MODEL PLEADINGS
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From: Nancy Tommelleo 2/14/95 4:50PM (2502 bytes: 71 in)
SI arlene Davis
David Savage, Patricia Strougal
ct: message to office
Message Contents —
Sharlene: please send this message to the dflice. Thanks
NLT
NEW MATERIAL AND EXAMPLE PLEADINGS FOR LIBRARY
Hardcopies of the following documents have been givet to
David Savage for placement in the Library.
ADMINISTRATIVE WARRANTS
1. Warrant Order for Entry and Investigation Pursuant
Section 9(B) of FIFRA
2. Subpoena Ad Testificandum and Subpoena Duces Tecum
under TSCA
3. Summary Memorandum: “The Pr paration and Execution
of Administrative Warrants”
FINANCIAL DISCOVERY PLEADINGS
1. Memo: “Using Financial Discovery to Rebut an
Inability to Pay Claim”
2. Motion for Order Compelling Response to Request for
Production of Documents
3. Memo of Law in Opposition to Motion for Order
Compelling Response to Prod. of Docs
4. Complainant’s Reply to Respondent’s Opposition
5. Compi’s Motion for Leave to Request Production
of Documents
6. Request for Production of Documents
7. Motion for Ruling on Compi’s Motion for Leave
to request Production of Documents
8. Compl’s Motion for Reconsideration of Ruling on
Request for Production of Documents
9. Compi’s Prehearing Exchange (on inability to pay
issue)
10. Subpoena Duces Tecum and Subpoena Ad Testificandum
(under CERCLA 122 (e) (3) (B)
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11. TSCA Section 11(c) Subpoena
OTHER DOCUMENTS RELATING TO FINANCIAL MATTERS INCLUDE:
IRS Sourcebook: 12/91 (repository of information useful
in locating taxpayers, their assets and financial records)
NEIC’s Financial Analysis Memo: (reflects general
documents needed by NEIC to perform a financial analysis).
For those of you dealing with inability to pay issues
in major cases—you may want to review these documents.
NLT
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ENFORCEMENT CONF IDENT ZAL
FINANCIAL ANALYSIS
GENERAL SYNOPSIS
NATIONAL ENFORCEMENT INVESTIGATIONS CENTER
1/24/95
GENERAL COMMENTS
This worksheet is provided as a guide and reflects only general
documentation to be obtained to perform a financial analysis. It
provides only limited insight into potential issues.
An important point to keep in mind, while reviewing the below
information, is the benefits associated with bringing an analyst in
early.
Early involvement in the case will allow the analyst to:
• Acquire historical knowledge of the case
• Provide assistance in on the spot reviews or discussions
• Provide assistance in other financial areas besides
ability to pay
• Provide enough interjection to persuade the respondent
that raising the ability to pay issue would not be
prudent
• The case will be handled in a more timely fashion because
an ability to pay case can take anywhere from 2 to 12
months. Waiting to start this process, when the
liability issues are resolved, will add (potentially)
another 2 to 12 months to the case.
So, consult with any analyst EARLY.
STEPS
I. INITIAL DOCUMENTATION TO BE PROVIDED BY ATTORNEY
1. Request memo detailing the following:
• Synopsis of the case (complete history)
• Inspection date
• Program personnel involved - names & phone numbers
• Violation details
• Penalty amount
• Current status of case
• Description of business activity, type of entity
(individual or corporation)
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ENFORCEMENT CONY IDENT IAL
FINANCIAL ANALYSIS
GENERAL SYNOPSIS
NATIONAL ENFORCEMENT INVESTIGATIONS CENTER
Details of ability to pay
What is Respondents position? — Respondent needs to
provide this in writing, not only their position but
also all documents substantiating their position
• Description of documents which have been provided b
Respondent and include copies
• Attorney’s opinion as to ability to pay argument
settlement
• Hearing potential
2. Copies of the complaint, answer, prehearing exchanges,
motions, etc.,?
3. Respondents written position in re: Ability to Pay ano
copies of all supporting documentation received.
4. Provide ABEL results
• If 80%, attorney can rely on ABEL for negotiations.
No need to bring analyst in except for general
advice. If settlement fails then discuss with
analyst. ABEL is not to be used in trial.
5. Tax returns and financial statements (5 year)-copies only
6. Depreciation schedule, all inclusive since date of
incorporation
7. Affiliation schedule, detailing corporate affiliaiions
8. D & Bs, & other data base searches
9. Other considerations
• Has an asset search been run?
• Has an executive search been run?
• Have the SEC filings been reviewed?
• Provide copies of all above output.
I I. WHEN THE CASE IS RECEIVED.
1. Review package, and pre plan case.
• Make sure you have only COPIES ; originals are to be
maintained by attorney.
• Make sure all requested information has been received.
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ENFORCEMENT CONF IDENT IAL
FINANCIAL ANALYS IS
GENERAL SYNOPS
NATIONAL ENFORCEMENT INVESTIGATIONS CENTER
• Review synopsis of case to get general idea of status
of case
• Read through complaint, answer, prehearing exchanges,
etc.
2. Call program personnel involved in the case to get general
history and additional details as to what he/she knows about
the entity, its officers, business dealings etc.
3. Discuss with attorney.
4. Begin set up of case file
• Develop time line
• Organization chart
• Options available
5. Verify that all the appropriate (to date) searches
have been done. IF NOT, ORDER THOSE NECESSARY.
6. Review the return to determine other assets, locations,
officers, related entities, legal actions, new loans, etc.,
for which additional data base searches should be conducted.
These services can be obtained through your regional library
or by contacting Irene Erhart, Information Services, NEIC
(303) 236—3636, ext. 558.
7. Review the ABEL output provided by the attorney.
8. Consider civil investigator (CI)involvernent in your region
(primarily Superfund) or Multi- Media CI Support from NEIC.
CIs can collect other financial information which may help
validate and/or supplement information provided by the
respondent and other sources. Some services offered by the
NEIC Civil Investigator program include:
• Asset information gathering
• Corporate affiliation and structure identification
• Witness location and interview services
• Other information gathering services
• For more information contact the Civil Investigator
Branch Chief, Jeff Lightner, at NEIC (303) 236-3636
ext. 504. Telephonic discussion of proposed case
specifics and requirements prior to official request is
desirable
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ENFORCEMENT CONF IDENT IAL
F INANCIAL ANALYS IS
GENERAL SYNOPSIS
NATIONAL ENFORCEMENT INVESTIGATIONS CENTER
9. If necessary, research counties which are not on line, and
request assistance from them. Have them call the various
counties, etc. to request the needed information. (This is
performed if return information and data base searches
already conducted indicate the firm can not pay the
penalty.)
10. If any lawsuits discovered, review synopsis and possibly
order copies of complaint and decision.
11. Identify Issues. Research applicable laws environmental and
tax etc., where necessary so that you will know what
elements need to be addressed in your write-up.
12. Review applicable penalty policies.
13. Develop organizational chart and time line.
14. Discuss up-to-date status with attorney. Outline
alternatives, etc.
15. Develop document request.
16. Develop initial interview questions.
17. Schedule initial interview through the attorney.
III. CONDUCT THE INITIAL INTERVIEW
IV. REQUEST ADDITIONAL DOCUMENTS
1. Voluntary document request submitted.
2. Subpoenas
• The Respondent has the burden-of-proof?
(New Waterbury)
• Instances where they have provided information which
superficially indicates inability to pay.
3. Motion to produce - filed with the court.
V. WHEN ADDITIONAL INFORMATION IS RECEIVED
1. Review the additional information and identify additional
sources of funds. Address issues which were identified in
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ENFORCEMENT CONY IDENT IAL
FINANCIAL ANALYSIS
GENERAL SYNOPSIS
NATIONAL ENFORCEMENT INVESTIGATIONS CENTER
step II, such as thinly capitalized, additional debt
capacity, loans to shareholders = capital, liquid assets,
unnecessary assets, unreported income, etc.
2. Third party contacts. The attorney should have already
discussed this with the respondent when ability to pay was
initially raised. Third party verification is a necess :
step in a financial analysis.
3. Go out to the field if necessary.
VI. DISCUSS WITH ATTORNEY CONCLUSIONS AND COURSES OF ACTION
TO DATE
VII. SCHEDULE CONFERENCE CALL OR SETTLEMENT MEETING
1. Discuss conclusion with respondent; ask additional
questions to further support our case and answer any
questions they may have.
2. Depending on the course of the case, this may be the
time to identify to whom we may need to issue subpoenas
if conflicting or missing information.
VIII. ISSUE SUBPOENAS FOR ANY ADDITIONAL INFORMATION REQUIRED TO
SUPPORT OUR CASE IN COURT.
1. Make sure we have ALL the necessary evidence to support
our case/rebut their position.
Ix. SETTLE THE CASE.
OR
x. GO TO COURT
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JAN03 1994
DRAPT--DRAPT Enforcement Confidential
Not to be released under FOIA
MEMORANDUM
To: Jonathan Libber, OE
From: Alexandra Callam, Assistant Regional Counsel
Office of Regional Counsel, Region II
Kimberly Zanier, C.P.A.
Financial Analyst — NEIC
Subject: Using Financial Discovery to Rebut an Inability to Pay
Claim: A Case Summary
Date: December 30, 1993
The following is a summary of an administrative case in
which EPA, Region II, used the discovery allowed under the
consolidated rules to obtain financial documents from a
Respondent claiming an inability to pay the proposed civil
penalty. The summary may be useful in those cases where a
Respondent asserts this affirmative defense but does not provide
all of the financial information EPA believes is necessary to
adequately evaluate the claim.
Backaround
Cray Valley Products is a wholly—owned subsidiary of a large
foreign parent corporation. It also has various sister
subsidiaries that are in the same business as Cray Valley — a
manufacturer and importer of resins for the coating industry.
EPA brought an administrative penalty case under TSCA against
Cray valley, seeking a $600,000 pen alty for violations of the PMN
and import certification requirements for several of this
company’s chemical substances. In its Answer to the Complaint,
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Cray Valley raised the affirmative defense that it had the
inability to pay the proposed penalty.
Cray Valley’s Defense
Cray Valley’s first sought to “prove” this inability by
providing EPA with “pro forma” income tax returns, which
contained Cray Valley’s federal tax. information, to run the ABEL
computer program. •Cray Valley asserted that these “pro forma”
returns contained the relevant tax information that its parent
used in the submission-of its consolidated tax return filed with
the federal government. Cray Valley refused to provide these
consolidated tax returns, or any other information on its parent
or sisters subsidiaries, because EPA named only Cray Valley as a
Respondent in the Complaint. It claimed that unless EPA was
planning to “pierce the corporate veil” and name its parents or
other related companies in the litigation, it needed only to
provide the tax information relating to it to prove its inability
to pay. Cray Valley argued, in other words, that for EPA to
consider its financial information relating to its parent and
sister subsidiaries, EPA would have to show that Cray Valley’s
corporate structure was a mere facade, i.e. that Cray Valley’s
parent corporation had such complete control over Cray valley’s
finances, policy, and business practices that Cray Valley had no
separate existence from these related entities.
EPA’s Theory
EPA argued that an entity’s ability to pay is a factual
question, and is dependent on factors which include its
interrelatedness to other entities. EPA claimed a court would
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look at a company’s entire business operations, including the
financial transactions entered between parent and subsidiary
corporations, in determining ability to pay. In this case, from
the D & B alone, it appeared that in addition to being wholly-
owned by its parent, Cray Valley was in the same business as its
parent and sister subsidiaries, it had intercompany loans and
advances from these entities, and it had intercompany merchandise
transactions with these entities. Thus, EPA asserted that to
assess Cray Valley’s ability to pay, it needed to know how much
this company’s financial health was linked to these other
entities.
The Case Development
Cray Valley first maintained it had the ability to pay only
$XX.XXX, a number based on the 1980 TSCA Civil Penalty Policy’s
suggestion that four percent of the gross sales of a company is
an indicator of ability to pay. Though it disagreed with EPA’S
theory, Cray Valley eventually provided to EPA additional
financial information in its pre—hearing exchange, including an
analysis by Coopers & Lybrand of its relationship with its
related subsidiaries to show how it was not manipulating finances
such that i s corporate veil could not be pierced. It appeared
that Cray Valley wanted to show the court that it had submitted
enough financial information to EPA such that the burden of
proving its abililty to pay could be shifted to EPA. Though
several inches thick, the documents Cray Valley submitted lacked
much of the basic financial information needed to evaluate the
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company’s finances and its relationzhips with its parent. EPA
thus still maintained that it needed more information on Cray
Valley’s business and on the nature of these relationships to
adequately evaluate the ability to pay.
As the litigation and negotiations progressed, Cray Valley
increased its initial offer considerably, but maintained that, in
court, it still would assert that it could afford only a $XX,xxx
civil penalty. In anticipation of an eventual trial, EPA
prepared to force the issue by drawing up a specific list of
financial documents and informally giving Cray Valley a chance to
produce these documents on its own. Included in this list were
the parent’s consolidated tax returns, as well as Cray Valley’s
financial statements, loan agreements, insurance policies, sales
and purchase records, etc. — information needed to adequately
evaluate Cray Valley’s financial wherewithal to pay a civil
penalty.
As expected, Cray Valley would not provide any of these
documents to EPA; therefore, - EPA filed a “Motion for Order
Compelling Response to Request For Production of Documents”
(Attachment I). This “discovery” request was filed pursuant to
40 C.F.R. Z .19(f), which allows for “additional” discovery after
documents are traded in the prehearing exchanges, if certain
criteria are met. The Motion averred that the information Cray
Valley had submitted was incomplete and contained internal
inconsistencies, and thus the Region was unable to assess Cray
Valley’s inability to pay claim.
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Cray Valley opposed this Motion, asserting that it had
provided all of the information EPA needed to evaluate an
inability to pay claim, and that EPA could not show that the
documents it sought had significant probative value. Its main
argument rested on its view that EPA assesses ability to pay by
running the ABEL program, and because it had supplied “pro forma”
tax returns with the requisite inputs to run this program, no
more information was necesary. (Attachment II).
The Administrative Law Judge, Judge Greene, responded by
requesting that the Region, in its Reply, address how Cray
Valley’s information was incomplete, why the ability to pay could
not be analyzed using the documents already submitted, and what
internal inconsistencies were contained in the documentation
(Attachment III). EPA filed a Reply, in which it specifically
discussed how each of the documents in its Request was
significantly probative for evaluating Cray Valley’s ability to
pay, and why it was unable to assess the ability to pay with the
documents Cray Valley had submitted (Attachment IV).
Cray Valley wrote a letter to the Judge in response to this
Reply, in which it claimed EPA was in error when it stated that
the consolidated tax returns did not contain separate individual
tax information on subsidiaries (Attachment V). EPA responded
with a letter that cited the Treasury regulations that require
affiliation schedules to be provided with the consolidated
returns (Attachment VI).
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The Result
Almost immediately, Judge Greene granted the Region’s
discovery motion, stating that EPA “...demonstrated the need for
and relevance of certain documents in connection with (the]...
asserted inability to pay...” (Attachment VII). Within a week,
Cray Valley agreed to settle the case.
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JAli -‘ -
ATT, t !& r I.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION II
x
In the Matter of :
CRAY VALLEY PRODUCTS, INC., : MOTION FOR ORDER
: COMPELLING RESPONSE TO
: REQUEST FOR PRODUCTION OF
: DOCUMENTS (FIRST SET)
Respondent. : Docket No.
- : IITCSA—P!fl -92-0222
Proceeding under Section 16(a) of
the Toxic Substances Control Act.
u— — — — — — — — ——— — —x
Complainant, the Director of the Environmental Services
Division of the United States Environmental Protection Agency
(“EPA”), Region II, submits this motion, pursuant to 40 C. F. R. SS
22.01(c), 22.04(c), 22.16(a), and 22.19(f), for an order
requiring the Respondent in this matter to respond to the
attached Request for Production of Documents.
Discussion
In its Answer and initial prehearing exchange, Respondent
has asserted an inability to pay the proposed penalty. The
documentation provided by Respondent to Complainant on this issue
to date has been incomplete and contains a number of significant
internal inconsistencies. For this reason, Complainant has been
unable to assess Respondent’s ability to pay the proposed
penalty.
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In the interest of expediting a fair resolution of this
matter, Complainant seeks the assistance of this Court in
obtaining further discovery from Respondent. This request meets
the test for such discovery set forth at 40 C.F.R. § 22.19(f) (1).
See also In the Matter of Chautauaua Hardware Corn. , EPCRA App.
No. 91—1 (June 24, 1991).
The request will not in any way unreasonably delay the
proceeding, since the request requires a compilation of
information that should be readily available to the Respondent.
In addition, the information is necessary in order for the
proceeding to move forward, since without it an assessment of
Cray Valley’s financial condition cannot be made.
In addition, the information is not otherwise obtainable by
Complainant, because it is information uniquely within
Respondent’s control, and cannot be provided by any other
source.’
‘ Section 2610(c) of the Toxic Substances Control Act,
which states that
(i]n carrying out this chapter, the Administrator may
by. subpoena require the attendance and testimony of
witnesses and the production of reports, papers,
documents, answers to questions, and other information
that the Admjnstrator deems necessary,
may be viewed as another means to obtain this information.
However, use of this authority is not a method by which EPA can
“otherwise obtain” this information within the scope of this
adminstrative proceeding. Furthermore, EPA could only enforce
such a subpoena in a US. district court, and thus the mechanism
is not clearly a means to obtain the, information without
potential delay.
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Also, the information has obvious significant probative
value with respect to the question of Respondent’s ability to pay
the proposed penalty. In Chautauaua , the Court noted that the
phrase “probative value” “denotes the tendency of a piece of
information to prove a fact that is of consequence to the case.”
Chautauaua at 10. There, the Court explained that “(t]he ability
of the company to continue doing business is...a factual
issue...(which will] have some bearing on the appropriateness of -
the proposed penalty.” Chautauqua at 11. Clearly, the
information requested seeks to discover signifcant and probative
facts about the Respondent’s ability to pay the proposed penalty.
Relief Sought
In the interest of expediting the fair resolution of this
matter, counsel for Complainant requests that the Court order
Respondent to respond to the attached Request for Production of
Documents.
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Da t ed:c k ‘l /‘
Li / ‘J
Respectfully submitted,
Alexandra K. Callam
Assistant Regional Counsel
Office of Regional Counsel
U.S. Environmental Protection
Agency - Region II
26 Federal Plaza
New York, New York 10278
(212) 264—9898
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UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY - REGION II
x
)
In The Matter of )
)
CRAY VALLEY PRODUCTS, INC.
) Docket No. II TSCA-PMN-92-0222
Respondent.
)
x
REQUEST FOR PRODUCTION OP DoCvxrni’rS oP U • S. PA
CRAY VALLEY PRODUCTS. INC. (FIRST SET )
Complainant requests that Cray Valley Products, Inc.
(“Respondent”) produce copies of, or make available for
inspection and copying at a location agreed upon by counsel for
both parties, the following documents which may be in
Respondent’s possession, custody or control.
Pursuant to regulations appearing at 40 C.F.R. Part 2,
Subpart B, Respondent is entitled to assert a business
confidentiality claim covering any part of the submitted
documents. Unless such a confidentiality claim is asserted at
the time that the requested documents are submitted, EPA may make
these documents available to the public without further notice to
you. Documents subject to a business confidentiality must
conform to the requirements set forth in 40 C. F.R. § 2.203(b).
DEFINITIONS MID INSTRUCTIONS
1. “Documents” means all (and all copies containing
additional matter) written, typewritten, printed, or graphic
matter of any kind or nature however produced or reproduced, and
form of collected data for use with electronic data processing
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equipment and other data compilations from which information can
be obtained, translated, if necessary, by Respondent through
detection devices into reasonably usable form, now or formerly in
the possession, custody or control of Respondent, including all
documents as defined in the broadest sense permitted by Rule 34,
Fed.R.Civ.P. “Documents” include, among other things, all
letters, correspondence, records of conferences or meetings,
memoranda, notes, -telegrams, telephone logs and.records,
teletypes, telexes, banking records, notices or wire transfer of
funds, canceled checks, books of account, budgets, financial
records, contracts, agreements of proposed agreements, invoices,
speeches, transcripts, depositions, affidavits, communications
with government bodies, interoffice communications, working
papers, newspaper or magazine articles, computer data, tax
returns, vouchers, papers similar to any of the foregoing and
other writings of every kind and description (whether or not
actually used) and other records of voice recordings, film,
tapes, and other data compilations from which information can be
obtained
2. “Cray Valley Products, Inc.” means the Respondent
together with its respective officials, employees, agents,
servants, and attorneys.
3. This discovery is deemed continuing and must be
supplemented if Respondent obtains further or different
information.
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4. Documents produced pursuant to this request shall be
segregated by the request numbers to which they are responsive
and grouped and labeled accordingly.
5. The singular includes the plural and vice versa. The
masculine includes the feminine and neuter genders and vice
versa. The past tense includes the present tense and vice versa.
6. These requests cover all documents and information in
Respondent’s immediate possession ot control and all documents -
and other sources of information to which it has access. All
documents in the possession of experts or consultants should also
be consulted.
7. If any document requested is no longer in Respondent’s
possession, custody or control, state
a. what was done with the document;
b. when this action occurred;
c. the identity or address of the current custodian of the
document;
d. the person who made the decision to transfer or dispose
of the document;
e. the reasons for transf disposition.
8. Where anything has b n eleted from a document produced
in response to a request, st p
a. the specific nature of the material deleted;
b. the reason for its deletion; and
C. the identity of the person responsible for the deletion.
9. Whenever you are unable to produce documents in response
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to a request, state in detail all steps taken to locate
responsive documents.
10. For each document produced, identify the sources and
its record keeper.
11. For each document produce identify whether it is a true
copy, and if it is not a true copy, explain why.
REOUEST : Produce the- following documents: -
1. Complete copies of the tax returns Cray Valley filed
with the Internal Revenue Service for the years 1988, 1989,
1990, 1991, and 1 92, including all attachments, exhibits, and
disclosures.
2. A copy each of the consolidated Coates Brothers, Inc.
tax returns for the years indicated in Request #1. Respondent’s
initial prehearing exchange stated that prior to 1991, Respondent
filed a consolidated return with Coates Brothers, Inc. “See
Exhibit F” - however, Exhibit P did not contain the consolidated
returns as indicated.
3. A copy each of the consolidated 1991 and 1992 federal
tax returns for Total A]nerióa, Inc. In Respondent’s initial
prehearing exchange, it states that “(b]eginning in 1991, Total
America, Inc. filed a consolidated federal tax return, including
CVP. See Exhibit S.” Exhibit S does not contain the consolidated
return.
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4. Complete copies of Cray Valley’s audited (if
unavailable, unaudited) financial statements prepared for the
years 1988, 1989, 1990, 1991, and 1992.
5. A copy of the Form 5472 that was required to be filed
with Cray Valley’s 1991.tax return.
6. A complete copy of the depreciation schedule for Cray
Valley from the date of incorporation. The schedule should
include assets description, date of purchase, cost of p*frchase,
accumulated depreciation, adjusted basis, and dates of sales, if
any.
7. A copy of the bill of sale for the vehicle Cray Valley
purchased on July 1, 1990.
8. A copy each of the payroll tax returns Cray Valley filed
for 1990, 1991, and 1992, including the 940’s, 941’s, W—2’s and
W—3’s.
9. A copy each of the 1099’s, 1098’s and 1096’s Cray Valley
filed for 1990, 1991, and 1992.
10. A copy of the schedule of what is included in Addition
263 costs, for the amount of $263,721, from Schedule A, of the
Cray Valley 1991 tax return.
11. Copies of any insurance policies that cover Cray
Valley’s assets of business or cover environmental claims,
including a schedule of assets covered by the policies.
12. A copy of the schedule that details the recipient of
Royalties and Commissions for the tax years 1990, 1991 and 1992.
Indicate payment by payee, date of payment and amount of payment.
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13. A copy of all lease agreements for which rent is being
paid each year for the facility at 7571 Rossman Road, Stuyvesant,
New York 12173.
14. A copy of the loan agreement between Coates Brothers
and Cray Valley.
15. A signed Form 8821, which allows disclosure of tax
related information to EPA personnel. This form will be used to:
a. Verify that the-tax returns submitted by Cray Valley are
in fact the same as those filed with the Internal Revenue Service
and
b. Determine whether any Form TD 90-22.1’s (Report of
Foreign Bank and Financial Accounts), Form 8300’s (Report of Cash
Payments over $10,000), Form 4790 (Report of International
Transportation of Currency or Monetary Instruments), or Form 4789
16. A list of all of Cray Valley’s customers (those
entities that purchased in excess of $9,000 in any one year), and
the total sales to each for the years 1989 through 1992.
17. A list of all Cray Valley’s suppliers (from which Cray
purchased in excess of $9,000 in any one year) and the total
purchases from each, for the years 1989 through 1991.
18. A copy of the corporate organization chart that
identifies all of the entities related to Cray Valley Products
and the percentage of common control.
19. The following books and records for Cray Valley for the
time period January 1, 1990, (with the following noted
exceptions) through the present:
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a. The Sales Journal from January, 1989, through the
present.
b. The Purchases Journal from January, 1989, through the
present.
c. The complete General Ledger from the date of
incorporation.
d. Cash Disbursements Journal.
e. Accounts Payable Journal.
f. Account Receivable Journal.
g. General Journal.
h. Trial Balances for each year.
i. Chart of Accounts.
j. Board Minutes from the date of inception.
k. Stock Record Book.
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IN THE MATTER OF CRAY VALLEY PRODUCTS, INC .
Respondent, Docket No. II TSCA-PMN—92-0222
Certificate of Service
I hereby certify that the following Motion for Order
Compelling .Resoonse to Rectuest for Production of Documents (and
the attached. Request for Production of Documents), dated
September 30, 1993 , was mailed this day in the following manner
to the addressees below:
Original by Hand to: Karen Maples
Regional Hearing Clerk
U.S. EPA - 5th Floor
26 Federal Plaza
New York, New York 10278
Copy by Pouch Mail to:.. Honorable J.F. Greene --
Administrative Law Judge
Mail Code A—hO
U.S. Environmental Protection
Agency
401 M Street, S.W.
Washington, D.C. 20460
Copy by Regular Mail to: Barry S. Neuman, Esq.
Schnader, Harrison, Segal & Lewis
1111 Nineteenth Street, N.W.
Suite 1000
Washington, D.C. 20036
Jake Hart, Esq.
Schnader, Harrison, Segal & Lewis
Suite 3600
1600 Market Street
Philadelphia, Pennsylvania 19103
Dated: c9cf
tkLø4
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION II
x
In the Matter of
CRAY VALLEY PRODUCTS, INC.,
Respondent,
Docket No.
Proceeding under Section 16(a) of : II TSCP -PMN-92-O222
the Toxic Substances Control Act : -
x
RESPONDENT CRAY VALLEY PRODUCTS, INC.’ S
MEMORANDUM OF LAW IN OPPOSITION TO
MOTION FOR ORDER COMPELLING RESPONSE TO
REQUEST FOR PRODUCTION OF DOCUMENTS (FIRST SET)
Respondent, Cray Valley Products, Inc. (“CVP”) hereby
submits this Memorandum in opposition to the EPA’S Motion For
Order Compelling CVP to Respond to Request for Production of
Documents (the “Motion”).
I. INTRODUCTION .
In its Motion, the EPA asserts that it needs the
documents listed in Request for Production of Documents of U.S.
EPA to Cray Valley Products, Inc. (First Set) (the “Requests”) to
.determine whether CVP is unable to pay the EPA’s proposed
penalty.
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Upon close examination of the Requests, the public
information available concerning the EPA ABEL computer program,
which the EPA uses to assess a party’s ability to pay, and the
information that CVP already has provided to the EPA, it is clear
that the EPA does not need the documents listed in the Requests
to assess CVP’s ability to pay. Rather, the Requests are an
overly broad and burdensome fishing expedition that do not seek
information of significant probative value, that would delay the
proceeding significantly and that are contrary to public policy.
II. FACTS .
In December 1992, CVP submitted in this matter a
Statement of Evidence.
CVP submitted with the Statement of Evidence documents
relevant to its defense that it is unable to pay the EPA’s
proposed penalty. The documents included p oforma U.S. Corpora-
tion Income Tax Returns for CVP, which were used in preparation
of the consolidated tax returns of its parent corporations. 1
Copies of the pro forma tax returns are attached as Exhibit “A”
to this Memorandum. In addition, CVP provided copies of its
General Business Corporation Franchise Tax Returns for the State
S
1. For the tax years 1988 through 1990, Coates Brothers, Inc.
was CVP’s parent corporation. Total America, Inc. subse-
quently acquired Coates Brothers and was CVP’S parent for
the 1991 tax year.
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of New York for the years 1988 through 1991. Copies of the state
tax returns are attached as Exhibit “B”.
CVP also provided an expert report from Coopers &
Lybrand. A copy of the Expert Report is attached as Exhibit “C”.
Coopers & Lybrand concluded that, based upon information from
CVP’s tax returns and use of the information in the EPA’s ABEL
computer program, CVP is not able to pay a penalty of more than
approximately $80,000.
The EPA’S ABEL computer program relies upon data from a
respondent’s tax returns and variables with standard values to
calculate a respondent’s ability to pay. A copy of the ABEL
User’s Manual dated September 1991 is attached as Exhibit “D”.
CVP has provided significant information to the EPA
concerning its relationships with its parent corporations and
affiliates. The information includes that CVP originally was a
100 percent subsidiary of Coates Brothers, Inc., that Total
America, Inc. subsequently became the parent corporation of
Coates Brothers, Inc., the identities of the director and of f 1-
cers of CVP and their relationship to Sartomer, a Total America
subsidiary, the existence and details of loan agreements between
CVP and Coates Brothers anc between CVP and Total America, its
relationships with companies affiliated with Coates Brothers and
Total America and documents relating to those relationships. See
Statement of Evidence at 7-10 and related exhibits.
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The documents that the EPA seeks in the Requests
include:
(a) The Sales Journal from January 1989 through the
present;
(b) The Purchases Journal from January 1989 through the
present;
Cc) The complete General Ledger from the date of incorpora-
tion;
Cd) Cash Disbursements Journal for January 1, 1990 through
the present;
Ce) Accounts Payable Journal for January 1, 1990 through
the present;
(f) Account Receivable Journal for January 1, 1990 through
the present;
(g) General Journal for January 1, 1990 through the
present;
(Ii) Trial Balances for each year.
Ci) Chart of Accounts for January 1, 1990 through the
present;
(j) Board Minutes from the date of inception, and
(k) Stock Record Book for January 1, 1990 through the
present. Request No. 19 (a-k). In order to respond to Request
No. 19 only, CVP would h ave to produce copies of more than 1,000
pages of documents.
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III. ARGUMENT .
A. The EPA’S Motion Should Be Denied Because CVP Has
Provided the Information That the EPA Needs to Assess
CVP’s Ability to Pay.
Under 40 C.F.R. 22.19(f), discovery, other than
exchange of witness lists and documents as provided by 40 C.F.R.
22.19(b), is permitted only when the Presiding Officer determines
that;
Ci) the discovery will not in any way unreasonably delay
the proceeding;
(ii) the information to be obtained is not otherwise
obtainable, and
(iii) the information has Significant probative value. 40
C.F.R. 22.19(f) (1).
