U.S. v. Power Engineering Co.

303 F.3d 1232

UNITED STATES of America, Plaintiff-Appellee, v. POWER ENGINEERING COMPANY; Redoubt, Ltd.; Richard J. Lilienthal, Defendants-Appellants, American Iron and Steel Institute; American Petroleum Institute; Chamber of Commerce of the United States of America; Environmental Federation of Oklahoma; Michigan Manufacturers Association; National Association of Manufacturers; Western States Petroleum Association; State of Maine; State of Arkansas; State of California; State of Connecticut; State of Illinois; State of Montana; State of New York; State of Vermont; State of West Virginia, Amici Curiae.

No. 01-1217.

United States Court of Appeals, Tenth Circuit.

September 4, 2002.

John F. McBride (Robert T. McAllister of Robert T. McAllister, P.C., Denver, CO, with him on the briefs), Denver, CO, appearing for Appellant.

Robert H. Oakley, Attorney, Department of Justice, Washington, DC (John C. Cruden, Acting Assistant Attorney General, Environment & Natural Resources Division, John W. Suthers, United States Attorney, John A. Bryson and John N. Moscato, Attorneys, Department of Justice, Washington, DC; and Stephen D. Taylor, Assistant United States Attorney, and Thomas Sitz, Office of Enforcement, Compliance and Environmental Justice, Environmental Protection Agency, Denver, CO, with him on the brief), appearing for Appellee.

G. Steven Rowe, Attorney General, and John H. Edwards, Assistant Attorney General, Natural Resources Division, State of Maine, Department of the Attorney General, Augusta, ME; Mark Pryor, Attorney General, State of Arkansas, Little Rock, AR; Bill Lockyer, Attorney General, State of California, San Diego, CA; Richard Blumenthal, Attorney General, State of Connecticut, Hartford, CT; James E. Ryan, Attorney General, State of Illinois, Chicago, IL; Mike McGrath, Attorney General, State of Montana, Helena, MT; Eliot Spitzer, Attorney General, State of New York, New York, NY; William H. Sorrell, Attorney General, State of Vermont, Montpelier, VT; and Darrell V. McGraw, Jr., Attorney General, State of West Virginia, Charleston, WV, filed an amicus curiae brief in support of the United States Environmental Protection Agency.

Scott M. DuBoff, Wright & Talisman, P.C., Washington, DC; Thomas M. Sneeringer, Washington, DC, Counsel for American Iron and Steel Institute; G. William Frick and Ralph J. Colleli, Jr., Washington, DC, Counsel for American Petroleum

Institute; Stephan A. Bokat and Robin S. Conrad, National Chamber Litigation Center, Inc., Washington, DC, Counsel for Chamber of Commerce of the United States; James Barnett, Kerr, Irvine, Rhodes & Ables, Oklahoma City, OK, Counsel for Environmental Federation of Oklahoma; Frederick R. Damm, Clark Hill, P.L.C., Detroit, MI, Counsel for Michigan Manufacturers Association; Jan Amundson, Washington, DC, Counsel for National Association of Manufacturers; Gregory McClintock and Brian Wall, Mayer, Brown & Platt, Los Angeles, CA, Counsel for Western States Petroleum Association, filed an amicus curiae brief in support of Appellants Power Engineering Company, et al.

Before TACHA, Chief Circuit Judge, BALDOCK, and LUCERO, Circuit Judges.

TACHA, Chief Circuit Judge.

The State of Colorado brought an enforcement action against defendants Power Engineering Company, Redoubt Limited, and Richard Lilienthal (collectively referred to as "PEC") for violations of the Colorado Hazardous Waste Management Act. Plaintiff United States, acting on behalf of the Environmental Protection Agency ("EPA"), filed its own lawsuit against PEC for the same violations, seeking financial assurances. The district court denied PEC's motion for summary judgment, finding that the EPA's lawsuit was not barred by statute or by res judicata. We exercise jurisdiction pursuant to 28 U.S.C. § 1292(a)(1) and AFFIRM.

I. Background

Power Engineering Company has operated a metal refinishing and chrome electroplating business in Denver, Colorado since 1968. Redoubt Limited owns land and buildings leased and used by Power Engineering. Richard Lilienthal is an officer of both Power Engineering and Redoubt, as well as the sole shareholder of both companies. Each month Power Engineering produces over 1000 kilograms of waste, including arsenic, lead, mercury, and chromium. This waste is covered by the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. §§ 6901-6992k, and is defined as "hazardous." After the Colorado Department of Public Health and Environment ("CDPHE") learned of a discharge of hexavalent chromium into the Platte River, it conducted inspections of PEC and discovered that chromium emanating from PEC was contaminating the groundwater. It also found that PEC treated, stored, and disposed of hazardous wastes without a permit. CDPHE issued a notice of violation on June 11, 1993, and an Initial Compliance Order in July 1994. CDPHE issued a Final Administrative Compliance Order on June 13, 1996, requiring PEC to comply with hazardous waste laws, implement a cleanup plan for chrome-contaminated soil, conduct frequent inspections, and submit periodic reports.

