Petition for A Writ of Certiorari — Production Plated Plastics, Inc. v. United States

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91-1269 Baprems Court, U.S. |

: 2 FILED

May 20 1992

DRG CE OF Te aes

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In The

Supreme Court of the United States

October Term, 1991

PRODUCTION PLATED PLASTICS, INC.,

MICHIGAN CITY PLASTICS CO., INC.,

AND MICHAEL J. LADNEY,

Petitioners,

UNITED STATES OF AMERICA, Frank J.

Kelley, Attorney General for the

State of Michigan, ex rel.; Michigan

Department of Natural Resources

Commission; Gordon E. Guyer,

Director of the Michigan Department

of Natural Resources,

Respondents.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

PETITION FOR WRIT OF CERTIORARI

Douc.as W. VaN Essen (P33169)

Attorney for Petitioners

Business Address & Telephone:

Suite 500, 200 Ottawa Ave., NW

Grand Rapids, Michigan 49503

(616) 459-1171

(Additional Counsel Listed On Inside Cover)

COCKLE LAW BRIEF PRINTING CO,, (800) 225-6964

OR CALL COLLECT (402) 342-283

ELuot Eper

MICHAEL SHIPARSKI

STUART HERSCH

Attorneys for Respondent-

United States of America

Business Address & Telephone:

P.O. Box 7611, Ben Franklin Station

Washington, D.C. 20044

(202) 514-1307

STEVEN E. CHESTER

Assistant Attorney General

Attorney for Respondent-

State of Michigan

Business Address & Telephone:

Environmental Protection Division

P.O. Box 30212

Lansing, MI 48909

(517) 373-7780

STATEMENT OF QUESTIONS PRESENTED

FOR REVIEW

Under Sup.Ct.R. 14.1(a), Petitioner submits the fol-

lowing issues for review:

1. Did Congress intend that individual corporate

officers be jointly and severally liable for corporate viola-

tions of the Resource Conservation and Recovery Act

(“RCRA”), 42 U.S.C. § 6901, et seq.?

2. Assuming for the sake of argument that Congress

intended that individual corporate officers can be jointly

and severally liable for corporate RCRA violations, is

such liability dependent upon personal participation in

the corporate decisions which produced the RCRA viola-

tion?

LIST OF PARTIES

Pursuant to Sup.Ct.R. 14.1(b), the following are par-

ties in this action:

Plaintiffs: | United States of America; Frank J.

Kelley, Attorney General for the

State of Michigan, ex rel; Michigan

Department of Natural Resources

Commission; Gordon E. Guyer,

Director of the Michigan Depart-

ment of Natural Resources

Defendants: Production Plated Plastics, Incor-

porated; Michigan City Plastics,

Incorporated; Michael Ladney;

Marguerite Ladney

Third-Party Defendants: Amerace Corporation

iii

TABLE OF CONTENTS

Page

STATEMENT OF QUESTIONS PRESENTED FOR

EMERG EN bad GA SSAA SN EDR eh bebe dsnesecess i

ee | iv

JURISDICTION AND OPINIONS BELOW .......... 2

STATEMENT OF CASE (FACTS) ..............0000- 3

STATUTORY PROVISIONS INVOLVED............. 8

ARGUMENT/INTRODUCTION .................... 9

I. RCRA AND ITS REGULATIONS ARE NOT

INTENDED TO IMPOSE JOINT AND SEVERAL

LIABILITY ON CORPORATE OFFICERS....... 11

Il. THE TRIAL COURT CLEARLY DID NOT

REVIEW THE EVIDENCE IN A LIGHT MOST

FAVORABLE TO MR. LADNEY WHEN IT CON-

CLUDED THAT LIKE PPP, MR. LADNEY WAS

THE PERSON RESPONSIBLE FOR THE OVER-

ALL OPERATION OF THE PPP LAGOONS.... 23

ee ree 29

TABLE OF AUTHORITIES

Page

Cases:

Anderson v. Butz, 550 F.2d 459 (9th Cir. 1977)........ 14

Berger v. Columbia Broadcasting System, Inc., 453

ee Se ee WON iss Cink yks ceceece eee rinics 9

Caminetti v. United States, 242 U.S. 470 (1917) ....... 13

Edmonds v. Campagnie Generale Transatlantique, 443

eG PE yee, Peer Tee ET Tee ee 18

In the matter of Southern Timber Products, Inc.,

RCRA (3008) Appeal No. 89-2..7........... 16, 17, 20

Joslyn v. T.L. James & Co., 696 F.Supp. 222 (W.D. La.

1988) aff’d 893 F.2d 80 (5th Cir. 1990) ..... 10, 12, 18

Kelley v. Arco Industries, 723 F.Supp. 1214 (W.D.

SOU: WHEE < k46 SNA aes hesecenbeanenwes 11, 21, 22, 28

Midlantic National Bank v. New Jersey, 474 U.S. 494

| Brrr rT ee eee pe eee 17

Moline Properties v. Commissioner, 319 U.S. 436

SE 5 as 666 cae KL EAS AE EER EO OE Rane od 9

New York v. Shore Realty, 759 F.2d 1032 (2nd Cir.

| Err rer Tere Se er rT ee OEE Somer 12

Schick v. Steiger, 583 F.Supp. 841 (E.D. Mich. 1984) .... 25

United States v. Environmental Waste Control, Inc.,

Fe WI. SUPE ap biiknne pend aenannnedonkeese- 15, 28

United States v. Northeastern Pharmaceutical (NEP-

ACCO) Co., 840 F.2d 726 (8th Cir. 1986)........ 11, 28

United States v. Production Plated Plastics, Inc., 742

F.Supp. 956 (W.D. 1990); 762 F.Supp. 722 (W.D.

Pee ere er eee passim

United States v. Ron Pair Enterprises, Inc., 489 U.S.

Ee SOPRA K 06 6 ens can ba ceed nenceckexesyavenweses 13

TABLE OF AUTHORITIES -— Continued

Page

STATUTES:

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USC 4M ee 11, 12

TABLE OF AUTHORITIES - Continued

Page

MISCELLANEOUS:

ee ee eer Ter rere errr ee 8, 13

45 Fed. Reg. 33301 (May -19, 1980)........... 14, 15, 16

Donald Mitchell, Jr., “Josyln v. James Returning to

the Mainstream of American Law” 5 Toxics Law

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No.

In The

Supreme Court of the United States

October Term, 1991

PRODUCTION PLATED PLASTICS, INC.,

MICHIGAN CITY PLASTICS CO., INC.,

AND MICHAEL J. LADNEY,

Petitioners,

UNITED STATES OF AMERICA, Frank J.

Kelley, Attorney General for the

State of Michigan, ex rel; Michigan

Department of Natural Resources

Commission; Gordon E. Guyer,

Director of the Michigan Department

of Natural Resources,

Respondents.

Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Sixth Circuit

PETITION FOR WRIT OF CERTIORARI

Petitioner, Michael Ladney, by and through his attor-

neys, Law, Weathers & Richardson of Grand Rapids,

Michigan, hereby petitions the Court for a writ of cer-

tiorari so that the United States Supreme Court may

review the questions presented for review for the reasons

contained herein.

JURISDICTION AND OPINIONS BELOW

Under Sup.Ct.R. 14.1(d) and (e), petitioner notes the

official and unofficial reports of decision below and the

grounds upon which the jurisdiction of this Court is

invoked:

1. Ina joint complaint, the plaintiff-appellee, United

States, originally brought an action pursuant to Sections

3308(a) and (g) of RCRA, being 42 U.S.C. §6928(a) and (g),

and the plaintiff-appellee, state of Michigan brought this

action pursuant to Section 7002(a) of RCRA, 42 U.S.C.

§6972(a), as well as Section 48 of the Michigan Hazardous

Waste Management Act (“HWMA”), MCL 299.548; MSA

13.30(48). Both governmental plaintiffs sought permanent

injunctive relief and the imposition of civil penalties.

Accordingly, the United States District Court for the

Western District of Michigan, Southern Division had

jurisdiction over this case under 28 U.S.C. §1331, §1345,

and §1355.

2. The district court granted a partial summary dis-

position under Fed. R. Civ. P. 56, finding corporate and

individual liability, in an opinion dated May 14, 1990.

United States v. Production Plated Plastics, Inc., 742 F. Supp.

956 (W.D. Mich 1990) See A-1.! The district court issued

further summary disposition relief on the issue of

remedies through an opinion dated January 24, 1991.

United States v. Production Plated Plastics, 762 F. Supp. 722

(W.D. Mich 1991). See A-18. This latter opinion was con-

verted into a permanent injunction which was entered by

the court on April 25, 1992, and timely appealed by the

Defendants-Appellants, Michael Ladney, Production

Plated Plastics, (“PPP”) and Michigan City Plastics,

(“MCP”) on May 24, 1991. Accordingly, the Defendants-

Appellants’ appeal to the 6th Circuit Court of Appeals

was timely. See 28 U.S.C. §2107, Fed. R. App. P. 4.

”

1 The citation form “A-__

the appendix to this petition.

refers to the page number in

3. The United States Circuit Court of Appeals for

the 6th Circuit affirmed the trial court orders and opin-

ions through a two page, unpublished opinion dated and

entered on February 20, 1992. See A-46. Accordingly, the

present petition for writ of certiorari is timely and the

Supreme Court has jurisdiction to accept the issues pre-

sented for review pursuant to 28 U.S.C. §2101, 28 U.S.C.

§2106, and Sup.Ct.R. 13.

STATEMENT OF CASE (FACTS)

Production Plated Plastics (“PPP”) is a Michigan cor-

poration with one plant located near the Village of Rich-

land, Michigan, in a rural, agricultural area

approximately ten (10) miles from the city of Kalamazoo,

Michigan. PPP-was a chrome plating plastic part manu-

facturer whose primary business was automotive supply.

Michigan City Plastics (“MCP”) is an Indiana corporation

with one plant in Michigan City, Indiana. MCP was also

an automotive plastic part manufacturer, and owned all

of PPP’s stock. Michael Ladney is a 74 year old resident

of Florida who owns 68% of MCP’s stock and is the

president of both companies. See A-3, 4. There are no

other parent or subsidiary companies to be disclosed

pursuant to Sup.Ct.R. 29.1.

PPP purchased the Richland plant in 1969 from Amerace

Corporation which built the facility, including its waste

lagoons. The waste lagoons were necessary because the plant

had no access to city sewer services. Approximately 10% of

the solid waste (“sludge”) in the lagoons was generated by

Amerace. PPP had wanted to dispose of its sludge off-site

but instead was instructed by the State Department of Natu-

ral Resources (“MDNR”) to discharge all of its sludge and

process water wastes on-site. At all times, PPP operated the

lagoons with a state discharge permit. In fact, at all times, all

of PPP’s waste was pretreated under a state approved meth-

odology which supposedly rendered the waste inert. In fact,

the sludge itself was a by-product of this pretreatment pro-

cess.

In 1977, before RCRA was implemented, groundwa-

ter contamination was discovered under the PPP plant

and the plaintiff State of Michigan through its Depart-

ment of Natural Resources (“MDNR”) sued PPP in

Kalamazoo County Circuit Court to remediate this prob-

lem. In 1978, PPP and the State executed a state court

consent decree which was to “phase” the closure of the

plating sludge lagoons. 742 F. Supp. at 958. From that

date, no new sludge was deposited on the site, although

until a sewer line could be extended from the City of

Kalamazoo, (a task finally completed in late 1987), the

Company had no option but to use the lagoons for

treated process water and cleansed water from a purge

system which was also installed and operated pursuant

to the State Court Order. This “State Court Closure Plan”

required the Company to secure an extension of city

sewer service to the plant, as well as to gradually remove

all existing sludge on the property and purge and clean

the groundwater contamination.

All phases of this State Court Closure Plan were

underway in 1980 when federal RCRA provisions became

applicable to the site. PPP complied with RCRA’s require-

ments by submitting a RCRA “Part A” application. Origi-

nally, PPP’s application listed Mr. Ladney’s name as the

“Installation’s legal owner”; however, a revised Part A

application which was accepted by the federal govern-

ment, substituted “Production Plated Plastics, Inc.” as the

owner and operator of the facility. 742 F.Supp. at 959, 963;

A-13.

The district court found that PPP lost its “interim

status” in November of 1985 since it was unable to satisfy

“Part B” pf the RCRA application, which was then due.

PPP couldn’t satisfy Part B’s obligations because PPP

lacked the’ ability to demonstrate sufficient financial

resources to close the site. 742 F. Supp. at 959; A-8. When

PPP was unable to produce such financial assurances, it

became “obligated” under RCRA to provide within 15

days a closure plan which would require that all waste to

be removed from the site within 180 days and which,

ironically, also required proof of adequate financial assur-

ances to insure the removal (closure) of all waste within

180 days. 742 F. Supp. at 961; A-8.

Although PPP did not meet the 15 day closure plan

submission requirement, it submitted a RCRA closure

plan on March 26, 1986, and revisions on October 14, 1986

and July 29, 1987. 742 F. Supp. at 959. These PPP prepared

RCRA closure plans coordinated the closure details and

timetables with the State Court Closure Plan. Although

the plaintiff, United States of America (“USEPA”) advised

PPP that its plan was generally acceptable, it noted that

PPP failed to submit the required financial assurances

which, ironically, necessitated the submission of the plan

in the first place. For this reason, in April of 1987, the

USEPA and MDNR sued PPP and Michael Ladney in an

effort to compel the production of such financial assur-

ances. Despite earlier USEPA communications which

indicated that the State Court Closure Plan’s rate of

removal was acceptable, the Complaint also sought the

removal of all waste within 180 days. See A-3, 4.

In an opinion on May 14, 1990, the Federal District

Court for the Western District of Michigan granted sum-

mary disposition to the governmental plaintiffs under

Fed. R. Civ. P. 56. The court found that PPP had violated

RCRA’s requirement to submit a closure plan within 15

days of the loss of interim status and to complete partial

and final closure activities within 180 days after the

State’s approval of the closure plan. 742 F. Supp. at 961;

A-8.

Relying on the “imminent hazard” section of RCRA,

a RCRA section under which the governmental plaintiffs

were not even suing, the district court also held that

RCRA imposes personal joint and several liability on

corporate officers and employees who “actually make

corporate decisions”, apparently irrespective of whether

such decisions relate to hazardous waste management.

742 F. Supp. at 963; A-12, 13.

Under its enumerated standard, the district court

found Mr. Ladney liable because as the President of PPP

there is a “natural and reasonable inference that he had

an important say in or actually made the corporate deci-

sions.” 742 F. Supp. at 963; A-14. The district court also

relied on an Affidavit of Mr. Ladney which the court

believed had been submitted in the present case,

although it actually had been submitted in the state court

case. The district court interpreted this affidavit as con-

taining an assertion by Mr. Ladney that he had ultimate

decision-making authority, although no such assertion is

contained in the Affidavit. Finally, the court relied on the

deposition testimony of PPP’s environmental specialist,

Steve Noble, wherein he indicated his belief that Mr.

Ladney was a corporate officer of PPP and that he was in

daily telephone contact with the plant’s manager, Mr.

William Evans. 742 F. Supp. at 963; A-14.