The party requesting additional discovery has the
burden of showing that the discovery should be permitted. 40
C.F.R. 22.19(f) (3); In the Matter of Hawaiian Independent Refin-
ery. Inc. , Docket No. RCRA-09-91-0007, Order Denying in Part and
•,Granting in Part Motion for Discovery, 1992 WL 175710 (E.P.A.),
- at *5 (July 14, 1992)
According to the ABEL User’s Manual, the EPA needs
information from CVP’s tax returns, which are in turn entered
into the ABEL program and considered with standard variables to
assess the ability to pay. ABEL User’s Manual at 3-4--3-15. By
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providing its pro forma tax returns and state tax returns, CVP
has produced the information necessary to use the ABEL program
to assess CVP’s ability to pay, as shown by the fact that Coopers
& Lybrand used the program to determine CVP’s ability to pay.
Furthermore, the EPA has not explained why it needs documents
other than the tax returns already provided to ascertain CVP’s
ability to pay. It thus is cl.ear that the EPA cannot show that
the documents it requests have significant probative value in
regard to CVP’s ability to pay, as required by 40 C.F.R. 22.19
(f) (1,3). Therefore, the Motion should be denied.
B.., An Order Compelling CVP to Respond to the EPA’s
Reauest Would Delay Unreasonably the Proceeding .
As pointed out earlier, EPA seeks via Request No. 19
numerous miscellaneous books and records of CVP. To respond to
request No. 19 alone, CVP would have to provide more than 1,000
pages of documents to EPA. In turn, EPA and its counsel would
have to expend numerous man-hours reviewing the documents.
Given the large number of pages of documents that are
responsive to request No. 19, it is clear that CVP’s response to
the Requests, and EPA ’s review of responsive documents, are
likely to delay unreasonably this proceeding. Therefore, EPA’S
Motion should be denied on the grounds that any response to the
Requests would be contrary to 40 C.F.R. 22.19(f) (1) Ci).
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C. The EPA Cannot Justify Its Request For
Consolidated Tax Returns of Coates Brothers,
Inc. and Total America, Inc. and Other Information
Concerning Corporations Related to CVP .
In the Requests, the EPA also seeks consolidated tax
returns of Coates Brothers, Inc., CVP’s parent corporation for
tax years 1988 through 1990, and Total America, Inc., CVP’s
parent corporation beginning in the 1991 tax year. Request Nos.
2-3. Additionally, the EPA requests a corporate organization
chart that shows all of the entities related to CVP. Request No.
18.
Upon examination of the information that CVP has
provided concerning its relationship with Coates Brothers, Total
America, and other affiliates, the ABEL User’s Manual, and the
Motion, it is clear that the EPA cannot show any need for further
information concerning corporations related to CVP. Therefore,
the Motion should be denied to the extent it seeks to compel
responses. to Request Nos. 2, 3 and 18.
CVP has provided significant information to the EPA
concerning its relationships with its parent corporations and
affiliates. The information includes that CVP originally was a
100 percent subsidiary of Coates Brothers, Inc., that Total
America, Inc. subsequently became the parent corporation of
Coates Brothers, Inc., the identities of the director and off i-
cers of Cvp and their relationship to Sartotner, a Total America
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subsidiary, the existence and details of loan agreements between
CVP and Coates Brothers and between CVP and Total America, its
relationships with companies affiliated with Coates Brothers and
Total America and documents relating to those relationships.
Statement of Evidence at 7-10. According to the ABEL User’s
Manual, such information is relevant to determine whether a
subsidiary corporation’s finances have been manipulated. ABEL
User’s Manual at 3-1.
CVP has been forthright i-n- pi oviding -information about
its corporate parents and affiliates. Confronted with the infor-
mation, the EPA does not contend in its Motion that the informa-
tion already provided suggests manipulation of CVP’s finances or
that it has any reason whatsoever to assert that CVP’s finances
have been manipulated. 2
In light of the lack of any contention by the EPA that
CVP’s finances have been manipulated, it is clear that the agency
cannot show that he documents sought via Requests Nos. 2, 3 and
18, have significant probative value. The Motion thus should be
denied to the extent it seeks to compel responses to Request Nos.
2, 3 and 18.
2. In fact, the information shows that CVP’s finances have not
been manipulated. See Coopers & Lybrand Report at 3
(Coopers & Lybrand was unable to “identify any excessive,
non-essential expenses or assets that may be available to
support the penalty payment”).
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D. It is Not Necessary, and Contrary to Public Policy,
To Compel CVP To Respond to the EPA’s Reauest No. 15 .
-__ Se’-
In its Requests, the EPA seeks from CVP a signed form (
8821, which would allow disclosure of tax related information to
EPA personnel. Request No. 15. The form would be used to (a)
verify that the tax returns submitted by CVP are in fact the same
as those filed with the Internal. Revenue Service, and (b)
determine whether various forms have been filed with the Internal
- .\1
Revenue Service. Id . -— J
As pointed out above, CVP’s tax returns are pro forma
returns used to prepare the consolidated returns of- its parent \ ‘
r
corporations. Therefore, CVP’s providing a signed Form 8821
would not verify that the tax returns submitted by CVP are the
same as those filed because CVP has not filed any tax returns.
Therefore, the signed Form 8821 will not lead to the EPA’s
obtaining information of “significant probative value” and should
be denied. In addition, the EPA does not explain why it needs to
know whether CVP has filed any Form TD 90-22.1’s, Form 8300’s,
Form 4790’s or Form 4789’s in connection with determining CVP’s
ability to pay. Therefore, CVP should not be required to provide
a signed Form 8821 because the EPA cannot show that the agency’s
use of the document will lead to its obtaining information of
“significant probative value” as required by 40 C.F.R. 22.19(f).
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There is a strong public policy against unnecessary
disclosure of tax information provided to federal authorities.
Maldonado v. St. Croix Discount. Inc., , 77 F.R.D. 501, 502 (D.V.I.
1978); Biliske v. American Live Stock Insurance Co. , 73 F .R . D.
124, 126 n.1 (W.D. Okia. 1977). The reason for this public
policy rule is that restrictions on disclosure of such informa-
tion promote the filing of complete and accurate tax information.
Federal Savings and Loan Insurance Corp. v. Krueger , 55 F.R.D.
512, 514 (N.D. Ill. 1972). Thus, the Courts have held that it is
improper to require parties in civil litigation to produce tax
returns when the information sought is readily obtainable by
other means”or from other sources. E.g., Maldonado , 77 F.R.D. at
502.
In the instant case, CVP has provided its pro forma
federal income tax returns and state tax returns, which contain
the information that the EPA needs to determine CVP’s ability to
pay. Given that CVP has provided these documents, CVP should not
be compelled to provide a signed Form 8821, as requested by the
EPA, because it would be contrary to the public policy that
unnecessary disclosure of tax information should be avoided.
This is especially true in the instant case because the EPA has•
not shown why it needs to know whether CVP has filed any Form TD
90-22.1’s, Form 8300’s, Form 4790’s or Form 4789’s.
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IV. CONCLUSION .
For the reasons set forth in this Memorandum,
Respondent Cray Valley Products, Inc. requests that the EPA’S
Motion for Order Compelling Response to Requests for Production
of Documents be denied.
Respectfully submitted,
Ja’ b P. Hart
Ro ey B. Griffith
Sc ADER, HARRISON, SEGAL & LEWIS
0 Market Street, Suite 3600
Philadelphia, Pennsylvania 19103
(215) 751-2502
Attorney for
Cray Valley Products, Inc.
Dated: October 11, 1993
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,4TTA -c/-tMENT
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D. C. 20460
IN THE MATTER OF
Cray Valley Products, Inc.
Respondent
.
Dkt. No. TSCA-II—P -92-0222
.
ORDER SETTING DATE FOR REPLY
Complainant shall have through October 22, 1993, in which to
reply to respondent’s opposition to the motion for order compelling
response to request for production of documents. Complainant shall
set forth, in its reply (1) why respondent’s ability to pay cannot
be analyzed using the documents already submitted by respondent,
and (2) how respondent’s submission has been incomplete to date;
and (3) what internal inconsistencies are contained in the
documentation.
Dated: October 12, 1993
Washington, D.C.
Administrative Law Judge
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,4Y ; 4 (-r-’ - 7.
— - -- -.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION II
x
In the Matter of
CRAY VALLEY PRODUCTS, INC.,
Respondent. : ‘Docket No.
II TCSA—PMN-92—0222
Proceeding under Section 16(a) of :
the Toxic Substances Control Act. :
COMPLAINANT’ S REPLY TO RESPONDENT’S OPPOSITION TO
EPA’S MOTION FOR ORDER COMPELLING RESPONSE FOR
PRODUCTION OP DOCUMENTS
Pursuant to this Court’s Order dated October 12, 1993,
Complainant submits this Reply which addresses, as directed by
this Court’s Order, how respondent’s submission has been
incomplete to date, why respondent’s ability to pay cannot be
analyzed using the documents already submitted by respondent, and
what internal inconsistencies are contained in the documentation.
Introduction
As part of its December, 1992, prehearing exchange, Cray
Valley Products, Inc. (“Cray Valley”) submitted selected
financial documents and a “Statement of Evidence” as its proof
that it cannot afford to pay the proposed penalty in this case.
Because the information was incomplete and contained internal
inconsistencies, EPA drew up the list of specific business
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2
records that contain the relevant financial information necessary
to evaluate Cray Valley’s inability to pay claim. Without these
documents, neither EPA nor this Court could conduct a complete
financial analysis of Cray Valley’s financial status.
Arqument
I. Cray Valley’s Submission to Date is Incomplete; EPA Needs the
Requested Documents Because They Would Provide Significant
Probative Information Needed to Assess Cray Valley’s-Inability to
Pay. Claim.
Cray Valley has not submitted the most basic documentation
of financial infor]nationthat is necessary to analyze whether it
has the ability to pay the proposed penalty in this case.
Documents on Cray Valley’s income, dividends paid, net worth,
sales, payments, stocks, accounts, firm size, financial
stability, the structure of the entity, the relationship it has
to its owners and other entities, would enable EPA to conduct a
comprehensive financial analysis of this company. Cray Valley
has provided its own select sample of documents from which only a
‘partial picti:ire of its financial health can be gleaned. In its
request, EPA lists those documents Cray Valley did not provide
and which contain probative information to enable EPA to evaluate
adequately the company’s claim that it is unable to pay the
proposed penalty. These documents also would verify some of the
unsubstantiated assertions Cray Valley makes in its “Statement of
Evidence.” Without these documents, EPA cannot conduct a
complete financial analysis to determine whether Cray Valley has
the ability to pay the proposed penalty.
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An essential part of an ability to pay analysis requires
information from a company’s federal tax return. In this case,
because Cray Valley is a wholly-owned subsidiary, its federal
income tax information is submitted as part of the consolidated
income tax return its parent submits to the federal government.
EPA needs the consolidated tax return because it is on this
return that Cray Valley’s tax information is submitted tothe
federal government. The “pro forma” federal tax returns Cray -:
Valley submitted are not the returns that were submitted to the
federal government. These forms are not signed, so there is no
verification that the information contained on them is the same
information that was submitted on the consolidated tax return.’
A copy of the consolidated tax return on which Cray Valley’s tax
information was submitted would document this federal tax
information.
The state tax returns Cray Valley filed with New York (the
General Business Corporation Franchise Tax Return) do not require
the same information as that required on the federal tax returns.
For example, the state returns do not include figures for annual
sales, costs of goods sold, any indication of most of the
expenses incurred by a corporation, or current or long term costs
‘ The ABEL User’s Manual states that “all returns submitted
for an ABEL analysis must be signed.” ABEL User’s Manual at 3-1,
Exhibit D of Cray Valley’s Memorandum of Law. It also notes
that, “(w]ithout the signature, you have no guarantee that this
information is accurate.” ABEL User’s Manual at 3-1.
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— all information that is relevant to determine ability to pay. 2
Therefore, as specified in its Request #1, #2, and #3, EPA needs
Cray Valley’s verified federal tax information that was filed as
part of the consolidated tax returns of its parent companies.
In addition, EPA asks in its Request #15 for a signed Form
8821, which would allow EPA to verify the tax information --
relating to Cray Valley on the consolidated tax return. As the
request notes, the form would allow EPA to verity whether-any- of..
the forms regarding foreign bank or financial accounts (Form TD
90—22.1), cash payments made over $10,00 (Form 8300), or money
coming into or out of the country (Form 4790) were filed for Cray
Valley. The information on these forms relates to assets owned
by a company, and thus has significant probative value in
assessing Cray Valley’s inability to pay claim.
There are numerous other documents Cray Valley did not
provide that contain significant probative information needed to
conduct a complete financial analysis. For instance, Cray Valley
has not provided the firm’s financial statements for the years
1988 through 1992 (Request #4), its depreciation schedule from
the date of incorporation (Request #6), or payroll tax returns
filed in 1990 through 1992 (Request #8). Other missing documents
include copies of insurance policies (Request #11), which would
indicate what Cray Valley’s assets are covered by insurance, and
whether business and environmental claims are covered. Certainly
2 In addition, the data from the state forms is not used to
run the ABEL computer analysis.
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this type of information is a pertinent part of an analysis to
determine what sources of income could fund a penalty. In
addition, EPA seeks in its Request #12 financial information on
Cray Valley’s royalties and commissions for the tax years 1990
through 1992. In its “Statement of Evidence,” Cray Valley
asserts that it paid--Sartomer (a sister subsidiary) a 2%
commission and that for 1992 that commission has been 20%
--including salaries and costs. Because neither of these--- -
statements is accompanied by any verifying documentation, EPA’s
Request #12 asks for this schedule.
The documents that would respond to Requests #16 and #17, a
list of Cray Valley’s customers and suppliers, and Cray Valley’s
sales and purchases, would provide relevant data on Cray Valley’s
income and expenditures, information that has probative value to
an ability to pay assessment. Likewise, EPA asks for the
specified forms in Request #9 to document whether and what amount
Cray Valley paid in contract labor (not wages) (Form 1099), the
amount it received for interest in any loans to another entity
(Form 1098), and information that reconciles these two forms
(Form 1096), because the information relates to money received or
paid out by Cray Valley and thus would make up another relevant
part of the financial analysis of the company.
The documents listed in Request #19 also would constitute an
important part of a financial analysis because these records and
books provide the details of Cray Valley’s sales, purchases,
accounts payable and receivable, and stocks — all of which have
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6
obvious significant probative value in determining Cray Valley’s
ability to pay a penalty. 3
Because information on payments Cray Valley makes is
relevant to its financial status, EPA asks in Request #7 for the
bill of sale for the vehicle Cray Valley purchased on July 1,
1990. This document would verify the amount of mofl y spent on
this purchase. Similarly, Request #13, that asks for a copy of
all lease agreements, would document how much Cray Valley pays in
rent each year. The copy of the lease agreement Cray Valley
provided is dated July, 1986, and ends September, 1991.
In two other requests, EPA asks for documents that should
have been provided with the 1991 tax return but were not.
Request #5 asks for a copy of the Form 5472 that was required to
be filed with Cray Valley’s 1991 tax return. Request #10 asks
for the schedule indicating what makes up the “addition 263
costs” from the 1991 tax return.
In its Request #18, EPA asks for a copy of the
organizational chart that identifies all of the entities related
to Cray Valley and the percentage of common control. Cray
Valley’s inability to pay claim must be analyzed within the
context of its status as a wholly-owned subsidiary and its
relationship to its parent and sister companies. Though Cray
EPA’s request states that CVP “produce copies of, or make
available for inspection and copying at a location aareed upon by
counsel for both parties. . .“ these documents (emphasis added).
ThUS, any burden to ClIP in providing this information can be
lessened by allowing EPA to examine these books to determine
which portions may need to be copied.
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Valley has provided a “Statement of Evidence” that contains some
of this information, it does not provide documentation that lists
all of the entities related to it or that details the financial
transactions that occur among them.
Much of the information Cray Valley provided on its parent
and related entities is in the form of unsupported statements
that contain only the select information Cray Valley wants to
have considered. For example, on page 9 of its “Statement of
Evidence,” Cray Valley states it has “customers among Coates—
affiliated corporations” which include Coates Bros. Inks U.S.A.,
Inc., and Colonial Printing Inks Corp. However, no other
information on how these entities are related to Cray Valley, nor
documentation on the amount of sales from these customers, is
given. In another example, also on page 9, Cray Valley states
that it “uses Schnader, Harrison, Segal & Lewis for this action.”
This statement does not indicate who pays for this
representation, though documents sent to EPA by Schnader,
Harrison, Segal & Lewis all have a fax cover sheet that state,
“Client: Sartomer.” In addition, the “pro forma” tax returns
Cray Valley submitted all have the notation “From: Sartomer
Finance” on the top of the pages. These seem to indicate the
existence of a financial relationship between Sartomer and Cray
Valley that is not explained or documented in the information
provided. Another reason why EPA requests the consolidated tax
returns of Cray Valley’s parent corporations is because this
wholly-owned subsidiary’s financial health may be integrally
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8
related to the financial health of its parent or 5lster
subsidiaries.
As demonstrated by hat Cray Valley does provide, its
submission to date is incomplete. The company does not provide
its basic business records, as outlined in EPA’s Request For
Production of Documents, that contain significant probative
financial information needed to determine whether this company
can afford to pay the proposed penalty in this case.
II. Cray Valley’s Inability to Pay Claim Cannot be Analyzed with
the Documents Already Submitted; EPA Needs the Requested
Documents to Assess Adequately Its Claim.
Cray Valley states that it has provided the information EPA
needs because, it asserts, EPA needs no information other than
the tax returns required to run an ABEL computer analysis to
assess an inability to pay claim. Cray Valley can cite no case
law or even an EPA policy to support this baseless proposition.
In fact, it acknowledges that other financial information is
pertinent in assessing its claim by its submission of various
other documents and statements not relating to its tax returns.
Furthermore, even its “expert report” provided in Exhibit LE of
its December, 1992, prehearing exchange (Exhibit C,of its
Memorandum of Law) notes that, “if ABEL predicts a company does
not have the ability to pay a proposed penalty, then additional
financial information of the company should be analyzed.”
Exhibit EE at 4.
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The use of the ABEL program is limited and is not designed
to provide a complete analysis of a company’s ability to finance
a penalty. EPA uses the ABEL program for settlement purposes
only to aid agency personnel who are not financial experts in
making a quick assessment of a respondent’s claim of inability to
pay. ABEL looks at a violator’s cash flow, and provides a fast,
conservative estimate of a firm’s ability to pay. Thus, if the
- - ABEL re ialt is negative or indeterminate, the government must
look further as there are many other potential sources of income
from which penalties can be funded.. To adequatel-y- determine or
rebut Cray Valley’s claim of inability to pay requires a more
extensive analysis of the firms business records, and its
structure and relationship to its parent and other entities.
The “expert” report contains Coopers & Lybrand opinion but
provides no financial documentation for EPA to analyze. The
report simply reflects the results of Coopers & Lybrand’s running
of the ABEL computer model. As stated above, the ABEL program
does not provide the only type of financial information needed by
EPA or this Court to make a determination of Cray Valley’s
financial wherewithal to pay the proposed penalty. In addition,
even if it did, the federal tax data needed to run this program
must be the verified data that was submitted to the federal
government, data that is not provided by the submission of a “pro
forma” tax return.
Furthermore, as noted above, the Coopers & Lybrand report
acknowledges that when the ABEL program indicates an inability to
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10
pay, “additional financial information” should be analyzed.
However, this report does not then analyze such information to
determine whether Cray Valley has the ability to pay. Instead,
the report simply jumps to an analysis of additional financial
information solely to determine whether, in its opinion, upon
review of Cray Valley’s relationship with related entities, such
“related entities could be pursued in seeking payment of the
proposed penalty.” Exhibit EE at 4. Such an analysis is . .
irrelevant to the question of whether information other than tax
return have probative value in determining Cray Valley’s ability
to pay a penalty.
Curiously, the “additional financial information” Coopers &
Lybrand looked at includes the same documents EPA requests but
that Cray Valley will not provide to EPA. These documents are
“the capital structure of CV? taken from the U.S. Corporation
Income Tax Return Form 1120 for the years 1988 through 1991 filed
by CVP’s arand arent companies, ” “documentation related to loans
from affiliated companies,” “various accounts relating to
activities with affiliated companies,” and “dividend payment
history.” Exhibit EE from Cray Valley’s prehearing exchange, at
page 7. 8 its submission of this opinion, then, Cray Valley
acknowledges that these documents have probative value in
assessing an inability to pay claim.
In addition, with regard to information other than tax
returns, Cray Valley claims in the “Facts” section of its
Memorandum of Law that it has “provided significant information
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to EPA concerning its relationship with its parent corporation
and affiliates.” Notwithstanding that this information is
incomplete, as detailed above, some of this and other financial
information is inconsistent with the exhibits referenced in
support of it. For example, Cray Valley states on page 7 of the
“Statement of Evidence” that it “had a factory built to
manufacture...inaterials in the United States. The factory was
built on a property in Stockport, New York....” The only
documentation accompanying this statement is a lease for a
building identified jn the lease as the “Midvale. Paper Board
plant” - a building that apparently already occupied the
property at the date of the lease. Also, on page 7 of this
“Statement of Evidence,” Cray Valley states that “Coates
Brothers, Inc. filed a consolidated income tax return, including
CVP. See Exhibit P.” Similarly, on page 7, Cray Valley states
that “(b)eginning in 1991, Total America, Inc. filed a
consolidated federal tax return, including CVP. See Exhibit S.”
Neither of these exhibits contain the referenced consolidated tax
return filed by these parent corporations. Other information
Cray Valley provided contains unverified and apparently
inconsistent data. Regarding the 1991 “pro forma” tax return,
the balance sheet numbers on Schedule L do not reconcile to
balance sheet numbers reported elsewhere on the return, and the
computation of income does not reconcile with these numbers. In
addition, Form 4562 appears to be incomplete, and the information
included on this form does not reconcile to the balance sheet.
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12
Also, on page 3 of the 1991 pro forma tax return, Cray Valley
indicates that the Form 5472 is attached, but it is not provided.
Thus, EPA cannot analyze Cray Valley’s inability to pay claim
with the documents submitted because the tax data is not
verified, the “expert” opinion does not contain the documents
upon which the opinion is based, and the information is
incomplete and contains inconsistencies.
Conclusion
The fact that Cray Valley has not provided the verified
federal tax information or the numerous other financial documents
listed in EPA request evidences how Cray Valley submission is
incomplete. In addition, the discrepancies identified, and the
incomplete nature of the information submitted underscore why CVP
has not provided sufficient information for EPA to conduct a
complete financial analysis of the company. Therefore, EPA
respectfully requests that its Motion for Production of Documents
be granted so that it can conduct a complete financial analysis
of Cray Valley so that its inability to pay claim can be
assessed.
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13
Respectfully submitted,
Alexandra K. Callam
Assistant Regional Counsel
Air, Waste, & Toxic Substances
Branch
Office of Regional Counsel
Environmental Protection Agency
26 Federal Plaza - Room 400
New York, New York - 10278 --
(212) 264—9898
Dated: ________
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% 1 k 1l .i -.
Apc 1M6kjT
SCHNADER. HARRISON. SEGA.
ATTORNEYS AT LAW
SurrE 3600
1600 MARKET STREET
PHILADELPHIA. PENNSYLVANIA 19103-4252
215-751-2000
FAX 215-751-2205
.JACOB P HART TELEX 53-4280 • CABL WALEW
215-751-2046
October 28, 1993
VIA UPS NEXT DAY AIR
Honorable J. F. Greene
Administrative Law Judge
Mail Code A-lb
U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Re: In the Matter of Cray Valley Products,
Inc.. Docket No. II TSCA-PMN-92-0222
Dear Judge Greene:
On behalf of Cray Valley Products, Inc., this letter is
submitted as a Surreply to Complainant’s Reply to Respondent’s
Opposition to EPA’s Motion for Order Compelling Response For
Production of Documents.
In its Reply, counsel for the EPA asserts that the EPA
needs the consolidated tax returns of CVP’s parent corporations
because it is in the consolidated tax returns that Cray Valley’s
tax information is submitted to the United States. In making
this assertion, counsel for the EPA apparently makes the
inaccurate assumption that the consolidated tax returns contain
specific information about the income, expenses and assets of
CVP. That assumption simply is not- true. In a consolidated tax
return, information about the income, assets and expenses of
individual affiliated corporations are combined into totals.
The consolidated tax returns thus will not provide the
information that the EPA allegedly needs for the ABEL Program.
PHILADELPHIA • WASHINGTON • NEW YORK. HARRISBURG
NORRISTOWN . SCRANTON - CHERRY HILL
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SCMNADCR. HARRISON. SCGAL & LEWIS
Honorable J. F. Greene -2-
The only source of that information is CVP’s pro forma
income tax returns, which have been provided to EPA. The pro
forma returns are business records and should be considered as
reliable as signed tax returns for the purposes of operating the
ABEL Program.
Counsel for EPA also asserts that there are certain
inconsistencies between schedules for the pro forma returns and
entries in the pro forma returns. CVP will review the returns
and schedules and will clarify any inconsistencies. In addition,
counsel for EPA also argues that it should be provided the
consolidated tax returns for CVP’s parent corporation and other
financial information concerning CVP because experts for CVP
relied upon information about CVP from the tax returns and upon
other financial data about CVP. Reply at 10. To the extent that
it has not already done so, CVP will provide to the EPA the
financial information relied upon by CVP’s experts. Clari fica-
tion of any inconsistencies in the pro forma tax returns, and the
data relied upon by CVP’s experts, along with the financial
information already provided to the EPA, should be more than
sufficient to allow the EPA to determine CVP’s ability to pay.
CVP thus respectfully requests, for the reasons set
forth in this letter and CVP’s opposition to EPA’s motion for
order compelling response to production of documents, that the
motion be denied.
Respectfully,
FOR
cc: Alexandra Callam, Esquire
Ms. Karen Maples
P. Hart
HARRISON, SEGAL & LEWIS
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itO
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
\ I REGION II
4 0j G
JACOB 1< JAVITS FEDERAL BUILDING
NEW YORK. NEW YORK 10278.0012
November 2, 1993
Honorable J.F. Greene
Administrative Law Judge
Mail Code A—lb
U.S. Environmental Protection Agency
401-M Street, S.W. ——
Washington, D.C. 20460
Re: In the Matter of Cray Valley Products, Inc.
Docket No. 11 TSCA—PMN —92—0222
Dear Judge Greene:
Complainant submits this in response to Cray Valley Products,
Inc. October 28, 1993, letter regarding Complainant’s Reply to
Respondent’s Opposition to EPA’S Motion for Order Compelling
Response For Production of Documents.
In its letter, Cray Valley questions the veracity of “EPA’s
assumption that the consolidated tax returns contain specific
information about the income, expenses and assets of CVP....”
EPA made this “assumption” based on the Internal Revenue Code and
Treasury Regulations that require such information to be
submitted to the United States as part of a consolidated tax
return. Internal Revenue Code (IRC) Section 1501 states:
An affiliated group of corporations shall, subject to
the provisions of this chapter, have the privilege of
making a consolidated return with respect to the income
tax imposed by Chapter 1 for the taxable year in lieu
of separate returns. The making of a consolidated
return shall be upon the condition that all
corporations which at any time during the taxable year
have been members of the affiliated group consent to
all the consolidated return regulations prescribed
under section 1502....
These regulations include the requirements that a Form 1120 be
filed for the consolidated group in total, and that Form 851 -
the affiliations schedule - be attached. Treasury Regulation
1.1502—75(j) further states that for each subsidiary
the statement of gross income and deductions and the
schedules required by the instructions on the return
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2
all be prepared and filed in columnar form so that the
details of. the items of gross income, deductions, and
credits for each member may be readily audited. Such
statements and schedules shall include in columnar form
a reconciliation of surplus for each corporation and a
reconciliation of consolidated surplus.
This regulation also requires that “(c]onsolidated balance sheets
as of the beginning and close of the taxable year of the group,
taken from the books of the members, shall accompany the
consolidated return and shall be prepared in a form similar to
that required for reconciliation of surplus.” TR 1.1502—75(j).
Furthermore, TR 1.1502—12 states that “the separate taxable
income of a member. . is computed in accordance with the
provisions of the Code covering the determination of taxable
income of separate corporations, subject to the following
modifications....” Specific items which are modified with
regard to consolidated entities and which are included with the
filed consolidated return include the transactions between
members and transactions with respect to stock, bonds, or other
obligations of members reflected in accordance with TR 1.1502—13
and TR 1.1502—14. see TR 1.502—12(a). Examples of items that
are covered by the consolidated return regulation include the
sale of property by one member of a group to another member of
the same group, the performance of services by one member of a
group for another member of a group, the payment of interest by
one member of a group to another member of the same group, and
intercompany sales of inventory items, among others.
Therefore, it is evident from the requirements of the Internal
Revenue Code and Treasury Regulations that, along with the filing
of a combined consolidated tax return, information regarding
income, deductions, assets, liabilities, stockholder’s equity,
retained earnings, certain intercompany transactions and
eliminations and other schedules, must be included on a separate
entity basis. Thus, as stated in its Reply memorandum, EPA
requests the consolidated tax returns so that it can obtain the
verified financial information relating to Cray Valley that was
submitted to the United States, and so that it can analyze Cray
Valley’. financial relationship to its parent and sister
affiliates. These and the other documents requested will provide
EPA the n.c.ssary information to begin its financial analysis of
Cray Valley’s inability to pay claim.
Cray Valley’s October 28, 1993, letter conveniently ignores the
reasons EPA has laid out for requesting the consolidated tax
returns. EPA does not need them to run the ABEL program, as Cray
Valley erroneously asserts, because ABEL does not provide a
definitive determination of an entity’s inability to pay. Cray
Valley’s claim at this late date that it will provide its own
selection of documents “to the extent it has not already done so”
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3
serves only to underscore that the information it has submitted
thus far is deficien t. Because EPA has not received all of the
specific documents as identified in its Request for Documents,
Cray Valley must be obligated by an Order of this Court to submit
these documents so that this company’s financial status can be
adequately analyzed.
Alexandra Callam
Assistant Regional Counsel
Office of Regional Counsel
cc: Karen Maples, Regional Hearing Clerk
Jacob Hart, Esq.
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flh/4C/tM AJ /
UNITED STATES ENVIRONMEI1TAL PROTECT.ION AGENCY
WASHINGTON, D.C. 20460
In the Matter of
Docket UTSCA-II-P -92-0222
CRAY VALLEY C, INC.
Judge Greene
Respondent
ORDER
REOUIRING RESPOND T TO MAKE AVAILABLE CERTAIN
DOCU? TS FOR INSPECTION AND COPYING
Complainant having demonstrated the need for and relevance of
certain documents in connection with respondent’s asserted
inability to pay the penalty sought in the complaint, it is hereby
ordered that no later than November 19, 1993, respondent shall make
available for inspection and copying the documents requested by
complainant (Motion for Order Compelling Response to Request for
Production of Documents, October 1, 1993; and Request for
Production of Documents of U. S. EPA to Cray Valley Products, Inc.,
September 30, 1993).
While no specific request for a protective order was made by
respondent in its October 11, 1993, response, given the tenor of
the opposition to complainant’s motion, consideration will be given
to the issuance of such an order if a proper showing is made.
And it is FURTHER ORDERED that, during the week ending
November 26, 1993, the parties shall report upon the status of this
matter.
J reene
inistrative Law Judge
October 29, 1993
Washington, D. C.
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CERTIFICATE OF SERVICE
I hereby certify that the original of this Order was sent to”
the Regional Hearing Clerk and copies were sent to the counsel for
the complainant and counsel for the respondent on November 1, 1993.
“ hirley mith
Legal Staff Assistant
for Judge J. F. Greene
NAXE OF RESPONDENT: Cray Valley Products; Inc.
( OCKET NUMBER: TSCA-PMN-II-92-0222
Ms. Karen Maples
Regional Hearing Clerk
Region II EPA -- -
26 Federal Plaza
New York, New York 10278
Alexandra K. Calla , Esq.
