The problem of manufactured gas plants

Before the United States had an extensive system of natural gas pipelines, municipalities that needed gas for lighting, heating and cooking had to make it. That involved the construction of plants that used coal and/or petroleum to create gas. As late as the 1940s, approximately half the country’s gas was manufactured.

The remains of those manufactured gas plants (MGPs) dot the United States, and estimates of their numbers range from 1,000 to 50,000 nationwide. Because of the wastes created by the gas production process, many MGPs are now toxic waste sites. Often, the utilities that ran them are defunct, and those that still do exist often deny responsibility for any cleanup. That leaves the cities a dilemma — clean up the sites themselves or sue the utilities — neither of which is an inexpensive alternative.

Recent events, including a lawsuit pitting West Allis, Wis., against Wisconsin Energy, and attempts by the city of Newburgh, N.Y., to force a cleanup of toxic wastes that had migrated into the Hudson River have given the problem national exposure. To help clarify the issue, American City & County and the New York law firm Carter, Ledyard & Milburn (CLM), which represents Newburgh, co-hosted a roundtable involving people who have fought or are fighting the problem of MGPs.

Participants included Clifford Case, a partner at CLM and co-director of its Environmental Practice Group; Jim Cummings, an environmental engineer in the Technology Innovation Office of the USEPA; Tod Delaney, president of First Environment, a Riverdale, N.J.-based environmental engineering firm; Bob Elliott, mayor of Croton-on-Hudson, N.Y., and founder and past chairman of Historic River Towns of Westchester, an 11-community consortium that focuses on waterfront development, tourism and main street economics; Susan Kath, chief of the Environmental Law Division in the New York City Corporation Counsel’s office; Mark Leitner, a shareholder with the Milwaukee law firm of Kravit, Gass, Hovel & Leitner, which represented West Allis in its lawsuit against Wisconsin Energy; and Harry Porr, city manager of Newburgh. American City & County editor Janet Ward moderated the roundtable.

Janet Ward (JW): What do we know about MGPs?

Clifford Case (CC): The problem of MGPs is one that we have not yet fully come to grips with. We don’t have a good inventory. But we do know that, in general, these plants left a history behind them — a legacy of wastes. In many cases, those wastes have not been evaluated, and we don’t really know what it’s going to take to clean them up. We do know enough about the wastes to know that they are significant from both a human health point of view and from an environmental damage point of view. It’s not accurate, incidentally, to say that people handled these wastes poorly in the past through ignorance. Manufactured gas pollution was recognized early as a serious problem. In New York state, the first statewide statute prohibiting the discharge of manufactured wastes into public waterways was passed in 1881, and there were similar early statutes in the latter part of the 19th century in many other states.

JW: Who owns these plants now?

Jim Cummings (JC): One interesting point is that, in many cases, through successor corporation principals, these plant sites are still owned by utilities. But to an as-yet undetermined extent, there are true orphan sites of which the municipality, either through tax default or some other mechanism, has become the owner.

Mark Leitner (ML): In a fairly substantial number of cases, the plants were actually owned by the municipalities. And the municipalities actually ran the operation. In fact, one of the names for manufactured gas was “town gas” because every town had its own plant. And in those situations the liability is direct. If you use Superfund’s or the federal environmental language, the municipalities are the “generator.”

JW: What does that mean for the municipalities?

Harry Porr (HP): Newburgh is sort of a case study in the kinds of problems that municipalities have. The current administration was unaware of our MGP and its operation because the plant had really terminated in the late 1940s and was just a vacant lot that had an ominous look to it, mostly ignored by the community and by the government. It wasn’t until later on when we were trying to improve our sewer treatment processes that we had to undertake an excavation of the property next to the sewer plant, and we discovered pollution from this former MGP.

As we were making our excavation, we were down about 10 or 14 feet, and some of the laborers came up complaining about irritation to their noses and lips. Work came to a halt, and we investigated what was causing the irritation. We quickly discovered that there was caustic material in the excavation, and, as we looked up the hill, we became more interested in that vacant lot that once was the site of an MGP.

We contacted the utility that was the successor of the original plant — which I believe began operation as early as the 1880s — and we told them of our concern. The utility was reluctant to admit any responsibility at all. Later it became obvious that they were going to try to walk away from their obligation to make the city whole for any delays or extra expenses attributed to their pollution being on our property.

What began then was a series of events that eventually led us to federal court. We got a jury verdict of $20 million in cleanup costs. That all took place beginning in August 1994. The verdict was in December 1998, and here we are in 2001, and not one teaspoon of pollution has been removed from the site.