In reality, both Mr. Noble and the other environmen-

tal specialist whose deposition was submitted, James

Breitenbach, testified that they had never met Mr. Ladney

and had never talked to him. Neither of these two indi-

viduals nor Mr. Evans, the plant manager linked Mr.

Ladney to any waste management decision made by PPP

generally, nor to the specific actions or inactions which

the district court found to have violated RCRA See

Exhibits to R73 —- Noble Deposition, A-49-51; Breitenbach

Deposition, A-52-54.

Despite the fact that the defendants pled impos-

sibility to perform and demonstrated their financial

inability to remove the 7600 cubic yards of sludge on the

site within 180 days, and despite the court’s earlier indi-

cation that it would consider such arguments when fash-

ioning relief, see 742 F. Supp. at 961; A-10, the district

court in a January 24, 1991 Opinion, granted the govern-

mental plaintiff’s request under Fed. R. Civ. P. 56 for

permanent, mandatory injunctive relief compelling the

defendants to remove the hazardous waste on the site

within 180 days, establish a groundwater monitoring plan

and establish a post-closure plan. See A-18.

At this point in time, the defendants found them-

selves in an impossible situation. MCP had ceased opera-

tions in 1987 and had no liquid assets. PPP had ceased

operations in 1989 and had virtually no liquid assets. Mr.

Ladney lacked sufficient cash or liquidity to pay for the

removal of all sludge on the property.

Fortunately, in the spring of 1991, a company in

which Mr. Ladney is a principal and which holds certain

intellectual property rights obtained a one-time

$3,000,000 royalty payment on technology totally unre-

lated to PPP or MCP. This technology has been developed

by Mr. Ladney in the last few years, independent from his

activities with PPP or MCP. This intellectual property

company loaned Mr. Ladney three million dollars for the

PPP clean-up.

In light of these practical problems, the district

court’s January 24, 1991 Opinion was not memorialized

into a permanent injunction order until April 25, 1991.

See A-42.

All the sludge was removed from the site in the

summer of 1991, although the defendants ran out of

funds before 2,000 yards of contaminated soils could be

removed. An alternate groundwater plan has been sub-

mitted and approved by the USEPA and the MDNR,

although the defendants lack the funds to implement it.

In addition, on the site, post-closure and corrective action

are likely tasks, with at least post-closure directed by the

April 25, 1991 Order. These are expensive projects for

which Mr. Ladney, PPP and MCP lack the operating capi-

tal. Furthermore, the governmental plaintiffs are intent

on seeking the imposition of RCRA penalties and fines

against all defendants.

In a two page per curiam opinion issued on February

20, 1992, the Sixth Circuit Court of Appeals affirmed the

district court rulings without discussion or analysis of the

personal liability issues. See A-46, 47.

STATUTORY PROVISIONS INVOLVED

Pursuant to Sup.Ct.R. 14.1(f), the petitioner cites the

following provisions of RCRA which are involved in this

issue:

Not later than 18 months after October 21, 1976,

the administrator shall promulgate regulations

requiring each person owning or operating a

facility for the treatment, storage or disposal of

hazardous waste identified or listed under this

Sub-chapter to have a permit issued pursuant to

this section. Such regulations shall take affect on

the date provided in Section 6930 of this Title

and upon and after such date the treatment,

storage or disposal of any such hazardous waste

is prohibited except in accordance with such a

permit.

42 U.S.C. §6925(a).

The USEPA has promulgated rules defining the terms

“operator” and “owner” as follows:

“Operator” means the person responsible for

the overall operation of a facility.

“Owner” means the person who owns the facil-

ity or part of a facility.

40 C.F.R. §260.102.

2 Mr. Ladney has also been summarily adjudged person-

ally liable under Michigan Hazardous Waste Management Act

(“HWMA”), M.C.L. §299.548. In all material ways, this state

statute mirrors RCRA. For example, M.C.L. 299.555(1) defines

“operator” as “ ... the person responsible for the overall

operation of a disposal, treatment, or storage facility with

approval of the director either by contract or license.” More-

over, the rules promulgated by the MDNR under the HWMA

provides the following definitions:

(Continued on following page)

ARGUMENT

INTRODUCTION

In American business law, the distinction between

corporate debt and personal obligation is among the most

fundamental precepts:

It is elemental jurisprudence that a corporation

is a creation of the law, endowed with a person-

ality separate and distinct from that of its

Owners, and that one of the principal purposes

for legal sanctioning of a separate corporate per-

sonality is to accord stockholders an oppor-

tunity to limit their personal liability.

Berger v. Columbia Broadcasting System, Inc., 453 F. 2d 991,

994 (Sth Cir. 1972).

There is no mystery in the motivation for this doc-

trine of limited liability. All of us want to protect our

personal goods and effects from the liabilities of com-

merce. By satisfying this basic need, this principle of

separating corporate liabilities from those of the individ-

uals who own its shares, occupy its boardrooms, or

orchestrate its commercial affairs has so fueled our eco-

nomic system that this Court itself has taken judicial

notice of its “useful purpose in business life.” See, e.g.

Moline Properties v. Commissioner, 319 U.S. 436, 439 (1943).

Despite its traditional, elemental, and useful nature,

the doctrine of limited liability of corporate officers for

the acts of the corporation is presently under an intense

(Continued from previous page)

“Operator” means the person responsible for the

overall operation of the facility.

“Owner” means the person who owns a treatment,

storage or disposal facility or part of such a facility,

including the title holder of the land in which the

facility is located.

1985 A.A.C.S. R299.9106(d) and (e).

judicial attack. This attack is virulent because it is occur-

ring within the most costly theater of liability facing

corporate America in our generation, namely environ-

mental liability.

This attack is also corrupted with a false passion

because although emblazoned with “polluters will pay”

rhetoric, the opinions of most federal courts throughout

the country on this issue actually impose liability on

employees for the waste disposal practices of their corpo-

rate employers without any proof of personal negligence,

individual fault, or even, such as in the present case,

without any evidence that the official played a role in the

corporate decisions leading to the alleged statutory viola-

tions.

This novel and unprecedented assignment of no-fault

personal liability for the strict liabilities of a corporation

is also insidious because none of the participant cases are

based on a reasoned analysis of the statutes or regula-

tions involved. In reality, no proper jurisprudential anal-

ysis could support such a finding.

Only one circuit has refused to join this self-propa-

gating judicial body. Lighting a beacon for the rules of

statutory interpretation, the Fifth Circuit has firmly

declined to assign employee and officer liability for the

statutory environmental violations of a corporation, at

least absent more express Congressional intent. Joslyn.

Manufacturing Co. v. T.L. James & Co., Inc., 893 F.2d 80 (5th

Cir. 1990).3

As this Court will see below, certiorari is therefore

justified in this case on the basis that there is now a split

of authority in the federal courts of appeals. See Sup.Ct.R.

3 Joslyn is a CERCLA case, but its rationale is equally

applicable to RCRA and given the uniform judicial practice of

treating personal liability under the statutes equally, see dis-

cussion infra at p. 11, the Joslyn decision should be considered

to be in conflict with the Sixth Circuit Court of Appeals’

decision in this case for purposes of Sup.Ct.R. 10.1(a).

iii

10.1(a). Certiorari is also warranted because the courts

finding personal liability for corporate RCRA violations,

including the ones here, have violated this Court’s prece-

dent regarding the interpretation of statutes. See

Sup.Ct.R. 10.1(c).

The most compelling reason, however, for this Court

to review the federal question presented in this case is

that the specter of personal liability for the enormous

environmental liabilities of corporate America is so

potentially deleterious to our system of capital invest-

ment and business development that this Court, our only

true national court, should evaluate whether such lia-

bility exists, and if it does, articulate the standards defin-

ing the assignment of such liability. See Sup.Ct.R. 10.1(c).

RCRA AND ITS REGULATIONS ARE NOT

INTENDED TO IMPOSE JOINT AND SEVERAL LIA-

BILITY ON CORPORATE OFFICERS

The federal courts have uniformly treated liability for

individual officers, directors and owners of corporations

under the Resource Conservation and Recovery Act

(“RCRA”), 42 U.S.C. 6901, et seq. and the Comprehensive

Environmental Response Compensation Liability Act

(“CERCLA”), 42 U.S.C. 9601 et seq. as subject to the same

standards. Cf. United States v. Northeastern Pharmaceutical

(“NEPACCO”) Co., 810 F.2d 726, 745 (8th Cir. 1986);

Accord, Kelley v. Arco Industries, 723 F. Supp. 1214, 1218

(W.D. Mich. 1989). This commonality springs from the

fact that these are the nation’s two principal statutes

governing the generation, disposal and environmental

impact of hazardous substances, and the fact that Con-

gress uses the terms “owner” and “operator” as liability

triggers in both statutes. See 42 U.S.C. § 6925(a) and 42

U.S.C. § 9601(20)(a).

CERCLA defines “owner” and “operator” in a circu-

lar fashion:

The term ‘owner or operator’ means. . . any

person owning or operating such a [hazardous

substance] facility.

42 U.S.C. § 9601(20)(a) (bracketed information added).

RCRA does not even attempt a definition of these terms.

Neither statute contains any legislative history to suggest

that these operative terms were designed to subject cor-

porate employees to joint and several liability with the

corporation.

Nevertheless, except in one case, all the federal

courts considering this issue have blindly found that this

definition applies to the violating corporation and also to

a variety of corporate employees, officers or share-

holders, although efforts to draw distinctions among such

personnel have produced a bevy of different judicial and

administrative enforcement standards.

The cases finding joint and several employee liability

all have their genesis in New York v. Shore Realty, 759 F.2d

1032 (2nd Cir. 1985), which found shareholder liability

based on a form of a priori logic, rather than a statutory

interpretation analysis. Indeed, although upholding the

corporate form in another part of the opinion, the second

circuit completely failed to analize the effect of the corpo-

rate form on the terms “person”, “owner” and “opera-

tor”. Since that case, each federal decision reaching the

same result has largely operated by a “gestalt” methodol-

ogy. They string cite Shore Realty and succeeding cases

which rely thereon, rather than perform their own statu-

tory analysis. In effect, Shore Realty founded an analytical

abyss and the subsequent federal courts have felt com-

pelled (or probably relieved) by precedent to move lock-

step into the jurisprudential void.

4 This history of stare decisis run afoul is well chronicled by

commentator Donald B. Mitchell, Jr. in “Joslyn v James, Retur-

ning to the Mainstream of American Law”, 5 Toxics Law

Reporter 1647 (May 22, 1991).

Despite the self-authenticating and self-deceiving

body of law to the contrary, an application of the rules of

statutory construction leaves no room for a conclusion

that Congress intended the joint and several liability of

corporate employees for the RCRA or CERCLA violations

of the corporations for whom they work.

For instance, “[i]t is elementary that the meaning of a

statute must in the first instance, be sought in the lan-

guage in which the act is framed.” See Caminetti v. United

States, 242 U.S. 470, 485 (1917). This Court has also consis-

tently ruled that courts must interpret statutes and rules

according to their plain meaning, except in the rare

instance where a literal application will produce a result

demonstrably at odds with the statute’s intent. See United

States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989).

The plain language of RCRA and its rules cannot

support officer liability. As noted above, RCRA does not

define “owner” or “operator” to include corporate offi-

cers, employees or shareholders. Indeed, it does not even

define these pivotal terms. While RCRA rules define

“operator” and “owner”, these definitions are plainly cast

in the singular sense, thereby contra-indicating an intent

to confer joint liability on corporate employees:

‘Operator’ means the person responsible for the

overall operation of a [hazardous substance dis-

posal] facility.

‘Owner’ means the person who owns a [hazardous

substance disposal] facility or part of a facility.

40 C.F.R. 260.105 (Emphasis and bracketed information

added).

° Mr. Ladney has also been summarily adjudged person-

ally liable under Michigan’s Hazardous Waste Management

Act (“HWMA”), M.C.L. § 299.548. In all material ways, this

State statute mirrors RCRA. For example, M.C.L. 299.55(1)

defines “operator” as “ . . . the person responsible for the

overall operation of a disposal, treatment, or storage facility

(Continued on following page)

The USEPA and MDNR presently scoff at the sugges-

tion that the terms “the operator” refer merely to the

company in a corporate setting. Yet, when the USEPA

promulgated this regulation it expressly stated this prop-

osition. On May 19, 1980, in explaining the definition of

“operator” the USEPA stated that:

“In the case of a corporation or other business

entity, the entity is the ‘person’ with the privi-

leges and duties.”

45 Fed. Reg. 33301 (Emphasis added).

After promulgating such a ruling and issuing such an

explanation, how can the USEPA in enforcement now

claim Mr. Ladney has duties (though presumably no

rights) as another “the person” or as a secondary opera-

tor?6

(Continued from previous page)

with approval of the director either by contract or license.”

Moreover, the rules promulgated under HWMA provide the

following definitions:

“ ‘Operator’ means the person responsible for the

overall operation of a facility.”

‘Owner’ means the person who owns a treatment,

storage or disposal facility or part of such a facility,

including the title holder of the land in which the

facility is located.”

1985 A.A.C.S. R299.9106(d) and (e) (Emphasis added).

6 The Administrative Procedures Act, 5 U.S.C. § 552(a)(1)

requires that any federal agency promulgate any substantive

rule of general applicability. Rules which are not published in

the Federal Register as required by the APA are void and

cannot be enforced. See Anderson v. Butz, 550 F.2d 459 (9th Cir.

1977). Assuming that USEPA now interprets “operator” to

include corporations and corporate officers, it is incumbent

upon USEPA to promulgate this interpretation by rule. At a

minimum it should advise the American people in the Federal

(Continued on following page)

In truth, nothing in RCRA suggests that the USEPA

in its rule-making erred by defining these terms in their

singular. Likewise, nothing in RCRA’s legislative history

suggests that Congress intended the joint and several

liability of corporate officers for the violations of a corpo-

ration.”

To the contrary, a finding such as in the present case

that a corporate employee is jointly and severally liable

with the corporation conflicts with the statutory use of

the terms “owner” and “operator” in RCRA itself. This is

apparent by examining 29 U.S.C. § 6925(a), which is the

most basic of RCRA requirements and was the RCRA

section Mr. Ladney was alleged to have violated.8 Subsec-

tion 6925a obligates “each person owning or operating an

existing facility . . . to have a [RCRA] permit... ”

(Emphasis and bracketed information added). It is absurd

to suggest that Michael Ladney in this case, and corpo-

rate officers generally, violate RCRA if they do not “each”

have a permit separate from the corporation to “own” or

“operate” a facility. Yet this is the necessary, logical result

of the opinions offered in this case.

(Continued from previous page)

tor with the corporation in order to effectively rescind or

modify its comments at 45 Fed. Reg. 33301.

” The USEPA and MDNR argue that there is precedent for

ignoring the plain, singular language of this rule. They refer to

United States v. Environmental Waste Control, Inc., 710 F. Supp.

1172, 1201-04 (N.D., Ind. 1989). In reality, this case notes in

dicta how persons in a joint venture or in joint tenancy would

jointly be “the person”. Such a ruling is consistent with com-

mon law assignments of liability. Mr. Ladney and PPP, how-

ever, are in no such relationship and common law would not

assign them joint liability.

