The KDDK Advantage
- July/August 2009
In
The Environmental Realm,
Sometimes A Contract Is Not A Contract
Agreed Orders outline
the tasks and responsibilities to be undertaken by a company
or person and the Indiana Department of Environmental
Management (IDEM). Agreed Orders typically include the
time frames for completion and the consequences for failure.
Both the company and IDEM sign the Agreed Order to confirm
agreement. Most people might think that sounds like a
contract, but they’d be wrong. So says the Indiana Supreme
Court in Indiana Department of Environmental Management
v. Raybestos Products Co., Ind., No. 49502-0804-CV-183,
12/09/08.
As a little background,
Raybestos was found responsible for the cleanup of historic
PCB contamination in Crawfordsville, Indiana’s Shelly
Ditch. In February, 1997, Raybestos and IDEM entered into
an Agreed Order requiring the company to remove and dispose
of PCBs in the ditch. IDEM later realized they had approved
an Agreed Order lacking a specified cleanup level and
allowing “hot spots” to remain with PCB concentrations
up to 238 parts per million (ppm) – a level exceeding
permissible federal limits of EPA regulations. As a result,
IDEM withdrew its approval of the Agreed Order with Raybestos
and, ultimately, convinced the EPA to issue a unilateral
agreed order requiring the ditch to be cleaned to a level
no greater than 10 ppm PCBs. Raybestos ultimately sued
to challenge IDEM’s withdrawal of the Agreed Order approval
and to recover from IDEM the additional several million
dollars required to meet EPA’s more stringent cleanup
levels.
In December, 2008 though,
the Indiana Supreme Court determined that Raybestos was
wrong to challenge IDEM’s disapproval in court. Finding
the Agreed Order to be an agency action, Raybestos could
only challenge IDEM's action outside of court according
to the Indiana Administrative Orders and Procedures Act
(AOPA). The court further determined that IDEM could properly
undo its “action” by disapproving the Agreed Order. Neither
was any wrong doing found in IDEM’s communications with
EPA.
This case illustrates
the critical importance for a company to closely teamwork
with its environmental consultant and legal counsel in
cleanups and negotiation of the accompanying Agreed Order
or similar agreements. With such a teamed approach, more
definitive and mutually acceptable cleanup tasks and objectives
can often result. As important, certain critical revisions
can be negotiated to the Agreed Order form. Through these
negotiations, the company can come away with a clear agreement
of responsibilities, better preservation of its rights
in any future challenge and avoid a stigma being applied
in subsequent environmental matters.
While many people are understandably
reluctant to voluntarily solicit involvement by higher
agencies, such “over-filing” can help verify that agreed
cleanup objectives are final. Notifying and working with
both federal and state agencies also assures the project
will not become a moving target resulting in mammoth unforeseen
costs and lengthy legal battles as befell Raybestos.
Kahn, Dees, Donovan
& Kahn, LLP regularly engages in environmental due
diligence efforts as part of business and real estate
transactions on behalf of individuals, banking, commercial
and manufacturing entities. As part of these efforts,
KDDK helps in the recovery of defense and indemnity costs
for environmental site investigations, enforcement actions
and clean-ups from historical CGL policies and prior titleholders.
For more information regarding our environmental law practice
or for assistance with an environmental matter, please
call one of our environmental law attorneys: G.
Michael Schopmeyer, Jeffrey
W. Ahlers, Kent
A. Brasseale II, Monica
E. Edwards and Michael
E. DiRienzo.
Dreaded
Lessons?>
“Beware of Your Waste Stream,”
says U.S. Supreme Court>>
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