Rogers Corp. v. Environmental Protection Agency

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 8, 2001 Decided January 4, 2002

No. 00-1542

Rogers Corporation,

Petitioner

v.

Environmental Protection Agency,

Respondent

Petition for Review of an Order of the

Environmental Protection Agency

Steven Ferrey argued the cause for petitioner. With him

on the briefs was Lee D. Hoffman.

D. Judith Keith, Attorney, U.S. Department of Justice,

argued the cause for respondent. With her on the brief was

John C. Cruden, Acting Assistant Attorney General.

Before: Ginsburg, Chief Judge, Rogers and Garland,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge: The Rogers Corporation ("the com-

pany") petitions for review of the decision of the Environmen-

tal Appeals Board assessing a penalty of $281,400 for violation

of section 15 of the Toxic Substances Control Act, 15 U.S.C.

s 2614 (1994). The company challenges the decision on a

variety of grounds. Suffice it to say, the company contends

that the Board's affirmance of the grant of the agency's

motion for partial accelerated decision, which requires a

finding that "no genuine issue of material fact exists," 40

C.F.R. s 22.20(a), was arbitrary and capricious. We agree,

and, accordingly, we grant the petition and remand the case

to the Board for further proceedings.

I.

The parties stipulated to the following facts: The company,

a Massachusetts corporation that has its principal place of

business in Connecticut, owns and operates a manufacturing

facility that produces polyurethane elastomers and foams.

During the relevant time period, the company used a heat

transfer system known as "HTS 975," which was located in a

basement room. The HTS 975 used oil as a heat transfer

medium, and oil occasionally dripped or wept from the pump

bearings and then collected on the concrete floor beneath the

HTS 975 in a shallow concrete berm. From time to time, the

company pumped the oil from the berm under the HTS 975

into drums, sampled the contents of the drums for hazardous

waste constituents, and shipped the drums off-site for dispos-

al. From at least 1988 to at least March 1992, analysis of the

samples of residual heat transfer fluid taken from the berm

did not reveal concentrations of polychlorinated biphenyls

("PCBs") equal to or greater than 50 parts per million

("ppm"). In April 1993, however, sampling of 16 drums of

waste oil revealed PCBs in excess of 50 ppm in nine drums.

The company was notified of the excessive PCBs in June

1993, and the sixteen drums were shipped off-site for disposal

in September 1993. In December 1993, the Connecticut

Department of Environmental Protection inspected the com-

pany, found PCBs in excess of 50 ppm in two of five samples

of oil taken from the HTS 975 room, and cited the company.

Four months later, the Department ordered the company to

conduct certain studies and to take remedial actions. In

response, the company continued to investigate the source of

the excessive PCBs and undertook remedial actions.

In September 1994, the Environmental Protection Agency

("the agency") charged the company with improper disposal

of PCBs from June 16, 1993, until on or around December 1,

1993 in violation of 40 C.F.R. s 761.60 and s 15 of the Toxic

Substance Control Act, 15 U.S.C. 2614, and proposed a civil

penalty of $226,750. The company filed an answer in October

1994, and, pursuant to 40 C.F.R. s 22.15(c), requested a

hearing. In its prehearing memorandum, the company stated

that it would offer evidence that it had not used any PCB-

containing heat transfer fluids since 1972, and that the only

logical source of the PCBs in the residual heat transfer fluid

was the concrete floor and soil underneath the HTS 975. In

a supplemental prehearing memorandum, the company prof-

fered Robert S. Potterton as an expert witness who would

"provide an opinion as to the physical/chemical basis for the

unexpected appearance, in or about 1993, of PCB concentra-

tions equal to or greater than 50 ppm in the fluid that was

pumped from the bermed containment area in the vicinity of

HTS 975...." Mr. Potterton would also testify about remed-

iation efforts by the company.

Just short of three years after the agency filed its charge,

on September 12, 1997, the company filed a motion for an

accelerated decision, pursuant to 40 C.F.R. s 22.20(a). The

company sought application of the agency's historic waste

exemption for PCB-containing fluids placed in a disposal site

prior to February 17, 1978. Anticipating that the agency

would rely on In the Matter of Standard Scrap Metal Compa-

ny, TSCA Appeal No. 87-4, 1990 E.P.A. App. LEXIS 8

(E.P.A. Aug. 2, 1990), the company argued that the phrase

"disposal site" did not refer to a narrow subcategory of places

for containing PCB-waste spilled or released prior to Febru-

ary 17, 1978. The company pointed to agency regulations

proposed December 6, 1994, clarifying that PCBs disposed of

prior to April 18, 1978, do not require further disposal action

unless a Regional Administrator finds that such historic waste

presents a risk to health or the environment from exposure.

