DEPT. OF ENVTL. MGMT. v. BOONE COUNTY RES. RECOVERY SYS.

• Decision Date: 16 February 2004
• Docket Number: No. 06A01-0302-CV-49.,06A01-0302-CV-49.
• Citation: 803 N.E.2d 267
• Parties: The INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Appellant-Respondent, v. BOONE COUNTY RESOURCE RECOVERY SYSTEMS, INC., Robert H. Bankert, Greg Bankert, Cindy Russell, and John Bankert, Jr., Appellees-Petitioners.
• Court: Indiana Appellate Court

803 N.E.2d 267

The INDIANA DEPARTMENT OF ENVIRONMENTAL MANAGEMENT, Appellant-Respondent, v. BOONE COUNTY RESOURCE RECOVERY SYSTEMS, INC., Robert H. Bankert, Greg Bankert, Cindy Russell, and John Bankert, Jr., Appellees-Petitioners.

No. 06A01-0302-CV-49.

Court of Appeals of Indiana.

February 16, 2004.

Steve Carter, Attorney General of Indiana, Sierra L. Cutts, Deputy Attorney General, Indianapolis, IN, Attorneys for Appellant.

Carol Sparks Drake, Parr Richey Obremskey & Morton, Lebanon, IN, S. Gregory Zubek, Whitham, Hebenstreit & Zubek, Indianapolis, IN, Attorneys for Appellees.

OPINION

NAJAM, Judge.

STATEMENT OF THE CASE

The Indiana Department of Environmental Management ("IDEM") challenges the trial court's judgment, which reversed the Indiana Office of Environmental Adjudication's ("OEA") grant of summary judgment against Boone County Resource Recovery Systems, Inc. ("BCRRS"), Robert Bankert ("Robert"), Greg Bankert ("Greg"), Cindy Russell ("Cindy") and John Bankert, Jr. ("John, Jr.") (collectively "the Bankerts"). IDEM presents several issues for our review, but we address a single dispositive issue, namely, whether the trial court erred when it reversed the OEA's summary judgment order.

We reverse.

FACTS AND PROCEDURAL HISTORY

In 1977, Northside Sanitary Landfill, Inc. ("NSLI") was incorporated, and John Bankert, Sr. ("John, Sr.") served as its president. NSLI had an operating permit for a sanitary landfill¹ operation in Boone County. John Jr. served as an officer and director of NSLI from 1970 until 1984, and he operated heavy equipment at the site; Cindy served as a director of NSLI from 1980 until 1992; Greg was a shareholder of NSLI and served as a heavy equipment operator, site foreman, and operations manager over a fifteen-year period; and Robert was a shareholder and employee of NSLI.

In May 1983, IDEM's predecessor, the Environmental Management Board ("EMB"), issued a Notice of Violation to NSLI for violating state environmental laws in connection with its operation of the landfill. According to the Notice, NSLI's operation of the landfill resulted in groundwater contamination, and the EMB directed NSLI to take certain measures to prevent further contamination.² On February 2, 1987, the Indiana Solid Waste Management Board ("the Board") found that the landfill "continues to release and threatens to release chemicals to the surface and groundwaters so as to significantly impair, threaten and pollute the environment of the State of Indiana in violation of IC 13-1-3-8 and 13-7-4-1(a), (b) & (f)."³ And the Board concluded that "[d]ue to the business practices, waste management techniques and operational practices on the permitted landfill site, the nature of the substances placed on or disposed of in it, and the nature of the surface and subsurface in the area, a remedy is necessary in order to reasonably protect the public health and environment." The Board ordered NSLI to fund the closure and post-closure costs for the landfill, to implement groundwater monitoring and leachate collection, and to pay civil penalties. (The parties refer to that order as "the N-95 order.") The Environmental Protection Agency eventually designated the landfill as a "Superfund" site under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-75 ("CERCLA"), after NSLI failed to comply with the N-95 order.

Meanwhile, in December 1983, Bankert Farms, Inc. ("BFI") was incorporated, and Greg served as president and treasurer of BFI. Greg was "generally in charge" of BFI. BFI operated a "clean fill" site.⁴ The Bankerts were the sole shareholders of BFI. In May 1988, BCRRS was incorporated. Robert served as president of BCRRS, and his siblings served as officers and directors. BCRRS operated a waste transfer station and a container collection system, but eventually joined BFI in the operation of a clean fill site.

