BEFORE

THE

ILLINOIS

POLLUTION

CONTROL

BOARD

PEOPLE

OF

THE

STATE

OF

ILLINOIS

)

ECEVED

L.ERK’S

OFFICE

Complainant,

)

FF8

0

‘

2009

v.

)

PCB

No.

)

(Enforcement)

PACKAGING

PERSONIFIED,

Inc.,

)

an

Illinois

Corporation,

)

)

Respondent.

)

RESPONDENT’S

EXPERT

WITNESS

DISCLOSURE

Packaging

Personified,

Inc.

(“Respondent”)

by

and

through

its

attorneys,

Drinker

Biddle

&

Reath

LLP,

submits

the

following

witness

list

and

expert

reports

in

accordance

with

the

hearing

officer’s

directive.

Respondent’s

Expert

Witness

List

1.

Christopher

McClure,

of

Navigant

Consulting,

will

be

testifying

as

the

Respondent’s

expert

witness

in

connection

with

the

economic

benefit

penalty

calculation.

Mr.

McClure’s

is

expected

to

testify

in

accordance

with

his

expert

report

which

is

enclosed

herein,

as

Attachment

A,

which

includes

an

analysis

of

the

compliance

alternatives

available

to

Respondent

and

an

analysis

of

the

economic

benefit

associated

with

each

respective

alternative.

2.

Richard

Trzupek,

Principal

Consultant

of

Mostardi

Platt

Environmental,

will

be

testifying

as

the

Respondent’s

expert

consultant

witness

in

connection

with

the

environmental

compliance

issues

at

the

Respondent’s

facility.

Mr.

Trzupek

is

expected

to

testify

in

accordance

with

his

expert

report

which

is

ericlosed

herein,

as

Attachment

B,

which

includes

the

historical

CHOI/

25296668.1

---

analysis

of

the

activities

undertaken

by

Respondent

to

comply

with

the

Flexographic

Printing

Rules.

Respectfully

submitted,

PACKAGING

PERSONIFIED,

INC.

By:

One

of

Its

Attorneys

Dated:

February

4,

2009

Roy

M.

Harsch

Lawrence

W.

Falbe

Yesenia

Villasenor-Rodriguez

Drinker

Biddle

&

Reath

LLP

191

North

Wacker

Drive

-

Suite

3700

Chicago,

IL

60606-1698

(312)

569-1441

(Phone)

(312)

569-3441

(Facsimile)

CHO1/

25296668.1

---

CERTIFICATE

OF

SERVICE

The

undersigned

certifies

that

copies

of

the

foregoing

were

served

upon:

Paula

Wheeler

Assistant

Attorney

General

Office

of

the

Illinois

Attorney

General

69

West

Washington

Street

—

Floor

Chicago,

IL

60602

Bradley

P.

Halloran

Hearing

Officer

Illinois

Pollution

Control

Board

James

R.

Thompson

Center

100W.

Randolph

Street

-

Suite

11-500

Chicago,

IL

60601

John

T.

Therriault

Illinois

Pollution

Control

Board

James

R.

Thompson

Center

100W.

Randolph

St.

-

Suite

11-500

Chicago,

IL

60601

by

Hand

Deliver

on

this

4

th

day

of

February

2009.

CHOI/

25296668.1

---

IN

THE

MATTER

OF:

PEOPLE

OF

THE

STATE

OF

ILLINOIS

V.

PACKAGING

PERSONIFIED,

INC.

PCB

04-16

EXPERT

REPORT

OF

CHRISTOPHER

MCCLURE

February

3,

2009

ATTACHMENT

A

NAVIGANT

CONSULTING

---

INTRODUCTION

&

QUALIFICATIONS

My

name

is

Christopher

McClure.

My

business

address

is

30

South

Wacker

Drive,

Suite

3100,

Chicago,

Illinois

60606.

I

am

a

Director

at

Navigant

Consulting

Inc.,

a

CPA

and

hold

a

Master

of

Business

Administration

Degree.

My

curriculum

vitae

is

found

at

Exhibit

1.

My

hourly

billing

rate

for

this

engagement

is

$450.

Navigant

Consulting

Inc.

is

an

international

consulting

firm

of

approximately

2,000

professional

which

include

Certified

Public

Accountants,

Masters

of

Business

Administration,

engineers

of

various

disciplines,

information

management

professionals

and

others

with

accounting,

economic

and

finance

experience,

including

expertise

in

environmental

matters.

Prior

to

joining

Navigant

Consulting

Inc.

in

2004,

I

was

employed

by

LECG,

a

global

expert

services

firm.

Prior

to

LECG,

I

was

employed

by

the

international

public

accounting

and

consulting

firm

of

Arthur

Andersen.

I

am

experienced

in

the

financial,

economic,

and

accounting

theories

and

methods

necessary

to

perform

the

analysis

in

this

matter.

My

experience

includes

compiling

claims

for

litigation

and

contribution

actions,

developing

cost

allocation

models,

assisting

parties

in

the

recovery

of

remediation

costs

from

their

insurance

companies,

and

performing

a

variety

of

other

types

of

accounting

and

financial

analyses.

I

have

calculated

economic

benefit

penalty

amounts

using

the

EPA

BEN

approach

on

three

occasions

and

also

testified

at

an

Illinois

Pollution

Control

Board

hearing.

This

report

is

limited

to

analyzing

the

potential

economic

benefit

penalty

component

only

to

possibly

be

imposed

by

the

Board

pursuant

to

Section

42

(h)(3)

of

the

Illinois

Environmental

Protection

Act

and

does

not

address

any

potential

gravity

component.

The

analysis

presented

in

this

report

is

based

on

currently

available

documents

and

information

and

is

subject

to

change

based

on

the

review

of

additional

information

that

may

be

provided.

I

reserve

the

right

to

revise

this

report.

I

understand

depositions

of

witnesses

may

continue

2

---

beyond

the

date

of

this

report.

I

understand

that

this

report

may

be

supplemented

by

deposition

and

trial

testimony.

If

this

matter

proceeds

to

trial,

selected

pages

of

the

documents

and

information

relied

upon

may

be

used

as

exhibits.

Additionally,

I

may

prepare

graphical

or

illustrative

exhibits

based

on

the

documents

and

information

relied

upon

and

my

analysis

of

those

documents

and

information.

CASE

BACKGROUND

Navigant

Consulting

Inc.

was

retained

by

Drinker

Biddle

&

Reath

LLP,

outside

counsel

for

Packaging

Personified,

Inc.,

(“Packaging”)

to

provide

analyses

related

to

the

amount

of

economic

benefit

penalty

that

could

possibly

be

imposed

onPackaging

by

the

Illinois

Pollution

Control

Board

(“Board”)

in

the

enforcement

action

brought

the

Illinois

Attorney

General

on

behalf

of

the

Illinois

Environmental

Protection

Agency

and

the

(collectively

“Government”)

in

the

matter

People

of

the

State

of

Illinois

v.

Packaging

Personified,

Inc.,

PCB

04-16.

The

financial

penalties

could

arise

from

the

Government’s

allegation

that

Packaging

enjoyed

an

economic

benefit

by

delaying

compliance

with

the

Volatile

Organic

Material

(“VOM”)

capture

and

control

requirements

outlined

in

35

Illinois

Administrative

Code

(“IAC”)

Section

218.401

-

“Flexographic

and

Rotogravure

Printing.”

Packaging

Personified

is

a

printing

company

located

in

Carol

Stream,

IL.

It

utilizes

printing

presses

with

inks

containing

organic

solvents

that

emit

as

VOM

during

the

printing

process.

