Petition for Writ of Certiorari — Newell Recycling Co. v. Environmental Protection Agency

Supreme Court brief2001

Ask Donna

What actually matters in this document.

Text

(D PFE’

001534 APR - 4 2003

No. _____ OFFICE OF THE CLERK

In the

Supreme Court of the Anited States

NEWELL RECYCLING COMPANY, INC.,

Petitioner,

ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

On Petition For Writ OF CERTIORARI

To Tue Unitep States Court OF APPEALS

For Tue Firtx Circuit

PETITION FOR WRIT OF CERTIORARI

MATTHEW J. NasutTi

Counsel of Record

Law OFFICE OF MATTHEW J. NASUTI

12802 VALLEY View STREET,

SuITE 9

GARDEN Grove, CA 92845

(714) 373-2529

Counsel for Petitioner

BECKER GALLAGHER LEGAL PUBLISHING, INC.,

CINCINNATI, OHIO 800-890-5001

QUESTIONS PRESENTED

Where the United States Environmental Protection

Agency (“EPA”) initiates a quasi-criminal

administrative proceeding in which it awards itself, in

summary judgment, a $1.345 million fine, which is

70.78 times greater than the EPA average fine (with

no explanation for the disparity), with no formal

hearing or oral argument permitted, where all agency

proceedings are conducted by mail, and where

discovery is denied and no rules of evidence enforced,

are the EPA findings of fact entitled to any deference

on appeai?

Did the Fifth Circuit Court of Appeals repudiate this

Court’s decision in United States v. Bajakajian, 524

U.S. 321 (1998) and chart a new course for the Eighth

Amendment to the United States Constitution by its

ruling that:

“No matter how excessive (in lay

terms) an administrative fine may

appear, if the fine does not exceed the

limits prescribed by the statute

authorizing it, the fine does not violate

the Eighth Amendment.” ~

Where the EPA was notified in 1985 about the

creation of a contaminated soil pile at a scrap yard in

Houston and yet waited until 1995 to file its civil

penalty action regarding the still existing soil pile,

may the agency, without clear due process notice

being given beforehand, undermine the five year

statute of limitations under 28 U.S.C. § 2462 and

evade the $25,000 penalty limit, by claiming there is

a “continuing disposal,” even though there is no

allegation of either continuing conduct or continuing

harm?

While “strict” rules of evidence do not generally apply

to federal agency adjudicatory proceedings pursuant to

5 U.S.C.§ 664 (Administrative Procedures Act), may

an agency ignore public policy cecsiderations and use

subsequent remedial measures as legal admissions of

liability; specifically, is the EPA permitted to argue

that Petitioner is guilty of the 1985 illegal disposal, in-

part, because it paid for the cleanup of the disposed

material in 1995?

PARTIES TO THE PROCEEDINGS

Petitioner

Newell Recycling Co., Inc. It has no parent company

and no subsidiaries. It does have an affiliated company called

Alaska Metal Processors, Inc. '

Respondent

United States Environmental Protection Agency.

Other Parties

The EPA did sue Oklahoma Metal Processing, Inc.

d/b/a Houston Metal Processing, but it settled. Matthew J.

Nasuti did move for leave before the Fifth Circuit Court of

Appeals to file an amicus brief, which was denied.

' Petitioner was represented by Oppenheimer, Blend,

Harrison & Tate, Inc. before the Fifth Circuit Court of Appeals,

and by that firm, Langley & Banack, and the Law Office of

Matthew J. Nasuti in the Petition for En Banc Review to the Fifth

Circuit Court of Appeals.

ill

TABLE OF CONTENTS

CURSE DEG WUREREENURIEED bc ccc was escevens i

PARTIES TO THE PROCEEDINGS ............ ill

pe es re ree ee ee iv

py ei ee err vii

OPINIONS DT See vee ese ba ee were l

eae ere wer yoy ae ree 2

CONSTITUTIONAL AND STATUTORY

ot es er rer 2

DEAEEEAUE Ge BUS IMD oid ose 4 oa we oe es 4

REASONS FOR GRANTING THE PETITION ...... 8

I. THE STANDARD OF

REVIEW OF AGENCY

SUMMARY JUDGMENT

DECISIONS IS A MATTER

OF FIRST IMPRESSION AND

MERITS SCRUTINY BY

pe ere Perea ee 8

II. THE FIFTH CIRCUIT’S

RULING ON EXCESSIVE

FINES UNDERMINES AND

CONFLICTS WITH THIS

COURT’S HOLDING IN U.S.

v. BA NES Sa eee ee 10

ii, THERE IS ACTUAL

CONFLICT IN THE

FEDERAL COURTS

REGARDING WHAT

CONSTITUTES A

“CONTINUING” DISPOSAL ....... 12

IV. IT IS AN ISSUE OF FIRST

IMPRESSION AS’ TO

WHETHER CONGRESS,

WHEN IT ENACTED 5

U.S.C. § 664, INTENDED TO

RELAX OR ELIMINATE

EVIDENTIARY RULES

THAT HAVE A STRONG

PUBLIC POLICY

CRATE. snk. 17

COI 6 oe 19

APPENDIX

Appendix A

Court of Appeals Opinion and

PE, PR a i FE weak ee ees la

Appendix B

U.S. EPA Environmental Appeals Board

Opinion and Judgment, 9/12/99 ........

Appendix C

Court of Appeals Order Denying Petition

for En Banc Review, 1/9/01 ...........

Appendix D

EPA Region 6 Memorandum Excerpt

Regarding Discovery, 3/97 ...........

EPA Region 6's FOIA Request Denial,

ae ao fy AP ee

Petitioner's FOIA Appeal, 5/2/97 .......

Appendix E

Newell Enterprises, Inc.'s correspondence

Fe RN eee ss eee

Appendix F

Telephone record - Lockwood, Andrews &

Newman, 10/20/87 ................

Appendix G

Texas Department of Health Memo to File,

i PERE EEEP TCC TIRE TE soe

Appendix H

Texas Bureau of Solid Waste Management

correspondence, Z/G/GS . 0. ccc cc eee.

TABLE OF AUTHORITIES

Cases

Page(s)

Beazer East, Inc. v. United States Environmental

Protection Agency, Region III,

963 F.2d 603 (Third Cir.1992) ............ 17

Bettis v. Town of Ontario, NY,

800 F.Supp. 1113 (W.D.N.Y. 1992) ........ 14

Butz v. Glover Livestock Commission. Co.,

Gan Ghee ee cs Gree’ bk ee 7-8, 11

Connecticut Coastal Fisherman Association v.

Remington Arms Co.,

989 F.2d 1305 (2nd Cir.1993) ............ 14

Federal Trade Commission v. Cement Institute,

ee Wis I EN oso cxk che we ctcane 19

Gwaltney. v Chesapeake Bay Foundation, Inc..,

I a 13

Harmelin v. Michigan,

Se Re ED, a hoc dacbe'wecdceunn 11

Havens Realty Corp. v. Coleman,

een IE; oo bc bab o's Cas wanncn 16

Informed Citizens United, Inc. v. USX Corp.

I: CO rN 15

In Re Air Crash Disaster,

6 F.26 SIC GCE. IGID oc ce cei ccenees 18

In Re Standard Scrap,

SRC: Ss. who bie de wee 6 ab O08 15

In the Matter of: City of Detroit,

Sek | were a eee 14

Lorance v. AT&T Technologies,

oe eee sees 16

3M Company (Minnesota Mining and Mfg.) v. Browner,

yee Fikes Al, a rer 13

Metro Broadcasting, Inc. v. F.C.C.,

Se es I ks OCR EE WETS et 9

Pharaon v. Board of Governors of Federal Reserve System,

135 F.36 148 (D.C.Ciwr. 1996)... 2... eee 11

Puerto Rico Aqueduct & Sewer Authority v. EPA,

oP eR. | rer rer er ae 8

Ramos v. Liberty Mutual Insurance Co.,

CIS Fae OPO AD 6 FR CNRS 18

Redwing Carriers, Inc. v. Saraland Apartments,

94 F.3d 1489 (llth Cir.1996)............. 9

Sasser v. EPA,

990 F.2d 127 (4th Cir. 1993) ............. 14

Solem v. Helm,

Ge ee GE x a bk oe a Oa ees 11

Stedman v. SEC,

ae ar ee oie Sie vit kee

Toussie v. United States,

Seas BO ck ok cee eee 16

United States v. Am General Corp.,

34 F.3d 472, 474 (7th Cir.1994) ........... 9

United States v. Bajakajian,

344 U.S. 321 (1996) .......... i, 10, 11, 12, 20

United States v. Cumberland Farms of Connecticut,

Gae-ruae Rook CeCe SO 6 is Ae 14

United States v. Hoeshst Celanese Corporation,

bZe F008 ZIG (GR Cer. 1997). ww i be es 9

United States v. Reeves,

923 F.Supp. 1530 (M.D. Fla. 1996) ........ 15

United States v. Telluride Co.,

884 F.Supp. 404 (D. Colo. 1995) .......... 14

Western States Petroleum Association v. E.P.A..,

Te wy ob a | Re ae ae ae g

Constitutional Provisions, Statutes and Rules

United States Constitution,

SU a he a er ee

ar Siok ok oes eS li, 3-4, 17, 18

Pe EE a ee eh de ee ee 8

> UA eee Eg 5 x ee nie se eee 5

ie OU aiins Oe eS ea eee ee 2

iD 0).BAs Gees 6 eee eae eee 3

ee Us GEE ko es ere eee a oe

COU Be SRR. Wace keh a ee ee 6

Le ee | rr ere rer ores 8

PO Ns OP is GA ay oad be Ee 8

Federal Rule of Evidence 407 ................. 18

Other Authorities

U.S. EPA PCB Penalty Policy (1990) ............ 16

IN THE SUPREME COURT OF

THE UNITED STATES

PETITION FOR WRIT OF CERTIORARI

Petitioner respectfully prays that a writ of certiorari

issue to review the judgment beiow.

OPINIONS BELOW

There are six prior opinions in this matter:

l. The January 9, 2001 denial for en banc review by the

Fifth Circuit, which is reproduced at Appendix

(“App.”) C and reported at 2001 App.Lexis 834.

3. The November 9, 2000 denial of Petitioner’s appeal

by the Fifth Circuit which is reported at 231 F.3d 204

(Sth Cir. 2000), and which is reproduced at App. A.

_ The September 13, 1999 opinion of the U.S.

Environmental Protection Agency’s Environmental

Appeals Board, which is reproduced at App. B.

4. The July 23, 1997 penalty opinion of the EPA

Presiding Officer.

n The April 29, 1997 accelerated decision of the EPA

Presiding Officer.

6. The February 6, 1997 decision of the EPA Presiding

Officer denying Petitioner’s discovery request.

JURISDICTION

The opinion of the United States Court of Appeals for

the Fifth Circuit was issued on November 8, 2000 and

reported at 231 F.3d 204 (Sth Cir. 2000). A timely petition

for en banc consideration was denied by that court on January

9, 2001. This Court has jurisdiction pursuant to 28 U.S.C.

§ 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Question 2

Amendment VIII to the United States Constitution

“Excessive bail shall not be required, nor

excessive fines imposed, nor cruel and unusual

punishment inflicted.”

Question 3

15 U.S.C. § 2615

“(a) Civil

(1) Any person who violates a provision of

section 2614 or 2689 of this title shall be liable

to the United States for a civil penalty in an

amount not to exceed $25,000 for each such

violation. Each day such a violation continues

shall,. for purposes of this subsection,

constitute a separate violation of section 2614

or 2689 of this title.”

15 U.S.C. § 2615(2)

“(B) In determining the amount of a civil

penalty, the Administrator shall take into

account the nature, circumstances, extent, and

gravity of the violation or violations and, with

respect to the violator, ability to pay, effect on

ability to continue to do business, any history

or prior such violations, the degree of

culpability, and such other matters as justice

may require.”

28 U.S.C. § 2462

“Except as otherwise provided by Act of

Congress, an action, suit or proceeding for the

enforcement of any civil fine, penalty, or

forfeiture, pecuniary or otherwise, shall not be

entertained unless commenced within five

years from the date when the claim first

accrued if, within the same period, the

offender or the property is found within the

United States in order that proper service may

be made thereon.”

