# Petition for Writ of Certiorari — Raybestos Products Products Co Co. v. Indiana Department of Environmental Management (No. 09-11) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0704%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2009 ## Text \r No. 09-11 JUN 29 2009 PRICE OF TRE CLERK Bn The Supreme Court of the United States RAYBESTOS PRODUCTS COMPANY, Petitioner, THE INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Respondent. On Petition For Writ Of Certiorari To The Indiana Supreme Court PETITION FOR WRIT OF CERTIORARI GEORGE M. PLEWS Counsel of Record JEFFREY D. CLAFLIN BRETT EF. NELSON , PLEWS SHADLEY RACHER & BRAUN LLP 1346 N. Delaware St. Indianapolis, IN 46202 (317) 637-0700 COCKLE LAW BRIEF 1 RINTING CO (800) 225-6964 OR CALL. COLLECT (402) 342-2831 QUESTIONS PRESENTED FOR REVIEW Where the state induces a private citizen to enter into an agreed order in resolution of an environ- mental enforcement action, to give up the right to litigate the dispute, is the state’s subsequent refusal to abide by the terms of that order a violation of the citizen’s right to Due Process? Where there is no effective mechanism for re- dress for the state’s violation of the terms of an agreed order, is that a violation of the citizen’s night to Due Process and a taking under the Fifth and Fourteenth Amendments to the Constitution of the United States? CORPORATE DISCLOSURE STATEMENT No publicly traded company owns more than 10% of Raybestos’ stock. lll TABLE OF CONTENTS Page QUESTIONS PRESENTED FOR REVIEW ......... i CORPORATE DISCLOSURE STATEMENT ........ il ROME COS GFGPEE ET Ee arse snes skciriccunsesciecmmanacencieys lil TABLE OF AUTRES ERG vovessvsecesvennexsssnseversesseeis Vv CITATIONS FOR OPINIONS BELOW. ................. 1 BASIS FOR JURISDICTION IN THIS COURT..... 1 CONSTITUTIONAL AND STATUTORY PROVI- EPEC Oe Be ses chee issieet ssincaosesnainaantns 2 STAT ENEGEe COPE BiB Cilla ssecsencscctastcsixsssveniveces 2 REASONS FOR GRANTING CERTIORARI ........ 11 I. DUE PROCESS REQUIRES STRICT EN- FORCEMENT OF THE AGREED ORDER... 11 II. DUE PROCESS REQUIRES A MEAN- INGFUL OPPORTUNITY TO SEEK AN BUE E BAS EV ES GURREEUED © os vsconscovecosnseseoesesenenns 17 Ill. IDEM’S DESTRUCTION OF THE AGREED ORDER IS A “TAKING” FOR WHICH RAYBESTOS IS ENTITLED TO COM- PE NTE oscar cicsiesddaeness csantascas sania 24 APE RA PIED. sass ccsxsnsccinkcbsdeaiadninsanineneiniaasentaenenean 30 APPENDIX Opinion of the Indiana Supreme Court on transfer, filed December 9, 2008, reported at 897 W.E.Sel 460 Cra. DOG) gsc eccccsceccccucsoscsccsecs App. 1 TABLE OF CONTENTS -— Continued Page July 6, 2004 summary judgment order, Marion County Superior Court (Cause No. 49D12- GRIPES D vv cvis cccvescsscccnssercsccssacesesevoversne App. 18 Opinion of the Indiana Court of Appeals, filed November 15, 2007, reported at 876 N.E.2d TOW CEG, CE. BI, BRET sissisincsecssieceesccsesnassiens App. 25 October 30, 2006 Judgment Entry Regarding Additional Damages and Attorney Fees, Marion County Superior Court (Cause No. 49112-0209-PL-O001553) .......ccccccscccsssscccssereese App. 33 June 12, 2006 Judgment Entry, Marion County Superior Court (Cause No. 49D12-0209-PL- See CE BL ne nine etka App. 42 June 1, 2001 Order on Petition for Review (Cause No. 49F12-0101-MI-00194) ............... App. 69 Opinion of the Indiana Supreme Court denying rehearing, filed March 31, 2009, reported at SOS IN.E.20 471 (ING. ZOOB) .......ccscsccosssessevcess App. 83 © cS. GUE, BOING. ATV, © Lo cccccssccsvcccscvesescsecsees App. 85 BO Ge Oi ia city ss essa cqcsrisenectn anes App. 85 FE A he ii sins ici thon shndsecineavecnrbasroanns App. 91 SO Te a iisdcrccdvinceptinseencctersanesens . App. 105 TE I We SE ic vainncaccancavresenrcicncamaeyeie App. 119 SO SO St BO visseiciccs i cco tnewurenchidesscmets App. 153 February 1997 Agreéd Order ......................2055 App. 154 TABLE OF AUTHORITIES Page CASES Armstrong v. United States, 364 U.S. 40 (1960)...... 28, 29 Ash v. Chandler, 530 N.E.2d 303 (Ind. Ct. App. MN scans a oes adap aieansca teases -onaunehnac bausanteincensnine ata Burns v. City of Terre Haute, 744 N.E.2d 1038 MIE rks IN, PEE Fis evince siivnascicaseencessensenscers uae WS 27, 28 Campbell v. State, 284 N.E.2d 733 (1972)............... ey Castle v. United States, 301 F.3d 1328 (Fed. Re CN caches ob cane cesecaiekedatesxevcantialauacerieeeer inane 28 Entergy Arkansus, Inc. v. State of Nebraska, 226 F. Supp. 2d 1047 (D. Neb. 2002), aff’d, SOE F.26 O20 (GER Cir, BODE) .....nccccccccocsecovcsescessereese 23 Franconia Associates v. United States, 536 U.S. IN oo iad day ca tcese cotnsvaunndhassoueacasaniaiiersienzonees: 26 General Elec. Co. v. Johnson, 362 F. Supp. 2d se ich acksve. abceisilen Raisasd neds 26 iinet nana ahi ‘eile anon SOAP aim i "ane lili hen ae ie ‘ din asset rans vi TABLE OF AUTHORITIES — Continued Page Logan v. Zimmerman Brush Co., 455 U.S. 422 il 17, 20 Lynch v. United States, 292 U.S. 571 (1934) ............. 26 Marbury v. Madison, 5 U.S. 187 (1808)............. eee. 24 McIntosh v. Melroe Co., a Div. of Clark Equip. Co., Inc., 729 N.E.2d 972 (Ind. 2000) ...............ss000 23 McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, 496 U.S. 18 (1990)...............ccescceeees 21, 22 Palazzolo v. Rhode Island, 533 U.S. 606 (2001)........ 25 State ex rel. Reichert v. Youngblood, 73 N.E.2d I dae aso csckcnshaenadovonsavaaetavetwons 23 United States v. Atlantic Refining Co., 360 U.S. eae dedasikaaraca ay cuskhanasanesevenaxtaaeles canes 13, 14 United States v. Armour & Co., 402 U.S. 673 a ae sssadackaantoasiveninans 12,13, 14 United States v. ITT Continental Baking Co., I SIE © I cons ca sasnv quxevaxenvusradsounseuyunvsvdassnece 12 United States v. Smith, 94 U.S. 214 (1876) ........0...... 26 United States v. Winstar Corp., 518 U.S. 839 ST ost cccatctsdecyciawerauesshuvexiyiisatescepeussucvecvinuen 26, 27 CONSTITUTIONAL PROVISIONS AND STATUTES ee es ccwcusasnevndieseadycduseasen 2, 25, 28 RJ te. CEG, MUOEIE, FALY, © Bh vccccccscscacsvccersccscncces 2.17, 25 IE IED o ccnvanaas sinceukacsncssashravelevarnassoasseoeecariie 1 vil TABLE OF AUTHORITIES — Continued Page Oe Be a, ee I iinisinttetescacaee rattan eae 20 ie es ID aoiccusctsesondsenebconavinccnssvderssdeesnnain 16 SE 0 Oe MD 0s ccccachaxtininnouenegetonsbedeacetseracnaus 19 BO, Se Ge i viii sivcicenievsentervacntccsnneens 2, 9, 19, 27 EG CN © BB i vvsssvievvvesinccsssvenssnsceisovsssevecenrsas 2,19 Fa, Co Oe vicki sce ncceciccovnesconsvsspcavcseveonsses 2,19 eee en a U.... .. sac vapcosevedcctexseneuasvaaaeeen 2, 49 RO, Te Oe I oviinrsenicssscnnssccendsticdevitianesens 2,19 Bs AY Or TOI as cas ccv'nscavnonsscecedaacseusebnbnbeacdasnns 2,19 eee Ce oe PE wg. suena ontiacusbanesennecespanianeuseden 2 pT ee eS eS Cs Se eee 2,10, 23, 25, 27 1 CITATIONS FOR OPINIONS BELOW Petitioner Raybestos Products Company (“Ray- bestos”) seeks review of the Opinion of the Indiana Supreme Court (App. 1-17) reported at 897 N.E.2d 469 (Ind. 2008). The Indiana Supreme Court denied Ray- bestos’ petition for rehearing, except for the limited purpose of correcting a minor error in the opinion im- material to this petition. The Indiana Supreme Court’s opinion on rehearing (App. 83-84) is reported at 903 N.E.2d 471 (Ind. 2009). The Indiana Court of Appeals’ opinion reversing the trial court’s judgment in favor of Raybestos (App. 25-32) is reported at 876 N.E.2d 759 (Ind. Ct. App. 2007). The trial court’s judgment en- tries (App. 33-68) and the trial court’s order on peti- tion for review (App. 69-82) were not reported, but are included in the appendix to this petition. ¢ BASIS FOR JURISDICTION IN THIS COURT The Indiana Supreme Court issued its Opinion on December 9, 2008 directing the trial court to vacate judgments in favor of petitioner Raybestos and to dismiss the action. Raybestos timely filed a peti- tion for rehearing on January 8, 2009. The Indiana Supreme Court substantively denied Raybestos’ peti- tion for rehearing on March 31, 2009. This Court has jurisdiction, pursuant to 28 U.S.C. §1257(a), to review the final judgment of the highest court of a state upon a petition for writ of certiorari. S ae Bat note en 2 Se i i NI oe Sina eT ee ae ‘ omtttege!S “a, aa Oe a —— 2 CONSTITUTIONAL AND STATUTORY PROVISIONS AT ISSUE No person shall be held to answer for a capi- tal, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual ser- vice in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just com- pensation. U.S. Const. amend. V. No State shall ... deprive any person of life, liberty, or property, without due process of law.... U.S. Const. amend. XIV, § 1. Ind. Code §§ 4-21.5-2-5, 4-21.5-3-4, 4-21.5-3-5, 4-21.5- 3-6, 4-21.5-3-8, 4-21.5-5, 13-25-4, 34-13-1-1. ¢ STATEMENT OF THE CASE This case raises the question of whether there is any effective remedy for Indiana citizens when the state environmental agency, the Indiana Department of Environmental Management (“IDEM”), subverts an agreement it enters regarding the investigation and remediation of environmental contamination. IDEM changed its mind about the agreement it had made and — unwilling to seek change through the agreement’s dispute resolution mechanism — set about inducing a reluctant. EPA to force Raybestos to perform a cleanup different than the risk-based cleanup required by the agreement that IDEM and Raybestos previously negotiated. This case does not involve “overfiling” by the United States Environmen- tal Protection Agency (“EPA”) as a result of routine communications with IDEM or EPA’s own, indepen- dent determination that the outcome of the state agreement would be inadequate. The Indiana Su- preme Court’s 2008 opinion leaves Raybestos and other Indiana citizens with no opportunity for redress when IDEM determines to renege on its agreements. This case began in February 1997, with an Agreed Order settling a dispute between Raybestos and IDEM. The dispute concerned whether, and to what extent, Raybestos was responsible for the clean- up of polychlorinated biphenyls (“PCBs”) in a drain- age ditch (known as “Shelly Ditch”) near Raybestos’ Crawfordsville, Indiana plant. Raybestos did not agree it was solely or even partially responsible, but in order to avoid a lengthy dispute Raybestos entered into an Agreed Order with IDEM by which Raybestos agreed to perform a “risk-based” remediation. A risk- based cleanup’s essential characteristic is that the cleanup is not to a pre-set or arbitrary level of clean- up, but to a level consistent with the actual risk 4 presented by the contaminant at the particular cleanup site. The Agreed Order included a dispute resolution mechanism. (App. 172-74.) Raybestos submitted its risk assessment. After fifteen months of review and analysis by IDEM and its EPA-approved outside risk-assessment contractor, IDEM approved Raybestos’ risk assessment. (App. 48, 413.) Raybestos then prepared a technical memo- randum incorporating the findings of the risk assess- ment. (/d., 14.) IDEM provided comments in response and suggested a “hot spot” removal. (/d.) Pursuant to IDEM’s suggestion and a potential cleanup level set forth in the approved risk assessment, Raybestos then proposed a “hot spot” cleanup to remove all PCBs to a maximum remaining concentration of 238 parts per million (“ppm”) in the worst areas (lower levels of PCBs would remain in all other areas). (/d.) However, IDEM’s administration changed and IDEM abruptly “withdrew” its risk assessment approval and disapproved Raybestos’ technical memorandum. (App. 19-20, 48, 714, 71-72.) After providing IDEM with the required notice of dispute under the Agreed Order’s dispute resolution procedures, Raybestos filed a petition for admini- strative review and, thereafter, its petition for judicial review in the Marion Superior Court. (/d., 72-74.) On judicial review, the state court judge found that IDEM’s withdrawal of the approval of the risk assess- ment and disapproval of the subsequent technical memorandum was arbitrary and capricious, unsup- ported by substantial evidence and had nothing to do with the specifics of the risk assessment or any site- specific evidence. (/d., 79.) Instead, the withdrawal was based upon a single consideration: IDEM did not want to set a “precedent” by allowing the “hot spot” level proposed by Raybestos. (/d.) On June 1, 2001, the state court held that Raybestos had been prejudiced by IDEM’s breaches of the Agreed Order and ordered that IDEM reinstate approval of the risk assessment and approve the technical memorandum. (/d., 81.) After Raybestos obtained an additional order compelling IDEM to act, IDEM ultimately sent a letter purporting to approve the technical memoran- dum and reinstate approval of the technical memo- randum. (/d., 59, 461-62.) However, IDEM refused to allow the cleanup it had agreed to under the Agreed Order. IDEM did not appeal the trial court’s order. (/d., 5.) Instead, throughout the dispute resolution, admin- istrative and judicial review processes, IDEM had mounted a planned, persistent campaign to use EPA to force a different cleanup. Ultimately, EPA proceed- ed to do just that, issuing a December 6, 2000 unilat- eral administrative order (*UAO”) forcing Raybestos — through the threat of punitive damages in an amount up to three times the actual cleanup costs (State Ct. App. 4070 (UAO penalty provision)) — to conduct a cleanup to a uniform, arbitrary standard (10 ppm) that ultimately cost over $16 million more than the cleanup IDEM and Raybestos agreed to under the Agreed Order. 