Opinion ID: 701769
Heading Depth: 1
Heading Rank: 3

Heading: Liability for Violating Obligation to Demonstrate Financial Responsibility for Third-Party Claims

Text: 29 The district court found that Ekco's obligation to demonstrate financial responsibility for third-party claims arose from two independent sources: the consent order, by which Ekco unambiguously agreed to comply with 40 C.F.R. Sec. 265.147; and Sec. 265.147 itself. Ekco challenges both bases for the district court's holding. Our affirmance on either ground is sufficient to affirm the district court's finding that Ekco was in violation of an obligation, and thus subject to civil penalties. We review the district court's holdings de novo.
30 At first blush, it is difficult to conceive of a basis on which Ekco could dispute its obligation to comply with Sec. 265.147, whatever the scope of its obligations in the consent order. The district court correctly found that Ekco operated the Massillon impoundment as a disposal facility from at least August 1988 to July 1992; that, although Ekco never obtained interim status, it was nonetheless subject to the Part 265 financial requirements; and that Sec. 265.147 requires an owner/operator of a hazardous waste facility to demonstrate financial responsibility for third-party claims throughout the closure process until final closure is certified. Sec. 265.147(e). 2 The conclusion which follows is that Ekco was obligated to comply with Sec. 265.147 until the impoundment's final closure was certified, and violated its obligation. 31 Ekco attempts to side-step the requirements of Sec. 265.147 by relying on the 1984 Hazardous and Solid Waste Amendments to the RCRA, Pub.L. 98-616 (1984). Included in those amendments is the provision codified at 42 U.S.C. Sec. 6925(e), which operated to put an outside limit on interim status. Pursuant to Sec. 6925(e), an existing land disposal facility would lose interim status unless the facility applied for a final determination regarding its permit and certified that it was in compliance with all groundwater monitoring and financial responsibility requirements by November 8, 1985, the loss of interim status (LOIS) deadline. Congress initially provided for interim status to allow hazardous waste facilities to operate, while giving the EPA sufficient time to act on permit applications. As indicated by the LOIS amendment, Congress determined in 1984 that owners/operators should move out of this short-term status and into full RCRA compliance. In 1985, the EPA issued Interim Status Standards for implementation of the 1984 amendments. 50 Fed.Reg. 38946 (1985). These standards made clear that the consequence of loss of interim status was closure of the facility in question. 32 Ekco contends that early cases construing the LOIS amendment had the effect of excusing facilities from compliance with the financial responsibility requirements if they shut down by that date. Ekco states that it had ceased operating the surface impoundment in 1984, when it stopped discharging waste into it, 3 and therefore was excused from compliance. We disagree. 33 The cases relied upon by Ekco are those in which owners/operators contended that they could not certify compliance with the financial responsibility requirements prior to the LOIS deadline because it was impossible to obtain insurance coverage which would enable them to do so. These cases suggest that an owner/operator would not be required to certify compliance with the financial responsibility requirements if it simply ceased operations prior to the LOIS deadline. See United States v. Clow Water Sys., 701 F.Supp. 1345, 1348 (S.D.Ohio 1988); United States v. Allegan Metal Finishing Co., 696 F.Supp. 275, 285 (W.D.Mich.1988); United States v. T & S Brass and Bronze Works, Inc., 681 F.Supp. 314, 319-20 (D.S.C.), aff'd in part and vacated in part on other grounds, 865 F.2d 1261 (4th Cir.1988) (Table). None of these cases, however, directly confronts the issue posed here, whether an owner/operator must nonetheless satisfy the financial responsibility requirements imposed by subpart H of Part 265 until final closure of the facility in question is certified. Moreover, the approach suggested in these cases is wholly unsatisfactory, as it would operate to reward those owners/operators which flouted the interim status and LOIS requirements by exempting them from complying with the financial responsibility requirements until final closure of their facilities, while leaving the balance of the regulated community subject to those requirements. 34 We decline to transform a statutory penalty--the loss of interim status--into an absolution from otherwise applicable regulatory obligations. Construing Sec. 6925(e) in this manner would defeat its obvious goal of bringing facilities into full compliance with the RCRA. See In re Gordon Redd Lumber Co., RCRA Appeal No. 91-4, 1994 RCRA LEXIS 29 at  55 (June 9, 1994) (rejecting argument that respondent was not required to comply with Sec. 265.147 because it had chosen to cease operations). We therefore conclude that Ekco's obligation to comply with Sec. 265.147 was not affected by the 1984 LOIS amendment, and affirm the district court's holding that Ekco violated Sec. 265.147 and was subject to civil penalties as a result.
35 The consent order required Ekco to [c]omply with the financial responsibility requirements for closure until closure has been certified, pursuant to 40 C.F.R. 265.140 through 265.151[.] Ekco claims that the emphasized words required it only to establish financial assurances for closure and post-closure care pursuant to Sec. 265.143 and Sec. 265.145, respectively, and that the decree did not include the obligation to demonstrate financial responsibility for third-party claims as set forth in Sec. 265.147. The question thus presented is whether Sec. 265.147 imposes a financial responsibility requirement for closure in the context of the consent order at issue. We conclude that it does. 36 As an initial matter, there is no question but that Sec. 265.147 is a financial responsibility requirement. Congress directed the EPA to promulgate regulations setting forth performance standards necessary to protect human health and the environment, including standards relating to financial responsibility. 42 U.S.C. Sec. 6924(a)(6). See also Sec. 6924(t) (itemizing types of financial responsibility requirements permissible). Section 265.147 is one of the financial requirements enumerated in subpart H of Title 40, Part 265. The Federal Register notices pertaining to Part 265's requirements refer to Sec. 265.147 as a financial responsibility requirement. See 52 Fed.Reg. 44,314 (1987); 51 Fed.Reg. 25,350 (1986). The obligation set forth in Sec. 265.147 is, by its own terminology, a financial responsibility requirement, and Sec. 265.147 expressly is included by the consent order's reference to those regulations found at 40 C.F.R. Secs. 265.140 through 265.151. (Emphasis added.) 37 To accept Ekco's argument, it would be necessary to hold that the words for closure negate the otherwise plain meaning of the language at issue, and limit Ekco's duties to establishing financial assurance for closure and postclosure care pursuant to Secs. 265.143 and 265.145. This construction is untenable. The consent order does not refer to the financial assurances requirements, but to the broader category of financial responsibility requirements, of which Sec. 265.147 clearly is one. The parties entered into the consent order contemplating that the surface impoundment would be closed, and agreed that Ekco would comply with the financial responsibility requirements when it submitted its closure plan. By its reference to for closure, the consent order merely incorporates the course of action planned by the parties, and agreed upon in the very same instrument. In sum, we are presented with no basis 4 on which to disturb the district court's construction of the terms of the consent order. Pursuant to the unambiguous language of that order, Ekco was obligated to comply with Sec. 265.147. 38