BKK Working Group Invites PRPs With Tolling Agreements to Mediation With California DTSC

In recent weeks, the BKK Working Group (BKK Group) has sent letters to numerous entities that allegedly sent waste to the BKK Class I Landfill in West Covina, California (BKK Landfill) and that had previously entered into tolling agreements. The letters invite recipients to participate in a mediation with the BKK Group and the California Department of Toxic Substances Control (DTSC) to attempt to resolve the BKK Group’s claims against them before litigation is initiated. 

This alert provides some background and thoughts regarding the invitation.

The BKK Landfill operated as a hazardous waste disposal site from the late 1960s through the late 1980s. Thousands of businesses sent waste to the site during that period. Starting in about 2004, after receiving an order from the DTSC to conduct essential activities at the site, about 50 parties that sent waste to the site formed the BKK Group. Since that time, the BKK Group has entered into three consent decrees with the DTSC pursuant to which the group investigated and conducted response activities at the site. The BKK Group claims to have spent millions of dollars on these activities.

Because the BKK Group wanted to preserve its claimed right to seek contribution from the thousands of other potentially responsible parties (PRPs) that allegedly sent waste to the site, it asked PRPs to enter into tolling agreements. While many did, others did not. In 2018, the BKK Group filed suit against several hundred parties in BKK Working Group et al. v. 1700 Santa Fe LTD et al., Case No. 2:18-cv-05810-MWF-PLA (C.D. Cal.), and BKK Working Group et al. v. Albertsons Companies, Inc. et al., Case No. 2:18-cv-05836-MWF-PLA (C.D. Cal.). The cases were initially stayed while the BKK Group and the DTSC pursued settlements with the PRPs.

Starting in about 2021, the DTSC and the BKK Group started making de minimis “cash out” settlement offers to PRPs. In exchange for payment of $467.41 per ton of waste allegedly sent to the site, they offered a covenant not to sue and contribution protection under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

We identified significant concerns about the offers, including the following: (1) The $467.41/ton figure is based on what we believe to be a significantly inflated cost estimate; (2) the $467.41 figure includes claims for costs incurred by the BKK Group that are barred by the statutes of limitations; (3) the figure includes a 125% premium that we believe is virtually unprecedented and unjustified; (4) the offers seek to hold PRPs responsible for waste that does not constitute “hazardous substances” as required by CERCLA; and (5) the proposed agreements may not provide adequate protection against future claims. (Read our client alert on the settlement offer and concerns about the amounts demanded and protections offered, “DTSC Makes ‘De Minimis’ Settlement Offers to BKK Site Potentially Responsible Parties,” here.) Despite these concerns, some parties accepted the settlement offers.

In April 2024, the court lifted the stays in the BKK cases, complaints were served and over 100 defendants appeared in the cases. The court appointed Loeb & Loeb LLP as Liaison Counsel for the defendants. As a result of initial motion practice, it has been determined that the BKK Group’s claims against many PRPs for costs incurred pursuant to the first and second consent decrees it entered into with the DTSC, totaling about $200 million, are barred by the statutes of limitations. The case was then stayed while the parties pursue mediation with mediator Rob Olian. That mediation is ongoing.

The BKK Group is now requesting that the PRPs that entered into tolling agreements, and therefore have yet to be sued, participate in a parallel mediation with the same mediator. Any party considering entering into the mediation should keep in mind the concerns about the settlement offers discussed above. In addition, we suggest that recipients seek some basic information from the BKK Group that it has made available to others, including:

1. Access to the Manifest Summary Report for the PRP. This includes copies of the records showing alleged disposals at the BKK Landfill and a summary of the records and tonnages. Note that in many cases the manifests do not identify any “hazardous substances.”
2. An initial settlement demand similar to those sent to others. The BKK Group should be asked with providing a demand that takes into account whether the claims against the PRP for costs incurred to the first two consent decrees are barred by the statutes of limitations.

In our experience, PRPs can more cost-effectively participate in these types of negotiations if they work together. We currently serve as Liaison Counsel in the BKK cases and represent defendants in these cases and other parties that have received invitations to mediate. 

If you received an invitation and would like assistance in evaluating how to proceed and working with other parties, please contact Albert Cohen.