MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Mar 04 2020, 5:37 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEE
Carrie G. Doehrmann Donn H. Wray
Alexander P. Will Glenn D. Bowman
Maggie L. Smith Marc A. Menkveld
Indianapolis, Indiana Indianapolis, Indiana
Curtis T. Hill, Jr.
Attorney General of Indiana
Frances Barrow
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
The City of Indianapolis, and March 4, 2020
Indiana Department of Court of Appeals Case No.
Environmental Management, 18A-PL-3055
Appellants-Respondents, Appeal from the Marion Superior
Court
v. The Honorable Patrick J. Dietrick,
Judge
Moran Electric Service, Inc., Trial Court Cause No.
49D12-1705-PL-17993
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Appellee-Petitioner
Altice, Judge.
Case Summary
[1] The City of Indianapolis (the City) took possession of a certain contaminated
property and engaged in significant remediation and monitoring activities.
Believing that the contaminated site had been sufficiently remediated, the City
petitioned the Indiana Department of Environmental Management (IDEM) for
issuance of a No Further Action letter (NFA Letter). After assessing the site,
IDEM concluded that no further remediation was necessary and therefore
issued an NFA Letter to the City.
[2] Moran Electric Service, Inc. (Moran), once an owner of property adjacent to
the contaminated site, challenged IDEM’s issuance of the NFA Letter by filing
objections with and seeking administrative review by the Office of
Environmental Adjudication (OEA). Moran argued that IDEM improperly
issued the NFA Letter because the remedial goals established for the site had
not been met. The OEA disagreed, finding that IDEM’s issuance of the NFA
Letter was proper. Moran timely sought judicial review of the OEA’s
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decisions. The trial court reversed, finding that IDEM’s issuance of the NFA
Letter, and the OEA’s review thereof, was not based on proper remediation
standards. The City and IDEM now appeal, presenting several issues for our
review, which we consolidate and restate as: Did the trial court err in finding
that IDEM and the OEA used incorrect remediation standards in determining
that the contaminated site had been sufficiently remediated?
[3] We reverse.
Facts & Procedural History
Background
[4] Ertel Manufacturing Corporation (Ertel) operated a 250,000 square foot
manufacturing facility on three parcels of land with frontage along what is now
Andrew J. Brown Drive in Indianapolis (the Ertel Site).1 Ertel’s manufacturing
process led to the release of hazardous substances, including petroleum and
chlorinated solvents such as trichloroethylene (TCE) and tetrachloroethylene
(PCE), into the soil and groundwater at the Ertel Site. Around 2001,
operations at the facility ceased, and the Ertel Site was abandoned.
[5] Moran once operated on a site located directly south of the Ertel Site (the
Moran Site). Moran purchased, stored, used, and disposed of chlorinated
1
The three parcels of land comprising the Ertel Site form a “P-shape.” Directly contiguous to the south and
east of the Ertel Site (i.e., sitting inside the “crook” of the P-shaped parcels) is a parcel of land formerly
owned by Zimmer Paper Products, Inc. (the Zimmer Parcel).
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solvents—i.e., TCE and PCE—in its operations until its plant closure sometime
in 1995 or 1996. IDEM believed that contamination at the Moran Site resulted
“predominantly from the sources at the Moran [S]ite itself”, but given the
groundwater flow direction, the Moran Site was also “impacted by
contamination emanating from the [Ertel] Site.” Joint Appendix of Appellants Vol.
VIII at 57; Joint Appendix of Appellants Vol. XII at 3. On October 4, 2005, Major
Tool and Machine, Inc. (Major Tool) purchased the Moran Site at a tax sale for
the expansion of its operations.
[6] Around 2005, IDEM and the Environmental Protection Agency (EPA) started
an investigation into contamination at the Ertel Site. The EPA funded the
initial removal of several potential sources of hazardous substances as well as
the initial investigation into the subsurface contamination. The City ultimately
acquired the Ertel Site in 2007 at a tax sale.2 Over the course of the next several
years, the City performed extensive environmental assessments and
remediation activities at the Ertel Site, including the removal and excavation of
37,000 tons of contaminated soil, demolition of certain structures, and
groundwater and vapor intrusion monitoring.
[7] In September 2007, the City and Major Tool entered into an agreement with
respect to the Ertel Site. Major Tool leased the Ertel Site for a period of five
2
The City’s “most immediate motivation” in procuring the Ertel Site was to address the environmental
issues. Joint Appendix of Appellants Vol. IX at 549. The City was also aware that Major Tool had interest in
the Ertel Site for a proposed expansion of its facility “if the environmental issues could be dealt with.” Id.
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years and constructed a manufacturing facility on the footprint of the former
Ertel facility. By the end of the lease term, the City was obligated to secure an
NFA Letter for the Ertel Site in order to trigger Major Tool’s obligation to
purchase the Ertel Site from the City.
The Agreed Order
[8] In 2008 and 2010, the City and IDEM, respectively, filed separate lawsuits
against Ertel asserting claims under Ind. Code § 13-25-4-10 3 and seeking a
declaratory judgment that Ertel was responsible for past and future costs
associated with the cleanup of the hazardous substances at or flowing from the
Ertel Site. In July 2011, IDEM, the City, Ertel, and Ertel’s insurance
companies entered into a single Settlement Agreement and Agreed Order (the
Agreed Order) for both actions and submitted such to the trial court. In
October 2011, the trial court approved the Agreed Order.
