Petition for Writ of Certiorari — Power Engineering Co. v. United States

Gerrans Court, U.S.

FILED

02108 6 JAN 17 2003

opie of THE CLERK

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In the

Supreme Court of the United States

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POWER ENGINEERING COMPANY;

REDOUBT, LTD.; and RICHARD J. LILIENTHAL,

Petitioners,

V.

UNITED STATES OF AMERICA,

Respondent.

4

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Tenth Circuit

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PETITION FOR WRIT OF CERTIORARI

as

M. REED HOPPER

Counsel of Record

ROBIN L. RIVETT

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, California 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Petitioners

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QUESTION PRESENTED

When a state that is authorized under the Resource

Conservation and Recovery Act to “administer and enforce” a

state hazardous waste program “in lieu” of a federal program

prosecutes an enforcement action, may the federal

Environmental Protection Agency undertake a separate

enforcement action against the same defendant for the same

violation?

PARTIES TO THE PROCEEDINGS

Petitioners are Power Engineering Company, Redoubt,

Ltd., and Richard J. Lilienthal. Respondent is the United States

of America.

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TABLE OF CONTENTS

Page

FO i

PARTIES TO THE PROCEEDINGS ...........cccccecees il

pp ee 1 Vv

PETITION FOR WRIT OF CERTIORARI ................. l

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enh as ic 6 b-0¥ aud a 0's 004 a0 Ui s wees l

STATUTORY PROVISIONS AT ISSUE .................. l

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UPRRMINOE OO BRU CCABE oo. ccc cccsessccssesncvcecs 4

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B. Procedural Background and Statement of Facts .... 5

REASONS FOR GRANTING THE WRIT ................. 7

I. BECAUSE THE TENTH CIRCUIT DECISION

BELOW AUTHORIZES THE EPA PRACTICE OF

“OVERFILING” UNDER RCRA THAT WAS

INVALIDATED BY THE EIGHTH CIRCUIT IN

HARMON INDUSTRIES, THIS CASE PRESENTS A

CONFLICT BETWEEN CIRCUITS THAT MUST

BE RESOLVED BY THIS COURT ................. 8

I. THE PETITION SHOULD BE GRANTED

BECAUSE THE DECISION BELOW

AUTHORIZES EPA TO USURP THE

ENFORCEMENT ROLE ASSIGNED TO THE

STATES UNDER RCRA WHICH UNDERMINES

THE FUNDAMENTAL CONCEPT OF FEDERAL

AND STATE COOPERATION EMBODIED IN

THE ACT AND NULLIFIES THE CLEAR

CONGRESSIONAL INTENT TO RELY ON

STATE ENFORCEMENT STRATEGIES ........... 15

iV

TABLE OF CONTENTS—Continued

Page

Ill. THE PETITION SHOULD BE GRANTED

BECAUSE THE IMPOSITION BY EPA OF

AN INDEPENDENT AND CONFLICTING

ENFORCEMENT STRATEGY IS CONTRARY TO

THE GOALS OF RCRA AND THE EPAITSELF .... 18

A. EPA “Overfiling” Has Only a Limited Deterrent

Effect and Is Counterproductive ..... Serer re 19

B. EPA “Overfiling” Is Unfair and Inequitable to

the Regulated Community .................55. 20

C. EPA “Overfiling” Interferes with Swift

Resolution of Environmental Problems .......... 21

CRIP GAME Kabob ese reesneerkwesevessheubenen seen 23

Vv

TABLE OF AUTHORITIES

Page

Cases

Gwaltney of Smithfield Ltd. v. Chesapeake Bay

Foundation, 484 U.S. 49 (1987) ............... 19-20

Harmon Industries, Inc. v. Browner,

191 F.3d 894 (8th Cir. 1999) ................. passim

Harmon Industries, Inc.v. Browner,

19 F. Supp. 2d 988 (D. Mo. 1998) ................ 10

United States v. Lehigh Portland Cement Co..,

1984 U.S. Dist. LEXIS 21366, No. C 84 3030

ees OE Fe Sacks ease ave rere

United States v. Power Engineering Company,

303 F.3d 1232 (10th Cir. 2002) ............ 1, 6, 13-14

United States v. Power Engineering Company,

125 F. Supp. 2d 1050 (D. Colo. 2000) ............ 1,7

United States v. Power Engineering Company,

191 F.3d 1224 (10th Cir 1999) .......... 5-6, 10, 11-13

United States v. Power Engineering Company,

10 F. Supp. 2d 1145 (D. Colo. 1998) ............... 6

United States v. SCM Corp.,

615 F. Supp. 411 (D. Md. 1985) .................. 18

Statutes

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Codes

49 Fed. Reg. 41036 (Nov. 2, 1984) ............. eens 5

Miscellaneous

Cook, Steven, State/Federal Enforcement of the Clean Air

Act and Other Federal Pollution Laws: Federal

Overfiling on State Enforcement Proceedings,

bth & Ree | eee rr 18-22

H.R. Rep. 1491, 94th Cong., 2nd Sess. 24, reprinted in

Fre Us WE oka Us eeease ves acta 12

Hearing before the Environment and Public

Works, United States Senate, 105th Cong.,

oem. 8 CU ran 5) shaw cede ian ees banaue 3

Humphrey, Hubert H., & Paddock, LeRoy C.,

The Federal and State Roles in Environmental

Enforcement: A Proposal for More Effective

and More Efficient Relationship,

14 Harv. Envtl L. Rev. 7 (1990) ........... 2, 7, 16, 22

Miller, Bryan S., Understanding Overfiling:

The Impact of Two Recent Federal Cases

on EPA Cverfiling,

1S: 3. BawG, Lb. & EAS SE CRG Oe os aces vcwcccccces 3

<ncPind B00

Zimmerman, Mark J., RCRA Overfiling by EPA:

The Start of a Trend?, 13 Envtl. Compliance &

Latie, Sees TOO. CE AESGEM occ ewisatssenvanweanhs 2

OAD R06 nth ate Ry oe Oe Ete meen’

l

PETITION FOR WRIT OF CERTIORARI

Power Engineering Company, Redoubt, Ltd., and Richard

J. Lilienthal, respectfully petition this Court for a writ of

certiorari to review the judgment of the United States Court of

Appeals for the Tenth Circuit.

> —

OPINIONS BELOW

The opinion of the court of appeals, United States v.

Power Engineering Company, et al., is reported at 303 F.3d

1232 (10th Cir. 2002), and. is included at Appendix B. The

opinion of the district court is reported at 125 F. Supp. 2d 1050

(D. Colo. 2000), and is included at Appendix C.

2

JURISDICTION

The judgment of the Court of Appeals for the Tenth

Circuit was entered on September 4, 2002. On November 14,

2002, this Court granted an extension of time to file a Petition

for Writ of Certiorari to January 17, 2003 (Application No.

02A393) (Appendix A). This Court has jurisdiction under 28

U.S.C. § 1254(1).

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STATUTORY PROVISIONS AT ISSUE

The pertinent provisions of the Resource Conservation and

Recovery Act are found at 42 U.S.C. § 6926(b), (d), and (e);

§ 6928(a)(1)-(2); and § 6972(b)(1)(B), and are set out in

Appendices F, G, and H.

—o—

2

INTRODUCTION

This is not the first case in which the Environmental

Protection Agency (EPA) has invaded a state’s enforcement

authority and filed an overlapping and inconsistent federal suit

when the state has already initiated its own enforcement action

for the same violations—a practice known as “overfiling.” It is,

however, the first case creating a conflict in the circuits over the

EPA’s authority to “overfile” under the Resource Conservation

and Recovery Act (RCRA). In Harmon Industries, Inc. v.

Browner, 191 F.3d 894 (8th Cir. 1999) (Appendix I), the Eighth

Circuit held that EPA was barred from “overfiling” under

RCRA. However, the Tenth Circuit in this case expressly

rejected the Harmon analysis and concluded that EPA

“overfiling” in a RCRA action is allowed. To resolve this

conflict, this Court should grant the Petition for Writ of

Certiorari.

This case warrants Supreme Court review for other

reasons as well; it raises an important question of national

scope that implicates the reach of federal enforcement authority,

the ability of the states to pursue their own enforcement

strategies without the threat of federal interference, and federal-

state cooperation. With increasing frequency, EPA is

undermining state enforcement efforts under a number of

federal environmental statutes. See Hubert H. Humphrey &

LeRoy C. Paddock, The Federal and State Roles in

Environmental Enforcement: A Proposal for More Effective

and More Efficient Relationship, 14 Harv. Envtl. L. Rev. 7

(1990). See also Mark J. Zimmerman, RCRA Overfiling by

EPA: The Start of a Trend?, 13 Envtl. Compliance & Litig.

Strategy No. 1 at 5 (1997).

In addition to RCRA, the states may administer and

enforce their own environmental programs under the Clean

Water Act (CWA) and the Clean Air Act (CAA). These state

programs must be equal to, or more stringent than, the

3

corresponding federal law and the state programs must be

approved by EPA. But, the Agency still overrides state permit

decisions and files duplicative federal suits against polluters

because EPA is dissatisfied with the conditions imposed or the

penalties sought. This insidious practice wastes federal, state,

and private resources, and breeds distrust between State and

federal enforcers. It also generates uncertainty among the

citizens in the regulated community who cannot rely on their

dealings with state officials so long as EPA claims it can

override state enforcement decisions. EPA maintains it has

virtually unlimited authority to “overfile” under RCRA. See

Bryan S. Miller, Understanding Overfiling: The Impact of Two

Recent Federal Cases on EPA Overfiling, 15 J. Envtl L. &

Litig. 21 (2000). But, this appears to be an “about face” for

EPA: “In adopting this policy, the Agency overruled internal

adjudicatory decisions that held that RCRA does not allow for

the practice.” /d. Miller questions whether EPA may “overfile”

at all, under any environmental statute. /d.

So disruptive has “overfiling” become, or, more

accurately, the threat of “overfiling,” that the Senate has held

hearings to consider the matter. See Hearing before the

Environment and Public Works, United States Senate, 105th

Cong., Sess. 1, (1997) on the Relationship Between the Federal

and State Governments in the Enforcement of Environmental

Laws. The validity of EPA “overfiling” is clearly an important

federal question justifying review by this Court. The resolution

of this question has become a matter of necessity, however, in

light of the conflict the decision below has created with the

Eighth Circuit decision in Harmon Industries.

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STATEMENT OF THE CASE

A. Statutory Background

RCRA provides for the regulation of hazardous waste

through federal leadership and incentives while recognizing that

the collection and disposal of hazardous waste “should continue

to be primarily the function of State, regional, and local

agencies... .” 42 U.S.C. § 6901(4) (Appendix D). Under

RCRA, any state may seek to “administer and enforce” a

hazardous waste program upon approval by the EPA. 42

U.S.C. § 6926(b). If approved, the state is authorized to carry

out its hazardous waste program “‘in lieu” of a federal program

and, among other things, to issue and enforce permits for the

storage, treatment, or disposal of hazardous wastes. Jd. EPA

approves a state program only when the Administrator has

found (1) the state program is “equivalent to the Federal

program,” (2) the state program is “consistent with the Federal

program” and other state programs, and (3) the state program

provides “adequate enforcement of compliance” with RCRA

requirements. Jd.

The effect of an authorized or permitted state program is

that “[a]ny action taken by a state under a hazardous waste

program ... shall have the same force and effect as action taken

by the Administrator [of the EPA]... .” 42 U.S.C. § 6926(d)

(emphasis added).

The federal remedy for state noncompliance with the

permitted state program is withdrawal of federal authorization:

Whenever the Administrator determines after public

hearing that a State is not administering and

enforcing a program authorized under this section

[42 U.S.C. § 6926] in accordance with requirements

of this section, he shall so notify the State and, if

appropriate corrective action is not taken within a

reasonable time, not to exceed ninety days, the

Administrator shall withdraw authorization of such

?

program and establish a Federal program pursuant to

this chapter. The Administrator shall not withdraw

authorization of any such program unless he shall

first have notified the State, and made public, in

writing, the reasons for such withdrawal.

42 U.S.C. § 6926(e).

B. Procedural Background and Statement of Facts

For almost twenty years, the State of Colorado has

administered and enforced its own hazardous waste program “‘in

lieu” of a federal program. That program is EPA approved and

is codified as the Colorado Hazardous Waste Management Act.

49 Fed. Reg. 41036 (Nov. 2, 1984) (Final Authorization of

State Hazardous Waste Management Program). The Colorado

Department of Public Health and Environment (CDPHE)

carries out the state program. See United States v. Power

Engineering Company, 303 F.3d 1232, 1235 (10th Cir. 2002)

(Appendix B). At no time has EPA sought to withdraw

authorization of the State hazardous waste program.

Power Engineering Company operates a metal refinishing

and chrome electroplating business in Denver, Colorado. Jd.

Redoubt, Ltd., leases land and buildings to Power Engineering

and Richard Lilienthal is an officer and the sole owner of both

companies (collectively “PEC”). Jd. The electroplating and

refinishing processes produce regulated hazardous waste. /d.

In 1986, PEC notified CDPHE that it was a generator of

hazardous waste. See United States v. Power Engineering

Company, 191 F.3d 1224, 1230 (10th Cir. 1999). After a

compliance inspection in 1993, however, CDPHE cited PEC for

treating, storing, and disposing of certain hazardous wastes

without a permit and charged that chromium from the Power

Engineering site had contaminated the soil and the groundwater.

Power Engineering, 303 F.3d at 1235. CDPHE issued an Initial

Compliance Order in July, 1994, and a Final Compliance Order

in June, 1996, directing PEC to clean up the contamination,

6

conduct frequent inspections, submit periodic cleanup reports,

and follow all hazardous waste laws. /d. Before CDPHE

issued its Final Compliance Order, EPA asked CDPHE to

enforce the requirements of RCRA and the Colorado

regulations and require financial assurances from PEC. /d. at

1235-36. However, CDPHE chose not to demand financial

assurances. Id. at 1236.

In August, 1996, EPA notified CDPHE that it had failed

to take timely and appropriate action with respect to PEC by not

assessing a civil penalty. When PEC did not comply with all of

the requirements of the cleanup order, CDPHE ordered PEC in

Deceinber, 1996, to pay civil penalties of $1.13 million and

sought enforcement of its orders in State court on August 1,

1997. See id. at 1235. Relying on RCRA and the State’s

regulations, the United States (on behalf of EPA) “filed its own

lawsuit against PEC for the same violations” simultaneously

with the State action. Jd. However, contrary to the State, EPA

sought civil penalties, an injunction to stop PEC’s hazardous

waste operations, and financial assurances. Among other

things, the district court granted the United States a preliminary

injunction requiring PEC to provide financial assurances of

$3.5 million. See United States v. Power Engineering

Company, 10 F. Supp. 2d 1145 (D. Colo. 1998). That

preliminary injunction was upheld on appeal by the Tenth

Circuit. See Power Engineering, 191 F.3d 1224. In March,

1999, the state court held the CDPHE orders were enforceable.

303 F.3d at 1235. After these decisions, the United States

dropped all of its claims except for financial assurances and

amended its complaint.

In district court, the United States and PEC filed cross-

motions for summary judgment. In reliance on the Eighth

Circuit decision in Harmon Industries, PEC argued that RCRA

and res judicata prohibited the EPA from “overfiling,” or filing

a federal enforcement action when the state has already

undertaken an enforcement action for the same conduct under

7

its federally-authorized hazardous waste program. Power

Engineering, 303 F.3d at 1236. The district court ruled for

EPA and held that PEC must provide financial assurances (later

fixed at $2,119,044) and obtain liability coverage for accidental

occurrences. See United States v. Power Engineering

Company, 125 F. Supp. 2d 1050 (D. Colo. 2000) (Appendix C).

On appeal, the Tenth Circuit rejected Harmon Industries’

interpretation of RCRA and affirmed the district court on

grounds that a federally-authorized state hazardous waste

program does not stand “in lieu” of the federal program for

enforcement purposes. 303 F.3d at 1236-40. This created an

express conflict between the Eighth and Tenth Circuits. To

resolve this conflict, PEC petitions this Court for a writ of

certiorari.

rN

REASONS FOR GRANTING THE WRIT

In this case, Petitioners challenge EPA’s expanding

practice of undermining state enforcement decisions by

“overfiling” under RCRA. But this case has iniplications

beyond its precise facts. Whether EPA may interfere in this

way with state enforcement efforts under RCRA will likely

define the federal-state relationship for other federal

environmental laws as well. In addition to RCRA, EPA has

“overfiled” under the CWA, the CAA, Superfund, and others.

See Humphrey, supra. -

The question for this Court is whether a state has

exclusive authority to enforce its EPA-approved hazardous

waste program—unless EPA withdraws its approval of the state

program or the state fails to initiate an enforcement action. The

Tenth Circuit in this case decided that the “in lieu” and “same

force and effect” language of RCRA does not bar the federal

government from filing its own enforcement action when the

state has already acted to address the same violations. But, that

8

decision expressly conflicts with a decision of the Eighth

Circuit in Harmon Industries.

Moreover, an objective of RCRA, as with similar

environmental laws, is to establish a viable federal-state

partnership in the Act’s implementation. This is essential to

achieving the statutory goals of a cleaner and _ safer

environment. However, the EPA’s practice of supplanting state

enforcement decisions generates distrust, creates uncertainty,

and defeats attempts at meaningful cooperation between state

and federal officials. The EPA’s practice of undermining state

enforcement efforts also wastes public and private resources,

conflicts with the historical role of states in dealing with local

environmental problems, and is counterproductive.

For these reasons, the petition should be granted.

I

BECAUSE THE TENTH CIRCUIT DECISION

BELOW AUTHORIZES THE EPA PRACTICE OF

“OVERFILING” UNDER RCRA THAT WAS

INVALIDATED BY THE EIGHTH CIRCUIT IN

HARMON INDUSTRIES, THIS CASE PRESENTS A

CONFLICT BETWEEN CIRCUITS THAT MUST BE

RESOLVED BY THIS COURT

Harmon Industries involved an “overfiling” action in the

State of Missouri. Like Colorado, the State of Missouri is

authorized to enforce it’s own hazardous waste program “in

lieu” of a federal program. Pursuant to this authority, the

Missouri Department of Natural Resources (MDNR) settled

with Harmon Industries, Inc., relative to contaminated property

_ at Harmon’s assembly facility in Grain Valley, Missouri. At

this facility, Harmon assembled circuit boards for railroad

equipment. From 1973 through 1987, Harmon employees used

organic solvents to clean soldering flux from the circuit boards.