6 Raybestos filed suit against IDEM in Marion Su- perior Court on July 26, 2002, seeking damages for IDEM’s breach of contract and declaratory relief regarding IDEM’s liability for Raybestos’ future dam- ages. (App. 5, 42.) On July 6, 2004, the trial court, Honorable Robyn Moberly, granted, in part, Raybestos’ motion for summary judgment. Judge Moberly held that the Agreed Order was a settlement agreement — a contract — and that IDEM’s requests for EPA inter- vention to subvert the risk-based process IDEM had agreed to were a breach of contract. Ud., 21, 23.) The trial court considered IDEM’s statutory and program obligations to communicate with EPA, but found that its actions in this case were not ordinary-course com- munications required by National Contingency Plan (“NCP”), the Superfund Memorandum of Agreement (“SMOA”) between IDEM and EPA, or other law. Ud., 22.) Instead, it was uncontested that IDEM’s commu- nications with EPA were “to avoid the terms of the Agreed Order, which were binding on [IDEM].” (d., 23.) The trial court reserved for trial the questions of causation and damages. (Id.) Following a six-day bench trial (id., 44), on June 12, 2006, the trial court entered judgment in favor of Raybestos in the amount of $11,645,321.58, plus post- judgment interest. (/d., 66-67.) At tmal, [IDEM presented evidence that it claimed showed that EPA’s enforcement action resulted from IDEM’s “legitimate” communications with EPA, including communications under the SMOA, rather than “illegitimate” commu- nications intended to avoid [DEM’s obligations under rE the Agreed Order. (/d., 59, (65; State Ct. App. 3096- 3102.) The trial court weighed this evidence and found that “IDEM’s communications to EPA regard- ing Shelly Ditch were not done in the ordinary course of business.” (U/d., 59, 763.) The trial court made numerous well supported factual findings on this issue. “IDEM was actively soliciting, encouraging and insisting on EPA involve- ment in the cleanup of the Raybestos/Shelly Ditch site.” (id., 56, 947.) “IDEM mounted a planned, organized, persistent campaign to use EPA to force a different cleanup.” (/d., 59, 463.) “The EPA’s en- forcement action was not due to possible NPL (“National Priorities List”] listing of the Sugar Creek Sediment Site or any pre-breach communication by IDEM” (/d., 964.) “IDEM argued that ... [its] “legitimate” communication could have caused EPA enforcement.... However, there is no _ evidence supporting this speculation.” Ud., 65.) “Independent action by EPA — that is, action not related to IDEM’s improper solicitations —. . . was not a substantial factor in EPA’s involvement in the Shelly Ditch cleanup.” (/d., 60, 167.) Although it is unknowable whether the EPA would have ever involved itself in the Shelly Ditch clean up, the evidence is voluminous and overwhelming that EPA would not have gotten involved in the clean up when it did or any time in the foreseeable future, but for the efforts of IDEM. 8 Ud., 56-57, 947.) “There were reasons that the EPA could have or might have eventually initiated enforce- ment actions against the Plaintiff, but the Court is unconvinced that there was any other factor in the EPA’s involvement other than the persistent insis- tence of IDEM.” Ud., 59, 62.) Raybestos was aware that EPA had the right to over-file to compel a more stringent clean- up than that proposed by Raybestos. Raybestos accepted the “risk” that the EPA would over- file when it signed the Agreed Order with IDEM. However, Raybestos did not accept the “risk” that IDEM would instigate, en- courage, facilitate and insist upon the EPA over-filing. (Id., 54, 137.) Not one of these findings was reversed or even criticized on appeal. Evidence related to Raybestos’ post-September 20, 2003 damages and Raybestos’ attorney fees was presented on September 8, 2006. (/d., 33-34.) The trial court’s October 30, 2006 judgment awarded Raybestos an additional $4,716,691.33. ([d., 40.) IDEM appealed. On November 15, 2007 the Indiana Court of Appeals issued a seven-page order reversing the trial court’s 2004 grant of summary judgment on the issue of IDEM’s breach of the Agreed Order. The court addressed almost none of the issues briefed by the parties. Its sole basis for reversal was a holding that IDEM lacked authority to approve Raybestos’ cleanup and the Agreed Order was unenforceable as a matter 9 of public policy. IDEM had never made this claim. Raybestos petitioned for, and obtained, transfer to the Indiana Supreme Court, vacating the Court of Appeals’ opinion. In its December 9, 2008 opinion, the Indiana Supreme Court found that IDEM actually did have authority to enter into risk-based cleanups and held that the Agreed Order “is an agency action governed by [the Indiana Administrative Orders and Proce- dures Act (“AOPA”)], not a contract that will support a claim for damages from IDEM.” (App. 1.) Essential to its holding was the finding that “IDEM’s com- munications with EPA are agency actions” subject to exclusive review under AOPA, which does not autho- rize money damages. (App. 10-11.) The Indiana Su- preme Court noted that not all contract claims against state agencies for money damages are precluded by AOPA, citing an AOPA exemption for “contracts for the acquisition, leasing or disposition of property or the procurement of goods or services.” (/d., 12.) But the court ignored that other actions are exempt from AOPA, including “decision|s] to initiate or not to initiate an inspection, investigation, or other similar inquir[ies] that will be conducted by the agency [or] another agency” and “decision[s] concerning the con- duct of an inspection, investigation, or other similar inquiries.” Ind. Code §§ 4-21.5-2-5(9) & (10). IDEM’s extraordinary efforts to induce the EPA to destroy the Agreed Order by instituting a second enforcement action fall within the plain language of these AOPA exemptions. 10 As noted by the Indiana Supreme Court, IDEM first argued that AOPA precluded Raybestos’ claim for _ contract damages in its brief to the Indiana Court of Appeals. (App. 9.) However, IDEM’s argument to the Indiana Court of Appeals was that the Agreed Order itself was an “agency action” and that Raybestos was required to seek judicial review or enforcement of the Agreed Order through AOPA. (Appellant’s Br. at 20- 21.) IDEM argued that Indiana courts are deprived of jurisdiction “when a party has an administrative rem- edy and fails to exhaust it.” (d., 21.) In response, Raybestos noted in its Appellee’s brief that it had sought judicial review and enforcement of the Agreed Order, had obtained the only relief possible under AOPA, had exhausted its administrative remedies and was now seeking damages, not judicial review. (Appellee’s Br. at 26-28.) IDEM never argued that its communications with EPA in an effort to subvert the Agreed order were “agency actions” or that AOPA precluded a damage claim under the Indiana statute permitting such claims against the state. The first suggestion that Raybestos had no pos- sible remedy for IDEM’s subversion of the Agreed Order was Indiana Supreme Court’s December Q, 2008 order. That order confirmed that AOPA did not permit the award of money damages but also held that AOPA precluded Raybestos’ claim under I.C. § 34-13-1-1(a), which permits contract claims against the state. Raybestos’ first opportunity to address the assertion that Indiana law deprived it of any effective remedy at all was with its petition for rehearing. 11 Raybestos briefed the due process issues addressed in this petition in its petition for rehearing. (Pet. Reh’g at 9-13.) The Indiana Supreme Court denied Raybestos’ petition for rehearing, other than to cor- rect that court’s misstatement regarding the stan- dards applicable to administrative review. > REASONS FOR GRANTING CERTIORARI I. DUE PROCESS REQUIRES STRICT EN- FORCEMENT OF THE AGREED ORDER. This Court has held that agreed orders or con- sent decrees between a state and a private citizen must be strictly and literally enforced, as written, because, by entering such orders or decrees, the citizen is giving up the fundamental due process right to litigate the dispute: Consent decrees are entered into by parties to a case after careful negotiation has produced agreement on their precise terms. The parties waive their right to litigate the issues involved in the case and thus save themselves the time, expense, and inevitable risk of litigation. Naturally, the agreement reached normally embodies a compromise; in exchange for the saving of cost and elimi- nation of risk, the parties each give up something they might have won had they proceeded with the litigation. Thus the de- cree itself cannot be said to have a purpose; rather the parties have purposes, generally 12 opposed to each other, and the resultant de- cree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill to achieve. For these reasons, the scope of a consent decree must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it. Because the defendant has, by the decree, waived his right to litigate the issues raised, a right guaranteed to him by the Due Process Clause, the conditions upon which he has given that waiver must be respected, and the instrument must be construed as it is written, and not as it might have been written had the plaintiff established his factual claims and legal theories in litigation. (Emphasis added; footnote omitted.) United States v. Armour & Co., 402 U.S. 673, 681-82 (1971); United States v. ITT Continental Baking Co., 420 U.S. 223, 245 (1975). The Armour Court cited Hughes v. United States, 342 U.S. 353 (1952), a case where “the Government sought to construe a consent decree that gave the defendant the option of selling his stock or putting it in a voting trust as requiring him to sell the stock within a reasonable time even though he chose the voting trust alternative, because the procompetitive purpose of the decree would otherwise be frustrated.” Armour, 402 U.S. at 682. It may be true as the Government now con- tends that Hughes’ large block of ownership 13 in both types of companies endangers the independence of each. Evidence might show that the sale by Hughes is indispensable if competition is to be preserved. However, in section V the parties and the District Court provided their own detailed plan to neutralize the evils from such ownership. Whatever justification there may be now or hereafter for new terms that require a sale of Hughes’ stock we think there is no fair support for reading that requirement into the language of section V. Armour, 402 U.S. at 682 (quoting Hughes, 342 U.S. at 357); see also United States v. Atlantic Refining Co., 360 U.S. 19 (1959). As was noted in the statement of the case, under the terms of the Agreed Order and the Scope of Work (“SOW”) incorporated therein (App. 161, (28), Raybestos was to undertake a risk-based cleanup of the site. The cleanup would be governed by a tech- nical memorandum incorporating the findings of the risk assessment. (/d., 196-97.) It was intended to be a fully comprehensive cleanup, “to address human health and environmental concerns and bring the site to closure such that no further actions [would be] re- quired.” (/d., 184.) Throughout this process, Raybestos worked closely with IDEM and its EPA- approved risk assessment contractor. [DEM proposed the “hot spot” removal. Raybestos then submitted the technical memorandum incorporating the hot spot removal, including a cleanup removing all PCBs to a maximum remaining concentration of 238 parts per 14 million in the worst areas. But then, IDEM’s administration changed and it abruptly “withdrew” its risk assessment approval and disapproved Raybestos’ technical memorandum. (App. 19-20, 48, 414, 71-72.) On judicial review, the trial court held that the agency’s withdrawal of the risk assessment and the disapproval of the technical memorandum was arbi- trary and capricious. The judge ordered IDEM to reinstate the risk assessment and to approve the technical memorandum. IDEM did not appeal the ruling of the trial court. The agency was, at that point, bound by the Agreed Order, as enforced by a trial court judge, to allow Raybestos to proceed with the hot spot cleanup mandated by the technical mem- orandum. Unwilling, though, to abide by the Agreed Order and its dispute resolution process, IDEM already had concluded a successful secret campaign to convince EPA that it should step in to compel Raybestos to conduct a different and much more expensive cleanup than what was otherwise required under the Agreed Order. IDEM intentionally disre- spected and disregarded the fundamental condition upon which Raybestos entered the Agreed Order — that there would be a risk-based cleanup governed by the results of the risk assessment — when it enlisted EPA to do what it then could not. Raybestos gave up its due process right to litigate its dispute with IDEM over responsibility for the cleanup of the alleged contamination in exchange for such a non-arbitrary, actual risk-based cleanup. Under Armour, Hughes, and Atlantic Refining, it does not matter that the 15 government later decided that the Agreed Order should be abandoned, even if that decision was argu- ably based on valid policy considerations. Due process required IDEM to abide by its agreement. The Indiana Supreme Court dismissed this ar- gument, finding that there was no promise in the Agreed Order that IDEM would not contact EPA, that EPA “overfilling” was a known risk that IDEM could not foreclose by its agreement with Raybestos, that there are “federal regulations requiring communica- tion between the agencies,” that the Agreed Order, “in the event of a conflict in the application of Federal, state or local laws,” compels Raybestos to comply with the most stringent standards, and that IDEM had, in any event, reserved all “rights and defenses” in the Agreed Order. (App. 15-17.) However, IDEM’s promise, and its waiver of its “right” to beg EPA to intervene, was the Agreed Order itself. IDEM committed to a course of action, to “suspend its own enforcement efforts” (id., 17), which included contacting EPA to demand a separate en- forcement action in spite of the Agreed Order. IDEM’s precise promise was expressly stated in paragraph 84 of the Agreed Order: “(nJothing in this order shall restrict the State of Indiana from seeking other appropriate relief to protect human health or the environment from pollution or contamination at or from this site not addressed in this Order.” (Id., 181, 784.) (Emphasis added.) IDEM asked EPA to inter- vene in precisely the same site and the same alleged contamination covered by the Agreed Order. There 16 could not be a clearer breach of IDEM’s obligations under the Agreed Order. Likewise, the Agreed Order was IDEM’s commit- ment in writing to a risk-based cleanup rather than the arbitrary numerical standards ultimately im- posed under EPA’s unilateral order. There was no “conflict” with a more stringent law; EPA’s regula- tions expressly allow such risk-based PCB cleanups. (App. 31 (citing 40 C.F.R. § 761.120(c)).) This was no overfiling in the normal sense, where EPA is con- cerned with state action or inaction and the efficacy of a proposed cleanup. See Harmon Indus. v. Browner, 191 F.3d 894 (8th Cir. 1999) (EPA initiated enforce- ment action seeking to impose a penalty for the same alleged violations that state agency and regulated entity addressed through a consent order which imposed no penalty.). EPA was not concerned with the Shelly Ditch cleanup until IDEM induced it to get involved; the Indiana Supreme Court accepted the trial court’s factual finding that “EPA would not have acted absent IDEM’s prodding.” (Jd., 15.) Finally, the federal regulations cited by the Indiana Supreme Court requiring communication between the agencies (td., 16) have nothing to do with specific enforcement actions or this case. “IDEM’s communications to EPA regarding Shelly Ditch were not done in the ordinary course of business. IDEM mounted a planned, or- ganized, persistent campaign to use EPA to force a different cleanup.” (/d., 59 463.) Both parties gave up rights in the Agreed Order. The general