[9] The Agreed Order provided that the mutual objectives of the parties were:
(a) to protect public health and welfare and the environment at
and around the [Ertel] Site; (b) for Ertel and [the insurance
companies] on Ertel’s behalf to make a cash payment to resolve
all past, present or future Claims or liabilities of any kind related
to the [Ertel] Site regarding releases of Contamination, whether
known or unknown, alleged to have occurred at or emanate from
the [Ertel] Site; (c) to provide a complete release, covenant not to
3
I.C. § 13-25-4-10(a) states that the commissioner “may proceed in the appropriate court to recover costs
and damages [related to the release or threatened release of hazardous substances] for which a responsible
person is liable to the state.”
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sue, contribution protection[ 4] and finality to Respondents and
[the insurance companies] for all past, current and future
remedial or removal actions at or in connection with the [Ertel]
Site regarding Contamination, whether known or unknown,
alleged to have occurred at or emanate from the [Ertel] Site; and
(d) to provide funds to allow IDEM and the City to recover a
portion of past costs in connection with remedial activities at the
[Ertel] Site, and for IDEM to conduct and complete future
Response Actions at or in connection with the [Ertel] Site and
close the [Ertel] Site, including any off-Site areas of
Contamination, as set forth herein.
Joint Appendix of Appellants Vol. II at 94. As to reimbursement for costs incurred,
the Agreed Order provided that Ertel’s insurance companies would pay
$4,000,000 to the City and an additional $1,000,000 to an IDEM escrow
account, with $140,000 of this amount allocated for past costs incurred by
IDEM and $860,000 allocated for any future remediation costs incurred by
IDEM to obtain “No Further Action status” for the Ertel Site. Id. at 95. Any
funds remaining in the IDEM escrow account after IDEM issued an NFA
Letter were to be turned over to the City.
[10] The Agreed Order set out the remedial goals for the Ertel Site as:
(1) reducing the on-site Contaminants of concern to industrial
default RISC[ 5] cleanup levels; and (2) reducing Contaminants of
concern flowing off-site in the groundwater to at or below
4
See I.C. § 13-25-4-27(b) and CERCLA § 113(f)(2), 42 U.S.C. § 9613(f)(2).
5
RISC is an acronym “Risk Integrated System of Closure.” Joint Appendix of Appellants Vol. XXVII at 12.
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MCLs[ 6] or to a site specific risk level, as defined by IDEM RISC
guidance, to be protective of human health and the environment
and of the City’s water supply;
***
d. When the remedial goals have been met, IDEM will issue a[n
NFA] Letter to [the City and Ertel].
Id. at 97-98. The ultimate goal was to obtain a notice of closure from IDEM,
which refers to the end result of remediation where IDEM issues written
recognition—typically through an NFA Letter—stating that a party has
demonstrated attainment of specific remedial or screening objectives for
contamination on a property such that it no longer poses a risk to human health
or the environment.
RISC
[11] RISC was a non-rule policy document authorized by Ind. Code § 13-14-1-11.5
that “provide[d] a systematic approach for consistently and rationally
implementing the laws and rules that govern site investigation and closure.”
Joint Appendix of Appellants Vol. XXVII at 12. “The primary goal of RISC [wa]s
to ensure that risks to human health and the environment [we]re reduced to a
negligible level.” Id. RISC was adopted by IDEM in 1996 and amended in
1999 and again in 2001. Under RISC, there were two methods employed to
6
MCLs means “maximum contaminant levels” set by the Safe Drinking Water Act, 40 CFR 141.2.
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obtain closure of a contaminated site: default closure and nondefault closure.
The default method was basically a “one size fits all” approach where closure
occurred automatically when the level of contaminants present in soil and
groundwater were reduced below standardized industry default closure levels
(IDCLs). 7 Joint Appendix of Appellants Vol. XIII at 131.
[12] Although RISC focused primarily on the default closure process, IDEM
recognized that such approach did not fit all situations. In such cases, parties
could follow the nondefault closure process under RISC, which “include[d] any
pertinent procedure with a valid technical or policy basis . . . not listed as a
default IDEM preference.” Id. The nondefault closure method was considered
“neither superior nor inferior to the default approach;” it simply provided a
greater degree of flexibility than the default closure method because closure
details could be site-specific. Id. One such nondefault method provided for the
use of a potential exposure concentration (PEC) 8 calculation for comparing
sample data with IDCLs. Site closure could be obtained if it could be shown
that PECs for a contaminated site were less than IDCLs.
7
IDCLs are specific numeric levels of contaminants in soil and groundwater at industrial sites that are used
to determine when an environmental cleanup has achieved a level of adequately protecting human health
and the environment.
8
A PEC is the “constituent concentration in surface and subsurface soil that is representative of the site mean
(based on random sampling), or the highest concentrations at the sample locations (based on judgmental
sampling).” Addendum at 7.
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Change in the Law
[13] During the 2009 legislative session, House Enrolled Act 1162 (HEA 1162)
amended several statutes regulating environmental remediation projects in
Indiana to change the remediation objectives that IDEM must consider. The
purpose of the amendments was to shift the focus for closure to risk-based
objectives. The changes went into effect on July 1, 2009. I.C. § 13-25-5-8.5
now provides:
(a) A voluntary remediation work plan must specify the
remediation objectives for the site. Subsections (b) through (e)
apply to a site regardless of whether the site was entered into the
voluntary remediation program before July 1, 2009, or after June
30, 2009.
(b) The remediation objectives for each hazardous substance and
any petroleum on the site shall be based on:
(1) background levels of hazardous substances and
petroleum that occur naturally on the site; or
(2) an assessment of the risks pursuant to subsection (d)
posed by the hazardous substance or petroleum presently
found on the site taking into consideration the following:
(A) Expected future use of the site.
