Flexsteel Settles, Ends Decades-long Legal Dispute Over Elkhart Contaminated Groundwater Site

$9.8 million settlement to pay for past and future cleanup of TCE at former RV seat-assembly facility.
November 4, 2022

The former owner of three RV seat-assembly facilities suspected of contributing to a contamination plume that is now a Superfund site in Elkhart agreed to pay $9.8 million to settle allegations it violated state and federal environmental laws.

Flexsteel Industries Inc. agreed to sign a consent decree with state and federal environmental agencies to settle claims the company violated the Comprehensive Environmental Response, Compensation and Liability Act, also known as the Superfund law, and equivalent state laws, by failing to prevent the release of a cancer-causing chemical called trichloroethene, also known as trichloroethylene or TCE; tetrachloroethene, or PCE; and other toxic chemicals.

Flexsteel denied being responsible for the contamination and said in a U.S. Securities and Exchange Commission filing it only signed the agreement because it was in the company’s “best interest.”

Lane Street Groundwater Contamination Superfund site in Elkhart

The settlement pays for part of the cleanup costs already incurred by the U.S. Environmental Protection Agency and the Indiana Department of Environmental Management at the Lane Street Groundwater Contamination Superfund site and will help fund future cleanup efforts.

“This settlement ensures that the responsible party and not the taxpayers fund the cleanup of the [site],” said assistant attorney general Todd Kim of the U.S. Department of Justice’s Environment and Natural Resources Division. “The cleanup funded by this agreement protects the environment and the health of the surrounding community.”

IDEM commissioner Brian Rockensuess called the agreement “great news” for Elkhart residents.

2016 EPA map of Lane Street Groundwater Contamination site plume.

More than 80% of global RV production is done in Elkhart, earning it the unofficial title of “RV Capital of the World.” But the manufacturing output required to keep up with industry demands has taken a toll on workers, residents and the environment.

RVs are essentially homes on wheels and require many more parts and features than standard vehicles. To make those parts and features, companies use chemicals like TCE, a manmade chemical created in the 1920s used for a variety of industrial purposes like making refrigerants, a degreasing solvent for metal equipment, tool cleaners, paint removers, spray adhesives, carpet cleaners and spot removers.

The chemical is useful because it is non-corrosive, nonflammable and easy to recycle, but it has been found to cause kidney cancer, Non-Hodgkin lymphoma and cardiac defects, and it is linked to leukemia, liver cancer, multiple myeloma, end-stage kidney disease, Parkinson disease, scleroderma and other adverse health effects including various prenatal health defects.

TCE contamination is an endemic problem in Elkhart. Dozens of polluted sites known as brownfields dot the city, many of them contaminated with TCE or other volatile organic compounds.

The city is also home to six Superfund sites, the most in the state, all of which are contaminated with TCE and additional similar chemicals. Two contamination plumes that would later become Superfund sites were discovered as IDEM was investigating separate adjacent TCE plumes.

Superfund sites in Elkhart.

One of those is the Lane Street Groundwater Contamination Superfund site.

In 2007, residents of the Meadow Farms neighborhood along Kershner Lane were warned that contamination from the Geocel Corp. sealant, caulking and adhesive manufacturing facility at 2502 Marina Drive had migrated to their neighborhood, potentially contaminating their private drinking water wells.

Mailer sent to Meadow Farms residents in 2008.

An environmental investigation found the presence of PCE, TCE and other contaminants in soil and groundwater at the Geocel facility and, later, dozens of nearby residential properties.

A resident living on neighboring Lane Street concerned about the Geocel contamination submitted well water samples to a private lab, where testing found high levels of TCE and other toxic compounds. But the TCE had a distinct contaminant profile that did not match the contamination found at the Geocel plume.

The resident uncovered completely new TCE contamination from an unknown source.

IDEM investigated, initially finding TCE at levels exceeding drinking water standards at 13 residences, and the agency provided bottled water and installed water filtration systems in those residences. But the plume was migrating to the southwest, potentially contaminating more homes.

To keep residents from drinking or using potentially contaminated water, the EPA hooked many residents to the city’s water systems, and they abandoned their residential wells. According to the agency, one unidentified resident refused to be connected to city water.