See Disposal of Polychlorinated Biphenyls, 59 Fed. Reg.

62,788 (proposed Dec. 6, 1994) (codified at 40 C.F.R.

s 761.50(b)(3)). The company asserted that this court had

acknowledged the validity of the proposed rule as a statement

of agency policy in General Electric Co. v. EPA, 53 F.3d 1324

(D.C. Cir. 1995), and that the Environmental Appeals Board

had relied on the proposed rule as support for the respon-

dent's position in In re CWM Chemical Services, Inc., TSCA

Appeal No. 93-1, 1995 E.P.A. App. LEXIS 20 (E.P.A. May

15, 1995). As evidentiary support for application of the

historic waste exemption, attached to the company's motion

for accelerated decision was an affidavit of Gerry L. Langeli-

er, an engineer at the company for 33 years, stating that the

company had ceased using PCB-based oil in 1972, and that,

since then, oil seepage from the wet seals into the bermed

containment area under the HTS 975 had never before the

1993 tests contained PCB concentrations above 50 ppm.

The agency filed an opposition to the company's motion for

accelerated decision, a motion to file an amended complaint to

increase the duration of the charged violation and the pro-

posed penalty to $300,300 (based on evidence that the spill

remained from June 16, 1993, until March 29, 1994, or later),

as well as its own motion for a partial accelerated decision on

liability. The company opposed the agency's motion for a

partial accelerated decision, renewed its argument based on

the agency's interpretation of its regulations as reflected in

the proposed regulations, and also argued that the agency's

inference that a disposal took place in 1993 was unwarranted

in light of the undisputed fact that there was no ongoing

source of PCBs in the HTS 975. Asserting that the question

of why PCBs suddenly showed up in 1993 berm samples was

a matter of speculation, the company stated that question was

irrelevant because there was no evidence of any spill or leak

at the company in 1993. An attached affidavit from its

engineer stated that no piping containing PCB had been

connected to the HTS 975 after the system was drained of

PCB oils in 1972 and that, upon cleaning the HTS 975 room

floor and the discovery of cracks in the sump area, the

company discovered PCB contaminated soil underneath the

floor.

By Order of November 13, 1997, an administrative law

judge ("ALJ") granted the agency's motions to amend the

complaint and for partial accelerated decision on liability.

The ALJ denied the company's motion for accelerated deci-

sion, and the company's request for oral argument, inasmuch

as the company had not set forth a basis for the request

"other than its generalized assertion that it is entitled to

judgment as a matter of law in this matter." 1997 Order on

Liability at 2. The ALJ summarized the stipulated facts and

observed that the parties disagreed as to the legal inferences

to be drawn therefrom. Noting that the company had offered

"no direct evidence showing when the uncontrolled discharges

at issue took place or how these discharges were caused," the

ALJ concluded that "the only plausible explanation for the

presence of PCBs at regulated levels in 1993 after years of

lower levels ... is that there was an uncontrolled discharge

in 1993." Id. at 23. Because the company failed to dispose of

the PCB-contaminated oil in the prescribed manner, the ALJ

found that there was an ongoing violation of the disposal

requirements of s 761.60(a). The ALJ rejected the compa-

ny's attempt to invoke the historic waste exemption because

(1) the berm under the HTS 975 was not a disposal site within

the meaning of the exemption; and (2) the company had

failed to carry its burden of showing that the PCB spill

occurred prior to February 17, 1978. Of the two causation

theories suggested to the ALJ upon review of the evidence,

the ALJ concluded that the company's leaching-up theory,

whereby PCBs had leached up from the concrete floor and

soil into the oil in the berm, "strains the imagination to

envision," while the agency's theory that increased production

had dislodged residual PCBs remaining inside the HTS 975

"appears far more likely." Id. at 24-25. The ALJ according-

ly found that there were no genuine issues of material fact,

and, upon rejecting the company's statute of limitations and

due process arguments, concluded that the agency was enti-

tled to judgment as a matter of law on liability.