® As noted in footnote 9, supra, Mr. Ladney was found by

the district court to have violated 42 U.S.C. § 6973(a) which is

the so-called imminent hazard section of RCRA, Section 7003.

This section had absolutely no relevance to this case.

This incongruous multiple “permitting” result which

is necessitated by interpreting RCRA as imposing joint

liability on corporate employees was recently recognized

by a USEPA Administrative Law Judge:

This parallel structure [RCRA Sections 3004

and 3005] is significant because in issuing RCRA

permits under RCRA § 3005, the Agency does not

usually consider corporate officers to be operators of

RCRA facilities that are considered owned or

operated by corporations. A RCRA permit is the

operative document that makes the Part 264 per-

formance standards applicable to an individual

facility, thereby putting all interested persons on

notice as to what the facility’s obligations are

under RCRA. In my June 1991 request for supple-

mental elon g omplainant lus EPA] was

expressly invited to cite examples of RCRA permits

that specify a corporate officer as an operator, but it

failed to provide a single example. The RCRA per-

mit application specifically instructs applicants

that “the legal entity” is to be listed on the

application as the operator. When the Agency

promulgated the “operator” definition, it

expressly rejected the notion that the corpora-

tion form should be ignored in determining

operator status: “In the case of a corporation or

other business entity, the entity is the ‘person’

with the privileges and duties.” See 45 Fed. Reg.

33301 (May 19, 1980).

In the Matter of Southern Timber Products, Inc., RCRA

(3008) Appeal No. 89-2, pp 17-19, 6 Toxics Law Reporter,

1276 (March 18, 1992). (Emphasis and bracketed informa-

tion added).

In fact, the judge in Southern Timber was expressly

critical of the district court opinion in the present case for

wholly failing to square the finding of liability against

Mr. Ladney with RCRA’s use of the term “operator”:

At least one decision cited in Complainant's

[USEPA’s] motion suggests that the term “opera-

tor” should be read to include anyone with

ultimate decision-making authority at a corpora-

tion that operates a RCRA facility. See United

States v. Production Plated Plastics, Inc., 742 F.

nies 8 956 (W.D. Mich 1990). Although the court

nowhere mentions RCRA § 7003 in describing the

specific counts alleged in the Complaint (id. at 958),

it unaccountably relies on § 7003 in deciding the

issue of individual liability for the violations at

issue. Id. at 960, 962-63. After quoting § 7003 and

citing NEPACCO (a RCRA § 7003 case), the

court concludes that “corporate officers and

employees who actually make corporate deci-

sions (that lead to a violation) are personally

liable under RCRA.” Id. at 963. This standard is

similar (though not identical) to that set forth in

the Stein/Diamond Memo, and like that Memo

the court makes no attempt to reconcile this standard

with the text of the “operator” definition. Because

the court relied on RCRA § 7003 in establishing

this standard, the case has little analytical value

to the issue at hand.

Southern Timber, supra at p 36 fn 47. (Emphasis and brack-

eted information added).9

In addition to pinning its entire statutory analysis on

the wrong section of RCRA and ignoring the plain mean-

ing of the relevant RCRA section and rule, the district

court also violated this Court’s defined statutory inter-

pretation rule that “if Congress intends for legislation to

change the interpretation of a judicially created concept it

makes that intent specific.” Midlantic National Bank v. New

Jersey, 474 U.S. 494, 501 (1986).

° The USEPA Judge’s critique of the present case is abso-

lutely correct. The district court's clearly erred by relying on

Section 7003 of RCRA (imiminent hazard) which is the reme-

dial, non-regulatory section of the statute. No violation of this

Section was pled much less proved and the Section was thus

absolutely irrelevant to the issue of whether Mr. Ladney was

liable as an “operator” under Section 3005.

The Joslyn courts articulate well this argument. The

Joslyn district court acknowledged the traditional doc-

trine of limited liability of corporate officials for corpo-

rate liabilities and noted the failure of Congress to

express any intent to abrogate this doctrine:

“Based upon the foregoing authorities, this

Court holds that the corporate form, including

limited liability for shareholders, is a doctrine

firmly entrenched in American Jurisprudence

that may not be disregard absent a specific con-

gressional directive. Neither the clear language

of CERCLA nor its legislative history provides

authority for imposing individual liability on

corporate officers or director liability on parent

corporations . . . This court will not read into the

statute a provision disregard decades of corpo-

ration law. The court’s conclusion is buttressed

by the fact that Congress has in the past, speci-

fied that shareholder or controlling parties are

to be held responsible for the acts or debts of a

valor corporation. See e.g. Depository Institu-

tion Management Interlocks Act, Internal Reve-

nue Code, Fair Labor Standards Act, ERISA.”

Joslyn Corp. v. T. L. James & Co. Inc., 696 F. Supp. 222, 226

(W.D. La. 1988).

Quoting from this Court’s holding in Edmonds v. Cam-

pagnie Generale Transatlantique, 443 U.S. 256, 267 (1979),

the Fifth Circuit affirmed the district court in Joslyn and

refused to extend liability to offices and directors:

[SJilence is most eloquent, for such reticence

while contemplating an important and contro-

versial change in existing law is unlikely. With-

out an express Congressional directive to the

contrary, common-law principles of corporation

law, such as limited liability, govern our court’s

analysis.

Joslyn Manufacturing Co. v. T.L. James & Co., Inc., 893 F.2d

80 (Sth Cir. 1990) 893 F.2d at 83.

This Court’s requirement that Congress “speak” if it

wants to abrogate elementary jurisprudential concepts is

especially appropriate for the present issue, because Con-

gress clearly knows how to phrase environmental statutes

when it wants liability to be placed upon corporate offi-

cers. For example, in the Clean Water Act of 1977, 33

U.S.C. § 1251, et seq., the term “person” triggers liability

and is broadly defined to include an individual, corpora-

tion, partnership, association, etc. . . 33 U.S.C. § 1362(5).

Nevertheless, Congress must not intend “person” to gen-

erally include corporate officers because in the “knowing

violations” subsection of the Clean Water Act, and only

that subsection, it expressly adds “responsible corporate”

officer to the term “person”:

For purposes of this paragraph, the term ‘per-

son’ shall mean, in addition to the definition

contained in section 1362(5) of this title any

responsible corporate officer.

33 U.S.C. § 1348(4)(B).

Likewise, the Clean Air Act notes that for certain

limited subsections, “operator” includes “any person

who is a senior management personnel or a corporate

officer.” 42 U.S.C. § 7413(h). The statute exculpates engi-

neers, technicians and other employees carrying out their

duties if they are not senior management personnel or

corporate officers unless the violations are willful and

knowing 42 U.S.C. § 7413(h).

If Congress itself recognizes a need in other environ-

mental statutes to further define the general terms “per-

son” and “operator” to include corporate officers in

limited liability contexts within those statutes, how can the

federal courts presume that Congress intended those

same general terms to include corporate officers in broad

application throughout RCRA without similar additional

language? Stated differently, if “operator” and “person”

were intended to make corporate officers jointly liable as

the courts in this case have held, then by necessity the

additional, specific language in the Clean Water Act and

Clean Air Act is redundant and the standards for such

joint liability contained therein, including the restrictions

to particular officers in particular instances are nullified.

As this Court is keenly aware, the great danger when

courts and enforcement agencies ignore the role of legis-

lators and agency rule-makers to define the law, is that

the former will develop their own disparate, discrete and

inconsistent standards of liability.

The USEPA administrative law judge in Southern Tim-

ber expresses his concern on this point, noting with due

alarum the fact that the USEPA has no published or even

unpublished enforcement standards defining corporate

officer liability under RCRA:

As noted in both the Initial Decision (p. 33) and

the Final Decision (p. 16), Complainant’s

[USEPA’s] theory of liability with respect to Mr.

Batson has not been consistent throughout this

proceeding. Complainant has alternately argued

that Batson is liable because he personally par-

ticipated in or was directly responsible for haz-

ardous waste management at the facility;

because he was directly responsible for the

impoundment’s closure; because he had ulti-

mate decision-making authority for Southern

Pine and the facility; because he was a facility

“owner”; because the corporation veil should be

pierced; or because he acted negligently in

attempting to achieve a risk-based closure of the

impoundment.”

Southern Timber, supra, at 7-8 (Bracketed information

added).'°

10 The absence of a clear standard leads to a form of

regulatory tyranny where the EPA and MDNK can threaten or

intimidate company officials. In fact, PPP’s lawyer has even

received the now infamous PRP (potentially responsible party)

letter from the MDNR regarding this site.

The absence of enforcement standards for corporate

officer liability is not surprising. Since RCRA was not

intended to impose such liability, the statute itself con-

tains no such standard. Since the USEPA when rule-

making was self professedly dedicated to preserving the

distinction between corporate and personal liabilities, the

RCRA rules contain no such standards.

Some federal courts have even acknowledged this

vacuum, but instead of recognizing it as a symptom of

faulty liability analysis, they have rushed-in to “legislate”

their own standards. The judges of the western district of

Michigan have been among the most active, and there is

no greater proof of the impropriety of this judicial “legis-

lation” than the fragmenting standards for personal envi-

ronmental liability emerging therein.

In Kelley v. Arco Industries, 723 F. Supp. 1214 (W.D.

Mich 1989), one of the members of this bench freely notes

that neither CERCLA nor RCRA nor their rules establish

any standards for employee liability, and that the courts

should therefore “respond” with proper standards which

evaluate the relative “fault” of corporate officers:

Imposing liability on a corporate individual is a

serious matter, and because CERCLA provides

no explicit way to distinguish among corporate

actors, the courts should respond with proper

standards. Strict liability may be too harsh and

broad-sweeping a standard to apply to all cor-

porate “owners” in all cases. Not all employees

or managers of a close corporation will neces-

sarily, absent special factors, be liable for a Sec-

tion 107 claim. Consequently, a more definitive

standard seems appropriate. . . .

Here, active, direct, knowing efforts to abate the

contamination may work for - not against - a

corporate defendant where the acts suggest the

individual tried but was unable to prevent or

abate the unlawful waste disposal . . . This stan-

dard is different, but more stringent on the

whole than traditional corporate tort liability,

yet it requires more than mere status as a corpo-

rate officer or director, which under CERCLA

would be the equivalent of a strict liability stan-

dard. The test - whether the individual in a

close corporation could have prevented or sig-

nificantly abated the release of hazardous sub-

stances — allows the fact-finder to impose

liability on a case-by-case basis, a result I favor

in this area due to the seriousness of potential

liability.

Kelley v. Arco Industries, 723 F. Supp. 1214, 1219-1220

(W.D. Mich 1989).

The Arco court should be given credit for at least

hinting at an understanding of the serious impact that a

blanket assignment of corporate officer liability could

have on the future development of this country’s manu-

facturing industry. Moreover, commentators have appre-

ciated that the Arco court at least has attempted to fill the

legislative and rule-making void by devising its own

“favored” standard. See Mitchell, supra, 5 Toxics Law

Reporter at 1653. Where, however, is the statutory author-

ity for such judicial activism? Where is the statutory

support for including fault as a standard for individual

“operator” liability (laudable as it is), when corporate

operator liability is strict? Where is the statutorily enable-

ment for treating officers of close corporations differently

than those in public corporations?

To make matters worse, the Arco court’s neighboring

court in the same district applies a different standard of

liability. That court, the district court in the present case,

looks only to the officer who has “ultimate decision-

making authority.” Production Plated Plastics, supra, 742 F.

Supp. at 963. In applying this standard the court will

assign RCRA liability to the president of a corporation

based on his status, at least unless the individual can

prove that he or she lacked ultimate decision-making

authority despite the office. Id.11

If courts across the land or even in the same court-

house, are each to favor their own distinct standards,

federal law cannot be applied uniformly, which is the

essential role of the federal courts in our system of feder-

alism. Given the enormous, personal liability at stake, the

gross departure from statutory language and case prece-

dent which is occurring on this issue, and the fact that the

liability standards are fragmenting not coalescing, this

issue begs clarification and delineation by our one uni-

fied court.

Il.

THE TRIAL COURT CLEARLY DID NOT REVIEW THE

EVIDENCE IN A LIGHT MOST FAVORABLE TO MR.

LADNEY WHEN IT CONCLUDED THAT LIKE PPP,

MR. LADNEY WAS THE PERSON RESPONSIBLE FOR

THE OVERALL OPERATION OF THE PPP LAGOONS.

This Court should accept this particular case as the

vehicle for reviewing officer environmental liability since

its assignment of personal liability merely because of

officer status is extreme, and was based on an undeniable

error of law and obvious mistake of fact.

The district court concluded that PPP was the opera-

tor of the Richland plant’s waste facilities. In other

words, it found the corporation to be “the person respon-

sible for the overall operation” of the waste lagoons

(“RCRA facility”) of the Richland plant. The district court

additionally concluded under Fed.R.Civ.P. 56 that

"! By definition the directors of the corporation would

have to be assigned liability automatically as well under this

standard.

Michael Ladney was also the person responsible for the

overall operation of the waste lagoon facility.!?

In finding Mr. Ladney personally liable on summary

judgment, the district court relied exclusively on the

defendants’ various documents and depositions submit-

ted in rebuttal of the plaintiffs’ motion for summary

disposition on liability. The district court ruled as follows:

In its review of the parties’ briefs and attach-

ments, the Court noted that Defendants have

submitted various documents and depositions

which in fact provide evidentiary support that

Ladney was personally involved in or directly

responsible for acts in violation of RCRA and

HWMA. Defendants have submitted the deposi-

tion of Steven D. Noble, an environmental spe-

cialist for PPP. Noble states that Ladney is a

corporate officer of PPP who was directly in

contact with William Evans. Defendants also

have submitted the affidavit of Ladney, as Presi-

dent of PPP, which states that he is competent to

testify as to the facts of this case and in which he

asserts decision-making authority. Finally, Defen-

-dants have submitted a letter from Ladney, writ-

ten in his capacity as President of PPP, outlining

PPP’s long term plan of operation.

742 F. Supp. at 963; A-13, 14 (Emphasis added).

A review of Mr. Ladney’s Affidavit clearly reveals

that the district court did not interpret the facts in a light

12 The USEPA and the MDNR rely heavily on the fact that

in the initial Part A application, Mr. Ladney was listed as the

facility operator. To its credit, the district court did not appar-

ently find this fact probative because, as it pointed out, PPP

amended its Part B in compliance with USEA regulations to list

the corporation as the operator. 742 F. Supp. at 959. This

amended Part A application was accepted by the USEPA years

before the alleged RCRA violation occurred.

| ei

most favorable to Mr. Ladney, as it should have. See

Schick v. Steiger, 583 F. Supp. 841 (E.D. Mich 1984). In fact,

the absolute opposite is true. The district court strained to

interpret this Affidavit in order to support the govern-

mental plaintiffs’ position and evidently the district

court’s preconceived notion that Mr. Ladney should be

found liable. Mr. Ladney’s Affidavit reads as follows:

STATE OF MICHIGAN

IN THE CIRCUIT COURT FOR THE

COUNTY OF KALAMAZOO

STATE OF MICHIGAN, Case No.

