IDEM's PSD Action Against Foundry Barred by the Marion Superior Court

In a significant victory for citizens facing arbitrary or out-of-date enforcement actions, an Indianapolis Court has invalidated an Indiana Department of Environmental Management ("IDEM") enforcement order against a Kendallville, Indiana, foundry. On November 20, 2003, Judge Thomas Carroll of the Marion County Superior Court granted summary judgment in favor of Dalton Corporation ("Dalton") invalidating an Order issued by IDEM against Dalton. IDEM's Order had purported to require Dalton to seek pre-construction permits under the Clean Air Act's ("CAA") Prevention of Significant Deterioration ("PSD") rules for projects implemented in 1984-1985 by a prior owner of the gray iron foundry located in Kendallville. IDEM's objective was to force Dalton to install emission-control equipment that would meet the CAA's Best Available Control Technology ("BACT") standards. Such an expenditure estimated to exceed $8 million likely would be cost prohibitive for Dalton in these tough times for foundries. The Marion Superior Court's recent decision helps protect the jobs of hundreds of Dalton's employees at the Kendallville Foundry.

The 1984-1985 projects were implemented by Amcast Industrial Corporation ("Amcast") which owned the Kendallville Foundry from 1983 to 1988. Amcast implemented the projects to make the Foundry more economically viable and safer to operate. The projects included replacement of portions of the cupola charge handling system, the raising of the cupola shell stack height and replacement of two molding lines by a single new molding line. While the projects improved efficiency and casting quality, the Kendallville Foundry's actual molding throughput decreased as a result of the projects.

When it received IDEM's Order, Dalton filed a petition for administrative review to preserve its appeal rights before Indiana's Office of Environmental Adjudication ("OEA"). Dalton also filed a lawsuit in the Marion Superior Court and almost immediately filed a motion for summary judgment in the court proceeding. IDEM sought to dismiss the court proceeding on the grounds that the dispute must first be adjudicated before the OEA under the "exhaustion of administrative remedies" doctrine. Dalton resisted, citing a recent Indiana Supreme Court decision,Indiana Department of Environmental Management v. Twin Eagle LLC, 798 N.E.2d 839 (Ind. 2003), which held that when the issues raised are purely legal, exhaustion of administrative remedies is not required...