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Power Engineering Company - Favorable EPA RCRA Case Decision

On September 4, 2002, the 10th Circuit upheld EPA's authority to bring enforcement actions for violation of the Resource Conservation and Recovery Act (RCRA) in states with authorized hazardous waste management programs (U.S. v. Power Engineering Co., No. 01-1217 (Sept. 4, 2002)). The court also found that EPA' s enforcement action was not barred by res judicata, because EPA and a state with an authorized hazardous waste management program are not in privity unless EPA pulls a "laboring oar" in the state's enforcement action.

EPA brought an enforcement action against Power Engineering Company and its owners (PEC) for failing to provide financial assurances as required by RCRA. When the Colorado Department of Public Health and Environment (CDPHE) learned of the discharge of hazardous waste into the groundwater and the Platte River, it inspected the facility and issued a notice of violation. Later CDPHE issued a final administrative compliance order requiring PEC to comply with hazardous waste laws and to clean up contamination, but it did not require PEC to provide financial assurances for closure of the facility or for third party liability. After PEC failed to comply with the order, CDPHE moved to enforce compliance. A Colorado state court determined that the administrative order was enforceable.

EPA asked CDHE to require PEC to comply with RCRA's financial assurance requirements. When CDPHE did not order PEC to provide financial assurance, EPA filed suit against PEC in federal court. The district court determined that RCRA gave EPA the power to enforce RCRA and that EPA's action was not barred by principles of res judicata. The court ordered PEC to provide approximately two million dollars in financial assurance and obtain liability coverage for accidental occurrences.

The 10th Circuit decided that RCRA grants EPA the power to take an enforcement action in a state with an authorized program, even where the state has taken an enforcement action. The court noted that RCRA was ambiguous, and because "EPA s interpretation of RCRA has substantial support in the text of the statute," and is therefore a "reasonable interpretation," the court deferred to EPA. Slip Op. at 14.

The 10th Circuit's decision disagrees with the 8th Circuit's decision in Harmon Indus. v. Browner, 191 F.3d 894 (8th Cir. 1999). The 10th Circuit notes that the 8th Circuit s "interpretation fails to account" for the language of RCRA 3006(b) and "does not adequately consider the structure of the statute." Slip Op. at 10. It also observes that the 8th Circuit s interpretation of RCRA "goes well beyond the plain language" and "reads too much" into the statute. Slip Op. at 11 and 12. The 10th Circuit also rejected the conclusion in Harmon that EPA s enforcement authority is triggered only after authorization is rescinded or if the state fails to initiate an enforcement action. Withdrawal of authorization is a drastic step, the court noted, and "[n]othing in the text of the statute suggests that such a step is a prerequisite to EPA enforcement or that it is the only remedy for inadequate enforcement." Slip Op. at 11-12.

Finally, the 10th Circuit concluded that EPA's action was not barred by res judicata because EPA and the state were not in privity. It rejected the conclusion in Harmon that the EPA and the state were in privity as a result of EPA's authorization of the state's program. Instead, the court concluded that EPA's authorization of the state's program was not sufficient to bring EPA into privity with CDPHE and that the two agencies had different interests. Slip Op. at 16 - 17.

Earlier History and Partial Summary Judgement

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