RESPONSIVENESS SUMMARY FOR PUBLIC COMMENTS … · RESPONSIVENESS SUMMARY FOR PUBLIC COMMENTS ......

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RESPONSIVENESS SUMMARYFOR PUBLIC COMMENTS

Proposed Administrative Order on Consentfor De Minimis Contributors

Casmalia Disposal Site, Santa Barbara County, CAEPA Region IX AOC No. 99-02(a)

TABLE OF CONTENTS

I. BACKGROUND 2A. Notice and Opportunity for Comment and Public Meeting on Proposed

Administrative Settlement 2B. EPA Authority to Enter into Administrative Settlement 2C. Overview of Proposed Administrative Settlement 2D. Settling De Minimis Parties 2

n. COMMENTS AND EPA RESPONSES 6A. Comments from Owner(s)/Operator(s) 6

1. The Hunter Entities 6a. Written Comments 6b. Oral Comments 17

B. Comments from Major Waste Generators 191. Compaq Computer Corporation 19

a. Written Comments 19b. Oral Comments 22

2. Continuous Coating Corporation of Orange, California 22a. Written Comments 22b. Oral Comments 23

3. Husky Oil Limited 24a. Written Comments 24

4. PGP Industries, Inc 27a. Written Comments 27-b. Oral Comments 28

5. Quemetco, Inc 29a. Written Comments 29

6. Reichhold, Inc. and Marathon Oil Company 29a. Written Comments 29

7. Royal Gold, Inc 34a. Written Comments 34

C. Comments from De Minimis Contributor 341. Alyeska Pipeline Service Company 34

a. Written Comments 35D. Comments from Individual Members of the Public 35

1. Kenneth Wolf 35a. Oral Comments 35

2. Terry Strickland 35a. Oral Comments 35

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I. BACKGROUND

A. Notice and Opportunity for Comment and Public Meeting on ProposedAdministrative Settlement

In accordance with Section 122(i) of the Comprehensive Environmental Response,Compensation and Liability Act of 1980, as amended (CERCLA), 42 U.S.C. § 9622(i), on March15, 2000, the United States Environmental Protection Agency (EPA or the Agency) published anotice in the Federal Register (Volume 65, Number 51, Pages 13967-13969), by which EPAprovided notice of proposed EPA Region DC AOC No. 99-02(a), an administrative order onconsent (AOC) for de minimis contributors concerning the Casmalia Disposal Site (Site orFacility) in Santa Barbara County, California. In accordance with Section 7003 of the ResourceConservation and Recovery Act (RCRA), 42 U.S.C. § 6973(d), EPA also afforded commentorsthe opportunity to request a public meeting in the affected area.

EPA initially accepted written comments on the proposed AOC during a 30-day periodbetween March 15, 2000 and April 14, 2000. Five written comments were filed timely by April14, 2000, including two requests for a public meeting. On June 12, 2000, EPA published anadditional notice in the Federal Register (Volume 65, Number 113, Page 36900), by which EPAextended the period for written comments through June 26, 2000. On June 26, 2000, EPAconducted a public meeting in Santa Maria, California, to hear oral comments. Five additionalwritten comments were filed timely by June 26, 2000.

B. EPA Authority to Enter into Administrative Settlement

Section 122(g) of CERCLA, 42 U.S.C. § 9622(g), provides EPA with the authority toenter into administrative settlements with de minimis parties.

C. Overview of Proposed Administrative Settlement

Proposed EPA Region DC AOC No. 99-02(a) is intended to resolve the liabilities of 432settling de minimis contributors for the Site under Section 122(g) of CERCLA, 42 U.S.C. §9622(g) and Section 7003 of the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. §6973, for matters covered by the settlement. For most of the settling parties, the proposed AOCalso will resolve their site-related liability for the response costs of the Federal Natural ResourcesTrustees (the Department of the Interior (United States Fish and Wildlife Service), theDepartment of Commerce (National Oceanic and Atmospheric Administration), and theDepartment of the Air Force) and for potential natural resource damages.

D. Settling De Minimis Parties

The following companies and governments are parties to proposed EPA Region DC AOCNo. 99-02(a): A & H Plating, Inc.; Accuride International; Acme Metals Inc.; Action ComputerProducts Sales Inc.; Air Industries Corp.; Air Logistics Corporation; Air Products and Chemicals,

Responsiveness Summary 2 EPA Region DC AOC No. 99-02(a)

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Inc.; AJ Daw Printing Ink Co.; Akzo Nobel Coatings; Alfiex Corp.; Allan Hancock JointCommunity College; Allergan Inc.; Alliant Foodservice, Inc.; Alma Pistons Co./Tomadur EngineCo.; Al's Plating Company Inc.; Alvord Unified School District; Alyeska Pipeline Service;American Broadcasting Company; American Honda Motor Co.; Ameron International Corp.;Amico West; Amtrak—National Railroad Passenger Corp; A.O. Smith; Angelus Sanitary CanMachine Co.; Anheuser-Busch Companies; Applied Power Inc.; Arcadia Unified School District;Armtec Defense Products; Ashland Specialty Chemical Company, a Division of Ashland Inc.;Asphalt Products Oil Corp.; Associates Insectary; Astech/MCI Manufacturing; Astro PakCorporation; Atlas Galvanizing; Avery Dennison; Aviall Service Inc.; Baker Petrolite; BallCorp.; Bandag Incorporated; Bank America; BASF Corp.; Basic Vegetable Products; BaxterHealthcare; Benjamin Moore & Co.; Bently Nevada Corp.; Berkshire Hathaway; BethlehemSteel Corp.; Beylik Drilling Inc.; BFI Waste Systems of North America; BHP Coated SteelCorporation; Bio-Rad Laboratories; BMC Industries Inc.; BOC Gases; Borg-Warner Automotive,Inc. (including Borg-Warner Security Corporation, f/k/a Borg-Warner Corporation, n/k/a BurnsInternational Services Corporation, and Flowserve Corporation, f/k/a BW/IP International, Inc.);Bregin, Inc.; Brown Pacific Inc.; Brush Wellman Inc.; Cabrillo Community College District;California Finished Metals; California Highway Patrol; California Institue of Technology;California Office of State Printing; California Regional Water Quality Control Board, NorthCoast Region; California State Compensation Insurance Fund; California Steel Industries;California Technical Plating Inc.; Cameo International Inc.; Camsco Residential; Carrier Corp.;Case Corporation; Central Santa Clara County Regional; Ceradyne Inc.; Cerritos CommunityCollege; Chabot-Las Positas Community College District; Chaffey Community College District;Champion Technologies, Inc.; Charter Community Hospital; Chemron Corp.; CHW CentralCoast-Marian Hospital; CEPCO Inc.; Citrus Community College; City of Azusa; City ofCarlsbad; City of Guadalupe; City of Monrovia; City of Mountain View; City of Norwalk; Cityof Richmond; City of Riverside; City of San Marino; City of Santa Paula; City of Sunnyvale;City of Thousand Oaks; City of Torrance; City of Vernon; Clougherty Packing Co.; CNFTransportation Inc.; Coast Community College District; Coca-Cola Enterprises; CoherentIncorporated; Cohu Inc. Electronics; Colonial Heights Packaging Inc., on behalf of Milprint andBemis Company, Inc.; Cominer Corporation; Commonwealth Aluminum Concast, Inc.; ConejoCircuits Inc.; Consolidated Drum Reconditioning; Consolidated Fabricators Corp.; ConstructionSpecialties (California), Inc.; Continental Materials Corp.; Contra Costa Community CollegeDistrict; Conway Oil Company; Cooper Industries; Cosmotronic Company; County ofContra Costa; County of Marin; County of Riverside; County of Sacramento; County of SanBenito; County of San Joaquin; County of Santa Barbara; County of Santa Clara; County ofVentura; CoxCom Inc.; Crane Company (including Hydro Aire, Inc., Barksdale, Inc., and PacificValves); Crowley Maritime Corporation; Cubic Corp; Culligan Industrial Water Purification;Culligan International & Culligan Water Conditioning; Cytec Industries; D & S Industries;Daimler Chrysler; Decalta International; Delta Airlines; Deluxe Packages; Diagnostic Products;Diversey Corp. (n/k/a Raython Corp.); Don E. Keith Transportation; Downey Glass; DunnEdwards Corporation; Dura-Bond Bearing Co./SKF USA, Inc.; E & T LLC; Eastman Kodak;Eaton Corporation; EDO Corporation; El Camino Community College; Electromatic Inc.;Electronic Plating Services; Elf Atochem North America Inc.; Elixir Industries Corp.; EmbeeInc.; Energy Factors Inc; Enthone OMI Inc.; Ernest Carlson; ESCO Electronics Corporation;


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Estate of Elfrida Hanchett and Hanchett Family Corp.; EXAR Corporation; Exide Corporation;Facet Energy (Gammaloy Ltd.); Fansteel Corp.; Far BestCorporation; Fair Co.; Fedco Inc.; Federal Bureau of Prisons; Federal Express Corporation;Federal Mogul; Federal Reserve Bank of San Francisco; Finegood Holdings Inc.; FleetwoodEnterprises Inc.; FMC Corp.; Foothill-DeAnza Community College District; Frazee Industries;Fremont Newark Community College District; GATX Corp.; Genentech Inc; Genlyte ThomasGroup; George Industries; Gillette SMMC; Glendale Community College District; GlendaleDevelopment Corporation (f/k/a. Glenfed Development Corporation); Goleta Union SchoolDistrict; Great Lakes Chemical Corp.; Great Spring Waters of America, Inc.; Great WesternChemical; Grossmont Cuyamaca Community College; H & H Paramount, Ltd.; HansonPermanente Cement Inc.; Hartnell Community College District; Hawthorne/Stone Real Estate;Holmes Turtle Ford Inc.; Hooker Industries; Hurst Chemical; ICN Pharmaceuticals Inc.;Industrial Wire Products Corp.; rngersoll-Rand Company; Intel Corporation; Intermetro;International Extrusion Corporation; International Paint HD & Marine; International PaperCompany, JASCO Chemical Corp.; Jensen General Contractors; Johns Manville InternationalInc.; Joslyn Manufacturing Corp.; J.R. Simplot Company; Julius L. Zelman Co.; JurupaUnified School District; Kaiser Aerospace and Electronics Corporation; Kalex ChemicalProducts (including Ellay, Inc.); Kamei International Corp.; Kern Community College; KernCounty; Kern Industries; Kimball International Inc.; Kinder Morgan Energy Partners; KinsburskyBrothers Supply Inc.; Koch Industries; Koppers Industries (n/k/a Beazer East Inc.); Leggett &Platt, Incorporated (including Bedline Manufacturing, a division of Leggett & Platt Inc., and L &P Property Management Company dba L & P PMC, Inc.); Levin-Richmond Terminal Corp.(a/k/a Levin Enterprises Inc.); Lindberg Corporation; Lindberg Heat TreatingCo. (including Industrial Steel Treating); Lodi Door-Overhead Door Corp.; Long BeachCommunity Medical Center; Long Beach Memorial Hospital; Long Beach Unified SchoolDistrict; Longview Fibre Company; Los Angeles Chemical Co.; Los Angeles CommunityCollege District; Los Angeles County Metropolitan Transit Authority; Los Angeles GalvanizingCo.; Los Angeles Office of Education (Long Beach Community College); Los Angeles Times,Division of Times Mirror; Los Rios Community College District; Lubeco Inc.; Magna PlatingCo. Inc.; Mandalay Properties; Marin Community College District; Master Halco Inc.; MathesonTri-Gas Inc., (f/k/a Matheson Gas Products); Matlack Inc.; Matson Navigation Co.; Mattel Inc.;Maytag Corp.; Mazda Motors of America; M.C. Gill Corporation; McKesson HBOC Inc.;McKesson Water Products Company; Mechanical Metal Finishing Co.; Merced CommunityCollege; Mercy Healthcare Sacramento; Mesa Center Automotive; Metal Container Corporationof California; Methodist Hospital of Arcadia; MGF Industries; Milard Group; Minnesota Miningand Manufacturing (including hnation Corporation); Mission Industries (f/k/a Mission LinenSupply); Mission Valley Ford Trucks; Modesto City Schools; Modine Manufacturing Company;Monrovia Unified School District; Montrose Chemical Corp.; Motorola Inc. Semiconductor; Mt.San Antonio Community College District; Mt. San Jacinto Community College District;Mountain View-Los Altos High School District; NAPP Systems Inc.; NASA Ames ResearchCenter; NASA Jet Propulsion Laboratory; National Steel and Shipbuilding; National SupplyCompany; Neville Chemical Co.; North Orange Community College District; Northwest PipeCompany (f/k/a Northwest Pipe and Casing); Norwalk-La Mirada Unified School District;O'Connor Hospital; Oakdale Memorial Park Inc.; Occidental Chemical Corporation (successor to


