Charleston attorney and former Department of Environmental Protection Secretary Michael Callaghan plans to establish a trust fund and to sue insurance companies of entities responsible for dumping PCB in Fayette County illegally, including at Minden and Fayetteville, Fayette Prosecuting Attorney Larry Harrah said Tuesday.

The leader of a local citizen's environmental rights group sharply criticized the plan on Tuesday, citing a similar strategy that failed and led to multi-million fees for the California city of Lodi. The Lodi case was executed by Michael Donovan, an attorney who is Callaghan's co-counsel on two legal cases.

The Fayette County Commission appointed Callaghan as special assistant prosecuting attorney and created the Environmental Public Health and Protection Division (EHPD) on Friday to oversee the removal of toxic substances from watersheds to improve the health of the systems. Harrah will oversee the division.

"There's lots of pollution in this county," Harrah said Tuesday. "We just kind of hide it and cover it up and don't think about it sometimes.

"Because of tourism, we don't want it out there."

Home of the New River Gorge, the New River and the Gauley River, Fayette County is a premier tourist destination spot in the state.

Harrah said that in addition to fracking waste pollution at Lochgelly and EPA reports of PCB contamination in Minden and Fayetteville, his office is investigating citizens' complaints of additional sites of possible PCB contamination in the county, including a site at Scarbro.

EPA officials tested for PCB contamination in Fayetteville in June. Results of the testing showed traces of PCB contamination at 3279 Court Street on property owned by Appalachian Whitewater founder Imre Szilagyi.

According to Harrah, Callaghan is hired on a contingency basis and will pursue actions against the insurance companies of the companies responsible for polluting the environment with PCB and possible other contaminants.

"The goal is to create a trust," Harrah said. "Once we go after these insurance companies and are able to recover, and you're talking some of these insurance companies have pretty good policies out there that we can, hopefully, go after, we would then create a trust for clean-up and/or once we design the trust, whatever falls within the parameters of that trust."

He said that if the responsible companies don't have insurance, an alternative strategy will be developed.

"We're going to have to figure out a way to work with other agencies to try to address the problem," he said, adding that county officials are aware that Minden residents distrust the EPA and DEP.

Minden hosts an EPA Superfund site, Shaffer's Equipment, where PCB was improperly stored and poured onto the ground, both at Shaffer's and at other places in the community, according to Minden residents and former Shaffer employees.

Residents have reported a high number of cancer cases in the community and attribute it to exposure to PCB, which all major world health organizations list as a probable carcinogen. Neither state nor federal health authorities have investigated their claims.

Minden residents say that county officials refused their requests in 2002 to dredge nearby Arbuckle Creek, which federal officials had identified as a pathway for PCB in 1992. The creek regularly floods, they added, carrying PCB into their yards.

Recent EPA testing of Minden properties along Arbuckle showed PCB contamination at both state and EPA actionable levels.

Brandon Richardson, founder of the environmental group Headwaters Defense which successfully pushed the latest round of EPA testing in Minden and the testing at the Fayetteville site, had criticized county officials for responding to trace amounts of PCB contamination at Fayetteville while ignoring Minden for decades — a charge Harrah denied Tuesday.

"My grandparents lived in Minden," Harrah said. "My grandma was the cook at Minden Elementary School for years and years.

"I used to spend nights down there all the time. I'm 38 years old. This problem is older than me.

"It's taken me a little while to get up to speed on it."

He said negotiations with Callaghan started before the Fayetteville PCB soil sample results had been made available in September under a Freedom of Information Act request.

"I didn't know anything about contamination at Fayetteville," Harrah said. "I knew they were testing out there. I didn't think they would find anything."

Harrah said Tuesday that county officials have been corresponding with Callaghan since July, after local businessman Gene Kistler, Dave Arnold of Adventures on the Gorge and others began talks with Callaghan about cleaning up pollution in the county.

"He had met with some folks around here, Gene Kistler, and Dave Arnold, and had been talking about ways to clean up polluted sites in Fayette County, Lochgelly being one of the most interesting," Harrah said. "When he mentioned Lochgelly, I mentioned Shaffer Equipment in Minden, about how can we really address this problem and get this stuff cleaned up.

"So he got in touch with me," Harrah reported. "I had an initial meeting with him, and it just went from there about how can we really clean these places up, instead of putting Band-Aids on them all the time."

Callaghan served as DEP secretary beginning in 2001 under Gov. Bob Wise and is a former Assistant United States Attorney.

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Lodi officials told The Register-Herald Tuesday that the city hired Michael Donovan to fund a clean-up of PCE, a dry cleaning chemical, that had been flushed into the Lodi sanitation system. Under federal environmental laws, Lodi was legally liable for the pollution. 

Donovan is an attorney who has worked with Callaghan to fund clean-up of the chemical MCHM in Putnam County and who serves as Callaghan's co-counsel on two current lawsuits, as a special prosecutor. 

The City of Lodi created its own body for the purpose of prosecuting an environmental clean-up, gaining permission from the California state environmental authority to take over the clean-up effort. 

Lodi officials said that the town council passed an ordinance at Donovan's suggestion and sued insurance companies under the ordinance to pay for the clean-up effort. Donovan was not working on a contingency basis, and the city ran through $4 million to $6 million in its water fund to support Donovan's strategy, according to statements by Lodi officials.

At Donovan's suggestion, city officials then borrowed $15 million at 20 percent interest, plus the London Interbank Offered Rate (LIBOR), which was an additional 8 percent, according to Lodi officials.

One Lodi official said that much of the money was paid to Donovan and environmental consultants.

The City of Lodi ultimately settled with most parties, including Donovan, who later sued the city.

Lodi city attorney Steve Schwabauer remarked, "The City of Lodi's relationship with (Donovan's firm) did not go well."

Schwabauer said that he had been contacted recently by a Fayette County representative regarding Donovan's work in Lodi.

Harrah said he had been aware of Callaghan's association with Donovan.

"If this thing doesn't go the way we want it to, the county has the ability under the contract to get rid of him (Callaghan) at any time at no cost to the county."

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Late Tuesday evening, Richardson said that his group, Headwaters Defense, does not support the county strategy to work with Callaghan.

"I fear that big chunks of this clean-up money, or relocation money, are going to go to this firm," Richardson said. "The strategy that he is mentioning is not coming from the community of Minden or Lochgelly.

"It is not even a strategy that anyone there is considering."

Richardson said those in Minden want to be relocated. A clean-up of the environment after relocation of the people there would be preferable, he said.

He said that his group does not back Callaghan's work in Minden. He added that Callaghan's association with Donovan is a concern, along with the strategy itself.

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