reservation of rights clause is limited by 17 IDEM’s specific agreement to a risk-based, compre- hensive cleanup and by its agreement to resolve any disputes through the dispute resolution mechanism of the Agreed Order. Raybestos gave up its right to litigate its dispute with IDEM when it entered into the Agreed Order. Raybestos was obligated to abide by the terms and conditions of that order; so was IDEM. Indiana law provides a mechanism — a contract claim against the state — to protect citizens like Ray- bestos from deprivation of the property right to en- force a consent decree. The Indiana Supreme Court’s eleventh-hour determination that this mechanism was not available leaves Raybestos and other Indiana citizens without any potential remedy for the state’s deprivation of this property right, in violation of their due process rights under the Fourteenth Amendment. Il. DUE PROCESS REQUIRES A MEANING- FUL OPPORTUNITY TO SEEK AN EFFEC- TIVE REMEDY. The Fourteenth Amendment requires “an oppor- tunity ... granted at a meaningful time and in a meaningful manner for a hearing appropriate to the nature of the case.” Logan v. Zimmerman Brush Co., 455 U.S. 422, 437 (1982). Here, Raybestos had no meaningful opportunity to challenge IDEM’s actions through AOPA, and — according to the Indiana Su- preme Court — may not challenge IDEM’s actions through a claim for contract damages. If the Indiana 18 Supreme Court’s decision stands, there will be no opportunity for any Indiana citizen to challenge IDEM’s efforts to make performance of the agree- ments it enters impossible. The Indiana Supreme Court held that “IDEM’s communications with EPA [are] agency action(s)” and that Raybestos’ “claim is for failure to carry out an obligation under the Order not to communicate with EPA,” and is thus a “failure to perform a duty, function or activity under [AOPA].” (App. 10.) It held that “pursuant to AOPA, exclusive jurisdiction to review the Agreed Order and IDEM’s obligations and functions under the order lies in the administrative procedure provided by [AOPA].” (d., 11.) However, Raybestos was not able to seek redress through AOPA for IDEM’s efforts to subvert the Agreed Order through extraordinary communications to EPA because those communications were secret. IDEM did not provide notice to Raybestos that, for example, it prepared and internally distributed a September 22, 1998 memorandum outlining how it would involve EPA to defeat the Agreed Order (App. 50, 421) or that its Assistant Commissioner was asking EPA to take over the Shelly Ditch enforcement effort “on a weekly basis.” (App. 56, 446). If these and other IDEM acts to destroy the Agreed Order were actually “agency actions” for which review was avail- able under AOPA, IDEM would have been required to provide Raybestos with written notice describing the agency action and explaining the available proce- dures and time limits for administrative review. See 19 I.C. §§ 4-21.5-3-4, 4-21.5-3-5, 4-21.5-3-6, and 4-21.5-3- 8 (requiring, inter alia, notice of “orders” which include “agency actions” that determine “the legal rights, duties ... or other legal interests” of a per- son.)' Even had IDEM provided notice to Raybestos of its illicit actions, a “claim against the State or its agency for damages is not among the available remedies” under AOPA. (App. 11.)° The only remedies available under AOPA are for the trial court to “re- mand the case to the agency for further proceedings” or to “compel agency action that has been unrea- sonably delayed or unlawfully withheld.” I.C. § 4- 21.5-5-15. This is the same relief Raybestos sought — and obtained — when it challenged IDEM’s “with- drawal” of its approval of the risk assessment and disapproval of its technical memorandum. Of course, by the time Raybestos obtained the relief available under AOPA, IDEM had successfully destroyed the Agreed Order by inducing EPA to begin a separate enforcement action. IDEM refused to make any ' See 1.C. § 4-21.5-1-9 (defining “order”). * Raybestos could not have obtained review of IDEM’s actions under AOPA in any event. IDEM’s extraordinary efforts to evade its own Agreed Order are expressly exempted from AOPA as “decision|s] to initiate or not to initiate an inspection, investigation, or other similar inquir|ies| that will be conducted by the agency [or) another agency” and “decision|s] concerning the conduct of an inspection, investigation, or other similar inquiries.” I.C,. §§ 4-21.5-2-5(9) & (10). The Indiana Supreme Court did not address these exemptions. 20 efforts to regain control of the cleanup following Judge Keele’s order on Raybestos’ petition for review. (State Ct. App. 4099-4103 (Raybestos’ October 26, 2001 letter requesting that IDEM petition EPA to reinstate IDEM as the “lead agency” directing the Shelly Ditch cleanup and IDEM’s November 6, 2001 letter declining to do so.).) That Raybestos ultimately successfully obtained judicial review of IDEM’s improper “withdrawal” of the risk-assessment approval is no substitute for a meaningful remedy for IDEM’s breaches of the Agreed Order. “(T]he Fourteenth Amendment [re- quires] an opportunity ... granted at a meaningful time and in a meaningful manner for a hearing appropriate to the nature of the case.” Logan, 455 U.S. at 437. IDEM’s letter “agreeing” (after being compelled to do so) to “reinstate” Raybestos’ risk assessment and approve Raybestos’ technical memo- randum was meaningless because IDEM already had made cleanup under the Agreed Order impossible. By December 2000, before the close of judicial review, EPA had already issued its order requiring Raybestos to clean up to a much more stringent level, under threat of treble damages. (App. 5.) See also 42 U.S.C. § 9607(c\3) (authorizing “punitive damages in an amount at least equal to, and not more than three times, the amount of any costs incurred by the Fund as a result of such failure to take proper action”). The Indiana Supreme Court also held that “IDEM’s communications with EPA are ‘agency ac- tions’” subject to exclusive review under AOPA and 21 that, unlike a claim for breach of a contract “for the acquisition, leasing or disposition of property or the procurement of goods or services,” no exemption per- mits a claim under the statute that permits contract claims against the state. (App. 10-13.) If the Indiana Supreme Court’s order stands, then Indiana’s statutes deprive Raybestos — and the many other citizens’ who enter agreed orders with IDEM — from any means to challenge IDEM when it reneges on its agreements. IDEM can make and break such agreements with impunity and Raybestos and other Indiana citizens will have no process at all; no opportunity to be heard, no remedy. The regulated community will surely be discouraged from making agreements that cannot be enforced. There is, of course, a better answer. The avail- ability of a post-deprivation claim for contract dam- ages comports with due process by providing a meaningful opportunity for post-implementation re- view and redress. See McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, 496 U.S. 18, 38 (1990) (where only remedy for unlawful tax is post- deprivation challenge to the collection of the tax, due process requires that “the State must provide tax- payers with not only a fair opportunity to challenge the accuracy and legal validity of their tax obliga- tions, but also a clear and certain remedy.”). This * IDEM represented to the Indiana courts that it enters into such agreed orders “on a daily basis.” (See IDEM’s December 18, 2006 Appellant’s Supplemental Case Summary at 3). 22 Court explained that in tax cases, the “taxpayer pay under duress when he proffers a timely payment merely to avoid a serious disadvantage in the asser- tion of his legal rights should he withhold payment and await a state enforcement proceeding,” and that this is further cause for there having to be an ade- quate post-deprivation remedy.” /d., 38 n.21. There is no difference betwen the taxpayer paying under duress and the person or company being regulated by any other administrative agency, where the full weight of the government and the threat of escalating enforcement actions similarly can be brought to bear. Post-enforcement review is familiar in the envi- ronmental context. Many defendants in Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) enforcement actions have challenged the constitutionality of § 106 of that statute because it does not provide for any pre-enforcement review of EPA’s actions. Courts addressing these clairas have upheld the constitutionality of § 106, but only because the statute explicitly requires judicial review prior to the actual deprivation of a property interest. E.g., General Elec. Co. v. Johnson, 362 F. Supp. 2d 327, 339 (D.D.C. 2005) (“The ability of the PRP to choose, under the language of the statute, whether to comply with a section 106 order is key. .. . [Wlere the [poten- tially responsible party] to be deprived of any mean- ingful choice to refuse to comply with an order, that might pose a different situation in assessing whether a deprivation of property has occurred.”). 23 Here, Raybestos was completely deprived of any pre-enforcement or post-enforcement remedy. IDEM failed to provide notice of its improper communica- tions with EPA and the Indiana Supreme Court held that the trial court did not have jurisdiction to hear Raybestos’ claim. The only remedy that Raybestos was left with — specific performance of the Agreed Order — was no longer available. Raybestos thus never had a chance to challenge the agency’s action, either before or after it was deprived of its property interest. Because Raybestos could not challenge IDEM’s destruction of the Agreed Order through AOPA or insist upon specific performance where per- formance was made impossible by IDEM, a claim for damages is the only remaining remedy. Such a remedy is provided for in Indiana’s Contract Claim Statute, I.C. § 34-13-1-1(a). Effective damage reme- dies for governmental undermining of the agreements it makes are vital to keeping government conduct within lawful bounds. Entergy Arkansas, Inc. v. State of Nebraska, 226 F. Supp. 2d 1047, 1161 (D. Neb. 2002), aff’d, 358 F.3d 528 (8th Cir. 2004). The right to a remedy is a basic tenet of law in a just society. Its roots can be found in the Magna Carta: “To no one will we sell, to no one will we deny, or delay right or justice.” McIntosh v. Melroe Co., a Div. of Clark Equip. Co., Inc., 729 N.E.2d 972, 987 (Ind. 2000). Under Indiana law, “[i]Jt has always been a general principle under our legal system that for every wrong there should be a remedy.” State ex rel. Reichert v. Youngblood, 73 N.E.2d 174, 179 (Ind. 24 1947). “The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury. One of the first duties of government is to afford that protection.” Marbury v. Madison, 5 U.S. 137, 163 (1803). Ill. IDEM’S DESTRUCTION OF THE AGREED ORDER IS A “TAKING” FOR WHICH RAY- BESTOS IS ENTITLED TO COMPENSA- TION. Raybestos’ theory of the case in the lower courts was based on IDEM’s breach of contract. After a six day bench trial, the trial court found that EPA would not have initiated an enforcement action against Raybestos but for IDEM’s extraordinary and unlawful effort to compel the federal agency to intervene, and that IDEM’s action were, thus, a breach of the Agreed Order, a breach entitling Raybestos to millions of dollars in damages. The Indiana Supreme Court did not hold that the Agreed Order was not a contract or that IDEM did not breach the contract, only that the Agreed Order was “not a contract that will support a claim for damages from IDEM.” (App. 1.) The Court reasoned that this was so because Rayhestos’ exclusive remedy was under AOPA, which does not provide for the recovery of damages, and because the state statute allowing for breach of contract actions against the 25 state did not apply because the Agreed Order was not a contract for goods or services.* If the Indiana Supreme Court’s Opinion is allowed to stand, then Raybestos will have suffered a breach of contract at the hands of a state agency, one costing Raybestos millions of dollars, for which there is no remedy whatsoever. The combination of these actions has resulted in a taking of Raybestos’ prop- erty by the State of Indiana in contravention of the Fifth and Fourteenth Amendments to the Constitu- tion of the United States, a taking that entitles Raybestos either to “just compensation,” if not con- tract damages. The Fifth Amendment to the United States Con- stitution provides that “[nlo person shall be ... de- prived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.” “The Takings Clause of the Fifth Amendment is applicable to the States through the Fourteenth Amendment.” Palazzolo uv. Rhode Island, 533 U.S. 606, 617 (2001). In Indiana, as in most jurisdictions, an agreed order or consent decree “is both contractual, in that it * Ind. Code § 34-13-1-l1(a) does not, as suggested by the Indiana Supreme Court, limit contract claims against the state to those contracts that meet the formality requirements for the purchase of goods or service: by an administrative agency pur- suant to Title 4. To the co.rary, section 34-13-1-1(a) expressly allows contract claims ior breaches of implied contracts that could not meet Title 4’: formality requirements. 26 is an agreement between the parties, and an entry of judgment by the court.” Jn re Estate of Moore, 714, N.E.2d 675, 678 (Ind. Ct. App. 1999); Ash v. Chandler, 530 N.E.2d 303, 306 (Ind. Ct. App. 1988). “Valid contracts are property, whether the obligor be a private individual, a municipality, a state, or the United States.” Lynch v. United States, 292 U.S. 571, 579 (1934). It has long been the rule that government can be held accountable for a breach of contract. United States v. Smith, 94 U.S. 214 (1876). “When the [government] enters into contracts its mghts and duties therein are governed generally by the law applicable to contracts between private individuals.” Franconia Associates v. United States, 536 U.S. 129, 141 (2002) (concerning contracts with the United States). With government contracts, as with private contracts, “damages are always the default remedy for breach of contract.” United States v. Winstar Corp., 518 U.S. 839 (1996), see also Justice Scalia’s concurring opinion, 518 U.S. at 919 (“Virtually every contract operates, not as a guarantee of a particular future conduct, but as an assumption of liability in the event of nonperformance: The duty to keep a contract at common law means a prediction that you must pay damages if you do not keep it, —- and nothing else.”) (citations omitted). There is an exception under the “sovereign acts doctrine,” where the act is “public and general,” that can protect the government from contract liability. Klamath Irrigation Dist. v. United States, 67 Fed. Cl. 27 504, 536 (2005) (citing Horowitz v. United States, 267 U.S. 456 (1925) and Winstar, 518 U.S. at 893-96). But an act of government will be considered to be sovereign so long as its impact on a contract is “merely incidental to the accomplishment of a broader governmental objective.” Jd. Moreover, an act will not be held to be “public and general if it has the substantial effect of releasing the Government from its contractual obligations.” Winstar, 518 U.S. at 899.