STATE OF INDIANA		)	SS:	BEFORE THE INDIANA DEPARTMENT OF
		)
COUNTY OF MARION		)		ENVIRONMENTAL MANAGEMENT
COMMISSIONER OF THE DEPARTMENT					)
OF ENVIRONMENTAL MANAGEMENT,					)
					)
Complainant,					)
					)
	v.				)	Case No. 2017-24836-H
					)
JACOBSON WAREHOUSE COmpany, inc.					)
					)
Respondent.					)

AGREED ORDER

Complainant and Respondent desire to settle and compromise this action without hearing or adjudication of any issue of fact or law, and consent to the entry of the following Findings of Fact and Order. Pursuant to IC 13-30-3-3, entry into the terms of this Agreed Order does not constitute an admission of any violations contained herein. Respondent’s entry into this Agreed Order shall not constitute a waiver of any defense, legal or equitable, which Respondent may have in any future administrative or judicial proceeding, except a proceeding to enforce this order.

I. FINDINGS OF FACT

1. Complainant is the Commissioner (“Complainant”) of the Indiana Department of Environmental Management (“IDEM”), a department of the State of Indiana created by Indiana Code (“IC”) 13-13-1-1.

2. Respondent is Jacobson Warehouse Company, Inc. (“Respondent”), which owns/operates the facility located at 600 Perry Road, Suite 151 in Plainfield, Hendricks County (“Site”).

3. IDEM has jurisdiction over the parties and the subject matter of this action.

4. Pursuant to IC 13-30-3-3, IDEM issued a Notice of Violation (“NOV”) via Certified Mail to Richard Valitutto, Vice President of XPO Logistics Supply Chain, Inc. and Corporation Service Company, Registered Agent for XPO Logistics Supply Chain, Inc.

5. XPO Logistics Supply Chain, Inc., is an affiliate of Jacobson Warehouse Company, Inc. Jacobson Warehouse Company, Inc. waives Notice of Violation and voluntarily agrees to substitute itself in this case on behalf of XPO Logistics Supply Chain, Inc.

6. Respondent owns/operates Jacobson Warehouse located in Plainfield, Indiana. Respondent specializes in supply chain management, concentrating mainly on transportation and logistics.

7. The subject matter of this Agreed Order pertains to electronic cigarette inventory of NJOY, Inc. (the “Plainfield Inventory”), previously stored at the Site pursuant to a Warehouse Agreement executed by NJOY Inc. (“NJOY”) and Respondent on March 14, 2013.

8. NJOY filed Chapter 11 bankruptcy Case No. 16-12076 in Delaware on September 16, 2016 (the “Bankruptcy Case”).

9. After the filing of the Bankruptcy Case, NJOY continued to operate its business as debtor in possession and to own its assets, including the Plainfield Inventory.

10. On September 20, 2016, NJOY filed a motion in the Bankruptcy Court to sell substantially all of its operating assets (the “NJOY Assets”).

11. By Order dated October 11, 2016, the Bankruptcy Court approved certain bidding procedures that governing the auction of all of the NJOY Assets to the highest and best bidder.

12. On October 26, 2016, NJOY identified the Warehouse Agreement as a contract potentially to be assumed and assigned in connection with the § 363 Sale.

13. On November 2, 2016, an auction of the NJOY Assets was conducted, and Homewood NJOY Acquisition, LLC was identified as the successful bidder (the “Purchaser”).

14. On November 15, 2016, the Bankruptcy Court entered the Order (A) Approving Asset Purchase Agreement and Authorizing the Sale of Assets of the Debtor Outside the Ordinary Course of Business, (B) Authorizing the Sale of Assets Free and Clear of All Liens, Claims, Encumbrances and Interests, (C) Authorizing the Assumption and Sale and Assignment of Certain Executory Contracts and unexpired Leases, and (D) Granting Related Relief (the “Sale Order”).

15. Although November 30, 2016, was originally set as the closing date of the sale, the sale of the NJOY Assets did not close until February 16, 2017 (the “Closing Date”).

16. At all times between October 26, 2016, the date of the Sale Order, and the Closing Date of February 16, 2017, NJOY identified its Warehouse Agreement with Respondent as an executory contract it intended to assume and assign to the Purchaser and represented that all of NJOY’s inventory was to be purchased by the Purchaser.

17. After the Closing Date, on February 21, 2017, NJOY filed a Motion to reject certain executory contracts, including the Warehouse Agreement between Respondent and NJOY pursuant to which the Plainfield Inventory was stored (the “Rejection Motion”).

