Thermex Energy Corporation and Richard W. Forsythe

Plain-English summary

EPA alleged that Thermex Energy Corporation violated RCRA at a hazardous-waste blasting-agent facility in Wyoming and proposed a $70,000 civil penalty. The Presiding Officer dismissed Richard W. Forsythe, Thermex’s president and principal shareholder, as an individual respondent. The EAB granted interlocutory review because delaying review could harm the public interest and because the record raised genuine factual questions about Forsythe’s role and potential liability. It vacated the dismissal orders and remanded the case for further proceedings. The proposed penalty was not finally decided in this order.

Decision snapshot

• Cited authorities: 42 U.S.C. §§ 6901 and 6925; 40 C.F.R. §§ 22.29(a), 22.29(c), and Part 262
• Outcome: The orders dismissing Forsythe were vacated and the case was remanded.
• Key point: Individual liability cannot be resolved on summary disposition when the record presents genuine factual questions about a corporate officer’s role.

Full text (EPA EAB public release)

68 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

IN THE MATTER OF THERMEX ENERGY
CORPORATION AND RICHARD W. FORSYTHE

RCRA (3008) Appeal No. 91-3

ORDER ON MOTION FOR INTERLOCUTORY APPEAL

Decided June 30, 1992

Syllabus

On April 23, 1991, the Presiding Officer summarily dismissed Richard W. For-
sythe as a Respondent in this case, relying primarily on In re Southern Timber
Products, Inc., RCRA (3008) Appeal No. 89-2 (November 13, 1990). The Presiding
Officer declined to certify the issue for interlocutory appeal, and Complainant has
moved for a non-certified interlocutory appeal.

Held: Complainant has shown, pursuant to 40 CFR §22.29(c), that exceptional
circumstances exist and that to delay resolution of the matter would be contrary
to the public interest, and the motion for interlocutory appeal is therefore granted.
The issue of Forsythe’s liability involves genuine issues of material fact that require
an evidentiary hearing to resolve, and the orders dismissing Forsythe are therefore
vacated, and the case is remanded for further proceedings.

Before Environmental Appeals Judges Ronald L.
McCallum, Edward E. Reich, and Timothy J. Dowling (Acting).

Opinion of the Board by Judge Dowling:

Before the Environmental Appeals Board! is Complainant’s mo-
tion for interlocutory appeal filed under Section 22.29(c) of the Agen-
cy’s Consolidated Rules of Practice. The motion seeks review and
reversal of two April 23, 1991 orders by the Presiding Officer that
dismiss Richard W. Forsythe as a Respondent. For the reasons set
forth below, those orders are vacated, and the case is remanded
for further proceedings.

1The Environmental Appeals Board, as the Administrator’s delegatee, has author-
ity to decide interlocutory appeals under 40 CFR §22.29. See 57 Fed. Reg. 5320
(Feb. 18, 1992).

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THERMEX ENERGY CORPORATION AND RICHARD W. 69
FORSYTHE

I. BACKGROUND

On December 30, 1988, U.S. EPA Region VIII filed a Complaint
against Thermex Energy Corporation alleging violations of Section
3005(e) of the Resource Conservation and Recovery Act of 1976
(“RCRA”), 42 U.S.C. §6901 et seq., as well as 40 CFR Part 262,
which sets forth standards for generators of hazardous waste under
RCRA. The alleged violations involve Thermex’s blasting agent pro-
duction and storage facility in Natrona County, Wyoming. The Com-
plaint contains a proposed compliance order to compel Thermex (1)
to determine the types of hazardous wastes at the facility; (2) to
remove all hazardous wastes from the facility to a licensed hazardous
waste disposal facility; and (3) to otherwise come into full compliance
with RCRA and the implementing rules. The Complaint also proposes
a civil penalty of $70,000.

Richard W. Forsythe is President, Chief Executive Officer, Chair-
man of the Board, and principal shareholder of Thermex. On October
4, 1989, Complainant moved to amend the Complaint to add Forsythe
as a Respondent, and on November 27, 1989, the Presiding Officer
granted the motion.

Respondents have now removed all hazardous waste from the
facility and have otherwise fully complied with the proposed compli-
ance order. The only issues that remain are whether Respondents
violated RCRA and the implementing rules and, if so, whether Com-
plainant’s proposed $70,000 penalty is appropriate. Thermex is now
in bankruptcy proceedings, and Complainant has filed a “Proof of
Claim” for the $70,000 proposed penalty. Complainant asserts, how-
ever, that it is a subordinated, unsecured creditor, and it does not
anticipate that Thermex will be able to pay any significant penalty.

On March 19, 1991, Respondents filed a motion for partial sum-
mary judgment, requesting that Forsythe be dismissed as a party.
On April 23, 1991, the Presiding Officer issued two orders granting
the motion to dismiss Forsythe. The dismissal is based largely on
the Final Decision in Southern Timber Products, Inc., RCRA (3008)
Appeal No. 89-2 (November 13, 1990), which declined to hold a cor-
porate officer personally liable for violations of RCRA rules (Part
265) applicable to “owners and operators” of hazardous waste man-
agement facilities.