A

Government

inspection

of

Packaging

Personified’s

facility

in

2002

revealed

that

one

of

its

four

printing

presses

was

non

compliant.

Packaging

Personified

decommissioned

the

non

compliant

press

in

December

2002

to

reach

compliance.

Packaging

Personified

should

have

been

in

compliance

in

January

1997.

At

that

time,

there

were

multiple

compliance

options

available

to

the

company.

These

compliance

options

and

their

associated

costs

are

as

follows:

3

---

Compliance

Option

#1—

Adjusted

Standard

Pursuant

to

the

authority

of

Section

28.1

of

the

Environmental

Protection

Act

(415

ILCS

5/28.1(1998)),

Packaging

Personified

could

have

applied

for

an

adjusted

standard

that

would

have

eliminated

the

need

for

a

compliance

system.

Packaging

Personified’s

competitors

such

as

Formel

Industries,

mc,

BEMA,

Inc.

and

Vonco

Products,

Inc.

received

adjusted

standards.

The

total

cost

of

receiving

the

adjusted

standard

is

estimated

at

$30,000

(in

2007

dollars),

consisting

primarily

of

legal

and

consulting

fees

to

complete

the

application

process.

Compliance

Option

#2—

Install

RTO

Packaging

Personified

ultimately

spent

$250,000

on

an

RTO

in

late

2003,

but

that

device

was

substantially

larger

than

needed

for

compliance

because

it

was

built

in

anticipation

of

future

expansion

and

the

installation

of

additional

presses.

The

installed

RTO

was

large

enough

to

accommodate

three

presses.

The

lower

cost

compliance

alternative

for

the

company

was

to

purchase

and

install

a

used

RTO

that

could

be

obtained

for

$75,000

and

maintained

for

an

annual

cost

(labor,

utilities)

of

$16,362,

based

on

the

best

estimates

of

the

company’s

engineering

consultants,

Mostardi

Platt

Environmental

(in

2007

dollars).

Compliance

Option

#3—

Decommission

I

Relocate

press

to

Michigan

Packaging

Personified

could

have

easily

complied

by

decommissioning

the

non

compliant

press

and

moving

itto

the

company’s

facility

in

Michigan.

Packaging

Personified

ultimately

did

decommission

the

press

in

December

2002

and

relocated

it

to

the

Michigan

facility

in

December

2004.

The

estimated

cost

for

this

option

is

$15,000

(in

2007

dollars),

based

on

Packaging

Personified’s

actual

expenditures.

The

following

table

summarizes

the

economic

benefit

of

non

compliance

Packaging

Personified

could

have

enjoyed

under

each

of

the

three

compliance

options.

The

exhibits

attached

to

this

report

provide

greater

detail

of

the

economic

benefit

calculations

of

these

three

compliance

options.

4

---

Compliance

Option

Economic

Benefit

1.

Adjusted

Standard

$33,707

2.

Install

RTO

$119,020

3.

Decommission

/

Relocate

press

to

Michigan

$16,853

DOCUMENTS

CONSIDERED

The

documents

I

considered

in

my

analysis

include:

•

EPA

BEN

user

manual

•

Cost

estimates

prepared

by

Mostardi

Platt

Environmental

for

RTO

purchase

and

annual

operating

costs

•

Correspondence

between

Illinois

EPA

and

Drinker,

Biddle

&

Reath

LLP

dated

June

12,

2007

and

November

24,

2008

•

Cases

andliterature

addressing

the

use

of

discount

rates

in

enforcement

actions

ILLINOIS

EPA

REPORT

I

have

reviewed

the

November

21,

2008

Economic

Benefit

Analysis

report

prepared

by

the

the

Illinois

EPA’s

analyst,

Mr.

Gary

Styzens.

Mr.

Styzens

estimated

an

economic

benefit

of

$711,274,

an

amount

which

I

find

to

be

significantly

overstated

for

several

reasons,

including:

•

Mr.

Styzens’

analysis

fails

to

consider

thatPackaging

Personified

had

compliance

alternatives

in

addition

to

theinstallation

of

an

RTO,

as

I

have

outlined

in

this

report.

•

Mr.

Styzens

fails

to

consider

that

the

RTO

ultimately

installed

by

Packaging

Personified

was

three

times

larger

than

the

one

required

to

reach

compliance

so

the

cost

estimate

he

uses

for

delayed

capital

expenditures

is

unduly

high.

•

Mr.

Styzens

incorrectly

utilizes

an

unusually

high

avoided

annual

operating

cost

averaging

$86,000

per

yearthat

he

derived

generically

rather

than

researching

more

accurate

costs

that

match

the

size

of

the

RTO

that

Packaging

Personified

would

have

installed.

The

annual

avoided

costs

actually

approximate

$16,000

per

year.

5

---

•

Mr.

Styzens

failed

to

terminate

the

period

of

non

compliance

at

the

end

of

2002

when

PackagingPersonified

decommissioned

the

press.

Instead,

he

continues

to

penalize

the

company

for

an

additional

year

and

then

calculates

interest

on

this

incorrect

benefit

amount.

ECONOMIC

BENEFIT

PENALTY

BACKGROUND

The

United

States

Environmental

Protection

Agency

(“EPA”)

employs

a

civil

penalty

program

to

help

ensure

that

regulated

entities

comply

with

environmental

regulations.

These

civil

penalty

figures

are

based

on

the

EPA’s

February

16,

1984,

generic

penalty

policy

which

was

codified

in

theGeneralEnforcement

Policy

Compendium

as

P.T.

1—i

and

P.T.

1-2.

A

copy

of

this

is

found

as

Exhibit

5.

These

civil

penalties

seek

to

recapture

the

economic

benefit

that

an

entity

may

have

gained

from

delaying

or

avoiding

compliance

with

regulations.

The

EPA

holds

that

economic

benefit

recapture

helps

level

the

economic

playing

field

amongst

all

regulated

entities,

serve

as

incentives

to

protect

the

environment

and

public

health,

and

help

deter

future

violations.

EPA

civil

penalties

have

two

main

components:

gravity

and

economic

benefit.

The

gravity

component

reflects

the

seriousness

of

the

violation

while

the

economic

benefit

component

focuses

on

the

violators

economic

gain

from

noncompliance.

This

economic

benefit

can

accrue

to

the

violator

in

three

basic

ways:

(1)

delaying

necessary

pollution

control

expenditures;

(2)

avoiding

necessary

pollution

control

expenditures;

and/or

(3)

obtaining

an

illegal

competitive

advantage.

The

EPA

designed

the

BEN

computer

model

in

1984

to

calculate

the

economic

benefit

from

these

first

two

types

of

economic

gain.

The

EPA

has

solicited

comments

from

the

public

on

multiple

occasions,

acknowledging

that

the

actual

computer

model

is

still

being

refined.

As

such,

the

EPA

provides

that

experts

calculating

the

economic

benefit

mayuse

the

BEN

model

or

6

---

other

analytical

tools

(e.g.

customized

computer

spreadsheets,

calculators)

as

needed.

The

EPA

is

more

adamant

regarding

the

methodology

for

calculating

economic

benefit,

stating

in

the

Federal

Register

Volume

64,

Number

117

dated

June

18,

1999,

that

the

EPA

believes

“that

BEN

is

by

far

the

best

approach

available

for

calculating

economic

benefit

derived

from

delayed

and/or

avoided

costs.”

A

copy

of

this

is

found

at

Exhibit

6.

In

addition

to

the

Federal

Register,

the

EPA

publishes

a

BEN

User

Manual

that

provides

guidance

on

the

theory

and

methodology

for

calculating

the

economic

benefit

penalty

as

well

as

technical

computer

instructions

for

using

the

BEN

Model.