During that time, Harmon employees collected residual solvent

in three to five gallon pails. Every few weeks, Harmon

9

maintenance workers would throw the solvent literally out the

back door onto the ground. This amounted to about 30 gallons

of solvent a month. Harmon management was unaware of this

practice and assumed the solvent was used until depleted.

Harmon management discovered this disposal practice during

a safety inspection in 1987. In response to this discovery,

Harmon switched to a nonhazardous cleaning material and

ceased to generate hazardous waste. Harmon also conducted an

investigation of the contaminated site and voluntarily reported

its illegal activities to the state.

Harmon investigators ultimately determined the disposal

site did not pose a risk to human health or the environment due

to low levels of contamination, the lack of groundwater

resources, and the absence of exposure pathways. Based on

these findings, Harmon proposed leaving the contaminants in

the ground and submitted a closure report for the site to MDNR.

MDNR approved the closure report and issued a closure permit

on condition that Harmon maintain liability coverage for the

site for the next thirty years.

Harmon spent over $800,000 to change its assembly

process, with annual costs estimated at $250,000, and

$1.4 million for site investigation, with anticipated post-closure

costs of about $500,000. MDNR apparently believed Harmon

acted in good faith and, over objections by the EPA, never filed

an enforcement action against Harmon seeking civil penalties.

Instead, MDNR entered into a court-approved consent decree

with Harmon specifying essentially that Harmon’s compliance

with the consent decree “constitutes full satisfaction and release

from all claims” arising from the incident. Notwithstanding

this consent decree, however, the EPA filed an administrative

complaint against Harmon for civil penalties of $2,777,324.

This was reduced to $586,716 by an administrative law judge.

The penalty was upheld by the Environmental Appeals Board

but overturned by the United States District Court for the

Western District of Missouri.

10

The district court reasoned that if state enforcement

actions under RCRA are to have the “same force and effect” as

actions taken by the Administrator of the EPA, the EPA cannot

“modify, by piecemeal measures, any action taken by states.”

Harmon Industries v. Browner, 19 F. Supp. 2d. 988, 996 (D.

Mo. 1998). The court determined the language of the statute

prohibited “overfiling” by the EPA and concluded that EPA

was bound by the consent decree. This decision was affirmed

by the Eighth Circuit on appeal. See Harmon Industries, Inc.

v. Browner, 191 F.3d 894 (Appendix I).

After observing that the statutory permissibility of

“overfiling” was a question of first impression in the federal

circuits, the Eighth Circuit first looked to the statutory language

of RCRA authorizing a state to administer and enforce a

hazardous waste program “‘in lieu” of a federal program. Jd. at

897-98. The court concluded: “The plain “in lieu of’ language

contained in the RCRA [42 U.S.C. § 6926(b)] reveals a

congressional intent for an authorized state program to supplant

the federal hazardous waste program in all respects including

enforcement.” 191 F.3d at 899. The court also noted the plain

language of section (d) that states, ““Any action taken by a state

under a hazardous waste program authorized under [RCRA]

[has] the same force and effect as action taken by the [EPA]

under this subchapter.” 42 U.S.C. § 6926(d). According to the

Eighth Circuit: “The “same force and effect” language of

section 6926(d) provides additional support for the primacy of

the states’ enforcement rights under the RCRA when the EPA

has authorized a state to act in lieu of it.”” Harmon, 191 F.3d at

899.

The court also found congressional intent evident in

RCRA’s provision allowing the EPA to withdraw authorization

from a state if the state’s program “does not provide adequate

enforcement of compliance with the requirements of’ RCRA.

191 F.3d at 899. See also 42 U.S.C. § 6926(e) (Withdrawal of

authorization). “This language,” the court stated, “indicates

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11

that Congress intended to grant states the primary role of

enforcing their own hazardous waste program.” 191 F.3d at

899. This indication is not undermined, the court concluded, as

EPA argued, by the language of section 6928:

Id.

Id.

[S]ection 6928(a)(1) allows the EPA to initiate

enforcement actions against suspected environmental

violators, except as provided in section 6928(a)(2).

Section 6928(a)(2) permits the EPA to enforce the

hazardous waste laws contained in the RCRA if the

agency gives written notice to the state.

But, the court observed, these two sections must be

interpreted in light of the entire Act.

Harmonizing the section 6928(a)(1) and (2) language

that allows the EPA to bring an enforcement action

in certain circumstances with section [6926]’s _

provision that the EPA has the right to withdraw

state authorization if the state’s enforcement is

inadequate manifests a congressional intent to give

the EPA a secondary enforcement right in those

cases where a state has been authorized to act that is

triggered only after state authorization is rescinded

or if the state fails to initiate an enforcement action.

According to the court, the notice requirement of section

6928(a)(2) “reinforces the primacy of a state’s enforcement

rights under RCRA” by allowing a state an opportunity to

initiate its own enforcement action. Jd. Only if the state fails

to act may EPA initiate its own action. Jd. “Thus, the notice

requirement is an indicator of the fact that Congress intended to

give the states, that are authorized to act, the lead role in

enforcement under RCRA.” Jd.

12

EPA countered by citing the citizen suit provision of the

Act. Section 6972(b)(1)(B) states that “if the [EPA] or State

has commenced and is diligently prosecuting a civil or criminal

action in a court of the United States or a State,” then a private

citizen suit is not allowed. EPA argued that if Congress had

intended to limit the Agency’s night to “overfile,” it would have

stated its intent like it did iffthe citizen suit provision. 191 F.3d

at 900. But the Eighth Circuit was not persuaded. The court

observed that section 6972 is directed at private enforcement

whereas section 6926 is directed at state enforcement.-/d. “The

mere fact that Congress did not choose to employ the exact

same language as contained in an unrelated part of the act does

not detract from the plain language used in the state

authorization section.” Further, the court reiterated: “Congress

provided that the state’s program should operate in lieu of the

federal program and that the state action should operate with the

same force and effect as action taken by the EPA.” Jd. at 900-

01.

In response to EPA’s argument that the language of RCRA

is ambiguous, the Eighth Circuit cited several excerpts from the

legislative history that support the primacy of the states’

enforcement rights. See, e.g., H.R. Rep. 1491, 94th Cong., 2nd

Sess. 24, reprinted in 1976 U.S.C.C.A.N. 6262 (“It is the

Committee’s intention that the States are to have primary

enforcement authority and if at any time a State wishes to take

over the hazardous waste program it is permitted to do so,

provided that the State laws meet the federal minimum

requirements for both administering and enforcing the law.’’).

See also 1976 U.S.C.C.A.N. at 6269 (Although the “legislation

permits the states to take the lead in the enforcement of the

hazardous wastes laws... the Administrator [of the EPA] is

not prohibited from acting in those cases where the state fails

to act, or from withdrawing approval of the state hazardous

waste plan and implementing the federal hazardous waste

program pursuant to . . . this act.””) (emphasis added).

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13

Based on these excerpts, and others, the court concluded:

“The House Report thus supports our interpretation of ‘the

statute—that the federal government’s right to pursue an

enforcement action under the RCRA attaches only when a

state’s authorization is revoked or when a state fails to initiate

any enforcement action.” 191 F.3d at 901. Therefore, the

Eighth Circuit held that the EPA practice of “overfiling”’ is

statutorily impermissible: “There is no support either in the

text of the statute or the legislative history for the proposition

that the EPA is allowed to duplicate a state’s enforcement

authority with its own enforcement action.” Jd. But, the Tenth

Circuit in this case expressly rejected this analysis and came to

the opposite conclusion.

In the decision below, the court correctly observed that

Harmon found that “the administration and enforcement of the

[hazardous waste] program are inexorably intertwined.” /d.

(emphasis added). However, the Tenth Circuit disagreed with

this conclusion: “This interpretation fails to account for the

placement of “enforcement” and “in lieu of” in separate clauses

of section 6926(b), and it does not adequately consider the

structure of the statute.” Power Engineering, 303 F.3d at 1238.

Therefore, the Tenth Circuit rejected Harmon’s interpretation

that “in lieu” authorization of a state hazardous waste program

deprives EPA of its enforcement powers.

The Tenth Circuit also rejected the Harmon court’s

interpretation of “the same force and effect” language. Section

6926(d) states: “Any action taken by a State under a hazardous

waste program authorized under this section shall have the

same force and effect as action taken by the [EPA] under this

subchapter.” 42 U.S.C. § 6926(d). Whereas Harmon “found

that this section applies broadly to any action authorized under

this subchapter, including enforcement,” the court in this case

concluded:

14

According to this interpretation, the statute

substitutes state enforcement action for EPA

enforcement action and therefore does not permit an

EPA lawsuit when a state has initiated an

enforcement suit. This interpretation reads too much

into the provision. The provision must be read in the

context of the language and design of the statute as

a whole.

303 F.3d at 1239.

Of course, that’s exactly what the Harmon court did. It

construed this section so as to avoid a conflict with section

6928(a)(1) and (2) which the EPA argues gives the agency carte

blanche to file a separate lawsuit when a state has already taken

action. But the Tenth Circuit dismissed the notion that

administration of a hazardous waste program and enforcement

of a hazardous waste program are “inexorably intertwined,” as

the Harmon court held. In the words of the Tenth Circuit, the

Eighth Circuit’s harmonizing of RCRA

[g]oes well beyond the plain language of the statute.

While Harmon correctly states that section 6928(a)

limits the EPA’s right to bring an enforcement action

to “certain circumstances,” the only explicit

limitation is that the EPA must provide prior notice

to authorized states. Withdrawal of authorization for

a state program is an “extreme” and “drastic” step

that requires the EPA to establish a federal program

to replace the cancelled state program. Nothing in

the text of the statute suggests that such a step is a

prerequisite to EPA enforcement or that it is the only

remedy for inadequate enforcement.

Id. at 1238-39 (citations omitted).

The Tenth Circuit’s decision in this case, that RCRA

permits “overfiling,” conflicts therefore *. ith the Eighth Circuit

se Ee

rey

15

decision in Harmon that RCRA prohibits “overfiling.”

Accordingly, this Court should grant the petition for writ of

certiorari and resolve this conflict.

Il

THE PETITION SHOULD BE GRANTED BECAUSE

THE DECISION BELOW AUTHORIZES EPA TO

USURP THE ENFORCEMENT ROLE ASSIGNED

TO THE STATES UNDER RCRA WHICH

UNDERMINES THE FUNDAMENTAL CONCEPT

OF FEDERAL AND STATE COOPERATION

EMBODIED IN THE ACT AND NULLIFIES THE

CLEAR CONGRESSIONAL INTENT TO RELY ON

STATE ENFORCEMENT STRATEGIES

Among the objectives Congress listed for RCRA is:

[E]stablishing a viable Federal-State partnership to

carry out the purposes of this chapter and insuring

that the Administrator will, in carrying out the

provisions of subchapter III of this chapter, give a

high priority to assisting and cooperating with States

in obtaining full authorization of State programs

under subchapter III of this chapter.

42 U.S.C. § 6902(a)(7) (Appendix E).

Subchapter III of RCRA details the Hazardous Waste

Management Program and delineates the process for state

authorization. The Act states: “Such State is authorized to

carry out such program in lieu of the Federal program.” 42

U.S.C. § 6926(b). Put another way, the effect of state

authorization is that “[aJ]ny action taken by a state under a

hazardous waste program [by an authorized state] shall have the

same force and effect as action taken by the Administrator.”

42 U.S.C. § 6926(d).

But notwithstanding the congressional directive to

establish a federal-state partnership and the clearly stated

16

deference EPA is to give authorized states, EPA seems to

believe its mandate for cooperation evaporates once a state is

certified. This is evident from the insidious practice of EPA to

usurp state enforcement decisions to seek its own enforcement

goals.

In their article, The Federal and State Roles in

Environmental Enforcement: A Proposal for More Effective

and More Efficient Relationship, 14 Harv. Envtl. L. Rev. 7,

Hubert H. Humphrey and LeRoy C. Paddock recount the EPA’s

history of “overfiling” under numerous environmental laws,

including the CAA, the CWA, and RCRA. According to the

authors, one of whom was Attorney General of the State of

Minnesota, “overfiling” is disruptive to state enforcement

programs in a number of ways. Primarily, “overfiling”

increases the reluctance on the part of regulated entities to deal

only with state enforcement officials. Obviously, if EPA can

override the state, regulated entities cannot be certain that a

compliance schedule or a penalty amount agreed to by the state

is final. One result is that states may find it harder to reach

settlements with regulated entities. Humphrey, supra, at 13-14.

At best, this is counterproductive. At worst, it unnecessarily

delays the resolution of a cleanup action to the ultimate injury

of the people and the environment.

Another result is that unilateral enforcement by EPA

breeds distrust between federal and state enforcement officials.

Indeed, the very act of “overfiling” is a breach of trust. Once a

state is authorized to enforce the federal program, the state

stands “in lieu” of EPA. This authorization is meaningless,

however, if EPA can invade state enforcement authority

whenever federal officials disagree with the state action.

Moreover, this disagreement may not have anything to do with

the state’s substantive response to the environmental problem.

So it was in this case.

17

Under RCRA, the state receives federal authorization only

after satisfying the EPA that (1) the state program is equivalent

to the federal program; (2) the state program is consistent with

other state programs; and (3) the state program provides

adequate enforcement of RCRA requirements. See 42 U.S.C.

§ 6926(b). Colorado met these exacting standards and received

state authorization from EPA. At no time during the PEC

incident did EPA question the state’s ability to handle the

investigation, cleanup, or resolution of the case. Nor did EPA

question the state’s fitness to keep its state authorization,

although EPA has the power to withdraw such authorization:

Whenever the Administrator determines after public

hearing that a State is not administering and

enforcing a program authorized under this section in

accordance with requirements of this section, he

shall so notify the State and, if appropriate corrective

action is not taken within a reasonable time, not to

exceed ninety days, the Administrator shall withdraw

authorization of such program and establish a

Federal program pursuant to this chapter.

42 U.S.C. § 6926(e).

Rather, EPA complained that CDPHE had not exacted its

“pound of flesh” from PEC by requiring it to put up more

money in the way of civil penalties and financial assurances. In

effect, EPA made an end run around the authorization

withdrawal process and simply overrode the state’s enforcement

strategy by filing its own civil action. The inconsistent federal

suit not only demonstrated EPA’s open disregard for the state’s

duly authorized RCRA enforcement program, but undermined

Colorado’s own enforcement goals.

This practice simply cannot be reconciled with the RCRA

objective of establishing a federal-state partnership and relying

on state enforcement to achieve the national goals of a cleaner

and safer environment. To the contrary, it subverts that

18

objective and disrupts the state enforcement program. EPA

enforcement under RCRA should be limited to those cases

where the state is unwilling or incapable of enforcement

altogether. If EPA enforcement goals are inconsistent with

state enforcement objectives, EPA should withdraw state

authorization and assume full responsibility for the hazardous

waste program. For these reasons the petition should be

granted.

Ill

THE PETITION SHOULD BE GRANTED

BECAUSE THE IMPOSITION BY EPA OF

AN INDEPENDENT AND CONFLICTING

ENFORCEMENT STRATEGY IS CONTRARY TO

THE GOALS OF RCRA AND THE EPA ITSELF

In his article, State/Federal Enforcement of the Clean Air

Act and Other Federal Pollution Laws: Federal Overfiling on

State Enforcement Proceedings, 1987 B.Y.U.L. Rev. 1085,

Steven Cook examines whether the practice of “overfiling” by

EPA helps the agency achieve its goals of deterrence, fair and

equitable treatment of the regulated community, and rapid

resolution of environmental problems. He concludes that, on

balance, it does not.

To illustrate EPA’s “overfiling” practices, Cook cites two

cases wherein EPA filed an action for civil penalties after the

parties had signed a consent decree with the state settling the

cases: United States v. Lehigh Portland Cement Co.,1984 U.S.

Dist. LEXIS 21366, No. C84 3030 (N.D. Iowa 1984), and

United States v. SCM Corp., 615 F. Supp. 411 (D. Md. 1985).

Cook notes that the negotiations between the companies and the

state were extensive and comprehensive and that EPA was

aware of the negotiations but did not intervene until after

settlement. He concludes that when EPA did take action, it was

in utter disregard for the previous work of the parties and the

overall effect of “overfiling’” was to the detriment, rather than

dike Sv eae Heat

Fe Cn ver eet Cr eee we Ae ees

LOE SLE TE SL BOR SEMA Nii 2c Mee AB Sipeecas

19

in furtherance, of EPA’s civil penalty objectives. Cook, supra,

at 1088-90.

A. EPA “Overfiling” Has Only a Limited

Deterrent Effect and Is Counterproductive

According to Cook, EPA “overfiling” policy is designed

to persuade violators to take precautions against future

violations and to deter others from committing violations. Jd.

at 1090. While acknowledging that “overfiling” has some

deterrent effect, he concludes that the EPA’s preference for

exacting money damages inhibits environmental cleanup

because it weakens the negotiating power of the state and

diverts money from the state which can be used for local

pollution control. For example, Utah once entered into a

~ consent decree with Pacific States Cast Iron Pipe Company over

CAA violations. In lieu of a $50,000 fine, Pacific States agreed

to install additional air pollution equipment not required by law.

Cook believes this approach is superior to the EPA money

damages approach in that the former deters similar violations

because the violator must spend substantial sums for the

equipment and the equipment cleans up the pollution—

something a check to the treasury cannot do. /d. at 1092. “If

EPA insists on monetary damages in a situation such as with

Pacific States, it restricts a state’s ability to impose equitable,

non-monetary remedies.” Jd. at 1093. In the present case,

CDPHE chose to forego financial assurances from PEC,

apparently confident in the knowledge that it could enforce its

compliance orders and that the money that would be applied

toward the assurances would best be used for the cleanup itself.