During the penalty phase of the proceedings in April 1998,

the company attempted to introduce new, exculpatory evi-

dence that would show that the excessive PCBs in 1993

resulted from contamination of the samples by pre-1978

PCBs that had collected in the concrete and soil beneath the

berm. The company proffered, consistent with the ALJ's

ruling that the new evidence would be considered only with

regard to the penalty, expert evidence relevant to the dura-

tion of the violation. The proffered evidence was twofold: (1)

that, contrary to the agency's theory that oil continued to drip

and come into contact with PCB-contaminated oil in the

berm, which under the anti-dilution provision results in a 286-

day violation, the State's sampling method in December 1993

entrained into the sample PCB-contaminated concrete, result-

ing from the previous use of PCBs at the facility and their

release into the berm; and (2) that, to a reasonable degree of

scientific certainty, Mr. Potterton opined that the company's

change in its method of collection of oil, from one type of

pump to a more efficient wet/dry vacuum system, which was a

more aggressive collection procedure, directly resulted in

PCB levels over 50 ppm by entraining concrete particles and

dust and introducing oils from cracks in the immediate sur-

face of the slightly porous, PCB-contaminated concrete. The

ALJ imposed a penalty of $281,400.

The Environmental Appeals Board ("Board"), upon de novo

review, affirmed the 1997 Order on liability and the $281,400

penalty. The Board rejected the company's contention that

the Board should consider all the evidence in the administra-

tive record including its new evidence explaining the source of

the PCB concentrations in excess of 50 ppm, ruling that its

review of an accelerated decision will "generally" be limited to

the evidence and arguments in the administrative record at

the time the accelerated decision was made. The Board also

rejected the company's contention that the ALJ had erred in

refusing to consider relative to liability the new evidence

proffered at the penalty hearing, ruling that the law of the

case doctrine permitted the ALJ to reject the company's new

exculpatory evidence once liability had been determined. The

Board further ruled that the company had failed to meet its

burden of production and persuasion to show as an affirma-

tive defense that the historic waste exemption applied.

Based on the evidence that PCB contamination had been

found in the waste oil in previous years and that production

had increased significantly in 1993, and in view of the compa-

ny's failure to carry its burden of showing that the PCBs

were released prior to February 17, 1978, the Board conclud-

ed that the ALJ had reasonably inferred that the excessive

PCBs came from oil weeping from the HTS 975 rather than

PCBs leaching up from the concrete and soil beneath the

floor. Finally, the Board declined to apply the regulations

effective August 28, 1998, because the complaint had been

filed and liability determined before the new regulations

became effective. The Board did not rule on the ALJ's

alternative holding that the company was not entitled to the

historic waste exemption because the berm was not a proper

disposal site.

II.

On appeal, the company contends that the ALJ erred in

granting the agency's motion for accelerated decision on

liability by making, with no supporting evidence, a self-

described technical inference that PCBs must have spilled in

1993, and then blocking all contrary evidence that the compa-

ny sought to put in the record. The company maintains that

the ALJ's reliance on the agency's inference was not only

contrary to the nature of accelerated decisions, which the

agency acknowledges are like summary judgment, but also

contrary to the agency's own 1979 regulatory scheme, which

presumed that PCB-containing oil would flush completely

from the company's heat transfer system within three months

of the introduction of non-PCB oils. The company also

contends that the agency could not shift its burden of proof as

to its prima facie case, as was done in Standard Scrap, nor

penalize the company for historic PCB contamination in the

face of undisputed evidence that its source was pre-1978 PCB

oil. The company further maintains that the agency's clarifi-

cation of its regulations on the historic waste exemption

applies ab initio, citing Supreme Court and agency prece-

dent. Finally, the company contends that the agency imper-

missibly blocked subsequent key evidence, and that it was a

violation of the company's due process right to fair notice to

penalize the company for an historic spill.

A.

The Toxic Substances Control Act ("Act"), 15 U.S.C.

ss 2601-2692 (1994), provides for regulation of the use and

disposal of toxic substances prior to their manufacture, pro-

cessing, distribution, and use in order to protect human

health and the environment. Section 5 goes so far as to bar,

with only limited exceptions, the manufacture of a new chemi-

cal substance or new use prior to notice to the Administrator

who, upon finding that there is a reasonable basis to conclude

such action presents or may present an unreasonable risk of

injury to health or the environment, may prohibit or place

restrictions on its manufacture, processing, or distribution.

