IN THE COURT OF APPEALS OF THE STATE OF OREGON

PACIFIC Ill, LLC, an Oregon limitedliability company,Intervenor-Appellant,

v.

STATE OF OREGON, ex rel. DICKPEDERSEN, Director, Department ofEnvironmental Quality,Plaintiffs-Respondents,

and

CRAIG E. BOWEN; PAMELA A. BOWEN;MICHAEL C. GIBBONS; PATRICK D.HUSKE and TAMARA L. HUSKE;IRONWOOD HOMES, INC.; LINKEENTERPRISES OF OREGON, INC., fkaFrontier Leather Company; DONALD W.NELSON; WELLSFARGO BANK, N.A. ; and JAMES M.WILSON, Defendants-Respondents.

Court of AppealsCase No. A151296

Washington County Circuit CourtCase No. C115183CV

APPELLANT’S OPENING BRIEF

and Excerpt of Record

Appeal from the Judgment of

The Washington County Circuit Court

The Honorable Donald R. Letourneau, Judge

Montgomery W. Cobb, OSB #831730 Stephanie Striffler, OSB #824053

Montgomery W. Cobb, llc Oregon Dept. Of Justice

1001 SW 5 Ave., Suite 1100 1162 Court St. NE th

Portland, OR 97204 Salem, OR 97301

Telephone 503-625-5888 Telephone 503-378-4402

mwc@montycobb.com stephanie.striffler@state.or.us

Attorney for Appellant Attorneys for Respondents State

Counsel listing continues on next page

October 2012

of Oregon and Pedersen

Janet M Schroer, OSB# 813645

Hart Wagner LLP

1000 SW Broadway, Suite 2000

Portland, OR 97205

jms@hartwagner.com

Phone 503 222-4499

Attorneys for Craig E. Bowen &

Pamela Bowen

Stephen G. Leatham, OSB# 873820

Heurlin Potter Jahn Leatham

211 E. McLoughlin Blvd., 100

PO Box 611

Vancouver, WA 98666

sgl@hpl-law.com

Phone 360 750-7547

Attorneys for Wells Fargo Bank and

James Wilson

Loren R. Dunn, OSB# 060350

Riddell W illiams PS

1001 4th Ave. Plaza, Suite 4500

Seattle, WA 98154

ldunn@riddellwilliams.com

Phone 206 624-3600

Attorneys for Linke Enterprises of

Oregon, Inc. and Donald Nelson

Patrick G. Rowe, OSB# 072122

Sussman Shank LLP

1000 SW Broadway, Suite 1400

Portland, OR 97205

prowe@sussmanshank.com

Phone 503 227-1111

Attorneys for Michael C. Gibbons

Thomas R. Benke, OSB # 922251

Environmental Compliance

7845 SW Capitol Hwy, Suite 8

Portland, OR 97219

trbenke@env-compliance.com

Phone 503 246-1514

Attorney for Patrick D. Huske,

Tamara L. Huske and Ironwood

Homes, Inc.

i

TABLE OF CONTENTS

I. STATEMENT OF THE CASE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A. Nature of the Action and Relief Sought. . . . . . . . . . . . . . . . . 1

B. Nature of the Judgment to be Reviewed. . . . . . . . . . . . . . . . 1

C. Jurisdiction on Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

D. Jurisdictional Dates on Appeal. . . . . . . . . . . . . . . . . . . . . . . 1

E. Questions Presented on Appeal. . . . . . . . . . . . . . . . . . . . . . 2

F. Summary of Arguments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

G. Summary of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1. The Contamination. . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2. The Cleanup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

3. The Secret Settlement . . . . . . . . . . . . . . . . . . . . . . . . . 6

4. The Revelation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

5. The Replacement Consent Judgment . . . . . . . . . . . . . 8

6. The Judicial Imprimatur . . . . . . . . . . . . . . . . . . . . . . . 10

II. Overview of ORS 465.325 Consent Judgment Scheme . . 11

A. Proceedings prior to Consent Judgment . . . . . . . . . . 11

B. Circuit Court Review . . . . . . . . . . . . . . . . . . . . . . . . . .12

C. Standard of Appellate Review . . . . . . . . . . . . . . . . . .13

III. FIRST ASSIGNMENT OF ERROR. . . . . . . . . . . . . . . . . . . 14

The Circuit Court erred in granting DEQ’s motion for entry of

consent judgment and in entering the consent judgment where

there was insufficient evidence that the settlement was fair and

reasonable, in the face of evidence of bias and unfairness.

A. Preservation of Error. . . . . . . . . . . . . . . . . . . . . . . . . 14

B. Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . 14

C. Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1. No Evidence of Fairness and Reasonableness 15

2. No Deference on Fairness . . . . . . . . . . . . . . . . . 21

IV. SECOND ASSIGNMENT OF ERROR . . . . . . . . . . . . . . . . 21

The Circuit Court Erred in limiting Pacific III’s requested discovery

to one interrogatory, a method of discovery not provided for in the

Oregon Rules of Civil Procedure.

ii

A. Preservation of Error. . . . . . . . . . . . . . . . . . . . . . . . . 22

B. Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . 22

C. Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

V. CONCLUSION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

iii

TABLE OF AUTHORITIES

CASES

Badger v. Paulson Inv. Co., Inc., 311 Or. 14, 803 P.2d 1178, 1182 (1991) . .13

E.E.O.C. v. Hiram Walker & Sons, Inc., 768 F.2d 884 (7th Cir. 1985) . . . . . . 5

Hall v. Life Ins. Co. of N. Am., 265 F.R.D. 356, 363 (N.D. Ind. 2010). . . . . . 25

Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151, 1164 (10th Cir.

2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 24

Newell v. Weston, 150 Or. App. 562, 572, 946 P.2d 691, 698 (1997) . . . . . 13

STATUTES

ORS 19.205(1) and (5).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ORS 19.255(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ORS 183.482. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ORS 183.484. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ORS 465.320. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 12

ORS 465.325. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 11, 12, 25

ORS 465.325(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7, 11, 12, 22, 25

ORS 465.325(4)(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ORS 465.325(4)(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ORS 465.325(6)(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 8

ADMINISTRATIVE RULES

OAR 340-122-0110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

iv

OTHER AUTHORITIES

2 RCRA and Superfund: A Practice Guide, 3d § 13:36. . . . . . . . . . . . . . . . 12

v

INDEX OF EXCERPT OF RECORD

Consent Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ER 1-42

L. Dunn Declaration, Ex. G . . . . . . . . . . . . . . . . . . . . . . . . . . . . ER 43-48

Order Granting Entry of Consent Judgment . . . . . . . . . . . . . . . . ER 49-50

1

APPELLANTS’ OPENING BRIEF

I. STATEMENT OF THE CASE

A. Nature of the Action and Relief Sought

This is an appeal from a “consent judgment” (general judgment of

consent) memorializing a settlement among the State of Oregon (DEQ)

and other defendants pursuant to ORS 465.325(4). The consent

judgment was entered over the objection of Pacific III, which had

intervened in the Circuit Court and was not a party to the settlement.

Pacific III seeks reversal of the judgment and remand for further

proceedings.

B. Nature of the Judgment to be Reviewed

The Circuit Court granted DEQ’s motion for entry of consent

judgment and ordered discovery limited to one interrogatory.

C. Jurisdiction on Appeal

This Court has jurisdiction pursuant to ORS 19.205(1) and (5).

D. Jurisdictional Dates on Appeal

The consent judgment was entered on March 27, 2012. The Notice

of Appeal was filed on April 26, 2012, within the time allowed by ORS

19.255(1).

2

E. Questions Presented on Appeal

1. Did the Circuit court err in approving the consent judgment in

the absence of evidence that it was fair or reasonable?

2. Should the trial court have deferred to DEQ on the question

of fairness of the settlement?

3. Should the trial court have limited discovery to one

interrogatory, a procedure not contemplated by the Oregon

Rules of Civil Procedure where there was evidence of

unfairness and bias improperly influencing DEQ?

F. Summary of Arguments

In the presence of evidence strongly suggesting that Pacific III was

being deliberately excluded, and its contribution rights deliberately

eliminated, the Circuit Court was obligated to give the consent judgment

heightened scrutiny. The circuit court did not have sufficient evidence to

justify a finding of fairness under these circumstances and should have

required DEQ to provide discovery. The Circuit Court should have

refrained from ruling on the consent judgment without more, or should

have declined to enter the consent judgment.

The Circuit Court was not obliged to defer to DEQ on the question

of economic fairness of the settlement, an issue which is not a subject of

superior agency technical expertise.

3

Limiting discovery to one interrogatory was an abuse of discretion.

There is no such discovery procedure in the Oregon Rules of Civil

Procedure. More extensive discovery was required to evaluate whether

DEQ met the statutory criteria and on the issue of fairnes.

G. Summary of Facts1

DEQ secretly negotiated a settlement with polluting parties,

deliberately structured to cut out Pacific III, even though Pacific III spent

$1.4 million to clean up the contamination pursuant to a prospective

purchaser agreement (PPA) between DEQ and Pacific III (10-11-11

Lucas Aff., ¶¶ 8, 9, Ex. A; 3-20-12 Lucas Aff., ¶¶ 5, 8, 9 ,10, 11, Ex. A). 2

DEQ then misused its authority under ORS 465.325 to obtain judicial

approval of the settlement and consummate its plan to deprive Pacific III

of compensation (DEQ Memo. in Support of Motion for Entry of Consent

Judgment, pp. 9-10 (OJIN 15)).

1. The Contamination

Defendants Wells Fargo, W ilson, Nelson and Linke (together

referred to as Polluting Defendants) were sued by DEQ for liability for

The trial court did not make findings of fact. The cited evidence1

supports the following statement of facts.

Defendants’ oral motions to strike the declarations and affidavits of2

Veley and Lucas were overruled (3-26-12 Tr. 35). Prior motions to strike

were not ruled on (12-5-2011 Tr. 45).

4

pollution on property in Washington County known as the Tannery Site

(ER 3-8; ER; Complaint). Polluting Defendants at various times owned

or controlled the property or operations of a leather tannery and a battery

manufacturing plant on the Tannery Site (ER 3-8; 10-11-11 Lucas Aff., ¶

4, Ex. A, p. 2, Ex. B, p. 3). The operations resulted in significant3

contamination of the Tannery Site with hazardous substances including

trivalent chromium oxide, cadmium, copper, mercury, chromium, cyanide,

asbestos, oils, solvents and lead from lead-acid battery manufacturing

and from battery casings that had been piled on the site by prior

operators (ER 4-7; 10-11-11 Lucas Aff., Ex. A, p. 2-6; 03-20-12 Lucas

Aff., ¶ 5). These hazardous substances contaminated the soils and wells

on the Tannery Site (Id.).

Some of the hazardous substances from the Tannery Site

operations were transported and dumped on the KFF Site (Ken Foster

Farms), a portion of which was later owned by the Huske Defendants. 4

2. The Cleanup

Pacific III bought the western half of the Tannery Site and entered

into a Prospective Purchaser Agreement (PPA) with DEQ to clean up the

Affidavits and declarations are abbreviated Aff. and Decl., preceded3

by the date and author. Transcript citations are preceded by the date.

Patrick Huske, Tamara Huske and their business, Defendant4

Ironwood Homes, Inc.

5

pollution on the western half (10-11-11 Lucas Aff., ¶¶ 3, 6, 8, Ex. A, p. 2).

Pacific III had no interest in the eastern half of the Tannery Site and no

responsibility or liability for cleaning it up (10-11-11 Lucas Aff., ¶ 3, 6, 8,

Ex. A). The eastern half has not been cleaned up (ER 3-8). The PPA

provided detailed requirements and plans for the extensive clean up (10-

11-11 Lucas Aff., Ex. A). The PPA contained a clause in which both

DEQ and Pacific III reserved, “any claim or cause of action they

respectively have as to any person or entity not a party to this agreement”

(10-11-11 Lucas Aff., Ex. A, p. 25, item H(2)).

Pacific III performed its remediation obligations under the PPA,

successfully removing the contaminants and rendering the western half

of the Tannery Site environmentally safe (10-11-11 Lucas Aff., Ex. C).

DEQ expressly approved the cleanup and remediation (Lucas Aff., ¶ 10,

Ex. C). DEQ admitted that "[a]t the time the DEQ approved the Consent5

Judgment, it was not aware of any need for further remediation on the

Western [half of the] Property" (DEQ Response to Interrogatory, p.

See also, Administrative Record, No. 26 (No Further Action5

Determination Tax Lot 500, Former Frontier Leather Site, Sherwood,

Oregon, ECST #116), No. 28 (No Further Acton Determination Lots 1 and 2,

Tax Lot 400. Former Frontier Leather Site, Sherwood, Oregon ECSI #1 16),

and No. 34 (Conditional No Further Action Determination. Former Frontier

Leather Site. Tax Lot 1100, 15104 SW Oregon Street, Sherwood, Oregon,

ECSI #116) (Confirming issuance of NFA’s for Tax Lots 500,900, 1000 and

1100- i.e. the Western Half of the Tannery Site).

6

6:10-12). Pacific III incurred more that $1,400,000 in cleanup costs (3-20-

12 Lucas Aff., ¶¶ 5, 8, 9 ,10, 11, Ex. A). DEQ oversaw the clean up and

Pacific III paid DEQ its oversight costs for the cleanup project (10-11-11

Lucas Aff., Ex. A, p. 24).

DEQ determined that a “substantial public benefit” would result

from Pacific III’s clean up of the western half of the Tannery Site (10-11-

11 Lucas Aff., Ex. A, p. 7, item P).

3. The Secret Settlement

Without notice or invitation to Pacific III, DEQ undertook settlement

negotiations with Polluter Defendants to settle DEQ’s claims for cleanup

costs on the entire Tannery Site, including the western half cleaned up by

Pacific III (10-11-11 Veley Aff., ¶ 9, 10; 10-11-11 Lucas Aff., Ex. B, p. 2).

DEQ reached a deal with Polluter Defendants Linke and Nelson and

prepared a consent judgment (First Consent Judgment) memorializing

the settlement on March 9, 2011 (10-11-11 Lucas Aff., ¶ 12, 13, Ex. B).

This settlement covered the entire Tannery Site, including the western

half cleaned up by Pacific III (10-11-11 Lucas Aff., ¶ 14, Ex. B, p. 2). It

even included the KFF Site cleaned up by Huske Defendants (10-11-11

Lucas Aff., ¶ 14, Ex. B, p. 2, 4), with no remuneration to Huske

Defendants (10-11-11 Lucas Aff., Ex. B).

By statute and its express terms, the First Consent Judgment

7

would have eliminated Pacific III’s and Huske’s rights of contribution from

Polluting Defendants (10-11-11 Lucas Aff., Ex. B at 10-11, item 8). ORS

465.325(6)(b).

