Source: http://www.courierpress.com, January 10, 2015
By: Thomas B. Langhorne
Dan Stocks doesn’t want to talk about the toxic mess his company left at Miller Plating & Metal Finishing or the fact that taxpayers footed the $1.4 million bill for the cleanup.
Stocks did not respond to telephone, text and Facebook messages seeking comment about the nearly 100,000 gallons of hazardous wastes left at the site when Miller Plating shut down in 2007. The toxic material, much of which the state found was stored improperly, was left 120 feet from a residential neighborhood.
Dan Stocks’ son, Jake Stocks, did respond to inquiries about Miller Plating. He said his father “has kind of pushed that out of his life now and moving forward, essentially.”
In a later email message, Jake Stocks cast Dan Stocks as the would-be savior of the formerly family-owned business, pointing to his company’s purchase of its assets in 2004.
“The Stocks Family made an effort to try and save a failing business, and we were unsuccessful. This was a domino effect that cost total of 800 jobs in our organization,” the junior Stocks wrote. “We have moved on with our lives and unwilling to reopen the past.”
But while Dan Stocks may view his abandonment of the environmentally contaminated Miller Plating property as a move forward, the U.S. Environmental Protection Agency calls it an artful sidestep.
The EPA says Stocks leveraged the legal system to evade his responsibility for the cleanup. They say Stocks’ personal liability was obscured by the Miller company’s status as a limited liability company, corporate bankruptcy filings and a three-year federal statute of limitations.
Vanderburgh County records still list Dan Stocks’ dissolved company as the owner of the seven-acre site at the corner of North 6th Avenue and Allens Lane. Jake Stocks said it is under “a mortgage with Springs Valley Bank (& Trust Co.), and they are in control of it.”
Officials of the French Lick, Ind., bank said they have walked away from two mortgages — for $900,000 and $712,500 — at the property, no longer having any interest in it.
Meanwhile, Dan Stocks — managing member and majority shareholder of the corporate entity that owned the Miller Plating property — apparently is thriving in Florida. He bought a $500,000 home in Fort Myers in December, having moved there three years ago.
‘Doing everything we can’
The insurance company for Miller Plating’s corporate entity hired Evansville attorney Jeff Henning to represent the corporate entity against environmental claims. It was Henning in whose care the EPA addressed a December 2008 letter to Stocks’ company notifying it of its “potential liability” for the cleanup that was to come and seeking reimbursement of costs.
The EPA ultimately identified Dan Stocks as the principal party to hold financially accountable for an emergency hazardous waste removal action carried out in 2009. Stocks and his company had operated on the property since 2004. But the $1.4 million bill for the cleanup was paid with taxpayer money.
Henning, who said he periodically updates Stocks on the former Miller Plating site, responded to several questions about the 2009 above-ground cleanup with answers about a below-ground cleanup that is still in the planning stages.
The subsurface remediation, led by the Indiana Department of Environmental Management (IDEM), is being paid for by insurers representing the Miller Plating property’s earlier family-owned operator, which conducted business there for decades before Stocks’ company got involved.
Henning pointed out that insurers for Miller Plating’s corporate entity paid for a 2013 demolition of remaining buildings on the property that he said will help facilitate the subsurface remediation.
Reminded that the EPA fingered Stocks as the principal party to hold financially accountable for the 2009 cleanup but failed to collect reimbursement from him, Henning paused several seconds.
“We’re working with the insurance companies in getting the site remediated and back to productive use,” he said.
Henning was shown a list of hazardous materials the EPA says Stocks’ company left at the site.
Do Stocks and his minority shareholders feel any moral obligation, if not a legal obligation, to pay for the cleanup?
“Again, we’re doing everything we can, working with the insurance companies, in order to remediate the site and get it back to productive use,” Henning said.
But what about all the hazardous waste materials and the EPA’s belief that Stocks’ company was responsible?
“I don’t have all the details of the EPA cleanup, but again, we have worked, both with EPA and IDEM, through the insurance companies, to try to remediate this site to the best of our ability,” Henning said.
Henning said he and Stocks “worked pretty diligently with the EPA in addressing all their requests and answering all their questions.” The EPA’s on-scene cleanup coordinator and project manager agreed that Stocks and former employees made themselves available for consultation.
Stocks’ company just didn’t pony up any money.
Later, Henning offered an explanation for that. It was the company’s bankruptcy filings, he said.
“They didn’t have anything,” he said. “Had no money.”
‘Way, way, way overreaching’
Russ Scalfano did directly address the EPA’s claims of hazardous waste materials left on the site — to scoff at them. Scalfano owned 20 percent of Stocks’ company to Stocks’ 70 percent.