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Diamond Shamrock Chemicals Company); Ogden Food Products (including OgdenCorporation); Olin Corporation; Olocco Agricultural Services; ORC Technologies Inc. (f/k/aOptical Radiation Corporation); Osbourne United; OSCA Inc.; Oxnard Pest Control Association;PAC Foundry; Pacific Coast Drum Company, Pacific Refining; Pacific Tube Company, PalomarCommunity College District; Parker Hannifin Corp.; Pasadena Area Community College;Pennzoil-Quaker State Company (including PennzEnergy Exploration and Production, L.L.C.);Pentrate Metal Processing, Inc.; Petrolite Corporation; Pilot Chemical; Pioneer North AmericaInc. (including Pioneer Video Manufacturing Inc. and Disco Vision Associates); Plastic MaterialsInc.; Pool California Energy Services; Pool Energy Services; Port of San Diego; Poway UnifiedSchool District; PQ Corp.; PRC-DeSoto International Inc.; Prime Alloy Steel Castings; PrimexTechnologies Inc.; Printronix; Products Engineering Corp.; Prudential General Real Estate;Prudential Lighting Corporation; Public Storage Inc.; Ralston Purina Company; Rancho SantiagoCommunity College District; Revlon Inc.; Rheem Manufacturing Co.; Riverside Cement Co.;Riverside Community Hopsital; Riverside Superintendent of Schools; Riverside Unified SchoolDistrict; Rogers Corporation; RR Donnelley & Sons; Sacramento County Sanitation District 1;Sacramento Municipal Utilities District; Sage Energy Company; San Bernardino CommunityCollege District; San Diego Community College District; Sandia National Laboratory; San DiegoMetropolitan Transit Development Board; San Francisco Community College; San JoaquinRefining; San Jose Evergreen Community College District; San Luis Obispo County CommunityCollege District; Santa Barbara Community College District; Santa Clara County Transit; SantaMonica Community College District; Sanyo E & E Corp.; Schmid Insulation Contractors, Inc.;Scripps Clinic and Research Foundation; Sears, Roebuck & Co.; Sequa Corporation;Shasta-Tehama-Trinity Community College District; Siebe Inc.; Sierracin Corp.; Sigma CircuitsInc.; Sigma Plating Co., Inc.; Signetics Corp.; Siliconix, hie.; Smith International; SonomaCounty Community College District; Sony Technology; Soule Steel—Arnon Liquidating Agency;South Orange Community College District; Spectra-Physics Lasers, Inc.; SRI hlternational; ST &I; Standex International Corp.; Stanford University; State Center Community College District;Steelcase, Inc.; Stepan Company; STI Properties hie. c/o Hemisphere Corporation; St. MarysMedical Center; Sunnyvale School District; Superior Industries hlternational Inc.; Supra Alloyshie.; Taormina Industries; Technicolor Film Service; Ted Levine Drum Co.; Tesoro PetroleumCompanies; Texas Instruments; The Archdiocese of Los Angeles; The Bekins Company; TheInterlake Corporation; The Marmon Corporation; The Mead Corporation; The Okonite Co.; The "Valspar Corp.; Three Bond hlternational Inc.; Time Warner Inc.; Torrance Unified SchoolDistrict; Transtechnology Corp.; Treasure Chest Advertising; Tree Island Industries Ltd.; Tricast,Inc.; Tri Valley Growers; Tucson Electric Power Co.; TWA Airlines; Tyco Printed CircuitGroup; Union Bank of California; Union Carbide; United Air Lines; United States SalesCorporation; University of Southern California; US Army; US Borax; US Border Patrol; USBureau of Indian Affairs; US Bureau of Land Management; US Bureau of Reclamation; USCustoms Service; US Department of Agriculture; US Department of Defense; US Department ofEnergy; US Department of Health and Human Services; US Department of Immigration andNaturalization Services; US Department of Transportation/FAA; US Drug EnforcementAdministration; US Federal Bureau of Investigation; US Fish and Wildlife Service; US GeneralServices Administration; US Geological Survey; US Marshall Service; US Mint; US ParkService; US Small Business Administration; Ventura County Community College District;


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Verdugo Hill Golf Course; Vesper Corp.; Virco Manufacturing Corp.; VWR Corporation;WAISCO (Marwais Steel Co.); Walt Disney Co.; Walt Disney Pictures & Television;Watkins-Johnson Co.; Weber Metals Inc.; West Valley-Mission Community College District;Western Fuel Oil Company; Western Tube & Conduit Corp.; Westminster Ceramics, Inc.;Wheaton USA hie.; Xerox Corporation; Yosemite Community College District; and ZeroCorporation.

H. COMMENTS AND EPA RESPONSES

Comments are grouped into four categories and organized alphabetically within eachcategory. The categories include: Owners/Operators; Large Waste Generators; De MinimisParties; and Individual Members of the Public.

A. Comments from Owner(s)/Operator(s)

1. The Hunter Entities

a. Written Comments

EPA received written comments dated April 11, 2000 from the law firm of Nossaman,Guthner, Knox & Elliott, LLP, which represents Casmalia Resources, Hunter Resources and theEstate of Kenneth H. Hunter, Jr. (collectively, the Hunter Entities).

HE#1: With respect to Section IV (Statement of Facts) of proposed EPA Region DC AOC No.99-02(a), the Hunter Entities state that the proposed de minimis settlement at Paragraph 10 of theAOC contains a typographical error (4,453 billion pounds).

EPA Response: EPA has corrected the typographical error in the final version of the proposedAOC regarding the approximate number of pounds of documented liquid and solid wastes thatwere accepted at the Site during its period of operation. The correct figure is 4.453 billionpounds.

«

HE#2: With respect to Section IV (Statement of Facts) of proposed EPA Region DC AOC No.99-02(a), the Hunter Entities state that the Facility failed to obtain a final RCRA Part B permitbecause of "inconsistent and changing governmental directions combined with political pressure,not because of any deficiencies in the Site's operations."

EPA Response: EPA disagrees with the Hunter Entities' comment. The Hunter Entities failed toobtain a RCRA Part B permit because they did not submit a permit application that met thenecessary minimum legal and technical requirements. The Hunter Entities submitted their firstPart B permit application to EPA in 1983. However, this permit application had multipledeficiencies as reflected in numerous notices of deficiencies issued by EPA. These deficienciesincluded: 1) failing to provide an acceptable run-on and run-off management system; 2)proposing that liquids be diverted to existing surface impoundments beyond the November 1988


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RCRA statutory deadline, which would result in a violation of the statute by placing waste inunlined surface impoundments past the deadline; 3) failing to submit an acceptable proposal formanaging leachate generated from the operation of the Pesticides/Solvents Landfill; 4) failing tocharacterize the extent of on-site and off-site groundwater contamination; 5) failing to adequatelycharacterize the groundwater flow direction for the Site; 6) failing to submit an acceptablecompliance monitoring and corrective action program; 7) failing to provide adequate plans andreports describing the corrective actions to be taken and a description of how the groundwatermonitoring program will demonstrate the adequacy of corrective actions; 8) failing todemonstrate that existing landfills are designed, constructed, maintained, and operated tominimize the possibility of a fire, explosion, or an unplanned sudden or non-sudden release ofhazardous waste or hazardous waste constituents to air, soil, or surface water which couldthreaten human health or the environment; 9) failing to comply with the financial assurancerequirements for closure and post-closure; and 10) failing to comply with liability requirements.Other deficiencies in this initial RCRA Part B permit application are described in the followingEPA documents which are contained in EPA's RCRA Record Center in San Francisco,California:

i) EPA's May 10, 1984, "Warning Letter/Notice of Deficiency" addressed to CasmaliaResources, Inc.;

ii) EPA's March 7,1986, "Warning Letter/Notice of Deficiency" addressed to CasmaliaResources;

iii) EPA's October 30,1987, "Notice of Deficiency" addressed to Casmalia Resources, Inc.;iv) EPA's December 31,1987, "RCRA Part B Application Notice of Deficiency" addressed

to Casmalia Resources; andv) EPA's January 12, 1988, "RCRA Part B Application Notice of Deficiency" addressed to

Casmalia Resources.

On July 15, 1988, EPA formally notified the Hunter Entities of its intent to deny the Facility'sRCRA Part B permit application as it related to the Pesticides/Solvents Landfill, the HeavyMetals/Sludges Landfill, the Caustics/Cyanides Landfill and the Acids Landfill. All of the Site'sother waste disposal units had been ordered closed previously by the California Regional WaterQuality Control Board and the County of Santa Barbara. :

The Hunter Entities initiated a second RCRA Part B permit application process in thelatter part of 1988 for the proposed modernization of the Facility. Additional deficiencies in thislater permit application are outlined in the following EPA documents which are contained inEPA's RCRA Record Center in San Francisco, California:

i) EPA's February 8, 1991, "Request for Additional Information and Revision of theCasmalia Resources Part B Permit Application" addressed to Casmalia Resources; and

ii) EPA's September 9, 1991, "Comments on Draft Closure Plans and Related Documents"addressed to Casmalia Resources.

On September 13, 1991, the California Environmental Protection Agency issued its intent to


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deny the second Part B permit application for the planned modernization and continued operationof the Facility. This intent to deny the permit application was based on the Facility's violations ofand non-compliance with state and federal laws and regulations, and the Facility owner(s)/operators)' non-compliance with orders issued by the Department of Toxic Substances Controland the Regional Water Quality Control Board. As outlined in the State of California'sSeptember 13, 1991 permit denial notification letter, specific areas of non-compliance included:1) failing to comply with financial assurance requirements; 2) failing to pump sufficientquantities of leachate from the Solvent Pesticide Well to achieve a steady state; 3) failing topump liquids from the Perimeter Source Control Trench; 4) failing to implement a groundwatermonitoring program as specified by the Regional Water Quality Control Board Waste DischargeRequirement No. 90-53; 5) failing to provide adequate security at the facility entrance; 6) storinghazardous waste in the Casmalia Neutralization System for a period exceeding one year; and 7)failing to perform annual inspection of the storage tanks in the Casmalia Neutralization System.Based upon these deficiencies, the California Environmental Protection Agency's finaldetermination to deny the Hunter Entities' RCRA Part B permit application for the Facility'smodernization and continued operation was made on April 22, 1992.

