United States District Court, S.D. Iowa, Central Division
For United States of America, Plaintiff: Eric C. Albert, U S DEPT OF JUSTICE, WASHINGTON, DC; Sara C Colangelo, U S DEPT OF JUSTICE - Environment & Natural Resources, WASHINGTON, DC; Steven D. Shermer, U.S. DEPARTMENT OF JUSTICE-Environment & Natural Resources, Environmental Enforcement Section, Washington, DC.
For Dico, Inc., Titan Tire Corporation, Defendants: Michael F Iasparro, LEAD ATTORNEY, PRO HAC VICE, HINSHAW & CULBERTSON LLP, ROCKFORD, IL; Sergio Enrique Acosta, Thomas D Lupo, LEAD ATTORNEYS, PRO HAC VICE, HINSHAW & CULBERTSON LLP, CHICAGO, IL; Mark McCormick, Stephen H. Locher, BELIN MCCORMICK, P.C., DES MOINES, IA.
ROBERT W. PRATT, U.S. DISTRICT JUDGE.
ORDER ON BENCH TRIAL
This lawsuit arose out of the United States of America's (" Plaintiff" ) claims against Dico, Inc. (" Dico" or " Defendant" ) and Titan Tire Corporation (" Titan Tire" ) (collectively " Defendants" ), under " Sections 106, 107 and 113(g) of the Comprehensive Environmental Response, Compensation, and Liability Act [" CERCLA" ] of 1980." Compl. (Clerk's No. 1) ¶ 2. Plaintiff sought to recover unreimbursed response costs from Defendants, and civil penalties and punitive damages from Dico, in connection with the release and/or the threat of release of polychlorinated biphenyls (" PCBs" ) at Southern Iowa Mechanical's (" SIM" ) site in Ottumwa, Iowa. See id. Plaintiff also requested that the Court enter a declaratory judgment holding Defendants liable for all future response costs that Plaintiff would incur as a result of the release and/or threat of release of PCBs at the SIM site. See id.
The Court resolved all but one of the issues presented by the parties during the summary judgment phase of the litigation. In particular, the Court held that: (1) Defendants arranged for the disposal of PCBs by selling some of its PCB-contaminated buildings to SIM, see Order (Clerk's No. 119) at 16-40; (2) Defendants were liable for all response costs that Plaintiff had already incurred or would incur as a result of the SIM site removal action, see Order (Clerk's No. 128) at 43; and (3) Dico was liable for both civil penalties and punitive damages for violating the 1994 Unilateral Administrative Order (the " 1994 Building UAO" ), see id. The sole issue reserved for trial was the amount, if any, of civil penalties and/or punitive damages to be assessed against Dico. See id. The Court held a bench trial on this issue from December 2-5, 2013. See Clerk's Nos. 186-89. On January 15, 2014, the parties submitted their proposed findings of fact and conclusions of law. See Clerk's Nos. 196-97. The matter is fully submitted.
I. CONSIDERATIONS ON REVIEW
Federal Rule of Civil Procedure 52(a) requires that in all cases tried without a jury or with an advisory jury, " the court
must find the facts specially and state its conclusions of law separately." In determining the credibility of the witnesses and the weight to be accorded their testimony, the Court has taken into consideration: the character of the witnesses, their demeanor and manner of testifying on the stand, their interest, if any, in the result of the trial, their relation to or feeling toward the parties to the trial, the probability or improbability of their statements, and all other facts and circumstances given in evidence. See United States v. Phillips, 522 F.2d 388, 391 (8th Cir. 1975); Clark v. United States, 391 F.2d 57, 60 (8th Cir. 1968); United States v. Earles, 983 F.Supp. 1236, 1254 (N.D. Iowa 1997); Manual of Model Civil Jury Instructions for the District Courts of the Eighth Circuit, Instruction 3.03 (2013) . With these considerations in mind, the Court finds facts and makes conclusions of law as articulated herein.
