Petition for Writ of Certiorari — W.R. Grace & Co. v. United States (No. 05-1363)

Supreme Court, U.S.

et?

a 05136 3APR 27 2006

No. 05. OFFICE OF THE CLERK

IN THE

Supreme Court of the United States

W.R. GRACE & CO., KOOTENAI DEVELOPMENT

CORPORATION, AND W.R. GRACE & CO.-CONN.,

Petitioners,

v.

UNITED STATES OF AMERICA,

Respondent.

On Petition for Writ of Certiorari

to the United States Court of Appeals

for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

KATHERYN J. COGGON CHRISTOPHER LANDAU

HOLME ROBERTS & Counsel of Record

OWEN LLP JOHN C. O’QUINN

1700 Lincoln St. KIRKLAND & ELLIS LLP

Denver, CO 80203 655 Fifteenth St., N.W.

Washington, DC 20005

(202) 879-5000

April 27, 2006

ee eee ee es

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether the Ninth Circuit erred, and created a

conflict with the Eighth and Tenth Circuits, by holding

that the _ Comprehensive Environmental Response,

Compensation, and Liability Act of 1980 (CERCLA), as

amended, 42 U.S.C. §§ 9601 et seq., requires a responsible

party to pay the entire cost of an environmental response

action of potentially unlimited scope and duration,

undertaken without any consideration of cost or cost-

effectiveness, without being allowed to challenge whether

all or part of that action was necessary to contain or abate

an immediate environmental hazard.

‘i

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 29.6 of the Rules of this Court,

petitioners state as follows:

Petitioner W.R. Grace & Co. is a publicly held

Delaware corporation. It has no parent corporation, and

no publicly held corporation owns 10% or more of its

stock.

Petitioner Kootenai Development Corporation is a

subsidiary of W.R. Grace & Co., and no other publicly

held corporation owns 10% or more of its stock.

Petitioner W.R. Grace & Co.-Conn. is a subsidiary of

W.R. Grace & Co., and no other publicly held corporation

owns 10% or more of its stock.

Petitioners W.R. Grace & Co., Kootenai Development

Corporation, and W.R. Grace & Co.-Conn. filed for

Chapter 11 bankruptcy in federal court in Delaware in

April 2001, and that proceeding remains pending.

TABLE OF CONTENTS

Page

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PERTINENT STATUTORY PROVISIONS .....................2020005: 4

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REASON FOR GRANTING THE WRIT......................c:cceeeeeee 13

PRICING ee

v

TABLE OF AUTHORITIES

Page(s)

Cases

Amland Properties Corp. v. Aluminum Co.,

711 F. Supp. 784 (D.N.J. 1989) .............. ee 15, 18

Anderson v. Liberty Lobby, Inc.,

Be es ee kis baits ch dasin cds Caasancaobsactoianedunnsanss 6

Channel Master Satellite Sys., Inc. v. JFD Elecs. Corp.,

748 F. Supp. 373 (E.D.N.C. 1990).....................04. 15

Chevron U.S.A., Inc. v. NRDC,

Ee ar ee CR sekiskcakccscncstasconsmanieeesinsbsecelanans 27

Colorado v. Sunoco, Inc.,

337 F.3d 1233 (10th Cir. 2003) ............... cesses 14

Conroy v. Antskoff,

re Rak te URE is ccaoicssasuaiasaeccceas catcsnenepncaiatse 25

Exxon Corp. v. Hunt,

ROG TS BR oii. cccvensvcsssenescon 14, 28

General Elec. Co. v. EPA,

860 F Sa 168 (D.C. Cir: ZOOSK). .....c ne ccccecccseescscsscns 13

In re Bell Petroleum Seruvs., Inc.,

3 F.3d 889 (Sth Cir. 1993) ........................ 14, 21, 25

Kelley v. EPA,

15: F.30 1100 (D.C. Cir. 1904).............000 50. ccccssi.. 26

Minnesota v. Kalman W. Abrams Metals, Inc.,

155 F.3d 1019

GE SANs RINE ccthscaasteecdnanaons 3, 15, 17, 18, 20, 25, 27

Morrison Enters. v. McShares, Inc.,

SOR F Sa FIZZ (IO Car. BOO) ......ceccccnreccecscscseces 14

New York v. Shore Realty Corp.,

BAO ete RI CE OE, BU novices sacacdcssnvendcseneses 14

vi

Public Serv. Co. v. Gates Rubber Co.,

175 F.3d 1177 (10th Cir. 1999) ....... 3, 15, 19, 20, 27

Sherwin-Williams Co. v. City of Hamtramck,

840 F. Supp. 470 (E.D. Mich. 1993) .....0..0...... 15, 24

United States v. Hardage,

982 F.2d 1436 (10th Cir. 1992) ...................ccceeeee 14

United States v. Mead Corp.,

WNe SFR A COIS Gascnknssésck tints esintnbaccechastpaaworanrcee 27

Versatile Metals, Inc. v. Union Corp.,

693 F. Supp. 1563 (E.D. Pa. 1988) ...0.0000.000... 15, 20

Statutes and Rules

28 U.S.C. § 113(g)(2).............. Pa tie aver eporsoerarttes wnloy «icra 10

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Other Authorities

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INTRODUCTION

This case presents the question whether the United

States may conduct an environmental response action of

unlimited scope and duration under the Comprehensive

Environmental Response, Compensation, and Liability

Act of 1980 (CERCLA), as amended, 42 U.S.C. §§ 9601 et

seq., without any consideration of cost or cost-effectiveness,

and then present a responsible party with the bill. The

Ninth Circuit answered that question in the affirmative,

holding that once the Environmental Protection Agency

(EPA) determines that any conditions at a particular site

create a public health hazard, the EPA is free to spend

money at will at that site, even on actions unnecessary to

contain or abate the hazard, and then recover that money

from a responsible party. That holding turns CERCLA

upside down, and conflicts with —— from the Eighth

and Tenth Circuits.

CERCLA creates a fundamertal distinction between

two types of environmental response actions: “removal”

and “remedial” actions. “Removal” actions are short-term,

temporary measures necessary to contain or abate an

immediate environmental hazard. Precisely because such

actions are limited in scope and duration, parties

undertaking them need not conduct extensive analysis of

cost or cost-effectiveness in order later to recover costs

from a responsible party. Indeed, subject to certain

narrow exceptions, CERCLA expressly caps “removal”

actions undertaken by the United States at $2 million or

12 months. “Remedial” actions, on the other hand, are

long-term measures undertaken as a _ permanent

environmental remedy. They are not limited in either

scope or duration, but a party undertaking such an action

must conduct substantial analysis of cost and cost-

effectiveness if it wishes later to recover costs from a

responsible party: The statute thus establishes a system

of checks-and-balances: removal actions are limited in

scope and duration, and hence require only limited

procedural safeguards, whereas remedial actions are

2

unlimited in scope and duration, and hence require

substantial procedural safeguards.

The ruling below obliterates this careful scheme. This

case involves one of the largest response actions in

American history: so far, the EPA has spent more than

$120 million over six years to address asbestos

contamination in and around Libby, Montana, and no end

is yet in sight. There is no question that CERCLA

authorizes the EPA to undertake such an action, and to

present responsible parties like petitioners with the bill.

But there is also no question that this massive response

action is a long-term, permanent effort to restore Libby to

its original condition. And therein lies the rub: the EPA

has never made any effort to justify the cost or cost-

effectiveness of any of its actions in Libby. To the

contrary, the EPA has simply thrown money at the

problem. The Government obviously may spend its own

money as it wishes, but cannot under CERCLA force

' private parties like petitioners to pay the bill unless it has

complied with the relevant procedural safeguards. The

EPA has attempted to circumvent those safeguards in

this case by asserting that everything done in Libby has

been part of a single “removal” action. And the statutory

caps on removal actions do not apply, according to the

EPA, because everything done in Libby has been part of

an emergency “removal” action exempt from those caps.

The Ninth Circuit held that this was all fine, and

affirmed the grant of summary judgment in the EPA’s

favor with respect to the entire Libby response action

through the end of 2001.

The upshot of that ruling is that, in the Ninth Circuit,

the line between removal and remedial actions under

CERCLA is effectively gone. If this response action can

be characterized as a removal action as a matter of law,

then any respense action can be characterized as a

removal action as a matter of law, and there is no more

need (ci incentive) for the EPA to consider cost or cost-

effectiveness when conducting such an action—after all, it

3

is essentially spending someone else’s money. Not

surprisingly, the ruling below cannot be reconciled with

rulings by other courts of appeals denying cost recovery

under CERCLA where a party undertook a remedial

action without observing the requisite procedural

safeguards, including consideration of cost and cost-

effectiveness, required for such actions. See Public Serv.

Co. v. Gates Rubber Co., 175 F.3d 1177, 1181-82 (10th Cir.

1999); Minnesota v. Kalman W. Abrams Metals, Inc., 155

F.3d 1019, 1024 (8th Cir. 1998).

This Court should grant certiorari to resolve the

conflict. Although CERCLA has been on the books for a

generation, and has had sweeping effects on American

business and society, this Court has never analyzed the

statute’s fundamental removal/remedial distinction. The

time is now ripe for this Court to do so, and to restore

CERCLA’s formidable cost-recovery authority to its

proper statutory bounds.

OPINIONS BELOW

The Ninth Circuit’s decision is reported at 429 F.3d

1224, and reprinted in the Appendix (App.) at 1-50a. The

district court’s decision granting the United States

summary judgment is reported at 280 F. Supp. 2d 1135,

and reprinted at App. 51-70a. The district court’s

decision awarding the United States all of the costs

requested is reported at 280 F.Supp. 2d 1149, and

reprinted at App. 71-138a.

JURISDICTION

The Ninth Circuit rendered its decision on December

1, 2005. App. la. On February 15, 2006, Justice Kennedy

granted petitioner’s application to extend the time within

which to file a petition for a writ of certiorari to April 28,

2006. This Court has jurisdiction under 28 U.S.C.

§ 1254(1). :

4

-

PERTINENT STATUTORY PROVISIONS

42 U.S.C. § 9601(23) provides:

The terms “remove” or “removal” means the

cleanup or removal of released hazerdous

substances from the environment, such

actions as may be necessary [sic] taken in

the event. of the threat of release of

hazardous substances into the environment,

such actions as may be necessary to monitor,

assess, and evaluate the release or threat of

release of hazardous substances, the

disposal of removed material, or the taking

of such other actions as may be necessary to

prevent, minimize, or mitigate damage to

the public health or welfare or to the

environment, which may otherwise result

from a release or threat of release. The term

includes, in addition, without being limited

to, security fencing or other measures to

limit access, provision of alternative water

supphes, temporary evacuation and housing

of threatened individuals not otherwise

provided for, action taken under section

9604(b) of this title, and any emergency

assistance which may be provided under the

Disaster Relief and Emergency Assistance

Act.

42 U.S.C. § 9601(24) provides:

The terms “remedy” or “remedial action”

means those actions consistent with

permanent remedy taken instead of or in

addition to removal actions in the event of a

release or threatened release of a hazardous

substance into the environment, to prevent

or minimize the release of hazardous

substances so that they do not migrate to

cause substantial danger to present or

5

future public health or welfare or the

environment. The term includes, but is not

limited to, such actions at the location of the

release as storage, confinement, perimeter

protection using dikes, trenches, or ditches,

clay cover, neutralization, cleanup of

released hazardous substances and

associated contaminated materials,

recycling or reuse, diversion, destruction,

segregation of reactive wastes, dredging or

excavations, repair or replacement of

leaking containers, collection of leachate and

runoff, onsite treatment or incineration,

provision of alternative water supplies, and

any monitoring reasonably required to

assure that such actions protect the public

health and welfare and the environment.

The term includes the costs of permanent

relocation of residents and businesses and

community facilities where the President

determines that, alone or in combination

with other measures, such relocation is more

cost-effective than and environmentally

preferable to the transportation, storage,

treatment, destruction, or secure disposition

offsite of hazardous substances, or may

otherwise be necessary to protect the public

health or welfare; the term includes offsite

transport and offsite storage, treatment, .

destruction, or secure disposition of

hazardous substances and _ associated

contaminated materials.

STATEMENT OF THE CASE

A. Background

This case arises out of long-ceased vermiculite mining

activities near Libby, a town of some 3,000 residents in

northwestern Montana. Vermiculite is not a hazardous

6

substance; it is a form of mica that, when heated, expands

like popcorn, and has a variety of commercial uses

(especially insulation). App. 140-4la.' Commercial

vermiculite mining at Zonolite Mountain, located about

ten miles outside of Libby, began in the 1920s; in 1939,

the Zonolite Company was formed to mine and process

vermiculite at the site. App. 5la. Petitioner W.R. Grace

& Co. purchased the Zonolite Company in 1963. See id.

Like most naturally-occurring minerals, raw

vermiculite contains impurities—foreign substances not

wanted in the final, commercial product. Among the

impurities associated with vermiculite from Zonolite

Mountain is tremolite, a naturally occurring mineral that

is present in both asbestos and nonasbestos forms. App.

140a. Asbestos (in contrast to vermiculite) is a hazardous

substance within the meaning of CERCLA. App. 72a

(citing 42 U.S.C. §9601(14) and 40 C.F.R. § 302.4).

Recause asbestos is an impurity in vermiculite, an

important part of the production process in Libby focused

on separating asbestos and other impurities from

vermiculite.

Grace ceased commercial mining operations in Libby

in 1990. Id. Over the following years, Grace dismantled

many of its mining facilities, and began selling off its

properties in and around the town. During those years,

federal, state, and local authorities were well aware of

residual vermiculite in and around the town, but saw no

1 Because the district court granted summary judgment in the

Government’s favor, a reviewing court must accept Grace’s

evidence as true, and draw all reasonable inferences in Grace’s

favor. See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

255 (1986). Accordingly, most of the facts set forth in this

petition are drawn from Grace’s Statement of Genuine Issues of

Material Fact filed in opposition to the Government's summary

judgment motion. See App. 139-84a.

reason for any action. In 1991, Grace sampled the air

along the unpaved road leading from the abandoned mine

to the Kootenai River for asbestos and submitted the

results to local officials. None of the samples contained

more than one-tenth the then-existing workplace-safety

asbestos standard of 0.2 fibers per cubic centimeter. C.A.

App. ER41-43. In 1992, the EPA investigated potential

asbestos contamination along the road, and concluded

that no action was necessary or appropriate. Jd. at ER44-

45; App. 9a. That same year, the Montana Department of

Health and Environmental Sciences sampled soil at the

former vermiculite export plant on the outskirts of town

and concluded that “[nJeither sample showed significant

asbestos contamination. Therefore the potential site will

be considered no further action at this time.” C.A. App.

ER1512-14.

Everything changed, however, in late 1999. On

November 18—nine years after Grace closed the mine—

the Seattle Post-Intelligencer began running a series of

articles on the health risks, from asbestos exposure in

Libby. App. 14la. The series asserted that 192 people —

had died from asbestos-related causes in Libby (“A Town

Left to Die”), and charged government agencies with

negligence (“While People are Dying, Government

Agencies Pass Buck”). The series caused a political

firestorm in Montana, and a public-relations crisis for the

EPA.

On November 22, 1999—within days of the Post-

Intelligencer series—the EPA dispatched an investigative

team to Libby. App. 14la. In February 2000, the

Committee on Environment and Public Works of the

United States Senate (which oversees the EPA and its

budget, and of which United States Senator Max Baucus

of Montana was then the Ranking Member), held a Field

Hearing in Libby on “Federal, State, and Local Response

to Public Health & Environmental Conditions From

Asbestos Contamination in Libby, Montana.” Senator

8

Baucus presided over that hearing, and EPA officials

testified that Libby would be handled as a top priority.

The results of EPA’s testing in Libby showed that

there was no problem with airborne asbestos at any

location in the town or its vicinity. App. 142a. Based on

these findings, EPA reassured the community that

asbestos did not present a health risk to persons living,

working, or visiting the town, and made no efforts to

evacuate anyone. App. 141-42a. In March 2000, the

EPA’s On-Scene Coordinator in Libby, Paul Peronard,

stated that “[nJone of the results from the soil, insulation

and dust samples point to obvious candidates for

cleanup.” C.A. App. ER1579; see also C.A. App. ER183

(“Test results from area homes, soil, dust and air have

thus far shown little for the community to be concerned

about,” and “[i]f somebody were asking me right now, I

would say the ambient air is no problem”) (Peronard);

C.A. App. ER171 (“Sampling to date does not indicate an

ambient air asbestos concentration problem.”).

Despite these findings, in May 2000, the EPA issued

an “Action Memorandum” memorializing its decision to

carry out not only a removal action (as opposed to a

remedial action), but an emergency removal action

(exempt from CERCLA’s 12-month, $2 million caps on

removal actions) at the site of the former screening plant

on the banks of the Kootenai River some four miles

outside of town. App. lla.2 At that point, the site was

owned and occupied by a local couple, the Parkers, who

2 The Action Memorandum also memorialized EPA’s decision to

undertake an emergency removal action at the former export

plant site. On the same day the agency issued the

Memorandum, however, the agency also issued a Unilateral

Administrative Order directing Grace to carry out that cleanup.

Grace did so at its own expense, and costs associated with thai

project are not at issue here. App. lla n.8.