° Consequently, to decide whether a taking has * At one time, American states had recognized the principle of sovereign immunity, that is: suit could not be maintained against a state without its consent. E.g., Burns v. City of Terre Haute, 744 N.E.2d 1038, 1040 (Ind. Ct. App. 2001) (citation omitted). However, “[iJn 1972, [the Indiana] supreme court abolished the doctrine of sovereign immunity.” Jd. (citing Camp- bell v. State, 284 N.E.2d 733, 737 (Ind. 1972).) The Campbell court then explained that, with some exceptions not relevant here, “the legislature was responsible for considering which instances of governmental conduct should be immunized from liability.” Jd. Indiana’s legislature has not subsequently created immunity for contract claims against the state or state agencies. The Indiana Contract Claims Act, I.C. § 34-13-1-1 through 7, was recodified in 1998 by P.L.1-1998, SEC. 8. The Act includes a ten year statute of limitations, but otherwise does not exclude claims or immunize governmental conduct. The AOPA exemp- tions set forth in I.C. § 4-21.5-2-5 — including the exemptions for “contracts for the acquisition, leasing or disposition of property or the procurement of goods or services” cited by the Indiana Supreme Court (App. 12) and exemptions for “decision[s] to initiate or not to initiate an inspection, investigation, or other similar inquir{ies] that will be conducted by the agency [or] another agency” and “decision[s] concerning the conduct of an inspection, investigation, or other similar inquiries” (1.C. §§ 4- 21.5-2-5(9) & (10)) — were added to the Indiana code in 1986. (Continued on following page) 28 occurred with respect to a government contract, the courts must decide whether there is some basis upon which the state can rely on the sovereign acts doc- trine and whether there would otherwise be a “full range of remedies associated with the vindication of a contract.” Castle v. United States, 301 F.3d 1328, 1332 (Fed. Cir. 2002). This Court has held that the destruction of con- tractual rights is a compensable taking under the Fifth Amendment. In Armstrong v. United States, 364 U.S. 40 (1960), materialmen had liens on vessels seized by the United States pursuant to the terms of the contract with the general contractor. Once the government seized the vessels, it claimed that the materialmen had no right to enforce their liens against the government. This Court held that there was a taking of the liens for which just compensation was due under the Fifth Amendment: “[t]he total © destruction by the Government of all value of these liens, which constitute compensable property, has every possible element of a Fifth Amendment ‘taking’ P.L.18-1986, SEC.1. Because the creation of sovereign immunity is in derogation of Indiana common law, exceptions to governmental liability “must be strictly construed against lim- itations on the claimant’s right to bring suit.” Burns, 744 N.E.2d at 1040 (citation omitted). The Indiana Supreme Court’s ex- pansive interpretation of AOPA to preclude Raybestos’ claim is in derogation of Indiana common law, which abolished sovereign immunity, and results in a deprivation of due process for Ray- bestos and any other Indiana citizen who is injured by the state’s breach of the agreed orders it enters. 29 and is not a mere ‘consequential incidence’ of a valid regulatory measure.” 364 U.S. at 48. Here, IDEM was not promulgating regulations or taking any action generally applicable when it secret- ly begged EPA to intervene and destroy the particular contract that IDEM had made with Raybestos. IDEM’s actions were directed solely at Raybestos, and the effect of those actions on the contract was anything but “incidental.” Those actions made the Agreed Or- der and Raybestos’ decision to forego litigation worth- less. Moreover, with no opportunity for injunctive relief and no right to recover damages arising from IDEM’s breach — the “default remedy” in all breach of contract cases — Raybestos has been denied all of the “remedies associated with the vindication of a contract.” IDEM’s breach and the Indiana Supreme Court’s subsequent decision that the breach should be uncompensated have worked a taking of substantial proportions, one that requires just compensation, compensation that was fairly measured by the trial court when it awarded damages. ¢ 30 CONCLUSION For the foregoing reasons, Raybestos respectfully asks that the Court grant its petition for a Writ of Certiorari, reverse the opinion of the Indiana Su- preme Court, and affirm the trial court’s judgments. DATED: June 29, 2009 Respectfully submitted, GEORGE M. PLEWS Counsel of Record JEFFREY D. CLAFLIN BRETT E. NELSON PLEWS SHADLEY RACHER & BRAUN LLP 1346 N. Delaware St. Indianapolis, IN 46202 (317) 637-0700 Attorneys for petitioner, Raybestos Products Company App. 1 897 N.E.2d 469 Supreme Court of Indiana. THE INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Appellant (Defendant below), V. RAYBESTOS PRODUCTS COMPANY, Appellee (Plaintiff below). No. 49S02-0804-CV-183. Dec. 9, 2008. Steve Carter, Attorney General of Indiana, David L. Steiner, Frances H. Barrow, Timothy J. Junk, Deputy Attorney Generals, Indianapolis, IN, Attor- neys for Appellant. George M. Plews, Brett E. Nelson, Indianapolis, IN, Attorneys for Appellee. On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-0609-CV-782. BOEHM., Justice. We hold that an agreed order for environmental cleanup with the Indiana Department of Environ- mental Management (“IDEM”) is an agency action governed by the Indiana Administrative Orders and Procedures Act, not a contract that will support a claim for damages from IDEM. We also hold that IDEM has authority to approve risk-based cleanups, App. 2 and IDEM’s communications with the federal Envi- ronmental Protection Agency did not violate its Agreed Order with Raybestos. Facts and Procedural History Raybestos Products Company manufactures brakes and clutches in its Crawfordsville, Indiana plant. This plant is adjacent to Shelly Ditch, a 5000- foot open earthen drain surrounded by homes, a school, fairgrounds, and a community swimming pool. In 1995, IDEM identified polychlorinated biphenyls (“PCBs”) in Shelly Ditch and notified Raybestos of its findings. Raybestos investigated internally and learned that in the late 1960s its corporate predeces- sor had used hydraulic oil containing PCBs. Some of this oil spilled and was pumped to a culvert which discharged into Shelly Ditch. In 1996, IDEM sent Raybestos a “Special Notice of Potential Liability” for cleanup of Shelly Ditch, and began negotiating a cleanup plan with Raybestos. IDEM also notified the federal Environmental Protec- tion Agency (“EPA”) of its findings. IDEM recom- mended that Shelly Ditch receive a high priority in the Superfund Hazard Ranking System, but because of IDEM’s ongoing negotiations, EPA initially as- signed the site a low priority. A December 1996 Statement of Work outlined a plan to “address human health and environmental concerns and bring the site to closure such that no future actions are required.” The Statement of Work App. 3 called for Raybestos to prepare a Risk Assessment for IDEM’s approval. In February 1997, IDEM and Raybestos entered an Agreed Order approved by IDEM’s Commissioner incorporating the Statement of Work and requiring Raybestos to remove and dispose of PCBs in Shelly Ditch. Raybestos submitted a Risk Assessment which concluded that the PCB levels in Shelly Ditch posed no human health risks. After review by IDEM staff and an outside risk assessment contractor, IDEM approved the Risk Assessment in March 1998. Neither the Agreed Order nor the Risk Assessment contained a numerical cleanup level. In May 1998, based on the approved Risk Assess- ment, Raybestos submitted a Technical Memorandum proposing no removal of PCBs from Shelly Ditch. Two months later, IDEM commented on the proposal and suggested that Raybestos consider a “hot spot” re- moval, in which high-level areas are cleaned to a specified level but the site is not cleaned to a uniform level. In late August 1998, IDEM’s Commissioner, a successor to the Commissioner who signed the Agreed Order, visited Crawfordsville and publicly promised residents that Shelly Ditch would be cleaned up promptly. On August 25, 1998, the U.S. Fish and Wildlife Service identified Shelly Ditch as within the range of the Indiana bat and the bald eagle, at the time respectively endangered and threatened species. At some point, IDEM determined that the Risk Assessment had been approved in error, and an App. 4 internal memorandum in September 1998 explored possible ways to require a more stringent cleanup level, including involving EPA. At about the same time, Raybestos proposed a cleanup that would allow hot spots to contain PCB concentrations up to 238 parts per million (“ppm”). IDEM responded that this proposal was unacceptable, and in November 1998, IDEM withdrew its approval of the Risk Assessment and disapproved the Technical Memorandum. Raybestos filed a Petition for Administrative Review in the Office of Environmental Adjudication. IDEM and Raybestos stipulated that the Agreed Order provision in which Raybestos agreed to “waive its right to administrative review of this Order” had “no effect on the proceedings.” Despite the parties’ stipulation, the Administrative Law Judge dismissed Raybestos’s petition for review, finding as a matter of law that Raybestos had waived its right to review of IDEM’s actions. Raybestos then sought judicial review of IDEM’s actions in the Marion Superior Court frequently referred to as the “Environmental Court.” The Envi- ronmental Court first concluded that the parties’ stipulation bound the Administrative Law Judge to permit review. The Environmental Court then deter- mined that IDEM lacked authority under the Agreed Order to withdraw approval of the Risk Assessment and that IDEM’s decision to withdraw approval was “arbitrary and capricious” and “not supported by any substantial evidence.” The Environmental Court found that IDEM’s only reason for withdrawing App. 5 approval was to avoid setting a precedent for the cleanup level proposed by Raybestos, and ordered IDEM to reinstate its approval of the Risk Assess- ment and to approve the Technical Memorandum. IDEM did not appeal that judgment, and reinstated the Risk Assessment and approved the Technical Memorandum. Meanwhile, beginning in October 1998, IDEM urged EPA to require a more complete cleanup, and in December 2000, EPA issued a Unilateral Agreed Order (““UAO”) requiring Raybestos to clean up Shelly Ditch to a level of no greater than 10 ppm PCBs. This cleanup was substantially more expensive than a 238 ppm hot spot cleanup. In July 2002, Raybestos filed the complaint initiating this lawsuit in Marion Superior Civil Division, claiming breach of contract by IDEM. Ray- bestos alleged that the Agreed Order constituted a contract that IDEM breached by withdrawing ap- proval of the Risk Assessment, disapproving the Technical Memorandum, and requesting EPA involve- ment in ordering a more stringent cleanup. Raybestos sought damages and a declaratory judgment that IDEM is liable for any future expenses incurred in remediating Shelly Ditch beyond what was required by the 1997 Agreed Order. IDEM moved to dismiss under Trial Rules 12(B)\(1) and 12(B)(6), asserting that (1) the trial court lacked subject matter jurisdiction, (2) any damages were caused by EPA, (3) IDEM did not App. 6 breach the Agreed Order, and (4) the Agreed Order is not a contract enforceable by a claim for damages. Raybestos moved for summary judgment, contending that-the Environmental Court’s order established IDEM’s breach and that IDEM had admitted the breach. The trial court granted partial summary judgment for Raybestos, concluding that as a matter of law, IDEM’s communications with EPA breached the Agreed Order and IDEM’s right or obligation to seek EPA enforcement under some circumstances did not justify the breach. The trial court certified its partial summary judgment order for interlocutory appeal, but the Court of Appeals denied IDEM’s request to accept an interlocutory appeal. Damages from the alleged breach then proceeded to a bench trial. On June 12, 2006, the trial court entered its findings of fact, conclusions of law, and partial judgment. The trial court found that EPA’s enforcement action was due solely to “IDEM’s persis- tent and repeated requests” that EPA address Shelly Ditch, and entered a partial judgment for $11,645,321.58 — the difference between the cost of the EPA-required cleanup and the projected costs of a cleanup to 238 ppm — plus post-judgment interest at the statutory rate. IDEM appealed this order and the trial court’s previous partial grant of summary judg- ment. On October 30, 2006, after hearing additional evidence, the trial court entered an additional award of $4,716,691.33 representing future cleanup costs and attorney fees. IDEM also appealed this order, and the Court of Appeals consolidated the two appeals. App. 7 The Court of Appeals reversed, holding that even if the Agreed Order were a contract, it would be unenforceable as “contrary to public policy” because a cleanup level of 238 ppm is twenty times the level allowed by federal regulations. Ind. Dept of Envtl. Mgmt. v. Raybestos Prods. Co., 876 N.E.2d 759, 763 (Ind.Ct.App.2007). We granted transfer. We hold that the Agreed Order is not a contract that will support a claim for damages. For the rea- sons explained below, we do not agree that IDEM violated the order by communicating with EPA, or that IDEM’s original agreenient to a less stringent cleanup than EPA regulations prescribe would neces- sarily contravene public policy. Standards of Review IDEM appeals the trial court’s denial of the motion to dismiss, partial grant and partial denial of summary judgment, and judgment entries dated June 12, 2006 and October 30, 2006 containing findings of fact and conclusions of law. To the extent they involve only legal issues, we review the trial court’s orders de novo. Charter One Mortgage Corp. v. Condra, 865 N.E.2d 602, 604 (Ind.2007); Univ. of S. Ind. Found. v. Baker, 843 N.E.2d 528, 531 (Ind.2006). We uphold the trial court’s findings of fact unless they are clearly erroneous. Ind. Trial Rule 52(A). App. 8 I. Damages for Breach of the Agreed Order Raybestos seeks damages under Indiana Code section 34-13-1-1 (2004), which permits claims against the state arising out of express or implied contracts. IDEM responds that Raybestos may not bring a contract action for two reasons: (1) the Agreed Order is an agency action that is subject to challenge only under the Indiana Administrative Orders and Procedures Act (“AOPA”), I.C. §§ 4-21.5-1-1 to -7-9 (2004), and (2) the Agreed Order fails to meet the statutory requirements ior a state agency contract. For the reasons explained below, we agree with IDEM and hold that the Agreed Order is not a contract that will support a claim for damages against the State.’ A. Indiana Administrative Orders and Proce- dures Act AOPA “establishes the exclusive means for judi- cial review of an agency action.” Jd. § 4-21.5-5-1. AOPA exempts several agencies and agency actions from this provision, but neither IDEM nor the Agreed Order is among them. Ind.Code Ann. §§ 4-21.5-2-4, -5 (West Supp.2008). Accordingly, if IDEM is an agency ' Because we hold that the Agreed Order is not a contract. we do not address Raybestos’s arguments that rely on applica- tion or extension of private contract doctrine: that IDEM breached a contract by preventing Raybestos’s performance, and that for at least government contracts, we should impose a general duty of good faith and fair dealing. App. 9 and the Agreed Order is an agency action, AOPA is the exclusive means to review the order. As a preliminary matter, we address whether IDEM has preserved its claim that AOPA limits the remedies available to Raybestos. IDEM argued before the trial court that the Agreed Order is not enforce- able by a claim for damages, but IDEM appears to have framed this argument specifically in terms of AOPA for the first time in its brief to the Court of Appeals. Generally, an appellate court will not review an issue that was not presented to the trial court. Cavens v. Zaberdac, 849 N.E.2d 526, 533 (Ind.2006). Raybestos briefed the issue and does not contend that IDEM waived the issue of whether AOPA precludes a claim for breach of contract. In any event, the issue challenges the jurisdiction of the trial court, and for this reason we address it. See State Bd. of Tax Comm’rs v. Ispat Inland, Inc., 784 N.E.2d 477, 482 (Ind.2003) (“Under Indiana law, if a party is required by the Administrative Orders and Procedures Act to exhaust its administrative remedies before an agency prior to obtaining judicial review of the agency deci- sion, courts are completely ousted of subject matter jurisdiction to hear the case at all.”); Town Council of New Harmony v. Parker, 726 N.E.2d 1217, 1223 n. 8 (Ind.2000) (lack of subject matter jurisdiction cannot be waived). IDEM is plainly an “agency” as defined ..y Indi- ana Code section 4-21.5-1-3, and the Agreed Order was an action by its Commissioner. AOPA defines “agency action” as “the whole or part of an order,” App. 10 “the failure to issue an order,” or “[aJn agency’s per- formance of, or failure to perform, any other duty, function, or activity under this article.” I.C. § 4-21.5- 1-4. Both the Agreed Order — an administrative order entered pursuant to section 13-25-4-23 — and IDEM’s communications with EPA are agency actions. If we view this claim as one for failure to comply with an implied provision of the Order, it seeks relief from an agency action because the order itself is by definition an “agency action.” If on the other hand the claim is for failure to carry out an obligation under the Order not to communicate with EPA, it is for “failure to perform” a “duty, function, or activity under this article.” Indeed, communication with EPA on enforce- ment matters and appropriate remedies is a duty or function mandated by federal law. E.g., 40 C.F.R. §§ 300.505 (2008) (requiring detailed annual consul- tation about activities), 300.515 (requiring communi- cation about remedy selection); see also Superfund Memorandum of Agreement Between the State of Indiana and the United States Environmental Protec- tion Agency Region V (1992) (outlining agencies’ agreement to communicate regularly, include each other in settlement agreements, and permit changes in lead agency status). Pursuant to a statute specifically addressing review of LIDEM’s actions, the exclusive means for review of an agency action of the IDEM Commis- sioner is by petition to the Office of Environmental Adjudication. I.C. § 4-21.5-7-3. That administrative body must grant relief to a party who has been App. 11 prejudiced by agency action that is, among other things, “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or “unsup- ported by substantial evidence.” Id. § 4-21.5-5-14. The forms of relief available are to “set aside an agency action and: (1) remand the case to the agency for further proceedings; or (2) compel agency action that has been unreasonably delayed or unlawfully with- held.” Jd. § 4-21.5-5-15. Money damages are not authorized, presumably reflecting the General As- sembly’s policy judgment that specific performance is a more appropriate remedy for agency error than a damages award ultimately borne by the taxpayers. In sum, pursuant to AOPA, exclusive jurisdiction to review the Agreed Order and IDEM’s obligations and functions under the order lies in the administra- tive procedure provided by these statutes, and a claim against the State or its agency for damages is not among the available remedies. B. Contract Claims Against State Agencies Raybestos contends that statutory provisions other than AOPA authorize its claim. Specifically, Raybestos points to Indiana Code section 34-13-1- l(a), which allows claims against the State for breaches of both express and implied contracts. Raybestos essentially contends that this provision overrides the exclusive jurisdiction provision of AOPA. We think these statutory provisions are not inconsis- tent and collectively demonstrate that Raybestos’s App. 12 claim is not well founded. Rather than apparently inconsistent provisions, AOPA and the statutes governing state contracts fit nicely together. AOPA does not completely foreclose contract claims against state agencies. For example, exempted from AOPA’s coverage are agency contracts for the acquisition, leasing, or disposition of property, or the procurement of goods or services. Ind.Code Ann. § 4- 21.5-2-5(11) (West Supp.2008). This exemption mir- rors the provisions found in Indiana Code sections 4- 13-2-14.1 and 4-13-2-14.2, which require contracts . with state agencies to be in writing and approved by the Commissioner of the Indiana Department of Administration, the Director of the Indiana State Budget Agency, and the Attorney General. IDEM asserts that the Agreed Order does not meet these requirements, and Kaybestos concedes this point but responds that the requirements do not apply to its claim because these formalities apply only to con- tracts for purchases of goods or services. Raybestos argues that the limited application of these require- ments to contracts for goods or services is shown by their placement in a chapter labeled “Administrative Management of State Services, Employees, Pur- chases, and Property.” To the extent Raybestos argues that the chapter name requires a particular interpretation, the General Assembly has instructed that the descriptive headings of titles, articles, and chapters “are intended for organizational purposes only and are not intended to affect the meaning, application or construction of the statute they App. 13 precede.” I.C. §1-1-1-5(f). But assuming these requirements apply only to contracts for goods or services, this merely reflects the point that the very same contracts are exempted from the exclusive judicial review provisions. In other words, pre- sumably because a contract for the purchase of goods or services will support a claim for damages, it is exempted from the exclusive jurisdiction provision of AOPA. Raybestos concedes the Agreed Order is not such a contract. It therefore is not exempted from AOPA. II. IDEM’s Authority to Approve Risk-Based Cleanups Because we hold that under AOPA the Agreed Order does not support a claim for damages, we need not decide whether public policy precludes the con- struction of the Agreed Order urged by Raybestos. However, because the Court of Appeals reversed the trial court’s judgment on this issue, we briefly turn to IDEM’s authority to order risk-based cleanups, clean- ups above or below the numerical level set by regula- tion.” The Court of Appeals concluded that IDEM * Raybestos argues that the Environmental Court order precludes IDEM from claiming that it lacked authority to approve a cleanup that did not reduce PCBs to 10 ppm. The order concluded that IDEM lacked authority to withdraw the Risk Assessment. It did not specifically address whether IDEM had authority to approve a cleanup above 10 ppm. In any event, claim preclusion applies only when the party against which it will be applied had a full and fair opportunity (Continued on following page) App. 14 lacked authority to approve a cleanup level that did not meet the applicable federal standard of 10 ppm. For this conclusion, the Court of Appeals relied on the federal PCB Spill Cleanup Policy, 40 C.F.R. §§ 761.120-761.135 (2008), which provides that “[s]oil contaminated by the spill will be decontaminated to 10 ppm.” Id. § 761.125(c)(4)(v). Even if applicable to this cleanup,’ that policy also gives EPA “flexibility to allow less stringent or alternative decontamination measures based upon site-specific considerations.” to litigate the issues or when application would be unfair given the circumstances. Tofany v. NBS Imaging Sys., Inc., 616 N.E.2d 1034, 1038 (Ind.1993) (citing Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979)). It would be unfair to preclude IDEM from arguing its authority because the previous action was for administrative relief, not money dam- ages, and by that time EPA had already ordered a more strin- gent cleanup. Jd. (“[Ujnfairness to the defendant against whom an estoppel is asserted may result ... where the defendant had little incentive to vigorously litigate the first action either because the damages were small or nominal, or because future suits were not foreseeable.” (quoting Parklane Hosiery, 439 U.S. at 330-31)). * The parties dispute whether the 10 ppm standard applies to Shelly Ditch. That standard does not apply to pre-1987 spills, 40 C.F.R. § 761.120(a)(1), and the parties dispute whether the spill occurred in the late 1960s o1 continuously through 1996. * This federal PCB Spill Cleanup Policy has been incorpo- rated by reference in the Indiana Administrative Code, 329 L.A.C. 4.1-5-1 (2000), and provides IDEM the same flexibility afforded to EPA by federal regulation. This policy was promul- gated as part of the solid waste management regulations, which the IDEM Commissioner can enforce by lawsuit or agreed order. I.C. §§ 13-14-2-6, -20-15-7, -30-3-3. We do not address whether it (Continued on following page) a App. 15 Id. § 761.120(c). We agree with Raybestos that the policy therefore does not constrain IDEM from agree- ing to less stringent measures. Ill. IDEM’s Actions Did Not Violate the Agreed Order We respectfully disagree with the trial court’s conclusion that money damages are necessary to further the “interest in the government abiding by its promises” which facilitates cleanup agreements. Our holding today does not remove the incentive to enter into voluntary cleanup agreements with IDEM. If IDEM unjustifiably violates an agreement or acts arbitrarily, its performance can be compelled — as Raybestos demonstrated by seeking judicial review of IDEM’s withdrawal of approval of the Risk Assess- ment. On the other hand, the public interest is not served by enforcing promises that were never made. We accept the trial court’s finding that EPA would not have acted absent IDEM’s prodding, and we recognize the practical difficulties EPA’s intervention caused Raybestos. For better or worse, federal “overfiling” — EPA’s initiation of a cleanup after a state has brought an enforcement action — is a risk known to parties applics to this action instituted under the Hazardous Sub- stances Response Trust Fund provisions, id. §§ 13-25-4-1 to -28. App. 16 negotiating a cleanup with a state agency.’ If Raybes- tos wished to foreclose EPA action, it needed to deal with EPA. At no time did IDEM promise not to in- volve EPA. The Agreed Order does not purport to forbid IDEM’s communication with EPA, and IDEM could not bind itself to fail to carry out its statutory obligations, including compliance with the federal regulations requiring communication between the agencies. E.g., 40 C.F.R. §g 300.505 (2008) (requiring detailed annual consultation about activities), 300.515 (requiring communication about remedy selection). Moreover, the Agreed Order itself acknowledged the potential applicability of federal authority and directs compliance with the most stringent cleanup require- ments: “In the event of a conflict in the application of Federal, state, or local laws, ordinances and * See Clifford Rechtschaffen & David L. Markell, Reinvent- ing Environmental Enforcement and the State / Federal Relation- ship 109-11 (2003) (describing a judicial split on the issue of whether EPA has authority to overfile, with most courts holding that overfiling is appropriate); Hubert H. Humphrey III & LeRoy C. Paddock, The Federal and State Roles in Environmen- tal Enforcement: A Proposal for a More Effective and More Efficient Relationship, 14 Harv. Envtl. L.Rev. 7, 14 (1990) (“After an overfiling, the regulated entities quite understandably become concerned that, without involving EPA, they cannot be sure a compliance schedule or a penalty amount agreed to by a state is final.”); Christopher J. Redd, Comment, The Adversarial Relationship Between the States and EPA: Conflict Over State Authority Under CERCLA, 3 Dick. J. Envtl. L. & Pol’y 101, 105 (1993) (“From the perspective of a responsible party, settlement with state officials docs not necessanly represent the end of the matter, or the limit of their liability.”). App. 17 regulations, |[Raybestos] shall comply with the most stringent of said laws, ordinances, or regulations, unless provided otherwise in writing by IDEM.” Finally, the Agreed Order provides that “IDEM and [Raybestos] reserve all rights and defenses they may have pursuant to any available legal authority unless expressly waived herein.” In short, IDEM did not and could not waive its authority to communicate with EPA, and did not commit to do more than suspend its own enforcement efforts. Conclusion Because the Agreed Order does not support a claim for damages and was not violated by IDEM’s actions, the trial court’s orders denying IDEM’s motions to dismiss and for summary judgment are reversed. This case is remanded with instructions to vacate the judgments in favor of Raybestos and dismiss the complaint for lack of subject matter jurisdiction. SHEPARD, C.J., and DICKSON, SULLIVAN, and RUCKER, JJ., concur. App. 18 STATE OF _) IN THE MARION COUNTY INDIANA )__ SUPERIOR COURT COUNTY OF )~”° CAUSE NO. MARION ? 