FOX CITIES MAY PAY FOR PCB CLEANUP

The cleanup that never began is the story that never ends. It is the tale of the Fox River, and the decades-long battle over its remediation. The players are familiar, for the most part – the paper companies that used Polychlorinated Biphenyls from the 1950’s until they were outlawed in 1971, and their insurers at the time who have been determined to also bear responsibility for the costs of the cleanup.

However, as the deadline for beginning the cleanup approaches, and as both the Department of Natural Resources and the Environmental Protection Agency begin to press for action to commence, another potentially responsible party is on the verge of being identified.

That party is our old friend The Taxpayer, this time in his guise as a customer of the same sewerage utilities that processed the paper mill wastes that polluted the bottom of the Lower Fox River and Green Bay.

The paper companies and their insurers, who are rarely in agreement on any issue, do agree that the mills contracted with various Publicly Owned Treatment Works (POTW) during the period of the PCB contamination. The argument goes that they reasonably expected the POTWs to treat their wastes so that the contaminants would be removed during the wastewater treatment cycle.

This is not quite the image we have been served over the years of giant paper mills dispensing their foul liquid wastes directly into Wisconsin’s pristine waters. It puts a whole new spin on the issue, and has municipal leaders and their insurers quite nervous.

As we will see, this is not news, and the Fox River newspapers have touched on the topic over the years. But like a burying a body in a swamp, the thing keeps coming up to the surface. It is time to dispose of the issue once and for all.

A BIT OF BACKGROUND

The League of Wisconsin Municipalities opened its 109^th Annual Conference in the Hilton Milwaukee City Center Wednesday, October 3^rd, 2007. The league, founded in 1898, counts among its members 188 of Wisconsin’s 190 cities and 391 of its 402 villages. Among the panels and discussions at the event was “Alternative Revenue Sources for Municipalities.” I checked out the exhibition hall at the conference and was surprised that many experts in brownfield remediation, environmental engineering and allied disciplines had never considered the possibility of municipal liability in the case of the Fox River.

But according to the Appleton Post Crescent on Thursday, October 18^th, 2007, the mayors of the Fox River cities met in closed-door session the day before to discuss their possible predicament.

“I don’t think anybody has fully grasped all of the implications that can happen here,” is the way Neenah Mayor George Scherck put it to reporter Duke Behnke.

“The municipalities are not responsible parties,” Bruce Baker, deputy administrator of the DNR told the paper in late September, when officials from his agency briefed municipal leaders. Baker could have said that they are Potentially Responsible Parties (PRP). Potentially Responsible Party is a recognized legal term in environmental cleanups, particularly of the Superfund type, where they bear the cost of 70 per cent of all cleanups. According to documents on the DNR website numbering thousands of pages, there is indication that the POTWs should be aware of their status as PRPs. (Thus far the Fox cleanup is being handled as a state project, but this could change if action is not commenced soon.)

However, the six paper companies involved in the PCB discharges prior to the banning of the chemical in 1971, are almost certain to claim that League members Neenah, Menasha, Kaukauna, De Pere and especially Appleton should bear a part – perhaps 10 per cent – of the $400 million cost of the project. This is what has municipal officials so concerned and uncertain.

Just as the paper companies successfully sought compensation from their liability insurers for a portion of their PCB remediation costs, so do they hope to rely on the POTWs for a share of the costs. The POTWs will have to find their money somewhere, which leads us back to the taxpayer – ratepayer.

THE APPLETON WASTEWATER TREATMENT PLANT

One municipally owned wastewater treatment plant in particular handled the greatest number of PCBs and could possibly face the greatest penalty. The Appleton Wastewater Treatment Facilities, established in 1883, handled the effluents leaving the Appleton Coated Paper Mill, which “is estimated to be the largest single discharger to the river at 119,000 kg and represents 38% of the cumulative release,” according to the 1999 report. “Primary system treatment efficiencies were routinely around 57%” until a 1964 upgrade when the plant should have theoretically been able to treat 90% of the wastes. Unfortunately, the combined sewerage system of Appleton was subject to frequent overflows, resulting in the poisonous discharges entering the river full strength. A similar situation prevailed with the other POTWs, although to a lesser degree. In DePere, for example, “A 1972 Enforcement Hearing indicated the DePere POTW received 3.5 to 7.3 million gallons a day (MGD) of inflow but only treated 2 to 3 MGD, implying the rest was bypassed.”

The official history of the Appleton Wastewater Treatment Facilities, found on its website, is almost cavalier about the conditions of the plant before and during the era of PCB effluent discharges:

“When Appleton first built the combined sanitary and storm sewer system in 1883, the world was a much different place. There wasn’t the widespread concern for the environment, and more specifically, water quality wasn’t a top priority issue. In fact, it could be said that many people took the quality of air and water for granted.”

“However, by the 1930’s, as more people moved into the city and more industries were developing, our community and government became more aware and concerned about the quality of our environment. … This awareness led to the 1937 construction of the Appleton Sewerage Treatment Plant and Interceptor Sewer System. This plant provided primary treatment which meant that the wastewater was only partially treated before discharge to the Fox River.”

You could see how this state of affairs could lead the paper companies to demand that there would be some level of municipal liability for the cleanup of the river into which publicly owned treatment works dumped their wastes. A $40 million hit could hurt the credit ratings of the City of Appleton or of the entities controlling other sewerage districts impacted by the cleanup. Most likely, they are underinsured also, and financially strapped.

The City of Appleton capital budget policies mandate that funds for capital expenditures such as an environmental cleanup come from “Revenue Bonds, General Obligation Notes, Internal Funds, Grant Funds, Special Assessments and Developer Contributions.”

The policy makers in Appleton might want to add “Proceeds from Insurance Carriers” to that list. In fact, the city of Appleton has recently authorized a $20,000 contract for an outside attorney to investigate whether the insurance policies it had in force during the time of the PCB discharges could be used to pay its liability, if any.

“At this point it is undetermined whether it would be covered,” City Attorney Jim Walsh said.

To Be Continued ---

[Updated, Tuesday, October 23rd. 2007 -- www.foxpolitics.net picked up this item in its news feed. Publisher Jo Egelhoff, a former Appleton alderman, said Fox River city governments have long known that they may be liable to suits from the paper companies and have hired consultants to advise them over the course of many years. --Ed.]

[P.S. -- When I updated this post I made a technical boo-boo, and may have messed up some links. As a result the item appears twice to preserve the links. I had no other choice -- Ed.]