Plaintiff D 773-046-CE

: HON. ROBERT L. BORSOS

PRODUCTION PLATED MICHAEL |-LADNEY

PLASTICS, INC. :

Defendant.

STATE OF MICHIGAN _)

) ss.

COUNTY OF MACOMB. )

Mike Ladney, being first duly sworn, deposes and says as

follows:

1. I have firsthand knowledge of the facts described below

and if sworn could testify competently thereon at trial.

2. Iam the President of the Production Plated Plastics,

Inc. (the “Company”), which operates a facility located in

Richland, Michigan.

3. The Company has experienced a market decline in

demand for its electro-plated products.

4. The Company intends to layoff some of its employees

as a result of the market decline.

5. The Company will retain the employment of personnel

necessary to operate the purge wells that treat the ground

water for chromium contamination.

6. The sludge removal operation will not be affected by

the workforce reduction.

Ls/

Michael J. Ladney

See R. 79.

As this Court can readily see, Mr. Ladney’s Affidavit

was not given in the present case. While the undeniable

truth that this Affidavit was offered in a different case

does not disqualify it from being used in this case, this

fact clearly refutes the district court’s finding that Mr.

Ladney in this Affidavit stated that “he is competent to

testify as to the facts of this case.” 742 F. Supp. at 963; A-14

(Emphasis added). Nowhere in the Affidavit does Mr.

Ladney testify that he is competent to testify as to the

facts of the present federal case nor, for that matter, the

state case.

Similarly, the district court, as demonstrated from its

opinion above, interpreted this Affidavit as including a

provision where Mr. Ladney asserts that he has decision-

making authority over environmental remediation at the

facility. Id. The truth, however, is that Mr. Ladney

nowhere in the Affidavit asserts such decision-making

authority. To the contrary, he directly states that PPP

“operates” the Richland facility. See Paragraph 2 of the

Affidavit above. Furthermore, although the Affidavit con-

tains the procedurally necessary acknowledgement that

the affiant has first-hand knowledge of the facts

described therein, Mr. Ladney describes the decisions

made as “Company” decisions, not his. No reference is

made at all to any personal decision Mr. Ladney might

have made, nor any personal decision-making authority

he might have.

The gravamen of the district court’s factual finding

was that “Mr. Ladney is personally involved in or directly

responsible for acts in violation of RCRA and HWMA.”

742 F. Supp. at 963. Yet, the district court fails to offer one

shred of evidence to support this factual conclusion.

Instead, the district court shifted the burden of proof to

Mr. Ladney, erroneously stating that he had to prove that

as Company President he didn’t play a role in these

decisions.

Although the district court’s transferral of the burden

of proof is a reversible error especially in a summary

judgment context, Mr. Ladney had in fact offered the

necessary rebuttal proofs. He submitted the depositions

of Steven Noble and James Breitenbach, the environmen-

tal specialists who were responsible for all of PPP’s envi-

ronmental compliance activities, including the activity

that allegedly violated RCRA and the HWMA. See

Exhibit C attached to R 73; A-49-54. Neither Mr. Breiten-

bach nor Mr. Noble had ever talked to or even met Mr.

Ladney, much less discussed any of their RCRA or

HWMA activities. Id. In fact, when asked to list the

individuals who discussed the waste management prac-

tices of PPP and made the decisions which led to the

alleged noncompliance with RCRA and HWMA, both Mr.

Noble and Mr. Breitenbach mentioned a number of corpo-

rate employees. Mr. Ladney’s name, however, does not

appear on either list. Id.

Obviously, it is difficult to prove a negative, but

when the governmental plaintiffs failed to connect Mr.

Ladney to any of the decisions they claim violate the law,

and when the company personnel assigned to make those

decisions did not identify Mr. Ladney as someone they

conferred with on these decisions, Mr. Ladney had every

right to expect that he would at least receive a trial on

liability.

In reality, Mr. Ladney was found liable under RCRA

merely because he was perceived by the court to have the

ultimate decision-making authority at the corporation, as

its President. In fact, the USEPA cites the present case for

such a proposition in other enforcement actions. See

Southern Timber, supra. However by corporate definition,

such status is also inherent in the directors of the corpo-

ration, and if this is the only standard for RCRA personal

liability under RCRA for the corporation’s violations,

then the courts should dispense with any kind of eviden-

tiary requirement and merely declare that corporate offi-

cers and directors, at least the president, board chair and

directors are, by virtue of their office, strictly liable under

RCRA.

Not one of the other courts that have assessed per-

sonal liability under RCRA have been willing to abrogate

the minimum burden of proof that a corporate individual

must be substantially involved in the waste management

practices of the company before personal liability is

assessed. See NEPACCO, supra; 810 F.2d at 745; United

States v. Environmental Waste Control, Inc., supra. In fact, in

another courtroom in the same division of the same dis-

trict court, the court has rejected the imposition of lia-

bility on the “mere status as a corporate officer or

director”, instead requiring a “heavily fact specific” anal-

ysis of whether the officer or director “could have pre-

vented or significantly abated the release of hazardous

substances.” Arco, supra, 723 F. Supp. at 1220.

If not reversed, the present case will stand out as a

glaring exception even to the cases which disregard the

corporate form and assess personal liability. Given the

USEPA’s penchant for citing this case for its unique hold-

ing in other enforcement actions, its presence will create

greater analytical contradiction in an area of enormous

liability that is already crowded with jurisprudential con-

fusion.

CONCLUSION

Mr. Ladney’s day in court to date has amounted to a

district court granting summary judgment against him

based on an inapplicable statutory section, a misreading

of an affidavit and the testimony of two PPP environmen-

tal specialists who had never talked to Mr. Ladney and

failed to identify him as a decision-maker on the issues in

dispute. His appellate review right constituted a two-

page affirmation which completely ignores the personal

liability issue, much less reviews his arguments. Clearly,

the means are being sacrificed here for the end.

However, Mr. Ladney has exhausted his personal

means by spending over three million dollars of his own

funds on this site with no end in sight. Since such expen-

ditures are being made pursuant to an injunction, it is

questionable whether he can ever discharge the “obliga-

tion” irrespective of his personal financial circumstances.

If the lesson taught in this case is that by investing

time and money in an American plant, an individual can

lose everything he owns without fault and despite the

protections offered by the corporate form, and can be, in

fact, further dogged by a mandatory order enforceable by

contempt for the rest of his life, then one would be

irresponsible indeed to invest in American manufactur-

ing. If our society is to risk such a result for the sake of

contributions in environmental clean-ups, which are mar-

ginal overall, then clearly Congress, which unlike the

courts can be held accountable, should so dictate.

This Court should grant a writ of certiorari and

reverse the decisions of the Western District Court of

Michigan and the Sixth Circuit Court of Appeals which

found and affirmed the liability of Mr. Ladney for PPP’s

RCRA violations.

Respectfully submitted,

Law, WEATHERS &

RICHARDSON, PC

Douc.tas W. VAN Essen (P33169)

Attorneys for Petitioner

Business Address & Telephone:

Suite 500, 200 Ottawa Ave., NW

Grand Rapids, Michigan 49503

(616) 459-1171

A-1

APPENDIX

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF File No.

AMERICA, K87-138 CA

et al., Hon. Benjamin F. Gibson

Plaintiffs, OPINION

v. (Filed

PRODUCTION PLATED May 14, 1990)

PLASTICS, INC.,

et al.,

Defendants.

INTRODUCTION

Plaintiffs United States of America, Frank J. Kelley,

Attorney General for the State of Michigan, the Michigan

Natural Resources Commission, and Gordon E. Guyer,

Director of the Michigan Department of Natural

Resources (collectively the “government”), filed the pre-

sent action for permanent injunctive relief and imposition

of civil penalties against defendants Production Placet

Plastics, Inc., Michigan City Plastics, Inc., Michael J.

Ladney, Jr. [sic],1 and Marguerite Ladney, pursuant to

Sections 3008(a) and (g) of the Resource Conservation

and Recovery Act of 1976 (“RCRA”), 42 U.S.C. §§ 6928(a)

and (g), and Section 48 of the Michigan Hazardous Waste

Management Act (“HWMA”), M.C.L.A. § 299.548. Plain-

tiffs allege that defendants operated a hazardous waste

A-2

facility and stored and disposed of hazardous waste at

defendant’s Richland, Michigan facility (“PPP facility”) in

violation of RCRA and HWMA.

More specifically, Count 1 of plaintiffs’ complaint

alleges violations of Section 3005(a) and (e) of RCRA, 42

U.S.C. § 6925(a) and (e), and the RCRA regulations, 40

C.F.R. Part 265, by discharging hazardous waste into

unlined surface impoundments and by operating waste

piles without an RCRA permit or RCRA interim status.

Count 2 alleges a violation of Section 3005(e) of RCRA, 42

U.S.C. § 6925(e), and the RCRA regulations, 40 C.F.R.

§ 265.112, by failing to submit a closure plan for the

surface impoundments and waste piles within 15 days

after termination of the interim status, and by failing to

commence or complete closure in a timely manner. Count

3 alleges a violation of Section 3005(e) of RCRA, 42 U.S.C.

§ 6925(e), and the RCRA regulations, 49 C.F.R. § 265.118,

by failing to submit a post-closure plan for the surface

impoundments and an adequate post-closure plan for

waste piles. Count 4 alleges a violation of Sections 6 and

22 of HWMA, M.C.L.A. §§ 299.506, .532, for the continued

operation of an unlicensed hazardous waste storage and

disposal facility.?

Presently pending before the Court is plaintiffs’

motion for partial summary judgment as to the issues of

defendants Production Plated Plastics, Inc.’s and Michael

J. Ladney’s liability under RCRA and HWMA pursuant to

Federal Rule of Civil Procedure 56. For the reasons stated

below, plaintiffs’ motion for partial summary judgment is

granted.

A-3

FACTS

Defendant Production Plated Plastics, Inc. (“PPP”) is

a corporation which has engaged in molding, electroplat-

ing, and painting of plastic parts primarily for the auto-

motive industry since commencing operations in 1966.

The manufacturing processes involve creation, discharge,

and storage of hazardous wastes.

In 1977, the Michigan Department of Natural

Resources (“MDNR”) filed an action in state court against

PPP seeking to enjoin PPP from discharging wastes and

seeking to order PPP to remove wastes pursuant to the

Water Resources Commission Act, M.C.L.A. §§ 323.1 et

seq. The state court entered a consent order in 1978

requiring PPP to remove sludge and to install and oper-

ate purge wells. Subsequent modifications of the order

specified the minimum amounts of sludge PPP was

required to remove per month as part of remediation and

ordered other remediation procedures.

On August 18, 1980, pursuant to newly enacted

RCRA requirements, defendants provided the Environ-

mental Protection Agency (“EPA”) a “Notification of Haz-

ardous Waste Activities,” listing specific hazardous

wastes that were generated, treated, stored, and disposed

of at the PPP facility. The notification form listed Michael

J. Ladney, Jr., as the “Installation’s Legal Owner.” PPP

also provided the EPA with a Part A permit application

for permission to continue to treat, store or dispose of

hazardous wastes at the PPP facility. Submission of the

Part A application automatically granted PPP interim

Status to continue operations pending review of their

A-4

application. See 42 U.S.C. § 6925(e)(1); 40 C.F.R.

§ 270.70(a). The Part A application listed Ladney as the

facility’s owner and operator and was signed by Ladney.

PPP submitted a revised Part A application on or about

January 17, 1985, changing the facility’s legal owner to

“Production Plated Plastics, Inc.”

In July 1984, PPP submitted a Part B permit applica-

tion. In February and October of 1985, the EPA notified

PPP of deficiencies in the second part of their application.

PPP acknowledged, by letters dated November 5, 1985,

and November 20, 1985, that it could not meet the RCRA

financial responsibility requirements, although it claimed

a good faith effort to obtain insurance. Nonetheless, PPP

continued to discharge hazardous waste. However, on

July 16, 1986, the Associate Regional Counsel for the EPA

wrote a letter to PPP stating that the “EPA will approve

the rate of removal of waste proposed in the closure plan

that is in accordance with the order of the Kalamazoo

County Circuit Court.”

PPP filed a “Piled and Buried Sludge Closure” plan

and subsequent revisions with the EPA on March 26,

1986, October 14, 1986, and July 29, 1987. PPP also filed a

“Tentative Surface Impoundment Closure Plan” and sub-

sequent revisions with the EPA on May 20, 1986, Febru-

ary 25, 1987, and on August 12, 1987. On September 30,

1988, the State of Michigan apparently approved the pro-

posed closure plans. It is not clear to what extent PPP has

complied with such plans to date.

STANDARD FOR REVIEW

Summary judgment is appropriate when “there is no

genuine issue as to any material fact and the moving

A-5

party is entitled to a judgment as a matter of law.” Fed. R.

Civ. P. 56(c); Atlas Concrete Pipe, Inc. v. Roger J. Au & Son,

Inc., 668 F.2d 905, 908 (6th Cir. 1982). There is no material

issue of fact for trial unless, by viewing the evidence in

favor of the non-moving party, a reasonable jury could

return a verdict for that party. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 249 (1986); Boddy v. Dean, 821 F.2d 346,

349 (6th Cir. 1987). “If the evidence is merely colorable, or

is not significantly probative, summary judgment may be

granted.” Anderson, 477 U.S. at 249 (citations omitted).

The party moving for summary judgment hears the

initial responsibility of informing the court of the basis

for its motion and identifying those portions of the record

which demonstrate the absence of a material issue of fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Potters

Medical Center v. City Hospital Association, 800 F.2d 568,

572 (6th Cir. 1986). Once the moving party has met its

burden, the non-moving party must go beyond the plead-

ings and come forward with specific facts to show that

there is a genuine issue for trial. Fed. R. Civ. P. 56(e);

Celotex, 477 U.S. at 322-24. If after adequate discovery the

party hearing the burden of proof fails to make a showing

sufficient to establish an essential element of his claim,

summary judgment is appropriate. /d.

APPLICABLE LAW & ANALYSIS

RCRA was enacted as an amendment to the Solid

Waste Disposal Act in an attempt by Congress to deal

with problems posed by the general disposal of wastes in

this country as well as the particular problems associated

with the disposal of hazardous substances. Pub. L. No.

A-6

94-580, 1976 U.S. Code Cong. & Admin. News (90 Stat.)

2795, 2798; H.R. Rep. No. 1491, 94th Cong., 2d Sess., pt. 1,

at 2-5, reprinted in 1976 U.S. Code Cong. & Admin. News

6238, 6239-43. The Act, amended three times since its

initial enactment, authorizes the EPA to identify hazard-

ous wastes, to promulgate standards for operators of

hazardous waste facilities, and to issue permits for the

operation of hazardous waste disposal faciiities. See 42

U.S.C. §§ 6921-25. Under the Act, a civil suit may be

brought against “any person . . . who has contributed or

who is contributing to such handling, storage, treatment,

transportation, or disposal.” 42 U.S.C. § 6973(a). RCRA is

a remedial strict liability statute which is construed liber-

ally. United States v. Aceto Agricultural Chemical Corp., 872

F.2d 1373, 1383 (8th Cir. 1989); United States v. North-

eastern Pharmaceutical & Chemical Co., 810 F.2d 726, 738

(8th Cir. 1986), cert. denied, 484 U.S. 848 (1987).