The

EPA

BEN

User

Manual

outlines

the

variables

required

to

calculate

economic

benefit.

It

also

provides

examples

of

a

number

of

issues

that

can

arise

in

the

calculation

of

economic

benefit,

including

offsets

for

byproduct

recovery

and

certain

types

of

good

faith

expenditures

that

did

not

lead

to

compliance.

These

examples

are

explored

in

more

detail

in

the

analysis

section

of

this

testimony.

It

is

important

to

note

that

the

EPA

BEN

User

Manual

clearly

distinguishes

between

the

economic

benefit

and

the

gravity

components

of

civil

penalties.

It

explicitly

states

on

page

A-i

that

“economic

benefit

is

“no

fault”

in

nature:

a

defendant

need

not

have

deliberately

chosen

to

delay

compliance

(for

financial

or

any

other

reasons),

or

in

fact

even

have

been

aware

of

its

noncompliance,

for

it

to

have

accrued

the

economic

benefit

of

noncompliance.”

It

goes

on

provide

an

example

on

page

4-3

of

how

certain

issues

are

“legal

distinctions

that

may

impact

the

gravity

component

but

not

the

economic

benefit.”

The

distinction

is

a

significant

one

and

the

EPA

BEN

User

Manual

highlights

it

to

stress

that

the

two

penalty

theories

are

separate

and

impressions

regarding

the

gravity

of

the

noncompliance

should

not

influence

the

economic

benefit

calculation.

7

---

EXHIBIT

1

CHRISTOPHER

T.

MCCLURE

Christopher

McClure

Director

Navigant

Consulting

30

S.

Wacker

Drive

#3100

Chicago,

Illinois

60606

Tel:

312.583.6986

cmcclure@navigantconsulting.com

Professional

History

•

Navigant

Consulting,

Inc.

2004

to

present

•

LECG,

LLC

2002—2004

•

Andersen

1995

-

2002

Education

•

M.B.A

Kellogg

School

of

Management

Northwestern

University

•

8.5.

Accounting/Finance

Trinity

University

Professional

Certifications

•

Certified

Public

Accountant

(CPA)

•

Certified

Fraud

Examiner

(CFE)

•

Certified

in

Financial

Forensics

(CFF)

Professional

Associations

•

Texas

Society

of

CPAs

•

AICPA

•

ACFE

Christopher

McClure

is

a

Director

in

the

Chicago

office

of

Navigant

Consulting,

Inc.

Mr.

McClure’s

work

focuses

on

forensic

accounting

investigations,

insurance

related

matters,

commercial

litigation,

and

product

liability

matters.

He

has

conducted

forensic

accounting

investigations

for

numerous

SEC

registrants

and

quantified

damages

in

commercial

litigation.

He

has

also

supervised

numerous

engagements

involving

insurance

policy

analyses,

allocation

methodologies,

economic

benefit

modeling

for

EPA

negotiations,

insurance

carrier

settlements,

and

other

coverage

issues.

Experience

Mr.

McClure

has

been

called

upon

to

assist

companies

with

independent

investigations

related

to

allegations

of

stock

options

backdating,

earnings

management,

revenue

recognition

violations,

and

other

accounting

improprieties.

In

addition

to

his

knowledge

of

accounting

and

general

business

issues,

Mr.

McClure

has

significant

experience

with

various

forensic

database

software

packages

and

other

methods

of

efficiently

analyzing

and

disseminating

important

content

from

large

populations

of

emails,

electronic

files,

and

recorded

phone

conversations.

Mr.

McClure

has

developed

significant

expertise

in

insurance

matters

related

to

asbestos,

environmental,

other

toxic

torts.

He

has

managednumerous

engagements

focused

on

insurance

coverage

litigation

in

various

industries

including

manufacturing,

energy,

chemical,

and

utility.

He

has

quantified

the

damages

associated

with

a

number

of

significant

claims

for

the

purposes

of

negotiating

policy

commutations,

structured

settlements,

and

coverage-in-place

agreements,

as

well

as

establishing

bankruptcy

trust

funds.

Mr.

McClure

has

also

quantified

damages

in

the

context

of

business

interruption,

most

recently

for

clients

recovering

from

the

events

of

the

September

11

terrorist

attacks

on

New

York.

Mr.

McClure

also

has

extensive

experience

performing

allocations

of

insurance

damages

to

coverage

under

a

variety

of

methodologies

including

All

Sums,

Carter-Wallace,

Stonewall,

and

Owens-Illinois,

as

well

as

numerous

other

permutations.

He

has

used

various

computer

software

tools

and

techniques

to

calculate

and

analyze

allocation

results

using

different

8

---

assumptions

for

trigger,

occurrence,

coverage

defenses,

and

other

important

allocation

variables.

Insurance,

Environmental,

and

Product

Liability

Experience

>>

Analyzed

historic

and

projected

future

asbestos

liabilities

for

a

boiler

manufacturer

in

bankruptcy.

Utilized

client

data

and

Manville

Trust

information

to

project

future

liabilities

under

numerous

scenarios.

Conducted

hundreds

of

allocation

sensitivities

considering

various

product/non-product

claim

splits,

state

law

changes,

trigger

periods,

and

liability

amounts.

Utilized

the

analysis

in

the

negotiation

of

policy

buybacks

with

several

U.S.

and

foreign

insurance

carriers.

Engaged

by

one

of

the

world’s

largest

oil

companies

to

analyze

the

potential

economic

benefits

resulting

from

delayed

expenditures

for

environmental

protection

system

implementations

at

a

large

refinery.

Performed

detailed

cost

modeling

of

time

value

of

deferred

capital

expenditures,

avoided

operational

costs,

and

foregone

economic

benefits

to

support

client

negotiations

with

the

EPA.

>>

Assisted

a

Fortune

100

client

seeking

reimbursement

from

the

US

Government

for

over

$100

million

in

remediation

costs

under

CERCLA.

Involved

cost

compilation,

analysis,

and

presentation

to

the

US

Government

as

well

as

support

of

depositions

and

expert

testimony.

Analyzed

historic

and

future

asbestos

and

environmental

exposures

for

a

tire

manufacturer

for

use

in

policy

commutations.

Gathered,

organized,

and

allocated

damages

across

hundreds

of

insurance

policies

under

various

scenarios.

Conducted

archaeology

to

locate

critical

insurance

policy

evidence.

Formulated

presentations

given

to

the

London

Market

Insurers

as

well

as

numerous

domestic

insurance

carriers.

Developed

strategic

operating

scenarios,

analyzed

financial

damages,

and

compiled

business

interruption

claim

for

a

World

Trade

Center

banking

client

impacted

by

the

events

of

Sept

11,

2001.

Reviewed

insurance

coverage

language,

collected

cost

data,

modeled

lost

revenue

for

various

divisions,

and

developed

numerous

damage

scenarios

for

use.

in

settlement

negotiations.

Engaged

by

one

of

the

world’s

largest

petrochemical

companies

to

pursue

insurance

recovery

for

historic

environmental

pollution

claims.

Involved

the

accumulation

of

invoices

and

creation

of

a

cost

database

to

support

over

$300

million

in

remedial

expenditures.

Also

required

projection

of

future

cleanup

costs

at

numerous

sites

as

well

as

analysis

of

Natural

Resource

Damages

and

Property

Value

Diminution

claims.

9

---

Engaged

by

a

major

chemical

company

to

review

and

forecast

liabilities

for

asbestos,

silica,

and

other

products

claims.