Office of Regional Counsel
Region II - EPA
26 Federal Plaza
New York, New York 10278
Jacob P. Hart, Esq.
Rodney B. Griffith, Esq.
Schnader, Harrison, Segal & Lewis
1600 Market Street, Suite 3600
Philadelphia, PA 19103
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( )
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTR.ATOR
In the Matter of
)
Colfax, Inc.,
)
38 Colfax Street
)
Pawtucket, RI 02860
)
Respondent
)
)
Docket No. EPCRA 1—93—1076
coMPLAINAN’r’s MOTION FOR LEAVE
TO REOUEST PRODUCTION OF DOCUMENTS
Pursuant to 40 C.F.R. § 22.19(f), Complainant, United States
Environmental Protection Agency, Region I, respectfully moves for
leave to serve upon Respondent, Colfax, Inc., the attached
Request by Complainant for Production of Documents (the Request).
The Request seeks financial information which is in the
possession or control of Respondent, which is relevant to
Respondent’s ability to pay the proposed penalty, and is
necessary for a hearing on this matter.
In support of this Motion, EPA states the following:
1. In his Order Granting In Part and Denying in Part
Complainant’s Motion for An Accelerated Decision, dated September
2, 1994, the Presiding Officer ordered the Respondent to submit
by September 19, 1994, any docurnents it intends to rely on at the
hearing with respect to Respondent’s inability to pay the
proposed penalty. In response, Respondent submitted a document
entitled “Combined Interim Financial State ients and Accountant’s
Review Report, June 30, 1994 and July 1, 1993” for the Colfax
-------
Corporate Group. The Respondent submitted no other
documentation.
2. The Consolidated Rules of Practice, 40 C.F.R.
5 22.19(f) (1), allows discovery upon a determination by the court
that (1) such discovery will net unreasonably delay the
proceeding, (2) the information requested is not otherwise
obtainable, and (3) the information sought has significant
probative value. The discovery sought in the Request meets these
three criteria.
3. Such discovery will not unreasonably delay the
proceeding because the documents should be readily available at
the Respondent’s facility or at the office of Respondent’s
accountant.
4. The information requested is not otherwise discoverable
because the information is in the possession or control of the
Respondent.
5. The information sought is necessary in order for
Complainant to conduct a thorough analysis of the Respondent’s
ability to pay the proposed penalty and to prepare for a hearing
on this matter. Respondent has supplied limited information
which is not specific to Colfax, Inc., but rather to a larger
entity, the Colfax Corporate Group. Therefore, discovery is
necessary in order for Complainant to have a full understanding
of the financial status of Colfax, Inc. and the relationship
between Colfax, Inc. and the Colfax Corporate Group. Discovery
is also necessary in order to corroborate the financial statement
submitted with other financial documentation such as Respondent’s
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tax returns, and to obtain financial information on Colfax, Inc.
and the Colfax Corporate Group from recent years.
Respectfully submitted,
Date: ‘ / I .,‘ 3 í
I l Andrea Simpson
Assistant Regional Counsel
U.S. Environmental Protection
Agency, Region I
J.F.K. Federal Building, RCE
Boston, Massachusetts 02203
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the Matter of
)
)
Co]fax, Inc.,
)
38 Colfax Street
)
Pawtucket, RI 02860
)
Respondent
)
)
Docket No. EPCRA I—93-1076
REQUEST BY COMPLAINANT
U.S. ENVIRO Q(ENTAL PROTECTION AGENCY FOR
PRODUCTION OF DOCUMENTS
Pursuant to 40 C.F.R. § 22.2 .9(f) and the decision of the
Presiding Officer on Complainant’s Motion for Leave to Request
Production of Documents, Complainant, United States Environmental
Protection Agency Region I (EPA), hereby requests Respondent,
Colfax, Inc., to produce the following documents which are in the
actual or constructive possession, custody or control of the
Respondent within fourteen (14) days of the date of this Request
or within such other time as the Presiding Officer shall order:
1. Provide the U.S. income tax returns of Colfax, Inc. for
the last five (5) fiscal years including all schedules and
attachments, and copies of trial balances used to prepare the
tax return for each of the last five (5) fiscal years. If
Colfax, Inc. is a member of a corporate group that files a
consolidated federal income tax return, provide the consolidated
federal income tax return for the last five (5) fiscal years
including all schedules and attachments and the data used for
Colfax, Inc.’s income and expenses for the last five (5) fiscal
years, including the balance sheet, statement of operations,
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retained earnings and cash flow, trial balances, and all other
financial information used as a basis for the determination of
profit or loss and! or financial position.
2. Provide depreciation schedules for Colfax, Inc. and the
Co]fax Corporate Group all inclusive since the dates of
incorporation.
3. Provide copies of all, completed 1099, 1098 and W—2 forms
issued to all officers and shareholders of Colfax, Inc. and the
Colfax Corporate Group for the years 1991, 1992 and 1993.
4. Provide copies of lease agreements for all property
rented by Colfax, Inc. since 1991. Include any amendments to
such lease agreements.
5. Please identify all financial institutions which Colfax,
Inc. and the Colfax Corporate Group have done business with over
the past five (5) years and sign the attached disclosure
authorization form for each such institution.
6. If any assets have been sold by Colfax, Inc. or the
Colfax Corporate Group within the past five years, provide copies
of the sales agreement, bill ’of sale, deeds transferred and any
other information pertaining to such sale.
7. If any assets have been bought by Colfax, Inc. or the
Colfax corporate Group within the past five years, provide copies
of the sales agreement, bill of sale, deeds transferred and any
other information pertaining to such purchase.
8. Provide copies of all bank statements for the past three
years \for all bank accounts of Colfax, Inc. and the Colfax
Corporate Group.
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9. For all outstanding loans to Colfax, Inc. or the Colfax
Corporate Group, provide copies of loan applications, loan
documents, notes, etc.
10. For any loans from a shareholder of Colfax, Inc. or the
Colfax Corporate Group, provide copies of the cancelled check
written to the corporation and loan documents.
11. Provide an organizational chart identifying any and all
related parties to the Respondent (brother, sister, affiliate and
parent, subsidiary relationships).
Respectfully submitted,
Date: •,., .
Andrea Simpson
Counsel for Complainant
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FINANCIAL DISCLOSURE FORM
I, ________________, hereby authorize and consent to the
disclosure and release of any and all information pertaining to
Colfax, Inc. or the Colfax Corporate Group held by any financial
institution to the United States Environmental Protection Agency
(EPA) or its representative.
This authorization for the release of financial information to
EPA further constitutes my consent for purposes of release of
financial records and information held by financial institutions
pursuant to the Right to Financial Privacy Act, 12 U.S.C. § 3402.
A true copy of this Financial Disclosure Form may be substituted
for an original.
_________________________(Signature)
__________________________(Title)
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U.S. EPfl OFFICE OF REG. COUNCIL
— 12’ø?’94 15:34 001
‘ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
EGIONt
. . J F KENNEDY FEDERAL BUILDING BOSTON. MASSACHUSETTS 02203-2211
.,
December 7, 1994
Mary Anne Gavin
Regional Hearing Clark
U.S. Environmental Protection Agency
Region I, RCG
J.F. Kennedy Federal Building
Boston, Massachusetts 02203
Re: In the Matter of Co1fa c. Inc , Docket No. EPCRA 1-93—1076
Dear Ms. Gavin:
Enclosed for filing in the above—referenced matter, please find
Motion for Ruling on Complainant’s Motion ter Leave to Request
Production of Documents. Copies of this document have been sent to
the Presiding Officer and to Counsel for the Respondent.
Thank you for your assistance in this matter.
Very truly yours,
- •1
Andrea Simpson
As3istant Regional Counsel
Enclosure
cc: Hon. Gerald Harwood
Stephen H. Burke, Esq.
OPTtON FORM 99 (7-90)
FAX TRANSMITTAL
_‘. P .ir.’
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— .‘ L I. .I. • J. .1. L..I ri L I LL LW L.LM•JI ‘ £
—
U 4ITED STATE8 ENVIRONMENTAl, PROTECTION AGENCY
BEFORE TRE ADMINISTRATOR
In the Matter of
)
)
COlfa)C, Inc.,
)
38 Colfax Street
)
Pawtucket, RI 02860
)
Respondent
)
—)
Docket NO. EPCRA 1-93-3076
MOTION FOR RULING
MOTION FOR RULING ON COMPLAINAIIT’S MOTION FOR LEAVE TO REQUEST
PROP UCTION OF DOCUXENT8
Complainant, United States Environmental Protection Agency,
Region I, hereby moves this court to issue an order requiring
Respond nt to produce the documents which were requested by
Complainant in its Motion for Leave to Request Production of
Documents and Request for Production of Documents, filed on
October 5, 1994 (attached). The documents requested are relevant
to Respondent’s claim that it is unable to pay the proposed
penalty.
As grounds for this motion, Complainant states that on
October 20, 1994, the Presiding Officer issued an order granting
Respondent an extension until December 1, 1994, to respond to
Complainant’s October 5, 1994 discovery motion. As of today’s
date, Complainant has not received a response. Such discovery
should be allowed pursuant to Section 22.19(f) of the
Consolidated Rules of Practice Governing the Administrative
1 ssessment of Penalties because (1) it will not unreasonably
delay the proceeding, (2) the information requested is not
otherwise obtainable, and (3) the information sought has
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— •‘ . . . ., _1 • £c_I_ I I% _1. %Jl1%. LI_.
significant probative value. Complainant requests that the
Presiding Officer order Respondent to produce the documents by
December 19, 1994, so that complainant will have sufficient time
to review the documents and prepare for the hearing in this
matter Which is scheduled for February 7, 1995.
WHEREFORE, Complainant requests that this court issue an
order requiring the Respondent to produce all of the documents
requested in Complainant’s October 5, 1994 motion by December 19,
1994.
Respectfully submitted,
Date:j :_ L J b
Andrea Simpson /
Assistant Regional counsel
U.S. Environmental Protection
Agency, Region I
J.F.K. Federal Building
Boston, Massachusetts 02203
(617) 565—9401
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U.b. .I- H UI-I- 1L UI- b. UJUNCIL
Docket Ho. EPCRA 1-93—1076
Certificate of Servjc
I hereby certify that the Motion for Ruling on CQmplainant’s Motion
for Leave to Request Production of Documents was delivered to the
Regional Hearing Clerk and copies thereof were sent to the
Presiding Officer and to Counsel for the Respondent this day, in
the following manner and at the addresses listed below:
Original by hand delivery to; Mary Anne Gavin
Regional Hearing Clerk
U.S. Environmental Protection
Agency
Region I, RCG
JFK Federal Building
Boston, Massachusetts 02203
Copy by first class mail to: The Hon. Gerald Harwood
Senior Administrative Law Judge
U.5. Environxaental Protection
Agency
Mail Code 1900
Washington, D.C. 20460
Copy by first class mail to: Stephen H. Burke, Esq.
Temkin & Stone
2500 Hospital Trust Tower
Providence, R.I. 02903
Date: __________ J/ .- 1.:’ .
Andrea Simpson
Counsel for Complainant
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the matter of
)
Colfax, Xnc. ) Docket No. EP RA 1—93—1076
)
Respondent )
ORDER DIRECTING P ODUCTIQN OF DOCUX TS
In response to my- order of September 2, 3.994, Respondent
produced some financial information that Complainant regards is
inèufficient to give a reliable picture of Respondent’s finanóial.
condition. -
Complainant, accordingly, has tiled a request for the
production of documents that it claims bear upon Respondent’s
ability to pay the proposed penalty of $86,000. Although unopposed,
the request seems unnecessaz’ily broad. Accordingly, Respondent at
this time is directed to comply with Paragraphs. 3. and 11 of
Complainant’s request dated October 5, 1994. If review of these
documents indicates the need for additional financial information,
Complainant may apply for such information.
These documents shall be produced and made available to
Complainant by 7anuary 10, 1995.
Respondent is notified that it Respondent does not produce the
documents as ordered, and no good cause is shown for the failure to
comply, the inference will be drawn that the documents would have
demonstrated that Respondent does have the financial ability to pay
the proposed penalty, and that payment of the penalty will not
:1.
-------
adversely affect Respondent’ a ability to continue in business.
See 40 C.F.R.. c22.o4(c)(5). If the documents are produced,-they
will be given such probative vaXue with -respect to Respondent’s
financial condition and ability to pay the penalty as is shown to
be justified by their contents.
dJ A 1
Gerald Harwoo
Senior Administrative Law 7udge
Dated:V .4.$t.44 dZO ,3.994
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE TEE ADMINISTRATOR
In the Matter of
)
)
Colfax, Inc.,
)
38 Coif ax Street
)
Pawtucket, RI 02860
)
Respondent
)
)
Docket No. EPCRA 1—93-1076
MOTION FOR RECONSIDERATION
COMPLAINANT’S MOTION FOR RECONSIDERATION OF RULING ON REQUEST FOR
PRODUCTION OF DOCUMENTS
Complainant, United States Environmental Protection Agency,
Region I, moves this court for a reconsideration of its December
20, 1994, Order Directing Production of Documents, which granted,
in part, Complainant’s Request for Production of Documents in the
above—captioned matter. As grounds for this motion, Complainant
states that all of the documents originally requested are necessary
for a complete and thorough analysis of Respondent’s ability to pay
the proposed penalty. In addition, Complainant states as follows:
1. On October 5, 1994, Complainant filed a Motion for Leave to
Request Production of Documents and Request for Production of
Documents relevant to Respondent’s ability to pay the proposed
penalty.
2. On October 20, 1994, the Presiding Officer granted an extension
of time until December 1, 1994, by which the Respondent was to
respond to Complainant’s discovery request.
3. On December 7, 1994, Complainant, having received no response
from Respondent to its October 5, 1994, motion, filed a Motion for
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a Ruling on its discovery request.
4. On December 20, 1994, the Presiding Officer ordered the
Respondent to produce by January 10, 1994, two (2) of the 11 pieces
of financial information requested by the Complainant.
Specifically, the Presiding Officer allowed discovery of 1) U.S.
income tax returns of Colfax, Inc. for the last five (5) fiscal
years including all schedules and attachments, and copies of trial
balances used to prepare the tax return for each of the last five
(5) fiscal years; If Colfax, Inc. is a member of a corporate group
that files a consolidated income tax return, the consolidated
federal income tax return for the last five (5) fiscal years
including all schedules and attachments and the data used for
Colfax, Inc.’s income and expenses for the last five (5) fiscal
years, including the balance sheet, statement of operations,
retained earnings and cash flow, trial balances, and all other
financial information used as a basis for the determination of
profit or loss and/or financial position; and 2) an organizational
chart identifying any and all related parties to the Respondent
(brother, sister, affiliate and parent subsidiary relationships).
The December 20, 1994, Order also provided that if review of these
documents indicates the need for additional financial information,
Complainant may apply for such information.
5. While the information which Respondent is ordered to produce
will provide some evidence of its ability to pay the penalty, it
will only allow Complainant to perform a cursory analysis of
Respondent’s financial position and its ability to pay the penalty.
2
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6. In order to clarify Complainant’s position with regard to its
discovery request, Complainant has attached a detailed explanation
of why, in addition to the tax returns and corporate
oraganizational chart, each piece of information originally
requested is necessary for a thorough analysis of Respondent’s
ability to pay the penalty. -
7. Concurrent with this motion, Complainant is filing a Motion for
a Continuance in order to allow additional time for discovery and
to allow Complainant adequate time to prepare for a hearing in this
matter.
WHEREFORE, Complainant respectfully requests that the
Presiding Officer issue an order requiring Respondent to produce
the documents described in the attached document.
Respectfully submitted,
Date:______ ___________
‘Andrea Simpson
Assistant Regional Counsel
U.S. Environmental Protection
Agency
Region I
J.F.K. Federal Building (RCE)
Boston, Massachusetts 02203
(617) 565—9401
3
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ATTACHNENT
EXPLANATION OF DOCUMENT REQUEST
The following is a description of the financial information
requested, its necessity, relevance, and an explanation as to how
the information requested will be used in determining Respondent’s
ability to pay the penalty. The information described below will
not appear on Respondent’s tax retirns which, along with a
corporate organization chart, were the only items allowed from
Complainant’s original document request.
2. Provide the depreciation schedule for Colfax, Inc. and the
Colfax Corporate Group all inclusive since the date of
incorporation.
A depreciation schedule is a detailed schedule of a corporation’s
assets which have a useful life of one year or more. It provides
a description of each asset, date the asset was purchased, cost of
the asset, expected useful life, depreciation expense currently
taken, the accumulated depreciation to date, book value of the
asset and when and if the asset was disposed of. If an asset has
been sold or otherwise disposed of it would still appear on the
depreciation schedule as a previously owned asset. The same holds
true if an asset has been fully depreciated (expensed).
The depreciation schedule has relevance in an ability to pay
analysis for a number of different reasons. The depreciation
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schedule:
a) will show if any assets have recently been purchased
and the associated cost of the asset. If the corporation
paid cash for these assets, the assets may be used to
secure a new loan. The proceeds from the loan could be
used to pay the penalty;
b) will show if there are unnecessary or luxury items being
paid for by the corporation. (Please note, other areas of
the financial statement or tax return may also indicate
additional luxury items.) If the corporation has
invested in real property, rental property, condominiums,
lwcury automobiles, airplanes, boats, or any other assets
which are not necessary for the continued operation of
the business, these non—essential assets could be sold to
generate additional cash which could be used to pay the
penalty;
C) will indicate assets which have been transferred by the
corporation either through a sale to an unrelated party
or a distribution to one of the shareholders or other
related party.’ These transfers may not be reported on
the tax return or they may not be reported at the asset’s
fair market value. Proceeds from the sale of an asset
Related parties are defined in Internal Revenue Code Section
267 and include an individual and a corporation more than 50
percent in value of the outstanding stock of which is owned,
directly or indirectly, by or for such individual, and two
corporations which are members of the same controlled group...
among others. Indirect ownership includes ownership through family
members and other entities. Treasury Regulation 1.267.
2
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which was not reported on the tax return would be a
source of additional income which could be used to pay a
penalty as would a distribution of assets from a
corporation to its shareholders at less than fair market
value. A shareholder is required to pay fair market
value for any assets sold to him or her. If the assets
were sold for less than fair market value, the difference
between the sale price and the fair market value would at
a minimum represent a receivable to the corporation. The
receivable would provide the corporation with additional
funds to pay the penalty;
d) will show the actual amount that the company paid for an
asset. This amount generally does not represent the
current fair market value of the asset. Fair market
value may be substantially higher than the asset’s
historical cost to the corporation. If that is the case,
such assets listed on the depreciation schedule may be
used to obtain a new loan, the proceeds of which may be
used to pay the penalty. Or, the assets may be
liquidated, in which case there would be additional funds
for payment of a penalty.
3. Provide copies of all completed 1099, 1098, and W—2 forms
issued to all officers and shareholders of Colfax, Inc. and the
Colfax Corporate Group for the years 1991, 1992, and 1993.
3
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Each of the forms identified above is required to be filed by
Colfax, Inc. and/or the Corporate Group with the Internal Revenue
Service and the recipient of the reported income (in this case the
officers and shareholders). The amount reported on each form
represents the total amount paid by the corporation to each
shareholder/officer for each of the income categories described
below.
a) Form 1099-INT will show how much interest a shareholder
has received from the corporation. A determination must
be made as to the validity of the underlying loan and
whether the interest rate is competitive with rates of
outside lending institutions. If the interest paid to
the shareholder/officer is excessive in relationship to
interest paid to non—related parties, the excess interest
should be allocated back to the corporation providing
additional income to be used to pay the penalty.
b) Form 1099-DIV will show how much each shareholder
received in dividends for the year. Corporations
generally issue dividends 1) in times of strong financial
health because the income is not needed to meet financial
obligations or 2) when corporate assets have been
liquidated and the proceeds received from such
liquidation are being distributed to the shareholders.
The issuance of dividends is thus a strong indication
that the firm will be able to meet its penalty
obligations. Also, dividends can be held back from being
4
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distributed and used to pay a penalty.
C) Form 1099-B identifies the value of any bartering
exchanges which have taken place. With regard to
bartering transactions which have taken place between the
corporation and the shareholder/officers (where goods or
services are exchanged for goods or services), the fair
value of these exchanges must be determined. If the
corporation has received less than fair market value for
what it exchanged, a receivable representing the
difference between the value received and the fair market
value of what it gave up would result. This receivable
would provide additional income to meet the penalty
obligation.
d) Form 1099-S identifies the dollar amount a shareholder or
officer received from the corporation as a result of the
sale of real estate to the corporation. Sales and
exchanges between the corporation and related parties
must be reported as an arms length transaction. If the
reported sale price is above fair market value, the
difference between the sale price and the fair value
would be reclassified to the corporation as income. This
additional income would be available to pay the penalty.
e) Form 1099—MISC shows how much a shareholder or officer
received for rent and/or other miscellaneous payments.
Here again, the fair value of these payments must be
determined. If the payment made to the
5
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shareholder/officer is for property rental and the cash
payments are substantially higher in relationship to
other rental fees charged for similar type property, then
the difference between the actual payments and the fair
rental value of the payments represents a receivable to
the corporation. This receivable would provide the
corporation with additional income to pay its penalty.
f) Form 1098 will show if there is a mortgage between the
corporation and one of the officers or shareholders.
A determination would have to be made as to whether the
underlying loan is a valid loan with a competitive
interest rate and whether the asset was transferred at
fair market value. If it is determined that the interest
rate is below the market rate or the asset changed hands
at less than fair market value, then a receivable for the
additional interest or sales proceeds due would be
established. This receivable would provide the
corporation with additional income to pay the penalty.
g) Form W-2 will show the amount of wages received by the
shareholders and officers as well as any fringe benefits
they have received. These forms are necessary to
determine if the officers and shareholders are being paid
reasonable salaries in light of the amount of time they
devote to the business. If it is determined that the
salary of an officer or shareholder is excessive or
unreasonable, that portion which is determined to be
6
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excessive should be allocated back to the corporation.
This reallocation would provide the corporation with
additional income to pay the penalty amount.
The three years of documentation requested for each of the above
categories is necessary to determine any significant increases or
decreases in reportable amounts. A three year comparison will
allow us to determine if the corporation has authorized any such
increases. Salary increases, additional fringe benefits and
dividend .payinents are all indications of a financially secure
corporation and provide evidence that the corporation has the
ability to meet its penalty obligations. If the corporation is
able to steadily increase an officer’s salary, provide for
additional fringe benefits, and/or declare dividends, it is a clear
indication that the corporation is experiencing growth and is in a
strong financial position.
Please note, if the above scenarios do not pertain to this
corporation then the documents outlined above will not exist and
therefore understandably will not be provided.
4. Provide copies of lease agreements for all property rented by
Colfax, Inc. since 1991. Include any amendments to such lease
agreements.
Lease agreements will show the parties to the lease arrangement and
7
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identify related party transactions. The lease agreements which
involve related parties must be reviewed to determine if they are
consistent with fair rental value. If the company’s lease payments
are in excess of fair rental value, the difference between the
payments and the fair rental value can be allocated back to the
corporation and made available to pay the penalty..
The leases may also show that the corporation is leasing luxury
automobiles or non—essential assets. In such circumstances, the
leases could be cancelled, freeing up additional cash which could
be used to pay the penalty.
5. Please identify all financial institutions which Colfax, Inc.
and the Colfax Corporate Group have done business with over the
past 5 years, and sign the attached disclosure authorization form
for each institution.
The disclosure authorization form allows the financial institutions
to release information concerning liabilities, credit, and
additional loans. The authorization form will allow EPA to:
a) verify the accuracy of liabilities to financial
institutions included on the tax return. The tax return
may reflect greater liabilities than actually exist. If
the actual liabilities are less than the amount reported
on the tax return, it would indicate that the corporation
is in a better financial position to pay the penalty amount;
8
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b) verify the amount of loans outstanding against corporate
assets and determine if additional funds could be
borrowed against these assets; and
C) review financial statements provided to the bank which
may disclose additional assets not listed on the
depreciation schedule. These assets may be sold or
leveraged to pay the penalty.
6. If any assets have been sold by Colfax, Inc. or the Colfax
Corporate Group within the past 5 years, provide copies of the
sales agreement, bill of sale, deeds transferred and any
information pertaining to such sale.
The documents requested in paragraph 6 will describe the assets
sold, the date the asset was sold, the sales price, the parties to
the transaction, the date of transfer and the terms of the sale.
This information, in conjunction with the 1099-S’s issued and the
loan information requested is necessary to analyze asset transfers
which have taken place. In addition, this information will provide
the following information:
a) If an asset was transferred to a related party at a sale
price which was below fair market value, a receivable
would be due to the corporation for the difference
between the sale price and fair market value. This
receivable would provide the corporation with additional
9
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income to pay its penalty obligation;
b) If the corporation financed the sale of one of its assets
and is holding the note on the asset, the payments the
corporation is receiving pertaining to this note would be
a source of cash available for payment of penalties.
7. If any assets have been bought by Colfax, Inc. or the Colfax
Corporate Group within the past 5 years, provide copies of the
sales agreement, bill of sale, deeds transferred and any other
information pertaining to such purchase.
The analysis of these documents in conjunction with loan
information requested will provide:
a) verification of the accuracy of the cost of assets
reported on the balance sheet and depreciation schedule.
If an asset’s purchase price is higher than the amount
reported on the balance sheet and depreciation schedule,
it is an indication that the corporation is in better
financial condition than appears because the value of the
corporation’s assets would be higher than reported;
b) information as to whether the assets were purchased with
cash, in which case the corporation may be able to obtain
a new loan against the asset. The proceeds from this new
loan could be used to meet the corporation’s penalty
obligation;
c) information as to whether the assets purchased are
10
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essential to the business. If the assets are not
essential to the business, they can be sold. The cash
generated from the sale could be used pay the penalty.
8. Provide copies of all bank statements for the past three years
for all bank accounts of Colfax, Inc. and the Colfax Corporate
Group.
Bank statements detail all banking activity during a particular
month for each of the different types of accounts an entity
maintains including, but not limited to, deposits, withdrawals,
checks written and balances. An analysis of the bank records may:
a) uncover unreported income. Unreported income is
additional income available to the corporation to pay the
penalty;
b) disclose an installment sale which was reported in a
previous year for which payments are being received
currently. These payments provide an influx of cash to
the corporation which would be available to pay the
penalty;
C) disclose large or unusual withdrawals or checks which
•1
would indicate further analysis is needed. This analysis
may lead to the discovery of luxury or unnecessary
purchases. Such purchases could be sold or withdrawals
reclassified, making additional funds available to the
corporation.
11
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The provision of documentation on all bank accounts allows review
of any money market accounts, certificates of deposits or other
investment accounts which Colfax may possess. These types of
accounts are liquid and represent a source of available funds to
pay a penalty.
9. For all outstanding loans to Colfax, Inc. or the Colfax
Corporate Group, provide copies of loan applications, loan
documents, notes, etc.
This information:
a) may disclose unrecorded assets. Such assets could be
used to secure new loans or could be sold to generate
additional income;
b) may identify a loan to Colfax from a related party which
is not an arm’s length transaction. If the interest rate
on the loan is excessive, the difference between the
stated interest rate and the current market rate can be
reclassified to the corporation as income, thereby
providing additional income to pay the penalty.
10. For any loans from a shareholder of Colfax, Inc. or the Colfax
Corporate Group, provide copies of the cancelled check written to
the corporation and loan documents.
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This information:
a) will allow verification that a reported loan was actually
made. If the payment to Colfax was not made, the
corporation would not owe the amount of the loan.
Therefore, the corporate liabilities would be reduced,
allowing for additional funds to meet the penalty
obligation;
b) may show that the money infused into the corporation was
not a loan but rather a contribution of capital. This
situation would reduce the liabilities of the corporation
and provide the corporation with additional capital to
pay the penalty.
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.fl. ._.. __•
L rfr-I urr L U - b. LUUNLIL
004
UNiTED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the Matter of
)
)
Colfax, Inc.,
)
38 Colfax Street
)
Pawtucket, I 02860
)
Respondent
)
Docket No. EPCRA 1.93-1076
OBJECTION TO MOTION FOR
RECONSIDERATION
RESPONDENTS OBJECTION TO COMPLAINANTS MOTION FOR
RECONSIDERATION OF RULING ON REQUEST FOR
PRODUCTION OF DOCUMENTS
Respondent, COlfax, Inc., hereby objects to Complainant’s December 30,1994 Motion
for Reconsideration of Ruling on Request for Production of Documents. The object of
Complainant’s Motion is to secure access to financial Information allegedly relevant to
Respondent’s ability to pay the penalties assessed.
On December 20, 1994, this Agency determined that the Complainant’s request was
“unnecessarily broad”. Accordingly, the Agency ordered compliance with Paragraphs 1 and
11 of Complainant’s request. The order also provided:
If review of these documents indicates the need for additional financial
Information, Complainants may file for such Information.
Notwithstanding that no such review has occurred, Complainant now contends that
production of additional documents is needed to permit adequate review of Respondent’s
ability to pay. In support of this contention, Complainant has attached to its Motion an EPA
form explaining what each document is, and bow, If produced, each document might lead to
the production of relevant evidence in some cases-
Complainant offers not a shred of evidence that any of the documents requested are
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g1r20/95 9:23 US EPA OFFICE OF REG. COUNCIL ø 5
likely to lead to the cliscoveiy of relevant evidence In this case.
Each of the documents requested would be relevant if this were a case in which
Respondent was civilly charged with financial chicanery such as under-reporting of assets,
insider trading or income tax underpayinents. In those cases, the prosecuting authority would
base a production request on at least some evidence that the facts to be uncovered by
document exandnation actually exist.
In this case, the Complainant has adduced no evidence that the facts it hopes to
uncover exist. Complainant is engaged hi a “fishing expedition” in a vain expectation that it
will obtain evidence sufficient to meet its burden of proof on the ultimate issue:
reasonableness of the penalty imposed in this case.
Should the Complainant, upon review of the documents to be produced by Januazy
10, 1995, be able to demonstrate to this Agency that additional document production is
required to adequately prepare its case, Respondent will have no objection to producing such
documents as may be ordered by the Agency. In the meantime, Respondent objects to
reconsideration of this matter at this time.
Respectfully submitted,
COU?AX, INC.
By its attorneys,
Temkin & Stone Ltd.
STEFHE! H. BIJRXE, ESQUIRE
2S00 Hospital Trust Tower
Providence, RI 02903
(401) 751-2400 (o)
(401) 751.7180 (f)
DATED: Januaiy 4,1995
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u , rH urri .. ur I< b. LUUNILIL
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the matter of )
)
Colfax, Inc. ) Docket No. E? BA 1-93-1076
)
Respondent )
ORDER
Complainant’s motion for reconsideration of my ruling on
request for production of documents is denied. Complainant’s motion
for continuance of the hearing is also denied. Coinpiathant’s
motions are based simply on conjecture that the information ordered
to be produced will not be sufficient and cannot be analyzed in
time for the hearing. Once the documents are produced, Complainant
may renew its motion for a continuance upon a proper shoving that
more time is needed to obtain additional documents or to analyze
the material produced.
Lii
Gerald Harwoo
Senior Administrative Law Judge
Dated: , 1995
:1.
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5A )(V1.
‘- —• .
