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United States v. Allegan Metal Finishing Co.

Citation: 19 ELR 20148
No. No. K86-441-CA4, 696 F. Supp. 275/28 ERC 1581/(W.D. Mich., 06/06/1988)

The court holds that the operator of a metal finishing facility is liable for violations of the Resource Conservation and Recovery Act's (RCRA's) loss of interim status (LOIS) provisions and for violations of an administrative consent decree entered into with the Environmental Protection Agency (EPA). The court first holds that wastewater discharged into defendant's holding ponds was solid waste subject to regulation under RCRA. The exclusion from the definition of solid waste in RCRA § 1004(27) for industrial discharges that are subject to national pollutant discharge elimination system (NPDES) permits applies only to actual permit discharges. Defendant's NPDES permit did not authorize discharges until October 1987, while defendant has disposed of hazardous waste into its holding ponds since 1980. Even assuming that defendant has discharged wastewater since October 1987pursuant to its NPDES permit, the facility is still subject to RCRA regulation, since the exclusion does not apply to sludges generated by industrial wastewater treatment. The court holds that defendant is not authorized under RCRA § 3005(j) to discharge hazardous wastes to its holding ponds through November 1988. Section 3005(j) requires that a facility first qualify for interim status under § 3005(e)(2) or otherwise have a final RCRA permit in order to continue to operate as a surface impoundment. The court holds that RCRA § 3008(a)(2), which requires EPA to notify a state of the filing of a civil action, does not apply since the violations at issue occurred prior to Michigan's authorization and the complaint was filed on the same day that Michigan received its authorization.

The court holds that defendant is liable under RCRA § 3008(a) for violations of RCRA's LOIS provisions. The court holds that the entry of the consent agreement and final order (CAFO) on May 20, 1985, does not bar the government's LOIS action under res judicata principles, since defendant did not comply with all the provisions of the CAFO and defendant failed to meet RCRA § 3005(e)(2)'s groundwater monitoring and financial responsibility certification requirements by November 8, 1985. Defendant's argument that it was commercially impracticable to obtain the requisite insurance is not relevant at the liability stage. The court holds that the government has established the four elements required for liability under RCRA § 3005(a) and (e). First, defendant is an operator of a hazardous waste facility. Second, defendant's facility is a land disposal facility. The court holds that EPA's interpretation that any surface impoundment at defendant's facility in which hazardous waste was placed is a land disposal facility is reasonable. The term "land disposal facility" as used in RCRA § 3005(e)(2) is not constrained by the regulatory definition of disposal facility, which limits a disposal facility to a location where hazardous waste is intentionally placed and will remain after closure. Such a reading would defeat the purpose of § 3005 to ensure that all facilities where hazardous waste is placed on the ground have a groundwater monitoring plan and the financial capability to remedy environmental damage, would conflict with the statutory definitions of land disposal and disposal, and is contrary to RCRA's strict liability scheme. Third, defendant failed to certify compliance with the financial responsibility requirements of § 3005(e)(2) by November 8, 1985. The court rejects defendant's impossibility defense. Congress intended compliance with the statutory deadline to be mandatory, even if defendant's only option was to shut down. Fourth, defendant operated the facility without a permit or interim status beyond the statutory deadline.

The court holds that issues of material fact remain concerning the government's claim that defendant violated the CAFO by failing to provide to EPA documentation of financial assurance for closure within 45 days of the entry of the CAFO. Although defendant did not submit the documentation by this deadline, defendant's affirmative defenses of estoppel and waiver raise genuine issues of material fact. Defendant alleges that the government misled it by entering into a CAFO that by its terms appeared to operate prospectively and by telling defendant that it could have an extension on the [19 ELR 20149] deadline for filing a financial assurance closure plan. The court rejects the government's argument that it can never be subject to equitable estoppel when exercising its sovereign powers. The court holds that defendant violated the CAFO by failing to provide EPA with documentation that it possessed liability insurance for sudden and non-sudden accidental occurrences within 30 days of entry of the CAFO. The court refuses to recognize defendant's impossibility defense, but notes that defendant's good faith efforts to obtain insurance are relevant with respect to the appropriate penalty and the scope of the injunctive relief sought. The court holds that the government's action to enforce the CAFO is not barred by res judicata. While it is not completely clear whether the CAFO was intended to have a prospective effect, that question is moot since defendant did not fully comply with the CAFO. The court holds that defendant violated the CAFO by failing to pay the $ 16,000 civil penalty within 60 days of the entry of the CAFO. Although the CAFO provided that the penalty would be reduced to $ 3,000 provided that all of its requirements were timely met, defendant failed to fully comply with the CAFO.

The court holds that it lacks jurisdiction under the Administrative Procedure Act (APA) to review EPA's refusal to stay or waive the liability insurance requirements. Such review would require the court to exercise an administrative function. Even assuming it has jurisdiction under the APA, the court notes EPA's actions were not arbitrary and capricious. The court holds that a magistrate's order denying the government's motion for compulsory joinder of Michigan as a party plaintiff was not clearly erroneous.

Counsel for Plaintiff
Gordon G. Stoner
Land and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 633-2721

Counsel for Defendant
Charles M. Denton, Theresa M. Poulton
Varnum, Riddering, Schmidt & Howlett
Ste. 800, 171 Monroe Ave. NW, Grand Rapids MI 49503
(616) 459-4186