Oil Re-Refining Co. v. Environmental Quality CommissionOil Re-Refining Co. v. Environmental Quality Commission
Case Information
*1 No. 6 February 9, 2017 IN THE SUPREME COURT OF THE STATE OF OREGON OIL RE-REFINING COMPANY, Petitioner on Review, v.
ENVIRONMENTAL QUALITY COMMISSION, Department of Environmental Quality for the State of Oregon, Respondent on Review.
(OAH 1001690, CA A149365, SC S063590) On judicial review from the Court of Appeals* Argued and submitted May 9, 2016.
Aaron J. Bell, Bell Law Firm, P.C., Wilsonville, argued the cause and filed the briefs for the petitioner on review.
Dustin Buehler, Assistant Attorney General, Salem, argued the cause and filed the brief for the respondent on review. Also on the briefs were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.
Before Balmer, Chief Justice, and Kistler, Walters, Landau, Baldwin, and Brewer, Justices, and Ortega, Judge of the Court of Appeals, Justice pro tempore.**
BALMER, C. J.
The decision of the Court of Appeals and the final order of the Environmental Quality Commission are affirmed. ______________ ** Judicial review of final order of the Environmental Quality Commission.
This case requires us to determine the standard of liability for violations of two provisions of the hazard- ous waste laws: 40 CFR section 263.20(a)(1), as adopted by OAR 340-100-0002(1), which prohibits a transporter from accepting hazardous waste without a proper manifest form, and ORS 466.095(1)(c), which prohibits operating a haz- ardous waste treatment site without a proper permit. The Department of Environmental Quality (the department) assessed civil penalties against petitioner, Oil Re-Refining Company (ORRCO), after it determined that ORRCO had accepted hazardous waste without a proper manifest form and treated hazardous waste without a proper permit. ORRCO conceded the factual basis for those allegations but asserted a reasonable-reliance defense—namely, that it rea- sonably relied on assurances by the generator of the waste that the material ORRCO transported and treated was not a hazardous waste, and, therefore, did not require the manifest and permit at issue. The Environmental Quality Commission (the commission) refused to consider ORRCO’s defense, because it interpreted the relevant provisions as *3 imposing a strict liability standard. The Court of Appeals agreed with the commission’s interpretations and affirmed its final order finding various violations and imposing civil penalties.
On review before this court, ORRCO argues that
the commission should have considered its reasonable-
reliance defense and that the commission had erred in
interpreting the relevant provisions as imposing a standard
of strict liability. We reject ORRCO’s argument because it
ignores statutory and regulatory context indicating that a
transporter’s or operator’s level of culpability is immaterial
the department’s enforcement action in 2009.
Quality Comm. Oil Re-Refining Co. v. Environmental
,
I. BACKGROUND
The parties do not dispute the facts found by the com- mission. In or around January 2004, Absorbent Technologies, Inc. (ATI) wanted to discard waste that resulted from its process for making a starch-based soil amendment. In that process, ATI used methanol to extract water from a starch mixture. That resulted in a water/methanol product, which ATI reused to remove water from subsequent loads of the starch mixture. Each additional use increased the concen- tration of water in the water/methanol product. Eventually, ATI determined that the concentration of water became too high to effectively remove water from loads of the starch mixture. At that point, ATI wanted to discard the resulting water/methanol waste and asked ORRCO to treat it.
ORRCO operated a waste treatment and disposal facility in Portland, subject to a facility management plan approved by the department. Under that plan, ORRCO treated and disposed of certain wastes that fell outside the legal definition of hazardous waste. ORRCO did not have the permit required to operate a facility that treats, stores, or disposes of hazardous waste. ORS 466.095(1) (requir- ing a permit to treat, store, or dispose of hazardous waste).
In general, ORRCO would not accept waste ship- ments to its facility until after it ran a number of tests used to detect potential hazardous wastes, including tests to detect the halogen level, pH level, and ignitability of the material. Although it is unclear whether ORRCO performed those tests in this case, ORRCO determined that it could treat ATI’s water/methanol waste after sending personnel to tour ATI’s facility, receiving an explanation of ATI’s man- ufacturing process, and reviewing paperwork completed by ATI, which described the halogen levels, pH levels, and *4 ignitability of ATI’s shipments.
From January to March 2004, ATI delivered seven shipments of its water/methanol waste to ORRCO’s facil- ity. The accompanying paperwork—in addition to describ- ing the waste as a mixture of water and methanol—showed potentially hazardous halogen levels and ignitability. And the paperwork for one shipment showed a potentially haz- ardous pH level. Further, ATI noted in the paperwork that the water/methanol waste had not been mixed with any other solvents or hazardous wastes, although the paperwork does not state whether the waste itself is a solvent and whether it is hazardous. ORRCO accepted six of the seven deliveries, rejecting only the delivery that showed a high pH level. For each of the six deliveries that it accepted, ORRCO treated the water/methanol waste by burning it for fuel recovery.
After receiving those six deliveries from ATI, ORRCO began picking up the water/methanol waste from ATI’s facility and transporting it back to its own facility for treatment. From July to September 2004, ORRCO trans- ported and treated three shipments of ATI’s water/methanol waste. Although ATI again provided ORRCO with paper- work describing the characteristics of the material being shipped, ATI did not provide ORRCO with the manifest form required to transport hazardous waste. 40 CFR § 263.20(a)(1), as adopted by OAR 340-100-0002(1) (impos- ing the manifest requirement).