In 1992, the Trustees of the Northside Sanitary Landfill Site Trust Fund ("the Trustees"), who were overseeing the Superfund site, obtained a preliminary injunction requiring BFI and BCRRS to stop accepting solid waste at the clean fill site, which was adjacent to the Superfund site. The court specifically concluded that BFI was operating a sanitary landfill in violation of zoning laws. That cause is known as Johnson v. Bankert Farms, Inc., BCRRS, NSLI, Patricia Bankert, Jonathan Bankert, Jr., Cynthia Russell, Robert Bankert, and Gregory Bankert ("Johnson v. BFI").⁵

In February 1997, BCRRS submitted an application to IDEM for a permit to operate a construction/demolition ("c/d") landfill in Boone County. In June 1997, BFI merged with BCRRS, but BCRRS did not notify IDEM of the merger. In December 1997, IDEM granted the permit, and the Trustees sought administrative review of that permit. The OEA concluded that BCRRS had not complied with certain statutory requirements for obtaining the permit, including its failure to disclose its merger with BFI. As such, the OEA declared the permit void. BCRRS did not appeal that decision.

Instead, in December 1998, BCRRS submitted a second application for a permit to operate a c/d landfill. BCRRS, as the applicant, and each of the Bankerts, as responsible parties,⁶ submitted disclosure statements to IDEM under Indiana Code Section 13-19-4-2. That statute provides in relevant part that applicants and responsible parties must describe their experience in managing the type of waste that will be managed under the permit and all civil and administrative complaints against the applicant or responsible party for the violation of any state or federal environmental protection laws. The disclosure statements submitted by the Bankerts revealed that they each had more than 20 years' experience in the management of solid waste, and they did not list any violations of environmental protection laws.

IDEM denied BCRRS' second application for a permit on the basis that "the applicant or responsible parties have knowingly and repeatedly violated state or federal environmental protection laws" in violation of Indiana Code Section 13-19-4-5(a)(5) (a provision of the "Good Character" law) and 329 IAC 10-11-1.⁷ BCRRS sought administrative review of that denial, and IDEM moved for summary judgment. The OEA granted IDEM's motion for summary judgment. The OEA found and concluded in relevant part as follows:

[T]he Commissioner could easily conclude BCRRS and its responsible parties, the Bankert children, have knowingly and repeatedly violated state environmental protection laws. The "knowingly" element is satisfied because BCRRS and the Bankert children are charged with knowledge of the laws of this state, especially in the highly regulated field of solid waste management.... "Repeatedly" is simply defined as "again and again." Here, both BCRRS and the Bankert children had more than one complaint filed against them.[⁸]

The Environmental Law Judge concludes as a matter of law, based on the foregoing Undisputed Facts and Discussion, that: (1) [the Bankerts] are responsible parties for NSLI, BFI and BCRRS as the term is defined in Ind. Code 13-11-1-191; ... [and] (4) the Commissioner of IDEM properly denied BCRRS'[] permit application pursuant to Ind.Code § 13-19-[4-5] and 329 IAC 10-11-1(c)(3)[.]

BCRRS then sought judicial review of the OEA's decision. The trial court reversed the OEA's grant of summary judgment and held that BCRRS was entitled to summary judgment as a matter of law. The trial court found in relevant part as follows:

The Court concludes OEA erred, as a matter of law, in interpreting Ind.Code § 13-19-4-3 to require BCRRS and its responsible parties to describe [the N-95 order, Johnson v. BFI, and the Trustee's objection to BCRRS' first application] in their respective disclosure statements, as this is contrary to the plain and unambiguous language of this statute.

* * *

The Court determines that in reaching its decision, OEA erroneously permitted a "guilt by association" concept to be read into the Good Character law which Indiana's legislature did not include. A denial based upon Ind.Code § 13-19-4-5(a)(5) requires that the knowing and repeated violations which form the basis for the denial have been committed by the applicant or one of its responsible parties. To the extent OEA approved denying this permit because of environmental law violations found in N-95, this application of Ind.Code § 13-19-4-5(a)(5) impermissibly infringed upon the responsible parties' freedom of association by effectively holding them responsible for environmental violations NSLI committed, i.e., the company their father ran, rather than because of their own acts. The Court determines it would infringe upon the responsible parties' constitutional rights of association to deny them a permit because their father, John Bankert, Sr., committed environmental violations. See Roberts v. United States Jaycees, 468 U.S. 609, 104 S.Ct. 3244, 82 L.Ed.2d 462 (1984)

.

The court also found that the OEA erred when it concluded that the trial court's findings in Johnson v. BFI constituted evidence of a violation of environmental law. This appeal ensued.

DISCUSSION AND DECISION

In Family Dev., Ltd. v. Steuben County Waste Watchers, Inc., 749 N.E.2d 1243, 1256 (Ind.Ct.App.2001), this court set out the applicable standard of review as follows:

We initially observe that judicial review of an administrative decision is limited. Review of an agency's decision is largely confined to the agency record and the court "may not try the case de novo or substitute its judgment for that of the agency." Deference is to be given by the reviewing court to the expertise of the administrative body, and the decision should be reversed only if it is (1) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (2) contrary to a constitutional right, power, privilege, or immunity; (3) in excess of statutory jurisdiction, authority, or limitations, or

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