Question 4

5 U.S.C.§ 664

“(d) Except as otherwise provided by statute,

the proponent of a rule or order has the burden

of proof. Any oral or documentary evidence

may be received, but the agency as a matter of

policy shall provide for the exclusion of

irrelevant, immaterial or unduly repetitious

evidence. A sanction may not be imposed or

rule or order issued except on consideration of

the whole record or those parts thereof cited

by a party and supported by and in accordance |

with reliable, probative and _ substantial

evidence... .”

STATEMENT OF THE CASE

” In 1985, Newell Industries, Inc. (“Industries”) and

Newell Enterprises, Inc. (“Enterprises”) returned to a scrap

yard located at 5225 Fidelity Road, Houston, Texas (“Site”)

to excavate and dispose of some residual lead from a former

battery breaking business that had operated there years

earlier. The excavation was conducted under the supervision

of the State of Texas. App. H at 108a-109a. The |

owner/operator of the Site was Oklahoma Metal Processors, )

Inc. d/b/a/ Houston Metal Processing (“OMP”). During

excavation activities by Industries and Enterprises, several

transformers containing polychlorinated biphynols (“PCBs’’)

were uncovered. App. G at 106a. They were removed and

the surrounding soil pushed into a 20 cubic-yard pile. Work

was halted while the parties consulted the Texas Department

of Health, which in turn consulted with the US.

Environmental Protection Agency-Region 6 (“Region 6").

App. G at 107a. The matter continued to be studied and

Region 6 was again briefed in 1987. At that time the agency

took the position that the matter was too minor for them to get

involved. App. F at 103a. Region 6 was briefed again in

1989. App. E at 10la-102a. The pile, now overgrown with

vegetation [See photos at Appellate Record (“A.R.”) pp. 188-

193], sat undisturbed in the back area of the scrap yard until

1995 when it was disposed of by OMP for $84,000. Those

monies were reimbursed to OMP by Newell Recycling Co.

Inc. (“Petitioner”) under a “no-admissions” agreement to help

settle a lawsuit regarding OMP’s purchase of the scrap yard

from Petitioner in 1982. Oklahoma Metal Processing Co. v.

Newell Recycling Co., Inc., et al., Civil Action No. H-95-

4596 (S.D.Texas) Houston Div.

On March 30, 1995, Region 6 filed an administrative

complaint internally with the EPA against Petitioner and

OMP, seeking a $1.345 million civil penalty under the Toxic

Substances Control Act (15 U.S.C. § 2614 et seq.) for the

illegal disposal of PCBs in that 20 cubic-yard soil pile. A.R.1

The agency’s evidence was three grab samples which found

PCBs at 190 parts per million (“ppm”), 190 ppm and 230

ppm, with the action level being 50 ppm. A.R. 195-205. OMP

settled the Complaint with Region 6 for $90,000, while

Petitioner rejected Region 6's $90,000 settlement offer and

elected to litigate.

Petitioner moved for an order permitting service of a

combined set of document requests and interrogatories on

Region 6, (A.R.522-559) which Region 6 promptly moved to

have quashed. Region 6 in its brief urged Petitioner to instead

file a Freedom of Information Act (“FOIA”) request with the

EPA under which it could obtain all the documents it was

seeking. App. D at 93a to 96a. Region 6 argued that

“formal” discovery was completely unnecessary. The

Presiding Judge agreed with Region 6 and denied discovery.

Petitioner, in reliance on Region 6's representations, then

filed a FOIA request for the documents it needed and Region

6 proceeded to deny almost all of the request! App. D at 97a

to 99a. *

> It is governmental arrogance such as this which caused

the English barons to unite against King John, forcing him to sign

of the Magna Carta in 1215. Petitioner finds itself petitioning this

Court for a similar charter of liberties against abuses by the EPA.

Region 6 then moved for an accelerated decision

(summary judgment), which Petitioner opposed by presenting

evidence (including App. H at 105a to 106a) which

established numerous factual disputes, including that it was

Enterprises and not Petitioner which created the soil pile in

1985. Despite these factual disputes, the Presiding Officer

granted Region 6's motion without holding a formal hearing.

He found that:

A. The illegal PCB disposal (soil pile) in

1985 was a continuing disposal, even

thought there was no claim by EPA of

release from the pile and no allegation

of environmental harm;

B. Petitioner was held to be liable based

on several factors including actions

taken by Petitioner after the creation of

the soil pile. The agency held that

subsequently hiring consultants to

investigate the soil pile and ultimately

reimbursing OMP for its costs to

dispose of the soil pile in 1995, were

admissions that could be used to

impose liability on Petitioner.

Petitioner then requested a formal hearing before

imposition of the penalty. 40 C.F.R. § 22.15c reads, in

relevant part that: “A hearing shall be held upon the request

of the respondent.” The request was denied on the grounds

that essentially “shall” does not mean “must.” App.B at 60a

Petitioner introduced, without objection, agency precedent

that showed that the EPA, in the past, had imposed an average

penalty of $19,000 for similar TSCA PCB disposal violations.

A.R.1113-1114. The EPA Presiding Officer held that the

agency does not have to consider agency precedent and

proceeded to grant EPA’s request for the full $1.345 million

penalty. Petitioner filed an internal appeal to the EPA

Environmental Appeals Board (“EAB”) and requested

permission to make oral argument. The EAB denied the

request for oral argument and affirmed the Presiding Officer’s

summary judgment decision. The EAB held that is was more

likely than not that the soil pile was created by Petitioner. °

The EAB went on to cite Butz v. Glover Livestock

Commission. Co., 411 U.S. 182, 187 (1973) as authority for

the proposition that the EPA did not have to consider prior

agency fines when imposing a new fine. App. B at 88a. The

entire EPA proceedings were conducted by mail. A timely

appeal was then filed with the Fifth Circuit Court of Appeals,

which issued its ruling on November 8, 2000:

(1) affirming that the illegal disposal (i.e.

creation of the soil pile) was a

continuing disposal;

(2) affirming that the EPA could use

subsequent remedial measures as

admissions of liability; and

(3) rejecting Petitioner’s request for a de

novo review of the allegedly excessive

fine on the grounds that “excessive”

does not mean excessive as a layperson

would interpret it. The Fifth Circuit

> The EAB weighed the facts and decided that it was more

likely than not that Petitioner was liable (App. B at 57a), which was

improper as this was a summary judgment appeal where the

underlying facts were clearly in dispute.

Court of Appeals ruled that while the

EPA fine was “severe” as there was no

evidence of environmental harm, it was

without authority to review the fine

because it was less than the maximum

that is technically set forth under the

TSCA statute. The court also

affirming the EPA position that under

Butz, prior agency TSCA precedent is

irrelevant; App. B at 14a.

Petitioner filed a timely motion for rehearing in banc,

which was denied on January 9, 2001, App. C at 9la-92a.

REASONS FOR GRANTING THE PETITION

I. THE STANDARD OF REVIEW OF AGENCY

SUMMARY JUDGMENT DECISIONS IS A

MATTER OF FIRST IMPRESSION AND

MERITS SCRUTINY BY THIS COURT

The EPA, through 40 C.F.R. § 22.20(a) has

promulgated a regulation that permits the agency to conduct

summary proceedings, which it calls “accelerated decisions.”

This rule was generally reviewed in Puerto Rico Aqueduct &

Sewer Authority v. EPA, 35 F.3d 600, 607 (1st Cir.1994).

The First Circuit held that “. . . the concept of administrative

summary judgment has been linked inextricably to

Fed.R.Civ.P. 56." What the First Circuit did not specifically

discuss is whether the standard for appellate review of this

newly created summary proceeding is or should be the same

as under Rule 56 (i.e. de-novo review). As Congress, in 5

U.S.C. § 706, did not set out de-novo review as an explicit

standard, it is arguable that Congress either did not intend for

federal agencies to act summarily or the Congress left it to the

Se ee eee en eT

courts to set the standard of appellate review from such

summary proceedings or Congress intended to create a

standard of judicial review for agency summary judgment that

was different from summary judgment imposed by a District

Court. Petitioner has found no authority that squarely

addresses this issue, although it is unlikely that Congress

intended to depart from the Rule 56 standard of de-novo

appellate review.

There are several decisions which do address what

deference, if any, is owed to agency decisions. In Metro

Broadcasting, Inc. v. F.C.C., 497 U.S. 547, 569 (1990) the

court held that no deference is owed to either an agency or the

Congress on constitutional matters. In Western States

Petroleum Association v. E.P.A., 87 F.3d 280, 283 (9th

Cir.1996) the court held that if EPA failed to follow its own

standards (as in the case at bar) no deference is owed to the

agency’s decision. Finally in Redwing Carriers, Inc. v.

Saraiand Apartments, 94 F.3d 1489, 1507, n.24 (11th

Cir. 1996), the court, in dicta, went even further. It stated

that where the EPA is functioning as a prosecutor, agency

findings are not entitled to any deference at all by the courts.

In conclusion, when the EPA initiates a quasi-criminal

administrative proceeding’ in which it makes a monetary

award to itself in summary judgment, the EPA findings of fact

should not be entitled to any deference when the case is

appealed to a Federal Court of Appeals. A ruling of this type

Caselaw supporting the proposition that civil penalty

cases are quasi-criminal includes: United States v. Hoeshst

Celanese Corporation, 128 F.3d 216, 224 (4th Cir.1997); and

United States v. Am General Corp., 34 F.3d 472, 474 (7th Cir.

1994).

would clarify and standardize federal law regarding the

appellate review of summary proceedings, and such a ruling

is needed on this important question.

Il. THE FIFTH CIRCUIT’S RULING ON

EXCESSIVE FINES UNDERMINES AND

CONFLICTS WITH THIS COURT’S HOLDING

IN U.S. v. BAJAKAJIAN

The Fifth Circuit held that the fine in the case at bar

was “severe” since there was no actual harm, but the court

then stated that:

“No matter how excessive (in lay terms) an

administrative fine may appear, if the fine does

not exceed the limits prescribed by the statute

authorizing it, the fine does not violate the

Eighth Amendment.” App. A at 14a

In United States v. Bajakajian, 524 U.S. 321 (1998)

the Court issued a two-part ruling regarding penalties which

might violate the Excessive Fines Clause. The Fifth Circuit

Court of Appeals, in the case at bar, has rejected both parts of

the ruling.

First, the Supreme Court recited that “excessive” has

no magical meaning, that excessive means “surpassing the

usual” and the Court referenced the lay definition in

Webster’s Dictionary. /d at p. 335. The Fifth Circuit Court

of Appeals discredits this position by its holding that it is

irrelevant whether a fine is “excessive” in lay terms.

Second, the Supreme Court held that Courts of Appeal

ust review the proportionality of the fine de-novo. The

Fifth Circuit Court of Appeals repudiates this position by

refusing to review proportionality, despite being specifically

cited to Bajakajian by Petitioner.

The Fifth Circuit Court of Appeals cited as authority

Pharaon v. Board of Governors of Federal Reserve System,

135 F.3d 148, 155-57 (D.C.Cir.1998). App. B, p.14.

Pharaon holds that there is a two-part test that the appellate

court must follow. First, the fine must be proportionate to the

offense, and second, the fine must be below the statutory

maximum.

The Fifth Circuit Court of Appeals has abrogated

Bajakajian and disregarded the first part of the Pharaon test

by its holding that the Eighth Amendment only applies where

the penalty imposed is in excess of the maximum permitted by

Congress. This is an absurd ruling because any fine in excess

of the statute would be null and void and there would be no

reason for a constitutional review.

The EPA and Fifth Circuit Court of Appeals have also

ignored the standards set by this Court regarding the role that

comparative analysis plays in the excessive fine review. In

Solem v. Helm, 463 U.S. 277, 291-292 (1983) the Court set

out a three-part test to evaluate a potentially excessive fine.

One of the parts involves a comparative analysis of prior

fines. This issue was discussed again by the Court in

Harmelin v. Michigan, 501 U.S. 957, 1004-1005 (1991).