18. After the Closing Date, on February 23, 2017, NJOY filed Notice of Abandonment of Property, pursuant to which NJOY stated that “it proposes to abandon from the Estate” the Plainfield Inventory (the “Abandonment Notice”). NJOY did not set a deadline for response or set a hearing on the Abandonment Notice.

19. On March 9, 2017 Respondent filed an Objection to the Notice of Abandonment (the “Abandonment Objection”).

20. On April 5, 2017, Respondent filed a Protective Objection to the Rejection Motion.

21. On July 7, 2017, Respondent filed a Motion to Compel Purchaser to pay assumed liabilities for storage and removal or disposition of purchased assets stored at the Site.

22. On July 19, 2017, the Bankruptcy Court entered an Order converting the Bankruptcy Case from Chapter 11 to Chapter 7, and on July 20, 2017, the United States Trustee appointed Jeoffrey L. Burtch as Chapter 7 trustee of NJOY.

23. On August 18, 2017, the Chapter 7 Trustee filed a Reply to the Abandonment Notice. On August 22, 2017, the Chapter 7 Trustee provided IDEM with notice of the Notice of Abandonment and Objection described in paragraphs 18 to 23.

24. On September 13, 2017, IDEM inspected the Site and the Plainfield Inventory.

25. Based on the pleadings related to the Abandonment Notice, after the inspection of the Site on September 13, 2017, IDEM concluded that the Plainfield Inventory could not be sold for its intended purpose, and therefore, the Plainfield Inventory was a hazardous waste. Consequently, on December 21, 2017, pursuant to IC 13-30-3-3, IDEM notified XPO Logistics Supply Chain, Inc. that its storage of the Plainfield Inventory was in violation of certain hazardous waste regulations (the “NOV” referenced above, in paragraph 4). Respondent believed the e-cigarette inventory to be a product and not a waste.

26. In December 2017, Respondent sent some of the Plainfield Inventory to evaluate the Plainfield Inventory for recycling and to determine the cost of such recycling.

27. Also in December of 2017, Respondent discovered a purchaser for the Plainfield Inventory, and in early January, 2018, Cargo Liquidators, LLC (“Cargo Liquidators”) offered to purchase the Plainfield Inventory from the Chapter 7 Trustee.

28. On January 23, 2018, the Chapter 7 Trustee filed a Motion to Sell all of the Plainfield Inventory free and clear of liens and encumbrances (the “Trustee’s Motion to Sell”).

29. Cargo Liquidators represented to the Trustee, the Respondent, and IDEM that Cargo Liquidators was purchasing the Plainfield Inventory for resale in the secondary market for its original intended purchase as electronic cigarettes.

30. Based on Cargo Liquidators’ representations, IDEM agreed to not object to the sale of the remaining Plainfield Inventory to Cargo Liquidators.

31. On January 25, 2018, the Bankruptcy Court entered an Order approving the Trustee’s Motion to Sell, and thereafter, all of the remaining Plainfield Inventory was removed from the Site and shipped to Cargo Liquidators.

32. 329 Indiana Administrative Code (“IAC”) 3.1 incorporates certain federal hazardous waste management requirements found in 40 Code of Federal Regulations (“CFR”) Parts 260 through 270 and Part 273, including those identified below.

33. Respondent’s entry into this Agreed Order shall not constitute a waiver of any defense, legal or equitable, which Respondent may have in any future administrative or judicial proceeding, except a proceeding to enforce this order. During the investigation, including an inspection on September 13, 2017, conducted by a representative of IDEM, the following violations were found:

a. Pursuant to 40 CFR 262.11, a person who generates a solid waste must determine if that waste is hazardous.

As noted during an inspection on September 13, 2017, Respondent failed to make a waste determination on the abandoned e-cigarette warehouse inventory. The e-cigarette inventory was determined to be waste because it was abandoned and nicotine contained in the e-cigarette products is an acutely toxic hazardous waste. IDEM was made aware of the contents of the NJOY inventory prior to the inspection and confirmed this information during the inspection; therefore, a waste determination is no longer necessary.

Respondent believed the e-cigarette inventory to be a product and not a waste.

b. Pursuant to 329 IAC 3.1-1-10, every hazardous waste generator, transporter, or owner or operator of a hazardous waste facility shall notify the commissioner of its hazardous waste activities.

As noted during an inspection on September 13, 2017, Respondent failed to notify IDEM and obtain an EPA identification number when they became a large quantity generator of hazardous waste.

