On September 9, 1992, Representative John Dingell of Michigan, chairman of the U.S. House Committee on Energy and Commerce subcommittee on oversight and investigations, issued a memorandum to members of his subcommittee. The memo had been prepared by his staff, which had, according to the memo, “identified about 20 cases in the last several years where the Environmental Crimes Section of the Department of Justice has, or is alleged to have, interfered with the effective criminal prosecution of companies, corporate officials and individuals for serious and willful violations of environmental laws.”
Only six of the very worst cases, in the judgment of the subcommittee staff, are discussed at length in the memo. Those cases are said to be “indicative of the serious management and performance problems plaguing the federal criminal environmental enforcement program. These problems include:
“1) failure to pursue aggressively a number of significant environmental cases. A pattern seems to emerge in which prosecution is strongly supported by the EPA, local Assistant U.S. Attorneys, and/or Justice Department staff attorneys assigned to the case, but is rejected or undermined, at the senior management level of the ECS or sometimes even higher at the DOJ…
“2) a serious lack of environmental law expertise at the senior management and supervisory level at the ECS;
“3) an extremely ineffective use of limited EPA investigative resources;
“4) serious morale problems within the EPA criminal investigative units and within the ECS itself;
“5) failure to inform the EPA of the reasons why ECS management has declined to prosecute the cases, notwithstanding official requests from the EPA. In one case [that of Hawaiian Western Steel] a declination letter was sent only to the defense counsel, which EPA officials describe as highly unusual; and
“6) a lack of creativity and aggressiveness among some attorneys at the ECS, which leads them to regard factual or legal challenges in a case as reasons to drop it.”
What follows are excerpts from the staff’s report on the handling of environmental violations at Hawaiian Western Steel:
Improper Dumping
In 1988, Hawaiian Western Steel melted an estimated 30,000 tons of steel in an electric arc furnace. This process generated various wastes, including dust, that failed by a large margin the EPA toxicity tests for cadmium and lead. The dust also contained a high volume of zinc. A system known as a bag house was supposed to collect this dust. According to the EPA, between 1.5 and 2 tons of this dust, which was a hazardous waste, was generated each 8-hour shift.
Investigation by the EPA’s San Francisco office identified several apparent violations of environmental law, including RCRA, which prohibits the storage or disposal of any listed hazardous waste without a permit, CERCLA, which requires a person in charge of a facility to notify the U.S. Coast Guard’s National Response Center immediately of any release of a hazardous substance exceeding specified quantities, and the Clean Air Act, which prohibits false statements about or the concealment of information relative to the reporting requirements under that act.
Under RCRA, generators of hazardous waste were required to notify the EPA by August 19, 1980. HWS did not comply with this requirement.
A September 1986 inspection by the Hawai`i Department of Health discovered that for years, HWS had been dumping improperly the melt shop wastes in an empty lot. HWS subsequently was required to move a volume of the dumped dust back to the mill area. The inspectors asked the melt shop supervisor if the baghouse dust was a hazardous waste, but the supervisor, who knew that it was, withheld this information. The inspectors ordered tests of the dust, and these results further confirmed that the dust was, indeed, a hazardous waste. Nonetheless, the dust continued to be accumulated in bags or simply dumped onto the ground. A civil administrative case was brought against HWS as a result of the dumping, but this case only concerned the landfill and not the facility itself.
In April 1987, shipments of the baghouse dust began to a company in Washington state for reprocessing to remove the zinc. These shipments which lasted until January 1988, did not include the material that had been returned from the landfill or dumped on the ground because it was unsuitable for such purpose. This material was put into bags beginning about October 1987, but lacked any proper means of disposal.
Hazardous Waste Incineration
In 1988, the melt shop supervisor described a plan to HWS’s attorney whereby the undisposable dust would be put back into the furnace with the objective of upgrading the percentage of zinc in the resultant waste to a commercially attractive level. A June 1988 article describing such a process, in which the waste was formed into briquettes before introduction into the furnace, was found by EPA investigators in the company’s files. The attorney advised the company that such an attempt would be legal. The supervisor put raw waste dust into the furnace a number of times, but could not increase the zinc content of the result to economically viable levels. Nonetheless, the supervisor admitted to EPA investigators that the baghouse dust continued to be placed into the furnace. Several other HWS employees confirmed this practice, adding that the broken dust bags, filter bags from the baghouse operation, and even protective clothing worn by baghoues workers were often thrown into the furnace. The investigators concluded that the furnace was being used as an incinerator and not for recycling, as was claimed. HWS had no permit for the incineration of hazardous waste, and the environmental control system at the mill did not begin to approach the level required for such permission.