49D 12-G209-PL-001553 RAYBESTOS PRODUCTS _ ) COMPANY, Plaintiff, Vv. THE INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Defendant. Nee ee Oe ORDER GRANTING, IN PART, AND DENYING, IN PART, THE CROSS MO- TIONS FOR SUMMARY JUDGMENT (Filed Jul. 6, 2004) On December 15 and 18, 2003 defendant Indiana Department of Environmental Management (“IDEM”) and plaintiff Raybestos Products Company (“Raybes- tos”) filed cross motions for summary judgment. The Court heard oral argument on the cross motions on June 10, 2004. For the reasons set forth below, Ray- bestos’ and IDEM’s Motions are GRANTED, in part and DENIED in part. The essential facts are not disputed and are well summarized in Judge Keele’s Order on Petition For Review dated June 1, 2001 as follows. In 1996, IDEM App. 19 alleged that Raybestos Products Company was re- sponsible for the presence of PCBs in Shelly Ditch near Raybestos’ Crawfordsville plant. The parties entered into an Agreed Order that required Raybestos to complete certain sequential steps, obtaining ap- proval from IDEM for each step. Raybestos was required to evaluate the extent of the damage, pre- pare a Risk Assessment to evaluate the risk posed by the PCB’s, prepare a Technical Memorandum defin- ing cleanup goals on the conclusions of the Risk Assessment and complete the cleanup. Raybestos prepared and submitted its Baseline Risk Assessment and IDEM ultimately approved it. Raybestos then submitted its Technical Memorandum to which IDEM made comment. Raybestos addressed cach of the stated concerns and the parties ultimately reached an agreement to clean all “hot spots” to no more than 238 ppm. The IDEM commissioner who signed the Agreed Order was replaced with a new commissioner, John Hamilton. A new assistant commissioner, Mary Beth Tuohy, was brought in from outside the agency. Re- sponsibility for Shelly Ditch, originally in the Project Management Section, was transferred to Harold Atkinson, an employee in the Site Investigations Section having virtually no experience with risk assessments. The new assistant commissioner de- cided that Raybestos’ proposed cleanup level of 238 ppm based on the site specific Risk Assessment would not be approved. She believed it would set a bad prec- edent. She then instructed her new project manager App. 20 to disapprove Raybestos’ Technical Memorandum and, because it was based on the already approved Risk Assessment, approval of that document had to be “withdrawn”. The parties engaged in extensive administrative litigation, which culminated in judi- cial review of IDEM’s actions. Judge Keele ordered IDEM to reinstate the Risk Assessment and to ap- prove the Technical Memorandum. After piotracted litigation, Judge Keele ordered IDEM to comply with his ruling requiring it to approve the Risk Assess- ment, which IDEM ultimately did. IDEM and Raybestos agree that IDEM repeat- edly asked the United States Environmental Protec- tion Agency (“EPA”) to step in and do what IDEM could not do under the Agreed Order: force Raybestos to perform a cleanup different than the cleanup required by IDEM’s Agreed Order. On December 6, 2000, EPA complied with IDEM’s requests and issued a Unilaterai Administrative Order (““UAO”) directing Raybestos to conduct a cleanup. Mr. Muno, the Super- fund Director, testified that he could not recall any other instance where EPA intervened and began its own enforcement proceedings where an Agreed Order already was in place. However, the levels of PCB proposed by the Risk Assessment were high enough to be qualified as a high priority under the EPA’s Superfund Hazard Ranking System. Raybestos has incurred substantial costs to comply with the EPA’s requirements, which are in excess of what it would have cost Raybestos to do a cleanup based on the approved Risk Assessment. App. 21 Raybestos seeks damages and a declaratory judgment against IDEM for soliciting and obtaining the Unilateral Administrative Order, which Raybes- tos characterizes as a breach of the Agreed Order. The Agreed Order is a settlement agreement, a contract. The essential elements of a breach of contract action are: 1) the existence of a contract, 2) the defendant’s breach thereof, and 3) damages. Fowler v. Campbell, 612 N.E.2d 596, 600 (Ind.Ct.App.1993). The plaintiff in such an action has the burden of demonstrating that the defendant’s breach was a substantial factor contributing to,the damages. Holloway v. Bob Evans Farms, Inc., 695 N.E.2d 991, 995 (Ind.Ct.App.1998). The test for measuring damages in a breach of con- tract action is the foreseeability of such damages at the time of entering into the contract rather than the facts existing and known to the parties at the time of the breach. Raybestos agreed to perform a risk-based clean up and IDEM accepted. Through the parties’ contract, IDEM received the benefit of forcing a risk- based clean-up without litigation, and Raybestos gave up its right to challenge IDEM’s right to require it to do any cleanup. If the actions of the EPA in issuing the UAO were the result of the efforts on the part of IDEM to force a clean up different than that to which it had committed itself in the Agreed Order, then Raybestos will have proven a breach of the contract. While the evidence is not in conflict as to whether IDEM tried to get the EPA to step in and change the standards of the clean up, it is in conflict as to whether the EPA would have done so absent the App. 22 solicitation of IDEM. In 1986, the EPA had issued a UAO to the owners of another site in the Sugar Creek Watershed, PR Mallory, to compel the cleanup of excessive levels of PCBs. PR Mallory was forced to clean up the PCB’s to a level of 10 ppm or lower. The allowable levels of PCBs under the Risk Assessment prepared by Raybestos were considerably higher than levels permitted by the EPA. Further, the EPA has the right to over-file if the state action is ineffective. Therefore, it can’t be said as a matter of law that the actions of the EPA were the direct consequence of the efforts by IDEM. This is Raybestos’ burden to prove at trial. IDEM contends it can’t be bound to the terms the Agreed Order because it has the ability to ask for the intervention of the EPA by substituting the EPA as the lead agency in any enforcement action at any time. Further IDEM contends that the Agreed Order did not limit its ability to solicit the assistance of the EPA, and that over-filing is always a risk a polluter takes when it deals with IDEM. While tne National Contingency Plan directs agencies with overlapping jurisdiction on environmental matters to communi- cate with one another, there is designated evidence that IDEM did not communicate with the EPA just to coordinate efforts. Designated evidence indicates that IDEM actively solicited the EPA to take a lead role when IDEM’s leadership changed and it wished to avoid the terms of the Agreed Order. Paragraph 6 of the Agreed Order specifically states that IDEM shall be bound by the terms of the Agreed Order. The App. 23 Agreed Order provides an alternative dispute resolu- tion process, but IDEM did not avail itself of this process when it determined that it wanted to avoid the Order all together. If IVEM is not bound to ac- cept, in action and deed, the terms of the Agreed Order, then why would any citizen enter into such an agreement? The finality of the remedy was addressed in the Agreed Order as follows: “The objective of the RA [Removal Action] will be to address human health, environmental concerns and bring the site to closure such that no further actions are required.” Therefore, the Court grants partial summary judgment to the Plaintiff a the issue of breach of the contract. The facts are not in dispute: IDEM actively sought the UAO from the EPA to avoid the terms of the Agreed Order, which were binding upon it. The Court specifically finds that IDEM’s statutory ability, and obligation at times, to seek the intervention of the EPA was not a justification for its breach of the Agreed Order. IDEM could have chosen to seek anv level of clean up it deemed appropriate or could have sought the advice or intervention of EPA up until the time it entered into the Agreed Order. At that point in time it had the legal duty to abide by its agreement and to take no actions contrary thereto. However, the Court can not say, as a matter of law, that the actions of the EPA in issuing the UAO were the direct conse- quence of the solicitation by IDEM. Therefore, the issue of whether Raybestos suffered any damages directly flowing from the breach of contract remains in dispute. In addition, the Plaintiff has failed to App. 24 state a reason why the American Rule as to attorney fees does not apply, thus precluding this element of damages. Therefore, the Court grants partial sum- mary judgment for the Defendant and orders that attorney fees are not recoverable by the Plaintiff, in the event the Plaintiff prevails on the underlying claim. Dated: July 6, 2004 /s/ Robyn L. Moberly Honorable Robyn Moberly, Judge Marion County Superior Court, Civil Division Copies to: George M. Plews Timothy J. Junk (Atty. No. 6274-49) Office of the Attorney Brett E. Nelson General (Atty. No. 22096-53 Indiana Government PLEWS SHADLEY Center South RACHER & BRAUN Fifth Floor 1346 North Delaware 402 W. Washington Street Street Indianapolis, IN Indianapolis, IN 46204-2770 46202-2415 Telephone: (317) 232-6247 Telephone: (317) 637-0700 Fax: (317) 637-0710 App. 25 876 N.E.2d 759 Indiana Dept. of Environmental Management v. Raybestos Products Co. Ind.App.,2007. Court of Appeals of Indiana. The INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Appellant-Defendant, Vv RAYBESTOS PRODUCTS COMPANY, Appellee-Plaintiff. No. 49A02-0609-CV-782. Nov. 15, 2007. Steve Carter, Attorney General of Indiana, David L. Steiner, Frances Barrow, Timothy J. Junk, Deputy Attorneys General, Indianapolis, IN, Attorneys for Appellant. George M. Plews, Brett E. Nelson, Plews Shadley Racher & Braun LLP, Indianapolis, IN, Attorneys for Appellees. OPINION MATHIAS, Judge. The Indiana Department of Environmental Management (“IDEM”) appeals the judgment of the Marion Superior Court in favor of Raybestos Products Company (“Raybestos”) in Raybestos’s breach of con- tract claim. IDEM raises three issues upon appeal, one of which we find dispositive: whether the trial court erred in granting partial summary judgment on App. 26 the issue of whether IDEM breached an agreed order entered into by the parties thus giving rise to a breach of contract claim. We reverse. Facts and Procedural History Raybestos operates a plant in Crawfordsville, Indiana which manufactures automobile brakes and clutches. The plant is located next to Shelly Ditch, which is an open earthen drain bordered by seventeen homes, a school, a fairground, and a swimming pool. Surface water from the Raybestos plant flows through a culvert into Shelly Ditch, which empties into Sugar Creek approximately one mile from the Raybestos plant. Testing performed in 1995 by IDEM revealed that polychlorinated biphenyls, commonly known as “PCBs,” were found in Shelly Ditch downstream from the Raybestos plant, but not upstream. Eventually, IDEM sent Raybestos a notice of potential liability. IDEM also sent a memorandum to the federal Environmental Protection Agency (“EPA”) recommending that Shelly Ditch be listed as a high priority in the Superfund Hazard Ranking. Instead, the EPA listed the Raybestos site as a low priority because IDEM was negotiating a cleanup order. On February 28, 1997, IDEM and Raybestos entered into an “Agreed Order” pursuant to Indiana Code section 13-25-4-23 (1998), in which Raybestos agreed to prepare a risk assessment subject to the approval of ~ App. 27 IDEM. Then, based upon the risk assessment, Raybestos was to propose a removal plan, again subject to IDEM approval. Raybestos prepared and submitted a risk assess- ment, which was ultimately approved by IDEM. Based upon the risk assessment, Raybestos then submitted its “technical memorandum” describing its planned cleanup. The proposed cleanup allowed certain “hot spots” to contain PCB levels of no more than 238 parts per million (“ppm”). Following personnel changes, IDEM determined that Raybestos’ proposed cleanup would not be approved because it would set a bad precedent. IDEM then disapproved the cleanup proposal and, because the cleanup proposal was based upon the already-approved risk assessment, withdrew its approval of the risk assess- ment. Displeased with this turn of events, Raybestos sought administrative review of IDEM’s actions. At a dispute resolution meeting, IDEM informed Raybestos that no PCBs could be present at the cleanup site at levels higher than 10 ppm. After a hearing before an Administrative Law Judge (“ALJ”), the ALJ determined that Raybestos had waived its right to seek review of IDEM’s actions based upon the terms of the Agreed Order. Raybestos sought judicial review of the ALJ’s determination in the Marion Circuit Court. On June 1, 2001, Judge Michaei D. Keele issued findings of fact and conclusions of law, determining therein that Raybestos had not waived its right to seek review of IDEM’s actions and that App. 28 IDEM had no authority to withdraw its earlier approval of the risk assessment. Judge Keele ordered IDEM to re-approve the risk assessment and ordered it to approve of the cleanup proposed in Raybestos’ technical memorandum. IDEM did not appeal this order. Instead, IDEM had been contacting the EPA and, after considerable prodding, convinced the EPA to become involved in the cleanup of the Raybestos site. On December 6, 2000, the EPA issued a Unilateral Administrative Order requiring Raybestos to clean up the PCBs to a level of no greater than 10 ppm. The cleanup required by the EPA was substantially more costly than the one which was approved by IDEM per court order. On July 26, 2003, Raybestos filed in the Marion Superior Court a complaint for breach of contract against IDEM, alleging that IDEM had breached the Agreed Order and seeking as damages the sub- stantially higher costs of the EPA-imposed cleanup. On December 17, 2003, IDEM filed a motion for summary judgment, which Raybestos responded to by filing a cross-motion for summary judgment. On June 10, 2004, the trial court held a summary judgment hearing. On July 6, 2004, the trial court granted partial summary judgment in favor of Raybestos on the issue of breach, but determined that there were genuine issues of material