Position Paper #3: Ethics
Violations in the Bloomington
PCB Consent Decree
by the PCB Alliance
Description of the Problem
In 1975, a major hazardous waste contamination problem was publicly disclosed
in Bloomington, Indiana. The City of Bloomington (City) and Westinghouse,
the company responsible for the contamination, negotiated unsuccessfully
for 5 years. The City decided to file a common law nuisance and trespass
suit against Westinghouse in 1981. The EPA followed suit, so to speak, and
sued Westinghouse under the federal RCRA and Superfund environmental statutes
in 1983 to attempt to force cleanup of the sites. Private negotiations ensued
with the result being, after more than nine years of delay, a proposed settlement
among EPA, Westinghouse, the City, and the State of Indiana.
The proposed settlement had major problems from the point of view of
concerned citizens, environmentalists and public interest groups in the
area. The agreement was negotiated in secret by City and County officials,
Westinghouse, EPA and State officials in apparent violation of the Indiana
Open Door Law. The cleanup agreement excluded many of the known areas of
contamination, which appeared to serve only the interests of Westinghouse
in minimizing their cleanup costs. The technological remedy proposed was
an experimental hazardous waste incinerator which was proposed to use municipal
garbage as fuel to burn 700,000 tons of soil contaminated with PCBs (a highly
heat resistant chemical) and other chemicals. The idea of garbage as fuel
appeared insane to environmentalists and appeared to serve no purpose other
than to allow Westinghouse to recoup its cleanup costs via tipping fees
which the City and County had privately agreed to pay Westinghouse to burn
their garbage in the incinerator.
The EPA, rather than performing a feasibility study to examine alternatives
and environmental impacts prior to selecting a remedy, as required by law,
essentially approved the remedy already negotiated by Westinghouse and the
City (both responsible parties under Superfund). The EPA also failed to
release the Record of Decision (ROD) on the remedy selected until two and
one half years after the fact, after all public hearings were over, and
after the federal court had already signed the agreement into law, in violation
of Superfund regulations and EPA policy. The EPA only released the ROD then
because of persistent FOIA requests and other prompting from InPIRG Chairman
Mick Harrison. Further, in violation of Superfund and the National Environmental
Policy Act, public comment was not taken on either a study of alternatives
and impacts or on the Record of Decision prior to the remedy being selected.
The EPA had signed the ROD as a final agency action one day before the first
public meeting.
Harrison, as Chairman and Environmental Project Director for InPIRG at
the time, in an effort to understand why so many irregularities and illegalities
were cropping up in the same case, began an inquiry with the help of several
associates which disclosed that:
Joseph Karaganis, the attorney representing the City of Bloomington in
the secret negotiations leading up to the selection of the garbage-fueled
incinerator remedy, had represented Chemical Waste Management, Inc. (CWM),
one of the largest hazardous waste firms in the country, during part or
all of the time that he also was negotiating this cleanup agreement for
the City. CWM is a subsidiary of Waste Management, Inc.(WM), the largest
municipal solid waste firm in the country,
The City called Mr. Karaganis to a meeting to ask about this apparent
conflict and he assured them that there was no real conflict. The City decided
to continue retaining his services.
It appeared to Harrison later, upon further research, that this firm,
CWM, Inc. stood to benefit from the very unusual remedy negotiated by Mr.
Karaganis. Specifically, CWM could benefit from the proposed experimental
incineration of garbage and contaminated soil in that 1) Incineration of
contaminated soil using garbage as fuel would lead to a greater volume of
ash (approx. one million tons) from the incinerator than the initial volume
of waste at the sites to begin with (approx. 700,000 tons). Since the scientific
studies on ash indicated that it too would be contaminated and would have
to be disposed of in a licensed facility, and given that the only facility
in the state that was licensed for such waste had been purchased by CWM,
Inc., it appeared that the company the City attorney was representing, in
one capacity or another, stood to gain a multimillion dollar ash disposal
and/or transportation contract as a result of the remedy negotiated by this
attorney repesenting the City.
