US v. CLOW WATER SYSTEMS, A DIV. OF McWANE, INC., C2-87-720.

Citation701 F. Supp. 1345
Decision Date19 December 1988
Docket NumberNo. C2-87-720.,C2-87-720.
PartiesUNITED STATES of America, Plaintiff, v. CLOW WATER SYSTEMS, A DIVISION OF McWANE, INC., Defendant.
CourtUnited States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio

D. Michael Crites, U.S. Atty., S.D. Ohio by James E. Rattan, Asst. U.S. Atty., Columbus, Ohio, Roger J. Marzulla, Asst. Atty. Gen., Land and Natural Resources Div. by Frederick S. Phillips, Environmental Enforcement Section, U.S. Dept. of Justice, Washington, D.C., for plaintiff; Marc Radell, Asst. Regional Counsel, U.S. E.P.A., Region V, Chicago, Ill., and Belinda Holmes, OECM — U.S. E.P.A., Washington, D.C., of counsel.

Joseph D. Lonardo, Columbus, Ohio, for defendant; John W. Hoberg and Elizabeth Sutor Bohanon, Vorys, Sater, Seymour and Pease, Columbus, Ohio, of counsel.

MEMORANDUM AND ORDER

GRAHAM, District Judge.

The United States of America, represented in this case by the United States Environmental Protection Agency ("U.S. EPA"), commenced an action against Clow Corporation by complaint filed on June 11, 1987 to enforce certain provisions of the Resource Conservation and Recovery Act ("RCRA"). Subsequent to the filing of this action, Clow Corporation was acquired by McWane, Inc., and now does business under the name of Clow Water Systems ("Clow"), a division of McWane, Inc. An amended complaint was filed on August 1, 1988 to reflect this change.

Clow, a Delaware corporation, manufactures metal pipes and pipe fittings at a plant located in Coshocton, Ohio. The complaint alleges that Clow treats, stores and disposes of hazardous wastes as defined in 42 U.S.C. § 6903(5), and therefore falls within the requirements of RCRA. Specifically, plaintiff alleges that Clow treats and stores hazardous wastes in the form of lead and cadmium filtered through Clow's cupola emission control system and carried in wastewater to a surface impoundment facility. Plaintiff also alleges that Clow maintains a calcium carbide desulpherization slag pile, and stores drums of paint waste. The complaint alleges violations of RCRA on the part of Clow, as well as violations of the Consent Agreement and Final Order ("CAFO") entered into by Clow and U.S. EPA on September 18, 1985.

This matter is now before the court on plaintiff's motion for partial summary judgment filed on October 14, 1988 and on Clow's response and cross-motion for partial summary judgment filed on November 10, 1988. Plaintiff seeks summary judgment on the issue of Clow's liability for a majority of the violations alleged in the four counts of the amended complaint.

The procedure for granting summary judgment is found in Fed.R.Civ.P. 56(c), which provides:

The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.

The evidence must be viewed in light favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Summary judgment will not lie if the dispute about a material fact is genuine, "that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). However, summary judgment is appropriate if the opposing party fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

Loss of Interim Status

Plaintiff first requests summary judgment on the issue of Clow's storage or disposal of hazardous waste in its surface impoundment despite loss of interim status, as alleged in Count Two of the amended complaint.

Congress enacted RCRA in 1976 to implement a program for the regulation of owners and operators of hazardous waste treatment, storage and disposal facilities. The owner or operator of a hazardous waste facility must obtain a permit from U.S. EPA to operate the facility. 42 U.S.C. § 6925. However, since Congress realized that the permit process would not be completed prior to the effective date of the regulations, it further provided that facilities in existence on November 19, 1980 could operate on an interim basis if they applied for a permit and notified the U.S. EPA or other appropriate state agency of the nature of the hazardous wastes being stored, treated or disposed of at those facilities. 42 U.S.C. § 6925(e). It is undisputed that Clow was operating its facility prior to November 19, 1980 and that it made the application and disclosures required by 42 U.S.C. § 6925(e) for attaining interim status.

