In a ruling that's left Dundalk-area residents shaking their heads, a federal court has declared that recent owners of the century-old steel-making complex at Sparrows Point can't be made to clean up past contamination of surrounding waters.

U.S. District Court Judge J. Frederick Motz ruled that under the terms of a 2003 bankruptcy sale of the steel mill, the company that bought Sparrows Point from Bethlehem Steel Corp. could not be held liable for any pollution that escaped the 2,300-acre peninsula before that sale.

State and federal regulators had argued that all subsequent owners of Sparrows Point were bound by a 1997 consent decree that required Bethlehem Steel to investigate and remediate any contamination caused by its operations. Severstal, the Russian steelmaker which operated the plant from 2008 until earlier this year, began removing and treating toxic chemicals in the ground water in a handful of spots last year. But the company balked at conducting an extensive search for contaminants in the waters and sediments on the bottom of the Patapsco and Bear Creek, a tributary.

Motz, in a July 5 opinion, did not let Severstal and other recent mill owners completely off the hook, suggesting that the government could require sampling of offshore sediments. And he granted a bid by the Chesapeake Bay Foundation and other environmentalists to intervene in the case.

In a memo to lawyers for all sides, the judge acknowledged that such environmental studies could be very costly, and he suggested that whatever the mill owners might have to spend looking for more contamination might be better devoted to actual cleanup. He gave the parties 45 days to see if they could agree on such a tradeoff.

A lawyer for Severstal declined to comment, as did a spokeswoman for RG Steel LLC, which took over the steel-making operation earlier this year. Dawn Stoltzfus, spokeswoman for the Maryland Department of the Environment, said state officials would work with Severstal and the environmentalists to see if they could agree on an offshore sampling plan.

State and federal regulators plan to meet this month with environmental group representatives, according to Dawn Heron, spokeswoman for the Environmental Protection Agency, but no meeting has been set with any of the mill's current or past owners.

William Pribyl, who lives across Bear Creek from Sparrows Point, said he worried that the ruling may slow cleanup activity at the plant to "a slow trickle." He and others have complained that the 14-year-old consent decree was vague and poorly enforced.

"It is just a sad state of affairs if the past companies and current owner can walk away from this responsibility for a 100 years plus of pollution right under the oversight supervision of the EPA & MDE," Pribyl wrote in an email.

Jon Mueller, the bay foundation's lawyer, said Severstal had previously refused to sample sediments more than 100 yards offshore. If they can't reach an agreement on a broader search for contaminants, he said, "that puts them back to square one." Failing some quick breakthrough, he said, environmentalists want state and federal agencies to go ahead with sampling at taxpayer expense so the full extent of contamination can finally be known.

A $500,000 investigation of the waters and sediments off one corner of Sparrows Point by the Maryland Port Administration found enough toxic contaminants to pose higher-than-normal health risks from long-term exposure for people and wildlife. The port, which released its findings earlier this year, is eyeing the Coke Point area as a possible disposal site for muck dredged from shipping channels in the harbor.

In simultaneous rulings in two related cases, the judge dismissed most of a lawsuit brought by environmental groups and several area residents alleging continuing pollution by the mill's landfills and other operations, while refusing to dismiss another suit brought by an adjoining shipyard over contamination of its dock.

The Chesapeake Bay Foundation, Baltimore Harbor Waterkeeper and residents sued last year, accusing Severstal and its predecessors of polluting waterways and neighboring communities. But Motz declared that under the law citizens may not sue to require cleanup if federal or state regulators are already on the case. He said the 1997 consent decree blocked independent legal action.

The judge did allow the environmental group, however, to pursue claims that the plant's hazardous-waste disposal sites are not adequately regulated and that the facility is violating state laws requiring that mud and storm-water runoff be controlled.

Motz cleared the way, meanwhile, for the owners of the Sparrows Point shipyard to pursue compensation for cleaning up cancer-causing benzene that's leaking into its dock. The shipyard has spent $700,000 to install a treatment system for removing the toxic chemicals, and is spending about $20,000 a month to operate the system, according to Michael Powell, a lawyer for the shipyard's owners, SPS Limited Partnership and SPS35, a limited liability corporation.

Russell Donnelly, an Edgemere resident and longtime critic of the steel plant's pollution, called the liability ruling a "Catch 22."

"You've got to determine where the pollution is, but you don't have to clean it," he said. "That doesn't make sense."

Donnelly said he and other residents are preparing yet another lawsuit seeking damages from Sparrows Point's owners for the impact the pollution has had on people's health, well-being and property.

tim.wheeler@baltsun.com

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