In 2005, the United States Environmental Protec- tion Agency (EPA) opened an investigation into ATI. That EPA investigation later led the department to investigate ORRCO. In September 2009, after completing its investi- gation, the department issued a Notice of Civil Penalty Assessment and Order to ORRCO, alleging three violations of the manifest requirement in 40 CFR section 263.20(a)(1), as adopted by OAR 340-100-0002(1), and nine violations of the permit requirement in ORS 466.095(1)(c). ORRCO requested an administrative hearing, which was held in December 2010 before an administrative law judge (ALJ).
At the hearing, ORRCO did not contest the basic facts that it transported and treated the water/methanol waste without a manifest or permit. ORRCO, however, pre- sented numerous legal arguments, including arguing that the water/methanol waste was not a hazardous waste and therefore did not trigger the manifest and permit require- ments. Further, ORRCO claimed that, even if the waste was hazardous and the manifest and permit requirements applied, it did not violate either requirement because it reasonably relied on the information provided by ATI— information that, according to ORRCO, suggested that the water/methanol waste was not hazardous.
The ALJ issued a proposed order, which became the commission’s final order. As an initial matter, the commis- sion determined that the water/methanol waste was a haz- ardous waste, which subjected ORRCO to the manifest and permit requirements. Although the commission concluded that ORRCO relied on information that ATI had provided, the commission never reached the question of whether that reliance was reasonable—that is, whether the infor- mation ATI provided actually suggested that the water/ methanol waste was not hazardous and, if so, whether ORRCO had reason to believe that ATI’s information was incorrect. The commission never reached that question, because it interpreted both the manifest requirement and the permit requirement as imposing strict liability stan- dards, thus making ORRCO’s reliance irrelevant to liability. The commission reached that determination because nei- ther requirement specified a particular mental state. As a result, the commission held ORRCO strictly liable for three violations of the manifest requirement in 40 CFR section 263.20(a)(1), as adopted by OAR 340-100-0002(1), and nine violations of the permit requirement in ORS 466.095(1)(c). For those violations, the commission assessed against ORRCO a civil penalty of $118,800.
ORRCO sought review in the Court of Appeals.
Before that court, ORRCO did not dispute the commission’s
findings of fact nor did it contend that the water/methanol
waste it transported and treated was not a hazardous
waste. Instead, ORRCO argued only that the commission
erred by interpreting the manifest and permit requirements
to impose strict liability. The Court of Appeals affirmed the
commission’s order and its interpretations.
Oil Re-Refining
Co. v. Environmental Quality Comm.
,
ORRCO petitioned this court for review, which we granted. On review, ORRCO reasserts the argument it pre- sented to the Court of Appeals—namely, that the manifest 7 and permit requirements should not impose liability on par- ties who reasonably rely on assurances from the generator that the waste was not hazardous.
II. ANALYSIS
A. Law Governing Hazardous Waste
We begin by placing the manifest and permit require-
ments within the broader legal framework that governs haz-
ardous waste. Hazardous waste is subject to overlapping
state and federal authority. At the federal level, the EPA
*6
has promulgated rules implementing the federal Resource
Conservation and Recovery Act (RCRA), which amended the
Solid Waste Disposal Act, 42 USC sections 6901 to 6992K.
Those rules establish criteria for identifying waste as “haz-
ardous waste.” If waste is hazardous, it is subject to much
stricter requirements than those for nonhazardous waste.
See City of Chicago v. Envtl. Def. Fund
,
At the state level, hazardous waste is governed by state-run hazardous waste programs authorized by the EPA. 42 USC § 6926(b). The EPA has authorized Oregon to administer its own hazardous waste program, which it does through the commission and the department. ORS 466.086. Under Oregon’s program, the department admin- isters, enforces, and implements Oregon’s hazardous waste program, and the commission adopts rules and issues orders relating to the hazardous waste program. ORS 466.015; ORS 466.020.
Federal law requires Oregon’s program to be at least as stringent as the EPA’s RCRA hazardous waste pro- gram. 42 USC §§ 6926(b), 6929; see generally 40 CFR part 271 (imposing standards for state programs). To comply with the commission’s conclusion that ATI’s water/methanol waste was a hazardous waste. Before this court, as before the Court of Appeals, ORRCO does not dispute that requirement, the commission has adopted by reference broad categories of EPA regulations “governing the manage- ment of hazardous waste, including its generation, transpor- tation, treatment, storage, recycling and disposal[.]” OAR 340-100-0002(1). Consequently, the commission and the department generally apply the EPA’s RCRA rules unless Oregon law, by statute or rule, modifies a rule or specifies some more stringent standard. ; see, e.g. , OAR 340-100- 0002(2) (excluding specific EPA rules not at issue in this case). The substance of Oregon’s program, therefore, follows the federal cradle-to-grave standards that apply to gener- ators, transporters, and TSD facilities. ORS 466.068 - 466.225 (statutes governing hazardous waste); see also ORS 466.086(2) (authorizing the commission to adopt, amend, or repeal rules necessary to obtain and implement a state RCRA program).