HE#3: With respect to Section 1-4 of proposed EPA Region DC AOC No. 99-02(a), the HunterEntities state: 1) no costs incurred by the United States were caused by a release or threatenedrelease of hazardous substances from the Site; and 2) the AOC incorrectly states that the Sitecontinues to pose an imminent and substantial endangerment even though the Site does not meetthe minimum ranking score necessary for listing on the National Priorities List.

EPA Response: EPA disagrees with the Hunter Entities' comments. There is substantial andcompelling evidence of releases and threatened releases at and from the Site and the need for theUnited States to take action to respond to the imminent and substantial endangerment posed tothe human health and the environment.

A federal court has rejected similar claims by the Hunter Entities. On May 22, 2000, the CentralDistrict of California issued an Order Granting the Government's Motion for Partial SummaryJudgment against Casmalia Resources and Hunter Resources as the owner and operator,respectively, of the 'Casmalia Landfill.' Defendants had admitted that the Casmalia Landfill is a *facility within the definition of CERCLA and that they are within the classes of persons subjectto CERCLA liability, but claimed that there had been no release "from" the facility; that at thetime EPA took control of the facility, there was no release or threatened release; and that theUnited States therefore was not entitled to recover its costs. The court held that there was ampleevidence of both threatened and actual releases at the Facility and that the time of any release orthreatened release had no legal significance. The court also found that releases had occurred off-site and to groundwater, which is publicly owned and not the Hunter Entities' property. On thecost argument, the court found that the government's burden was minimal and had been satisfiedby a showing that the government had incurred costs at the Facility.

With respect to evidence of releases and threatened releases at and from the Site and the need forthe United States to take action to respond to the imminent and substantial endangerment posed


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to human health and the environment, in 1991, Donn Zuroski, the On-Scene Coordinator forEPA who oversaw the Agency's emergency site stabilization actions from 1992-1996, inspectedthe Site. Mr. Zuroski testified in his deposition in the ongoing CERCLA cost recovery litigationinvolving the Hunter Entities, styled United States v. Kenneth H. Hunter. Jr. et al. Civ No. 97-9449 RAP (RZx) (C.D. Cal.) (Hunter Litigation), that he observed that hazardous waste wasseeping from landfills, waste was exposed, the Site was in "substantial disrepair," and that the"potential for waste to migrate offsite was great." He also described that exposed waste was onthe faces of the landfills and that erosion had exposed buried waste. Mr. Zuroski described"drums sticking out of the ground" and plastic liners from trucks that had dumped waste at theSite. He further described that "[t]he potential for off-site migration is great when you have soilsthat may be contaminated that are not anchored down," that there were "seeps at the bases of thelandfills," and the ponds were full of liquids. He testified about the great potential for hydraulicproblems in the subsurface and that there was subsurface migration of hazardous waste liquids.After completing this inspection, Mr. Zuroski concluded that site stabilization was needed"soon."

Mr. Zuroski re-entered the Site in the spring of 1992. He testified that the Hunter Entitieshad essentially abandoned the Site, the Site was "out of hydraulic control," there was exposedwaste, drums were "sticking out of the ground," the ponds were near capacity, it "was certain thatyou had subsurface problems," subsurface leachate was coming out of the bases of the landfills,dikes were in danger of failing, and that "immediate stabilization" was needed, hi its July 21,1992 Action Memorandum, EPA determined that the Site was uncontrolled and that siteconditions constituted an imminent and substantial endangerment to human health and theenvironment, hi response to this threatening condition, in August 1992, EPA's emergency teambegan stabilizing the Site, focusing on the contaminated liquids, liquid waste and the surfaceextraction of hazardous waste to "keep the site from getting hydraulically out of control," "tokeep it from going artesian," and "to keep the liquids from migrating out of control."

Sampling conducted during the ongoing site clean-up and closure has documentedadditional releases of hazardous substances that have extended into the groundwater and outsidethe perimeter of the Site. More specifically, these data show, in part, the following hazardoussubstances have migrated off-site: terra hydrofuran, chloroform, naphthalene, phenaphthalene, "methylene chloride, toluene, isopropyl benzene, dichloroethelene, di-n-butyl phthalate, dacamba,tetrachloroethene, trichloroethene, diethylphthalate, ethyl benzene, zxylenes, bis (2 ethylehexyl)pthalate, 2 fluoro 6 nitrophenol, aniline, butylcarbetol, phenol, cis 1-bromo 2-chlorocyclohexane, dichloroprop, and trichloroifluormethane.

The Hunter Entities also recognized that there have been releases of hazardous substancesrelated to the Site, including releases to the groundwater. A 1988 Hydrogeologic SummaryReport prepared for Casmalia Resources and submitted to EPA (the "Casmalia ResourcesHydrogeologic Report") admits that there were on-site and off-site releases of hazardoussubstances into the environment. More specifically, a section of Casmalia Resources'Hydrogeologic Report, entitled "Sources and Concentrations of On-Site GroundwaterConstituents in Groundwater Exceeding Estimated Threshold Background Values,"


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acknowledges the following:

• the Pesticides/Solvents Landfill is believed to be a major source for detectable volatileorganic compounds and elevated Total Organic Carbon (TOC) and Total OrganicHalogens (TOX) concentrations in groundwater;

• the Pesticides/Solvents Landfill also appears to be a source of nickel valuesexceeding the estimated threshold background level in groundwater;

• the Shallow Disposal Well/Burial Cells Unit is believed to be a major source forthe volatile organic constituents TOC, TOX, nickel, and nitrate above estimatedthreshold background value in groundwater; and

• other identifiable sources of observed concentrations of indicator parametersexceeding estimated threshold background values include the Metals Landfilland Sludges 2.

Another section of the Casmalia Resources Hydrogeologic Report, entitled "GroundwaterConstituents Exceeding Estimated Threshold Background Values in Off-Site Areas," describesthe following:

• indicator parameters were measured at concentrations exceeding estimated thresholdbackground values in groundwater samples from a number of off-site wells andpiezometers;

• groundwater in two downgradient off-site areas have two or more indicator parametersthat exceed estimated threshold background values, and are adjacent to broad on-siteareas in which the same parameters exceed estimated threshold background levels; and

• the exceedance of estimated threshold background levels in groundwater in these areasis probably site-related.

In March 1992, five months before EPA commenced its removal action, Casmalia Resourcesprepared a report entitled "Revised Groundwater Monitoring Program," (the "CasmaliaResources Groundwater Report"), which again admits that there were on-site and off-site releasesof hazardous substances, including releases to the groundwater. A section of this report notes thefollowing: •

• current impacts on groundwater beneath and near the Site include the occurrence oforganic compounds in groundwater samples, elevated concentrations of trace elements,or concentrations of inorganics that are significantly above levels used to identify"natural" concentrations in groundwater;

• these results indicate that organic compounds and trace elements have infiltrated intothe artificial fill, weathered and unweathered claystone and groundwater on-site and off-site; and

• the active solvents/pesticides, metals, caustics, and acids landfills are unlined and are allbelieved to have groundwater in direct contact with wastes contained within them.

Another section of the Casmalia Resources' Groundwater Report, entitled "Offsite


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Exceedances," discusses the following:

• indicator parameter groundwater exceedances are present in several off-site areas;• off-site groundwater exceedances are probably site related and include VOC, TOX,

TDS, nickel, chloride, nitrate, bromide, and several other inorganic parameters; and• groundwater exceedances have been found in several off-site areas as far as 800 feet

from the boundary.

Further, the Hunter Entities stated in their response to the United States' interrogatories hi theHunter Litigation that there was a release of hazardous substances that extended off-site beyondthe southern boundary of the Site. The Hunter Entities also stated in briefs in the HunterLitigation that the Site contaminated the groundwater and that "Casmalia Resources conducted...hydrogeologic investigation at the site during early 1988 and 1989...[t]hat study described thenature and the extent of groundwater within the Facility boundary that had been affected byFacility operations," that "[t]he [hydrogeologic] study also indicated that the shallowgroundwater in four localized areas outside and immediately adjacent to the Southern Facilityboundary exhibited some water quality parameters that were believed to indicate groundwatercontamination attributable to the Facility," and that "elevated levels of groundwater qualityparameters" were found in 1989.

The Hunter Entities' reference to the National Priorities List is not germane. The absence of asite on the National Priorities List does not mean that the costs incurred were not caused byrelease or threatened release of hazardous substances or that a site does not pose an imminent andsubstantial endangerment to the environment. The National Priorities List merely identifies thosesites that meet specified criteria and are therefore eligible for Superfund funding for certain siteremediation activities. It is clear for the reasons stated above that the Site's operations resulted inreleases or threatened releases of hazardous substances at and from the Site, and that the Siteposes and posed an imminent and substantial endangerment to the environment.

HE#4: With respect to Section IV (Statement of Facts) of proposed EPA Region DC AOC No.99-02(a), the Hunter Entities state: 1) Site conditions deteriorated because the government didnot allow Casmalia Resources to implement its closure plan or to provide an alternative plan; 2) 'the AOC "ignores" that Casmalia Resources spent monies attempting to remediate the Site, andsought governmental approval to close the Site utilizing the closure fund; and 3) the UnitedStates "seized" $1.4 million from the closure fond despite the fact there was not an approvedclosure plan.

EPA Response; EPA disagrees with the Hunter Entities' comments. EPA has a strongpreference that owners and operators of RCRA land disposal facilities close these facilitiesthemselves under government oversight without resort to government (i.e.. public) funding. IfCasmalia Resources had submitted technically acceptable and implementable closure plans, EPAwould have approved the plans. However, as explained in part in EPA's response to HE#2 (andincorporated herein), the Hunter Entities did not submit acceptable closure plans to EPA. As lateas September 1991, EPA and the State of California issued a letter to Casmalia Resources which


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contained the agencies' comments on the deficiencies with the draft closure plans for the Site.When the California Environmental Protection Agency denied the Hunter Entities' permitapplication in 1992 for the modernization and continued operation of the Site, the Hunter Entitiesceased active maintenance of the Site and proceeded to essentially abandon their responsibility toproperly close and remediate the Site pursuant to the requirements of RCRA and other applicablefederal and state environmental laws. The draft closure plans were subsequently never revisedand resubmitted to EPA or the State of California, nor was Casmalia Resources' approximate$12 million closure fund sufficient to clean-up and close the Site, which is expected to costapproximately $271.9 million.

As referenced in EPA's response to HE#2 and HE#3 (and incorporated herein), EPA's actionsdid not cause conditions to deteriorate, but were necessary to stabilize the Site and to respond toreleases and threatened releases of hazardous substances and the imminent and substantialendangerment to the environment. One reason for the deterioration of site conditions was theeffective abandonment of the Site by the Hunter Entities in 1992. As. early as 1991, the HunterEntities scaled back their maintenance activities at the Site and environmental conditions beganto deteriorate further. As referenced in EPA's response to HE#3 (and incorporated herein), by1992 site conditions had deteriorated to the extent that they presented an imminent andsubstantial endangerment to human health and the environment.

It is possible that Casmalia Resources spent monies attempting to partially remediate the Site.However, that question is not relevant to whether the proposed AOC should be approved, nor isit necessary that this unconfirmed assertion be included in the proposed AOC.

The United States did not "seize" monies from the closure fund. Consistent with the purpose ofthe closure fund and the standards governing closure funds, after the Hunter Entities essentiallyabandoned the Site, approximately $1.4 million of the closure fund was utilized during EPA'semergency site stabilization action to pay the costs associated with handling the hazardousliquids left at the Site. This included the collection, treatment and disposal of hazardous landfillleachate and contaminated groundwater. The fact that there was not an approved closure plan atthe time of EPA's emergency removal action supports the use of a portion of the closure fund,since one purpose of the closure fund is to fund emergency activities in the event, such as thecase here, that an owner or operator is not undertaking sufficient closure activities.