9

had purchased the property from Grace in the mid-1990s

for $126,600. C.A. App. ER1515-17. The Action

Memorandum allocated $4.025 million for remediation

work at the site, which (without any analysis of cost or

cost-effectiveaess) was spent on razing all the buildings,

excavating the soil to a depth of up to 13 feet, replacing

the soil, and improving the property (e.g., installing step

pools for trout and rocks along the river to prevent

erosion) dd. at ER896-97, ER1021-22, ER1187-88;

ER1145-72 (photographs); App. 159-63a.

In July 2001, EPA issued a_ second Action

Memorandum memorializing its decision to expand the

Libby response action from the screening plant site to two

nearby uninhabited forest areas (the Flyway and the

Bluffs), three local schools to which Grace had donated

vermiculite and/or other mining materials for outdoor

athletic facilities, two residential properties (Siefke and

Brownlee) with small piles of vermiculite or contaminated

mining equipment on site, and the unpaved road between

the mine and the river. App. 12a. The second Action

Memorandum raised the ceiling for spending on the Libby

response action: to over $20 million, and extended the

estimated duration of the project to 34 months. App. 12-

13a. Pursuant to the second Action Memorandum, EPA

(without any analysis of cost or cost-effectiveness) dug up

the soil in the forest at the Flyway and the Bluffs,

replaced all the soil, ripped up the athletic facilities at the

schools (even though the mining materials donated by

Grace had long since been removed or paved over), and

engaged in other remedial activities (including buying a

new public announcement system and portable popcorn

machine for the high school). App. 163-69a; see also C.A.

App. ER642-51, ER897-912, ER1021-22, ER1653-57.

In May 2002, EPA issued a third Action Memorandum

memorializing its decision to expand the Libby removal

action yet again, this time to residential properties and

businesses throughout the Libby valley. App. 13a. The

third Action Memorandum raised the ceiling for spending

10

on the Libby project to $55.6 million, and extended the

estimated duration of the project by two to three years.

Id. Pursuant to the third Action Memorandum, EPA

(without any analysis of cost or cost-effectiveness) to this

day is digging up residents’ yards throughout Libby,

replacing the soil, and restoring the facilities. C.A. App.

ER912-13. :

Notwithstanding all of this activity, EPA made no

attempt to place Libby on the National Priorities List

(NPL), a list required by CERCLA, 42 U.S.C. § 9605(a)(8),

which ranks the highest national priorities for

environmental response actions (and in this period

included over 1,000 sites). Inclusion on the NPL is a

prerequisite for EPA to perform a remedial action (unlike

a removal action). See 42 U.S.C. § 9605(a)(8); 40 C.F_R.

§ 300.425(b)(1). Ultimately, rather than itself trying to

justify placing Libby on the NPL, the agency instead

lobbied the Governor cf Montana to exercise her

unreviewable one-time statutory power to designate a site

within the State for placement on the NPL. C.A. App. ER

1643-45. The Governor agreed to do so, id. at ER1646-48,

and Libby was listed on the NPL in October 2002, see

National Priorities List for Uncontrolled Hazardous Waste

Sites, 67 Fed. Reg. 65315 (Oct. 24, 2002)—well after the

agency had issued the three Action Memoranda and

incurred all of the costs at issue here.

B. This Lawsuit

On March 30, 2001, the United States filed this action

against Grace and its subsidiaries Kootenai Development

- Corporation and W.R. Grace & Co.-Conn (collectively

Grace) under Section 107 of CERCLA, 42 U.S.C. § 9607,

seeking recovery of response costs incurred in Libby

through December 31, 2001. The complaint also sought a

declaration of Grace’s liability under Section 113(g)(2) of

CERCLA, 42 U.S.C. § 9613(g)(2), that would be binding in

future actions to recover further response costs or

11

damages incurred by the United States in connection with

the Libby response action.

Grace sought to defend itself on the grounds, among

others, that the EPA had exceeded its statutory and

regulatory authority (1) by characterizing the entire

Libby response action as a removal action, thereby

evading the procedural safeguards required for remedial

actions, and (2) in any event, by characterizing the entire

Libby response action as an “emergency,” and thereby

exceeding the 12-month, $2 million caps on removal

actions. In December 2002—before discovery was

finished, and before Grace had even taken certain critical

depositions—the district court (Molloy, C.J.) granted the

United States summary judgment with respect to both

these challenges. App. 5la-70a. (Because discovery had

not yet concluded, the district court allowed Grace to file

its Statement of Genuine Issues of Material Fact (App.

139-84a) after the court entered its summary judgment

order; the court later stated on the record that none of the

facts identified in the Statement altered its decision.)

With respect to the agency’s characterization of the

entire Libby response action as a removal action, the

court asserted that “the record indicates that the EPA

considered the mandatory factors set forth in 40 C.F.R.

§ 300.415(b)(2)” for a removal action, and that the agency

could “proceed with a removal action after considering

these factors.” App. 60a (emphasis added). The court

emphasized that “/c/onsideration of the mandatory factors

is what is required to conduct a removal action; because

the EPA did so, its decision to conduct a removal action

rather than a remedial action ... cannot be second-

guessed by this Court.” Jd. (emphasis added). The court

did not address Grace’s contention that the agency’s

actual response actions in Libby went far beyond the

permissible scope of a removal action. And with respect

to the agency’s decision to exceed the statutory caps: on

removal actions, the court asserted that the caps are “not

inviolate,” and upheld EPA’s decision on the ground that

12

the agency had “considerfedj’ the factors necessary to

exceed the caps. App. 61-62a (emphasis added).

After the court granted the United States summary

judgment on liability, the only issue left for trial was

whether the United States was entitled to all the costs

claimed—$54,527,081.11. The court held a three-day

bench trial on that issue in early 2003, and, several

months later, issued a decision granting the United

States every penny requested. App. 7la-138a.

Grace appealed, but a panel of the Ninth Circuit

(McKeown, J., joined by Betty Fletcher and Bea, JJ.)

affirmed. App. 1-50a. The panel “diverge[d] from the

district court’s reasoning in some respects,” but “reach[ed]

the same ultimate conclusion: The EPA’s cleanup in Libby

was a removal action that was exempt from the temporal

and monetary cap.” App. 4a. . The Ninth Circuit

recognized that “Congress created a bifurcated scheme of

removal and remedial actions and, accordingly, there

must be outer limits to removal actions.” App. 42a.

Nonetheless, the court held that the EPA was entitled to

characterize the entire Libby response action as a

“removal action” in light of “the documented evidence

that, absent immediate action, the airborne toxic particles

would continue to pose a substantial threat to public

health.” Jd. The court made no effort to link the entire

Libby response action to any such threat. Rather, the

court declared, “[w]e refrain from slicing and dicing the

EPA’s single, cohesive removal action into a myriad of

fractured parts.” App. 23a. On the twin assumptions

that (1) the EPA was entitled to undertake an emergency

removal action to respond to an immediate public health

hazard, and (2) the EPA was entitled to characterize the

entire Libby response action as a “single, cohesive

removal action,” the court not only held that the entire

Libby response action was a removal, but that the entire

Libby response action was an emergency removal exempt

from the statute’s monetary and durational caps. Judge

Bea concurred “to emphasize that this court should stand

13

ready to review separately the EPA’s actions at different

locations at a removal site under the ‘arbitrary and

capricious’ standard stated in 42 U.S.C. § 9613G)(2).”

App. 50a.

This petition follows.

REASON FOR GRANTING THE WRIT

The Ninth Circuit Erred, And Created A Circuit

Conflict, By Holding That The Entire Libby

Response Action Qualifies As An Emergency

Removal Action That Exempts The EPA From

Considering Cost Or Cost-Effectiveness.

_The Ninth Circuit erred, and created a circuit conflict,

by holding that CERCLA requires a responsible party to

pay the entire cost of an environmental response action of

potentially unlimited scope and duration, undertaken

without any consideration of cost or cost-effectiveness,

without being allowed to challenge whether all or part of

that action was necessary to contain or abate an

immediate environmental hazard. That approach turns

CERCLA on its head by essentially obliterating the core

statutory distinction between “removal” and “remedial”

actions.

Although, as the Ninth Circuit correctly observed, the

statutory definitions of “removal” and “remedial” actions

are hardly models of clarity, see App. 14a, 24a, there is

broad consensus on the basic nature of the distinction.

“Removal actions are short-term remedies, designed to

cleanup, monitor, assess, and evaluate the release or

threatened release of hazardous substances. Remedial

actions are longer-term, more permanent remedies to

‘minimize the release of hazardous substances so that

they do not migrate to cause substantial danger to

present or future public health or welfare or the

environment.” General Elec. Co. v. EPA, 360 F.3d 188,

189 (D.C. Cir. 2004) (per curiam) (quoting 42 U.S.C.

§ 9601(24)); see also Exxon Corp. v. Hunt, 475 U.S. 355,

14

360 (1986) (distinguishing a “removal action,” 1.e., “a

short-term cleanup” from a “remedial action,” i.e.,

“measures to achieve a ‘permanent remedy to a

particular hazardous waste problem”); Colorado ov.

Sunoco, Inc., 337 F.3d 1233, 1240 (10th Cir. 2003) (same);

In re Bell Petroleum Serus., Inc., 3 F.3d 889, 894 (5th Cir.

1993) (same); New York v. Shore Realty Corp., 759 F.2d

1032, 1040 (2d Cir. 1985) (same); cf. 182 Cong. Rec.

S14895-02, 14896 (daily ed. Oct. 3, 1986) (“Removals

should remain interim and relatively short-term and

inexpensive actions or urgent responses.”) (statement of

Sen. Stafford, Chairman of the Senate Committee on

Environment and Public Works).

However difficult it may be to distinguish between

removal and remedial actions at the margins, the

distinction is “critical” to CERCLA’s statutory scheme and

the EPA’s corresponding regulatory scheme, the National

Contingency Plan (NCP). App. 8a; see also Jerry L.

Anderson, Removal or Remedial? The Myth of CERCLA’s

Two-Response System, 18 Colum. J. Envtl. L. 103, 103-04

(1993). As the Ninth Circuit explained below, “the

requirements for remedial actions are much more detailed

and onerous” than the requirements for removal] actions.

App. 8a (quoting Morrison Enters. v. McShares, Inc., 302

F.3d 1127, 1136 (10th Cir. 2002)); see also Anderson,

supra, at 104 (CERCLA and the NCP provide

“dramatically different requirements for removal as

opposed to remedial action”).

In particular, “the EPA is required to consider costs

when selecting remedial alternatives whereas ‘CERCLA

contains no corresponding mandate for removal actions.”

App. 8a (quoting United States v. Hardage, 982 F.2d 1436,

1443 (10th Cir. 1992)). This distinction makes sense: a

party need not consider cost or cost-effectiveness before

containing or abating an immediate environmental

hazard, but must consider cost and cost-effectiveness

before permanently remediating a contaminated site.

“The division of responses into the two categories of

15

removal and remedial actions is designed to provide an

opportunity for immediate action—a removal—without

detailed review, where there is no time to safely conduct

such review due to the exigencies of the situation.”

Channel Master Satellite Sys., Inc. v. JFD Elecs. Corp.,

748 F.Supp. 373, 385-86 (E.D.N.C. 1990); see also

Anderson, supra, at 107-08. A party is free to remediate a

site without following the procedural safeguards for

remedial actions, but cannot thereafter recover those

costs from another party. See, e.g., Gates Rubber, 175

F.3d at 1181-82; Kalman W. Abrams, 155 F.3d at 1024;

Sherwin-Williams Co. v. City of Hamtramck, 840 F. Supp.

470, 475-76 (E.D. Mich. 1993); Channel Master, 748

F. Supp. at 384-87; Amland Properties Corp. v. Aluminum

Co., 711 F.Supp. 784, 795-801 (D.N.J. 1989); Versatile

Metals, Inc. v. Union Corp., 693 F. Supp. 1563, 1574-83

(E.D. Pa. 1988). The statute thus protects the public

health without forcing liable parties to. pay for

unnecessary or wasteful response costs. See, e.g.,

Anderson, supra at 107-08; see also id. at 103 (“Congress

made the distinction between remedies and removals

crucial to the recovery of cleanup costs.”) (emphasis

added); App. 8a (removal/remedial distinction “vital to -

those held liable”).

In this case, however, the Ninth Circuit held that the

EPA was entitled to characterize the entire Libby

response action as a “removal” action, and to recover from

Grace every penny of the more than $54 million spent

through the end of 2001, because the agency was entitled

to conclude that there was a public health hazard in

Libby that justified such an action. See App. 4a, 14a-15a,

41a-42a. With all due respect, that is a non sequitur.

Grace does not deny that CERCLA authorizes the

EPA to conduct removal actions to contain or abate

immediate environmental hazards, without any

consideration of cost or cost-effectiveness, and thereafter

recover the cost of such actions from responsible parties.

But that is not what the EPA did here. Rather, from the

16

outset, the EPA set out to permanently remediate the

entire site. Indeed, EPA’s On-Scene Coordinator, Paul

Peronard, described the response action in Libby as a

“permanent,” “long-term” solution. C.A. App. ER1183,

ER1191; see also App. 160a. The problem here is that the

EPA undertook these remedial actions without observing

the procedural safeguards for such actions, and made no

effort to distinguish these improper remedial actions from

otherwise permissible removal actions. Through this

lawsuit, the EPA is seeking to recover the cost of all its

actions in Libby through the end of 2001, without regard

to whether those actions involved the containment or

abatement of an immediate environmental hazard or the

permanent remediation of the site.

All Grace is saying here, thus, is that it is entitled to

its day in court to try to prove that particular elements of

the $54 million requested by the Government (in Grace’s

view, the vast majority of that amount) were not

necessary to contain or abate an immediate

environmental hazard, and thus not recoverable as

“removal” costs under CERCLA. (As the Ninth Circuit

noted, “[t]he EPA does not dispute that the [Libby]

cleanup did not meet the National Contingency Plan’s

procedural requirements for a remedial action.” App. 14a

n.13.) So far, Grace has been denied that opportunity: the

district court granted (and the Ninth Circuit affirmed)

summary judgment against Grace with respect to liability

for the entire Libby response action through the end of

2001. That result is particularly shocking because the

EPA has never claimed, and neither the district court nor

the Ninth Circuit ever determined, that all (or even a

majority, or a substantial portion) of the costs at issue

were necessary to contain or abate an immediate

environmental hazard (as opposed to permanently

remediate the site).

It is no answer to say, as did the Ninth Circuit, that

“the situation fin Libby] warranted an immediate,

aggressive response to abate the public health threat.”

17

See App. 4a. Whether or not a removal action was

warranted has nothing to do with whether or not a

removal action was conducted. The Ninth Circuit

brushed aside Grace’s core argument that the Libby

response action went far beyond the permissible scope of a

removal by declaring that it would not “slic[e] and dic[e]

the EPA’s single, cohesive removal action into a myriad of

fractured parts.” App. 23a; see also App. 1la n.9 (“[W]e

analyze the EPA’s activities in Libby as a single response

action rather than a patchwork of discrete smaller

actions.”). That, of course, is the very question presented

.in this case: whether the EPA’s Libby response action

through the end of 2001 was a “single, cohesive removal

action.” To the extent that the action was devoted in

whole or in part to the permanent remediation of the site,

as opposed to the containment or abatement of an

immediate environmental hazard, it was not a “single,

cohesive removal action” exempt from the procedural

safeguards for remedial actions, such as consideration of

cost and _ cost-effectiveness. In a_ nutshell, the

Government is not entitled to collect costs for the entire

Libby response action as a removal action if the entire |

Libby response action was not a removal action.

The Ninth Circuit’s “all or nothing” approach—under

which an entire response action at a site may be

characterized as a removal action if any portion of that

action may be characterized as a removal action—is flatiy

inconsistent with decisions from other circuits. Thus, in

Kalman W. Abrams, the Eighth Circuit affirmed in part

and reversed in part a grant of summary judgment in

favor of the defendant in a CERCLA cost-recovery action.

See 155 F.3d at 1023-26. At issue there was a site where

hazardous lead contaminants had been spread over a

property. See id. at 1021. The Minnesota Pollution

Control Agency conducted a response action at the site;

over the course of several years, it permanently

remediated the property (digging up the contaminated

soil and replacing it with new soil), but failed to observe

18

the procedural safeguards required for remedial action.

See id. at 1021-22. When the State of Minnesota later

filed a CERCLA cost recovery action against several

responsible parties, the district court granted summary

judgment in the defendants’ favor on the ground that the

State could not recover remedial costs where it had not

complied with remedial safeguards. See id. at 1023.

The Eighth Circuit affirmed the district court’s

decision that the State could not recover the cost of the

entire response action. See id. at 1024. The Eighth

Circuit readily acknowledged “the obvious fact that lead

contaminants were ‘removed’ from the site.” Jd. But that

did not mean, the court explained, that the procedural

safeguards for remedial actions were categorically

inapplicable. To the contrary, the court concluded, “we

agree with the district court that the permanent nature of

the McGuire site cleanup and the leisurely manner in

which MPCA dealt with the problem make it appropriate

to hold the agency to the NCP standards for remedial

action.” Jd. (emphasis added); see also id. at 1026 (“[T}he

kind of arbitrary and wasteful agency action that

occurred in this case cannot be rewarded.”).