Respondents have notified IDEM and obtained an EPA identification number as a large quantity generator of hazardous waste, although Respondent believed the e-cigarette inventory to be a product and not a waste.

c. Pursuant to 40 CFR 262.34(b), a generator who accumulates hazardous waste for more than 90 days is an operator of a storage facility and is subject to the requirements of 40 CFR Part 264 and the permit requirements of 40 CFR Part 270 unless he has been granted an extension to the 90-day period.

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent accumulated the e-cigarette inventory on site for more than 90 days without a permit. A RCRA permit is required for the treatment, storage, and disposal of any hazardous waste.

d. Pursuant to 40 CFR 262.34(a)(1)(i) referencing 40 CFR 265.174, a generator must inspect areas where containers are stored, at least weekly, looking for leaks and deterioration caused by corrosion or other factors.

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent failed to conduct weekly inspections.

e. Pursuant to 40 CFR 262.34(a)(2), a generator may accumulate hazardous waste on-site for 90 days or less without a permit, provided that the date when the accumulation begins is clearly marked and visible for inspection on each container.

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent failed to clearly mark containers with the accumulation start date.

f. Pursuant to 40 CFR 262.34(a)(3), a generator may accumulate hazardous waste on-site for 90 days or less without a permit, provided that, while being accumulated on-site, each container and tank is labeled or marked clearly with the words "Hazardous Waste".

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent failed to clearly mark/label each container with the words “Hazardous Waste”.

g. Pursuant to 40 CFR 262.34(a)(4) referencing 40 CFR 265.35, a generator must maintain aisle space to allow the unobstructed movement of personnel, fire protection, equipment, spill control equipment, and decontamination equipment to any area of facility operation in an emergency.

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent failed to stack boxes/pallets in a manner that allows for unobstructed movement to any area of the facility.

h. Pursuant to 40 CFR 262.34(a)(4) referencing 40 CFR 265.51, a generator must have a contingency plan for the facility.

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent failed to develop a hazardous waste contingency plan.

i. Pursuant to 40 CFR 262.34(a)(4) referencing 40 CFR 265.16(a), (b), & (c), facility personnel must complete a program of classroom instruction or on-the-job training that teaches them to perform their duties in compliance with the hazardous waste management rules. Employees must be trained within six months after their date of hire and must take part in an annual review of the initial training.

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent failed to provide hazardous waste training to employees.

j. Pursuant to 40 CFR 270.1(c), a permit is required for the treatment, storage and disposal of any hazardous waste as identified or listed in 40 CFR Part 261.

Respondent believed the e-cigarette inventory to be a product and not a waste. Respondent stored hazardous waste for more than 90 days without a permit. A RCRA permit is required for the treatment, storage, and disposal of any hazardous waste.

34. Based on the pleadings related to the Abandonment Notice, after the inspection of the Site on September 13, 2017, IDEM concluded that the Plainfield Inventory could not be sold for its intended purpose, and therefore, the Plainfield Inventory was a hazardous waste. Consequently, on December 21, 2017, pursuant to IC 13-30-3-3, IDEM notified Respondent that its storage of the Plainfield Inventory was in violation of certain hazardous waste regulations (the “NOV” referenced above, in paragraph 4).

35. In recognition of the settlement reached, Respondent waives any right to administrative and judicial review of this Agreed Order.

36. Respondent’s entry into this Agreed Order shall not constitute a waiver of any defense, legal or equitable, which Respondent may have in any future administrative or judicial proceeding, except a proceeding to enforce this Agreed Order.

37. On March 29, 2019, IDEM issued a Notice and Order of the Commissioner (“Commissioner’s Order”) to XPO Logistics Supply Chain, Inc., pursuant to IC 13-30-3-4, IC 13-30-3-10, and IC 13-30-3-11 based on the violations IDEM alleged in the NOV.

38. On April 17, 2019, Jacobson Warehouse Company, Inc. d/b/a/ XPO Logistics, and XPO Logistics Supply Chain, Inc. filed a Petition for Administrative Review of the Commissioner’s Order with the Office of Environmental Adjudication, which has been pending as Cause No. 19-S-E-5059.

39. The parties agree that entry into this Agreed Order will promote judicial economy, will conserve the parties’ resources, is protective of human health and the environment and is otherwise in their respective best interests.