CC: I think that one of the interesting things about Newburgh is that it shows how the location of contamination can affect broader issues for a municipality. I mean, one of the keys to redevelopment in Newburgh is taking advantage of its site on the Hudson River, and that’s, of course, true for many of the communities along the Hudson. There’s been a tremendous regrowth of tourism, recreational use, and that’s been the goal — to try to bring the public back to the river in a number of different ways. You can’t really do that if you have a lot of tars sitting in the river. In Newburgh, getting this contamination cleaned up is a key to the successful redevelopment of the city.

HP: Redevelopment of the waterfront reconnected people to the river, and getting rid of the old industrial uses is one important point. But another point is that, every time we want to go into the ground around our sewer plant — whether for excavation or rehabilitation or reconstruction — it’s going to cost us many more times the dollars that it would have cost because of the pollution. Additionally, for decades the utility was able to make a lot of money by manufacturing gas at this site, and the city and its taxpayers did not share in any of those profits. So our position has been now that the time has come to clean up that property, the taxpayers should not have to pay for that cleanup.

JW: So you have the judgment. Now where do you go?

HP: We won this $20 million award for a certain part of the trial. There were some other items that were to be litigated that went to bench trial. Rather than going through the bench trial, we decided to settle and agreed to allow the state Department of Environmental Conservation (DEC) to be the arbiter in terms of what level of cleanup will occur at the site. The city would have the ability to review the cleanup plan presented by the utility and comment on that.

Our feeling has been that the first cleanup plan by the utility was really a cover-up, as opposed to a cleanup. It wanted to leave in place the polluting materials and to literally put a geotextile blanket over the top of it. And this is in the Hudson River itself. We challenged that plan, and the utility was told by the DEC to go back and do something more extensive. Right now we’re at the point where we’re waiting for the utility’s second response.

JW: What kind of waste are we talking about, and what is it doing?

ML: One of the witnesses in our case in Wisconsin testified that, in our situation, the gas plant waste — in particular the oxide box waste, the sulfur and cyanide-coated wood chips that were used in the final filtration stage of the gas cleaning process — was dumped by the utility into an intermittent pond. And one of the witnesses in our case, who was a gentleman who had worked in the MGP industry for four or five decades, said it was the only time he had seen this waste dumped into water. It was just something that wouldn’t have been done — in particular because of the extremely sulfuric conditions that are created when the oxide box waste is dumped into a wet area. It’s just about the worst possible thing you can do.

HP: We are aware that, not only is the pollution in the ground, it’s still moving, and it’s moving from this upland site through our property and into the river. Sometimes we have seen sheens on the river during low tides. So part of our concern is not just the land that we own that we need for our sewer operation, but the fact that the pollution continues to move. We have monitoring wells all over the site, and we know that, let’s say from benchmark one, which might be a month into 2000, there might have been an inch of material accumulated in one of our monitoring wells. You go back a year later, and there’s 12 inches in there. I think the entire area is affected environmentally by this pollution being in the ground.

JW: How is it migrating?

Tod Delaney (TD): The Newburgh case is somewhat unique in that the primary discharge for the process was through two sewer systems in the early years: A brick-lined sewer went from the former manufactured gas property right into the river, and a private eight-inch sewer line also went from the manufactured gas plant directly into the river. So at Newburgh, we really have three main plumes, one that is associated with the direct discharge that occurred over a number of years that’s literally sitting in the Hudson River only a few inches below the sediment surface. If you walk in it, you put out a black puddle that rises to the surface. If you’re sitting out there at low tide, the material wells up from the Hudson River. In fact, we were out kayaking one time, and as far as 25 to 30 feet offshore you would see bubbles of the MGP waste coming to the surface.

There’s another fairly shallow plume that runs all the way from the MGP under the road, under the railroad track and then into the sewerage treatment plant property. And that’s anywhere from about eight feet to about 16 feet in depth.

And then there is another plume of liquid material that runs from the gas holder that had an earthen bottom that was in the center of the MGP that runs down anywhere from between 20 and 60 feet deep across the center of the sewage treatment plant. All these plumes eventually end up in the Hudson River.

HP: Not only is this material moving, but it’s moving into a National Heritage River, the Hudson. Its location is important.

JW: From a legal standpoint, how does a city deal with this?

ML: We brought our case as a standard trespass, nuisance, negligence state court lawsuit rather than a federal case for contribution under CERCLA (the Comprehensive Environmental Response, Compensation and Liability Act), precisely because the Blackstone Valley case had just come down a couple of years before. In that case, the First Circuit kicked the issue of whether the chemical involved was a listed hazardous substance over to EPA for rule-making, and, so far as I know, it’s still there. We anticipated that the utility would file a motion saying, “Look, let’s just delay this case and put it on hold until the EPA makes up its mind if this is a listed substance.” We thought we could get around it, but we decided to go to state court anyway just to avoid this problem.