HE#5: With respect to Section IV (Statement of Facts) of proposed EPA Region DC AOC No.99-02(a), the Hunter Entities state that the AOC "omits the fact that Casmalia Resources (sic)employees continued to perform liquids management and other essential maintenance activitiesat the Site for several years after the Site was no longer accepting off-site waste."

EPA Response: Testimony in the ongoing Hunter Litigation identified two Casmalia Resources'employees described as "ranch hands" or handymen that remained at the Site and wereperforming routine maintenance after the Site was no longer accepting off-site waste. However,these facts are not relevant to whether the proposed AOC should be approved, nor is it necessarythat this detailed information be included in the proposed AOC.


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HE#6: With respect to Section IV (Statement of Facts) of proposed EPA Region DC AOC No.99-02(a), the Hunter Entities state that the AOC should be changed to state that the United States"has alleged" that the Hunter Entities are former owner(s)/operator(s) of the Site.

EPA Response: EPA believes there is ample evidence supporting these references in theproposed AOC. The Hunter Entities stated in papers filed in the Hunter Litigation that CasmaliaResources "holds title to the Facility," and stated in a February 5,1999 letter sent to EPA bycounsel for the Hunter Entities that "Casmalia Resources continues to hold record title to theproperty." Further, the limited partners of Casmalia Resources stated in response to informationrequests propounded by EPA that Casmalia Resources owned the Site from its inception until atleast the date of their responses in the spring of 1997.

Site documents confirm that the general partner of Casmalia Resources was originally KennethH. Hunter, Jr., who was succeeded by Kenneth Hunter, Jr., Inc. in 1975 and by Hunter Resourcesin 1981. Hunter Resources, a California corporation, remained the general partner of CasmaliaResources for the duration of its operations and is the current general partner of that limitedpartnership. Certified State of California records signed by Kenneth H. Hunter, Jr. whenCasmalia Resources registered with the State of California as a limited partnership confirm thatHunter Resources is the general partner of Casmalia Resources, and that the agent for service ofprocess for the limited partnership was Kenneth H. Hunter, Jr. Moreover, the Hunter Entitiesstated in papers filed in the Hunter Litigation that Hunter Resources is the general partner forCasmalia Resources, a statement confirmed by limited partners of Casmalia Resources inresponse to EPA information requests. As the general partners of Casmalia Resources, KennethH. Hunter, Jr.; Kenneth Hunter, Jr., Inc.; and Hunter Resources are owner(s)/operator(s) of theSite and liable for the partnership debts. See, e.g.. Cal. Corp. Code §§ 15509,15015, 15632,15643; Evans v. Galardi. 16 Cal.3d 300, 304,128 Cal. Rptr. 25, 28 (En bane) (Sup. Ct. of Cal.1976); Keller Construction Co.. Inc. v. Kashani. 220 Cal. App. 3d 222, 227, 269 Cal. Rptr. 259,262 (1990).

In addition to being the general partner of Casmalia Disposal (the predecessor to CasmaliaResources), Kenneth H. Hunter, Jr. was involved in the daily operations of the Site. For example,Kenneth H. Hunter, Jr. took significant steps in purchasing the Site and obtaining approval for "the disposal of waste, and was involved in selecting the location of the Site, held discussionswith the appropriate regulatory officials for the permitting of the then named "Kenneth H.Hunter, Jr. Disposal Site," sought approval for the disposal of waste, briefed the County of SantaBarbara on the proposed permit, and entered into escrow for the Site.

After taking these significant steps, in 1972, Kenneth H. Hunter, Jr. entered into the CasmaliaDisposal partnership for the purpose of creating and operating the Site. Kenneth H. Hunter, Jr.assigned to the partnership all of his right, title, and interest in the Site, although facilitymanagement and operational responsibilities resided with the general manager, Kenneth H.Hunter, Jr. After the Facility was permitted, Kenneth H. Hunter, Jr. remained active as thegeneral partner and was involved in making important decisions in the operations. Moreover,Kenneth H. Hunter, Jr. held himself out as the owner and operator of the Facility to customers


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and regulators.

After the nominal change in 1975 of incorporating Kenneth H. Hunter, Jr. Inc. and substitutingthis new corporate entity as the general manager of the Site, Kenneth H. Hunter, Jr., as presidentof the new corporation, continued to exercise control and hold himself out as the operator of theSite, including, but not limited to, making decisions on the facility layout, permits, construction,regulatory compliance, and waste disposal issues, negotiations with customers and potentialcustomers, site management, concerned citizens, personnel decisions, equipment purchases,budgets, and billing. Kenneth H. Hunter, Jr. also sent documents to EPA describing himself asthe owner/operator of the Site.

For these reasons and based upon additional information available to EPA, EPA believes that theproposed AOC accurately describes the Hunter Entities as current or former owners/operators ofthe Site.

HE#7: The Hunter Entities state that it is inappropriate and inconsistent with CERCLA to allowcertain Federal agencies to individually resolve their alleged liabilities by entering into theproposed AOC, especially given that the AOC defines "the United States" as "the United Statesof America, including its departments, agencies and instrumentalities," implying that the UnitedStates is a single entity.

EPA Response: EPA disagrees that the proposed settlement is either inappropriate orinconsistent with CERCLA It is consistent with Section 122(g) of CERCLA, 42 U.S.C.§9622(g), that Federal agencies, like private parties and state and local units of government, begiven the opportunity to participate in settlements such as this one so that EPA can obtain moniesfor site remediation, and these settling Federal agencies can reduce transaction costs and avoidunnecessary litigation. If Federal agencies were not permitted to settle these matters on the samebasis as other private and public entities, public agencies would have few, if any, settlementoptions and might be forced to litigate to judgment all matters in which any Federal agency isinvolved as an alleged potentially responsible party (PRP), a nonsensical solution which wouldarbitrarily create unnecessary litigation and delay EPA recouping settlement monies that could beused to remediate contaminated sites. Allowing Federal parties to individually settle theirliabilities is consistent with EPA's treatment of other public and private entities that areparticipating in this settlement. For example, EPA has calculated individual waste volumes foreach state and local agency, college, and independent corporate subsidiary, and then allowed anentity to settle as a de minimis party on an individual basis if the waste volume for that party fallsbelow the de minimis eligibility cut-off. By allowing the Federal agencies to settle individually,EPA is treating these agencies like other, similarly situated, private and public parties and in afundamentally fair manner. Further, it is necessary that the proposed AOC define the UnitedStates as the "United States of America, including its departments, agencies andinstrumentalities" so that each of the 432 settling parties are given settlement protection in theproposed AOC from the United States as a whole, not just from certain defined Federal agencies,which would thwart one purpose of the proposed AOC and potentially allow non-defined Federalparties to bring actions against the settling de minimis parties. The payment of the Federal


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agencies' settlements by the "United States" merely reflects that the method of payment will befrom a common fund that is used by individual settling Federal agencies.

The textual provision of CERCLA supports treating Federal agencies separately forsettlement purposes and that this does not unfairly prejudice non-settling PRPs. Specifically,Section 120(a)(l) of CERCLA describes the potential individual role of the various Federalagencies:

Each department, agency, and instrumentality of the United States (including theexecutive, legislative, and judicial branches of government) shall be subject to,and comply with, this chapter in the same manner and to the same extent, bothprocedurally and substantively, as any nongovernmental entity, including liabilityunder section 9607 of this title.

See 42 U.S.C.A. §§ 9620(a)(l).

Further, the legislative history surrounding CERCLA, and particularly the de minimissettlement provisions that were incorporated into the statute with the 1986 SuperfundAmendment and Reauthorization Act supports treating the Federal agencies individually and thatCongress intended to provide contribution protection to Federal agencies. For example, duringthe debate over the de minimis settlement provisions, Representative Glickman stated:

Although the [de minimis settlement provision at section 122(g)] is primarilydirected toward private parties who are minimal contributors of waste or who areotherwise minimally related to the hazardous substance problems at a facility,federal agencies may also satisfy the de minimis criteria at particular facilities.Thus when federal agencies fall within the criteria of [the de minimis provision]they too should be treated as de minimis parties.

131 Cong. Rec. 34,649 (Dec. 5, 1985) (extended statement of Rep. Glickman).

Consistent with the express language and the legislative history of CERCLA supporting *the inclusion of the Federal agencies in this proposed AOC, courts have permitted Federalagencies to enter into separate settlements and obtain contribution protection. Indeed, theargument that Federal agencies should receive less protection under the contribution protectionprovisions of CERCLA than nongovernmental PRPs was flatly rejected in Avnet v. AlliedSignal. 825 F. Supp. 1132 (D. R.I., 1992).

In Avnet. which involved a de minimis settlement with the United States Navy, UnitedStates Coast Guard and the General Services Administration, the court relied in part on Section120(a)(l) of CERCLA and legislative history to uphold the validity of a settlement that grantedcontribution protection to individual Federal agencies. The court held that governmental agencieswere entitled to the same protection that any other de minimis party settlor would receive:


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The legislative history of CERCLA shows that Congress intended to providecontribution protection to federal agencies who were involved in de minimissettlements...

The settlement terms for the federal PRPs are exactly the same as the other deminimis settlors. The calculation of ^as federal defendants' settlement paymentsare on the same basis and include the same 56% settlement premium that theprivate de minimis settlors paid.

Id. at 1142 (emphasis in original).

hi rejecting the plaintiffs' argument, the court concluded:

The effect of plaintiffs' argument, if accepted, would be to create disincentives forsettlement because settlors would be required to pay twice: once to EPA in thesettlement and then again to nonsettling parties who sue for contribution. Thisresult would punish the de minimis parties for settling and paying their fair shareearly, and reward non-settlors for holding out. The result would be fewersettlements and increased litigation. The express purpose of CERCLA Sections113(f) and 122 would be undermined.

Id. at 1142.

Similarly, the concerns raised by the court in U.S. v. Moore. 703 F. Supp. 455 (E.D. Va.1988), a case cited by the Hunter Entities, are satisfied since the proposed AOC has been subjectto defined administrative procedures and public comment, and the Federal agencies are settlingon the same terms as similarly situated private and public de minimis parties. Thus, the Federalagencies are likewise entitled to contribution protection and any other benefits that might accruefrom the proposed AOC.

HE#8: The Hunter Entities state that there is an inherent conflict in allowing the Federal agenciesto enter into this settlement, and that the United States seeks to unfairly reduce its liabilityrelating to the Site.

EPA Response: EPA disagrees with the Hunter Entities' comments. The settling Federalagencies are being treated similarly to the other de minimis contributors that were offered theopportunity to resolve their alleged liabilities under the terms of the proposed AOC. The settlingFederal agencies will be paying the identical amount of settlement monies that other de minimisparties will be paying per pound of waste sent to the Site. Additionally, the Federal agencies willbe bound by similar covenants and restrictions, and will be offered a similar level of protection asother de minimis parties. Further, the basis for the waste volumes being assessed against theFederal agencies is, and has been, available for public review, and should also be in thepossession of the Hunter Entities as the owner(s)/operator(s) of the Facility. EPA also is unawareof any information regarding the toxicity of waste allegedly sent to the Site by the settling

Responsiveness Summary 16 EPA Region IX AOC No. 99-02(a)

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Federal agencies that would bar these agencies from participating in this settlement. Because theFederal agencies are being treated like all other private and public parties, it is irrelevant thatindividual Federal agencies also may have regulatory roles relating to the Site. The United Statesis not "unfairly" reducing its liability but, like other settlors, Federal agencies have agreed to stepforward and pay substantial monies, including a 100% premium, to resolve their allegedliabilities for the waste volumes associated with the settling Federal agencies. This is preciselythe purpose of this and other de minimis settlements.