II. FINDINGS OF FACT
A. Stipulated Facts
The parties have stipulated to many of the facts in this case. See Am. Proposed Order on Final Pretrial Conference (Clerk's No. 181) at 2-6. Pursuant to this stipulation, the Court finds the following facts:
o Dico is a corporation organized and existing pursuant to the laws of the State of Delaware.
o Dico owns property located at 200 Southwest 16th Street in Des Moines, Iowa, which is part of the Des Moines TCE Superfund Site.
o The Des Moines TCE  Superfund Site is divided into four Operable Units (" OU" ).
o OU1 involves a groundwater extraction, treatment, and monitoring system designed to address historical volatile organic compound contamination in the groundwater on the Dico property.
o OU3 involves groundwater in the area north of the Dico property. Dico does not own the land at issue in OU3.
o OU2 and OU4 include several buildings on the Dico property where, among other things, formulation of pesticides and herbicides once occurred. OU4 also includes soil and sediment associated with an aldrin tank that once existed on the property; the South Pond area; and a drainage channel south and east of the Dico property. As part of the remedial work associated with OU4, Dico installed an asphalt cap over a substantial portion of the Site. To this day, Dico is responsible for maintaining the asphalt cap.
o In 1992, PCBs were discovered in the insulation of five buildings (Buildings 2-5 and the Maintenance Building, collectively the " Dico Buildings" ) on Dico's property within what is now OU4.
o [The Environmental Protection Agency] [(" the] EPA[" or the " Agency" )] issued . . . the 1994 Building UAO to Dico to address contamination within the Dico Buildings. The 1994 Building UAO did not cover certain other buildings on the Dico property, including the Weld Shop and [the] Production Building.
o Dico performed the work set forth in the approved Removal Action Work Plan required by the 1994 Building UAO and submitted a final report to
[the] EPA on April 11, 1997 (" the 1997 Report" ). . . .
o Mary Peterson [(" Peterson" )], [the] EPA's project manager for the Dico Site, reviewed and approved the 1997 Report.
o On May 8, 1997, [the] EPA issued a notice of completion approving the 1997 Report and noting that " the continuing obligations" of the . . . [1994 Building UAO] remained in effect. . . .
o Dico prepared and revised the [Operations and Maintenance Plan] [(" ]O& M Plan[" )] pursuant to [the] EPA's directions in accordance with Paragraph 31 of the 1994 Building UAO, and submitted the revised O& M Plan to [the] EPA for approval on June 10, 1994.
o [The] EPA approved the June 10, 1994 O& M Plan on February 5, 1997.
o In December 2002, Dico wrote a letter to . . . Peterson regarding proposed modifications to the OU1 groundwater treatment and monitoring system, and raised the possibility of modifying the O& M Plan applicable to the Dico Buildings. Dico and [the] EPA exchanged additional communications, including a draft work plan, regarding these modifications in subsequent months.
o On July 2, 2003, Dan Buttars, on behalf of Dico, sent a letter to . . . Peterson providing a revised " Work Plan for Proposed Modification of Des Moines TCE Site." The July 2, 2003 revised Work Plan included a statement that Dico " has intentions of possible future demolition or dismantling of these buildings. No date of certainty can be given for this however." [The] EPA and Dico exchanged additional letters in subsequent months.
o On September 3, 2003, [the] EPA wrote a letter to Dico in which it approved the modifications to the O& M Plan applicable to the Dico Buildings. The letter also acknowledged that " [t]he Work Plan mentions that Dico may demolish the buildings which are associated with previous response actions and subject to certain requirements for operation and maintenance." The letter further stated that [the] EPA " does not necessarily object to demolition of the buildings, but urges Dico to coordinate any plans for demolition of the buildings with [the] EPA." The letter further stated that " certain disposal requirements may apply for building debris, and the EPA or state would want to oversee the demolition." (emphasis added).
o On September 23, 2003, Dico sent a letter responding to [the] EPA's September 3, 2003 letter, in which it stated that " Dico will notify EPA by phone and writing at least one week prior to any future site activity regarding building dismantling or demolition, improvements, and/or re-use."
o Beginning in May 2007, Titan Tire, on behalf of Dico, entered into three transactions with SIM concerning the Dico Buildings: two contracts for the Maintenance Building and the western annex of Building 3, and one contract for Buildings 4 and 5 and the north end of the Production Building. SIM paid $1.00 per square foot for these buildings.
o Buildings 1 and 2 and the remainder of Building 3 were not part of the transactions in 2007 and remain on the Dico property.
o The Dico Buildings that were the subject of Titan Tire's transactions with SIM were steel-beamed, Butler-style buildings.
o SIM began dismantling the first of the Dico Buildings it purchased (the Maintenance Building) no earlier than June 19, 2007.
o [The] EPA discovered that the buildings were being dismantled during the five-year review site inspection on September 19, 2007. . . . The dismantling was not complete on that date.
o SIM finished removing all remaining building materials and debris from the Dico site no later than November 27, 2007.
o SIM took the steel beams from the buildings to its property in Ottumwa, Iowa.