Further, CWM would appear to benefit from setting the Bloomington precedent
of obtaining EPA and state approval for using garbage as fuel for hazardous
waste incineration. This is something that was never before attempted. CWM
and its parent company WM would appear to benefit since CWM and WM had enormous
amounts of both garbage and hazardous waste for which they needed to find
a method of disposal. Should EPA and the state give approval to the experimental
idea of using garbage (MSW) to fuel hazardous waste incinerators, then CWM
and WM stand to make huge profits from their massive solid waste and hazardous
waste disposal operations.
CWM and WM already make a profit disposing of others waste in traditional
facilities for solid waste and hazardous waste, respectively. In addition
to needing separate facilities for the two categories of waste, CWM must
buy expensive fuel such as natural gas or oil to fuel their hazardous waste
incinerators, pay large fees to have the waste treated or burned elsewhere,
or land dispose that waste which is still legal to land dispose, and incur
short and long term liability for pollution from these land disposal facilities.
If garbage fueled hazardous waste incineration becomes an approved practice,
then CWM and WM will be free to dispose of their hazardous waste and solid
waste jointly in one type of incineration facility, and save the bulk of
their fuel costs by using their own garbage to burn their own hazardous
waste, which should dramatically reduce their costs and increase their profit.
The Westinghouse lead attorney, Jodie Bernstein, was, as it turned out,
a former EPA attorney. After Bernstein left EPA, she also worked for CWM
during the same time period as Karaganis, as well as later. After the consent
agreement was negotiated, Bernstein became lead counsel for CWM.
To complicate an already involved scenario, the primary EPA attorney
on the case, Barbara Magel, after negotiating the consent agreement via
what clearly appeared to be an illegal procedure circumventing fundamental
procedural requirements of both the Superfund statute and the National Environmental
Policy Act, left EPA and joined Mr. Karaganis' firm in Chicago. Mr. Karaganis
assured all that Ms. Magel would not work directly on the Bloomington case.
Applicable Provisions of the ABA Model Code of Professional Responsibility
This paper addresses the issues of 1) whether the EPA's, City's, and
Westinghouse's attorneys' conduct constituted one or more ethical violations,
and 2) how the matter should be resolved. The primary applicable provisions
of the ABA model code are discussed below.
A. Simultaneous Clients with Different Interests
Model Code Canon 5 states that "a lawyer should exercise independent
professional judgment on behalf of a client." EC 5-1 states that the
professional judgment of a lawyer should be "free of compromising influences"
and loyalties." "Neither his personal interests, the interests
of other clients, nor the desires of third persons should be permitted to
dilute his [her] loyalty to his client." The facts described above
allow a reasonable inference that the financial interests of CWM and WM
in the ash contracts from the experimental incinerator, and in the promotion
of the idea of garbage as a fuel for hazardous waste incineration, may have
influenced the City and Westinghouse attorneys to either suggest the garbage-fueled
incineration remedy or to be predisposed to accept it uncritically, without
properly evaluating the proposal in light of their clients'(the City and
Westinghouse respectively) interests. The remedy selected is not only highly
unusual (experimental and unique), it has obvious environmental liabilities
such that it normally would not be expected to survive assessment of environmental
impacts nor would it survive an objective analysis of feasibility compared
with available alternatives. The fact that the decision was made in private
and that the statutorily required studies of impacts and feasibility were
conveniently omitted raises obvious concerns.
More specifically, EC 5-14 states that the required maintenance of independent
judgment precludes a lawyer accepting or continuing employment "that
will adversely affect his judgment on behalf of or dilute his loyalty to
a client." "This problem arises whenever a lawyer is asked to
represent two or more clients who may have differing interests . . . ."
This would include situations in which the attorney would, on behalf of
one client, have a duty to contend for that which a duty to another client
would require her to oppose. See ABA Canon 6. In the present case, the attorney
representing the City would have a duty to critically review the proposed
incineration remedy to avoid environmental and financial costs to the taxpayers,
while the same attorney's simultaneous employment by WM, whose interest
is in acquiring ash disposal contracts and in promoting the idea of garbage-fueled
incineration, may influence him to be predisposed to accept the proposed
remedy and overlook the costs to taxpayers. This would appear to be differing
interests within the meaning of EC 5-14.
