The Indiana Department of Environmental Management (IDEM) recently issued Nonrule Policy Document No. MP-008-NPD to express its interpretation of the corrective action requirements under the federal Resource Conservation and Recovery Act (RCRA) and the parallel authority under Indiana law for subsequent owners of former hazardous waste treatment, storage or disposal facilities. Specifically, IDEM determined that its authority to order corrective action under RCRA and related state and federal statutes and regulations “does not extend to subsequent owners of hazardous waste facilities if the subsequent owner did not operate such a facility on the site, did not seek or receive a permit to do so, and was not required to seek or receive such a permit.”

Notably, this Nonrule Policy does not change any corrective action requirements for any person or entity who applied for a permit to operate a hazardous waste facility, received such a permit, or should have applied for and received such a permit. As to those individuals, IDEM retains its authority to issue corrective action orders even after the facility ceases its operations.

The Nonrule Policy became effective on Nov. 13, 2015, and is guided by the statutory language of RCRA and applicable cases deciding similar issues. First, RCRA requires corrective action for releases at hazardous waste facilities. 40 U.S.C. § 6924(u). Under RCRA, an “owner” is defined as a “person who owns a facility or part of a facility.” 40 C.F.R. § 260.10 (emphasis added). In the context of corrective action, a “facility” is defined as “all contiguous property under the control of the owner or operator seeking a permit under Subtitle C of RCRA.” Id. (emphasis added). This definition is far narrower than the same term used in the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which defines a “facility” as “any site … where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located.” 42 U.S.C. § 9601(9). CERCLA liability attaches to the current owner who holds title to a “facility” without regard to intent or responsibility for the deposition of a hazardous substance unless the owner qualifies for a specific statutory defense. Unlike RCRA, there is no requirement that the owner also be one who has sought a permit. As such, Congress intentionally defined facility under RCRA differently than under CERCLA to exclude subsequent owners of former facilities.

Second, a case from New York’s appellate court held that, under RCRA regulations essentially identical to Indiana’s regulations, a subsequent owner is not subject to corrective action requirements at a formerly permitted hazardous waste facility. Thompson Corners, LLC v. New York State Dep’t of Envtl. Conservation, 2014 WL 1924148 (N.Y. App. Div. May 15, 2014). This case arose when New York’s Department of Environmental Conservation (“DEC”) issued an order requiring a subsequent owner of property, which previously was a permitted hazardous waste storage facility, to comply with certain RCRA corrective action requirements. New York’s applicable provision states that corrective action is required “for all releases of hazardous waste or constituents from any solid waste management unit at a TSD facility seeking a permit [to operate]. . .” E.C.L. § 27-0913. The court emphasized the language “seeking a permit” and held that, on its face, the regulation contemplates that corrective action can only be imposed as a condition of obtaining a permit to operate a hazardous waste facility. Thompson, 2014 WL 1924148. The court explained further that “if the Legislature had intended to impose liability on landowners . . . without regard to whether they had ever operated a TSD facility on the property in question – clear language to that effect could easily have found its place in the statute and regulations.”  Id.

Third, several courts have held that prior owners of RCRA-permitted sites, rather than subsequent owners, continue to be “permittees” until closure or corrective action has taken place. In relying on this holding, subsequent owners of former RCRA-permitted sites have brought citizen suits against prior owner/operators under 42 U.S.C. § 6792(a)(1)(A) for failure to properly close the facility. See, e.g., Cornerstone Realty, Inc. v. Dresser Rand Co., 993 F. Supp. 107, 117 (D. Conn. 1998) (owner of a hazardous waste facility is obligated to close the facility even after transferring the property to a subsequent owner); Acme Printing Ink Co. v. Menard, Inc., 891 F. Supp. 1289, 1302-03 (E.D. Wis. 1995) (dismissing RCRA citizen suit against Menard, the subsequent owner, where Menard merely purchased the former hazardous waste facility and did not operate the facility); Goodwill Industries of Chicago v. Valspar Corp., 1990 WL 485455, *5 (N.D. Ill. Mar. 9, 1990) (holding that the former owner and former operator continue to be the permittees of the waste storage facility and, therefore, failure to properly close the site constitutes a continuing violation of their permit). The court in Goodwill Industries rejected “the argument raised by defendants which, reduced to its base, is that an [sic] RCRA permit holder (or one with interim status) may avoid liability for permit violations [including proper closure] by simply transferring title to the site of the facility.” Instead, the court held that “[o]nce a permit is issued … continuing obligations attach which cannot be avoided by merely transferring ownership of the facility.” Id. Clearly, RCRA corrective action and closure obligations are intended to remain with the owner/operator of a hazardous waste facility — not to be transferred to a subsequent owner simply by virtue of a property transaction.

Importantly, the U.S. Environmental Protection Agency (USEPA) has not spoken on the question of whether a subsequent owner of a former hazardous waste facility is responsible for corrective action since the 1990s. In 1990, the USEPA proposed new regulations to govern certain aspects of RCRA corrective action implementation. 55 Fed. Reg. 30798 (July 27, 1990) (also known as the Subpart S proposal). The Subpart S proposal identified two potential answers to the above question: first, to require the former permittee to complete corrective action on property sold to others; or second, to require the purchaser to complete corrective action. In 1999, the USEPA withdrew its Subpart S proposal, in part because it did not want to disrupt the state programs already authorized to implement and enforce corrective action. 64 Fed. Reg. 54604-01 (Oct. 7, 1999). However, one exception to the withdrawal was the question of who is responsible for corrective action in the event of a property transfer. Notwithstanding the passage of 15 years, the USEPA has yet to answer this question.

At the end of the day, despite the long-standing arguments against such an interpretation, the USEPA may still require a subsequent owner to complete corrective action at a former hazardous waste facility. However, IDEM’s Nonrule Policy is an important step in the right direction for subsequent owners of former RCRA facilities in Indiana. Additionally, IDEM’s Nonrule Policy is also favorable for brownfield redevelopment, as there are no parallel bona fide prospective purchaser protections under RCRA to those found in CERCLA.