But that conclusion, in turn, did not mean that the

State was categorically barred from recovering any of its

response costs. See id. at 1025 (“[W]e disagree with the

district court’s decision to preclude the State from any

cost recovery under CERCLA.”). Rather, the State was

entitled to recover that portion of the costs that were

incurred in compliance with the CERCLA scheme. See id.

Thus, the Eighth Circuit remanded the case to give the

defendants an opportunity to show that particular

response costs were “unreasonable or unnecessary.” Id. at

1026. “The State may not recover response costs incurred

in implementing appropriate remedial actions to the

extent appellees prove on remand that they would have

and could have accomplished the cleanup more cost

effectively.” IJd.; see also Amland, 711 F. Supp. at 795-96

(granting summary judgment to CERCLA cost-recovery

19

defendant with respect to the “vast majority of the costs”

incurred in a response action, which were “for the

remedial actions undertaken in an attempt to remove

[hazardous chemicals] from the [site].”).

Similarly, in Gates Rubber, the Tenth Circuit affirmed

a grant of summary iudement. in. favor of the defendant in

a CERCLA cost-recovery action. See 175 F.3d at 1183-86.

At issue there was a site contaminated with lead and

polychlorinated biphenyls (PCBs). See id. at 1179. One of

the responsible parties, the Public Service Company of

Colorado (PSCO), undertook a comprehensive response

action (which included excavating and _ transporting

contaminated soil from the site) over more than four

years, but failed to comply with the procedural

requirements for remedial actions. See id. at 1179-80,

1184. PSCO later sought to recover a proportionate share

of the response cost from other responsible parties, but

the district court granted summary judgment in favor of

the defendants on the ground that “as a matter of law

PSCO’s cleanup was a remedial action” that did not

comply with the procedural requirements for such actions.

Id. at 1180.

The Tenth Circuit agreed with the district court, and

affirmed the judgment denying any cost recovery. As the

court explained, “PSCO intended to effect a permanent

remedy” through the multi-year response action. Id. at

1184. Although, in the course of this comprehensive

response action, PSCO undertook discrete actions that,

standing alone, might qualify as removal actions, that did

not alter the fact that they were part of a broader

remedial action subject to CERCLA’s heightened

procedural safeguards. See id. (“Although PSCO

‘removed’ and ‘excavated’ soils and buried storage drums,

neither of those acts alone nor their particular labeling

transforms the cleanup into a removal action.”). Thus,

the Tenth Circuit concluded that “[t]he district court did

not err in concluding PSCO undertook a remedial action

which triggered the more detailed requirements of the

20

NCP.” dd. (citing Kalman W. Abrams, 155 F.3d at 1024);

see also Versatile Metals, 693 F. Supp. at 1578 (granting

judgment in favor of CERCLA cost-recovery defendants

based on evidence presented at a trial “that although

some immediate actions were taken at the time the

contamination was discovered, [the CERCLA cost-

recovery plaintiffs’) response action was remedial.”).

The Ninth Circuit’s decision below, affirming the

grant of summary judgment in favor of the plaintiff in a

CERCLA cost-recovery action, cannot possibly be squared

with these precedents. As noted above, the Ninth Circuit

characterized the entire Libby response action though the

end of 2001 as a removal action, even though Grace

vigorously disputed whether the bulk of the action was

necessary to contain or abate an immediate

environmental hazard, see App. 139-84a, and the EPA

itself neither could nor did attempt to justify all of its

actions in Libby under that standard. In contrast, the

Eighth Circuit in Kalman W. Abrams remanded for a

determination of which response costs were indeed

necessary, and the Tenth Circuit in Gates Rubber simply

denied any cost recovery altogether. Both Kalman W.

Abrams and Gates Rubber rejected the argument that an

entire response action at a particular site must (or even

may) be characterized as a removal just because, among

other things, hazardous substances were contained,

abated, or removed. See 175 F.3d at 1184; 155 F.3d at

1024. Thus, the cost-recovery defendants in both Kalman

W. Abrams and Gates Rubber—in sharp contrast to

Grace—had their day in court to argue that at least

portions of a disputed CERCLA response action were

remedial in nature but lacked the remedial safeguards.

The Ninth Circuit’s “all or nothing” approach not only

conflicts with Kalman W. Abrams and Gates Rubber, but

renders the fundamental removal/remedial distinction a

dead letter. After all, the predicate for any response

action (whether removal or remedial) under CERCLA is

the release of “hazardous substances” into’ the

21

environment. 42 U.S.C. § 9601(23) (statutory definition of

“removal” actions); id. § 9601(24) (statutory definition of

“remedial” actions). By definition, then, any CERCLA

response action will involve an attempt to address an

environmental hazard. Accordingly, if the existence of a

such a hazard. were the touchstone for distinguishing

between removal and remedial actions, the distinction

would be meaningless. Indeed, almost every remedial

action could be said to encompass a removal action,

because the permanent remediation of a site typically

involves the removal of hazardous substances. Under the

Ninth Circuit's decision below, a party responding to

environmental contamination can immediately launch a

remedial action without any consideration of cost or cost-

effectiveness, and later collect all of the costs of that

action, by simply pointing to the part of the action that

contained or abated the release of a hazardous

substance—which is precisely what the EPA has done

here. Needless to say, the statutory and regulatory

requirements for remedial actions would be wholly

meaningless if any response action can be characterized

as a removal action.

In other words, the only way that a statutory and

regulatory regime based on the removal/remedial

distinction makes sense is that a removal action must be

limited in scope to containing or abating the exigency that

gave rise to that action in the first place. If, as the

decision below allows, an exigency justifying a removal

action is an “open sesame” to conduct a full-blown

remedial action without observing the remedial

safeguards, the removal/remedial distinction is gone. A

responding party has no incentive to constrain its

spending (and indeed, a.perverse incentive to maximize

its spending) if it knows that it can conduct a multi-year,

multi-million dollar cleanup on someone else’s tab. See,

e.g., Bell, 3 F.8d at 907 (CERCLA does not give EPA

“unrestrained spending discretion,” and “such unbridled

discretion removes any restraint upon the conduct of the

22

EPA in exercising its awesome powers; if the EPA knows

there are no economic consequences to it, its decisions and

conduct are likely to be less responsible”); cf. Stephen G.

Breyer, Breaking the Vicious Circle 11-19 (1993) (noting

danger that unconstrained regulators will overregulate

against risk). That is why there must be a nexus between

the exigency justifying a removal action and the scope of

that action, and sober judicial assessment of that nexus—

particularly because CERCLA gives the EPA broad

discretion to select the response in the first instance, see

42 U.S.C. § 9613G)(2), and bars pre-enforcement judicial

review of that response, see id. § 9613(h). Because the

district court here granted summary judgment in the

Government's favor across the board, and the Ninth

Circuit affirmed that decision, Grace has been denied any

such assessment.

It is no answer to say, as did the Ninth Circuit, that

the situation in Libby is “truly extraordinary.” App. 4a,

15a. What that means, apparently, is that the Ninth

Circuit concluded (notwithstanding the summary

judgment posture of the case) that the public health

-hazard presented in Libby was acute. See id. at 4a

(“[T]he population of Libby ... faces ongoing, pervasive

exposure to asbestos particles being released through

documented exposure pathways. We cannot escape the

fact that people are sick and dying as a result of this

continuing exposure.”). But that means at most that the

Ninth Circuit believes that it would be hard for Grace to

show that all aspects of the EPA’s response action in

Libby through the end of 2001 were not necessary to

contain or abate such an immediate environmental

hazard. It provides no basis whatsoever for denying

Grace its day in court to attempt to make that showing in

the first place.%

3 Judge Bea’s concurrence is especially perplexing on this score.

Judge Bea appeared to agree with Grace that particular

23

In opposing the Government’s motion for summary

judgment, Grace identified numerous aspects of the Libby

response action that were mot geared to containing or

abating an immediate environmental hazard. App. 139-

84a. At the most basic level, the Libby response action

focused from the outset on excavating and replacing the

soil. Given that asbestos does not pose a public health

risk unless it is airborne, App. 155a, it is fanciful to

suggest that excavating and replacing the soil at a depth

of anywhere from five to thirteen feet could represent a

short-term or interim (rather than permanent) solution to

an asbestos contamination problem. The EPA dug up

concrete and asphalt to get to the soil underneath, and

then after replacing the soil, remediated the site by,

among other things, planting new trees, installing new

rocks along the riverfront to prevent erosion, and building

new step pools for trout. App. 159-65a. By no stretch of

the imagination can all of these actions be characterized

as steps necessary to contain or abate an immediate

environmental hazard. Notably, neither the EPA, the

district court, nor the Ninth Circuit ever contended

otherwise. Rather, as noted above, the EPA, the district

court, and the Ninth Circuit all characterized the entire

Libby response action as a permissible removal because it

components of the Libby response action could be challenged,

but rejected a particular example discussed in Grace’s Ninth

Circuit brief on the ground that “the record contains additional

findings that supply a rational reason” to place that example on

the removal side of the removal/remedial distinction. App. 50a.

Given the summary judgment posture of the case, however, the

question is not whether the EPA’s position was “rational,” but

whether the EPA’s position was correct as a matter of law.

Again, Grace never has had its day in court to show that all the

EPA’s actions in Libby through the end of 2001 were not

necessary to contain or abate an immediate environmental

hazard.

24

contained a removal (as well as a frankly remedial)

component—precisely the opposite of the way the Eighth

and Tenth Circuits approached the issue.

The EPA, moreover, has been taking its time on the

Libby response action; right now, that action has been

underway for more than six years, and no end is in sight.

Although the Ninth Circuit downplayed the duration of

the action by blaming the weather, see App. 36a-37a

(citing Sherwin-Williams with a “but see”), that assertion

misses the point that the EPA has had ample time to

evaluate the cost and cost-effectiveness of its actions in

Libby but steadfastly has refused to do so, see App. 163-

68a. If excavating and replacing the soil to a depth of six

feet in uninhabited forest areas was not necessary to

contain or abate an immediate hazard, see App. 163-65a,

then the EPA should have analyzed cost and cost-

effectiveness before excavating and replacing the soil to a

depth cf six feet in uninhabited forest areas—which might

have dissuaded the EPA from undertaking that particular

action in the first place. That is the way CERCLA is

supposed to work.

Indeed, given that CERCLA expressly caps removal

actions by the EPA at $2 million or 12 months, see 42

U.S.C. § 9604(c)(1), it is nothing short of remarkable that

the Ninth Circuit held that the EPA was entitled to

summary judgment with respect to its characterization of

the entire Libby response action through the end of 2001

as a removal action. Although the statutory caps are not

inviolate, and may be exceeded (as allegedly relevant

here) if “immediately required to prevent, limit, or

mitigate an emergency,” 42 U.S.C. § 9604(c)(1)(A), the

caps at the very least underscore the limited and interim

nature of removal actions. Certainly, the fact that the

EPA is seeking through this lawsuit to recover more than

$54 million in costs for response actions taken over more

than two years on its face tends strongly to confirm

Grace’s position that something more than a removal

action is afoot.

25

The Ninth Circuit tried to justify its contrary

conclusion by insisting that “the purpose of the statute ...

points towards a liberal reading of ‘removal’ in order to

effectuate CERCLA’s underlying purpose of protecting

and preserving public health and the environment by

facilitating the expeditious and efficient cleanup of

hazardous waste sites.” App. 28a (internal quotation and

brackets omitted); see also id. (“{A] liberal reading

provides the EPA with greater flexibility to use this tool

for the protection of the public health.”). That approach,

of course, begs the fundamental question whether all of

the EPA’s actions in Libby through the end of 2001 (as to

which the Ninth Circuit affirmed the grant of summary

judgment in the EPA’s favor) were in fact necessary to

contain or abate an immediate environmental hazard.

Allowing Grace its day in court to challenge specific

actions would not undermine CERCLA’s purpose of

protecting public health and the environment; rather, it

would only further CERCLA’s purpose of preventing

arbitrary and capricious agency action. “Congress has

not provided that private parties must pay for the

consequences of arbitrary and capricious agency action.”

Kalman W. Abrams, 155 F.3d at 1024 (quoting Bell, 3

F.3d at 905). This distinct purpose is reflected in the

statutory provisions mandating procedural safeguards

(including consideration of cost and cost-effectiveness) for

remedial actions; to declare (as did the Ninth Circuit) that

CERCLA’s “remedial purpose” mandates a_ broad

interpretation of “removal actions,” App. 41a, is simply to

read these latter provisions out of the statute.

Nor does the legislative history support the Ninth

Circuit’s approach. Indeed, the decision below provides a

classic example of the adage that legislative history can

be used in a manner akin to “entering a crowded cocktail

party and looking over the heads of the guests for one’s

friends.” Conroy v. Aniskoff, 507 U.S. 511, 519 (1993)

(Scalia, J., concurring). The Ninth Circuit “[took] away

from the legislative history ... the drafters’ overarching

26

concern that aggressive action be taken to protect the

public health.” App. 29a. By focusing on that

“overarching concern,” the Ninth Circuit wholly ignored a

more specific concern applicable here: a concern that the

EPA not use its removal authority “to circumvent the

more rigorous and explicit requirements regarding public

participation and health standards” for remedial actions.

132 Cong. Rec. at 14896 (statement of Sen. Stafford,

Chairman of the Committee on Environment and Public

Works).

. Similarly misguided is. the Ninth Circuit’s suggestion

that some form of judicial deference (the Ninth Circuit

was not sure which) was due the EPA’s characterization

of its actions in Libby as removal actions. See App. 19a-

24a. That suggestion defies fundamental principles of

administrative law. This lawsuit is a cost-recovery action

brought by the EPA. Congress delegated to the courts,

not the agency, the authority to determine in the first

instance whether such cost recovery is warranted. See 42

U.S.C. § 9607. Thus, there is no basis for courts to defer

to the agency’s characterization of particular actions as

removal (as opposed to remedial) actions, just as there is

no basis for. courts to defer to a _ prosecutor’s

characterization of particular actions as criminal. See,

e.g., Kelley v. EPA, 15 F.3d 1100, 1105-08 (D.C. Cir. 1994)

(Silberman, J.). With respect to the characterization of

the particular response actions undertaken by the EPA in

Libby, there is nothing to which a court can defer other

than the agency’s briefs.

In any event, the Ninth Circuit’s discussion of the

deference issue only underscores the need for this Court’s

review. The Ninth Circuit frankly admitted that it could

not reconcile this Court's precedents in this area,

particularly on the degree of judicial deference due to

informal agency adjudications. See App. 19a (“Our

decisions understandably have been conflicted as to

whether Chevron deference only applies upon formal

rulemaking and whether lesser deference applies in other

27

situations.”) (citing Chevron U.S.A., Inc. v. NRDC, 467

U.S. 837 (1984); United States v. Mead Corp., 533 U.S.

218 (2001)). As the Ninth Circuit observed, with some

understatement, “[fljollowing Mead, the continuum of

agency deference has been fraught with ambiguity.” App.

19a; see also id. at 20a (“Mead ... further obscured the

already murky administrative law surrounding

Chevron.”) (internal quotation omitted). Ironically, Grace

agrees with the Ninth Circuit’s ultimate conclusion that

resolution of the deference issue should not affect the

result in this case, see App. 2la, but for the opposite

reason: while the Ninth Circuit concluded that the entire

Libby action may be characterized as a removal action

regardless of the standard of deference, Grace believes

that the entire Libby action may not be characterized as a

removal action regardless of the standard of deference.

Given the Ninth Circuit’s open confusion on the deference

issue, though, at the very least that issue confirms the

need for this Court’s review.

In the final analysis, the Ninth Circuit has seriously

distorted an important federal statute. As the Eighth and

Tenth Circuits have recognized, CERCLA’s remedial

safeguards are not technicalities, but vital checks on the

awesome power to present someone else with the bill for

an environmental cleanup. See Gates Rubber, 175 F.3d at

1181-82; Kalman W. Abrams, 155 F.3d at 1024. In the

Ninth Circuit, however, a party can now avoid those

checks by simply identifying some removal component

within a remedial action, and then shoehorning the entire

response action at the site into the removal category. The

upshot is that, in the Ninth Circuit at least, the EPA now

has carte blanche under CERCLA to use its removal

authority not only to contain or abate an immediate

environmental hazard, but also to remediate a site

without complying with the procedural requirements for

remedial actions.

By underscoring that—for better or worse—the

removal/remedial distinction underlying CERCLA is

28

“critical,” App. 8a, the Ninth Circuit also underscored that

this distinction should be clear. If any lesson may be

drawn from the decision below, it is that the distinction is

not clear. Although this Court has alluded to the

distinction in passing, see Exxon, 475 U.S. at 360, it has

never analyzed it. Given CERCLA’s signal role in

American environmental law, and the billions of dollars

expended under that statute, Grace respectfully submits

that the decision below is worthy of this Court’s review.

The bottom line here is that if EPA is allowed to

characterize the entire Libby response action (which to

date has cost over $120 million and lasted over six years)

not only as a removal action, but as an “emergency” .

removal exempt from the statutory caps, then CERCLA’s

substantive and procedural protections are a dead letter,

and the agency has unfettered power to spend other

people’s money. That result would be a defeat not only for

sound environmental policy but also for the rule of law.

CONCLUSION

For the foregoing reasons, this Court should grant the

petition for writ of certiorari.