The manifest and permit requirements at issue in this case are components in the cradle-to-grave approach required by RCRA. That approach begins with regulations requiring waste generators to determine whether the waste is a solid waste subject to RCRA. If it is, then the genera- tor must determine whether the solid waste is a hazardous waste. 40 CFR § 262.11. Some solid wastes are hazardous because they exhibit characteristics defined as hazardous by the EPA. Other solid wastes are hazardous because the *7 EPA has specifically listed them as hazardous, regardless of the characteristics that they exhibit.
If the generator intends to treat, store, or dispose of its hazardous waste on site, then the generator must obtain a permit to operate a TSD facility. See 42 USC § 6925(a) (requiring the EPA to promulgate regulations requiring permits); ORS 466.095(1)(c) (requiring permits for TSD facilities). Obtaining a permit subjects a facility to “the very strict, complex and expensive regulatory requirements of RCRA and parallel state laws.” Michael B. Gerrard ed., 4A-29 Environmental Law Practice Guide § 29.05 (2015). Regulations govern the manner in which TSD facilities engage in specific operations and impose recordkeeping and emergency planning requirements. A generator can 9 avoid those requirements by shipping its hazardous waste to a TSD facility that already has the appropriate permits.
Shipping hazardous waste raises a host of regula- tory requirements intended to track the waste and to pro- tect human health and the environment. Regulations aim to protect human health and the environment by ensuring that the waste is transported safely from the generator to the TSD facility. As a result, if a generator intends to ship hazardous waste to an off-site TSD facility, then the gen- erator is subject to a number of pretransport requirements that address the packaging, labeling, marking, and plac- arding of the waste. 40 CFR §§ 262.30 - 262.33. Further, a transporter must report discharges of hazardous waste that occur during the shipment. 40 CFR § 263.30.
Regulations also require tracking hazardous waste through a manifest system. The generator is responsi- ble for preparing a manifest form by characterizing the waste’s quantity, origin, and composition and identifying the intended route of the waste through registered trans- porters to the TSD facility that will treat, store, or dispose of it. 40 CFR § 262.20(a)(1). The generator provides copies of the manifest to the transporter. The transporter is pro- hibited from accepting hazardous waste without a mani- fest. 40 CFR § 263.20(a)(1). Signed copies of the manifest are created each time hazardous waste is transferred from one handler to another. After accepting hazardous waste, the transporter is generally required to deliver the waste to the next designated transporter or to the TSD facility listed on the manifest. 40 CFR § 263.21(a). TSD facilities receiving shipments of hazardous waste must compare the shipment to the descriptions contained on the manifest and provide proof of receipt to both the transporter and the gen- erator. The manifest system “provides accountability during the United States Department of Transportation (USDOT) in rules governing ence through its RCRA rules. the transportation of hazardous materials, which the EPA later adopted by refer- 40 CFR § 262.30 (adopting USDOT regulations labeling packages); 40 CFR § 262.32 (adopting USDOT regulations related to related to packaging); 40 CFR § 262.31 (adopting USDOT regulations related to *8 discharges). placarding); 40 CFR § 263.30 (adopting USDOT regulations related to reporting marking packages); 40 CFR § 262.33 (adopting USDOT regulations related to Those pretransport and reporting requirements were first established by each step of the movement of hazardous waste.” 45 Fed Reg 12738, 12740 (Feb 26, 1980); see also Gerrard, 4A-29 Environmental Law Practice Guide § 29.03 (“[T]he manifest system is critical to the functioning of the federal hazardous waste regulatory scheme.”).
In this case, the commission concluded that ORRCO violated the manifest requirement imposed on transporters, 40 CFR section 263.20(a)(1), as adopted by OAR 340-100- 0002(1), and the permit requirement imposed on TSD facil- ities, ORS 466.095(1)(c). The commission interpreted both provisions as imposing strict liability standards. ORRCO disagrees with those interpretations. The dispute between the parties thus raises issues of regulatory and statutory construction. ORRCO, however, does not present a separate argument for each provision. Instead, ORRCO directs its argument almost exclusively at the manifest requirement. We therefore begin with the manifest requirement. B. Manifest Requirement
1. Text and interpretative framework Before turning to the parties’ arguments, we first set out the applicable interpretative framework. To the extent that we apply different interpretative frameworks to state regulations and federal regulations, we must determine whether we are interpreting a state or a federal regulation. [4] Although the substance of the manifest requirement is con- tained in a federal regulation promulgated by the EPA, 40 CFR section 263.20(a)(1), the manifest requirement is part of Oregon’s hazardous waste management program because the commission incorporated that requirement through its own regulation, OAR 340-100-0002(1). That regulation adopts by reference
“the rules and regulations governing the management of
hazardous waste, including its * * * transportation, * * *
with Hagan v. Gemstate
ing standards for interpreting state regulations)
Friends of Columbia Gorge
dards for interpreting federal regulations);
see also
, 328 Or 535, 545, 982 P2d 1108 (1999) (describing stan-
Manufacturing, Inc.
own rule).
federal and state standards of deference owed to an agency’s interpretation of its
,
Id.
This court has previously noted that “[t]he legisla-
ture’s incorporation by reference is equivalent to its having
republished the specified federal provisions in the state stat-
utes.”
Okorn v. Dept. of Rev.