15 U.S.C. s 2604. The Act gives special attention, however,

to PCBs in view of the seriousness of their threat to human

health and the environment. See Envtl. Def. Fund, Inc. v.

EPA, 636 F.2d 1267, 1271 (D.C. Cir. 1980). Section 6 sets

forth a detailed scheme to dispose of and phase out PCBs,

and directs the Administrator to promulgate rules within six

months after January 1, 1977 (the Act's effective date), pre-

scribing methods of disposal and marking of PCBs. 15

U.S.C. s 2605(e). As relevant here, s 15 identifies prohibited

acts, including failing to comply with the Administrator's

rules and orders. Id. s 2614(1). The Act authorizes the

assessment of civil penalties not to exceed $25,000 for each

violation as well as criminal prosecution for knowing or willful

violations, and requires prior written notice of a proposed civil

penalty for violation of a prohibited act and a hearing in

accordance with s 554 of the Administrative Procedure Act, 5

U.S.C. s 554. 15 U.S.C. s 2615.

In 1978, the agency promulgated the first of two sets of

regulations to carry out s 6(e). See Envtl. Def. Fund, 636

F.2d at 1272. The first regulations, the so-called "Disposal

Regulations," covered pure PCB compounds as well as mate-

rials contaminated with at least 500 ppm of PCBs. Id.

Explaining that it chose this regulatory cutoff in order to

regulate disposal of most PCBs "as soon as possible," Pream-

ble to Final Disposal Regulations, 43 Fed. Reg. 7,151 (1978),

the agency warned that it was considering a new cutoff

"possibly in the range of 50 ppm or below" for the proposed

"Ban Regulations." Id. In June 1978, the agency proposed

regulations with a 50 ppm cutoff, see 43 Fed. Reg. 24,813

(1978), and this cutoff remained in the final rule. See Poly-

chlorinated Biphenyls (PCBs) Manufacturing, Processing,

Distribution in Commerce, and Use Prohibitions, 44 Fed.

Reg. 31,514, 31,543 (1979).

As amended, the regulations in effect in 1993-94 also

contained a 50 ppm cutoff, and defined "disposal" to mean

"intentionally or accidentally to discard, throw away, or other-

wise complete or terminate the useful life of PCBs." 40

C.F.R. s 761.3 (1993). Subpart D set forth the disposal

requirements, defining "[s]pills and other uncontrolled dis-

charges of PCBs at concentrations of 50 ppm or greater [to]

constitute the disposal of PCBs." Id. s 761.60(d)(1). A

prefatory note to Subpart D stated that PCB items that have

been placed in a disposal site are considered to be "in service"

for purposes of Subpart D, and that Subpart D does not

require "removal of PCBs and PCB items from service and

disposal earlier than would normally be the case." Id. pt.

761, Subpart D (prefatory note). Subpart G, regulating spill

cleanup, requires the cleanup of PCBs within 48 hours of

notice or awareness of a spill. Id. s 761.125(c).

The Board interpreted the prefatory note in Subpart D of

the disposal regulations in Standard Scrap, 1990 E.P.A. App.

LEXIS 8. The case involved a civil enforcement proceeding

under s 16(a) of the Act charging violations of 40 C.F.R.

s 761.60 and 15 U.S.C. s 2614. Id. at *1-*2. The Board

stated that "[f]rom the unexplained presence of PCBs in the

soil, it can be inferred that one or more 'uncontrolled dis-

charges' of PCBs took place." Id. at *6. Under s 761.60(d)

of the regulations, the Board ruled, such a discharge amounts

to an improper disposal. Id. Standard Scrap argued that

the PCBs at issue fell within the historic waste exemption

provided in the prefatory note to Subpart D. Id. at *8. The

Board disagreed. The Board stated that the historic waste

exemption is available only as an affirmative defense, and that

the respondent bears the initial burden of production and the

ultimate burden of persuasion on the applicability of the

exemption. See id. at *10. Because Standard Scrap had

failed to show by a preponderance of the evidence that the

PCBs in the soil samples were "placed in a disposal site"

prior to February 17, 1978, the Board ruled that it could not

avail itself of the exemption. Id. at *13. In the alternative,

the Board held that "a 'disposal site' is something more than

a place where PCBs have been accidentally discharged." Id.

at *21.