The First Consent Judgment purported to resolve all the cleanup

costs for $600,000 (10-11-11 Lucas Aff., Ex. B, p. 6), when Pacific III had

spent $1,400.000 (03-20-12 Lucas Decl., ¶ 5, 8, 9, 10) on the

remediation of its portion of the contaminated property.

The record reveals one of DEQ’s possible motives for concealing

the negotiations from Pacific III, (11-18-2011 L. Dunn Decl., Ex. G). J.

Patrick Lucas is the managing member of Pacific III (10-11-11 Lucas Aff.,

¶ 2). Mr. Lucas has been engaged in a long running conflict with DEQ

regarding an unrelated site in rural eastern Oregon which is the subject of

currently pending litigation (Umatilla Co. Cir. Ct. Case Nos. CF090292

and CF 080235; OAH Case No. 1002077) and has been the subject of

protracted prior litigation (11-18-2011 L. Dunn Decl., Ex. G). Pacific III is

the only party with a stake or means excluded by DEQ from the

settlement negotiations.

4. The Revelation

Consent judgments are required to be made available for public

comment. ORS 465.235(4); ORS 465.320. The public review period for

the First Consent Judgment began on March 14 or April 1, 2011 (ER 40,

8

items 50 and 51). Pacific III learned of the proposed First Consent

Judgment in April, 2011 and immediately objected (10-11-11 Lucas Aff.,

¶ 15; 10-11-11 Veley Aff., ¶ 7, Ex. C). On April 7, 2011, Pacific III sued

Polluter Defendants and DEQ for contribution and to recover its cleanup

costs (10-11-11 Veley Aff., ¶ 8, Ex. E). The cost recovery claim was

dismissed on motion by some of the defendants in that case (10-11-11

Veley Aff., ¶ 9). The remainder of those claims were dismissed pursuant

to a stipulated judgment of dismissal without prejudice which included a

tolling agreement, pending the resolution of the instant case because the

consent judgment in this case would preclude Pacific III’s claims against

Polluter Defendants. ORS 465.325(6)(b).

5. The Replacement Consent Judgment

DEQ withdrew the proposed First Consent Judgment on June 29,

2011 (ER 40, item 54) and, again without notice or invitation to Pacific III,

renegotiated another consent judgment (Replacement Consent

Judgment - ER 1-42) with Polluter Defendants (ER 1-42; 10-11-11 Veley

Aff., ¶ 10). The Replacement Consent Judgment contained the same

primary terms as the First Consent Judgment, but added additional

parties and increased the settlement amount (compare ER 1-42 with 10-

11-11 Lucas Aff., Ex. B). The Replacement Consent Judgment increased

the settlement amount to $2,600,000 (ER 9) a four fold increase over the

9

First Consent Judgment. The Replacement Consent Judgment retained

the provision insulating Polluter Defendants from Liability to Pacific III

(ER 18-19).

DEQ offered to immunize Polluter Defendants from liability to

Pacific III (ER 18-19), despite the absence of any payment for the clean

up of the western half of the Tanner site cleaned up by Pacific III. DEQ

noticed the Replacement Consent Judgment for public comment on July

1, 2011 and the comment period ended on August 1, 2011 (ER 8, 40).

This Replacement Consent Judgment is the subject of the instant

case.

Pacific III objected to the Replacement Consent Judgment and

sued DEQ and Polluter Defendants. DEQ’s response to Pacific III’s

objection was:

Pacific III also asserted its claim that DEQ would breach the

PPA in a lawsuit against the DEQ and settling parties. Pacific

III, LLC v. Wells Fargo Bank. et al.. Washington Co. Circuit

Court Case No. C 112031 CV. On August 8. 2011, the court

ruled that Pacific III had failed to state a claim against DEQ

and its action against DEQ should be dismissed. DEQ's

position before the court was that entry of the proposed

consent judgment is consistent with the DEQ's rights against

other liable parties for cleanup at the Frontier Leather

[Tannery] site, and that contribution protection is granted by

statute to parties settling with DEQ. (0-28-11 Giles Decl., Ex.

B, p. 10).

Pacific III intervened in the present case, as described immediately

10

below.

6. The Judicial Imprimatur

DEQ reached the settlement agreement with the parties other than

Lucas before going to public comment (Tr. 17).

On February 21, 2012, five months after DEQ filed this lawsuit to

approve the Replacement Consent Judgment, and six months after the

comment period had expired, DEQ emailed a small group of people and

attached a "February 2012" update regarding the Ken Foster Farm [KFF]

Site entitled "Re: Ken Foster Farm Site-Change in Risk-Based

Concentrations for Chromium" (03-20-12 Lucas Aff., ¶¶ 12, 13, Ex. B)

The email was sent at 3:53 p.m., precisely 18 minutes after Pacific III,

LLC served its Response to DEQ’s motion for entry of the replacement

consent judgment; (03-20-12 Veley Aff., ¶ 4, 5, 6, Ex. A). DEQ had

represented to the court that the record was as posted prior to the

supplemental response (03-20-12 Lucas Aff., ¶¶ 12, 13, Ex. B). The

alteration to the record, announced that DEQ had changed the

contamination level criteria for hexavalent chromium (03-20-12 Lucas

Aff., ¶¶ 12, 13, Ex. B). DEQ, based on the change, withdrew its finding

that the KFF site was not a risk to human health (03-20-12 Lucas Aff., ¶

13, Ex. B; 03-20-12 Veley Aff., ¶ 7). The alteration also revealed for the

first time that the residents of the subdivision on the KFF Site were

11

exposed to the contamination (03-20-12 Lucas Aff., ¶ 12, 13, Ex. B).

This email was not sent to Pacific III (03-20-12 Lucas Aff., ¶ 14, Ex.

B). It was provided to Pacific III by an environmental consultant (Id.).

DEQ did not withdraw the Replacement Consent Judgment, did not

conduct new risk assessments, nor did it reopen the public comment

period following this change in the record (03-20-12 Lucas Aff., ¶¶ 12, 13,

Ex. B.; 03-20-12 Veley Aff., ¶ 8; entire administrative record).

II. OVERVIEW OF ORS 465.325 CONSENT JUDGMENT SCHEME

Oregon’s appellate courts have not addressed the procedural or

substantive questions raised by the entry of a consent judgment in a

Circuit Court under ORS 465.325(4). Common to all the assignments of

error are the unknowns of this process. Unfortunately, as noted by Judge

Letourneau (Tr. 35-36), the statute offers almost no guidance. It is more

accurate to describe the consent judgment provisions of ORS 465.325 as

“allowing” a consent judgment rather than governing it. The term

“scheme” is a stretch when referring to this statute.

A. Proceedings prior to Consent Judgment

DEQ followed a simple process for arriving at the consent

judgment. DEQ simply negotiated the settlements, provided notice of

them after the fact, assembled an “administrative record” consisting of

the items listed in Exhibit A to the consent judgment (ER 35-40), allowed

12

public comment, and then presented the consent judgment to the Circuit

Court. The statute provides scant guidance on the pre-submission

process. It requires notice of the proposed agreement to “the public and

to persons not named as parties to the agreement,” an opportunity to

comment and applies the requirements of ORS 465.320 as to the

duration of the comment period, a public meeting, and the manner of

notice. ORS 465.325(4)(d).

Apparently DEQ has not enacted any rules governing consent

judgments under ORS 465.325(4). OAR 340-122-0110 specifies the

content of the administrative record in remedial actions, but does not

appear to apply to settlements by consent decree.

Conspicuously absent from the “notice and service list” attached to the

consent judgment is Pacific III (ER 41-42).

B. Circuit Court Review

ORS 465.325 does not expressly provide for any review by the

Circuit Court. It simply says that “the agreement shall be entered in the

appropriate circuit court as a consent judgment.” ORS 465.325(4)(a).

DEQ asserted, and the parties proceeded in the Circuit Court on the

assumption that federal case law, decided under CERCLA provides the6

A useful, if condensed, summary of federal law on challenging an6

EPA consent decree may be found at: Settlement and Consent Decrees in

CERCLA Actions, 2 RCRA and Superfund: A Practice Guide, 3d § 13:36

13

proper standard of review and the procedural parameters in Oregon’s

circuit courts because Oregon’s environmental remediation statutory

scheme was modeled in part on the CERCLA statutes. “In situations

involving Oregon laws in large measure drawn from a federal

counterpart, it is appropriate to look for guidance to federal court

decisions interpreting similar federal laws, even though those decisions

do not bind us.” Badger v. Paulson Inv. Co., Inc., 311 Or. 14, 21, 803

P.2d 1178, 1182 (1991). This Court has held that federal CERCLA case

law provided guidance in interpreting another provision of ORS 465.

Newell v. Weston, 150 Or. App. 562, 572, 946 P.2d 691, 698 (1997)

review denied, 327 Or. 317, 966 P.2d 221 (1998).

C. Standard of Appellate Review

Left for this court to decide, is the proper standard of review on

appeal. Federal case law interpreting CERCLA provisions does not

apply to a question of appellate procedure in Oregon courts. DEQ

asserted that this case is not subject to ORS 183 (Tr. 26). The standards

of review in ORS 183.482 and ORS 183.484 would not apply if that

position is correct. Alternative standards of review to be considered

include the federal CERCLA case law and the familiar Oregon standards

for review of a trial court’s findings of fact and conclusions of law.

(2012).

14

III. FIRST ASSIGNMENT OF ERROR

The Circuit Court erred in granting DEQ’s motion for entry of

consent judgment and in entering the consent judgment where there was

insufficient evidence that the settlement was fair and reasonable, in the

face of evidence of bias and unfairness.

A. Preservation of Error

DEQ filed its motion for entry of consent judgment (OJIN 14).

Pacific III filed a response in opposition (OJIN 64) and a supplemental

response (OJIN 76) to the motion along with supporting documents and

declarations. The Circuit Court granted the motion for entry of consent

judgment (ER 49-50) and entered the consent judgment (ER 1).

B. Standards of Review

This assignment of error presents questions of law on the question

of deference, which are reviewed de novo for errors of law; and questions

of the decisions of the Circuit Court on the issue of fairness, which are

reviewed for abuse of discretion and for errors of law on the applicable

standard to be applied to Circuit Court review of consent judgments.

C. Argument

DEQ acknowleged in its memorandum in support of the motion for

entry of consent judgment that the Circuit Court was required to review

DEQ’s compliance with each element of ORS 465.325 and to review for

15

fairness and reasonableness. The Circuit Court, however, did not make

findings on any element and did not find that each element was factually

justified. Rather the Court simply found that it was required to defer to

DEQ’s action in entering into the consent judgment and granted DEQ’s

motion for entry of judgment, despite feeling very conflicted about Pacific

III’s predicament (Tr. 36-38).

Although DEQ listed the Oregon statutory elements, as well as the

CERCLA case law requiring fairness in its memorandum in support of the

motion for entry of consent judgment. Despite reciting the fairness

requirement at p. 4 of the memorandum in support, DEQ did not discuss

it and did not offer any evidence that the settlement was fair or that it was

reasonable.

1. No Evidence of Fairness and Reasonableness

There is no evidence sufficient to support a finding that the consent

judgment was fair or reasonable under the circumstances. It was,

therefore, an abuse of discretion to approve and enter the consent

judgment. The Circuit Court ordered DEQ to answer one interrogatory

which asked DEQ to explain why it included the western half of the

property in the consent judgment, eliminating Pacific III’s contribution

claim against Wells Fargo, the obvious deep pocket Polluter Defendant,

for a mere $1,900,000. DEQ did not see fit to address the fairness issue

16

with evidence or even a rationale. Rather DEQ simply said, “DEQ

determined that the Consent Judgment is in the public interest

notwithstanding the fact that Pacific III failed to obtain a judgment against

some of the defendants and, upon entry of the Consent Judgment, will be

barred by statute from seeking contribution from those defendants.”

Response to Interrogatory, p. 4:9-12.

Here, the agency, DEQ, did not exercise discretion or judgment. It

merely excluded Pacific III from the settlement process and wiped out

Pacific III’s claims without any rationale whatsoever. DEQ’s position on

this record is, “we decided to because we decided to.” In the absence of

an exercise of discretion, there is no discretion to which a court need

defer.

Pacific III objected to the consent judgment as unfair because

Pacific III was excluded from the negotiations, was precluded by the

consent judgment from recovering its clean up costs, and from asserting

contribution claims. DEQ offered no evidence that it had considered

these factors and no rationale to support its decision to enter into the

consent judgment without including Pacific III, or at least affording Pacific

III a chance to participate. W ithout Pacific III’s participation, neither DEQ

nor the Circuit Court could possibly evaluate whether additional funds

could have been obtained from the Polluter Defendants.

17

Defendant Wells Fargo Bank is ranked number 1 in the United

States in market value and fourth largest in asset value according to its

latest annual report. Its earnings for 2011 were up 28% to $15.9 billion.7

Id. Wells Fargo’s $1.9 million share of the consent judgment settlement

amount is .01194969 of one percent of last year’s earnings. That is the

equivalent of $11.95 for a person earning $100,000 per year. It is no

wonder that DEQ did not argue in this case that Wells Fargo could not

have contributed more in order to compensate Pacific III for its efforts, or

that Wells Fargo would not have entered into a consent judgment without

the immunity from liability to Pacific III.

Not only would those arguments have been implausible, they would

have been impossible on this record because DEQ did not have any facts

to support those arguments. DEQ never tried to find out. There was no

evidence of any attempts to bring Pacific III into the negotiations or to

allow Pacific III to bring its claims against Wells Fargo. On the contrary

there is evidence that Pacific III was deliberately excluded, and no

evidence proffered to the contrary. If the consent judgment is affirmed on

this appeal, no one, including DEQ, will ever know whether it was

possible or probable or impossible to structure the settlement so that

https://www.wellsfargo.com/downloads/pdf/invest_relations/wf2011an7

nualreport.pdf

18

Pacific III could proceed on its claims, or to include Pacific III in the

negotiations.

Nor is it fair to deliberately exclude the one party who successfully

cleaned up its portion of the Tannery Site from not merely the

negotiations, but from all compensation whatsoever. It may be, in

abstract theory, possible that in some other case there may be a reason

to shut out the environmental savior of real estate from compensation.

For example, perhaps the only polluter defendant may be impecunious.

But it this case, no reason was offered (see DEQ’s response to

interrogatory offering nothing), and no reason can be found.

The decision to exclude Pacific III was arbitrary and capricious, if

not worse. In addition to the lack of evidence to legitimize the ostracism

of Pacific III and the deliberate elimination of its contribution claims, there

is other evidence suggesting a motive for DEQ to act capriciously: bias.

DEQ was involved in unrelated civil and criminal litigation with Patrick

Lucas, the manager of Pacific III (ER 43-48 - Ex G to Loren Dunn Decl.8

of 11-18-2011) and had accused Mr. Lucas of environmental crimes and

violations unrelated to Pacific III or the Tannery Site. At least two of the

Oddly, this evidence was submitted by counsel for Wells Fargo Bank8

in a transparent attempt to smear Pacific III by association, using irrelevant

evidence. Unwittingly, he offered evidence which actually is relevant to

DEQ’s bias.