J I aI Z
JRN1 :
4 aa .JV/t27o’75
(20, / 6.r 2 72
January 6, 1995
Administrative Law Judge Jon G. Lotis
U.S. Environmental Protection Agency
Mail Code 1900
401. M Street, S.W.
Washington, D.C. 20460
Re: Docket #11 EPCR,A - 93 -0112
Dear Judge Lotis;
X represent SAR Industrial Finishing and have cornp1i ta
Your Honor’s Order setting pre-hearing procedures. I note .i
Honor’s Order that the agency policy encourages settlement ar
you directed that the counsel for complainant file on or ..•
September 30, 1994 a statement with respect to the stat .- c f
settlement negotiations. I am not aware that that filing ha L en
place. I have attempted diligently to settle this Case ar. i ve
_ 1& . th voluminous requests for discovery and just ye
received an additional request, copy of which is attached
December 23, 1994, which I strenuously object to on behal- ‘1 ‘
client. Negotiations have been on going for A per
approximately six to nine months and the parties are a few t
dollars a part. I- think in the interest of justice Your
should be apprised of this” situation and I would ask the C.. •
assistance in settling this matter down for a settlement COfl ’;
with Your Honor at Your Honor’s convenience. I respec.:. . ly
request that this conference take place somewhere in New Jerse7 - as
that is the site of the violations.
Respectfully yours,
// _4 ,
PATRICK P. RAZW ZZO
PPR/ld
Enclosures
cc: Mr. & Mrs. Mauro
Richard 3. Weisberg, Esq.
Ms. Karen Maples
— S
@/ Od 6S P P9 I DèJO N0193è1 d3 91
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U. £“
r UNITED STATES ENVIRONMENTAL PROTRCTION AGE g.
4 i / REGIONI I . . -,
44 PROS JACOB K. JAVITS FEDERAL BUILDING REGJon,
NEW YORK . NEW YORK 10278-0012
January 17, 1995
Mon. Jon G. Lotis
Administrative Law Judge
Office of Administrative Law Judges
U.S. Environmental Protection Agency
Mail Code 1900
401 M Street, S.W.
Washington, D.C. 20460
Re: sat Industrial Finishing , Dkt. No. II EPCRA-93-Ot ’’
Dear Judge Lotis:
I have recently received a copy of the letter to you,
January 6, 1995, from Mr. Randazzo, the Attorney for the
Respondent, BAR Industrial Finishing (“SAW’). I am writing
correct a misstatement in this letter, and to apprise you
complainant’s intention to-move for discovery in this matt :
First, however, I note in passing that Complainant (“EPA”) h.
made a very serious and generous effort to settle I this mattc:.
but has been unable to do so. I note also that the statement v. th
respect to the status of settlement negotiations required tc
submitted by EPA by your order setting prehearing procedur i s
timely filed and served on September 30, 1994. A copy of tn± i
statement bearing the Regional Hearing Clerk’s date st mp, t
with the certificate of service, is enclosed,
The portion of Mr. Randazzo’s letter to which 1 wish
respond is his statement that “I have ... complied with
voluminous requests for discovery”. This is simply not the
This point is likely to be dealt with in more detail in EPA
forthcoming motion. For the moment it suffices to note as
follows.
In this proceeding SAR has raised a claim of inability tc
pay (the “Inability Claim”). To support the Inability Clai n ,
submitted its 1987 — 1991 tax returns to EPA’s Environment”
Services Division in 1993, before this matter was referred
EPA’s Office of Regional Counsel, and before either I, or .
Randazzo had entered our appearances. Subsequently, in Marn
1994, I requested that SAR update this disclosure by provi
its 1992 tax return, and its 1993 return when available.
Thereafter, in July 1994, EPA sought to commence its finan .
analysis of the Inability Claim prior to the prehearing exch;tnc.3 ,
FRIhITED ON RECVCLED PAPER
LO/E2d 6S2P P9 I DtJO NOlCBeI d3 Sn
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to minimize future delay. To this end EPA requested SAR tc
produce its cumulative depreciation schedule, any fiqanci.
documents on which it intended to rely, and a syhopsis of ,y
facts and arguments underlying the Inability Claim. The l t
document was necessary because the pro se answer filed he’
stated the Inability Claim in a totally conolusory manner ‘
EPA had no idea as to the nature or substance of the Inab ,
Claim, and could not commence its analysis without some m’r.
factual delineation.
In short, SAR ultimately produced its 1992 tax returi
late July 1994, approximately four months after the initi-
request, and only after several further requests. SAR pro
none of the other documents requested.
EPA considers its above request for documents to hav3 1:- .
quite modest. Contrary to Mr. Randazzo’ s statement, SAR re u - i
to comply with much of this request. Moreover, SAR’s refu ?S -:.
provide EPA prior to the prehearing exchange with even a h-
statement of the facts underlying the Inability Claim ref :‘.. - ‘ (
uniquely uncooperative and obstructionist attitude.
As noted in Mr. Randazzo’s letter, EPA has served SAJ
request for documents and interrogatories, dated December IL
1994, and returnable on January 18, 1995 (the “Demand”). E1
right to the disclosure sought in the Demand in connectior
the Inability Claim is unassailable in light of the Envircr
Appeals Board’s decision in the matter of New Waterbury l d .
provided that this discovery complies with the requirements
§22.19(f) of the Consolidated Rules. Thus, in New Waterbury
Board expanded EPA’s burden of proof in cases where ability Th
pay is at issue, and as a coronary directed that “the R SgID
must be given access to respondent’s financial records befor:’ ha
start of (thej hearing.” In re: New WaterburyLtd. , TSCA 1
No. 93—2 (Final Decision of the EAB), 10/20/94 at 8.
In his letter, Mr. Randazzo objects strenuously to tF
Demand on behalf of SAR, without offering any reason. EPA
construes this as a refusal to comply with any portion of
Demand. Accordingly, EPA will now file and serve a motion
pursuant to §22.19(f) for an order compelling the discovery
sought in the Demand.
Very truly yours,
JZ J2 Wj4L .
Richard J. isberg
Assistant Regional Counsel
LO’VWd 6S2P P9E ?T I D?JO E N0193è1 tJdB Sn
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:‘
UNITED STATES ENVIRONMENTAL PROTECTION GENC j
‘ -:), REGIONI I
JACOB I C. JAVtTS FEDEItAL. BUILDING - L L. .‘ .
NEW YORK NEW YORK 10276-0012
September 30, 1994
Hon. Jon G. Lotis
Administrative Law Judge
Office of Administrative Law Judges
US. Environmental Protection Agency
Mail Code 1900
401 M Street, S.W.
Washington, D.C. 20460
Re: Sar Industxial.Yinishina , Dkt. No. II EPCRA—93-0112
Dear Judge Lotis:
Pursuant to your Order of January 5, 1994, please be ad .
that we have been unable to settle the referenced proceeding.
Accordingly, Ce tplainant is in the process of preparing for ‘.
prehearing exchange, scheduled for November.
Your Li
Richard J. We sberg
Assistant Regional Counsel
2/SOd 6S P P9 I J O NOUJ èI tid3 Sn
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CERTIFICATE OF SERVICE
I hereby certify that the annexed letter/status report
Hon. Jon G. Lotis, dated September 30, 1994, was sent this d. •’
the following manner to the addressees listed below..
Ori inai. bv hand to :
Ms. Karen Maples
Regional Hearing Clerk
USEPA-Ragion II
26 Federal Plaza—Room 437
New York, New York 10278
Co ie by reaular mail to :
Hon. Jon C. Lotis
Administrative Law Judge
Office of Administrative Law Judges
U.S.. Environmental Protection Agency
Mail Code 1900
401 14 Street, S.W.
Washington, D.C. 20460
Patrick P. Randazzo, Esq.
372 Kinderinack Road
Westwood, NJ. 07675
Dated: September 30, 1994 - l ) k.c
Richard 7. Wei erg
Assistant Regional Counsel
.O/9 d 6S P P9 1 DèJO N0193è1 t3d3 Sn t
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ERPIFICATE - OF SERVICE
I hereby certify that the annexed letter, dated Januar”
1995, was sent this day in the following manner to th adc3r ’:’ : es
listed below.
Oriaina.l by hand to :
Ms. Karen Naples
Regional Hearing Clerk
USEPA-Region II
26 Federal Plaza—Room 437
New York, New York 10278
Copy by couch mail to :
Hon. Jon G. Lotis
Administrative Law Judge
Office of Administrative Law Judges
U.S. Environmental Protection Agency
Mail Code 1900
401 N Street, S.W.
Washington, D.C. 20460
CoDy by regular mail to :
Patrick P. Randazzo, Esg.
372 Kinderkamack Road
Westwood, N.J. 07675
Dated: January 17, 1995 —
Richard WeisbergQ
Assistant Regional Counsel
6S2P P9 T D JO NOIOJèJ bd Sn
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U.S
) i? ?oTtCTIC
LI
UNITED STATES ENVIRONMENTAL PROTECTIOk NCY IO 26
REGION II “ L ‘iE’
CLç p.. “iRi/ ’
JACOB K. j*vrrs DERAI. BUII.DING
NEW YORK. NEW YORK 10278-0012
December 23, 1994
Patrick P. Randazzo, Esq.
372 Kinderkamack Road
Westwood, N.J. 07675
Re: Sar Industrial Finishina (“SAR”)
Dkt. No. II EPCRA—93—0112
Dear Mr. Randazzo:
As indicated in our reply prehearing exchange concerning
SAR’s claim of inability to pay (the Inability Claim”), Ms.
Kimberly A. Zanier, EPA’s financial expert, will require, in
addition to SAR’s tax returns previously produced, further
documents and information to perform the requisite analysis of
SAR’s finances. The financial documents and the information
initially required by Ms. Zanier are set forth in Appendix A to
this letter. EPA also requests that SAR produce additional
information concerning the individual referred to in SAR’s
prehearing exchange, who allegedly was responsible for “all
filings with regard to environmental compliance”. The information
sought concerning this individual is set forth in Appendix B. It
is requested that SAR produce the documents and the information
sought in Appendices A and B, on or before January 18, 1995.
Please be advised that after her review of SAR’s response, Ms.
Zanier may require further financial records and information to
complete her analysis of the Inability Claim.
All responses to information sought in Appendices A and B
should be signed by an officer of the corporation.
As stated in our reply prehearing exchange, if .SAR is
unwilling to provide the requested documents and information
voluntarily, in whole or in part, EPA will be constrained to move
the Administrative Law Judge for discovery pursuant to S22.l9(f)
of the Consolidated Rules.
1
V .J uy
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Thank you for your cooperation in this matter.
Very truly yours,
/3/
Richard J. Weisberg
Assistant Regional Counsel
cc:
Ms. Kimberly A. Zanier, CPA
U.S. Environmental Protection Agency
National Enforcement Investigation Center
Denver Federal Center (Bldg. 53)
Box 25227
Denver, Colorado 80225
6- /
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APPENDIX A
1. GENERAL FINANCIAL RECORDS — Please provide copies of the
following documents:
a. SAR’s year end trial balances for the fiscal years ending
June 30, 1993 and June 30, 1994;
b. SAR’s chart of accounts for the fiscal years ending June
30, 1993 and June 30, 1994;
c. SAR’s general ledger for the month ending June 30, 1993;
d. SAR’s general Ledger for the time period January 1, 1994
through June 30, 1994;
e. SAR’s tax return for the fiscal year ending June 30,
1994, or, if this return has not yet been filed, a copy of the
preliminary draft.
f. SAR’s most current financial statements.
2. OTHER INVESTMENTS
a. With reference to the “Other investments” in the amount
of $103,259, listed in column D of the Balance Sheet at page 4 of
SAR’s tax return for the fiscal year ending June 30, 1993, please
list and identify each investment separately, including a
description of the asset/investment, the estimated fair market
value of the asset/investment, the purchase price, the purchase
date, and the name and address of the broker who initiated the
purchase.
b. With reference to the other investments referred to in
paragraph 2.a. above, please provide copies of the following
documents:
(1) all brokerage statements from June 1, 1992 through the
present; and
(2) all IRS Forms 1099 reflecting dividend income received
by SAR since January 1, 1993.
c. If there are any brokerage firms and/or individuals which
SAR has dealt with since June 1, 1992, which have not provided
statements, please identify all such firms and/or individuals by
name and address.
3. ASSETS
a. Please provide an all inclusive copy of SAR’s cumulative
depreciation schedule since the date of SAR’s incorporation.
(Please note that SAR’s partial depreciation schedule filed with
SAR’s tax return for the fiscal year ending June 30, 1993, does
1- — —
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not reconcile to SAR’s total assets in the amount of $669,372,
included on the balance sheet of said return).
b. Please provide copies of the following documents:
(1) all purchase contracts, invoices or other purchase
documentation for all assets purchased by SAR from July 1, 1992
through the present which cost $10,000 or more, along with a
description of each such asset, if it is not fully and legibly
described in the purchase documentation; and
(2) copies of the loan documents for all assets purchased
by SAR since July 1, 1992, for which SAR borrowed funds to make
the purchase; and
(3) copies of all sales agreements and or bills of sale
for all assets sold by SAR from July 1, 1992, through the
present, excluding assets whose sale price was less than $10,000,
and excluding the sale of goods and services. In the event a
written agreement is not in existence, provide an explanation
specifying the details of the transaction.
4. LIABILITIES — SAR’s tax return for the fiscal year ending June
30, 1993, indicates outstanding loans as follows: Mortgages,
notes, bonds payable in less than 1 year - $4,324; and Mortgages,
notes, bonds payable in 1 year or more — $1,260. If any new loans
have been initiated or are now outstanding which are not
reflected in the balance sheet of SAR’s tax return for the fiscal
year ending June 30, 1993, please provide copies of the following
documents, and the following information:
a. all loan documents, settlement sheets, closing
statements, and other documents pertaining to each loan; and
b. an explanation as to why the loan was necessary and what
the proceeds were used for.
5. INTEREST INCOME - Please provide copies of all IRS Forms 1099
reflecting any interest income earned by SAR in 1993 and 1994.
6. LEASES — Please provide a copy of any lease agreement pursuant
to which SAR rents property from the officers of SAR, including
the original lease and any amendments thereto.
- (-.
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APPENDIX B
With reference to the individual alleged by SAR in its
prehearing exchange to be “responsible for all filings with
regard to environmental compliance” (the “Employee”), please
provide the following information:
1. the Employee’s name, and last known address and telephone
number;
2. the dates of the Employee’s employment;
3. the time period during which the Employee was responsible
for SAR’s filings with regard to environmental compliance;
4. the Employee’s education prior to his designation as the
individual responsible for all filings with regard to
environmental compliance;
5. the Employee’s work experience, prior to his designation
as the individual responsible for all filings with regard to
environmental compliance; and
6. the Employee’s qualifications, including, but not limited
to, his education and work experience, which led SAR to designate
this individual as the person responsible for all filings with
regard to environmental compliance.
/
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01/24/95 10:45 ‘ 415 744 1041 EPA REG 9 (ORC) 1Th002
UNITED STATES ENViRONMENTAL PROTECTtON AGENCY \ )
REGION TX
75 Hawthorne Strect
San Francisco, CA 94105
In The Matter of: )
)
Kenneth H. Hunter, Jr. ) SUBPOENA DUCES TECUM AND
Casmalia Resources, ) SUBPOENA AD TESTIFICANDUM
Hunter Resources, Inc. )
TO: Kenneth H. Hunter, Yr., Respondent:
Pursuant to the authority of Section 122(e) (3) (B) of the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. § 9601 at seq. , as amended by the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No.
99-499, 100 Stat. 1613 (1986). ( CERCLA”), the United States
Environmental Protection Agency (“EPA”) is issuing this subpoena
for the purpose of determining your ability to pay and to
otherwise implement Section 122 of CERCLA. Information collected
wi3.3. include, but not be limited to, your complete personal arid
business portfolio, financial condition, viability, and
liquidity, both as an individual and based on your standing as a
partner, corporate officer, or interest-holder in any of
partnership, orporation, or other entity in which you have
financial or other interests.
YOU ARE HEREBY COMMANDED TO APPEAR IN PERSON at the following
place and time:
TIME AND DATE: October 28, 1994 10:00 a.m.
PLACE: ‘75 Hawthorne Street, 16th Floor
San Francisco, CA. 94105
At the above time and place, the EPA will take the statement of
Kenneth H. Hunter, Jr., on the matters described above upon oral
examination before a court reporter or other officer authorized
by law to take sworn statements.
YOU ARE FURTHER COMMANDED THEN- AND THERE UNDER OATH, TO GIVE ORAL
AND TRUTHFUL RESPONSES to all lawful inquiries and questions put
to you on behalf of the EPA, and TO REMAIN IN ATTENDANCE until
expressly excused by the attorney conducting the proceeding for
the EPA.
YOU ARE COMMANDED FURTHER TO BRING WITH YOU, at the time and
place stated above, and then and there to produce for inspection
and/or copying, all documents and/or records in your possession
not previously provided which relate to the matters described
above and/or to the information requested in EPA’S letter dated
September 21, 1994, attached hereto as Appendix “A”.
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01/24/95 10:46 V415 744 1041 EPA REG 9 (ORC) 1Th003
You are entitled to claim confidentiality over information
provided to EPA, in accordance with 40 C.F.R., Part 2.
FAILURE TO COMPLY WITH THE SUBPOENA MAY SUBJECT YOU TO A CIVIL
ENFORCEMENT ACTION.
Issued at San Francisco, CA., this J Lday of October, 1994.
Kei. h A. Takata
Deputy Director for Superfund
Hazardous Waste Management Division
U.S. EPA Region IX
Msy questions concerning this subpoena should be directed to:
David A. Rabbino
A.ssistant Regional Counsel
75 Hawthorne Street, RC-3-2.
San Francisco, CA. . 94105
(415) 744-1336
2
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01/24/95 10:46 e415 744 1041 EPA REC 9 (ORC) I J004
CERTIFICATE OF SERVICE
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
I hereby certify that being a person over 18 yeprs of age, I
served a copy of thq attached subpoena to the person named on the
subpoena on the /S’ ’day of £ .4L ,- , 1994, by mailing a copy
of thereof by certified mail, postage prepaid, return receipt
requested, at the address shown thereon.
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•t: s- 4 .
?‘ s’
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
_____ WASHINGTON. 0 C 20460
( pq 0 itC
MAY 10 1993
OFFICE OF
PREVENTION PESTIc:DES
CERTIFIED MAIL TOXICSUBSTANCES
RETURN RECEIPT REQUESTED
Industrial Bank of Japan Trust Company
Corporate Trust Department
ATTN: Mr. Koji Muranaka
Eleventh Floor
One State Street
New York, New York 10004
RE: Subpoena Pursuant to Section 11(c) of the
Toxic Substances Control Act
Dear Mr. Muranaka:
The Environmental Protection Agency is conducting an
enforcement action involving the manufacturing, processing, and
distribution in commerce of certain chemicals by the
Accompanying this letter is a subpoena issued under
the—authori ’ of Section 11(c) of the Toxic Substances Control Act
(hereinafter “TSCA”), 15 U.S.C. Section 2610(c). You are hereby
required to provide the information specified below to the United
States Environmental Protection Agency (hereinafter “EPA”) within
twenty (20) calendar days from your receipt of this subpoena unless
EPA extends the date for compliance with this subpoena for good
cause shown. Any such request for an extension must be made in
writing and forwarded to the EPA representative below:
Tony Ellis
U.S. Environmental Protection Agency
Office of Compliance Monitoring
Compliance Division
Mail Code EN-342
401 M Street, S.W.
Washington, D.C. 20460
(202) 260—1119
In carrying out its obligation under TSCA, EPA is authorized
to obtain by subpoena information related to your compliance with
the requirements of TSCA. This may include requiring the
attendance and testimony of witnesses, the production of reports,
papers, documents, answers to questions, and other information EPA
deems necessary.
—— — I_ — .fl - — - I. I 2
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The issuance of this subpoena does not preclude the issuance
of further subpoenas relating to this matter to you or to any other
parties.
In responding to this subpoena, you should base your answers
on information in your possession or reasonably available to you.
Where information necessary for a complete response is neither in
your possession nor reasonably available to you, indicate this fact
in your response and, if possible, identify any source that either
possesses or is likely to possess such information.
Your responses are required to be signed and must be attested
to under oath. Your response shall be made to the EPA
representative, Mr. Ellis, unless it contains confidential business
information.
Pursuant to the regulations appearing at 40 C.F.R. Part 2,
Subpart B, you are entitled to assert a business confidentiality
claim covering any part of the submitted information. Unless such
a confidentiality claim is asserted at the time the required
information is submitted, EPA may make this information available
to the public without further notice to you. Information subject
to a business confidentiality claim may be made available to the
public only to the extent set forth in the above—cited regulations.
Any such claim for confidentiality must conform to the requirements
set forth in 40 C.F.R. Section 2.203(b).
____ If any portion of your response to this subpoena contains
i forination which you claim as TSCA business con
should submit that portion of the response in accor ance wi.t1 Tthe
following procedures. The material itself should be marked to
indicate that it is cla med confidential. It should be placed in
an envelope addressed to the EPA representative identified at the
end of this section. The envelope should be marked “Confidential
Business Information - To Be Opened By Addressee Only.” The
envelope should then be placed in a second, “outer” envelope
addressed to:
Teresa Little
Document Control Officer
U.S. Environmental Protection Agency
Office of Compliance Monitoring (EN 342)
401 M Street, S.W.
Washington, D.C. 20460
The package containing the confidential business information
portion of your response should then be mailed, by registered mail,
to Me. Little, in care of Mr. Ellis.
If you have any questions concerning this subpoena, please
2
13
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contact Tony Ellis at the above number concerning technical
matters, and Robert Fentress at (202) 260-9501 concerning legal
matters.
Sincerely yours,
rJ ____ - - I .
k” Michat
Complie.nce Division
Office of Compliance Monitoring
Enclosure
3
1
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
)
In the Matter of )
)
DOCKET NO. TSCA-90-H-23
)
SUBPOENA DUCES TECUM AND
SUBPOENA AD TESTIFICANDUM
Respondent.
TO: Industrial Bank of Japan Trust Company
Corporate Trust Department
ATIN: Mr. Koji Muranaka
Eleventh Floor
One State Street
New York, New York 10004
YOU ARE HEREBY COMMANDED, pursuant to Title 15, United States Code,
Section 2610(c) (Toxic Substances Control Act Section 11(c)), TO
PRODUCE FOR INSPECTION AND/OR COPYING those reports, papers,
documents, answers to, and all other information requested in the
ATTACHED SPECIFICATIONS, at the following date, time and place:
DATE AND TIME: Tuesday, June 1, L993
PLACE: U.S. Environmental Protection Agency
Office of Compliance Monitoring
Compliance Division (EN—342)
401 N Street, S.W.
Washington, D.C. 20460
ALTERNATIVELY, you may submit to the United States Environmental
Protection Agency true, complete, and accurate copies of those
reports, papers, documents, answers to, and other information
requested in the ATTACHED SPECIFICATIONS, by the above date. All
such copies must be certified, under penalty of perjury, by an
authorized corporate official of Industrial Bank of Japan Trust
Company to be true, complete, and accurate, and forwarded by
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registered mail to the person identified below:
Tony Ellis
U.S. Environmental Protection Agency
Office of Compliance Monitoring
Compliance Division
Mail Code EN-342
401 H Street, S.W.
Washington, D.C. 20460
(202) 260—1l1
YOU ARE COMMANDED FURThER TO APPEAR PHYSICALLY IN PERSON at- -the
following date, time and place:
DATE AND TIME: Tuesday, June 15, 1993
PLACE: U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Room NE 113
YOU ARE COMMANDED FURTHER TO TESTIFY then and there upon oath and
MAKE TRUTHFUL RESPONSE to all lawful inquiries and questions then
and there put to you on behalf of the United States Environmental
Protection Agency, and TO REMAIN IN ATTENDANCE until expressly
excused by the EPA attorney conducting the proceeding.
FAILURE TO COMPLY WITH THIS SUBPOENA MAY RESULT IN A COURT ACTION
AGAINST YOU.
Issued at Washington, D.C. this i ” day of May, 1993.
Attorney Contact: Robert as
To ion
ninental Protection Agency
LE-134P
401 M Street, S.W.
Washington, D.C. 20460
(202) 260—9501
Micha . Wood, D ector
Compliance Division
Office of Compliance Monitoring
2
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I NBTRUCT I ONS
1. Each document submitted shall be clearly and precisely
identified by its title, author, date of preparation, subject
matter, th. numbered question to which it responds, and any and all
persons having any knowledge relating to the documents sought by
this subpoena.
2. For each response to this subpoena which includes documents,
compile an index of the documents produced. The index should state
the paragraph number of the information and document request and
list all documents submitted in response to that paragraph.
3. If the information sought by this subpoena is not contained in
a document, separately identify the person(s) who provided the
information in your response, the basis for each person’s
knowledge, the position occupied by the person providing the
response, and the person’s address and supervisor.
4. If any document was, but is no longer, in the possession,
custody, or control of the Industrial Bank of Japan Trust Company,
provide the following information:
(a) state the disposition of the document;
(b) state the date such disposition was made;
(c) identify the present custodian of the document and his
address or, if the document no longer exists, so state;
(d) identify the person who made the decision regarding the
disposition of the document;
(e) state the reason for the disposition; and
(f) describe the document and the contents of the document,
including the title, date, author, addresses, locations,
and number of copies made and their locations.
or icers, directors,
agents or employees of i.i . or including
contractors, consultants, employees or any Such peri n, and any
merged, consolidated, or acquired predecessor or parent,
subsidiary, division, related person(s) or affiliates thereof.
“Chemical Substance” has the meaning as defined at 40 C.F.R.
S 720.3(e).
“Company” means the cor ’poration_ ider that name or any
assumed name.
“Document” or “Record” means the original or true copy, or
substantial copy of all written, typewritten, handwritten, printed,
or graphic matter of any kind or nature, however produced or
3
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reproduced (including any copies containing additional matter, any
form of col.lected data for use with electronic data Processing
equipment, and any mechanical or electronic visual or Sound
recording including, without limitation, all tapes and discs), now
or formerly in your possession, custody, or control. It includes,
but is not limited to, any logs of materials or containers shipped,
other logs, invoices, purchase orders, checks, receipts, bills of
lading, weight receipts, toll receipts, loading tickets, receiving
tickets, shipping orders, manifests, inventories, licenses,
permits, reports to government agencies, ledgers, memoranda,
handwritten or other notes, calendar or diary of entries, graphs,
..charts, maps, photographs, surveys, data, sampling results,
computer printouts, magnetic tapes, discs, microfilm, and
microfiche.
“Identify” and “identity” means:
(1) as to a document: the type of document (Letter,
memorandum, etc.), the identity of the author or originator, the
date authorized or originated, the identity of each person to whom
the original or copy was addressed or delivered, the identity of
each person known or reasonably believed by you to have present
possession, custody, or control thereof, and a brief description of
the subject matter thereof.
(2) as to a person: the name or last known business and
residence address(es), occupation, job title, and dates so employed
and, if not an individual, state the full name, the type of entity,
the address of its principal place of business, and the name, title
and address of its chief officer.
The word “Include” or 1 -f 1 T sell be construed without
limitation.
“) cture” ha. the meaning a. defined at 40 C.F.R.
S 720.3(q).
“Ma port for commercial purposes” has the
meaning a n a 0 C.F.R. S 720.3(r).
“Manufacturer” ha. the meaning as defined at 40 C.F.R.
S 720.3(t).
“Or” M11 be construed wither conjunctively or disjunctively
to bring vithin the scope of this subpoena any information which
might otherwise be construed to be outside the scope of these
requests.
“Person” and “Persons” mean all natural persons and all
entities including, but not limited to, corporations, associations,
companies, partnership., banks, joint ventures, firms, agencies,
authorities, and commissions.
4
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“Possession” or “Control” has its ordinary meaning in addition
to the meaning as defined at 40 C.F.R. S 720.3(y).
“Relate” or “Relating” includes, without limitation,
construing, defining, concerning, embodying, reflecting,
identifying, stating, referring to, dealing with, or in any way
pertaining to.
“You” and “Your” means the person or entity to whom these
information requests are directed or persons acting on his/its
behalf, including officers, directors, agents, attorneys, or
employees or any such person and any merged, consolidated, or
acquired predecessor or parent, subsidiary, division, or affiliate
thereof.
TIXI PERIOD OF RE8PONBEB:
The time period for which the requests set out below seek
information is all periods for which information is available.
Where not otherwise specified in the subpoena or its attachments
the time period is July 1, 1979, to date.
IIIPORXAT ION AND
•ii’i
You are hereby requested to supply information and documents
as indicated below.
1. Provide a copy of the Environmental Indemnification and Escrow
Agreement between and the Environmental Escrow
Agent.
2. Provide copies of all agreements executed betwee — and the
Industrial Bank of Japan Trust Company.
3. Provide copies of the monthly statements of account in regard
to the Escrow Agreement between and the
Environmental Escrow Agent.
4. Provide copies of any withdrawal transactions which may have
occurr4 since the Escrow Account was established and the
reasong for the allowance of such withdrawals to occur.
Provid a copy of the requisition form used by clients to
request withdrawals from escrow accounts.
5
5.
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Section 11(c) of TSCA, 15 U.S.C. Section 2610(c), provides
that in the event of contumacy, failure, or refusal of any person
to obey a subpoena issued under that section, any district court of
the United States in which venue is proper shall have jurisdiction
to order any such person to comply with such subpoena. Any failure
to obey such an order of the court is punishable by the court as a
contempt thereof.
If you have any questions concerning this action, please
contact Robert Ferttress at (202) 260-9501.
6
.,
3J1
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CERTIFICATION OF SERVICE
UNITED STATES ENVIRONNENTAL PROTECTION AGENCY
I HEREBY CERTIFY that a copy of the foregoing Subpoena Duces
Tecum and Subpoena Ad Testificandum has been delivered to the
appropriate mail facilities for the U.S. Environmental Protection
Agency to be sent certified mail, return receipt requested, to the
person and address listed below:
Industrial Bank of Japan Trust Company
Corporate Trust Department
ATTN: Mr. Koji Muranaka
Eleventh Floor
One State Street
New York, New York 10004
DatF/ / Fentress,Attorne!
U.S. Environmental Protection Agency
7
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iE
‘-I.
f UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
_____ WASHINGTON. D C 20460
MAY 101993
OFFiCE OF
PREVENTION. PESTIC:DES
CERTIFIED M.AIL TOXICSuBSTANCES
RETURN RECEIPT REQUESTED
Deloitte & Touche
ATTN: Mr. Irwin Siegel
100 Peachtree Street
Suite 1700
Atlanta, Georgia 30303
RE: Subpoena Pursuant to Section 11(c) of the
Toxic Substances Control Act
Dear Mr. Siegel:
The Environmental Protection Agency is conducting an
enforcement action involving the manufacturing, processing, and
distribution in commerce of certain chemicals by the
Accompanying this letter is a subpoena issued under
the authority of Section 11(c) of the Toxic Substances Control Act
(hereinafter “TSCA”), 15 U.S.C. Section 2610(c). You are hereby
required to provide the information specified below to the United
States Environmental Protection Agency (hereinafter “EPA”) within
twenty (20) calendar days from your receipt of this subpoena unless
EPA extends the date for compliance with this subpoena for good
cause shown. Any request for such extension must be made in
writing and forwarded to the EPA representative below:
Tony Ellis -
U.S. Environmental Protection Agency
Office of Compliance Monitoring
Compliance Division
Mail Code EN-342
401. M Street, S.W.
Washington, D.C. 20460
(202) 260—1119
In carrying out its obligation under TSCA, EPA is authorized
to obtain by subpoena information- related to your compliance with
the requirements of TSCA. This may include requiring the
attendance and testimony of witnesses, the production of reports,
papers, documents, answers to questions, and other information EPA
deems necessary.
( 2’ R.cvct.d/R.cvclabl.
-------
The issuance of this subpoena does not preclude the issuance
of further subpoenas relating to this matter to you or to any other
parties.
In responding to this subpoena, you should base your answers
on information in your possession or reasonably available to you.