While the Supreme Court held that comparative analysis is

only appropriate in rare cases, it can be useful where the

penalty is grossly disproportionate to what has previously

been imposed. The EPA and the Fifth Circuit Court of

Appeals disregarded agency precedent as an element in an

excessive fine review, and miscited to Butz v. Glover

Livestock Commission. Co., 411 U.S. 182, 187 (1973) as

authority for the proposition that the EPA did not have to

consider prior agency fines when imposing a new fine (App.

A at 14a, and App.B at 88a). This decision was made even

though the EPA fine was 70.78 times greater than the average

TSCA disposal fine, which would qualify it as “grossly

disproportionate” to that previously imposed.

This is serious error which should not be left to stand

because it invites agencies to act capriciously in total

disregard of agency precedent.

In summary, this was an insignificant and dormant soil

pile, with marginal PCBs which sat undisturbed and

overgrown with weeds in the back of a scrap yard for 10

years with no evidence of any release, with full notice to the

EPA, which cost only $84,000 to remediate, where the EPA

settled with the owner/operator of the scrap yard for $90,000,

and where the EPA in the past imposed an average TSCA fine

of $19,000. As a result, how can a $1.345 million fine for

Petitioner possibly be proportionate or be consistent with

agency precedent? The Fifth Circuit Court of Appeals did not

explain why it has elected to challenge the extremely clear

U.S. Supreme Court ruling in Bajakajian.

lil. THERE IS ACTUAL CONFLICT IN THE

FEDERAL COURTS REGARDING WHAT

CONSTITUTES A “CONTINUING” DISPOSAL

The EPA has prevailed to-date in this matter because

the Fifth Circuit Court of Appeals held that the soil pile at

issue was a continuing disposal (and therefore a continuing

violation) which both tolled the five year statute of limitations

contained in 28 U.S.C. § 2462, and permitted a new fine of

up to $25,000 for each day the pile sat in Houston. ° This is

an issue regarding which there is a division of opinion within

the Circuit Courts, District Courts and within the EPA itself.

As a result, the EPA failed to provide adequate due process

notice to Petitioner regarding what is a continuing violation.

The division of opinion and overall confusion in the courts

regarding this issue merits review by this Court.

The decisional law regarding what is a “continuing

disposal” is split between two camps, those wherein all

disposals are continuing (which nullifies all statutes of

limitations and enhances penalties) and those where a disposal

is generally viewed as a one-time occurrence which

commences the applicable statutes of limitation and is limited

to a one-time penalty of $25,000.

The following represents some of the court decisions

cited by both parties, which set forth the conflict regarding

what constitutes a single vs. a continuing disposal:

Single Disposal

Gwaltney v. Chesapeake Bay Foundation, Inc.,

484 U.S. 49, 59-60 (1987).

Citizens suits could not be filed under the Clean Water Act

for “wholly past violations” but only for “continuous or

intermittent” violations.

> In 3M Company (Minnesota Mining and Mfg.) v.

Browner, 17 F 3d. 1453 (D.C. Cir. 1994), it was settled that the

five-year statute of limitations under 28 U.S.C. §2462 applies to

administrative proceedings for the assessment for civil penalties

under TSCA.

Connecticut Coastal Fisherman Association

Remington Arms Co.,

989 F.2d 1305, 1308-13 (2nd Cir.1993).

The decomposition of 2400 tons of lead shot, previously

‘discharged on land and into adjacent waters, is not a

continuing violation.

In the Matter of: City of Detroit,

TSCA Appeal No. 89-85 3 E.A.D. 514 (1991).

The disposal of PCBs in a soil pile which remained

undisturbed for 634 days was not a continuing violation under

TSCA.

United States v. Telluride Co.,

884 F.Supp. 404 (D. Colo. 1995), rev’d on other grounds 146

F.3d 1241 (10th Cir. 1998).

The unlawful excavation and disposal of soil in violation of

the Clean Water Act did not constitute a continuing violation.

Bettis v. Town of Ontario, NY,

800 F.Supp. 1113, 1119 (W.D.N.Y. 1992).

Material used to illegally fill wetlands is not a continuing

violation of the Clean Water Act.

Continuing Disposal

United States v. Cumberland Farms of Connecticut,

826 F.2d 1151 (1st Cir. 1987).

Cumberland’s continuing efforts to dredge and fill the

wetlands constituted a continuing violation.

Sasser v. EPA,

990 F.2d 127, 129 (4th Cir. 1993).

Each day that the pollutants remain in the wetlands without a

permit constitutes an additional day of violation.

ne NE A SE 5ST A ET ET TELA L AL LEBEL LED EY EOE ELEC AI EE EEE OO ECL AE

aie er ania AR ete a a a eee TE gee a

United States v. Reeves,

923 F.Supp 1530 (M.D. Fla. 1996).

An unpermitted discharge of fill materials into wetlands is a

continuing violation for as long as the fill remains.

Informed Citizens United, Inc. v. USX Corp.,

36 F.Supp.2d 375, 377 (S.D.Tex-1999).

Federal courts have jurisdiction over illegal dumping, even

after the dumping has ceased.

In Re Standard Scrap,

TSCA Appeal No. 87-3 3 E.A.D. 267 (1990).

Failure to properly dispose of PCBs constitutes as long as the

PCBs remain in a state of improper disposal.

Those courts which have endorsed the position that

every disposal is a continuing disposal/violation, assert that

the disposal continues until the material is recovered and

properly disposed. The proponents of this argument do not

address what would happen if there should be a TSCA

disposal into a river or the ocean, where the material could

never be recovered. In such a situation, either the disposal

and its $25,000 per day penalty would continue forever

(which is unlikely), or it would be considered a one-time

event whose penalty would be capped at $25,000? How can

it be equitable for a person who disposes upon land to incur

a continuing fine of $25,000 per day, while a person who

disposes into water has his or her fine capped at $25,000?

In summary:

Was it the intent of Congress to encourage

ocean and river dumping because the

penalty for such conduct would be a tiny

fraction of the penalty for a land disposal?

[Petitioner thinks not.]

Where a disposal occurs and there is no evidence or

even allegation of continuing conduct or any quantifiable

continuing harm, there is no logical or equitable argument that

could be made for a continuing disposal.

There is excellent guidance regarding the continuing

offense doctrine, which we believe is relevant to the

continuing disposal issue. Those cases hold that statutes of

repose should be liberally interpreted, and a continuing

offense found only in limited circumstances. Toussie v. United

States, 397 U.S. 112; 115 (1970). In addition there usually

must be a continuing policy, practice or action. Havens Realty

Corp. v. Coleman, 455 U.S. 363, 380-381 (1982); Lorance v.

AT&T Technologies, 490 U.S. 900, 911 fn.4 (1989). The

EPA has formulated its own version of the “continuing

conduct/continuing harm” standard in U.S. EPA PCB Penalty

Policy, (1990), p. 13 [A.R. 306]

“Assessment of such per-day penalties is

reserved for repeated acts, or acts that present

considerable risk or harm, such as where

someone improperly disposes of PCBs on

more than one occasion, or when someone

illegally imports PCBs_ on_ separate

occasions.“U.S. EPA PCB Penalty Policy,

(1990), p. 13 [A.R. 306]

Notwithstanding its own policy, the EPA (and the

Fifth Circuit Court of Appeals) somehow found a continuing

disposal by Petitioner even though there were no “repeated

acts” and there was no “considerable risk or harm” as the

PCBs detected in the pile were barely over the “safe” level of

50 ppm and never migrated from the pile.

The split in the caselaw and the decision by the EPA

to ignore its own policy means two things. First, the public

has not been provided with adequate and clear notice

regarding the what is a continuing disposal. Second, the EPA

itself does not have a clear standard to apply, and, as a result,

each of its penalty rulings is per se arbitrary and capricious.

On this latter point, it has been correctly said:

“We note however, that in the complex area of

environmental regulation, the EPA must create

bright lines to separate prohibited and

permissible activity.” Beazer East, Inc. v.

United States Environmental Protection

Agency, Region Ill, 963 F.2d 603, 609 (3rd

Cir. 1992).

IV. ITISAN ISSUE OF FIRST IMPRESSION AS TO

WHETHER CONGRESS, WHEN IT ENACTED 5

U.S.C. § 664, INTENDED TO RELAX OR

ELIMINATE EVIDENTIARY RULES THAT

HAVE A STRONG PUBLIC POLICY

FOUNDATION

The Fifth Circuit Court of Appeals, in an issue of first

impression, permitted the EPA to use subsequent remedial

measures as admissions, and based on those and other

reasons, to impose liability on Petitioner for the 1985 soil-pile

disposal. Those subsequent remedial measures included the

retention in 1987 and 1989-1990 of two environmental

consulting firms to recommend remedies for the PCB

contamination and the payment by Petitioner in 1995 of the

costs of removing the contaminated soil-pile to a disposal

facility. See App. B, p.6

The Administrative Procedures Act (“APA”) 5

U.S.C. § 664, has been interpreted to exempt federal agencies

from following “strict” rules of evidence in their hearing

proceedings. The interpretation that there could be a

relaxation of some rules of evidence did not evidence an intent

of Congress to abolish all rules of evidence, even though this

has been the practical effect. While it is understandable that

Congress wished to streamline agency proceedings, did

Congress intend for agencies to act contrary to public policy

by imposing liability based upon, in whole or in part, the use

of subsequent remedial measures as admissions of liability?

The answer is obvious.

The history of the public policy against using

subsequent remedial measures as admissions is strong and has

resulted in the enactment of Federal Rule of Evidence 407.

The policy is to encourage steps that improve safety. Ramos

v. Liberty Mutual Insurance Co., 615 F.2d 334, 341 (Sth

Cir.1980), cert. den., 449 U.S. 1112 (1980). In addition,

subsequent remedial measures are very poor evidence, and are

of dubious evidentiary value in proving original negligence or

culpability. /n Re Air Crash Disaster, 86 F.3d 498, 529 (6th

Cir.1996). This Court held in Stedman v. SEC, 450 U.S. 91,

102 (1981) that one of the intents of Congress in enacting 5

U.S.C. § 664 was to eliminate agency decision-making

premised on “poor quality” evidence. Subsequent remedial

measures are poor quality evidence, if they are evidence at all

of anything of relevance.

In the case at bar, it is common sense that had

Petitioner known that the EPA would use subsequent remedial

measures as admissions against it, Petitioner would not have

ndertaken sures. Is this what Congress intended?

Did Congress intend that toxic site remediations would all

remain on hold until the end of all litigation? Again, the

answer is obvious. The EPA, in its zeal to impose one of its

largest TSCA fines in history, is oblivious to the fact that its

new evidentiary interpretation is grossly unfair when

retroactively imposed and is clearly contrary to the public

. | health and welfare. U.S. Government policy must always

. encourage and never discourage subsequent environmental

remedial measures, which it has completely failed to do in this

instance.

This Court briefly looked at this general issue in

Federal Trade Commission v. Cement Institute, 333 U.S. 683,

707 (1947). In that case the Court discussed the fact that

“rigid rules of evidence” do not generally apply to civil

proceedings of the FTC, but the Court went on to discuss that

such might not be the case in “criminal or quasi-criminal”

cases.

There are two sub-issues in the case at bar. First,

Should federal agencies be permitted to use subsequent

remedial measures as admissions of liability at all? Second, ‘

are civil penalty cases “quasi-criminal” proceedings where

rigid rules of evidence should apply across the board?

These are important issues of first impression which

merit review by this Court.

7: CONCLUSION

Petitioner in this case was swept into the internal

adjudicatory world of the EPA It is a world where there are

no statutes of limitations, and no discovery is permitted.

Neither rules of evidence nor public policy are considered

impediments to agency action. Summary judgment is imposed

despite the fact that Petitioner asserts that it is not a party

which caused or contributed to the “disposal.” A punishing

fine is imposed without a formal hearing and without

standards. The fine is 70.78 times greater than the EPA

average because agency precedent is not to be considered. It

is considered proper to accept a $90,000 settlement from one

co-defendant (owner/operator) and then assess a $1.345

million fine against the other co-defendant (former owner).