Respectfully submitted,

KATHERYN J. COGGON CHRISTOPHER LANDAU

HOLME ROBERTS & Counsel of Record

OWEN LLP JOHN C. O’QUINN

1700 Lincoln St. KIRKLAND & ELLIS LLP

Denver, CO 80203 655 Fifteenth St., N.W.

Washington, DC 20005

(202) 879-5000

APPENDIX

TABLE OF CONTENTS

Page

Ninth Circuit Opinion,

at a TN i la

District Court Opinion on Liability,

enemies TF; Ss id eee ce eae 5la

District Court Opinion on Costs,

PT, Be: MONO cack ecikssce patented Vacniucieenacneainn Tla

Defendants’ Revised Genuine Issues Of Material Fact

In Response To Government’s Motion For

Summary Judgment,

ROUEN TE DI oso ckcd coc Resse ceases 139a

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee, No. 03-35924

v. D.C. No.

W.R. GRACE & CO.; KOOTENAI CV-01-00072-DWM

DEVELOPMENT, CORPORATION; W.R. OPINION

GRACE & Co. CONN.,

Defendants-Appellants.

Appeal! from the United States District Court

for the District of Montana

Donald W. Molloy, District Judge, Presiding

Argued and Submitted

February 7, 2005—Seattle, Washington

Filed December 1, 2005

Before: Betty B. Fletcher, M. Margaret McKeown, and

Carlos T. Bea, Circuit Judges.

Opinion by Judge McKeown;

Concurrence by Judge Bea

2a

COUNSEL

Christopher Landau and John C. O’Quinn, Kirkland &

Ellis LLP, Washington, D.C.; Kenneth W. Lund, Linnea

Sruwn anu’ Nacheryu Jarvis Coggon, Holme Noberts & Owen

LLP, Denver, Colorado, for the defendants-appellants. —

John T. Stahr, Environment and Natural Resources

Division, U.S. Department of Justice, Washington, D.C.;

James Freeman, Environment and Natural Resources

Division, U.S. Department of Justice, Denver, Colorado, for

the plaintiff-appellee.

David L. Mulliken, Esq., Latham & Watkins, LLP, San

Diego, California, for the amicus.

OPINION

McKEOWN, Circuit Judge:

Libby, Montana, sits sixty-five miles south of the

Canadian border. The seemingly rustic and picturesque

environment of this area masks a troubling history—the

community has been plagued with asbestos-related

contamination. In 1999, the Environmental Protection

Agency (“EPA”) was cailed in to address disturbing health

reports due to asbestos-related contamination. We must

decide whether, in responding to this threat, the EPA

exceeded the bounds of its authority to conduct cleanup

activities under the Comprehensive Environmental

Response, Compensation, and Liability Act (“CERCLA”), 42

U.S.C. § 9601 et seq. We hold that it did not.

Defendants W.R. Grace & Co.,! Kootenai Development

Corporation, and W.R. Grace & Co.-Conn. (collectively,

“Grace”) do not dispute that they are financially obligated

! Although the case caption has remained consistent, we note that

the district court’s order states that the parties stipulated to the

dismissal of W.R. Grace. & Co., a Delaware corporation that was

incorporated in 1998 and is the sole shareholder of W.R. Grace &

Co.-Conn. United States v. W.R. Grace & Co.-Conn., 280

F. Supp. 2d 1135, 1139 n.1 (D. Mont. 2002) (“Grace I’).

3a

under CERCLA to assist with the cleanup of asbestos

originating from their former mining and processing

operations near Libby.? Instead, Grace contests the EPA’s

characterization of the cleanup as a removal action rather

than a remedial action under CERCLA. Ifthe cleanup is a

remedial action, which is often characterized as a permanent

cleanup, then Grace argues that the EPA did not fulfill the

regulatory requirements for remedial actions. For example,

a remedial action requires certain analysis of the costs and

effectiveness of the remediation and also requires inclusion

on the National Priority List. See 40 C.F.R.

§§ 300.425(b)(1), 300.430(e)(7). In contrast, the regulatory

requirements for removal actions, which provide the EPA

with substantial flexibility to tailor prompt and effective

responses to immediate threats to human health and the

environment, are considerably relaxed.

Grace argues that the EPA circumvented the regulatory

safeguards by conducting a remedial action under the guise

of a removal, thereby giving the EPA free rein to conduct

what Grace styles as “the quintessential remedial action”

under the less-restrictive requirements applied to removals.

Grace presents this as a legal question: Is the EPA’s

characterization of its activities in Libby as a removal action

correct as a matter of law?

Grace further contends that even if the action is

appropriately classified as a removal action, the district

court erred in exempting the action from CERCLA’s general

12-month, $2 million cap for removal actions and in granting

the EPA over $54 million in reimbursement plus a

declaratory judgment for future costs. Finally, Grace

2 In February 2005, the United States unsealed a criminal

indictment charging Grace and various of its employees with

offenses relating to knowingly exposing miners and Libby

residents to asbestos. See Charges Issued Over Asbestos at a

Mine, N.Y. Times, Feb. 8, 2005, at A16. This pending indictment

does not affect these proceedings.

4a

disputes the accounting methods used to calculate the EPA’s

indirect costs.

The situation confronting the EPA in Libby is truly

extraordinary. ‘This cleanup site is not a remote, abandoned

mine. Rather, the population of Libby and nearby

communities, which the EPA estimates at about 12,000,

faces ongoing, pervasive exposure to asbestos particles being

released through documented exposure pathways. We

cannot escape the fact that people are sick and dying as a

result of this continuing exposure. Confronted with this

information, the EPA determined on the basis of its

professional judgment, and in accord with its administrative

interpretation of the scope of removal actions, that the

situation warranted an immediate, aggressive response to

abate the public health threat.

Although we diverge from the district court’s reasoning in

some respects, we reach the same ultimate conclusion: The

EPA’s cleanup in Libby was a removal action that was

exempt from the temporal and monetary cap. In light of the

EPA’s expertise in this area, we owe considerable deference,

albeit not necessarily full Chevron deference, to its

characterization of the cleanup activities as a removal

action. See Chevron U.S.A., Inc. v. Natural Res. Def.

Council, 467 U.S. 837 (1984). We therefore affirm the

judgment of the district court.

Background

The outcome of this case is controlled by our

interpretation of key provisions of CERCLA, a

comprehensive statutory scheme to respond to

environmental threats, obtain compensation from those

responsible for the polluting activities, and assign liability to

responsible parties. See Pub. L. No. 96-510, 94 Stat. 2767

(1980). Before applying CERCLA to the case at hand, we

begin with a brief review of this statute as well as the

background on the hazards afflicting Libby.

5a

I. CERCLA

A key component of CERCLA was the establishment of a

trust fund, commonly known as “Superfund,” for use when

responding to the release or threat of release of hazardous

substances into the environment. See CERCLA, Subtitle B—

Establishment of Hazardous Substance Response Trust

Fund § 221, 94 Stat. at 2801-02; see also Superfund

Amendments and Reauthorization Act of 1986, Pub. L. No.

99-499, 100 Stat. 1613 (1986). Today, Superfund

expenditures are directed by the provisions of CERCLA and

the National Oil and Hazardous Substances Pollution

Contingency Plan (“National Contingency Plan”), 40 C.F.R.

pt. 300.3

CERCLA and the National Contingency Plan divide

response actions into two broad categories: removal actions

and remedial actions. See 42 U.S.C. § 9601(25). Removal

actions‘ are typically described as time-sensitive responses

3 The National Contingency Plan “specifies procedures for

preparing and responding to contaminations and was promulgated

by the [EPA] pursuant to CERCLA.” Cooper Indus., Inc. v. Aviall

Servs., Inc., 543 U.S. ___, 125 S. Ct. 577, 580 n.2 (2004); see also 42

U.S.C. § 9605. Last revised in 1994, see 59 Fed. Reg. 47,384 (Sept.

15, 1994), the National Contingency Plan has undergone several

rounds of revisions since its initial publication.

4 Although “removal action” is not itself defined in CERCLA,

“remove” and “removal” are defined. In light of the central

importance of the definition to this case, it is worth citing the

rather cumbersome definition in its entirety:

The terms “remove” or “removal” means the cleanup or

removal of released hazardous substances from the

environment, such actions as may be necessary [sic]

taken in the event of the threat of release of hazardous

substances into the environment, such actions as may be

necessary to monitor, assess, and evaluate the release or

threat of release of hazardous substances, the disposal of

removed material, or the taking of such other actions as

may be necessary to prevent, minimize, or mitigate

damage to the public health or welfare or to the

6a

to public health threats for which the EPA is granted

considerable leeway in structuring the cleanup. See, e.g.,

Minnesota v. Kalman W. Abrams Metals, Inc., 155 F.3d 1019,

1024 (8th Cir. 1998) (describing “removal actions” as “those

taken to counter imminent and substantial threats to public

health and welfare”). Superfund-financed removal actions

genera!ly are required to “be terminated after $2 million has

been obligated for the action or 12 months have elapsed from

the date removal activities begin on-site.” 40 C.F.R.

§ 300.415(b)(5). These limitations are not, however,

inviolate. The EPA® may exceed this cap if it determines one

of two exemptions applies:

There is an immediate risk to public health or

welfare of the United States or the environment;

continued response actions are immediately

required to prevent, limit, or mitigate an

emergency; and such assistance will not

otherwise be provided on a timely basis; or

Continued response action is otherwise

appropriate and consistent with the remedial

action to be taken.

40 C.F.R. § 300.415(b)(5); see also 42 U.S.C. § 9604(c)(1).

environment, which may otherwise result from a release

or threat of release. The term includes, in addition,

without being limited to, security fencing or other

measures to limit access, provision of alternative water

supplies, temporary evacuation and housing of

threatened individuals not otherwise provided for, action

taken under section 9604(b) of this title, and any

emergency assistance which may be provided under the

Disaster Relief and Emergency Assistance Act.

42 U.S.C. § 9601(23).

5 In Executive Orders 12,580 and 12,777, the President delegated

most functions and responsibilities to the EPA that were vested in

him by CERCLA. See 40 C.F.R. § 300.100.

7a

Remedial actions,® on the other hand, are often described

as permanent remedies to threats for which an urgent

response is not warranted. See, e.g., Pub. Serv. Co. of Colo.

v. Gates Rubber Co., 175 F.3d 1177, 1182 (10th Cir. 1999)

(“In broad contrast, a remedial action seeks to effect a

6 As with “removal,” the definition of “remedial action” has a

maze-like structure:

The terms “remedy” or “remedial action” means those

actions consistent with permanent remedy taken instead

of or in addition to removal actions in the event of a

release or threatened release of a hazardous substance

into the environment, to prevent or minimize the release

of hazardous substances so that they do not migrate to

cause substantial danger to present or future public

health or welfare or the environment. The term

includes, but is not limited to, such actions at the

location of the release as storage, confinement,

perimeter protection using dikes, trenches, or ditches,

clay cover, neutralization, cleanup of released hazardous

substances and associated contaminated materials,

recycling or reuse, diversion, destruction, segregation of

reactive wastes, dredging or excavations, repair or

replacement of leaking containers, collection of leachate

and runoff, onsite treatment or incineration, provision of

alternative water supplies, and any monitoring

reasonably required to assure that such actions protect

the public health and welfare and the environment. The

term includes the costs of permanent relocation of

residents and businesses and community facilities where

the President determines that, alone or in combination

with other measures, such relocation is more cost-

effective than and environmentally preferable to the

transportation, storage, treatment, destruction, or

secure disposition offsite of hazardous substances, or

may otherwise be necessary to protect the public health

or welfare; the term includes offsite transport and offsite

storage, treatment, destruction, or secure disposition of

hazardous substances and associated contaminated

materials.

42 U.S.C. § 9601(24).

8a

permanent remedy to the release of hazardous substances

when there is no immediate threat to the public health.”).

The distinction between removal and remedial actions is

critical under CERCLA because “[b}oth types of actions have

substantial requirements, but the requirements for remedial

actions are much more detailed and onerous.” Morrison

Enters. v. McShares, Inc., 302 F.3d 1127, 1136 (10th Cir.

2002). For example, remedial actions are only eligible for

Superfund financing when the site is listed on the National

Priorities List.? See 40 C.F.R. § 300.425(b)(1). Further, the

_EPA is required to consider costs when selecting remedial

alternatives whereas “CERCLA contains no corresponding

mandate for removal actions.” United States v. Hardage,

982 F.2d 1436, 1443 (10th Cir. 1992); see also 40 C.F.R.

§ 300.430 (listing requirements for a selection of remedy

including consideration of effectiveness, permanence, and

cost). Because CERCLA provides that responsible parties

shall be liable for “all costs of removal or remedial action

incurred by the United States Government ... not

inconsistent with the national contingency plan,” this

distinction is vital to those held liable. 42 U.S.C.

§ 9607(a)(4).

II. HISTORY OF THE EPA’sS CLEANUP ACTIVITIES IN

LIBBY

The roots of this case stretch back nearly a century to the

beginning of mining operations in the vicinity of Libby. It

was not until the late 1990s, however, that the extent of the

problem came to light fully, leading to the EPA’s cleanup

action.

A. ASBESTOS CONTAMINATION IN LIBBY

From the 1920s until 1990,.Grace and its predecessors

mined and processed vermiculite—a mineral containing a

7 The National Priorities List is “the list, compiled by EPA

pursuant to CERCLA section 105, of uncontrolled hazardous

substance releases in the United States that are priorities for

long-term remedial evaluation and response.” 40 C.F.R. § 300.5

9a

type of asbestos called tremolite—at a mine approximately

seven miles northeast of Libby. See Grace I at 1138-41

(describing factual background in an order granting the

EPA’s motion for summary judgment). Processed ore was

trucked to screening plants and expansion/export plants

from which the materials were distributed nationwide.

Vermiculite was also available for employees to take home

for their personal use, and Grace donated vermiculite to the

local schools. .

Although Grace did not cease mining and processing

operations in Libby until 1990, state and federal agencies

conducted studies on the health effects of the mining

operations as early as the 1940s. These efforts were,

however, focused on workplace exposure rather than

contamination in the greater Libby community. For

example, in the 1940s and 1950s, the Montana State Board

of Health issued several industrial hygiene studies to

determine whether the mine’s operations were detrimental

to the employees’ health. In 1992, the EPA issued a written

determination on the applicability of the National Emissions

Standards for Hazardous Air Pollutants to a road on the

mine property. However, no CERCLA activities were

performed in Libby prior to the EPA’s commencement of an

investigation in 1999 that led to the current cleanup. :

B. THE EPA’S INVOLVEMENT IN LIBBY

After beginning its investigation in November 1999, the

EPA issued a Sampling and Quality Assurance Project Plan

in December, followed by a more comprehensive revised plan

in January 2000. The plan “address[ed] questions and

concerns raised by citizens of Libby regarding possible

ongoing exposures to asbestos fibers as a result of historical

mining, processing and exportation of asbestos-containing

vermiculite.” The EPA’s immediate efforts were directed

toward (1) obtaining information on airborne asbestos levels

in order to judge whether a time-critical intervention was

needed to protect public health, and (2) obtaining data on

friable asbestos levels in potentially contaminated materials

10a

around Libby. The EPA stated that “[t}he first decision to be

made is whether or not time-critical intervention is needed

to protect public health.”

In his testimony before the Senate’s Environment and

Public Works Committee in February 2000, the EPA’s

regional administrator attested that the initial investigation

confirmed two things: (1) “a large number of current and

historic cases of asbestos related diseases centered around

Libby,” including “33 incidents of apparently non-

occupational exposures”; and (2) a “high likelihood that

significant amounts of asbestos contaminated vermiculite

still remain in and around Libby.” Vermiculite from the

mine’s waste piles was “commonly used by local residents in

their yards and gardens as a soil conditioner.” It was also

used to create running tracks and baseball fields for nearby

schools. The residents were particularly concerned because

children regularly played in and around piles of vermiculite.

These findings compelled the EPA to undertake more

expansive testing. To put it mildly, subsequent testing

showed asbestos contamination to be pervasive.

Because asbestos is generally only harmful if inhaled or

ingested, the mere presence of asbestos does not necessarily

constitute an immediate threat. But the situation in Libby

did not present this benign scenario. Instead, the EPA

documented “complete human exposure pathways’ through

which asbestos particles were becoming airborne as a result

of normal human activities, such as foot traffic and

vacuuming, and natural forces, such as wind—especially

during the dry summer months. This migration

transformed the latent threat of undisturbed asbestos into a

current hazard to anyone breathing the airborne particles.

For example, residents described halting baseball games

when large dust clouds swept over the field carrying

particles from exposed piles of vermiculite. A study of Libby

residents conducted in 2000 by the Agency for Toxic

Substances and Disease Registry not only found that most

participants reported multiple routes of exposure, but also

that 18% of those x-rayed had abnormalities in the lining of

lla

their lungs—as compared with the expected rate of 0.2% to

2.3% for groups living in the United States who have no

known asbestos exposures.