Involved

a

comprehensive

review

of

client’s

historic

production

as

well

as

exhaustive

corporate

history

research.

Utilized

Manville

Trust

and

Nicholson

study

in

the

formulation

of

products

and

premises

liability

forecasts.

Generated

numerous

liability

scenarios

and

allocated

the

damages

under

several

scenarios

to

client’s

historic

insurance

coverage

to

assist

in

negotiating

a

coverage-in-place

agreement.

Accounting

Investigations

&

Litigation

Experience

Assisted

counsel

in

the

defense

of

a

multi-national

professional

services

firm

related

to

allegations

of

negligence

in

the

performance

of

the

annual

financial

audit

at

a

Fortune

100

company

at

which

one

of

the

largest

frauds

in

U.S.

history

occurred.

Involved

scrutinizing

annual

audit

workpapers

and

procedures

to

fully

analyze

the

complexity

of

the

fraud

and

build

a

defense

strategy

for

the

services

firm.

>>

Assisted

counsel

to

numerous

companies

faced

with

both

formal

and

informal

SEC

inquiries

into

historic

option

granting

processes.

These

engagements

involved

interviews

of

company

board

members

and

executives,

analysis

of

option

granting

procedures,

and

review

of

hundreds

of

thousands

of

emails

and

electronic

documents.

The

results

of

these

analyses

were

reported

to

the

SEC,

the

companies’

outside

auditors,

and

the

Board

of

Directors

and

also

used

in

financial

restatements.

Remediation

plans

were

also

created

to

assist

the

companies

with

improving

internal

controls.

>>

Assisted

counsel

to

an

SEC

registrant

with

an

independent

investigation

of

improper

accounting

entries

and

financial

reporting

errors

and

manipulations.

This

engagement

focused

on

the

analysis

of

numerous

corporate

reserve

accounts

across

multiple

years,

interviews

with

management,

and

the

review

of

over

50,000

emails

to

identify

and

quantify

amounts

for

the

restatement

of

the

company’s

financials.

The

investigation

involved

significant

interaction

with

the

corporate

management,

auditors,

and

the

SEC.

>>

Assisted

counsel

to

the

audit

committee

of

an

SEC

registrant

with

an

investigation

of

accounting,

financial

reporting,

and

operational

issues

raised

by

a

corporate

whistleblower.

The

investigation

involved

significant

interaction

with

the

company’s

outside

auditor,

the

Illinois

Commerce

Commission,

and

the

SEC.

This

engagement

also

required

the

analysis

and

organization

of

over

60,000

phone

call

recordings,

50,000

emails,

and

over

100,000

pages

of

hardcopy

documents.

>>

Assisted

counsel

to

the

seller

engaged

in

a

post-acquisition

dispute

arbitration

focusing

on

the

calculation

of

annual

revenue

earn-out

amounts

in

accordance

with

the

provisions

of

the

purchase

agreement.

Involved

analyzing

buyer’s

revenue

recognition

principles

and

methods

for

allocating

expenses

across

multiple

acquisitions.

10

---

>>

Assisted

in

the

compilation

and

analysis

of

the

books

and

records

of

ten

acquisitions

performed

by

an

SEC

registrant

over

the

last

five

years.

Responsible

for

identifying

material

accounting

issues

and

reporting

them

to

the

CFO

of

the

company

for

inclusion

in

the

company’s

ongoing

financial

restatement

process.

>>

Evaluated

the

financial

implications

of

a

multi-billion

dollar

international

merger

for

one

of

the

worlds

largest

retailers

—

included

revenue•

and

cash

flow

projections,

operational

analyses,

and

sensitivity

modeling

that

considered

currency

fluctuations

and

the

impact

of

political

and

economic

policy

changes

Engaged

by

a

Fortune

50

energy

firm

to

assist

in

the

redesign

of

its

executive

staff

following

a

major

merger.

Involved

mapping

and

redesigning

accounting

and

financial

processes

and

internal

controls

and

working

with

corporate

executives

to

identify

opportunities

for

greater

efficiency.

Project

resulted

in

annual

savings

of

over

$200

million

for

the

client.

Publications

and

Speaking

Engagements

•

Author

of

“Coping

with

FASB

Interpretation

No.

47

-.

Accounting

for

Conditional

Asset

Retirement

Obligations”.

American

Bar

Association,

Fall

2007.

•

Presenter

of

“White

Collar

Investigations

Update:

Trends

and

Best

Practices”

—

AICPA

webinar

series,

April

2008.

•

Author

of

“Gatekeepers:

A

Balancing

Act

for

Corporate

Counsel”

—

Navigant

Consulting

Inc.

Investigations

Quarterly

Magazine,

Summer

200&

Testimony

/

Alternative

Dispute

Resolution

Experience:

•

Provided

deposition

testimony

and

testimony

at

the

Pollution

Control

Board

hearing

in

2008

in

an

Illinois

EPA

economic

benefit

penalty

matter.

(People

of

the

State

of

Illinois

v.

Toyal

America,

Inc.

f/k/a

Alcan-Toyo

America,

Inc.,

PCB

2000-211)

11

---

Packaging

Personified,

Inc.

Economic

Benefit

Calculation

Exhibit

2

Scenario

Scenario:

Description

1

Adjusted

Standard

Total

Avoided

Operation

Costs/(Benefits)

$28,258

L

KEY

Total

Economic

Benefit!

(Detriment)

$33,707

M

A

The

estimated

capital

expenditures

deflated

to

1997.

B

Costs

permanently

avoided

by

delaying

compliance

C

Estimate

of

the

monthly

lost

benefit

not

realized

by

delaying

compliance

D

Depreciation

that

would

have

been

taken

on

amount

in

column

A

E

Sum

of

B+C+D

F

Tax

impact

of

item

E

G

E+F

H

Actual

dollars

spent

I

1=

Previous(I-f-K)+Current(A+G-H)

J

Risk-free

T-Bill

rate

to

inflate

dollars

to

the

date

of

compliance

K

Amount

earned

on

the

cumulative

deferred

spending

L

Sum

of

columns

B+C,

represents

the

total

avoided

cost

or

(benefit)

from

the

delay

M

Total

economic

benefit

(delayed

+

avoided)

1998

1999

00

2000

2002

2001

54

0

0

1997

1

0

28,258

0

0

28,258

(10,455)

17,803

0

17,803

2

00

0

00

18,805

3

00000

19,755

0

0

00

0

0

0

0

pendmg

0

0

0

0

00

6

0

00

00000

0

28,258

0

0

28,258

(10,455)

17,803

0

0

0

5.05%

5.63%

5.08%

3.49%

6.11%

2.00%

0

20,759

0

22,796

22,027

$1,002

$950

$1,268

$1,004

$769

$456

$5,449

Privileged

and

Confidential-

Prepared

at

the

Request

of

Counsel

Page

1

of

4

---

Packaging

Personified,

Inc.

Economic

Benefit

Calculation

Exhibit

2

Scenario

Scenario:

Description

Installation

2

of

a

Regenerative

Thermal

Oxidizer

(RTO)

70,645

15,412

0

15,504

0

15,597

0

15,691

0

15,785

0

15,880

70,645

93,870

0

(9,419)

5,993

(2,217)

3,776

0

(9,419)

6,085

(2,251)

3,834

0

(9,419)

6,178

(2,286)

3,892

0

(9,419)

6,272

(2,321)

3,951

0

(9,419)

6,366

(2,355)

4,011

0

(9,419)

6,461

(2,390)

4,071

0

(56,516)

37,354

(13,820)

23,534

0

74,421

5.63%

0

82,445

5.05%

0

90,500

5.08%

0

99,048

6.11%

0

109,111

3.49%

0

116,989

2.00%

0

$4,190

$4,163

$4,597

$6,052

$3,808

$2,340

$25,150

Total

Avoided

Operation

Costs!(Benef

its)

$93,870

L

KEY

Total

Economic

Benefit!