,
We therefore apply our framework for interpreting
state regulations. In applying that framework, however,
we encounter another question: whether the commission’s
interpretation of the manifest requirement is entitled to def-
erence. Within our framework for interpreting state regula-
tions, this court ordinarily defers to an agency’s interpreta-
tion of its own regulation if that interpretation is a plausible
one and otherwise consistent with the law.
AT&T Corp. v.
Dept. of Rev.
,
The commission asserts, in a footnote and without
argument, that its interpretation is entitled to deference
because it promulgated the state rule (OAR 340-100-0002(1))
that incorporates the federal rule (40 CFR section 263.20(a)(1))
containing the manifest requirement’s standard of conduct.
This court has not previously addressed the question of
whether we should defer to an agency’s interpretation of a fed-
eral rule that the agency has incorporated into its own rule
by reference.
Brand Energy Services, LLC v. OR-OSHA
,
We can resolve the parties’ dispute in this case,
however, without resolving the question of whether to defer
*10
to the commission’s interpretation of the manifest require-
ment. On the issue disputed in this case—the propriety
of a strict liability standard—we conclude, for the reasons
explained below, that the manifest requirement permits
adopted the federal manifest requirement imposed on transporters. None of the
visions address transportation. Those provisions authorize the commission to
the cited statutes—ORS 465.009, ORS 465.505, or ORS 466.020—only two pro-
statutes cited in OAR 340-100-0002(1) clearly provide such authority. Among
adopt rules “relating to the transportation of hazardous waste by air or water,”
be found in other statutes. For example, ORS 466.086(2) authorizes the commis-
containing or derived from hazardous waste,” ORS 466.020(6). Authority could
ORS 466.020(5), and to adopt rules relating to the “transportation * * * of fuels
RCRA program, although the extent to which the commission could rely on that
statute for any particular rule would require considering the scope of authority
provided by the statute.
sion to adopt rules “necessary” to gain the EPA’s authorization of a state-run
It is not clear what statutory authority the commission relied on when it
[5]
Oregon
ing regulation,” which is a regulation that copies or paraphrases the statutory
Supreme Court denied deference to an agency’s interpretation of its own “parrot-
,
We determine whether an agency regulation is sus-
ceptible to more than one plausible interpretation of the issue
in dispute by applying “the same analytical framework that
applies to the construction of statutes.”
State v. Hogevoll
,
With that framework in mind, we turn to the text of *11 the manifest requirement. That provision states:
“Manifest requirement. A transporter may not accept haz- ardous waste from a generator unless the transporter is also provided with a manifest signed in accordance with the requirement of § 262.23.”
40 CFR § 263.20(a)(1), as adopted OAR 340-100-0002(1).
As noted, the commission concluded that the mani- fest requirement imposed a strict liability standard, because the rule does not specify that a particular mental state is required to establish a violation. ORRCO challenges that interpretation of the manifest requirement and argues that the commission should have considered its defense claim- ing that it reasonably relied on information provided to it by ATI, which, according to ORRCO, suggested that the mani- fest requirement did not apply. In asserting that argument, ORRCO relies on context created by two sources: 40 CFR section 262.11, which requires a waste generator to deter- mine whether waste is hazardous, and statutes and rules enforced by the United States Department of Transportation (USDOT), which expressly allow for a reasonable-reliance defense.
2.
Culpability in state and federal RCRA enforcement
The commission is, of course, correct that the mani-
fest requirement itself does not identify a particular mental
state or level of culpability necessary to establish a violation.
That omission, however, would not necessarily be given deci-
sive weight if a contrary intent were revealed by the rule’s
statutory and regulatory context—namely, the remaining
statutes and rules that comprise the rest of Oregon’s haz-
ardous waste program.
Gafur v. Legacy Good Samaritan
Hospital
,
When we expand the analysis to the rule’s statutory and regulatory context, we discover substantial support for the commission’s strict liability interpretation. In particular, the legislature and the commission established a regulatory scheme that imposes numerous substantive standards— requiring or prohibiting certain specific conduct—and then authorized the department to enforce those substantive standards through different types of offenses. The primary factor distinguishing the offenses is the level of culpability of the party that breached the substantive standard. As a party’s culpability increases, so does the authorized penalty.
In this case, the substantive standard is contained in the manifest requirement, which prohibits transporters from accepting hazardous waste without a manifest. The legislature and the commission have established two civil offenses to enforce that substantive standard: a violation and a more egregious violation, known as an “extreme vio- lation.” Under authority provided by the legislature, ORS 468.130(1), the department may “assess a civil penalty for any violation.” OAR 340-012-0045; see also OAR 340- 012-0068(1)(e) (defining a Class I violation as including “[a]ccepting, transporting or offering for transport hazard- ous waste without a uniform hazardous waste manifest”). Under that provision, which is what the department used to assess a penalty against ORRCO in this case, the depart- ment’s authority to assess a civil penalty for a violation is not subject to a culpability requirement. At the time of enforce- ment, the department was authorized to assess a penalty of up to $10,000. ORS 468.130(1).
However, if the department presents evidence of a party’s culpable mental state, it can establish an extreme violation. ORS 468.996(1). A party commits an extreme violation by “intentionally or recklessly violat[ing]” haz- ardous waste laws that “results in or creates the immi- nent likelihood for an extreme hazard to the public health or which causes extensive damage to the environment.” Id. If the department determines that a party has committed an extreme violation, then it may assess a penalty of up to $100,000. ; OAR 340-012-0155(1) (same).
