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Severstal liabilities narrowed

Severstal Sparrows Point LLC is not liable for pollution that occurred before the 2003 approval of Bethlehem Steel Corp.’s bankruptcy sale, but may be required to undertake a study of offshore pollution in the area, a federal judge has ruled.

The decision is a mixed win for Severstal, which asked the U.S. District Court to resolve its dispute with regulators over the terms of a 1997 consent decree in which Bethlehem Steel agreed to conduct the study and control its hazardous-waste releases.

Separately on Tuesday, Judge J. Frederick Motz also narrowed claims against Severstal in two related lawsuits, including one brought by environmental nonprofits and several individuals who “live, recreate and enjoy the waters” around the facility.

The Chesapeake Bay Foundation and Baltimore Harbor Waterkeeper brought suit against Severstal and its predecessor, ArcelorMittal, for violating the federal Resource Conservation and Recovery Act and Clean Water Act as well as state laws.

The suit said the company was generating, storing and disposing of hazardous waste without a permit. The judge allowed that claim to move forward, along with another on sediment control. Five other counts were dismissed.

“We’re happy that we’ve got those claims alive,” said Jon Mueller, an attorney for the Chesapeake Bay Foundation.

“It was always a great puzzlement to me how the companies were able to operate the landfills without permits for all these years,” he said. “It’s equally disquieting that no one is responsible for addressing contamination in Bear Creek.”

In the third ruling Tuesday, Motz also narrowed Superfund and Resource Conservation and Recovery Act claims against Severstal brought by a neighboring shipyard that Bethlehem Steel sold in 1997.

SPS Limited Partnership LLLP is seeking compensation for the $700,000 installation and operation of a wastewater treatment system to remove benzene from the dock, which is expected to cost an additional $20,000 a month in maintenance and operating costs.

“We are pleased that the judge allowed our federal claims to proceed so that the defendants can be held accountable for the contamination coming from their property,” said Margaret Witherup, an attorney with Gordon, Feinblatt, Rothman, Hoffberger & Hollander LLC, who is representing SPS.

There was no discussion of how the opinions would affect Renco Group, the New York-based company that bought the Sparrows Point Steel Mill in March. Bette Kovach, a spokeswoman for Renco subsidiary RG Steel, which is running the steel mill, said the company had not had time to review the opinions yet.

While the name of the entity that owns the steel mill has changed four times since Bethlehem Steel filed for bankruptcy protection in 2001, Motz’s opinions indicate the entity has limited obligation under Bethlehem Steel’s 1997 consent decree with the U.S. Environmental Protection Agency and the Maryland Department of the Environment.

Vincent Atriano, an attorney with Squire, Sanders & Dempsey in Columbus, Ohio, who represented ArcelorMittal, said he was pleased the court recognized that the 2003 bankruptcy order resolved the issue of whether the future owners of the plant would be responsible for the pollution attributable to Bethlehem Steel.

The lead attorney for Severstal, Edward J. Longosz II of Washington, D.C.-based Eckert Seamans Cherin & Mellott LLC, did not respond to a request for comment. A spokeswoman for MDE said the agency had not read the opinion yet, and an attorney representing the U.S. EPA did not respond to a request for comment.

Independent agreements

In Severstal’s case against the EPA and the MDE, Motz found that Severstal and ArcelorMittal were limited in their liability for remediating toxic discharges that occurred prior to April 23, 2003, the date the U.S. Bankruptcy Court for the Southern District of New York entered Bethlehem Steel’s bankruptcy sale order.

But, Motz said, the consent decree independently requires the owner of the steel mill to conduct a site-wide investigation to evaluate the “risk to human health and the environment from current and past releases of hazardous wastes” at the facility.

Thus, it would not be arbitrary or capricious for MDE or EPA to interpret the consent decree as still requiring the site-wide investigation, Motz wrote.

The judge noted, however, that the agencies had assumed Severstal was at least partially responsible for remediating pre-2003 contamination.

In light of his ruling to the contrary, he asked the agencies to reconsider their stance, and asked all parties to report to him within 45 days to determine whether they have reached an agreement on the scope of the site-wide investigation.