibility.

Meyer faces personal liability, according to the district court, if he and the company have an identity of interests and if justice would be served by "piercing the corporate veil" (that is, ignoring the corporate structure) and implicating top management as individuals.

Corporate officers who directly participate in the illegal disposal of hazardous wastes will be held personally liable, according to a number of federal Superfund rulings. Thus, if Meyer turns out to be the "guiding force" behind his accused company, the court will hold him personally liable for all or some of the cleanup costs, said the district court.

"Specifically, plaintiffs have alleged that defendant Meyer was the vice president and president of R.W. Meyer Inc., the corporation which holds the legal title to the site, a member of the board of directors, and the owner of one-third of its stock," the court said.

"Plaintiffs also assert that the board of directors never held a meeting . . . that defendant Meyer entered into an agreement with a plating company . . . to provide sewer service; that . . . Meyer supervised the sewer installation; and that the sewer was intended to leach contaminants into the ground," the court continued.

According to court papers, the state found that a construction firm owned by Meyer built a private sanitary sewer in the late 1960s from his warehouse to the city sewer system, allegedly allowing sanitary sewage to leach into the ground. R.W. Meyer Inc., which was controlled by Meyer, allegedly took over the business and operations of the construction firm.

The state alleges that Meyer managed the construction of a sewer line extension for industrial plating wastes that contained hexavalent chromium, which eventually contaminated nearby soil and groundwater.