EC 5-15 advises that a lawyer should normally avoid taking employment
from clients with potentially differing interests. However, EC 5-15 further
states that there are instances where a lawyer may properly serve multiple
clients having potentially differing interests in matters not involving
litigation. In the instant case, the attorneys involved may argue that their
simultaneous representation of WM and the City or Westinghouse falls into
this exception to the general prohibition since WM was not a party to the
litigation resulting in the cleanup settlement.
However, EC 5-16 requires full disclosure by each attorney to each client
of the implications of the common representation and allows continued representation
only after the client consents upon full disclosure. Further discovery would
be useful in the present case, but it appears from preliminary investigation
that the full extent of the City attorney's involvment with WM was not disclosed
when the attorney appeared before the City utility board during the City's
inquiry into the potential conflict. More certainly, there is nothing in
the record indicating any disclosure by the City attorney or the Westinghouse
attorney of the potentially differing interests of their common client WM,
and the interests of the City and of Westinghouse. There was no disclosure
that WM, having stockpiles of both municipal garbage and hazardous waste
and large ongoing contracts to dispose of great quantities of both, had
an interest in promoting the use of garbage as a fuel for hazardous waste
incineration since they could save millions in disposal costs by using their
own garbage to burn their own hazardous wastes.
There is no evidence in the record of any disclosure to anyone by the
Westinghouse attorney of her employment with WM. Such disclosure, had it
been made, might have not only influenced Westinghouse's decision to retain
her, but might also have resulted in the City viewing Karaganis' WM employment
as more significant as a potential conflict, knowing that a 2nd of the three
key attorneys who negotiated the settlement worked for WM also.
DR 5-101(A) states that except with the consent of the client "after
full disclosure, a lawyer shall not accept employment if the exercise of
his professional judgment on behalf of his client will be or reasonably
may be affected by his own financial, business . . . interests." At
issue here is whether Karaganis' and/or Bernstein's business and financial
interests in continued employment with WM affected or could reasonably have
been considered as possibly affecting their professional judgment on behalf
of the City or Westinghouse respectively. If WM were known to have expressed
an interest in the outcome of the Bloomington litigation or settlement,
then the answer would be a clear yes. In the absence of evidence that WM
actually had such an interest, other than the hypothetical one, the answer
is maybe.
DR 5-105 is directly on point. Section A of DR 5-105 requires that an
attorney decline employment if the exercise of his independent professional
judgment on behalf of his client would be impaired, or if the employment
would involve him in representing differing interests. Section B of DR 5-105
requires an attorney to discontinue multiple employment under these same
circumstances. Section C of DR 5-105 allows continued multiple employment
only if it is obvious that the attorney can adequately represent the interests
of each client, and if each consents to representation after full disclosure
of the possible effects on the exercise of his independent professional
judgment. The facts in the present case do not demonstrate that the necessary
full disclosure was made to any of the clients involved. Nor was disclosure
made to the public which, while not explicitly required by the Code, should
be the practice when a government client conducting the public's business
is involved.
B. Post-Representation Employment with Opposing Counsel
DR 5-105(D) requires that when a lawyer is required to decline employment
or withdraw from employment under a Disciplinary Rule, no partner or associate,
or any other affiliated lawyer, may accept or continue such employment.
DR 5-107(A) states that "except with the consent of his [her] client
after full disclosure, a lawyer shall not:
Accept compensation for his legal services from one other than his client.
Accept from one other than his client any thing of value related to his
representation of or his employment by his client."
DR 9-101(B) requires that a lawyer should avoid even the appearance of
impropriety, and therefore mandates that a lawyer shall not accept private
employment in a matter in which he had substantial responsibility while
he was a public employee.
On the facts of this case, EPA attorney Magel, after negotiating the
settlement with Westinghouse and the City, left EPA to join the private
firm of the City's attorney. Facts have not been made public which would
show that Magel accepted any thing of value from the City or Westinghouse
or WM related to her representation in the settlement, other than employment
by the City's attorney's firm. Accepting money from another party's attorney
during the negotiations, for example, would be a clear violation of DR 5-107(A).