On April 30, 1991, Complainant moved for certification of the
ruling for interlocutory appeal under 40 CFR § 22.29(a), but the Pre-

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70 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

siding Office declined to certify the matter. Complainant then filed
the instant motion.

II. DISCUSSION

Where a Presiding Officer declines to certify a ruling for inter-
locutory appeal, the Board may review the ruling on interlocutory
appeal only if it determines, “upon motion of a party and in excep-
tional circumstances, that to delay review would be contrary to the
public interest.” 40 CFR §22.29(c). Absent such a determination, re-
view must wait until issuance of an initial decision that disposes
of all issues.

In our view, exceptional circumstances exist in this case sufficient
to warrant immediate review of the decision to dismiss Forsythe.
As noted by Complainant, unless the orders at issue are reviewed
now, Complainant would be forced to litigate against Thermex alone.
The Presiding Officer would presumably exclude as irrelevant evi-
dence bearing upon Forsythe’s role in Thermex, his activities at the
Natrona facility, his connection to the alleged violations, and other
aspects of his involvement that bear upon the issue of his liability.
If the orders dismissing Forsythe were then reversed on appeal of
the initial decision, additional evidentiary hearings would be re-
quired. Such a bifurcated hearing would lead to an inefficient use
of the Agency’s adjudicative resources. Moreover, Complainant would
be placed in the untenable position of having to decide whether to
pursue potentially costly litigation against an insolvent corporation
without knowing whether the corporation would be able to pay a
civil penalty or whether Forsythe would be reinstated as a Respond-
ent. Faced with such uncertainty, Complainant might well decide
to direct its enforcement resources elsewhere, leaving the issues of
Forsythe’s and Thermex’s liability and the penalty amount unre-
solved. The public interest in vigorous and fully effective enforcement
of the environmental laws warrants immediate review of the issue.

Having concluded that interlocutory review is appropriate, we
now address the issue of Forsythe’s dismissal. In our view, the dis-
missal is premature for two reasons. First, Southern Timber involved
the issue of whether a corporate officer was an “owner” or “operator”
of the facility and thus liable for violations of Part 265 of the rules.
In large measure, the analysis turned on the specific wording of
the regulatory definition of “operator.” See Southern Timber (Final
Decision), slip op. at 16-25; Southern Timber (Order on Motion for
Reconsideration), slip op. at 16-38. In contrast, Forsythe is alleged
to be liable for violations of rules that apply to hazardous waste

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THERMEX ENERGY CORPORATION AND RICHARD W. 71
FORSYTHE

generators, a matter not directly controlled by Southern Timber. Sec-
ond, the Order on Motion for Reconsideration (pp. 19-29) in Southern
Timber makes clear that the general issue of corporate officer liability
under RCRA is a factually sensitive matter that requires investiga-
tion into the nature and extent of the role played by the corporate
officer. In the case at hand, viewing the evidence in the light most
favorable to Complainant,2 we believe there is a genuine issue of
material fact as to Forsythe’s role at the Natrona facility and his
liability for the alleged violations. Accordingly, the matter is not
amenable to summary disposition at this time.³

The April 23, 1991 orders dismissing Forsythe as a Respondent
are vacated, and the case is remanded for further proceedings.⁵

So ordered.

2 Although the Agency’s Consolidated Rules do not directly address the issue,
it is well established that on a motion for summary judgment, the evidence should
be viewed in the light most favorable to the non-moving party. See 6 J. Moore,
W. Taggart & J. Wicker, Moore’s Federal Practice, ] 56.15 (2d ed. 1992).

3For example, Complainant presented evidence that Forsythe (1) was regularly
updated on environmental problems at the Natrona facility; (2) was regularly informed
of the actions and expenditures required to effect environmental compliance; and (3)
more significantly, exercised final authority for the allocation of funds for corrective
measures, and made or approved all significant expenditures for correcting environ-
mental problems. See April 12, 1991 Stephens Affidavit. This evidence stands in sharp
contrast to the evidence adduced in Southern Timber, which failed to show that the
officer at issue had final authority for plant operations or significant expenditure
of funds. See Order on Motion for Reconsideration, at 25-29. While we express no
view as to whether Stephens’ testimony by itself would be sufficient to support a
finding that Forsythe is personally liable for the violations at issue, when combined
with Forsythe’s position as President, Chief Executive Officer, Chairman of the Board,
and principal shareholder of Thermex, it creates a genuine issue of material fact
that warrants further exploration at trial.

4In fairness to the Presiding Officer, it should be noted that the Order on Motion
for Reconsideration in Southern Timber was issued after Forsythe was dismissed as
a Respondent. Although certain language in the Southern Timber Final Decision could
be read to suggest broad immunity under RCRA for corporate officers, the Order
on Motion for Reconsideration makes clear that the issue entails a factual inquiry
into the nature and role of the officer’s activities.

5 By letter dated June 30, 1991, Respondents allege that counsel for Complainant
has improperly coerced a former Thermex employee into withdrawing an affidavit
that supports Respondents’ position as to Forsythe’s liability. Respondents request
that this proceeding be stayed until the matter is fully investigated. We express
no view as to these allegations, and we leave it to the Presiding Officer to determine
in the first instance what effect, if any, they should have on future proceedings.

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