(Detriment)

$119,020

M

A

The

estimated

capital

expenditures

deflated

to

1997.

B

Costs

permanently

avoided

by

delaying

compliance

C

Estimate

of

the

monthly

lost

benefit

not

realized

by

delaying

compliance

0

Depreciation

that

would

have

been

taken

on

amount

in

column

A

E

Sum

of

B+C+D

F

Tax

impact

of

item

E

G

El-F

H

Actual

dollars

spent

I

I’

Previous(I+K)+Current(A÷G-H)

J

Risk-free

T-Bill

rate

to

inflate

dollars

to

the

date

of

compliance

K

Amount

earned

on

the

cumulative

deferred

spending

L

Sum

of

columns

B÷C,

represents

the

total

avoided

Cost

or

(benefit)

from

the

delay

M

Total

economic

benefit

(delayed

+

avoided)

1997

1998

1999

2001

2000

2002

1

2

3

4

5

6

Privileged

and

Confidential-

Prepared

at

the

Request

of

Counsel

Page

2

of

4

---

Packaging

Personified,

Inc.

Economic

Benefit

Calculation

Exhibit

2

Scenario

Scenario:

Description

Decommission

3

I

Relocate

Press

Total

Avoided

Operation

Costsl(Benefits)

$14,129

L

KEY

Total

Economic

Benefit

/

(Detriment)

$16,853

M

The

estimated

capital

expenditures

deflated

to

1997.

Costs

permanently

avoided

by

delaying

compliance

Estimate

of

the

monthly

lost

benefit

not

realized

by

delaying

compliance

Depreciation

that

would

have

been

taken

on

amount

in

column

A

Sum

of

B+C÷D

Tax

impact

of

item

E

H

Actual

dollars

spent

I

1=

Previous

(I÷K)+Current(A+G-H)

J

Risk-free

T-Bill

rate

to

inflate

dollars

to

the

date

of

compliance

K

.

Amount

earned

on

the

cumulative

deferred

spending

L

Sum

of

columns

BC,

represents

the

total

avoided

cost

or

(benefit)

from

the

delay

M

Total

economic

benefit

(delayed

+

avoided)

21

0

0

1997

1998

1999

2000

2001

2002

14,129

0

0

0

3

4

65

00

14,129

0

00

0

0

0

0000

14,129

(5,228)

8,901

00

00

0

0

0

0000

0

0

0

0

0

14,129

0000

(5,228)

00

0

0

8,901

0

8,901

0

9,402

0

9,877

0

10,379

0

11,013

0

11,397

0

5.05%

5.63%

5.08%

6.11%

3.49%

2.00%

$475

$501

$634

$502

$384

$228

$2,724

BA

F

EDC

G

E÷F

Privileged

and

Confidential-

Prepared

at

the

Request

of

Counsel

Page

3

of

4

---

Packaging

Personified,

Inc

Exhibit

2

Economic

Benefit

Calculation

Inflation

Calculations

PCI

Inflation

I

0.60%

I

(Avg

1996-2002)

Annual

One-Time

Expenditure

2007

$

30,000

2006

$

29,821

2005

$

29,643

2004

$

29,466

2003

$

29,291

2002

$

29,116

2001

$

28,942

2000

$

28,770

1999

$

28,598

1998

$

28,428

1997

$

28,258

$

74,553

$

16,264

$

$

74,108

$

16,167

$

$

73,666

$

16,071

$

$

73,227

$

15,975

$

$

72,790

$

15,880

$

$

72,356

$

15,785

$

$

71,924

$

15,691

$

$

71,495

$

15,597

$

$

71,069

$

15,504

$

$

70,645

$

15,412

$

14,911

14,822

14,733

14,645

1996

381.7

__________

Average

0.60%

One-Time

Recurring

One-Time

Expenditure

Cost

Expenditure

$

75,000

$

16,362

$

15,000

14,558

2002

395.6

0.33%

14,471

2001

394.3

0.05%

14,385

2000

394.1

0.90%

14,299

1999

390.6

0.28%

14,214

1998

389.5

0.78%

14,129

1997

386.5

1.26%

Privileged

and

Confidential-

Prepared

at

the

Request

of

Counsel

Page

4

of

4

---

Page

1

A

Caution

As

of:

Sep

05,

2008

LEXSEE

72

F.

SUPP.

2D

810

UNITED

STATES

OF

AMERICA,

Plaintiff,

v.

WCI

STEEL,

INC.,

Defendant.

CASE

NO.

4:98-CV-1082

UNITED

STATES

DISTRICT

COURT

FOR

THE

NORTHERN

DISTRICT

OF

OHIO,

EASTERN

DIVISION

72

F.

Supp.

2d

810;

1999

U.S.

Dist.

LEXIS

17436;

49

ERC

(BNA)

1685;

30

ELR

20169

October

22,

1999,

Decided

October

22,

1999,

Filed

DISPOSITION:

[**1J

United

States

request

for

in

junctive

relief

denied.

CASE

SUMMARY:

PROCEDURAL

POSTURE:

Plaintiff

United

States

filed

a

motion

for

injunctive

relief

against

defendant

steel

company,

alleging

that

defendant

was

subject

to

the

Re

source

Conservation

and

Recovery

Act,

42

U.S.C.S.

§

6901

et

seq.,

because

it

treated,

stored,

and

disposed

of

hazardous

waste

at

its

steelmaking

facility

without

a

permit

or

interim

status.

OVERVIEW:

Plaintiff

United

States

filed

a

motion

for

injunctive

relief

against

defendant

steel

company,

alleg

ing

that

defendant

was

subject

to

Resource

Conservation

and

Recovery

Act

(RCRA),

42

U.S.C.S.

§

6901

et

seq.,

because

it

treated,

stored,

and

disposed

of

hazardous

waste

at

its

steelmaking

facility

without

a

permit

or

in

terim

status.

It

was

undisputed

that

defendant

had

neither

a

permit

nor

interim

status,

plus

the

court

found

that

the

wastewater

treated,

stored,

and

disposed

of

by

defendant

exhibited

the

hazardous

waste

characteristic

of

corrosiv

ity;

thereby,

subjecting

defendant

to

RCRA.

In

imposing

a

$

1

million

civil

penalty

upon

defendant,

the

court

con

sidered

the

fact

that

defendant

had

made

efforts

to

reduce

pollution,

no

harm

to

human

health

or

the

environment

had

resulted,

and

plaintiff

had

unduly

delayed

the

litiga

tion.

Moreover,

because

plaintiff

failed

to

show

any

im

.minent

threat

to

public

health

or

the

environment,

its

motion

for

injunctive

relief

was

denied.

OUTCOME:

The

court

denied

plaintiff

United

States’

motion

for

injunctive

relief,

because

plaintiff

failed

to

show

any

imminent

threat

to

public

health

or

the

envi

ronment

resulting

from

defendant

steel

company’s

non

compliance

with

the

Resource

Conservation

and

Recov

ery

Act;

however,

it

did

impose

upon

defendant

a

civil

penalty

of$

I

million.