HE#9: The Hunter Entities allege that it is improper for the United States to grant contributionprotection to several Federal entities because it would give the United States unfair advantage inresponding to counterclaims, including a claim for contribution, brought by the Hunter Entitiesagainst the United States in the Hunter Litigation.

EPA Response: EPA disagrees with this comment. First, the statement is incorrect because theHunter Entities have not answered the United States' complaint in the Hunter Litigation, andtherefore do not have any counterclaims or a claim for contribution pending against the UnitedStates. The United States also disagrees that it is seeking an "unfair advantage" in the HunterLitigation because, as set forth in EPA's responses to HE #7 and HE#8 , the Federal agencies aremerely settling their alleged Liabilities under the same settlement terms as other private andpublic de minimis contributors.

The fundamental fairness of the proposed settlement is evidenced by the fact that the keysettlement terms and procedures are not Federal agency specific, but are being applied to 432similarly situated de minimis parties that have entered into the proposed AOC in this arms lengthtransaction. Since the Federal agencies are being offered the similar settlement terms andprocedures as other de minimis parties, there is neither an appearance of a conflict of interest, nora conflict of interest in fact.

b. Oral Comments

hi addition, Henry Weinstock of the firm of Nossaman, Guthner, Knox & Elliott, LLP,which represents Casmalia Resources, Hunter Resources and the Estate of Kenneth H. Hunter, Jr".(collectively, the Hunter Entities), made oral comments at the June 26, 2000 public meeting.

HE#10: While referencing their written comments, the Hunter Entities stated that although theydo not generally have a problem with the settlement to the extent that it involves private entities,they object to EPA settling with approximately 20 Federal departments and agencies.Fundamentally, the Hunter Entities object to the United States settling with itself without courtoversight and to the government giving itself an alleged preference. The Hunter Entities alsostated that they believe that most of the estimated site cleanup costs could have been avoided ifthe Hunter Entities had been allowed to close the Site. It is the Hunter Entities' position thatbecause they were not allowed to close the Site, environmental conditions deteriorated, greatlyincreasing the cost of remediating the Site. The Hunter Entities therefore believe that thegovernment agencies that oversaw the Site should be allocated all or a significant share of the


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increased site remediation costs that could have been avoided if the Site had been closed.

EPA Response:

hi response to the Hunter Entities' written comments (HE #8 and HE#9), EPA described why itwas fair and appropriate that the settling Federal agencies been given the same opportunity asother public agencies and private entities to enter into the proposed AOC. These comments areincorporated herein.

EPA disagrees with the Hunter Entities' assertion that the actions of governmental agenciescaused site response costs to increase. EPA believes that these costs could have been avoided ifthe Hunter Entities had closed the Site pursuant to the requirements of RCRA and otherapplicable Federal and state environmental laws. EPA also disagrees with the Hunter Entities'position that the government regulatory agencies prevented Casmalia Resources from fulfillingtheir site closure and remediation obligations. As noted in EPA's response to HE#2 and HE#4(and incorporated herein), the Hunter Entities never submitted acceptable site closure plans toEPA. hi 1992, after the State of California denied their permit application for the modernizationand continued operation of the Site, the Hunter Entities ceased active maintenance of the Site andproceeded to essentially abandon their responsibility to properly close and remediate the Sitepursuant to the requirements of RCRA and other applicable Federal and state environmentallaws. Some of the Hunter Entities' major unfulfilled Site closure obligations included: i) placingfinal cover systems over the Site's landfills; ii) closing and remediating the Site's remaining wastemanagement units (hazardous waste injection wells, waste disposal trenches, and waste disposalponds and pads); iii) installing and operating long-term groundwater remedies to prevent thegeneration and migration of contaminated groundwater; iv) installing stormwater managementsystems and managing site stormwater on a long-term basis; and v) performing long-term post-closure care of the inactive Site. As noted in EPA's response to HE#3 (and incorporated herein),as early as 1991, the Hunter Entities were allowing site environmental conditions to deteriorate.The Hunter Entities allowed site conditions to deteriorate to the point where in 1992, EPAdeclared that the Site posed an imminent and substantial endangerment to human health and theenvironment and initiated emergency site stabilization activities using CERCLA authorities. EPAwould have preferred that the Hunter Entities had submitted an acceptable closure plan andclosed the Site without the public potentially bearing some of the remediation costs associatedwith the Site. However, the Hunter Entities' inadequate proposals and lack of action coupledwith the deteriorating Site conditions caused EPA to initiate emergency site stabilizationactivities. As a result, there is no justification for imposing any site response costs on any Federalagency resulting from the emergency site stabilization activities and oversight of the Site.

B. Comments from Major Waste Generators

1. Compaq Computer Corporation

a. Written Comments


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EPA received written comments dated June 23,2000 from the law firm of BrobeckPhleger & Harrison LLP, which represents Compaq Computer Corporation (Compaq), one of 93large waste generators that EPA has notified that it is a PRP for the Site.

Compaqtfl: Compaq states that the 2,843,000 pound eligibility cut-off to qualify for theproposed settlement is arbitrary and should be expanded to include any party sending less thanone percent (1.0%) of the total waste to the Site on a poundage basis. Compaq requested thatEPA increase the current de minimis eligibility threshold to one percent or 4.453 million pounds.

EPA Response: EPA disagrees with Compaq's statement. EPA has established guidelines fordetermining which PRPs qualify for treatment as de minimis contributors pursuant to Section122(g)(l)(A) of CERCLA, 42 U.S.C. § 9622(g)(l)(A). EPA's de minimis guidance clearly statesthat it is incumbent upon EPA to take into consideration site-specific circumstances in setting thede minimis eligibility cut-off for a particular site and specifically declines to recommend aprescribed eligibility cut-off which is applicable to all sites. EPA's de minimis guidance providesin relevant part,

Because site conditions, remedial programs, number of PRPs and otherconsiderations vary tremendously among sites, the approach taken by thisguidance, consistent with Section 122(g)(l)(A) of SARA, is that the de minimiscontributor will be defined on a site-specific basis.

Interim Guidance on Settlements with De Minimis Waste Contributors under Section 122(g) ofSARA, OSWER Dkective #9834.7 (June 19, 1987), at p. 4 (emphasis added). EPA's subsequentde minimis guidance further clarifies the Agency's guidelines,

There is no specific statutory criterion for identifying the appropriate cutoff"otherthan the requirement that the contribution of each de minimis party must beminimal relative to other hazardous substance contributors.

Methodology for Early De Minimis Waste Contributor Settlements under CERCLA Section122(g)(l)(A), OSWER Directive 9834.7-lc (June 2, 1992), at pp. 9-10 (emphasis added). EPA's*following de minimis guidance also clarifies the Agency's guidelines,

...a Region needs to determine the appropriate cutoff for de minimis and non-deminimis parties at the site. This guidance does not establish a set percentage foreligibility for a de minimis waste contributor settlement; we believe that decisionis primarily site-specific.

Streamlined Approach for Settlements with De Minimis Waste Contributors under CERCLASection 122(g)(l)(A), OSWER Directive #9834.7-lD (July 30, 1993), at p. 2 (emphasis added).

Pursuant to EPA's de minimis guidance, the Agency took site-specific considerations intoaccount in setting the eligibility cut-off at 2,843,000 pounds. In particular, EPA considered that


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approximately 10,000 to 12,000 PRPs disposed of the roughly 4,453,000,000 pounds of wastematerial sent to the Site. Among this large universe of PRPs, roughly the top 150 of the 10,000 to12,000 PRPs sent two-thirds of the total waste material disposed of at the Site. These top 150waste generators are comprised of the 54 members of the Casmalia Steering Committee (CSC)and the approximately 93 large waste generators variously referred to as the large waste generatorgroup or the Tier II PRPs. Each of these 150 major waste generators disposed of 2,843,000pounds or more of waste material—which is roughly equivalent to .06% (or higher) of the total4.453 billion pounds of waste material at the Site. The remaining thousands of waste generatorssent the other one-third of the waste material to the Site.

hi its enforcement discretion, EPA established the de minimis eligibility cut-off at 2,843,000pounds to ensure that similarly situated parties by volume are treated similarly. Historically,PRPs that disposed of 2,843,000 pounds or more of waste material at the Site have been eligibleto participate in a settlement agreement for major waste generators. This figure is roughly theamount of waste material sent to the Site by the CSC member that disposed of the least amountof waste material among that group of major waste generators. In 1993, when EPA notifiedmajor waste generators of their site liabilities based on information provided by theowner(s)/operator(s) and the State of California, EPA intended to send general notice letters andreach settlement with the Site's top PRPs by volume. However, subsequent waste-in informationobtained by EPA showed that additional PRPs disposed of waste material in the CSC'svolumetric range (i.e» 2,843,000 pounds or more of waste material). Based on this site-specificsettlement history, EPA concluded that major waste generators (Le., those parties that disposed of2,843,000 pounds or more) that were notified subsequent to the settlement agreement betweenthe United States and the CSC would have a reasonable expectation of participating in a futuresettlement opportunity for major waste generators.

The commentor is incorrect in stating that EPA's de minimis guidance prescribes a 1.0%eligibility cut-off. EPA's de minimis guidance only makes two references to a 1.0% figure. Thefirst is a footnote in guidance stating that 1.0% is the statistical median for de minimissettlements entered into as of July 1993. Streamlined Approach for Settlements With De MinimisWaste Contributors under CERCLA Section 122(g)(l)(A), OSWER Directive #9834.7-lD (July30, 1993), at pp. 2-3, footnote 5. This guidance also noted that the de minimis eligibility cut-off :

ranged from 0.07% to 10.0% for the same time period, due to site-specific considerations. Theother is a hypothetical example of how to manage uncertainty about waste volumes in a way that"ensures that a party is truly de minimis." In the example, the total volume of waste at a site canonly be expressed as a range (50,000 to 100,000 batteries) and the individual party's contributionis known (500 batteries). Using this example, the guidance recommends using the lower numberof the range (50,000) as the total amount of waste, in which case the individual contributor'swaste is 1.0% (500/50,000). Streamlined Approach for Settlements with De Minimis WasteContributors under CERCLA Section 122(g)(l)(A), OSWER Directive #9834.7-lD (July 30,1993), at pp. 2-3 (emphasis added). Importantly, the EPA's guidance does not prescribe aparticular eligibility cut-off point in either reference to the 1.0% figure.

With respect to the commentor's request to increase the de minimis eligibility cut-off to 1.0% or


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4.5 million pounds, EPA rejects this request. Based on the 4.453 billion pounds of waste materialdisposed of at the Site, 1.0% of 4,453,000,000 represents 44,530,000' pounds. 44.53 millionpounds is not a de minimis volume on its face. EPA does not believe it is reasonable to apply a1.0% eligibility cut-off because such a cut-off point would mean that waste generators thatdisposed of up to a staggering 44,530,000 million pounds of waste material would be eligible forde minimis status, contrary to both the statute and EPA guidance.

