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United States v. Bayer CropScience LP

United States District Court, S.D. West Virginia, Charleston

July 24, 2018




         Pending is the motion to intervene of Pamela L. Nixon; Kathy Ferguson; People Concerned About Chemical Safety, Inc. (“PCACS”); and Natural Resources Defense Council, Inc. (“NRDC”) (together, “Citizen Plaintiffs”), filed November 8, 2017.

         I. Background

         On August 28, 2008, a runaway chemical reaction occurred inside a pressurized vessel at a chemical plant in Institute, West Virginia (the “Institute Plant”), owned and operated at the time by defendant Bayer CropScience LP (“Bayer”). (2015 Hunt Decl. ¶ 9; Daniel Decl. ¶ 8; Shabazz Decl. ¶ 7.) The vessel was located in the Methomyl unit of the Institute Plant. (2015 Hunt Decl. ¶ 9.) Methomyl is a pesticide used in a process to make Larvin, the finished product, which is also a pesticide. (Id. ¶¶ 9, 25.) The vessel exploded, spraying and igniting about 2, 500 gallons of its highly flammable contents and causing a fire that lasted more than four hours. (E.g. 2015 Hunt Decl. ¶ 8.) The explosion killed two Bayer employees, and over 40, 000 area residents were ordered to shelter in place for more than three hours. (Id. ¶ 8; Daniel Decl. ¶ 8; Shabazz Decl. ¶ 7.)

         At the time of the explosion, Bayer processed several chemical compounds at the Institute Plant classified as “extremely hazardous substances” under Section 112(r) of the Clean Air Act, 42 U.S.C. § 7412 (2016).[1] (See Daniel Decl. ¶ 9; Shabazz Decl. ¶ 9.) Congress enacted Section 112(r) in an effort “to reduce hazardous air pollutants.” Sierra Club v. EPA, 863 F.3d 834, 835 (D.C. Cir. 2017). Specifically, the objective of Section 112(r) is “to prevent the accidental release and to minimize the consequences of any such release of any . . . extremely hazardous substance.” 42 U.S.C. § 7412(r)(1). An “extremely hazardous substance” is one “known to cause or may reasonably be anticipated to cause death, injury, or serious adverse effects to human health or the environment.” Id. § 7412(r)(3). Since the explosion, Bayer has limited its Institute Plant operations to the production of Larvin, which evidently does not require the use of any chemicals considered an extremely hazardous substance. (See Daniel Decl. ¶¶ 13-16.) Methomyl, now purchased from another source rather than produced on-site, is not an extremely hazardous substance. (See id. ¶ 16.)[2]

         In a January 2011 report relating to the 2008 explosion, the investigation team for the United States Chemical Safety and Hazard Investigation Board (“CSB”) - tasked with, inter alia, investigating industrial chemical accidents involving extremely hazardous substances, 42 U.S.C. § 7412(r)(6) - “determined that the runaway chemical reaction and loss of containment of the flammable and toxic chemicals resulted from deviation from the written start-up procedures, including bypassing critical safety devices intended to prevent such a condition.” (Wang Decl., Attach. 4, CSB Investigation Report at 1.) Other governmental agencies also investigated the explosion, including the Environmental Protection Agency (“EPA”), (e.g., 2017 Hunt Decl. ¶ 7), most prominent here because it is tasked with regulating under Section 112 as well as general enforcement of the Clean Air Act, see 42 U.S.C. §§ 7412(r)(7), 7413(b).

         On September 21, 2015, at the request of the EPA, the United States filed a complaint against Bayer in this court, alleging violations of Section 112(r) at the Institute Plant. (Compl. at 1, ¶ 1; see also 2015 Hunt Decl. ¶¶ 18-19 (stating that EPA concluded Bayer violated Section 112(r) and recommended civil action).) On August 9, 2016, this court approved a consent decree between the United States and Bayer. (See ECF #18 (memorandum opinion and order); ECF #19 (“Consent Decree”).) The consent decree obligated Bayer to pay $975, 000 as a civil penalty, submit to specified injunctive relief, and carry out various supplemental environmental projects (“SEP”) at an ultimate estimated cost of $4.4 million, of which $3.1 million was estimated for the “west sump” project. (See generally Consent Decree.)[3]

         As explained by the EPA's Supplemental Environmental Projects Policy, a SEP is

an environmentally beneficial project or activity that is not required by law, but that a defendant agrees to undertake as part of the settlement of an enforcement action. SEPs are projects or activities that go beyond what could legally be required in order for the defendant to return to compliance, and secure environmental and/or public health benefits in addition to those achieved by compliance with applicable laws.