(B) Measurable risks to human health, natural
resources, or the environment based on the:
(i) activities that take place; and
(ii) environmental impact;
on the site.
(c) If the:
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(1) nature and extent of the hazardous substance or
petroleum is adequately characterized under the voluntary
remediation work plan, considering the remediation
objectives developed under this section; and
(2) the level of the hazardous substance or petroleum is
demonstrated to be below:
(A) background levels of the hazardous substances
and petroleum that occur naturally on the site; or
(B) the risk based levels developed under subsection
(d);
additional action is not necessary to protect human health
or the environment.
(d) Risk based remediation objectives shall be based on one (1) of
the following:
(1) Levels of hazardous substances and petroleum
calculated by the department using standard equations and
default values for particular hazardous substances or
petroleum.
(2) Levels of hazardous substances and petroleum
calculated using site specific data for the default values in
the department’s standard equations.
(3) Levels of hazardous substances and petroleum
developed based on site specific risk assessments that take
into account site specific factors, including remedial
measures, restrictive covenants, and environmental
restrictive ordinances that:
(A) manage risk; and
(B) control completed or potential exposure
pathways.
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(e) The department shall consider and give effect to restrictive
covenants and environmental restrictive ordinances in evaluating
risk based remediation proposals.
[14] On December 7, 2009, IDEM issued an “Interim Implementation Document”
noting that the statutory amendments changed the remediation objectives
IDEM is required to consider. IDEM interpreted the amendments to mean that
IDEM is required to consider risk-based remediation objectives that manage
risk and control completed or potential exposure pathways. IDEM stated that
the objective of its risk-based policy is “to assure that all sites are mitigated
through risk assessment procedures to assure no unacceptable risk or hazard to
human health or the environment, or through risk management measures to
assure no unacceptable exposures.” Joint Appendix of Appellants Vol. XIV at 168
(emphasis in original). IDEM explained that it was working on a revised
technical guide but, noting such “will take some time,” directed IDEM staff to
use the Interim Implementation Document together with the RISC guidance
document. Id. at 165.
RCG
[15] In response to HEA 1162, IDEM substantially revised RISC and renamed it the
Remediation Closure Guide (RCG). The RCG went into effect in March 2012.
Like RISC, the RCG is a non-rule, policy document that does not have the
force of law but is intended solely as guidance. Indeed, it expressly provides
that “if it conflicts with . . . rules or laws, the rules or laws shall control.” Joint
Appendix of Appellants Vol. XIII at 184.
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[16] The RCG set out several approaches to investigation and risk-based closure of
contaminated sites. 9 The RCG established that “[t]he objective of a risk-based
approach is to define an environmental concentration that corresponds to an
acceptable level of risk to persons who may undergo exposure to a particular
chemical.” Id. at 196. An important consideration under the risk-based
approach is whether exposure pathways may be controlled by risk management
practices, including such things as vapor mitigation systems or environmental
restrictive covenants (ERCs).
Soil Contamination
[17] In 2008, before the passage of HEA 1162 and while RISC remained the
technical guide for closure, Quality Environmental Professionals, Inc. (QEPI)
submitted a Soil Remediation Completion Report (SRCR) to the City. The
report noted that the City excavated nearly 37,000 tons of soil to a depth of
nearly seventeen feet below ground surface and acknowledged that even after
such excavation, impacts of PCE and TCE were still present at discrete
locations at concentrations exceeding IDCLs. Because of such, QEPI
calculated PEC values for the Ertel Site and determined that such values were
below RISC IDCLs and therefore, the Ertel Site “meets the requirements for
surface and subsurface soil closure under RISC default guidance.” Joint
Appendix of Appellants Vol. XVII at 176. QEPI also opined that given the
9
A companion manual, the Remediation Program Guide (RPG), also provides guidance related to specific
regulatory programs. The RPG was not submitted during the proceedings before the OEA.
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location and redevelopment nature of the property, the “residual impacts do not
pose an ongoing threat to the property.” Id. at 186. The City submitted the
SRCR to IDEM in 2008.
[18] An IDEM project manager who oversaw the soil remediation at the Ertel Site
testified that after he reviewed the SRCR, he believed the soil at the Ertel Site
had been adequately remediated. Further, a geologist for IDEM reviewed the
SRCR and concluded that the PEC calculations for soil contaminants of
concern were accurate and verified that such calculations were below respective
RISC IDCLs. IDEM issued a comment letter on September 16, 2008, noting as
much. IDEM further commented that the excavated areas of the Ertel Site
were to be covered by concrete. Although acknowledging that residual soil
contamination existed on the Ertel Site, IDEM concluded that such “does not
present a risk of exposure at this time.” Joint Appendix of Appellants Vol. XX at
67. After receiving IDEM’s comment letter, the City moved forward “under
the impression” that soil remediation was complete. Joint Appendix of Appellants
Vol. VIII a 122. IDEM likewise moved forward without further concern for soil
contamination.
Groundwater Contamination
[19] Following the soil excavation, the City installed permanent wells and
implemented groundwater monitoring at the Ertel Site during the first quarter
of 2008 and continued with such on a quarterly basis through 2009. The City
also conducted two additional sampling events in July and October 2010. At
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IDEM’s request, the City conducted ground water monitoring again in 2012 to
update the data for the Ertel Site.
