Allied Chemical Corp., today promised to create an $8 million environmental fund for Virginia, and, in return, asked a federal judge here to cut its record $13.2 million Kepone pollution fine to $1.4 million.
U.S. District Judge Robert R. Merhige promised Allied lawyers he will cut the fine, the largest ever imposed in a criminal pollution case in the United States, but said the size of the reduction will depend on recommendations he will receive Tuesday from Virginia and Justice Department lawyers.
"You're going to get a reduction, let's put it that way, provided that the $8 million is still floating around," the judge said at one point in a brief courtroom hearing today.
But both Merhige and U.S. Attorney William B. Bummings, who prosecuted the Allied case, appeared concerned that proceeds from the $8 million fund might be used to pay for projects that Allied Chemical might already be liable for because of its Kepone pollution.
Cummings said he wanted to be certain that the fund would not find itself "going down the same path" with Allied, paying for certain Kepone-related expenses that Allied should have to pay regardless of the criminal fine, such as damages resulting from civil suits filed against the chemical firm.
Allieddirectors meeting in New York Thursday agreed to endow an $8 million enviromental fund, said yesterday that the commitment stands regardless of what happens to the $13.2 million fine. Allied lawyer Murray J. Janus told Merhige, "We're on the hook for the $8 million."
Later, Allied vice chairman Alexander B. Trowbridge defended at a news conference Allied's decision to ask the judge to cut its fine by more than $12 million and to offer only $8 million because "we felt it's appropriate to the size of the problem."
However, Virginia State Attorney General Anthony F. Tony appearing before Merhige, said the state estimates it will face about $14 million in Kepone-related costs that it cannot recover from Allied.
Allied manufactured Kepone, a white, powdery pesticide, at its Hopewell, Va., complex south of Richmond from 1966 to 1974. Wastes from the highly toxic pesticide - used primarily to kill banana and potato plant pests - were secretly dumped by Allied into virginia's James River along with other chemical wastes.
After Virginia health officials closed a small Hopewell plant making Kepone for Allied in June, 1975, they discovered the secret Allied discharges. Gov. Mills E. Godwin in December, 1975, was forced to close about 100 miles of the James River to fishing because of Kepone contamination.
Last year Allied pleaded no contest to 940 counts of dumping the chemicals into the river and Merhige, on Oct. 5, fined the company the maximum for the offenses, saying he wanted to send a warning to other large corporations.
Today Merhige appeared to be jovial and repeatedly complimented Allied for the fund, which he called "a very generous gesture." Both the judge and federal and state lawyers had been secretly briefed on the plan recently at a conference in Merhige's
Under the plan, Allied is committed to give the $8 million to a "Virginia Envirnomental Endowment," a private, nonprofit Virginia corporation that would be administered by aboard of seven directors named by Merhige. Allied Chemical officers and employees would be prohibited from the company would be allowed to suggest nominees for a "technical advisory" committee, under the proposal.
Proposed articles of incorporation for the endowment would empower its directors to use the $8 million "to improve and enchance the quality of the enviroment in and about the commonwealth of Virginia." The board "shall choose such projects, remedial efforts and program as, in its sole discretion, shall be of the greatest benefit to the citizen of Virginia," the plan suggests.
Allied's Trowbridge described the fund as a "no strings attached" gift from the New Jersey-based corporation. In court, Allied lawyers said the search, loan gurantees, and other projects, same of which would presumably help Kepone victims.
Cummings said he wanted time to study details of the Allied proposal and voiced fears that the enviromental fund might end up funding some of the projects that Allied should pay for out of its own treasury.
Merhige had laid the foundations for today's hearing when he told Allied lawyers on Oct. 5 that he would consider reducing the fine if the corporation undertook "voluntary" steps to reduce some of the state's Kepone-related problems.