Dioxin Developments

September 23, 2016 | Commercial Litigation | Complex Torts & Product Liability

Army Corps Evaluates Alternatives for Remediating San Jacinto River Waste Pits

The U.S. Army Corps of Engineers has issued a new report at the request of the U.S. Environmental Protection Agency (the “EPA”) that evaluates various remediation alternatives presented in a feasibility study for the San Jacinto River Waste Pits Superfund Site (the “Site”).

Background

The San Jacinto River is a coastal plain estuary. The San Jacinto River Waste Pits are located in a Federal Emergency Management Agency (“FEMA”) designated floodway zone, which is essentially the 100-year floodplain for the San Jacinto River.

The Site consists of several waste ponds, or impoundments, approximately 14 acres in size, built in the mid-1960s for the disposal of paper mill wastes as well as the surrounding areas containing sediments and soils potentially contaminated by the waste materials that had been disposed of in these impoundments. The impoundments are located immediately north and south of the I-10 bridge and on the western bank of the San Jacinto River in Harris County, Texas.

As the Corps explained in its report, large scale groundwater extraction has resulted in regional subsidence of land in proximity to the Site that has caused the exposure of the contents of the northern impoundments to surface waters. A time-critical removal action (“TCRA”) was completed in 2011 to stabilize the pulp waste material in the northern impoundments and the sediments within the impoundments to prevent further release of dioxins, furans, and other chemicals into the environment. The removal consisted of placement of a temporary armor rock cap over a geotextile bedding layer and an impermeable geomembrane in some areas. The total area of the temporary armor cap is 15.7 acres. The cap was designed to withstand a 100-year storm event.

The southern impoundments are located south of I-10 and west of Market Street, where various marine and shipping companies have operations. The area around the former southern impoundments is an upland area that is not currently in contact with surface water.

The Report

The Army Corps report presented the results from 18 tasks that were identified by the EPA for the Corps to perform. In its key parts, the report addressed the permanence of capping, the effectiveness of capping, the effectiveness of dredging, and the short-term impacts of remediation, particularly by dredging.

Permanence of Capping

The Corps evaluated the permanence of the existing repaired TCRA cap with modifications outlined in the feasibility study and declared that the cap “is expected to be generally resistant to erosion except for very extreme hydrologic events, which could erode a sizable portion of the cap.” The most severe event simulated by the Corp was the hypothetical “synoptic occurrence of Hurricane Ike and the October 1994 flood” occurring at peak storm surge height at the Site. According to the Corps, approximately 80 percent (12.5 acres) of the 15.7 acre TCRA cap incurred severe erosion during the simulated extreme (hypothetical) storm. It declared that replacement of the armor materials with a median size of at least D50 = 12 inches would be needed to greatly reduce the amount of scour during such an extreme event.

The Corps also found that some localized disturbances of the cap might occur from bearing capacity failures of the soft sediment, gas entrapment by the geomembrane or geotextiles, or barge strikes, requiring maintenance or repair. It added that the expected releases from these localized disturbances “would be expected to be very small” – in fact, more than a thousand times smaller than releases from removal of the contaminated sediment as predicted for certain of the dredging alternatives.

Moreover, the Corps added, issues related to cap permanence could be addressed by certain modifications to control sediment migration into the cap and by upgrading the armor stone size in vulnerable areas by doubling its D50 to prevent movement during very severe hydrologic and hydrodynamic events, thickening of the armor cap to at least 24 to 30 inches across the Site to minimize the potential for disturbance by anthropogenic activities or gas entrapment in submerged areas where a geotextile filter was used, and installing pilings to protect the cap from barge strikes.

The Corps predicted that the armored cap would have long term reliability from scour related processes except under very severe hydrologic and hydrodynamic events. It noted that reliability had been “routinely achieved” at other armored sites and facilities.

It also found a low probability of barge strikes that would impact the integrity of the cap. Additionally, according to the Corps report, if the cap were impacted, the accumulative potential releases of contaminated sediment would be “very much smaller” than the releases from complete removal of the sediment. A major barge strike, which would be predicted to occur once in 400 years, would impact less than one percent of the cap area and potentially release less than 0.1 percent of the contaminated sediment, which was less than 25 percent of the releases predicted for a full removal.

Effectiveness of Capping  

According to the Corps’ report, the existing repaired TCRA cap with its proposed modifications would be expected to be “highly effective in controlling the flux of contaminants and reducing the exposure concentration of contaminants in the water column.”

Indeed, the Corps continued, the expected resuspension and short-term releases from capping “are virtually non-existent.” In comparison, it observed, at least 0.1 percent of the contaminant mass and most likely at least 0.3 percent and possibly “much more” of the contaminant mass would be released by certain removal operations.