Where information necessary for a complete response is neither in
your possession nor reasonably available to you, indicate this fact
in your response and, if possible, identify any source that either
possesses or is likely to possess such information.
Your responses are required to be signed and must be attested
to under oath. Your response shall be made to the EPA
representative, Mr. Ellis, unless it contains confidential business
thforination.
Pursuant to the regulati ns ap aring at 40 C.F.R. Part 2,
Subpart B, you are entitled to assert a business confidentiality
claim covering any patt of the submitted information. Unless such
a confidentiality claim is asserted at the time the required
information is submitted, EPA may make this information available
to the public without further notice to you. Information subject
to a business confidentiality claim may be made available to the
public only to the extent set forth in the above-cited regulations.
Any such claim for confidentiality must conform to the requirements
set forth in 40 C.F.R. Section 2.203(b).
If any portion of your response to this subn na r - -’
information which you claim as TSCA business con&.. )TOU
should submit that portion of the response in accordance with the
following procedures. The material itself should be marked to
indicate that it is claimed confidential. It should be placed in
an envelope addressed to the EPA representative identified at the
end of this section. The envelope should be marked “Confidential
Business Information - To Be Opened By Addressee Only.” The
envelope should then be placed in a second, “outer” envelope
addressed to:
Teresa Little
Document Control Officer
U.S. Environmental Protection Agency
Office of Compliance Monitoring (EN 342)
401 N Street, S.W.
Washington, D.C. 20460
The package containing the confidential business information
portion of your response should then be mailed, by registered mail,
to Ms. Little, in care of Mr. Ellis.
If you have any questions concerning this subpoena, please
2
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contact Tony Ellis at the, above number concerning technical
matters, and Robert Fentress at (202) 260-9501 concerning legal
matters.
Sincerely yours,
Enclosure
,vi
- - - - - - tor ing
3
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
BEPORE TEE ADMINISTRATOR
In the Matter of )
)
)
)
)
Respondent.
DOCKET NO. TSCA-90-H-23
SUBPOENA DUCES TECUM AND
SUBPOENA AD TESTIFICANDUM
TO:
Deloitte & Touche (r) )
ATTN: Mr. Irwin Siegel
100 Peachtree Street
Suite 1700
Atlanta, Georgia 30303
YOU ARE HEREBY COMMANDED, pursuant to Title 15, United States Code,
Section 2610(c) (Toxic Substances Control Act Section 11(c)) TO
PRODUCE FOR INSPECTION AND/OR COPYING those reports, papers,
documents, answers to, and all other information requested in the
ATTACHED SPECIFICATIONS, at the following date, time and place:
DATE AND TIME:
PLACE:
Tuesday, une , 1993
U.S. Environmental Protection Agency
Office of Compliance Monitoring
Compliance Division (EN—342)
401 N Street, S.W.
Washington, D.C. 20460
ALTERNATIVELY, you may submit to the United States Environmental
Protection Agency true, complete, and accurate copies of those
reports, papers, documents, answers to, and other information
requested in the ATTACHED SPECIFICATIONS, by the date specified
above. All such copies must be certified, under penalty of
perjury, by an authorized corporate official of Deloitte & Touche
to be true, complete, and accurate, and must be forwarded by
-------
registered mail, to the person identified below:
Tony Ellis
U.S. Environmental Protection Agency
Office of Compliance Monitoring
Compliance Division
Mail Code EN—342
401 M Street, S.W.
Washington, D.C. 20460
(202) 260—1119
YOU ARE COMMANDED FURTHER TO APPEAR PHYSICALLY IN PERSON at the
following date, time and place:
DATE AND TIME: Tuesday, June 15, 1993
PLACE: U.S. Environmental Protection Agency
401 M Street, S.W.
Washington, D.C. 20460
Room NE 113
YOU ARE COMMANDED FURTHER TO TESTIFY then and there upon oath and
MAKE TRUTHFUL RESPONSE to all lawful inquiries and questions then
and there put to you on behalf of the United States Environmental
Protection Agency, and TO REMAIN IN ATTENDANCE until expressly
excused by the EPA attorney conducting the proceeding.
FAILURE TO COMPLY WITH THIS SUBPOENA MAY RESULT IN A COURT ACTION
AGAINST YOU.
Issued at Washington, D.C. this ________ day of May, 1993.
Attorney Contact:
U.S.
LE- 13 4P
401 M Street, S.W.
Washington, D.C. 20460
(202) 260—9501
1 -
Michae F. Wood, Dir ctor
Compliance Division
Office of Compliance Monitoring
Robert
,nmental Protection Agency
2
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INSTRUCTIONS
1. Each document submitted shall be clearly and precisely
identified by its title, author, date of preparation, subject
matter, the numbered question to which it responds, and any and all
persons having any knowledge relating to the documents sought by
this subpoena.
2. For each response to this subpoena which includes documents,
compile an index of the documents produced. The index should state
the paragraph number of the information and document request and
list all documents submitted in response to that paragraph.
3. If the information sought by this subpoena is not contained in
a document, separately identify the person(s) who provided the
information in your response, the basis for each person’s
knowledge, the position occupied by the person providing the
response, and the person’s address and supervisor.
4. If any document was, but is no longer, in the possession,
custody, or control of Deloitte & Touche, provide the following
information:
(a) state the disposition of the document;
(b) state the date such disposition was made;
(C) identify the present custodian of the document and his
address or, if the document no longer exists, so state;
(d) identify the person who made the decision regarding the
disposition of the document;
(e) state the reason for the disposition; and
(f) describe the document and the contents of the document,
including the title, date, author, addresses, locations,
and number of copies made and their locations.
DEPINI N8
-ludes any officers, directors,
agents L orporation or - including
contractors, consultants, ._ - s or any such person, and any
merged, consolidated, or acquired predecessor or parent,
subsidiary, division, related person(s) or affiliates thereof..
“Chemical Substance” has the meaning as defined at 40 C.F.R.
S 720.3(e).
“Company” means the corporation under that name or any
assumed name.
“Document” or “Record” means the original or true c y, or
substantial copy of a].]. written, typewritten, handwritten, printed,
or graphic matter of any kind or nature, however produced or
3
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reproduced (including any copies containing additional matter, any
form of collected data for use with electronic data processing
equipment, and any mechanical or electronic visual or sound
recording including, without limitation, all tapes and discs), now
or formerly in your possession, custody, or control. It includes,
but is not limited to, any logs of materials or containers shipped,
other logs, invoices, purchase orders, checks, receipts, bills of
lading, weight receipts, toll receipts, loading tickets, receiving
tickets, shipping orders, manifests, inventories, licenses,
permits, reports to goverrunent agencies, ledgers, memoranda,
handwritten or other notes, calendar or diary of entries, graphs,
charts, maps, photographs, surveys, data, sampling results,
computer printouts, magnetic tapes, discs, microfilm, and
microfiche.
“Identify” and “identity” means:
(1) as to a document: the type of document (Letter,
memorandum, etc.), the identity of the author or originator, the
date authorized or originated, the identity of each person to whom
the original or copy was addressed or delivered, the identity of
each person known or reasonably believed by you to have present
possession, custody, or control thereof, and a brief description of
the subject matter thereof.
(2) as to a person: the name or last known business and
residence address(es), occupation, job title, and dates so employed
and, if not an individual, state the full name, the type of entity,
the address of its principal place of business, and the name, title
and address of its chief officer.
The word “Include” or “Including” shall be constru ithout
limitation.
“Manufacture” has the meaning
S 720.3(q).
- “Manufacture or import for commercial purposes” has the
meaning as defined at 40 C.F.R. S 720.3(r).
“Manufacturer” has the meaning as defined at 40 C.F.R.
S 720.3(t). _____________
“Or” ball be construed wither conjunctively or disjunctively
to bring within the scope of this subpoena any information which
mig t thervise be construed to be outside the scope of these
re s.
“Person” and “Persons” mean all natural persons and all
entities including, but not limited to, corporations, associations,
companies, partnerships, banks, joint ventures, firms, agencies,
authorities, and commissions.
4
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“Possession” or “Control” has its ordinary meaning in addition
to the meaning as defined at 40 C.F.R. S 720.3(y).
“Relate” or “Relating” includes, without limitation,
construing, defining, concerning, embodying, reflecting,
identifying, stating, referring to, dealing with, or in any way
pertaining to.
“Your” and “Your” means the person or entity to whom these
information requests are directed or persons acting on his/its
behalf, including officers, directors, agents, attorneys, or
employees or any such person and any merged, consolidated, or
acquired predecessor or parent, subsidiary, division, or affiliate
thereof.
TIME PERIOD OF RESPONSES:
The time period for which the requests set out below seek
information is all periods for which information is available.
Where not otherwise in the subpoena or its attachments
the time period i uly 1 , 1979 to date.
INPORXA AIID 8 REOUESTE4
You are hereby requested to supply information and documents
indicated below.
1. Provide a copy of your permanent files maintained in regard to
- ‘LLV c1A, T R . 1 •
:“ C.. h U & c pALa o-( ALt I/\’L&t .kdO C ’J- . 4 C . - 7 A
2. ! ov1de a copy of your permanent files maintained in regard to
— (± C. L.( C..) L.
/ 3. Provide copies of all workpaper files maintained in regard
. J; )
Provide copies of all workpaper files maintained in regard to
the financial statements prepared by Deloitte & Touche for
•, for 1986, 1987, 1988, 1989, 1990,
1991, and 1992. jç Siié,t 1 C ’ L 15 I /( (
Provide copies of all work a er files maintained in regard to
he tax returns pared by e tte & Touche for for
986, 1987, 1988, 1989, 1990, 1991, and 1992, including but
lot limited to all documents, contracts, excerpts, purchase
agreements, merger agreements, board minutes, promissory
notes, and sales agreements reviewed by Deloitte & Touche in
performing the necessary audit.
-------
6. Provide copies of all workpaper files maintained in regard to
the tax returns prepared by Deloitte & Touche
for 1986, 1987, 1988, 1989, 1990, 1991, ã i1d
c ’ f)i 1992, including but not limited to all documents, contracts,
excerpts, purchase agreements, merger agreements, board
minutes, promissory notes, and sales agreements reviewed by
Deloitte & Touche in performing the necessary audit.
Section 11(c) of TSCA, 15 U.S.C. Section 2610(c), provides
that in the event of contumacy, failure, or refusal of any person
to obey a subpoena issued under that section, any district court of
the United States in which venue is proper shall have jurisdiction
to order any such person to comply with such subpoena. Any failure
to obey such an order of the court is punishable by the court as a
contempt thereof.
If you have any questions concerning this action, please
contact Robert Fentress at (202) 260-9501.
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CERTIFICATION OF SERVICE
ITED STATES ENVIRONMENTAL PROTECIi
I HEREBY CERTIFY that a copy of the foregoing Subpoena Duces
Tecum and Subpoena Ad Testificandum has been delivered to the
appropriate mail facilities for the U.S. Environmental Protection
Agency to be sent certified mail, return receipt requested, to the
person and address listed below:
Deloitte & Touche
ATTN: Mr. Irwin Siegel
100 Peachtree Street
Suite 1700
Atlanta, Georgia 30303
c/iq’r3
Date Ro er Fentress, Attorney
U.S. Environmental Protection Agency
7
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION II
x
In the Matter of
.
SAR INDUSTRIAL FINISHING, : Docket No.
II EPCRA—93—0112
Respondent.
Proceeding under Section 325(c)
of Title III of the Superfund
Amendments and Reauthorization Act.
x
COMPLAINANT’S PREHEARING EXCHANGE
Pursuant to the order of Administrative Law Judge Jon G.
Lotis (the “AL]”) dated January 5, 1994, directing the parties to
file prehearing exchanges on or before November 21, 1994,
Complainant hereby files its prehearing exchange in the captioned
proceeding.
I. Background and Reservation of Rights
Complainant, Barbara Metzger, Director of the Environmental
Services Division of the United States Environmental Protection
Agency, Region II (the “Complainant” or “EPA”), commenced this
proceeding on or about June 30, 1993, by serving the Respondent,
SAR Industrial Finishing, Inc. (“SAR”), with a complaint and
notice of opportunity for hearing (the “Complaint”). The
Complaint, in six counts, charges SAR with six violations of
§313, Title III of the Superfund Amendments and Reauthorization
Act (also known as the Emergency Planning and Community Right-to-
Know Act of 1986 (“EPCRA”), 42 U.S.C. §11023). More specifically,
the Complaint charges that SAR failed to timely submit to the
Administrator of the United States Environmental Protection
Agency (“USEPA”) required Form Rs on six separate occasions for
reporting years 1988, 1989, 1990 and 1991, and proposes a penalty
of $30,000.
In November 1993, SAR, by its President, Ralph D. Mauro,
answered. The answer is composed of two letters, both dated
November 17, 1993, one from Mr. Mauro to the Regional Hearing
Clerk, and the other from Mr. Mauro to the Complainant (the
“Answer”). Mr. Mauro and his wife Patricia, SAR’s Secretary and
Treasurer, are apparently the sole shareholders and owners of
SAR.
By notice of motion dated February 18, 1994, EPA moved the
AL] pursuant to the Consolidated Rules of Practice Governing the
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Administrative Assessment of Civil Penalties (the “Consolidated
Rules”), 40 C.F.R. Part 22, for partial accelerated decision on
liability. In its memorandum of law submitted in support of its
motion, EPA argued that SAR, in the Answer, had directly admitted
some of the allegations of the Complaint. As to the remaining
allegations in the Complaint, these were neither admitted,
denied, nor explained. The Consolidated Rules provide, however,
that the “ [ f]ailure of respondent to admit, deny, or explain any
material factual allegations contained in the complaint
constitutes an admission of the allegation.” 40 C.F.R.
§22.15(d). Consequently, EPA argued that SAR must be deemed to
have admitted all of the allegations of the Complaint, including
the material elements of the six violations alleged. Thus, there
were no genuine issues of material fact on the issue of
liability, and EPA was entitled to judgment on this issue as a
matter of law.
On January 11, 1994, the undersigned was advised
telephonically by Patricia Mauro that SAR had retained Patrick P.
Randazzo, Esq. to represent it in this proceeding. Under cover of
a letter dated January 21, 1994, Mr. Randazzo filed and served a
notice and substitution of attorney stating that he was “hereby
substituted as counsel for Respondent in the place of Ralph D.
Mauro, Pro Se.”
SAR failed to respond to EPA’s motion. Subsequently, by
order dated March 21, 1994 the AU granted EPA’s motion for
partial accelerated decision on liability, noting that the issue
of the penalty remained for hearing.
A liberal reading of the Answer suggests that SAR seeks to
raise the following possible defenses in mitigation of the
penalty: ignorance of the law; i.e., a lack of awareness of SAR’s
obligations under EPCRA §313 (“ 313”); the length of time it took
EPA to detect SAR’s violations; good attitude; and inability to
pay. The Answer is vaguely pled. In particular, the allegations
of good attitude and inability to pay are alleged in a conclusory
manner, without the particularity of fact required by the
Consolidated Rules. (“The answer shall.. .state (1) the
circumstances or arguments which are alleged to constitute the
grounds of defense, [ and] (2) the facts which respondent intends
to place at issue....” 40 C.F.R. §22.15(b). Accord, Landfill.
Inc. , Dkt. No. RCRA-IV-85—R (Final Decision of the Chief Judicial
Officer, 11/30/90 at 8-9). SAR has made no effort to amend the
Answer since retaining Mr. Randazzo. See. Thornburg Farm SupDly ,
Dkt. No. I.F. & R. V-14-9l (AU Frazier, 5/27/92 at 1—2).
SAR’s failure to identify the facts on which it intends to
rely has prevented EPA from identifying the full scope of facts
that may be required to rebut SAR’s defenses. Thus, EPA
anticipates the possible need to expand the scope of the
testimony of the witnesses listed below, to call additional
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witnesses, to produce additional documents, to respond to
additional issues that SAR may raise, and to move alternatively
for discovery, a more definite statement, or to strike one or
more defenses. Accordingly, EPA reserves its right to supplement
its prehearing exchange, and to make the above, or other motions.
II. Witnesses
EPA currently expects to present the following witnesses at
the hearing:
1. Nora Lopez
Chemist
Environmental Services Division
U.S. Environmental Protection Agency, Region II
Building 10, MS 105
2809 Woodbridge Avenue
Edison, New Jersey 08837-3679
2. Alan Bookinan
Supervising Environmental Specialist
Bureau of Hazardous Substances Information
New Jersey Department of Environmental Protection
CN 405
Trenton, New Jersey 08625—0405
3. James Sullivan
Environmental Engineer
Air and Waste Management Division
U.S. Environmental Protection Agency, Region II
26 Federal Plaza
New York, New York 10278
4. Ralph D. Mauro
President
SAR Industrial Finishing, Inc.
104 N. Route 73
RD #1
Berlin, New Jersey 08009
Mr. Mauro will be called as a hostile witness to testify
concerning Exhibit 5, hereto.
5. Patricia Mauro
Secretary Treasurer
SAR Industrial Finishing, Inc.
104 N. Route 73
RD #1
Berlin, New Jersey 08009
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Ms. Mauro will be called as a hostile witness to testify
concerning the portions of SAR’s Form Rs for the relevant
reporting years, submitted in May 1993, and annexed hereto as
Exhibit 4.
6. Kimberly A. Zanier, CPA
U.S. Environmental Protection Agency/NEIC
Denver Federal Center (Bldg. 53)
Box 25227
Denver, Colorado 80225
Ms. Zanier is a CPA and a former IRS agent. She is currently
employed by EPA at its National Enforcement Investigation Center,
where she devotes a substantial amount of her time to the
analysis of inability to pay claims and other financial issues.
Ms. Zanier will serve as EPA’S expert witness on the issue of
SAR’s claimed inability to pay, provided this issue is preserved
for trial. For the reasons set forth below in paragraph V 1 the
substance of Ms. Zanier’s testimony is currently unknown.
III. The Direct Testimony of Nora Lopez, Alan Bookman and James
Sullivan, and the Related Exhibits 1
EPA intends to place in evidence the direct testimony and
related exhibits of Ms. Lopez, Mr. Bookinan, and Mr. Sullivan, in
conformity with §22.22(c) of the Consolidated Rules, which
provides that:
[ t]he Presiding Officer may admit an insert into the
record as evidence, in lieu of oral testimony,
statements of fact or opinion prepared by a witness.
The admissibility of the evidence shall be subject to
the same rules as if the testimony were produced under
oral examination. Before any such statement is read or
admitted into evidence, the witness shall deliver a
copy of the statement to the Presiding Officer, the
reporter and opposing counsel. The witness presenting
the statement shall swear to or affirm the statement
and shall be subject to appropriate cross-examination
upon the contents thereof.
Accordingly, there is annexed hereto the declarations of Ms.
Lopez, Mr. Bookinan, and Mr. Sullivan, and the exhibits thereto,
comprising their direct testimony. EPA does not intend to produce
these witnesses at the hearing to place in evidence their direct
testimony and related exhibits. Furthermore, EPA intends to
produce these witnesses at the hearing for further testimonial
purposes solely at its option, unless SAR, in its reply to this
1 Complainant’s exhibits shall be identified as “C’s Ex.” on
the exhibit tabs to this prehearing exchange.
4
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prehearing exchange, requests EPA to produce one or more of these
witnesses for the purpose of cross-examination on the witnesses’
direct testimony. In the absence of such a request, EPA shall
deem SAR to have waived its right to cross-examine these three
witnesses on their direct testimony and related exhibits.
EPA is utilizing this procedure to expedite the hearing.
Additionally, EPA is utilizing this procedure to minimize the
cost of this proceeding to the State of New Jersey and the
federal government, including the costs of the witnesses’ travel
and lost services, in the event that SAR does not wish to cross-
examine them.
1. Testimony of Nora Lopez and Related Exhibits
A. Summary of the Testimony of Nora Lopez - Through her
direct testimony contained in her declaration ( Complainant’s
Exhibit 1 ) Ms. Lopez will testify concerning the following: the
purposes of §313; how data collected pursuant to §313 is used and
disseminated to the public; the importance of §313 and the
detriment to the public interest caused by late reporting, or
non-reporting; the scope and content of the outreach program
conducted by USEPA, EPA and the State of New Jersey (the “State”)
in 1988 and 1989, designed to notify members of the regulated
community of their obligations under EPCRA in general, and §313
in particular; the presence of SAR’s name and address on the
computer mailing list which EPA utilized in 1989 to mail to the
regulated community notice of the EPCRA outreach seminars that it
was conducting within the State; and the number of facilities
within EPA’s territorial jurisdiction subject to the requirements
of §313, and the number of inspectors allotted to EPA to conduct
compliance inspections of these facilities. In addition, Ms.
Lopez’ testimony states how the proposed penalty was determined,
and how the specific provisions of the relevant penalty policy,
the Enforcement Response Policy for Section 313 of the Emergency
Planning and Community Right-to-Know Act (1986) and Section 6607
of the Pollution Prevention Act (1990 ) (August 10, 1992, the
“ERP”), were utilized in this calculation. Please note that Ms.
Lopez has recalculated the proposed penalty and determined that
the appropriate penalty in this proceeding is $28,827.
B. Related Exhibits
Complainant’s Exhibit la — A print-out, reflecting
SAR’s name and address, from the computer mailing list which EPA
utilized in 1989 to mail to the regulated community notice of the
EPCRA outreach seminars that it was conducting within the State.
Complainant’s Exhibit lb - The attendance list from
EPA’S EPCRA outreach seminar conducted at Cherry Hill, New Jersey
on April 7, 1989.
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Complainant’s Exhibit ic - The flyer announcing EPA’S
EPCRA outreach seminar held at Jamesburg, New Jersey on April 10,
1989.
Complainant’s Exhibit id - The ERP.
2. Testimony of Alan Bookman and Related Exhibits
A. Summary of the Testimony of Alan Booknian - Through
his direct testimony contained in his declaration ( Complainant’s
Exhibit 2 ) Mr. Bookman will testify as to the functions of the
Bureau of Hazardous Substances Information of the New Jersey
Department of Environmental Protection (the “Bureau”); the
procedures utilized by the Bureau to develop a computer mailing
list from which to conduct an outreach mailing in 1988 (the “1988
Mailing”) to notify members of the regulated community within the
State of their obligations under various related reporting
statutes, including §313; the content of the 1988 mailing, which
was comprised of four documents; and the receipt by SAR of the
1988 Mailing, as evidenced by the presence within the Bureau’s
files of SAR’s response to the 1988 Mailing, signed by “Ralph D.
Mauro”, and dated June 7, 1988.
B. Related Exhibits - Complainant’s Exhibits 2a - 2d
listed below are copies of the four documents which comprised the
1988 Mailing.
Complainant’s Exhibit 2a - A cover information sheet.
Complainant’s Exhibit 2b - A brochure prepared by USEPA
containing copies of Form R and instructions for its completion
and submission.
Complainant’s Exhibit 2c - New Jersey Department of
Environmental Protection Form DEQ-100, entitled “Right To Know
Supplemental Information Form”.
Complainant’s Exhibit 2d - Instructions for completing
and submitting Form DEQ-100.
Complainant’s Exhibit 2e - A copy of the first page of
the Form DEQ-100 received by SAR and signed by Mr. Mauro on June
7, 1988.
3. Testimony of James Sullivan and Related Exhibits
A. Summary of the Testimony of James Sullivan - In the
Answer, Mr. Mauro alleged that “we have submitted all the other
forms as required in a timely fashion through the years.” (See
Mr. Mauro’s November 17, 1993, letter to the Regional Hearing
Clerk). Mr. Mauro also alleged that upon being notified of SAR’s
noncompliance with §313 “we were stunned for we always work very
6
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diligently to cooperate in all matters.” (See Mr. Mauro’s
November 17, 1993, letter to Complainant at 1). Similarly, Mr.
Mauro claimed “(w]e work very hard to be in compliance....” .
at 2. It is from these statements that EPA infers that SAR is
raising the defense of good attitude. Thus, while it is unclear,
Mr. Mauro appears to be claiming, inter alia . that SAR’s instant
§313 violations are its first violations of environmental law or
regulation. This is not so. In fact, in 1989, SAR was found to be
in substantial violation of the Resource Conservation and
Recovery Act (“RCRA”), and was served with Notices of Violation
by both EPA and the State. Mr. Sullivan’s direct testimony
contained in his declaration ( Complainant’s Exhibit 3 ) serves
primarily as a conduit through which to place in the record the
documents evidencing SAR’s 1989 RCRA violations and their
remediation.
B. Related Exhibits
Complainant’s Exhibit 3a - A copy of the report of the
inspection of SAR’s facility on October 24, 1989, by State
inspector, Ben Wilbur, including the Notice of Violation served
on SAR by the State.
Complainant’s Exhibit 3b — SAR’s RCRA “Notification of
Hazardous Waste Activity” dated October 12, 1983.
Complainant’s Exhibit 3c - Letter/Notice of Violation
dated November 21, 1989, from George C. Meyer, Chief of EPA’s
Hazardous Waste Compliance Branch, to SAR.
Complainant’s Exhibit 3d - Letter dated November 28,
1989, from Patricia Mauro to Mr. Meyer, with attachments,
responding to EPA’S Notice of Violation.
Complainant’s Exhibit 3e - Letter dated December 11,
1989, from Mr. Meyer to Ms. Mauro.
IV. Additional Exhibits That EPA Currently Anticipates Relying On
Complainant’s Exhibit 4 - The relevant portions of the
Form Rs submitted by SAR in May 1993, for reporting years 1988 -
199 1.
Complainant’s Exhibit 5 — Letter dated December 6, 1993
from Mr. Mauro to Manuela M. Morais.
V. The Inability to Pay Issue
The issue of SAR’s inability to pay the penalty (the
“Inability Claim”) is currently clouded with confusion to the
extent that EPA is unsure if SAR intends to press this claim, and
if so, what the nature of this claim is, and the arguments and
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facts on which SAR intends to rely. Consequently, at this
juncture EPA is unclear as to what facts or documents may be
relevant. The reasons for this confusion are summarized below.
As noted above, the Inability Claim is vaguely pled. Thus,
in the Answer, Mr. Nauro stated that the penalty “would be
financially disastrous to our Company.” (See Mr. Mauro’s November
17, 1993, letter to the Regional Hearing Clerk). Mr. Mauro
further stated that the penalty would “cause us financial
difficulty at this time when the economy is so poor.” (See Mr.
Mauro’s November 17, 1993, letter to Complainant at 2). These are
the sole allegations framing the Inability Claim.
In support of the Inability Claim, SAR submitted its
corporate tax returns for the five years 1988 - 199]. to EPA’s
Environmental Services Division. The Inability Claim was
initially screened by evaluating these tax returns by means of
ABEL, USEPA’s computer program designed to help analyze and
evaluate the financial health of privately held companies and
their ability to finance civil penalties. ( , Colonial
Processing 1 Inc. , Dkt. No. II EPCRA-89-0114 (M i Frazier, 6/24/91
at 26-29. To conduct a proper ABEL analysis, a minimum of three
tax returns are needed). The ABEL analysis indicated that there
was a greater than 99% probability that SAR could finance the
originally proposed penalty of $30,000 on the basis of its
projected cash flows in the ensuing five years. Additionally,
various entries in SAR’s 1988 — 1991 tax returns further
indicated that the Inability Claim was totally meritless.
Subsequently, to update its analysis, EPA requested by
letter dated March 28, 1994, from the undersigned to Mr.
Randazzo, that SAR produce its tax returns for the years 1992 and
1993. By early July, EPA had decided to commence work on the
detailed analysis of the Inability Claim that would be presented
at trial. In discussions with Ms. Zanier, the undersigned was
informed, however, that this work could not be fruitfully
performed at the time due to the absence of any facts in the
record indicating the nature or substance of the Inability Claim.
Ms. Zanier further advised that to perform her analysis she would
preliminarily require a statement of the facts and arguments
underlying the Inability Claim, SAR’s cumulative depreciation
schedule, and any additional financial records that SAR intended
to rely on, as well as SAR’s 1992 and 1993 tax returns, which
still had not been produced. Accordingly, by letter dated July 8,
1994, from the undersigned to Mr. Randazzo, EPA again requested
that SAR produce its 1992 and 1993 tax returns, and also
requested that SAR produce a synopsis of the facts and arguments
underlying the Inability Claim, SAR’s cumulative depreciation
schedule, and any additional financial records that SAR intended
to rely on in support of the Inability Claim (the “Additional
Documents”). EPA noted that the requested tax returns and the
Additional Documents would have to be produced by SAR sooner or
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later, if it wished to maintain the Inability Claim, and
therefore, prompt compliance with EPA’s request would serve to
minimize future delay.
On or about July 22, 1994, SAR produced its tax returns for
3.992 and 1993, as well as the personal income tax returns and W2
forms for Mr. and Mrs. Mauro for the these two years. SAR,
however, failed to produce any of the Additional Documents,
including a synopsis of the facts and arguments underlying the
Inability Claim (the “Synopsis”). During a telephone conversation
between the undersigned and Mr. Randazzo on August 8, Mr.
Randazzo stated that he thought the statement of the Inability
Claim in the Answer was “adequate”. Moreover, Mr. Randazzo opined
that the Inability Claim was sufficiently framed, since it was
clear that payment of the penalty by SAR would adversely affect
the personal income of Mr. and Mrs. Mauro. Thus, Mr. Randazzo
recast the Inability Claim from a corporate claim on behalf of
SAR, to a personal claim on behalf of the Mauros.
By letter dated August 12, 1994, from the undersigned to Mr.
Randazzo, EPA notified SAR that the recasting of the Inability
Claim from a corporate to a personal claim created numerous
problems. Primarily, since the facts and documents underlying a
corporate claim and those underlying a personal claim of
inability to pay are different, the recasting of the Inability
Claim totally confused this issue and emphasized the need for
clarification by means of the Synopsis. Accordingly, the
undersigned urged Mr. Randazzo, as an initial step, to produce
the Synopsis, noting again that a refusal would simply waste
time.
SAR has not yet produced the Synopsis. Consequently, at this
time EPA does not know whether SAR intends to press the Inability
Claim, and if so, whether it will be a corporate, or a personal
claim, what facts will underlie the claim, and what documents
will be relevant. Thus, EPA has been precluded from substantively
addressing the Inability Claim in its prehearing exchange, and
will have to await SAR’s prehearing exchange to determine what
action will be appropriate with reference to this issue.
VI. Paperwork Reduction Act
This action is based on SAR’s violation of reporting
requirements imposed by statute. See EPCRA Sections 313(a) and
(g), 42 U.S • C. § 11023 (a) and (g). The Paperwork Reduction Act
does not affect the enforcement of reporting requirements imposed
by statute. 44 U.S.C. § 3502(11); 3512; U.S. v. Hicks ,
947 F.2d 1356, 1359—60 (9th Cir. 1991); U.S. v. Kerwin , 945 F.2d
92 (5th Cir. 1991); U.S. v. Wunder , 919 F.2d 34, 38 (6th Cir.
1991), U.S. v. Great Lakes Casting Corp. , Slip Op., Hillman,
U.S.D.J., Case No. 1:92—CV—645, at 13—16 (W.D. Mich. 3/23/94).
9
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(The applicable Office of Management and Budget control number is
2070—0093).
VII. Location of the Hearing
Pursuant to 40 C.F.R. §S 22.19(d) and 22.21(d), Complainant
requests that the hearing be held in New York, New York. As a
transportation hub, New York City is the location most accessible
to all parties and witnesses. Furthermore, numerous rooms are
available for the conduct of the hearing in the federal building
in New York City, in which EPA’S main office is located, as well
as in other federal facilities and courthouses in the immediate
vicinity.