_ In this world, there is no rhyme or reason for this disparixy,

other than the EPA simply chooses to impose excessive

penalties on those who elect to litigate. The fine is reviewed

internally, with no oral argument permitted by the Petitioner.

When the fine is appealed to a real court, the Fifth Circuit

Court of Appeals essentially holds that it has no real authority

to review the matter.

If Petitioner had been sued in small claims court in

Texas for $100, it would have had a trial, would have been

able to confront and cross-examine witnesses and would have

appeared before a real judge. Even if the EPA had elected to

conduct its administrative proceedings by using a Star

Chamber, such would preferable to having all proceedings

conducted by mail.

Certiorari jurisdiction is warranted in order clarify the

law on continuing disposals, to reinforce the prohibition on

using subsequent remedial measures as admissions, and to

correct the Fifth Circuit Court of Appeals’ refusal to follow

this Court’s Bajakajian decision. Certiorari is also generally

needed to protect the rights of parties who increasingly are

finding themselves drifting through quasi-criminal agency

“pro forma” proceedings, with no real prospects for justice.

The petition for writ of certiorari should be granted.

Respectfully submitted,

/s/

Matthew J. Nasuti

Counsel of Record

Law Office of Matthew J. Nasuti

12802 Valley View Street, Suite 9

Garden Grove, California 92845

(714) 373-2529

Counsel for Petitioner

Newell Recycling Co., Inc.

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

[Filed November 8, 2000]

No. 99-60694

NEWELL RECYCLING COMPANY,-

INC.,

Petitioner,

VERSUS

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY,

Respondent.

Petition For Review of a Final Order of the

Environmental Protection Agency

Before DUHE, EMILIO M. GARZA and DeMOSS, Circuit

Judges.

DUHE, Circuit Judge.

Newell Recycling Company, Inc. ("Newell") appeals

a final decision of the Environmental Protection Agency's

Environmental Appeals Board ("EAB") holding Newell liable

Court of Appeals Opinion - 11/8/00

for violating the disposal requirements for polychlorinated

biphenyls ("PCBs") established in Section 6(e) of the Toxic

Substances Control Act ("TSCA"). The EAB's decision

penalized Newell $1.345 million, less an amount paid in

settlement by a co-defendant, for violating the TSCA. For the

following reasons, we affirm.

BACKGROUND

Newell owned and operated a recycling facility in

Houston, Texas, during the 1970's and early 1980's. In 1982,

Newell sold the facility to Oklahoma Metal Processing, Inc.

d/b/a Houston Metal Processing Company ("HMPC"). In the

sale, Newell agreed to "specifically assume any liability

resulting from an occurrence prior to the closing date of this

sale."

Within two years of the sale, the Texas Department of

Health sought soil samples to verify its suspicions of lead

contamination at the recycling facility site. Shortly thereafter,

Newell Enterprises asked HMPC to authorize Newell

Recycling Company, Inc. (i.e., "Newell," the Petitioner in

this case), Newell Products of Houston, Inc., and Newell

Industries, Inc., to commence testing for lead contamination

and cleanup on the site. After the soil samples showed lead

contamination, a consultant recommended to Newell that the

contaminated soil be removed to a hazardous waste facility for

disposal. The consultant noted that HMPC had authorized

Newell to perform testing, cleanup, and soil transportation

functions at the site.

While superintending lead cleanup operations there in

1985, Newell discovered the PCB contamination that this case

Court of Appeals Opinion - 11/8/00

concerns. Electric capacitors seeping PCB-contaminated fluids

lay buried in the soil unearthed during the lead contamination

cleanup. Newell - although advised repeatedly by another

consultant it had hired that the PCB-contaminated soil piled at

the site had to be treated or disposed of by methods acceptable

to the EPA under the TSCA - waited until after the EPA filed

an administrative complaint against it in 1995 for vioiating the

TSCA to remove the soil to a disposal facility. Approximately

ten years elapsed, then, from Newell's discovery of the buried

Capacitors in 1985 to its proper disposal of the PCB-

contaminated soil pile in 1995. The record does not explain

this delay.

The Presiding Officer granted the EPA an accelerated

decision (the equivalent of summary judgment) on its

administrative complaint, holding that Newell committed an

act of improper disposal by knowingly causing PCB-

contaminated soil to be excavated and stockpiled at the site

and then “leaving [the soil} there and taking no further clean-

up action.” In re Oklahoma Metal Processing Co., Inc., No.

VI-659C (EPA April 29, 1997) (order granting partial

accelerated decision on issue of liability). The Presiding

Officer assessed Newell a $1.345 million fine for the disposal

violation, less the amount HMPC paid the EPA to settle an

action regarding its role in the improper disposal at the site.

Newell appealed the Presiding Officer's liability rulings and

his penalty assessment decision to the EAB. It affirmed the

Presiding Officer's decision. Newell appeals the EAB's

decision.

Newell argues that a five-year statute of limitations

barred the EPA's TSCA complaint, that on the merits Newell

is not liable for an "improper disposal" under the TSCA, and

Court of Appeals Opinion - 11/8/00

that the Presiding Officer's application of the EPA's 1990

Polychlorinated Biphenyls Penalty Policy (the "Penalty

Policy") generated an excessive penalty that violated Newell's

constitutional rights.

DISCUSSION

We must affirm the EAB's decision unless it is

“arbitrary, Capricious, an abuse of discretion, or otherwise not

in accordance with law." 5 U.S.C. § 706(2)(A). See also

Amoco Production Co. v. Lujan, 877 F.2d 1243, 1248 (Sth

Cir. 1989) ("On review of an agency adjudication, . . . the

reviewing court must in general affirm the decision unless the

agency's action was arbitrary, capricious, or otherwise not in

accordance with law").

I. Limitations

28 U.S.C. § 2462 supplies the statute of limitations

applicable here:

Except as otherwise provided by Act of

Congress, an action, suit or proceeding for the

enforcement of any civil fine, penalty, or

forfeiture, pecuniary or otherwise, shall not be

entertained unless commenced within five

years of the date when the claim first accrued.

Newell argues that the EPA's improper disposal claim

"accrued" when the PCBs polluting the soil pile were "taken

out of service." See 40 C.F.R. § 761.3 ("Disposal means

intentionally or accidentally to discard, throw away, or

Court of Appeals Opinion - 11/8/00

otherwise complete or terminate the useful life of PCBs and

PCB Items. Disposal includes spills, leaks, and other

uncontrolled discharges of PCBs as well as actions related to

containing, transporting, destroying, degrading,

decontaminating, or confining PCBs and PCB Items"). Since,

Newell asserts, the PCBs were "taken out of service"

sometime before 1990, the EPA's claim accrued more than

five years before the filing of its TSCA complaint against

Newell in 1995 and is thus time-barred. The EPA argues that

Newell's TSCA violation -- excavating and stockpiling the

soil and then leaving it on the site for ten years before

disposing of it in accordance with 40 C.F.R. § 761.60(a),

which requires that soil contaminated with PCBs above a

certain ppm threshold be disposed of in an EPA-approved

incinerator or landfill -- was "continuing" in nature. See

InterAmericas Investments, Ltd. v. Board of Governors of the

Federal Reserve System, 111 F.3d 376, 382 (Sth Cir. 1997)

("A continuing violation applies when the conduct is ongoing,

rather than a single event"). The EAB agreed with the EPA.

The EAB held that the EPA's TSCA cause of action against

Newell did not accrue until the course of conduct complained

of no longer continued. See Fiswick v. United States, 329

U.S. 211, 216 (1946) (statute of limitations for continuing

offenses runs from the last day of the continuing offense); In

re Standard Scrap, TSCA Appeal No. 87-4, 3 E.A.D. 267,

1997 WL 603524, at *2 (EAB Aug. 2, 1990) (Final Decision)

("Failure to [properly dispose of PCBs] constitutes a violation

of the regulation, and the violation continues as long as the

PCBs remain out of service and in a state of improper

disposal"). That is, it did not accrue until 1995, when Newell

properly disposed of the soil. If stockpiling the soil was a

disposal, we cannot say the EAB's conclusion was arbitrary,

Capricious, an abuse of discretion or otherwise not in

PN ee

Court of Appeals Opinion - 11/8/00

accordance with law.' Because we hold that the EPA's TSCA

cause of action against Newell did not accrue for limitations

purposes until 1995, we also affirm the EAB's denial of

Newell's request for additional discovery. This discovery,

Newell claims, would establish that the EPA had actual notice

of conditions at the site earlier than five years before the EPA

filed its complaint. Information about when the EPA actually

knew of the site's conditions is not "significant[ly] probative"

of any fact relevant to our statute of limitations determination.

See 40 C.F.R. § 22.19(f).

I. Liability

Newell challenges its TSCA liability on two grounds.

First, Newell argues that the EAB erroneously held that

Newell contributed to the creation of the PCB-contaminated

soil pile. Second, Newell contends that if, arguendo, it did

cause the creation of the soil pile, that act of creation and

Newell's subsequent involvement with the pile did not

constitute an improper disposal of PCBs within the meaning

of the TSCA.

The EAB properly determined that Newell contributed

to the creation of the soil pile. The PCB Rule of the TSCA

extends civil penalty liability to any "person who violates

these regulations." 40 C.F.R. § 761.1(d). "Violators" in this

context are those who have “caused (or contributed to the

cause of) the [improper] disposal." In re City of Detroit, 3

E.A.D. 514, 526 (CJO 1991).

' See discussion of disposal that follows.

Court of Appeals Opinion - 11/8/00

Ample evidence indicates that Newell at least

contributed to the creation of the soil pile. Newell contends

that a Newell affiliate, not Newell itself, created the pile. The

record suggests otherwise. The EAB aptly characterized its

contents: Newell "may not have acted alone, but it was

certainly an active party in the events constituting the TSCA

violation." Newell Recycling Co., Inc. v. United States

Environmental Protection Agency, TSCA Appeal No. 97-7,

slip op. at 33 (EAB Sept. 13, 1999). Newell, and not one of

its affiliates, owned the Fidelity Road site immediately before

conveying it to HMPC. In the sale of the site Newell assumed

liability for "occurrence[s] prior to the closing date of thfe]

sale." This covenant produced Newell's extensive

involvement in remedying the lead and PCB contamination at

the site. Newell's involvement included, the EAB correctly

found: a visit by Newell's owner, Alton Newell, to the site in

response to HMPC's demand for remedial action; Newell's

two-time (1987 and 1989-90) retention of an environmental

consulting firm to recommend remedies for PCB

contamination at the site; execution in 1987 of an agreement

with HMPC and another party interested in the site tolling the

Statute of limitations on claims against Newell arising from

the site's contamination; and Newell's removal in 1995 of the

contaminated soil to a disposal facility at its own expense.

Moreover, until this enforcement action, Newell never

suggested to the Texas or federal authorities involved in

decontamination of the site that some other Newell entity was

responsible for the contaminated soil pile.

In view of these facts, the EAB's determination that

Newell contributed to the creation of the soil pile was not

arbitrary, capricious, an abuse of discretion or otherwise not

in accordance with law.

Court of Appeals Opinion - 11/8/00

Newell, however, argues that if it contributed to the

creation of the soil pile, its contribution was not an improper

disposal under the TSCA. Newell argues that PCB disposal is

a one-time event occurring, in a case like this one, only when

capacitors containing PCBs are buried and their contents

released into the surrounding soil. Because, Newell contends,

there is no evidence implicating Newell in the original

disposal of the capacitors, the EPA failed to establish that

Newell improperly disposed of PCBs. The EAB rejected this

argument, noting that Newell's interpretation of "disposal"

would have "no TSCA liability . . . attach even if Newell had

taken the pile of contaminated soil from the Fidelity Road site

and dumped it into the nearest river, stream, or vacant lot."

Newell Recycling Co., Inc. v. United States Environmental

Protection Agency, TSCA Appeal No. 97-7, slip op. at 29-30

(EAB Sept. 13, 1999). Such an interpretation, the EAB

continued, would subvert the environmental protection goals

of the TSCA regime. See In re Samsonite Corp., 3 E.A.D.