(Wang Decl., Attach. 3, U.S. EPA, Supplemental Environmental Projects Policy (2015 Update) (“SEP Policy”) at 1 (footnote omitted).) Any SEP must have a “sufficient nexus” to the underlying violations of environmental law, which, generally speaking, means that there must be a “relationship between the violation and the proposed [SEP].” See SEP Policy at 7-8; (2017 Hunt Decl. ¶ 11). A sufficient nexus “is easier to establish if the primary impact of the project is at the site where the alleged violation occurred, at a different site in the same ecosystem, or within the immediate geographic area.” SEP Policy at 8.

         “A primary incentive for a defendant to propose a SEP is the potential mitigation of its civil penalty.” Id. at 21. A defendant may subtract up to 80% of the cost to implement a SEP from its total civil penalty. See id. at 24; (2017 Hunt Decl. ¶ 14). Thus, a defendant that agrees to complete a SEP will pay a lower civil penalty than the defendant otherwise would have without a SEP. (See SEP Policy at 21.) While mitigation is determined on a case-by-case basis, a SEP that better achieves the EPA's criteria generally results in a greater mitigation. See id. at 20; (2017 Hunt Decl. ¶ 13).

         Of particular relevance here, Bayer agreed to a SEP under which it would expand the “west sump” of the Institute Plant to “provide additional storage capacity to prevent untreated process wastewater from overflowing into the Kanawha River during heavy rain events, fire-fighting emergencies, and process upsets.” (Consent Decree ¶ VII.23.a; see generally id., App. B.) In all, Bayer initially committed to spend an estimated total of about $4.2 million on all SEPs described in the consent decree, (id. ¶ VII.25.a), of which the west sump comprised $3.1 million, (id. ¶ VII.25.a.i). Later, Bayer agreed to a non-material modification of the consent decree that increased its total SEP costs to about $4.4 million. (ECF #21 Attach. 1 at Recitals.) Combined with a civil penalty of $975 thousand, (Consent Decree ¶ IV.8), Bayer's obligations totaled around $5.4 million.

         Prior to agreeing to the west sump SEP, Bayer had begun implementing in November 2012 “a series of projects [independent of the SEP] to reduce the likelihood of overflows from the West Sump” at a cost of $800 thousand. (2017 Stewart Decl. ¶ 10.) Because of those projects, the west sump has not had an overflow since August 30, 2013. (See id. ¶¶ 11, 15.) Additionally, while excavating for the west sump SEP, Bayer encountered subsurface conditions, including harmful soil contaminants, that increased the cost of the SEP and exposed Bayer's workers to health risks. (Id. ¶ 14; 2017 Hunt Decl. ¶¶ 25-26.) For these reasons, Bayer, the Department of Justice, and the EPA decided to halt construction of the west sump SEP. (2017 Stewart Decl. ¶ 15; 2017 Hunt Decl. ¶¶ 27, 30.) Bayer had spent about $2.2 million of the $3.1 million on the SEP up to that point. (2017 Stewart Decl. ¶ 13; 2017 Hunt Decl. ¶ 30.)

         Bayer then proposed a series of SEPs to replace the west sump SEP. (2017 Hunt Decl. ¶ 31; see also 2017 Stewart Decl. ¶ 17.) Mary A. Hunt, a Risk Management Program Coordinator for the EPA, is “the lead technical member of the [Clean Air Act] team for the judicial enforcement action” against Bayer. (2017 Hunt Decl. ¶¶ 1, 3, 7.) She has served in that role since the original investigation and enforcement action against Bayer that culminated in the consent decree. (Id. ¶ 7; 2015 Hunt Decl. ¶ 7.) Her job duties include “analyzing [SEPs], ” “evaluat[ing] proposed SEPs to determine benefit to public health and the environment in accordance with EPA's SEP Policy, ” and “develop[ing] penalty calculations using the applicable EPA penalty policy.” (2017 Hunt Decl. ¶ 5.) Ultimately, after Hunt's evaluation, Bayer and the EPA agreed to two SEPs, one for each of two fire departments. The two SEPs would require Bayer to purchase new fire trucks, “specialized equipment for chemical-firefighting, ” and other equipment for the Jefferson Volunteer Fire Department and the Institute Volunteer Fire Department. (2017 Stewart Decl. ¶ 18; 2017 Hunt Decl. ¶ 32.) Hunt determined that the two replacement SEPs are entitled to the same mitigation percentage that she previously assigned to other equipment purchase SEPs under the consent decree. (2017 Hunt Decl. ¶ 35.)