The 1980 amendments to RCRA, effective November

19, 1980, required each owner and operator of a “facility

for the treatment, storage, or disposal of hazardous

waste” to obtain a permit. 42 U.S.C. § 6925(a). However,

facilities in operation at the time of enactment of the

permit requirement were granted interim status in order

to operate without an RCRA permit pending administra-

tive action on the permit application. 42 U.S.C. § 6925(e).

In 1984, RCRA was amended to terminate interim

status if certain conditions were not satisfied. The 1984

amendment provides that:

In the case of each land disposal facility

which has been granted interim status under

this subsection before November 8, 1984,

interim status shall terminate on the date twelve

A-7

months after November 8, 1984, unless the

owner or operator of such facility -

(A) applies for a determination

regarding the issuance of a permit under

subsection (c) of this section for such facility

before the date twelve months after Novem-

ber 8, 1984; and

(B) certifies that such facility is in

compliance with all applicable groundwater

monitoring and financial responsibility

requirements.

42 U.S.C. § 6925(e)(2). Thus, under this section, a facility

was required to submit a Part B permit application certi-

fying compliance with applicable groundwater monitor-

ing and financial responsibility requirements before

November 8, 1985. If the facility failed to satisfy the

above conditions, interim status was lost as of November

8, 1985. 42 U.S.C. § 6925(e)(2)(A); 40 C.F.R. § 270.73; 50

Fed. Reg. 38946, 38946-49 (Sept. 25, 1985); 50 Fed. Reg.

28701, 28723-24 (July 15, 1985). Further, if the hazardous

waste treatment storage and disposal facility lost its

interim status, the owner or operator of the facility was

required to submit a closure plan and post-closure plan to

the EPA within fifteen days of the termination of interim

status and to complete partial and final closure activities

within 180 days after the EPA’s approval of the closure

plan. See 40 C.F.R. §§ 265.112(d)(3)(i), 265.118(e)(1),

265.113(b).

The government has the initial responsibility of

establishing the absence of a material issue of fact for trial

regarding RCRA and HWMaA liability. The government

has established that PPP is the owner or operator of a

;

A-8

hazardous waste facility which stored and disposed of

waste both before and continuing after November 19,

1980. Thus, under the 1980 amendments, PPP automat-

ically was granted interim status with the submission of

its Part A application. However, PPP failed to certify

compliance with the financial responsibility requirements

mandated by the 1984 amendments, failed to obtain an

RCRA permit, and failed to meet RCRA deadlines for

having permitted land disposal units and adequate

underground monitoring. Thus, as a matter of law, PPP

lost interim status as of November 8, 1985. See United

States v. Northeastern Pharmaceutical & Chemical Co., 810

F.2d 726, 738 (8th Cir. 1986), cert. denied, 484 U.S. 848

(1987). Nonetheless, PPP continued its waste activities.

Furthermore, defendants failed to submit required clo-

sure and post-closure plans within the appropriate time

periods. Accordingly, plaintiffs have established a prima

facie case of liability.

Plaintiffs having established a prima facie case of lia-

bility, the Court next must consider defendants PPP’s and

Ladney’s defenses in order to determine whether sum-

mary judgment with regard to liability is appropriate. In

attempts to avoid liability and in opposition to partial

summary judgment, PPP and Ladney deny violating

RCRA and HWMA, arguing that compliance with the

state court ordered remediation closure plan complies

with the intent and requirements of RCRA and HWMA

and was accepted by the EPA, that plaintiffs are estopped

from seeking a closure plan inconsistent with the state

plan, that defendants’ inability to comply with the finan-

cial responsibility requirements of RCRA regulations

A-9

excuses lack of compliance, and that plaintiffs have selec-

tively enforced this action against them in violation of

equal protection and due process.

A. COMPLIANCE WITH STATE PLAN/ESTOPPEL

As their first defense, defendants argue that timely

filings with the EPA and compliance with the state court

ordered lagoon closure plan satisfy the intent of RCRA.

Defendants urge the Court to review the provisions of the

state court closure plan in light of RCRA’s objectives and

the impact on such plan if PPP was forced to cease

operations due to its inability to meet the financial

responsibility requirements. Further, defendants argue

that representations by the EPA that the state closure plan

was acceptable to the EPA estops the EPA from bringing

the present enforcement action.

After conducting a complete review of the file,

record, and prior proceedings in this matter, the Court

concludes that the consent judgment in state court does

not relieve PPP of obligations under RCRA. The Court

finds no authority for the proposition that compliance

with a state remedial order excuses an RCRA violation.

The Court recognizes the frustration underlying defen-

dants’ arguments, but finds that the state court proceed-

ings do not change the fact that they have violated RCRA.

Rather, defendants’ arguments may be considered in

fashioning an appropriate remedy. Furthermore, the

Court does not believe that the EPA letter dated July 16,

1986 excuses liability, although again such fact may be

relevant when appropriate damages and/or penalties are

assessed.‘

A-10

Accordingly, the Court concludes that defendants’

first defenses do not excuse defendants from liability for

RCRA and HWMaA violations.

B. INABILITY TO SATISFY FINANCIAL RESPON-

SIBILITY REQUIREMENT

Next, relying on United States v. T & S Brass & Bronze

Works, Inc., 681 F. Supp. 314 (D. S.C. 1988), defendants

apparently argue that since it was impossible for them to

satisfy the financial responsibility requirements, they are

excused from complying with RCRA requirements. How-

ever, the Court notes that in T & S Brass, although not

controlling authority over this Court’s disposition of the

matter, the district court held that neither T & S Brass’

argument that it made a good faith attempt to obtain

insurance nor that insurance was impossible to obtain

were sufficient defenses. On appeal, the Fourth Circuit,

affirming in part and vacating in part, also rejected the

impossibility defense. United States v. T & S Brass &

Bronze Works, Inc., No. 88-3531, slip op. at 4 (4th Cir. Dec.

22, 1988) (per curiam) (unpublished).

After reviewing the facts of this case and the existing

caselaw, the Court concludes that neither an impossibility

defense nor good faith efforts to secure financial assur-

ances are defenses to liability after November 8, 1985,

although such efforts are pertinent to the appropriate

remedies or imposition of sanctions. See United States v.

Clow Water Systems, A Division of McWane, Inc., 701 F.

Supp. 1345, 1348 (S.D. Ohio 1988); United States v. Allegan

Metal Finishing Co., 696 F. Supp. 275, 285 (W.D. Mich.

1988); T & S Brass & Bronze Works, 681 F. Supp. at 321.

A-11

Thus, the Court concludes that this defense also does not

preclude a finding of liability.

C. SELECTIVE ENFORCEMENT

Finally, defendants argue that this action is constitu-

tionally invalid since the government has selectively

enforced RCRA and HWMA against defendants in bad

faith or arbitrarily while others similarly situated have

not been prosecuted. Defendants argue that the site at

issue, which is a compliant company on a non-dangerous

site, does not appear on the MDNR’s list of hazardous

waste sites requiring remediation, while many dangerous

sites on the list have not been subjected to enforcement

actions.

The government generally is afforded a presumption

of validity in the enforcement of federal statutes and its

discretion in enforcing federal statutes is extremely

broad, although not unfettered. See Wayte v. United States,

470 U.S. 598, 607-10 (1985); Ovler v. Boles, 368 U.S. 448, 456

(1962). In order to state a prima facie selective prosecution

defense, defendants bear a heavy burden of establishing

that (1) defendants have been singled out while other

similarly situated violators were left untouched, and (2)

that the government selected defendants for prosecution

“invidious[ly] or in bad faith, i.e., based upon such

impermissible considerations as race, religion, or the

desire to prevent the exercise of [their] constitutional

rights.” United States v. Bustamante, 805 F.2d 201, 202 (6th

Cir. 1986); United States v. Hazel, 696 F.2d 473, 474 (6th Cir.

1983).

A-12

The Court finds no proof of selective prosecution

other than defendants’ mere allegations and arguments in

their brief which are not sufficient to raise an issue of

material fact. Defendants have provided no proof that

similarly situated violators have not been cited for RCRA

violations. Furthermore, even if defendants had satisfied

the first element of a selective enforcement defense, there

also is no evidence of governmental vindictiveness, that

the selection was based on race, religion or some other

arbitrary classification which would support finding a

denial of equal protection, or that the government

engaged in intentional, purposeful discrimination which

would meet defendants’ heavy burden of establishing a

prima facie case of selective enforcement. As a result, the

Court finds that defendants’ selective enforcement

defense does not preclude summary judgment as a matter

of law.

Accordingly, since defendants have failed to present

a valid defense to liability, summary judgment solely on

the issue of liability is appropriate in favor of plaintiffs

and against defendant PPP.

D. INDIVIDUAL LIABILITY UNDER RCRA

Since the Court has determined that defendant PPP is

liable for violations of RCRA and HWMaA, the Court must

determine whether a question of fact exists regarding

whether defendant Ladney is jointly liable for such viola-

tions. An action alleging violations of RCRA may be

brought against “any person (including any past or pre-

sent generator, past or present transporter, or past or

present owner or operator of a treatment, storage, or

A-13 _

disposal facility).” 42 U.S.C. § 6973(a). Thus, corporate

officers and employees who actually make corporation

decisions are personally liable under RCRA. United States

v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726,

745 (8th Cir. 1986).

In their complaint, plaintiffs allege that Ladney is the

owner or operator of PPP. Defendants dispute plaintiffs’

allegations and argue that plaintiffs must be able to prove

that Ladney plays an active role in controlling the waste

management policies and practices of PPP in order to

hold Ladney personally liable for the alleged violations.

However, although defendants do agree that Michigan

City Plastics, Inc. (“MCP”) owns PPP and that Ladney

owns 68% of MCP’s stock, defendants contend that there

is no evidence that Ladney actively controls MCP or

plays an active role in controlling the waste management

policies and practices of PPP.

Plaintiffs respond that Ladney’s name appears as the

“Installation’s Legal Owner” on the initial “Notification

of Hazardous Waste Activities” and on the Part A appli-

cation. However, the Court notes that the revised Part A

application substituted “Production Plated Plastics, Inc.”

as the legal owner of the facility. Plaintiffs also contend

that in his deposition, William Evans, PPP’s plant man-

ager, stated that he frequently discussed the manufactur-

ing of products with Ladney.

In its review of the parties’ briefs and attachments,

the Court notes that defendants have submitted various

documents and depositions which in fact provide eviden-

tiary support that Ladney is personally involved in or

directly responsible for acts in violation of RCRA and

A-14

HWMaA. Defendants have submitted the deposition of

Steven D. Noble, an environmental specialist for PPP.

Noble states that Ladney is a corporate officer of PPP

who is in daily contact with William Evans. Defendants

also have submitted the affidavit of Ladney, as president

of PPP, which states that he is competent to testify as to

the facts of this case and in which he asserts decision-

making authority. Finally, defendants have submitted a

letter from Ladney, written in his capacity as president of

PPP, outlining PPP’s long-term plan of operations.

The Court, viewing the evidence submitted in the

light most favorable to the nonmoving party and drawing

all reasonable inferences, finds that the evidence shows

that Ladney was actively involved in the day-to-day

operations of PPP. Defendants assert in their briefs that

plaintiffs have not established that Ladney was actively

involved in the operations of PPP. However, defendarts

provide no evidence that Ladney is not PPP’s owner or

operator. Defendants offer no explanation of the state-

ments made in Ladney’s affidavit which indicate that he

is the ultimate decision-making authority, or how, as

president of PPP, he is to be excluded from the natural

and reasonable inference that he had an important say in

or actually made the corporate decisions. Accordingly,

the Court holds Ladney jointly liable with PPP for RCRA

and HWMaA violations. |

CONCLUSION

The Court concludes that no genuine issue of mate-

rial fact exists with regard to defendants PPP’s and

Ladney’s liability, thus plaintiffs are entitled to judgment

A-15

as a matter of law. In reaching its decision, the Court has

not considered the appropriateness of civil penalties

and/or injunctive relief. Although PPP and Ladney have

been found liable as a matter of law, the issue of appro-

priate remedies and/or penalties will be considered in

light of the state court orders and in conjunction with

defendants’ various defenses.

The Court recognizes that this is a unique case.

Although RCRA and HWMA requirements have not been

met and defendants are liable for RCRA and HWMA

violations, the Court encourages continual attempts by

the parties to resolve this matter and notes that it will

consider factors such as the state court proceedings and

steps taken pursuant to such proceedings when fashion-

ing the appropriate relief warranted.

/s/ Benjamin F. Gibson

BENJAMIN F. GIBSON

U.S. DISTRICT JUDGE

DATED: May 14, 1990

FOOTNOTES

1. Unless otherwise indicated, references to

“Ladney” refer to defendant Michael J. Ladney, Jr., and

not to defendant Marguerite Ladney.

2. HWMaA authorizes the continued operatior » «

facility that was in existence on the effective date ~

1982 Act, March 30, 1983, if certain conditions were met.

One of the conditions is compliance with the federal solid

waste disposal act regulations, 42 U.S.C. §§ 6901 et seq.

A-16

M.C.L.A. § 299.522(c). An owner or operator of a hazard-

ous waste facility in Michigan is required to comply with

RCRA and HWMA, administered by both the EPA and

the State of Michigan. See 42 U.S.C. §§ 6926; 6928(a)(2).

3. The initial statute was amended by the Quiet

Communities Act of 1978, Pub. L. No. 95-609, § 7, 1978

U.S. Code Cong. & Admin. News (92 Stat.) 3079, 3081-84;

Solid Waste Disposal Act Amendments of 1980, Pub. L.

No. 96-482, 1980 U.S. Code Cong. & Admin. News (94

Stat.) 2334; Hazardous and Solid Waste Amendments of

1984, Pub. L. No, 98-616, 1984 U.S. Code Cong. & Admin.

News (98 Stat.) 3221.

4. The Court notes that as a general rule equitable

defenses such as estoppel are not available against the

sovereign when it is asserting public rights. See, e.g.,

Costello v. United States, 365 U.S 265, 281 (1961); Pan

American Petroleum & Transport Co. v. United States, 273

U.S. 456, 506 (1927); Chesapeake & Delaware Canal Co. v.

United States, 250 U.S. 123, 125 (1919). “Where the

defenses of unclean hands or laches have been used

against the government when it is asserting public rights,

courts have repeatedly held that equitable principles will

not be applied to thwart public policy or the purpose of

federal laws.” Kelley v. Thomas Solvent Co., 714 F. Supp.

1439, 1451 (W.D. Mich. 1989).

Oe a eae tee a,

;

A-17

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF File No. K87-138 CA

AMERICA, et al.,

Plaintiffs, Hon. Benjamin F. Gibson

ma ORDER

cn ae aan (Filed May 15, 1990)

Defendants.

At a session of the Court held in and for said

District and Division in the City of Grand

Rapids, Michigan, this 14th day of May, 1990.

PRESENT: HON. BENJAMIN F. GIBSON, DIS-

TRICT JUDGE

In accordance with the Opinion dated May 14, 1990,

IT Is HEREBY ORDERED that plaintiffs’ motion for par-

tial summary judgment is GRANTED.