CC: When you’re thinking about the manufactured gas issue, you can’t just think about the actual sites where the gas was generated. Those often are problematic, but, in many cases, wastes were moved from those sites to other locations for disposal. Those have to be looked at as well.

ML: It’s another possibility for municipal liability because municipalities were running landfills. These wastes were being generated from the 18th century and throughout the entire 19th century well into the 20th, and municipalities were running open dumps. And these wastes often went into the municipal dump.

Susan Kath (SK): The approach we have taken is somewhat different. Obviously the city has a number of these former sites, and we ended up in the position of owning a lot of them — some willingly. What has really driven any action on our part has been a desire to use the land. What is happening now with a very large site in the Bronx is that we want to move the Fulton Fish Market from downtown up there. So there’s now a use for the property. And we’ve gone from threatening litigation to trying to work out an agreement with Con Edison about how we, through a voluntary cleanup agreement, are going to remediate the site, with Con Ed paying for it.

JW: It appears, then, that redevelopment, and not the mere fact that all this pollution exists, is what drives the desire for a cleanup. Why is that?

JC: These tars can be mobile, but, in many cases, they’re not. They are carcinogenic, but they’re not going anywhere. So the risk factors that drive remediation decisions (i.e., concern about the pollution itself) absent the redevelopment pressures seem to be lacking. At present, there’s only a dozen or so MGP sites on the National Priority List because of that. So most of the cleanups that are going to be taking place are either voluntary cleanup programs, brownfields situations or because of administrative orders. Redevelopers favor the parking lot approach to the problem — just paving over it.

TD: You can use the parking lot approach to the problem as long as the material is not going off your property. But if it’s going off your property and going across somebody else’s, you don’t have that level of control. In New York state that’s what the utilities have said to the state DEC: “Look, there is no risk, it’s on our property, it’s not going anyplace, it’s not mobile, it’s just staying put.” But the state now is finding that it is mobile, that it has been moving. In fact, to some extent because of the issues that developed at Newburgh, the state now has had to set up a completely new unit to start looking at MGPs. I think in the next few years you’ll see things, especially in New York state, change quite a bit because of the emphasis and because of Newburgh.

JW: What has been the utility response?

JC: To the extent that the utilities have been willing to address the problem, it’s usually the top eight feet that they want to go over. Historically, there has been a problem dealing with contamination at depth or in the water table. The problem with these dense non-aqueous phase leachates is that they penetrate the water table and just continue to migrate downwards to a containing layer. That could be 20 to 60 feet in Newburgh. We don’t have very much experience addressing contamination at that depth.

TD: That’s one of the things that the utility in the Newburgh case has used to its advantage — saying that it is a dense material, and there aren’t very many known ways to clean this material up. In our case, the material is just a little bit denser than water. Consequently, its mobility is quite a bit more than they’ve ever seen and certainly more than the state has seen. That is a problem because the state DEC is in the position of saying, “Well, this is a dense material; it’s not going to move very much. How did it get from there over to the river?” It’s a continuing fight because the utilities want to say it’s not moving, it’s a tar, and it’s not going to do anybody any damage.

HP: We went to the utility after we sampled a little bit of its product west of us and told it what was in our ground. We then began discussions with the utility in hopes that the city would be made whole for any additional cost related to pollution on our property and our construction. We went into probably two years of back-and-forth discussions.

They really didn’t care about the pollution problem. Their immediate response was, “How little do we have to pay to get out of this?” We were being stonewalled. We finally had no recourse but to go to court. We didn’t want to spend the money; we’re a poor city. We have other needs.

We had no choice because of the utility’s unwillingness to work in good faith. I always felt that we weren’t dealing just with Central Hudson, but that we were dealing with all the utilities combined, and all of their combined resources beyond Central Hudson were working against Newburgh to make sure that we didn’t set a precedent in requiring certain kinds of levels of cleanup.

JW: How do you convince people who may not be in office four or eight years from now of the rationality of undertaking such a monumental project that may not show immediate results?

HP: Maybe I’m reading too much into this, but I see a sinister plot. The utility knows that issues are driven by certain people, and, if you remove certain people, the issue may die. So it’s a waiting game. That’s why we need a prompt response from regulatory agencies. If it isn’t attended to in some persistent fashion with some kind of vigilance on the part of government, as personalities change and governments change, priorities change also.

Bob Elliott (BE): And there are many communities in which nothing drives the process. In the Hudson Valley right now, there is a drive to revitalize the waterfront. But in many communities, there is no incentive whatsoever, no redevelopment prospect whatsoever for any elected official or appointed official to go out and do anything. And you don’t have a constituency to take on something as large as a power company, let alone all the power companies in the state of New York.