These findings led the EPA to set out the intended

removal action in a series of three memoranda issued

between May 2000 and May 2002, which progressively

broadened the scope of the cleanup. The original action

memorandum, dated May 23, 2000 (“First Action Memo’),

covered a former vermiculite export plant and screening

plant, the former of which was being used as a retail lumber

mill and the latter as a combined commercial/residential

property.’ The First Action Memo authorized a time-critical

removal action® to be completed by spring/summer 2001

with a total project ceiling of approximately $5.8 million for

the two sites. The EPA determined that the action met the

requirements to exceed the $2 million, 12-month cap

because the asbestos in the environment posed an

immediate threat to the local population; a cleanup beyond

the cap was required to prevent, limit, or mitigate an

emergency because of the size of the cleanup and the short

construction season; and assistance from other government

agencies was not anticipated on a timely basis.

8 Grace largely conducted the cleanup of the export plant in

response to an EPA order dated May 23, 2000.

8 The EPA describes the cleanup in Libby as a single removal

action both in the action memoranda and its briefs to this court:

“EPA authorized a removal action to remove asbestos-

contaminated materials from hundreds of homes, businesses,

yards, gardens, school athletic fields, driveways, and mining plant

facilities.” (emphasis added). Likewise, on appeal, Grace argues

that the district court erred “by granting the United States

summary judgment with respect to the validity of EPA’s

characterization of the Libby response action as a removal rather

than a remedial action.” Accordingly, we analyze the EPA’s

activities in Libby as a single response action rather than a

patchwork of discrete smaller actions. Cf. Colorado v. Sunoco,

Inc., 337 F.3d 1233, 1241 (10th Cir. 2003) (concluding that there

can be but one “removal action” per site).

12a

The EPA then broadened the scope of the cleanup in an

action memorandum amendment, dated July 20, 2001

(“Second Action Memo”), which covered “newly identified

risks” at six additional locations and requested increased

funding for costs associated with Grace’s reported denial of

access to the screening plant. The six sites included two

private residences, three local schools, and a public road

running past the mine site. Among the EPA’s foremost

concerns were the high asbestos concentrations in the

materials at these sites and the easily crumbled state of the

exposed asbestos. For example, the EPA found nuggets of

tremolite around the high school track that it described as

“readily friable, releasing copious amounts of fibers upon

degradation.” The EPA measured asbestos concentrations of

2% by polarized light microscopy (“PLM”) at a pile of

vermiculite at one residence, and concentrations up to 1.5%

in material scraped off equipment at the other residence. !°

Samples taken from materials visible outside the

elementary school indicated that the area contained

asbestos at levels between 3% to 8% by PLM, and testing at

the road showed asbestos concentrations up to 5%. As with

the First Action Memo, the EPA determined that the

situation warranted an exemption from the cap and,

10 To put these numbers into perspective, in the First Action

Memo, the EPA explained how asbestos concentrations in soil

translate into risks to the public health:

Currently EPA has not established, under any of its

regulatory programs, an asbestos level in soil below

which an exposure does not pose a risk. The 1% cut-off

level for regulation under the Toxic Substances Control

Act abatement program was established on the basis of

analytical capability at the time, and was not

established based.on the level of risk represented. To

the contrary, at Superfund sites in California EPA

Region IX found in certain settings that concentrations

of asbestos less than 1% posed unacceptable inhalation

risks when subject to disturbance by traffic.

Significantly, the asbestos was in a friable state.

13a

consequently, authorized a total site removal ceiling of

approximately $20.1 million with an estimated completion

date for most of the work by winter 2001/02.

The EPA expanded the removal action again in an action

memorandum amendment, dated May 2, 2002 (“Third

Action Memo”), which brought a number of homes and

businesses in Libby within the ambit of the removal action.

The EPA again determined that an exemption from the

statutory cap was warranted. In addition, although Libby

was not added to the National Priorities List until October

2002, see 67 Fed. Reg. 65,315 (Oct. 24, 2002), the EPA

proposed that the site be added in February 2002. The

Third Action Memo also explained that the removal action

was consistent with a planned future remedial action.!! The

EPA estimated that the proposed work would take two to

three construction seasons, and it raised the total project

ceiling to approximately $55.6 million. The EPA continued

removal activities consistent with its various Action

Memos.?2

C. COST-RECOVERY ACTION AGAINST GRACE

The EPA filed suit against Grace in March 2001 seeking

recovery of all response costs incurred by the government

and a declaration that Grace would be liable for future costs.

See 42 U.S.C. §§ 9607, 9613(g)(2). In December 2002, the

district court granted the EPA summary judgment on the

liability issue but determined that there were material

issues of fact regarding costs associated with certain

properties. Grace I, 280 F. Supp. 2d at 1148.

11 The EPA proposed that the Libby site be added to the National

Priorities List in February 2002 so that a remedial response action

could be conducted. In October 2002, the site was officially added

to the List. See 67 Fed. Reg. 65,315 (Oct. 24, 2002).

12 According to the EPA’s CERCLIS database, the EPA currently

is in the study and remedy selection phase and a final remedy has

not been selected for the Libby site. See http://cfpubl.epa.gov/

supercpad/cursites/csitinfo.cfm?id=0801744 (last visited July 26,

2005).

l4a

After a three-day bench trial, the district court issued an

order awarding the EPA the full $54.53 million in

reimbursement requested, including $11.32 million in

indirect costs, and granting a declaratory judgment that

Grace would be liable for future cleanup costs. United States

v. W.R. Grace & Co., 280 F. Supp. 2d 1149 (D. Mont. 2003)

(“Grace IT’). This appeal followed.

ANALYSIS

The EPA’s ability to recover the costs of its cleanup in

Libby hinges on whether its response is properly

characterized as a removal action, as argued by the EPA and

found by the district court, or a remedial action, as argued

by Grace.!° The tangled language of CERCLA hardly lends

itself to clearcut distinctions between the two types of

actions. Nonetheless, certain overarching attributes emerge

with the time-sensitivity of the threat and the significance of

the public health threat as key factors underlying removal

actions. In Libby, the EPA determined that there was a

serious threat to public health that required a time-sensitive

response, and it acted on this information.

We emphasize at the outset that the EPA’s response

action in Libby is no mere run-of-the-mill CERCLA cleanup.

As the EPA itself recognizes, the Libby cleanup is a unique

13 Under CERCLA’s burden-shifting procedures, once the EPA

establishes its prima facie case for response costs, the burden

shifts to Grace to prove that the response was inconsistent with

the National Contingency Plan. See United States v. Chapman,

146 F.3d 1166, 1169 (9th Cir. 1998). Specifically, CERCLA

provides that responsible parties shall be liable for “all costs of

removal or remedial action incurred by the United States

Government ... not inconsistent with the national contingency

plan.” 42 U.S.C. § 9607(a)(4). Because the National Contingency

Plan prescribes heightened requirements for a remedial action, a

threshold inquiry is whether the action was a removal or remedial

action. The EPA does not dispute that the cleanup did not meet

the National Contingency Plan’s procedural requirements for a

remedial action.

15a

removal action of a size and cost not previously seen. But

the situation in Libby was, and remains today, truly

extraordinary.

I. REMOVAL OR REMEDIAL ACTION: STRUCTURE OF

THE TWO-STEP INQUIRY AND APPLICATION TO THE

CLEANUP IN LIBBY

The district court concluded, based on an arbitrary and

capricious standard of review, that “[the EPA’s} decision to

conduct a removal action rather than a remedial action is

consistent with the [National Contingency Plan] and cannot

be second-guessed by this Court.” Grace J, 280 F. Supp. 2d

at 1143. We take a slightly different tack. CERCLA

provides that the selection of response actions shall be

upheld “unless arbitrary and capricious or otherwise not in

accordance with the law.” 42 U.S.C. § 9613()(2). We agree

that it was not arbitrary and capricious for the EPA “to

approve a time-critical removal action.” Jd. at 1144.

However, the statutory scheme compels us to take the

inquiry one step further. See Martinez-Villareal v. Lewis, 80

F.3d 1301, 1305 (9th Cir. 1996) (“We may affirm on any

ground supported by the record even if it differs from the

rationale of the district court.”).

Under CERCLA, once the response action is selected—in

this case as a removal based on “an imminent and

substantial danger to the public health’—then the EPA is

authorized to take necessary actions consistent with the

National Contingency Plan. See 42 U.S.C. § 9604(a)(1).

Regulations implementing the Plan provide that “[i]f the

[EPA] determines that a removal action is appropriate,

actions shall, as appropriate, begin as soon as possible to

abate, prevent, minimize, stabilize, mitigate, or eliminate

the threat to public health or welfare of the United States or

the environment.” 40 C.F.R. § 300.415(b)(3). Thus, even if

the EPA’s selection of a removal action was proper, the

question remains whether the actions actually taken by the

EPA to combat the threat are properly categorized as such.

16a

We agree with Grace that this second step of our inquiry

is a question of law: Does the EPA’s response action in Libby

fall within the statutory limits of a removal action? Grace’s

challenge is built on the premise that the EPA termed its

cleanup in Libby a removal action as a subterfuge when the

response was, in substance, a remedial action.'4 To resolve

this question, we must explore the statutory confines of

removal actions under CERCLA and, within this legal

structure, ask to what extent we should defer to the EPA’s

interpretation based on the agency’s expertise.

A. DECISION TO CONDUCT A REMOVAL ACTION IN

LIBBY

The EPA’s initial decision to conduct a removal action

must be upheld unless Grace can demonstrate on the

administrative record that the decision was arbitrary and

capricious or otherwise not in accordance with law. 42

U.S.C. § 9613G)(2). Grace has not met this burden.

The National Contingency Plan requires the EPA to

consider a series of factors!’ to determine that it was

14 Grace attributes the timing and scope of the EPA’s cleanup to

intense media attention regarding conditions in Libby. We have

previously rejected an “ulterior motive” analysis in a challenge to

whether CERCLA response costs incurred by a private landowner

were necessary: “The issue is not why the landowner decided to

undertake the cleanup, but whether it was necessary. To hold

otherwise would result in a disincentive for cleanup.” Carson

Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 871-72 (9th Cir.

2001) (en banc) (citation omitted). This logic applies with equal

force when the EPA is a party. We therefore do not inquire into

the EPA’s subjective motives behind the cleanup, but rather ask if

the objective evidence supports the response.

15 40 C.F.R. § 300.415(b)(2) provides that “[t]he following factors

shall be considered in determining the appropriateness of a

removal action ...:”

(i) Actual or potential exposure to nearby human

populations, animals, or the food chain from hazardous

substances or pollutants or contaminants;

17a

appropriate to initiate a removal action. Cf. Chapman, 146

F.3d at 1171-73 (holding that the EPA did not act arbitrarily

or capriciously in ordering a removal action after considering

the § 300.415(b)(2) factors). The EPA did so and its findings

are extensively documented.

The First Action Memo discusses five of the eight factors!®

in concluding that the conditions in Libby presented an

imminent and substantial threat to human health and the

environment that met the regulatory criteria. Chief among

the factors was that complete exposure pathways existed

through which people were being exposed to asbestos. The

First Action Memo details specific threats, including that

“there are over 3000 three gallon buckets of unexpanded

‘Libby vermiculite” being used at a mushroom farm at the

former screening plant, and that surface soils contained

visible vermiculite that could readily migrate.

The magnitude of the current and potential impact on

public health resulting from the widespread use of

(ii) Actual or potential contamination of drinking water

supplies or sensitive ecosystems;

(iit) Hazardous substances or pollutants or contaminants

in drums, barrels, tanks, or other bulk storage

containers, that may pose a threat of release;

(iv) High levels of hazardous substances or pollutants or

contaminants in soils largely at or near the surface, that

may migrate;

(v) Weather conditions that may cause hazardous

substances or pollutants or contaminants to migrate or

be released;

(vi) Threat of fire or explosion;

(vii) The availability of other appropriate federal or state

response mechanisms to respond to the release; and

(viii) Other situations or factors that may pose threats to

public health or welfare of the United States or the

environment.

16 Specifically, the memo invokes the first, third, fourth, fifth, and

seventh factors listed in 40 C.F.R. § 300.415(b)(2).

18a

vermiculite by Libby residents led the EPA in its Second

Action Memo to invoke the catch-all eighth factor— [o]ther

situations or factors that may pose threats to public health

or welfare of the United States or the environment,” 40

C.F.R. § 300.415(b) (2)(viii):

The sheer magnitude of the medical impact in

Libby dictates the need for an expedient and

thorough response. Unfortunately, because of

the latencies of asbestos related diseases there is

no easy way to directly correlate exposure to

amphibole asbestos today to the direct

development of an asbestos related disease. The

only way to determine this for certain is to

observe an individual for 10 to 40 years after

exposure to see if they become sick. However,

waiting for this type of certainty is

unconscionable. CERCLA was designed and

enacted to prevent illness and death resulting

from exposure to hazardous substances, not wait

for its occurrence to prove a threat.

Finally, the Third Action Memo cites several factors in

support of the EPA’s decision to expand the removal action

and asserts that “[t]he significant medical impact of asbestos

exposure in Libby dictates the need for an expedient and

thorough response.” In light of the EPA’s carefully

documented reasoning in the three Action Memos, we agree

with the district court that the EPA’s decision to approve a

removal action was not arbitrary and capricious. See 42

U.S.C. § 9613G)(2). This threshold decision does not,

however, end our inquiry. We must consider how to classify

the EPA’s action.

B. CHARACTERIZATION OF THE EPA’S RESPONSE

ACTION

The question remains whether the steps actually taken by

the EPA to combat the threat are properly characterized as

a removal action. Whether the EPA’s cleanup activity was a

removal action—or, on the other hand, a remedial action in

19a

removal action’s clothing—is a question of statutory

interpretation. “Congress provided definitions for ‘removal’

and ‘remedial action,’ and the classification of the activity is

_determined as a matter of law.” Geraghty & Miller, Inc. v.

Conoco Inc., 234 F.3d 917, 925-26 (5th Cir. 2000) (footnotes

omitted); see also Sunoco, 337 F.3d at 1242 (“Nothing in [42

U.S.C.] § 9613G)(2) refers to the EPA’s characterization of a

particular action [as a removal or remedial action].”). The

decision to select a removal or remedial action is therefore

distinct from the question whether the action carried out

was, in fact, the action selected. It is to this crucial inquiry

that we now turn.

The statutory interpretation of “removal” is a legal issue

that we review as a matter of law. See Carson Harbor Vill.,

270 F.3d at 870. But in addressing the statute, the parties

disagree as to the level of deference, if any, that we should

grant the EPA’s formulation of the term “removal.”

Resolving this question requires that we consider the

Supreme Court’s recent refinement of the traditional

agency-deference analysis under Chevron. See 467 U.S. at

842-45; United States v. Mead Corp., 533 U.S. 218, 226-27

(2001) (Chevron applies “when it appears that Congress

delegated authority to the agency generally to make rules

carrying the force of law, and that the agency interpretation

claiming deference was promulgated in the exercise of that

authority.”).

Following Mead, the continuum of agency deference has

been fraught with ambiguity. Compare Barnhart v. Walton,

535 U.S. 212, 221 (2002) (applying Chevron deference even

though the EPA reached its interpretation through means

less formal than “notice and comment” rulemaking) with

Mead, 533 U.S. at 226-27 (agency’s tariff classification had

“no claim to judicial deference under Chevron, there being

no indication that Congress intended such a ruling to carry

the force of law”). Our decisions understandably have been

conflicted as to whether Chevron deference only applies

upon formal rulemaking and whether lesser deference

applies in other situations. See, e.g., Cal. Dep’t of Soc. Servs.

20a

uv. Thompson, 321 F.3d 835, 847-48 (9th Cir. 2003)

(discussing how Mead and Walton have “further obscured

the already murky administrative law surrounding

Chevron”); Davis v. United States EPA, 348 F.3d 772, 779 n.5

(9th Cir. 2003) (‘The mere fact that the EPA engaged in

informal agency adjudication ... does not vitiate the Chevron

deference owed to the agency’s interpretation ....”). As

Justice Scalia presciently noted in his dissent in Mead, “We

will be sorting out the consequences of the Mead doctrine,

which has today replaced the Chevron doctrine, for years to

come.” 533 U.S. at 239 (Scalia, J., dissenting).

The Supreme Court’s most recent pronouncement in

National Cable & Telecommunications Ass’n v. Brand X

Internet Services, 125 S. Ct. 2688 (2005), calls into question

whether Mead in fact “replaced” Chevron as Justice Scalia

contends. Perhaps because Brand X involved formal

rulemaking, see id. at 2699, the Court did not clarify

whether there is a “deference distinction” between Chevron

and Mead. Nonetheless, in Brand X the majority’s language

explaining Chevron is quite broad and does not come with a

proviso that the Chevron deference is limited to agency

interpretations expressed through formal rulemaking. See

id. (“In Chevron, this Court held that ambiguities in statutes

within an agency’s jurisdiction to administer are delegations

of authority to the agency to fill the statutory gap in

reasonable fashion.”); id. at 2700 (“Chevron’s premise is that

it is for agencies, not courts, to fill statutory gaps.”).

The interplay between Chevron and Mead is highlighted

in Justice Breyer’s concurrence, in which he writes that “the

existence of a formal rulemaking proceeding is neither a

necessary nor a sufficient condition for according Chevron

deference to an agency’s interpretation of a statute.” Id. at

2712 (Breyer, J., concurring). This explanation stands in

contrast to Justice Scalia’s dissents in Brand X and Mead.