[20] On May 30, 2012, the City submitted a site status update for the Ertel Site
setting forth its groundwater monitoring data since 2008 and addressing the
new RCG considerations for risk-based objectives, including exposure
pathways. While acknowledging that the results of the most recent
groundwater sampling event indicated impacts exceeding IDCLs, the City
asserted that the concentrations established a declining trend of contaminants
flowing from the Ertel Site as the levels were “either below or similar to those
historically encountered at the site.” Joint Appendix of Appellants Vol. XXIV at
96. The City submitted:
Based on the results of the most recent groundwater sampling
event and after evaluation of the sampling results with respect to
historic sampling data, it appears that the soil remediation
conducted at the [Ertel S]ite has been effective in mitigating
migration of impacts off-site and downgradient from the [Ertel
S]ite.
Id. The City further addressed the risk associated with such, noting that “[o]ff-
site migration of impacts from the [Ertel S]ite does not appear to pose a
continual impact to groundwater.” Id.
[21] The City also addressed the risk of vapor intrusion, noting that Major Tool
included in construction of its facility on the Ertel Site an extensive vapor
mitigation system. Because no vapor impacts in excess of IDEM closure
criteria had been encountered and given that the active vents of the vapor
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mitigation system were no longer in use, the City asserted that vapor intrusion
issues had been “successfully mitigated and do not appear to pose a threat to
human health.” Id. at 97. Based on its assessment, the City formally requested
that IDEM issue an NFA Letter. After review, IDEM did not issue an NFA
Letter, but rather requested additional information regarding the City’s risk
assessment and evaluation of exposure pathways.
[22] On October 15, 2012, the City submitted an extended “Exposure Pathway Risk
Analysis” to IDEM to augment the May 30, 2012 site status update. The City
opined that “[p]otential exposure pathways do not present a threat to human
health and the environment and any residual impacts remaining can be
addressed through the use of an ERC.” Joint Appendix of Appellants Vol. XXIV at
115. In support thereof, the City pointed out: (1) no wetlands existed on the
Ertel Site, (2) the Ertel Site was not within a Wellhead Protection Area, (3) the
impacted soil had been removed and the Ertel Site was subsequently
redeveloped and covered with concrete, (4) the Ertel Site is supplied with
municipal water by the City of Indianapolis, (5) there are no local residential
potable water wells within a one-mile radius of the Ertel Site, and (6) impacts to
groundwater had been shown to be stable or decreasing since completion of soil
remediation. While noting that impacts exceeding IDCLs had been recorded at
a facility located directly downgradient of the Ertel Site, the City asserted that
such was the result of an on-site source independent of potential migratory
impacts from the Ertel Site.
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[23] On November 19, 2012, IDEM issued an NFA Letter concluding that no
further action was required to address contamination at the Ertel Site. In
making this determination, IDEM noted that it reviewed the following reports
and information:
• Exposure Pathway Risk Analysis and No Further Action Request, submitted by
Heartland Environmental Associates, Inc. (Heartland) on October 15,
2012;
• Site Status Update, submitted by Heartland and dated May 30, 2012;
• Final VI System Sampling Report, submitted by [QEPI] and dated
December 2010; and
• various groundwater monitoring reports from March 2008 through April
2010.
Joint Appendix of Appellants Vol. III at 12.
[24] With regard to soil contamination at the Ertel Site, IDEM noted the extensive
removal of contaminated soil, the post-excavation soil sampling that showed
remaining soil contaminants were within IDEM RISC parameters, and that
Major Tool’s construction of a new manufacturing facility on the Ertel Site
“effectively capped the [Ertel] Site and eliminated any potential direct contact
soil exposure risk.” Id. at 19. As to groundwater contamination, IDEM noted
that monitoring from 2008 through 2012 showed that “chlorinated hydrocarbon
concentrations were exhibiting a declining trend at all wells and all ground
water depths.” Id. IDEM acknowledged that during the most recent
groundwater monitoring event there were impacts exceeding IDCLs but noted
that no potable wells existed within one mile of the Ertel Site and that the Ertel
Site was not located in a wellhead protection area. IDEM also noted that to
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manage any potential exposure risk, an ERC 10 had been recorded with the Ertel
Site.
[25] IDEM concluded that “[b]ased on the information provided, as well as current
industrial site use, no further action is required at this time” as there was no
longer any potential direct contact soil exposure risk, no vapor inhalation
pathway, and no further migration of contaminants into the groundwater at the
Ertel Site. Joint Appendix of Appellants Vol. III at 14. At that time, $846,000
remained in the escrow account. The parties do not dispute that these funds
were surrendered to the City.
[26] On January 29, 2013, Moran, as “a downgradient property owner,” filed a
petition for administrative review with the OEA (OEA I) challenging IDEM’s
issuance of the NFA Letter. 11 Id. at 2. Moran requested that the NFA Letter be
revoked because IDEM failed to fully characterize contamination arising from
the Ertel Site in that it did not consider offsite impacts. In response, the City
and IDEM argued that the NFA Letter was properly issued based upon RISC
10
The ERC prohibited residential use of the Ertel Site, installation of potable wells for ground water
extraction and consumption, and excavation of soil without IDEM’s prior approval. The ERC also required
the continued operation and maintenance of the sub-slab vapor mitigation system.
11
Moran also sought to intervene in the civil action between IDEM and Ertel. The trial court initially denied
the motion to intervene, but on appeal this court reversed, finding that Moran “had an immediate and direct
interest in the proceedings” and that the distribution of funds remaining in the escrow account to the City
would impede protection of its property in that Moran was claiming contamination on its property
emanating from the Ertel Site not addressed by IDEM prior to issuing the NFA Letter for the Ertel Site. See
Moran Elec. Serv., Inc. v. Ind. Dep’t of Envtl. Mgmt., 8 N.E.3d 698, 708 (Ind. Ct. App. 2014), aff’d on reh’g 13
N.E.3d 906. This court also determined that under the primary jurisdiction doctrine, the action before the
trial court should be stayed until the administrative proceedings before the OEA became final. Id. at 706.