The Corps said that the expected long-term releases from capping “are to be very small in the absence of cap erosion or a major disturbance by a barge strike and comparable to long-term releases from dredging” residuals with a well-constructed single layer residuals cover, and “better than the residuals cover” if mixing with residuals or erosion were to occur.

Effectiveness of Dredging  

Regarding the effectiveness of dredging, the Corps found that “best construction practices” as well as erosion control for residuals management would be needed for removal alternatives to achieve the same level of long-term effectiveness as capping alternatives, based on predictions of the long-term contaminant flux and bioavailable contaminant concentrations in the bioactive zone.

Impacts of Remediation    

According to the Corps’ report, the short-term impacts of remediation activities are primarily related to resuspension of sediment, erosion of residuals, and the concurrent release of contaminants. Enhancement of the TCRA cap would be expected to produce very little impacts, while a full removal would be expected to “significantly increase short-term exposures to contaminants.”

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Bayer and Monsanto Agree to Merge in US$66 Billion Deal

Bayer and Monsanto have signed a definitive merger agreement under which Bayer will acquire Monsanto for US$128 per share in a US$66 billion all-cash transaction.

Monsanto’s board of directors, Bayer’s board of management, and Bayer’s supervisory board have unanimously approved the agreement.

Based on Monsanto’s closing share price on May 9, 2016, the day before Bayer’s first written proposal to Monsanto, the offer represents a premium of 44 percent to that price.

Antitrust regulators in the United States and around the world will be reviewing the proposed merger, which likely would mean a closing late next year.

The Companies Comment

In a statement, the chief executive officer of Bayer AG, Werner Baumann, said, “We are pleased to announce the combination of our two great organizations. This represents a major step forward for our crop science business and reinforces Bayer’s leadership position as a global innovation driven life science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees, and society at large.”

Hugh Grant, the chairman and chief executive officer of Monsanto, added that the merger “is a testament to everything we’ve achieved and the value that we have created for our stakeholders at Monsanto. We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration.

“We are entering a new era in agriculture – one with significant challenges that demand new, sustainable solutions and technologies to enable growers to produce more with less. This combination with Bayer will deliver just that – an innovation engine that pairs Bayer’s crop protection portfolio with our world-class seeds and traits and digital agriculture tools to help growers overcome the obstacles of tomorrow. Together Monsanto and Bayer will build on our proud tradition and respective track records of innovation in the agriculture industry, delivering a more comprehensive and broader set of solutions to growers.”

Liam Condon, a member of the board of management of Bayer AG and the head of its crop science division, said, “The agriculture industry is at the heart of one of the greatest challenges of our time: how to feed an additional three billion people in the world by 2050 in an environmentally sustainable way. It has been both companies’ belief that this challenge requires a new approach that more systematically integrates expertise across seeds, traits, and crop protection including biologicals with a deep commitment to innovation and sustainable agriculture practices.”

Merger Details

Pro forma sales of the combined agricultural business amounted to EUR 23 billion in calendar year 2015. The companies said that the combined company “will be well positioned to participate in the agricultural industry with significant long-term growth potential.”

Bayer said that it expects the transaction to provide its shareholders with accretion to core earnings per share (“EPS”) in the first full year after closing and a double-digit percentage accretion in the third full year. Bayer added that it has confirmed sales and cost synergies assumptions in due diligence and expects annual EBITDA contributions from total synergies of approximately US$ 1.5 billion after year three.

Bayer said that it intends to finance the transaction with a combination of debt and equity. The equity component of approximately US$ 19 billion is expected to be raised through an issuance of mandatory convertible bonds and through a rights issue with subscription rights. Bridge financing for US$ 57 billion has been committed by BofA Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC, and JP Morgan.

The combined agriculture business will have its global seeds and traits and North American commercial headquarters in St. Louis, Missouri, its global crop protection and overall crop science headquarters in Monheim, Germany, and a presence in Durham, North Carolina, as well as many other locations throughout the United States and around the world. The digital farming activities for the combined business will be based in San Francisco, California.

“This combination is a great opportunity for employees, who will be at the forefront of innovation in our sector. This transaction also enhances Bayer’s strong commitment to the U.S., building on our 150-year history with operations across 25 states employing more than 12,000 people in the country. I am convinced that Monsanto will flourish as part of one of the most respected and trusted companies in the world,” said Mr. Baumann.

For further information, please contact James V. Aiosa Paul V. Majkowski Lawrence S. Han or your regular Rivkin Radler attorney.

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