Dated: Novemberfl, 1994
Respectfully submitted,
u.
Assistant Regional Counsel
Office of Regional Counsel
U.S.E.P.A., Region II
26 Federal Plaza (Rni. 400)
New York, N.Y. 10278
(212) 264—6259
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rHllciLr I’lUri .’.IJ’ L LI. C.L NO. u1ooOO 4O NOV i l, 4 i. ..DO I 4O.UU) r.u,
e1a an4w
. V/ 0767$
(io ,) f6o 6D72
(2_
November 21, 1994
Richard J. Weisberg, Esq.
Assistant Regional Counsel
U.S. Environmental Protection
Agency, Region II
26 Federal Plaza
New York, New York 10278
Re: Docket 1111 EPCRA - 93-0112
Dear Mr. Weisberg2
Per the order setting prehearing procedures dated January 5,
1994 signed by Judge I otis, I am enclosing the discovery
information as per my telephone conversion with you today.
I will be forwarding the heard copy to you by FedEx with
Exhibits attached which are the corporate tax returns which have
already been provided to you in prior discovery.
Very truly yours,
PATRICK P. RANDAZZO
PPR: SC
Enclosures
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ri-1IrsiL I’4L)H .U C. . I .L N . UJ OOOO 4O I’ QV i,’ ’4 J. •DO I’ O.1JLL) r.U)
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
IN THE MATTER OF )
)
SAR Industrial Finishing,) Docket No. II-EPCRA-93-0112
Respondent) RESPONDENT SUBMISSION PURSUANT
) TO SECTION 22.19(B)
I submit the following information pursuant to Section
22.19(b) of the Rules.
The names of the witnesses are as follows:
Ralph Mauro
Patricia Mauro
Frank 1. Bartolone, CPA
Mr. Bartolone is expected to testify either in person or by
affidavit that he is a CPA and a partner in the firm of Bartolone
& Snyder and that he has been handling the filings of corporate and
personal income tax returns for S.A.R. Industrial Finishings, Inc.
and Mr. and Mrs. Ralph Mauro for many years and that he knows them
personally and will vouch for their character and their diligence Jd
in filing all financial returns. Further, he will vouch for the
fact that the company has been run in a very professional manner
and his personal knowledge of the individuals, Ralph and Patricia
Mauro, and the fact that they are of the highest character and that
they have always taken their responsibilities, both professionally
and personally, in a most serious manner.
Mr. & Mrs. Mauro are expected to testify as follows -- that in
1986 they had an employee who was responsible for all filings with
regard to environmental compliance and unfortunately that
individual passed away and they were not aware of the requirement
to file a Form R and when they were advised of same, they
immediately went through every record and filed .Form R for the Ms.
years 1988 through 1992. During the term of 1988 through 1991, the
defendant company was not contacted during the entire time to bring
to its attention the failure to file. The requirement threshold for
the respective chemicals for the years 1988 through 1992 was 10,000
pounds. The amount of actual chemicals used in most cases ranged
from 12,000 to 15,000 pounds. The amount was a minimal amount in
excess of the 10,000 pounds reporting requirement. As a result the
Agency imposed a fine of six violations each in the amount of
$5,000 or a total of $30,000 upon the defendant corporation. The
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r 1iIc 1Lr KHNLHi .u’ Ic.L NO. UiOoOO 4O Nov j, II4 L4.Db NO.UU.,) r.ULe
defendant corporation is a small company with under 50 employees
and the principals Ralph and Patricia Mauro work hand in hand with
their employees. The defendants have not objected to a partial
summary judgment on the issue of liability but only contest the
amount of the fine. The amount of the fine, it is respectfully
submitted, is excessive especially when considered in comparison
with the July 1, 1991 to June 30, 1992 corporate income tax return
and the July 1, 1992 to June 30, 1993 corporate income tax return
for the defendant. In 1991. to 1992 the corporation showed a profit
of $863.00 as set forth in defendant’s Exhibit 1 1991 — 1992
corporate return. In 1992 - 1993 the profit shown for the
corporation was $18,656.00 as shown in defendant’s Exhibit 2. The
proposed fine exceeds the profit for the entire corporation. The
defendant respectfully suggests to the Court that the penalty
exceeds the violator’s ability to pay and further asks the court to
consider the special circumstances in this case including the
significant minor borderline violation.
Defendant respectfully further suggests that the place of
hearing be as close geographically to the defendant’s place of
business in Berlin, New Jersey in accordance with Section 22.21(d)
and 22.19(d) of the Rules.
Dated: November 21, 1994
Attorney for Respondent,
S.A.R. Industrial Finishing,Inc.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION II
x
In the Matter of
SAR INDUSTRIAL FINISHING, : Docket No.
II EPCR.A—93—0112
Respondent.
Proceeding under Section 325(c)
of Title III of the Superfund
Amendments and Reauthorization Act.
x
COMPLAINANT’S REPLY PREHEARING EXCHANGE
Pursuant to the order of the AU 1 dated January 5, 1994,
directing the parties to file their replies to each others’
prehearing exchanges on or before December 12, 1994, EPA hereby
files its reply prehearing exchange in the captioned proceeding.
I. Witnesses - Additional Testimony and Related Matters
1. The Direct Testimony of Nora Lopez 1 Alan Bookman and
James Sullivan
SAR, in its reply prehearing exchange, requests the
production of the above three witnesses, for purposes of cross-
examining them on their direct testimony. The declarations of
these three witnesses containing their direct testimony were
annexed to EPA’S prehearing exchange. EPA previously stated in
its prehearing exchange that it would produce these witness at
SAR’s request for purposes of cross-examination on their direct
testimony. In its reply prehearing exchange, SAR indicates that
it seeks to cross-examine these witness on their direct testimony
because their declarations “contain numerous instances of
hearsay”. Accordingly, EPA takes this opportunity to note that
hearsay is admissible in EPA administrative proceedings pursuant
to the Consolidated Rules, §22.22(a), and settled case law, g.,
Great lakes Division of National Steel Corp. , EPCRA Appeal No.
93—3 (EAB, 6/29/94 at 35—36).
2. Nora Lopez - In its prehearing exchange, SAR indicates
that it will seek mitigation of the penalty on the ground that
the amounts of chemicals used in the relevant reporting years in
1 The definitional terms used herein are the same as those
used in EPA’S prehearing exchange.
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excess of the threshold amounts, which triggers the §313
reporting requirement, were “minimal”, and therefore, were “minor
borderline” violations. The ERP at page 18 allows for mitigation
for borderline violations. EPA will call Ms. Nora Lopez,
previously identified, as a rebuttal witness on this point. Ms.
Lopez will testify that SAR used chemicals in excess of the
threshold amounts in quantities that cannot be construed as
borderline, and that mitigation would be inappropriate on this
ground.
3. Kimberly A. Zanier, CPA - In its prehearing exchange, SAR
identified its claimed inability to pay the penalty as a
corporate claim, and based this claim solely on the fact that
in its two most recent fiscal years its corporate profits were
less than the proposed penalty. Ms. Zanier, previously
identified, will testify concerning SAR’s claimed inability to
pay. Ms. Zanier will provide a detailed financial analysis to
demonstrate that SAR has the ability to pay the full proposed
penalty despite the fact that its profits may be less than this
amount. To complete her analysis of SAR’s financial condition,
Ms. Zanier will require additional documents beyond SAR’s
corporate tax returns annexed hereto as EPA exhibits. EPA will
seek to obtain these documents voluntarily from SAR. If SAR
refuses to produce these documents, EPA will move the AU for
discovery pursuant to §22.19(f) of the Consolidated Rules.
II- Additional Exhibits That EPA Currently Anticipates Relying On
Additional exhibits that EPA currently anticipates relying
on are listed below. EPA reserves its right to supplement its
prehearing exchange to produce additional documents as exhibits,
including those documents referred to above, relevant to SAR’s
claim of inability to pay, which EPA will seek to obtain from SAR
voluntarily, or on motion.
Complainant’s Exhibit 6 — SAR’s 1987 federal corporate
income tax return (form 1120).
Complainant’s Exhibit 7 - SAR’s 1988 federal corporate
income tax return (form 1120).
Complainant’s Exhibit 8 - SAR’s 1989 federal corporate
income tax return (form 1120).
Complainant’s Exhibit 9 - SAR’s 1990 federal corporate
income tax return (form 1120).
Complainant’s Exhibit 10 - SAR’s 1991 federal corporate
income tax return (form 1120).
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Complainant’s Exhibit 11 — SAR’s 1992 federal corporate
income tax return (form 1120).
Dated: December 9, 1994
Respectfully submitted,
Richard J. Weisberg
Assistant Regional Counsel
Office of Regional Counsel
U.S.E.P.A., Region II
26 Federal Plaza (Rm. 400)
New York, N.Y. 10278
(212) 264—6259
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THE PREPARATION AM) EXECUTION
OF ADMINISTRATIVE WARRANTh
DENNIS MUCHNICKI
L INTRODUCTION
As discussed earlier, administrative warrants are, in essence, the judicial mechanism
for vindicating a legislative determinz tion that, in order to promote public health, safety and
welfare, certain commercial enterprises have a reduced expectation of privacy because they
will be subject to inspections to assure compliance with regulatoiy programs. As a result,
the background for all discussion of administrative warrants is the statute which authorizes
the inspection scheme. The answer to almost any question will turn, in large part, on the
provisions of the statute authori7ing the inspections.
IL FUNCTIONS SERVED BY AN ADMINISfl ATIVE WARRANT
A. Administrative warrants provide significant benefits when compared to
warrantless inspections. Marshall v. Barlow . 436 U.S. 307, 98 S. Ct 1816
(1978). Those advantages include:
1. The entity subject to the inspection benefits by having the assurance
that a neutral ni2gistrate has reviewed the basis for the inspection-
search, thereby assuring the inspected entity against abuse by
administrative whim.
Z Primarily the entity searched, but also the inspector, benefit by having
the nature and scope of the inspection-search clearly defined.
3. The inspector benefits by receiving the warrant from the court, which
functions as an order of the court, thereby enlisting the assistance of
the law enforcement community to assure that no one interferes with
the implementation of the court’s order (the warrant).
a. In addition, the inspection efficiency is improved by the ex parte
nature of the warrant system. , Marshall. supra . at 320, fn.
15; Bunker Hill Co. Lead & Smelter v. U.S. EPA . 658 F.2d
1280, 1285 (9th Cir. 1981); National Standard Co. v. Adainkus .
881 F.2d 352, 362 (7th Cir. 1989); In re Order Pursuant to
Section 3013(d) . 550 F.Supp. 1361 (W.D. Wash. 1982).
In the absence of a warrant, resistance to an inspection could
only be overcome by an action for injunctive relief which would
provide the resisting party with the opportunity to contest the
inspection.
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m. MAT1ERS TO BE CONSIDERED IN PREPARING TO OBTAIN AN
ADMINISI1 AT1VE WARRANT
A. In the a4ministrative context, probable cause maybe based upon either: (1)
a showing of specific evidence of an existing violation; or (2) upon a showing
that the inspection is being conducted pursuant to a general administrative
plan, derived from neutral sources, for the enforcement of a statute. Marshall
Barlow 436 U.S. 307, 320321, 98 S.Ct. 1816 (1978); Matter of
Establishment Inspection of Trinity Industiie& Inc. . 898 F2d 1049, 1051 (5th
Cir. 1990); National.Standard v. Adaznkus . 881 F.2d 352, 361 (7th Cir. 1989).
The level of evidence necessaly to support the “specific evidence”
prong of administrative probable cause is something less than that
which is required to establish crimirnil probable cause.
Administrative probable cause will be found if the application supports
a “reasonable belief’ that the act was violated. Matter of Midwest
Instruments Co. . 900 F.2d 1150, 1153 (7th Cir. 1990).
Administrative probable cause is established upon showing of a
“reasonable belief’ that a violation had been committed and that the
inspection was not based upon a desire to harass the target of the
inspection. U.S. v. Establishment Inspection of: Jeep Corp. . 836 F.2d
1026, 1027 (6th Cir. 1988).
The administrative probable cause requirement “is met by a showing
of specific evidence sufficient to support a reasonable suspicion of a
violation.” West Point-PepperelL Inc. v. Donovan . 689 F2d 950,
957.958 (11th Cir. 1982)).
There must be “some plmtcible basis for believing that a violation is
likely to be found.” Marshall v. Horn Seed Co.. Inc. . 647 F.2d 96, 102
(10th dr. 1981).
a. The warrant application, however, cannot merely allege that a
violation has ocoJrre(L
An affidavit stating merely that the agency had received a
written complaint from an employee of the business to be
searched and had determined that a violation existed was
“unrelieved boilerplate” and insufficient to establish probable
cause. Weyerhaeuser Co. v. Marshall . 592 F.2d 373, 378 (7th
Cir. 1979).
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An application stating agency believed violations existed at the
facility on the basis of information contained in unverified
newspaper articles was insufficient to establish probable cause.
Donovan v. Federal Cleaning Die Casting Co. . 655 F.2d 793,
797 (7th Cir. 1981).
An OSHA warrant that merely described the occurrence of an
accident at a facility and concluded in boilerplate language that
the accident indicated the existence of possible violations was
insufficient to establish probable cause. Chicago Zoological
Soc. v. Donovan . 558 F.Supp. 1147, 1152 (N.D. 111. 1983).
b. Courts require some information that will support the
inspector’s suspicion that a violation has actually occurred.
Ideally the affidavit should state whether the complaint was
received by the afflant personally, inform the magistrate of the
source of the complaint, detail the facts of the complaint, attach
the complaint and other written material received from the
complairumt, specify the steps taken by agency to verify the
complaint, provide the number of prior searches of the facility
and relate any other relevant information. Marshall v. Horn
Seed Co.. Inc. . 647 F.2d 96, 102.104 (10th Cir. 1981).
A court has upheld a warrant supported by only a sworn
application det2iling facts of complaint made by an informant
and an indication of the basis for concluding that the statute
was violated. Matter of Establishment Inspection of Gilbert &
Bennett Mfg. Co . 589 F.2d 1335, 1539(7th Cir. 1979).
2. An inspection warrant that relies upon the “general administrative
plan” prong must be based upon an inspection plan derived from
neutral sources and contain a description of how the particular facility
to be searched was chosen for inspection.
“An a Irninistratjve warrant will pass constitutional muster if it issues
pursuant to a plan based on sufficient, specific neutral criteria and the
warrant application adequately explains why an inspection of the
particular establishment is within the program.” Brock v. Gretna
Mach. & Ironworks. Inc. . 769 F.2d 1110, 1112 (5th Cir. 1985).
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a. The inspection plan must be based upon specific neutral
criteria
Numerous cases uphold the validity of OSHA’s neutral
inspection plan which operates on a “worst-first” basis by
comparing what industries manufacture with the number of
work days lost by their employees to determine which, and in
what order, companies should be inspected. Matter of
Establishment Inspection of Trinity Industries. Inc. . 876 F.2d
1485, 1490-1491 (11th Cir. 1989).
A court, however, has suggested that the General Service
Administration’s selection of utility to be searched may not
have been pursuant to a valid a iministrative plan where the
plan, though based on neutral criteria, was not generally
accepted for use or formally promulgated by the EPA. U.S. v.
New Orleans Public SeMce. Inc. . 723 R2d 422, 429 fn. 7 (5th
Cir. 1984).
A valid neutral administrative plan is established where a
government agency desires to do a study on the health effects
of occupational exposure in the leather thnning and finishing
industries and selects companies for inspection on the basis of
the age of the factory and the number of workers employed.
Matter of Pfister & Vogel Tanning Co. . 493 F.Supp. 351 (ED.
Wis. 1980).
b. Courts generally will not inquire into the validity or accuracy of
the facts relied upon by an agency in developing an inspection
plan.
“The Cowl is not authorized to inquire into the facts which
presaged formulation of the plan.” Matter of Establishment
Inspection of Trinity Industries. Inc. . 876 F.2d at 1490.
c. However, the warrant application must describe the inspection
plan in enough detail to allow the magistrate to properly assess
the plan’s neutrality.
‘To enable a m gictrate to determine whether the
[ administrative plani prong of the Barlow’s test has been met,
the warrant application must contain adequate information from
which the ni gistrate properly may assess the inspection plan’s
neutrality.” Matter of Establishment Inspection of Trinity
Industries. Inc. . 876 F.2d at 1491.
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In analyzing an inspection plan, the magjstrate considering the
warrant application must review the plan itself to ensure that it
contains the specific neutral criteria mandated by Bar1o s.
Industrial Steel Products Co.. Inc. v. OSHA . 845 F.2d 1330,
1330 (5th Cir. 1988).
The warrant application must describe the program. Pa. Steel
Foundry & Mach. v. Sec. of Labor . 831 F.2d 1211, 1215 (3rd
Cir. 1987).
Probable cause exists where the affidavit in support of the
warrant stated that the inspection was part of the Nationai-
Local plan designed to achieve significant reduction in the high
incident of occupational injuries and illnesses found in the
metal-working and foundry industry”. Matter of Establishment
Inspection of Gilbert & Bennett Mfg. Co. . 589 F2d 1335 (7th
Cir. 1979).
The application for warrant was deemed insufficient where the
affidavit merely stated that the desired inspection was “part of
an inspection and investigation program designed to assure
compliance with the Act.”) Matter of Northwest Airlines. Inc. .
587 F2d 12, 14(7th Cir. 1978).
Where the application stated that the desired inspection was
part of an accident investigation as prescribed by the OSHA
Field Operations Manual, the magistrate had sufficient
infonnation to determine the existence of a reasonable
inspection program. Chicago Zoological Soc. v. Donovan . 558
F.Supp. 1147, 1153 (ND. ilL 1983).
The warrant was issued where the application described in
detail the contents of the inspection plan. Erie Bottling Corp.
v. Donovan . 539 F.Supp. 600, 605 (WD. Pa. 1982).
The warrant will be issued where affidavit described the
purpose of the inspection and the criteria used to select the
industry for inspection. Matter of Pfister & Vogel Tannin Co. .
493 F.Supp. 351, 354.355 (WD. Wisc. 1980).
Compare : The warrant itself and not just the application, must
describe the plan. Donovan v. Enterprise Foundry. Inc. . 561 F.
Supp. 1433, 1440 (D. Maine 1984). The Warrant is not invalid
because only the warrant, which did not contain a description
of the plan, was served on the facility. Matter of Peterson
Builders. Inc. . 525 F.Supp. 642 (ED. Wis. 1981).
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d. Courts may require a description of how the particular company
was chosen under the plan rather than simply a statement to
the effect that the company to be searched was selected
pursuant to the plan.
Where government officer could not remember whether he
actually considered any of the pian’s criteria, a court held that
the Fourth Amendment requires an actual showing that the
proper procedures were followed at the time of the proposed
inspection. U.S. v. New Orleans Public Service . 723 F2d 422
(5th C i i. 1984).
The conflict among the circuits regarding whether it is sufficient
to simply state in OSHA warrant applications that the facility
to be searched was selected pursuant to a neutral plan or
whether a more detailed description of the actual selection
process is required is discussed in Pa. Steel Foundiy & Machine
v. Sec. of Labor . 831 F2d at 1214.1216.
e. Some courts have allowed searches pursuant to a plan to
investigate complaints or accidents, even when the area
searched or inspected is broader than the area mentioned in the
complaint.
The warrant was not overbroad even though it authorized the
search of an area exceeding that of the complaint because the
complaint was handled as part of a valid complaint investigation
program. Donovan v. Burlington Northern Inc. . 694 F2d 1213.
An inspection conducted pursuant to OSHA’s accident
investigation program did not have to be limited to area where
accident occurred. Chicago Zoological Soc. v. Donovan . 558
F.Supp. at 1149.
B. The allowable scope of an a Inthiictrative inspection will valy depending upon
which of the Marshall prongs is relied upon to support the issuance of the
warrant.
1. Courts will generally allow a reasonable !wall to wall inspection in
warrants relying upon the administrative plan wrong. Because the
purpose of the inspection was to determine general compliance with
OSHA health and safety regulations and because the exact location of
violations could not be known prior to entering the facility, the court
held that a narrow, a restricted warrant would defeat the purposes of
the statute. Matter of Establishment Inspection of Gilbert & Bennett .
589 F.2d at 1343.
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A Warrant authorizing exaniinntion of records and interviews with
employees was not invalid since statute provided for these activities.
Donovan v. Wollaston Alloys . Inc., 695 F2d 1 (5th Cir. 1982). A
Warrant authorizing “wall-to-wall” inspection of facility including the
review of documents, the taking of photographs, and the affixing of
monitoring devices on employees did not violate the Fourth
Amendment’s reasonableness requirement. Ingersoll-Rand Co. v.
Donovan . 540 F.Supp. 222,225-226 (M.D. Pa. 1982).
The agenc.y could conduct “wall-to-wall” inspectk)n, but the
examination of private medical records and the interviewing of
employees while worldng would be prohibited. Erie Bottling Corp. v.
Donovan . 539 F.Supp. at 606-607.
A Warrant has been found invalid because a determination of
reasonableness of administrative search must be oriented to specific
factual aspects of the government’s intrusive authority in a given case.
Donovan v. Enterprise Foundry. Inc. . 581 F.Supp. at 1440 (D. Maine,
1984).
2. With respect to warrants relying upon the specific evidence prong
courts are split on whether the scope of the search should be limited
to the substance of the alleged violations.
a. Some courts have decided that the inspection must be limited
in scope to the substance of the alleged violations.
An administrative warrant limiting the inspection of records to
those which were directly related to the purpose of the
inspection was not constitutionally overbroad. U.S. v.
Establishment Inspection of: Jeep Corp. . 836 F.2d at 1028.
Because of the potential for abuse of discretion and
intrusiveness, a complaint inspection must bear an appropriate
relationship to the violation alleged in the complaint. Donovan
v. Sarasota Concrete Co. . 693 F.2d 1061, 1068-1070 (11th Cir.
1982).
When a warrant, be it admini tradve or criminal , is issued for
the inspection of business records on the basis of one suspected
violation, the warrant must e press, with particularity, the dates
of the records sought. Pieper v. U.S. . 604 F.2d 1131, 1134 (8th
Cir. 1979).
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An EPA warrant was overbroad where it authorized access to
documents “of any type”. Matter of Investigation Pursuant to
aean Air Act . 728 F.Supp. 626 (D. Idaho 1990).
b. Some cases hold that the inspection may extend to matters
beyond the substance of the violations.
Once probable cause is established on the basis of an employee
complaint, the government may inspect the entire premises in
order to advance the broad remedial purposes of the act and
prohibit employees from presenting “sanitized” areas to
inspections while concealing violations elsewhere. Burkart
Randall Div. of Textron’ Inc. v. Marshall . 625 F.2d 1313,
1322.1326 (7th Cir. 1980).
Regulatory authority carries with it all modes of investigation
traditionally employed to exeaite the authority granted;
consequently, the EPA was authorized to use the traditional
techniques of taking background samples in areas other than
those where the violations existed. National.Standard Co. v.
Adamkus . 881 F2d 352,362(7th Cir. 1989).
The Consumer Product Safety Comniics ion has been authorized
to inspect all records relevant to determining compliance with
the act or regulations. Matter of Establishment Inspection of
Skil Corp. . 846 F.2d 1127, 1133(7th Cir. 1988).
A “wall-to-wall” inspection is permissible on the basis that,
among other thingS the company searched was scheduled for an
administrative plan inspection later in the year. Matter of
Inspection of Workplace . 741 F.2d 172, 175-177 (8th Cir. 1984).
A warrant is not overbroad where it authorized government to
go anywhere on the plant to look for certain violations. fl E.
Oil. Inc. v. Marshall . 509 F.Supp. 802, 807 (E.D. Pa. 1981).
3. Some courts have ruled that the search may extend to matters beyond
the substance of the alleged violation where the search is pursuant to
a complaint or accident investigation program.
A warrant is not overbroad even though it authorized the search of an
area exceeding that of the complaint because the complaint was
handled as part of a valid complaint investigation program. Donovan
v. Burlington Northern. Inc. . 694 F2d 1213.
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An inspection conducted pursuant to OSHA’s accident investigation
program did not have to be limited to area where accident occurred.
Chicago Zoological Soc. v. Donovan . 558 F.Supp. at 1149.
A warrant is valid where complaint investigation was part of an
“investigation program designed to assure compliance with the Act.”
Hem Iron Works. Inc. v. Donovan . 670 F.2d at 841.
C. It Is Particularly Important To Delineate Carefully In The Warrant The Full
Nature And Scope Of The Inspection
Since, according to the Supreme Court, one of the key benefits of the
administrative warrant is that it clearly delineates the nature and scope
of the inspection, the government should take advantage of the
opportunity to carefully authorize every activity which is needed for a
complete inspection-search.
a. Geographic area - describe with particularity all areas of a
facility which need to be covered by the inspection. Specify
which buildings you desire to inspect.
b. Documents - describe all possible documents you wish to seize.
In particular, assure that you have specific authorization to
seize computerized records, discs, even computers themselves.
c. Tasks To Be Performed - Be sure to include authorization for
all tasks, such as digging monitoring, sampling, taldng
photographs, etc., which it will be necessary to perform during
the inspection.
d. Persons - Be sure to comprehensively list by name or function
all government agents who are authorized by the warrant to
participate in the inspection.
D. Carefully Prepare AU The Three Types of Documents Required To Obtain
The Warrant.
Application For Warrant - The application for the warrant is the
equivalent of the legal memorandum which explains your entitlement
to the warrant
- The application should include; (1) a citation to, and discussion
of, all statutory authorities which authorize the inspection; (2)
a summary of the key facts from your affidavit supporting the
warrant with particular emphasis on the facts which establish
administrative probable cause; and (3) a careful explanation of
any unique aspects of the scope of the search (such as locations
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where diggings must take place to uncover buried drums,
locations where monitoring wells must be dug and installed,
computers and computerized data which must be seized, etc.).
2. Affidavits In Support - Carefully prepare affidavits to support the type
of probable cause which is being used to justify the warrant and to
factually support any unique aspects of the scope of the warrani
a. When preparing affidavits to support probable cause under a
neutral inspection plan” standard, the following questions
should be considered:
(1) What is the inspection plan?
(2) Has it been reduced to writing?
(3) Who formulated the plan? What procedure was used in
formulating the plan?
(4) What criteria were used to select facilities for inspection
under the plan?
(5) Are the criteria neutral and unbiased?
(6) What policies does the plan seek to implement? Why
was the plan developed?
(7) Has the plan been applied consistently in the past?
(8) How was the facility to be searched selected under the
plan?
(9) How many times and on what dates has the facility been
inspected in the past? Why was the facility searched in
the past?
b. When preparing the affidavits to support probable cause under
a “specific evidence of violations” standard, the following
questions should be considered:
(1) What statutes and/or regulations have allegedly been
violated?
(2) What evidence is there of the violations?
(3) When did these violations allegedly occur?
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(4) How did the agency learn of the violations? From a
complaint? Who made the complaint, an employee,
private citizen, or business competitor? Who in the
Agency took down the complaint? Was it reduced to
writing and signed by the complainant?
(5) What steps did the agency take to verify the complaint?
Did they attempt an inspection? What did they
observe? Were they refused access to the facility? Did
the agency representatives comply with all statutory
procedures before being refused access?
(6) How detailed is the information provided in the
complaint?
(7) Does the agency have any information that would bear
on the credibility of the informant? If the informant is
an employee, has he recently been disciplined or
discharged? Is it a confidential informant?
(8) Does the facility in question have a history of statutory
violations?
(9) Has the facility ever been inspected before? When?
For what purpose?
3. The Proposed Warrant Authorizing The Inspection - A proposed warrant
anthori iing the inspection (literally, the warrant itself) should always be
prepared in advance and submitted to the judicial officer for their signature.
As previously emphasized, this order must be carefully thought out and assure
that it authorizes access for all individuals needed to perform the inspection
and that it authorizes all activities necessaly to complete a successful
inspectio lL
1V. EXECUTION OF ADMINISl1 ATIVE WARRANTS
A. The Need For An Adminictrative Warrant Is Usually Triggered By A
Regulated Entity’s Refusal To Allow An Inspection.
1. The typical setting involves an unannounced inspection or complaint
investigation.
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2. Should the inspector announce existence of complaint up front if the
inspection results from a complaint investigation? Whether it should
be immediately announced is debatable. Probably it should not be
automatically announced. At a minimum, however, the inspector
should truthfully answer if he is asked the basis for the inspection.
3. The inspector should ask unequivocally: Wifi you allow me to enter
at this time to conduct an inspection or investigation?
4. Examples of types of refusals: Come back Thursday when the
environmental ni n ger will be here. Call the environmental m n ger
to make an appointment. Get a warrant Over my dea l body.
5. It should be remembered, however, that refusal is not necessarily
required to obtain a warrant. Check your statute.
B. The Environmental Agency Has Three Options In Responding To A RefusaL
1. The inspector may reschedule the inspection or investigation.
2. The inspector’s supervisor or a staff attorney may call a representative
of company to negotiate ently.
3. The agency may seek as ailministrative search warrant.
C. The Inspectors And Government Attorneys Each Have An Important Role
In The Preparation Of The Warrant.
1. The inspector must be interviewed in order to get facts and
circumstances justifying the warrant, including infoniiadon surrounding
the denial of entiy if such denial occurred.
2. The inspector should explain to the attorney what activities the
inspector will want to conduct during the inspection or investigation,
e.g., take samples, review records, take photographs.
3. The agency must then prepare an inspection team.
4. The team must develop an inspection plan.
5. The team members must define all tasks which must be performed
during inspection and assign each task to a specific person: For
example, who handles sampling, waiky-talky, documentation of search
in log book, etc
12
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6. The team must gather equipment it will need: sampling, walky-talky,
2 cars, cameras, video recorders, etc.
7. Normally investigators who are strictly criminal investigators with no
civil or administrative enforcement responsibilities should not be
involved in this process.
D. Inspector-Attorney Cooperation Must Continue When Appearing Before The
Judicial Officer.
1. An Assistant U.S. Attorney or a local prosecutor’s office may help to
find an available judge. Some waiting, however, may be unavoidable.
2. When appearing before a judge, the attorney explains why the
government representatives are there and presents the papers.
3. The inspector signs the affidavit and answers any question the judicial
officer may have to the best of the inspector’s ability.
4. The judicial officer then signs the warrant
5. The total time before the judicial officer could be only 10 minutes.
6. The agency representatives should then meet with the law enforcement
officers who will present the warrant.
E The Agency Personnel And The Law Enforcement Personnel Must
Coordinate The Execution Of The Warrant
1. The law enforcement team serves the warrant (or lets inspector). They
usually stay around to make sure agency personnel get on property.
They may leave shortly after entiy unless complications occur.
2. The environmental agency team should perform the following tasks:
a. They conduct the actual inspection or investigation;
b. They usually must be on facility property just during daylight
hours and within three (3) days of issuance of the warrant,
unless otherwise authorized by the warrant.
c. They should contact the agency attorney if there are any
problems. The attorney may wish to be in a car across the
street from the facility.
13
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d. The agency team may question facility employees but the
employees are not necessarily required to respond (although
they may not interfere with the search).
e. The agency team should generally defer questions from facility
representatives and employees concerning the search to the
agency attorney.
F. Procedures For The Return Of The Warrant Must Be Carefully Followed
1. Both an inspector and a facility representative must sign a form listing
an inventory of times seized.
2. An inspector signs a return of warrant form.
3. Agency personnel should then assure that these two forms are returned
to the court.
0. Because Of Conflicts And Confusion In Various Court Decisions, Agency
Personnel Must Be Sensitive To The Possibility That Evidence Of Criminal
Violations May Be Discovered During The Inspection.