fact as to whether the EPA’s involvement was a direct consequence of IDEM’s solicitations. On August 3, 2005, the parties filed stipulations regarding damages, and on August 8, 2005, a bench App. 29 trial began. On June 12, 2006, the trial court entered judgment in favor of Raybestos in the amount of $11,645,321.58. On October 30, 2006, the trial court entered judgment regarding additional damages and attorney fees in the amount of $4,716,691.33. IDEM now appeals. Standard of Review In this case, IDEM challenges several of the trial court’s orders. However, as we find the summary judgment issue dispositive, we address only the trial court’s grant of summary judgment in favor of Raybestos on the issue of whether IDEM’s actions constituted a breach of the Agreed Order. Summary judgment is a procedural means to halt litigation when there are no factual disputes and to allow the case to be determined as a matter of law. Garneau v. Bush, 838 N.E.2d_ 1134, 1140 (Ind.Ct.App.2005), trans. denied. Under Indiana Trial Rule 56, the moving party bears the burden of showing that there are no genuine issues of material fact; if the moving party meets its burden, then the burden shifts to the nonmoving party to set forth facts showing the existence of a genuine issue for trial. Id. Summary judgment is appropriate only where the designated evidence reveals no genuine issues of material fact for trial and the moving party is entitled to judgment as a matter o: law. ZId. Summary judgment is inappropriate if any material facts are in dispute or even if undisputed facts can lead to conflicting material inferences. /d. App. 30 Discussion and Decision In its order granting partial summary judgment to Raybestos, the trial court concluded that the Agreed Order was a valid contract and that IDEM breached the Agreed Order. However, the trial court concluded that genuine issues of material fact pre- cluded summary judgment on the issue of resulting damages. IDEM claims that the Agreed Order is not a valid contract, but that even if it were to be con- sidered a valid contract, its actions did not constitute a breach. Thus, if we assume without deciding that the Agreed Order was a binding contract, the dis- positive issue becomes whether IDEM breached the Agreed Order. Raybestos argues that IDEM’s actions breached the Agreed Order. Although the parties present many arguments, we find one to be dispositive: whether the cleanup IDEM originally agreed to complied with applicable federal regulations. The cleanup proposed by Raybestos, which was based upon the Risk Assess- ment which IDEM had already approved, called for a cleanup level of 238 ppm. IDEM claims that the applicable federal regulations require PCB spills to be cleaned up to a level of no more than 10 ppm. In support of this claim, IDEM cites 40 C.F.R. section 761.125(c)(4)(v) (2007), which states in relevant part: Soil contaminated by the spill will be decontaminated to 10 ppm PCBs by weight provided that soil is excavated to a minimum depth of 10 inches. The excavated soil will be replaced with clean soil, i.e., App. 31 containing less than 1 ppm PCBs, and the spill! site will be restored (e.g., replacement of turf). Raybestos does not directly deny the applicability of this federal regulation in its appellee’s brief. Raybestos does refer to 40 C.F.R. section 761.120(c) (2007), which gives the EPA the “flexibility to allow less stringent or alternative decontamination meas- ures based upon site-specific considerations.” Raybestos does not explain, however, how this section allows IDEM the same flexibility." More importantly, the Agreed Order upon which Raybestos bases its breach of contract claim specifically states that the most stringent standard will apply. See Appellant’s App. p. 3730. Thus, the 238 ppm cleanup proposed by Raybestos and based on the IDEM approved risk assessment did not meet the applicable federal standards. We fail to see how IDEM had any authority to approve a cleanup which did not comply with these standards. Again, such compliance was contemplated in the Agreed Order itself, which provided that, in the case of a conflict in the applicable laws, rules, or ordinances, that the most stringent standard would apply. See Appellant’s App. p. 3730. ' It is apparent that the EPA did not order a less stringent cleanup at the Raybestos site. App. 32 Based upon public policy grounds, we will not enforce agreements that contravene statute, that clearly tend to injure the public in some way, or that are otherwise contrary to the declared public policy of Indiana. Ahuja v. Lynco Ltd. Med. Research, 675 N.E.2d 704, 707 (Ind.Ct.App.1996), trans. denied. Clearly, an agreement which would permit cleanup levels over twenty times that of the applicable federal regulations would be contrary to public policy, and Raybestos may not rely upon such an agreement or recover for any breach thereof by IDEM. We therefore reverse the judgment of the trial court. Reversed. BAKER, C.J., and KIRSCH, J., concur. App. 33 STATE OF ) IN THE MARION COUNTY INDIANA )__ SUPERIOR COURT COUNTY OF )~””” CAUSE NO. MARION ? 49D12-0209-PL-001553 RAYBESTOS PRODUCTS ) COMPANY, Plaintiff, We THE INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Defendant. Nees wee ee “ee” JUDGMENT ENTRY REGARDING ADDI- TIONAL DAMAGES AND ATTORNEY FEES (Filed Oct. 30, 2006) This Court’s June 12, 2006 Judgment Entry (“June 12 Judgment”) set a hearing on the issue of the amount of attorney fees incurred and recoverable by Plaintiff Raybestos Products Company (“Raybes- tos”) as a result of the breach of a February 29, 1997 Agreed Order by the Indiana Department of Environ- mental Management (“IDEM”). Prior to the six-day bench trial in this matter, Raybestos and IDEM stipulated that the parties would initially try this case as to IDEM’s liability for Raybestos’ alleged damages through September 20, 2003 and address post-September 20, 2003 damages after the Court en- tered judgment on Raybestos’ initial claim. Following App. 34 the June 12 Judgment, Raybestos moved to join the issue of post-September 20, 2003 damages with the attorney fee hearing. The Court granted that motion and evidence was presented on both issues on September 8, 2006. The parties stipulated additional evidence into the record, including invoices for the costs Raybestos claims as additional damages and a chart itemizing and classifying Raybestos’ claimed attorney fees. Raybestos presented three witnesses and additional documents. IDEM called one witness. The Court enters the following findings of fact and conclusions of law: 1. Raybestos’ environmental contractor for the Shelly Ditch cleanup is Exponent. Since September 20, 2003, Exponent billed $398,465.22 in performing EPA-mandated environmental work at Raybestos’ Crawfordsville facility and Shelly Ditch. Of this figure, $209,903.83 relate exclusively to the Shelly Ditch cleanup and should be recovered by Plaintiff in this action. 2. In addition, during the period from October 14, 2003 through August 14, 2004, Raybestos in- curred $11,634.94 in remediating PCB contamination at Shelly Ditch in response to the demands of the United States Environmental Protection Agency (“EPA”), which do not include costs invoiced by Expo- nent and the Wildman Harrold law firm. App. 35 3. The cleanup of Shelly Ditch has not yet been completed. 4. Additional cleanup is being required by EPA in two parts of Shelly Ditch: “Reach 4” (downstream from Reaches 1-3 and closer to Sugar Creek) and the Railroad and Culvert Area (“RR & CA”) (immediately downstream of Raybestos’ outfall at the beginning of Reach 1). 5. Mr. Brugger is a Senior Environmental Engineer at Exponent with a long history of conduct- ing environmental cleanups and is an expert in estimating the costs of performing environmental remediation. 6. EPA’s Superfund Section is requiring addi- tional cleanup of PCBs and lead in Reach 4. 7. Mr. Brugger currently estimates that Raybes- tos will incur $1,774,711 in future costs for cleanup of Reach 4. These costs include $1,443,711 in remedial costs, $88,000 in pre-remedial costs (including report preparation, design and coordination with EPA) and $243,000 in EPA oversight costs. 8. Cleanup of Reach 4 should be completed by December 2007. 9. Based on all of this evidence, the Court finds that the future costs of EPA-mandated cleanup in Reach 4 of Shelly Ditch will be at least $1,774,711. These costs, like the other costs imposed by EPA for the cleanup of Shelly Ditch, are a result of IDEM’s App. 36 repeated solicitations for EPA involvement in breach of the Agreed Order. 10. EPA also is requiring additional cleanup of PCBs and lead at the RR & CA. 11. Enforcement efforts by EPA at the RR & CA include EPA’s Superfund Section. 12. The RR & CA includes an active railroad spur that is used to service a number of businesses in Crawfordsville. This area was previously addressed as part of Reach 1 of Shelly Ditch under EPA’s De- cember 6, 2000 Unilateral Administrative Order (“UAO”). However, some PCBs were left in the ground in the RR & CA and the area was covered with a concrete cap. 13. In Order to remediate the remaining PCBs at the RR & CA, Exponent will need to excavate the area including the concrete cap and drive sheet metal vertically into the ground to stabilize the banks of Shelly Ditch and the perimeter of the excavation. This process will make the existing railroad spur potentially unstable and require that it not be used during the period of the excavation. 14. Based on discussions with EPA, Mr. Brug- ger testified that he expects the cleanup goal for the RR & CA to be 10ppm for PCBs, as it has been along the rest of Shelly Ditch. The actual levels of PCBs that are allowed to remain in this area will depend on the specifics of where the PCBs are located and how App. 37 difficult it is to remove them without destroying the existing railroad spur. 15. The court finds that the cost of future work at the RR & CA area will be $2,287,999.00 which includes $257,000 for EPA oversight costs. 16. Cleanup of the RR & CA should be com- pleted by April 2008. 17. The Court finds that the future costs of EPA-mandated cleanup in the RR & CA of Shelly Ditch will be at least $2,287,999.00. These costs, like the other costs imposed by EPA for the cleanup of Shelly Ditch, arise from IDEM’s repeated solicitations for EPA to force a more expensive cleanup in Shelly Ditch, in breach of the Agreed Order. 18. The Court finds that Raybestos has in- curred an additional $304,584.45 in attorney fees through the Indianapolis law firm of Plews Shadley Racher and Braun (“PSRB”) during the relevant period of time in an effort to defend against enforce- ment action by the EPA under CERCLA. program resulting from IDEM’s breach of the parties’ settle- ment and the Agreed Order. Raybestos has argued that an additional $56,782.20 in attorney fees that were incurred to resist enforcement efforts brought under EPA program areas other than the Superfund Section should also be recoverable. The Court finds that the Plaintiff has failed to carry its burden of proof on this point, despite the lack of evidence pre- sented by IDEM on this issue. App. 38 19. Raybestos also seeks $23,519.61 in PSRB attorney fees and expenses that the parties catego- rized as “bankruptcy” related. The Court finds that these fees were not reasonably related nor necessary to resolution of this underlying breach of contract and resulting environmental clean up matter and, there- fore, the Court finds these fees are not recoverable. 20. The sole entry in the “other” column of Stip. Exh. 253 is a $7,319.55 entry on PSRB invoice No. 16756. Raybestos introduced backup documentation for this entry in the form of an invoice from the environmental contractor, Exponent. This expense related to an ecological risk assessment performed in anticipation of a claim for Natural Resources Dam- ages (“NRD”) under CERCLA. Again, the Court finds that the Plaintiff failed to carry its burden of proof that this expense was incurred in defending against the EPA actions that resulted from IDEM’s breach otf the Agreed Order. 21. The Chicago law firm of Wildman, Harrold, Allen & Dixon, LLP (“Wildman Harrold”) invoiced Raybestos $78,693.83 for attorney fees and expenses that the Court finds are reasonable and relate to the EPA’s Shelly Ditch enforcement actions that resulted from IDEM’s breach of the Agreed Order. 22. Mr. Madonia estimated that his firm’s billings through April 2008 would total $49,164.28. The Court finds that it is more likely than not that Raybestos’ future legal costs relating to the EPA’s Shelly Ditch enforcement action, which the Court has App. 39 previously found was caused by the breach of the Agreed order, will total at least $49,164.28. Judgment ~The Court, having heard and considered the evidence and facts described above, now concludes as follows: A. Additional damages resulting from IDEM’s breach. 1. The Court incorporates all of its Findings of Fact and Conclusions of Law contained in the June 12, 2006 Judgment as though specifically set forth herein. 2. The Court finds that Raybestos has incurred additional costs, since September 20, 2003, in per- forming the EPA-mandated cleanup of Shelly Ditch in the amount of $221,538.77. IDEM’s breach of the Agreed Order was, at least, a substantial factor in causing these damages. 3. The EPA-mandated cleanup of Shelly Ditch is not yet completed. The Court finds that the future cost to Raybestos of EPA-mandated cleanup of Shelly Ditch will be at least $4,062,710. This figure includes $1,774,711 for the cleanup of Reach 4 plus $2,287,999.00 for the cleanup of the RR & CA. IDEM’s breach of the Agreed Order was, ai least, a substantial factor in causing these damages. Cleanup App. 40 of the Ditch will not be completed until at least April 2008. B. Attorney Fees. 4. As discussed in the June 12, 2006 judgment, the Court is mindful of the holding in Masonic Temple Association of Crawfordsville v. Indiana Farmers Mut. Ins. Raybestos incurred $304,584.45 in attorney fees through PSRB and $78,693.83 through the Wildman Harrold firm in defending against the EPA actions and overseeing EPA-mandated cleanup di- rectly related to the breach of the Agreed Order. 