         The two replacement SEPs cost around $1.7 million, (2017 Stewart Decl. ¶ 18; 2017 Hunt Decl. ¶ 34), which is $1.4 million less than the $3.1 million cost of the west sump SEP. Correspondingly, the two replacement SEPs would lower Bayer's total monetary obligation under the consent decree from $5.4 million to $4 million, if one disregards the $2.2 million spent by Bayer on the now abandoned west sump SEP. Nevertheless, the EPA determined that “the mitigation percentage of the [two] proposed replacement SEPs is higher than the percentage for the West Sump Expansion” to such a degree that, consequently, “the penalty mitigation amount [for the two replacement SEPs] is also slightly higher than the penalty mitigation amount for the West Sump Expansion SEP.” (2017 Hunt Decl. ¶ 35.) The actual mitigation percentages are not given.

         On August 31, 2017, the United States lodged the Second Modification of Consent Decree (the “proposed modification”) in this court for approval. (See ECF #25, Attach. 1 (second modification of consent decree).) The proposed modification evinces the parties' agreement to the two replacement SEPs. (See id. ¶¶ 1-5.) After receiving public comments, the EPA concluded that the proposed modification is “fair and reasonable.”[4] (2017 Hunt Decl. ¶ 40.) “Although [Bayer] has expended approximately [$2.2 million] on the [west sump] SEP, in proposing the substitute SEPs . . ., [Bayer] does not seek and does not expect to receive any credit for these costs.” (2017 Stewart Decl. ¶ 20.)

         Citizen Plaintiffs oppose the proposed modification and have moved to intervene “for the purpose of opposing any reduction in the financial obligations of Bayer.” (Mot. to Interv. 1.) Citizen Plaintiffs seek to “propos[e SEPs] to utilize funds Bayer . . . agreed to expend under the original Consent Decree, ” including “a medical health study of the affected community, and the development of an emergency evacuation plan for the Institute area that does not require evacuees to drive west, towards the chemical plant.” (Id.)

         Citizen Plaintiffs claim that they were harmed by the 2008 explosion at the Institute Plant and that the decreased SEP spending under the consent decree as a result of the proposed modification would increase the likelihood and their fear of future incidents and deprive their communities of environmental and health benefits. Pamela Nixon is a longtime member and current president of People Concerned About Chemical Safety and its predecessor organization, People Concerned About MIC (a reference to methyl isocyanate, an extremely hazardous substance as earlier noted). (Nixon Decl. ¶¶ 2-3.) PCACS' “purpose is to promote international human rights by advocating for chemical safety and by conducting public education regarding the risks of chemical operations and means of reducing such risks.” (Id. ¶ 7.)

         Since 1993, Nixon has resided in South Charleston, West Virginia, which is about five miles east of Institute. (Id. ¶ 1.) She recalls how she felt in the aftermath of the 2008 explosion:

It is like a wave that engulfs you when you hear an explosion, you feel your home shake, you see the smoke and the glow of the fire in the sky, and not knowing what will happen next, you fear for the safety of your family. When you live that close to a chemical plant you learn that every minute counts, and time was passing.

(Id. ¶ 11.) She states that she “was very concerned that [she] was being exposed to [methyl isocyanate] or other chemicals.” (Id. ¶ 14.) Indeed, she blames the explosion for the re-emergence in September 2008 of symptoms of her autoimmune disease that she states went into remission in 1998. (Id. ¶¶ 15-16.)

         Now “[b]ecause of Bayer's past behavior, [Nixon] and others involved in PCACS fear that Bayer will not keep members of the community safe.” (Id. ΒΆ 18.) She also states that she is fearful of ...

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