ML: The situation in the West Allis case was created by a confluence of two factors. Number one is exactly the one that you just described, where the utility just digs in its heels and says, “We’re not paying.” That’s essentially what Wisconsin Energy did back in 1993 and 1994 when they were first approached. Which essentially leaves the city with the choice of saying, “Well, we either go to court or we stick the taxpayers with the bill,” and that’s certainly not a popular action.

But it’s also not necessarily a popular action to spend the money for the lawyers to conduct the fight, especially because these fights are so long and drawn out. So it’s really a no-win situation and a very, very difficult one for the municipal parties.

And the second thing that drove it was the fact that the situation in West Allis was a little analogous to the waterfront and river redevelopment. It was doing everything that it could through financing and tax relief, and all sorts of measures were being taken by the city to try to redevelop, try to get businesses in there. They had finally filled in these retention ponds and were preparing to sell it, and they discovered the blue wood chips — cyanide turns wood chips blue — on the ground.

The problem here of course is that the cleanup and the litigation delayed the development for five years or so, and also resulted in one particularly large business saying, “Well, I can’t wait anymore” and moving somewhere else. It’s just a really difficult situation when the party on the other side, whether it’s a utility or some other defendant, knows that it has time on its side and that it’s going to gain by digging in its heels.

JW: What kinds of resources are available to help cities fight this battle?

JC: The Clean Water Act revolving fund historically was used to build treatment plants. Now my own counterparts in the Office of Water are touting the fact that the Clean Water Act revolving funds can be used to pay for pollution abatement where groundwater or surface water bodies are affected. This is good news, especially for smaller communities that are looking for support.

It’s also helpful to get some economies of scale, especially for the small communities that are reasonably close together — as opposed to dealing with the problems in isolation. There were some NPL sites in Waterloo, Iowa, and there are three or four little communities around the sites.

They weren’t big enough, they didn’t have the expertise, so they all parked a thermal absorber on one site and trucked the waste in from the three or four other sites. They saved millions of dollars and millions of headaches. There are other ways to overcome these financial burdens, but they require collaboration.

CC: MGP sites are subsets of brownfield sites or could be viewed that way. And, increasingly, there is funding available for at least some portion of brownfields remediation. Sometimes it requires, as it does in New York, that the municipality contribute a share of the funding, and you’re often in competition with other possible users of those monies. But there are state funds available. There is a federal program for brownfields remediation through EPA. So there are sources of money that can be looked to and often help to cover a significant part of the cost. If a piece of property is redevelopable, then ultimately the successful sale of the property to a developer will generate further funds to cover the costs.

BE: Yes, there is funding, but it’s never enough. And the paperwork alone is intimidating to any municipality of almost any size.

CC: Look at the Hudson River. There are goals set forth in the Hudson River management plan, and among those is the goal of cleaning up historical contamination sites. And there is, little by little, money being channelled into that by the state. And that will not necessarily just result in economic redevelopment; it will also result in the improvement of the Hudson River environment through development of parks and public access and use of the recreational resources of the Hudson. None of these things is supported as well as we might like them to be, but they are supported — if a municipality develops a vision with public support for a particular site.

But it’s important to realize that, as you go through a project, you really have to be able to develop long-term public support. If you have that support, you’re able to do many things, and you’re able to take advantage of programs. You’re able to generate support at the state level for what you’re doing at the local level. So it’s obviously very important to do something that people in general feel is important. You can’t set off on a tangent to do something that nobody thinks is key. But environmental protection, environmental improvement is something we feel strongly about, and we’re willing to have our money spent on it.

JW: When most people think about economic development, they think about ballparks and factories. You’re talking about parks and greenspace.

BE: I think you need to redefine the term “economic development.” In the Hudson Valley, when you talk about parks and cleaning the river, that does fall under the category of economic development. The second largest industry in the state is tourism. So any amenity, any improvement, any trail, any park, all feeds into the larger, more sustainable definition of economic development.

CC: I think also we have to tie this into the issue of sprawl. You say that it is difficult to find funding, and it’s hard to work through these programs. Well, that’s all true, but I think there is gradually emerging an understanding that uncontrolled development is not a good thing. It is certainly an issue in the Hudson Valley; it’s certainly an issue in many places throughout the country.

What’s the alternative to sprawl? The alternative is refocusing development on areas that have already got the infrastructure, the historic sites of development in the country — the cities. And part of the way to avoid the costs of sprawl, both financial and social, is to focus development on cleaning up and reusing brownfield sites, including, of course, the gas sites.

To the extent that we understand this as a nation and are able to make our policies work that way from Washington to the state capitals and on down, then I think we will understand why it is worthwhile to go through the aggravation and to redevelop these sites.