[In 1964, HWS and its affiliate, Western Steel (Canada) Ltd., had been purchased by Cominco, a Canadian company. — Editor’s note] Cominco agreed in March 1988 to take shipments of baghouse dust from HWS for reuse in its lead smelter. Based on Cominco letters to HWS, which indicated that the Canadian company had no need for any more zinc slag, EPA investigators concluded that Cominco was merely accommodating a dire need of its subsidiary. The only alternative, according to the baghouse superintendent, was to send the waste to an approved landfill on the U.S. mainland — an option that would be much more expensive.
A June 1988 inspection by the Department of Health found that the bags of dust awaiting transport to Canada were not marked properly with hazardous waste labels and fill dates, as was required by federal regulation. Moreover, 33 broken bags were noted at the baghouse, as well as a volume of dust. These bags were also not labeled, as required by regulation, and appeared to exceed the 90-day time permitted for storage of hazardous waste at a site.
Persistent Violations
In the fall of 1990, an EPA RCRA enforcement officer referred the HWS matter to the Criminal Investigation Division of the San Francsico regional office because of continuing violations. A criminal case was opened on February 4, 1991.
EPA criminal investigators conducted surveillance on the facility on February 27. The inspectors observed numerous holes in the roof over the furnace, which resulted in massive releases of dust, as well as significant leakage from the baghouse.
The baghouse supervisor later told EPA investigators that about 25 percent of the baghouse dust was released into the air because of problems with the system.
In 1989, the plant manager wrote to the new owners of the facility, another Canadian company named IPSCO, that there was no ready solution to the hazardous waste problem, the operation could not be turned into a money-maker and the mill should be shut down. The mill continued to operate but continued to lose money.
On March 5, 1991, during the execution of a search warrant, EPA investigators found 66 bags of baghouse dust in the vicinity of the baghouse. Even though the mill had been operating regularly since October 1990, no shipments of the baghouse dust had been made. Clearly, some of this dust had been stored at the mill for longer than the allowed 90-day period. This violation continued similar storage, labeling, and false manifesting violations discovered in inspections beginning in 1986. The HWS manager claimed that a prolonged strike at the British Columbia disposal site prevented shipments of the baghouse dust for five months. Investigation by the agents established that the strike lasted for only two weeks. Moreover, EPA agents discovered 40 bags of hazardous waste that had been returned to the mill from the landfill about 1988, as well as two roll-on/roll-off containers full of the same type of waste parked at the rear of the facility.
Failure to Notify
Various managers at HWS failed to notify the Coast Guard about the release of lead, a listed hazardous substance, despite their knowledge that the furnace smoke far exceeded the permitted lead limit. Reports in the files of HWS indicated that the baghouse dust contained 3 to 6 percent lead. This equates to a release of between 15 and 30 pounds of lead per day into the atmosphere. The EPA estimates that a total of 500 pounds of hazardous waste escaped the emission control system each day, but the required reports were not made to the National Response Center between 1987 and 1991.
HWS failed to report malfunctions of environmental control equipment to the state, which was responsible for implementing a control plan under the Clean Air Act. In 1990, a state inspector noticed the holes in the roof over the furnace. The company promised by letter to remedy this and other environmental control failures, but never followed through.
Eagerness to Prosecute
At first, the Assistant U.S. Attorney in Hawai`i was receptive to the case and expressed eagerness to show the photographs taken of the facility by the EPA to a jury. These dramatic night-time photographs show huge quantities of smoke pouring through the roof of the facility. However, the Assistant U.S. Attorney looked to the Environmental Crimes Section, in theory the repository of environmental law expertise in the Department of Justice, for ultimate guidance. Despite the evidence of violations developed by the EPA and over the objections of that agency, the ECS decided in the summer of 1991 not to pursue the RCRA charges. Ironically, according to the EPA’s Special Agent in Charge (SAIC) in San Francisco, the RCRA violations were thought by Ray Mushal, a senior attorney in the ECS, to be too complicated. Further review of the case by the ECS and EPA headquarters personnel resulted in a decision to pursue the CERCLA and Clean Air Act violations, which the SAIC then began to document.