5. Raybestos will continue to incur attorney fees in defending against the EPA actions, and overseeing EPA-mandated cleanup, at Shelly Ditch through April 2008. Raybestos’ future legal costs relating to the EPA’s Shelly Ditch enforcement action will total at least $49,164.28. WHEREFORE, the Court finds that Raybes- tos has proven additional damages, since September 20, 2003, in the amount of $4,716,691.33. The Court enters judgment in Raybestos’ favor in the total amount of $4,716,691.33. This judgment is in addi- tion to the $11,645,321.58 awarded in the Court’s June 12 Judgment. Dated: 10/30/06 /s/ Robyn L. Moberly Honorable Robyn Moberly, Judge Marion County Superior Court, Civil Division 12 App. 41 Copies to: George M. Plews (Atty. No. 6274-49) Brett E. Nelson (Atty. No. 22096-53) PLEWS SHADLEY RACHER & BRAUN 1346 North Delaware Street Indianapolis, IN 46202-2415 Telephone: (317) 637-0700 Fax: (317) 637-0710 Timothy J. Junk Deputy Attorney General Indiana Department of Environmental Management 100 N. Senate Ave., MC 60-1 Ind. Gov. Cent. North, 1307 Indianapolis, IN 46204 Telephone: (317) 232-6247 App. 42 STATE OF ) IN THE MARION COUNTY INDIANA ) SUPERIOR COURT )SS: COUNTY OF ) CAUSE NO. MARION ) 49D12-0209-PL-001553 RAYBESTOS PRODUCTS COMPANY, ) ) Plaintiff, Vv. ) THE INDIANA ) DEPARTMENT OF ) ) ) ENVIRONMENTAL MANAGEMENT, Defendant. JUDGMENT ENTRY (Filed Jun. 12, 2006) On July 26, 2002 Plaintiff, Raybestos Products Company, (“Raybestos”) filed this suit against the Indiana Department of Environmental Management (“IDEM”) alleging breach of contract and seeking declaratory relief. The case arises out of an alleged breach of an Agreed Order dated February 28, 1997 between Raybestos and IDEM concerning investiga- tion and cleanup of polychlorinated biphenyls (“PCBs”) and lead in an area known as Shelly Ditch in Crawfordsville Indiana. Raybestos alleges that IDEM repeatedly asked the United States Environ- mental Protection Agency (“EPA”) to step in and do what IDEM could not do under the Agreed Order: App. 43 force Raybestos to perform a cleanup different than the cleanup required by IDEM’s Agreed Order. EPA eventually did so. The cost of the cleanup was sub- stantially higher than the cost of the cleanup Raybes- tos expected to perform under the Agreed Order. Raybestos seeks these increased costs as damages in this action. The IDEM alleges that the Raybestos site con- tained high levels of PCB’s as would adversely affect human health or the environment from pollution or contamination. IDEM further alleges that the Agreed Order between IDEM and Raybestos contemplated the adoption of a Baseline Risk Assessment. The Risk Assessment entered into between the parties was an error on the part of IDEM and did not adequately protect human health and the environment. There- fore, IDEM sought the intervention of the EPA to exercise jurisdiction and force a different clean up. IDEM contends that it had the right to actively seek the intervention of the EPA and that eventually the EPA would have forced a clean up higher than the Risk Assessment indicated was necessary and, there- fore, there were no damages suffered by Raybestos. On July 6, 2004, the Court granted in part and de- nied in part the parties’ cross motions for summary judgment (“July 6 Order”). In its July 6 Order, this Court found that the “Agreed Order is a settlement agreement, a contract”; IDEM’s requests for EPA intervention were a breach of contract as a matter of law; IDEM had a legal duty to abide by its agreement with Raybestos and to take no actions App. 44 contrary thereto, and “IDEM’s statutory ability . . . to seek the intervention of the EPA was not a justifica- tion for its breach of the Agreed Order”. The Court reserved for trial the question of whether IDEM’s requests to EPA were a substantial factor in bringing about EPA’s involvement in the Shelly Ditch cleanup and, ultimately, its issuance of a Unilateral Adminis- trative Order (“UAO”) to Raybestos requiring a much more expensive cleanup. A six-day bench trial was held on August 2-3, November 14-15 and December 28, 2005 and January 19, 2006. The parties stipulated substantial evidence into the record, including deposition testimony, in- voices for the costs Raybestos claims as damages, various written communications within and between EPA and IDEM and numerous other documents. In addition, the parties stipulated that the issue of damages at trial would be confined to IDEM’s liability for Raybestos’ damages through September 20, 2003 and that the issue of damages accruing after Septem- ber 20, 2003, if any, will be reserved for resolution at a later date. Having heard witnesses and received evidence, the Court enters the following findings of fact and conclusions of law: I. Findings of Fact. 1. In 1951, Raybestos of Manhattan, Inc., began the manufacturing of friction products for the auto- motive industry, such as brakes and clutches, in App. 45 Crawfordsville, Indiana. From 1982 through 1987, the Crawfordsville facility was owned by Ray Mark Industries, and since 1987 it has been owned and operated by the Raybestos Products Company. 2. Raybestos’ manufacturing plant is adjacent to Shelly Ditch. Surface water from the Raybestos manufacturing facility flows through an on-site culvert and into the adjacent Shelly Ditch. About a mile downstream, Shelly Ditch empties into the Sugar Creek. Shelly Ditch is approximately 5000 feet in length and begins by the east edge of the railroad tracks on the west side of the Raybestos manufactur- ing facility. Shelly Ditch is an open earthen drain bordered by the backyards of 17 homes, a school, a fairgrounds, and a swimming pool. 3. In 1995, PCB’s were found in Shelley Ditch. IDEM contacted Raybestos about the PCBs discov- ered in Shelly Ditch, and, in 1996 Raybestos began an investigation. Raybestos learned that in 1967 its corporate predecessor had purchased and used an hydraulic oil that contained a specific type of PCB known under the brand name “Pydraul F-9.” Pydraul F-9 was heavier than water and contained one spe- cific PCB Aroclor. Raybestos traced its PCBs from the oil spills on the floor of the tunnels under the furnace lines, to a sump which pumped to an 18-inch culvert, which then discharged into Shelly Ditch. Surface rainwater also flowed into the 18-inch culvert, and Raybestos believed that each rain event would wash residual PCBs into Shelly Ditch. In 1996, Raybestos also excavated the 18-inch culvert and replaced the App. 46 section of fitted drain tile closest to the discharge into Shelly Ditch. 4. On June 13, 1996, IDEM sent Raybestos a “Spe- cial Notice of Potential Liability” regarding Shelly Ditch. Mark Jaworski, IDEM’s Project Manager in Site Investigations, prepared a Memorandum of Decision to the EPA recommending that Shelley Ditch receive a high priority on the Superfund Hazard Ranking system. On September 30, 1996, Jan Pels (Early Action Project Manager, Region V, EPA) made a “Remedial Site Assessment Decision” assigning Raybestos a “low priority” and noting that the “State is negotiating [an] order for cleanup.” 5. The EPA Superfund Division generally defers to cleanup efforts by a state or another federal program, and will not take action on a site if the human health and environmental threats posed by that site are being addressed through enforcement efforts by a state (such as Indiana). 6. On February 28, 1997, IDEM and Raybestos entered an Agreed Order pursuant to Indiana Code §13-25-4-23. Among other things, the Order required Raybestos to remove and dispose of the PCB’s and take any “actions necessary to monitor, assess and evaluate the continuing effectiveness” of the removal of the PCB’s from Shelly Ditch. 7. Attached to the Agreed Order for Removal is a Statement of Work which describes the purpose of the removal action as follows: App. 47 I. PURPOSE The purpose of this Removal Action (RA) is to investigate the nature and extent of im- pacts at the Shelly Ditch site and to develop, evaluate, and implement alternatives, as ap- propriate. The objective of the RA will be to address human health and environmental concerns and bring the site to closure such that no further actions are required. 8. The parties also agreed that the Agreed Order for Removal would take precedence over any conflict that might arise with either the Statement of Work or the approved Removal Work Plan. In Paragraph 14 of the Agreed Order for Removal, Raybestos promised that “the activities conducted by the Respondent shall be consistent with the requirements of the National Oil and Hazardous Substance Pollution contingency Plan, U.S. EPA guidance documents, and all applica- ble laws.” 9. The Agreed Order provided for alternative dis- pute resolution if a disagreement occurred between IDEM and Raybestos during the process of developing of plans, obtaining a risk assessment, engineering evaluations, technical memorandum, implementation and completion of the project. 10. A dispute did occur between IDEM and Raybes- tos when IDEM decided that the Risk Assessment it had previously approved was approved in error and, therefore, all subsequent actions taken, including the App. 48 written Agreed Order signed by the then-Commis- sioner of IDEM were repudiated by IDEM. 11. For reasons not explained through testimony, IDEM never sought resolution of its dispute under the process provided in the Agreed Order. 12. Whether the Baseline Risk Assessment, the Technical Memorandum, and Statement of the Work fully insured human health and the environment is not known by this court and is not an issue in the present case. 13. On March 16, 1998, after 15 months of review both by its staff and an outside risk assessment contractor, IDEM did approve Raybestos’ Risk Assess- ment. 14. Raybestos paid for the preparation and submis- sion of a Technical Memorandum. IDEM’s staff sug- gested a “hot spot” cleanup to remove all PCB’s toa maximum remaining concentration of 238 ppm in the worst areas. Ultimately, on November 30, 1998, IDEM “withdrew” its approval of the Risk Assess- ment. 15. In response to IDEM’s withdrawal of approval, Raybestos went through the administrative appeal process. Ultimately Raybestos obtained a judgment from a Marion Superior Court finding that IDEM “arbitrarily withdrew approval of the Risk Assess- ment, although there was nothing wrong with the report. The agency then used the withdrawal of approval as the basis for disapproving the Technical App. 49 Memorandum ... IDEM did not rely on any site- specific evidence about the Shelly Ditch ... IDEM acted arbitrarily.” 16. On June 1, 2002, the court ordered IDEM to reinstate the approval of the Risk Assessment and the approval of the Technical Memorandum. IDEM never appealed the decision of the Marion Superior court. and by letter dated September 14, 2001; IDEM eventually approved and reinstated the Baseline risk Assessment for Shelly Ditch and the Technical Memo- randum. 17. On July 14, 1998, two months after the submis- sion of the Technical Memorandum, Raybestos’ con- tractor asked the US Fish & Wildlife Service for a critical habitat review in the vicinity of Shelly Ditch. The letter acknowledges that this review was re- quested as part of an ecological screening assessment required by an Agreed Order between Raybestos and the Department. 18. The US Fish & Wildlife Service responded by letter dated August 25, 1998, and identified Shelly Ditch as within the range of the Federally endan- gered Indiana bat, and the Federally threatened bald eagle. A portion of Sugar Creek in Montgomery County is considered a primary wintering area for eagles in Indiana. 19. Raybestos responded to the issues present by the US fish & Wildlife Service by stating that the issues pertaining to the Ecological Screening Assess- ment Report were being addressed in a separate App. 50 | document, and that subsequent revisions to the Technical Memorandum should be deferred until the comments on the Ecological Screening Assessment Report were fully addressed. 20. In 1998, IDEM experienced a change in top administration and John Hamilton became the new commissioner. Mr. Hamilton visited Crawfordsville in late August 1998 and very publicly promised resi- dents that Shelly Ditch would be cleaned up promptly. 21. On September 22, 1998 an internal IDEM memorandum was prepared and circulated among the top administrators at IDEM. The memorandum discusses the “impasse” perceived by IDEM and lays out options for IDEM to pursue to force Raybestos to adopt a different cleanup level. These options in- cluded: resolution through the Agreed Order’s dispute resolution provisions; “[e]ncourag{ing] EPA to pursue cleanup and enforcement through TSCA/RCRA.”; and “{plursu[ing] National Priority Listing by scoring both the Sugar Creek and Shelly Ditch.” According to that memorandum, placement of Sugar Creek on the NPL (National Priority List) “would allow IDEM to pursue the PCB contamination in both Shelly Ditch and Sugar Creek.” The memorandum outlines with consi- derable precision the steps IDEM subsequently took to involve EPA. 22. Catherine Gibbs, the IDEM lawyer who nego- tiated the Agreed Order and IDEM employee Harry Atkinson asked a member of IDEM’s RCRA group, App. 51 Don Stilz to assist in compelling Raybestos to conduct a cleanup different than the one IDEM and Raybestos had developed under the Agreed Order. Mr. Stilz made efforts to get the Raybestos site re-ranked under the National Corrective Action Prioritization System (“NCAPS”). He believed that re-ranking would allow IDEM to require a cleanup standard significantly lower than ti:e 238 ppm standard al- ready approved by IDEM. 23. In mid-October, 1998, IDEM’s Mike Sickels, Don Stilz’ supervisor, had a telephone conversation with EPA as to whether EPA would consider assigning a higher RCRA priority to Raybestos Products Com- pany and discussed this information with Don Stilz. 24. By e-mail dated October 15, 1998, Mr. Stilz advised Catherine Gibbs that IDEM might be able to get Raybestos ranked as a “high” priority under RCRA. 25. On October 16, 1998, Mr. Stilz provided a draft memorandum to Harry Atkinson regarding how to get EPA to re-rank and Stilz’ supervisor, Mike Sickels, sent an e-mail noting the difficulties in getting EPA to rescore a site as a high priority. 26. On October 29, 1998, Don Stilz circulated an Office Memorandum advising that EPA’s RCRA section had ranked Raybestos as a “low priority” site and noting that IDEM’s “problem” was how to get EPA to re-rank Raybestos. Mr. Stilz prepared this memorandum in response to the phone call that he received from Harry Atkinson and Catherine Gibbs App. 52 regarding the authority of IDEM’s Corrective Action section to compel a cleanup different than the one agreed to pursuant to the Agreed Order. 27. The October 29 memorandum states that “EPA is very reluctant to “create” more high priorities for the Corrective Action program” and suggests that “the only chance we have to achieve the re-ranking we desire is to have [IDEM] Commissioner Hamilton personally request Director Robert Springer, Waste, Pesticides and Toxics Division, U.S. EPA, Region 5 to do so.” 28. On November 4, 1998, IDEM sampled the outfall from Raybestos’ plant into Shelly Ditch for the third time without the presence of Raybestos. PCBs w [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0704%3A1. Public record. Not legal advice.