In addition to those civil offenses, the legislature also has established two criminal offenses related to the manifest requirement and has made a defendant’s culpable mental state an element of those offenses as well. If a party knowingly transports hazardous waste in violation of haz- ardous waste laws, then that party may be guilty of “unlaw- ful transport of hazardous waste in the second degree.” ORS 468.929(1). That offense is a Class B misdemeanor, which would subject the party to a penalty of up to six months in prison, a $10,000 fine, or both. ORS 468.929(2); ORS 161.615(2). And if, while knowingly transporting hazard- ous waste in violation of hazardous waste laws, a party also “recklessly causes substantial harm to human health or the environment” or “[k]nowingly disregards the law in committing the violation,” then that party may be guilty of “unlawful transport of hazardous waste in the first degree.” ORS 468.931(1). That offense is a Class B felony, which sub- jects the party to a penalty of up to 10 years in prison, a $250,000 fine, or both. ORS 161.605(2); ORS 161.625(1)(c).
The fact that lawmakers expressly chose to require *13 evidence of culpable mental states for extreme violations and criminal offenses but not for simple violations strongly sug- gests that lawmakers intended to authorize the department to bring enforcement actions for simple violations without evidence of a culpable mental state. That reading is fur- ther supported by the statutes and regulations identifying the factors that must be considered when assessing a civil penalty.
In ORS 468.130(2)(f), the legislature directed the commission to consider a respondent’s culpability when determining the amount of the fine to impose—specifically, to consider “[w]hether the cause of the violation was an unavoidable accident, negligence or an intentional act.” Within the context of that statute, “unavoidable accident” is best understood as referring to a violation that does not result from a respondent’s negligent or intentional conduct. See, e.g. , Restatement (Second) of Torts § 8 (1965) (“The words ‘unavoidable accident’ are used throughout the Restatement of this Subject to denote the fact that the harm which is so described is not caused by any tortious act of the one whose conduct is in question.”).
The commission has adopted rules carrying out that legislative direction. Subject to exceptions not rele- vant here, those rules require the department to calculate a civil penalty according to a multifactor formula that looks at the class and magnitude of the violation, the economic benefit received by the respondent, and certain mitigating and aggravating factors. OAR 340-012-0045. A respondent’s level of culpability is one of those potentially aggravating factors that may increase a respondent’s penalty. OAR 340- 012-0145(5). With regard to culpability, the greatest increase results from a finding that the respondent acted flagrantly. OAR 340-012-0145(5)(a)(D). Smaller amounts are added if the respondent acted recklessly, negligently, or with con- structive knowledge. OAR 340-012-0145(5)(a)(B) - (C). If the 17 department presents insufficient evidence to establish that the respondent acted with any culpable mental state, then the commission does not increase the respondent’s penalty to account for the respondent’s mental state. OAR 340-012- 0145(5)(a)(A).
Together, the provisions indicate that, as it relates to simple violations, a respondent’s level of culpability is a penalty factor rather than a liability factor. In other words, a respondent’s level of culpability may be used to determine the amount of the fine assessed for a violation, but it is not used to determine whether a respondent has violated a sub- stantive standard in the first place.
That reading is consistent with the analogous fed-
eral RCRA program, which provides the baseline level of
stringency for Oregon’s hazardous waste program. 42 USC
§§ 6926(b), 6929 (requiring state programs to be at least as
stringent as the federal RCRA program). Congress estab-
lished separate offenses for hazardous waste violations based
on a party’s culpable mental state. Under 42 USC section
6928(d)(5), a party who knowingly transports hazardous
*14
waste without a manifest may be subject to criminal penal-
ties.
See also
42 USC § 6928(e) (establishing crime of know-
ing endangerment based on violation of manifest require-
ment). But establishing liability for a civil penalty requires
no such mental state. In 42 USC section 6928(g), Congress
provided, “Any person who violates any requirement of this
subchapter shall be liable to the United States for a civil pen-
alty in an amount not to exceed $25,000 for each such vio-
lation.”
[8]
Because Congress included a “knowing” standard
ment alleged that ORRCO acted intentionally, while ORRCO contended that it
i.e.
acted reasonably— , that the department presented insufficient evidence to
establish that ORRCO acted with any culpable mental state. The commission, how-
the penalty assessed. By statute, the commission was authorized to assess a maxi-
ever, did not resolve that dispute, because its resolution would not have affected
commission determined that the culpability penalty factor was irrelevant.
consider already pushed ORRCO beyond that maximum penalty. As a result, the
mum penalty of $10,000 per violation. The penalty factors that the commission did
Before the commission, the parties disputed this penalty factor. The depart-
[7]
United States v. Liviola
Water Act, 33 USC section 1319(d). (ND Ohio 1985). Courts uniformly interpret that provision as imposing strict
,
And, as within the state scheme, Congress rele-
gated a party’s level of culpability to influencing the civil
penalty amount, rather than determining whether a viola-
tion occurred in the first place. 42 USC § 6928(a) (“In
assessing such a penalty, the Administrator shall take into
account the seriousness of the violation and any good faith
efforts to comply with applicable requirements.”);
U.S. EPA
v. Environmental Waste Control, Inc.
,
Thus, RCRA’s civil enforcement provision, 42 USC
section 6928(g), establishes a strict liability standard for
simple violations. Courts have repeatedly confirmed that
reading.
