The Environmental Problem
From approximately 1919 through 1989, Raymark Industries owned and operated a plant in Stratford, Connecticut where it manufactured a variety of products containing asbestos, including brake linings and clutch facings for the automotive industry. These manufacturing processes generated enormous quantities of waste materials containing PCBs, lead and asbestos, which it disposed of in lagoons on the property.
In some locations there are deposits of hazardous waste up to twenty-four feet thick beneath the surface of the ground. As Raymark filled the lagoons with wastes, some of the lagoons were dredged and some of the dredged waste material, containing lead, asbestos and PCBs, was dried and then transported by Raymark to various locations in Stratford, where it was deposited as fill material on commercial, residential and municipal properties.
The Environmental Protection Agency (EPA) took many steps to clean up the contamination at the property including:
- the demolition of all buildings;
- the removal and off-site disposal of quantities of hazardous materials; and
- the construction of an impermeable “cap” over the entire 33 acre property to prevent human contact with the hazardous contaminants and to mitigate the spread of contamination in groundwater.
Because the remedy for the property includes an impermeable cap, the Site would not ordinarily be suitable for any redevelopment that could jeopardize the integrity of that cap, such as construction of buildings or other structures that would either require cutting into the cap or loading it with more weight than it could structurally support. However, EPA took special steps to strengthen certain areas on the property with steel pilings prior to building the cap so that buildings and other structures could be constructed on top of the cap.
Because of EPA’s efforts to restore the property to productive use, a Wal-Mart, Home Depot and a Shaw’s food store were all ultimately constructed on top of the cap. In addition to cleaning up the property, EPA also cleaned up the waste Raymark had disposed of at scores of residential, municipal and commercial properties in Stratford.
View EPA’s activities at the Site.
Raymark’s Corporate Transactions
As a result of Raymark's production of asbestos products and its generation of asbestos waste and other hazardous substances, Raymark had enormous exposure for personal injury liabilities as well as environmental liabilities. Between 1982 and 1988, Raymark engaged in a series of transactions in an attempt to place its valuable assets beyond the reach of its creditors. These complex transactions are described in Schmoll v. ACandS, Inc., 703 F. Supp. 868 (D. Or. 1988), aff'd, 977 F.2d 499 (9th Cir. 1992).
The result of these transactions was that the profitable divisions of Raymark became a company called Raytech. After the corporate transactions were completed, Raymark was no longer an operating entity, but was rather a mere shell holding a few remaining assets, including some insurance policies and the Raymark Property.
The Environmental Enforcement Section (EES) Enforcement Actions
The Section employed a number of enforcement tools to help EPA recover its cleanup costs and to facilitate redevelopment of the Raymark property:
- Raytech filed for bankruptcy protection and in January 1997, we filed a Proof of Claim alleging a claim in excess of $300 million. EES also asserted that Raytech was Raymark’s successor, that it had unlimited liability for Raymark’s obligations, and that Raytech’s liability extended to the United States’ environmental claims. On August 15, 1997, the court agreed with the United States’ position finding that Raytech’s liability was unlimited and that Raytech is a successor to Raymark for the United States’ environmental claims.
Through these rulings, EES established that Raytech was liable to the United States and other environmental creditors for Raymark’s contamination.
- EES filed a lawsuit against Raymark in which we sought over $280 million in costs that EPA had spent cleaning up the Raymark Property and other properties around Stratford that had been contaminated with Raymark’s waste. EES also sought an order allowing the sale of the Raymark property to help recover some of the costs that EPA had expended cleaning up the company’s waste.
Raymark then sued the owners of residential property in Stratford seeking to recover from them the costs of cleaning up the waste that Raymark had generated. EES took the position that Raymark’s suit against the owners of the residential properties was improper and we immediately sought to settle with each residential property owner to protect them from Raymark’s suit. The law provides that once a party resolves its liability at a Superfund site with the United States, it receives protection from lawsuits by other parties also seeking to recover cleanup costs in connection with the site. This is known as “contribution protection.”
The residential homeowners settled any liability they might have had in connection with the Raymark hazardous waste by the payment of $1.00 to the United States. The Court approved the settlement with the owners of the residential properties and these property owners received protection from Raymark’s lawsuit.
- When Raymark sought bankruptcy protection, the United States filed a claim in the bankruptcy seeking reimbursement of EPA’s costs, just as we had in the Raytech bankruptcy case. The United States also helped orchestrate the sale of the Raymark property through the bankruptcy court. In order to facilitate the sale, the United States made available a “Prospective Purchaser Agreement”, or PPA, to potential purchasers of the Raymark property to ensure that the purchaser would be protected from liability for the contamination existing on the property.
As a result of the PPA and the sale the Raymark property, EPA recovered more than $19 million that it had spent cleaning up Raymark’s waste in Stratford. Eventually, EPA also received additional reimbursement of its cleanup costs as the result of the claims EES filed in the Raytech bankruptcy.