Effective August 28, 1998, the agency amended the PCB

regulations. See 63 Fed. Reg. 35,384 (1998) (codified in

scattered sections of 40 C.F.R. Part 761). Comments on the

regulations as proposed in December 1994 had urged clarifi-

cation of the prefatory note in light of the Board's decision in

Standard Scrap. See 59 Fed. Reg. 62,788, 62,792. The 1998

regulations deleted the prefatory note and provided that sites

where PCBs have been placed in a land disposal facility,

spilled, or otherwise released to the environment prior to

April 18, 1978, are presumed not to present an unreasonable

risk of injury to health or the environment from exposure to

PCBs at the site, and do not necessarily require further

disposal action unless, on a case-by-case basis, the Adminis-

trator makes a finding that spills, leaks, or other uncontrolled

discharges, such as leaching from a pre-1978 disposal site,

constitute ongoing disposal that may present an unreasonable

risk of exposure to PCBs. 40 C.F.R. s 761.50(b)(3)(i)(A)

(2000). The regulations further clarified the burden on the

respondent, providing that "[t]he owner or operator of a site

containing PCB remediation waste has the burden of proving

the date that the waste was placed in a land disposal facility,

spilled, or otherwise released into the environment[.]" Id.

s 761.50(b)(3)(iii).

B.

Under the agency's Consolidated Rules of Practice, an ALJ

may issue an accelerated decision if there are no genuine

issues of material fact and the movant is entitled to judgment

as a matter of law. See 40 C.F.R. 22.20(a). The Board has

construed an accelerated decision to be in the nature of

summary judgment, and has adopted the formulation of the

Supreme Court in Anderson v. Liberty Lobby, Inc., 477 U.S.

242 (1986), and Celotex Corp. v. Catrett, 477 U.S. 317 (1986),

construing Federal Rule of Civil Procedure 56. See In re

BWX Tech., Inc., RCRA (3008) Appeal No. 97-5, 2000 E.P.A.

App. LEXIS 13, at *34-*41 (E.P.A. Apr. 5, 2000). Thus, the

movant is entitled to an accelerated decision only if it pres-

ents "evidence that is so strong and persuasive that no

reasonable [factfinder] is free to disregard it." Id. at *38-

*39. Evidence not too lacking in probative value must be

viewed in the light most favorable to the party opposing the

motion. See Anderson, 477 U.S. at 251, 255. Although the

finder of fact may draw inferences from the evidence, they

must be "reasonably probable," BWX, 2000 E.P.A. App.

LEXIS 13, at *45 n.22, and based on more than speculation.

See, e.g., Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,

475 U.S. 574, 587-88 (1986); BWX, 2000 E.P.A. App. LEXIS

13, at *45 n.22; In re Clarksburg Casket Co., EPCRA Appeal

No. 98-8, 1999 E.P.A. App. LEXIS 23, at *28 (E.P.A. July 16,

1999). Summary judgment is inappropriate when contradic-

tory inferences may be drawn from the evidence. See, e.g.,

Londrigan v. FBI, 670 F.2d 1164, 1171 n.37 (D.C. Cir. 1981).

To prevail, then, on a motion for accelerated decision on

liability, the agency "must show that it has established the

critical elements of [statutory] liability and that [the respon-

dent] has failed to raise a genuine issue of material fact on its

affirmative defense...." BWX, 2000 E.P.A. App. LEXIS 13,

at *43. As to the affirmative defense, the Board has ex-

plained that "the [agency's initial] task is to show that there is

an absence of support in the record for the defense." Id. at

*44 (citing Celotex, 477 U.S. at 323-24). "If the [agency]

satisfies this burden, [the respondent], as the non-movant

bearing the ultimate burden of persuasion on its affirmative

defense, must meet its countervailing burden of production by

identifying 'specific facts' from which a reasonable factfinder

could find in its favor by a preponderance of the evidence."

Id.

The evidence before the ALJ on liability consisted of the

pleadings, the parties' joint stipulation of July 3, 1997 and

attachments, and two affidavits of the company's engineer,

Mr. Langelier. In addition, the company proffered the ex-

pert testimony of Mr. Potterton to the effect that there was a

physical and chemical basis for the unexpected appearance in

1993 of PCB concentrations in excess of 50 ppm, and, thus, no

new spill or uncontrolled discharge in 1993. The undisputed

evidence shows that PCB concentrations found in samples

taken from the berm under the HTS 975 between April and

December 1993 exceeded 50 ppm. The undisputed evidence

also shows that the company had ceased using oils containing

PCBs in 1972, and thereafter it had properly flushed its

system in 1977 and 1988, and that the samples taken through

1992 had shown PCB concentrations of less than 50 ppm.