196, 199 (CJO 1990) (PCB regulations “should be read in

such a way as to further the purposes of the Act, particularly

where, as in this case, public health and safety are involved").

At any rate, the EAB concluded, Newell's interpretation of

"disposal" fails because it would effectively exclude what the

textual definition of disposal cited above indisputably

includes: activities undertaken to address known PCB

contamination. See 40 C.F.R. § 761.3 ("[dJisposal includes

spills, leaks, and other uncontrolled discharges as well as

actions related to containing, transporting, destroying,

degrading, decontaminating, or confining PCBs or PCB

items"). The EAB determined that Newell's involvement with

the soil pile, described above, fits this definition of

"disposal." Newell Recycling Co., Inc. v. United States

Environmental Protection Agency, TSCA Appeal No. 97-7,

Court of Appeals Opinion - 11/8/00

slip op. at 31 (EAB Sept. 13, 1999) ("The act of excavating

and stockpiling PCB-contaminated soil at the Fidelity Road

site is clearly in the nature of an action to ‘contain,’

‘transport,’ and ‘confine’ PCBs. Moreover, leaving the

stockpiled waste abandoned there for years is evidence that

the PCB-contaminated soil was ‘discarded’ within the meaning

of the rule").

We cannot say that this determination was arbitrary,

Capricious, an abuse of discretion or otherwise not in

accordance with law.

III. Penalty

Because an agency's selection of an appropriate

sanction to effect its policies is an act peculiarly within its

institutional competence, our review of the penalty in this case

is limited. See Wayne Cusimano, Inc. v. Block, 692 F.2d

1025, 1030 (Sth Cir. 1982). An agency's penalty

determination "is reviewed with significant deference;" we

will not reverse it unless it is arbitrary, capricious, an abuse

of discretion or otherwise not in accordance with law.

InterAmericas Investments, Ltd., 111 F.3d at 384.

Accordingly, although the penalty here strikes us as severe

since there was no actual harm, we cannot disturb it.

The Penalty Policy limns a two-part process for PCB

penalty assessment. First, the Penalty Policy requires the

administrative law judge (the "Administrator") to examine the

nature, circumstances, gravity and extent of the violation.

Those factors suggest a gravity-based penalty. After the

Administrator determines the gravity-based penalty, he or she

considers (the second part of the process) the violator's ability

Court of Appeais Opinion - 11/8/00

to pay the penalty, the effect of the penalty on the violator's

ability to continue to do business, the violator's history (if

any) of such violations, the degree of culpability, and "such

other matters as justice may require." POLYCHLORINATED

BIPHENYLS (PCB) PENALTY POLICY (1990). The

Administrator may adjust the gravity-based penalty in view of

these factors.

A. The Gravity-Based Penalty

The Penalty Policy makes the gravity-based penalty

determination process mostly mechanical by pegging the

above-described factors (the nature, circumstances, gravity

and extent of the violation’) to statistical benchmarks or fixed

formulations. So, for example, the Presiding Officer did not

err by concluding that the "extent" of Newell's violation was

"major;" the Penalty Policy expressly defines violations

involving more than 300 cubic feet of contaminated soil as

"major," and the soil pile here was approximately 540 cubic

feet in size. Id. Similarly, the Presiding Officer correctly

characterized the "circumstances" of Newell's violation as

"High Range, Level One" under the Penalty Policy.’ The

Penalty Policy states that "any disposal of PCBs or PCB Items

in a manner that is not authorized by the PCB regulations" is

automatically ranked "High Range, Level One." Id. Because

> Newell challenges the Presiding Officer's treatment of

the "circumstances" and "extent" factors, but not his treatment of

the "nature" and “gravity” ones.

* The Penalty Policy ranks the "circumstances" of a

violation as Low, Medium, or High Range, and subdivides each of

these categories into two Levels.

10a

Court of Appeals Opinion - 11/8/00

discarding and abandoning PCB-contaminated soil in a pile is

a disposal not authorized by the PCB regulations, the

Presiding Officer rightly characterized Newell's as a "High

Range, Level One" violation.

B. Adjustment of the Gravity-Based Penalty

The Presiding Officer may adjust the gravity-based

penalty in view of the violator's ability to pay it, the effect the

penalty might have on the violator's ability to continue to do

business, the violator's history (if any) of prior such

violations, the violator's degree of culpability, and such other

matters as justice may require. 15 U.S.C. § 2615(a)(2)(B).

The "as justice may require" rubric includes whether the

violator voluntarily disclosed the violation, any economic

benefits the violator reaped from the violation, and any

environmentally beneficial measures a violator may perform

in exchange for penalty reduction. Newell argues that some of

these factors counsel reduction of its penalty, and that the

Presiding Officer's refusal to reduce it, in turn, was error.

1. Culpability

The Presiding Officer's determination that the

"culpability" factor did not recommend mitigation of Newell's

penalty was sound. The "two principal criteria" in the Penalty

Policy for assessing culpability are: 1) the violator's

knowledge of the particular requirement; and 2) the degree of

the violator's control over the violative condition.

POLYCHLORINATED BIPHENYLS (PCB) PENALTY

POLICY (1990). As noted above, Newell knew the TSCA

required more than the excavation and complete abandonment

of the PCB-contaminated soil; Newell's environmental

lla

————

Court of Appeals Opinion - 11/8/00

consultants repeatedly told Newell as much. Even though

Newell did not own the property on which the soil lay,

Newell had extensive control, described above, over the

violative condition here. The record does not explain to our

satisfaction why Newell waited years to properly dispose of

the soil. The Presiding Officer, therefore, appropriately

declined to mitigate Newell's penalty on culpability grounds.

2. Voluntary Disclosure

The Presiding Officer correctly declined to adjust the

penalty in view of Newell's alleged* voluntary disclosure of

the TSCA violation. Newell waived this argument by failing

to request in its submissions to the Presiding Officer a

reduction in the penalty for voluntary disclosure. See In re

Britton Construction Co., CWA Appeal Nos. 97-5 & 97-8,

slip op. at 22-23 (EAB, Mar. 30, 1999),8E.A.D. (under 40

C.F.R. § 22.30, appellant "may not appeal issues that were

Waiver aside, nothing in the record indicates that

Newell, in fact, voluntarily disclosed the violation here before the

EPA initiated its TSCA action. Newell tacitly admits as much in its

brief, but argues that the Presiding Officer erroneously denied

Newell discovery that "would have provided conclusive evidence

that the remediated soil pile was reported to the Texas Department

of Health and to EPA [sic]." See Petitioner's Brief at 48. The EAB

found this claim "a disingenuous proposition. If Newe!l had indeed

made a voluntary disclosure, then, surely, Newell was in the best

position to attest to it. Having failed to do so by affidavit in

Response to the Region's motion for penalty assessment, Newell

cannot credibly revive this argument on appeal." Newell Recycling

Co., Inc. v. United States Environmental Protection Agency, TSCA

Appeal No. 97-7, slip op. at 60 (EAB Sept. 13, 1999).

12a

Court of Appeals Opinion - 11/8/00

not raised before the presiding officer. As a result, arguments

raised for the first time on appeal . . . are deemed waived")

(citations omitted).

3. Ability to Pay / Continue to Do Business

The Penalty Policy requires the EPA to assume that an

alleged TSCA violator has the ability to pay any fine assessed

under the Penalty Policy and, therefore, to continue in

business. POLYCHLORINATED BIPHENYLS (PCB)

PENALTY POLICY (1990). The alleged TSCA violator may

raise the issue of its ability to pay in its answer to the EPA's

administrative complaint and "shall present sufficient

documentation to permit the Agency to establish such

inability." Id. If "the alleged violator fails to provide the

necessary information, and the information is not readily

available from other sources, then the violator will be

presumed to be able to pay." Id. Newell's brief candidly states

(and the Presiding Officer and EAB both held) that the record

here features "a complete absence of evidence as to Newell's

ability to pay and any effect on it's [sic] ability to do

business." Petitioner's Brief at 39. Surely Newell was in

possession of such information if anyone was. Nothing in the

record, moreover, intimates that information regarding

Newell's ability to pay is readily available from a source other

than Newell. The Presiding Officer, therefore, correctly

declined to mitigate the penalty on the basis of Newell's

putative inability to pay it.

Court of Appeals Opinion - 11/8/00

IV. Constitutional Concerns

Newell also argues that the penalty violated the Eighth

Amendment's proscription of excessive fines and Newell's

due process rights. Newell's constitutional claims fail.

A. Eighth Amendment Concerns

Newell's argument that the penalty is excessive,’ and

therefore a violation of its Eighth Amendment rights, is

erroneous. Newell argues that the Excessive Fines Clause of

the Eighth Amendment requires us to consider the value of its

fine ($1.345 million) in relation to the magnitude of the

offense inspiring it (Newell suggests that the $84,000 it paid

to dispose of the soil accurately indicates the magnitude of its

offense). See U.S. CONST. amend. VIII ("Excessive bail

shall not be required, nor excessive fines imposed, nor cruel

and unusual punishments inflicted"). No matter how excessive

(in lay terms) an administrative fine may appear, if the fine

does not exceed the limits prescribed by the statute

authorizing it, the fine does not violate the Eighth

Amendment. Here, the fine assessed against Newell is only

about 10% of the maximum fine for which Newell was

eligible under the TSCA. Newell's fine, therefore, does not

violate the Eighth Amendment. See Pharaon v. Board of

> Newell also argues that the penalty is excessive when

compared to penalties in similar cases. The penalty here, however,

need not resemble those assessed in similar cases. See Butz v.

Glover Livestock Comm'n Co., 411 U.S. 182, 187 (1973) ("[t}he

employment of a sanction within the authority of an administrative

agency is . . . not rendered invalid in a particular case because it is

more severe than sanctions imposed in other cases").

l4a

ms Eg a ee en ee Oe Pee gee EO PM ee eee Me eS ee ey

Sn Te Fe ee ee eee ee en Ne ee eee rama

Court of Appeals Opinion - 11/8/00

Governors of Federal Reserve System;-135 F.3d 148, 155-57

(D.C. Cir. 1998) (finding no Eighth Amendment violation

because the penalty was within the limits established by the

applicable statute).

B. Due Process Concerns

Newell's due process argument also fails. Newell

argues that an evidentiary hearing was "required" in this

matter, and that the absence of one violated Newell's right to

due process of law. Petitioner's Brief at 55. EPA regulations

require that a hearing be held at a respondent's request if the

party requesting the hearing has raised a genuine issue of

material fact. 40 C.F.R. § 22.15; see also In re Green

Thumb Nursery, Inc., FIFRA Appeal No. 95-42, 6 E.A.D.

782, 1997 WL 131973, at *8 (EAB Mar. 6, 1997) (Final

Order). Similarly , constitutional due process doctrine requires

that the person claiming the benefit of due process protections

place some relevant matter into dispute. See Codd v. Velger,

429 U.S. 624, 627 (1977) ("[I]f the hearing mandated by the

Due Process Clause is to serve any useful purpose, there must

be some factual dispute. . . ."); Costle v. Pacific Legal

Foundation, 445 U.S. 198, 213 (1980) (permitting the EPA

to condition an adjudicatory hearing on "identification of a

disputed issue of fact by an interested party"). The Presiding

Officer's accelerated decision held that Newell raised no

genuine issue of material fact that would necessitate an

evidentiary hearing. The EAB agreed. We find no contested

issue of fact on penalty in the record. We decline to set aside

the penalty on due process grounds.

Court of Appeais Opinion - 11/8/00

CONCLUSION

Because the applicable five-year statute of limitations

does not bar the EPA's TSCA complaint, because Newell was

liable for an “improper disposal" under the TSCA, and

because the Presiding Officer's application of the EPA's 1990

Polychlorinated Biphenyls Penalty Policy generated a penalty

that was not arbitrary, capricious, an abuse of discretion,

constitutionally infirm or otherwise illicit, we affirm.

AFFIRMED.

l6a

APPENDIX B

BEFORE THE ENVIRONMENTAL APPEALS BOARD

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY WASHINGTON, D.C.

[Decided September 13, 1999]

TSCA Appeal No. 97-7

In re:

Newell Recycling Company, Inc.

