On September 16, 1999, the Eighth Circuit handed the Environmental Protection Agency ("EPA") another defeat designed to protect federalist values. (See also the article in this issue on the D.C. Circuit's nondelegation doctrine.) Harmon disapproved the EPA's use of a doctrine called "overfiling," which is designed to allow EPA to enforce certain environmental laws (here the Resource Conservation and Recovery Act ("RCRA")) in a fashion in addition to and/or contrary to the way in which a state has chosen to enforce those very same laws. In such RCRA cases, and perhaps wherever Congress has created a system of cooperative federalism in which the states and EPA share enforcement authority, the Eighth Circuit has now held that when the state has chosen to act to enforce federal law, EPA may not second guess the state's judgment and "overfile" its own enforcement action.
The facts of the case are simple. Harmon Industries owned a plant in Missouri that it used to assemble circuit boards. In 1987, a Harmon official discovered that workers had been routinely discarding solvents such as trichloroethylene ("TCE") behind the plant since 1973. Once Harmon management was informed of this practice, it ordered it brought to a halt. Harmon then voluntarily contacted the Missouri Department of Environmental Resources ("MDNR"). MDNR investigated and determined that no significant threat to human health or the environment were posed by the disposal practice. (See the discussion of the risks of TCE in the book review in this issue.) Nevertheless, MDNR and Harmon cooperatively devised a plan to clean up the site. Before this plan was confirmed in a consent decree, EPA brought an administrative action under RCRA against Harmon. Later a state judge in Missouri entered the consent decree, which did not impose any monetary penalties -- in recognition of Harmon's decision to report its unlawful disposal practice voluntarily to MDNR. EPA, however, went on to impose an administrative penalty against Harmon of $586,716. An appeals board at EPA affirmed this result, and Harmon challenged the agency's final action in district court, where Harmon prevailed.
In affirming, the Eighth Circuit emphasized that RCRA expressly provided that once EPA had granted authorization to administer and enforce a hazardous waste program under that statute, the state program was to operate "in lieu of" the federal program.(2) Moreover, once EPA had granted such authorization, it was not to be rescinded unless EPA was able to make one of three findings: 1) the state program is not the equivalent to the federal program; 2) the state program is not consistent with federal or state programs in other states; or 3) the state program is failing to provide adequate enforcement of compliance in accord with the requirements of federal law.3 Here, MDNR was operating an authorized RCRA program, and before bringing its own enforcement action EPA had not made any findings rescinding that authorization.
The Eighth Circuit noted that the question of whether the overfiling of enforcement actions in such circumstances was permissible was a question of first impression. EPA argued that the proper resolution of this question of first impression was to construe RCRA as a whole, which appeared to contemplate enforcement by EPA in some circumstances in which a state was operating an authorized program. "The EPA contends that the RCRA, taken as a whole, authorizes either the state or the EPA to enforce the state's regulations, which are in compliance with the regulations of the EPA. The only requirement, according to the EPA, is that the EPA notify the state in writing if it intends to initiate an enforcement action against an alleged violator."4 The Eighth Circuit rejected this argument, finding the language "in lieu of" clear enough on its face to prohibit EPA from engaging in overfiling.5 EPA's argument from the notice requirement in the statute was rejected as follows: "Rather than serving as an affirmative grant of federal enforcement power as EPA suggests, we conclude that the notice requirement . . . reinforces the primacy of a state's enforcement rights under RCRA. Taken in the context of the statute as a whole, the notice requirement operates as a means to allow a state the first chance opportunity to initiate the statutorily-permitted enforcement action. If the state fails to initiate any action, then the EPA may institute its own action. Thus, the notice requirement is an indicator of the fact that Congress intended to give those states, that are authorized to act the lead role in enforcement under RCRA."6
The decision is also notable from an administrative law standpoint. While it faithfully applied Chevron, U.S.A., Inc. v. NRDC7 in its most important aspect (by finding that the relevant text of RCRA was unambiguous and therefore that deference to EPA was not possible), the Eighth Circuit implicitly held that it could consult the legislative history of RCRA before considering whether deferring to EPA was appropriate.8 Finding the legislative history to establish the "primacy of states' enforcement rights,"9 the Eighth held in the alternative that it would not have deferred to EPA's interpretation even if the relevant provisions of RCRA were ambiguous.
More generally, the Eighth Circuit invoked notions of federalism and comity to support its decision. "A contrary interpretation would result in two separate enforcement actions . . . . While, generally speaking, two separate sovereigns can institute two separate enforcement actions, those actions can cause vastly different and potentially contradictory results. Such a potential schism runs afoul of the principles of comity and federalism so clearly embodied in the text and history of the RCRA."10 These policy concerns also caused the Eighth Circuit to denounce EPA's interpretation of RCRA as unreasonable. Thus, in a second-level alternative ruling, EPA's interpretation was rejected as violative of Chevron step two.11
Finally, the Eighth Circuit rejected EPA's position based on a third-level alternative ruling -- the Eighth Circuit held that EPA's enforcement action was barred by res judicata. Citing 28 U.S.C. § 1738, which requires the federal courts to give state judgments the same preclusive effect they would be given in state court, the Eighth Circuit easily held that EPA was suing the same person (Harmon) for the same thing (disposing solvents in violation of RCRA) that had caused MDNR to sue. The only tricky part was deciding whether MDNR's and EPA's interests were sufficiently aligned -- i.e., whether MDNR and EPA were in privity with one another for purposes of the action brought by MDNR against EPA.
The Eighth Circuit concluded that privity existed as a matter of law based on the same "in lieu of" language that drove its principal conclusion that EPA's interpretation of RCRA to permit overfiling was erroneous and entitled to no deference. Thus, EPA responded in much the same way as it had on that issue. EPA did interpose an additional argument, however -- it claimed that sovereign immunity prevents res judicata from being imposed against the United States without its consent. Pointing to the sovereign immunity case of Montana v. United States,12 EPA argued that because it did not have "a sufficient laboring oar" in MDNR's litigation against Harmon, it was not subject to res judicata. The Eighth Circuit brushed aside this argument easily: "The `laboring oar' is pulled on much earlier in the process [here]. It occurs at the authorization stage when the EPA grants the state permission to enforce the EPA's interests through the state's own hazardous waste program."13 Thus, EPA's defense of overfiling was rejected on just about every conceivable ground. Indeed, the only argument of Harmon's not accepted by the Eighth Circuit was its claim that EPA's enforcement action was barred by the applicable statute of limitations.
Harmon is a significant decision that one can only hope will make its effects felt in other environmental quarters. The states are the best-positioned to bring enforcement actions tailored to individual circumstances prevailing in that state. It contradicts the intent of cooperative federalism statutes such as RCRA, but also including other environmental statutes such as the Clean Air and Water Acts, if the EPA is allowed to second guess those "on-the-ground" state judgments.
1. --- F.3d ---, 1999 WL 718443 (8th Cir. Sept. 16, 1999).
2. Id. at *2.
3. See id. (citing 42 U.S.C. § 6926(b)).
4. Id. at *3.
5. See also id. at *4-5 (also accepting Harmon's argument that the same result was required by the language in RCRA that mandating that "any action taken" by a state with an authorized program and by EPA were to have the "same force and effect").
6. Id. at *4.
7. 467 U.S. 837 (1984).
8. See Harmon, 1999 WL 718443, at *6.
10. Id. at *.7.
11. See id.
12. 440 U.S. 147 (1979).
13. Id. at *9.