This Court recognized a phenomenon similar to Pacific

States in a case called Gwaltney of Smithfield, Ltd. v.

Chesapeake Bay Foundation, 484 U.S. 49 (1987). In Gwaltney,

this Court considered whether the citizen suit provision in the

CWA authorized citizen suits for wholly past violations. This

Court determined the Act did not confer such jurisdiction.

Concluding that the citizen suit provision of the CWA was

20

intended to support the government’s enforcement program and

not displace it, this Court suggested a hypothetical to make its

point. Suppose, this Court said, the Administrator of EPA

identified a violator and issued a compliance order. Jd at 60.

“Suppose further that the Administrator agreed not to assess or

otherwise seek civil penalties on the condition that the violator

take some extreme corrective action, such as to install

particularly effective but expensive machinery, that it otherwise

would not be obliged to take.” Jd. at 60-61. “If citizens could

file suit, months or years later, in order to seek the civil

penalties that the Administrator chose to forgo, then the

Administrator’s discretion to enforce the Act in the public

interest would be curtailed considerably.” Jd. at 61.

So it is with “overfiling.” If EPA can file a suit, after the

state resolves a RCRA action, as it did in this case, in order to

seek exactions the state chose to forgo, then the state’s

discretion to enforce RCRA in the public interest would be

curtailed considerably.

B. EPA “Overfiling” Is Unfair and Inequitable

to the Regulated Community

With respect to whether “overfiling” achieves the goal of

fair and equitable treatment of the regulated community, Cook

is pointed:

While overfiling may conserve EPA’s enforcement

resources, it is actually a duplication of effort and

wastes limited enforcement dollars. EPA’s efforts

do not produce additional facts or other pertinent

information necessary to bring additional actions

against other pollution sources. Instead, EPA

recycles the same data and creates the illusion that it

is leading the way in cracking down on the nation’s

polluters. As a result, while federal and state

agencies are pursuing one violator, other known or

suspected violators are left outside the enforcement

WIRE Sh aA a NE Catach

21

umbrella due to lack of money and insufficient

personnel to pursue additional cases. Any money

that is collected will end up in the general fund and

will not create any additional funds for enforcement

purposes. Consequently, the goal of fair and

equitable treatment of the regulated community is

not achieved as violators are either receiving a

double blow or escaping untouched.

Cook, supra, at 1094-95.

C. EPA “Overfiling” Interferes with Swift

Resolution of Environmental Problems

I. his article, Cook ascertains three reasons why EPA

“overfiling” does not advance the goal of rapid resolution of

environmental problems. First, the speed and effectiveness

with which a state can respond to a pollution problem is

hampered by “overfiling” because subsequent negotiations with

EPA can delay implementation of remedial measures agreed to

by the state and the violator. /d. at 1095. Second, “overfiling”

discourages early settlement because incentives for a violator to

negotiate early with the state are diminished by the knowledge

that the EPA may have to be satisfied later. Jd. at 1096. And

third, “overfiling” undermines state credibility with the

regulated community because the violator cannot rely on its

negotiations with the state to conclude the matter. This can

handicap efforts to reach quick settlements. Jd.

According to Cook:

Overfiling fails to promote swift resolution in any

measurable way. Federal efforts merely duplicate

the state’s actions by requiring the violator to

go through a second set of negotiations. This new

round of negotiations usually produces no additional

benefit to the environment.

Id. at 1095.

22

In summary, Cook maintains that while “overfiling” has

some deterrent effect, it fails to acknowledge the needs and

goals of the state program, violators are treated unequally, and

resolution is delayed because the state’s credibility is eroded.

He suggests, moreover, that EPA’s goals can be better

accomplished through increased cooperation with the states. Jd.

at 1101. Humphrey and Paddock agree. They conclude that

federal “overfiling” results in redundant enforcement efforts,

introduces uncertainty into the state enforcement program, saps

the limited enforcement resources of state and federal agencies,

undermines and disrupts the federal-state working relationships,

and conflicts with the historical role of the state in addressing

environmental problems. Humphrey, supra, at 39. If

environmental compliance programs are going to work in the

long run, there must be greater reliance on state and local

enforcement. EPA “overfiling,” after a violator has negotiated

a good faith settlement with the state, is counterproductive and

should not be allowed. As Humphrey and Paddock realized:

Twenty years ago, one of the main reasons for an

increased federal role in environmental protection

was the inadequacy of state programs, including state

enforcement. Today, allowing states and, in some

cases, local governments, to reassume a greater

enforcement role may be the only way to ensure an

effective enforcement presence among the tens of

thousands of regulated entities that now exist in each

state. Strong, well-focused enforcement efforts

designed to address the varying types of regulated

entities in each state are necessary to obtain high

levels of voluntary compliance without which the

vast regulatory programs will not succeed.

Id. at 36-37.

23

CONCLUSION

EPA “overfiling” is contrary to the RCRA objective to

establish a viable federal-state partnership. “‘Overfiling”

undermines that partnership and robs the state of meaningful

enforcement discretion—discretion it was given when it was

authorized to stand in the stead of EPA and enforce its own

hazardous waste program. Moreover, the practice of

“overfiling” does not advance the EPA’s enforcement goals.

To the contrary, “overfiling” results in redundant enforcement

efforts, introduces uncertainty into state enforcement programs,

wastes public and private resources, arid conflicts with the

historical and statutory role of states in dealing with local

environmental problems. Moreover, the decision of the Tenth

Circuit in this case, validating the EPA’s practice of

“overfiling,” is in direct conflict with the Eighth Circuit’s

decision in Harmon Industries.

For these reasons, this Court should grant the Petition for

Writ of Certiori and overrule the decision below.

DATED: January, 2003.

Respectfully submitted,

M. REED HOPPER

Counsel of Record

ROBIN L. RIVETT

Pacific Legal Foundation

10360 Old Placerville Road,

Suite 100

Sacramento, California 95827

Telephone: (916) 362-2833

Facsimile: (916) 362-2932

Counsel for Petitioners

sch saith

Pa ORCI AL AT ABCa Nasa cy NY I dip

1

TABLE OF CONTENTS ~

Extension of time to file a Petition for Writ of Certiorari

to January 17, 2003 (Application No. 02A393)

Decision from the United States Court of Appeals for

the Tenth Circuit (September 4, 2002)

Decision from the United States District Court for the

District of Colorado (November 24, 2000)

Title 42. The Public Health and Welfare Chapter 82.

Solid Waste Disposal General Provisions (42 U.S.C.S.

§ 6901 (2002))

Title 42. The Public Health and Welfare Chapter 82.

Solid Waste Disposal General Provisions (42 U.S.C.S.

§ 6902 (2002))

Title 42. The Public Health and Welfare Chapter 82.

Solid Waste Disposal Hazardous Waste Management

(42 U.S.C.S. § 6926 (2002))

Title 42. The Public Health and Welfare Chapter 82.

Solid Waste Disposal Hazardous Waste Management

(42 U.S.C.S. § 6928 (2002))

Title 42. The Public Health and Welfare Chapter 82.

Solid Waste Disposal Miscellaneous Provisions (42

U.S.C.S. § 6972 (2002))

Harmon Industries, Inc. v. Browner, 191 F.3d 894

(1999). Decision from the United States Court of

Appeals for the Eighth Circuit

Appendix A-1

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE CLERK

WASHINGTON, DC 20543-0001

WILLIAM K. SUTER AREA CODE 202

CLERK OF THE COURT 479-3011

November 14, 2002

Mr. M. Reed Hopper

10360 Old Placerville Road

Suite 100

Sacramento, CA 95827

Re: Power Engineering Company, et al.

v. United States

Application No. 02A393

Dear Mr. Hopper:

The application for an extension of time within which

to file a petition for a writ of certiorari in the above-entitled

case has been presented to Justice Breyer, who on November

14, 2002, extended the time to and including January 17, 2003.

Se ae mE Pet Meee eat Ye ae tor nite Or ee sac

This letter has been sent to those designated on the

attached notification list.

~ Sincerely,

WILLIAM K. SUTER, Clerk

By /s/ Ruth Jones

Ruth Jones

Assistant Clerk

Appendix A-2

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE CLERK

WASHINGTON, DC 20543-0001

WILLIAM K. SUTER AREA CODE 202

CLERK OF THE COURT 479-3011

NOTIFICATION LIST

Mr. M. Reed Hopper

10360 Old Placerville Road

Suite 100

Sacramento, CA 95827

Hon. Theodore B. Olson

Solicitor General

Department of Justice

Washington, DC 20530

Clerk

United States Court of Appeals for

the Tenth Circuit

Byron White Courthouse

1823 Stout Street

Denver, CO 80257

Appendix B-1

303 F.3d 1232, 2002 U.S. App. LEXIS 18263,

54 ERC (BNA) 1993

UNITED STATES OF AMERICA, Plaintiff-Appellee, v.

POWER ENGINEERING COMPANY; REDOUBT, LTD.;

RICHARD J. LILIENTHAL, Defendants-Appellants,

AMERICAN IRON AND STEEL INSTITUTE;

AMERICAN PETROLEUM INSTITUTE; CHAMBER OF

COMMERCE OF THE UNITED STATES OF AMERICA;

ENVIRONMENTAL FEDERATION OF OKLAHOMA;

MICHIGAN MANUFACTURERS ASSOCIATION;

NATIONAL ASSOCIATION OF MANUFACTURERS;

WESTERN STATES PETROLEUM ASSOCIATION;

STATE OF MAINE; STATE OF ARKANSAS; STATE OF

CALIFORNIA; STATE OF CONNECTICUT; STATE OF

ILLINOIS; STATE OF MONTANA; STATE OF NEW

YORK; STATE OF VERMONT; STATE OF WEST

VIRGINIA, Amici Curiae.

Fe en ee ee

Dh ete

No. 01-1217

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

303 F.3d 1232; 2002 U.S. App. LEXIS 18263;

54 ERC (BNA) 1993

PRIOR HISTORY:

Appeal from the United States District Court for the District of

' September 4, 2002, Filed

§

3

q

} Colorado. (D. Ct. No. 97-B-1654).

DISPOSITION:

Affirmed.

Appendix B-2

COUNSEL:

John F. McBride (Robert T. McAllister of Robert T.

McAllister, P.C., Denver, Colorado, with him on the briefs),

Denver, Colorado, appearing for Appellant.

Robert H. Oakley, Attorney, Department of Justice,

Washington, DC (John C. Cruden, Acting Assistant Attorney

General, Environment & Natural Resources Division, John W.

Suthers, United States Attorney, John A. Bryson and John N.

Moscato, Attorneys, Department of Justice, Washington, DC;

and Stephen D. Taylor, Assistant United States Attorney, and

Thomas Sitz, Office of Enforcement, Compliance and

Environmental Justice, Environmental Protection Agency,

Denver, Colorado, with him on the brief), appearing for

Appellee.

G. Steven Rowe, Attorney General, and John H. Edwards,

Assistant Attorney General, Natural Resources Division, State

of Maine, Department of the Attorney General, Augusta,

Maine; Mark Pryor, Attorney General, State of Arkansas, Little

Rock, Arkansas; Bill Lockyer, Attorney General, State of

California, San Diego, California; Richard Blumenthal,

Attorney General, State of Connecticut, Hartford, Connecticut;

James E. Ryan, Attorney General, State of Illinois, Chicago,

Illinois; Mike McGrath, Attorney General, State of Montana,

Helena, Montana; Eliot Spitzer, Attorney General, State of New

York, New York, New York; William H. Sorrell, Attorney

General, State of Vermont, Montpelier, Vermont; and

Darrell V. McGraw, Jr., Attorney General, State of West

Virginia, Charleston, West Virginia, filed an amicus curiae

brief in support of the United States Environmental Protection

Agency.

Scott M. DuBoff, Wright & Talisman, P.C., Washington, DC;

Thomas M. Sneeringer, Washington, DC, Counsel for

American Iron and Steel Institute; G. William Frick and Ralph

Te ead

<i Sec ler apatite Gd AER at A Sl A AERA RITE PR COP apatanetaes!

Appendix B-3

J. Colleli, Jr., Washington, DC, Counsel for American

Petroleum Institute; Stephan A. Bokat and Robin S. Conrad,

National Chamber Litigation Center, Inc., Washington, DC,

Counsel for Chamber of Commerce of the United States; James

Barnett, Kerr, Irvine, Rhodes & Ables, Oklahoma City,

Oklahoma, Counsel for Environmental Federation of

Oklahoma; Frederick R. Damm, Clark Hill, P.L.C., Detroit,

Michigan, Counsel for Michigan Manufacturers Association;

Jan Amundson, Washington, DC, Counsel for National

Association of Manufacturers; Gregory McClintock and Brian

Wall, Mayer, Brown & Platt, Los Angeles, California, Counsel

for Western States Petroleum Association, filed an amicus

curiae brief in support of Appellants Power Engineering

Company, et al.

JUDGES:

Before TACHA, Chief Circuit Judge, BALDOCK, and

LUCERO, Circuit Judges.

OPINION BY:

TACHA

OPINION:

TACHA, Chief Circuit Judge: The State of Colorado

brought an enforcement action against defendants Power

Engineering Company, Redoubt Limited, and Richard

Lilienthal (coliectively referred to as “PEC”) for violations of

the Colorado Hazardous Waste Management Act. Plaintiff

United States, acting on behalf of the Environmental Protection

Agency (“EPA”), filed its own lawsuit against PEC for the

same violations, seeking financial assurances. The district court

denied PEC’s motion for summary judgment, finding that the

EPA’s lawsuit was not barred by statute or by res judicata. We

a

Appendix B-4

exercise jurisdiction pursuant to 28 U.S.C. § 1292(a)(1) and

AFFIRM.

I. Background

Power Engineering Company has operated a metal

refinishing and chrome electroplating business in Denver,

Colorado since 1968. Redoubt Limited owns land and

buildings leased and used by Power Engineering. Richard

Lilienthal is an officer of both Power Engineering and Redoubt,

as well as the sole shareholder of both companies. Each month

Power Engineering produces over 1000 kilograms of waste,

including arsenic, lead, mercury, and chromium. This waste is

covered by the Resource Conservation and Recovery Act

(“RCRA”), 42 U.S.C. §§ 6901-6992k, and is defined as

“hazardous.” After the Colorado Department of Public Health

and Environment (“CDPHE”) learned of a discharge of

hexavalent chromium into the Platte River, it conducted

inspections of PEC and discovered that chromium emanating

from PEC was contaminating the groundwater. It also found

that PEC treated, stored, and disposed of hazardous wastes

without a permit. CDPHE issued a notice of violation on

June 11, 1993, and an Initial Compliance Order in July 1994.

CDPHE issued a Final Administrative Compliance Order on

June 13, 1996, requiring PEC to comply with hazardous waste

laws, implement a cleanup plan for chrome-contaminated soil,

conduct frequent inspections, and submit periodic reports.

PEC failed to comply with this order, and CDPHE issued

an Administrative Penalty Order on December 23, 1996,

assessing civil penalties of $ 1.13 million. When PEC refused

to pay the penalties, CDPHE brought suit in state court to force

compliance with both orders. The Colorado state court found

on March 23, 1999, that the Final Administrative Compliance

Order and the Administrative Penalty Order were enforceable

as a matter of law.

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Appendix B-5

Before CDPHE issued its Final Administrative Compliance

Order. the EPA had requested that CDPHE enforce RCRA’s

financial assurance requirements against PEC. The EPA

notified CDPHE that it would bring its own enforcement action

‘f CDPHE failed to do so. When CDPHE did not demand

financial assurances, the EPA filed its own suit against PEC.

The EPA and PEC filed cross-motions for summary

judgment. PEC argued that the RCRA statute and res judicata

barred the EPA from “overfiling”—which has been defined in

this context as “the EPA’s process of duplicating enforcement

actions.” Harmon Indus. v. Browner, 191 F.3d 894, 898 (8th

Cir. 1999). The district court granted summary judgment for

the EPA and held that PEC must provide $2,119,044 in

financial assurances and obtain liability coverage for accidental

occurrences. PEC appeals the district court’s grant of summary

judgment.

II. Discussion

We review the grant of summary judgment de novo,

applying the same standard as the district court. Wark v. United

States, 269 F.3d 1185, 1187 (10th Cir. 2001). Summary

judgment is appropriate when there is no genuine issue of

material fact, viewing the evidence in the light most favorable

to the nonmoving party. Id.

A. Permissibility of Overfiling

PEC contends that the district court erred in not following

the Eighth Circuit’s interpretation of RCRA in Harmon. Under

RCRA, a state may apply to the EPA for authorization to

administer and enforce its own hazardous waste program if its

program is equivalent to the federal program and provides

adequate enforcement. 42 U.S.C. § 6926(b), (c). The Harmon

court held that RCRA allows the EPA to overfile after

Appendix B-6

providing notice to the authorized state only if the EPA

withdraws authorization or if the state fails to initiate an

enforcement action. 191 F.3d at 899. We review the district

court’s construction of a statute de novo. Foutz v. United

States, 72 F.3d 802, 804 (10th Cir. 1995).

A state program authorized pursuant to RCRA operates

“in lieu of” the federal program. 42 U.S.C. § 6926(b). PEC

contends that the “in lieu of’ language renders the EPA

powerless to file a separate lawsuit when a state has been

authorized to run its own program and initiates its own

enforcement action. The EPA disagrees and interprets RCRA

in its regulations to allow such overfiling. 40 C.F.R.

§§ 271.16(c) note, 271.19; see also United States v. Power

Eng’g Co., 125 F. Supp. 2d 1050, 1061 (D. Colo. 2000)

(discussing the history and context of these regulations).

Because the EPA is charged with the administration of

RCRA, Chevron v. NRDC guides our review of its

interpretation of the statute. 467 U.S. 837, 81 L. Ed. 2d 694,

104 S. Ct. 2778 (1984). Our first question is “whether

Congress has directly spoken to the precise question at issue.”

467 U.S. at 842. “If the intent of Congress is clear, that is the

end of the matter; for the cuurt, as well as the agency, must give

effect to the unambiguously expressed intent of Congress.”

