USA. v. Power Eng'g v. Lilienthal

• Citation: 191 F.3d 1224
• Decision Date: 08 September 1999
• Docket Number: No. 98-1273,98-1273
• Parties: (10th Cir. 1999) UNITED STATES OF AMERICA, Plaintiff-Appellee, v. POWER ENGINEERING COMPANY; REDOUBT, LTD.; and RICHARD J. LILIENTHAL, Defendants-Third-Party Plaintiffs-Appellants, v. JACK LILIENTHAL, Third-Party-Defendant
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1224

191 F.3d 1224 (10th Cir. 1999)

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. POWER ENGINEERING COMPANY; REDOUBT, LTD.; and RICHARD J. LILIENTHAL, Defendants-Third-Party Plaintiffs-Appellants, v. JACK LILIENTHAL, Third-Party-Defendant.

No. 98-1273

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

September 8, 1999

Appeal from the United States District Court for the District of Colorado. D.C. No. 97-B-1654

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] John F. McBride(John J. Zodrow with him on the briefs), Zodrow et al. P.C., Denver, Colorado, for Defendants-Appellants.

Greer Goldman, Department of Justice, Washington, D.C.(Lois J. Schiffer, Assistant Attorney General, Henry L. Solano, United States Attorney, Stephen D. Taylor, Assistant United States Attorney, Denver, Colorado; John A. Bryson, John N. Moscato, Lisa E. Jones, Attorneys, Department of Justice, Washington, D.C.; and Thomas Sitz, General Counsel for Office of Enforcement, Compliance and Environmental Justice, Environmental Protection Agency, Denver, Colorado, with him on the briefs), for Plaintiff-Appellee.

Before EBEL,MAGILL^* and LUCERO, Circuit Judges.

EBEL, Circuit Judge.

Plaintiff-Appellee United States, acting on behalf of the Environmental Protection Agency ("EPA"), sought a mandatory preliminary injunction directing Defendant-Appellants Power Engineering Company ("PEC"), Redoubt, Ltd., and Richard J. Lilienthal (collectively, "Defendants"), to comply with the financial assurance regulations adopted by the Colorado Department of Public Health and Environment ("CDPHE") under authority delegated to Colorado by the EPA pursuant to the Resource Conservation and Recovery Act of 1976 ("RCRA"). The district court granted the mandatory preliminary injunction, requiring Defendants to provide financial assurances in the amount of $3,500,000 to ensure remediation of ground and water contamination caused by chromium and other by-products of PEC's metal refinishing business. Defendants appeal the grant of the preliminary injunction. We affirm.

I. BACKGROUND¹

Statutory and Regulatory Background

In 1976, Congress enacted RCRA, a comprehensive statutory scheme providing cradle-to-grave oversight of solid and hazardous waste. See 42 U.S.C. § 6902; United States v. Colorado, 990 F.2d 1565, 1570 (10th Cir. 1993); United States v. Power Engineering Co., 10 F. Supp.2d 1145, 1147 (D. Colo. 1998) ("PEC"). RCRA's Subtitle C, 42 U.S.C. §§ 6921-39, governs the generation, transportation, storage, disposal, and treatment of hazardous wastes to minimize present and future threats to human health and the environment. See 42 U.S.C. § 6924(a); United Technologies Corp. v. EPA, 821 F.2d 714, 716 (D.C. Cir. 1987). To that end, section 3004 of RCRA, 42 U.S.C. § 6924, directs the EPA to promulgate regulations establishing standards for owners and operators of hazardous waste facilities, such as standards for "financial responsibility (including financial responsibility for corrective action) as may be necessary or desirable." 42 U.S.C. § 6924(a)(6). Section 3004 also permits the EPA to promulgate regulations establishing standards for compliance with section 3005 of RCRA. See 42 U.S.C. § 6924(a)(7). Section 3005 of RCRA, 42 U.S.C. § 6925, prohibits any person from treating, storing, or disposing of hazardous waste or constructing any hazardous waste facility for such treatment, storage, or disposal without (1) a permit issued pursuant to Section 3005; or (2) designation of "interim status," obtained by notifying the EPA of the person's hazardous waste activities and submitting an application for a permit. 42 U.S.C. § 6925(a) & (e).

If authorized by the EPA, a state may "carry out [its own hazardous waste] program in lieu of the Federal program" under Subtitle C and "issue and enforce permits for the storage, treatment, or disposal of hazardous waste." 42 U.S.C. § 6926(b); see Colorado, 990 F.2d at 1569. Action taken by a state pursuant to its federally authorized program has "the same force and effect as action taken by the [EPA]." 42 U.S.C. § 6926(d); see Colorado, 990 F.2d at 1569.