Scalfano, who held the title of CEO, said he doesn’t know who paid for the 2009, $1.4 million cleanup and hasn’t talked to Stocks recently. But he laughed when read a Jan. 28, 2009 Courier & Press news account of “a massive vat of cyanide solution and sludge” at the cleanup site.
“I remember (a Miller Plating employee) being in the plant, maybe it’s when the reporter was in there,” he said. “They’re talking about the caustic chemicals in these plating tanks and so forth and, so to kind of make a point to them, (the employee) stuck his hand in there and waved it around. And he said, ‘This is water.’”
Scalfano said Miller Plating technical personnel felt the EPA was “way, way, way overreaching” in its pursuit of the company.
“The way a plating factory runs, you have all these chemicals that are disposed of in, you know, whatever the protocol is, and there’s — and particularly once the plant was closed, all of that stuff was disposed of. And what was left in the tanks was water,” he said.
Scalfano was read a list of hazardous materials the EPA says his company left behind at the Miller Plating site. It’s the same list Henning was asked about — the list that includes cyanide liquid, nitric acid, silver-contaminated wastewater, acidic liquid solution and hazardous sludge.
“I can’t comment on any of that,” he said. “And again, much of those things are common, you know, they are present when the plant’s operating. And they all get dealt with as protocol — either run through the wastewater treatment plant or hauled off or … You know, that was part of our everyday operation.
“There was no cleanup required for that, I guess is what I’m saying.”
‘Zombie corporation’
The corporate entity that owned the Miller Plating property left Vanderburgh County with nearly $1 million in unpaid property taxes — but Stocks and his two minority shareholders can’t be touched.
The precise figure — $926,382 owed for three parcels, each of which had one building — includes late fees, unpaid sewer service bills and reimbursements for mowing grass, according to the county treasurer’s office. The Miller Plating property went to tax sale in 2010, 2012, 2013 and 2014, and in each case it didn’t sell. Put off by the environmental contamination, county government didn’t do what it routinely does with almost all properties that don’t sell at tax sale — it didn’t take title in anticipation of offering the property at auction.
So the back taxes remain on the books, still owed — on paper at least — but likely never to be collected.
Stocks and minority shareholders Scalfano and Steve Winberg cannot be held accountable because the Indiana Secretary of State’s Office administratively dissolved their corporation in 2011 after it failed to file required reports.
That means there is no liability for unpaid property taxes, said Chapter 13 Bankruptcy Trustee Robert Musgrave. In the administrative dissolution of a business corporation, Musgrave said, shareholders are protected from liability.
“When a corporation is administratively dissolved, it continues its corporate existence but may not carry on any business except winding up and liquidating its business,” said Murgrave, citing state law governing corporate dissolutions.
“In other words, it becomes a sort of ghost, or zombie corporation. It’s still there protecting the shareholders from any liability the corporation has, but it can’t do anything except sell its assets to pay its creditors.”
Back property taxes would be a liability of such a “zombie corporation,” so the shareholders don’t have to pay them.
Musgrave opined that legislators may have intended to prevent individual shareholders in large corporations — larger than the one that owned the Miller Plating property — from being punished for decisions they may not have personally helped make.
But even when there are just three shareholders, the same laws apply.
“The legislators may not have considered every eventuality,” Musgrave said.
Inaction
While professing a desire to see the former Miller Plating property decontaminated, developed and returned to the tax rolls, city officials have resisted taking a leadership role.
Ben Miller, director of the Evansville-Vanderburgh County Building Commission, said police told his department years ago that the then-crime-ridden property needed to be secured. But Miller decided the cost of a fence — as much as $50,000 — was more than his department could afford. After all, the city doesn’t even own the property.
When insurers for Miller Plating’s corporate entity agreed to pay for the demolition of buildings on the property in 2013, Miller seized on the news.
“We believed that would eliminate the need for a fence. It would at least prevent meth labs from happening inside of the buildings,” said Miller, who said he has no family relationship to the company.
When the demolition left two walls standing, Miller also said no to spending between $80,000 and $100,000 to knock down those walls and remove remaining concrete and other loose debris on the property.
“We decided to wait and see if (the property) sold at tax sale,” he said, although it had already been offered at tax sale several times without selling. “We also would have had to explore getting clearance from IDEM.”
Miller’s proposed solution for the former Miller Plating property?
He hoped that when it failed to sell at the 2014 tax sale, the county would take title and liens for back taxes, sewer service and mowing would be expunged. Then, city government’s brownfields program would “take it on as a project,” presumably gaining title from the county.
The county to date has refused to take title. Miller still thinks the property is a natural for the local brownfields program.
“Now we’re hopeful they can seek grants and funding to get the rest of it cleaned up and get that site cleared,” he said. “Ultimately, that can get it into the hands of somebody who’ll take care of it.”