1. If evidence of a crimin 1 violation is discovered during the execution
of the a iministrative warrant the inspectors should notify the attorney
immediately.
2. The reason the attorney must know is that a crimirnil warrant may be
appropriate in order to use the evidence in a future crimin 1
proceeding.
3. There are at least two (2) options at that point
a. Stop adniinb trative warrant and obtain crimin 1 warrant.
b. Complete administrative warrant and obtain criminal warrant.
4. In order to anticipate this problem, sometimes a separate team can be
standing by to obtain a criminal warrant if it is suspected that evidence
of criminal conduct may be found.
14
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FILED
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS d PA’
AUSTIN DIVISION 1 I 02 iii
IN THE MATTER OF: ) U•S. CL OFFICE
) BY
Craven Laboratories, Inc. ) Docket No. ____________
Austin, Texas )
) WARRANT AND ORDER FOR
) ENTRY AND INVESTIGATION
) PURSUANT TO SECTION 9(B)
OF THE FEDERAL
INSECTICIDE, FUNGICIDE,
AND RODENTICIDE ACT
TO: ANY DULY DESIGNATED OFFICER OR EMPLOYEE OF THE
ADMINISTRATOR OF THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,
UNITED STATES MARSHAL, OR OTHER FEDERAL OFFICER:
Application having been made by the United States Attorney on
behalf of the Environmental Protection Agency (EPA) for a warrant
to enter, inspect, and copy records at Craven Laboratories, Inc.
to determine compliance with the Federal Insecticide, Fungicide,
and Rodenticide Act (FIFRA), 7 U.S.C. SS 136—136(y), the court
being satisfied that there is reason to believe that the provisions
of FIFRA and the regulations promulgated thereunder have been
violated, and that sufficient grounds exist for the issuance of a
warrant;
IT IS HEREBY ORDERED that EPA, through its duly designated
officers or employees, the U. S. Marshal, or other Federal
Officers, are hereby entitled and authorized to enter the premises
of Craven Laboratories, Inc. located at 2800 Longhorn Blvd.,
Austin, Texas.
IT IS FURTHER ORDERED that EPA, through its duly designated
officers and employees, the U. S. Marshal or other federal
-------
officers, shall be authorized and permitted to enter and re-enter
the above described premises during normal businsess hours or at
other reasonable times to conduct the following activities:
1. Inspect the laboratory facilities of Craven Laboratories,
Inc. to determine its compliance with the Good Laboratory
Practice (GLP) Standards promulgated under FIFRA at 40
CFR Part 160 as amended by 54 Fed. Reg. 34052 (08/17/89).
2. Review all records including, but not limited to
operating manuals, protocols, directives and guidance
pertinent to the operation of the Craven Laboratories,
Inc. in accordance with GLP Standards.
3. Review all records related to the work of Craven
Laboratories, Inc. in connection with the Ethylene
bisdithiocarbamate (EBDC)/Ethylene thiourea (ETU)
National Food Survey - EPA Data Call-in Notice of March
10, 1989.
4. Copy any records necessary to document whether Craven
Laboratories, Inc. is in compliance with FIFRA
requirements.
5. Take any other actions necessary to adequately inspect
the premises or review records needed to assess
compliance with FIFRA.
IT IS FURTHER ORDERED that records may be removed from the
premises of Craven laboratories, Inc. for copying, provided that:
(1) any such records so removed are properly receipted for by the
representatives of the EPA, (2) Craven Laboratories, Inc. may send
2
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one of its employees to accompany the EPA representatives during
such copying, and (3) such records shall be returned within 72
hours of the time they were first removed frog the premises.
IT IS FURTHER ORDERED that EPA, through its duly designated
officers, employees or representatives is hereby entitled to and
shall be authorized to seal the above described records in their
containers, or in containers to be provided, until such records can
be copied, provided that (1) sealed records which are necessary for
the conduct of the everyday businsess affairs of Craven
Laboratories, Inc., shall be reviewed and/or copied and unsealed
first, (2) any other records which are sealed shall be reviewed
and/or copied and unsealed before other records are examined and/or
copied, and (3) the seals placed on the containers which hold the
records may be broken only by a person authorized to place the
seals or pursuant to court order.
IT IS FURTHER ORDERED that a copy of this warrant shall be
left at the premises at the time of investigation.
IT IS FURTHER ORDERED that this warrant shall be valid for a
period of 10 days from the date of this warrant.
IT IS FURTHER ORDERED that the United States Marshal is hereby
authorized and directed to assist the representatives of the United
States Environmental Protection Agency in such manner as may be
reasonable, necessary, and required.
IT IS FURTHER ORDERED that a prompt return of this warrant
3
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shall be made to this court within 10 days from the date hereof,
showing this warrant has been executed.
Date: _____ co
United St 1 tes Magistrate
4
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FILED
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION S
IN THE MATTER OF: ) U.S. CLL;(
Craven Laboratories, Inc. ) Docket No. ___________
Austin, Texas )
) APPLICATION FOR AN
ADMINISTRATIVE
SEARCH WARRANT
)
The United States of America, on behalf of the Administrator
of the Unites States Environmental Protection Agency, through
Ronald F. Ederer, United States Attorney for the Western District
of Texas applies for an administrative warrant to enter, inspect,
and copy records at Craven Laboratories, Inc., 2800 Longhorn Blvd.,
Austin, Texas, to determine compliance with the requirements of the
Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). There
is reason to believe that the provisions of Section 8(a) of FIFRA,
7 U.S.C. § 136f(a), and the regulations promulgated thereunder,
have been violated. Section 9(b) of FIFRA, 7 U.S.C. § 136g(b),
authorizes the issuance of a warrant to duly designated employees
of Administrator for the purposes listed above. In support of this
application, the United States submits the affidavit of a duly
designated employee of the Administrator and a proposed warrant.
Respectfully submitted,
RONALD F. EDERER
UNITED STATES ATTORNEY
By:
Assistant U. S. Attorney
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FILED
UNITED STATES DISTRICT COURT ç j
WESTERN DISTRICT OF TEXAS 1 01 ?n ‘ Sf)
AUSTIN DIVISION ,, ,, -
(dL. ’ S :FF CE
IN THE MATTER OF: ) BY
DEPUTY
Craven Laboratories, Inc. ) Docket No. ____________
Austin, Texas )
AFFIDAVIT IN SUPPORT OF
APPLICATION FOR AN
ADMINISTRATIVE
SEARCH WARRANT
)
State of Texas
County of Travis:
Diane Bradway, being duly sworn upon her oath, according to law,
deposes and says:
1. I am an enforcement officer with the United States
Environmental Protection Agency, National Enforcement
Investigations Center, and have been duly designated by the
Administrator of the United States Environmental Protection Agency
for the purpose of conducting inspections pursuant to all Federal
Laws administered by the United States Environmental Protection
Agency. My duties include the investigation of potential vio-
lations of the Federal Insecticide, Fungicide, and Rodenticide Act.
2. I currently am involved in an investigation of Craven
Laboratories, Inc. concerning violations of FIFRA and the FIFRA
Good Laboratory Practice Standards.
3. Craven Laboratories, Inc. is and has been involved in
conducting a study of the residues p1 pesticides known as Ethylene
bisdithiocarbainates (EBDC) and a common inetabolite (in the human
body) ethylene thiourea (ETU). This study is critical to the risk
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assessment of the EBDC pesticides. In order for EPA to adequately
assess the potential risk to the public health or the environment,
it must have reliable data concerning the residues of EBDC’s and
ETU in foods.
4. To design the study, approve the study protocol and
oversee the work being done by Craven Laboratories, Inc., as well
as other laboratories, a Task Force was established by the
manufacturers of these EBDC pesticides.
5. On August 9, 1990, Edward M. Ruckert, legal counsel for
the Task Force, reported that there may be irregularities with some
data from Craven Laboratories, Inc. and asked for a meeting to
discuss the situation. See attachment 3. - Letter from Ruckert to
Tinsworth.
6. On August 13, 1990, EPA met with members of the Task
Force to discuss the data irregularities reported by Mr. Ruckert.
See Attachment 2 — Notes of August 13, 1990 Meeting with Task Force
to EBDC Files.
7. An EPA employee, Francis B. Suhre participated in that
meeting and subsequently briefed me regarding the meeting.
8. According to Mr. Suhre, and as related in the notes of
August 14, 1990 meeting, the Task Force informed EPA that, based
upon information received from an informant at the laboratory,
Craven Laboratories, Inc. laboratory technicians had manipulated
analytical instruments while calibrating the instruments and while
analyzing quality control samples. These manipulations violated
the procedure set forth in the protocol approved for the study.
2
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9. These manipulations would affect the quality of the data
obtained by Craven Laboratories, Inc. In particular, the accuracy
of the data reported at or near the instrument’s lover limit of
detection could be seriously compromised.
10. The integrity of the data at the lower limit of detection
is critical in this study because pesticide residues are typically
found at these levels. Under the approach that Craven
Laboratories, Inc. has apparently taken, much of the data on
pesticide residues might be lost because the lower limit of
detection was artificially raised by Craven’s manipulation of the
analytical instruments. The result would be that the Agency’s risk
assessment would be based on incomplete and inaccurate data. For
example, a risk assessment based upon Craven’s data would
understate the amount of EBDC in the average person’s diet.
11. On August 23, 1990, Craven Laboratories, Inc. was
notified by letter that EPA would conduct a Good Laboratory
Practice Standards compliance inspection and audit the EBDC study
under the authority of FIFRA. They were notified that the
inspection would begin September 4, 1990 and conclude on
September 7, 1990.— See Attachment 3 — Letter from Dull to Craven.
12. On August 29, 1990, Gerard Treanor, counsel for Craven
Laboratories, Inc. notified EPA that the inspection could not take
place September 4-7, 1990. See Attachment 4 — letter from Treanor
to Dull.
13. On August 30, 1990, I participated, along with counsel
for EPA, in a conference via telephone with Mr. Treanor. He was
3
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informed that we still intended to conduct the inspection on
September 4, 1990, given the Agency’s clear authority to conduct
such inspections under FIFRA, notwithstanding the company’s
consent. Nevertheless, we told him that we were willing to delay
the inspection one or two days if it would allow him to address his
client’s concerns. In response to our offer Mr. Treanor stated
that no inspection could take place at any time during that week.
14. Under Section 8(a) of FIFRA, 7 U.S.C. S 136f(a), it
states that “(t]he Administrator may prescribe regulations
requiring producers, registrants, and applicants for registration
to maintain such records with respect to. ...pesticides and devices
produced as he determines are necessary for the effective
enforcement of this Act and to make the records available for
inspection and copying in the same manner as provided in subsection
(b) .
15. The EPA Administrator has promulgated the FIFRA Good
Laboratory Practice (GLP) Standards, 40 CFR Part 160, which
“prescribes good laboratory practices for studies and support....
permits for pesticide products regulated by the EPA....to assure
the quality and integrity of data....” 40 CFR S 160.1(a).
16. The GLP Standards apply to studies performed by the
pesticide producer or registrant and to studies performed by an
independent testing laboratory, such as Craven Laboratories, Inc.,
acting as agent for the pesticide producer or registrant. See 40
CFR S 160.10.
17. The GLP Standards require that analytical equipment shall
4
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be adequately calibrated. 40 CFR § 160.63(a).
18. The GLP Standards require that a study be conducted in
accordance with the protocol. 40 CFR S 160.130(a).
19. Section 12(a) (2) (Q) of FIFRA, 7 U.S.C. § 136j(a)(2)(Q),
makes it unlawful for any person: “ [ T]o falsify all or part of any
information relating to the testing of any pesticide (or any
ingredient, metabolite, or degradation product thereof), including
the nature of any protocol, procedure, substance, organism, or
equipment used, observation made, or conclusion or opinion formed,
submitted to the Administrator, or that the person knows will be
furnished to the Administrator or will become part of any records
required to be maintained by this Act”.
Diane Bradway
Residue Chemist and
Enforcement Officer
Subscribed and sworn before me this day of
September, 1990. c
United S tes Magistrate
5
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF FLORIDA
IN THE MA1 rI a OF: )
)
MARYLAND ASSEMBLIES, INC. ) Case No. 89—444128
PERRY, FLORIDA )
WARRANT AND ORDER
FOR ENTRY AND
INVESTIGATION
) PURSUANT TO SECTION
3007 OF THE RESOURCE
) CONSERVATION AND
RECOVERY ACT, AS
) AMENDED, 42 U.S.C
) §6927, SECTION 308 OF
) THE CLEAN WATER ACT,
) AS AMENDED, 33 U.S.C.
) §1318, SECTION 114 OF
) THE CLEAN AIR ACT, AS
) AMENDED, 42 U.S.C.
) §7414, AND SECTION 11
) OF THE TOXIC SUBSTANCES
AND CONTROL ACT, AS
AMENDED, 15 U.S.C.
§2610
TO: J. Scott Gordon, Florida Coordinator for the Waste
Compliance Section, United States Environmental Protection
Agency, (hereinafter referred to as “EPA”), Region IV, any
duly designated officer or employee of the EPA-National
Enforcement Investigations Center, any other duly designated
officer, employee, or representative of the Administrator of
the EPA.
-------
Application having been made by the United States Attorney
based upon an affidavit made before me, by J. Scott Gordon on
behalf of the EPA for a warrant of entry, inspection,
reproduction of records, and sampling to determine compliance
of Maryland Assemblies, Inc., (hereinafter referred to as “the
premises”, and which is an entity more particularly described
in the attached Affidavit, which is hereby incorporated by
reference) with the Resource Conservation and Recovery Act,
the Clean Water Act, the Clean Air Act, the Toxic Substances
Control Act, as cited above; and, the court being satisfied
that there has been a sufficient showing that reasonable
legislative or administrative standards for conducting an
inspection and investigation have been satisfied;
IT IS HEREBY ORDERED that EPA through its duly
designated officer, J. Scott Gordon and any authorized
attorney or representative of said Agency is hereby entitled
and authorized to have entry upon the premises.
IT IS FURTHER ORDERED that entry, inspection,
reproduction of records, and sampling shall be conducted
during daylight hours within reasonable limits, and in a
reasonable manner.
IT IS FURTHER ORDERED that the warrant shall be for the
purpose of conducting an entry, inspection, reproduction of
records, photography, and sampling pursuant to the laws cited
above consisting of the following activities:
1. Entry to, upon, or through the above described
2
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premises including all buildings, structures, pits, open
ground, and other sites where hazardous wastes are, or have
been, generated, stored, treated, or disposed of, or
transported from.
2. Inspection, sampling, photography, and
investigation of the premises.
3. Access to company records shall include, but not
be limited to, any record required to be kept under the
following federal laws:
42 U.S.C. §6901, et seq. , as amended
15 U.S.C. §2601, et sea. , as amended
33 U.S.C. §1251, et sea. , as amended
42 U.S.C. §7401, et sea. , as amended
4. Access to and reproduction of all records
(including computer records) pertaining to or relating to
hazardous wastes and processes which generate hazardous
wastes, wastewater discharge, air emissions, and handling of
PCB’s or PCB equipment. Any other records which pertain to
Maryland Assemblies, Inc., and/or the premises, compliance
with the above—cited laws may be reviewed and reproduced.
5. To take any further activities deemed necessary by
EPA to adequately inspect and sample the property as
authorized by any of the federal laws referenced above in
paragraph 3.
IT IS FURTHER ORDERED that if records are reproduced
off the premises, (1) any such record so removed shall be
3
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properly receipted for by the representatives of the EPA, (2)
Maryland Assemblies Inc., may send one of its employees to
accompany the aforementioned representatives of EPA during
such reproduction, and (3) such records shall be returned
within 72 hours of the time they are first removed from the
premises.
IT IS FURTHER ORDERED that the United States of
America, EPA, through its duly designat d representative or
representatives is hereby entitled to and shall be authorized
to seal the above described records in their containers, or
in containers to be provided, until such records can be
copied, provided that (1) sealed records which are necessary
for the conduct of thi everyday business affairs of Maryland
Assemblies, Inc., and/or the premises, shall be reviewed
and/or copied and unsealed first, (2) any other records which
are sealed shall be reviewed and/or copied and unsealed before
other records are examined and/or copied, and (3) the seals
placed on the containers which hold the records may be broken
only by a person authorized to place the seals or pursuant to
court order.
IT IS FURTHER ORDERED that EPA representatives may halt
and sample any waste shipments.
IT IS FURTHER ORDERED that a copy of this warrant shall
be left at the premises at the time of investigation.
IT IS FURTHER ORDERED that an inventory identifying any
material removed from the premises shall be furnished by the
4
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EPA to the owner, operator, or representative of Maryland
Assemblies, Inc., and/or the premises.
IT IS FURTHER ORDERED that this warrant shall be valid
for a period of 10 days from the date of this warrant.
IT IS FURTHER ORDERED that a prompt return of this
warrant shall be made to this court within ___ days from the
date hereof, showing this warrant has been executed, and the
entry and activity authorized herein has been completed within
the time specified.
1 ’wi e. 4
United States Magistrate
2.7 i’ ’3
o OIM.
5
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UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
IN THE MATTER OF: ) No.
)
NATIONAL STANDARD COMPANY ) WARRANT AND ORDER FOR ENTRY AND
CITY COMPLEX AND LAKE STREET ) INVESTIGIATION PURSUANT TO
PLANTS ) SECTION 3007 OF THE RESOURCE
MILES, MICHIGAN ), CONSERVATION AND RECOVERY ACT OF
) 1976, AS AMENDED, 42 U.S.C. S6927
TO: THE UNITED SrATJ S MARSHAL FOR THE WESTERN DISTRICT OF
MICHIGAN AND ANY OFFtCER, EMPLOYEE, OR DESIGNATEI) REPRESENTATIVE
OF THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY (U.S. EPA).
An affidavit by Carol Ann Witt, having established that for
the purposes of enforcing the provisions of RCRA it is necessary
to inspect anti obtain samples at the National—Standard Company
facilities located at 601 N. Eighth Street (City Complex Plant)
and at 1631 Lake Street (Lake Street Plant) in Niles, Michigan;
an application by the United States of America, on behalf of
the U.S. EPA, having established that the issuance of this
warrant is constitutional, and that the right of the U.S. EPA
to enter and investigate is authorized by the Solid Waste
Disposal ACtL as amended by the Resource Conservation and
Recovery Act of 1976 (RCRA), as further amended by the Hazardous
and Solid Waste Amendments of 1984 (HSWA), 4. U.S.C. S6901 et
and this Court having foun i that reasonable grounds exist
for issuance of a warrant, IT IS HERERY ORDERED THAT upon
service of this Warrant upon National—Standard Company or upon
-------
—2—
its duly designated representative, any officers, employees and
designated representatives of the U.S. EPA, including the Michigan
Department of Natural Resources (MDNR) and their officers, employees
and designated representatives, and including U.S. EPA contractors
and subcontractors, and the United States Marshal, shall be
permitted to enter upon the property described as:
1. All property owned by or in the possession of National—
Standard Company located at 601 N. Eighth Street (City
Complex plant), City of Niles, Berrien County, Michigan.
2. All property owned by or in the possession of National—
Standard Company located at 1631 Lake Street (Lake Street
plant), City of Niles, Berrien County, Michigan.
IT IS FURTHER ORDERED that officers, employees and designated
representatives of the U.S. EPA, including the MDNR and their
officers, employees and designated representatives, and including
any duly designated U.S. EPA contractors or subcontractors, and
the United States Marshal, shall be authorized and permitted to
enter and reenter the above—described premises during the
hours of 7:00 a.m. to 7:00 p.m. to conduct thereon the following
activities:
1. To bring upon the property for use, and during the ten
(10) working days authorized by this warrant, to leave upon the
property, all eouipnent and vehicles needed for inspection and
sampling.
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—3—
2. To take a maximum of sixty (60) soil, ground water,
surface water and air samples, not including equivalent samples
provided to the company, at approximately 45 locations as
needed to investigate releases or possible releases of hazardous
waste or constituents from any units which U.S. EPA designates
as Solid Waste Management Units (SWMUs) at the property. Such
sampling shall include the taking of background samples at the
property.
3. To package and process such samples for analysis at an
off—site laboratory.
4. To take photographs to document the sampling activity.
5. To take any further activities deemed necessary by U.S.
EPA to adeauately inspect and sample the property as authorized
by Section 3007 of RCRA/HSWA, 42 U.S.C. S6927.
IT IS FURTHER ORDERED that a copy of this Warrant shall be
left at the premises at the time of investigation.
IT IS F RTHER ORDERED that a brief inventory identifying any
material removed from the premises shall be furnished by the U.S.
EPA to the owner, operator, or representative of National—Standard
Company.
IT IS FURTHER ORDERED that the duration of the entry, inves-
tigation, and activity authorized by this Warrant shall be of
such reasonable length to enable the U.S. EPA to satisfactorily
-------
—4—
complete the above—described activities. Entry shall not be
permitted for longer than ten (10) working days front the date
hereof for purposes of insepection and sampling. -
IT IS FURTHER ORDERED that the United States Marshal is
hereby authorized and directed to assist officers, employees, and
representatives of the U.S. EPA in such manner as may be reason-
able and necessary to properly execute this Warrant and all the
provisions contained herein.
IT IS FURTHER ORDERED that a prompt return of this Warrant
shall be made to this Court within one hundred eighty (180) days
from the date hereof, showing this Warrant has been executed, and
that the entry and activity authorized herein has been completed
within the time specified above.
Dated this ______day of June, 1987.
Stephen W.
Ui tsd Siat• 1 gigfr
United States Magistrate
Cei*d flaAbve
U S. Distnd Cow?
Westecn d Michigift
Date JUN I I J
-------
RETURN OF SERVICE
I hereby certify that a copy of the within Warrant was
served by presenting a copy of the same
to ________________________________ an agent
of _____________________________________
_______________________________________ 1987 at the National—
Standard Company facility located at 601 N. Eighth Street (City
Co nplex Plant) in Miles, Berriert County, Michigan.
Official Title
RETURN
Inspection of the establishment described in this Warrant
completed on _____________________________, 1987.
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INVENTORY OF PROPERTY RECEIVED
PURSUANT TO WARRANT
While conducting the entry and inspection of the Jationa1—
Standard Company facilities located at 601 N. Eighth Street (City
Complex Plant) in Niles, Berrien County, State of Michigan, on
_________________________________, 1987. I, _______________________
seized certain property. The following is an inventory of the
property seized:
I hereby and affirm that a recipt for the property was signed by me
and left with ______________________________
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RETURN OF SERVICE
I hereby certify that a copy of the within Warrant was
served by presenting a copy of the same
to __________________________________________ an agent
of _______________________
on ______________________, 1987, at the National—Standard Company
facility located at 1631 Lake Street (Lake Street Plant) in Niles,
Berrien County, Michigan.
Official Title
RETURN
Inspection of the establishment described in this Warrant completed
on ______________________________, 1987.
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INVENTORY OF PROPERTY RECEIVED
PURSUANT TO WARRANT
While conducting the entry and inspection of the National—
Standard Company facilities located at 601 N. Eighth Street (Lake
Street JPlant) in Niles, Berrien County, State of Michigan, on
________________________________, 1987, I, ______________________
seized certain pçoperty. The following is an inventory of the
property seized:
I hereby and affirm that a recipt for the property was signed by me
and left with
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BEFORE THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
EPA REGION II, 26 FEDERAL PLAZA
NEW YORK, NEW YORK, (212) 264—5335
)
IN THE MATTER 0F2 ) SUBPOENA AD TESTIFICANDUM
)
EASThAN KODAK COMPANY ) AND SUBPOENA DUCES TECUM
)
—- No. II TSCA—SUB—88-0202
T ’ R. Frederick Porter
Vice President end Assistant General Manager
Kodak Park Division
Eastman Kodak Company;
and designated individuals having knowledge of the processes
arid operations at the Eastman Kodak facility known as
MK ak Park’.
YOU ARE HEREBY COMMANDED, pursuant to the provisions contained
in Titli 15, United States Code, Section 2610(c) (Toxic Sub-
stances Control Act, Section l1(c)3 TO APPEAR IN PERSON at
the following time and placei
DATE MID T!ME August 30, 1988 at 9z30 AM
PLACES Federal Building — Room 620
Rochester. New York 14614
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YOU ARE COMMANDED FURTHER TO TESTIFY then and there upon oath
and MAKE TRUTHFUL RESPONSE to all lawful inquiries and question.
then and there put to you on behalf of the Unit•d States Envi—
rrnimental Protection Agency, relating to the matters set forth
in the attached pages. and TO RF .1AfN IN ATTENDANCE until
expressly excused by the of fici l conducting the proceeding en
behalf of EPA. In addition to appearing personally. you may
designate person. with knowledge of these matters to testify on
behalf of Eastman Kodak Company.
YOU ARE COMMANDED FURTHER TO BRING WITH YOU at the above atated
time and place, and then TO PRODUCE for inspection and/or copy-
ing by EPA, th. documents and other items described in the
Attachment.
You may claim any information that you submit in response to
this subpoena to be confidential business information; pleas.
mark each page containing such info mae ion with the word wCOfl_
fidentiat TM . If you wish to make a claim of confidentiality for
this. information, you must do so by the data set forth above.
Any documents or other information not marked confidential will
be avef labia to the public. That portion of your response to
the subposna marked as confidential will, be handled maccord. .
ance with EPA’s public information regulatIon. (40 C.F.R. Part
2). if you claim information submitted in response to this
subpoena as confidential, you must also provide a redacted
version-of the information with all. TSCA confidential
business information deleted.
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FAILURE TO COMPLY WITH THIS SUBPOENA MAY RESULT IN A COURT
ACTION AGAINST YOU.
Issued at New York, New York, this day of 4 M t. , 1988.
W ama. uszn
Acting Reg onal A inietrator
EPA Region 11, New York. New York 10278
Attorney Contacti
Terry Sullivan
Assistant Regional Counsel
Waste and Toxic Substances Branch
United States Environmental Protection Agency
26 Federal Plaza
New York, New York 10278
(212) 264—4544
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ATTACHMENT TO SUB P0 NA
In The Matter of Eastman Kodak Company
I. INSTRUCTIONS AND DEFINITIONS
1. The words “and” and “or” ha]1 be construed conjun—
tivel.y or disjunctively as necessary to make the request inclu—
give rather than exclusive.
2. When a question asks for identification or other
response regarding the “character” of a substance the identifi—
cation or response shall include a description of the substan—
Stand’s composition in terms of chemical elements, compounds or
mixtures,
3. “Chemical Substance” or “substance” includes any
organic or inorganic substance as defined in 15 U.S.C. Section
2602(2). A chemical substance includes; without limitation, a
solid, semi-solid, liquid, fluid or oil material containing
chemical., as well as any mixture thereof.
4. “Disposal” or Dispose” means the discharge, deposit,
injection, dumping, spilling, leaking, or placing of any waste
into any or on any land or water so that such waste or any con-
stituent thereof may enter the environment or be emitted into
the air or discharged into any waters, including ground waters.
5. The word “document” or “documents” means all written,
typewritten, handwritten, or printed matters, including drafts,
originals, and nonconforming copies that contain deletions,
insertions, handwritten notes or comments, or graphic matter of
any kind or nature, however produced or reproduced. Any form of
éollected data for use with electronic data processing equip-
ment, and any mechanical or electronic, visual or sound r.cord—
ings including, without limitation, all tapes and discs, now or
formerly in your possession, custody or control. It includes.
but is not limited to, any loge of materials or containers
shipped, a. well as other logs, invoices, purchase orders,
receipts, bills of lading, weight receipts, toll receipts, load-
ing tickets, receiving tickets, shipping orders, manifest., in-
ventories, letters and other correspondence, contracts, igre.—
ments, bids, proposals licenses, permits, communications with
government agencies, operating procedures, minutes of meetings,
source and use analyses, memoranda, handwritten or other notes,
calendar or diary entries, agendas, bulletins, graphs, charts,
map., photographs, drawings, surveys, data, sampling results,
analytical results, descriptions of materials, load schedules,
price lists, summaries, telegrams, teletypes, computer print-
outs, magnetic tapes. discs, microfilm, and microfiche.
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For purposes of th. foregoing, “drafts” means any earlier,
preliminary, preparatory, or tentative version of all or part of
a document, whether or not such draft was superseded by a later
draft and whether or not the terms of the draft ore the same as
or different from the terms of the final document: and the term
“copies” means each and every copy of any document which is not
identical in every respect to the d9cument being produced.
6. “Identify” or “identity 1 ’ means:
Ci) as to a documenti the type of document (letter.
memorandum, etc.). the identity of the author or
originator, the date authorized or originated,
the identity of each person to whom the original
or copy was addressed or delivered, the identity
of each person known or reasonably believed to
have present possession, custody, or control
thereof, and a brief description of the subject
matter thereof.
(ii) as to a person: the name, present or last known
business and residence addrese(es), occupation,
job title, and dates so employed and, it not an
individual, state the full name, the type of
entity. the address of its principal place of
business, and the name,
7. The word “include” or “including” shall be construed
without limitation.
8. “Kodak Park” means the facility owned and operated by
the Eastman Kodak Company, located at 1669 Lake Avenue,
Rochester, New York. This includes all areas contiguous to this
address, and includes, but is not limited to, Kodak Park East,
Kodak Park West, KodaVista, Kodak Park X, Kodak Park 14, Kodak
Park S. Kodak Park T, Kodak Park V, Kodak Park Y, and all other
properties owned by the Eastman Kodak Company in that vicinity.
9 • The word “person” or “persona” as used herein includes
natural persona, .firms, partnerships, associations, joint
ventures, corporations, business trusts, banking institutions,
unincorporated organizations. and any other legal entity. The
word “person” or Npersons also means personnel or employees.
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10. A document or communication “relating to,” or that
“relates to,” a given subject means any document or
communication that constitutes, contains, embodies, •comprl.es,
reflects, identifies, states, refers to, deals with, Comments
on, responds to, describes, analyzes, or is in any way pertinent
to that subject, including, without limitation, a document
concerning th. presentation of other documents.
11. “Release” means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, or disposing into the environment.
12. “Storage” or “Store” means the containment of wastes,
either on a temporary basis or for a period of years, in such a
manner as not to constitute disposal of such waste..
13. “Treatment” or “Treat” means any method, technique, or
process, including neutralization, designed to change the
physical, chemical, or biologic&1 characteristic or composition
of any waste so as to neutralize such waste or so as to render
such waste nonhazardous, safer for transport, amenable for
recovery.
14. “You” and “your” means the person or entity to whom
these information requests are directed or persons acting on
his/its behalf, including officers, directors, agents,
attorneys, or employees or any such person and any merged,
consolidated, or acquired predecessor or parent, subsidiary,
division, or affiliate thereof.
15. Each document submitted shall be clearly and precisely
identified as to its title, author, date of preparation, subject
mattir, the numbered question to which it responds. and any and
all persons having any knowledge relating to the documents
sought by this subpoena.
16. If the information sought by thi. subpoena is not
contained in a document, separately identify the person(s) who
provided the information in your response, and the basis for
each person’s knowledge.
17. The plural shall include the singular and the singular
shall include the plural. Any reference to a male pronoun shall
also constitute reference to a female pronoun.
18. If any document was, but is no longer, In the
possession, custody. or control of Respondent, provide the
following information:
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—4
(a) stat. the disposition of the document;
(b) stat. the date such disposition was made;
Cc) identify the present custodian of the document
and state his address or, if the document no
longer exists, 60 stats;
Cd) identify the person who made the decision to
regarding th. disposition of the document,
Ce) state th. reason for’ the disposition: and,
Ct) describe the document end the content. of the
document. including the title, the author, the
position or title of the author, addressee, the
position or title of the addressee, indicated or
blind copies, date, subject matter, number of
pages. attachments or appendices, and all persona
to whom the document was distributed, shown, or
explained.