See id. at 2713-21; Mead, 533 U.S. at 239-61. Echoing his

dissent in Mead, Justice Scalia proffers in his Brand X

dissent that “Mead drastically limited the categories of

agency action that would qualify for deference under

2la

Chevron.” 125S. Ct. at 2718 (Scalia, J., dissenting). Rather

than clarifying what these categories are, Justice Scalia

advances that, in Brand X, the Court “continues the

administrative-law improvisation project it began four years

ago in [Mead].” Id.

Because the discussion in Brand X leaves some doubt as

to the degree of formality of the underlying agency

interpretation that is required for Chevron deference, we

look to the post-Mead Supreme Court decision that most

closely resembles the circumstances we face here. The Court

explained last year in Alaska Department of Environmental

Conservation v. EPA, 540 U.S. 461, 487-88 (2004), that the ©

EPA’s interpretation of a statute in internal guidance

memoranda warrants respect but does not qualify for

Chevron deference. Although the Court cited Mead in

rejecting Chevron deference, it accorded “respect” to the

“EPA’s reading of the relevant statutory provisions.” Jd. at

488. Accordingly, at a minimum, we impose a modified

deference standard affording respect to the EPA’s informal

interpretations here. But either under modified deference or

full Chevron deference, the result would be the same: The

EPA’s cleanup activities in Libby are properly categorized as

a removal action.

Despite the EPA’s insistence that arbitrary and capricious

review applies to all aspects of our inquiry, the statute does

not support this reading. CERCLA requires that we uphold

the EPA’s “decision in selecting the response action” unless

arbitrary and capricious or otherwise not in accordance with

the law. 42 U.S.C. § 9613(j)(2). Here we address not the

EPA’s selection of its remedy, but rather whether the actions

taken fall within the statutory definition of a removal.

Thus, we consider whether the statutory construction that

the EPA advances in this litigation is correct as a matter of

law. The degree of deference granted to the EPA’s

interpretation of a statute is considered in light of Chevron

and its progeny. See Alaska Dep't of Envtl. Conservation,

540 U.S. at 487-88. In contrast, an agency’s actions

exercised under its statutory authority are generally subject

22a

to arbitrary and capricious review. See id. at 496-97

(applying arbitrary and capricious review to the EPA’s taken

actions under the Clean Air Act); see also 5 U.S.C. § 706(2)

(applying arbitrary and capricious review to agency

conclusions and findings).

With the Supreme Court's recent agency-deference cases

as a backdrop, we begin with Cheuron’s first step and ask

“whether Congress has directly spoken to the precise

question at issue,” Chevron, 467 U.S. at 842, i.e., whether a

response action such as the one carried out in Libby is a

removal or remedial action.!” If Congress has

“unambiguously expressed [its] intent,” then our inquiry

ends there, for that intent must be given effect as law. Id. at

842-43. If, however, the statute is ambiguous, then we look

to the EPA’s interpretation of the statute. Even if full-blown

Chevron deference is not due because of the informal nature

of the interpretation, we will still accord a modified level of

respect because “Chevron did nothing to eliminate

Skidmore’s[!*} holding that an agency’s interpretation may

17 Although we have touched on the interplay between removal

and remedial actions under CERCLA in prior decisions, the

specific contexts in which those cases arose render them of limited

use to our decision here. See California v. Neville Chem..Co., 358

F.3d 661, 667, 670 (9th Cir. 2004) (concluding that for the

purposes of “the onset of the limitations period for recovery of

remedial action costs under CERCLA,” no action can be “remedial”

until adoption of a final remedial action plan); Hanford

Downwinders Coalition, Inc. v. Dowdle, 71 F.3d 1469, 1475, 1477

n.10 (9th Cir. 1995) (holding that a government health assessment

was a “removal or remedial action entitled to the protection of [42

U.S.C.] § 9613(h)” without the need to clarify the distinction

between the two types of actions).

18 The Court explained in Skidmore v. Swift & Co. that “[t]he

weight [accorded to an administrative] judgment in a particular

case will depend upon the thoroughness evident in its

consideration, the validity of its reasoning, its consistency with

earlier and later pronouncements, and all those factors which give

it power to persuade, if lacking power to control.” 323 U.S. 134,

140 (1944); see also Sunoco, 337 F.3d at 1243 (concluding that the

23a

merit some deference whatever its form.” Mead, 533 U.S. at

234; see also Wilderness Soc’y v. United States Fish &

Wildlife Serv., 353 F.3d 1051, 1059-62 (9th Cir. 2003) (en

banc), amended by 360 F.3d 1374 (2004) (applying this

analytical framework to review of an _ agency's

interpretation). Put simply, even if EPA manuals, policy

statements, and other pronouncements “are beyond the

Chevron pale,” Mead, 533 U.S. at 234, they are not beyond

the reach of our deference.

As elaborated below, the statutory definition of “removal”

is vague and, consequently, the EPA’s construction of this

statutory term warrants our deference. In light of this

deference and the well-documented record of the scope of

cleanup activity, we hold that the EPA’s action in Libby is

properly characterized as a removal action. In so holding,

we recognize that the emphasis on time-sensitivity both in

the EPA’s selection of a removal action and in our decision

whether the action carried out actually was a removal action

threatens to collapse the two issues into a single

“immediacy” inquiry. Our review of the EPA’s decision to

conduct a removal action is limited to whether the EPA

considered the eight factors under 40 C.F.R.

§ 300.415(b)(2). In contrast, although immediacy is a

paramount consideration when evaluating whether the

action indeed was a removal, this second phase of our

inquiry is not bound by those eight factors. For example, we

also consider, among other things, the interplay between a

removal and remedial action conducted at a single site and

whether the action comports with the examples in 40 C.F.R.

§ 300.415(e).

Grace contests the denomination of the action as a

removal by cherry-picking discrete cleanup activities which,

standing alone, might fall within the ambit of a remedial

action. We refrain from slicing and dicing the EPA’s single,

cohesive removal action into a mvriad of fractured parts.

EPA’s characterization of a response action deserves Skidmore

deference).

24a

Such atomization would undermine the EPA’s scientific and

administrative expertise by requiring us to second-guess

whether, for example, the excavation of soil at the local

elementary school was a remedial action because 1000 cubic

yards of soil was removed when perhaps removal of less soil

or less drastic measures could have been employed to

counteract the immediate threat. Instead, we take a more

comprehensive view of the administrative record in

concluding that the EPA’s response was a removal action.

1. STATUTORY INTERPRETATION: REMOVAL

AND REMEDIAL ACTIONS

The first step under Chevron requires a straightforward

exercise in statutory interpretation: “If a court, employing

traditional tools of statutory interpretation, ascertains that

Congress had an intention on the precise question at issue,

that intention is the law and must be given effect.” Chevron,

467 US. at 843 n.9.

We begin with the statutory definitions because “[w]hen a

statute includes an explicit definition, we must follow that

definition, even if it varies from that term’s ordinary

meaning.” Stenberg v. Carhart, 530 U.S. 914, 942 (2000). It

has become de rigueur to criticize CERCLA as a hastily

passed statute that is far from a paragon of legislative

clarity. See, e.g., Exxon Corp. v. Hunt, 475 U.S. 355, 363

(1986) (commenting that a provision in CERCLA “is not a

model of legislative draftsmanship”); Carson Harbor Vill.,

270 F.3d at 883 (“Clearly, neither a logician nor a

grammarian will find comfort in the world of CERCLA.”).

The definitions of removal and remedial action exemplify

this muddled language. See 42 U.S.C. § 9601(23) (defining

“removal”); id. § 9601(24) (defining “remedial action”); id.

§ 9601(25) (defining “response”); see also supra notes 4, 6

(quoting definitions).

The definition of “removal” is written in sweeping terms.

It begins with the general statement that “removal” means

“the cleanup or removal of released hazardous substances

from the environment.” 42 U.S.C. § 9601(23). The definition

25a

goes on to describe three categories of events that trigger

removal: (1) "such actions as may be necessary [sic] taken in

the event of the threat of release of hazardous substances

into the environment’; (2) ’such actions as may be necessary

to monitor, assess, and evaluate the release or threat of

release of hazardous substances”; and a third catch-all

category, (3)”such other actions as may be necessary to

prevent, minimize, or mitigate damage to the public health

or welfare or to the environment, which may otherwise

result from a release or threat of release.” Id.

Finally, the definition lists a number of specific activities

that fall within the definition of “removal’—’alternative

water supplies,” “temporary evacuation and housing,” and

“emergency assistance.” Although at first glance this half of

the definition appears to provide concrete guidance by

listing identifiable activities such as “security fencing,” this

part too is left vague by the opening caveat that the term

“removal” “includes, in addition, without being limited to,

, security fencing ....”. Id. Consequently, “these examples

serve only as a guide to what activities may appropriately be

classified as ‘removal action.” Hanford Downwinders

Coalition, 71 F.3d at 1478 n.13.

The definition of “remedial action” is similarly broad, but

can be distinguished from “removal” because it refers to

“permanent” remedies and its list of specific actions is, in

large part, distinct from the list included under “removal.”

(For example, “removal” is focused on temporary and

emergency activities.) To begin, the definition states that a

“remedial action” is an action “consistent with permanent

remedy tz ken instead of or in addition to removal actions.”

42 U.S.C. § 9601(24). Although the section begins with this

clear language, it threatens to collapse into the definition of

“removal” because it includes those actions “taken instead of

or in addition to removal actions” and is triggered “in the

event of a release or threatened release of a hazardous

substance into the environment, to prevent or minimize the

release of hazardous substances so that they do not migrate

to cause substantial danger to present or future public

26a

health or welfare or the environment.” Jd. Thus, the

triggering factors begin to sound virtually similar to the

triggering factors for a “removal” action. In fact, two of the

triggering factors for “removal” are almost identical to the

factors for “remedy”:

Removal — 42 U.S.C Remedy — 42 U.S.C.

§ 9601(23) § 9601(24)

“such actions as may bej| “those actions consistent

necessary [sic] taken inthe | with permanent remedy

event of the threat of| taken in the event of a

release of hazardous | release or threatened release

substances into the | of hazardous substances into

environment” the environment”

“such other actions as may | “those actions consistent

be necessary to prevent,| with permanent remedy

minimize, or mitigate | taken to prevent or minimize

damage to the public health | the release of hazardous

or welfare or to the} substances so that they do

environment, which may not migrate to cause

otherwise result from aj} substantial danger to

release or threat of release” | present or future public

health or welfare of the

environment.

The definition concludes with three lists of specific

examples classified as a remedy, such as “segregation of

reactive wastes.” The first list details various locations of

the release. As with the term “removal,” the definition for

the first list diminishes the examples’ guidance with the

qualifying language that the term “includes, but is not

limited to,” the listed examples. Jd. The second list spells

out when permanent relocation of residents, businesses, and

community facilities is appropriate. Finally, the third list is

a list of actions included within “remedy,” ranging from

offsite storage to disposition of hazardous substances.

27a

Adding to the confusion is the overlap between the two

definitions. See Neville Chem. Co., 358 F.3d at 667 (noting

listing of “provision of alternative water supplies” under

both “remedial action” and “removal”); Geraghty & Miller,

234 F.3d at 927 (noting overlap). Attempting to untie the

Gordian knot of these definitions solely based on their plain

meanings is thus unavailing.!9

In interpreting “removal” and “remedial,” we next follow

the Supreme Court’s guidance in taking a comprehensive,

holistic view of CERCLA because it is a “fundamental canon

of statutory construction that the words of a statute must be

read in their context and with a view to their place in the

overall statutory scheme.” FDA v. Brown & Williamson

Tobacco Corp., 529 U.S. 120, 133 (2000) (quoting Davis v.

Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989)).

CERCLA makes clear that the EPA has the tools of both

removal and remedial actions at its fingertips when there is

a release or threatened release of a hazardous substance.

Specifically, the EPA is authorized “to remove or arrange for

the removal of, and provide for remedial action relating to

such hazardous substance, pollutant, or contaminant at any

time ..., or take any other response measure consistent with

the national contingency plan which the [EPA] deems

19 Other courts have similarly been unable to extract answers from

the statute’s plain meaning:

[T]hose courts which have attempted to unravel

CERCLA’s definitions have found no solace in either the

“plain meaning” of the statute or the reams of legislative

history. Instead, in an attempt to glean legislative

intent, courts seem to resort to a sort of “Purkinje

phenomenon,” hoping that if they stare at CERCLA long

enough, it will burn a coherent afterimage on the brain.

CP Holdings, Inc. v. Goldberg-Zoino & Assocs., Inc., 769 F. Supp.

432, 435 (D.N.H. 1991) (footnote omitted) (referring to “[a]n optical

illusion named for Johannes E. Purkinje (1787-1869), whereby the

eye retains an afterimage of an object in a different color from the

original”).

28a

necessary to protect the public health or welfare or the

environment.” 42 U.S.C. § 9604(a)(1). The statute as a

whole, however, does little to clarify how to categorize a

given response action except to suggest that remedial

actions may be “long term.” See, e.g., id. § 9604(a)(2)

(indicating that any removal action should contribute to the

efficient performance of any “long term” remedial actions

without further elaboration).

Nor does the purpose of the statute provide definitive

guidance, though it points towards a liberal reading of

“removal” in order to effectuate CERCLA’s underlying

purpose of “protect{ ing] and preserv[ing] public health and

- the environment by facilitating the expeditious and efficient

cleanup of hazardous waste sites.” Carson Harbor Vill., 270

F.3d at 880 (quoting Pritikin v. Dept of Energy, 254 F.3d

791, 794-95 (9th Cir. 2001) (internal quotation marks and

citation omitted)); see also, e.g., Sierra Club v. Seaboard

Farms, Inc., 387 F.3d 1167, 1172 (10th Cir. 2004)

(advocating that CERCLA be interpreted liberally so as to

accomplish its remedial goals). Specifically, because a

removal action can be initiated promptly after notification of

a threat, a liberal reading provides the EPA with greater

flexibility to use this tool for the protection of the public

health.

Last, we turn to CERCLA’s legislative history for

guidance. See BedRoc Ltd. v. United State. , 541 U.S. 176,

187 n.8 (2004) (noting “longstanding precedents that permit

resort to legislative history only when necessary to interpret

ambiguous statutory text”). But see Johnson v. United

States, 529 U.S. 694, 723 (2000) (Scalia, J., dissenting)

(criticizing majority’s reliance on legislative history because

“foJur obligation is to go as far in achieving the general

congressional purpose as the text of the statute fairly

prescribes—and no further’).

Unfortunately, legislative history is _ particularly

unhelpful because of the haphazard passage of CERCLA

with many of the more lucid descriptions of the statute

29a

falling under the oxymeronic category of post-enactment

“history.” See, e.g., 126 Cong. Rec. $16,428 (daily ed. Dec.

12, 1980), reprinted in 1 The Environmental Law Institute,

Superfund: A Legislative History 87 (Helen Cohn

Needham & Mark Menefee eds., 1982) (hereinafter

“Superfund History”) (post-passage “clarification” by Sen.

Stafford that “the purpose of [CERCLA] and the response

plan is to protect the public health and welfare in its

broadest sense”); see also Alfred R. Light, CERCLA Law and

Procedure 12-18 (1991) (describing the “unusual back-room

congressional compromise process” behind CERCLA); 1

Superfund History, supra, at xiii (“The emergence of this

last-minute compromise hampers the ability of researchers

to draw definitive conclusions from the otherwise extensive

legislative history of CERCLA.”). Considering that no

committee or conference reports address the version of

CERCLA that ultimately became law, it is apt to describe

the search for legislative history as “somewhat of a snark

hunt.” Carson Harbor Vill., 270 F.3d at 885.

Without the benefit of a definitive committee report or

other deliberate congressional documents describing the

genesis of the final bill, we are hesitant to rely on legislative

history for guidance, especially in regard to the nuanced

inquiry as to which side an action falls on the

removal/remedial line. See United States v. Adams, 343 F.3d

1024, 1032 n.8 (9th Cir. 2003) (warning that subsequent

legislative history is a “hazardous basis for inferring the

intent of an earlier Congress”) (quoting United States v.

McCoy, 323 F.3d 1114, 1121 (9th Cir. 2003)).

What we can take away from the legislative history is the

drafters’ overarching concern that aggressive action be

taken to protect the public health. See, e.g., 126 Cong. Rec.

$14,714 (daily ed. Nov. 19, 1980), reprinted in 1 Superfund

History, supra, at 90 (statement of Sen. Mitchell) (“The

Surgeon General of the United States has stated that toxic

wastes may be the most serious threat to public health in

cur country in the next decade. So it is in this spirit of

urgency that I cosponsor this substitute [bill] today.”);

30a

S. Rep. No. 96-848, at 2 (1980) (stating in report for

unadupted draft of CERCLA that “the potential impact of

toxic chemicals on the general public and environment

tnrougn unsound ‘hazartous disposal sites and other

releases of chemicals is tremendous’); see also 55 Fed. Reg.

8666, 8725 (Mar. 8, 1990) (statement in comments to 1990

amendments to the National Contingency Plan that “Section

121 of CERCLA makes clear, and the legislative history

confirms, that the overarching mandate of the Superfund

program is to protect human health and the environment

from the current and potential threats posed by uncontrolled

hazardous waste sites.”). Such statements encourage us to

construe “removal” liberally to effectuate CERCLA’s

remedial purpose, but they do not illuminate the

removal/remedial distinction. Cf. Seaboard Farms, 387 F.3d

at 1172 (“[CERCLA] must be interpreted liberally so as to

accomplish its remedial goals.”); Kelley v. E.I. DuPont de

Nemours & Co., 17 F.3d 836, 843 (6th Cir. 1994) (“We

conclude that Congress intended that the term ‘removal

action’ be given a broad interpretation.”).