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guidance and a risk analysis under the RCG. The City and IDEM also argued
that Moran did not have standing to challenge issuance of the NFA Letter
because Moran was not aggrieved or adversely affected.
[27] Over the next several years, the parties conducted extensive discovery, resulting
in a voluminous record that was presented to the OEA during a final hearing on
Moran’s objection held October 24 through October 27, 2016. Before the OEA
issued its decision, Moran filed a second petition for administrative review with
the OEA on December 30, 2016 (OEA II), again requesting review and
revocation of IDEM’s issuance of the NFA Letter regarding the Ertel Site. 12 In
OEA II, Moran relied upon data it collected after the NFA letter was issued,
which Moran claimed showed TCE contamination at the Ertel Site at levels far
greater than the levels IDEM relied upon to justify issuance of the NFA Letter.
Moran asserted that recently collected data also suggested that contamination at
downgradient properties had the same isotopic signature as the contamination
found on the Ertel Site, thus suggesting that contamination was still emanating
therefrom. Moran also argued for the first time that IDEM failed to apply the
cleanup standards set forth in the Agreed Order and that by applying different
standards, IDEM violated state and federal law.
12
In its second petition, Moran stated that it was “being sued in state and federal court for environmental
response costs that were and are necessitated by contamination that migrated, and is migrating from the
[Ertel S]ite.” Joint Appendix of Appellants Vol. XII at 3. Moran also stated that it had “incurred substantial
costs to investigate the nature and extent of contamination originating from and migrating to the former
Moran [Site].” Id.
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[28] On April 7, 2017, the OEA issued a fourteen-page final order setting out its
findings of fact and conclusions of law in OEA I. The OEA detailed the history
of the Ertel Site, the remediation efforts undertaken by the City, and the
sampling data collected thereafter. The OEA found that IDEM properly relied
upon RISC and the RCG, thereby rejecting Moran’s argument that pursuant to
the terms of the Agreed Order, IDEM was strictly limited to following the RISC
default approach. Specifically, the OEA concluded:
IDEM relied on RISC and RCG to determine if the Ertel Site
qualified for no further action status. [Moran] argues that the use
of the RCG was improper as the Settlement Agreement and the
[Agreed Order] indicated that the NFA should be issued using
the RISC guidance. However, the RCG guidance was in effect
when the NFA Letter was issued and at the time IDEM was
analyzing whether NFA was appropriate. The [Agreed Order]
contemplated that the [Ertel] Site could be closed using RISC.
This would necessitate using the RCG. Also, both RISC and
RCG are non-rule policy documents and do not have the force of
law. Further, the use of the RCG is consistent with the statutory
authority . . . in effect when the NFA Letter was issued. So, the
applicable statutes and rules would clearly have precedent in this
instance.
Joint Appendix of Appellants Vol. II at 63.
[29] With regard to soil contamination, the OEA acknowledged that there were
individual sidewall and bottom soil samples that showed contaminants of
concern at levels exceeding RISC IDCLs. The OEA, however, accepted expert
testimony that these individual samples were “indicative of ground water
contamination, not soil contamination.” Id. The OEA further found that PEC
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calculations, which were shown to be below IDCLs, were “an appropriate line
of evidence for closure under RISC” and “consistent with the law.” Id. at 59,
64. Based on its de novo review of the evidence and the fact that Moran did not
present any evidence challenging the PEC calculation relied upon by IDEM, 13
the OEA concluded that although it was “possible” that contaminants of
concern remained on the Ertel Site, “the weight of the evidence” demonstrated
that the remedial goals for soil contamination had been met. Id.
[30] With regard to groundwater contamination and migration of contaminants of
concern from the Ertel Site to the Moran Site, the OEA agreed with IDEM that
any contamination flowing from the Ertel Site commingled with more
significant contamination that directly occurred on the Moran Site itself 14 and
that Moran was “a responsible party” with regard to such contamination. Id. at
55. The OEA found that “any residual contaminants migrating off of the Ertel
[S]ite would be remediated or contained by [Moran] without additional cost to
them, when [Moran] remediated or contained [its] own contributions to the co-
mingled plume.” Id. at 60. The OEA also agreed with IDEM’s assessment of
groundwater exposure pathways. Based on its de novo review of the data, the
OEA concluded that IDEM properly determined that “the ground water plume
13
Moran’s own expert admitted that the PEC calculation was accurate and below IDCLs.
14
In support, the OEA noted that “several witnesses testified that the ground water contamination
downgradient of the Moran [Site] were orders of magnitude above the amount of ground water
contamination migrating from the upgradient Ertel Site onto the Moran [Site].” Joint Appendix of Appellants
Vol. II at 65. This evidence suggested that any contamination emanating from the Ertel Site was less than the
contamination existing on the Moran Site.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3055 | March 4, 2020 Page 20 of 32
coming from [the] Ertel [Site] was stable; that the exposure pathways for
ground water were incomplete; and that the levels emanating from the Ertel
[S]ite are at an acceptable site-specific risk level.” Id. at 66.
[31] The OEA also concluded that “vapor intrusion issues downgradient of the Ertel
[Site]” were only minimally caused by contamination on the Ertel Site. Id. at
65. In closing, the OEA concluded that IDEM “was consistent in how it
applied RISC and RCG and the law” and that “the Ertel Site qualified for NFA
status.” Id. at 66.