467 U.S. at 842-43. if the statute is “silent or ambiguous,”

however, we defer to the agency’s interpretation “if it is based

on a permissible construction of the statute.” 467 U.S. at 843.

More specifically, if there is “an express delegation of authority

to the agency to elucidate a specific provision of the statute by

regulation,” we must accept the agency’s interpretation unless

it is “arbitrary, capricious, or manifestly contrary to the statute.”

467 U.S. at 843-44. Alternatively, if there is only an implicit

delegation of authority to the agency, we must accept a

“reasonable interpretation made by the administrator of [the]

———————————— = Cr rr —CSS

Appendix B-7

agency.” 467 U.S. at 844. After reviewing the statute, we

conclude that it is ambiguous, and we defer to the agency

interpretation.

The EPA argues that Congressional intent to allow

overfiling is demonstrated by 42 U.S.C. § 6928(a), which

conditions EPA enforcement only on providing notice to an

authorized state: “The [EPA] Administrator may issue an order

assessing a civil penalty for any past or current violation ....

The Administrator shall give notice to the State in which such

violation has occurred prior to issuing an order or commencing

a civil action under this section.” As another circuit court held,

“Read in context, section [6928(a)] .. - simply conditions the

exercise of [federal] authority on the provision of prior notice.”

Wyckoff Co. v. EPA, 796 F.2d 1197, 1201 (9th Cir. 1986).

The EPA finds support for this interpretation in RCRA’s

citizen suit provision, which explicitly limits authority for

citizen suits. This provision states, “No [citizen suit] may be

commenced .. . if the [EPA] or State has commenced and is

diligently prosecuting a civil or criminal action... .” 42 U.S.C.

§ 6972(b)(1). No similar language 1s included in section 6928,

which only requires notice. “Where Congress includes

particular language in one section of a statute but omits it in

another section of the same Act, it is generally presumed that

Congress acts intentionally and purposely in the disparate

inclusion or exclusion.” Brown v. Gardner, 513 U.S. 115, 120,

130 L. Ed. 2d 462, 115 S. Ct. 552 (1994). Because Congress

explicitly prohibits citizens from duplicating a federal or state

RCRA action in section 6972(b)(1), but omits such language

from section 6928, the statute suggests that Congress intended

to prohibit duplicative citizen suits but not duplicative federal

suits.

PEC argues, however, that several provisions of RCRA

support its interpretation that RCRA unambiguously prohibits

Appendix B-8

overfiling. PEC relies largely on section 6926(b), which

provides that, once a state’s hazardous waste program has been

approved under RCRA, “‘such State is authorized to carry out

such program in lieu of the Federal program under this

subchapter in such State and to issue and enforce permits... .”

42 U.S.C. § 6926(b). PEC argues that, because an authorized

state program operates “‘in lieu of” the federal program, the

EPA may not file an enforcement action after a state has done

so. The linchpin of PEC’s argument “‘is that the term

‘program’ in § 6926 incorporates the exclusive responsibility to

enforce criminal provisions penalizing the disposal of

hazardous wastes.” ‘‘United States v. Elias, 269 F.3d 1003,

1009 (9th Cir. 2001) (quoting United States v. MacDonald &

Watson Waste Oil Co., 933 F.2d 35, 44 (1st Cir. 1991)). The

statute, however, does not define the term “program,” and the

meaning of the term is ambiguous. Wyckoff Co. v. EPA, 796

F.2d 1197, 1200 (9th Cir. 1986). The EPA argues that

“program” refers only to the administration of the regulatory

program, and not to enforcement. It argues that section 6926(b)

simply provides that once authorization has taken place, state

requirements replace federal requirements, because the state

requirements may be more stringent. Cf. 40 C.F.R. § 271.1(i)

(allowing states to adopt more stringent and extensive

requirements than the federal requirements).

The wording of section 6926(b) lends support to the EPA’s

interpretation. Power Eng’g, 125 F. Supp. 2d at 1059. The

administration of authorized state programs and _ the

enforcement of state regulations are addressed in separate

clauses of the relevant sentence: “[An authorized] State is

authorized to carry out [its] program in lieu of the Federal

program under this subchapter in such State and to issue and

enforce permits for the storage, treatment, or disposal of

hazardous waste... .” 42 U.S.C. § 6926(b) (emphasis added).

Because “‘in lieu of” appears in the first clause rather than the

second, the language can reasonably be interpreted as saying

eel

Appendix B-9

that the state is authorized to carry out its program in lieu of the

federal program, and that the state is authorized to issue and

enforce permits. Power Eng’g, 125 F. Supp. 2d at 1059. If

enforcement were considered part of carrying out a program,

the second clause would be superfluous, and we cannot

“construe a statute in a way that renders ‘words or phrases

meaningless, redundant, or superfluous.’” /d. at 1059 (quoting

Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1272 (10th

Cir. 2000)).

The only other circuit court of which we are aware that has

directly addressed the question acknowledged that “the EPA is

correct that the ‘in lieu of language refers to the program

itself.” Harmon, 191 F.3d at 899. The Harmon court

nonetheless found that “the administration and enforcement of

the program are inexorably intertwined.” Jd. at 899. This

interpretation fails to account for the placement of

“enforcement” and “in lieu of” in separate clauses of section

6926(b), and it does not adequately consider the structure of the

statute. Section 6926 addresses the administration and

enforcement of state regulations by authorized states, while the

federal enforcement of such regulations is addressed in a

different part of the statute—section 6928. Given this statutory

structure, the EPA’s conclusion that administration and

enforcement of RCRA are not inexorably intertwined—and that

authorization of a state program therefore does not deprive the

EPA of its enforcement powers—is not unreasonable. See also

Power Eng’g, 125 F. Supp. 2d at 1059.

Even if we were to find that administration and

enforcement were inexorably intertwined, we could only reach

the Harmon court’s ultimate holding by “harmonizing” different

sections of the statute:

Harmonizing the section 6928(a)(1) and (2) language

that allows the EPA to bring an enforcement action in

Appendix B-10

certain circumstances with section 6926(b)’ [sic n1]

provision that the EPA has the right to withdraw state

authorization if the state’s enforcement is inadequate

manifests a congressional intent to give the EPA a

secondary enforcement right in those cases where a

state has been authorized to act that is triggered only

after state authorization is rescinded or if the state

fails to initiate an enforcement action.

191 F.3d at 899. This interpretation goes well beyond the plain

language of the statute. While Harmon correctly states that

section 6928(a) limits the EPA’s right to bring an enforcement

action to “certain circumstances,” the only explicit limitation is

that the EPA must provide prior notice to authorized states. 42

U.S.C. § 6928(a)(2). Withdrawal of authorization for a state

program is an “extreme” and “drastic” step that requires the

EPA to establish a federal program to replace the cancelled

state program. Waste Mgmt., Inc. v. EPA, 714 F. Supp. 340,

341 (N.D. Ill. 1989). Nothing in the text of the statute suggests

that such a step is a prerequisite to EPA enforcement or that it

is the only remedy for inadequate enforcement.

nl Section 6926(e), rather than section 6926(b), allows for

withdrawal of authorization. Section 6926(b) states when the

EPA may deny a state’s application for authorization.

PEC also relies upon section 6926(d) in support of its

position that the statute does not allow overfiling. That section

provides:

Appendix B-11

Effect of a State permit

Any action taken by a State under a hazardous waste

program authorized under this section shall have the

same force and effect as action taken by the [EPA]

under this subchapter.

42 U.S.C. § 6926(d). The Harmon court, construing “the Act

as a whole,” found that this section applies broadly to any

action authorized under this subchapter, including enforcement:

The state authorization provision substitutes state

action (not excluding enforcement action) for federal

action. It would be incongruous to conclude that the

RCRA authorizes states to implement and administer

a hazardous waste program “in lieu of’ the federal

program where only the issuance of permits is

accorded the same force and effect as an action taken

by the federal government .... Nothing in the statute

suggests that the “same force and effect” language is

limited to the issuance of permits but not their

enforcement.

191 F.3d at 900. According to this interpretation, the statute

substitutes state enforcement action for EPA enforcement

action and therefore does not permit an EPA lawsuit when a

state has initiated an enforcement suit. This interpretation reads

too much into the provision. The provision must be read in the

context of the language and design of the statute as a whole.

United States v. Thompson, 287 F.3d 1244, 1249 (10th Cir.

2002). Section 6926 addresses the authorization of state

programs, not federal enforcement. The heading of subsection

6926(d) also suggests that the provision is more limited. While

the title of a statutory subsection “is not part of the law itself

_.. it can be used to interpret an ambiguous statute.” United

States v. Glover, 52 F.3d 283, 286 (10th Cir. 1995). Again, it

Appendix B-12

is ambiguous whether “program” includes enforcement.

Wyckoff, 796 F.2d at 1200. The statutory heading, “Effect of a

State permit,” suggests that this subsection only intends for

state permits to have the “same force vid effect” as federal

permits.

In our judgment, limiting the “same force and effect”

language to the issuance of permits is not “incongruous” with

RCRA as a whole. Harmon, 191 F.3d at 900. It would be

reasonable to conclude that Congress simply intended for

section 6926(d) [to clarify that recipients of state-issued permits

need not obtain a permit from the EPA. Power Eng’g, 125 F.

Supp. 2d at 1060; see also 42 U.S.C. § 6925(a) (“The

Administrator shall promulgate regulations requiring each

person owning or operating an existing facility or planning to

construct a new facility for the treatment, storage, or disposal of

hazardous waste identified or listed under this subchapter to

have a permit issued pursuant to this section.”). Thus, it is

reasonable to conclude that while subsection 6926(d) prevents

the EPA from denying the effect of a state permit, it does not

prevent the EPA from taking action when a violation occurs.

PEC also argues that the language of the citizen suit

provision supports its interpretation. That provision states that

no citizen suit may be brought if “the [EPA] Administrator or

State” is diligently pursuing a lawsuit. 42 U.S.C. § 6972(b)(1)

(emphasis added). PEC contends that the choice of the word

“or” instead of “and/or” indicates that Congress did not

contemplate competing actions between the EPA and an

authorized state. Harmon, 191 F.3d at 901. This distinction is

ambiguous at most. The word “and” is unnecessary in this

context, because the statute clearly states that a lawsuit by either

entity is sufficient to bar a citizen suit. Even without the word

“and,” the statute clearly prohibits citizen suits when both the

EPA and a state are diligently pursuing an action.

ec ee ee

St Sg WAI ERLE Tag

Appendix B-13

In sum, PEC’s position is arguably supported by the “in

lieu of’ and “‘same force and effect” language of section 6926,

as well as the “or” instead of “and/or” language of section

6972(b)(1). On the other hand, PEC’s interpretation contradicts

the plain language of section 6928, the wording of section

6926(b), and the structure of the statute. Moreover, PEC’s

result is only reached by “harmonizing” sections 6928 and 6926

in a rather strained manner. Given these ambiguities and

contradictions, we find that Congress has not “directly spoken

to the precise question at issue.” Chevron, 467 U.S. at 842.

Because RCRA is ambiguous regarding whether EPA overfiling

is permissible, we must defer to the EPA" reasonable

interpretation “even if we would have reached a different result

had we construed the statute initially.” Wash. Dep’t of Ecology

v. EPA, 752 F.2d 1465, 1469 (9th Cir. 1985); see Chevron, 467

U.S. at 843 n.11. We find that the EPA’s interpretation of

RCRA has substantial support in the text of the statute and is

therefore a reasonable interpretation of the statute.

B. Res Judicata

PEC next argues that the EPA’s lawsuit is barred by the

doctrine of res judicata. The question of application of res

judicata to the facts, viewed in the light most favorable to the

nonmoving party, is a pure question of law to be reviewed de

novo. Plotner v. AT & T Corp., 224 F.3d 1161, 1168 (10th Cir.

2000).

“Under res judicata, a final judgment on the merits bars

further claims by parties or their privies based on the same

cause of action.” Montana v. United States, 440 U.S. 147, 153,

59 L. Ed. 2d 210, 99 S. Ct. 970 (1979). The Colorado lawsuit

ended in a final judgment on the merits for CDPHE based on a

cause of action under RCRA. It is disputed, however, whether

the EPA was in privity with CDPHE and whether the EPA,

Appendix B-14

which sought only financial assurances, brought the same cause

of action as the CDPHE.

Privity requires “at a minimum, a substantial identity

between the issues in controversy and showing that the parties

in the two actions are really and substantially in interest the

same.” Lowell Staats Min. Co. v. Philadelphia Elec. Co., 878

F.2d 1271, 1275 (10th Cir. 1989). In general, “state and federal

governments are separate parties for res judicata purposes, so

that litigation by one does not bind another.” 18 Charles Alan

Wright, et al., Federal Practice and Procedure, § 4458, at 503.

The Supreme Court has stated that “to bind the United States

when it is not formally a party, it must have a laboring oar in a

controversy.” Drummond v. United States, 324 U.S. 316, 318,

89 L. Ed. 969, 65 S. Ct. 659 (1945). The United States has

such a “laboring oar” when it “assumes control over litigation.”

Montana, 440 U.S. at 154. In Montana, such control was

demonstrated by the fact that the United States had:

(1) required the [] lawsuit to be filed;

(2) reviewed and approved the complaint;

(3) paid the attorneys’ fees and costs;

(4) directed the appeal from State District Court to the Montana

Supreme Court;

(5) appeared and submitted a brief as amicus in the Montana

Supreme Court;

(6) directed the filing of a notice of appeal to this Court; and

(7) effectuated [the] abandonment of that appeal on advice of

the Solicitor General.

Appendix B-15

Id. at 155. Here, none of these factors is present, and there is no

evidence that the EPA directly “assumed control over the

litigation.”

PEC argues, however, that the EPA “pulled” the “laboring

oar” earlier in the process, when it ceded authority to the state

to operate programs “‘in lieu of’ and “with the same force and

effect” as the EPA. Harmon, 191 F.3d at 904. In support of its

position, PEC relies on Harmon and United States v. ITT

Rayonier, 627 F.2d 996, 1002-03 (9th Cir. 1980), both of which

found privity where a state program operated “in lieu of” a

federal program.

Even if we agreed that the “laboring oar” could be “pulled”

by such a delegation of authority, Harmon and Rayonier are

distinguishable from the present case, and we find no other

authority that would allow us to find privity based on the

tenuous connection presented here. Unlike the Eighth Circuit

in Harmon, we have found that states act in lieu of the EPA

only with respect to administration of the program and issuance

of permits. The EPA’s connection to the state’s litigation is

therefore more limited than in Harmon. In Rayonier, the court

did not follow the laboring oar analysis. Instead, the court

relied largely on the identical interests of the state agency and

the EPA. 627 F.2d at 1003. The state agency maintained the

same position as the EPA in the state proceedings, and the

agency asserted that position “vigorously.” Jd. at 1003. Unlike

the state agency in Rayonier, the CDPHE did not maintain the

same position as the EPA, as it did not seek financial

assurances as the EPA had requested. We therefore decline to

extend the doctrine of privity to cover the situation in this case.

The delegation of authority to the state agency was limited, and

the two agencies had different interests. Because there is no

privity, res judicata does not apply, and we need not consider

whether the cause of action was the same in both cases.

Appendix B-16

Ill. Conclusion

We find that the RCRA statute is ambiguous, and we defer

to the EPA’s reasonable interpretation that RCRA allows EPA

overfiling. We also find that the EPA and CDPHE were not in

privity, making the res judicata doctrine inapplicable. We

therefore AFFIRM the ruling of the district court.

Appendix C-1

125 F. Supp. 2d 1050

UNITED STATES OF AMERICA, Plaintiff, v. POWER

ENGINEERING COMPANY, REDOUBT, LTD. and

RICHARD J. LILIENTHAL, Defendants.

Civil Action No. 97-B-1654

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF COLORADO

125 F. Supp. 2d 1050; 2000 U.S. Dist. LEXIS 18381;

51 ERC (BNA) 1756; 31 ELR 20335

November 24, 2000, Decided

November 24, 2000, Filed

* * * *

COUNSEL:

For USA, plaintiff: Stephen D. Taylor, United States

Attorney’s Office, Denver, CO U.S.A. John N. Moscato, U.S.

Department of Justice, Denver, CO U.S.A. David E. Street,

U.S. Department of Justice, Washington, DC USA.

For POWER ENGINEERING COMPANY, REDOUBT, LTD..,

defendants: John F.X. McBride, John Joseph Zodrow, Zodrow,

et al., P.C., Denver, CO USA.

For RICHARD J. LILIENTHAL, defendant: Robert T.

McAllister, McAllister & Murphy, P.C., Denver, CO U.S.A.

John F.X. McBride, John Joseph Zodrow, Zodrow, et al., P.C.,

Denver, CO USA. |

Appendix C-2

For POWER ENGINEERING COMPANY, REDOUBT, LTD.,

third-party plaintiffs: John F.X. McBride, John Joseph Zodrow,

Zodrow, et al., P.C., Denver, CO USA.

For RICHARD J. LILIENTHAL, third-party plaintiff: Robert

T. McAllister, McAllister & Murphy, P.C., Denver, CO U.S.A.

John F.X. McBride, John Joseph Zodrow, Zodrow, et al., P.C.,

Denver, CO USA.

For JACK LILIENTHAL, third-party defendant: John L.

Watson, Moye, Giles, O’Keefe, Vermeire & Gorrell, Denver,

CO U.S.A. Robert T. McAllister, McAllister & Murphy, P.C.,

Denver, CO U.S.A.

JUDGES:

LEWIS T. BABCOCK, CHIEF JUDGE.

OPINION BY:

LEWIS T. BABCOCK

OPINION:

MEMORANDUM OPINION AND ORDER

Babcock, C.J.

Plaintiff moves for partial summary judgment on the

question whether Defendants must post financial assurances

under Colorado regulations. Plaintiff concedes that there are

genuine issues of material fact regarding the proper amount of

those financial assurances and, accordingly, summary judgment

is inappropriate on that question. Defendants cross-move for

summary judgment. The motions are adequately briefed, and

argued. For the reasons set forth below, I grant Plaintiff's

Appendix C-3

motion, and deny Defendants’ motion. Jurisdiction exists under

28 U.S.C. § 1331.

I.