II. ORDER

1. This Agreed Order shall be effective (“Effective Date”) when it is approved by Complainant or Complainant’s delegate, and has been received by Respondent. This Agreed Order shall have no force or effect until the Effective Date.

2. All submittals required by this Agreed Order, unless Respondent is notified otherwise in writing by IDEM, shall be sent to:

Amy Elliott, Enforcement Case Manager

Office of Land Quality

Indiana Department of Environmental Management

100 North Senate Avenue

Indianapolis, IN 46204-2251

3. Respondent is assessed and agrees to pay a civil penalty of eleven thousand dollars ($11,000). Said penalty amount shall be due and payable to the Environmental Management Special Fund within thirty (30) days of the Effective Date; the 30^th day being the “Due Date”.

4. Civil penalties are payable by check to the “Environmental Management Special Fund.” Checks shall include the Case Number of this action and shall be mailed to:

Indiana Department of Environmental Management

Accounts Receivable

IGCN, Room 1340

100 North Senate Avenue

Indianapolis, IN 46204

5. In the event that the monies due to IDEM pursuant to this Agreed Order are not paid on or before their Due Date, Respondent shall pay interest on the unpaid balance at the rate established by IC 24-4.6-1. The interest shall be computed as having accrued from the Due Date until the date that Respondent pays any unpaid balance. Such interest shall be payable to the Environmental Management Special Fund, and shall be payable to IDEM in the manner specified in Paragraph 4, above.

6. Having resolved all issues involved in this matter, the parties agree that the Commissioner’s Order and the appeal thereto can now be dismissed. Within fourteen (14) days of the Effective Date of this Agreed Order, IDEM and Jacobson Warehouse Company, Inc., d/b/a/ XPO Logistics, and XPO Logistics Supply Chain, Inc., shall file an Agreed Entry with the Office of Environmental Adjudication that recognizes that this Agreed Order supersedes the Commissioner’s Order, and thus the Commissioner’s Order, the Petition for Administrative Review, and Cause No. 19-S-E-5059 should be dismissed.

7. This Agreed Order shall apply to and be binding upon Respondent and its successors and assigns. Respondent’s signatories to this Agreed Order certify that they are fully authorized to execute this Agreed Order and legally bind the party they represent. No change in ownership, corporate, or partnership status of Respondent shall in any way alter its status or responsibilities under this Agreed Order.

8. In the event that any terms of this Agreed Order are found to be invalid, the remaining terms shall remain in full force and effect and shall be construed and enforced as if this Agreed Order did not contain the invalid terms.

9. Respondent shall provide a copy of this Agreed Order, if in force, to any subsequent owners or successors before ownership rights are transferred. Respondent shall ensure that all contractors, firms and other persons performing work under this Agreed Order comply with the terms of this Agreed Order.

10. This Agreed Order is not and shall not be interpreted to be a permit or a modification of an existing permit. This Agreed Order, and IDEM’s review or approval of any submittal made by Respondent pursuant to this Agreed Order, shall not in any way relieve Respondent of its obligation to comply with the requirements of its applicable permits or any applicable Federal or State law or regulation.

11. Complainant does not, by its approval of this Agreed Order, warrant or aver in any manner that Respondent’s compliance with any aspect of this Agreed Order will result in compliance with the provisions of any permit, order, or any applicable Federal or State law or regulation. Additionally, IDEM or anyone acting on its behalf shall not be held liable for any costs or penalties Respondent may incur as a result of Respondent’s efforts to comply with this Agreed Order.

12. Nothing in this Agreed Order shall prevent or limit IDEM’s rights to obtain penalties or injunctive relief under any applicable Federal or State law or regulation, except that IDEM may not, and hereby waives its right to, seek additional civil penalties for the same violations specified in the NOV.

13. This Agreed Order shall remain in effect until IDEM issues a Resolution of Case letter to Respondent.

TECHNICAL RECOMMENDATION:				RESPONDENT:
Department of Environmental Management
By: _________________________				By: _________________________
	Linda L. McClure, Chief
	Land Enforcement Section			Printed: ______________________
Office of Land Quality
				Title: ________________________
Date: __________________				Date: _______________________
				COUNSEL FOR RESPONDENT:
				By: ________________________
				Date: ______________________
APPROVED AND ADOPTED BY THE INDIANA DEPARTMENT OF ENVIRONMENTAL
MANAGEMENT THIS		______	DAY OF	________________________,	20__.
				For the Commissioner:
				Signed 1/20/2020
				______________________
				Peggy Dorsey, Assistant Commissioner
				Office of Land Quality