Pursuant to EPA authorization, Colorado implemented its own hazardous waste program, and promulgated regulations governing generators of hazardous waste and the operation and maintenance of hazardous waste treatment, storage, and disposal facilities. See generally, 6 Colo. Code Regs. 1007-3 ("C.C.R.") §§ 262, 264-68; Colorado, 990 F.2d at 1571; PEC, 10 F. Supp.2d at 1148. Colorado's regulations are substantially identical to the EPA's regulations, such that analysis of the federal scheme can "overlay[] and define[] that of Colorado." See Sierra Club v. United States Dept. of Energy, 734 F. Supp. 946, 947 (D. Colo. 1990). Among the state's regulations are the so-called financial assurance requirements, located in C.C.R. § 266, which require owners and operators of all hazardous waste facilities to document that they have secured the financial resources required for closure and, if necessary, post-closure of their facilities in an appropriate and safe manner, and to pay third-party claims that may arise from their operations. See C.C.R. §§ 266.14 & 266.16; PEC, 10 F. Supp.2d at 1146.² The specifics of Colorado's regulatory scheme will be discussed further in the relevant context.

For present purposes, however, it is useful to identify two propositions which the district court stated, and which neither party challenges on appeal. First, according to the district court, the EPA "retains the right to bring enforcement actions compelling compliance with Colorado's hazardous waste regulations." PEC, 10 F. Supp.2d at 1148 (citing 42 U.S.C. §§ 6928, 6934, & 6973; 49 Fed. Reg. 41036 (1984); 51 Fed. Reg. 37729 (1986); 54 Fed. Reg. 20847 (1989); 56 Fed. Reg. 21601 (1991); 59 Fed. Reg. 16568 (1994)).³ Second even though the state resolved its enforcement proceedings against Defendants in this case through an administrative order, the district court assumed the EPA had "overfile" power under RCRA to bring its own subsequent enforcement action. See PEC, 10 F. Supp.2d at 1146; see also Bryan S. Miller, Harmonizing RCRA's Enforcement Provisions: RCRA Overfiling in Light of Harmon Industries v. Browner, 5 Envtl. Law. 585, 586 (1999) ("Overfiling occurs when EPA initiates an enforcement action after a state begins an action on the same matter.").

On appeal, the parties focus their argument only on whether the EPA may enforce the financial assurance provisions of the state regulations independently of compelling compliance with the entire permitting scheme. Therefore, because the propositions set forth above are not in dispute in this appeal, we assume without deciding for purposes of this appeal (1) that the EPA may enforce the state's hazardous waste regulations, see United States v. Marine Shale Processors, 81 F.3d 1361, 1367 (5th Cir. 1996) ("42 U.S.C. § 6928(a) gave EPA the power to enforce the substance of an approved state's program against private parties in that state."); and (2) that the EPA may do so even after the state has taken its own enforcement actions, but see Harmon Indus., Inc. v. Browner, 19 F. Supp.2d 988, 994, 996 (W.D. Mo. 1998) (recognizing that EPA could withdraw state authority or enforce a violation of RCRA "when the state remains inactive, after giving notice" pursuant to 42 U.S.C. § 6928(a)(2), but holding that EPA may not overfile under RCRA after state concludes enforcement action on same matter); see also Miller, supra, at 593 ("Harmon Industries, Inc. v. Browner is the first federal court decision that directly addresses the issue of whether EPA may overfile under RCRA after a state concludes an enforcement action.").⁴

Parties

The United States is the plaintiff acting on behalf of the EPA. PEC is a Colorado corporation located in Denver. From approximately 1968, PEC has operated a business of refinishing metal crankshafts, connecting rods, and rod journals for large diesel engines used in heavy equipment. Redoubt owns the land and buildings leased to PEC, and thus is the owner of PEC's facility under Colorado regulations. Lilienthal is the president of PEC and owns 51% of the outstanding stock of both PEC and Redoubt. For purposes of the preliminary injunction motion, Lilienthal agreed that he is an "owner" and "operator" of PEC and as such subject to any order entered by the district court directing Defendants to secure financial assurances.

Nature of the Case

PEC's refurbishing operations produce more than 1,000 kilograms of hazardous waste per month, and the facility stores more than 6,000 kilograms per month. The facility generates approximately thirteen different waste streams, including arsenic, lead, mercury, and hexavalent chromium contaminated media. In 1992, Denver Health and Hospitals ("DHH") contacted the CDPHE concerning a discharge into the Platte River of high levels of hexavalent chromium. After investigation, DHH determined that PEC was the likely sources of the discharge. The CDPHE then conducted compliance review inspections at PEC in August and September of 1992, and reported numerous violations of federal and state regulations governing the treatment, storage, and disposal of hazardous waste, which the district court set out at length. In addition, PEC never applied for a permit or obtained interim status.

Although PEC notified the CDPHE in 1986 that it was a generator of certain hazardous waste, PEC failed to assess adequately its generation, treatment, storage, and disposal of hazardous waste, and the CDPHE did not know the severity and extent of PEC's noncompliance with the state hazardous waste program until the August 1992 inspection. As a result of PEC's illegal storage and disposal of hazardous waste, groundwater at and under the facility, as well as groundwater under areas outside the facility, is contaminated with levels of hexavalent chromium greatly exceeding established toxicity levels.⁵ A plume of...