INDIANAPOLIS (AP) Ñ State court decisions are allowing Indiana officials to interpret environmental regulations more strictly than the federal government does, even when the rules are based on federal standards.

The case involved a dispute between the Indiana Department of Environmental Management and Steel Dynamics Inc., which operates a small steel mill in the central Indiana town of Pittsboro. Initial reviews by the state Office of Environmental Adjudication and Marion County Superior Court yielded mixed results, and IDEM won the key issue on appeal.

The state Supreme Court last week opted not to hear the case, letting the decision stand.

IDEM had held that a silo used to store filtered dust and particulate matter from an electric arc furnace was a hazardous waste tank subject to regulation under federal law. But Steel Dynamics cited a reference by the U.S. Environmental Protection Agency saying such silos are part of the production unit and not regulated tanks.

The steel company argued that since IDEM had adopted relevant EPA rules rather than written its own, the agency was bound by EPA’s interpretation of the federal Resource Conservation and Recovery Act.

The state appeals court disagreed.

“However, a state may choose to impose more stringent regulations than those imposed by RCRA, and ’RCRA sets a floor, not a ceiling, for state regulation of hazardous wastes,”’ said appeals court ruling, which cited a federal court decision.

“By incorporating these regulations, they became IDEM regulations, and subject to independent IDEM interpretation, just as much as if IDEM had promulgated them itself,” the court said in an October ruling.

Indianapolis attorney David L. Hatchett, who represented Steel Dynamics, said Friday that the company hadn’t decided on its next course of action. It wasn’t immediately clear whether a federal appeal was possible.

“The company’s obviously disappointed,” he said. “We don’t necessarily agree with IDEM’s interpretation of that rule, but the court ruling is what it is.”

Hatchett said the IDEM action puts Indiana at odds with other states where Steel Dynamics, the nation’s fifth-largest producer of carbon steel products, does business.

“This approach that IDEM is insisting on is putting any steel mills in Indiana at a disadvantage,” he said, “because other states that SDI operates in do not interpret the regulation the way IDEM does.”

IDEM said Steel Dynamics faces a civil penalty of $20,700 depending on the final outcome of the case, which was referred back to the administrative court to resolve some other issues.

An expert on environmental law said that under the system in which states are empowered to enforce environmental regulations, they are required to set standards that are at least as stringent as federal ones.

Eric R. Dannenmaier, an associate professor at the Indiana University School of Law in Indianapolis, also noted that the Bush administration had developed a reputation for lax enforcement and weakened regulation that drove states to take leadership.

“It’s not surprising that IDEM read the rules more cautiously than the federal EPA would have read them over the last eight years,” he said.

Posted 3/9/2009