Finally, EPA's de minimis guidance specifically states that EPA should make "a determinationthat the individual waste contributions of the parties constitute only a minor portion of the totalsite response costs," and that the de minimis eligibility cutoff should be established "such thatsufficient viable major parties remain to negotiate or litigate for the response actions at the site."Methodologies for Implementation of CERCLA Section 122(g)(l)(A) De Minimis WasteContributor settlement proposals and agreements, OSWER Directive 9834.7-1B, December 20,1989, at p. 10. Setting the de minimis eligibility cut-off at 1.0% for Casmalia would leave only13 out of over 10,000 PRPs above the eligibility cut-off (12 of the 54 members of the CSC and 1out of the 93 parties in the large waste generator group). EPA's de minimis guidance provides fortaking site-specific considerations into account for precisely these kinds of reasons.

Rather than adopting a 1.0% de minimis eligibility cut-off that is clearly not prescribed bystatute, recommended in guidance, or reasonable on its face, EPA has decided at this time to treatthe top 150 PRPs as major waste generators, and to designate the remaining thousands of wastegenerators as de minimis or de micromis contributors. EPA believes that 150 PRPs represents themaximum number of parties that could reasonably participate in settlements for major wastegenerators, and that the individual waste contributions (i.e.. less than 2,843,000 pounds) of theremaining parties constitutes only a minor portion of the total site costs.

b. Oral Comments

Compaq#2: Compaq reiterated its written comment that while Compaq supports the proposed deminimis settlement in concept Compaq believes that the eligibility cut-off is arbitrary and shouldbe expanded to include any parties sending less than one percent of the total waste to the Site on *a poundage basis.

EPA Response: The issue commentor raises orally is duplicative of the commentor's writtencomments. Please refer to EPA's response to Compaq#l for the Agency's response on this issue.

'Several commentors appear to share a common misapprehension that 1.0% of4,453,000,000 is equal to 4,453,000. Based on comments submitted by this and othercommentors, it seems that commentors derived the 4.5 million pound figure based on themisapprehension that 1.0% of 4,453,000,000 is equal to 4,453,000. In fact, 4.5 million poundsrepresents .1% (.001) of the total waste material disposed of at the Site.


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2. Continuous Coating Corporation of Orange, California

a. Written Comments

EPA received written comments dated April 13, 2000 (together with a May 1, 2000submirtal for a missing page) from the law firm of Katten Muchin Zavis, which representsContinuous Coating Corporation (CCC) of Orange, California, one of 93 large waste generatorsthat EPA has notified that it is a PRP for the Site.

CCC#1: CCC states that it is unfair to finalize the proposed de minimis settlement just weeksbefore the public and other PRPs could evaluate it in the context of EPA's total settlementpackage for the Site; this package necessarily includes EPA's imminent settlement with the largewaste generator group.

EPA Response: Commentor raises an issue that is generally duplicative of that raised by anothercommentor. Please refer to PGP#1 below for EPA's response.

CCC#2: CCC states that EPA's proposed de minimis settlement creates an arbitrary andinequitable burden for potential natural resource damages (NRD) claims on the large wastegenerator group's lower-volume PRPs.

EPA Response: EPA does not agree with the CCC's statement. At the request of the de minimisparties, EPA has worked closely with the Federal Natural Resources Trustees to secure theiragreement to grant covenants to de minimis contributors. As discussed in EPA's response toCompaq#l, the total share of the waste material disposed of at the Site by all parties that sent lessthan 2.843 million pounds of waste material is roughly 22%. The 432 settling parties to theproposed de minimis settlement in EPA Region DC AOC No. 99-02(a) sent only 5.5% of the total4.453 billion pounds of waste material to the Site. In contrast, the top 150 parties sentapproximately two-thirds of the waste material sent to the Site. This means that the responsibilityfor potential natural resources damages is shared among 150 remaining major waste generatorsand does not represent an inequitable burden on PRPs that are not party to this proposed deminimis settlement.

b. Oral Comments

CCC#3 (Nancy Rich): CCC states that EPA ignored valuable waste shipment manifestinformation in identifying PRPs, and that EPA failed to provide notice to other generators at thetime that the members of the CSC were contacted initially.

EPA Response: EPA disagrees with CCC's statement, hi 1993, EPA began its efforts to identifythe thousands of PRPs that may have disposed of waste material during the Facility's 16-yearoperational period between 1973 and 1989. At the outset, EPA's regional office in San Francisco(Region IX) requested that EPA's National Enforcement Investigations Center (NEIC) conduct


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an on-site assessment and inventory of the Facility's waste shipment and other related businessrecords to assist Region DC in developing strategies for the following: 1) managing thevoluminous disposal records at Casmalia; and 2) accessing, retrieving, and using the informationin the records for enforcement case development. As part of this effort, NEIC reviewed hard copydocuments, microfiche, and computer records kept by the Facility's owner(s)/operator(s) duringthe normal course of business.

With respect to the hard copy documents, NEIC inventoried 737 boxes (of which about 617contained pertinent documents). Of the boxes inventoried, most were standard office box sizeabout 8.5" x 11" x 17.5" (roughly 5,000 sheets per box), hi addition, NEIC copied the Facility'scomplete set of 11,452 microfiche cards. Finally, NEIC obtained a backup copy of the computerfiles kept by the Facility's owner(s)/operator(s). All told, EPA obtained records from the Facilitythat showed approximately 22,000 facilities with individual EPA identification numbers disposedof waste material at the Site.

While the facility's owner(s)/operator(s) had preserved comprehensive records showing theidentities of waste generators, it was evident from NEIC's records assessment and inventory thatEPA would have to analyze, organize and manage this massive body of information to identifyPRPs properly by attributing waste shipments from individual facilities to PRPs. hi managingthis records collection, EPA personnel knew early on that it would be necessary to normalize thenames of facilities that disposed of waste material (i.e.. correct for spelling errors in facilitynames); aggregate individual facilities under parent entities (i.e.. attributing waste shipmentsfrom multiple facilities to a single corporate or government entity responsible for more than onefacility); and update contact information for thousands of PRPs from potentially stale address andtelephone contact information.

Due to the enormity of this effort, EPA initially relied upon information from the Facility'sowner(s)/operator(s) and the State of California to identify the PRPs that coalesced as the CSC,which includes many of the largest waste generators that disposed of waste material at the Site.As part of its PRP investigation, EPA subsequently identified other PRPs, including thousands ofde minimis contributors and approximately 93 additional large waste generators.

+

CCC#4 (Ken Harel) (name incorrectly spelled as 'Berverelli' in transcript of June 26. 2000public meeting): CCC states that EPA should have contacted all PRPs at the same time becausewaste shipment manifests contain both addresses and telephone numbers.

EPA Response: EPA disagrees with the CCC's statement. Although it is true that wasteshipment manifests maintained by the Facility's owner(s)/operator(s) contain identifyingcustomer information, contact information in many instances was outdated even in 1993 becausesuch records dated from the 1970s and 1980s. It has been necessary to invest significantresources in the effort to update such information to track parties, many of which have undergonesignificant changes as a result of business transactions (e.g.. mergers, acquisitions, bankruptcies)as well as changes in location. EPA could not simultaneously identify, locate and track roughly10,000 to 12,000 PRPs without detracting from EPA's ability to offer settlement opportunities to


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any PRPs. As a result, EPA has implemented a staggered approach to offering settlementopportunities to PRPs, beginning with a group of the largest waste generators, next offeringcashout settlement opportunities to hundreds of the thousands of de minimis contributors, andmore recently a group of additional large waste generators.

CCC#5 (Ken Harel): CCC states that it is inappropriate to include companies such as CCC inthe same group as PRPs that arranged for the disposal of substantially more waste material at theSite.

EPA Response: Commentor raises issues that are essentially duplicative of those raised by othercommentors. Please refer to EPA's response to Compaq#l.

3. Husky Oil Limited

EPA received written comments dated April 14, 2000 from the law firm of Parsons Behle& Latimer, which represents Husky Oil Limited (Husky), one of 93 large waste generators thatEPA has notified that it is a PRP for the Site.

a. Written Comments

HOL#1: Husky states that the proposed settlement is inconsistent with EPA's guidelines for deminimis settlements and provides benefits that are not adequately reflected in the payments to bemade by the parties to the settlement. Specifically, EPA has granted most settling partiesprotection from the risk that response costs at the Site will exceed the total response costs uponwhich the settling parties' payments are based.

EPA Response: EPA disagrees with Husky's comments, hi offering a cashout settlementopportunity to de minimis contributors, EPA carefully considered the balance between settlingparties' cash payments and the scope of the covenant not to sue and contribution protectionafforded by the proposed settlement. Under the terms of the settlement, settling parties thataccepted Option A receive a comprehensive release from the United States for liability at the Siteby paying their share of the estimated cleanup costs, based on the number of pounds of wastematerial they disposed of at the Site, plus a 100% cashout premium to cover future site-relatedand enforcement uncertainties. This cashout premium is consistent with EPA guidance whichrecommends a presumptive premium of 100% for a settlement without a cost reopener.Standardizing the De Minimis Premium (July 7, 1995), at p. 4. Settling parties that acceptedOption B pay less money up front but receive more limited liability releases from the UnitedStates with respect to the Site. EPA may require Option B settling parties to pay additionalmoney in the future for Site costs in excess of the 1999 Cost Estimate for the Casmalia DisposalSite (Revised August 1999). The payment amount for Option B settling parties reflects a 50%cashout premium, consistent with EPA guidance which recommends a presumptive premium of50% for a settlement with a cost reopener. Standardizing the De Minimis Premium, OSWER(July 7, 1995), atp.4.


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The cashout premiums for Options A and B are intended to cover future site-related andenforcement uncertainties, including the risk of cost overruns (subject to certain cost reopenersfor Option B settling parties). The commentor has not supported its statement that the settlingparties have not paid adequate consideration for the covenants not to sue and contributionprotection that they will receive under the proposed settlement in the face of their substantialcashout payments that include premiums. EPA does not believe there are site-specificconsiderations that warrant deviation from the presumptive 100% premium for Option A(settlement without a cost reopener) or the presumptive 50% premium for Option B (settlementwith a cost reopener).

HQL#2: Husky states that protection from potential claims for natural resource damages is notnormally included in de minimis settlements and that the settlement appears to undervalue thisprotection. Husky states that this protection greatly increases the liability exposure of PRPs thatare not parties, and therefore the settling parties should pay substantial additional compensationto cover the potentially significant costs associated with natural resource damages.

EPA Response: EPA disagrees with Husky's comments. Contrary to the commentor's statement,the settling de minimis parties that accepted Option A under the proposed AOC have paidconsideration for the covenants not to sue from the Federal Natural Resource Trustees (theDepartment of the Interior (United States Fish and Wildlife Service), the Department ofCommerce (National Oceanic and Atmospheric Administration), and the Department of the AirForce). In consideration of the releases from the Federal Natural Resource Trustees, Option Asettling parties made a payment to cover the Federal Natural Resource Trustees' estimatedresponse costs at the Site, in addition to the payment to cover the response costs included inEPA's estimate. (Option B settling parties were not eligible to be released from any liability forthe costs incurred by the Federal Natural Resource Trustees associated with response actions orpotential natural resource damages at the Site.)

As discussed in EPA's response to CCC#2, the effect of the proposed AOC is to shift theresponsibility for potential natural resources damages to large waste generators, however, suchresponsibility is shared among the top 150 PRPs that disposed of two-thirds of the total wastematerial sent to the Site. In addition, EPA's and the Federal Natural Resource Trustees' response"actions at the Site are expected to minimize the need for natural resource assessment activitiesand possibly natural resource damage restoration activities. For example, settling parties'payments will fund the performance of a Risk Assessment at the Site which will require thecollection and analysis of data necessary to assess possible injuries to natural resources.

HOL#3: Husky states that the proposed AOC provides no verification that the Federal NaturalResources Trustees have agreed to the terms contained in the settlement, as required by Section122G)(2) of CERCLA.