20. Provide three copies of the documents requested in
this subpoena, separated Into three distinct units, at the time
and place specified in the subpoena, or provide originals of the
documents which may be left with EPA until they are copied.
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II. TESTIMONY OF KODAK REPRESENTATIVE
1. The organization of Eastman Kodak Company (Kodak) as
it relates to operation. in Kodak Park and facilities
within a fifty—mile radiu. of Kodak Park, including general
management raspOnBibilitiea and authoritie, as they
relate to production and envirqrimental affairs.
2. The identity of each division, subdivision, or other Kodak..
related entity that is operating or has operated facilities
within the geographic area described in Number 1 above.
3. The location of all Kodak facilities identified in response
to Number 2 above, and the period the facility operated.
4. The identity of production processes and/or process lines
that are or have been used at each of the facilities identj
tied in Number 3 above and the period during which they
were operational.
5. A characterization of movements of chemical substances, in
liquid, solid, or gaseous form, that have occurred between
Kodak Park and other Kodak facilities within a fifty—mile
radius.
6. A general characterization of movements of chemical
substances between Kodak Park and Kodak facilities beyond a
fifty—mile radius.
7. The conveyance and method that had been or is being used
to transport each type of chemical substances described in
Numbers S and 6.
8. The identitj, for each division, facility, or plant, as
appropriate, of the person (by title) and/or group responsi-
ble for movements of chemical substances between Kodak Park
and other Kodak facilities within a fifty’ .mi]e radius.
9. A description of the types arid locations of records that are
or have been prepared for or by Kodak for movements of
chemical substances between Kodak Park and other Kodak
facilities within a fifty—mile radius.
10. A description of current operations at Kodak Park, explana-
tion of types of processes used in the operation., arid
identity of the associated buildings on a site map.
11. A description of the historical development of Kodak Park
and it. production operations. A description of when new
Op.rations were added and the identity of associated build-
ings and support facilities.
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12. The identity of arias within Kodak Park that have bean or
are being used to store chemical substances and the location
of the areas on a site map. The identity of storage areas
used for wastes products. intermediates, and recyclable
materials, end the approximate periods the areas have been
used for that purpose.
13. The identity of areas within Kodak Park where chemical
substances are being transferre’d from one type of conveyance
to another, or to a storage tank or container, and the
location of the areas on a site map.
14. The identity of areas within Kodak Park that are being used
for treatment, recycling, and/or disposal of chemical
substances, the approzin ate periods of use, and the location
of the areas on a site map.
15. The identity of the organizational unit(s) at Kodak Park
that has been and is responsible for compliance with
State and Federal environmental statutes and regulations.
16. A description of the management, authorities, responsibjlj
ties of the Kodak Environmental Technical Services Division.
and those of its comparable or predecessor organizational
unit Cs).
17. A description of spill response procedures being used at
Kodak Park for reloases of chemicals and when these procedure
were implemented. A description of and the identity of
locations of documents associated with responses to such
releases. A description of the types of releases that
would and would not be covered by the reporting procedures.
18. A description of areas where releases of chemical substances
tQ soil, surface water and/or ground water have occurred at
Kodak Park and the location(s) on a site map.
19. A description of the types and number of aerial photographs.
of Kodak Park in Kodak’s possession, area they cover, and
the dates they were taken.
20. A general description of the types of other photographs
which portray the historical development of Kodak Park and
its production operations which are in Kodak’s possession.
21. A description of Kodak’s policies and procedures for the
retention and destruction of documents pertaining to
operations at Kodak Park.
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III. INFORMATION AND DOCUMENTS REQUESTED
In order to supplement your answers to the questions listed in
Section II above, provide th. following informationi
22..As a supplement to question num’bsr 10, a description of each
curr n p oc ca line and ope ation at Kodak Park including:
a. schematic layout — designating all. major processes in .
cluding chemical substances addition and removal
points, the types or names of the chemical substances,
and a description of how chemical substances, once
removed, are managed.
b. narrative description of the operation. which take
place.
c. narrative description of discharges and losses from
each process line.
23. As a supplement to question numbers 12 and 17, a list of
all, storage areas ‘for chemical substances, the types of
chemical substances stored, and the spill retention or
containment steasures for each area.
24. As a supplement to question numbers 17 and 18, all document.
relating to spills, releases, other than permitted discharges
and emissions, of chemical substances, including all actions
taken to mitigate/remedy any releases.
25. As a supplement to question numbsr 21, all instruction..
protocols. methods, directions and other documents regarding
Kodak’s procedures for, and records of. the retention and
destruction of documents at Kodak Park. Such documentation
includes:
a. any and al ] logs or other documents identifying docu-
m•ntc which have been destroyed, and the date of such
destruction;
b. instructions for the length of tint. documents ar. to be
retained, including any exceptions to those procedures,
and the title of any employee authorized to make such
exceptions.
26. All Kodak facility maps refer.nc.d in Section II above that
are not otherwise requested herein. Any ether documents
used by Kodak representatives in presenting the testimony
in •sction ZZ.
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-‘4 ..- r ’ ’ .”rn ‘ti
‘.111 . • •...i ..fli .LI
• •- .‘‘.—. . •Iii., OF LiuiiiArIoN
BEFORE THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
401 N Street, S.W.
Washington, D.C. 20460
Til I UU’ M ’!”I P AP’I
)
)
TEXAS EASTERN TRANSMISSION ) SUBPOENA DUCES TECUM AND
CORPORATION ) SUBPOENA AD TESTIFICANDUM
)
)
__________________ )
TO: H. D. CHURCH
SENIOR VICE PRESIDENT ENGINEERING
AND OPERATIONS
TEXAS EASTERN GAS PIPELINE COMPANY
1221 Mcxinney, P.O. Box 2521,
HOUSTON, TEXAS 77252-2521, RESPONDENT
YOU ARE HEREBY COMMANDED, pursuant to the provisions contained
in Title 15, United States Code, Section 2610(c) (Toxic Substances
Control Act Section 11(c)) and the Title 42, United States Code,
Section 9622(e)(3)(B) [ Comprehensive Environmental Response Compen-
sation and Liability Act Section 122(e)(3)(B)J TO PRODUCE THE
DOCUMENTS and other items described herein at your offices on
1221 Mckinney, Houston, Texas, at 10 ,00 A.M. on April 14, 1987,
for inspection and/or copying AND, at the same time and place,
PROVIDE PERSON(S) WITH KNOWLEDGE regarding the matters addressed
herein to respond to questione relative to thes. documents.
YOU ARE COMMANDED FURTHER TO TESTIFY then and there upon
oath and MAKE TRUTHFUL RESPONSE to all lawful inquiries and
questions then and thers put to you on behalf of the United
Stat•s Environmental Protection Agency, and TO REMAIN IN
ATTENDANCE until expressly excussd by the official conductir g
the proceeding on b.half of EPA.
You may claim any information that you submit in r.sponee to
this subpoena to be confidential business Information; please
mark each page containi”g such information with the word Rconfi_
dential.N If you wish to make a claim of confidentiality for this
Information, you must - o so by the date set forth above. Any
documents or other information not marked confidential will be
available to the public. That portion of your response to the
subpoena marked as confide tia1 will be handled in accordance
with EPA’s public information regulatIons (40 C.F.R. Part 2). If
I
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you claim information submitted in response to this subpoena as
confid.ntial, you must also provide a redacted version of the
information with all TSCA/CERCLA confidential business information
deleted.
FAILURE TO COMPLY WITH THIS SUBPOENA MAY RESULT IN COURT PROCEEDINGS
AGAINST YOU IN A UNITED STATES DISTRICT COURT.
Issued: Washington, D.C., this day______ of
.1987.
David C. Batson
Toxic Litigation Division
U.S. Environmental Protection
Agency (LE—134P)
401 H. Street, S.W.
Washington, D.C. 20460
(2.02) 475—9501
National Enforcement Inveati2atLonR
Center Contacts
Barrett B. Benson
NEIC
Building 53
ox 25277
Denver, Co1orac o
‘(303) 236.5120
-‘-
THOMAS I. . . ADAMS, JR. K
Assistant Administrator fo \
Enforcement and- Compliance
Monitoring
Attorney Contacts
S0225
03/22 15:15
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#83
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ATTACHMENT TO SUBPOENA
In The Matter Of Texas Eastern Ca. Pipeline Company
I. INSTRUCTIONS AND DEFINITIONS
1. The words “and” and “or” shall i ,e construed conjunceively
or disjunctively as necessary to make I e request inclusive
rather than exclusive.
2. When a question asks for for (dentifleation or other
response regarding the “character” of a substance the identi-
fication or response shall include a description of the substance’s
composition in terms of chemical elements, compound. or mixtures.
Include a statement as to the probability of the substance containing
PCBs, or other hazardous substances, their concentrations if known
and method of analysts and the basis for this statement.
3. “(Themical Substance” or “substance” includes any organic
or inorganic substance as defined in 15 U.S.C. 12602(2). A
chemical, substance includes; without limitation, any solid,
semi.solid, liquid, fluid or oil material containing chemical.,
as well a. any mixture thereof.
4. “Closed unit” means any unit where the operating status of
the unit has been termtntated by means of closure activities.
5. “Closure activities”, means activities related to and
resulting in the termination of the operating status of a
pit or other unit. These activities may include cessation of
receipt of hazardous substances; backfilling; applying or
installing final covers or caps; disposing of decontaminating
equipment, structures, soil, and residual hazardous substance.;
and care and maintenance of the closed ptt or unit.
6. “Disposal” or “Dispose” means the discharge, deposit,
injection, dumping, spilling, leaking, or placing of any waste
into any or on any land or water so that such waste or any
constituent thereof may enter the environment or be emitted into
the air or discharged into any waters, including ground waters.
7. ‘The word “document” or “documents” means all, written,
typewritten, handwritten, or printed matters, including drafts,
originals, and nonconforming copies that contain deletions,
insertions, handwritten notes or comments, or graphic tatter of
,ir, eh , ail r r reoroduced. any form of
collected data for use with electronic data processing equipment,
and any mechanical or electronic, visual or sound recordings
including, without limitation, alt tapes and discs, now or for.
merly in your possession, custody or control. It includes, but
1,’22 i :ic
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.4.
is not Limited to, any logs of materials or containers shipped,
as veil. as other logs, invoices, purchase orders, checks, bankine
records, receipts, bills of lading, weight receipts, tol). receipts,
loading tickets, receiving tickets, shipping orders, manifests,
inventories, letters and other correspondence, offers, contracts,
agreements, bids, proposals, ltcense permit., communications
with government agencies, operating procedures, ledgers, account.
receivable, accounts payable, account etacem nts , financial
statements, monthly reports, other reports, minutes of meetings,
sales estimates, sates reports, source and u e analyses, memoranda,
handwritten or other notes, calendar or dtaiey’ entries, agendas,
bulletins, graphs, charts, maps, photog aphc 9 drawings, surveys,
data, sampling results, analytictil r nult ., deccriptions of
materials, load schedules, price lists, SUmmarieQ, telegrams,
teletypes, computer printout., magnetic tapes discs, microfilm,
and microfiche.
For purposes of the foregoing, “drafts” means any earlier,
preliminary, preparatory, or tentative version of all or part of
a document, whether or not such draft was superseded by a later
draft and whether or not the terms of the draft are the same as
or different from the terms of the final document; and the term
“copies” means each and evecy copy of ny document which is not
ienttctl inevery respect to the document being produced.
8. “Drum” includes eiahtv-f Lye (85) gallon overpack
ci&uiu , u.co ,i 41. flhr. n ke or
any other container or object less than fifty-five (55) gallons
capable of containment,
9. “Hazardous subctance” include, all solid, liquid,
sludge-like, gaseous, or other materials (including, without
limitation, PCBs, condensates, and all residues in drums and
all contact and non-contact water or process water employed
in an chemical or industrial operation) that are, that
contain, or may contain chemicals or chemical, industrial,
domestic or other by-products, test products, unused products,
materials that may be recycled, including mixtures or sewage
which could be discharged or placed into the air, any water,
lagoon, landfill, container, storage tank, barrel, durms,
ditch, trench or surface or subsurface impoundment, and any
other solid or hazardous weete, hazardous substance, or
pollutant or contaminant as defined in 42 U.S.C. 69O3(5) and
(27) or 42 U.S.C. t9601(14).
10. “Identify” or “indicate” means
(i) as to a document: the type of document (letter,
memorandum, etc.), the identity of the author
or originator, the date authorized or origi-
nated, the identity of each person to whom
the original or copy was addressed or delivered,
C,
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th. identity of each parson known or reasonably
bsli.v.d to have present possession, custody,
or control thereof, and a brief description of
the subject matter thereof.
(ii) as to a persons the name, present or last
known business and residence address(es),
occupation, job title, and dates so employed
and, if not an individual, state the full
name, th. type of entity, th. address of its
principal place of buiiness, and th.name,
ii. Th. word ‘include’ or 9ncludlng ’ shall be construed without
limitation.
12. ‘In—service’ unit means an active unit which is receiving,
treating, storing, disposing, or otherwise handling hazardous
substances and which is not a closed unit or undergoing closure
activities.
13. The terms ‘liquid’ or ‘liquids,’ and fluid’ or
•fluids,’ and ‘oil’ or ‘oils,’ shall b. construs’d broadlyto
include sludges, sludge—like materials and semi—solids so as
to make the request inclusive rather than exclusive.
14. The word ‘person’ or ‘persons’ as used herein includes
natural persons, firms, partnerships, associations, joint ventures,
corporations, business trusts, banking institutions, unincorporated
organizations, and any other legal entity. The word ‘person’
or ‘persons’ also means personnel or employe.e.
15. The term ‘pipeline’ includes any pipeline components
associated with the transmission of product.
16. ‘pit’ includes surface impoundments, lagoons, ponds,
diked areas, natural depressions, excavated holes, ditches, or
any other discrete natural or man—made structure or area which
is currently in use, has been used, or ii intended for use for
the receipt, sccv*ulation, storage, treatment, or disposal of
chemical or hazardous substances and which is not a tank nor drum
as defined hiram.
17. ‘Polychlorinated Biphenyls’ (PCB or PCBs) means any
chemical substance that it is limited to the biphenyl molecule
that has been chlorinated to varying degrees or any combina-
tion of substances which contain such substances as defined
In 40 C.P’.R. 5761.3.
19. A document or communication ‘relating to,’ that ‘relates
to,’ or that ii ‘in connection with’ a given subject means any
document or communication that constitutie, contains, embodies,
‘ ‘22 1 17
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.6 -
comprises, reflects, identifies, states, refers to, deals with,
comments on, respond . to, describes, analyzes, or is in any way
pertinent to that subject, including, without limitation, a docu-
ment concerning th. presentation of other documents.
19. ‘Service Facility Site’ means any property previously
or currently maintained or used by Texas Eastern or on behalf
of Texas Eastern including compressor stations, gas dehydration
facilities, tutor—separation facilities, sweetening facilities,
pumping stations, pipeline maintenance yards, any building,
structure, initaliction, equipment, pipe or pipeline (including
any pipe into a sewer or publicly owned treatment works), well,
pit, pond, lagoon, impoundment, ditch, landfill, storage container,
motor vehicle, rolling stock, or aircraft; any present, or
past pits or oth•r unit and any other location, titles and job
description used to generate, treat, store, dispose, plac.,
accumulate, collect, receive, transport, ship, or otherwise
manage waits, waste oils, lubricants, pipeline liquids and
compressor, dehydrator, hydraulic, and dielectric fluids,
PCB5, PCB containing materials or other substances used at
any time in the maintenance and operation of the Company’s
natural gas pipeline, or where any waste ha. otherwise comes
tø.be located.
20. Storage ’ or ‘Store’ means th. containment of wastes,
either on a temporary basis or for a period of years, in such a
manner as not to constitute disposal of such wastes.
21. ‘Tank’ includes any object capabi. of containment
that is not subject to inclusion under the definition(s) of
‘drum’ or ‘pit’, regardless of size, capacity or
construct ion.
22. ‘Texas Eastern Transmission Corporation’ or ‘Texas Eastern’
includes Texas Eastern Gas Pipeline Company (Texas Eastern Gas),
Roy F. Weston, Inc. (Weston) and any off ic.rs, directors, agents
or employees of Texas Eastern, Texas Eastern Gas, or Weston.
23. ‘Treatment’ or ‘Treat’ means any method, technique, or
process, including neutralizaton, designed to change the physical,
chemical, or biological characteristic or compoeition of any
waste so as to noutralize such waste or so as to render such waste
nonha ardous, safer for transport, amenable for recov.ry, amenable
24. When a questior asks for identification or oth.r response
regarding ‘type’ of a substance the identification or response shall
include a descriptio f the substance by method of generation,
such as pipeline conde-sate or pipeline liquid.
25. ‘Unit’ means descernibli unit, building, equipment, or
structure, wh•ther man-made or natural, which is now or was ever
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used for th. treatment, storage, disposal, or other handling of
wastes and substances. This definition includes pits, drums,
tanks, waits pills, land treatment units, ditches, incenerators,
injection wells, container storage areas, and transfer stations.
26. Each document submitted shall bs clearly and precisely
ld.ntif led as to its titis, author, date of preparation subject
matter, the numbered question to which it responds, and any and
all persons having any knowledge relating to the documents
sought by this subpoena.
27, Two sets of documents shall be submitted in response to
each question. The first I.e of documents will be arranged by
service Facility Site with the exception that documents provided
in response to questions regarding corporate—wide programs will
be organized in a separate group. The second set of document.
will be arranged by question number.
28. If the information sought by this subpoena is not
contained in a document, separately identify the person(s)
who provided the information in your response, and the basis
for each person’s knowledge.
29. The plural shall include the singular and the singular
a. • . .. I U l sh 11
also constitute reference to a female pronoun. -
30. If any document was, but is no longer, in the possession,
custody, or control of Respondent, provide the following informa—
tioru
(a) state the disposition of th. document;
(b) state the date such disposition was made;
Cc) identify the present custodian of the document
and state his address or, it the documónt no
longer exists, so state;
Cd) identify the person who made the decision to
regarding the disposition of the document;
(e) state the reason for the disposition; and,
(f) describe the document and the contents of
the document, including the title, the author,
the position or title of the author, addressee,
the poattion or title of the addressee, indicated
or blind copies, date, subject matter, number of
pages, attachments or appendices, and all persons
to whom the document was distributed, shown, or
explained.
03/22 15:19 7303024 *88
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31. In pr.parLn responses to this subpoena, all information
or document. requested by the government are to include and
cover the period be inntng January 1, 1q78 and conttnuin to
the present. In the event that information or document. which
are responsive Co thts subpoena predate 1918, but relate to
information or documents requested herein, they must also be
provided.
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II. Information and Documents Regulated
SERVICE FACILITY SITE DESCRIPTION
1. Provide a description of each service facility site including:
a. topographic map
b. schematic layout — designating all Compressors,
pits, storage tsnka(above and below ground), blow
down twiks, liquid separators, transformers,
large high andlarge low voltage capacitors, or
other units
c. architectural and engineering drawinge of all
systems a. installed
d. any available geologic data including distance to
ground water, analysis of ground water, ground water
flow direction *
e. the location of all domestic and industrial wells
WiI,4&• 4$ lIIaè%, 4 %m i..a ;t f II4 *
wells
f. narrative description of th. operations which take
place or have ever taken, place at the site
g. copies of al]. operating procedures developed by
or for each individual service facility site:
compressor operation/servicing
— removal of fluid
— storage of fluid
— disposal of fluid
— clean-up of spills
— filter separator operation/servicing
2. For each pit, tank or other unit at each service facility
site, describ, the purpose of each unit (e.g., evsporation,
sedimentation, neutralization, burning or incineration).
3. For multiple pits, tanks or other units for each service
facility site, provide flow charts describing the relationship
between units.
4. Provid. a list by service facility eite of all compressors
operated by Texas Eastern, indicate the type of compressor
and size.
COMPRESSORS
S. For each compresso at each service facility site, provide
a monthly summary and supporting documents of the volume,
type, vendor, scientific name, commercial name, and character
of the chemical substances purchased for maintenance, repair
or replacement of each compressor, and nam.., title, and
job description of employees who executed the purchases.
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6. For •ach compressor at each service facility site, provide
— — ., — ; - —: ——— — ‘ ••
type, source, scientific name, commercial name, and
character of the chemical substances added to each compressor,
and names, title, •nd job description of employee, who
performed this function.
7. Provide maintenance and servicing records for each compressor
by service facility site, including the names, title and job
description of employees who per or ed this function.
8. For each compressor at each service facility site, provide
a monthly summary and supporting documents of the volume,
type, and character of the hazardous substances intentionally
or unintentionally removed from each compressor; the reason
and method of removal, the volume, character and location of
any of this hazardous substanc. placed in storage, the
method of transport to the storage unit, the volume, character,
method of disposal and ultimate disposal site of the removed
ahzardous substances and the names, title and job description
of employees who performed these functions.
9. Poe each compressor at each servico facility site, provide
a monthly summary and supporting documents of compressor
blowouts or seal failures and the volume of chemical or
hazardous substance lost In each failure.
10. Provide all documcnt pertaining to the sources and causes of
pipeline liquids, the character of the liquids, and programs
implemented for their removal.
10(a) , Provide all documents, or in the absence of documents prepare
a narrative, describing what occurs due to compressor ‘b3.owouts’
or seal failures and the resultant entry of compressor fluids
into th• pipeline system.
FILTER SEPARATORS
11. Provid, a list by service facility site of all filter
separators that are now or have ever been operated by Texas
Eastern. Indicate the type of filter separator, size,
installation date, and any and all removal efficiency data
dev.lop.d by the manufacturer and Texas Eastern.
11(a), For each filter separator at each service facility site,
provid, a monthly summary and supporting documents of the
— — — — 1
—•‘— —..— —
substances intentionally or unintentionally removed from
•ach filter separator; the volume, character and location of
any chemical or hazardous substances placed in storage, the
volume, character and u1timat disposal sits of the removed
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chemical or hazardous substances, and th. names, titles, and
job description of employee who performed these functions.
DEHYDRATORS
12. Provide a list by servic, facility sits of all dehydrator.
that are operated by Texas Eastern. Indicate the type of
dehydrator., size, installation date, and any and all removal
efficiency data developed by the manufacturer and Texas
Eastern.
13. For each dehydrator at each service facility site, provide
a monthly summary and supporting documents from of the
volume, type, and character of chemical or hazardous substances
intentionally or unintentionally removed from each dehydrator,
the volume, character and location of any chemical or hazardous
substances placed in storage, the volume, character and
ultimate disposal site of the removed chemical or hazardous
substances, and the names, title, and job description of
employees who performed these functions.
OTHER UNITS
a 14... kD f*v fl1Pv rifts of any and all units
other than those describeG or listed In rstponse to queation
above or below, that are now or have ever been operated
by Texas Eastern. Indicate the type of device or system, its
size, installation date, and any or all removal efficiency
data developed by the manufacturer at-ad Texa Eastern.
15. For each unit not described or listed in response to questions
above or below, at each service facility site, provide a
monthly summary and supporting documents of the volume,
type, and character of chemical and hazardous substances
intentionally or unintentionally removed from each compressor;
the volume, character, and 1ocatio of any chemical and
hazardous substances placed in storage, the volum., character,
and ultimate disposal site of the removed chemical and
hazardous substances, and the nam.s, title and job description
of employees who performed these functions.
ADDITION. COLLECTION, AND REMOVAL POINTS
16. Provide a listing by service facility site of all pipeline
liquid addition, removal and collection points.
17. Provide for each adittion point at each service facility
site, a monthly summary and supportiflg documents of the
volume, type, vendor, brand name, scientific name, purpose,
and character of all substances added, and the names, title
and job description of the employees who performed this
function.
I ——————
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£0. FVL •ai &i II • • ir’ -- ‘. -
facility site, provid, a monthly summary and supporting
documents of chemical or hazardous substances, the volume and
character of substances removed, the reason removed, method
of removal, the volume, character, and location of any
chemical or hazardous substances placed in storage, the
method of transportation to the storage unit, and the volume,
character, method of disposal, and name and location of the
ultimate disposal site of the remov•d substances, and the
names, titloo, and job description of th. employ.es who
performed this function. Eor each eollection point where
pipeline chsmical or hazardous substances are no longer
removed, provide the reasons they ar. no longer removed.
DRUM/BARREL STORAGE AREAS
19. Provide a list by service facility site of all drum/barrel
storage areas and a description of the structural components
of the area., and types of chemical or hazardous substances
and materials stored.
20. For each drum/barrel storage area at •ach service facility
site, provide a monthly summary and supporting docuiuents’of
the volume, source, type, and character of the chemical
or hazardous substances added to the area, the method of
transport to the area, and the names, title, and job
description of the employees who performed this function.
21. For each drum/barrel storage area at each service facility
site, provide a monthly summary and supporting documents of
the volume, source, type, number of drums or barrels, and
character of chemical substance or hazardous substance
removed from the area, the method of transportation to the
disposal site, and location and ownership of the ultimate
disposal site of any chemical substances or hazardous sub-
stance removed from th. area, and the namo., titus, and
job description of the employees who performed this function.
TANKS
22. Provide a list by service facility eite of all tanks,
indicating their purpose, current status as in service or
closed. th• dates placed in service and closed, the location
a)w q* g is Pi.1ni nisni,nd. their containment volume, if the
tanks ever conta&n u bias
including the concentration of any PCBs, if known, and method
of analysis, and the name of any previous owners.
23. For each tank at each service facility site, provide a
monthly summary and supporting documents of the volume,
source, type and character of the chemical or hazardous
substance added to th. tank, the method of transport to the
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•‘l 2.
tank, the purpos, of the addition, and the names, titles,
and job description employees who performed this function.
24. For •ach tank at •ach service facility sit., provid. a
monthly summary and supporting d urnenta of the volume,
source, type, and character of the chemical or hazardous
substances r•moved, th. purpose of removal, the name and
location of the ultimate diepomal site, tfl. method of transport
to the site. the method of disposal, and the names, titles,
and job description of the emp1oy ce vho porformed this
function.
5, r vi : 311 cu! e! t! ert ! 4 nc Pn Pha lnNtitution of a
tank installation program in lieu of using pits, including
dates of all tank installations at each service facility
site.
PITS
26. Provide a list by service facility sit . of all pits operated
.• i4i.4, n ehm $aPus as either in
servic, or closed, the dates p.Laceo in service ana s.io. u,
and the approximate di eniions (width, length, depth) of
each pit, and the date each pit was constructed, and actively
used.
27. For each pit, provide a chronological listing pith supporting
documents by month of all chemical or hazardoum substances
placed in each pit, by service facility site, indicating the
purpose, volume, source, type, and character of the, chemical
or hazardous substance, method of transport to the site,
purpose of placement, the names, title, and job description
of employees who performed this function.
28. For each pit, provide a chronological listing with supporting
documents by month of all chemical or hazardous substances
removed from the pit indicating the volume, type, method of
removal, method of transport, the name and location of the
ultimate disposal site, method of disposal, and the names,
titles, md job description of th. employees who performed
this function.
29. For each pit provide an estimate of the substances remaining
in the pit. Supply supporting documents.
30. Provide a list by service facility site of all pits where
materials wire burfled, a listing of materials which were
burned, dates of burning, frequency of burning and quantity
burned.
31. Provide all documents pertaining to the program for the
discontinuation of use of pits by service facility site.
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37. Provid, copies of all documents in uss or that have ever been
u .d which contain instruction, on the method of disposal of
substances intentionally or unintentionally generated during
the operation and closure of service facility sites. In the
ev.nt that the documents are no longer available, provide a
list of such documents, end en explanation for their unavail-
ability. Such documents include instruction documents or*z
a. Compressor station operations
b. Filter separator operations
c. Removal of pipeline fluids, PCB oils and other
li uide
d. Storage of pipeline liquids, PCB oils and oth.r
liquids
. ,: r r—-• 4i . A
liquids
f. Clean up of PCB spills, PCB compressors and pipeline
fluids.
38. Provide a copy of all instructions, protocols, methods,
directions and other documents regarding Texas Eastern’s
procedures for, and records of, the retention and destruction
.of docurnsnts. Such documentation includes ,.
a. Any and all logs or other documents identifying
documents which have been destroyed, and th. date
of such destructton
b. Instructions for the lsngth of time documents are
to be retained, including any exceptions to those
procedures, and the titl. of any employee authorised
to make such exception..
39. Provide all documents and make whatever inquiries are neces-
sary to obtain information that describes and identif Lee
the character, type, quantity, extint, sources, and causes
of soil, air, ground wat.r, surface water, and sediment
contamination beyond unit or service facility site boundari..,
at all Texas Eastern service facility sites where such
contamination has been detected.
40. For each service facility site, provide all documents
containing analytical results from the monitoring of air,
surface watsr, ground water, eludge, or soil at or in th.
vicinity of each of these service facility sites.
41. Provide all documer ts pertaining to the need for and
implementation of a monitoring program at servic, facility
sites owned or operated by Tixas Eastern.
42. Provide a lilt by each service facility sit. of all
PCB items, PCB storage areas and PCB transport vshicles
which have been marked in accordanes with 40 CPa 761 and
the date of marking.
/ l
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43. Provide all records and reports prepared by Texas Eastern
to fulfill the requirements imposed by 40 CFR 761.
44. Provid, all documents showing th. manufacture, import,
export, or processing of PCBe by Texas Eastern.
45. Provide all documents relating to the preparation of PCB
monitoring reports submitted to EPA as part of th. gas
pipeline remedial monitoring program.
46. Provide any and all document. and raw data collected by
Texas Eastern in investigating/surveying all Texas Eastern
service facility sites including data collected for the
purpose of preparing the reports tieledi ‘Results of Compressor
Station Disposal Pit Investigations’ (dat.d April 21, 1986)i
‘Preliminary Report of Sampling Program at Texas Eastern
Compressor Stations’ (dated December 1986); and ‘Generic
C1ean Up Plan for PCBs at Compressor Station Sites’ (dated
December 1986). For purposes of this requ..t, ‘raw data’
includes sampling and analytical results in both nw and
numerical form, quality assurance/quality control data and
information, data sheets, field notes and logs, map., drawings,
plane, photographs, surveys, memoranda, work plans, sampling
plans, interim progress reports, and other information
collected or maintained for any and all servic• facility
sites or pits. The request includes all service facility
sites investigated and I. not limited to the eight stations
discussed in the above—referenced reports. Describe the
method used to collect samples and identify any laboratory(Ios)
that conducted analyses of the samples. Include the names,
addresses, phone numbers and job descriptions and qualifications
for each person involved in the Roy P. Weston investigations
of service facility sites. Texas Eastern shall provide a
listing and brief summary of the contents of each set or
‘ 4•S v r iu4almi1.
47. Provide all permits, certifications, and/or authorization.
received by Texas Eastern from any or all Federal, State,
or local regulatory agencies for construction, operation,
disposal, closure, or other activities occurring at any and
all of the service facility sites that are or wire operated
by Texas !ast.rn. Also, provide copies of any and all
notifications of such activities submitted by Texas Eastern
to any or all Federal, State or local regulatory agencies.
48. If any service facility site or component thereof discharges
chemical or haza dcus substances to surface waters or to
publicly owned t eatm.nt works, provide analyses for all
discharges and prov d. copies of permits.
49. Provide .11 docume’ts. manifests, correspondence, shipping
bills of lading. for PCB liquid, solid, or sludge—like
/ ?
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matirials tran.port.d to any itorags or dispo.al facilities.
50. Provide all documents pertaining to any and all programs for
thophase out or discontinuation of specific chemical or
hazardous substances at service facility sites. This shall
include Monsanto product os—el and Turbinol 153.
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