In sum, we are unable to discern Congress’s clear intent

through the normal tools of statutory interpretation. The

meanings of “removal” and “remedial action” under

CERCLA are inescapably vague. |

2. DEFERENCE TO THE EPA’S

CHARACTERIZATION

Having concluded that Congress did not draw a clear line

between removal and remedial actions, we turn to the

second step under Chevron and ask whether, in view of the

deference owed to the EPA, the Libby cleanup was a removal

action as a matter of law. As noted earlier, the level of

deference we accord to a given agency interpretation is

directed by its form.

The administrative posture of CERCLA presents two

types of agency interpretations. One is the National

sla

Contingency Plan, which carries the force of law.2° The

second relates to informal agency interpretations, which at a

minimum receive respect and, depending on the interplay of

Mead and Brand X, may even deserve Chevron deference.

Whichever of these applies, we reach the same result: We

hold that the EPA has rationally construed CERCLA and

that construction deserves our respect. Cf. Alaska Dep't of

Envtl. Conservation, 540 U.S. at 485-88 (EPA “rationally

construed” Clean Air Act in internal guidance memoranda,

which construction deserved “respect and approbation” but

not Chevron deference). As interpreted by the EPA, the

removal/remedial distinction boils down to whether the

exigencies of the situation were such that the EPA did not

have time to undertake the procedural steps required for a

remedial action, and, in responding to such a time-sensitive

threat, the EPA sought to minimize and stabilize imminent

harms to human health and the environment. The EPA did

so here.

The definitions of “removal” and “remedial action”.in the

EPA-promulgated National Contingency Plan merely parrot

CERCLA’s definitions, aside from a few minor revisions for

the National Contingency Plan context. See, e.g., 40 C.F.R.

§ 300.5 (replacing “EPA” for “the President” in definition of

“remedial action” and noting that, for the purpose of the

National Contingency Plan, “remedial” and “removal”

include enforcement activities related thereto). Because

these definitions do nothing to interpret the definitions in

CERCLA, they are unhelpful to our inquiry.

20 40 C.F.R. § 300.2 explains that the President delegated to the

EPA “the responsibility for the amendment of the [National

Contingency Plan}.” See also id. (“The [National Contingency

Plan] is applicable to response actions taken pursuant to the

authorities under CERCLA ....”); Vigil v. Leavitt, 381 F.3d 826, 834

(9th Cir. 2004) (“Congress has given EPA general rulemaking

authority, which, when exercised, requires our deference in

accordance with Chevron.”) (citation omitted).

32a

That being said, other parts of the National Contingency

Plan offer some guidance. For instance, 40 C.F.R.

§ 300.415(e) sets forth examples of activities that are “as a

general rule,” appropriate as part of a removal action, but

notes that the list “is not exhaustive and is not intended to

prevent the lead agency from taking any other actions

deemed necessary under CERCLA.” See also 42 U.S.C.

§ 9601(23) (providing that the scope of removals is not

limited to the examples in the statutory definition). The

examples include, among others, fences or other site control

precautions; capping of contaminated soils to reduce

migration; excavation, consolidation, or removal of highly

contaminated soils; and removal and treatment of hazardous

materials where it will reduce the likelihood of human

exposure. 40 C.F.R. § 300.415(e). The bulk of activities

carried out in Libby easily fall within the scope of the listed

examples. For instance, the EPA removed hazardous soil

from the screening plant, restricted access to contaminated

roads, installed a temporary cover on a school’s ice skating

rink, excavated and backfilled contaminated soil, and

removed exposed piles of vermiculite.

Although “immediacy” is not used in the definition of

“removal” either in CERCLA or the National Contingency

Plan, the examples in 40 C.F.R. § 300.415(e) imply a level of

urgency in addressing the threat both by expressly using the

word “immediately,” see id. § 300.415(e)(9) (providing

alternative water supply “where necessary immediately to

reduce exposure to contaminated household water”), and by

describing looming threats against which prompt action is

needed, see, e.g., id. § 300.415(e)(4) (capping contaminated

soils “where needed to reduce migration of hazardous

substances ... into soil, ground or surface water, or air”). Not

surprisingly, the criteria used to determine whether the

selection of a removal action is appropriate are similarly

infused with this sense of immediacy. See, e.g., id.

§ 300.415(b)(2)(iv) (factors include whether there are

hazardous substances in soils “largely at or near the surface,

that may migrate”).

33a

The need for immediate action permeates the EPA’s

activities in Libby. The toxicologist’s May 17, 2000, report

that was attached to the First Action Memo concludes that

“fajirborne fiber concentrations in the residential area of

Libby exceeded the present occupational Permissible

Exposure Level (PEL) of 0.1 fiber/cubic centimeter

established by OSHA 1994 (MRI, 1982).”2!_ These levels

translated into an immediate public health threat because,

as documented in the health consultation by the Agency for

Toxic Substances and Disease Registry, complete exposure

pathways were present around Libby. For example, EPA

investigations found deteriorating bags of vermiculite at the

former screening plant, as well as vermiculite tailings at the

surface of a walking path next to the Libby High School

track. And the dilapidated condition of houses was such

that “[i]Jn some Libby homes, vermiculite insulation is

literally falling out into the living space from gaps around

light fixtures and electrical switches.” That these particles

were present in people’s homes and schools is especially

troubling because, in contrast to standards set by OSHA for

workers who are exposed to particles during an eight-hour

workday, home and school contamination could result in

exposure for twenty-four hours per day. In short, the

carcinogenic fibers were widespread and, contrary to Grace’s

assertions, were not contained such that they would not be

inhaled. As ominously observed by the EPA, “Of course once

airborne, the fibers will migrate whichever way the wind

blows.”

The sequence of activities in Libby further comports with

the EPA’s description in the National Contingency Plan of

the preferred development of response actions. The

21 The Permissible Exposure Level is for eight hours, not twenty-

four. Although Grace argues that the EPA’s toxicologist’s report is

incorrect, it does not cite to the report of any other experts who

concluded otherwise. Nor does Grace cite to any provisions of

OSHA that require a different protocol for the taking of samples

which the EPA’s expert did not follow.

34a

National Contingency Plan provides that the agency should

orderly transition from a removal to a remedial action if it

“determines that the removal action will not fully address

the threat posed by the release.” 40 C.F.R. § 300.415(g).

This progression is evidenced by the three Action Memos for

Libby, which began by calling for a removal action but later

paved the way for a remedial action.22. Indeed, the First

Action Memo notes that the proposed removal action “should

compliment and contribute to the overall success of any

remedial actions in the future.” The Third Action Memo

further states, “Continued response actions are appropriate

and consistent with the remedial actions to be taken.” Thus,

the EPA conducted its removal action in Libby not in lieu of

a remedial action, but rather as a prelude to a

comprehensive remedial action.

Looking beyond the National Contingency Plan, the

EPA’s characterization of response actions in documents

that do not have the heft of regulations still carry weight

because “[c]ogent ‘administrative interpretations ... not [the]

products of formal rulemaking ... nevertheless warrant

respect.’ “Alaska Dep’ of Envtl. Conservation, 540 U.S. at

488 (quoting Wash. State Dep’t of Soc. & Health Servs. v.

Guardianship Estate of Keffeler, 537 U.S. 371, 385 (2003)

(alterations in original)); see also FTC v. Garvey, 383 F.3d

891, 903 (9th Cir. 2004) (where Chevron deference does not

apply, “[an agency’s] pronouncement’s persuasiveness may

nevertheless entitle it to respect”). The need for agency

expertise is particularly acute when we are faced with a

complex regulatory regime, such as CERCLA. In this

situation, we recognize that the “well-reasoned views of an

expert administrator rest on a body of experience and

22 We note, however, that there need not be a linear progression

from a removal to a remedial action. For example, “removal

actions may be conducted in response to a time-critical situation at

a remedial response site.” 53 Fed. Reg. 51,394, 51,405 (Dec. 21,

1988) (comment in the EPA’s proposed revisions to the National

Contingency Plan).

35a

informed judgment to which courts and litigants may

properly resort for guidance.” Alaska Dep’ of Envitl.

Conservation, 540° U.S. at 487 (internal citations and

quotation marks omitted).

Most notably, the EPA issued a memo in 2000 to guide

project managers during the decisionmaking process of

selecting between remedial and removal actions. See

Stephen Luftig, Director, Office of Emergency and Remedial

Response, Use of Non-Time-Critical Removal Authority in

Superfund Response Actions (Feb. 14, 2000), available at

http://www.epa.gov/superfund/resources/remedy/pdf/memofe

b 2000-s.pdf (last visited July 26, 2005) (hereinafter

“Removal Memo”). Amplifying the National Contingency

Plan’s focus on the immediacy of the threat, the Removal

Memo emphasizes “time sensitivity,” i.e., “the need to take

relatively prompt action,” as a key characteristic of removal

actions: “[E]ven expensive and complex response actions

may be removal action candidates if they are relatively time-

sensitive.” Removal Memo, supra, at 3-4 (“For example,

dredging large quantities of contaminated sediment could be

conducted using removal authority where such action was

the appropriate course for abating or controlling a time-

sensitive threat.”).22 An EPA report published in 2000

describing the removal program reiterates that “[t]he critical

element in all cases is time-prompt action is crucial.” Office

of Emergency and Remedial Response, EPA, EPA 540-K-00-

002, The Emergency Response and Removal Program 3

23 The three Action Memos all categorize the action in Libby as

“Time Critical.” The EPA may also choose to conduct “non-time-

critical” removal actions “when the lead Agency determines, based

on the site evaluation, that a removal action is appropriate, and a

planning period of at least six months is available before on-site

activities must begin.” Office of Emergency and Remedial

Response, EPA, Conducting Non-Time-Critical Removal Actions

Under CERCLA, EPA/540/F-94/009, at 1(Dec. 1993), available at

http://www.epa.gov/superfund/resources/ remedy/pdf/540f-94009-

s.pdf (last visited July 26, 2005). This subset of removal actions is

subject to more stringent procedural requirements.

36a

(2000), available at

http://www.epa.gov/superfund/resources/emer_res.htm (last

visited July 26, 2005) (hereinafter “Removal Program

Report’).

Courts have also stressed the immediacy of a threat in

deciding whether a cleanup is a removal action. See, e.g.,

City of Wichita v. Trs. of APCO Oil Corp. Liquidating Trust,

306 F. Supp. 2d 1040, 1077-78 (D. Kan. 2003) (city’s cleanup

was “remedial in nature” under CERCLA where “[t}he court

has heard no evidence that the contamination at the Site

posed a threat to human health or the environment which

required an immediate response”); Carson Harbor Vill., Ltd.

v. Unocal Corp., 287 F. Supp. 2d 1118, 1157 (C.D. Cal. 2003)

(finding action was remedial where “[t]here is no evidence in

the record that the materials posed the type of threat to

human health and welfare that required immediate action’);

Hatco Corp. v. W.R. Grace & Co.-Conn., 849 F. Supp. 931,

963 (D.N.J. 1994) (in finding response was a removal,

placing “significant weight upon the fact that the release of

[the hazardous substance] was not only imminent, but

actually occurring”).

While stressing time sensitivity, the Removal Memo

downplays the importance that some courts have placed on

duration, i.e., “how long the response action will take to

build or implement,” because “removal actions are most

often of short duration, but they certainly can be long-

running responses, too, thereby undercutting the probative

value of duration ... in deciding whether an action is removal

rather than remedial in nature.” Removal Memo, supra, at

3n.2. But see Sherwin-Williams Co. v. City of Hamtramck,

840 F. Supp. 470, 475-76 (E.D. Mich. 1993) (“[T]he extended

and protracted nature of the cleanup indicate that the City

has engaged in a remedial action.”). Accordingly, the action

in Libby is not disqualified from being a removal action just

because it took several years. Cf. Vill. of Milford v. K-H

Holding Corp., 390 F.3d 926, 934 (6th Cir. 2004) (explaining

that the court has “never held” that the short-term nature of

an action is required for finding costs recoverable as removal

37a

costs). The length of the cleanup in Libby is especially

understandable given that harsh winters truncated the

construction season and that the sheer magnitude of the

initial cleanup far exceeded the normal situation faced by

the EPA. Cf. Sunoco, 337 F.3d at 1244 (concluding that

action was a removal in part because it was finished in

about 14 months, “a relatively short time frame in the

context of a clean-up lasting more than a decade in a harsh

environment’ (internal quotation marks omitted)).

Likewise, the Removal Memo describes courts’ reliance on

the “permanence” of the response as “sometimes

misleading”: “As a practical matter, removal actions are

often permanent solutions such as can be the case in a

typical soil or drum removal.” Removal Memo, supra, at 3

n.3; cf. Geraghty & Miller, 234 F.3d at 927 (“Even if the

replacements for these wells are integral to the long-term

remediation of the site, that does not mean that their initial

placement cannot be categorized as removal.”). This

observation seems logical, as we do not want to tie the EPA’s

hands or compel it to adopt short term remedies for fear that

any more permanent solutions automatically will be dubbed

“remedial actions.” Nor would it make economic or practical

sense to impose a requirement that removal actions must be

only temporary in nature. The Removal Memo instead uses

the term “comprehensiveness’” to distinguish between the

use of removal authority to conduct interim or partial

response actions that are focused on immediate risk

reduction as compared with a final or “comprehensive”

response at the site. Removal Memo, supra, at 3 n.3. The

Libby cleanup exhibits this two-tier approach of an interim

removal action that the EPA transforms into a

comprehensive remedial action. Cf. Geraghty & Miller, 234

F.3d at 926 (noting that “removal actions generally are

immediate or interim responses’).

These informal interpretations combined with the

descriptions in the National Contingency Plan provide a

persuasive interpretation that removal actions encompass

interim, partial time-sensitive resporses taken to counter

38a

serious threats to public health. As the EPA explained in

the Second Action Memo, “CERCLA was designed and

enacted to prevent illness and death resulting from exposure

to hazardous substances, not wait for its occurrence to prove

a threat.” Grace attempts to add another layer of complexity

to our analysis by challenging various scientific and other

methodology judgments made by the EPA as part of the

cleanup. Once we determine that a response action on the

whole is, by nature, classified as a removal action under the

law, we will not delve further to second-guess the underlying

data absent a showing of specific evidence that the EPA’s

conclusions were not warranted. See Balt. Gas and Elec. Co.

v. Natural Res. Def. Council, 462 U.S. 87, 103 (1983). (“When

examining this kind of scientific determination, as opposed

to simple findings of fact, a reviewing court must generally

be at its most deferential.”). Although Grace argues in its

briefs that the EPA’s data and conclusions were wrong, it

did not present evidence to support its claim that the EPA’s

selection of a removal action was arbitrary and capricious,

see 42 U.S.C. § 9613(G)(2), or that its characterization of the

action as a removal] action. did not comport with the

statutory definition, see 42 U.S.C. § 9601(23). Of course, the

EPA does not have free rein to ignore accepted scientific

principle or to adopt findings that are wholly at odds with

the record evidence. See Great Basin Mine Watch v. United

States EPA, 401 F.3d 1094, 1098 (9th Cir. 2005) (court will

overturn a final agency action if the agency “entirely failed

to consider an imporiant aspect of the problem, offered an

explanation for its decision that runs counter to the evidence

before the agency, or is so implausible that it could not be

ascribed to a difference in view or the product of agency

expertise”) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). But such is not

the case here. Nor can it be said that the EPA’s conclusions

are arbitrary and capricious. See Envtl. Def. Ctr., Inc. v.

EPA, 344 F.3d 832, 858 n.36 (9th Cir. 2003) (an agency

decision is arbitrary and capricious if there is no rational

connection between the decision and the facts in the record).

39a

The disputes between Grace and the EPA regarding

testing methodology and data analysis are exceedingly

complex. The administrative record includes, for instance,

the EPA’s 15571 response to Grace’s contention that the

EPA “inappropriately calculated PCMEs [phase contrast

microscopy equivalents} if those findings are going to be

compared to the OSHA PEL [Occupational Safety & Health

Administration permissible exposure limits].” We are not

scientists, nor do we intend to play armchair EPA

administrator. But we are judges and it is our role to

evaluate the record evidence against the standard of

review. We defer to the EPA’s reasoned judgment. See

Sunoco, 337 F.3d at 1243 (“[Skidmore] deference seems

particularly appropriate where an action reasonably can be

classified as both ‘removal’ and ‘remedial’ under CERCLA’s

complex definitional provisions.”).

The EPA’s scientific basis for finding an immediate threat

to the public health is thoroughly documented over

thousands of pages. In addition to the detailed evaluation of

the threat in the three Action Memos, the administrative

record includes, for example, comprehensive reports by both

the EPA’s regional toxicologist and senior toxicologist

explaining the imminent and substantial endangerment to

public health in Libby, extensive respenses by the EPA to

Grace’s comments on the cleanup, and lengthy findings by

the Agency for Toxic Substances and Disease Registry on

medical testing conducted on Libby residents. In particular,

the Agency’s February 22, 2001, report documents findings

from its study conducted from July through November 2000

in which 1,078 people participated. Of those participants,

the findings can be summarized as follows:

40a

Type of Possible Exposure | Percentage who had a pleural

abnormality?4 on the chest

radiograph that could be seen

by at least two certified

specialists

Grace Workers and

37%

secondary contractors

Other work-related 18%

contacts with vermiculite .