The following facts are undisputed unless otherwise noted.

From approximately 1968 to the present, Defendants have

operated a metal refinishing/chrome electroplating business at

2525 South Delaware Street in Denver, Colorado (Facility).

The business specializes in stripping and refinishing

crankshafts, connecting rods, and rod journals for large diesel

engines used in heavy equipment. The process of stripping

produces thirteen different waste streams and more than 1000

kilograms of hazardous waste per month as defined under the

Resource Conservation and Recovery Act (RCRA). See 42

U.S.C. § 6901 et seg. The wastes in these streams that exceed

the regulatory toxicity standards include arsenic, lead, mercury,

and hexavalent chromium contaminated material.

In 1986, Defendant Power Engineering Company (PEC)

notified the Colorado Department of Public Health and the

Environment (CDPHE) that it was a generator of four different

types of hazardous waste, but neither listed chromium as a

constituent part of the waste generated, nor indicated that

Defendant PEC treated, stored, or disposed of the wastes at its

South Delaware Street facility. In 1992, the CDPHE learned of

a discharge into the Platte River of high levels of hexavalent

chromium. Soon thereafter, the CDPHE began a series of

compliance evaluation inspections that continued through 1994.

As a result of these inspections, the CDPHE discovered that

Defendant PEC had been treating, storing, and disposing of

hazardous wastes without either the proper state or federal

permits, or attaining “interim status” under 42 U.S.C.

§ 6925(e)(1) which allows continued operations during the

pendency of an application for a federal permit. In addition, the

CDPHE learned that chromium emanating from Defendant

Appendix C-4

PEC’s place of business had contaminated groundwater both

under, and under areas outside of, its place of business. On

March 10, 1993, Defendant PEC notified the CDPHE that in

addition to one of the wastes identified in its 1986 notification,

it also generated five other hazardous wastes. On June 11,

1993, the CDPHE issued a notice of violation to Defendant

PEC indicating that it had been improperly treating storing, and

disposing of hazardous wastes.

In July 1994, the CDPHE issued an Initial Compliance

Order, but stayed its execution so as to discuss the order with

Defendants. These discussions took place from September

1994 to June 1996. In June 1996, the CDPHE issued a Final

Administrative Compliance Order which requires Defendant

PEC to: (1) immediately comply with applicable hazardous

waste laws; (2) refrain from the treatment, storage, and disposal

of hazardous wastes without obtaining Interim Status or the

proper permit(s); (3) properly manage wastes; (4) submit for

review and approval plans for weekly inspections of hazardous

waste containers; (5) submit a complete 1990/1991 Biennial

Report reflecting all hazardous wastes generated, treated,

stored, and disposed of during those years; (6) submit an

updated 1992/1993 Biennial Report including waste codes

applicable to off-site disposal; (7) implement the “Removal

Plan for Chrome Contaminated Stockpiled Soils”; (8) submit

for review and approval a soil characterization and groundwater

sampling work plan; (9) submit for review and approval a

corrective measure study plan evaluating remedial alternatives

to prevent, mitigate, and remediate the releases from the

Facility; and (10) within thirty days of CDHPE approval of the

corrective measure study, implement the remedial alternative.

Defendant PEC did not appeal this order, but also failed to

implement its requirements. Consequently, the CDPHE issued

an Administrative Penalty Order assessing civil penalties of

Appendix C-5

$1.13 million. When Defendant PEC also failed to comply

with the Administrative Penalty Order, the CDPHE brought suit

in state court on August 1, 1997 seeking to force Defendant

PEC to comply with both the Final Administrative Compliance

Order, and the Administrative Penalty Order. See Plaintiffs

Cross-Motion for Summary Judgment, Ex. A. On March 22,

1999, a Colorado state court held that the Final Administrative

Compliance Order, and the Administrative Penalty Order are

enforceable as a matter of law. See id., Ex. D.

Although the CDPHE had the authority to demand

financial assurances, the Final Administrative Compliance

Order did not require them. Plaintiff asked the CDPHE to

enforce the financial assurance requirements of the RCRA and

corresponding Colorado regulations with respect to Defendants.

Plaintiff also informed the CDPHE that if it did not, Plaintiff

would seek its own enforcement action. See Plaintiff's

Response, Ex. 8 (letter dated August 26, 1996 informing the

CDPHE that its actions with respect to Defendant PEC had not

been “timely and/or appropriate,” and that unless the CDPHE

so acted, Plaintiff would seek to enforce the RCRA itself);

Plaintiffs Motion/or Summary Judgment, Ex. 25 (affidavit of

Carol Rushin, Assistant Regional Administrator, Office of

Enforcement, Compliance and Environmental Justice, EPA,

that subsequent to the August 26, 1996 letter Plaintiffinformed

the CDPHE that its failure to seek financial assurances was

inappropriate). Because the CDPHE failed to so act, and

because Plaintiff believed Defendant Lilienthal was seeking to

divest himself of, or otherwise insulate, his assets and might

“leave the country, declare bankruptcy, or liquidate Defendant

PEC,” Plaintiff filed this action on August 1, 1997. Plaintiff

alleged eight claims: (1) treatment of hazardous waste without

a permit or interim status; (2) disposal of hazardous waste

without a permit or interim status; (3) shipment of hazardous

waste to an un-permitted facility; (4) improper container

management; (5) storage of hazardous waste without a permit

Appendix C-6

or interim status; (6) failure to provide employee training;

(7) failure to have a hazardous waste contingency plan; and

(8) illegal operations (failure to have a groundwater monitoring

program, failure to have a closure plan, failure to minimize

releases of hazardous waste, and failure to obtain and provide

financial assurances for closure and post-closure). Plaintiffalso

alleged that Power Engineering has failed to comply with

CDPHE’s Administrative Compliance Order.

After a preliminary injunction hearing at which Walter

Avramenko, a CDPHE employee, testified that Colorado

supports Plaintiff's action to obtain financial assurances, |

granted Plaintiffs motion for preliminary injunction on

June 10, 1998, and ordered Defendants to “provide financial

assurance in the amount of $3,500,000 pursuant to 6 COLO.

CODE REGS. 1007-3 § 266 and all applicable subparts.” U.S.

v. Power Engineering Co., 10 F. Supp. 2d 1145, 1165 (D. Colo.

1998). On July 22, 1998, Defendants appealed my June 10,

1998 ruling. On August 17, 1998, after a dispute over the form

the financial assurances would take, I ordered Defendants to

post “a surety bond guaranteeing payment into a closure and/or

post closure trust fund” pursuant to 6 COLO. CODE REGS.

1007-3 § 266.14(f). U.S. v. Power Engineering Co., 10 F.

Supp. 2d 1165, 1172 (D. Colo. 1998). On September 24, 1998,

I modified the August 17, 1998 Memorandum Opinion and

Order so that Defendants could provide financial assurances in

accordance with any subpart of Section 266 if Plaintiff so

agreed.

On October 15, 1998, Defendants filed a Show Cause

Submittal arguing that “they are not able to obtain financial

assurances in the amount of Three Million Five Hundred

Thousand Dollars because there is no third party willing to

extend credit to Defendants to secure the obligations of a third

party financial institution issuing such financial assurances.

Plaintiff opposed the Show Cause Submittal, and moved to both

”

Appendix C-7

hold Defendants in contempt, and impose sanctions. On

November 24, 1998, Defendants moved to modify the

preliminary injunction. In that motion, Defendants claimed that

the $3,500,000 estimate of the cost of remediation undertaken

at the May 11-13, 1998 hearing was inaccurate. Instead,

Defendants claimed that “based upon the work performed by

PEC and its consultants after the May hearing, the information

now available to PEC, and the current plans for remediation of

contaminated groundwater and soils,” the cost of remediation

would only be $ 575,500. Defendants thus moved to modify

my June 10, 1998 Memorandum Opinion and Order to require

Defendants to provide financial assurances of only $575,500.

On February 25, 1999, Plaintiff moved for partial summary

judgment on the question of the liability of Defendants. On

March 17, 1999, Defendants responded to Plaintiff's motion,

and cross-moved for summary judgment. The central basis for

Defendants’ cross-motion is that Plaintiff does not have the

authority to “overfile” a state enforcement action. Overfiling is

nowhere defined by statute or regulation but is said to occur

when the federal government initiates an enforcement action

after a state government begins an action on the same matter.

On July 13, 1999, I denied without prejudice Defendants’

motion to modify preliminary injunction, and Plaintiffs motion

for partial summary judgment. In that order, I stated that “the

opinion of the Tenth Circuit will probably have material bearing

upon the issues remaining, including the issues raised by the

parties in their motions for summary judgment. It is likely that

further briefing on the motions for summary judgment will be

required, in light of the Tenth Circuit’s opinion on appeal.”

On September 8, 1999, the Tenth Circuit issued its

decision. See U.S. v. Power Eng’g Co., 191 F.3d 1224 (10th

Cir. 1999). In that decision, the Tenth Circuit did not decide

the “overfile” issue raised by Defendants in their cross-motion.

Appendix C-8

Instead, it merely “assumed without deciding . . . that the EPA

may [overfile] even after the state has taken its own

enforcement actions.” Jd. at 1229. On January 19, 2000,

Defendants filed a petition for writ of certiorari in the United

States Supreme Court which was denied on April 24, 2000.

On September 11, 2000, both parties filed a joint

stipulation regarding amendment of complaint, and briefing

schedule for summary judgment in which they requested that:

(1) Plaintiffbe permitted to amend its complaint to eliminate all

of its claims except that regarding financial assurances; (2) the

motion for partial summary judgment, and cross-motion for

summary judgment be withdrawn; and (3) both parties be

permitted to file new Rule 56 motions. After I approved the

joint stipulation the parties filed their present cross-motions for

summary judgment.

Il.

Rule 56 provides that summary judgment shall be granted

if the pleadings, depositions, answers to interrogatories,

admissions, or affidavits show that there is no genuine issue of

material fact and the moving party is entitled to judgment as a

matter of law. Fed. R. Civ. P. 56(c). The very purpose of a

summary judgment motion is to assess whether a trial is

necessary. White v. York Int'l Corp., 45 F.3d 357, 360 (10th

Cir. 1995). A party seeking summary judgment bears the initial

responsibility of informing the court of the basis for its motion,

and identifying those portions of the pleadings, depositions,

interrogatories, and admissions on file together with affidavits,

if any, that demonstrate the absence of genuine issues for trial.

Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265,

106 S. Ct. 2548 (1986); Mares v. ConAgra Poultry Co., Inc.,

971 F.2d 492, 494 (10th Cir. 1992).

Appendix C-9

Once a properly supported summary judgment motion is

made, the non-moving party has the burden of showing that

issues of undetermined material fact exist. Celotex, 477 U.S. at

322. In so doing, the opposing party may not rest on the

allegations contained in the complaint, but must respond with

specific facts showing the existence of a genuine factual issue

to be tried. Oftteson v. United States, 622 F.2d 516, 519 (10th

Cir. 1980); Fed. R. Civ. P. 56(e). These specific facts may be

shown “by any of the kinds of evidentiary materials listed in

Rule 56(c), except the mere pleadings themselves.” Celotex,

477 U.S. at 324. Unsupported allegations “without any

significant probative evidence tending to support he complaint”

are insufficient, White, 45 F.3d at 360 (internal quote and

citation omitted), as are conclusory assertions that factual

disputes exist. See Anderson v. Liberty Lobby, Inc., 477 U.S.

242, 247-48, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Where,

as here, the parties file cross motions for summary judgment, I

assume that no evidence need be considered other than that

filed by the parties. James Barlow Family Ltd. Partnership v.

David M Munson, Inc., 132 F.3d 1316, 1319 (10th Cir. 1997).

Nevertheless, summary judgment is inappropriate if genuine

issues of material fact exist. Jd.

In ruling on summary judgment, I must view the factual

record and reasonable inferences therefrom in the light most

favorable to the nonmoving party. See id. If no reasonable

juror could find for the non-moving party based on the evidence

present in the motion and response, then summary judgment is

proper and a trial is unnecessary. Matsushita Elec. Indus. Co.,

Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d

538, 106 S. Ct. 1348 (1986). Summary judgment should not

enter if a reasonable trier of fact could return a verdict for the

nonmoving party. Liberty Lobby, 477 U.S. at 252; Mares, 971

F.2d at 494.

Appendix C-10

III.

A.

In their cross-motion, Defendants argue that Plaintiff's

Amended Complaint must be dismissed because: (1) subject

matter jurisdiction does not exist; (2) the Eighth Circuit’s

reasoning in Harmon Indus., Inc. v. Browner, 191 F.3d 894 (8th

Cir. 1999) that the RCRA prohibits “overfiling” is applicable

here; and (3) the doctrine of res judicata precludes Plaintiffs

action. Plaintiff responds that: (1) subject matter jurisdiction

exists under 28 U.S.C. §§ 1331, 1345; (2) Harmon is

distinguishable on its facts, and incorrectly decided; and (3) res

judicata is inapplicable. I address each question in turn.

1.

Defendants’ argument that 28 U.S.C. §§ 1331, 1345 do not

confer subject matter jurisdiction is unpersuasive. 28 U.S.C. §

1331 states: “The district courts shall have original jurisdiction

of all civil actions arising under the Constitution, laws, or

treaties of the United States.” Under Tenth Circuit authority,

“Ta] case ‘arises’ under the laws of the United States ifit clearly

and substantially involves a dispute or controversy respecting

the validity, construction or effect of such laws which is

determinative of the resulting judgment.” “Mountain Fuel

Supply Co. v. Johnson, 586 F.2d 1375, 1381 (10th Cir. 1978),

cert. denied, 441 U.S. 952, 60 L. Ed. 2d 1058, 99 S. Ct. 2182

(1979) (citing Shulthis v. McDougal, 225 U.S. 561, 56 L. Ed.

1205, 32 S. Ct. 704 (1912)). As discussed in detail below, this

case involves a “controversy respecting the [] construction or

effect” of the RCRA “which is determinative of the resulting

judgment.” Mountain Fuel Supply, 586 F.2d at 1381.

Consequently, I have subject matter jurisdiction pursuant to

Section 1331.

Appendix C-11

28 U.S.C. § 1345 also provides subject matter jurisdiction.

Section 1345 states “the district courts shall have original

jurisdiction of all civil actions, suits or proceedings commenced

by the United States.” 28 U.S.C. § 1345. As a leading treatise

states, “no subject matter jurisdiction difficulties are presented

when the United States is the plaintiffin an action in the federal

courts,” Wright et al., Federal Practice and Procedure § 3651

at 208 (3d ed. 1998), unless “the government [] lend[s] its name

to a lawsuit merely for the benefit of a private individual.” Jd.

at 213. If there is any question regarding the interest involved,

the operative inquiry is whether the United States is “litigating

[]in order to assure the proper implementation of one of the

government’s policies and programs.” Jd. at 215.

Here, the United States is the Plaintiff, and Defendant does

not contend that Plaintiffhas brought this action “merely for the

benefit of a private individual.” Jd. at 213. Even if Defendant

did so argue, it is indisputable that Plaintiff is “litigating [] in

order to assure the proper implementation of one of the

governmeni’s policies and programs.” Jd. at 215.

Consequently, I will not dismiss this case for lack of subject

matter jurisdiction.

2.

The next question is whether the Harmon decision applies

to this case, and if so, whether the Eighth Circuit correctly

interpreted the RCRA.

Under the RCRA, States can apply to the Environmental

Protection Agency (EPA) for authorization to administer and

enforce their own hazardous waste programs after they

promulgate regulations consistent with the RCRA’s

requirements. See 42 U.S.C. § 6926 (b). If authorization is

Appendix C-12

granted, the “state is authorized to carry out such program in

lieu of the Federal program under this subchapter . . . and to

issue and enforce permits for the storage, treatment, or disposal

of hazardous waste.” Jd. In a subsection of Section 6926

entitled “Effect of State permit,” the RCRA states: “Any action

taken by a State under a hazardous waste program authorized

under [the RCRA] [has] the same force and effect as action

taken by the [EPA] under this subchapter.” 42 U.S.C.

§ 6926(d). Once the EPA authorizes a state, however,

authorization can be withdrawn only when the Administrator

[of the EPA] determines after public hearing that [the] State is

not administering and enforcing a program authorized under

[the RCRA] in accordance with requirements of [the RCRA],

he [] so notifies the State and, [] appropriate corrective action

is not taken within a reasonable time, not to exceed ninety days.

42 U.S.C. § 6926. Under Section 6928(a)(2), the EPA retains

the power to independently address “violations [of the RCRA

that] occur[] in [] State[s] which [are] authorized to carry out a

hazardous waste program under section 6926 of this title “by

“commencing a civil action under this section” provided “the

Administrator [first] give[s] notice to the State in which such

violation has occurred.” 42 U.S.C. § 6928(a)(2).

In Harmon, the EPA filed an administrative enforcement

action against Harmon Industries, Inc. (Harmon Industries)

seeking a monetary penalty for violation of the RCRA.

Harmon, 191 F.3d at 897. At the same time, Harmon Industries

negotiated with the State of Missouri regarding the same

violations. Jd. During the pendency of the EPA’s court action,

Harmon Industries and the State of Missouri reached a

settlement which released Harmon Industries from any

monetary penalty. Jd. A Missouri State court subsequently

approved the consent decree. Jd. The EPA then successfully

pursued their enforcement action through the administrative

process, and Harmon Industries appealed to federal court.

Appendix C-13

In reversing the administrative enforcement action, the

Eighth Circuit first defined “overfiling” as “the EPA’s process

of duplicating enforcement actions.” Harmon, 191 F.3d at 898.

The Harmon court then held that the EPA can undertake its

own enforcement action after providing notice to an authorized

state only if either the authorized state fails to initiate an

enforcement action, or the Federal Government withdraws

authorization. Jd. at 899 (upon giving notice, the EPA may

pursue an enforcement action “only after State authorization is

rescinded or if the state fails to initiate an enforcement action”).