IT IS SO ORDERED.

/s/ Benjamin F. Gibson

BENJAMIN F. GIBSON

U.S. DISTRICT JUDGE

A-18

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF File No. K87-138 CA

AMERICA, et al.,

Plaintiffs, Hon. Benjamin F. Gibson

™ OPINION

PRODUCTION PLATED

PLASTICS, INC., et al.,

Defendants.

Plaintiffs United States of America, Frank J. Kelley,

Attorney General for the State of Michigan, the Michigan

Natural Resources Commission, and Gordon E. Guyer,

Director of the Michigan Department of Natural

Resources (collectively the “government”), filed the pre-

sent action for permanent injunctive relief and imposition

of civil penalties against defendants Production Plated

Plastics, Inc. (“PPP”), Michigan City Plastics, Inc.

(“MCP”), Michael J. Ladney, Jr., and Marguerite Ladney,!

pursuant to Sections 3008(a) and (g) of the Resource

Conservation and Recovery Act of 1976 (“RCRA” or the

“Act”), 42 U.S.C. §§ 6928(a) and (g), and Section 48 of the

Michigan Hazardous Waste Management Act (“HWMA”),

M.C.L.A. § 299.548.

On May 14, 1990, this Court determined that defen-

dants Michael J. Ladney Jr. (“Ladney”) and PPP operated

a hazardous waste facility and stored hazardous waste at

A-19

their Richland, Michigan facility (the “Richland facility”)

in violation of RCRA and HWMA. Specifically, Ladney

and PPP violated Sections 3005 (a) and (e) of RCRA, 42

U.S.C. § 6925(a) and (e), and the RCRA regulations, 40

C.F.R. Part 265, by discharging hazardous waste into

unlined surface impoundments and by operating waste

piles without an RCRA permit or RCRA interim status.

They also failed to submit required closure and post-

closure plans and commence and complete closure of the

Richland facility within the time periods required by

RCRA Section 3005(e) and 40 C.F.R. §§ 265.112 and

265.118. These RCRA violations in turn amounted to vio-

lations of Sections 6 and 22 of HWMA, M.C.L.A.

§§ 299.506 and 299.522, for the continued operation of an

unlicensed hazardous waste storage and disposal facil-

ity.?

Now pending before the Court is plaintiffs’ motion

for partial summary judgment as to appropriate injunc-

tive relief pursuant to Federal Rule of Civil Procedure 56.

Plaintiffs request that the Court order PPP and Ladney:

(i) to conduct, complete and certify closure

pursuant to all terms and conditions of the clo-

sure plan approved by the State of Michigan, as

required by 40 C.F.R. § 265.112(d);

(ii) to provide financial assurance for closure

in accordance with 40 C.FR. § 265.143;

(iii) to comply with all financial responsibility

requirements of 40 C.FR. § 265.147; and

(iv) to comply with all groundwater monitor-

ing requirements in 40 C.F.R. Part 265 Subpart F.

A-20

For the reasons stated below, the motion is granted in

part and denied in part.

A. Statutory and Regulatory Guidelines

In 1976 Congress enacted RCRA, 42 U.S.C. §§ 6901 et

seq., to regulate the disposal of solid waste in the United

States. The overriding concern of the legislation is to

minimize the adverse environmental impact of solid

waste, especially hazardous waste. Its objectives are “to

promote the protection of health and the environment

and to conserve valuable material and energy resources.”

42 U.S.C. § 6902(a).3 To meet those objectives congress

fashioned a far ranging regulatory scheme which is

designed to encourage solid waste planning by states and

fund resource recovery projects.

Specifically, Section 3004(a) of RCRA requires that

the United States Environmental Protection Agency

(“EPA”) Administrator promulgate regulations establish-

ing performance standards for owners and operators of

hazardous waste facilities “as may be necessary to protect

human health and the environment.” 42 U.S.C. § 6924(a).4

Section 3005(a) provides for regulations “requiring each

person owning or operating an existing facility .. . for the

treatment, storage, or disposal of hazardous waste identi-

fied or listed under this subchapter to have a permit

issued pursuant to this section.” 42 U.S.C. § 6925(a). The

issuance of operating permits is the primary mechanism

established in RCRA for enforcing the hazardous waste

regulatory scheme with respect to the owners and opera-

tors of treatment, storage, and disposal facilities.

te Se INRA Is Woe Aree cl Bille Let AT Be

A-21

Under section 3005(e) a hazardous waste manage-

ment facility that was in existence on November 19, 1980,

could obtain authority to continue operations as an

“interim status” facility by filing a “Part A application”

with the EPA. The Part A application requires informa-

tion concerning the nature of the applicant’s business, a

scale drawing, photographs and a topographic map of the

facility, a description of its hazardous waste management

processes and the design capacity of these processes, a

specification of the types and quantities of hazardous

wastes processed, stored or disposed of at the facility as

well as information regarding permits or construction

approvals received or applied for by the facility. 40 C.F.R.

§ 270.14. An interim status facility’s operation is limited

to the types of wastes and procedures specified in the

Part A application and the facility must comply with the

operating standards of 40 C.F.R. § 265.

Recognizing widespread noncompliance with the

basic regulatory requirements of RCRA, Congress

amended the Act in 1984 to provide that all interim status

hazardous waste land disposal facilities would automat-

ically lose their interim status unless they certified by

November 8, 1985, that they were in compliance with all

applicable groundwater monitoring and financial respon-

sibility requirements. 42 U.S.C. § 6925(e)(2). Upon losing

interim status the facility must immediately cease its

hazardous waste management operations and within fif-

teen days the owner or operator of the facility must

submit a “closure” plan for approval by the regional

administrator of the EPA. 42 U.S.C. § 6925(a); 40 C.F.R.

§ 265.112(d)(3)(i).5 The public is provided an opportunity

to comment on the submitted plan. 40 C.F.R.

A-22

§ 265.112(d)(4). The regional administrator must approve,

modify, or disapprove the plan within ninety days of its

receipt. If the regional administrator modifies or disap-

proves the plan, the owner or operator has thirty addi-

tional days to modify the plan or submit a new plan.

Finally, the regional director must approve or modify this

plan within an additional sixty days. If the regional direc-

tor modifies the plan, it becomes an approved plan. Id.

The owner or operator may apply for an amendment of

the plan at any time prior to closure of the facility by

submitting a written request to the regional administra-

tor. After review, the proposed modifications must be

accepted or rejected by the regional administrator. 40

C.F.R. § 265.112(c).

The facility must begin final closure within ninety

days of approval of a closure plan and must complete

closure within 180 days of approval of the closure plan,

unless the regional administrator permits an extension of

the closure period. 40 C.F.R. § 265.113. After closure is

complete, the owner or operator is required to maintain

post-closure care of the facility for a period of thirty years

unless the regional administrator finds that a shorter

post-closure care period is sufficient to protect human

health and the environment. 40 C.F.R. § 265.117.

The regulations also require that the owner or opera-

tor of a surface impoundment landfill or land treatment

facility used to manage hazardous waste must implement

a groundwater monitoring system capable of determining

the facility’s impact on the quality of groundwater in the

uppermost aquifer underlying the facility. 40 C.F.R.

§§ 265.90 et seq. The groundwater monitoring requirement

Pe eee ee

A-23

applies during the active life of the facility and through-

out the post-closure care period. 40 C.F.R. § 265.111.

Along with the closure, post-closure and monitoring

requirements, the owner or operator must establish and

maintain financial assurance for proper closure and post-

closure care of the facility, as well as liability coverage of

specified amounts for bodily injury and property damage

to third parties resulting from sudden accidental occur-

rences at the facility. 40 C.F.R. §§ 265.140 et seq. These

financial responsibility requirements are designed to

ensure that funds are available to close the facility and

maintain post-closure monitoring of the facility. An

owner or operator has a variety of options to choose from

in establishing financial assurance. Among these are

establishment of a closure trust fund, obtaining a surety

bond guaranteeing payments into a closure trust fund,

obtaining a letter of credit or sufficient closure insurance,

or passing a financial test set out in the regulations. 40

C.F.R. § 265.143.

Finally, RCRA provides a mechanism by which a

state can administer its own program in lieu of the fed-

eral program, although the state authorized program may

be enforced by the federal government as well as the

state. 42 U.S.C. § 6926. Michigan has been granted “Phase

I” authorization by the EPA to regulate hazardous wastes

through HWMA. HWMA was designed to track RCRA

and is the state law equivalent of RCRA. All the regula-

tions of 40 C.F.R. § 265 are adopted by reference in Rule

1003 of regulations promulgated pursuant to HWMA.

Mich. Admin. Code § 299.11003(1)(n).

A-24

B. Facts

PPP has engaged in the molding, electroplating, and

painting of plastic automobile parts at its Richland facil-

ity since 1969. The manufacturing processes involve the

creation, discharge, and storage of hazardous wastes. On

August 18, 1980, PPP provided the EPA a “Notification of

Hazardous Waste Activities”, listing specific hazardous

wastes that were generated, treated, stored, and disposed

of at the Richland facility. PPP also provided the EPA

with a Part A application in order to achieve interim

status pursuant to RCRA. At this time PPP identified

5,955 tons of listed hazardous waste in surface impound-

ments and a waste pile at the Richland facility. PPP was

not able to meet the financial responsibility requirements

of RCRA and so lost its interim status on November 8,

1985. Nevertheless PPP continued operating its hazard-

ous waste management facility without a license until

December 7, 1987. Although the proper timetable was not

followed, a closure plan which estimated the total cost of

closure at $2,300,000 was eventually submitted by PPP

and approved by the Michigan Department of Natural

Resources (“MDNR”) on September 30, 1988. On October

19, 1989, and November 1, 1989, respectively, PPP submit-

ted proposed amendments to the approved closure plan.

On December 11, 1989, MDNR provided PPP with a

Notice of Deficiency concerning the proposed amend-

ments, and the amendments were never approved. PPP

has entirely failed to implement the approved plan.

PPP and Ladney have also failed to meet the financial

responsibility requirements of RCRA and have not imple-

mented a groundwater monitoring system pursuant to

A-25

RCRA. However, they assert that they have implemented

a similar groundwater monitoring and purge system

under a consent order entered in a previous lawsuit

brought by the MDNR in state court.

In their motion for partial summary judgment, plain-

tiffs argue that RCRA is a strict liability statute which is

to be construed liberally in order to effectuate its reme-

dial goals. Once PPP and Ladney were found liable for

violations, an injunction requiring them to comply with

RCRA should issue as a matter of law. An approved

closure plan is in existence, and if PPP and Ladney had

followed the timetable include in the approved plan,

closure of the Richland facility would have been complete

by now. Given RCRA’s overriding concern with minimiz-

ing hazardous waste’s “present and future threat to

human health and the environment”, plaintiffs contend

the RCRA requirements should be implemented imme-

diately.

PPP and Ladney answer that it is inappropriate to

grant a permanent mandatory injunction at the summary

judgment stage. Defendants assert that their compliance

with a state court order and their alleged inability to

fulfill RCRA’s financial responsibility requirements are

mitigating circumstances which the Court must take into

account in fashioning injunctive relief. It is alleged that

these mitigating circumstances require the Court to con-

duct an evidentiary hearing. Further, defendants argue

that they cannot fulfill RCRA’s financial responsibility

requirements and that their implementation of a ground-

water monitoring system required by a state court order

precludes this Court from requiring them to implement

A-26

another groundwater monitoring system pursuant to

RCRA regulations.

II.

Summary judgment is appropriate when “there is no

genuine issue as to any material fact and the moving

party is entitled to a judgment as a matter of law.” Fed. R.

Civ. P. 56(c); Atlas Concrete Pipe, Inc. v. Roger ] . Au & Son,

Inc., 668 F.2d 905, 908 (6th Cir. 1982). There is no material

issue of fact for trial unless,-by viewing the evidence in

favor of the non-moving party, a reasonable jury could

return a verdict for that party. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 249 (1986); Boddy v. Dean, 821 F.2d 346,

349 (6th Cir. 1987). “If the evidence is merely colorable, or

is not significantly probative, summary judgment may be

granted.” Anderson, 477 U.S. at 249 (citations omitted).

The party moving for summary judgment bears the

initial responsibility of informing the court of the basis

for its motion and identifying those portions of the record

which demonstrate the absence of a material issue of act.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Potters

Medical Center v. City Hospital Association, 800 F.2d 568,

572 (6th Cir. 1986). Once the moving party has met its

burden, the non-moving party must go beyond the plead-

ings and come forward with specific facts to show that

there is a genuine issue for trial. Fed. R. Civ. P. 56(e);

Celotex, 477 U.S. at 322-24. If after adequate discovery the

party bearing the burden of proof fails to make a showing

sufficient to establish an essential element of his claim,

summary judgment is appropriate. Id.

A-27

The hornbook rule regarding injunctive relief is that

in order to prevail a plaintiff must prove that there is no

adequate remedy at law, that the plaintiff may suffer an

irreparable injury if an injunction is not granted and that

the balance of the equities justifies an injunction. For this

reason an evidentiary hearing is normally required before

injunctive relief may be granted. United States v. McGee,

714 F.2d 607, 613 (6th Cir. 1983). However, it has been

held that when the plaintiff is a governmental entity, or

private attorney general, and the activity may endanger

public health, injunctive relief is proper without under-

taking a balancing of the equities. Environmental Defense

Fund, Inc. v. Lamphier, 714 F.2d 331, 337-38 (4th Cir. 1983).

Likewise in cases of public health legislation, the

emphasis in balancing the equities shifts from irreparable

injury to concern for the general public interest. Id.

The Supreme Court has recently held that when envi-

ronmental legislation is at issue the court’s focus should

be on the purpose of the legislation. An injunction should

not automatically issue whenever there is a statutory

violation. Only if the conduct complained of thwarts the

legislative purpose and the statute specifically provides

for injunctive relief may the court issue an injunction

without undertaking a balancing of the equities or find-

ing irreparable injury. Amoco Production Co. v. Gambell,

480 U.S. 531, 542-43 (1987); See also Weinberger v. Romero-

Barcelo, 456 U.S. 305, 313 (1982).

Even applying the traditional equity standards

though, an injunction is normally the proper remedy for

violations of an environmental statute. There is rarely an

adequate remedy at law for an environmental injury, the

injury is usually irreparable, and the important role of the

A-28

public interest often shifts the balance of the equities in

favor of equitable relief. Gambell, 480 U.S. at 545. See also

Lamphier, 714 F.2d at 338 (when an injunction is autho-

rized by statute irreparable injury need not be shown);

United States v. White, 769 F.2d 511, 515 (8th Cir. 1985) (if

the prerequisites for a statutory remedy have been dem-

onstrated and an injunction will fulfill the legislative

purpose then the injunction should be granted).

III.

A. Implementation of Approved Closure Plan

Plaintiffs request that this Court order PPP and

Ladney to finally implement the closure plan approved

by the MDNR on September 30, 1988. As a preliminary

matter defendants argue that injunctive relief is an inap-

propriate remedy to grant at the summary judgment

stage and that the traditional standards for equitable

relief require the Court to conduct an evidentiary hear-

ing. This argument fails for two reasons.

