Perona Brothers Junkyard Fire Dec. 6th 1986

Enforcement Case Summary
Case: Perona Brothers Junkyard
Elwood, New Jersey


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Background:

Perona Brothers, Inc. operated a junkyard in Elwood, New Jersey, that contained approximately five million tires and an undetermined number of automobiles, trucks and other discarded debris, as well as drums and cylinders with materials of unknown origin.

On December 6, 1986, a fire started at the junkyard and lasted for five days. As a result of the fire, hazardous substances and materials were released on site and discharged into the groundwater.

On October 31, 1986, Perona Brothers, Inc. filed a petition for protection under Chapter 11 (reorganization) of the United States Bankruptcy Code. The trustee in the bankruptcy case asked the Court to convert the Chapter 11 bankruptcy to a Chapter 7 (liquidation) bankruptcy, which was granted on June 14, 1989.

Actions: In 1986, EPA incurred cost to respond to the fire at the junkyard. On June 29, 1989, the New Jersey Department of Environmental Protection (NJDEP) requested that EPA perform a CERCLA removal action at the junkyard to remove the hazardous substances and materials that resulted from the December 1986 fire. EPA incurred costs to conduct this action and requested that a contingency fund be established to cover any costs that EPA may incur at the site in the future.

Penalty: To protect the ability to recover response costs from the potentially responsible party in this case, EPA filed a Proof of Claim with the bankruptcy court to recover the costs incurred by EPA prior to 1989 (i.e., approximately $171,000) as well as additional costs that might be incurred by EPA in the future. At that time, the assets of the junkyard totaled less than $34,000.

The New Jersey District Court ruled that the State of New Jersey had a super priority lien (pursuant to a state spill act) against the claims of EPA and the bankruptcy trustee. This meant that the State had priority to the $33,764 in remaining estate assets. Because the State incurred costs of approximately $100,000 at the site, there was no money left to settle EPA’s claims and any claims submitted to the trustee after the funds in the estate were used to pay the State.

In January 1997, the bankruptcy court issued a final decree that discharged the trustee of the estate and closed the bankruptcy case due to a lack of funds to pay claims. In 1999, EPA chose to close the case without recovering any of their costs.

Actions to Avoid Violation: Proper segregation and storage of materials on site, especially flammable materials, could have either prevented the fire or controlled its spread. Perona Brothers should have implemented best management practices for removing all fluids and hazardous materials from scrap automobiles. Perona Brothers should also have installed separate storage areas and containers for each type of waste generated on site, instead of mixing these in drums of “unknown material.” The waste storage areas could have been installed under roof and on bermed concrete pads or liners to prevent storm water runoff and ground water contamination. Segregating wastes would have allowed for easier recycling and disposal of the wastes, since many waste haulers, recyclers, or disposal facilities won’t accept wastes of unknown origin. Proper segregation, storage, and labeling would have also facilitated better response to the fire by giving responders adequate information as to what types of materials were present on site. If Perona Brothers had taken these preventive measures, it probably would have been able to limit the damage to prevent a total loss.