Because the State of Missouri had undertaken its own

enforcement action and the EPA did not withdraw the State’s

authorization, the Eighth Circuit dismissed the EPA’s action.

Here, Plaintiff's action does not duplicate the action

undertaken by the CDPHE. The CDPHE’s enforcement action

did not obtain financial assurances, and Defendants have not

cited any provision of either the Final Administrative

Compliance Order, or the Administrative Penalty Order that

releases Defendants from the RCRA’s requirement of financial

assurances. Under the Eighth Circuit’s definition, therefore,

Plaintiff's action here does not constitute an “overfiling.”

This does not end the analysis because the Eighth Circuit’s

ruling prohibits the EPA from acting when a state takes “any”

enforcement action, irrespective of whether an EPA suit

duplicates any part of the state’s action. See id. at 899 (“If the

state fails to initiate any action, then the EPA may institute its

own action.”); 901 (“the federal government’s right to pursue

an enforcement action vader the RCRA attaches only when a

state’s authorization is revoked or when a state fails to initiate

any enforcement action”) (emphases added). Because

Defendants rely on Harmon’s expansive holding in their

cross-motion, Harmon’s factual distinctions arguably have no

bearing on the applicability of the Eighth Circuit’s legal

Appendix C-14

interpretation of the RCRA to this case. Consequently, I turn

next to the Harmon court’s interpretation of the RCRA.

b.

i.

““Where, as here, resolution of a question of federal law

turns on a statute and the intention of Congress, [I] look first to

the statutory language’” to determine whether it either has a

plain meaning or is ambiguous. Gudenkauf v. Stauffer

Communications, Inc., 158 F.3d 1074, 1079 (10th Cir. 1998)

(quoting Blum v. Stenson, 465 U.S. 886, 896, 79 L. Ed. 2d 891,

104 S. Ct. 1541 (1984)). “‘The plainness or ambiguity of

statutory language is determined by reference to the language

itself, the specific, context in which that language is used, and

the broader context of the statute as a whole.’” Jd. (quoting

Robinson v. Shell Oil Co., 519 U.S. 337, 136 L. Ed. 2d 808, 117

S. Ct. 843 (1997)). “[My] inquiry must cease if the statutory

language is unambiguous and ‘the statutory scheme is coherent

and consistent.’” Robinson, 519 U.S. at 340 (quoting U.S. v.

Ron Pair Enterprises, Inc., 489 U.S. 235, 240, 103 L. Ed. 2d

290, 109 S. Ct. 1026 (1989)).

If the statutory language is ambiguous and Congress has

charged an agency to administer the statute, however, I must

“defer to the agency’s interpretation, if it is a permissible one.”

Southern Utah Wilderness Alliance v. Dabney, 222 F.3d 819,

824 (10th Cir. 2000) (citing Chevron U.S.A., Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837, 843-44, 81 L.

Ed. 2d 694, 104 S. Ct. 2778 (1984)). “The Supreme Court has

‘long recognized that considerable weight should be accorded

to an executive department’s construction of a statutory scheme

it is entrusted to administer.” Rivera-Jimenez v. INS, 214 F.3d

1213, 1218 (10th Cir. 2000) (quoting Chevron, 467 U.S. at

844). See Udall v. Tallman, 380 U.S. 1, 16, 13 L. Ed. 2d 616,

OEE

Appendix C-15

85 S. Ct. 792 (1965) (noting that courts must give “great

deference” to the interpretations of agencies). Nevertheless,

“the judiciary is the final authority on issues of statutory

construction and must reject administrative constructions which

are contrary to clear congressional intent.” Chevron, 467 U.S.

at 843 n.9. “An agency interpretation of a relevant provision

which conflicts with the agency’s earlier interpretation is

‘entitled to considerably less deference’ than a consistently held

agency view.” INS v. Cardoza Fonesca, 480 U.S. 421, 447

n.30, 94 L. Ed. 2d 434, 107 S. Ct. 1207 (1987) (quoting Watt v.

Alaska, 451 U.S. 259, 273, 68 L. Ed. 2d 80, 101 S. Ct. 1673

(1981)). But see Christensen v. Harris County, 529 U.S. 576,

120 S. Ct. 1655, 1662, 146 L. Ed. 2d 621 (2000)

(“Interpretations such as those in opinion letters—like

interpretations contained in policy statements, agency manuals,

and enforcement guidelines, all of which lack the force of

law—do not warrant Chevron-style deference.”).

The Harmon court’s interpretation of the RCRA derives

from the conclusion that the “in lieu of’ language contained in

[Section 6926(b)] reveals a congressional intent for an

authorized state program to supplant the federal hazardous

waste program in all respects including enforcement. “Harmon,

191 F.3d at 899 (emphasis added). In reaching this conclusion,

the Eighth Circuit conceded that the “in lieu of” language in

Section 6926(b) refers to the regulations promulgated by

authorized states. See id. at 898-99 (“According to the EPA,

the phrase ‘in lieu of? refers to which regulations are to be

enforced in an authorized state .... The EPA is correct that the

‘in lieu of language refers to the program itself.”).

Nevertheless, the Harmon court determined that the “‘in lieu of’

language must also apply to the enforcement of state regulations

because “the administration and enforcement of the

[regulations] are inexorably intertwined.” Jd.

Appendix C-16

Based on this foundational conclusion, the Eighth Circuit

held that the plain language of Section 6928(a)(2)—that the

Administrator of the EPA can file an enforcement action in an

authorized state after giving notice to that state—cannot be

given its plain meaning when it is interpreted within the context

of the entire Act.” Jd. See id. (indicating that the Harmon court

was conducting a “plain language” analysis of the RCRA). The

Harmon court considered Section 6928(b) together with the “in

lieu of’ language of Section 6926(b), and the “‘same force and

effect language’ of section 6926(d),” and concluded that the

Federal Government can initiate an action under Section

6928(a)(2) after providing notice to an authorized state only if

either the authorized state fails to initiate an enforcement action,

or the Federal Government withdraws authorization. /d. at 899.

See 42 U.S.C. § 6928(a)(2) (“in the case of a violation of any

requirement of this subchapter where such violation occurs in

a State which is authorized to carry out a hazardous waste

program under section 6926 of this title, the Administrator shall

give notice to the State in which such violation has occurred

prior to issuing an order or commencing a civil action under

this section”); 42 U.S.C. § 6926(d) (“any action taken by a State

under a hazardous waste program authorized under this section

shall have the same force and effect as action taken by the

Administrator’). Accordingly, under Harmon, the notice

requirement of section 6928(a)(2) “reinforces the primacy of a

state’s enforcement rights under RCRA,” and thereby justifies

appending restrictions on the EPA’s enforcement power not

found explicitly in any part of the statute. Harmon, 191 F.3d at

899.

With all due respect, I conclude that the Harmon decision

incorrectly interprets the RCRA. As an initial matter, the plain

meaning of Section 6926’s “in lieu of” language is that an

authorized state’s regulations supplant those of the Federal

Government, as the Harmon court conceded. See Harmon, 191

F.3d at 899. It is questionable, however, that “the

Appendix C-17

administration and enforcement of the program are inexorably

intertwined” under the RCRA. Jd. Indeed, while Section 6926

primarily addresses the administration and enforcement of state

regulations by authorized states, Section 6928 concerns the

federal enforcement of such regulations. The very structure of

the RCRA suggests, therefore, that the administration and

enforcement of state regulations are not inexorably

intertwined.”

The structure of the sentence containing the “‘in lieu of”

language also suggests that Congress did not intend “‘in lieu of”

to apply to enforcement. Section 6926(b) states that an

authorized state “is authorized to carry out [its] program in lieu

of the Federal program under this subchapter in such State and

to issue and enforce permits for the storage, treatment, or

disposal of hazardous waste.” 42 U.S.C. § 6926(b) (emphasis

added). Because the administration of state authorized

programs, and the enforcement of state regulations are

addressed in separate clauses, the structure of Section 6926(b)

indicates Congress’ intent that administration and enforcement

are not “inexorably intertwined.”

In addition, the plain language of Section 6926(b) indicates

that the “in lieu of’ appearing in the first clause does not

modify the second clause in which the question of enforcement

is explicitly addressed. Harmon’s interpretation of the

contested sentence in Section 6926(b) renders the second

clause superfluous. If the “‘in lieu of? language contained in

[Section 6926(b)] reveals a congressional intent for an

authorized state program to supplant the federal hazardous

waste program in all respects including enforcement,” Harmon,

191 F.3d at 899 (emphasis added), Congress would have had no

reason to include the second clause granting enforcement

powers to authorized states. Because I cannot “construe a

statute in a way that renders words or phrases meaningless,

redundant, or superfluous,” Proctor and Gamble Co. v.

Appendix C-18

Haugen, 222 F.3d 1262, 1272 (10th Cir. 2000) (quoting Bridger

Coal Co./Pac. Minerals, Inc. v. Director, Office of Workers’

Compensation Programs, 927 F.2d 1150, 1153 (10th Cir.

1991), cannot adopt the Harmon decision’s interpretation. See

also Hohn v. U.S., 524 U.S. 236, 249, 141 L. Ed. 2d 242, 118

S. Ct. 1969 (1998) (“We are reluctant to adopt a construction

making another statutory provision superfluous”) (citations

omitted). Consequently, the plain language of the RCRA does

not support one of the main foundations upon which the

Harmon decision is built—that the “‘in lieu of? language

contained in [Section 6926(b)] reveals a congressional intent for

an authorized state program to supplant the federal hazardous

waste program in all respects including enforcement.” /d.

(emphasis added).

ii.

Undermining this foundation has profound effects on the

rest of the conclusions in Harmon. Harmon held that the EPA

can undertake its own enforcement action after providing notice

to an authorized state only if either the authorized state fails to

initiate an enforcement action, or the Federal Government

withdraws authorization. 191 F.3d at 899. As the Harmon

court acknowledged, however, this conclusion is not derived

from the plain language of the RCRA, but is reached only by

“harmonizing” Sections 6926(b) and 6928(a). Jd. Such

harmonization is achieved only if the “‘in lieu of language

contained in [Section 6926(b)] reveals a congressional intent for

an authorized state program to supplant the federal hazardous

waste program in all respects including enforcement.” Jd.

(emphasis added). If the plain language of the RCRA does not

indicate that federal enforcement authority has been

“supplant[ed]” by state authority in authorized states, then there

is no reason to impose restrictions on federal authority not

found explicitly in the statute.

esiennnieniaieitateeetaiasiameiieiiliiisa naan

Appendix C-19

Moreover, it is not necessarily inconsistent to conclude that

Section 6928(a)(2)’s notice requirement both “reinforces the

primacy of a state’s enforcement rights under RCRA,” and

allows the EPA to institute enforcement actions after providing

notice. It is reasonable to conclude that Congress included the

notice requirement to minimize the likelihood of duplicative

actions. The notice requirement achieves this end by providing

authorized states with the opportunity to incorporate the

remedies or claims identified by the EPA into either new or

existing enforcement actions before the EPA institutes its own

action.

The Harmon court’s interpretation of Section 6926(d)

similarly rests on a flawed interpretation of Section 6926(b).

Under the heading “Effect of State permit,” Section 6926(d)

states that “any action taken by a State under a hazardous waste

program authorized under this section shall have the same force

and effect as action taken by the Administrator under this

subchapter.” In interpreting this subsection, the Harmon court

stressed the “any action” language and stated

The state authorization provision substitutes state

action (not excluding enforcement action) for federal

action. It would be incongruous to conclude that the

RCRA authorizes states to implement and administer

a hazardous waste program “in lieu of the federal

program where only the issuance of permits is

accorded the same force and effect as an action taken

by the federal government. ... Nothing in the statute- --

suggests that the “same force and effect” language is

limited to the issuance of permits but not their

enforcement. We believe that if Congress had

intended such a peculiar result, it would have stated

its preference in a clear and unambiguous manner.

Appendix C-20

Harmon, 191 F.3d at 900. Construing “the Act as a whole,” id.,

the Harmon court disregarded the title of Section 6926(d), and

concluded that the subsection applies to enforcement actions.

Nevertheless, if “an authorized state program [does not]

supplant the federal hazardous waste program in all respects

including enforcement,” Harmon, 191 F.3d at 899 (emphasis

added), it is not necessarily “incongruous” or “peculiar” to

conclude that Section 6926(d) applies only to the issuance of

permits. Jd. at 900. Instead, it is reasonable to conclude that

Congress intended to restrict the effect of Section 6926(d) to

state-issued permits because otherwise there could be doubt as

to whether the recipient of a state permit also needs to obtain a

permit from the EPA in accordance with Section 6925(a). See

42 U.S.C. § 6925(a) (“the Administrator shall promulgate

regulations requiring each person owning or operating an

existing facility or planning to construct a new facility for the

treatment, storage, or disposal of hazardous waste identified or

listed under this subchapter to have a permit issued pursuant to

this section.””). Accordingly, Congress’ reference to “any

action” within Section 6926(d) creates ambiguity in light of the

rest of the statute.

The Supreme Court has held that “the title of a statute or

section can aid in resolving an ambiguity in the legislation’s

text.” INS v. National Ctr. for Immigrants’ Rights, Inc., 502

U.S. 183, 189, 116 L. Ed. 2d 546, 112 S. Ct. 551 (1991). See

Almendarez-Torres v. United States, 523 U.S. 224, 234, 140 L.

Ed. 2d 350, 118 S. Ct. 1219 (1998) (“the title of a statute and

the heading of a section’ are ‘tools available for the resolution

of a doubt’ about the meaning of a statute”) (quoting

Brotherhood of R. Trainmen v. Baltimore & Ohio R. Co., 331

U.S. 519, 528-529, 67S. Ct. 1387, 91 L. Ed. 1646 (1947)). The

title of Section 6926(d)—“Effect of State permit”— indicates

Congressional intent to limit the scope of Section 6926(d) to the

permitting process. I conclude that such an interpretation is the

Appendix C-21

most reasonable because it both gives effect to every word of

the statute, and does not necessitate harmonizing” Section 6928

by adding restrictions on the EPA’s enforcement power not

found in the plain language of that section.

iii.

The alternative holding in Harmon underscores a further

fundamental problem with the outcome in that case. In that

alternative holding, the Harmon court assumed ambiguity exists

within the RCRA and interpreted the statute’s legislative history

to reach the same outcome. See Garcia v. U.S., 469 U.S. 70,

76, n.3, 83 L. Ed. 2d 472, 105 S. Ct. 479 (“resort to legislative

history is only justified where the face of the [statute] is

inescapably ambiguous”’) (quoting Schwegmann Brothers v.

Calvert Distillers Corp., 341 U.S. 384, 395, 95 L. Ed. 1035, 71

S. Ct. 745 (1951) (concurring opinion)); Oklahoma v. New

Mexico, 501 U.S. 221, 234 n.5, 115 L. Ed. 2d 207, 111 S. Ct.

2281 (1991) (“we repeatedly have looked to legislative history

and other extrinsic material when required to interpret a statute

which is ambiguous’) (citations omitted). Yet the Harmon

court gave short shrift to the EPA’s interpretation of the RCRA

under such circumstances. As the Supreme Court has stated,

if a statute is silent or ambiguous with respect to the

question at issue, our longstanding practice is to defer

to the ‘executive department’s construction of a

statutory scheme it is entrusted to administer,’

Chevron, supra, 467 U.S. at 844, 104 S. Ct. at 2782,

unless the legislative history of the enactment shows

with sufficient clarity that the agency construction is

contrary to the will of Congress.

Japan Whaling Ass’n v. American Cetacean Soc., 478 U.S. 221,

233, 92 L. Ed. 2d 166, 106 S. Ct. 2860 (1986). Accordingly,

EL ee

~ Appendix C-22

the Harmon decision failed to consider properly the EPA’s

interpretation of the RCRA.

Under the EPA’s interpretation, the only restriction on its

authority to pursue enforcement actions independent of

comparable state actions is that explicitly included in Section

6928(a)(2), the notice requirement. See 42 U.S.C. § 6928(a)(2)

(before filing an enforcement action the EPA must “give notice

to the State in which [the] violation has occurred.”). 40 C.F.R.

§ 271.16(c) specifies that “a civil penalty assessed, sought, or

agreed upon by the State Director under paragraph (a)(3) of this

section shall be appropriate to the violation.” In a “Note” to

Section 271.16(c), the EPA states

To the extent the State judgments or settlements

provide penalties in amounts which EPA believes to

be substantially inadequate in comparison to the

amounts which EPA would require under similar

facts, EPA, when authorized by applicable statute,

may commence separate actions for penalties.

40 C.F.R. § 271.16(c). The language “when authorized by

applicable statute” is included because the EPA settled a

lawsuit challenging certain parts of its proposed consolidation

of the requirements and procedures for separate state permit

programs authorized under various statutes. The “Note” was

part of the settlement and was intended to apply to three

separate permit programs authorized under the RCRA, the

Clean Water Act, and the Safe Drinking Water Act. See 47 FR

25546 (June 14, 1982). The settlement was contingent on the

EPA “promulgating final rules [with respect to all three

programs] which are substantially the same as these proposed

rules” in the settlement. Jd. at 25547 (emphasis added). The

EPA did just that on September 1, 1983 by incorporating the

“Note” without change into the regulations of all three

programs. See 48 FR 39611 (September 1, 1983).

CP ae Ce ee ee eee tT) eer So

Appendix C-23

Consequently, the fact that the language “when authorized by

applicable statute” is included in Section 271.16(c) indicates

that the EPA had no doubt that “overfiling” is permissible

under the RCRA.

Other regulations reflect EPA’s statutory interpretation of

the power to overfile. 40 C.F.R. § 271.19 states in relevant

part:

(e) Under Section 3008(a)(3) of RCRA, EPA may

terminate a State-issued permit or bring an

enforcement action in accordance with the procedures

of 40 CFR Part 22 in the case of a violation of a State

program requirement. In exercising these authorities,

EPA will observe the following conditions:

(1) The Regional Administrator may take action

under section 3008(a)(3) of RCRA against a holder of

a State-issued permit at any time on the ground that

the permittee is not complying with a condition of that

permit.