See, e.g.
,
United States v. JG-24, Inc.
, 331 F Supp
2d 14, 70 (DPR 2004),
aff’d
,
ORRCO does not cite any case law, administrative guidance, or legislative history suggesting that RCRA’s civil enforcement provision, 42 USC section 6928(g), is anything other than a strict liability statute. Instead, ORRCO con- tends that reading that provision as imposing a strict liabil- ity standard would be unfair and ineffective as a deterrent because, according to ORRCO, it may be impossible in many cases for the transporter to know whether the material it is transporting is hazardous waste triggering the manifest requirement.
Contrary to ORRCO’s contention, however, courts have rejected impossibility as a defense to RCRA civil enforcement. See, e.g. , Domestic Indus., Inc. , 32 F Supp 2d at 867 n 8 (“[I]t is not a defense to argue that compliance with the RCRA regulations was impossible.”). Moreover, in our view, such an enforcement scheme is not inherently unfair. If a transporter relies on another’s characterization of the waste, the transporter could seek indemnification to account for the risk that the characterization is wrong. And the EPA maintains discretion not to bring cases if doing so would result in substantial inequities.
Further, it is not unreasonable to think that a strict
liability standard is necessary to carry out the deterrence
intended by Congress.
JG-24, Inc.
,
For example, traffic violations are often strict liabil-
ity offenses.
See State v. Stroup
,
Courts have similarly considered the public welfare
effects of environmental violations when imposing a strict
liability standard under RCRA’s civil enforcement provision.
See, e.g.
,
Domestic Industries, Inc.
,
Thus, the enforcement scheme intended by the leg- islature and the commission, as well as by Congress and the EPA, provides a compelling basis for affirming the com- mission’s strict liability interpretation. ORRCO neverthe- less argues against that reading based on additional con- text provided by 40 CFR section 262.11 and rules adopted by USDOT.
3. 40 CFR section 262.11
First, ORRCO relies on 40 CFR section 262.11, which was promulgated by the EPA as part of its RCRA program and adopted by the commission through OAR 340- 100-0002(1). Under 40 CFR section 262.11, a generator of solid waste must determine whether the waste is hazardous or nonhazardous. (“A person who generates a solid waste, as defined in 40 CFR 261.2, must determine if that waste is a hazardous waste using [a particular] method[.]”). The man- ifest requirement only applies to hazardous waste. Thus, if a transporter reasonably relies on a generator’s determina- tion that the waste is not hazardous, then the transporter would not know that the manifest requirement applies in the first place. According to ORRCO, imposing liability on a transporter in that circumstance would, in effect, require *17 a transporter to make its own independent determination about whether the waste is hazardous waste, even though a transporter is often in a worse position than the generator to make that determination. [10]
Contrary to ORRCO’s characterization, however, the requirement imposed on generators under 40 CFR section 262.11 is distinct from the manifest requirement imposed on transporters under 40 CFR section 263.20(a)(1). The former requires determining whether waste is haz- ardous and the latter prohibits accepting hazardous waste without a manifest. ORRCO improperly conflates those provisions because a generator who fails to properly deter- mine whether waste is hazardous might cause a transporter to accept hazardous waste without a manifest, even if the transporter has taken all reasonable precautions—or even extraordinary precautions—to comply with the law. In that sense, a generator who violates 40 CFR section 262.11 may be the party at fault for a transporter’s separate violation of the manifest requirement in 40 CFR section 263.20(a)(1).
ORRCO’s argument presumes that fault is relevant, but ORRCO fails to explain how 40 CFR section 262.11 makes fault relevant. Fault would be relevant only if the manifest requirement were subject to a liability standard transporters are required to make a determination about whether waste is haz- the EPA’s jurisdiction; (2) when a transporter mixes different wastes, potentially ardous: (1) when a transporter imports waste from a foreign country outside of making waste hazardous that was nonhazardous when the transporter accepted it. 40 CFR § 263.10(c). ORRCO contends that, because this case is not one of determination about whether the waste is hazardous. those circumstances, it should not be required to make that its own independent ORRCO further points out that there are circumstances in which, by law, other than strict liability, such as negligence or intent. A strict liability standard is distinct from other standards specifically because it allows liability to be imposed with- out a finding of fault. See, e.g. , Restatement (Third) of Torts: Phys. & Emot. Harm ch. 4 Scope Note (2010) (“[L]iability for negligence or for intent is liability based on fault. By contrast, strict liability signifies liability without fault, or at least without any proof of fault.”). By premising its argu- ment on fault being a relevant consideration, ORRCO begs the question of whether the manifest requirement is subject to a strict liability standard and, thus, fails to counter the analysis above, which suggests that the manifest require- ment is subject to strict liability.
4. Statutes and rules enforced by the USDOT ORRCO makes a second contextual argument, how- ever. ORRCO argues that, regardless of whether RCRA’s civil enforcement provision establishes a strict liability standard in general, that standard should not be applied to the manifest requirement. ORRCO contends that, because the manifest requirement is an EPA regulation imposed on transporters, it must be reconciled with companion statutes and rules enforced by the USDOT: the Hazardous Material Transportation Act (HMTA), as amended and codified in 49 USC section 5101 et seq. , and the USDOT’s hazardous *18 materials regulations adopted pursuant to that act, 49 CFR parts 100 to 180.