The site was added to the National Priorities List, a list of the nation’s most contaminated sites, in 2009.

While the extent of the contamination was being assessed, IDEM also looked for the contamination source. Inspectors collected groundwater samples and visited facilities an industrial park just north of Lane Street and found three facilities that used or stored hazardous substances. One of those facilities belonged to Flexsteel Industries.

Flexsteel Industries acquired Dygert Seating, a vehicle furniture manufacturer, in 1997. The company occupied several buildings in the industrial park north of Lane Street.

The EPA suspected at least one Dygert Seating facility was the source of TCE. The EPA began interviewing company officials, who denied the widespread use of degreasers or solvents.

The company’s former vice president of production, Greg Lucchese, said the company’s maintenance department never had more than a gallon or two of solvent present at any time. The former owner, David Dygert, told the EPA he did not know of any contaminants used while he operated the companies between 1983 and 2007.

In 2011, some residents living in the Lane Street Superfund site filed a lawsuit against Flexsteel, Dygert Seating and company officials, alleging the company used TCE and regularly instructed their employees to illegally dispose of TCE and other solvent waste.

The lawsuit alleged the defendants implemented “schemes” to hide their illegal actions, which included a litany of violations, including mail fraud, interstate wire fraud, obstruction of justice and witness tampering.

As part of the lawsuit, former employees provided written testimony about their experiences. The employees said the company regularly used C-60, a TCE solvent degreaser, which would arrive in 55-gallon drums or in smaller 5- or 10-gallon buckets. The solvent was used to degrease seat frames, clean the glue gun equipment or clean the installation tables.

After rainfall, water would leak in behind the doors and puddle on the floor and under the conveyor belt, where a chemical sheen formed in the puddles due to C-60 that dripped onto the floor, according to one employee. The puddles would be pushed outside using squeegees and push brooms.

According to employee affidavits, Dygert Seating supervisors, including vice president of production Greg Lucchese, would tell employees to dump excess solvent outside the back door of at least one building. Empty TCE containers, rags and other TCE-contaminated equipment were placed in carboard boxes then dumped with general trash into overflowing trash barrels instead of being treated like a hazardous material. The cardboard would often be soaked with TCE before being thrown away.

Employees also said the back of the installation area, where employees would take smoke breaks and dump solvent, was littered with contaminated rags, C-60 cans, car parts and other trash. Workers had to try to avoid cans of C-60 rolling around in the parking lot.

The employee affidavits were used by consulting firm Keramida Inc. as part of IDEM and EPA’s assessment of the source of the contamination.

Keramida founder and CEO Vasiliki Keramida herself also submitted written testimony as the plaintiffs’ expert in the case, which she submitted to the agencies in 2013.

“It is my professional opinion, with a reasonable degree of scientific certainty, that the operations of Dygert/Flexsteel are the source or the major contributing source of the groundwater contamination at the Lane Street Neighborhood,” she said in her affidavit.

Later that year, Flexsteel settled the case for $6.25 million.

EPA and IDEM continued their investigation into the source of the contamination. In March 2016, the EPA sent letters to Flexsteel and two other companies informing them they may be liable for the cleanup.

In October 2022, the U.S. Department of Justice’s Environment and Natural Resources Division and the Indiana Office of Attorney General filed a lawsuit against Flexsteel, alleging the company was responsible for paying for the cleanup.

The company agreed to pay $9.8 million to settle the claim but denies being responsible for the contamination.

“Flexsteel’s independent environmental investigation determined that the source of the contamination was located at another property where Flexsteel did not operate, supporting Flexsteel’s position that it did not cause or contribute to the contamination,” the company said in a SEC filing. “Despite that fact, Flexsteel determined that entering into this agreement, and foreclosing on the liabilities associated with the EPA’s claims, is in the best interest of the company.”

The EPA has chosen to clean up the Lane Street site through a treatment called in-situ groundwater treatment through enhanced bioremediation. The agency will inject nutrients and other compounds into the groundwater to encourage the growth of microorganisms that will eat the TCE and other toxic chemicals and reduce them into harmless compounds.

Flexsteel Settles, Ends Decades-long Legal Dispute Over Elkhart Contaminated Groundwater Site