The Tenth Circuit’s Power Engineering Decision: Parting Company with Harmon, Tenth Circuit Upholds EPA “Overfiling” Authority under RCRA

Scott M. DuBoff

The Tenth Circuit’s Sept. 4, 2002 ruling in United States v. Power Engineering Co., et al., 303 F.3d 1232 (10th Cir. 2002), upholds the U.S. Environmental Protection Agency’s so-called “overfiling” authority for enforcement of the Resource Conservation and Recovery Act (RCRA) where a state with delegated authority to administer the RCRA program has already initiated its own enforcement action concerning the same matters. Affirming a Colorado federal district court, the Tenth Circuit’s September 4 ruling directly conflicts with the Eighth Circuit’s Harmon decision, Harmon Industries, Inc. v. Browner, 191 F.3d 894 (8th Cir. 1999).

Power Engineering’s facts are straight forward. The state agency involved, the Colorado Department of Public Health and Environment (CDPHE), has EPA-delegated authority to administer RCRA’s hazardous waste management (Subtitle C) program in the state (RCRA provides that such management responsibility for solid and hazardous waste is “primarily the function of State, regional, and local agencies” and places “high priority” on “full authorization of State programs”). See 42 U.S.C. §§ 6901(a)(4) and 6902(a)(7). Following an investigation, CDPHE concluded that Power Engineering had violated various hazardous waste management standards at its Denver electroplating facility. As a result, CDPHE initiated a state court civil action against Power Engineering seeking various forms of injunctive relief to remedy those violations as well as assessment of a $1.13 million civil penalty. The CDPHE had also exercised its discretion not to require another remedial measure – financial assurance (i.e., contingent funding) for possible future cleanup work. See 6 Colo. Code Regs. 1007-3 Section 266. After the CDPHE had filed its state court action against Power Engineering, EPA filed an identical suit in federal court (as initially filed EPA’s suit differed only in the penalty demand – $1.88 million rather than CDPHE’s $1.13 million). EPA subsequently amended its complaint, adding a claim for the financial assurance mechanism that CDPHE had not sought and withdrawing all other claims against Power Engineering.

The two principal statutes at issue in Power Engineering are RCRA Sections 3006(b) and (d), 42 U.S.C. §§ 6926(b) and (d). They provide, respectively, that (i) a RCRA-delegated state “is authorized to carry out [its RCRA] program in lieu of the Federal program . . . in such State and to issue and enforce [hazardous waste] permits” and (ii) “[a]ny action taken by a State under [that] program . . . shall have the same force and effect as action taken by” EPA. The other RCRA provision pertinent to the case was 42 U.S.C. § 6928(a)(2), which authorizes federal enforcement in specific cases following notice to the affected state. The Tenth Circuit preceded its discussion of these statutes by noting their interrelationship to each other and ambiguity; given that ambiguity, the court said it would defer to EPA’s “reasonable” interpretation. [Although a complete discussion would go beyond the scope of this paper, a counterpoint to the suggestion of such deference is the fact that EPA’s position on overfiling was announced in an enforcement guidance memorandum; statutory interpretations contained in such enforcement guidelines are not entitled to Chevron deference. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984); Christensen v. Harris County, 529 U.S. 576, 587 (2000). In addition, EPA rulings concerning RCRA overfiling authority have been inconsistent. See e.g., In re BKK Corp., 2 E.A.D. 35, 1985 WL 57139, at *3 (EPA Chief Judicial Officer, May 10, 1985), vacated on other grounds, 2 E.A.D. 93, 1985 WL 57150 (EPA Administrator, Oct. 23, 1985) (“EPA cannot take enforcement action for RCRA violations in the face of reasonable and appropriate enforcement action for the same violations by an authorized state”). Such inconsistency also counsels against special deference. See INS v. Cardoza-Fonseca, 480 U.S. 421, 448 n.30 (1987).]

The Tenth Circuit turned initially to Section 6926(b)’s “in lieu of” proviso and accepted EPA’s argument that the provision applies to a delegated state’s RCRA program other than the state’s enforcement of its program. The court’s rationale: the “in lieu of” proviso appears in Section 6926(b)’s state program clause and does not modify the next clause which refers to state enforcement. 303 F.3d at 1237-39. Although not addressed by the Tenth Circuit, various RCRA provisions clearly state that enforcement is an integral component of the “program” to which Section 6926(b) refers. For example, Section 3006(b)’s introductory clause provides that a state may “seek[] to administer and enforce a hazardous waste program” (emphasis added). The statute further explains that enforcement is an integral component of the state “program,” and that “such program [must] provide adequate enforcement of compliance.” See also Harmon, 191 F.3d at 900 (“Issuance [of permits] and enforcement are two of the functions authorized as part of the state’s hazardous waste enforcement program under the RCRA”).

The court then turned to Section 6926(d) which, as noted above, provides that any action taken by a state under its delegated RCRA program has the “same force and effect” as federal action in a non-delegated state. Although the Eighth Circuit concluded in Harmon that Section 6926(d) applies to enforcement as well as permit issuance, the Tenth Circuit disagreed. It reasoned that section 6926(d) “must be read in the context of the language and design of the statute as a whole” in which Section 6926 focuses on authorization of state programs and federal enforcement is addressed in Section 6928. See 303 F.3d at 1239 (it should be noted that in an earlier case the Tenth Circuit interpreted section 6926(d) quite differently, suggesting that because EPA had authorized Colorado to enforce its hazardous waste program in lieu of EPA enforcement of RCRA, “[a]ny action taken by [Colorado] . . . [has] the same force and effect as action taken by the [EPA]”). See United States v. State of Colorado, 990 F.2d 1565, 1576 (10th Cir. 1993).

While EPA has defended its overfiling policy on the basis, among others, that overfiling is infrequent, see Brief of United States, United States v. Power Engineering Co., United States Court of Appeals for the Tenth Circuit, Case No. 01-1217, at 36, limiting the use of a counterproductive regulatory policy does not neutralize its adverse impact. In that regard, earlier EPA decisions recognized RCRA’s emphasis on federalism, noting that “Congress envisioned that those closest to the problem should have the right to weig[h] [their] options and choose that course of action most likely to result in the desired goal.” In re Martin Electronics, Inc., No. RCRA 84-45-R, 1986 RCRA LEXIS 35, at *10 (EPA Jan. 14, 1986) (decision on motion to reconsider), vacated on other grounds, 1987 EPA App. LEXIS 6 (June 22, 1987). Put another way, the enforcement strategy adopted by one segment of government will not always be identical to that which another may choose. That does not mean that one is right and the other is wrong; it merely says that there is usually more than one viable approach to solving a problem.

Id. Simply put, it is inevitable that different regulators will at times perceive the appropriate enforcement strategy for a given case in different ways. The discretion to make such choices is a necessary aspect of authorized-state RCRA programs.

Although Power Engineering did not request rehearing concerning the Tenth Circuit’s September 4 ruling, the RCRA overfiling issue presented in the Harmon and Power Engineering cases remains controversial, and recent reports indicate that a petition for a writ of certiorari requesting Supreme Court review of the Tenth Circuit’s decision is in preparation. On the other hand, given the very limited number of new cases the Supreme Court agrees to hear on a year-to-year basis, it would be naive to expect near term resolution by the Court of the Eighth and Tenth Circuits’ conflicting views regarding RCRA overfiling. Nevertheless, it will be quite beneficial to monitor future developments concerning this important issue.

Scott M. DuBoff (DuBoff@wrightlaw.com) is a member of Wright & Talisman, P.C. in Washington, D.C. where he specializes on environmental matters.