[32] On May 4, 2017, Moran filed a petition for judicial review of OEA I. On July
24, 2017, the trial court granted an agreed motion to stay the proceedings
pending resolution of OEA II.
[33] The OEA held a final hearing on the OEA II matter on August 24-25, 2017.
On January 17, 2018, the OEA issued extensive findings of fact and conclusions
of law denying OEA II. The OEA acknowledged Moran’s new data but noted
that the method used to obtain such (i.e., grab samples) 15 rendered it
“inadequate for compliance or closure purposes because they only show one
sampling event in one location and, therefore, are insufficient to show whether
15
Moran submitted data from vertical aquifer profiling samples, which are also knows as “grab”
groundwater samples. The OEA noted that “[g]rab groundwater samples are useful for screening,
investigative or delineation purposes,” Joint Appendix of Appellants Vol. II at 71. The OEA also noted that
split samples taken by another entity at the same time and location as Moran’s samples “resulted in a few
high relative percent difference values,” which “made IDEM question the reproducibility of [Moran’s]
samples.” Id.
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a plume is stable or declining over time.” Id. at 71. In contrast to the grab
samples, the OEA considered data from the permanent wells on the Ertel Site,
which the OEA found showed that contaminants of concern were stable or
declining.
[34] Having considered Moran’s arguments in OEA II, the OEA concluded as
follows:
5. There is sufficient evidence to support a conclusion that
releases occurred on the Ertel . . . and Moran site[s]. There is
also no question that contamination was left on the Ertel [S]ite.
Moran has presented sufficient evidence to call into question
whether upgradient contamination from Ertel or [another
upgradient property] has migrated onto the Moran [S]ite. But the
question before the Court is not whether there is contamination
migrating from Ertel to Moran, but whether IDEM properly
applied the RISC policy in evaluating the request for NFA status
for Ertel, even in light of the new data collected by Moran. So, a
conclusion that contamination is migrating does not
automatically lead to a conclusion that IDEM erred in issuing
the NFA [Letter] or refusing Moran’s request to revoke the NFA
[Letter] based on the data collected by Moran afterwards. The
RISC policy does not require a cleanup to zero. RISC considers
whether each exposure pathway poses a threat to human health
or the environment. In this case, the sites are part of a larger
industrial area. Each possible exposure pathway was analyzed
under the rules and guidance documents and IDEM determined
that, after the remediation undertaken at the Ertel [S]ite, none of
the pathways posed a hazard to human health or the
environment.
6. The three exposure pathways analyzed for Ertel were direct
soil contact, ground water and vapor intrusion.
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7. The soil contamination was addressed by (1) excavation of the
contaminated soil; (2) restrictive covenants on use of the
property, including but not limited to the continued operation of
the sub-slab vapor extraction mitigation system; and (3) potential
exposure analysis addressed. On this basis, IDEM determined
that there was no exposure pathway for direct soil contact.
8. Drinking water in this area is supplied by the City of
Indianapolis so there is no exposure pathway for ground water.
9. Vapor intrusion is not likely in this area because there are few
buildings in the affected area and there are vapor intrusion
mitigation devices in those buildings that might be affected.
10. While Moran has provided data that indicates high
concentrations of TCE and PCE . . . , this data was based on
“grab” sampling. This type of sample does not carry the same
weight as samples taken from permanent wells over a long period
of time. So, the preponderance of the evidence weighs in favor of
IDEM’s decision. These grab groundwater samples are not
comparable to the data from the permanent wells . . . and they
presented insufficient information to revisit the determination as
to whether the plume emanating from the Ertel Site was stable or
declining.
11. IDEM was evaluating [the Ertel Site] to determine if there
were any open exposure pathways. Moran’s evidence, while it
shows contamination still exists, failed to address the risk posed
by the remaining contamination. Moran has presented no
evidence that a completed exposure pathway exists at the Ertel
Site or that the risk-based approach used to close the Ertel Site is
no longer effective or that it otherwise presents a risk to human
health or the environment.
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Id. at 77-78. Moran timely sought judicial review of OEA II. Pursuant to the
parties’ request, Moran’s petitions for judicial review were consolidated. 16
[35] The trial court heard argument on Moran’s petitions on August 14, 2018. On
November 20, 2018, the trial court issued its Order on Petition for Judicial
Review. The trial court sided with Moran, concluding that “the OEA erred in
concluding applicable statutes and rules would have precedent over the contract
terms negotiated by the parties in the Agreed Order.” Id. at 47. In so
concluding, the trial court relied on a single comment in IDEM’s RPG, which
presumably 17 states that “IDEM must follow state law, unless the site is
governed by an agreement, such as a Voluntary Remediation Agreement or
Agreed Order.” Id. at 49 (emphasis in original). The court continued, “The
[Ertel] Site was governed by an Agreed Order which set out specific remedial
goals. One party to an agreement cannot unilaterally change remediation terms
after an agreement has been signed by the parties and entered by the Court.”
Id. The trial court concluded that “the language of the Agreed Order must
control” and therefore reversed the OEA’s decision upholding IDEM’s issuance
16
The trial court sua sponte consolidated Moran’s petitions for judicial review with IDEM’s civil action
against Ertel in which Moran was permitted to intervene.
17
We say presumably because the RPG was not part of the record before the OEA. According to IDEM, the
RPG is part of the record in the civil action it filed against Ertel. IDEM asserts, however, that the trial court
improperly consolidated this action pertaining to review of the OEA’s decision under AOPA with the civil
action. Thus, IDEM maintains that the trial court erroneously relied upon the RPG as it was not part of the
agency record.