First, it simply is not true that an evidentiary hearing

is always required before an injunction is issued. When

the evidence presented by affidavit and other documenta-

tion clearly establish the plaintiff’s right to an injunction,

a hearing need not be conducted. American Can Co. v.

Mansukhani, 814 F.2d 431, 425 (7th Cir. 1987); Socialist

Workers Party v. Illinois State Board of Elections, 566 F.2d

586 (7th Cir.), affirmed 440 U.S. 173 (1979). See McCarthy v.

Briscoe, 429 U.S. 1317, 1324 (1976).

Moreover, as discussed above, the traditional require-

ments for injunctive relief are less rigid when environ-

mental legislation is at issue. Following the Supreme

A-29

Court’s decision in Gambell, if the purpose of the legisla-

tion is thwarted by failure to comply, and the legislation

specifically authorizes injunctive relief, no finding of

irreparable injury or balancing of the equities need be

made. Even if these traditional prerequisites are consid-

ered by the court, equitable relief will often issue given

that an environmental injury is usually irreparable, plain-

tiffs rarely have an adequate remedy at law, and special

weight must be given to the public interest in balancing

the equities. 7

Because no material issue of fact remains as to defen-

dants’ liability, two issues now face the Court concerning

the appropriateness of granting injunctive relief. First,

does defendants’ violation thwart the purpose of RCRA?

If it does, an injunction should issue as a matter of law.

Second, if the violation is not directly at odds with

RCRA’s purpose, is an injunction nevertheless compelled

by a balancing of the equities?

As to the first issue, the purpose of RCRA as stated in

its declaration of policy is to minimize hazardous waste’s

“present and future threat to human health and the envi-

ronment.” 42 U.S.C. § 6902(b). In failing to implement a

closure plan mandated by RCRA, defendants are acting

_ directly at odds with the stated purpose of RCRA. Every

day that the Richland facility remains unclosed the threat

from the hazardous waste stored there goes unabated. In

addition, the Act specifically authorizes the issuance of

injunctive relief to effectuate its goals. 42 U.S.C.

§ 6928(a)(1). Under the Gambell analysis it is clear that

once liability has been established, as it has been here, an

injunction ordering compliance with RCRA’s closure

requirements must be granted.

A-30

Even applying the traditional standards for issuing

injunctive relief, implementation of the approved closure

plan is mandated. It is evident that despite defendants’

assertions to the contrary there is no adequate remedy at

law. Money damages will not close the Richland facility.

Given the harm already caused by defendants’ violations

and the continuing threat to human health and the envi-

ronment, closure is the only adequate remedy. If the

facility is to be closed pursuant to RCRA, it mut be

closed by the owners or operators. There is no other

mechanism to effectuate closure under the Act. irrepar-

able injury is established by the nature of hazardous

wastes, and in weighing the public interest the Court

notes once again that RCRA is specifically designed to

protect the public from the threat of harm caused by

hazardous waste. As long as closure of the facility is not

completed, that threat exists and is sufficient in itself to

compel closure. See USEPA v. Environmentai Waste Control

Inc., 917 F.2d 327, 332 (7th Cir. 1990) (Permanent injunc-

tion pursuant to RCRA was supported by potential dan-

ger to environment and public health.)

The only “equity” in the balance which weighs in

defendants’ favor is that closure of the facility will be

expensive. Defendants maintain that they do not pres-

ently have the $2,300,000 necessary to complete closure

and that imposition of the requested relief will simply

lead to contempt citations being issued against defen-

dants. Defendants rely on the affidavit of Thomas

Hinsberg, a certified public accountant, for the proposi-

tion that they do not have adequate funds to implement

the approved closure plan.” In examining this argument

the Court is cognizant of the fact that defendants had the

A-31

financial wherewithal to operate the Richland facility for

over two years after it lost interim status. RCRA is

designed to ensure that closure takes place at a time

when owners and operators have the funds necessary to

comply. If Ladney and PPP had fulfilled their obligations

under RCRA beginning on November 8, 1985, the facility

would have been closed some time in early 1986. Now,

almost five years after closure should have been complete

[sic], there is no equity in permitting defendants to

escape liability because they claim not to have the funds

necessary to meet that liability.

It is also apparent that upon ordering defendants to.

close the facility today they are not required to deliver

full payment for closure tomorrow. There is no require-

ment in RCRA that the entire cost of closure be paid at

once. Defendants’ main concern seems to be that they

hold many non-liquid assets which will take some time to

liquidate. Although the approved plan estimates that clo-

sure will cost $2,300,000, implementation of the plan will

likely cost substantially less. There is nothing which pro-

hibits defendants from beginning the closure process

immediately. As it becomes necessary to expend more

funds, assets can be liquidated to satisfy defendants’

obligations until closure is complete. In any event defen-

dants’ unsubstantiated assertion that they are unable to

pay for closure is an insufficient reason to deny injunctive

relief. Plaintiffs have satisfied their burden of proving

that a permanent injunction is warranted and the

Hinsberg affidavit, relying as it does on unsubstantiated

statements made by defendants, does nothing to raise a

material issue of fact for trial.

A-32

Finally defendants contend that it is impossible for

them to implement the approved closure plan because of

changes in the rules and regulations applicable to dis-

posal of hazardous wastes. They submit the affidavit of

Ronald C. Waybrant, an environmental consultant, which

states that the approved closure plan does not provide for

“stabilization” of the wastes before they are placed in a

landfill. Waybrant maintains that stabilization is now

required before the wastes may be buried. He also avers

that the approved closure plan relies on the assumption

that-a specific smelter in Canada would be available to

process certain sludges now stored at the Richland facil-

ity. He states that the smelter cannot process the sludge at

the rate required by the plan.

After reviewing the approved closure plan the Court

concludes that Waybrant’s assertions are in error. The

plan requires that wastes be treated “at a licensed hazard-

ous waste management facility that will render the waste

acceptable for disposal in accordance with the land ban

restrictions specified in 1988 40 C.F.R. § 268.33 and

268.40.” Approved Closure Plan, Modification 12.

According to the affidavit of Kathleen Clancy, an environ-

mental engineer employed by the MDNR, this require-

ment includes provision for stabilization of the waste.

Waybrant’s testimony does not identify which regulations

now require stabilization or where the approved plan

runs afoul of those regulations. The weight of the evi-

dence, viewed in defendants’ favor, establishes that the

approved plan is in compliance with the applicable EPA

regulations. Likewise, the plan makes no mention of the

smelter in Canada.® There is no reason to believe that the

plan cannot be fully implemented today.

A-33

In any event, defendants may propose amendments

to the approved plan if the circumstances upon which the

plan was based have changed. In fact, they are required

to amend the plan if “unexpected events require a mod-

ification.” 40 C.F.R. § 265.112(c). The Court is informed

that an amended plan is being prepared or recently has

been prepared by Waybrant. There are administrative

Processes outlined in RCRA through which these pro-

posed amendments will be reviewed by the EPA. Cur-

rently though the only approved plan is the 1988 plan

and it must be implemented as expeditiously as possible.?

B. Provision of Financial Assurance

Plaintiffs request that defendants be ordered to pro-

vide financial assurance for closure in accordance with 40

C.F.R. § 265.143. Defendants maintain that this relief is

inappropriate because they are unable to comply and

plaintiffs have an adequate remedy at law, namely, a

money judgment for a sum certain.

Viewing the totality of the evidence before it, the

Court suspects that defendants are not being forthright in

their assertion that they cannot provide financial assur-

ance. They rely once again on the affidavit of Thomas

Hinsberg as evidence of their inability to comply. It seems

fair to say that if defendants had been acting in good

faith for the past five years in attempting to comply with

RCRA they could now present the Court with better

evidence of their financial condition than a single affi-

davit which is admittedly untrustworthy and based on

unsubstantiated statements of the defendants and their

employees.

A-34

Still, the financial assurance requirement is second-

ary to the main goal of implementing the approved clo-

sure plan. Defendants are not required to provide

financial assurance before they implement the plan. This

provision is designed to guarantee that funds will be

available to complete closure and ultimately post-closure

maintenance in the event that defendants fail to fulfill

their closure and maintenance obligations. Applying the

Supreme Court’s Gambell analysis and giving defendants

the benefit of the doubt, it does not appear that an

injunction is necessary on this issue at this time. The

overriding purpose of RCRA is not to ensure that defen-

dants provide financial assurance, so an injunction

should not issue as a matter of course on this issue and

the Court must undertake an equitable analysis. Based on

the evidence presently before the Court there appears to

be little threat of irreparable injury from failure to imme-

diately provide financial assurance. After all, defendants

are required to immediately implement the approved clo-

sure plan. The public interest will be protected by imple-

mentation of the closure plan and plaintiffs may have an

adequate remedy at law in the form of a money judg-

ment. This matter is scheduled for trial beginning on

February 4, 1991, and at this time one of the main issues

before the Court will be defendants’ failure to provide

financial assurance. The Court expects that defendants

will come forward with more reliable evidence of their

respective financial situations than they have presented

at this juncture.

A-35

C. Compliance With Liability Requirements

Plaintiffs also request that the Court order defen-

dants to fulfill their liability requirements pursuant to 40

C.F.R. § 265.147. This issue is almost identical to the

financial assurances issue discussed above. Although the

Court is not satisfied with defendants’ contention that

they are not able to meet this responsibility, this require-

ment is not of the same urgency as the issue of closure.

Again, plaintiffs may have an adequate remedy at law

and based on the evidence presently before the Court a

balance of the equities appears to weigh in defendants’

favor. Resolution of this issue will await trial.

D. Compliance With Groundwater Monitoring Require-

ments

Plaintiffs’ final request is for an order compelling

defendants to comply with RCRA’s groundwater mon-

itoring requirements pursuant to 40 C.F.R. Part 265 Sub-

part F. From the Court’s previous finding of liability, it is

clear that defendants are required to implement a

groundwater monitoring system. Under an equitable

analysis of the present situation the issuance of an injunc-

tion in favor of the plaintiffs would now be warranted

except for an issue of fact that has yet to be resolved.

Defendants claim that an adequate groundwater

monitoring and purge system was installed at the Rich-

land facility this part year. Apparently this system was

installed pursuant to a 1984 state court order arising out

of earlier state court litigation. In support of this assertion

defendants offer the affidavit testimony of Nathan B.

Driggers, corporate counsel for PPP. He contends that the

A-36

installed system was approved by the MDNR, and defen-

dants imply in their brief (although they do not state

outright) that the system satisfies RCRA. Although plain-

tiffs correctly argue that compliance with the state order

does not excuse compliance with RCRA, it would be

inequitable to order defendants to do duplicate work.

Plaintiffs’ basis for their assertion that no groundwater

maintenance system has yet been installed is a July 31,

1989, MDNR report. Given Driggers’ affidavit asserting

that a system was installed in 1990, questions of fact

remain as to the existence of the system and its adequacy

under RCRA. Plaintiffs do not rebut defendants’ evidence

that this new system has been installed and that it fulfills

the RCRA requirements. Accordingly summary judgment

on this issue is inappropriate.

IV.

For the reasons stated above, plaintiffs’ motion for par-

tial summary judgment is granted in part and denied in part.

Plaintiffs are ordered to provide this Court with a detailed

proposed Order granting a permanent injunction as to defen-

dants’ implementation of the 1988 approved closure plan

and compliance with RCRA’s closure provisions, in accor-

dance with the foregoing opinion. The proposed Order

should specify exactly what activities defendants are

required to undertake and should incorporate the terms and

timetable of the approved closure plan.

/s/ Benjamin F. Gibson

BENJAMIN F. GIBSON

U.S. DISTRICT JUDGE

DATED: January 24, 1991

A-37

FOOTNOTES

1. Marguerite Ladney and the government have reached

a stipulated settlement and the claims against her have

been voluntarily dismissed. References to “Ladney” refer

to defendant Michael J. Ladney, Jr. and not to defendant

Marguerite Ladney.

2. Although the May 14, 1990, opinion does not discuss

MCP’s liability, the Court is informed that MCP will

stipulate to its liability. Accordingly, the only issue

remaining in this action is the appropriate relief to be

assessed against Ladney, PPP, and MCP.

3. RCRA further states:

The Congress hereby declares it to be the

national policy of the United States that wher-

ever feasible, the generation of hazardous waste

is to be reduced or eliminated as expeditiously

as possible. Waste that is nevertheless generated

should be treated, stored, or disposed of so as to

minimize the present and future threat to

human health and the environment.

42 U.S.C. § 6902(b).

4. Section 1004 of RCRA provides:

(5) The term “Hazardous waste” means a solid

waste, or combination of solid wastes, which

because of its quantity, concentration, or physi-

cal, chemical, or infectious characteristics may —

(A) cause, or significantly contribute to an

increase in mortality or an increase in

serious irreversible, or incapacitating

reversible, illness; or

(B) pose a substantial present or potential

hazard to human health or the environment

A-38

when improperly treated, stored, trans-

ported, or disposed of, or otherwise man-

aged.

42 U.S.C. § 6903(5). Pursuant to the requirements of Sec-

tion 3001 of RCRA, the Administrator has promulgated

regulations identifying hazardous waste characteristics

and specific hazardous wastes. 40 C.F.R. § 261, subparts C

and D.

5. 40 C.FR. § 265.111 requires that a hazardous waste

management facility must be closed in a manner that:

(a) Minimizes the need for further mainte-

nance, and

(b) Controls, minimizes or eliminates, to the

extent necessary to protect human health and

the environment, post-closure escape of hazard-

ous waste, hazardous constituents, leachate,

contaminated run-off, or hazardous waste

decomposition products to the ground or sur-

face waters or to the atmosphere, and

this subpart.

6. Defendants maintain that they are entitled to have a

money judgment, rather than an injunction, entered

against them in order that their contribution claims

against various third-parties may survive. However, there

is no reason to believe that any valid contribution claim

will be prejudiced by granting injunctive relief. Defen-

dants may pursue these claims in separate proceedings.

In any event, the availability of RCRA’s remedies do not

hinge on a defendant's ability to seek contribution.

7. Despite defendants’ assertion that the Court must

“believe” what is stated in the affidavit, taken at face

value the affidavit is worthless. Hinsberg did not conduct

an audit of PPP or Ladney. The basis for his conclusion

) |

A-39

that defendants do not currently have $2,300,000 is a

letter from Ladney and information he received from

unnamed PPP Personnel. In other words Hinsberg’s affi-

davit is based solely on unsubstantiated information pro-

vided by defendants. He even states, “None of the

aforementioned financial information from Mr. Ladney

and PPP has been audited, reviewed or compiled by me

in accordance with generally accepted accounting princi-

ples and I do not express any form of assurance on it”

(emphasis added). If defendants’ own expert witness can-

not attest to the truth of what he asserts, the Court is

perplexed as to why it must “believe” the affidavit.

8. Given several misstatements of fact contained in his

affidavit, it is unclear whether Waybrant’s testimony

refers to the approved closure plan. Plaintiffs offer the

theory that he is relying on PPP’s proposed amendments

which were received and rejected by the EPA in the fall of

1989. PPP never understood an appeal from the rejection

of these amendments, and so they are irrelevant at this

point.