Although the railcar contained residue of poison that had previously been similarly misplaced. There, a transporter consigned a railcar to a third party. 1985), where the court accepted a transporter’s reasonable-reliance defense, is ing injuries from the poison residue remaining in the railcar. The generator then railcar was empty. The third party sued the generator for negligence after suffer- completed based on information provided by the waste generator, stating that the shipped in the car, the transporter provided the third party with paperwork, sued the transporter based on indemnity and contribution—claims that turned on whether the transporter’s conduct was negligent. Id. at 1531. In considering transporter’s reasonable-reliance defense against the allegation that the trans- whether the material being transported was hazardous waste and accepted the lations did not require a transporter to make an independent determination of the generator’s claims against the transporter, the court noted that EPA regu- would be relevant only if the standard of liability in this case were negligence. But Crockett does not speak to porter acted negligently. at 1534. Thus, Crockett the issue before us—namely, determining what standard of liability should apply in the first place—nor does it involve agency enforcement of a waste regulation. , 772 F2d 1524 (11th Cir Crockett v. Uniroyal, Inc. ORRCO’s reliance on ORRCO points out that, although Congress autho- rized the EPA to promulgate rules applied to transporters of hazardous waste, Congress required the EPA to ensure that its rules are “consistent with the requirements” imposed by USDOT, 42 USC section 6923(b). One of the rules adopted by the EPA that must be consistent with USDOT regulations is the EPA’s manifest requirement. 42 USC § 6923(a)(3) (so stating). USDOT promulgated a manifest requirement that is almost identical to the EPA’s manifest requirement:
“No person may offer, transport, transfer, or deliver a haz- ardous waste (waste) unless * * * [a] hazardous waste man- ifest (manifest) is prepared in accordance with 40 CFR 262.20 and is signed, carried, and given as required of that person by this section.”
49 CFR § 172.205(a); see also 49 CFR § 171.3(b)(2) (requir- ing transporters to comply with 49 CFR § 172.205(a)).
Although USDOT has used wording similar to the EPA’s manifest requirement, USDOT has stated that its manifest requirement and other requirements imposed on transporters are not subject to a strict liability standard. In 1998, USDOT issued a formal interpretation of its regula- tions governing transporters who accept hazardous materi- als, including hazardous waste. 63 Fed Reg 30411 (June 4, 1998). In that formal interpretation, USDOT explains that a civil penalty will be assessed only against transporters who knowingly violate those regulations, thus permitting a reasonable-reliance defense:
“[A]n offeror who fails to properly declare (and prepare) a shipment of hazardous materials bears the primary responsibility for a hidden shipment. Whenever hazardous materials have not been shipped in compliance with the HMR, DOT generally will attempt to identify and bring an enforcement proceeding against the person who first caused the transportation of a noncomplying shipment. “* * * * *
“To the extent that any carrier, regardless of the mode of transportation, is truly ‘innocent’ in accepting an unde- clared or hidden shipment of hazardous materials, it lacks the knowledge required for assessment of a civil penalty.” at 30412. ORRCO argues that, to be consistent with USDOT’s manifest requirement, the EPA’s manifest requirement must be read to allow a civil penalty only if the transporter acts knowingly. And, if we must read the EPA’s manifest requirement as imposing a knowledge standard, then we should assume that the commission intended to adopt that knowledge standard when it adopted the EPA’s manifest requirement by reference in OAR 340-100-0002(1).
We reject ORRCO’s argument because it ignores the source of USDOT’s knowledge standard—namely, USDOT’s civil enforcement statute, 49 USC section 5123(a). Under that provision, USDOT can assess a civil penalty only against “[a] person that knowingly violates” the USDOT’s hazard- ous materials rules. (Emphasis added.) Thus, USDOT does not assess liability on transporters who unknowingly accept hazardous waste without a manifest because USDOT has no authority to do so. The USDOT formal interpretation that ORRCO relies on, 63 Fed Reg at 30412, is not a for- mal interpretation of the manifest requirement or any other substantive regulation imposed on transporters. Instead, it is an application of USDOT’s civil enforcement provision. id. (noting that USDOT has “the authority in 49 U.S.C. 5123 to assess a civil penalty against any person who ‘know- ingly violates’ any requirement in the [hazardous materials rules]”). As a result, that formal interpretation merely rec- ognizes a limit that Congress placed on USDOT’s authority to assess civil penalties. But Congress placed no such limit on the authority that it granted the EPA to enforce RCRA.
The manifest requirements imposed by the com- mission, the EPA, and the USDOT are consistent. They each prohibit a transporter from transporting hazardous waste without a manifest. 49 CFR § 172.205(a); 40 CFR § 263.20(a)(1), as adopted by OAR 340-100-0002(1). A trans- porter who transports hazardous waste without a manifest violates each of those provisions. The difference is that the commission and the EPA have the authority to assess a pen- alty for such a violation, but USDOT has the authority to assess such a penalty only if the violation was knowing. [12] in 40 CFR section 263.20(a)(1), as adopted by OAR 340-100-0002(1), is consistent Because we hold that the EPA’s and the commission’s manifest requirement *20 That difference does not make the subject provisions incom- patible or contradictory.
