Systech Environmental Corporation v. United States Environmental Protection Agency, National Cement Company of California, Inc. v. United States Environmental Protection Agency
Docket: 94-70419
Court: Court of Appeals for the Ninth Circuit; May 31, 1995; Federal Appellate Court
The case involves petitions for review by Systech Environmental Corporation and National Cement Company of California against a decision by the Environmental Protection Agency (EPA) denying National's application for a Resource Conservation and Recovery Act (RCRA) permit to incinerate hazardous waste. The EPA's denial was based on the absence of a certification from the landowner, Tejon Ranchcorp, asserting that the permit application was processed under their direction as mandated by 40 C.F.R. § 270.11. The Ninth Circuit Court found the EPA's interpretation of this requirement to be arbitrary and irrational, determining that the representations made by Tejon were sufficient to meet the certification requirement. Consequently, the court vacated the EPA's denial and ordered the agency to process National's application based on its merits.
Background details include that Tejon Ranchcorp leased land to General Portland Cement, which began incinerating hazardous waste as part of its operations in 1982. Systech was involved in collecting and processing waste for incineration, and National took over these operations in 1987. Following the implementation of federal regulations in 1991, National was required to apply for hazardous waste management permits to continue its operations, which it did in September 1991. The court's ruling emphasizes the sufficiency of Tejon's representations and the need for the EPA to reconsider its decision.
Section 270 of 40 C.F.R. outlines the RCRA permit application process and mandates specific content requirements, including a certification of truthfulness by the applicant as per Section 270.11(d). In August 1992, the EPA notified National that its application was incomplete, asserting that Tejon, the landowner, was also obligated to sign and certify the application. National was granted thirty days to address this deficiency, followed by three extensions totaling fourteen months while attempting to secure Tejon's certification. In October 1993, the EPA issued a Notice of Intent to Deny the application due to the absence of Tejon's required signature and certification. Tejon later indicated it could not certify the application’s accuracy as it lacked the basis to do so. National contested Tejon's status as "owner" under RCRA and argued that requiring Tejon's certification was overly burdensome and inconsistent with RCRA's objectives. National proposed an alternative certification from Tejon, which acknowledged Tejon's liability but failed to conform to Section 270.11's language. The EPA rejected this substitute certification, deeming the application incomplete by March 31, 1994. National petitioned the Environmental Appeals Board, which upheld the EPA's decision. On July 28, 1994, the EPA formally denied National's permit application. National's subsequent requests to withdraw the final decision, accompanied by a new certification from Tejon, were denied due to administrative finality and deficiencies in the certification. National subsequently challenges the legality of the EPA's decisions regarding Tejon's status as an "owner" and the necessity for exact compliance with certification language.
Under the Administrative Procedure Act, the EPA's actions must be upheld unless deemed arbitrary, capricious, or not in accordance with the law. The EPA asserts that Tejon, despite not owning the structures for hazardous waste treatment, qualifies as an "owner" under RCRA due to ownership of the contiguous land used for such purposes. This interpretation aligns with the EPA's regulatory history, which identifies absentee landlords as owners responsible for compliance with hazardous waste regulations. Consequently, Tejon must co-sign the permit application, as per 40 C.F.R. Sec. 270.10, which requires both owners and operators to obtain permits. The EPA's interpretation emphasizes shared responsibility for compliance between owners and operators, supported by the plain language of the regulations and legislative history, making its classification of Tejon as an owner rational and consistent with statutory objectives.
Tejon is subject to the certification requirements of 40 C.F.R. Sec. 270.11(d), which mandates that all signatories of RCRA permit applications certify that the document has been prepared under their direction or supervision, ensuring the information is true, accurate, and complete. The regulation presents challenges for absentee landowners like Tejon, as they may be required to certify involvement in the application process without direct supervision. The EPA emphasizes the importance of the owner's awareness of hazardous waste activities on their property and their joint responsibility for compliance. However, Tejon argues that it cannot truthfully certify supervision of the application process as required by the EPA, contending that this interpretation is unreasonable and forces false attestation. The document suggests that while the EPA's intent to treat Tejon as an owner is reasonable, the strict application of section 270.11(d) leads to irrational outcomes, including the risk of perjury. A more appropriate certification could acknowledge the owner's awareness of activities and liability without necessitating false claims about direct oversight of the application process. Such an approach would align with the objectives of both the EPA and Congress without imposing unjust burdens on absentee owners.
EPA acknowledged the challenges faced by companies like National and Tejon regarding the certification requirements for absentee owners of hazardous waste facilities. The agency recognized that non-owner operators struggled to obtain necessary signatures and certifications from absentee owners, leading to an impractical situation. Although EPA proposed a less stringent certification process in February 1992, which would have allowed Tejon to acknowledge joint liability without asserting direct involvement in the application’s preparation, this proposal was never implemented. Tejon delayed signing an alternate certification due to ongoing sale negotiations with National, which ultimately failed.
In February 1994, National submitted a certification similar to EPA's 1992 proposal, but EPA rejected it for not adhering strictly to section 270.11(d). The rejection imposed significant burdens on absentee owners without advancing the policy objectives of the regulation. The document concludes that EPA's interpretation of section 270.11(d) is arbitrary and irrational, invalidating the requirement that an absentee landowner must certify personal supervision of the permit application preparation.
Tejon's submission of the alternate certification and engagement of expert consultants demonstrated adequate knowledge of hazardous waste management on their property and acknowledgment of liability under RCRA. Consequently, the court vacated EPA's final decision and ordered the agency to continue processing National's permit application. The arguments regarding National's request to withdraw its final decision were deemed moot. The petition for review was granted, the order vacated, and the case remanded. Tejon eventually signed the permit application; EPA's denial was based solely on the lack of a valid certification from Tejon.
Tejon's certificate is deemed sufficient, but the EPA may still propose a regulation mandating absentee landowners to certify the truth of permit applications based on "information and belief." The EPA acknowledges that certification can be burdensome for owners not involved in operations, particularly in large corporations or government agencies, where it may be impractical for an owner to verify all information personally. Consequently, the EPA is contemplating an alternative certification for situations where the owner and operator differ. The proposed alternate certification states that the signatory understands the application is for a permit and acknowledges joint responsibility for compliance with RCRA regulations by both Tejon Ranchcorp (the landowner) and National Cement Company (the lessee). Despite Tejon Ranchcorp owning the land, the facility is operated by a subtenant under a long-term lease. This proposed language would further ease certification requirements, as it does not necessitate due diligence or even a good faith belief in the application's truthfulness from Tejon.