EPA Response: EPA disagrees with Husky's comment. The protection at issue is being providedby the Federal Natural Resource Trustees. The proposed AOC plainly provides that the AssistantAttorney General for the Environment and Natural Resources Division is to sign the settlement


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on behalf of the Department of the Interior (United States Fish and Wildlife Service or USFWS),the Department of Commerce (National Oceanic and Atmospheric Administration or NOAA),and the Department of the Air Force (Air Force) (jointly referred to as the Federal NaturalResource Trustees), hi letters dated March 17,1999 and April 5,1999, the Department of Justicerequested that the Federal Natural Resource Trustees authorize the Department of Justice to granta covenant not to sue to de minimis parties for the Federal Natural Resource Trustees' responsecosts and for potential natural resources damages at the Site, hi response, the Federal NaturalResource Trustees agreed in writing to release de minimis parties that accept Option A under theproposed AOC from any liability for both the Federal Natural Resource Trustees' response costsand potential natural resource damages at the Site, in exchange for payment of certain costs theFederal Natural Resource Trustees estimate they will spend in connection with the Site. TheFederal Natural Resource Trustees' letters authorize the Department of Justice to sign the AOCon their behalf.2 These documents are available to the public at EPA's Superfund Records Centerin San Francisco, CA.

HOL#4: Husky requests that EPA delay execution of the proposed settlement until more isknown about the Site as well as the settling parties' contributions and a more fair and equitableagreement can be negotiated that will not disadvantage PRPs not party to the proposedsettlement.

EPA Response: EPA rejects the commentor's request. EPA believes that the proposedsettlement for de minimis contributors is consistent with Section 122(g)(l) of CERCLA, 42U.S.C. § 9522(g)(l), and EPA's de minimis guidance. CERCLA § 122(g)(l) provides in part:

Whenever practicable and in the public interest, as determined by the President,the President shall as promptly as possible reach a final settlement with apotentially responsible party in an administrative or civil action under section9606 or 9607 of this title if such settlement involves only a minor portion of theresponse costs at the facility concerned and, in the judgment of the President, theconditions in either of the following paragraph (A) or (B) are met.

*42 U.S.C. § 9522(g)(l) (emphasis added). In exercising its discretionary authority under Section "122(g)(l), EPA has developed guidelines for negotiating with de minimis parties. Pursuant toEPA's guidance (Interim Guidance on Settlements with De Minimis Waste Contributors underSection 122(g) of SARA, OSWER Directive #9834.7 dated June 19, 1987), the Agencyrecognizes that de minimis contributor settlements under Section 122(g) can be an effectivemeans of providing de minimis parties with an early and equitable resolution of their liabilitieswhile minimizing their transaction costs. It is the Agency's practice to allow PRPs that made

2Letters dated August 9, 1999 from Monica Medina, General Counsel, NOAA, to BruceGelber, Department of Justice; September 14, 1999 from David Nawi, Regional Solicitor,USFWS, to Joel Gross, Department of Justice; and October 19, 1999 from Thomas W.L. McCall,Jr., Deputy Assistant Secretary of the Air Force, to Joel Gross, Department of Justice.


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minimal contributions to a site to resolve their liabilities quickly and without the need forextensive negotiations with the government. The guidance provides that early discussions withpotential candidates for de minimis settlements will be most beneficial at sites with numerousPRPs, and that EPA may consider early settlement where complete information concerning PRPcontributions and the nature of the remedy is not yet available.

Consistent with guidance, EPA offered an early cashout settlement opportunity to the settling deminimis parties under proposed EPA Region DC AOC No. 99-02(a). hi Section V(Determinations) of the proposed AOC, EPA has determined inter alia that:

• prompt settlement is "practicable" and in the "public interest" within themeaning of Section 122(g)(l) of CERCLA, 42 U.S.C. § 9622(g)(l);

• as to each Settling Party, [the] Consent Order involves only a minorportion of the total response costs at the Site within the meaning of Section122(g)(l) of CERCLA, 42 U.S.C. § 9622(g)(l); and

• the amount of hazardous substances and the toxic or other hazardouseffects of the hazardous substances contributed to the Site by each SettlingParty are minimal in comparison to other hazardous substances at the Sitewithin the meaning of Section 122(g)(l)(A) of CERCLA, 42 U.S.C. §9622(g)(l)(A).

These determinations are supported by the Findings of Fact contained in the proposed AOC andthe administrative record for the Site.

4. PGP Industries, Inc.

EPA received written comments dated June 5, 2000 from the law firm of Gammage &Burnham, which represents PGP Industries, hie. (PGP), one of 93 large waste generators thatEPA has notified that it is a PRP for the Site.

a. Written Comments•,

PGP#1: PGP states that EPA set an arbitrary cut-off of 2,843,000 Ibs. to participate in theproposed de minimis settlement, and that EPA denied procedural due process by failing toprovide large waste generators an opportunity to participate in and receive notice of the proposedde minimis settlement.

EPA Response: EPA disagrees with the PGP's comment. With respect to the de minimiseligibility issue which the commentor raises, this issue is generally duplicative of that raised byother commentors. Please refer to EPA's response to Compaq#l for the Agency's response onthe de minimis eligibility cut-off issue.

With respect to procedural due process, EPA is not required to afford all PRPs the opportunity toparticipate in any single CERCLA settlement. In fact, Congress provided EPA with the authority


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to enter into administrative settlements with de minimis parties under Section 122(g) ofCERCLA, 42 U.S.C. § 9622(g), with a view to providing the benefit of expedited settlement andreduced transaction costs to de minimis contributors. EPA has endeavored to provide suchbenefit to de minimis parties at Casmalia. EPA has provided notice of and opportunity for publiccomment on the proposed AOC. On March 15,2000, EPA published notice in the FederalRegister (Volume 65, Number 51, Pages 13967-13969), by which EPA provided notice ofproposed EPA Region DC AOC No. 99-02(a) in accordance with Section 122(i) of CERCLA, 42U.S.C. § 9622(i). EPA also afforded commentors the opportunity to request a public meeting inthe affected area in accordance with Section 7003 of RCRA, 42 U.S.C. § 6973(d). EPA initiallyaccepted written comments on the proposed AOC during a 30-day period between March 15,2000 and April 14, 2000. Five written comments were filed timely by April 14, 2000, includingtwo requests for a public meeting. On June 12, 2000, EPA published an additional notice in theFederal Register (Volume 65, Number 113, Page 36900), by which EPA extended the period forwritten comments through June 26, 2000. On June 21, 2000, EPA conducted a public meeting inSanta Maria, California, to hear oral comments. Five additional written comments were filedtimely by June 26, 2000. hi addition, EPA provided actual notice of the proposed AOC to theCSC, the Casmalia Negotiating Committee (Tier n PRP group), the State of California, and theHunter Entities.

b. Oral Comments

PGP#2: PGP reiterated its written comments that EPA set an arbitrary cut-off of 2,843,000 Ibs.to participate in the proposed de minimis settlement, and that EPA denied procedural due processby failing to provide large waste generators an opportunity to participate in and receive notice ofthe proposed de minimis settlement. PGP requested that EPA increase the current de minimiseligibility threshold to one percent or 4.5 million pounds.

EPA Response: The issue commentor raises orally is duplicative of the commentor's writtencomments. Please refer to EPA's response to Compaq#l for the Agency's response on deminimis eligibility cut-off issue, and refer to EPA's response to PGP#1 for the Agency'sresponse on the procedural due process issue.

5. Quemetco, Inc.

EPA received written comments dated April 28, 2000 from Quemetco, Inc. (Quemetco),one of 93 large waste generators that EPA has notified that it is a PRP for the Site.

a. Written Comments

QUE#1: Quemetco states that it joins in and endorses the comments and objections set forth incomments from the law firm of Shapiro & Dupont, dated April 14, 2000.


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EPA Response: Commentor raises issues that are duplicative of those raised by othercommentors. Please refer to EPA's response to RM##l-5 below.

6. Reichhold, Inc. and Marathon Oil Company

EPA received written comments dated April 14, 2000 from the law firm of Shapiro &Dupont, which represents Reichhold, Inc. (Reichhold) and Marathon Oil Company (Marathon),two of the 93 large waste generators that EPA has notified that it is a PRP for the Site.

a. Written Comments

RM#1: Reichhold and Marathon state that the proposed de minimis settlement is inappropriate inthat it is based upon an interim cost estimate.

EPA Response: EPA disagrees with Reichhold's and Marathon's comment. EPA based settlingde minimis parties' cashout payments, in part, on the Agency's August 1999 cost estimate, hiorder to calculate each settling party's share of total site costs, EPA needed to develop anestimate of the cost of proposed response actions before releasing PRPs from liability at the Site.Experienced EPA personnel, with the support of a reputable consulting firm and the State ofCalifornia Department of Toxic Substances Control, developed the Agency's cost estimate.External parties with competing interests including consultants hired by an ad hoc coalition of deminimis parties and the CSC reviewed and commented on the cost estimate. The proposedresponse actions used in the estimate as well as the associated costs reflect consideration of manyfactors and issues raised by these parties. EPA believes that the Agency's $271.9 million estimateis reasonable based on information available at this time.

RM#2: Reichhold and Marathon state that the proposed de minimis settlement is improperbecause it includes a cashout premium on the estimated cost of work to be performed by the CSCunder the Casmalia Consent Decree. Reichhold and Marathon state that this fails to comply withSection 113(f) of CERCLA. Reichhold and Marathon state that EPA should therefore havededucted the estimated cost of the CSC's Phase I work obligation ($69.9 million) from theestimated total site costs of $271.9 million prior to assessing a premium on base costs.

EPA Response: EPA disagrees with Reichhold's and Marathon's statement concerning theassessment of a cashout premium on the CSC's future costs. Pursuant to EPA's de minimisguidance, the proposed de minimis settlement includes a cashout premium, which was assessedon the future (i.e.. estimated) cost portion of EPA's $271.9 million cost estimate. No premiumwas applied to past (i.e.. fixed) costs. According to EPA guidance, by paying the premium as partof a cashout settlement, the settling de minimis party compensates for the finality it obtains andfor the risks that EPA and the Site's remaining PRPs assume. Standardizing the De MinimisPremium, July 7, 1995. By participating in this settlement, de minimis parties obtain contributionprotection, and therefore cannot be sued by the CSC should the cost of the CSC's futureobligations under the Casmalia Consent Decree increase. The costs of these future obligationsremain speculative to the degree to which such obligations have not been satisfied and the costs


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have not yet been incurred. It is therefore reasonable for settling parties to pay a premium on thefuture component of the costs associated with the CSC's Phase I work obligation, just as suchparties pay a premium on the future component of any other remaining costs.

With respect to Reichhold's and Marathon's argument concerning Section 113(f)(2) ofCERCLA, the commentors assert that the proposed AOC is in contravention of the statute.Section 113(f)(2) of CERCLA provides,

A person who has resolved its liability to the United States or a State in anadministrative or judicially approved settlement shall not be liable for claims forcontribution regarding matters addressed in the settlement. Such settlement doesnot discharge any of the other potentially liable persons unless its terms soprovide, but it reduces the potential liability of the others by the amount of thesettlement.

42 U.S.C. § 9613(f)(2). Reichhold and Marathon rely upon this statutory provision to claim thatthe proposed de minimis settlement is improper because EPA has not reduced the settling deminimis parties' cashout payments by the value of the settlement between the United States andthe CSC, which is embodied in the Casmalia Consent Decree. The commentors cite severalcases3 to support their view, however, these cases do not support their assertion that the proposedsettlement is hi contravention of the statute.

