United States v. Power Engineering Co.

Power Engineering Company (PEC) (defendant) operated a business of refinishing metal parts for large diesel engines used in heavy equipment. PEC’s facility generated 1,000 kilograms of hazardous waste per month. In 1992, the Colorado Department of Public Health and Environment (CDPHE) conducted compliance-review inspections of the PEC facility and reported numerous violations of federal and state regulations governing the treatment, storage, and disposal of hazardous waste. As a result of PEC’s illegal storage and disposal of hazardous waste that was deposited onto the soil, groundwater at and near the facility became contaminated with hexavalent-chromium levels that greatly exceeded established toxicity levels. The CDPHE issued several administrative orders against PEC, but PEC did not comply. In 1996, the EPA, on behalf of the United States (plaintiff), exercised its authority to seek PEC’s compliance with the state regulations. Colorado had implemented its own hazardous-waste program that was substantially identical to the EPA’s Resource Conservation and Recovery Act (RCRA) regulations. One regulation included financial-assurance requirements, which required owners and operators of hazardous-waste facilities to document that they have secured the financial resources required for closure of their facilities in a safe manner and to pay third-party claims that may arise from their operations. The United States sought a mandatory preliminary injunction requiring PEC to comply with the regulations for financial assurances. PEC argued that it did not dispose of hazardous waste and was thus not subject to Colorado’s regulations for facilities that treat, store, or dispose of hazardous waste (TSD facilities). The district court granted the preliminary injunction. PEC appealed.