CORE

TERMS:

pond,

hazardous

waste,

wastewater,

sampling,

hazardous,

steel,

s.u,

influent,

waste

manage

ment,

probe,

treatment

plant,

measurement,

impound

ment,

corrosivity,

surface,

corrosive,

sludge,

economic

benefit,

closure,

acid,

grab,

meter,

solid

wastes,

inspec

tion,

box,

pickle,

liquor,clean,

injunctive,

disposed

LexisNexis(R)

Headnotes

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Permits

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances>

Treatment,

Storage

&

Disposal

[HN1J

42

U.S.C.S.

§

6925(a)

prohibits

the

operation

of

any

facility

that

treats,

stores,

or

disp.oses

of

hazardous

wastes,

except

in

accordance

with

a

permit.

Moreover,

a

party

receiving

a

permit

to

store

or

dispose

of

hazardous

waste

must

thereafter

comply

with

the

requirements-

of

the

permits.

---

Page

2

72

F.

Supp.

2d

810,

*;

1999

U.S.

Dist.

LEXIS

17436,

**;

49

ERC

(BNA)

1685;

30

ELR

20169

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Enforcement>

Civil

Penalties

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN2j

If

certain

requirements

are

met,

the

Resource

Conservation

and

Recovery

Act,

42

U.S.C.S.

§

6901

et

seq.,

allows

states

to

operate

hazardous

waste

regulatory

programs

in

lieu

of

the

federal

program.

42

U.S.C.S.

§

6926(b).

Even

where

a

state

is

given

authority

to

operate

such

a

regulatory

program,

the

United

States

retains

the

right

to

enforce

the

state-authorized

programs.

42

U.S.C.S.

§

6928(a)(2).

Civil

Procedure

>

Remedies

>

Injunctions

>

Permanent

Injunctions

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Enforcement

>

Injunctive

Relief

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN3}

Under

42

U.S.C.S.

§

6928(a),

the

United

States

may

file

a

civil

action

in

federal

district

court

to

obtain

appropriate

relief,

including

a

temporary

or

permanent

injunction

upon

obtaining

information

that

any

person

has

violated

or

is

violating

any

requirement

of

the

Re

source

Conservation

and

RecOvery

Act,

42

U.S.C.S,

§

6901

et

seq.

If

a

violation

is

shown,

42

U.S.C.S.

§

6928(g)

provides

for

a

civil

penalty

in

an

amount

not

to

exceed

$

27,500

per

day

of

noncompliance

for

each

vio

lation.

Civil

Procedure

>

Pretrial

Matters>

General

Overview

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

Governments

>

Legislation

>

Statutes

of

Limitations>

Pleading

&

Proof

[1TN4J

The

United

States

has

the

burden

to

establish

each

of

the

elements

of

liability

under

the

Resource

Conserva

tion

and

Recovery

Act,

42

U.S.C.S.

§

6901

et

seq.

In

showing

liability,

the

applicable

statute

of

limitations,

28

U.S.C.S.

§

2462,

stops

any

claim

for

penalty

for

a

viola

tion

before

May

11,

1993.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

General

Overview

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances>

Treatment,

Storage

&

Disposal

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[ENS]

To

establish

a

violation

of

the

Resource

Conser

vation

and

Recovery

Act

(RCRA),

42

U.S.C.S.

§

6901

et

seq.,

the

United

States

must

prove

fourgeneral

elements:

(1)

that

the

defendant

is

a

“person”

within

the

meaning

of

the

RCRA;

(2)

that

the

defendant

has

a

“facility’

within

the

meaning

of

the

RCRA;

(3)

that

the

defendant

did

not

have

a

permit

or

interim

status

for

the

treatment,

storage,

or

disposal

of

hazardous

waste;

and

(4)

that

the

defen

dant

treated,

stored,

or

disposed

of

hazardous

waste.

Enviromnental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN6]

The

Resource

Conservation

and

Recovery

Act

(RCRA),

42

U.S.C.S.

§

6901

et

seq.,

controls

the

release

of

a

“hazardous

waste.”

If

a

substance

exhibits

certain

characteristics,

industrial

wastewaters

are

subject

to

regulation

under

the

RCRA.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

[RN7]

42

U.S.C.S.

§

6921

provides

two

ways

in

which

a

waste

will

be

considered

“hazardous.”

First,

a

waste

will

be

classified

as

“hazardous”

where

the

Environmental

Protection

Agency

(EPA)

has

specifically

listed

the

waste

as

hazardous.

By

regulation,

the

EPA

has

listed

a

number

of

wastes

as

hazardous.

40

C.F.R.

§

261.31-

261.33

(1989).

The

EPA

will

also

classify

a

waste

as

“hazardous”

if

it

has

one

or

more

of

the

characteristics

of

ignitability,

corrosivity,

reactivity,

or

toxicity.

40

C.F.R.

§

26l.21-.26l.24.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

[HN8]

Corrosiveness

is

the

property

that

enables

a

sub

stance

to

dissolve

material

with

which

it

comes

in

con

tact.

Improperly

managed

corrosive

wastes

can

pose

a

substantial

present

or

potential

danger

to

human

health

and

the

environment.

Under

40

C.F.R.

§

261.22

and

Ohio

Admin.

Code

§

3745-51-22,

a

waste

is

corrosive

if

it

is

aqueous

and

has

a

pH

of

two

standard

units

or

less,

or

greater

than

or

equal

to

12.5

standard

units.

Where

a

surface

impoundment

contains

aqueous

water

with

a

pH

of

two

standard

units

or

less,

on

at

least

one

occasion,

the

water

in

the

surface

impoundment

is

hazardous

waste.

---

Page

3

72

F.

Supp.

2d

810,

*;

1999

U.S.

Dist.

LEXIS

17436,

**;

49

ERC

(BNA)

1685;

30

ELR

20169

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

[HN9]

See

40

C.F.R.

§

261.22(a)(1).

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[RN

10]

Under

the

regulations,

the

United

States

must

show

that

a

defendant

violated

the

Resource

Conserva

tion

and

Recovery

Act

(RCRA),

42

U.S.C.S.

§

6901

et

seq.,

via

a

“representative

sample”

of

the

water.

RCRA

regulations

define

“representative

sample”

as

a

sample

of

a

universe

or

whole

(e.g.,

waste

pile,

lagoon,

groundwa

ter)

which

can

be

expected

to

exhibit

the

average

proper

ties

of

the

universe

or

whole.

40

C.F.R.

§

260.10.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Enforcement>

Criminal

Prosecutions

[RN1

1]

While

an

Environmental

Protection

Agency-

approved

test

of

a

material

will

be

persuasive

evidence

as

to

whether

the

material

is

hazardous

waste,

the

United

States

is

not

required

to

prove

this

element

through

test

data.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances>

CERCLA

&

Superfund>

General

Overview

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

C’onservation

&

Recoveiy

Act

>

General

Overview

[RN

12]

Failure

to

adhere

to

Environmental

Protection

Agency

(EPA)-approved

test

methods

does

not

stop

a

finding

of

hazardous

substances.

Furthermore,

failure

to

rigidly

adhere

to

EPA-approved

test

methods

does

not

render

the

sampling

evidence

inadmissible.

Any

devia

tion

from

EPA

guidelines

goes

to

the

weight

of

the

evi

dence

and

not

its

admissibility.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN13]

To

show

that

wastewater

contains

hazardous

substances

and

is,

as

a

result,

subject

to

the

cradle-to-

grave

restrictions

of

the

Resource

Conservation

and

Re

covery

Act,

42

U.S.C.S.