Household contacts with 20%

Grace Workers "

Vermiculite Insulation in 14%

home

Some recreational contact 16%

with vermiculite | F

No apparent exposure, but 14%

lives in or around Libby .

In comparison, the report recites the following statistics:

Studies of differing groups within the United

States believed to have no substantive work-

related asbestos exposures have found the

prevalence of pleural abnormalities ranging

from 0.02% among blue-collar workers in North

Carolina [Castellan 1985], to 0.9% among

loggers in Washington and Oregon (Stilbolt

24 According to the report, “Asbestos exposure is associated with

several changes in the pleura (lining of the lungs and internal

chest wall).... They indicate past exposure to asbestos, and can

often be detected in chest radiographs (CXW), also known as X-

rays.” The report goes on to explain that “[t]he presence of any of

these pleural abnormalities on chest radiograph, associated with

asbestos exposure, indicates increased risk for mesothelioma and

lung cancer.”

4la

1991], to 1.89 among New Jersey residents

[Anderson 1979], and 2.3% among patients at

Veterans Administration hospitals in New

Jersey [Miller JA 1996].

Further, in response to the EPA’s request that the Agency

for Toxic Substances and Disease Registry comment on

whether the proposed removal action was appropriate to

protect the public health, the Agency concluded in a May 17,

2000, report that “Asbestos contamination is present at the

screening plant and export plant at levels that pose a public

health hazard. The time critical removal action proposed by

EPA is warranted to protect the public health.”

Beyond the findings that prompted the EPA to undertake

the removal action, the administrative record also

documents the concrete steps taken to combat this threat,

such as removing vermiculite tailings from under and

around running tracks at local schools, covering and

demarcating major contaminated areas at residential

properties, and cleaning the interiors of infected homes.

In sum, given the sweeping language in the definition of

“removal,” the significant deference due to the EPA’s

interpretation of this language, and the scope of the interim

cleanup, we hold that the EPA’s cleanup in Libby falls

within the bounds of a removal action. The EPA “has

rationally construed the Act’s text and [the] EPA’s

construction warrants our respect and approbation.” Alaska

Dep't of Envtl. Conservation, 540 U.S. at 485. This holding

comports with CERCLA’s fundamental goal of protecting the

public health. See, e.g., Hanford Downwinders Coalition, 71

F.3d at 1481 (“[T]his circuit has joined others in recognizing

that protection of the public health was one of the remedial

goals of CERCLA.”). Considering the chaotic history behind

CERCLA’s passage, we are particularly sensitive not to

adopt a reading that would undermine its remedial purpose.

See Clark v. Uebersee Finanz-Korporation, 332 U.S. 480, 488

(1947) (advising that courts should not adopt an

interpretation of statutory language that would “run counter

42a

to the policy of the Act and be disruptive of its purpose ...

[when] dealing with hasty legislation which Congress did

not stop to perfect as an integrated whole”).

In so holding, we recognize that Congress created a

bifurcated scheme of removal and remedial actions and,

accordingly, there must be outer limits to removal actions.

But the EPA did not exceed these limits in this case. Nor

need we delineate the outer parameters. We simply

conclude that the EPA’s characterization of the cleanup in

Libby as a removal action is amply supported by the

administrative record and easily withstands scrutiny under

the modified level of interpretive deference afforded by Mead

and Alaska Department of Environmental Conservation.

Although deference to the EPA’s interpretation is

significant, it is not blind. Courts must, as a matter of law,

ultimately determine that the EPA’s characterization of a

given response action accords with CERCLA, as we so

determine here.

Crucial to our determination is the documented evidence

that, absent immediate attention, the airborne toxic

particles would continue to pose a substantial threat to

public health. To combat this widespread, looming threat,

the EPA had no choice but to undertake an aggressive

removal action of an expansive scope. The removal activities

easily fall within the statutory definition of removal.

Notably, the definitions for removal and remedial actions

consciously include some overlap. Because of the nature of

the contaminant, some of the measures taken by the EPA as

part of the removal action might also effect a permanent

solution for a particular location (e.g., removing exposed

piles of vermiculite). But by no means did the removal

action fully eliminate the public health threat or amount to

a full-blown remediation. According to the EPA’s CERCLIS

database, the EPA is continuing work to ensure that

potential or actual human exposures are under control. See

http://cfpub1.epa.gov/supercpad/cursites/csitinfo.cfm?id= 080

1744 (last visited July 26, 2005). Although Libby’s problems

appear far from solved, the EPA is making progress. As

43a

envisioned by CERCLA, the EPA plans to effect a

comprehensive resolution to the asbestos contamination

through the pending remedial action.

II. EXEMPTIONS FROM THE $2 MILLION, 12-MONTH

STATUTORY CAP APPLICABLE TO REMOVAL ACTIONS

Having determined that the action is _ properly

characterized as a removal action, the inquiry turns to

whether the EPA can recover costs in excess of the $2

million, 12-month statutory cap on removal actions. See 40

C.F.R. § 300.415(b)(5). The district court found persuasive

the EPA’s explanations in the Action Memos of the

immediate risk to public health. Grace I, 280 F. Supp. 2d at

1144. We agree and hold that, considering the widespread

and pervasive asbestos contamination and the potential for

further migration of asbestos fibers as documented in the

Action Memos, the EPA’s decision to exceed the statutory

cap was not arbitrary and capricious.

We begin with the language of 42 U.S.C. § 9604(c)(1):

Unless (A) [the EPA) finds that (i) continued

response actions are immediately required to

prevent, limit, or mitigate an »mergency, (ii)

there is an immediate risk to public health or

welfare or the environment, and (iii) such

assistance will not otherwise be provided on a

timely basis, ... obligations from the Fund ...

shall not continue after $2,000,000 has been

obligated for response actions or 12 months has

elapsed from the date of initial response to a

release or threatened release of hazardous

substances.

See also 40 C.F.R. § 300.415(b)(5) (limiting actions to

$2 million and 12 months “unless the lead agency

determines that” one of the exemptions applies). Despite

Grace’s assertion that the decision to exceed the cap is not

subject to arbitrary and capricious review, the fact that the

statute allows the EPA to invoke the exemptions when it

“finds” certain conditions counsels otherwise. See 5 U.S.C.

44a

§ 706(2) (courts should set aside agency conclusions and

findings where “arbitrary, capricious, an abuse of discretion,

or otherwise not in accordance with law”). The EPA’s

determinations in this case that there was an emergency,

that the risk to public health was immediate, and that the

assistance would not otherwise be forthcoming are

inherently fact-based.

In the First Action Memo, the EPA determined that the

removal action met the three statutory elements required to

exceed the cap. See § 9604(c)(1)(A). Namely, (1) the asbestos

in the environment posed an immediate threat to the local

population; (2) a cleanup beyond the cap was required to

prevent, limit, or mitigate an emergency” because of the

size of the cleanup and the short construction season; and

(3) assistance from other government agencies was not

anticipated on a timely basis. The Second Action Memo

reiterated this reliance on the “emergency exemption,”

explaining that “[a]t all the locations discussed in this Action

Memorandum if Removal Actions are not initiated or

continued then people will be exposed to unsafe levels of

amphibole asbestos.” In light of the EPA’s documentation of

2 The term “emergency” is not defined in CERLCA or the

National Contingency Plan, and the EPA has interpreted it to

include a range of time-sensitive threats:

Not all actions begin under what are commonly thought

of as “emergency” conditions. Though events such as

tire fires, train derailments, and chemical explosions

require immediate action, other less dramatic threats to

public health are addressed under EPA’s Emergency

Response and Removal Program. Such threats include

the discovery of leaking drums or tanks at an abandoned

factory or complaints of tainted drinking water near a

landfill. Regardless of the circumstances, quick and

efficient cleanup of hazardous material eliminates risks

to people and the environment and minimizes the

stigma contamination can bring to properties and

communities.

Removal Program Report, supra, at 3.

45a

complete exposure pathways and the resulting continuing

threat to public health, we hold that the EPA “articulate[d] a

rational connection between the facts found and the

conclusions made.” . Envil. Def. Ctr., 344 F.3d at 858 n.36.

Turning to the Third Action Memo, the EPA continued its

reliance on the emergency exemption, once again citing the

statutory factors and explaining that a continued removal

action was necessary to prevent exposure to unsafe levels of

asbestos. In addition, the EPA relied on the “consistency

exemption,” which allows for a continued removal action

over the cap when it is “otherwise appropriate and

consistent with the remedial action to be taken.” 42 U.S.C.

§ 9604(c)(1)(C);. see also 40 C.F.R. § 300.415(b)(5)Qi)

(corresponding provision). At the time the Third Action

Memo was released, the EPA had proposed Libby to the

National Priorities List but it had not yet been listed. Thus,

as envisioned in the Action Memos, the removal action in

Libby was not an exhaustive cleanup effort. Rather, the

EPA has segued into the remedial phase and, in the interim,

found that “[cJontinued response actions are appropriate and

consistent with the remedial actions to be taken.”

On a practical level, the need to exceed the cap is not

surprising given the urgency, magnitude, and long-standing

nature of the problem. First, the tremendous scope of the

removal in Libby made the $2 million ceiling unworkable.

An entire town needed to be cleaned up, not just a mobile

home park, Carson Harbor Vill., 270 F.3d at 867, or a “five-

acre parcel of land,” Chapman, 146 F.3d at 1168. In contrast

to these localized threats, the EPA explained in its response

to comments received from Grace in December 2001 that it

still had more than 2000 properties to sample around Libby.

The 12-month limit was also impractical given both the

scale of the effort and the meteorological reality of the harsh

conditions, which result in a short construction season and

thus necessitate several years to complete cleanup activities

that might be completed considerably faster in a more

temperate climate. The severe winters and hot summers are

46a

further problematic in that they exacerbate the spread of

asbestos particles through wind and erosion. Cleansing the

site of these widespread particles requires such labor-

intensive acts as bulk removal of contaminated materials

followed by thorough cleaning and vacuuming of the houses.

Given these daunting realities and the EPA’s careful

documentation of its reasons for invoking the emergency and

consistency exemptions, we hold that the EPA’s decision to

exceed the statutory cap was based on the relevant factors,

there has been no clear error of judgment, and the decision

was not arbitrary and capricious. See Marsh v. Or. Natl

Res. Council, 490 U.S. 360, 378 (1989); Enuvtl. Def. Ctr., 344

F.3d at 858 n.36. Therefore, the EPA is entitled to recover

the full costs of its removal action in Libby as found by the

district court.

III. INDIRECT COSTS CALCULATION

Finally, Grace complains that the methodology used to

calculate indirect costs of $11,322,226 overstated the EPA’s

costs attributable to the Libby response action. See Grace II,

280 F. Supp. 2d at 1173, 1187 (calculating indirect costs).

Grace disputes the use of total site-specific costs as the basis

for calculating indirect costs, arguing that because the EPA

delegated substantial authority to the U.S. Department of

Transportation, the EPA’s overhead was substantially lower

than it would have been had the EPA administered the

entire project directly.

After review of the district court’s extensive findings on

the indirect costs methodology and its application to this

particular case, see id. at 1167-73, we conclude that the

district court did not err in its award of indirect costs. See

W. Props. Serv. Corp. v. Shell Oil Co., 358 F.3d 678, 685 (9th

Cir. 2004) (“The district court’s findings of fact can be

reversed only if clearly erroneous, and not merely because

we might have found otherwise on the same evidence.”).

CERCLA authorizes the EPA to recover “all costs of

removal or remedial action ... [that are] not inconsistent

with the national contingency plan.” 42 USC.

47a

§ 9607(a)(4)(A). “All costs” include indirect costs such as

administrative and other overhead costs incurred in

managing the greater Superfund program. See, e.g., United

States v. Dico, 266 F.3d 864, 878 (8th Cir. 2001) (concluding

that “oversight and indirect costs are recoverable in

remedial actions under CERCLA”). In order to capture

these costs from disparate CERCLA response actions,

“Allocating indirect costs that cannot be directly accounted

for as costs of a specific project is a well-established

accounting practice.” Kennecott Utah Copper Corp. v. United

States DOT, 88 F.3d 1191, 1224 (D.C. Cir. 1996).

Grace. maintains that the EPA should have used the

“labor hour” approach that the EPA abandoned in 2000.

Under the labor hour method, the indirect costs attributable

to each site were calculated based on the number of hours

that EPA personnel charged to a site during a fiscal year.

Cf. United States v. R.W. Meyer, Inc., 889 F.2d 1497, 1503-04

(6th Cir. 1989) (calculating indirect costs using labor hours

method). In contrast, the new “full cost” methodology

allocates indirect costs based on the total site-specific

expenditures incurred for a particular site.

The EPA explains that the labor hours method was

rejected because it did not. identify the full costs of

Superfund site cleanups, and the revised methodology is a

better process for estimating and allocating the total

Superfund overhead costs.. The revised methodology is also

supported by reports from the General Accounting Office

and the accounting firm KPMG, which found that the fuli

cost approach complies with the federal government's costs

accounting standards. See Grace IT, 280 F. Supp. 2d at 1171-

72; see also Guidance on Exercising CERCLA Enforcement

Discretion in Anticipation of Full Cost Accounting

Consistent With the “Sittatement of Federal Financial

Accounting Standards No. 4,” 65 Fed. Reg. 35, 339 (EPA

June 2, 2000). 7

In awarding the EPA $11.32 million in indirect costs, the

district court found that the “EPA’s revised methodology is

48a

an appropriate accounting measure of its indirect costs

charged to Superfund sites, including the Libby Asbestos

Site.” Grace IT, 280 F. Supp. 2d at 1169. The district court

reached this conclusion after a three-day trial and detailed

findings. Grace characterizes this conclusion as a legal error

meriting de novo review. We disagree. The district court’s

approach comports with the statute; the court’s findings on

the methodology and its application to this case are

supported by the record, id. at 1167-73, and we will not

overturn them except for clear error. See W. Props. Serv.

Corp., 358 F.3d at 685. Besides, we do not think it is in

anyone’s interest to have appellate courts step. into the

accountants’ shoes and determine the accuracy of accounting

calculations de novo. Grace’s arguments do not rise to the

level of demonstrating that the district court’s findings were

clearly erroneous. We are particularly hesitant to second-

guess the district court’s judgment on this issue where the

court specifically found that Grace’s accounting expert was

“not credible.” Grace IJ, 280 F.Supp. 2d at 1169, 1171

(“(Grace’s] accounting expert ... does not know what

methodology the EPA should use to recover its indirect

costs.”).

Conclusion

We AFFIRM the district court’s order granting the EPA

summary judgment on the liability issue. We also AFFIRM

the district court’s order awarding tne EPA $54,527,081.11

in costs and a declaratory judgment on the liability of Grace

for future costs.

AFFIRMED.

BEA, Circuit Judge, concurring:

I concur in the result that the majority reaches. The

EPA’s activities in Libby, Montana, when taken as a whole,

are properly classified as a removal action in response to the

immediate threat posed by the large quantities’ of friable

asbestos found in Libby. See, e.g.,, Majority Opinion at

49a

p.15576 ante (noting that EPA toxicologist reported that

Libby residents were being exposed to airborne asbestos in

excess of OSHA’s permissible occupational exposure level).

Accordingly, I would uphold the EPA’s classification of its

Libby response action under Mead as opposed to Chevron

deference. See United States v. Mead Corp., 533 U.S. 218,

234-35 (2001).

Under CERCLA, the EPA can recover “all costs of removal

or remedial action ... not inconsistent with the national

contingency plan.” 42 U.S.C. §9607(a)(4)(A). The

regulations set forth the national contingency plan

standards governing the EPA’s selection of a response

action. See 40 C.F.R. § 300.415. In conducting judicial

review, this court “shail uphold the President’s decision in

selecting the response action unless the objecting party can

demonstrate, on the administrative record, that the decision

was arbitrary and capricious or otherwise not in accordance

with the law.” 42 U.S.C. § 9613(j)(2).

The national contingency plan regulations governing

removal action also provide that “[ijn determining the

appropriate extent of action to be taken in response to a

given release, the lead agency shall first review the removal

site evaluation, any information produced through a -

remedial site evaluation ... and the current site conditions,

to determine if removal action is appropriate.” 40 C.F.R.

§ 300.415(a)(1). Thus, the regulations govern not only the

EPA’s selection of a response action, but also its

determination of the extent of a response action. Jd. at

300.415(a)(1). I would also review this latter determination

under the arbitrary and capricious standard stated in 42

U.S.C. § 9613G)(2).

For example, the EPA’s decision to excavate the

vermiculite tailings buried beneath the Libby Middle School

track warrants scrutiny. According to a letter from the

superintendent of Libby’s schools, the EPA had concluded

that “[s]ince the asbestos ... detected is all at depth and, in

some cases, covered by the track,” “there is not currently a

50a

risk of exposure.” Were this the enly finding in the record, I

would be hard pressed to see any rational connection

between this finding and the decision to include the Middle

This text is long and has been trimmed here. Open the source document for the complete record.