It would seem just the kind of project the brownfields program is meant to take on. Indiana defines a brownfield site as “a parcel of real estate that is abandoned or inactive or may not be operated at its appropriate use and on which expansion or redevelopment is complicated because of the presence or potential presence of a hazardous substance, a contaminant, petroleum, or a petroleum product that poses a risk to human health or the environment.”
There are processes, albeit complicated, by which the brownfields program could gain title to the property.
But the city brownfields program hasn’t tried to gain ownership and point the way toward eventual redevelopment of the property.
Program leaders haven’t even tried to keep tabs. Brownfields coordinator Carolyn Rusk wasn’t aware that IDEM is leading a planned subsurface cleanup of the former Miller Plating property, and she has not spoken to IDEM since the Courier & Press apprised her of the cleanup in October.
Rusk acknowledged the brownfields program could get federal money and state liability protection to help facilitate redevelopment, but she said there is still too much expense, uncertainty and risk involved. The brownfields program needs more information, she said.
Some of Rusk’s reasons for not getting involved are based on mistaken notions.
She said the brownfields program literally cannot obtain title to the former Miller Plating property. Why? Because having gone through the 2014 tax sale in September, it is still in a redemption period.
But the Miller Plating property’s tax liens did not sell at the tax sale — and there is no redemption period for properties that didn’t sell if county government does not attempt to take title. The county has consistently refused to take title to the former Miller Plating property.
“I believe they’re in bankruptcy too,” Rusk said of the former Miller Plating property’s corporate owner of record. But the bankruptcy case closed in 2008. In addition, a bankruptcy trustee did not to protect the property because of the contamination.
‘No money in the budget’
The city is hamstrung, Rusk said, by a lack of money to commission the necessary Phase I Environmental Site Assessment report at the property.
“The first question would be, where do we get the money to do a Phase I or Phase II report to find out what if any contamination exists there?” she said. “There’s no money in the budget.
“At this point there are very few grants available to get a Phase I conducted. I don’t know what funds would be used for that. That’s where I’m stuck.”
If the city gained title to the property without a reading on the contamination, Rusk warned, “then we put the city in jeopardy and on the hook for a cleanup.”
“What if it’s a $20 million cleanup? We don’t know,” she said.
In a similar situation more than a dozen years ago, the city sought and obtained a $72,000 grant from IDEM to commission a Phase I study at the former site of Swanson-Nunn Electric Co. at 420 S.E. Eighth St. Testing at that site showed subsurface contamination originating primarily from the building’s use as an industrial laundry and dry cleaner decades earlier.
IDEM no longer awards such grants, but the EPA does. It costs money to put together an application for the grants, which are sought in competition with other local governments or coalitions of such, and other states. You need lawyers and grant writers to handle documentation and legal processes.
There are no guarantees of funding.
Successful applicants often seek EPA grant money for multiple Phase I and Phase II studies spread over several parcels and several years — but the seven-acre, three-parcel former Miller Plating site isn’t exactly tiny.
Rusk said she is aware of the EPA grant process — but no grant application is underway.
Why not?
Any grant application the city fills out will ask if the city brownfields program has lined up an intended re-use for the property, Rusk said. A developer or buyer would be hard to find, she said, since the extent of the property’s contamination is not known.
“That’s private information at this point. They don’t have to share it with me,” Rusk said of the insurers who have funded extensive testing of groundwater and soil at the site as a prelude to the planned below-ground cleanup. She added that such funding is often capped.
But IDEM makes publicly available on its website a trove of documents about the testing done. The brownfields program could read those documents or consult IDEM officials about the extent of contamination.
“But what would we gain at this point, to do that?” Rusk countered, saying grants are funded in seasonal cycles. “We’ve got to wait until the timing is right. Isn’t it better to let (IDEM) use their resources and authority to gather all the information that we’re going to need to proceed?”
Rusk pointed out that no developer could know when the property will be cleaned up and available. IDEM has made no projection on when the below-ground remediation will end.
“If the city wanted to obligate resources to (a grant application), I suppose it could be done,” Rusk said. “But what are the odds — and it’s a very, I think, valid question — what are the odds that we would get that Phase I? ‘Give us money but we have no idea if anybody’s interested in re-using this property.’ If you’re EPA, do you want to do it?”
“We need to have a known re-use lined up.”
But Brownfields program officials have not tried to find a developer or buyer, public or private. Nor have they tried to get City Council funding.
“I’m not saying it would be difficult; I just don’t know who (a buyer) would be,” Rusk said. “If somebody comes forward and wants to discuss this with us, let’s talk about what they would like to see there, do they have the financial ability to do it?”