§

6901

et

seq.,

the

United

States

must

show,

via

representative

samples,

only

that

the

sur

face

impoundment

contained

aqueous

water

with

a

pH

of

two

standard

units

or

less,

on

at

least

one

occasion.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

General

Overview

[H1

14]

In

order

to

be

valid,

sampling

must

show

that

it

is

random,

that

is,

that

every

unit

of

the

population

(e.g.,

every

location

in

a

lagoon

used

to

store

a

solid

waste)

has

a

theoretically

equal

chance

of

being

sampled

and

meas

ured,

thus

ensuring

that

the

sample

is

representative

of

the

population.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN1S]

Lime-neutralized

spent

pickle

liquor

is

exempt

from

the

Resource

Conservation

and

Recovery

Act’s,

42

U.S.C.S.

§

6901

et

seq.,

hazardous

waste

regulations

under

the

iron

and

steel

industry

exemption

in

40

C.F.R.

§

261

.3(c)(2)(ii)(A).

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

conservation

&

Recovery

Act

>

General

Overview

[HN16]

See

40

C.F.R.

§

260.10.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Identification

&

Listing

of

Hazardous

Wastes

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HNI7J

Under

42

U.S.C.S.

§

6925(a),

(e)

and

Ohio

Rev.

Code

§

3734.02(F),

3734.04,

the

owner

and

operator

of

a

hazardous

waste

management

unit

is

prohibited

from

operating

a

hazardous

waste

management

unit

except

in

accordance

with

a

permit

issued

pursuant

to

the

Resource

Conservation

Recovery

Act,

42

U.S.C.S.

§

6901

et

seq.,

unless

the

facility

has

interim

status.

Enviro,imental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

•

Enforcement>

Civil

Penalties

[HN18]

Under

42

U.S.C.S.

§

6928(a)

and

40

C.F.R.

§

270.1(b),

a

party

may

not

store

hazardous

waste

in

a

sur

face

impoundment

without

a

permit

or

interim

status.

---

Page

4

72

F.

Supp.

2d

810,

*;

1999

U.S.

Dist.

LEXIS

17436,

**;

49

ERC

(BNA)

1685;

30

ELR

20169

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

General

Overview

[HN19J

Under

42

U.S.C.S.

§

6925(j),

surface

impound

ments

existing

on

November

8;

1984,

were

required

to

meet

minimum

technological

requirements

unless

granted

an

exemption

by

the

Environmental

Protection

Agency

or

the

state.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

General

Overview

[HN2O]

Under

40

C.F.R.

§

264.112

andOhio

Admin

Code

§

3745-55-12,

the

owner

or

operator

of

a

hazardous

waste

management

unit

is

required

to

have

a

written

clo

sure

plan.

The

closure

plan

must

identify

the

steps

needed

to

perform

a

partial

or

final

closure

of

the

facility.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>.

Resource

Conservation

&

Recovery

Act

>

General

Overview

Environmental

Law>

Water

Quality

>

Safe

Drinking

Water

Act

>

National

Drinking

Water

Regulations

[HN2I]

Under

40

C.F.

R.

§

264.140

-264.151

and

Ohio

Admin.

Code

§

3745-55-40

to

3745-55-51,

the

owner

or

operator

of

a

hazardous

waste

management

facility

is

required

to

have

a

detailed

written

estimate

in

current

dollars

of

the

cost

of

closing

hazardous

waste

manage

ment

units.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

‘onservation

&

Recovery

Act

>

General

Overview

Real

Property

Law>

Water

Rights>

Groundwater

[HN221

The

owner

or

operator

of

a

surface

impound

ment

is

required

to

install,

operate,

and

maintain

a

groundwater

monitoring

system

which

satisfies

the

crite

ria

contained

at

40

C.F.R.

Pt.

264,

subpt.

F,

and

Ohio

Admin.

Code

§

3745-54-90

to

3745-54-99,

3745-55-01

to

3745-55-02.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Enforcement>

Civil

Penalties

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Enforcement

>

Injunctive

Relief

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN23]

Under

42

U.S.C.S.

§

6928(a),

(g),

a

United

States

district

court

has

the

power

to

enjoin

a

defendant

and

to

impose

civil

penalties

for

each

violation

of

the

Resource

Conservation

and

Recovery

Act,

42

U.S.C.S.

§

6901

et

seq.,

and

the

hazardous

waste

management

pro

gram

forthe

state.

The

district

court

can

impose

penalties

of

up

to

$

25,000

per

day

for

each

day

of

violation

prior

to

January

30,

1997

and

$

27,500

for

each

day

of

viola

tion

thereafter.

In

determining

the

appropriate

civil

pen

alties,

the

district

court

considers

the

seriousness

of

the

violation,

what

efforts

were

made

to

comply

with

regula

tions,

the

harm

caused

by

the

violation,

the

economic

benefit

derived

from

noncompliance,

the

defendant’s

ability

to

pay,

the

United

States’

conduct,

and

the

clarity

of

the

obligation

involved.

In

determining

the

penalty,

the

district

court

exercises

its

discretion.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Enforcement>

Civil

Penalties

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN24]

Where

a

proven

violation

of

the

Resource

Con

servation

and

Recovery

Act,

42

U.S.C.S.

§

6901

et

seq.,

does

not

result

in

the

creation

of

a

situation

with

the

po

tential

to

seriously

harm

the

environment,

civil

penalties

have

been

substantially

reduced.

Environmental

Law

>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

General

Overview

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

Governments

>

Legislation

>

Statutes

of

Limitations

>

Time

Limitations

[HN25j

The

Resource

Conservation

and

Recovery

Act,

42

U.S.C.S.

§

6901

et

seq.,

encompasses

both

current

and

continuing

violations,

even

if

the

latter

originated

in

activities

occurring

before

the

applicable

date

of

the

stat

ute.

However,

the

assessment

of

a

civil

fine

for

a

viola

tion

occurring

prior

to

May

11,

1993,

is

limited

by

the

federal

statute

of

limitations

found

in

28

U.S.C.S.

§

2462.

Environmental

Law

>

Litigation

&

Administrative

Pro

ceedings>

General

Overview

Governments

>

Legislation

>

Statutes

of

Limitations>

Time

Limitations

[HN26]

See

28

U.S.C.S.

§

2462.

Environmental

Law

>

Litigation

&

Administrative

Pro

ceedings>

General

Overview

---

Page

5

72

F.

Supp.

2d

810,

*;

1999

U.S.

Dist.

LEXIS

17436,

**;

49

ERC

(BNA)

1685;

30

ELR

20169

[RN27]

Courts

shall

respond

to

the

Environmental

Pro

tection

Agency’s

undue

agency

delay

by

reducing

penal

ties

in

an

enforcement

action

in

order

to

counteract

any

incentive

the

agency

might

have

to

place

itself

in

a

supe

rior

litigating

position.

Civil

Procedure

>

Equity

>

Adequate

Remedy

at

Law

Civil

Procedure

>

Remedies

>

Injunctions

>

Elements

>

Irreparable

Harm

Environmental

Law

>

Litigation

&

Administrative

Pro

ceedings>

General

Overview

[HN28]

Normally,

to

obtain

injunctive

relief,

a

party

must

prove

that

there

is

no

adequate

remedy

at

law,

that

the

plaintiff

may

suffer

an

irreparable

injury

if

an

injunc

tion

is

not

granted,

and

that

the

balance

of

the

equities

justifies

an

injunction.

However,

when

the

United

States

brings

the

action

and

shows

that

an

activity

endangers

public

health,

injunctive

relief

is

proper

without

under

taking

a

balancing

of

the

equities.

In

cases

of

public

health

legislation,

the

emphasis

shifts

from

consideration

of

irreparable

injury

to

concern

for

the

general

public

interest.

