November 28, 2012

TO: FROM: SUBJECT:

Members of the Board C.T. Skip Miller, AAE Settlement of Liability for LWD Superfund Site Cleanup

As you may recall, LWD formerly operated a landfill and hazardous waste incinerator in Calvert City, Kentucky. Less than 500,000 pounds of waste from the Louisville Airport Improvement Program was sent to this site during the late-1990s for disposal. During 2003, nine unsecured creditors filed a bankruptcy petition with respect to LWD. During 2004, the Kentucky Department of Environmental Protection (KDEP) terminated the RCRA permit for the site and ordered its closure. By 2005, the site was abandoned. KDEP then requested the assistance of the Environmental Protection Agency (EPA) to investigate the site and respond to the release of pollutants. The EPA has worked with a group of potentially responsible parties to stabilize and develop long term plans for the site. In March, 2012, the Authority Board authorized staff to enter into a partial settlement for cleanup and remediation costs of the LWD Superfund Site incurred through January, 2012. That settlement did not release claims for future costs or for contribution against the Authority made by other potentially responsible parties for the LWD Superfund Site. Specifically, a group of potentially responsible parties, called the LWD PRP Group and composed primarily of the larger contributors, has asserted CERCLA, Kentucky Environmental Protection Act, and common law cost-recovery and contribution claims against the Authority. More recently, the LWD PRP Group has proposed a settlement under which: (1) the Authority would pay the Group $49,836, (2) the EPA and the Commonwealth would agree not to sue the Authority for liabilities associated with the LWD Superfund Site, (3) the LWD PRP Group would agree to indemnify the Authority against claims relating to the LWD Superfund Site (such as claims for contribution asserted by non-settling potentially responsible parties), and (4) all members of the LWD PRP Group would release, and agree not to sue the Authority on account of, their claims against the Authority relating to the LWD Superfund Site. The amount of the Authoritys proposed settlement payment has been determined based on the Authoritys volumetric contribution of materials to the LWD Superfund Site and includes an allocation of $30,000 for the Groups administrative costs in defending ongoing claims relating to the Site. This would be a final settlement of claims against the Authority by the LWD PRP Group, the EPA, and/or the Commonwealth relating to the LWD Superfund Site. Therefore, I recommend that the Board: 1. 2. Approve the Authoritys payment of $49,836 to the LWD PRP Group in settlement of the Authoritys liability for the LWD Superfund Site; and Authorize the Executive Director to execute and deliver the settlement agreement, subject to approval of counsel as to legality of form and content.