(2) The Regional Administrator may take action

under Section 3008(a)(3) of RCRA against a holder of

a State-issued permit at any time on the ground that

the permittee is not complying with a condition that

the Regional Administrator in commenting on the

permit application or draft permit stated was

necessary to implement approved State program

requirements, whether or not that condition was

included in the final permit.

(3) The Regional Administrator may not take

action under section 3008(a)(3) of RCRA against a

holder of a State-issued permit on the ground that the

permittee is not complying with a condition necessary

Appendix C-24

to implement approved State program requirements

unless the Regional Administrator stated in

commenting on the permit application or draft permit

that the condition was necessary. _

(4) The Regional Administrator may take action under

Section 7003 of RCRA against a permit holder at any

time whether or not the permit holder is complying

with permit conditions.

40 C.F.R. § 271.19 (emphases added). Although this regulation

applies to Section 6928(a)(3) (“Any order issued [by the

Administrator of the EPA] pursuant to this subsection may

include a suspension or revocation of any permit issued by the

Administrator or a State under this subchapter and shall state

with reasonable specificity the nature of the violation”), it

rejects the fundamental tenet of the Harmon decision that “an

authorized state program supplant[s] the federal hazardous

waste program in all respects including enforcement.” Harmon,

191 F.3d at 899 (emphasis added). Under Harmon’s reasoning,

the EPA could not act under Section 6928(a)(3) unless it first

revoked the authorization of the state within which the violation

occurred. Sections 271.16(c) and 271.19 indicate EPA’s belief

that the only restrictions on its authority to bring enforcement

actions are those explicitly stated in the RCRA. See 40 C.F.R.

§§ 271.16(c), 271.19.

Defendants argue that I must disregard these regulations

because a contemporaneous interpretation by the EPA of the

RCRA conflicts with the interpretation found in 40 C.F.R. §§

271.16(c), 271.19. See Defendants’ Reply at 15-16 (citing Watt

v. Alaska, 451 U.S. 259, 273, 68 L. Ed. 2d 80, 101 S. Ct. 1673

(1981) (“The Department’s current interpretation, being in

conflict with its initial position, is entitled to considerably less

deference.”’”)). The alleged interpretation is found in testimony

by an EPA Assistant Administrator, Thomas C. Jorling, before

Appendix C-25

the Senate Subcommittee of Resource Protection of the

Committee on Environment and Public Works. The relevant

exchange is as follows:

Senator Randolph: Thank you very much.

Two of out panelists, Mr. Wingerter and Mr.

Plehn, I understand, will suggest that EPA grant only

partial interim program authorization for those

portions of the hazardous waste control program

which a state can actually administer in an effective

way. This would be in place of what we call the total

interim authorization that I think you intend to give to

states for any part of their program. What do you think

of such an approach?

Mr. Jorling: Mr. Chairman, when we get into the

period of full implementation of the hazardous

program, it is our view that that program is best

conducted by one or the other level of government,

either the State or the Federal. It is very hard to

operate a program with segregated responsibility. It

is a cohesive program of regulation; it is one that

requires very close implementation of several pieces,

so that our implementation, when we are in the full

versus the interim period should be completely

performed by one level of government. We would not

have the benefit to the public by such segmented

implementation by piecemeal implementation. It just

becomes too great of a management task. Therefore,

we support the concept of full authorization and full

implementation of those responsibilities by the States.

“Resource Conservation and Recovery Act Oversight,” Hearing

before the Subcommittee of Resource Protection of the Senate

Committee on Environment and Public Works, 95th Cong., 2d

Sess. at 22 (Mar. 20, 1978) (testimony of Thomas C. Jorling).

Appendix C-26

In their reply, Defendants only reproduce Mr. Jorling’s response

to the question, and characterize its meaning as “once an

authorized state program was fully implemented, hazardous

waste regulation and enforcement would be conducted by either

the Federal government or by the State governments, but not

both.” Defendants’ Reply at 15 (emphasis in original).

I note first that Mr. Jorling did not explicitly address the

question of enforcement in his answer. In addition, once both

Mr. Jorling’s response and the relevant question are considered

together, it is clear that Mr. Jorling’s answer, far from

addressing the question of enforcement as Defendants maintain,

concerns the manner in which “interim authorization” of a

state’s hazardous waste program under Section 6926(c) should

be implemented. See 42 U.S.C. § 6926(c). Consequently, I will

not disregard the EPA’s interpretation of its enforcement

authority in 40 C.F.R. §§ 271.16(c), 271.19 on the basis of

Mr. Jorling’s testimony. In any event, Defendants should have

included Senator Randolph’s query in their citation to

Mr. Jorling’s testimony, as their duty of candor requires.

Even if 1 were to accept that Mr. Jorling’s testimony

applied to the EPA’s enforcement authority, the Supreme Court

has held that “interpretations . . . [that] lack the force of law[]do

not warrant Chevron-style deference. Instead, [such]

interpretations . . . are ‘entitled to respect’ under our decision in

Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S. Ct. 161, 89

L. Ed. 124 (1944), but only to the extent that those

interpretations have the ‘power to persuade.” Christensen, 120

S. Ct. at 1657 (citations omitted). It is indisputable that

Mr. Jorling’s Senate testimony “lack[s] the force of law.” I

conclude, therefore, that the above testimony has no “power to

persuade” with respect to Defendants’ proposed interpretation

thereof in light of the full context of the testimony, and the

EPA’s regulations concerning the scope of their enforcement

powers. See id. (“Of course, the framework of deference set

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Appendix C-27

forth in Chevron does apply to an agency interpretation

contained in a regulation.”). Accordingly, Mr. Jorling’s

testimony does not trump the EPA’s interpretation of 40 C.F.R.

§§ 271.16(c), 271.19.

I also will not disregard the EPA’s interpretation because

it is “contrary to the will of Congress.” Japan Whaling Ass’n,

478 U.S. at 233. Defendants primarily rely on two separate

provisions of a report published by the House of

Representatives regarding a preliminary version of the RCRA:

This legislation permits the states to take the lead in

the enforcement of the hazardous wastes [sic] laws.

. . . Although the Administrator is required to give

notice of violations of this title to the states with

authorized hazardous waste programs the

Administrator is not prohibited from acting in those

cases where the state fails to act, or from withdrawing

approval of the state hazardous waste plan and

implementing the federal hazardous waste program

pursuant to Title III of this act.

The Administrator, after giving the appropriate

notice to a state that is authorized to implement the

state hazardous waste program, that violations of the

Act are occurring and the state failing to take action

against such violations, is authorized to take

appropriate action against those persons in such state

not in compliance with the hazardous waste title.

H. Rep. 1491, 94th Cong., 2d Sess. 31, 32 reprinted in 1976

U.S.C.C.A.N. 6238, 6269, 6270. Nevertheless, these provisions

of the House Report do not explicitly prohibit Plaintiffs action

here. After Plaintiff provided notice to CDPHE regarding the

Appendix C-28

RCRA remedies the CDPHE’s preexisting enforcement action

failed to address, Colorado “fail[ed] to act” with respect to

those remedies.

I also note that Congress knew how to specifically prohibit

enforcement action once any action is undertaken by a state.

Section 6972 prohibits citizen suits to enforce the RCRA “‘if the

Administrator or State has commenced and is diligently

prosecuting a civil or criminal action in a court of the United

States or a State to require compliance with such permit,

standard, regulation, condition, requirement, prohibition, or

order.” 42 U.S.C. § 6972(b)(1)(B). Similar language was not

included in Section 6928. ‘“‘Where Congress includes

particular language in one section of a statute but omits it in

another section of the same Act, it is generally presumed that

Congress acts intentionally and purposely in the disparate

inclusion or exclusion.”” Brown v. Gardner, 513 U.S. 115,

120, 130 L. Ed. 2d 462, 115 S. Ct. 552 (1994) (quoting Russello

v. U.S., 464 U.S. 16, 23, 78 L. Ed. 2d 17, 104 S. Ct. 296

(1983)).

Defendants also cite statements by individual Senators

purportedly supporting the proposition that “Congress

recognized that hazardous waste regulation [is] essentially a

local issue.” Defendants’ Response at 18 (citing, e.g., Senator

Randolph’s statement that “This legislation recognizes that

solid waste is a uniquely local problem.”). The text of the

statute, however, indicates that Congress thought otherwise.

See 42 U.S.C. § 6901(a)(4) (“The Congress finds with respect

to solid waste . . . that while the collection and disposal of solid

wastes should continue to be primarily the function of State,

regional, and local agencies, the problems of waste disposal as

set forth above have become a matter national in scope and in

concern”); 42 U.S.C. § 6902(b) (“The Congress hereby declares

it to be the national policy of the United States that, wherever

feasible, the generation of hazardous waste is to be reduced or

a ee ee

Appendix C-29

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.”’) (emphasis added). See also 42 U.S.C.

§ 6903(5) (emphasis added) (“The term ‘hazardous waste’

means a solid waste.”). I cannot let the statements of individual

Senators trump explicit statutory text. Under these

circumstances, I will not conclude that “the legislative history

of the enactment shows with sufficient clarity that the agency

construction is contrary to the will of Congress.” Japan

Whaling Ass’n, 478 U.S. at 233.

iv.

Finally, the consequences of the Harmon decision support

my view of Congressional intent in writing the RCRA.

Consider an authorized state with an unblemished record of

both complying with the RCRA and working cooperatively

with the EPA that discovers significant pollution caused by a

large industrial employer located within the authorized state but

in close proximity to the border of at least one other state.

Because the polluting entity employs a large number of the

authorized state’s citizens, and provides significant tax

revenues to the authorized state, the authorized state is less than

inclined to take the action mandated by the RCRA that might

put the polluting employer at risk. Consequently, the

authorized state, even after appeals from the EPA, takes

minimal enforcement action against the polluting employer that

protects the citizens of neither the authorized state nor the

neighboring state(s). Under Harmon’s analysis of the RCRA,

EPA’s only course of action would be to de-authorize the

authorized state’s entire hazardous waste program,

notwithstanding the state’s otherwise perfect record of

enforcing the RCRA, in order to protect the citizens of the

affected states. Based on the statute and legislative history, I

find no evidence that Congress intended such an outcome.

Appendix C-30

For the foregoing reasons, and because Defendants do not

dispute that Plaintiff provided the notice required by Section

6928(a)(2) to the CDPHE prior to commencing this action, see

Plaintiffs Response, Ex. 8 (letter dated August 26, 1996

informing the CDPHE that its actions with respect to Defendant

PEC had not been “timely and/or appropriate,” and that unless

the CDPHE so acted, Plaintiff would seek to enforce the RCRA

itself); Plaintiffs Motion for Summary Judgment, Ex. 25

(affidavit of Carol Rushin, Assistant Regional Administrator,

Office of Enforcement, Compliance and Environmental Justice,

EPA, that subsequent to the August 26, 1996 letter Plaintiff

informed the CDPHE that its failure to seek financial

assurances was inappropriate), I conclude that the RCRA does

not prohibit this action.

3.

I find unpersuasive Defendants’ final argument that res

judicata bars Plaintiffs claims here. In Drummond v. U.S., 324

U.S. 316, 89 L. Ed. 969, 65 S. Ct. 659 (1945), the Supreme

Court held that as a general matter “to bind the United States

when it is not formally a party, it must have a laboring oar in a

controversy.” Drummond v. U.S., 324 U.S. 316, 318, 89 L. Ed.

969, 65 S. Ct. 659 (1945). The United States has a “laboring

oar” when it “assume[s] control over litigation,” Montana v.

U.S., 440 U.S. 147, 154, 59 L. Ed. 2d 210, 99 S. Ct. 970 (1979),

by “employing counsel to represent its interest . . . or otherwise

actively aid{ing] in [the] conduct” of the litigation. Drummond,

324 U.S. at 318. In Montana, such control was evident because

the United States:

(1) required the [] lawsuit to be filed;

(2) reviewed and approved the complaint;

(3) paid the attorneys’ fees and costs;

TT

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Appendix C-31

(4) directed the appeal from State District Court to the

Montana Supreme Court;

(5) appeared and submitted a brief as amicus in the

Montana Supreme Court;

(6) directed the filing of a notice of appeal to this

Court; and

(7) effectuated [the] abandonment of that appeal on

advice of the Solicitor General.

Montana, 440 U.S. at 154. In the context of federal-state

relations, one leading treatise concludes that “it is clear that

State and federal governments are separate parties for res

judicata purposes, so that litigation by one does not bind

another.” Wright, Federal Practice and Procedure, § 4458 at

503. Nevertheless, both Harmon and one other federal court

has applied res judicata to a suit brought by the federal

government after a state concluded a similar suit. See U.S. v.

ITT Rayonier, Inc., 627 F.2d 996 (9th Cir. 1980).

In my view, the Harmon decision results in an unsupported

expansion of the doctrine of res judicata as it is applied to the

federal government under existing Supreme Court authority.

The Harmon court decided that because the RCRA “authorized

the state to proceed ‘in lieu of the federal government and ‘with

the same force and effect’ as the federal government... . the

‘laboring oar’ is pulled on much earlier in the process....

when the EPA grants the state permission to enforce the EPA’s

interests through the state’s own hazardous waste program.”

Harmon, 191 F.3d at 904. The Harmon court failed to cite any

authority in which the federal government was deemed to have

a “laboring oar” on the basis of a similarly attenuated

connection, nor am I aware of any. Instead, the Harmon court

cited generally to the Ninth Circuit’s decision in Rayonier.

Appendix C-32

The Rayonier court, however, did not undertake the

“laboring oar” analysis. The Ninth Circuit assessed whether the

application of res judicata would “promote harmony and

cooperation between courts.” Rayonier, 627 F.2d at 1001.

Because it does not address whether the Federal Government

pulled a “laboring oar” in the state court proceedings, I find the

Rayonier decision unpersuasive.

Rayonier is distinguishable for another reason. In

Rayonier, the EPA authorized Washington State to issue

permits under the Federal Water Pollution Control Act

(FWPCA). Washington State then issued a permit to ITT

Rayonier, Inc. that stated in “footnote f’ that certain standards

stated in the permit “will be modified to be consistent with the

applicable final effluent when promulgated by the EPA in the

Federal Register, or as thereafter modified by final action

consequent upon any appeal from such guidelines.” Id. at 999.

In November 1975, the EPA notified Washington State that ITT

Rayonier was not complying with new standards promulgated

by the EPA that applied to ITT Rayonier under footnote f.

Washington State issued a compliance order in December 1975

which was overturned by an intermediate state appellate court

ruling that the new regulations did not apply to ITT Rayonier

under footnote f. Soon thereafter, the EPA filed its own suit in

federal court raising the same argument. The Rayonier court

stated that “if the EPA is dissatisfied with state enforcement

efforts or the lack thereof it can revoke permit-issuing authority

or bring an independent action in federal court” /d. at 1002

(emphasis added). Because the “state court [] entered a final

judgment on [the] identical issue” raised by the EPA in Federal

court, the Ninth Circuit held that harmony and cooperation

between state and federal courts would be best served if res

judicata applied to the state court’s decision. See Rayonier, 627

F.2d at 1001 (“Res judicata is a rule promoting harmony and

cooperation between courts.”).

eee ye

Appendix C-33

Here, in contrast, the issue of financial assurances was not

before the Colorado court. In addition, the CDPHE supports

Plaintiff's pursuit of financial assurances. Plaintiff's Motion

for Partial Summary Judgment, Ex. 1 at 235 (testimony of

Walter Avramenko, a CDPHE employee, at preliminary

injunction hearing on May 11, 1998 that Colorado supports

Plaintiff's action to obtain financial assurances); Ex. 8 at para.

24 (affidavit of Mr. Avramenko dated June 13, 2000).

Applying res judicata in this instance, therefore, would not

“promote harmony and cooperation between courts,” Rayonier,

627 F.2d at 1001, or between Colorado and the federal

government. Instead, Plaintiff's suit here is precisely the type of

“independent action” contemplated by the Ninth Circuit. Jd. at

1002 (“if the EPA is dissatisfied with state enforcement efforts

or the lack thereof it can revoke permit-issuing authority or

bring an independent action in federal court”) (emphasis

added). Rayonier is distinguishable on its facts. Accordingly,

I decline to follow either Rayonier or Harmon, and instead

apply the Supreme Court’s analysis in Drummond and

Montana. Because Defendants offer no evidence that Plaintiff

exercised the type of control over the CDPHE’s state court

action identified in Drummond and Montana, | will not

conclude that Plaintiff pulled the “laboring oar,” or otherwise

controlled, the CDPHE’s action in state court. See Montana,

440 U.S. at 154; Drummond, 324 U.S. at 318. For the

foregoing reasons, the doctrine of res judicata does not apply to

this case.

In its motion for partial summary judgment, Plaintiff

argues that Defendants are covered by the RCRA and that they

treated, stored, and disposed of hazardous waste at their Facility

in violation of the RCRA. In response, Defendants argue that:

(1) financial assurances are no longer required because they are

no longer actively violating the RCRA, Colorado statutes, or

Appendix C-34

regulations; (2) because they “made tremendous progress in

remediating contaminated soils and groundwater at or around

PEC’s property, [and are] currently in compliance with the

terms and conditions of the Compliance Order,” Defendants’

Response at 2, Plaintiff cannot establish an irreparable injury

requiring a permanent injunction; (3) Defendant Lilienthal is

not an “operator” of the Facility under Colorado regulations;

and (4) the doctrine of laches bars this action. Again, I address

each argument in turn.

i.

In their response to Plaintiff's motion for partial summary

judgment, Defendants neither argue nor present any evidence

that their past actions identified in detail by Plaintiff in its

Motion for Partial Summary Judgment did not constitute

treatment, storage, and disposal of hazardous waste at their

Facility in violation of the RCRA and relevant state regulations.