Environmental

Law>

Hazardous

Wastes

&

Toxic

Sub

stances

>

Resource

Conservation

&

Recovery

Act

>

Enforcement

>

Injunctive

Relief

Environmental

Law

>

Litigation

&

Administrative

Pro

ceedings>

General

Overview

Environmental

Law

>

Solid

Wastes

>

Resource

Recov

ery

&

Recycling

[HN29]

In

deciding

whether

the

strong

remedy

of

injunc

tive

relief

shall

be

given,

a

United

States

district

court

is

most

concerned

with

whether

this

relief

is

necessary

to

stop

the

danger

that

might

result

from

violations

of

the

Resource

Conservation

and

Recovery

Act,

42

U.S.C.S.

§

6901

etseq.

COUNSEL:

For

UNITED

STATES

OF

AMERICA,

plaintiff:

Arthur

I.

Harris,

Esq.,

Office

Of

The

U.S.

At

torney,

Cleveland,

OH.

For

UNITED

STATES

OF

AMERICA,

plaintiff:

Francis

J.

Biros,

Esq.,

Department

Of

Justice,

Washington,

DC.

For

UNITED

STATES

OF

AMERICA,

plaintiff:

Lois

J.

Schiffer,

Esq.,

Department

Of

Justice,

Washington,

DC.

For

UNITED

STATES

OF

AMERICA,

plaintiff:

Frank

Bentkover,

Esq.,

Drenaye

Houston,

Esq.,

Matthew

A.

Fogelson,

Esq.,

Department

Of

Justice,

Washington,

DC.

For

WCI

STEEL,

INC.,

defendant:

Van

Carson,

Esq.,

Lisa

R.

Duffett,

Esq.,

Ellen

Seibenschuh,

Esq.,

Lisa

D.

Sutton,

Esq.,

Squire,

Sanders

&

Dempsey,

Cleveland,

OH.

For

WCI

STEEL,

INC.,

defendant:

Vincent

Atriano,

Esq.,

Squire,

Sanders

&

Dempsey,

Columbus,

OH.

JUDGES:

Hon.

James

S.

Gwin,

U.S.

District

Court

Judge.

OPINION

BY:

James

S.

Gwin

OPINION

[*812]

FINDINGS

CONCLUSIONS

OF

LAW

OF

FACT

AND

In

this

action,

the

Plaintiff

United

States

alleges

that

three

wastewater

ponds

at

[*8

13]

Defendant

WCI

Steel’s

Warren,

Ohio

steelmaking

facility

(Ponds

5,

6,

and

6A)

are

hazardous

waste

units,

and

as

such

are

sub

ject

to

regulation

under

the

Resource

Conservation

and

Recovery

Act

(“RCRA”),

[*

*2]

42

U.S.C.

§

6901

et

seq.

As

grounds

for

this

allegation,

the

United

States

claims

that

Ponds

5,

6,

and

6A

once

contained

wastewa

ter

having

a

pH

‘of

2.0

standard

units

(“s.u.”)

or

lower,

and

thus

had

a

cOrrosive

characteristic.

2

1

The

measure

of

pH

provides

an

estimate

of

the

acidic

agent

(hydrogen

ion)

and

the

basic

agent

(hydroxide

ion).

2

The

United

States’

complaint

alleges,

inpart:

24.

One

or

more

of

the

surface

impound

ments

at

the

facility,

including

Ponds

5,

6

and

6A,

have

contained

wastewaters

which

exhibited

a

pH

of

2

or

less

during

the

time

period

relevant

to

this

Complaint.

25.

Wastewaters

flowing

into,

contained

in,

or

flowing

out

of

Ponds

5,

6

and

6A

have

exhib

ited

the

characteristic

of

corrosivity

and

are

a

hazardous

waste

within

the

meaning

of

40

C.F.R.

§

261.20

and

261.22.

26.

Ponds

5,

6

and

6A

at

the

facility

are

haz

ardous

waste

management

units

as

defined

by

40

C.F.R.

§

260.10,

and

O.A.C.

§

3747-50-

10(A)(49)

and

are

subject

to

regulation

as

haz

ardous

waste

management

units

subject

to

the

provisions

of

RCRA

and

the

O.A.C.

Complaint,

PP

24-26.

[**3]

Plaintiff

United

States

filed

this

action

on

May

11,

1998.

To

establish

WCI’s

use

of

corrosive

sub

stances,

the

United

States

principally

relies

upon

sam

pling

it

did

in

May

and

June

1993

and

upon

data

supplied

by

WCI

in

early

1994.

---

Page

6

72

F.

Supp.

2d

810,

*;

1999

U.S.

Dist.

LEXIS

17436,

**;

49

ERC

(BNA)

1685;

30

ELR

20169

The

parties

having

waived

a

jury,

this

matter

went

to

trialbefore

this

Court.

After

observing

the

demeanor

of

the

witnesses

and

considering

the

parties’

evidence

and

arguments,

the

Court

makes

the

following

findings

of

fact

and

conclusions

of

law.

I.

FINDiNGS

OF

FACT

A.

History

of

WCI

Steel

The

Defendant

WCI

Steel,

Inc.

(“WCI”)

is

an

Ohio

corporation

with

its

principal

place

of

business

at

1040

Pine

Avenue,

Warren,

Ohio.

At

this

facility,

Defendant

WCI

operates

the

last

remaining

integrated

steel

mill

in

the

Mahoning

River

Valley.

3

All

of

the

United

States’

claims

relate

to

WCI’s

Warren

facility.

WCI

Warren

facility

manufactures

hot

rolled

strip

steel,

pickled

and

oiled

hot

rolled

steel

strip,

cold

rolled

steel,

and

coated

flat

steel

products.

Employing

approxi

mately

2,200

[**4j

employees,

WCI

is

the

largest

steel

employer

in

the

Mahoning

Valley.

Steel

production

began

at

the

Warren

facility

in

1912.

Beginning

in

the

1930s,

Republic

Steel

Corpora

tion

owned

the

facility.

In

1984,

Republic

Steel

Corpora

tion

merged

with

J&L

Steel

Corporation

to

form

LTV

Steel

Company.

In

1988,

LTV

Steel

Company

.went

into

bankruptcy.

With

little

potential

to

operate

profitably,

the

bankruptcy

trustee

decided

to

sell

the

Warren

facility

to

Defendant

WCI

for

an

insignificant

price

compared

with

the

facility’s

physical

assets.

4

On

August

31,

1988,

Warren

Consolidated

In

dustries,

Inc.,

acquired

the

facility

from

LTV

Steel

Company.

In

December

1991,

Warren

Con

solidated

Industries,

Inc.

changed

its

corporate

name

to

WCI

Steel,

Inc.

In

August

1988,

Defendant

WCI

purchased

the

War

ren

facility

during

a

time

of

major

decline

in

United

States

integrated

steelmaking

production.

By

saving

the

facility

from

shutdown,

WCI

greatly

benefitted

its

work

ers

and

the

Warren,

Ohio,

community.

5

Product

had

declined

by

nearly

50%

in

a

dec

ade.

The

year

WCI

purchased

the

Warren

facility

marked

the

seventh

consecutive

year

of

loss

for

the

steel

industry.

[**5]

After

purchasing

the

Warren

facility,

Defen

dant

WCI

made

major

investments

in

production

equip

ment

and

facilities.

WCI

spent

more

than

$

300

million

on

capital

improvements.

These

capital

expenditures

also

reduced

the

amounts

of

pollution.

[*8141

B.

Wastewater

System

At

its

Warren

Ohio,

facility,

WCI

has

a

system

for

the

collection

and

treatment

of

wastewater

generated

in

its

steel

production.

The

WCI

steel

facility

first

collects

wastewater

from