19

cases, the administrative civil penalty case, and the criminal case are still

pending (Umatilla Co. Cir. Ct. Case Nos. CF090292 and CF 080235;

OAH Case No. 1002077). Parties in litigation have obvious self interest

and emotional biases. This evidence is sufficient cause to require a real

explanation, supported by evidence, of the reasons Pacific III was

excluded from the settlement and its contribution claim eliminated without

reason.

Federal courts reviewing consent decrees have developed a list of

suspicious factors which cause a consent decree to be carefully

scrutinized. In E.E.O.C. v. Hiram Walker & Sons, Inc., 768 F.2d 884,

890-91 (7th Cir. 1985), the Seventh Circuit reviewed the cases:

Those suspicious factors include the allocation of most or all

of the settlement benefits to the named plaintiffs or, in cases

like this, the charging parties, see Holmes v. Continental Can

Co., 706 F.2d 1144, 1147 (11th Cir.1983); United States v.

Texas Education Agency, 679 F.2d 1104, 1107 (5th Cir.1982)

(per curiam); Plummer v. Chemical Bank, 668 F.2d 654 (2d

Cir.1982), the filing of a proposed decree early in the history

of a case, before significant discovery has occurred, see

Oswald v. General Motors Corp. (In re General Motors Corp.

Engine Interchange Litigation), 594 F.2d 1106, 1128 (7th

Cir.1979), cert. denied, 444 U.S. 870, 100 S.Ct. 146, 62

L.Ed.2d 95; accord Malchman v. Davis, 706 F.2d 426, 434

(2d Cir.1983); TBK Partners, Ltd. v. Western Union Corp.,

675 F.2d 456, 463 (2d Cir.1982); Plummer v. Chemical Bank,

668 F.2d 654, or, an allegation that the attorneys involved

have sacrificed their clients' interests to assure themselves of

receiving sizable attorneys' fees, Oswald v. General Motors

Corp. (In re General Motors Corp. Engine Interchange

Litigation), 594 F.2d at 1130; Patterson v. Stovall, 528 F.2d

20

108 at 113 (7th Cir.1976); accord Ficalora v. Lockheed

California Co., 751 F.2d 995, 996-97 (9th Cir.1985). In the

present case, most of the settlement funds went to

employees other than the principal charging parties, see

Parker v. Anderson, 667 F.2d 1204 (5th Cir.1982), the

settlement occurred only after extensive discovery, see Flinn

v. FMC Corp., 528 F.2d at 1172 (settlement at late stage of

discovery assures sufficient development of record to permit

reasonable assessment of merits), and, each party agreed to

bear its own costs.

In the instant case, DEQ has allocated the settlement proceeds to

exclude compensating a party that has actually cleaned up the most

contaminated portion of the site and has not shown that the Polluting

Defendants lack the means to respond in damages for the full amount of

the cleanup - whether it be to Pacific III in a contribution suit or an amount

to be allocated to Pacific III from a settlement. DEQ has not shown how

its allocation of the settlement proceeds is consistent with a fair

settlement designed to pay for remediation of the pollution on the two

sites. DEQ has not offered any evidence to justify this apparently

capricious action. There is no evidence that the settlement amount could

not have been large enough to at least partially compensate Pacific III.

DEQ argued that these concerns are just Pacific III’s concerns, and

that DEQ must consider the larger picture. But that is no justification for

ignoring Pacific III’s interests completely. Pacific III is not just any

member of the public. Pacific III cleaned up the major contamination on

21

the Tannery Site. Pacific III is directly impacted by the settlement

because it precludes Pacific III’s contribution claim against Wells Fargo.

Fairness requires that Pacific III’s concerns be addressed meaningfully.

There is no evidence that Pacific III’s concerns were addressed

meaningfully. The consent judgment should be reversed.

2. No Deference on Fairness

Deference is granted to an administrative agency in exercising its

discretion and in areas of technical knowledge where the agency has

special expertise. Deference is not required where an issue is one of

general knowledge. Fairness of a monetary settlement and procedural

fairness are areas in which the courts and lawyers have expertise and

are equipped to fully evaluate the fairness of settlements.

The Circuit Court stated that it was deferring to DEQ completely

(Tr. 36-38). The Court did not make any finding of fairness, but the

standard had been briefed and argued extensively. The court should not

have deferred to DEQ on the fairness element. The case should be

remanded for a new determination of fairness, after discovery and without

deference to DEQ on the question of economic fairness of the monetary

settlement.

IV. SECOND ASSIGNMENT OF ERROR

The Circuit Court Erred in limiting Pacific III’s requested discovery

22

to one interrogatory, a method of discovery not provided for in the Oregon

Rules of Civil Procedure.

A. Preservation of Error

Pacific III filed its motion to allow discovery (OJIN 38), seeking the

full range of discovery methods, but with limited scope and duration (12-

5-2012 Tr. 47-48). The motion was allowed in part but mostly denied (Id).

Subsequently after briefing, the Circuit Court ruled that Pacific III would

be allowed only to propound one interrogatory (12-5-2012 Tr. 47-48).

B. Standard of Review

In the absence of law governing the standard of review of this issue

in a consent judgment proceeding, we propose that the standard of

review for whether discovery is allowed in an ORS 465.325(4) consent

judgment proceeding is for errors of law. See, e.g., Murphy v. Deloitte &

Touche Group Ins. Plan, 619 F.3d 1151, 1164 (10th Cir. 2010)(“we

review de novo whether the district court employed the correct legal

standard in resolving a discovery request”). The standard of review of a

court’s determination of what methods of discovery are available in a

consent judgment proceeding should also be for errors of law. See, Id.

The standard of review for a court’s limitation of discovery or for setting

the scope of discovery should be for abuse of discretion. See, Id. (“...in

exercising that discretion the district court must bear in mind both the

23

need for a fair and informed resolution of the claim and the need for a

speedy, inexpensive, and efficient resolution of the claim, we will not

disturb a district court's exercise of discretion unless it has abused that

discretion”).

C. Argument

DEQ argued that no discovery should be allowed because DEQ

believed the scope of the Circuit Court’s review is limited to the

administrative record DEQ had created (Tr. 46). Pacific III argued that

the scope of the Circuit Court’s review was broader and required the

Circuit Court to evaluate additional factors, particularly factors outside the

record which might affect the fairness and reasonableness standards the

federal courts evaluate in determining whether to accept a consent

judgment (OJIN 46 - reply brief on motion to allow discovery, pp. 9-10).

Even if the Circuit Court’s review of the consent judgment is limited

to the administrative record, discovery greater than that allowed by the

Circuit Court is proper. ERISA cases are an example. In the usual

ERISA case, review is limited to the administrative record. However,

where evidence outside the record is relevant to the court’s evaluation of

an issue, such as bias, discovery will be allowed.

For the reasons we have discussed above, then, we conclude

that our case law prohibits courts from considering materials

outside the administrative record where the extra-record

24

materials sought to be introduced relate to a claimant's

eligibility for benefits. See Sandoval, 967 F.2d at 380. Our

cases and the Supreme Court's decision in Glenn, however,

contemplate that this general restriction does not conclusively

prohibit a district court from considering extra-record

materials related to an administrator's dual role conflict of

interest. Therefore, discovery related to the scope and impact

of a dual role conflict of interest may, at times, be

appropriate, and we now turn to elucidating the standard for

addressing discovery requests related to a dual role conflict

of interest.

Murphy v. Deloitte & Touche Group Ins. Plan, 619 F.3d 1151, 1162 (10th

Cir. 2010). A US District court surveyed cases allowing discovery on the

issues of bias and conflict of interest in ERISA cases:

In Gessling v. Group Long Term Disability Plan for

Employees of Sprint/United Management Co., the court found

that prior cases such as Semien that “made discovery in such

cases nearly impossible to obtain” had been superceded by

Glenn [Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 128

S.Ct. 2343, 2346, 171 L.Ed.2d 299 (2008)] and that discovery

outside the administrative record is permissible, although the

court limited the additional discovery to the issue of bias. No.

1:07-CV-0483-DFH-DML, 2008 WL 5070434, at *1 (S.D.Ind.

Nov.26, 2008) (citing Hogan-Cross v. Metro. Life Ins. Co.,

568 F.Supp.2d 410, 414-16 (S.D.N.Y.2008); Winterbauer v.

Life Ins. Co. of N. Am., 2008 WL 4643942, at *4-6 (E.D.Mo.

Oct.20, 2008)).

Affirming Gessling's skepticism that Semien remains vital in

light of Glenn yet acknowledging the lingering admonition in

Semien that discovery should remain limited even in the

presence of a conflict, another court in the same division

allowed discovery into the conflict of interest such as

discovery of underwriting materials, plan procedures, training,

the relationship between the administrator and third-party

reviewers, compensation structures, approval/denial

statistics, and steps taken to ensure accuracy. See Fischer v.

25

Life Ins. Co. of N. Am., No. 1:08-CV396, 2009 WL 734705, at

*3 (S.D.Ind. Mar. 19, 2009) (citing Semien, 436 F.3d at 814-

15); see also Barker, 265 F.R.D. at 394-95, 2009 WL

5191441, at *4 (finding that Glenn contemplates the

production of evidence relevant to the claim administrator's

alleged conflicts in making disability determinations but

assessing each request for relevancy); Anderson v. Hartford

Life and Accident Ins. Co., 668 F.Supp.2d 1129, 1130-31

(S.D.Ind.2009) (finding that conflict-of-interest discovery

should be the rule rather than the exception in ERISA cases);

Hughes v. CUNA Mut. Group, 257 F.R.D. 176, 179 (S.D. Ind.

2009) (agreeing that the test in Semien is incompatible with

Glenn's rejection of “special procedural ... rules”); Reimann v.

Anthem Ins. Cos., Inc., No. 1:08-CV-830, 2008 WL 4810543,

at *23 (S.D.Ind. Oct. 31, 2008) (finding that, under Semien

and in light of Glenn, plaintiff must have an opportunity to

supplement the record and, “presumably, to conduct at least

some targeted discovery”); but see Creasey v. Cigna Life Ins.

Co. of New York, 255 F.R.D. 481, 482-83 (S.D.Ind.2008),

reaffirmed in Creasey v. Cigna Life Ins. Co. of New York, 255

F.R.D. 483, 483-84 (S.D.Ind.2009) (declining to follow

Semien but finding that the question of whether further

discovery is required in cases with a structural conflict of

interest should only be decided after the dispositive motion is

fully briefed).

Hall v. Life Ins. Co. of N. Am., 265 F.R.D. 356, 363 (N.D. Ind. 2010).

But the discovery allowed in a consent judgment proceeding under

ORS 465.325 should not be so limited. This Court should announce that

the scope of discovery in an ORS 465.325(4) proceeding includes all the

methods allowed under the Oregon Rules of Civil Procedure, which may

be limited by the court to the discovery necessary to allow the Circuit

Court to evaluate whether the proposed consent judgment complies with

the statutory requirement and is fair and reasonable.

26

In the present case, the Circuit Court too narrowly constrained the

discovery, so that the Court was unable to evaluate the fairness and

reasonableness of the settlement. It also abused its discretion in

ordering an interrogatory, a means of discovery not allowed under the

Oregon Rules of Civil Procedure. The Court also abused its discretion in

dictating the content of the one interrogatory it allowed. The adversarial

process benefits from and is informed by the evidentiary information

generated by the motivated self interest of each party in developing

issues and tactics, and from the give and take among parties. Ordering

discovery which allows one party an unfettered and unchecked platform

for self serving and unsupported rhetoric is the antithesis of that process.

There was no opportunity to challenge the interrogatory, no opportunity to

verify it, no requirement that the answer be verifiable, no cross

examination, no opportunity to obtain corroborating or conflicting

documents or testimony, no cross-check, no verification.

Pacific III should have been afforded an opportunity to find

evidence of bias or other improper influence on the process, to verify that

the administrative record assembled by DEQ was complete and

accurate, and an opportunity to see the supporting documentation for the

administrative record.

Discovery of evidence not contained in the administrative record is

27

needed to establish whether the procedural requirements were satisfied

and whether there is evidence of bias.

There is evidence which suggests that the exclusion of Pacific III

from the settlement and the elimination by DEQ of Pacific III’s

contribution rights was motivated by something other than a fair and

objective resolution of the

1. There is no apparent reason or need for the elimination of

DEQ’s contribution claims.

2. There is no evidence that the settlement could not have been

achieved with Pacific III’s participation, or without including

the western half of the property in the settlement, eliminating

Pacific III’s contribution claims.

3. There is no evidence that the massive financial assets of

Wells Fargo were insufficient to cover Pacific III’s costs.

4. There is no evidence that the settlement amount could have

been increased and a portion distributed to Pacific III.

5. There is no evidence from which it can be determined that it

is fair and reasonable to deprive the non-polluting party who

actually cleaned up most of the contamination of all

compensation for the $1,400,000 it spent on the remediation.

Without the requested discovery, the court could not, and did not make

28

an informed finding that the consent decree was fair and reasonable.

There is insufficient evidence, without those additional facts, to establish

that the consent decree and its complete elimination of Pacific III’s

contribution claims is not arbitrary and capricious. There must be some

reason to allocate all of the settlement proceeds to the other half of the

property and to DEQ’s general budget rather than paying at least a

portion of the costs of cleaning up the western half cleaned up by Pacific

III. On this record there is no such reason. That is why discovery is

needed, to determine if some improper factor was considered by DEQ or

influenced DEQ to let Wells Fargo off the hook for a farthing, to the

exclusion of Pacific III.

V. CONCLUSION

The order of the Circuit Court should be reversed and the case

remanded for further proceedings.

Respectfully submitted this 9 day of October, 2012.th

Montgomery W. Cobb, llc

/s/ Montgomery W. Cobb

Montgomery W. Cobb, OSB# 831730

EXCERPT OF RECORD

l 26 '1'12 2 "''P�' 1,pr. , , L·J .v,; ,y1 No. 5278 P 2

• ••••••• FILED

GREGOH JUDICIAl DF.PARTi'IEHT VI ASHINGTOH COUNH

20!2 MAR 26 PH 3: 49 l 2

3

4

IN THE CIRCUiT COURT OF nlE STATE OF OREGON

FOR THE COUNTY OF WASHINGTON

STATE OF OREGON, ex rei DICK S PEDERSON,DIRECTOR DBPARTMENT 6 OF ENVJRONMENTAL QUALITY,

7 8 v.

Plaintiff,

CRAIG E. BOWEN, PAMELA A. BOWEN, 9 MICHAEL C. GIBBONS, PATRICK D.

