ELR Citation: ELR 20263
No(s). 2:90-CV-326-RL (N.D. Ind. Aug 31, 1993)

The court assesses civil penalties of $6 million against a steel manufacturer for violations of the Resource Conservation and Recovery Act (RCRA) and the Safe Drinking Water Act (SDWA) resulting from its failure to perform the corrective action program required by its underground injection control (UIC) permits, and for RCRA violations resulting from its operation and management of a landfill. The court first rejects the manufacturer's argument that it was impossible for it to comply with the time schedule in UIC permits. The compilation of existing information could have been submitted by the permit deadline. Even if the documents were incomplete, the manufacturer could have shown its good faith by attempting to partially comply by the deadline. Further, the manufacturer never challenged the compliance schedule on appeal, nor formally requested a modification pursuant to the permit terms. And, of the seven other companies that were issued permits with the same schedule, one complied within the permit schedules, and five are now in compliance, some due to requests for permit modifications. The court finds that the manufacturer's failure to comply with the corrective action schedules in the permits resulted from its own willful actions and inactions. Those actions frustrated the purposes of RCRA and the SDWA and adversely impacted the resources of the U.S. Environmental Protection Agency (EPA), which was required to devote an inordinate amount of its resources trying to obtain the manufacturer's compliance. Also, the manufacturer had the substantial benefit of being able to inject millions of gallons of hazardous waste into the earth's surface rather than having to pay to ship the waste off-site. The court holds that releases from 52 solid waste management units at the site pose a potential risk of harm to human health and the environment.

The court holds that the manufacturer failed to substantially complete its preliminary assessment plan for 1,068 days, and that it failed to submit a remedial investigation for 1,448 days. The court holds the manufacturer subject to civil penalties for failure to comply with federal and state closure regulations for 2,088 days, failure to comply with groundwater monitoring requirements for 2,062 days, and failure to comply with financial assurance and liability insurance requirements for 2,231 days. The court further holds the manufacturer subject to civil penalties for failure to install a run-on control system, runoff management system, or wind dispersal management system for its hazardous waste landfill for 2,240 days; and for failure to submit part B of its RCRA permit application to the state of Indiana for 1,653 days.

In assessing the amount of the penalties, the court holds that the manufacturer's failure to comply with its permits was a serious violation, because EPA's uncertainty whether the releases from the wells were hazardous is attributable to the manufacturer, whose monitoring wells do not comply with RCRA and who filtered the water samples that were tested. The court finds that the manufacturer made no effort to comply with the terms of its permits until EPA brought an action against it, although it provided EPA with the initial set of documents within 11 days after management decided to attempt compliance. The court, therefore, holds that the manufacturer is not entitled to any penalty mitigation for the period before EPA filed its action. The court finds credible testimony by the government's expert that the economic benefit to the manufacturer for failure to comply with corrective action requirements and the closure requirements of the landfill was $1.8 million. The court gives no weight to the manufacturer's claimed corrective action expenditures, because the manufacturer failed to provide any information as to how and when the expenditures were made, and how this amount factors into its economic benefit or loss. Moreover, the cost of compliance with the law is not a proper setoff to apply to penalties for noncompliance. The court finds that the manufacturer is able to pay a substantial penalty, although not the maximum amount, because it made a profit in recent years. The court, therefore, assesses a civil penalty against the manufacturer of $4.2 million for violation of its corrective action permits.

Turning to the penalty for the manufacturer's landfill violations, the court rejects the manufacturer's argument that the penalty should be reduced because EPA failed to prove that the filtercake in the landfill was hazardous. The manufacturer is at fault for not providing EPA with a true picture of the potential hazardous nature of its landfills. The court holds that the penalty should not be mitigated on account of EPA's delay in ruling on the manufacturer's delisting petition, because a large portion of the delay was due to matters outside EPA's control. Further, until EPA ruled on its petition, the manufacturer had a duty to comply with closure, groundwater monitoring, financial assurance, liability insurance, and run-on/runoff control system requirements, and with the requirement that it submit part B of its permit application to the state of Indiana. The court holds that the D.C. Circuit's invalidation of EPA's mixture rule does not excuse the manufacturer's noncompliance before that decision, but may tend to mitigate noncompliance afterwards. The court rejects the manufacturer's argument that the penalty should be mitigated based on allegedly improper contacts between EPA's enforcement staff and the delisting contractor who reviewed the delisting petition. The fact that the delisting office was communicating with EPA and state lawyers does not prove that there was any conspiracy against the manufacturer. The piecemeal evidence presented by the manufacturer does not overcome the presumption of regularity in the delisting process. It is also uncertain whether a commingling defense is proper in a penalty hearing. The court finds credible testimony by the government's expert that the manufacturer's economic benefit for failing to comply with the landfill closure requirements was $1,586,900. The court rejects the argument that the manufacturer sustained a loss because it could have moved the landfill at a cost lower than the cost of closing it. The manufacturer did not have that option because its temporary exclusion had expired. The court, therefore, assesses a civil penalty of $1.8 million for the manufacturer's landfill violations.

[A prior decision in this litigation is published at 24 ELR 20251. Pleadings in related litigation are published at ELR PEND. LIT. 66282.]

Counsel for Plaintiff
Andrew B. Baker Jr., Ass't U.S. Attorney
U.S. Attorney's Office
1001 Main St., Ste. A, Dyer IN 46311
(219) 322-8576

Counsel for Defendant
Bryan G. Tabler, Donald E. Williams
Barnes & Thornburg
1313 Merchants Bank Bldg.
11 S. Meridian St., Indianapolis IN 46204
(317) 638-1313