TSCA Docket No. VI-659C

i i i i ed

FINAL DECISION

Before Environmental Appeals Judges Scott C.

Fulton, Ronald L. McCallum, and Edward E. Reich.

Before Environmental Appeals Judges Scott C.

Fulton, Ronald L. McCallum, and Edward E. Reich.

Opinion of the Board by Judge Fulton:

Respondent Newell Recycling Company, Inc.

(‘Newell") appeals from orders of Administrative Law Judge

Edward J. Kuhlmann ("Presiding Officer") dated April 28,

1997, and October 7, 1997. In his April 28, 1997 order, the

17a

Environmental Appeals Bd. Final Decision - 9/13/99

Presiding Officer ruled that Newell had, throughout a 529-day

period from September 10, 1992, through February 21, 1994,

continuously violated 40 C.F.R. § 761.60(a)(4), which

prescribes disposal requirements for soil contaminated with

polychlorinated biphenyls ("PCBs") at concentrations of 50

ppm or greater. Section 761.60(a)(4) is a rule promulgated

under section 6 of the Toxic Substances Control Act

(“TSCA"), 15 U.S.C. § 2605; violations of section

761.60(a)(4) are therefore unlawful acts pursuant to TSCA

§ 15, 15 U.S.C. § 2614, for which administrative penalties

are assessable pursuant to TSCA § 16, 15 U.S.C. § 2615. In

his October 7, 1997 order, the Presiding Officer assessed a

penalty against Newell in the amount of $1.345 million, less

the amount paid to EPA in settlement by Newell's

correspondent in this action, Oklahoma Metal Processing

Company, Inc. d/b/a Houston Metal Processing Company

(“HMPC”).

WRT MICS ewe re ht wlaRT NR tenant» ETE

Ssaubeiedinaakannaticworeaais

He a

Newell has appealed both the Presiding Officer's

liability decision and his penalty assessment decision. In

addition, Newell challenges a February 7, 1997 ruling in

which the Presiding Officer denied a motion by Newell for

leave to conduct discovery beyond that which is described in

section 22.19(b) of EPA's Consolidated Rules of Practice

Governing the Administrative Assessment of Civil Penalties,

40 C.F.R. § 22.19(b).' For the reasons set forth herein, we

' We note that the Consolidated Rules of Practice

Governing the Administrative Assessment of Civil Penalties and the

Revocation or Suspension of Permits, 40 C.F.R. pt. 22, were

amended on July 23, 1999, with the amended version of the roles

becoming effective on August 23, 1999. See 64 Fed. Reg. 40, 138

(July 23, 1999). All citations to the part 22 roles in this decision

18a

Environmental Appeals Bd. Final Decision - 9/13/99

affirm the Presiding Officer's liability decision and penalty

assessment.

I. INTRODUCTION

A. Overview of the Case

A number of years before the actions giving rise to

this case capacitors containing PCB-contaminated liquids were

apparently buried at the site located at 5225 Fidelity Road in

Houston, Texas, which is currently owned by HMPC

(hereinafter the “Fidelity Road site" or the "HMPC site").

During a cleanup of lead contamination at the site in February

1985, the buried capacitors were discovered and then

excavated, along with a large volume of PCB-contaminated

soil. While the capacitors themselves were disposed of off-

site, the PCB-contaminated soil was left behind in a large pile.

It is this excavation and stockpiling of PCB-contaminated soil

at the Fidelity Road site that is at the heart of this case.

The complaint in this matter alleges that on September

10, 1992, an EPA inspector discovered the soil pile at the

site. Complaint ¢ 7. Samples taken from the soil by the

inspector revealed PCBs at levels greater than 50 parts per

million - the action level for PCBs under TSCA. Jd. {4 14-15.

As stated in the complaint, PCB-contaminated soil of this kind

must be disposed of either at a TSCA-compliant incinerator or

in a chemical waste landfill approved for disposal of such

waste. Id. ¢ 25. Failure to so dispose of such waste is a

refer to the roles that were in effect just prior to the issuance of

these amendments.

19a

a 4

G §

. i

Environmental Appeals Bd. Final Decision - 9/13/99

violation of TSCA, giving rise to liability for civil penalties.

Id. 4{ 37-39, Section III (of the Complaint).

The complaint alleges that Newell had been the owner

or operator of the Fidelity Road site "from 1974 until

approximately 1982," and had then sold it to HMPC. Jd. 43.

The PCB-contaminated soil, according to the complaint, had

been excavated "by Newell, or by a third party at the

direction of Newell, and placed in [the] pile at the Houston

Facility." Id. { 10. In view of the alleged failure to remove

and properly dispose of the waste pile, the complaint

proposed a civil penalty against Newell and its co-respondent,

HMPC, for the 529-day period running from September 10,

1992, through February 21, 1994, totaling $1.345 million. Jd.

Section III.

As discussed more fully below, the Presiding Officer

found that the Region had satisfied the essential elements of

its complaint and, accordingly, assessed a penalty in this

matter of $1.345 million. He found that Newell committed an

act of improper disposal by knowingly causing PCB-

contaminated soil to be excavated and stockpiled in a corner

of the HMPC site, and then "leaving [the PCBs] there and

> The February 21, 1994 closing date for the Region's

penalty calculation apparently derives from the fact that this was the

date of HMPC's response to a subpoena issued by the Region,

which served to confirm that the PCB-contaminated soil was still

on-site. As explained below, the contaminated soil was not actually

disposed of until considerably later-- between September 20 and 28,

1995. It is unclear from the record why the Region elected not to

seek penalties for the period running from February 22, 1994, to

September 19, 1995.

20a

Environmental Appeals Ld. Final Decision - 9/13/99

taking no further clean-up action." Partial Accelerated

Decision on Issue of Liability at 23. In this appeal, Newell

contends that it was not involved in the excavation and

stockpiling of the soil and did not otherwise engage in any act

constituting PCB "disposal." Newell claims that the soil pile

was never shown to contain regulated levels of PCBs. Newell

maintains that any regulated PCB disposal activity at the

HMPC site ended more than five years before the

commencement of this action, and that the action is therefore

untimely. Newell also raises several arguments in opposition

to the Presiding Officer's civil penalty assessment.

B. Factual Background

The facts of this case, while somewhat complex, are

not materially in dispute. Given their significance to the legal

issues raised by appellant, however, they are set out in some

detail below.

On September 10, 1992, an EPA inspector conducted

a PCB compliance inspection at the Fidelity Road site, owned

and operated at that time by HMPC. At the inspection,

HMPC Vice President and General Manager Francis

Garrigues related to the inspector that the facility had a

"historical connection * * * with PCB contamination."

Complainant's Exhibit ("CX") 4 at 4 (PCB Compliance

Inspection Report).* Specifically, according to the inspection

> The exhibit numbers cited in this opinion, both for

the complainant and the respondent, are the numbers that the

parties have assigned to them in their appellate briefs. They

may Or may not correspond to the numbers assigned by the

21a

Environmental Appeals Bd. Final Decision - 9/13/99

report, Mr. Garrigues advised that_the facility had been

purchased by HMPC "in 1982 from Newell Recycling (of San

Antonio) which recycled lead batteries." Jd. He went on to

state that soil sampling by the Texas Water Commission in

1984 had disclosed the presence of lead contamination, and

that during the ensuing excavation of lead-contaminated soil

there were found, among other things, a number of buried

capacitors. He stated that the capacitors themselves had been

removed,* but that the contaminated soil in which those

capacitors had been buried was still on-site in a pile. The

inspector took photographs of the pile of contaminated soil

and collected three samples of the soil for laboratory analysis.

The samples were analyzed for PCB content on

September 24, 1992, and the resulting report dated October

7, 1992 (CX 5) states that "[t]here was Aroclor 1248 detected

in all three samples at levels greater than 50 ppm." Aroclor

1248 is a form of polychlorinated biphenyl subject to

regulation under TSCA, and the EPA regulations promulgated

thereunder governing the manufacturing, processing,

distribution in commerce, and use of PCBs (hereinafter the

"PCB Rule"). Significantly, these rules cover, among other

things, soil contaminated with specified levels of PCBs. 40

C.F.R. § 761.1(b). See also 40 C.F.R. § 761.60(a)(4)

(providing that "disposal requirements" apply to "[a]ny non-

parties to the same exhibits in their pre-heating exchanges in

the proceedings before the Presiding Officer.

* In reality, six capacitors were still on-site. See CX 8 at

16.

22a

REESE L PIM

Environmental Appeals Bd. Final Decision - 9/13/99

liquid PCBs at concentrations of 50 ppm or greater in the

form of contaminated soil, rags, or other debris") (emphasis

added). The pile of soil observed during the September 1992

inspection of the HMPC facility, and immediately thereafter

shown to contain Aroclor 1248 in concentrations greater than

50 ppm, was therefore governed by the disposal requirements

of the PCB Rule.

HMPC's response to a subpoena duces tecum issued to

it on or about January 13, 1994, by U.S. EPA Region 6,

provides a chronology that is (for all purposes material to the

present proceeding) essentially undisputed regarding the

continued presence of an uncontrolled, PCB-contaminated soil

pile at the HMPC facility.

According to the documents, the Fidelity Road

property had been sold to HMPC during 1982 by a seller

identified (in the text of the purchase and sale agreement) as

"Newell Recycling Co., a Texas Corporation." CX 6 at 1.

The purchase and sale agreement contains a number of

representations and warranties by the seller (Newell Recycling

Co.), one of which, in particular, has an important

; circumstantial bearing on whether Newell caused, or

4 contributed to the cause of, the unlawful disposal of PCB-

contaminated soil. The agreement provides that Newell

Recycling Co. "specifically assumes any liability resulting

from an occurrence prior to the closing date of this sale." CX

6 at 6 (¢ 2.5(a)).° The agreement further includes among the

* The purchase and sale agreement, which was executed

on September 8, 1982, contemplated a closing date “not later than

October 5, 1982." CX 6 at 14. The specific date on which the

23a

Environmental Appeals Bd. Final Decision - 9/13/99

seller's representations and warranties the statement that, to

the best of the seller's knowledge, “all the property" to be

conveyed "conform[ed] in all material respects to applicable

* * * environmental (including air, water and solid waste laws

and regulations) * * * laws and ordinances." CX 6 at 8

(¢ 2.9).

Soil sampling at the Fidelity Road property for

suspected lead contamination (based on "the nature of the

previous work" performed there) was apparently first

demanded by the Texas Department of Health, within two

years after the sale of the property to HMPC. CX 11 (report

by Raba-Kistner Consultants, Inc. ["Raba-Kistner"] dated

January 15, 1985°) at 1. Indeed, a substantial likelihood of

finding lead contamination requiring "cleanup" was evidently

assumed, both by the current owner and by the former owner

of the property, as of the autumn of 1984. On October 16,

1984, Wayne R. Mathis, Executive Vice President of “Newell

transaction actually closed is of no particular concern for purposes

of this case.

° To be precise, the first page of this report is dated

January 15, 1985, but some subsequent pages are dated December

26, 1984. The document's authenticity has not been questioned, and

thus the noted discrepancy is of no significance.

24a

LRA RANG ENIONE Bi ats NaNO Co 5 a inhale yet nics invent’

Environmental Appeals Bd. Final Decision - 9/13/99

Enterprises, Inc.,”’ wrote the following letter to Mr.

Garrigues of HMPC:

Dear Francis:

In the process of our negotiations with the

State on the proposed cleanup of the site for

lead content, the State has requested that we

provide them with a letter from your company

authorizing Newell to begin testing and

cleanup. Accordingly, if possible, I would

appreciate your providing me with such a letter

of authorization for Newell Recycling Co.,

Inc., Newell Products of Houston, Inc., and

Newell Industries, Inc.

GSE EEL LION ASI PAPA LENE LED IPED IL

A EGOS INH: Mia

Although Mr. Mathis first appears in the record as an

executive officer of a Newell entity, he is identified in subsequent

correspondence as “of counsel" to the San Antonio law firm Brock

& Kelfer (CX 19, CX 22) -- which, by the end of 1989, was

evidently renamed Brock & Mathis. See CX 18. Notwithstanding

his apparent departure for private law practice, however, Mr.

