Morouns negotiate with EPA over reuse of polluted McLouth site; cleanup could cost $100M

The Moroun family’s purchase last month of McLouth Steel in downriver Trenton signaled redevelopment would finally happen of the 188-acre contaminated site that’s been vacant for the last 20 years.

But before the Morouns’ purchase from Wayne County is final, they have until mid-December to work out a deal with the U.S. EPA detailing how the site will be restored, including financial commitments from the Morouns to handle severe pollution at McLouth.

“It’s a problem site and there is some leaching into the Detroit River impacting the fish,” said Trenton city administrator Jim Wagner.

Cleanups at similar sites, such as the U.S. Steel site in Chicago, have been estimated to cost between $40 million and $100 million, according to the EPA.

The negotiations between Crown Enterprises — a real estate and development firm within the Morouns’ stable of companies — and the EPA are complex and the stakes are high.

“The Morouns are trying to limit their potential liability for clean-up costs and it’s basically like a covenant the EPA will not sue them,” said Nick Schroeck, director of the Transnational Environmental Law Clinic and assistant clinical professor at the Wayne State University Law School.

Such an agreement would lay the foundation for the Moroun family to revive the McLouth site and gain another strategically-placed transportation facility within its vast shipping and trucking empire, which eventually could include a new Ambassador Bridge crossing to Canada.

The U.S. Department of Justice soon will join negotiations, according to the EPA, and the department also must sign off on any deal with Crown.

McLouth’s redevelopment is under high scrutiny due to its contamination. According to the EPA, groundwater under the property is polluted and nearby soils contain dioxin, a known carcinogen.

Those involved in the talks are tight-lipped about details.

Crown Enterprises President Michael Samhat acknowledged Crown is working with the EPA to come to an agreement. He said the company is working in good faith with all stakeholders, including the city of Trenton, Wayne County and the EPA.

Last month, Crown reached an agreement with Wayne County to buy the foreclosed McLouth site for $4 million, an amount based on the site’s unpaid taxes. The county commission approved the property’s transfer to Crown by an 11-3 vote. The Trenton City Council also weighed in, unanimously supporting Crown’s bid to develop the site.

The Morouns’ pursuit of the McLouth Steel site resurrected some contentious dealings with the EPA that go back at least to 2010 and could factor into the negotiations.

Riverview Trenton Railroad Company, another Moroun-owned firm, acquired a 76-acre industrial site north of McLouth in 2000. Following the collection of hazardous waste at the property in 2009 and 2010, the EPA ordered the company in 2010 to mitigate “releases and threatened releases of hazardous substances” from the property, according to court records.

The EPA ended up doing the work after Riverview declined to follow the order. The job involved building a barrier to prevent “high pH leachate” — a hazardous substance — from seeping into a creek that runs along the northern edge of the property and flows into the Detroit River.

The federal government filed a civil complaint in December 2014 against Riverview to recover its cleanup costs. The job cost $900,000.

In February 2015, the government and Riverview reached a consent decree, filed in U.S. District Court, that settled the dispute for a $675,000 payment from Riverview.

Joseph Dufficy, land revitalization branch chief for the EPA’s Superfund division, rehashed details of the settlement in an August letter to Wayne County deputy executive Richard Kaufman, who had requested information about McLouth Steel in anticipation of the county’s sale to Crown.

The letter, obtained by the Free Press, raised questions about the relationship between Crown and Riverview. But it did not make any conclusions about how any such relationship would affect the sale of McLouth to Crown.

“While the region has not done a full inquiry into the relationship between (Riverview) and Crown Enterprises, the connection between the two entities during the region’s earlier interactions with (Riverview) raises the question of whether Crown Enterprises can demonstrate that it is not ‘affiliated with’ a potentially liable party,” the letter reads.

Samhat, president of Crown, declined to comment on the letter.

While the August letter raised questions about Morouns’ two companies, the EPA since seems to have taken a different stance.

In a recent statement to the Free Press, an EPA spokesman said the “EPA is treating Crown and (Riverview) as separate entities, though it is aware of their affiliation.”

Schroeck, of the Wayne State University Law School, said the EPA should be very careful in negotiating the agreement.

“In other words, we don’t want any backsliding here,” he said. “We want to make sure Crown does the work they say they’ll do and that they’re held to the most protective environmental standards under the law.”

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