In 1984, Congress amended RCRA to add the Loss of Interim Status Provision ("LOIS"), 42 U.S.C. § 6925(e)(2). This provision terminates interim status for land disposal facilities on November 8, 1985 unless those facilities have submitted Part B permit applications and have certified compliance with applicable groundwater monitoring and financial responsibility requirements. Continued operation after loss of interim status exposes the facility to liability under the civil enforcement provisions of 42 U.S.C. § 6928(a).

In order to establish a violation of the LOIS provision, plaintiff must prove: 1) that Clow was the owner or operator of a "land disposal facility"; 2) that Clow did not have a permit or interim status to operate the facility; and 3) that Clow continued to operate its facility after the November 8, 1985 deadline. See United States v. T & S Brass and Bronze Works, Inc., 681 F.Supp. 314 (D.S.C.1988). Clow has admitted that it is the operator of a facility which maintains a surface impoundment in which hazardous wastes are stored. The term "land disposal" includes the placement of hazardous waste in a surface impoundment. 42 U.S.C. § 6924(k). Clow also acknowledges that it continued to operate the surface impoundment after November 8, 1985, and that it did not have a permit.

Clow does disagree with plaintiff's claim that it lost interim status on November 8, 1985. Plaintiff claims that Clow failed to certify that it was in compliance with all financial responsibility requirements because it did not certify that it had obtained non-sudden accidental liability insurance required by 40 C.F.R. § 265.147(b). Clow admits that it was unable to secure the required insurance by November 8, 1985, and its certification letter of November 6, 1985 (Clow's Ex. E) states only that liability coverage for non-sudden accidental liability insurance has been applied for. Thus, Clow's certification demonstrates on its face that it was not in compliance with the requirements of 42 U.S.C. § 6925(e)(2).

Clow contends that the operation of § 6925(e)(2) is not automatic, and that its operation is dependent upon a notification of the facility by the U.S. EPA of loss of interim status. This interpretation is contrary to the precise wording of the statute, which provides that "interim status shall terminate" on November 8, 1985 unless the statutory requirements are met. It would also be contrary to the congressional intent to accelerate the EPA's enforcement activities, including final permit review of major land disposal facilities. See H.R.Rep. No. 198, 98th Cong., 2nd Sess., Pt. I, at 44, reprinted in 1984 U.S.Code Cong. & Admin.News 5576, 5603.

Clow relies on United States EPA v. Environmental Waste Control, Inc., 698 F.Supp. 1422 (N.D.Ind.1988) in which the court found summary judgment inappropriate in a case where the facility had certified that it had obtained the necessary insurance and the EPA challenged whether the policy limits complied with the regulatory requirements. This case is distinguishable, however, since it is undisputed that Clow did not have the necessary insurance as of November 8, 1985. The U.S. EPA has construed § 6925(e)(2) as requiring certification of compliance by November 8, 1985. The agency interpretation is entitled to deference as being reasonable and consonant with congressional intent. Vineland Chemical Co. v. United States E.P.A., 810 F.2d 402, 409 (3d Cir.1987). The district court upon remand of the Vineland Chemical case went on to hold that a facility's loss of status is automatic by operation of statute, and declined to differentiate between facilities who fail to certify at all and facilities whose certifications are later found to be deficient. See United States v. Vineland Chemical Co., Inc., 692 F.Supp. 415 (D.N.J.1988).

Clow contends that it made a good faith effort to obtain insurance, but that insurance was difficult to obtain due to the nature of the insurance market prior to November 8, 1985. Clow points to the language in paragraph A(6) of the CAFO, which states, "Should Respondent become unable to comply with this requirement due to the unavailability of insurance, Respondent shall demonstrate that a good faith effort has been made and continues to be made to obtain said coverage." However, there is no language in the CAFO about such a good faith effort suspending the loss of interim status. As the court noted in United States v. Allegan Metal Finishing Co., 696 F.Supp. 275 (W.D.Mich.1988), the U.S. EPA made clear by announcement in Fed.Reg. 33902, 33907 (Aug. 21, 1988) that its practice of using compliance schedules for obtaining insurance would not apply after November 8, 1985 and would not affect the certification requirements of the statute. Good faith effort is not a defense to liability after November 8, 1985. T & S Brass, 681 F.Supp. at 321.

Clow also advances the defense that it was impossible for it to obtain insurance prior to the statutory deadline due to the nature of the insurance market. Clow's impossibility defense may have some relevance to the nature of any relief given in this...

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