Mathis remained closely involved with the situation at the HMPC

site

25a

Environmental Appeals Bd. Final Decision - 9/13/99

Respondent's Exhibit ("RX") 9 at 7.8 Mr. Garrigues complied

with that request by letter dated October 18, 1994 (CX 14):

As per your request, please find hereby

our authorization to begin testing and perform

the clean-up operation of our property located

at 5225 Fidelity Road, Houston, TX for the

following companies:

- Newell Recycling Co., Inc.

- Newell Products of Houston, Inc.

3 PLL NO INL F 6 eSthe br “ wate

- Newell Industries, Inc.

8 It is in RX 9 that the Board encounters, for the first time, E

a reference to several different "Newell" entities. As discussed later &

in this opinion, Newell Recycling Co. (the appellant in this

proceeding) argues that if any violation of the PCB Rule was

committed in this case, the violation was committed by one of the

other "Newell" entities or by some other non-party. The Board will

address that contention in due course. For now we note simply that

it is already apparent, from the limited chronology recounted thus

far, that appellant Newell Recycling Co. was the seller of the

property to HMPC (and hence the party that contractually

undertook to "assume[] any liability resulting from an occurrence

prior to the closing date" (CX 6 at 6)) and that it was also --

logically enough, given its contractual assumption of liability for

pre-sale “occurrences” -- among the companies that sought (RX 9)

and obtained (CX 14) authorization from HMPC to conduct the

lead cleanup at the HMPC property.

26a

Environmental Appeals Bd. Final Decision - 9/13/99

The testing and the clean-up of the site

are for lead content.

The documentary chronology resumes with the

January 15, 1985 Raba-Kismer report (CX 11) alluded to

earlier, which reports the following:

Mr. Wayne Mathis of Newell collected twelve

soil samples and submitted these to [Raba-

: Kistner] for analysis. * * * Additional samples

; were collected by [Raba-Kistner] on August

17, 1984 * * *. These samples reveal that lead

contamination is present * * *. Results [of

additiona! testing] indicated that the mid and

high range samples leached at levels

considered hazardous under the provisions of

the Resource Conservation and Recovery Act

(RCRA).

! EEE eye, SPM Re We a

CX 11 at 1-2. The report concludes with a tentative

recommendation that soil in the affected areas be removed and

taken to a nearby hazardeus waste facility for disposal. CX 11

at 5.

At this point, the documentary record temporarily

lapses into silence. A note composed by Mr. Garrigues -- on

which we would ordinarily hesitate to rely because it is

undated, but which is offered for our examination not only by

the Region but also by Newell (RX 6) -- recounts that:

Between February and August 1985,

clean-up operations start. Scrapping [sic] 10

inches of soil and piling dirt. Subsequently, the

27a

Environmental Appeals Bd. Final Decision - 9/13/99

soil was to be tested again to see if additional

scrapping was necessary. During scrapping,

electric transformers containing PCB oil are

found buried.

Newell Enterprises inc. (John) passes

the file to Newell Manufacturing (Scott).

Everything stops.”!

» Two points should be noted in connection with this

document. First, although the document refers to buried

"transformers," HMPC's later response to EPA's subpoena clearly

states that only "[bJuried capacitors were excavated from the

HMPC site during the initial cleanup of lead contaminated soil

which was conducted by Newell in February, 1985." CX 8 at 16

(emphasis added). HMPC's account refers to a total of 41 buried

capacitors, 35 of which were removed from the site on June 23,

1989, and six of which were still on-site as of February 10, 1994.

Id. at 16-17. See also RX 7 at 1-2 ("waste data profile sheet" dated

June 23, 1989, referring to removal of "35 PCB capacitors” from

the site). Second, in a descriptive index to the exhibits

accompanying its appellate brief, Newell asserts that this note

"describes Newell Enterprises involvement in excavation of soil

pile in 1985." Exhibits to Brief for Appellant at i (filed Nov. 3,

1997). In reality, the note states that an entity called "Newell

Enterprises" passed a "file" to an entity called “Newell

Manufacturing” at some point after PCB contamination was first

encountered. Neither of the named entities is described as having

any particular role or "involvement" in the "excavation of [the] soil

pile in 1985." Indeed, neither "Newell Enterprises" nor "Newell

Manufacturing" was among the entities for which authorization was

requested (RX 9 at 7) and granted (CX 14) to participate in the lead

cleanup in the first instance.

28a

SA ORNS Ree Hi NE adie Ce tit cence nena ty Sean ninth e

Environmental Appeals Bd. Final Decision - 9/13/99

It appears clear, in any event, that by April 24, 1985, Raba-

Kistner had already begun analyzing soil samples from the

HMPC site for PCB content. RX 9 at 16.

The next correspondence between buyer and seller is

dated August 19, 1985. In that correspondence, Timothy F.

Johnson -- identified by his stationery as General Counsel to

"The Newell Companies" -- writes to Mr. Garrigues to "bring

you up to date on where we are with the PCB cleanup." CX

27 at 1. Mr. Johnson reports, in substance, that the "PCB

cleanup" is going to "take longer * * * than what we had

anticipated." This is attributed to a delay in obtaining results

of a "chemistry analysis that we needed," and to an impending

change in the State regulatory structure, that was expected to

shift "the authority for this problem" from the Department of

Health to the Texas Water Commission. /d. Mr. Johnson

refers briefly to a proposed cleanup plan involving biological

treatment of PCB-contaminated soil, estimates the PCB

cleanup cost at "somewhere around $160,000.00," and

concludes: "I apologize for the delay in this matter, but I am

sure you realize that it is very important to both you and

Newell that it be done right the first time through." /d. at 1-2.

When the parties next correspond six months later

(March 21, 1986), it appears that a dispute is taking shape.

Mr. Garrigues writes directly to Mr. Alton Newell of Newell

Recycling Co., noting that "we have had a pile of

contaminated soil in a corner of our yard for about one year,"

and threatening to turn the matter over to an attorney if "the

cleanup program has not been completed" within the

following two months. CX 26.

Environmental Appeals Bd. Final Decision - 9/13/99

That letter elicits a response from Mr. Johnson dated

April 12, 1986, acknowledging receipt of Mr. Garrigues's

letter and “assur[ing] you that we are taking it quite

seriously." CX 25 at 1. Mr. Johnson's letter makes no attempt

to deflect responsibility for implementation of a cleanup plan

away from Newell Recycling Company. It suggests, rather,

that because the State regulatory structure is still in flux, "we

[i.e., Newell] have not been able to find anyone who will give

us final approval on a cleanup plan." /d.

The documentary record then advances to August 27,

1986, when Mr. Johnson writes to the environmental

consulting firm Lockwood, Andrews & Newnam, Inc.

("LAN"). Although not yet willing to execute a formal

agreement for the services of that firm, he writes that "Newell

Recycling Company would like for you to proceed to develop

a testing plan and begin to execute it." CX 24. Indeed, Mr.

Johnson's August 1986 letter presses the Lockwood firm "to

move this project along as quickly as possible." /d.

No further correspondence appears in the record until

January 22, 1987. On that date, with almost two years having

elapsed since the discovery of PCB contamination, Mr.

Garrigues again writes directly to Alton Newell of Newell

Recycling Co. Referring back to his letter of March 21, 1986,

Mr. Garrigues indicates that Mr. Newell had personally

visited the site shortly after receiving that letter and that "after

your personal visit we were really under the impression that

thing[s] would start happening fast." Mr. Newell's site visit

notwithstanding, however, "[t}en months have passed since

then and the situation remains the same as far as we are

concerned." CX 23. Mr. Garrigues concludes by stating that

HMPC will now begin charging Newell Recycling Co. a

30a

Environmental Appeals Bd. Final Decision - 9/13/99

monthly fee "as compensation for not being able to use and

enjoy freely the contaminated land. This charge will remain

in effect until completion of the clean-up." /d.

In May 1987, LAN, having apparently been formally

retained by Newell Recycling (see CX 24), issues a "Site

Clean-Up Interim Report" (CX 9). In the Interim Report,

LAN solicits additional guidance from the parties because

"the initial sampling results are much higher than

anticipated"; moreover, there may well be more bad news still

to come, given that "the initial sampling effort did not define

the aerial [sic] and vertical extent of the contamination." In

other words, LAN (and by extension, the parties) faced a

potentially more significant job than expected. But the Interim

Report was clear and unequivocal in asserting that the

problem, whatever its magnitude, absolutely had to be

addressed:

PCB clean-up will fall under the Toxic

Substances Control Act (TSCA) Compliance

Program. TSCA policy states that all

improperly disposed PCB shall be cleaned up

to background levels. This has also been

interpreted to be the lowest level below 50

ppm practicably attainable through the use of

normal clean-up methods.

At a minimum, that means the [sic] all

soil contaminated with greater than 50 ppm

PCB must be removed from the site. Wastes

with these concentrations must be incinerated

or disposed of in a chemical waste landfill.

3la

Environmental Appeals Bd. Final Decision - 9/13/99

CX 9 at 4 (emphasis added).

Perhaps predictably, the ensuing correspondence is

between attorneys. At first, however, it appears that Newell

Recycling Co. still intends to move forward with the cleanup

in some fashion. Attorney Wayne R. Mathis (the former

Newell Executive Vice-President) writes, on behalf of Newell

Recycling Co., to HMPC's counsel Mark A. Huvard on June

8, 1987. Counsel have apparently met during the previous

month, and Mr. Mathis writes that after the meeting "I

discussed our fact situation with the consultants I have

retained, Lockwood, Andrews & Newnam, Inc. ("'LAN')." He

indicates that “additional reports" from LAN will be

forthcoming and will be made available to HMPC, and that

"[m]y staff is currently working on the information to be

provided to you * * * and I expect to mail this out sometime

next week." CX 22 at 1-2. Copies of this letter are also sent

to LAN and toa Mr. John Triesch of "Newell Recycling Co."

Id. at 2.

During the remainder of June and much of July the

attorneys negotiate a three-year tolling agreement (see CX 20

[6/16/87 Huvard to Garrigues, enclosing draft]; CX 19

[7/6/87 Mathis to Huvard, enclosing draft]; CX 21 [final

agreement with signatures dated as of July 17, 23, and 31,

1987]). A new party has also entered the picture: The parties

to the tolling agreement are Newell Recycling Co., Inc.,

Oklahoma Metal Processing Company, Inc. (d/b/a HMPC),

and "J.L.B. Investment Corporation, N.V., a Netherlands-

Antilles corporation" (to which "certain rights [have been]

assigned" by HMPC with respect to some or all of the

Fidelity Road site). CX 21 at 1. In substance, the agreement

provides that for the following three years, Newell Recycling

32a

RAR ERE RR NTS

PEERS DR PRE NERI ORNL SEA CANE NR PR RN ADRS td ANN Mee ER ROMER RAEI oy EAI MONO SG MCANE ue RANA LON Re abe a ANSTEY NAT

Environmental Appeals Bd. Final Decision - 9/13/99

Co. will not interpose a statute of limitations defense to any

claim or cause of action that HMPC (or J.L.B.) might bring

against it based on the contamination of the Fidelity Road

property. The agreement is an effort to keep Newell

Recycling's potential liability to HMPC alive for an additional

three years, but it says nothing about any plan to proceed with

Site remediation -- even though the agreement, while in draft

form, did note that the Fidelity Road property "has substantia!

PCB contamination and lead contamination" and that "the

parties acknowledge and agree that the problem presented by

the PCB contamination and lead contamination is a serious

one." CX 20 at 1.

A lengthy period of apparent inactivity follows the

execution of the tolling agreement. The silence is broken only

alter EPA Region 6 conducts an October 19, 1989 PCB

inspection at the Fidelity Road property. In the report

describing that investigation, the EPA inspector notes that the

PCB-contaminated area has not been marked in any way and

that it is accessible to HMPC employees and to pets that are

living on-site. Having been advised by HMPC officials that

HMPC itself accepts no PCB-contaminated materials for

recycling, the inspector reports making contact with Newell

Recycling:

Mr. Eric Green of Newell Recycling indicated

that the clean-up was being handled by the law

firm Rock & Mathis [sic]. Mr. Wayne Mathis

of Rock & Mathis was then contacted * * *.