ORRCO additionally relies on a 2005 rule amend- ment by USDOT expressly acknowledging that transporters may reasonably rely on information provided by generators. See 70 Fed Reg 43638, 43644 (July 28, 2005) (amending 49 CFR § 171.2(f)); 49 CFR § 171.2(f) (“Each carrier who trans- ports a hazardous material in commerce may rely on infor- mation provided by the offeror of the hazardous material or a prior carrier, unless the carrier knows or, a reasonable person, acting in the circumstances and exercising reason- able care, would have knowledge that the information pro- vided by the offeror or prior carrier is incorrect.”).
That amendment, however, does not change our analysis. The amendment applies to all USDOT rules and is not specific to the manifest requirement. At the time of its adoption, USDOT stated that the amendment merely reflected the limits imposed on its statutory enforcement authority by the knowledge standard described above. 70 Fed Reg at 43639 (“[T]he language proposed in § 171.2 should reflect the standard for ‘knowingly’ established in Federal hazmat law. Therefore, in this final rule, we are revising paragraphs (b) and (f) of § 171.2 (proposed as para- graphs (a) and (b) of § 171.2 in the NPRM) for consistency with Federal hazmat law.”). USDOT viewed the amendment as a clarification of existing law, rather than a change in its substantive law. at 43639 (“[T]he [notice of proposed rulemaking] proposed to clarify in § 171.2 that an offeror or carrier of a hazardous material may rely on information provided by a previous offeror or carrier in the absence of knowledge that the information is incorrect.”). And ORRCO has not identified any source indicating that the EPA has regarded the amendment as one that requires a change to the EPA’s own regulations.
with the USDOT’s manifest requirement in 49 CFR section 172.205(a), we need
not assess the legislative and administrative history that ORRCO cites, which
includes that the EPA’s regulations must be consistent with USDOT’s regula-
tions. We also need not assess ORRCO’s reliance on
New York v. United States
Department of Transportation
,
B. Permit Requirement
As noted above, the commission found ORRCO strictly liable both for violations of the manifest requirement in 40 CFR section 263.20(a)(1), as adopted by OAR 340-100- 0002(1), and for violations of the permit requirement in ORS 466.095(1)(c). ORRCO substantially ignores the per- mit requirement, ORS 466.095(1)(c), in its briefing, relying entirely on the arguments it made with respect to the man- *21 ifest requirement. Those arguments fail here as well.
In contrast to the manifest requirement, which appears in a regulation, the permit requirement is con- tained in a state statute, ORS 466.095(1)(c):
“[N]o person shall * * * [e]stablish, construct or operate a hazardous waste treatment site in this state without obtaining a hazardous waste treatment site permit issued pursuant to ORS 466.005 to 466.385 and 466.992.” Id.
We generally interpret statutes by “examin[ing]
the statutory text in context, along with its legislative his-
tory, applying as needed relevant rules and canons of con-
struction.”
Lake Oswego Preservation Society v. City of Lake
Oswego
,
The permit requirement is subject to the same reg- ulatory framework that applies to the manifest require- ment identified above. The department enforced the permit requirement by assessing a penalty against ORRCO under its legislatively delegated authority to “assess a civil penalty for any violation.” OAR 340-012-0045; see ORS 468.130(1) (providing legislative authorization); see also OAR 340- 012-0068(1)(c) (defining a Class I violation as including “[o]perating a hazardous waste treatment, storage or dis- posal facility (TSD) without first obtaining a permit or with- out having interim status”). The department’s authority to assess a penalty for a simple violation is not subject to a culpable mental state requirement, such as those defining an “extreme violation,” ORS 468.996(1), or related crimi- nal offenses, ORS 468.922(1) (defining unlawful treatment of hazardous waste in the second degree); ORS 468.926(1) (defining unlawful treatment of hazardous waste in the first degree). Instead, as it relates to simple violations, the leg- islature has made culpability a penalty factor rather than a liability factor. ORS 468.130(2)(f); see also OAR 340-012- 0145(5) (identifying culpability as a factor increasing a respondent’s civil penalty).
Because the permit requirement is subject to the
same regulatory framework that applies to the manifest
requirement, we reject ORRCO’s arguments as to the permit
requirement for the same reason that we have rejected them
as to the manifest requirement. Further, decisions applying
the analogous rule within the EPA’s RCRA program have
similarly concluded that the provision is subject to a strict
liability standard.
See, e.g.
,
Domestic Industries, Inc.
, 32 F
Supp 2d at 868 (applying the federal permit requirement and
noting that “[t]here is no explicit knowledge requirement for
liability under this section of RCRA”);
In the Matter of Gary
Development Co.
, RCRA-V-W-86-R-45,
For the foregoing reasons, we reject ORRCO’s argu- ment that, because it reasonably relied on assurances from full brunt of EPA’s enforcement efforts under RCRA tends to be focused on the are increasingly resulting in the assessment of civil penalties in the six or seven TSD civil violations, even where no meaningful environmental damage is done, with the literal language of the regulations and the TSD permits. Non-negligent to comply strictly liable owners and operators of TSD facilities, who will be held figure range.” (Emphasis added.)). Environmental Law Practice Guide § 29.05 (“The Gerrard, See also 4A-29 the generator of the material that it transported and dis- posed of that the material was not hazardous waste, it did not violate the hazardous waste laws as charged by the department.
The decision of the Court of Appeals and the final order of the Environmental Quality Commission are affirmed.