In a case cited by the commentors, B.F. Goodrich Co. v. Murtha, Reichhold and Marathon relyupon this case for the proposition that 'non-settling parties are entitled to credit for priorsettlements.' hi Murtha. the court held that the United States must give non-settlors credit for thefull amount of a prior settlement based on its finding that prior settlement had made the UnitedStates whole for the money it had spent at the site. The Murtha court also held that EPA did nothave the discretion to channel settlement funds to a second related site and not credit such fundsin favor of non-settling PRPs at the first site. The facts in Murtha are unique and clearlydistinguishable from the present case because the previous Casmalia settlement, namely, theCasmalia Consent Decree, did not make the United States whole. Nor is a portion of the proceedsfrom the proposed de minimis settlement being channeled to cleanup of any other site, but isbeing applied to the Casmalia Site.

In another case cited, U.S. v. Cannons Engineering Corp.. Reichhold and Marathon rely on thiscase for the proposition that "Section 113(f)(2) expressly states that in the event of a settlement

3Reichhold and Marathon cite the following judicial opinions in support of theirstatements: B.F. Goodrich Co. v. Murtha. 855 F.Supp 545, 545-49 (D. Conn. 1994) (reversed inpart on other grounds); B.F. Goodrich v. Betkoski. 99 F.3d 505, 528-29 (2nd Cir. 1996), cert,denied. Zollo Drum Co.. Inc. v. B.F. Goodrich Co.. 524 U.S. 926 (1998); U.S. v. CannonsEngineering Corp.. 720 F.Supp 1027 (D. Mass. 1989); Atlantic Richfield Co. v. AmericanAirlines. 836 F.Supp. 763, 764-65 (N.D. Okla. 1993).


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the joint and several liability of non-settling defendants is reduced 'by the amount of thesettlement'." hi Cannons, the court held that Section 113(f)(2) reduces non-settling parties'liability by the amount actually obtained hi settlement, not by the amount of the prior settlingparties' proportionate share of liability. Importantly, the court stated,

Section 113(f) expressly states that in the event of a settlement the joint andseveral liability of non-settling defendants is reduced *by the amount of thesettlement.'4

(emphasis added). The court in Cannons noted that the de minimis settlement premium was fairand reasonable "in view of the risks the major PRPs are continuing to assume."5

At Casmalia, the proposed AOC is not predicated on joint and several liability. Rather, theproposed de minimis settlement provides for individual cashout payments by settling parties tied toeach settling party's share of total site costs based, in part, on the volume of waste material thateach settling party disposed of at the Site. Clearly, the settling Casmalia de minimis parties arenot being asked to bear joint and several liability; they are being asked to pay their share, basedon the number of pounds of waste material they sent to the Site, of the costs associated withresponse actions at the Site, plus a premium to cover the risks of unexpected costs from whichthis settlement would insulate them. The liability of each de minimis party has thereforeeffectively been reduced, not only by the amount of the prior settling parties, but by the liabilityof every other PRP at the Site.

In still another case cited, Atlantic Richfield Company v. American Airlines, the court held thatSection 113(f)(2), in a contribution action between two private parties, is to be interpreted thesame way as in a cost recovery action by the United States against a non-settling party—that is,the non-settling party's liability is reduced by the dollar amount of any prior settlement, not bythe amount of the proportional liability of the prior settlors.

hi a final case cited, B.F. Goodrich v. Betkoski. the court reiterated the positions taken by theCannons and Atlantic Richfield courts that Section 113(f)(2) reduces non-settling parties'

4720 F.Supp. at 1048.

5 720 F.Supp at 1043. The Cannons court cites U.S. v. Seymour Recycling Corp.. 554F.Supp. 1334 (S.D. hid. 1982) in which the court stated that "while in total the sum being askedfrom those who are not a party to the Consent Decree is greater than the sum being paid by the 24who are parties to the Decree, this does not render the government's approach unfair to anyparties. Those who are parties to the Consent Decree took upon themselves the obligation to hirethe contractor and to develop a work proposal by which the surface cleanup is to be completedwithout active management (but with monitoring) by the United States and without respect tocost." 554 F.Supp. at 1339.


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liability by the amount of the prior settlement, but states that "non-settling defendants will still beheld accountable for the remainder of the government's response costs."

hi sum, the cases relied upon by the commentors support EPA's allocation of liability and theterms of the proposed AOC.

RM#3: Reichhold and Marathon state that the proposed de minimis settlement is improper inthat it violates standard agency guidance for calculation of a discount rate to be applied forestimated future costs.

EPA Response: Although EPA's Draft Guide to Developing and Documenting RemedialAlternative Cost Estimates During the Feasibility Study recommends a 7% discount rate whencomparing the costs of various remedial alternatives, the same guidance also states that there maybe circumstances hi which it would be appropriate to consider the use of a lower or higherdiscount rate. EPA believes that the rates the Agency employed reflect a realistic economicscenario for the Site.

EPA has developed a cost estimate that represents the Agency's best estimate of what it will costto care for the Site in perpetuity for the purpose of determining settling parties' shares of totalsite costs to be paid in a settlement now. To accurately capture these costs in one present valueamount, EPA needed to apply a discount rate to its estimated costs. This discount rate accountsfor the fact that a dollar received from a settling party today is worth more than a dollar receivedin the future, because of the interest money received now can earn in the future and becauseinflation reduces the value of that money over time. Through the discount rate EPA tried toapproximate the rate of return on the funds available to perform work at the Site, as well as totake into account the effect inflation will have on these funds.

EPA worked with economic experts from two private firms and the Department of Justice'sCorporate Finance Unit, to develop discount rates based on historic, current and projectedeconomic data and site needs. Using the expected cash flow available to fund work at the Site,the expected rate of return on cleanup funds, and the forecasted rate of inflation, EPA developeddiscount rates of 3.43% (for the first 10 years) and 4.2% (for the remaining period), hi order to "earn a 7% real rate of return (after adjusting for inflation), these funds would have to earn anominal return of more than 9%. These funds are unlikely to earn more than 9% because theymust be invested: 1) in "liquid" investments that allow the funds to be drawn upon regularly topay for Site work; and 2) in relatively low-risk investments to ensure that the funds are availablewhen needed. In fact, it is possible to argue that the discount rates are too high, because they donot take into account taxes that will be paid on earnings, and because the present valuecalculation presumes that all of the funds necessary to finance the proposed response actions atthe Site in perpetuity will be available in 2000, which is not the case.

RM#4: Reichhold and Marathon state that EPA did not conduct any type of sensitivity analysisto show the net effect of its alternate discount rate from the standard 7% rate as directed byOSWER.


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EPA Response: EPA did not run a sensitivity analysis to show the net effect of using a discountrate other than 7% when developing an estimate of total site costs because, as discussed in EPA'sresponse to RM#3 (and incorporated herein), EPA recognized that the Agency could not realize areal rate of return that approaches 7% while still maintaining regular access to the funds andprotecting the principal. EPA is aware that a lower discount rate results in a higher present valuefor the same estimated costs. However, as discussed hi response to RM#3, EPA's Draft Guide toDeveloping and Documenting Remedial Alternative Cost Estimates During the Feasibility Studydoes not apply here — for Casmalia purposes, the discount rate is not being used to perform acost-benefit analysis of competing remedial alternatives, but to ensure that settling de minimisparties pay their share of total site costs in return for releases from liability.

RM#5: Reichhold and Marathon state that EPA does not explain why it uses a tax freeinvestment portfolio when the funds are in government controlled funds and therefore are taxexempt as a matter of law. An investment portfolio based on securities that are not tax free wouldyield considerably higher returns, which would approximate a 7% pre-tax return rate.

EPA Response: hi accordance with Section XVII. A of the Casmalia Consent Decree, the fundscollected from Third Parties, a term defined in the Decree, will be placed in the CasmaliaConsent Decree Escrow Account (Escrow Account) established by the CSC. Although EPAmonitors the Escrow Account to ensure compliance with the Casmalia Consent Decree'srequirements, the Escrow Account is not a government controlled account and, therefore, is notexempt from taxes. When determining the discount rate, the Agency did not lower the rate toaccount for taxes, but where possible, EPA attempted to mitigate the effects of taxes by assumingthat some or all of the funds would be placed in tax-exempt investments.

If the funds were to be held in a government managed account (i.e.. a Superfund SpecialAccount), the funds would be exempt from taxes, but the nominal return rate on this fund is 5.3%(FY 2000 Hazardous Substances Superfund Interest Rate). This rate, when reduced by theinflation rate of 2%6 for the first 10 years of site work and 3.3%7 for the remaining years of theestimate, will yield a lower real return than that which EPA assumed would be earned on theEscrow Account. "

7. Royal Gold, Inc.

EPA received written comments dated April 14, 2000 from Royal Gold, Inc. (RoyalGold), one of 93 large waste generators that EPA has notified that it is a PRP for the Site.

6 From Blue Chip Economic Indicators, average rate across various forecasts for thisperiod.

7From Consumer Price Index historical average rate of inflation between 1926 and 1998.


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a. Written Comments

RG#1: Royal Gold states that the proposed de minimis settlement is inappropriate in that it isbased upon an interim cost estimate.

EPA Response: Commentor raises issues that are duplicative of those raised by othercommentors. Please refer to EPA's response to RM#1.

RG#2: Royal Gold states that the proposed de minimis settlement is improper because theproposed premium payment violates the express language of Section 113(f) of CERCLA.


RG#3: Royal Gold states that the proposed de minimis settlement is improper in that it violatesstandard agency guidance for calculation of a discount rate to be applied for estimated futurecosts.


C. Comments from De Minimis Contributor

1. Alyeska Pipeline Service Company

EPA received written comments dated June 12, 2000 from Alyeska Pipeline ServiceCompany (Alyeska), one of the settling parties under the proposed de minimis settlement.

a. Written Comments

APSCffl: Alyeska states that it supports the proposed de minimis settlement because it provides "for an appropriate, proper and adequate settlement.

EPA Response: EPA agrees with Alyeska's comment.

D. Comments from Individual Members of the Public

1. Kenneth Wolf

Kenneth Wolf, a resident of Santa Maria, made oral comments at EPA's June 21, 2000public meeting.


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a. Oral Comments

KW#1: Mr. Wolf states it is EPA's responsibility to assess the financial status of parties thataccept settlement Option B to ensure that they are financially viable.

EPA Response: 424 of 432 of the settling parties accepted Option A under the proposed AOCwhile only 8 settling parties accepted Option B. Consequently, virtually all of the settling partiespaid a base payment (comprised of their volumetric share of the estimated response costs) plus a100% cashout premium in return for a comprehensive release from site-related liabilities. Theremaining settling parties also paid a base payment plus a reduced 50% cashout premium, whichreflects the more limited releases that Option B settling parties will receive under the proposedsettlement. EPA has not made Option B available to parties that have indicated financial hardshipor ability-to-pay problems, hi addition, EPA has not made available Option B to PRPs that havefiled for bankruptcy or are in the process of corporate dissolution. EPA believes that assessingthe current financial status of the Option B settling parties does not provide a sufficient guaranteeof their viability 12 or more years from now to merit the expenditure of resources.

2. Terry Strickland

Terry Strickland, a resident of Casmalia, made oral comments at EPA's June 21, 2000public meeting.

a. Oral Comments

TS#1: Ms. Strickland states that finishing negotiations with Casmalia Resources and the State ofCalifornia should be a top priority for EPA.

EPA Response: EPA agrees with Ms. Strickland's statement. The United States is currentlynegotiating a settlement with the State of California, and participating in mediation with theHunter Entities.


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