Court of Appeals of Indiana | Memorandum Decision 18A-PL-3055 | March 4, 2020 Page 24 of 32
of the NFA Letter for the Ertel Site. Id. The City and IDEM now appeal.
Additional facts will be provided as necessary.
Discussion & Decision
Standard of Review
[36] Judicial review of an administrative decision is limited under the
Administrative Orders and Procedures Act (AOPA). Huffman v. Office of Envtl.
Adjudication, 811 N.E.2d 806, 809 (Ind. 2004). We give deference to the
expertise of the administrative body, and will reverse the agency’s decision only
if it is
(1) arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law; (2) contrary to constitutional right,
power, privilege, or immunity; (3) in excess of statutory
jurisdiction, authority, or limitations, or short of statutory right;
(4) without observance of procedure required by law; or (5)
unsupported by substantial evidence.
Ind. Code § 4-21.5-5-14(d). “A decision is arbitrary and capricious when it is
made without any consideration of the facts and lacks any basis that may lead a
reasonable person to make the same decision made by the administrative
agency.” Ind. Dep’t of Envtl. Mgmt. v. Schnippel Constr., Inc., 778 N.E.2d 407, 412
(Ind. Ct. App. 2002), trans. denied (2003). The party seeking judicial review
bears the burden of proving that the agency action is invalid for one of the five
reasons. Jay Classroom Teachers Ass’n v. Jay Sch. Corp., 55 N.E.3d 813, 816 (Ind.
2016).
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[37] “When reviewing an administrative agency’s decision, appellate courts stand in
the same position as the trial court.” Pendleton v. McCarty, 747 N.E.2d 56, 61
(Ind. Ct. App. 2001) (citing Amoco Oil Co. v. Comm’r of Labor, 726 N.E.2d 869,
872 (Ind. Ct. App. 2000)). This court may not substitute its judgment on
factual matters for that of the agency, and we are bound by the agency’s
findings of fact if they are supported by substantial evidence. See Whirlpool
Corp. v. Vanderburgh Cty.-City of Evansville Human Relations Comm’n, 875 N.E.2d
751, 759 (Ind. Ct. App. 2007). On review, we are prohibited from reweighing
the evidence or judging the credibility of witnesses. Amoco, 726 N.E.2d at 873.
[38] While reviewing courts must accept the agency’s findings of fact if supported by
substantial evidence, no such deference need be accorded an agency’s
conclusions of law, as the law is the province of the judiciary. Id. However,
“[a]n interpretation of a statute by an administrative agency charged with the
duty of enforcing the statute is entitled to great weight, unless this interpretation
would be inconsistent with the statute itself.” Moriarity v. Ind. Dep’t of Natural
Res., 113 N.E.3d 614, 619 (Ind. 2019) (quoting LTV Steel Co. v. Griffin, 730
N.E.2d 1251, 1257 (Ind. 2000)); see also Hoosier Outdoor Advertising Corp. v. RBL
Mgmt., Inc., 844 N.E.2d 157, 163 (Ind. Ct. App. 2006), trans. denied.
[39] Here, the agency action being challenged is IDEM’s issuance of the NFA Letter
and the OEA’s affirmance thereof. The dispute on appeal concerns the proper
remediation objectives that IDEM was to use in deciding whether the Ertel Site
qualified for closure.
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[40] We begin with the language of the Agreed Order, which set out the remedial
goals for the Ertel Site as follows:
(1) reducing the on-site Contaminants of concern to industrial
default RISC[ ] cleanup levels; and (2) reducing Contaminants of
concern flowing off-site in the groundwater to at or below
MCLs[] or to a site specific risk level, as defined by IDEM RISC
guidance, to be protective of human health and the environment
and of the City’s water supply.
Joint Appendix of Appellants Vol. II at 97. Moran argues that this provision set
“specific levels to which contaminants must be reduced in soil and groundwater
on the Ertel Site” and mandated that IDEM follow the default approach under
RISC. Appellee’s Brief at 23. Specifically, Moran argues that IDEM could not
consider the PEC calculations as to soil contamination because such was a
nondefault method under RISC. Moran also argues that IDEM could not
consider other risk-based objectives found under the RISC nondefault method
or the RCG because the Agreed Order required that the “specific levels” be
attained before closure could occur. The City and IDEM argue that the PEC
calculation and risk-based objectives (including an assessment of risk associated
with exposure pathways) under the RCG technical guidance were properly
considered in concluding that the Ertel Site qualified for closure.
[41] In reviewing these same arguments, the OEA acknowledged that the Agreed
Order “contemplated that the Site could be closed using RISC.” Joint Appendix
of Appellants Vol. II at 63. However, noting that RISC was replaced with the
RCG and that the RCG was in effect when the NFA Letter was issued, the
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OEA found that the Agreed Order’s reference to RISC “would necessitate using
the RCG.” Id. The OEA also noted that RISC and the RCG were non-rule
policy documents that do not have the force of law. 18 Thus, the OEA found
that the statutes in effect when the NFA Letter was issued took precedence over
the language in the Agreed Order that referenced only RISC guidance. The
OEA therefore concluded that IDEM properly relied on risk-based remediation
standards in deciding to issue the NFA Letter.
[42] In reversing the OEA’s order, the trial court relied upon a single statement from
IDEM’s RPG, namely that “‘IDEM must follow state law, unless the site is
governed by an agreement, such as a Voluntary Remediation Agreement or
Agreed Order.’” Id. at 49 (quoting “(Remediation Program Guide, February
2012, With Corrections Up to July 9, 2012, Indiana Department of
Environmental Management, p. 10, emphasis added.)). Based on this statement
out of the RPG, the trial court concluded that “the language of the Agreed
Order must control.” Id.