HUSKE and TAMARA L. HUSKE, I 0 IRONWOOD HOMES, INC., LINKE

11 EMTERPRISES OF OREGON, INC., fka FRONTIER LEAlliER COMPANY,

12 DONALD W. NELSON, WELLS FARGO BANK, N.A., and JAMES M. WILSON,

13 Defendants.

Case No. G\ \lf5�� CONSENT JUDGMENT General Judgment

14 Contents

15 1. Parties and Purpose ...... ................... .... .......... ... ......... ........ .......... ......... ................ ................... 3 16 2. Stipulations and Findings ........... ... .............. ............ ........................... .... .......... ............... ..... ... 3 17 3. Payment of Remedial Action Costs ........... ............. ................................................ . . .............. 9

18 4. Option to· Purchase Linke Property .......... ........ ... .............................................. .................... 10

19 5. Access and CoopeJ:ation .. ,, ... , ........... , ........................................................... 12

'20 6. Soils Management at KFF Site . . . ... . . . . . .... .. ... .... .. .... ... . . . ....... . . . . .. .. .. . .. . .... . .. .. . .... 16 21 7. Notices .................................................................................................................................. 17 22 8. Covenant Not to s.ue by State of0re'g0il ................ . ...... ... .. u ... .... ...... , .................................. l7

23 9. Liability Release by DEQ.,, .......................... , ............................................... 18

24 10. Contribution Protection and Actions . .. ... . . .. , ................... , ...... , .......................... 18

25 1 L Covenant Not to Sue and Liability Release be Defenden!ll .......... ......................... ........ ...... 19

26 12, Effect of Settlement .... , .. , ............................................................................ 19

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13. Dispute Resolution ....... . . , ...... . ,.,,, .. , ...... , .. ,,.,.,,,,.,,, .. ,, ........ , .. H,,,,,u •••• , .............. d .. uanu.-o •••�••n 20

2 14, Recordini ••••••••••••••••••••"� .. ,.,,.,,.,,u,. ... .... ... noouun•nooHuo•••••••••••••••••"''''''*'''''''''''"''�'''''' .. _.._n,oo 21

3 15. Modification . .. .. . .. . . .. . .. .. ······••t••••,, ............ , ............•.• •••••• ........... ...•.•.. , ••••n•21

4 16. Signatories; Service ........ ... ,,.,,,n, .. , , .. ,""''"''''''''''''''''' .. , ....... .... ,, .. .,H ....... ,u •• , .... ,,,., ... ,_, •..•....•. 21

5 17. Retention of Jurisdiotion .......... ......... ...... � .... ................ u .. ...... ....... .... ............ ......... u .............. 21

6 Exhibit I Site Locations

7 Exhibit 2 Tannery Site Map

8 Exhibit 3 KFF Site Map

9 Exhibit 4 Administrative Record Index

l 0 Exhibit S Notice and Service List

11

12

13

14

15

16

17

!8

19

20

21

22

23

24

25

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I, Partie s and Pumose

No. 5278

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:2 Parties to this Consent Judgment (collectively, '�Parties") are Plaintiff State of Oregon ex

3 rei. the Oregon Department of Environmental Quality ("DEQ") and Defendants Craig E. Bowen

4 and Pamela A. Bowen (the "Bowens"); Michael C, Gibbons ("Gibbons"); Patrick D. Huske,

5 Tamara L. Huske, and Ironwood Homes, Inc. (the "Huskes"); Linke Enterprises of Oregon, Inc.,

6 flea Frontier Leather Company ("Linke"}; Donald W. Nelson ("Nelson''); Wells Fargo Bank,

7 N.A. ("Wells Fargo"); and James M. Wilson ("Wilson"), collectively, the "Defendants."

8 This Consent Judgment is filed simultaneously with and for the purpose of resolving the

9 underlying complaint by the State of Oregon. The Partie8 desire to resolve this action without

10 litigation and have agreed to entry of the Consent Judgment without admission or adjudication of

11 any issue of fact or law.

12 The mutual objectives of the Parties are: (a) to protect public health, safety, and welfare

13 and the environment by the implementation of remedial measures in accordance with ORS

14 465.200 through 465.410 and regulations promulgated theret.:>; and (b) to resolve each

15 Defendant's liability at the Facility defined in Paragraph 2.B.(10).

16 2.

17

!8

19

20

Sdpulations and Findings

A. Each Defendant stipulates:

(1) To entry of this Consent Judgment;

(2) To perform and comply with all provision s of this Consent Judgment; and

(3) In any proceeding brought by DEQ to enforce this Consent Judgment, not

21 to litigate this Court's jurisdiction over this matter or tbe validity of the Consent Judgment.

22

23

B. DEQ finds, and each Defendant neither admits nor denies:

(I) From 1947 to 1988, Linke, fonnerly known as Froniier Leather Company,

24 operated a leather tannery at 1210 NE Oregon Street (now 15104 SW Oregon Street) in

25 Sherwood, Wasl1ington County, Oregon. The tannery and associated operations encompassed an

26 area approximately 33 acres in si?.e, referred to in this Consent Judgment as the "Tannery Site."

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The general location of the Tannery Site is shown as "Frontier Leather Company" on Exhibit 1,

2 attached to and incorporated into this Consent Judgment. For purposes of this Consent

3 Judgment, "Tannery Site" llleans Tax Lots 500,'600, 602, 900, 1000, and 1100 in Section 29, and

4 Tax Lot 400 in Section 28, in Township 2 South, Range 1 West of the WiHamette Meridian, in

5 the southeast quarter of Section 29 and the southwest quarter of Section 28. A map of the

6 Tannery Site is set forth in Exhibit 2, attached to and incorporated by reference into this Consent

7 Judgment. Linke owns Tax Lot 600 within the Tannery Si te, comprising 21.06 acres (the "Linke

8 Property").

9 (2) Frontier Leather produced finished leather from animal hides using a tanning

l 0 solution containing 5 percent trivalent chromium oxide. Hide tanning operations generated large

11 volumes of wastewater, which was processed by a treatment system consisting of a primary and

!2 secondary clarifier on Tax Lot 602 (formerly T.L. 503) and aeration ponds on the Linke

13 Property. Sludge from the primary clarifier was dewatered using a vacuum filter. Unconfirmed

14 reports indicate that before 1978 these sludges may have contained up to S percent chromium.

15 This sludge, along with sludge from the aeration ponds, was landfilled on the original Frontier

16 Leather facility. Surface water and sediment samples from the fonner wastewater treatment

17 lagoons contained metals (including cadmium, chromium, copper, lead, manganese, mercury,

18 nickel, and zinc) and volatile organic compounds including di-n-buytlphthalate, methylens

19 chloride, 1 ,2-dichloroethane, and toluene. A 1985 sludge sample analysis using the Toxicity

20 Leaching Characteristic Procedtll'e ("TCLP") detected 460 milligrams per liter (mg/L)

21 chromium.

22 (3) After tanning, chromium-treated animal hides were "split" and only the

23 high value front or grain side of the hides was �old. The splits were landfilled in Tax Lots 500

24 and 600 between 1971 and 1974. Analyses of hide splits indicate that they contain significa nt

25 concentrations of total chromium. The chromium was predominantly in the trivalent oxidation

26 state, although low concentrations of hexavalent chromium were also present. A hide split

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sample that ODEQ extracted with distilled water in 1973 released sufficient chromium to suggest

2 that the hide splits could represent a significant threat to groundwater quality,

3 (4) Between 1956 and 1972, Frontier Leather leased a portion of Tax Lot 500

4 including a second building on-site to a series oflead·acid battery manufacturers. Activities at

5 the historic battery manufacturing facility included lead ingot melting and battery assembly

6 operations. The lead used for battery manufacturing was reported to contain between 3 and 7

7 percent antimony. Surface dust samples collected within the facility's battery area, furnace

8 room, and ventilation duct work in 1988 eontained high concentrations of lead and antimony,

9 Excess lead and sulfuric acid "pastes" from the manufacturing process were discharged to an

1 0 unlined rec�very sump adjacent to the building. The sump was reportedly cleaned out

11 approximately every 10 days, and the recovered materials sold to lead smelters. In addition,

12 during the first year of operations (1956), 400 to 500 used batteries per day were preprocessed

l3 for the recovery of lead. The empty casings were plied northeast of the building, north of the

14 , acid discharge area. The pile eventually included 200,000 to 300,000 battery casings and

15 covered one-third of an acre, In about ! 96!, a fire consumed the casings. The remains of the

16 casings (mostly ash) hai:! apparently not been remove(,! as of January 31,2002. Subsurface soil

17 east of the former battery manufacturing facility was analyzed for lead in 1988 and 2000. In

18 ! 990, Linke excavated 743 tons of lead·conlaminated soil and wastes from the northern end of

19 Tax Lot 500, adjacent to the former battery manufacturing facility, The contaminated materials,

20 containing up to 95,000 mgikg total lead and up to 160 mg/L lead by TCLP, were shipped to

21 Chem-Security Systems in Arlington, Oregon for disposal. No confirmation samples were

22 collected, In Apri12000, a soH investigation was performed to further assess lead contamination

23 in this area. Soil samples contained up to 43,600 mg/kg lead.

24 (5) Unconfirmed reports indicate an estimated 21,000 cubic yards of

25 cltromi�-<:ontalning wastes, including chromium"treated hlde splits and chromium-containing

26 vac:uum filter sludge, were placed over ao approximate 6. 9 acre area on Tax Lots 500 and 600'.

Page 5 • CONSENT JUDGMENT lliSTlCE-1128445269

U.partmonl of llllli" !SIS SW Fifth Avo,Suito4l0

Ponland� OR 97201 (971) m-1880/Fax: (971) 67)-1886

ER 5

Apr. 26. 2012 2:05PM No. 5278 P. 7

• •

Other waste alleged to have been buried in this area includes lead-acid battery casings, residues

2 from bumed battery casings, concrete, sulfuric acid from battery manufacturing operations, wood

3 and metal scraps, and household garbage from the City of Sherwood.

4 {6) In 2003, DEQ completed a remedial investigation at Tax Lot 600 at the

5 Tannery Site, and identified metals including antimony, trivalent chromium, lead, manganese,

6 and mercury as contaminants of concern. Chromium was detected at the highest relative

7 concentration. Trivalent chromium was detected up to 21,000 mg/kg in soil associated with

8 landfilled hide splits, up to 13,000 mg/kg in sedimentation lagoon soil, and up to 890 mg/kg in

9 wetland soil collected from the Rock Creek floodplain. A risk assessment undertaken by DEQ

I 0 for the Tannery Site identified trivalent chromium hot spots in soils at levels posing unacceptable

11 risk to tecrestrial receptors. To address these unacceptable risks, DEQ completed a feasibility

!2 study and developed a range of potential remedies for the site involving off·slte removal of

13 remaining hide splits and hot spot soil concentrations, and capping of residual contaminated

14 sediment with clean filL A final remedy has not.been sele.cted for the Tannery Site.

IS (7) In addition to waste disposal at the Tannery Site, between 1962 and 1971

16 hides and other animal wastes and liquid sludge from operations at the Tannery Site were

17 disposed of at what is known as the Ken Foster Farm Site in Sherwood, Oregon ("KFF Site'').

18 The KFF Site is located approximately one-half mile from the Tannery Site, as shown on Exhibit

19 l to this Consent Judgment. For pw:poses of this Consent Judgment, "KFF Site" means the

20 entire 40.44-acre tract of property located in the northwest quarter of the southwest quarter of

21 Section 33, Township 2 South, Range 1 West of the Wi!lamette Meridian. A map of the KFF

22 Site is set forth in Exhibit 3, attached to and incorporated by reference into this Consent

23 Judgment.

24 {8) Sampling conducted in 2006 at the KFF Site found contaminants in ·

25 surface soU including autimony, trivalent chromium, leed, and mercury. Triv.alent chromium

26 was detected at up to 58,900 mglkg in soils. In 2007, DEQ completed a screening-level risk

Page 6 • CONSENT JUDGMENT JUS1'1CM2ll445269

Dt:panm�n of Jostiet !SlS SW FlMAVe,Suitt4l(.l

Pon!and. OR 97201 (971) 61l-188U I P"'; (911)673.\iU .

ER 6

0 • · 2''2 2 n•nu Apr. Lb. Vi :vorhi

• •

1 assessment at the KFF Site to assess potential risks to residents living on the site. This

2 evaluation concluded that site residents are not subject to significant risk through direct contact

3 with site soils. Limited soil cleanup was completed by Ironwood Homes, Inc. for several

4 residential lots at the Ironwood Hon1es development, resulting in DEQ issuance of no further

5 action determinations for those lots. Soils removed from the lots remain on property owned by

6 the Huskes at the KFF Site and are managed in two engineered soil cells. Additional work at the

7 KFF Site is waiTanted, including completion of a comprehensive remedial investigation and risk

8 assessment, feasibility study, and implementation of removal or remedial action as necessary.

9 (9) Contaminants described above are "hazardous substances" within the

1 0 meaning of ORS 465.200(16). The presence of these hazardous substances in soils and

11 sediments at the Tannery and KFF Sites constitutes a "release" or "threat of release" of

12 hazardous substances into the environment within the meaning of ORS 465.200(22).

l3 (1 0} Solely for the purposes of this Consent Judgment, and not otherwise, the

14 "Facility," as defined in ORS 465.200(13}, means; (a) the Tannery Site; (b) the KFF Site; and

15 (c) the full extent of existing known or unknown contamination by hazardous substances of any

16 media on, above, or below the Tannery Site or the KFF Site, or that has migrnted, may have

17 migrated, or hereafter migrates to anywhere from the Tannery Site or the KFF Site.

18 (1 1) Donald Nelson was plant manager for Frontier Leather Company from

19 1966 to 1972 and its general manager from 1972 untill988.

20 (12) For various time periods from 1969 to present, Wells Fargo Bank or its

21 corporate predecessors acted as trustee for Linke·related trusts, which trusts from approximately

22 December 1975 onward held a controlling share of stock in Frontier Leather Company, and

23 allegedly managed operations at the Tannery Site through bank employees. James Wilson

24 served on the board of directors of Frontier Leather Company, and acted as Wells Fargo's

25 representative in managing operations at the Tannery Site.

26

Page 7 • CONSENT JUDGMENT JUSTICE·#28445269

Dtpartmem of Justice 1515 SW Fifth Ave, Suite 410

Portlaod, OR 97201 (911l61l-t880 /Pox; (911) 673·1386

ER 7

h 5278 P. 9

• •

(!3) In 1983, Mi.:hael Gibbons purchased two parcels of undeveloped real

2 property within the boundaries of the KFF Site. Each parcel was approximately ten acres in size.

3 In approximately 1986, Gibbons sold one of the parcels to persons that are not a party to this

4 Consent Judgment. In 1987, Gibbons sold the other parcel, which included Tax Lot 900 and a

5 right·of·way serving Ta,x Lot 900, to Craig and Pamela Bowen. According to Michael Gibbons,

6 during the time he owned the aforementioned parcels, he did not undertake any construction or

7 improvement of the properties, other than to lay a gravel road in order to provide access to the

8 Tax lot 900 parceL In 2004, the Bowens conveyed Tax Lot 900 and the righHf-way to

9 Ironwood Homes, rnc. Patrick Huske is the sole shareholder of Ironwood Homes, Inc.

!0 ( 14) Each Defendant is a "person" within the meaning of ORS 465.200(21 ),

ll an<! is a potentially liable person under ORS 465.255.