PEC failed to comply with this order, and CDPHE issued an Administrative Penalty Order on December 23, 1996, assessing civil penalties of $1.13 million. When PEC refused to pay the penalties, CDPHE brought suit in state court to force compliance with both orders. The Colorado state court found on March 23, 1999 that the Final Administrative Compliance Order and the Administrative Penalty Order were enforceable as a matter of law.

Before CDPHE issued its Final Administrative Compliance Order, the EPA had requested that CDPHE enforce RCRA's financial assurance requirements against PEC. The EPA notified CDPHE that it would bring its own enforcement action if CDPHE failed to do so. When CDPHE did not demand financial assurances, the EPA filed its own suit against PEC.

The EPA and PEC filed cross-motions for summary judgment. PEC argued that the RCRA statute and res judicata barred the EPA from "overfiling" — which has been defined in this context as "[t]he EPA's process of duplicating enforcement actions." Harmon Indus. v. Browner, 191 F.3d 894, 898 (8th Cir.1999). The district court granted summary judgment for the EPA and held that PEC must provide $2,119,044 in financial assurances and obtain liability coverage for accidental occurrences. PEC appeals the district court's grant of summary judgment.

II. Discussion

We review the grant of summary judgment de novo, applying the same standard as the district court. Wark v. United States, 269 F.3d 1185, 1187 (10th Cir.2001). Summary judgment is appropriate when there is no genuine issue of material fact, viewing the evidence in the light most favorable to the nonmoving party. Id.

A. Permissibility of Overfiling

PEC contends that the district court erred in not following the Eighth Circuit's interpretation of RCRA in Harmon. Under RCRA, a state may apply to the EPA for authorization to administer and enforce its own hazardous waste program if its program is equivalent to the federal program and provides adequate enforcement. 42 U.S.C. § 6926(b), (c). The Harmon court held that RCRA allows the EPA to overfile after providing notice to the authorized state only if the EPA withdraws authorization or if the state fails to initiate an enforcement action. 191 F.3d at 899. We review the district court's construction of a statute de novo. Foutz v. United States, 72 F.3d 802, 804 (10th Cir.1995).

A state program authorized pursuant to RCRA operates "in lieu of" the federal program. 42 U.S.C. § 6926(b). PEC contends that the "in lieu of" language renders the EPA powerless to file a separate lawsuit when a state has been authorized to run its own program and initiates its own enforcement action. The EPA disagrees and interprets RCRA in its regulations to allow such overfiling. 40 C.F.R. §§ 271.16(c) note, 271.19; see also United States v. Power Eng'g Co., 125 F.Supp.2d 1050, 1061 (D.Colo.2000) (discussing the history and context of these regulations).

Because the EPA is charged with the administration of RCRA, Chevron v. NRDC guides our review of its interpretation of the statute. 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Our first question is "whether Congress has directly spoken to the precise question at issue." Id. at 842, 104 S.Ct. 2778. "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. 2778. If the statute is "silent or ambiguous," however, we defer to the agency's interpretation "if it is based on a permissible construction of the statute." Id. at 843, 104 S.Ct. 2778. More specifically, if there is "an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation," we must accept the agency's interpretation unless it is "arbitrary, capricious, or manifestly contrary to the statute." Id. at 843-44, 104 S.Ct. 2778. Alternatively, if there is only an implicit delegation of authority to the agency, we must accept a "reasonable interpretation made by the administrator of [the] agency." Id. at 844, 104 S.Ct. 2778. After reviewing the statute, we conclude that it is ambiguous, and we defer to the agency interpretation.

The EPA argues that Congressional intent to allow overfiling is demonstrated by 42 U.S.C. § 6928(a), which conditions EPA enforcement only on providing notice to an authorized state: "[T]he [EPA] Administrator may issue an order assessing a civil penalty for any past or current violation.... [T]he Administrator shall give notice to the State in which such violation has occurred prior to issuing an order or commencing a civil action under this section." As another circuit court held, "Read in context, section [6928(a)] ... simply conditions the exercise of [federal] authority on the provision of prior notice." Wyckoff Co. v. EPA, 796 F.2d 1197, 1201 (9th...