February 28, 2012


Posted on February 28, 2012 by Ronald R. Janke

A recent enforcement decision concluded the defendants did not have to pay response costs covered by an administrative consent order because the Ohio EPA lacked statutory authority to recover such costs.  The opinion affirmed the trial court’s denial of a claim for response costs  the Ohio EPA had incurred with respect to property owned by Mass Realty, which had failed to comply with an Ohio EPA administrative consent order it had signed when it acquired the property.  The order required Mass Realty to operate and maintain an existing groundwater gradient control system and to pay the Ohio EPA’s past and future response costs.  Mass Realty eventually failed to operate the system, and the Ohio EPA brought on enforcement action to impose civil penalties and to recover its response costs that had risen to about $116,000.

The appellate court denied the claim for response costs, which included “payroll costs, travel costs and enforcement-related costs” despite the fact the administrative consent order Mass Realty signed expressly obligated the company to pay response costs.  The order broadly defined the covered costs as “all costs including, but not limited to, payroll costs, contractor costs, travel costs, direct costs, indirect costs, legal and enforcement-related costs, oversight costs, laboratory costs, the costs of reviewing or developing plans, reports, and other items pursuant to these Orders, verifying the Work, or otherwise implementing or enforcing these Orders.”

Agreeing with Mass Realty’s argument that the Ohio EPA lacked statutory authority to collect the claimed response costs, the court concluded such costs were well beyond the scope of the statutory cost recovery provisions, which authorizes recovery of “the cost of investigation and measures performed, including costs for labor, materials and any contract services.”  

The court also rejected the Ohio EPA’s second statutory basis for issuing the order and recovering the costs pursuant thereto.  The agency noted Ohio law authorizes the agency to “enter into contracts or agreements” in furtherance of Ohio’s environmental statutes.  The court rejected this argument because it found the document that Mass Realty had signed was an order and not a contract or agreement within the meaning of the statute.  The court similarly rejected the Ohio EPA’s further arguments it could collect response costs either due to implied powers under other statutory authority or simply as a valid contract between two entities.  Noting the Ohio EPA “cannot extend its powers beyond those authorized by statute” and finding no statutory provision expressly authorizing the collection of the response costs, the court affirmed the trial court’s judgment.

Tags: response costsOhio EPA


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