12 (15) In accordance with ORS 465.325(4)(d) and 465.320(1}, on July 1, 2011,

13 DEQ provided public notice and opportunity for comment on this Consent 1udgment through

14 publication of notice in the Secretary of State's Oregon Bulletin.. DEQ also provided notice of

15 the proposed Consent Judgment and a public hearing though publication on July 16, 2011 in The

16 Oregonian newspapef. On July 26, 20!1, DEQ held a public meeting in Sherwood regarding the

17 Consent Judgment. The public comment period ended on August 1, 201 1. Written and oral

I g comments were received and considered by DEQ, all documented in the agency's file.

19 (16) Based on the administrative l'ecord described in the Administrative Record

20 Index attached to and incorporated by reference into this Consent Judgment as Exhibit 4, the

21 Director determines, in accordance with ORS 465.325(1) and (7), that this Consent Judgment

22 and Defendants' commitments under the Consent Judgment will expedite removal or remedial

23 action, minimize litigation, be consistent with rules adopted under ORS 465.400, and be in the

24 public interest.

25

26

Page 8 • CONSENT JUDGMENT JUST!C£·#26445269

�partrncnt of J\lstice !51$ SW Pifih Av� Suite410

Ponl.,d, OR 97201 (911) 613·1880 I Fox; (97i)67l-ISS6

ER 8

•

3. Payment of Remedial Action Costs

No. 5278 P. 10

•

2 Within 30 days of entry of this Consent Judgment by the Court, the following

3 amounts shall be paid to DEQ by or on behalf of the specified Defendants:

4

5

6

7

8

9

10

11

12 B.

Bowens $50,000

Gibbens $50,000

Linke $500,000

Nelson $100,000

Wells Fargo and Wilson $!,900,000

(Total) $2,600,000

Payment must be made by certified or cashier's check(s), made payable to

13 "Oregon DEQ, Hazardous Substances Remedial Action Fund," and mailed to: Oregon

14 Department of Justice, c/o Kurt Burkholder, 1515 SW Fifth·Ave., Suite 410, Portland, Oregon

15 9720 I. Each check must reference "Frontier Leather/KFF Site." The Oregon Department of

!6 Justice ("ODOJ'� shall bold the check(s) in trust until full payment of the total amount under

17 Subsection 3 .A., and, upon full payment, shall forward the check(s) to DEQ. Payment is deemed

18

!9

made to OEQ upon receipt by ODOJ.

c. Timely payment is of the essence. fn the event timely payment of the total

20 amount specified in Subsection 3.A. is not received by 0001, DEQ may, at its sole option

21

22

23

before receipt of the total amount, move to set aside and/or vacate this Consent Judgment, and

each Defendant stipulates to such setting aside and/or vacating and waives any objections to the

same. In the event this Consent Judgment is set aside and/or vacated pursuant to this Subsection,

24 and such setting aside and/or vacating is a final non-appealable order, ODOJ shall immediately

25

26

return any payments received.

Page 9 - CONSENT JUDGMBNT JUST!CE-#28445269

Dapartment of Jl.l$tlce 1515 SW Fifth Avt, Suite 410

Portl011d. OR 91201 (97\) 97:1-1880 I P"': (911) 6n·l3!16

ER 9

5278 P II

• •

l D. In the event the Court's entry of this Consent Judgment is appealed, payment shall

2 be due bu.t held in trust by ODO.l until the appeal is resolved, ot until this Consent Judgment is

3 set aside and/or vacated in accordance with Subsection 3.C., whichever occurs first. If upon

4 appeal the Court's entry of this Consent Judgment is upheld, ODOJ shall forward the check(s) to

5 DEQ. If upon appeal the Court's entry of this Consent Judgll)en! is not upheld, or if this Consent

6 Judgment is earlier set aside and/or vacated, ODOJ shall immediately return any payments

7 received. In the event the Consent Judgment is not appealed, or is appealed but upheld, sole

8 legal and equitable right, title, and interest in auch money and interest earned on the money

9 irrevocably vests in the State of Oregon, and each Defendant waives, discharges, and releases

lO any claim to or recow:se against the money.

11 E. Upon receipt of payment from ODOi pursuant to this Section 3, DEQ shall

12 deposit the payment into a site-specific account within the Hazardous Substances Remedial

13 Action Fund dedicated to use at DEQ's sole discretion to fund investigation, removal, or

14 remedial actions at the Facility. All moneys in the site-specific account, including interesi

15 earned on the account, shall be used by DEQ as it deems appropriate for petfonning or paying

16 f<lr investigation, r emoval, or remedial actions at the Facility, paying DEQ' s oversight costs

! 7 incurred in connection with such actions, paying DEQ's costs of administering the account, and

18 reimbursing outstanding DEQ remedial action costs at the Facility. Any funds remaining in the

19 account afterthese expenses may be used by DEQ al its sole discretion.

20 4.

21

Option to Purchase Linke Property

A. Linke, in return for considerations set fonh in this Consent Judgment, hereby

22 grants to DEQ the sole, exclusive, and irrevocable right and option (the "Option") to take title to

23 the 'Linke Property described in Paragraph 2.B.(l), subject to the following terms and conditions.

24 B. The term of the Option shall oommenen upon the entry of this Consent Judgment

25 by the Court, and shall expire at 5:00p.m. on the first anniversary of the Court's entry of this

26

Page 10 • CONSENT JUDGMENT JUSnCE•II2844:>�o9

Dt:partmcnl of Juslice 151,, SW Flnh Ave. SuitJl4!0

Portland. 0� 97201 (971) 673-1880 /Fax: (971) 613·1886

ER 10

�h. 5278

• •

Consent Judgment; provided, Linke is required to convey no greater interest in the Linke

2 Property than it possesses at the time DEQ exercises the Option.

3 C. DEQ may exercise the Option by written notice to Linke given at any time before

4 the expiration of the term of the Option and by payment to Linke of the sum of $50.

5 D. lfDEQ exercises the Option to take title to the Linke Property, Linke shall, within

6 30 days after the Option is exercised and if redemption of the Linke Property is allowable under

7 law at tl11tt time, pay Washington County the amount necessary to redeem !he Linke Property

8 from foreclosure.

9 E. Linke shall allow DEQ and its officers, agents, authorized representatives,

l 0 employees, and contractors to enter all portions of the Lioke Property under its ownership at all

ll reasonable times for the purpose of performing investigation or removal or remedial actions at

12 the Facility, regardless of whether the Option is exercised.

l3 F. Within 60 days after the redemption of the Link� Property under Subsection 4.D.,

!4 Linke shall convey and quit claim to DEQ the Linke Property described in Paragraph 2.8.(1).

J 5 DEQ acknowledges and agrees that lile Linke Property will be conveyed by Linke and accepted

16 by DEQ "AS IS," "WHERE IS" and "WITH ALL FAULTS AND DEFECTS," and that neither

17 Linke nor its representatives have made or will be making any warranty or representation,

18 express or implied, or arising by operation oflaw, regarding the Linke i"roperty, including

19 without limitation any warranty of quality, condition, merchantability, and/or fitness for a

20 particular purpose or title.

21 a. DEQ acknowledges, and Linke agrees that, before any exercise of the Option,

22 DEQ will be provided w_ith the opportunity to inspect and make such investigations regarding ihe

23 Linke Property and perform such due diligence, inspection, and investigation of the Linke

24 Property and its suitability for DEQ's purposes, including review of documents and information,

25 as DEQ deems appropriate.

26

Page 11 • CONSENT JUDGMENT JUST-lC£.#28445269

Departmellt of JUitWc 151$ SW Fifth Avt,Suit• 410

f"911land1 OR 97201 (9"11) 673·18!0 I Fax: (97!) 673·1186

12

ER 11

2012 2 06 PM No. 5278

• •

H. Except as provided in Subsection 4.D., DEQ shall be solely responsible for any

2 and all fees, costs, taXeil, or any other expenses associated with the exercise of the Option and

3 Linke's transfer of the Linke Property to DEQ.

4 I. DEQ may transfer the Option to another entity of its sole choosing, within the

5 tenn of the Option and subject to all provisions ofihis Section 4. The transferee of the Option

6 may exercise the Option in accordance with and subject to all rights and obligations ofDEQ

7 under this Section 4.

8 5. Access and Cooperation

9 A. Any Defendant owning or controlling real property at the Facility sh�ll allow

I 0 DEQ and its officers, agents, authorized representatives, employees, and contrac!Ol'S to enter the

l ! property for the purpose of performing remedial activities pursuant to this Consent Judgment.

12

!3 to:

!4

IS

B. DEQ's remedial activities at a Defendant's property may include but are not limited

(!) Sampling and inspecting air, water, and/or soil at the property;

(2) Constructing, operating, or maintaining groundwater monitoring wells,

16 groundwater extraction wells, piping, utilities, soil liorings, test pits, and/or e xcavations at the

!7 property;

18

!9

20

(3) Removing contaminated soils and groundwater from the property;

(4) Treating contaminated soils and groundwater;

(5) Maintaining any monitoring well or extraction well located on the

21 property in accordance with Oregon Administrative Rules Chapter 690, Division 240;

22

23 property;

24

25

(6) Temporarily storing equipment, vehicles, tools, and other materials at the

(7) Temporarily storing wastewaters and related materials and wastes;

(!!) Restoring the surface condition of areas disturbed by remedi� activities

26 and repairing any structures or improvements damaged by remedial activities; and

Page 12- CONSENT JUDGMENT JUST!CE-#2844S269

i)epllnm�nt a( Justice 1m SW Fifth Ave, Silile410

Port1,.,d, OR 97201 (971) 673-1880/ p,., (971) 673·1$86

P. 13

ER 12

A •· ""'" 2 n'"'A F!� LA '(!lL 'IO" ,. : • ,,, {. v ' ' v • ' No. 5278 ° I"

• •

1 (9) Photographing portions of the property and structures, objects, and materials

2 at the property as necessary to fa9ilitate remedial measures.'

3 C. All tools, equipment, and other property brought upon a Defendant's property by

4 or at DEQ's direction remain DEQ's property, and shall be removed by DEQ no later than

5 completion of remedial activities at the property. DEQ shall manage and dispose all waste

6 generated by OEQ in accordance with applicable federal, state, and local laws, and DEQ shall be

7 designated as the generator ofsuoh waste. Except with the consent of the Defendant, no waste or

8 materials generated by DEQ's remedial activities may he disposed or discharged at a

9 Defendant's property.

10 D. No later than completion of remedial activities at a Defendant's property, DEQ

11 shall abandon any remedial action wells on the property in accordance with OAR 69Q..240, and

t 2 restore the surface condition of areas disturbed by remedial activities, to the maximum extent

13 reasonably practicable to a condition equivalent to the condition existing before remedial

14 activities,

15 E. DEQ shall coordinate its activities with the Defendant and any tenant to prevent, to

!6 the maximum extent reasonably practicable, any impairment of .access by customers or business

1 7 invitees of Defendant and tenants on the property and any inconvenience to or disruption of

18 Defendant's or tenants' business on a Defendant's property due to DEQ's activities. DEQ shall

! 9 provide the Defendant a minimum of 30 days to review and comment on the location and design of

20 remedial activities.

21 F. Before undertaking any remedial activity at a Defendant's property, except for

22 emergencies, system failures, or time-critical repairs, DEQ shall provide the Defendant and any

23 tenant at least 72 hours verbal notice ofthe activity. Before commencing any excavation or

24 construotion at a Defendant's property, DEQ, except in an emergency, shall provide the

25 DefendlUlt and tenants no less than 30 calendar days written notice of the activity, To the

26 maximum extent reasonably practicable, DEQ shall coordinate and schedule any remedial

Page 13 - CONSENT JUDGMENT JUSTJCE-#23445269

Ooportmcnt of JUS!ioc 1513 SW Fiith Ave. Suilc410

Ponland, OR 91201 (911)01j·J8801f$><: (ll7!) 61J·l8i6

ER 13

.�or 26. 2012 2:06PM

• •

activity that might disrupt or interfere with the use of the property through the contacts

2 designated in Exhibit 5.

Nc. 5278 P. 15

3 G. DEQ shall comply with applicable federal, state, and local laws at all times while

4 on the Facility and, subject to ORS 465.315(3), secure aU necessary permitsand authorizations in

5 connection with remedial activities at the Facility. Each Defendant shall cooperate with DEQ as

6 necessary for DEQ to obtain necessary pern1its and authorizations. DBQ shall perform all remedial

7 activities in a manner that will not cause contamination or exacerbate contamination existing at the

8 Facility.

9 H. The Defendant owning or controlling property at the Facility, or its authorized

10 representative, may observe DEQ while DEQ is undertaking remedial activities at said

ll Defendant's property: provided, any observer must have health and safety training consistent

12 with the requirements of the health and safety plan for DEQ's activities. Upon request, DEQ

13 shall provide any Defendant a copy of test data, final sample results and analysis reports, toxicity

14 evaluations, and other written reporta that arise from DEQ's remedial activities at the Facility,

t 5 unless the record is exempt from disclosure under the Oregon Public Records Law.

16 I. The State of Oregon shall, to the extent permitted by Article XI, Section 7, of the

17 Oregon Constitution and by the Oregon Tort Claims Act, hold harmless Defendants and

18 Defendants' directorS, officers, employees, agents, shareholders, partners, affiliates,

19 representatives, tenants, suecessors, and assigns, and indemnify the foregoing, from and against

20 any and ail manner of actions and claims, including but not limited to third party claims, arising

21 from remedial activities under this Consent Judgment by DEQ or its commissions, agencies,

22 officers, employees, contractors, or agents. The indemnity provided in this subsection does not

23 extend to:(!) liability for any action or claim caused by acts or omissions not related to DEQ

24 remedial activities of (a) a Defendant or its tenants or agents, or (b) a third party not a signatory

25 to this Consent Jndgment; or (2) liability for any action or claim that is attributable to

26 contamination already existing at or under the Facility at the time this Consent Judgment is

Page 14 • CONSENT JUDGMENT . JUSTICE·#2S445269 [)ep!Utmtnt o( Justice

IllS SW Fifth Av..SUite410 Pwtlan4,0R 97201

(971) 673-18!0/ F«: (�71) 673·1886

ER 14

A or. 26 20:2 2 07PM Nc. 5278 P 16

• •

entered by the Court, except to the extent such an action or claim arises from DEQ remedial

2 activities after the date the Consent Judgment is entered that contribute to or e11acerbate existing

3 contamination.