Following the March 1991 search warrant, attorneys for HWS began pressing the EPA to detail what violations had been committed. It was alleged that HWS’s parent company was contemplating a capital investment in the mill, but could take no action so long as the cloud of the investigation hung over the company. It was not explained why the parent company had declined to invest in HWS in the years prior to the investigation. Representations were made that at least 100 families were going to be put out of work, although the investigation indicated that these statistics were substantially inflated. Moreover, there were indications that the company had been planning to fire the workforce anyway and was finding it expedient to have someone else to blame. The ECS staff attorney assigned to the case, Paul Rosenzweig, was said by the EPA to be supportive of criminal prosecution, but his supervisors were in doubt.
The SAIC in San Francisco was informed that meetings had been held in the fall of 1991 between HWS defense attorneys and ECS supervisory attorneys, including Neil Cartusciello and one of his section chiefs, Greg Linsin. Curiously, the ECS staff attorney was said to be absent from these meetings.
‘Insane’ Laws
In January 1992, Neil Cartusciello, several of his deputies, the ECS line attorney, the head of the EPA’s Office of Enforcement and other EPA headquarters personnel flew to San Francisco for an all-day meeting on the case with the SAIC, the regional counsel and others. The SAIC, who has some 20 years of federal law enforcement experience, told subcommittee staff that he had never experienced a meeting like this. Mr. Cartusciello reportedly buried himself in the minutest details of the case and went off on puzzling tangents. As a result, less than one-third of the issues in the case were even discussed.
At the time, Mr. Cartusciello reportedly exhibited a poor understanding of the law and, in certain instances, disapproved of it. When discussion turned to HWS’s failure to notify the Coast Guard of the releases of hazardous waste, as required by CERCLA, Mr. Cartusciello reportedly expressed disbelief that such an omission could be illegal. When the statute was read to him, he reportedly dismissed the idea of such a prosecution as “insane.”
Absurd Discussions
Mr. Cartusciello also was said to have expressed the view that notice was given by the company, because when the state air inspector discovered the holes in the roof, the company sent a letter promising to fix them. The EPA found this explanation weak, at best. They pointed out, however, that even if that were an adequate partial explanation, the letter did not mention fixing the baghouse, which had leaked hazardous waste into the air and spilled it onto the ground for years without any notification. Mr. Cartusciello then was said to have countered that the company also had promised to fix a valve in the baghouse.
The absurdity of this discussion was underscored by the fact that the baghouse system was so deficient as to be incapable of preventing serious releases of hazardous waste even if it were repaired and in full working order. HWS supervisory personnel had admitted to EPA investigators that the capacity of the baghouse was about half of what was required, and a totally new system would have to be constructed to prevent the discharges. Obviously, if the company had admitted this to the state, the mill probably would have been shut down immediately.
Eventually, according to the SAIC, a potential flaw with the case was raised by the ECS, which subsequently was declared to be serious. The ECS noted that the CERCLA charges might be open to challenge on procedural grounds because the EPA had issued a proposed rule on the regulations, but had never issued the final rule. After further study and deliberation by the ECS and the EPA, it was decided that this was, indeed, a serious problem that could well have jeopardized the failure-to-notify violations. However, it clearly was not presented as such by the environmental law experts in the ECS at any time up to or including the January 1992 meeting.
Mr. Cartusciello reportedly pressed for completion of the investigation by March 1, 1992, a date the investigators considered unreasonable. His deputy, Chuck DeMonaco, revealed that the ECS had promised the defense that the case would be finished by the end of March. EPA representatives found it hard to understand why this case had to be finished in such a rush when the ECS routinely sat on cases for two or more years. Nonetheless, the EPA gave the case top priority and the SAIC sent two of his three agents to Hawai`i to conduct further interviews and review documents.
‘Bizarre Deviation’
While work was in progress on this request, the EPA learned that in February the ECS had sent a letter to the defense counsel declining prosecution against the company. In a bizarre deviation from standard procedures, the declination letter was addressed to defense counsel, with only a copy to the EPA. The question of whether to prosecute any individuals was not resolved until June, when the ECS sent another declination letter to counsel.
At least one of these letters reportedly was sent against the express desire of the U.S. Attorney’s office in Hawai`i, and neither was of any help to the civil case against HWS. Moreover, the willingness of the ECS to send such letters to the HWS counsel is quite puzzling in view of the unwillingness they have evinced in other cases to provide case declination letters to the EPA.
At present, the mill has been closed and HWS is in Chapter 11 proceedings. The company issued a press release blaming the government for the shutdown, but the parent company had declined to make the necessary capital investments in HWS well before the opening of the criminal case, and it is questionable whether the parent company would have been inclined to invest in the economically doomed facility in any case.
Volume 3, Number 7 January 1993
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