Recent Court Case Limits Ohio EPA Enforcement Authority and Ability to Recover Costs

A recent court case calls into question Ohio EPA's legal authority to recover certain costs related to investigation and clean up of contaminated sites.  The case also raises questions about Ohio EPA's long standing practice to negotiate administrative settlements of enforcement actions.

On January 18, 2012, the First District Court of Appeals in Hamilton County issued a decision in DeWine v. Mass Realty.  Due to the serious implications that may stem from this decision, it is certain the State will seek a appeal to the Ohio Supreme Court.

Recovery of "Response Costs"

Ohio EPA has long pursued recovery of costs it incurs in investigating, cleaning up and taking enforcement actions at sites that have soil and groundwater contamination.  Ohio EPA tracks the time its personnel work on these properties and routinely recovers such costs through enforcement actions against the owners or operators of those sites.  Ohio EPA relies on R.C. 3734.20 as the basis of its authority to recover such costs.

The Court in Mass Realty said that Ohio EPA had over reached its statutory authority under R.C. 3734.20 in terms of the types of costs it could recover.  The Court said Ohio EPA's authority is limited to costs the Agency's incurs directly related to "investigation" or "corrective measure."  The Court said that staff time and travel costs were simply "normal office overhead items" for which Ohio EPA does not have the legal authority to recover.

The Court's view of costs recoverable under R.C. 3734.20 is more limited than U.S. EPA's ability to recover response costs under CERCLA (Superfund). 

Enforcement Authority

For decades, Ohio EPA has negotiated resolution of enforcement actions with companies using administrative order settlements.  These orders are referred to as Consensual Director's Findings & Orders ("Consensual F&Os").

Use of agreed settlements is important to Ohio EPA because it lacks the authority to unilaterally impose civil penalties. By negotiating resolutions of enforcement actions, Ohio EPA could impose penalties without having to refer those cases to the Ohio Attorney General's Office.

In virtually all Consensual F&Os issued over the last decade, Ohio EPA routinely cited to R.C. 3745.01 as its legal authority for such actions.  Ohio EPA has argued this statutory provision provides the Agency the ability to enter contracts.  Ohio EPA says Consensual F&Os are contracts- a voluntary agreement to resolve violations between the Agency and companies or individuals.

The Court rejected Ohio EPA's claim.  It said that R.C. 3745.01 did not provide the legal authority for such Orders.  The Court said Consensual F&Os goes beyond the type of contracting authority granted the Agency by the Ohio Legislature.

Potential Impact of the Ruling on Ohio EPA's Enforcement Process

Ohio EPA stopped issuing enforcement reports in 2006.  However, reviewing the charts from the last available report, highlights the significant issue that the Agency faces should Ohio EPA be found to lack the authority to impose penalties through Consensual F&Os.

 If Ohio EPA is forced to refer every case to the Attorney General's Office that it wishes to impose a civil penalty could mean a 400% increase in the number of cases referred.

 

 

 

 

 

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