4 J. Any Defendant owning or controlling property at the Facility shall not interfere

5 with or otherwise limit any activity conducted at the property pursuant to and consistent with this

6 Consent Judgment by DEQ or its officers, employees, agents, contractors,.or authorized

7 representatives. This obligation shall also apply to and be binding upon any and all tenants of

8 Defendant.

9 K. Any Defendant owning or controlling property at the Facility shall cooperate with

I 0 DEQ as to incidentals necessary for DEQ's performance of a removal or remedial action,

11 including but not limited to recording, implementing, and complying with any easements and use

12 restrictions at the property required to implement the removal or remedial action.

13 L. DEQ shall not be responsible for the following costs or expenses related to future )

14 construction, development, use, or occupation of properties located at the Facility if the activities

15 are not necessary to a removal or remedial action performed by DEQ: (l) demolition, design,

16 engineering, permitting, construction, grading, excavation, and modifications, including

17 architectural, structural, fixtures, utilities, or engi�eering modifications and HV AC

18 modifications; (2) landscaping modifications: (3) construction worker health or safety measures;

19 or (4) modification or relocation of treatment systems, piping, utilities, or other remedial

ZO equipment and operations in order to accommodate future construction, development, use, or

21 occupation of the properties. DEQ shall be responsible for costs or expenses of the foregoing

22 activities to the extent such activities are undertaken by DEQ to complete a removal or remedial

23 action. The Defendant owning or controlling property at the Facility shall bear the costs of any

24 modification to or relocation of treatment sy�tems, piping, utilities, or other remedial equipment

2S and operations required to accommodate future construction, development, use, or occupation of

26 the property, and shall bear the costs of repair for any damage to treatment systems, piping,

Page 15 • CONSENT JUDGMENT JUSTICE-1128445269

Department of Jm1ico Ill SSW FiM Avo,Suite4l0

Ponland, OR 9720 I (971) m-18so1 � ... {971) m-11!6

ER 15

Aor. 26. 2012 2:07PM No. 5278 ?. 17

• ••

utilities, or other remedial equipment inadvertently caused by future construction, development,

2 use, or occupation of the property.

3 6. Soils Management at KFF Site

4 A. DEQ shall take the following steps regarding soils at residential properties located

5 at the KFF Site:

6 (1) Complete evaluation of risks posed to human health or ecological

7 !'eceptors by soils contamination, including further soil sampling as necessary in DEQ's

8 judgment;

9 (2) . Conduct workllhop(s) or otherwise consult with property owners and the

10 City of Sherwood to develop outcomes addressing: (a) any health concerns; (b) best practices to

ll avoid human or ecological receptor exposure to contaminated soils, run-off to wetlands, or other

!2 coilcerus; and (c) marketability of residential properties;

13 (3) [f DEQ confirms that soils do not pose a risk to human health or eoological

14 receptors at a residential property, issue a parcel-specific No Further Action determination

15 ("NFA") or conditional NF A. If an NFA is inadequate in addresaing marketability or other

16 concerns at a particular property, DEQ in its discretion will consider administrative settlements

17 with the property owner providing liability protections and other assurances; and

!8 (4) !fDEQ determines that soils may pose a risk to human health or ecological

19 receptors at a residential property, ot should be managed to avoid wetland impacts' or other

20 concerns, consider a range of tools to address the risk or other concern-e.g., educational

21 outreach regarding best practices, institutional controls, remedial measures.

22 B. DEQ' s objective regarding soils at the KFF Site is to develop and implement an

23 approach where residential property owners will not bear a fiscal burden for soils contamination

24 posing a risk to human health or ecological receptors, provided the owner provides access and

2S cooperation to DEQ, such as following best practices regarding any residual soils contamination

26 and accepting reasonable use restrictions at the property. In DEQ's discretion, this approach

Page 16 • CONSENT JUDGMENT IUSTICE-#28445269

O.p•llm<nl of J .. tl<e ISiS SW Fifth Ave, Sui!G 410

Portland, OR 97201 (971] 673·1110 I Poxo (971) 673·1816

ER 16

Apr, 26, 2012 2:07PM No, 5278 P 18

• •

1 may be described in greater detail in an area-wide Record of Decision issued by DEQ for public

2 review and comment.

3 c. DEQ is not required, under this Subsection or any other provision of this Consent

4 Judgment, to perfonn remedial measures regarding the two engineered soil cells located on

5 Huske property. DEQ and the State of Oregon are not liable, by virtue of this Subsection or any

6 other provision of this Consent Judgment, to compensate any property owner, any Party, or any

7 other person for remedial action costs, damages, or any other claim incurred in relation to or

8 arising from past, present, or future releases ofhazardous substances at the KFF Site.

9 7.

10

Notices

All notices and other communications required under this Consent Judgment shall be

11 directed to the recipients designated in Exhibit 5, attached to and incorporated by reference into

12 this Consent Judgment. A Party may change its designated recipient at any time, without Court

13 approval, through advance written notice to all Parties.

14 8.

]5

Covenant Not to Sue by State of Oregon

A. Subject to Subsection 8.B., the State of Oregon covenants not to sue or take any

16 other judicial or administrative action pursuant to ORS 465.200 to 465.545 and 455.900 against

17 any Defendant regarding Matters Addressed. "Matters Addressed" for purposes of this Consent

18 Judgment means all investigation, removal,' and remedial actions taken or to be taken and all ·

19 removal and remedial action costs incurred or to be incurred at or in connection with a release of

20 hazardous substances at the Facility. This covenant not to sue shall be effective as to each

21 Defendant upon satisfaction of the total amount of payments specified in Subsection 3A

22 B. The State of Oregon reserves all rights against each Defendant with respect to

23 maners not expressly included within the covenant not to sue set forth in Subsection 8.A.,

24 Including but not limited to:

25 (!) Failure by a Defendant to comply with any applicable requirement of this

25 Consent Judgment;

Page 17 • CONSENT JUDGMENT lUST!CE·#28445269

Deplll'tmen� of Ju&tlct ISIS SW Fifth Ave. Suite 410

Ponllllld. OR 9'1201 (971)613·1810/F"'' (911) 673·1886

ER 17

A o r. 2 6. 2 0 1 2 2 : 0 7 PM

•

No.5278 P. 19

•

(2) A Defendant's act or omission causing, contributing to, or exacerbating a

2 release of hazardous substance at the. Facility after the date of entry of this Consent Judgment;

3 and

4 (3) Regarding Linke and Nelson only, liability under federal or state law for

5 natural resource damages.

6 9. Liability Release by DEO

7 A. DEQ release.q each Defendant from liability to DEQ under any tederal or state

8 statute, regulation, or common law, including but not limited to the Comprehensive

9 Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S. C. § 9601 et seq.,

I 0 regarding Matters Addressed. This liability release shall be effective as to each Defendant upon

11 satisfaction of the total amount of payments specified in Subsection 3.A.

12 B. DEQ reserves all rights against each Defendant under federal or state law with

13 respect to matters not expressly included within the liability release set forth in Subsection 9.A

14 above, including but not limited to:

15

16 Judgment;

17

(I) Failure by a Defendant to meet any applicable requirement of tills Consent

(2) A Defendant's act or omission causing, contributing to, or exacerbating a

18 release of hazardous substance at the Facility after the date of entry of this Consent Judgment;

19 and

20 (3) Regarding Linke and Nelson only, liability under federal or state law for

21 natural resource damages.

22 l 0. Contribution Pwtection and Actions

23 A. The Parties agree that this Consent Judgment is a judicial settlement within the

24 meaning ofORS 465.325(6)(b), pursuant to which each Defendant has resolved its liability t o the

25 State of Oregon regarding Matters Addressed. Effective upon satisfaction of the total amount of

26

Page 18 • CONSENT JUDGMENT IUSTICE-1128445269

Ot:pmmenl of Just«:u: 1515 SW rlfth Ave, Suile 41�

Portland, OR !J7l<IJ (971) 673-ISBO !Fdx: (971)673·1886

ER 18

2:07PM

• •

1 payments specified in Subsection 3.A, each Defendant shall not be Uabl� for claims for

2 contribution regarding Matters Addressed for any portion of the Facility.

No. 5278

3 B. Subject to Section 11, Defendants may seek contribution in accordance with ORS

4 465.325(6)(c)(B).

5 11. Covenant Not to Sue and Liability Release by Defendants

6 Eaqh Defendant covenants not to sue or assert any claim or cause of action, In any

7 judicial or administrative forum, against the State of Oregon with respect to the Facility or this

8 Consent Judgment, including but not limited to any claim pursuant to ORS 46$.255, 465.257,

9 ORS 465.260(7), or 465.325(6)(c)(B). Further, each Defendant releases DEQ from liability to

1 0 Defendant under any federal or state statute, regulation, or common law in connection with a

11 release of hazardous substaMes at the Facility. Notwithstanding the previous two sentences,

12 each Defendant reserves all rights concerning the obligations ofDEQ and the State of Oregon

13 under this Consent Judgment and concerning any gross negligence or intentional misconduct in

14 DEQ' s performance of remedial measures at the Facility.

15 12. Effect of Settlement

16 A. Subject to Subsection 2.A., no Defendant admits any liability, violation oflaw, or

17 factual or legal findings, conclusions, or detenninations made by DEQ under this Consent

18 Judgment.

19 B. Nothing in this Consent Judgment is intended to create any cause of action in

20 favor of any person not a party to this Consent Judgment, and the fact of the participation of any

21 Party under thls Consent Judgment shall not be admissible in any judicial or administrative

22 proceeding to establish an admission of liability against the Party.

23 c. Ex:eept as provided in Seetions 8 through II, nothing !n this Consent Judgment

24 precludes DEQ or any Defendant from asserting any claim, cause of action, or demand for

25 indemnification, contribution, or cost recovery.against any person who is not a party to this

26 Consent Judgment.

Page 19- CONSENT JUDGMENT JUSTICE412844l269

D11par1menl of Juitie¥: ISIS SW Fifth Ave, Suite410

Fot11•1d, OR 97201 (971) 673·1llBO I p,., (971) 61l·l$86

D 2·,1 • J

ER 19

Apr. 26. 2012 2:07PM �lo. 5278 ° 21

• •

D. If for any reason the Court declines to approve this Consent Judgment in the form

2 presented, this settlement is voidable at the sole discfetion of any Party and the terms of the

3 settlement may not be used in evidence in any litigation among or against the Parties.

4 E. Unless specified o therwise, the use of the term "days" in this Consent Judgment

5 means calendar days.

6 F. No change in corpotate status.or ownership relating to the Facility shall in any

7 way alter a Defendant's obligations under this Consent Judgment, unless othetwise approved in

8 writing by DEQ, which approval shall not be unreasonably withheld.

9 G. DEQ and Defendants intend for this Consent Judgment to be construed as a

10 judicially approved settlement, by which Defendants have resolved lheirrespective liabllltyto

11 rhe State of Oregon regarding Matters Addressed in this Consent Judgment, within the meaning

!2 of Section 113(£)(2) of lhe Comprehensive Environmental Response, Compensation and

13 Liability Act (CERCLA), 42 U.S.C. § 96! 3(£)(2), and for each Defendant not to be liable for

14 claims for contribution regarding Matters Addressed in this Consent Judgment for any portion of

15 the Facility to the extent provided by Section 113(£){2) of CERCLA, 42 U.S.C. §§ 96!3(£)(2).

!6 !3. Dispute Resolution

17 In the event a Defendant disagrees with DEQ regarding performance of any obligation

18 underthis ConsentJudgment, the Defendantsha!l promptly notify DEQ in writing of its

! 9 objection. DEQ and the Defendant shall then make a I:JOOd-failh effort to resolve the

20 disagreement within 14 days' of the Defendant's written objection. At the end of the 14-day

21 period, DEQ shall provide the Defendant with a written statement of its position from the DEQ's

22 Northwest Region C!eariup Manager. If the Defendant still disagrees with DEQ's position, the

23 Defendant may, within !4 days ofrecelpt ofDEQ's position from the Cleanup Manager, provide

24 Defendant's position and rationale in writing to DEQ's Northwest Region Administrator. The

25 Region Administrator may discuss tbe disputed matter with the Defendant and, in any event,

26 shall provide Defendant with DEQ's final position in writing as soon as practicable after receipt

Page 20 • CONSENT JUDGMENT JVSi!CE·#2844S:Z69

Oeptrtmenl t>f 1ust!ce iSIS _SW Fifth AW:, SUite 410

Pcrttlmd, OR 97201 (971) 673·1880 I p.,., (!)71) 673·1886

ER 20

Apr, 26. 2012 2:07PM

• •

l of Defendant's written position. If the Defendant disagrees with DEQ's final position,

2 Defendant may refer the dispute to this Court.'

3 ! 4. Recording

No. 5278 P. 22

4 Within 30 days of entry of this Consent Judgment, Linke and the Huskes, for their

5 respective properties located at the Tannery and KFF Sites, shall submit a copy of this Consent

6 Judgment to the county clerk to be recorded in the real property records of Washington County,

7 State of Oregon. Withln seven days of recording, Linke and the Huskes shall provide eaoh Party

8 with a file-stamped copy of the recorded judgment.

9 !S. Modification

10 The Parties may modify this Consent Judgment by unanimous written agreement, subject

11 to approval by this Court.

12 16. Signatories: Service

13 A. The undersigned representative of each Party certifies that he or she is fully

14 authorized to execute this Consent Judgment and bind such Party to this Consent Judgment.

15 B. Each Party designates in Exhibit 5 the name and address of an agent authorized to

16 accept service of process by mail on behalf of the Party with respect to any matter relating to this

17 Consent Judgment. Each Party agrees to accept service in such manner, and waives any other

I 8 service requirements set forth in the Oregon Rules of Civil Procedure or local rules of this Court.

19 The Patties agree that Defendants need not file an answer to the complaint in this action unless

20 or until the Court expressly declines to approve this Consent Judgment.

21 17. Retention ofJurisdlction

22 This Court shall retain jurisdiction over the matter for the purpose of enforcing the terms

23 of this Consent Judgment.

24

25

26

Page 21 - CONSENT JUDGMENT IUST!CE-#28445269

Oep�t.rtmtl\t or Justice ISIS SW rif!hAvo. Sultc4!0

Portland, OR 97201 (971) 67J-1880 I P": (911)613·!116

ER 21

' · " ' "0'2 2·""P'' r\Or, t.v, Lv: ,\Jf m

• •

UPON stipulation of the Parties for entry of this Consent Judgment,

No. 5278 ° 23

2 IT IS ORDERED and ADJUDGED that this Consent Judgment be entered, this _day

3 of 201 I.