9. Defendants raise two additional objections to order-

ing closure of the Richland facility, neither of which has

merit. First, they contend that their compliance with the

state court order and inability to provide financial assur-

ance are mitigating circumstances to consider in granting

the appropriate relief. Although the Court determined in

its May 14, 1990, opinion that these circumstance [sic]

maybe considered in fashioning the appropriate relief, at

a minimum PPP and Ladney are strictly liable for closure

of the facility. The Court cannot order the defendants to

do less than RCRA minimally requires. If mitigation is

warranted, it may only be considered in assessing mone-

tary fines and/or money damages at trial.

Second, defendants argue that providing financial

assurance is a prerequisite to closure. Because they have

A-40

not provided financial assurance they contend they can-

not be compelled to close the facility. Defendants are in

error. Although financial assurance is an important part

of the RCRA’s stautory [sic] and regulatory scheme, it is

not a necessary prerequisite, either logically or within the

Act’s framework, to implementation of an approved clo-

sure plan. If the statute required otherwise, closure could

easily be avoided by any defendant claiming to have

inadequate funds. Congressional intent is clear that clo-

sure, not financial assurance, is the overriding concern of

RCRA.

A-41

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF > File No. K87-138 CA

AMERICA, et al.,

Plaintiffs,

V. ORDER

PRODUCTION PLATED

PLASTICS, INC., et al.,

Defendants.

Hon. Benjamin F. Gibson

(Filed Jan. 24, 1991)

At a session of the Court held in and for said

District and Division in the City of Grand

Rapids, Michigan, this 24th day of Jan., 1991.

PRESENT: HON. BENJAMIN F. GIBSON, DIS-

TRICT JUDGE

In accordance with the Opinion dated January 24,

1991, IT IS HEREBY ORDERED that plaintiffs United

States and the State of Michigan’s motion for partial

summary judgment is GRANTED IN PART and DENIED

IN PART.

IT IS FURTHER ORDERED that plaintiffs prepare a

proposed Order, in accordance with the Opinion dated

January 24, 1991, granting a permanent injunction as to

defendants’ compliance with their statutory duty to close

their Richland, Michigan facility.

IT IS SO ORDERED.

/s/ Benjamin F. Gibson

U.S. District Judge

A-42

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA,

et al.,

Plaintiffs, Case No.

VS. K87-138-CA

PRODUCTION PLATED

PLASTICS, INC., MICHAEL J. Honorable

LADNEY, JR., MICHIGAN CITY Benjamin F. Gibson

PLASTICS, INC., et al.,

Defendants.

ORDER OF PERMANENT INJUNCTION

(Filed April 26, 1991)

At a session of said Court held in the Federal

Building, Kent County, Grand Rapids, Michigan,

on the 25th day of April, 1991.

PRESENT: HONORABLE BENJAMIN F. GIB-

SON

United States District Court Judge

The Court being fully advised in the premises, and

an Opinion and Order previously having been entered by

the Court on January 24, 1991, now, therefore;

IT IS ORDERED:

1. On September 30, 1988, the Michigan Department

of Natural Resources (“MDNR”) approved, with mod-

ifications, a Surface Impoundment Closure Plan and a

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Piled and Buried Sludge Closure Plan, both of which

were received by MDNR on or about July 29, 1987, for

Defendants’ electroplating facility located at 9899 East D

Avenue, Richland, Michigan (the “Richland Facility”).

These Closure Plans were approved pursuant to the

requirements of the Resource Conservation and Recovery

Act (“RCRA”), 42 USC 6901 et seg, and the Michigan

Hazardous Waste Management Act (“HWMA”), 1979 PA

64, as amended, MCL 299.501 et seq; MSA 13.30(1) et seq.

The Closure Plans, as approved by MDNR, are attached

hereto, incorporated by reference, and made an enforce-

able part of this Order Of Permanent Injunction.

2. Defendants Production Plated Plastics, Inc.

(“PPP”), Michael J. Ladney, and Michigan City Plastics,

Inc. (“MCP”) shall implement the terms and conditions of

the approved Closure Plans, as modified by MDNR, to

achieve timely closure of the RCRA/HWMA-regulated

surface impoundments, buried sludges, piled sludges

(“waste pile”), and associated traffic-loading areas

located at the Richland Facility.

3. Defendants PPP, Michael J. Ladney, and MCP

shall commence closure activities pursuant to the terms

and conditions of the approved Closure Plans promptly

upon entry of this Order Of Permanent Injunction. Clo-

sure of the surface impoundments, buried sludges, waste

pile, and associated traffic-loading areas shall be con-

ducted, completed, and submitted for certified compli-

ance in compliance with the following schedule:

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Surface Piled And

Impound- Buried

ment Sludge

Activity Closure Closure

(a) Construction of

decontamination

facility (surface

impoundment closure

only) 2 Weeks*

(b) Complete sludge

removal 16 10

sampling, analysis,

and removal 24 18

(d) Equipment

decontamination 25 19

(e) Decontamination

facility removal (in

piled and buried

sludge closure

schedule only) 20

(f) Grade area 26 21

(g) Closure certification

submittal 34 29

“Weeks to be calculated thirty (30) days from the date

of entry of this Order.

4. If Defendants PPP, Michael J. Ladney, and MCP

cannot achieve clean closure of the surface impound-

ments, buried sludges, waste pile, and associated traffic-

loading areas, as required by RCRA, HWMA, and the

terms and conditions of the approved Closure Plans, then

they shall fully comply with the post-closure care require-

ments of 40 C.F.R. Part 265, adopted by reference in Mich.

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Admin. Code, R. 299.11003(1)(n), including, without limita-

tion, the submittal of post-closure plan(s) for the Rich-

land Facility for MDNR review and approval.

5. By April 30, 1991, Defendants PPP, Michael J.

Ladney, and MCP shall submit to MDNR for its review

and approval an alternate groundwater monitoring pro-

gram for the Richland Facility in compliance with 40

C.F.R. Part 265, Subpart F. This program shall include,

without limitation, location, number and depth of wells,

sampling and analytical methods, evaluation procedures,

schedule of implementation, and provisions for deter-

mination of concentrations, rate, and extent of migration

of hazardous wastes and constituents. A copy of this

program shall be sent to U.S. EPA, Region V, Michigan/

Wisconsin Technical Enforcement Section, RCRA Enforce-

ment Section. 2305 Dearborn Street, SHR-12, Chicago,

Illinois 60604. Defendants thereafter shall implement the

new groundwater monitoring program approved by

MDNR.

6. This Order Of Permanent Injunction shall be

binding upon Defendant PPP, Michael J. Ladney, and

MCP, and upon their officers, agents, servants,

employees, and attorneys, and upon those persons in

active concert cr participation with them, who receive

actual notice of this Order by personal service or other-

wise.

/s/ Benjamin F. Gibson

Benjamin F. Gibson

United States District Court Judge

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No. 91-1728

UNITED STATES COURT OF APPEAL

FOR THE SIXTH CIRCUIT

UNITED STATES OF

AMERICA, AND FRANK J.

KELLY, Attorney General for

the State of Michigan ex rel.

MICHIGAN NATURAL

RESOURCES COMMISSION, ON APPEAL FROM

and GORDON E. GUYER, THE UNITED STATES

Director of the Michigan DISTRICT COURT

Department of Natural FOR THE WESTERN

Resources, DISTRICT OF

Plaintiffs-Appellees, sadeinienteais

V. (Filed

PRODUCTION PLATED Feb. 20, 1992)

PLASTICS, INC., MICHIGAN

CITY PLASTIC CO., INC.,

MICHAEL J. LADNEY, JR.;

Defendants-Appellants.

BEFORE: MARTIN and MILBURN, Circuit Judges; and

CONTIE, Senior Circuit Judge.

PER CURIAM. Production Plated Plastics, Inc., Mic-

hael Ladney and Michigan City Plastics appeal the dis-

trict court’s grant of summary judgment to the United

States. We need not repeat the facts of this case as they

have been outlined in United States v. Production Plated

Plastics, Inc., 742 F. Supp. 956, 960-91 (W.D. Mich. 1990).

In granting summary judgment, the district court found

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Production and Production’s president, Michael Ladney

liable for violations of the Resource Conservation and

Recovery Act and the Michigan Hazardous Waste Man-

agement Act. The district court found as a matter of law,

Production lost its interim status to operate a hazardous

waste facility on November 8, 1985 and continued its

hazardous waste activities after that loss.

In a separate opinion, the district court granted par-

tial summary judgment to the United States in the form of

a permanent injunction against Production, Michael

Ladney, and Production’s parent corporation, Michigan

City Plastics. The permanent injunction requires Produc-

tion, Ladney, and Michigan City Plastics to implement

and complete a state-approved closure plan as mandated

by RCRA and Michigan’s hazardous waste act. The dis-

trict court incorporated the approved plan into the

injunctive order and included a time schedule for com-

pletion of the various parts of the plan. The court ordered

that if Production was unable to comply with the closure

plans, Production must fully comply with post-closure

maintenance requirements as stated in 42 U.S.C. § 265.

The court also ordered Production to implement a new

groundwater monitoring system approved by Michigan’s

Department Natural Resources.

We have reviewed the record and find that the dis-

trict court properly applied the standards for injunctive

relief. By not closing the Richland facility in November

1985, Production was in direct conflict with RCRA. The

continued use of the facility after November 1985, and

the failure to implement the state-approved closure plans

imposes a continuing health hazard and thwarts the

express purpose of RCRA. Production argues that it is

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impossible for Production to comply with the district

court’s injunction. Other courts have effectively rejected

impossibility as a viable defense. See United States v. T&S

Brass and Bronze Works, Inc., 681 F.Supp 314, 321 (D. S.C.),

aff'd, 865 F.2d 1261 (4th Cir. 1988).

Production and Ladney are the only parties who can

bring about closure of the facility in keeping with RCRA’s

mandate. The purposes and intent of RCRA in its applica-

tion to the Richland facility will be achieved only through

the implementation of the approved closure plan. The

district court has correctly and appropriately insured the

implementation of the closure plan by finding Produc-

tion, Michigan City Plastics and Michael Ladney liable for

violations of RCRA and Michigan’s hazardous waste act

and through the imposition of an injunctive order.

We adopt the opinions of the district court and the

findings contained therein.

A TRUE COPY

Attest:

LEONARD GREEN, Clerk

By /s/ Sharon R. Tallango

Deputy Clerk

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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA,

FRANK J. KELLY, Attorney General

for the State of Michigan, ex rel.,

MICHIGAN NATURAL RESOURCES

COMMISSION, and GORDON E. GUYER,

Director of the Michigan Department

of Natural Resources,

Plaintiffs, File No. K87-138-CZ

HON. BENJAMIN F. GIBSON

we we we wee ee ee

VS.

PRODUCTION PLATED

PLASTICS, INC.,

and MICHAEL J. LADNEY, JR.,

Defendants.

DEPOSITION OF: January 30, 1989

STEVEN D. NOBLE 621 North 10th Street

Plainwell, Michigan

Appearances - MARK S. MEADOWS, P-24101

and

WILLIAM MERRILL, ESQ.

Attorneys for Plaintiffs

DOUGLAS W. VAN ESSEN, P-33169

Attorney for Defendants

Recorded By - NETWORK REPORTING CORPORA-

TION

Sandra L. Corsiglia, CER-3454

[p. 53] Q You don’t know who the corporate officers

are? Do you know any of the corporate officers?

A_ A few of them, yes, that I have had contact with.

Q Who are the ones you’ve had contact with?

A 1 have contact with Mr. Breen, the corporate

counsel, and Mr. Krockta, who is corporate safety and

environmental, and that’s about the extent of it.

Q Is Mr. Ladney a corporate officer?

A_ Yes, he is.

Q Have you even had contact - have you ever had

any discussions with him?

A No, I have not.

Q Who hired you?

A Mr. Evans hired me.

Q_ In your discussions about the - either the layouts

or the shutdown of the plant with Mr. Evans, did he ever

mention discussing either of those matters with Mr.

Ladney?

A He’s in contact daily with Mr. Ladney, from what

I understand.

* ¢ *

[p. 57} Q You made a statement that you under-

stood Mr. Evans to be in contact daily with Mr. Ladney.

How do you know that?

A_ He receives phone calls from him.

A-51

Q How do you know that?

A Because he’s said that he’s talked to Mr. Ladney

or -

Q He tells you that he talks to Mr. Ladney daily?

A Yeah. I - well, not daily, but he receives phone

calls. You know, I -

Q You've been present when he’s received phone

calls from Mr. Ladney?

A_ Yeah.

Q Have you been present when he calls Mr.

Ladney?

A No, I have not.

Q_ Do you know, when you refer to Mr. Ladney, do

you mean Michael Ladney or Nicholas Ladney?

A Michael Ladney.

A-52

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

UNITED STATES OF AMERICA, FRANK J.

KELLY, Attorney General for the

State of Michigan, ex rel., MICHIGAN

NATURAL RESOURCES COMMISSION, and

GORDON E. GUYER, Director of

the Michigan Department of Natural

Resources,

Plaintiffs, FILE NUMBER:

K87-138-CZ

HON. BENJAMIN F. GIBSON

PRODUCTION PLATED’

PLASTICS, INC.,

and MICHAEL J. LADNEY, JR.,

Defendants.

VS.

DEPOSITION OF: February 1, 1989

621 North 10th Street

JAMES M. BREITENBACH Plainwell, Michigan

Appearances - MARK S. MEADOWS, P-24101

and

WILLIAM MERRILL, ESQ.

Attorneys for Plaintiffs

DOUGLAS W. VanESSEN, P-33169

Attorney for Defendants

Recorded By - NETWORK REPORTING CORPORA-

TION

Sandra L. Corsiglia, CER-3454

A-53

[p. 6} Q All right. And from August of ‘85, when

you hired on at PPP, until the time you left in June of ’88,

did you hold the same position during that time period at

PPP?

O > 0

Yeah.

And what was your title?

Environmental specialist.

And what were your duties?

Well, mainly to make sure the company was in

compliance with the environmental regulations as far as |

could go, and to actually do the work to keep the com-

pany in compliance, revamp the contingency plans. The

biggest priority when I first came on was to write the

closure plans and carry those out, I guess. And the

groundwater monitoring was my responsibility, and mis-

cellaneous sorts of things dealing with the air quality

*from the paint booths and public health.

How about the lagoons at the plant? Did you

have any control over those lagoons, or responsibility

relating to them?

Well, I felt I had an input on the handling of

material there.

* * *

[p.12]Q Obviously, if Charles Gilchrist is dead, you

didn’t consult with him. Who did you then report to after

he died?

A Bill Evans.

A-54

Q And did you have any discussions with him

relating to the closure plans?

A_ Oh, yeah. The closure plans were a group effect.

Everybody had their input as to -

Q Okay. Tell me who else had input besides your-

self and Mr. Evans. .

A Well, just to bend other people’s ear. I talked to

John Wuori, who was an industry engineer at the time.

And, to some extent, Mike Smith was also involved, as far

as any [p. 13] treatment of waters.

* * om

[p. 52] Q When you talked about some of the rec-

ommendations you made, you said something about,

well, you didn’t have the final say. Who did have the final

Say with respect to environmental matters?

A Bill Evans on certain issues, I’m sure.

* * +

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.