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Systech Environmental Corp. v. EPA

 

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General Portland Cement, Inc. leased land from Tejon Ranchcorp to conduct a cement-making business. In 1982, Portland Cement began burning certain types of industrial wastes in its kiln. Systech Environmental Corporation collected waste from outside generators for Portland Cement to use in this process. Portland Cement was purchased by National Cement Company of California in 1987 and National assumed Portland Cement’s long-term lease.

The Boiler and Industrial Furnace Rule,[1] promulgated by the Environmental Protection Agency (EPA) took effect in 1991. Because of National’s program of burning industrial waste, it came under the requirement to obtain a hazardous waste management permit under the Resource Conservation and Recovery Act (RCRA).[2] National prepared and submitted an application for the permit and was allowed to continue the program on an interim basis until EPA reached a final decision on the permit.

Under 40 C.F.R. § 270.11(d), the applicant is required to certify that the application was prepared under the applicant’s supervision or direction and that the information contained in the application is true. The applicant must use the precise language in the regulation. National submitted its application with the proper language. However, EPA also required Tejon to sign and certify the application because EPA considered Tejon to be the owner of the land. EPA gave National thirty days to receive Tejon’s certification, eventually granting National three extensions. National was not successful in obtaining Tejon’s certification. A Notice of Intent to Deny National’s application was issued in October 1993. Both Tejon and National submitted comments.

National then submitted an alternative certification from Tejon. The certification did not use the language in section 270.11(d) and did not certify as to the truth of the information in the application. However, Tejon used language originally proposed by EPA and acknowledged their liability as a land owner under RCRA. EPA found National’s application incomplete on March 31, 1994, even though Tejon had signed the application and submitted the alternative certification. National appealed to the Environmental Appeals Board and the Board found EPA had not clearly erred in finding the application incomplete. EPA’s final decision denying the permit was issued on July 28, 1994. The Appeals Board denied National’s Motion for Reconsideration. National then sent a letter to EPA with a new certification from Tejon which tracked the language in section 270.11(d), but also contained a disclaimer. EPA found the disclaimer would have circumvented the intent of section 270.11(d). After this final denial, National filed suit.

National argued that Tejon was not an owner under RCRA and should not be required to sign or certify the permit application. However, the EPA regulation defining “owner” covers both the owner of the facility and the owner of the contiguous land on which the facility is located. In addition, the Federal Register contains language that makes clear that EPA intended to cover absentee landowners. The court found that Tejon is an owner under EPA regulations.

Tejon, as an owner, is required to submit an application pursuant to RCRA and EPA regulations implementing the permit program. RCRA requires owners and operators of hazardous waste management facilities to obtain permits. According to the regulations issued by EPA, any person required to have a permit must submit an application. The application must include the certification. Thus, Tejon was required to submit an application and certification. The court found that EPA’s interpretation of these regulations was reasonable. Therefore, when EPA required Tejon to submit an application and obtain a permit, its action was not arbitrary and capricious.

National also argued that even if Tejon was an owner, EPA erred when it required Tejon to track the exact language in section 270.11(d). In deciding this issue, the court looked at the intent of EPA when it adopted this regulation. EPA wanted to effectuate the intent of Congress in requiring the operator of the hazardous waste facility to notify the owner regarding the nature and extent of the operator’s activity. EPA also wanted to provide notice to the owner that EPA considered the owner jointly and severally responsible for compliance at the facility. The court found these objectives were legitimate but that requiring an absentee landowner to use the exact language of the section did not serve these objectives. In addition, the court found that requiring Tejon to use the certification in section 270.11(d) would have required Tejon to submit a false statement. The court noted that EPA was aware of the problems faced by absentee landlords because of the certification language. In fact, EPA had proposed an alternative regulation that could be used when the owner of the facility was not the operator. This regulation was never finalized.

The court held invalid EPA’s decision to require that the owner of a facility who was not also the operator of the facility submit a certification stating the application was prepared under the owner’s direction and supervision. Instead, the court held that Tejon had satisfied the requirements of section 270.11(d) through its alternate certification and its hiring of experts to evaluate National’s permit application. Tejon had demonstrated they understood their liability and the nature and extent of National’s activity at the facility. The court remanded the case and required that National’s application be evaluated on its merits.


[1]40 C.F.R. §§ 266.110, 266.112 (1995).

[2]42 U.S.C. § 6925(a) (1994).

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