Defendants have also stipulated that under the RCRA and

corresponding Colorado regulations the Facility is a “facility,”

and Defendants PEC and Redoubt are an “operator” and

“owner,” respectively, of the Facility. See Plaintiff's Motion

for Partial Summary Judgment, Ex. 2 at paras. 13-16. See also

6 COLO. CODE REGS. 1007-3 §§ 260.10 (“The requirements

of Sections 266.12, 266.14, and 266.16 through 266.17 applies

[sic] to owners and operators of hazardous waste facilities,

except as otherwise provided in this Section or in Section

264.1.”); 266.14 (“An owner or operator of each facility, on the

effective date of these regulations, must establish financial

assurance for closure of the facility, and if applicable,

post-closure financial assurance.”). No genuine issue of

material fact remains, therefore, regarding whether Defendants

violated the RCRA and Colorado regulations, and Defendants

PEC and Redoubt are subject to the RCRA and corresponding

Colorado regulations. Consequently, summary judgment is

appropriate on these questions.

Appendix C-35

2.

Defendants’ argument that financial assurances are no

longer required because they are no longer actively violating the

RCRA, Colorado statutes, or regulations is unpersuasive. At

the preliminary injunction stage of this case, Defendants made

the same argument. See U.S. v. Power Engineering Co., 10 F.

Supp. 2d 1145, 1160-61 (D. Colo. 1998) (noting Defendants’

argument that “the United States may not obtain financial

assurances for past violations of RCRA.”). As I held in my

June 10, 1998 Memorandum Opinion and Order:

Nothing within RCRA’s “cradle-to-grave” regulatory

scheme indicates that owners and operators of

hazardous waste facilities are exempt from providing

financial assurance requirements before remediation

and closure is accomplished. To the contrary, the

clear intent of federal and state regulations is for the

financial assurance requirements to attach until

remediation, closure, and, if necessary, post-closure

care is assured. See 40 C.F.R. § 265.1(a) (standards

for Interim Status facilities “define the acceptable

management of hazardous waste during the period of

interim status and until certification of final closure”

(emphasis added)); see also 40 C.F.R. § 265.1(b)

(Interim Status standards “apply . . . until either a

permit is issued . . . or until applicable closure and

post-closure responsibilities are fulfilled”); 6 COLO.

CODE REGS. 1007-3 §§ 265.1(a) and (b).

Defendants’ failure to disclose their treatment, storage, and

disposal of hazardous waste does not now exempt them from

the financial assurance requirements. The evidence shows that

defendants were legally obligated to but did not file a permit

application, seek interim status, or cease their activities of

treatment, storage, and disposal. Like many of the facilities

Appendix C-36

operating before and after RCRA’s effective date, the Facility

is now somewhere between the cradle and grave. The recent

discovery of defendants’ previous unauthorized activities does

not, at this juncture, relieve them from their legal obligation to

provide financial assurances. To hold otherwise would be

contrary to the expressed intent of Congress, the clear language

of applicable regulations, and public policy. To reward

defendants’ past evasion of RCRA would encourage similar

conduct by others.

Id. at 1161-62. Defendants attack, therefore, a holding that is

the law of this case.

“The law of the case ‘doctrine posits that when a court

decides upon a rule of law, that decision should continue to

govern the same issues in subsequent stages in the same case.”

U.S. v. Monsisvais, 946 F.2d 114, 115 (10th Cir. 1991) (quoting

Arizona v. California, 460 U.S. 605, 618,75 L. Ed. 2d 318, 103

S. Ct. 1382 (1983)). “The doctrine is ‘based on sound public

policy that litigation should come to an end and is designed to

bring about a quick resolution of disputes by preventing

continued re-argument of issues already decided.” Mcllravy v.

Kerr-McGee Coal Corp., 204 F.3d 1031, 1035 (10th Cir. 2000)

(quoting Gage v. General Motors Corp., 796 F.2d 345, 349

(10th Cir. 1986) (citations omitted)). The doctrine is, however,

“only a rule of practice in the courts and not a limit on their

power.” Monsisvais, 946 F.2d at 116 (citing Messenger v.

Anderson, 225 U.S. 436, 444, 56 L. Ed. 1152, 32 S. Ct. 739

(1912)). The Tenth Circuit has recognized three “exceptionally

narrow” grounds for departure from that rule of practice: “(1)

when the evidence in a subsequent trial is substantially

different; (2) when controlling authority kas subsequently made

a contrary decision of the law applicable to such issues; or (3)

when the decision was clearly erroneous and would work a

manifest injustice.” U.S. v. Alvarez, 142 F.3d 1243, 1247 (10th

Appendix C-37

Cir.), cert. denied, 525 U.S. 905, 142 L. Ed. 2d 199, 119 S. Ct.

242 (1998) (citing Monsisvais, 946 F.2d at 117).

Here, Defendants have provided no reason why I should

disregard my previous ruling. Accordingly, my June 10, 1998

holding that Plaintiffis permitted to obtain financial assurances

for past violations of the RCRA is the law of the case.

3.

The thrust of Defendants’ response to Plaintiffs motion for

partial summary judgment is that they have “made tremendous

progress in remediating contaminated soils and groundwater at

or around PEC’s property, [and are] currently in compliance

with the terms and conditions of the Compliance Order.”

Defendants’ Response at 2. Based on this “tremendous

progress,” Defendants argue that Plaintiff cannot establish the

type of irreparable injury necessary to warrant the entry of

permanent injunction at the summary judgment stage. I

disagree.

Under Tenth Circuit authority,

When the evidence shows that the defendants are

engaged in, or about to be engaged in, the act or

practices prohibited by a statute which provides for

injunctive relief to prevent such violations, irreparable

harm to the plaintiffs need not be shown.

Atchison, Topeka and Santa Fe Ry. v. Lennen, 640 F.2d 255,

259 (10th Cir. 1981) (per curiam). Further, “where an

injunction is authorized by statute it is unnecessary for plaintiff

to plead and prove the existence of the usual equitable grounds,

irreparable injury and absence of an adequate remedy at law. It

is enough if the requirements of the statute are satisfied.” Jd. at

260.

J

Appendix C-38

Here, “the financial assurance requirements [of the relevant

statutes and regulations] attach until remediation, closure, and,

if necessary, post-closure care is assured.” Power Engineering,

10 F. Supp. 2d at 1161-62. Moreover, the RCRA specifically

authorizes Plaintiff to seek injunctive relief. See 42 U.S.C.

§ 6928(a)(1). Because Defendants do not genuinely dispute that

their previous treatment, storage, and disposal of hazardous

waste at their Facility requires them to provide financial

assurances, or that remediation is incomplete, they are currently

in violation of the financial assurance requirements of the

Colorado regulations. Consequently, “Defendants are engaged

in... the act or practices prohibited by a statute which provides

for injunctive relief to prevent such violations, [and

consequently] irreparable harm to the plaintiffs need not be

shown.” Atchison, 640 F.2d at 259. I will not, therefore, deny

Plaintiff's motion based on Defendants’ allegations that they

have made “tremendous progress” in the remediation of the

Facility.

4.

I also find unpersuasive Defendant Lilienthal’s argument

that there are genuine issues of material fact as to whether he is

an operator of the Facility. At all times relevant to this action,

Defendant Redoubt owned the lands and buildings at the

Facility, and leased both to Defendant PEC. Plaintiff's Motion

for Partial Summary Judgment, Ex. 2 at para.6-7. At the time

Plaintiff filed the initial complaint in this action, Defendant

Lilienthal was the president of Defendants PEC and Redoubt,

and owned 51% of the outstanding stock in both. /d., Ex. 2 at

para. 8. The Lilienthal Family Trust owned the remainder of

the stock in both Defendant PEC and Redoubt. See id. Ex. 1 at

23. Plaintiff contends, and Defendants do not dispute, that

Defendant Lilienthal now owns 100% of the outstanding stock

in Defendant PEC. Jd. at 13. Moreover, Defendants admit that

Defendant “Lilienthal generally was involved in making

ee a ee ee

Appendix C-39

management decisions for [Defendants PEC and Redoubt],

including decisions regarding environmental compliance

matters.” Amended Answer at para. 8.

Defendants’ admission is supported by testimony from

Defendant Lilienthal and others at Defendants PEC and

Redoubt. In Defendant Lilienthal’s deposition, the following

exchange occurred:

Q: Mr. Lilienthal, are you committed to clean up

the Power Engineering property?

A: I am still here. I haven’t fled to Belize. |

worked for my father since I was 17 years old. Iknow

no other place, no other business. The property is a

good property. My company is a good company I

have people that have worked for me for over 40 years

there. I have been trying to clean up my property for

at least five years or more. I can get no direction. I

can get no help. I can get no answers. I have paid

multi-thousands of dollars out in lawyer fees.

Yeah, I’ve done things wrong, probably filled out

paperwork that was wrong. I didn’t get the things

done on time that I was supposed to. I stored some

waste for a long time that I shouldn’t have stored it.

We hoped to reuse it and put it back in the tanks,

which we could have done, but we had to ship it out.

All I want to do is I want to clean the property up.

Plaintiff's Motion for Partial Summary J udgment, Ex. 1, at 445.

In addition, Defendant PEC’s comptroller, Daniel Frieson,

testified as follows:

ee _ ey Pee ey ae ae a

— oa =

Appendix C-40

Q: I’m going to jump around a little bit again.

With regard to environmental decisions at Power

Engineering, those are decisions concerning what

remediation to do, how fast to do it, when to do it. Do

you make those decisions?

A: No.

Q: Who makes those decisions?

A: Dick Lilienthal.

Q: That would include decisions-to your

knowledge, has Mr. Lilienthal involved himself in

decisions regarding disposal of hazardous waste?

A: On a day to day basis?

Q: Yes sir.

A: I talk to Dick about getting set up with the

facility. This facility actually talked to our health and

safety manager, gave him a price. I looked at the

price and said, Dick, this is what we came up with. Is

this okay? Do you approve it? Well, he said, yes. So

we don’t ask him every shipment, does he approve

that shipment? It’s something—it’s just part of our

operation that’s ongoing.

Q: For instance, if you were looking at facility

cleanup, does Mr. Lilienthal have the ultimate

authority to make a determination on how to clean up

and how much money to spend?

A: Yes.

Appendix C-41

Q: And, in fact, does he exercise that authority?

A: Yes.

Q: PEC is a public corporation, is it not?

A: No, it’s privately held.

Q: It’s privately held. Essentially, is Mr.

Lilienthal the person who holds controlling interest in

PEC?

A: That’s correct.

Q: Asa person who holds controlling interest, he

would have ultimate authority over its business

decisions?

A: That’s correct.

Q: Over its environmental decisions?

A: That’s correct.

Q: Over the direction and tenor of its

relationships with the Environmental Protection

Agency or the State of Colorado Department of

Health?

A: He is directly involved in it.

Id., Ex. 11 at 87-89.

Under Colorado regulations, “‘operator’ means the person

operating a hazardous waste management facility or site either

by contract or permit.” 6 COLO. CODE REGS. § 260.10.

Appendix C-42

Courts have devised two tests to determine operator liability

under the RCRA and_ state’ regulations. The

“authority-to-control” test imposes operator liability “as long as

one [entity] had the capability to control [another entity], even

if it was never utilized.” Lansford-Coaldale Joint Water Auth.

v. Tonolli Corp., 4 F.3d 1209, 1221 (3d Cir. 1993); see also

FMC Corp. v. Aero Indus., 998 F.2d 842, 846 (10th Cir. 1993)

(citing cases) (noting that some courts treat those with authority

to control a facility as operators regardless of whether they

actually exercise that control). The “actual control” test, in

contrast, considers whether a corporation exercised “substantial

control” over the activities of another corporation which

commits an environmental violation. Lansford-Coaldale, 4

F.3d at 1221; see also FMC, 998 F.2d at 846 (“Actual control

and personal participation in the wrongful conduct clearly

makes one an operator under CERCLA.”); U.S. v. Kayser-Roth

Corp., 910 F.2d 24, 27 (1st Cir. 1990) (holding that to be an

operator, a parent corporation must, at a minimum, be actively

involved in its subsidiary’s activities); Mathews v. Dow Chem.

Co., 947 F. Supp. 1517, 1526 (D. Colo. 1996) (citing cases)

(recognizing that most courts impose operator liability upon one

corporation for the acts of another corporation where the first

corporation exercises “substantial control” over the second).

Although these tests have been devised to determine whether an

individual or entity is an “operator” under the Comprehensive

Environmental Response Compensation and Liability Act, there

is no reason not to apply them to the “operator” inquiry under

the RCRA given the similarity of the definitions in both

statutes. See 42 U.S.C.A. § 9601(20)(A) (“The term ‘owner or

operator’ means... any person . . . operating such facility”). -

The Tenth Circuit has not chosen between the two tests,

see FMC, 998 F.2d at 846 (identifying both approaches but

holding that “we need not decide which approach is best

because” the Defendant was liable under both), and neither do

I. Under either test, Defendant Lilienthal is an “operator” of the

Appendix C-43

facility. Consequently, there is no genuine issue of material fact

as to whether Defendant Lilienthal is an operator of the F acility.

5.

Finally, I reject Defendants’ argument that there are

“factual disputes as to whether laches bars Plaintiffs claims.”

Plaintiff's Response at 24. The Supreme Court has held that

“laches or neglect of duty on the part of officers of the

government is no defense to a suit by it to enforce a public right

or protect a public interest.” . Utah Power & Light Co. v. U.S.,

243 U.S. 389, 409, 61 L. Ed. 791, 37 S. Ct. 387 (1917). See

Albrechtsen v. Andrus, 570 F.2d 906, 910 (10th Cir.), cert.

denied, 439 U.S. 818, 58 L. Ed. 2d 109, 99 S. Ct. 79 (1978)

(citing Utah Power & Light and holding that “the Government

is too vast, its operations too varied and intricate, to put it to the

risk of losing that which it holds for the nation as a whole

because of the oversight of subordinate officials.”). Defendants

state that no public interest is involved because “the interest

sought to be protected by the Plaintiff in this case is the

government’s economic interest in having PEC pay for

remedia! activities.’ Defendants’ Opposition at 20. If

Defendants do not pay for remediation of the Facility, however,

it is likely that the Government, and thus the public, will. I

conclude, therefore, that Plaintiffs suit is “to . .. protect a public

interest.” Utah Power & Light Co., 243 U.S. at 409. Summary

judgment is appropriate against Defendants’ claim that the

doctrine of laches applies to this case.

Accordingly, IT IS ORDERED THAT

(1) PlaintifPs Motion for Partial Summary Judgment is

GRANTED;

(2) Defendants’ Motion for Summary Judgment is

DENIED;

Appendix C-44

(3) Defendants are required to provide financial assurances

for closure and postclosure care of the Facility and to post

third-party assurances in a manner consistent with 6 COLO.

CODE REGS. 1007-3 §§ 266 and ail applicable subparts; and

(4) Plaintiff is AWARDED ITS COSTS.

Dated: November 24, 2000 in Denver, Colorado.

BY THE COURT:

LEWIS T. BABCOCK, CHIEF JUDGE

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Appendix D-1

TITLE 42.

THE PUBLIC HEALTH AND WELFARE

CHAPTER 82. SOLID WASTE DISPOSAL

GENERAL PROVISIONS

42 USCS § 6901 (2002)

§ 6901. Congressional findings

(a) Solid waste.

The Congress finds with respect to solid waste—

(1) that the continuing technological progress and

improvement in methods of manufacture, packaging, and

marketing of consumer products has resulted in an

ever-mounting increase, and in a change in the characteristics,

of the mass material discarded by the purchaser of such

products;

(2) that the economic and population growth of our

Nation, and the improvements in the standard of living enjoyed

by our population, have required increased industrial production

to meet our needs, and have made necessary the demolition of

old buildings, the construction of new buildings, and the

provision of highways and other avenues of transportation,

which, together with related industrial, commercial, and

agricultural operations, have resulted in a rising tide of scrap,

discarded, and waste materials;

(3) that the continuing concentration of our population in

expanding metropolitan and other urban areas has presented

these communities with serious financial, management,

intergovernmental, and technical problems in the disposal of

solid wastes resulting from the industrial, commercial,

domestic, and other activities carried on in such areas;

Appendix D-2

(4) that while the collection and disposal of solid wastes

should continue to be primarily the function of State, regional,

and local agencies, the problems of waste disposal as set forth

above have become a matter national in scope and in concern

and necessitate federal action through financial and technical

assistance and leadership in the development, demonstration,

and application of new and improved methods and processes to

reduce the amount of waste and unsalvageable materials and to

provide for proper and economical solid waste disposal

practices.

(b) Environment and health.

The Congress finds with respect to the environment and

health, that—

(1) although land is too valuable a national resource to be

needlessly polluted by discarded materials, most solid waste is

disposed of on land in open dumps and sanitary landfills;

(2) disposal of solid waste and hazardous waste in or on

the land without careful planning and management can present

a danger to human health and the environment;

(3) as aresult of the Clean Air Act [42 USCS §§ 7401 et

seq.], the Water Pollution Control Act [33 USCS §§ 1251 et

seq], and other Federal and State laws respecting public health

and the environment, greater amounts of solid waste (in the

form of sludge and other pollution treatment residues) have

been created. Similarly, inadequate and environmentally

unsound practices for the disposal or use of solid waste have

created greater amounts of air and water pollution and other

problems for the environment and for health;

(4) open dumping is particularly harmful to health,

contaminates drinking water from underground and surface

supplies, and pollutes the air and the land;

Appendix D-3

(5) the placement of inadequate controls on hazardous

waste management will result in substantial risks to human

health and the environment;

(6) if hazardous waste management is improperly per-

formed in the first instance, corrective action is likely to be

expensive, complex, and time consuming;

(7) certain classes of iand disposal facilities are not

capable of assuring long-term containment of certain hazardous

wastes, and to avoid substantial risk to human health and the

environment, reliance on land disposal should be minimized or

eliminated, and land disposal, particularly landfill and surface

impoundment, should be the least favored method for managing

hazardous wastes; and

(8) alternatives to existing methods of land disposal must

be developed since many of the cities in the United States will

be running out of suitable solid waste disposal sites within five

years unless immediate action is taken.

(c) Materials.

The Congress finds with respect to materials, that—

(1) millions of tons of recoverable material which could

be used are needlessly buried each year;

(2) methods are available to separate usable materials

from solid waste; and

(3) the recovery and conservation of such materials can

reduce the dependence of the United States on foreign resources

and

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