[43] The trial court’s reliance on the RPG was erroneous for several reasons. First,
as pointed out by IDEM, the RPG was not part of the review proceedings
before the OEA and therefore such was not part of the agency record available
18
Indeed, we note that both documents expressly caution that if any provisions therein conflict with statutes,
the statutes control. RISC expressly provided: “If a conflict exists between RISC and state or federal rules or
statutes, the rules and statutes will prevail.” Joint Appendix of Appellants Vol. XXVII at 12. The RCG also
contains a similar disclaimer, stating that “[i]t is intended solely as guidance and shall be used in conjunction
with applicable rules or laws” and that “if it conflicts with these rules or laws, the rules or laws shall control.”
Joint Appendix of Appellants Vol. XIII at 184.
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for the trial court’s review. See, e.g., Dev. Servs. Alternatives, Inc. v. Ind. Family &
Social Servs. Admin., 915 N.E.2d 169, 176 (Ind. Ct. App. 2009) (noting that
judicial review of disputed issues of fact must be confined to the agency record
for the agency action), trans. denied. The RPG is also not in the record on
appeal. 19 Second, even if the RPG was in the record, the legislature’s mandate
that IDEM consider risk-based objectives for site closure in conjunction with its
expressed intent that such objectives be applied retroactively cannot be ignored.
See I.C. § 13-25-5-8.5(a) (providing that statutory changes “apply to a site
regardless of whether the site was entered into the voluntary remediation
program before July 1, 2009, or after June 30, 2009”). Third, the RPG is a non-
rule policy document that does not have the effect of law. A statement in the
RPG cannot therefore overrule the clear intent of the legislature with regard to
closure of environmental sites.
[44] Here, the parties to the Agreed Order (which, we note, does not include Moran)
referenced use of RISC technical guidance, which was the only technical
guidance in existence at the time the Agreed Order was entered, for defining the
contamination level acceptable for closure of the Ertel Site. While the Agreed
Order referenced “default RISC cleanup levels” and “IDEM RISC guidance,” it
did not specify whether the default or nondefault method should be employed.
Joint Appendix of Appellants Vol. II. at 97. Thus, contrary to Moran’s argument,
19
According to IDEM, the RPG was admitted as part of the proceedings in IDEM’s civil action against
Ertel. IDEM argues that the trial court erred when it sua sponte consolidated the civil action with this review
action under AOPA and thus, the RPG was not properly before trial court.
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the Agreed Order did not limit the method of compliance to the default method
under RISC, i.e., a strict comparison of TCE and PCE values to IDCLs. Use of
the PEC calculation, a valid, nondefault method of site closure under RISC, did
not therefore contravene the terms of the Agreed Order. See Ind. Dept. of Envtl.
Mgmt. v. Raybestos Products Co., 897 N.E.2d 469, 477 (holding that “the public
interest is not served by enforcing promises that were never made” and thus
IDEM did not violate the terms of an agreed order by communicating with the
EPA when the agreed order did not “purport to forbid” such). In accordance
with RISC guidance, IDEM presented evidence that the PEC calculation for
contaminants of concern at the Ertel Site were less than IDCLs and such served
as the basis for IDEM’s conclusion that soil contamination at the Ertel Site had
been adequately remediated. In this vein, we also note that soil remediation
was considered complete years before the Agreed Order was entered and the
parties to the Agreed Order were clearly aware that IDEM used a nondefault
method (i.e., comparison of the PEC calculation with IDCLs) in finding that no
further soil remediation at the Ertel Site was required.
[45] We next turn to the statutory amendments made by the legislature. We agree
with the OEA’s assessment of the facts and timing of events as they pertain to
interpretation of the Agreed Order. At the time the Agreed Order was entered,
RISC was the technical guidance document followed by IDEM. In the time
between the Agreed Order and issuance of the NFA Letter, IDEM replaced
RISC with the RCG, which provided technical guidance for site closure that
was consistent with the new statutory requirements. The RCG became
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effective after the Agreed Order was entered and was the technical guidance
document being utilized by IDEM for site closure when the City asked IDEM
to evaluate the Ertel Site for no further action status. In light of the evolving
environmental policies of this State, the OEA determined that IDEM properly
considered risk-based objectives and its reliance on the RCG was proper as such
was consistent with the statutory mandate. Moran has not established that
application of the RCG and risk-based objectives was arbitrary and capricious.
We therefore find no error in the OEA’s review of IDEM’s issuance of the NFA
Letter.
[46] Moran has also not established that the OEA’s refusal to set aside the NFA
Letter based on the new sampling data Moran submitted was arbitrary and
capricious. The OEA acknowledged Moran’s data, but found that such was
unreliable, did not undermine the City’s data from the time of closure, and did
not establish a completed exposure pathway for soil or groundwater
contamination or vapor intrusion. 20 Moran does not challenge these factual
findings and we will not substitute our judgment for that of the administrative
agency.
[47] In sum, we conclude that the determination as to the proper remediation
standards to be applied in deciding whether the Ertel Site qualified for no
20
IDEM and the City also argue that Moran is not an aggrieved or adversely affected party for purposes of
seeking review under AOPA. Given our conclusion that IDEM properly issued the NFA Letter, we need not
address the parties’ arguments in this regard.
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further action status was not arbitrary and capricious and was in accordance
with the law in effect when the NFA Letter was issued. IDEM’s issuance of the
NFA Letter was not in error. We therefore reverse the trial court’s order
remanding the matter to IDEM.
[48] Judgment reversed.
Brown, J. and Tavitas, J., concur.
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