Further, there was evidence from the company's manager of

environmental engineering that the company had "dramatical-

ly" increased its production in 1992, running the HTS 975 for

24 hours a day, 7 days a week, through 1993 and into 1994.

The ALJ granted the agency's motion for partial accelerat-

ed decision, relying on Standard Scrap, 1990 E.P.A. App.

LEXIS 8, at *6 n.6, in which the Board stated that the agency

presents a prima facie case of a violation by showing that the

samples contain PCBs in excess of 50 ppm and that the PCBs

were not disposed of in a proper site, a conclusion that may

be inferred from where the PCBs were found. The Board, on

de novo review, approved of the ALJ's reliance on the infer-

ence that because there was an unexplained presence of

PCBs on the concrete floor, one or more uncontrolled dis-

charges of PCBs took place. Ruling that the timing of an

improper disposal is an element of the historic waste affirma-

tive defense, not a part of the agency's prima facie case, the

Board agreed that the company had failed to meet its burden

of showing entitlement to the historic waste exemption. Pre-

termitting the correctness of the Board's position on the

parties' burdens, we hold that the Board's conclusion that the

administrative record during the liability phase of the pro-

ceedings did not present a genuine dispute of material fact

was erroneous, and thus its grant of the agency's motion for

accelerated decision was arbitrary and capricious. See Envtl.

Def. Fund, Inc. v. Costle, 657 F.2d 275, 282-83 (D.C. Cir.

1981); 5 U.S.C. s 706(2)(A).

The company presented undisputed evidence that it had not

introduced any PCB-containing heat transfer fluids since 1972

and that the results of its flushing, refilling, and testing of the

HTS 975 through at least 1992 had shown PCB concentra-

tions of less than 50 ppm. In addition, the company present-

ed evidence that it had discovered cracks in the concrete

berm and that PCB concentrations in the soil below were

very high. In light of this evidence, the company's inference

that the increase in PCBs was caused by PCBs leaching up

from the PCB-rich concrete and soil into the berm, rather

than leaking down from the HTS 975, would appear to raise a

disputed issue of material fact. Any doubt is, in any event,

dispelled by the company's proffered expert testimony in its

pleadings that itself raised a material question as to whether

an uncontrolled discharge had occurred in 1993. Neither the

Board nor the ALJ nor the agency on appeal challenge the

sufficiency of the proffers, but rather the agency defends the

Board's decision on the ground that the company "failed to

proffer ... alleged evidence in support [of its causation

theory]." Resp't's Br. at 46. Contrary to the agency's

argument, and the ALJ's finding, the company both proffered

evidence and a theory about how the samples contained

excessive concentrations of PCB in the absence of a spill in

1993. By affidavits, the company, in addition, introduced

evidence to support its theory.

The company's evidence that it had not introduced PCB-

containing fluid into its system since 1972 and that it had

discovered PCB-rich soil below the berm and cracks in the

berm could not be dismissed as "a scintilla of evidence."

BWX, 2000 E.P.A. App. LEXIS 13, at *40. The evidence

showed that, prior to 1993, samples from the berm contained

only PCB concentrations below 50 ppm. The ALJ concluded,

and the agency maintains on appeal, that the presence of

PCBs in unregulated quantities contradicted the company's

"assertion" that it had not used PCB-containing fluids since

1972. Not so. Unlike Standard Scrap, in which there was

evidence that PCB-containing fluid had been contemporane-

ously introduced into the system, Standard Scrap, 1990

E.P.A. App. LEXIS 8, at *13-*14, here there was undisputed

evidence, which the ALJ must credit, that no such fluids had

been introduced. That PCBs were detected at below 50 ppm

for twenty years--viewing the evidence in the light most

favorable to the company--does not contradict the inference

from the company's evidence that the presence of PCBs in

1993 was linked to excessive PCBs in the soil or concrete

resulting from pre-1978 PCB usage. In view of the compa-

ny's evidence and its proffered expert testimony, the agency

could not dismiss the company's theory that the PCBs

leached up from the berm as speculative. Put otherwise,

once the company presented evidence that there was no new

source of PCBs in excess of 50 ppm because it stopped using

PCB-containing oil in 1972, and proffered that there was a

"physical/chemical" explanation for the presence of PCBs in

excess of 50 ppm in 1993, the agency was not entitled to an

accelerated decision on liability in the absence of either

evidence that a spill had occurred in 1993 or other evidence

sufficient to show that no reasonable factfinder could conclude

by a preponderance of the evidence that any spill was histor-

ic.