o In May 2008, [the] EPA tested samples from the steel beams, from soil near the beams, and from a large piece of insulation that was found between several beams, and confirmed that PCBs were present on some of the beams, in the soil, and in the sampled insulation.
o [The] EPA issued a Unilateral Administrative Order [(" UAO" )] to Dico and Titan Tire requiring them to perform a removal action at the SIM [s]ite, which became effective on January 23, 2009 (the " SIM Site [UAO]" ).
o Dico and Titan Tire performed the work required by [the] EPA at the SIM [s]ite in accordance with the SIM Site UAO.
o On June 1, 2010, [the] EPA issued a " Notice of Completion" letter to Dico and Titan Tire for the work required under the SIM Site UAO.
o Dico is subject to two Administrative Orders in addition to the 1994 Building UAO . . . . They pertain to groundwater for OU1 (issued in 1991) and soil remediation for OU4 (issued in 1994). Dico has performed the groundwater treatment and monitoring required of it by the Administrative Order and associated . . . [O& M] Plan for OU1. Dico has maintained the asphalt cap pursuant to the Administrative Order and associated . . . [O& M] Plan for the asphalt cap for OU4. SIM's removal of the [Dico] [B]uildings did not affect the integrity of the asphalt cap.
Id. ¶ ¶ 1-29.
B. Additional Findings of Fact
Although the parties did not stipulate to the facts that follow, the Court finds that they have been amply proven or established by testimony and other evidence at trial.
1. Nature of Dico's conduct.
o James Fechter (" Fechter" ) was employed as corporate environmental engineer by Titan International from 1993 to 1998. Ex. 1149 (Fechter Dep.) at 8:18-20, 10:15-18. In that capacity, he was responsible for, among other things, Dico's environmental compliance at its Des Moines, Iowa facility. Id. at 11:12-23.
o Fechter understood that the 1994 Building UAO sought to remedy PCB contamination. Id. at 28:23-29:2. He testified that PCBs were present in the ceiling and wall insulation inside the Dico Buildings. Id. at 29:13-30:3.
o Fechter oversaw the removal action undertaken pursuant to the 1994 Building UAO, and was regularly communicating with Cheri Holley (" Holley" ) to update her on the status of this removal action. Id. at 42:3-13, 43:21-44:14, 49:18-50:3.
o Fechter understood that PCBs remained inside the Dico Buildings even following the completion of the removal action. Id. at 86:17-87:2. In fact, the overarching purpose of the O& M Plan, which was required by the 1994 Building UAO, was to ensure the integrity of the paint encapsulating the remaining PCBs inside the Dico Buildings. Id. at 87:18-88:11, 97:12-98:12.
o Fechter testified that the " Notice of Completion" issued by the EPA on May 8, 1997 did not terminate the 1994 Building UAO or the O& M Plan. Id. at 123:23-125:10.
o Holley is Dico's general counsel and the Dico officer in charge of managing all environmental matters related to Dico. See Ex. 1151 (Dico Dep.) at 61:17-62:3, 71:13-21, 74:1-10, 79:12-80:4. In this capacity, she assigned responsibilities and oversaw the work of the various employees or consultants with respect to Dico's environmental matters. See id.
o Prior to the sale of the Dico Buildings to SIM, Holley received and reviewed a copy of a March 2007 Reuse Planning Report, see id. at 179:2-180:6, 180:25-181:6, which clearly stated that the buildings in question still contained PCBs, see Ex. 178 at 3, 21. Brian Mills (" Mills" ), an environmental consultant  for the Dico site, also received a copy of this report. See Ex. 1151 (Dico Dep.) at 179:2-19.
o Titan Tire, acting on behalf of Dico through its President William Campbell (" Campbell" ), see Trial Tr. at 360:8-13, sold the Dico Buildings to
SIM in 2007, see, e.g., id. at 377:14-379:12 (explaining that Campbell and Don Brown (" Brown" ) were acting on behalf of Dico in selling the 12,000-square-foot truck garage because Dico did not have any employees at the time); see also Exs. 1026-29.
o Campbell testified that prior to selling the buildings to SIM, he asked Brown to inquire of Mills whether those buildings were subject to any environmental restrictions. Trial Tr. at 386:8-21.
o Mills testified he assured Brown that he did not know of any environmental restrictions, and also told Brown that he wanted to contact Louis Barrentine (" Barrentine" ) to see if he was aware of any. Id. at 436:2-5, 436:12-19, 437:16-438:7. According to Mills's testimony, Barrentine told him that he did not know of " any ...