Further, the City's attorney Karaganis, who hired Magel, claimed Magel
would not have substantial responsibility for the ongoing Indiana case,
which if true, avoids a clear violation of DR 9-101(B). The facts here may
involve an unusual violation of DR 5-105(D), however. Consider that had
Magel joined Karaganis' firm prior to the Karaganis firm's representation
of the City, Karaganis, as a partner of Magel, would not have been able
to have taken on that representation due to Magel's past role in the case
for EPA. The question is, can a private firm hire a government attorney
who had a lead role for an opposing government party in an ongoing litigation
with the private firm, on the rationale that the ex-government attorney
will only do unrelated work? Doesn't such conduct at a minimum create the
appearance of impropriety and undercut public confidence in the profession?
Even if there is found no clear violation of DR 5-105(D) in the fact
that Magel's now partner Karaganis continued, after Magel joined Karaganis'
firm, to represent the City in litigation that Magel led for EPA and therefore
could not accept herself, there is still another troubling question. If,
under DR 5-107(A) a lawyer can not accept any thing of value from one other
than the client related to representation of the client, wouldn't accepting
a job with opposing counsel at a higher rate of pay be the same class of
violation as accepting a direct and immediate cash payment during negotiations?
Is the fact that the payment is deferred or not in simple cash, but rather
is cash in the guise of employment, significant enough to classify post-representation
employment as not a violation where a simple cash payment during the representation
would be a violation? Does it matter whether the job offer occurred during
the initial litigation with the future employer or after the litigation?
What of cases such as here, where there is continuing litigation and a court
ordered consent decree which involves a plan that the court will be overseeing
for years?
The disciplinary rules do not appear to speak directly to this situation.
However, interpreting such conduct involving post-representation employment
with an opposing counsel or party as not an ethical violation under DR 5-107(A)
leaves the door wide open for flagrant circumvention of DR 5-107(A) by use
bribes in the form of employment offers, and clearly creates the appearance
of impropriety. Post-representation employment poses two ethical concerns
only one of which is clearly addressed by DR 9-101(B). DR 9-101(B) precludes
the sort of ethical conflict that arises when someone is hired by a private
firm to work on the same issue that they worked on in their prior position
in government. This avoids misuse of confidential or inside information
and avoids the use of personal influence on behalf of the new private employer
by the ex-government attorney with officials still working on the matter.
DR 9-101(B) does not address the ethical problem of use of employment offers
as bribes to improperly influence the government attorney's conduct while
that attorney is still with the government. DR 5-107(A) should be construed
to cover this situation with the employment offered seen as falling within
the scope of "any thing of value."
C. Illegality, Misrepresentation and Fraud on the Court DR 1-102(3)(4)
and (5) prohibit a lawyer from engaging in illegal conduct involving moral
turpitude, conduct involving dishonesty, fraud, deceit, or misrepresentation,
and conduct prejudicial to the administration of justice. The EPA attorney
clearly, and the other parties' attorneys apparently, engaged in conduct
that was both illegal and deceitful. The EPA attorney directed the signing
of the record of decision which constituted final selection of the remedy
prior to taking public comment on the "proposed" remedy. Public
comment is clearly required both under Superfund and NEPA prior to final
remedy selection.
In representing a client, a lawyer may not conceal or fail to disclose
that which he is required by law to reveal. DR 7-102(A)(3). Likewise, a
lawyer may not knowingly make a false statement of law or fact. DR 7-102(A)(5).
A lawyer may not counsel or assist his client in conduct that the lawyer
knows to be illegal or fraudulent. DR 7-102(A)(7). Neither can a lawyer
knowingly engage in other illegal conduct. DR 7-102(A)(8).
A lawyer who receives information clearly establishing that his client
has, in the course of the representation, perpetrated a fraud upon a person
or tribunal shall promptly call upon his client to rectify the fraud, and
if the client does not do so, the lawyer shall reveal the fraud to the affected
person or tribunal, unless the information constitutes a privileged communication.
See DR 7-102(B).
Actual and Recommended Resolution of the Problem
Who is the client for an attorney representing a government: the officials
involved, the person(s) in the highest position of authority in that government,
or the public? In the exercise of the lawyer's professional judgment in
handling a legal matter, a lawyer should always act in a manner consistent
with the best interests of her client. See EC 7-9. What does the lawyer
do when the individual officials involved who have arranged her retainer
appear to have interests different than the interests of some higher official
body or of the public?
The PCB Alliance is group of Monroe County Citizens, dedicated to a safe
and sane remediation of the our PCB pollution problems. |