4

5

6 Ctrcuit Court .! udge

7

8 THE UNDERSIGNED PARTIES enter into this Consent Judgment:

9 STATE OF OREGON

10 DEPARTMENT OF ENVIRONMENTAL QUALITY

11 By: Date: Nina DeConcini

12 Administrator of Northwest Region

!3 JQHNKROGER

14 ATTORNEY GENERAL STATE OF OREGON

15

16 Sy: Date: Kurt Burkholder, OSB No. 804658

!7 Assistant Attorney General Oregon Department of Justice

18 1515 SW Fifth Ave., Suite410

19 Portland, OR 97201 Tel: 971·673·1898

20 Fax: 97!-673-1886 lrurt.burkholder@dQj .�tate.or JlS

21

22 CRAIG E. BOWEN

23 By: Date: - Craig B. Bowen

24

25 PAMELA A. BOWEN

26 By:. Date: Pamela E. Bowen

Page 22 • CONSENT JUDGMENT JUSTICE.#2S44S269

Oep�rtmeat or Jll�tice lSIS SW Fifth A.<Je, $uite410

PoniWid, OR !t7201 (971)67l·III8Dif"': (911) 673·1!10

ER 22

Aor. 26. 2012 2.08PM No. 5278 ° 2i

• •

UPON stipulation of the Patties for entty of this Consent Judgment, 1 2 lT IS ORDERED and ADJUDGED that this Co!lSent Judgment be entered, this. 'l; day

3 of 4 5 6 7

oflt fA vel..., 20 Jt...

C!r�uit Court Judge . ,(:..lv><...->V''1...

8 THE UNDERSIGNED PARTIES enter into this Co11sent Judgment: · 9 STATEOFOREGON

DEPARTMENT OF ENVIRONMENTAL QUALITY 10 11 .By: b) � Date: �� 1}w11 �'Nina eCu il1l 12 Administrator ofNorthwest Region

13 JOHN KROGER ATIORNEY GENERAL

14 STATEOPOREGON 15 By: t!r--3!/JJ£ 16 Kurt Burkholder, OSB No. S04658

Assistent Attorney General 17

!8 19 20 21

Oregon Department of Justice . ISIS SW Fifth Ave., Suite 410 Portland, OR 97201 Tel: 97!·673-1898 Fax: 971·613·1886 kurt.burJsholge!:@doi.state.or.us

Date: 1·'1(-{(

22 CRAIG E. BOWEN

23 By: _ �c�m�!g�E-.�so-w_e_u ______________ __

Date:--�------

24 25 PAMELA A. BOWEN

26 By: �Prem-e���E�. �B-ow_e_n·-

-------------- Date: _______ _

l'age 22 • CONSENT JUDGMENT JUS'flCE•#21l44S269

Dl:p!U1mtnt cf JWitit:e Ul5 SW FiftbAYt-1 Suk.e-110

�"11101\d, OR 912�1 (971) 673-II!SG/ l'ax: (971) 613·1!86

ER 23

A "' 2"12 • •epu ,p�, J..[), lJ L:!; IY'

• •

of Defendant's written position. If the Defendant disagrees with DEQ's final position,

2 Defendant may refer the dispute to this Court,·

3 14. Recording

4 Within 30 days of entry of this Consent Judgment, Linke and the Huskes, for their

5278 p 25

5 respective properties located at the Tannery end KFF Site.q, shall submit a copy of this Consent

6 Judgment to the oounty clerk to oo recorded in the real property xecords of Washington County,

7 State of Otegon.· Within seven days of recording, Linke and the Huskes shall provide each Party

& with a fiJe.stamped oopy of the recorded judgment.

9 15. Modification

10 The Partie$ may modizy this Consent Judgment by unanimous written a�ernent, subject

11 to appwval by this Ccurt.

12 16. Signatories; Service

13 A. The Ulldersigned representative of eacli Party certifies that he or she i� fully

14 authorized to execute this Consent Judgment and bind such Party to this Consent Judgment.

15 B. Each Part)' designates in ExhibitS the name and address of an agent authorized to.

16 accept se1vioe of process by mall on behalf of the Party with respect to any matter relating to this

17 Ccnsent Judgment . Each Party ag�-ees to accept service in such manner, and waives any other

18 service requirements set forth in the Oregon Rules of Civil Procedure or local tules of this Court.

!9 The Parties agree that Defendants need not lite an answer to the complaint In this action unless

20 or until the Court expressly declines to approve this ConsCllt Judgment.

21 17, Retention of Jurisdiction

22 This Court shall retain jurisdiction over the matter for the purpcse of cmforoing the terms

23 of this Consent Judgment.

24

25

26

Pase 21 - CONSENT JUDGMENT JU�TICB-#2844,269

�partmmt of Ju�tict !5USWFil\llAv�S•lt>4!0

Portl1111<1, OR 97201 (971) 673·1!80 IF"" (971) 673·1116

ER 24

A�r. 25. 2012 2:08'M h 5278 p 26

• •

UPON stipulation of the Parties for entry of this Consent Judgment, 2 IT IS ORDBRED and AD� that this Consent Judgment be entered, this_ day

3 of

4

5

6

7

. ' 2011. """ '· .,

... '•.

'·

8 THE UNDERSIGNED PARTIES enter into this Consent Judgmeht:

9 STA TB OF OREGON DEPARTMENT OF ENVIRONMENTAL QUALITY

10

II By: Date: --------Nina DeConelni

12 Administrator of Northwest Region

13 JOHN KROGER ATTORNEY GENERAL

14 STATE OF OREGON !5

By: -----------lo Kurt Burkholder, OSB No. 804�8 Date: ________ _

17

18 !9 20 2!

Assistant Attorney General Oregon Department of Justice 1515 SW Pifth Ave,, Suite 410 Portland, OR 97201 Tel: 971·673-1898 Fax: 971-673·1886 kurt.bur!¢Plder@l<lr,>!.�we.ot•.ttR

22 CRAIG E. BOWEN

23 �y: Ci��nd 24

25 PAMELA A. BOWEN

26 By: � ti.'�a, a 8cw "*' ... Pamea . owen

Page 22 • CONSENT JUDGMENT IUS1'1Cfl.lm445269

Date: q-10-1 J

0.1>"1"""1•1 1\ol"' Ill! SW Plnh Ave, SUI�410

Plll11"'d.Ok 91201 @11) 673·1110 I p.., (971) 61!·111&

ER 25

Apr. 26. 2012 2:08PM

4

s PATRICK D. HUSKE

6 By:

l'atr!oli: D. Huske

7

8 TAMARA L. HUSKE

• •

Date: ________ �

No. 5278 P 27

9 By:

Tamara L. Husl{e Date: ________ _

lO

1 1 IRONWOOD HOMES, INC.

By: 12 P�a-m�.c�k� D-.H�u-s�ke-,

�P r�����e-nt _____ __ Date: __ ��-----

13

14 LINKE ENTERPRISES OF OREGON, !NC.lka FRONTIER LEATHER COMPANY

By: 15 �Pa-tn�'o�ia�n�o-��--------Date: ________ _

16 Ciient Reprellentatlve

l7 DONALD W. NELSON

18 By:

19 DOnald W. Nelson

20 WELLS FARGO BANK, N.A.

21 By:

22 Herber C. Leney, Jr.

23 JAMES M. WILSON

24 By:

25 James i'J. wilson

26

Page 23 • CONSENT JUDGMENT JUST!Cll-�2844 5269

Date: _______ _

Date: ________ _

Date:-�------

,_oflllllia llUSWPifthAvt,SUilll410

Portland. OR 97201 (911) 6'1)-1880/ p.,, (111) 07).1116

ER 26

' · 26 ""12 " '"PM hpr . . L\; L:!Jd.:

1 2 MICHAEL C. GIBBONS

•

By: ,..,.,...,._��.,...._-------3 Michael C. Gibbons 4 5 6 7 8 TAM. ARA.L.HUSKE

-1 _!L . . J.., By' J� 0(, �C/V 9 Tamara L. Huske

10 II

By:::-t..��J./t_�::::::::=--12 P !ck D. Huske, President l3

•

·Oat•---------

Date: 2-/;L- Z.:>//

Date: _qL--f./_,5:__"_.2;,:f21L�-

14 LINKE ENTERPRlSBS OF OREGON, INC. fka FRONTIER LEATHER COMPANY

By; !S l'atncia Dost 16 Client Representative

17 DONALD W. NELSON

Date: _______ _

18 By; �D�on�hl�a�w�.�Nrerlso_n ________ ____ __

19 Date: _______ _

20 WELLS FARGO BANK, N.A. 21 By: 22 �H�e�r�-r�C�.�Le_n_ey-, �J r-.----- -----�- Date'------------

23 JAMES M. WILSON

24 By: Jra-m-��M� .-w�i�ls-on ---- -----------

25 Date: _________ _

26

Page 23 • CONSENT JUDGMENT JUSTICE-Ua844S269

Dep11rlintnl of Jiii\k; 1$1! SW Fiftl1Avo,Sui�410

Purtllnd, OR. 011!)1 (971) 673·1110 I P"'; (971) 5134111

No. 5278 " 28

ER 27

A 2• 2''2 •·08P'·I .pr. D. U L··J · IV

1 2 MICHAEL C. GIBBONS

3 By: Michael C. Gibbons

4 5 PA TRlCK D. HUSKE

6 By: Patrick D. HuSJ(e

7 TAMARA L. HUSKB 8

•

By: 9 �T�mn���rL.'H�u���e---------- -----

10 ll IRONWOOD HOMES, INC.

By: 12 ph.��ic�krD�."H�us�ke�. �Pre-.md7e-n�t---------

13

No. 5278 P. 29

•

0�----------------

Date: _ _ _ _ ____ _

Date: ________ _

Date: -----�--

14 G.id�TE.:;:_RP.RISBS OF OREGON,JNC. !ka FRONTIER LEATHER COMPANY

IS By: ..+.-,...,..-,;, �L�=::.... __ �= 0�.�1.11

16 17 DONALD W, NELSON

18 By: 19 Donald W. Nelson

Date: ________ _

20 WELLS FARGO BANK, N.A.

21 By: Herber C. Leney, It. il:':=?'l"""'-:::-::::-o::-------- Date:--------

22

23 JAMES M, WILSON 24 By: 2S James M. Wllson

26

Page 23 • CONSENT JUDGMENT .JUSTIC!!-112844!269

Dale: __________ _

DcpilrtiTHint of Justice 15USWfifth Av�lluil•410 Pol11and, OR 9m1 (971) &73•1880 1 v"" (911) 67l·18B&

ER 28

A;c 26. 2012 2:08PM

2 MICHAEL C, GIBBONS

3 By: Michael C. Gibbons

4 5 PATRICK D. HUSKE

6 By: Patrick D. Huske

7 TAMA!lA L. HUSKE 8

No. 5278 P. 30

• •

Date: ________ _

By: 9 �T�am�arn�t�.�H�u�*�e---------------Date:------..,..----

10

11 IRONWOOD HOMES, INC.

By; l2 P�a�tn�·c�k�O�.�H-us�ke-,�P-re �si�de-n�t �---

ll

£4 LINKE ENTERPRISES OF OREGON, INC. fka FRONTIER LEATHER COMPAN'Y �" :.1! '

' �· ""

By:' . . . ·-

i 5 Patricia Dost 16 Client Representative

17 DONALDW.NELSON

18 By:Q�v-} � Donald W. Nelson 1'9

20 WELLS FARGO BANK, N.A.

21 22

By: Date: �H��Yb�e��.c�_rt��ey�.�J,-.---------

---------------

23 JAMES M. WILSON

24 25

By:_· ="''rrnm:::::" -----�­James M: Wilson

26 . . ;� .

Page 23 • CONSENT JUDGMENT JUST!CE·"28445269

DcpnJtimnt of Alfllce t51SSWF'ifi11 Aw,Suii101410

Po:tiAilll, oa mo: (Ill) 6?l·IS!O/l'Jx: (911) 61)·1386

' ' . . ''·

ER 29

Apr. 26. 2012 2:08

• •

2 MICHAEL C. OIBBONS

By: Dnte 3 Michael C, GibbOns

4

5 PATRICK D. HUSKE

By: Date: 6 Patrick D. Hus'lio

7

8 TAMARA L. HUSJ<E

9 By: Date:

Tam!ll'll L. Huske

lQ

11 IRONWOOD HOMES, INC.

12 By: Date:

Patrick D. Huske, President

13

14 LI)'IK.B ENTERPRISES OF OREGON, INC. fka FRONTIBR LEATHER COMPANY

IS By: Dale: Piiii'lOia Dost

16 Client Representative

17 DONALD W. NELSON

18 By: Date:

19 DOnald W. Nelson

20

::LLurJiil!j� 21 Date:

22 Her r . eney, .

23 JAMES M. WILSON

24 By:

25 James M. Wilson

26

Page 23 • CONSENT JUDGMENT JUS'I'ICil-1128445269

Date:

Oepl\rllt!eM or JI!Sll�e 151' SW Filth Ave,.Suito4l0

Polflan� OR 9?201 (�71) OT.I-11101 ""' (!171) 1'73•1 186

?/1 /t!

) 31

ER 30

1\pr. 26. 2012 2:08PM

• •

2 MICHAEL C. GJBBONS

By: Date 3 Michael C, Gibbons

4

5 PATRICK D. HUSKE

By: Date: 6 Patrick D. Huske

7

8 TAMARA L, HUSKE

By: Date: 9 Tamara t: Huske

10

11 IRONWOOD HOMES, rNC.

By: Date: 12 Patrick D. Huske, President

13

14 LINKE ENTERPRISES OF OREGON, INC. fka FRONTIER LEATHER COMPANY

15 By: Patricia Dos\

16 Client Representative

!7 DONALD W. NELSON

18 By:

19 . Donald W. Nelson

20 WSLLS FARGO BANK, N.A.

21 By:

22 Herber C. Leney, Jr.

23 JAMES M. WJLSON

24 By: 1fJ. W;lt�

25 a es

· �rw� 26 t:d llfl� Page 23 - CONSENT JUDGMENT

JUSTICE·"2844SU9

Date:

Dale:

Date:

Date:

�-mtnt or Ju:tl« 15tS sw Flftb Ave. Suitc410

Portland. OR 97<0!

q .. , .. Lf

(911) m-mo/Fu: (971)673·1115

k 5278 P. 32

ER 31

Ap•. 26. 2012 2:08PM No. 5278 ?. 33

• •

EXHffiiTl

ER 32

2012 2:09PM

)

II

I ,,_ )I . . ./' / ·" /

•'

EXHmiT2

No. 5278

" "

F. 34

ER 33

Apr 26 2012 2:09PM No. 5278 p' 3 5

,..... I

� ��-�r---�--�--���· --���--�

0 ,...

'

·� ! '

ER 34

•

EXHIBIT4

DEQ ADMINISTRATIVE RECORD

lNDEX for

CONSENT JUDGMENT DEQ v. Craig E. Bowen et al.

