Manufacturers win key round vs. cities in landfill litigation.

Companies charged with the $500 million cleanup of a local Superfund site have scored a key court victory in their bid to get Southland cities to pick up part of the tab, even as Congress mulls legislation that would get those municipalities off the environmental hook in the continuing high-stakes trial.

U.S. District Court Judge William Byrne Jr., in a July 21 oral ruling, concluded the 14 cities can indeed be held financially liable for costly hazardous waste removal at Monterey Park's Operating Industries Landfill. Because those cities made formal arrangements with private waste haulers to dispose of the household and office trash there, they exercised "sufficient control" over the garbage to make them "owners or possessors" of it and thus added to the landfill's troubles, according to Byrne.

"The ruling really was more important to the corporations than us because if they lost, that's the end of the case," said Mitchell Abbott, one of the attorneys representing Alhambra, Compton, Montebello, San Gabriel and 10 other small municipalities. "But it's still a serious setback."

Abbott, a lawyer with Richards, Watson & Gershon, said his clients would appeal the ruling with the Ninth Circuit Court of Appeals in San Francisco next week. Meanwhile, a lobbying coalition of the 14 cities is racing to get a bill passed this year in Congress that would quash the industrial polluters' argument that cities must shoulder some of the burden.

Still, the case could affect 20 others because it represents one of the few occasions industry has pursued cities, not other businesses, to recoup Superfund costs. Byrne's ruling, moreover, was precedent-setting since it was the first time the Superfund "liability test" was successfully applied to cities, specifically through contracts and franchise agreements they made with waste haulers.

Among the 64 plaintiffs are oil giants Atlantic Richfield Co., Unocal Corp. and Chevron Oil, as well as McDonnell Douglas Corp., Lockheed Corp., Dunn-Edwards Corp., Uniroyal Tire Co. and Procter & Gamble Co. Those companies filed suit against the cities in December 1989, five years after the U.S. Environmental Protection Agency closed down the 180-acre landfill and sued them for clean-up expenses under the Superfund law.

Under that 12-year-old law, the EPA can force polluters, without formal admissions of guilt, to clean up America's 1,100 worst toxic waste sites. At Monterey Park, the bulk of hazardous substances came from industry-produced petroleum waste, cleaning solvents and manufacturing liquids.

The dump, adjacent to the Pomona (60) Freeway, legally took in 15 million to 22 million tons of debris during its 36 years of operation. Roughly 90 percent of all the waste came from Southland cities, with the rest liquid waste from industry.

The pending case only involves the liability for the first two phases of the cleanup, which sources said was half-way completed and estimated to cost $61 million. Those funds are being used to drain and treat leachate, a yellowish hazardous waste produced mainly by manufacturers, and basic maintenance and monitoring of the landfill.

The next stage, forecast to ring up $140 million in bills, will mean ridding the dump of methane gas and the sealing the landfill. The final phases, probably costing at least $320 million, will subsidize removal of contaminated groundwater and shuttering the site for good.

Among the central questions to be thrashed out will be the precise amount of trash hauled to the dump by both sides, the level of toxicity of the industrial waste and household-office trash, and the extent to which the non-industrial swill is aggravating the company-subsidized cleanup.

What makes the case so worrisome for the cities is the likelihood the companies would sue them on the remaining cleanup phases if they prevailed in the current trial, though corporate interests would not comment on that point.

Elizabeth Weaver, one of the attorneys representing the 64 companies, said she was not surprised by Byrne's decision and expects the trial to end before mid-1993.

"The big question now is what each side owes," said Weaver, a lawyer with Century City-based Kaye, Scholer, Fierman, Hays & Handler. "They're liable, we're liable and it's up to the judge to allocate costs. We only want the cities to pay their fair share, not ours."

Weaver rejected the notion, advanced by some city officials, that the companies would seek to recover out-of-pocket cleanup costs based on the proportion of waste dumped, regardless of whether it was hazardous, or 90 percent of $61 million.

Instead, she said, the plaintiffs will try to determine how much of the residential-office garbage itself was hazardous from discarded insecticides, cleaning solvents, batteries and the like. Also, they will try to prove the mountain of garbage has aggravated the cleanup because of erosion and safety concerns.

Abbott, the cities' lawyer, retorted it was manufacturing by-products -- perhaps 500 million gallons of it -- that prompted the EPA to declare the Operating Industries Landfill one of 14 Superfund sites in Los Angeles County.

"The fact is that there was no problem until the plaintiffs showed up with their tanker trucks," Abbott said, noting household-office trash usually contains only 0.4 percent hazardous substances. "Nobody would have ever heard of OII if it wasn't for the industrial wastes."

Abbott said the industrial polluters' ultimate goal is to create a citizens' outcry over so-called third party lawsuits so federal lawmakers are forced to revise the Superfund law -- an allegation Weaver called a "PR spin."

Nevertheless, Bryne's initial ruling could foreshadow more grim financial news for the cities, especially since California's budget troubles will probably mean cutbacks in their state subsidies. (Together, both sides have already spent about $10 million in legal fees.)

Alhambra, whose current budget is $60 million, might have to ante up between $10 million and $40 million if the companies win their claims on all five cleanup stages, according to interim City Manager Terry James. To pay for that, the city would be forced to sell bonds and then levy a new surcharge on all trash-collection bills because the general fund is stretched so thin.

"Our bone of contention is that we didn't own the refuse, that we only had an agreement with a private waste hauler to pick it up on the curbside and dispose of it like state law requires," James said. "The judge obviously thought otherwise."

San Gabriel, which also depended on OII for decades, would have to slap a $40-50 annual fee on every household for 30 years just to meet debt service on bonds used to pay for prospective company claims in this trial, City Administrator Michael Paules figured.

"It's not just serious" for city finances, "it's terribly unfair because we can't control the contents of someone's trash," Paules fumed. "If they win, the companies will have shifted their costs onto the taxpayers."

However, relief could be on the way for the local city halls in the form of a new federal law. Called the Government Sponsored Enterprises amendment and authored by Sen. Frank Lautenberg, D-N.J., the bill would allow the EPA, not private industry, to sue cities for Superfund cleanup costs. The legislation, pushed hard by the city-sponsored American Communities for Cleanup Equity, has already passed the Senate as part of a larger banking measures and only requires House approval for it to be sent to President Bush's desk.

Cautioned Abbott, "We know that big business will go on the absolute warpath to keep it from passing because it's so terribly important."