In finding liability, the ALJ did not rely on contrary

evidence from the agency. The ALJ instead inferred from

the company's evidence, and the Board agreed, that the

increased production resulted in a spill in 1993. Yet the

ALJ's inference was based on nothing more than speculation.

The agency offered no technological or other evidence to

show either that the increased use of the HTS 975 was

related to the increased PCBs in the berm, or that the wet

seals harbored PCBs until dislodged by the increased produc-

tion. As the Board observed, the evidence was "very limit-

ed," and clearly there was none to support the inference that

the PCBs had been stuck inside the HTS 975 for twenty-one

years and had suddenly come loose other than the samples

themselves. Given the company's undisputed evidence of its

discontinuance of PCB-based oil in 1972, the agency was not

entitled to an accelerated decision on liability based on the

speculative notion that PCBs in the HTS 975 could affect the

samples more than twenty years after termination of the use

of PCB-containing oil. See BWX, 2000 E.P.A. App. LEXIS

13, at *38-*39.

The company's evidence, when viewed in the light most

favorable to the company, as the ALJ and Board were

required to do on accelerated decision, created a genuine

issue of material fact whether the company had met its

burden of proving its affirmative defense that the spill was

historic. Because the company's evidence presented a disput-

ed issue of material fact regarding the timing of the spill that

led to the presence of PCBs in excess of 50 ppm in 1993, and

thus, a disputed issue whether a spill had occurred in 1993,

neither the Board nor the ALJ could find that "no genuine

issue of material fact exists." 40 C.F.R. s 22.20(a). An

accelerated decision, like the grant of summary judgment, is

inappropriate when there is a disputed issue of material fact

giving rise to conflicting inferences and a choice among them

would amount to fact finding. BWX, 2000 E.P.A. App.

LEXIS 13, at *44. The Board's affirmance of the finding of

liability, resting on both the ALJ's inference that "the in-

creased PCB levels likely came about as a result of the

residual PCBs in the HTS 975 being dislodged by increased

production" and the ALJ's rejection of the company's prof-

fered inference, was exactly that--an improper choice be-

tween two competing theories as to the source of the PCBs.

Although a factfinder may be entitled, on cross motions for

accelerated decision, to decide among reasonable inferences

where the evidence is fully developed, the case did not come

before the ALJ in this posture. See BWX, 2000 E.P.A. App.

LEXIS 13, at *20 n.10. Both the ALJ and Board relied on

the company's assertions that no genuine issues of material

fact existed and that "[w]hy the PCBs suddenly showed up in

1993 berm samples is a matter of speculation and in any case

is irrelevant to this case." Board's Order (Nov. 28, 2000)

(quoting Resp. to Partial Accelerated Decision Mot. at 3 n.2).

These statements were made in the context of the company's

legal argument that the agency bore the burden of proving

that a spill took place in 1993. Once the company lost that

legal argument, there was no basis for the ALJ or Board to

conclude that the company had conceded that there was no

dispute as to the source of PCBs, particularly in view of the

fact that prior to the 1997 Order on liability the company

proffered additional evidence regarding the chemical and

physical basis for the 1993 PCB concentrations.

Although the ALJ ruled alternatively that the company was

not entitled to the historic waste exemption because the berm

was not a proper disposal site, the Board on de novo review

did not adopt this alternative holding. Whether the company

can, on remand, meet its burden of showing that it is entitled

to the historic waste exemption remains to be seen. At this

stage, we need hold only that the Board erred in affirming

the accelerated decision on liability. Because we hold that

the decision the Board invoked as "law of the case" must be

revisited because it was improper for the ALJ to grant the

agency's motion for accelerated decision based on the evi-

dence presented, on remand there will be no occasion to

revisit the question whether the ALJ properly could exclude

new liability evidence at the penalty phase, and hence we

need not address whether the Board and ALJ erred in

considering the law of the case argument. Further, because

the 1998 regulations are now final, we need not address

whether the ALJ and the Board should have considered the

company's reliance on the proposed regulations as reflecting

agency policy.

Accordingly, we grant the petition and remand the case to

the Board for further proceedings.