•

Frontier Leather Site No. Title Date Author

l. EPA Site Inspection, Frontier 4/14/80 USEPA Leather Company, Sherwood, OR, Aoril14, 1980

2. Development Document for November USEPA Effluent Limitations 1982 Guidellnes and Standards for the Leather Tanning and Finishing Point Souroe Cate�orv, EPA 440/1-82..016,

3. EPA Preliminary Assessment, July 1984 USEPA Frontier Leather Company, lncoroorated, Sherwood, OR

4. Preliminary Assessment and 417/89 OMNI Environmental Site Investigation, Battery Services, Inc Manufacturing Facilities and Expanded Site Investigation, Frontier Leather Tannerv

s. Summary Environmental 7/31/90 OMNI Environmental Measurements and Remedial Services, Inc. Activity, Frontier Leather Tannery and Battery

'

Manufacturing Facility, Sherwood, Ore!!On

6, Environmental Assessment, 2!13/92 Department of the Proposed Tualatin River Interior, U.S. Fish National Wildlife Refuge, and Wildlife Service, W ashlngton County, OR, Region 1 Department of the Interior, U.S. Fish and Wildlife Service, Rel!ion I, Portland, OR

7. DEQ Site Response Section August DEQ Project Status and Issue 1992 Report, Frontier Leather (Linke Bnterprisas) - Sherwood

Bxh!bit 4 Administrative Record Index

No. 5278 P. 36

Addressee n/a

n/a

n/a

n/a

n/a

--

n/a

nla

ER 35

Acr. 26. 2012 2:09P\1 No. 5278 P. 37

• •

No. Title Date Author Addressee 8. Summary of Field Activities July 1992 OMNT Environmental Linke

conducted for Linke Enterprises Enterprises, Inc., (Draft), prepared for Linke Enterprises by OMNI Environmental Services. inc.

9. Analytical Results for Soil and 1/22/93 Tetra Tech, Inc. nia Water Samples collected Downgradient from the Labo�atory Disposal Pit, Frontier Leather Facility, I Sherwood, OR '

10. Work Description, Letter to February Christopher Davies, Paull3umet, Paul Burnet, Oregon DEQ, 23, 1993 Riedel Environmental OregonDEQ from Christopher Davies, Services, Inc. Riedel Envirorunental Services, Inc.

11. Site Inspection Prioritization December URS Consultants, EPA Report for Fron Lier Leather !994 Inc.

'

Site (CERCL!S No . RD00904 3357)

12. Level II Pre-Acquisition September U.S. Department of I nla Contaminant Survey for the 1994 the Interior, Fish and South Sherwood Unit of the Wildlife Service, Tualatin River National Ecological Services, Wildlife Refuge, September Oregon State Office, 1994. Portland, OR,

13. DEQ Site Assessment Strategy l/24195 DEQ nla Recommendation, Frontier Leather Comnany, ECSI 11116.

!4. DEQ Memo: Frontier Leather 5/31/95 Mike Anderson, DEQ Lon Revall, Site DEQ

15. Memorandum Frontier l/29/98 DEQ nla Leather Site - Ecological Sconing Assessment '

'

16. DEQ Memo: Frontier Leather 41911999 Broce Sterling, DEQ Bill Dana, Chromium Ass�!!lm-:nt DEQ

18. Prospective Purchaser 1/31102 DEQ Pacific III, Agreement DEQ No. 02-01 LLC between DEQ and Pacific Ill, LLC

19. Remedial Investigation Work 4/28/03 GeoEngineers, Inc nla Plan, Former Frontier Leather Sedimentation Lagoons

Exhibit4 2 Administrative Record Index

ER 36

Apr 26. 2012 2:09PM No. 5278 ° 38

• •

No. Title Date Author Addressee

20. Phase II RI Work Plan, 12/8/03 GeoEngineers, Inc n/a

Fonner Frontier Leather Sedimentation Lagoons, dated December 8, 2003

21. Remedial Investigation Report 6/22/04 GeoEngineers, lno n/a

DEQ Frontier Leather Site Sherwood, Oregon .

22. StaffReport, Tax Lot 500, 9/24/04 Mark Pugh, DEQ Terry Frontier Leather Site Hosaka,

DEQ 23. Notice of opportunity to !0/l/04 The Oregonian n/a

comment on proposed Soil Cleanup Approval and No Further Action Determination

24. Notice of opport1111ity to 10/1/04 Secretary of State n/a comment on proposed Soil Bulletin Cleanup Approval and No Further Action Determination

25, Focused Feasibility Study 10/29/04 GeoEngineers, Inc n/a Report-Former Frontier Leather Sedimentation Lagoons Sherwood, Oregon

26. No Ful'lher Action Determination 11/2/04 Terry Hosaka, DEQ Pacific III, Tax Lot 500, Former Frontier LLC Leather Site, Sherwood, Oregon, ECSI #116

27, StaffReport, Tax Lots 400 6123/05 Mark Pugh, DEQ Bruce Gilles, (Lots I and 2}, Frontier DEQ Leather Site

28. No Further Action Determination 10/3/05 Bruce Gilles, DEQ Pacific lll, . Lots l and 2, Tax Lot 400, LLC

Former Frontier Leather Site Sherwood, Oregon ECSI# 116

29. Notice of opportunity to I 12/01/04 The Oregonian n/a comment on proposed Soil

'

I Cleanup Approval and No Further Action Detennination

30. Notice of opport1111ity to 12/J/04 Secretary of State n/a comment on proposed Soil Bulletin Cleanup Approval and No Further Action Determination i

31. Staff Report, Fonner Frontier 2/26/08 Mark Pugh, DEQ Bruce Gilles, Leather Site, Tax Lot 1100, DEO

Exhibit4 3 Administrative Record Index

ER 37

' "6 '"'2 " "DPM ,'lpr. L . ,:\;! L:J,.. ,'

•

No. Title 15!04 SW Oregon Street, Sherwood, Oregon, ECSI #116

32. Notice of opportunity to comment on Proposed Conditional No Further Action Decision

33. Notice of opportunity to comment on Proposed Conditional No Further

' Action Decision

34. Conditional No Further Action Determination. Fonner Frontier Leather Site, Tax Lot 1100, 15104 SW Oregon

, Street, Sherwood, Oregon,

I ECSI#Il6

Ken Foster Farms Site 35. Oregon DEQ, "Preliminary

Ass�ssment, Ken Foster Farm (former), 23000-23500 SW Murdock Roae, Sherwood, Oregon, 97140, EPA lD #ORNI002567

36. U.s. Environmental Protection Agency (EPA), (former) Ken Foster Farm Integrated Assessment, Sherwood, Oregon, TDD Nwnber: 06-04-0008

37, Interim Removal Action Measures Work Plan (Lots 1 lhroUQh 4)

38, DEQ Screening Level Hwnan Health Risk Assessment-Former Ken Foster Farm

39, Notice of opportunity to c omment on proposed no further action determination for Lots I, 2 & 4; 233:20 SW Murdock Road, Sherwood,

Exhibit 4 Administrative Record Index

No. 5278 ° 39

•

Date Author Addressee

3/3/08 ! Sherwood Gazette nla

3/3/08 Secretary of State nla Bulletin

I

4/3/08 Bruce Gilles, DEQ Pacific !II, LLC

9/21/05 DEQ USEPA

March USEPA n/a 2007

4/23/07 Creekside Ironwood Environmental Homes, Inc Consulting LLC

7/13/07 DEQ nla

I

6/1108 The Oregonian nla

4

ER 38

A"' 2� 2(11° . ;; , . u. v L 2:09PM

•

No. Title Oregon ECSl4750

40. Notice of opportunity to comment on proposed no further action dete�mination for Lots l, 2 & 4; 23320 SW Murdock Road, Sherwood, Oregon, ECSI47SO

41. Response to Comments, Ironwood Homes (!HI), Interim Remedial Action Measures (lRAM), NFA Proposal for Ironwood Homes Lots l, 2 & 4; 23320 SW Murdock Road, Sherwood, Ore�on ECSI 4750

42. Staff Report, Ironwood Homes, Interim Remedial Action Measures (!RAM), NF A Proposal for Ironwood Homes Lots, l, 2 & 4; 23320 SW Murdock Road, Sherwood, Oregon, ECSI 4750

43. DEQ Letter of No Furth�r Action DeteTmination-Ironwood Homes Lots, 1 , 2 and 4; ECSI 4750

44. Staff Report, Ironwood Homes, Interim Remedial Action Measures (!RAM), NFA Proposal for Ironwood Homes Lot 3; 23320 SW Murdock Road, Sherwood, Oregon, ECS! 4750

45. Notice of opportunity to comment on proposed no further action determination for Lots 1, 2 & 4; 23320 SW Murdock Road, Sherwood, Oregon, ECS!4750

46. Notice of opportunity to comment on proposed no further action determination for Lots J, 2 & 4; 23320 SW Murdock Road, Sherwood,

Exhibit 4 Administrative Record Index

No. 52 i8 p 40

•

Date Author Addressee

6/1/08 Secretary of State n/a Bulletin

7/10/08 Chuck Harman, DEQ Ironwood Homes, Inc., ECSI4750,

7/15/08 Chuck Hannan, DEQ Bruce Gilles, DEQ

7/1 S/08 Bruce Gilles, DEQ Ironwood Homes, Inc.

2/26/09 Chuck Harman, DEQ Bruce Gilles, DEQ

3/1/09 The Oregonian n/a

3/1/09 Secretary of State n/a Bulletin

5

ER 39

•

Ironwood Homes (lHl), Interim Remedial Action Measu�es (!RAM), NFA Proposal for Ironwood Homes Lots 3; 23320 SW Murdock Road,Sherwood,�egon,

and

to

Letterre: proposed settlement with Linke and Nelson and notice of new proposed consent

55. Notice to comment on proposed consent

re.

Proposed Cleanup Settlement and Consideration of Public

Exhibit4 Administrative Record Index

•

4/1/11 Oregon

6

No. 5278 P. 41

Homes, Inc., ECSI47SO,

Homes, Inc.

List

wa

List

DeConcini

ER 40

A.o r, 26. No 5278 42

• •

EXHIBITS

Notiee and Service List

DEQ Craie: and Pamela Bowen Mark Pugh Dr. Craig and Pamela Bowen DEQ Northwest Region 14505 S.W. Bell Road 2020 SW 4th Avenue, Suite 400 Sherwood, OR 97140 Portland, OR 9720 I Phone: (503) 229·5587 Agent Authorized to Accept Service: Fax: (503) 229-6899 Tom Spooner Email: pugh.mark@deq.state.or.us Spooner & Much

530 Center St. NE, Suite 722 Agent Authorized ro Accept Service: Salem, OR 97301 Kurt Burkholder Oregon Department of Justice !S15 SW Sth Ave., Suite 410 Portland, OR 9720 I

Linke Entemrises Wells Fargo Bank and James Wilson Loren R. Dunn Riddell Williams P.S. Herber C. Leney, Jr. 1001 Fourth Ave, Suite 4500 Wells Fargo Bank Seattle, W A 98154-l 065 Legal Dept. MAC AOJ 94-266 Phone: (206) 624-3600 45 Fremont St. 261h Floor Fax: (206) 389·1708 San Francisco, CA 941 OS-2223 Email: ldunn@riddel!willi!!mS.com Phone: (415) 396·4492

Fax: (415) 975-7864 Agent Authorized to Accept Service:

E-mail: leneyh@Wellsfargo.com LorenR. Dunn Riddell Williams P.S. 1001 Fourth Ave, Suite 4500 Agent Authorized to Accept Service: Seattle, WA 98154-1065

Stephen 0. Leatham

Heurlin Potter Jahn Leahtam

211 E. Mcloughlin Blvd. 1 00

V aooouver, W A 98666

. . Exh1b1t 5 l Notice ;md Service List

ER 41

Aor. 26. 2012 2:10PM

•

Rlddell Williams P.S. tOOl Fourth Ave, Suite 4500 Seattle, WA 981 54·1 065 Phone: (206) 624-3600 Fax: (206) 389-1708 Email: ldunn@ridde!lwilliams.com

Agem Awhorlzed to Accept Service.· Loren R. Dunn Riddell Williams P.S. 100! Fourth Ave, Suite 4500 Seattle, WA 981S4-106S

Huske,

Sherwood, Oregon 97140

Agent Authorized to Accept Service: Thomas Benke Environmental Compliance 7845 SW Capitol Hwy, Suite 8 Portland, OR 97219

Exhibit 5 Notice and Service List

•

Aurora, Oregon 97002

Agent Authorized to Accept Servic�.· Patrick Rowe Sussman Shank 1000 SW Broadway, Suite 1400 Portland, OR 97205

No. 5278 P 43 ':'I

ER 42

ER 43

ER 44

ER 45

ER 46

ER 47

ER 48

ER 49

ER 50

i

CERTIFICATE OF COMPLIANCE WITH ORAP 5.05(2)(d)

I certify that (1) this brief complies with the word-count limitation in

ORAP 5.05(2)(b) and (2) the word-count of this brief as described in

ORAP 5.05(2)(a) is 6393 words.

DATED this 9 day of October, 2012.th

Montgomery W. Cobb, llc,

/s/ Montgomery W. Cobb

Montgomery W. Cobb, OSB#83173

Of Attorneys for Plaintiffs - Appellants

CERTIFICATE OF SERVICE

I certify that on October 9, 2012, I served a copy of Appellants’

Opening Brief and Excerpt of Record on:

.

Janet M Schroer, OSB# 813645

Hart Wagner LLP

1000 SW Broadway, Suite 2000

Portland, OR 97205

jms@hartwagner.com

Phone 503 222-4499

Attorneys for Craig E. Bowen &

Pamela Bowen

Stephen G. Leatham, OSB#

873820

Heurlin Potter Jahn Leatham

211 E. McLoughlin Blvd., 100

PO Box 611

Vancouver, WA 98666

sgl@hpl-law.com

Phone 360 750-7547

Attorneys for Wells Fargo Bank

and James Wilson

Loren R. Dunn, OSB# 060350

Riddell W illiams PS

1001 4th Ave. Plaza, Suite 4500

Seattle, WA 98154

ldunn@riddellwilliams.com

Phone 206 624-3600

Attorneys for Linke Enterprises of

Oregon, Inc. and Donald Nelson

Patrick G. Rowe, OSB# 072122

Sussman Shank LLP

1000 SW Broadway, Suite 1400

Portland, OR 97205

prowe@sussmanshank.com

Phone 503 227-1111

Attorneys for Michael C. Gibbons

ii

Thomas R. Benke, OSB #

922251

Environmental Compliance

7845 SW Capitol Hwy, Suite 8

Portland, OR 97219

trbenke@env-compliance.com

Phone 503 246-1514

Attorney for Patrick D. Huske,

Tamara L. Huske and Ironwood

Homes, Inc.

Stephanie Striffler, OSB# 824053

Anna Marie Joyce, OSB# 013112

DOJ Attorney General's Office

1162 Court St. NE

Salem, OR 97301

stephanie.striffler@state.or.us

Phone 503 378-4402

Attorneys for State of Oregon and

Pederson

by emailing it to them at the listed email addresses, and upon attorneys

Joyce, Rowe, Leatham and Schroer, who are registered with the eFiling

system, by eFiling it with the electronic filing system.

Montgomery W. Cobb, llc

By: /s/ Montgomery W. Cobb

Montgomery W. Cobb, OSB #83173

Attorney for Appellants