Mr. Mathis explained that the previous owner

does not feel responsible for the cleanup cost,

but that ENSR consultants had been hired to

prepare a remediation plan of the facility. Mr.

33a

Environmental Appeals Bd. Final Decision - 9/13/99

Mathis also explained that Newell Recycling is

currently involved in a law suit with [the

Texas Water Commission] and other property

owners regarding a similarly contaminated site

in Corpus Christi and that Newell Recycling is

currently waiting for the lawsuit settlement and

TWC approval of the Corpus site remediation

plan before proceeding with any clean-up

efforts of the Houston Metal Processing site.

RX 11 at 9. The inspector's inquiry leads him to conclude

simply that "the clean-up effort at [HMPC] was dropped for

unknown reasons." He urges in his report that, once the safety

of plant workers and animals has been ensured, removal and

disposal of the contaminated soil should commence right

away:

The contaminated area should be made

physically inaccessible to plant employees and

pets and any soil migration should be

minimized as no erosion control measures have

yet been taken. If possible however, the

contaminated soil should be removed and

disposed of as soon as possible.

RX 11 at 9.

Among the interesting features of the 1989 inspection

report is the fact that, once again, representatives of Newell

Recycling are not reported to have pointed to the involvement

of any other "Newell" entity. Rather, Newell Recycling

asserts through counsel that it "does not feel responsible" and

has therefore decided to do nothing pending the outcome of

34a

a a i a Nt a ae ai -

i A ah ali) om iat Rt a ta Tee

Environmental Appeals Bd. Final Decision - 9/13/99

litigation involving a "similarly contaminated" but otherwise

unrelated site. Other information in the record tends to

corroborate the view that Newell Recycling's disclaimer of

responsibility was predicated on the company's belief that an

expensive cleanup was beyond its contractual accountability,

not because some other Newell entity was the responsible

party. See CX 18 (December 9, 1989 Letter from HMPC

Counsel Mark Huvard to Wayne Mathis).

The record reflects one more effort by LAN to focus

the parties’ attention on their TSCA obiigations. In a January

1990 "Technology Assessment and Economic Evaluation,"

LAN reminds the parties that its original recommendations

with respect to the HMPC site were presented in June 1987,

and observes that "[rJecent contact with the U.S. EPA has

prompted renewed interest in cleanup requirements at the

site." CX 17 at 1. After reiterating the findings of its 1987

investigation, LAN advises as follows:

After contact with the U.S. EPA, it was

established that PCB's had to be reduced to

background levels for a clean site closure. The

site could be remediated to a PCB

concentration of 25 ppm and deed record [sic]

for in place closure. This is also predicated on

a proper in place closure plan, i.e.

groundwater protection and cap. The soil with

PCB concentration has to be treated or

disposed of by methods acceptable to the U.S.

EPA under TCSA [sic]. /t was determined that

for contaminated soil two methods are allowed

by TCSA. The soil either had to be incinerated

35a

Environmental Appeals Bd. Final Decision - 9/13/99

or landfilled, both in at [sic] approved

facilities.

CX 17 at 3 (emphasis added). LAN's advice was apparently

disregarded. ;

As recounted at the outset of this discussion, as of

September 1992 the pile or piles of contaminated soil were

still on-site. Some additional sampling was conducted by

HMPC in late 1993, confirming the presence, in one of the

soil piles, of a PCB concentration (based on a composite of

six samples) of 314 ppm. CX 13. EPA then filed this TSCA

enforcement action in March 1995. On May 24, 1995, HMPC

and Newell Recycling Company executed an agreement

wherein Newell Recycling Company’° agreed to "remove and

arrange for the proper and lawful disposal of the 120 ton soil

pile * * * at its own expense." RX 15 at 1. On September 22,

1995, HMPC filed a civil action against Newell Recycling

Co. and certain of its affiliates and controlling persons in the

U.S. District Court for the Southern District of Texas,

alleging breach of the May 1995 agreement, breach of the

September 1982 agreement for the sale of the Fidelity Road

property, fraud, and causes of action arising under the

Comprehensive Environmental Response, Compensation and

Liability Act of 1980 ("CERCLA"). CX 1. Between

September 20 and September 28, 1995, 495,000 pounds of

contaminated soil was finally removed from the site and

transported, by the American Ecology Transportation

Company, to a disposal facility in Beatty, Nevada. CX 29.

iT An bie iiCn ed mgr Ae 1kcpek 2 Pata NS MERE ter KR at ue agri euch) poting

‘0 Conspicuously absent from this agreement is any

reference to any of the othe Newell entities.

36a

Environmental Appeals Bd. Final Decision - 9/13/99

The ultimate cost of removal of the contaminated soil from the

HMPC site was, according to Newell, $84,000."

C. Proceedings Below

Upon examining the documentary record -- which he

aptly described as "a ten year argument over who would pay

the cost of removing the contaminated soil" -- the Presiding

Officer resolved the liability issues regarding both

respondents on cross-motions by EPA Region 6 and by

HMPC" for accelerated decision. See 22 C.F.R. § 22.20(a)."°

With respect to Newell Recycling in particular, the Presiding

Officer ruled that liability for improper disposal attached

'! There is some uncertainty in the record about what the

$84,000 actually represents. In its appellate brief, Newell cites the

$84,000 figure, first, as the cost to "remov[e]" the PCB-

contaminated soil, but then (a few sentences later) as the "total

disposal cost." Brief for Appellant at 47. In a Declaration executed

by Newell's attorney, the attorney states: "The pile was removed

in 1995 with OMP performing the work and Newell Recycling

paying the bill ($84,000)." Nasuti Decl. ¢ P. In any case, the

Region has not contested this number, notwithstanding the fact that

far higher estimates of projected costs appear elsewhere in the

record.

De ya chaste PESGAL SE Wate AE ALTE eo ae AOE alin aga RENO

'2 Newell filed a notice with the Presiding Officer

indicating that Newell wished to join in the Motion for Accelerated

Decision that had been filed by HMPC.

AagesTAnrnehan i ienteys

‘5 Section 22.20(a) authorizes the Agency's Presiding

Officers to render an accelerated decision "as to all or any part of

[an enforcement] proceeding * * * if no genuine issue of material

fact exists and a party is entitled to judgment as a manner of law."

37a

Environmental Appeals Bd. Final Decision - 9/13/99

because Newell Recycling, like HMPC, "controlled the

improper disposal of the PCBs at the facility":

Newell Recycling undertook an analysis of the

scope of the problem and had a plan developed

for removal of the contaminated soil. A

contractor over which Newell Recycling had

control removed the contaminated soil into a

pile. Newell Recycling knew that the lead-

contaminated soil would need to be removed

and it knew that the PCB-contaminated soil

which it placed in a pile at the facility was

disposed of improperly. The original closure

plan under which excavation was initiated

called for disposal [of lead-contaminated soil]

at a hazardous waste dis»osal facility.

Subsequent cleanup plans addressing PCBs

called for offsite disposal of regulated levels of

PCBs. However, rather than completing the

requirements of the original closure plan, or

following the later recommendations for site

cleanup, Newell discarded the PCBs at the

Fidelity Road facility by leaving them there

and taking no further clean-up action. Newell's

actions in creating the pile, confirming the

contaminated soil in a central stockpile, and

abandoning it are actions meeting the

definition of "disposal" in 40 C.F.R. § 761.3.

Partial Accelerated Decision on Issue of Liability at 22-23

(April 28, 1997). The Presiding Officer denied Newell's

Motion for Reconsideration of the liability ruling in an order

dated June 4, 1997, whereupon HMPC entered into a

38a

Environmental Appeals Bd. Final Decision - 9/13/99

settlement with the Region. The Presiding Officer considered

briefs submitted by the Region and by Newell with respect to

an appropriate penalty, but did not conduct an evidentiary

hearing on the penalty issues. Rather, on October 7, 1997, the

Presiding Officer issued a Decision on Complainant's Motion

for Assessment of Civil Penalty, assessing a civil penalty

against Newell Recycling in the total amount of $1.345

million, which he further ordered to be reduced, dollar-for-

dollar, by the amount paid by HMPC pursuant to its

settlement agreement with the Region.

Newell Recycling has appealed the Presiding Officer's

liability rulings and his penalty assessment decision. In

addition, Newell Recycling appeals an earlier order of the

Presiding Officer denying Newell's request for leave to take

discovery exceeding the parameters of the typical Part 22

exchange of documents. The appeal is timely and the Board

has jurisdiction pursuant to 40 C.F.R. § 22.30.

II. DISCUSSION

The Board reviews the Presiding Officer's factual and

legal conclusions on a de novo basis. 40 C.F.R. § 22.31(a).

Matters in cuntroversy must be established by a

preponderance of the evidence. /d. § 22.24; see In re B.J.

Carney Industries, CWA Appeal No. 96-2, slip op. at 61

(EAB, June 9, 1997), 7E.A.D. _. As the orders from which

appeal is taken are challenged, in part, because they were

summary adjudications rendered without an evidentiary

hearing, our review will consider whether there are any

genuine issues of material fact relative to the issues raised.

See In re Green Thumb Nursery, Inc., 6 E.A.D. 782, 792-93

(EAB 1997); see also 40 C.F.R. § 22.20(a) (Presiding Officer

39a

Environmental Appeals Bd. Final Decision - 9/13/99

may enter an accelerated decision as to "al! or any part" of a

proceeding, "if no genuine issue of material fact exists and a

party is entitled to judgment as a matter of law").'* In the

discussion that follows, we address the challenged discovery

ruling, the applicable statute of limitations, the issues

surrounding Newell's TSCA liability, and finally the

calculation of the penalty.

A. Discovery

Newell contends that the Presiding Officer committed

reversible error by denying Newell an opportunity to conduct

discovery concerning the Region's alleged misconduct in

commencing this enforcement action. The applicable

regulatory provision is 40 C.F.R. § 22.19(0 ("Other

Discovery"), which states in part:

(1) Except as provided by paragraph

(b) of this section [concerning preheating

exchanges of exhibits and witness lists],

further discovery, under this section, shall be

permitted only upon determination by the

Presiding Officer:

'* We consider the "administrative summary judgment

standard, requiring timely presentation [by Newell] or a genuine

and material factual dispute, similar to judicial summary judgment

under Rule 56, Fed. R. Civ. P." Green Thumb, 6 E.A.D. at 793

(citing /n re Mayaguez Regional Sewage Treatment Plant, 4 E.A.D.

772, 780-82 (EAB 1993), aff'd sub nom. Puerto Rico Aqueduct &

Sewer Authority v. EPA, 35 F.3d 300 (1st Cir. 1994)).

40a

POOP AC OR a ED NN Ory

gare aha a)

Environmental Appeals Bd. Final Decision - 9/13/99

(i) That such discovery will not in any

way unreasonably delay the proceeding;

(ii) That the information to be obtained

is not otherwise obtainable; and

(iii) That such information has

significant probative value.

We need not consider issues of obtainability, because the

Presiding Officer was plainly correct in his determination that

the information sought by Newell was not significantly

probative.

In its motion for leave to conduct discovery pursuant

to section 22.19(f), Newell advised the Presiding Officer that

the proposed discovery was intended to demonstrate "an

apparent effort [by Region 6] to avoid being sanctioned since

its Complaint was filed March 30, 1995 in violation of the

five (5) year statute of limitations." Motion for Discovery at

1 (Jan. 19, 1997). "Respondents' burden," Newell explained,

"is to establish that EPA had notice of the Site and/or its

conditions prior to March 30, 1990." /d. at 1-2. The proposed

discovery would allegedly have enabled Newell to meet that

"burden."

As the discussion below makes clear, Newell's

proffered grounds for taking the proposed discovery were

flawed. Newell apparently assumed that the applicable statute

of limitations would have been triggered by EPA's first

“notice” concerning the HMPC site or its “conditions.” That

assumption, as we will show momentarily, was unfounded,

and once it is put aside the discovery proposed to be taken by

4la

Environmental Appeals Bd. Final Decision - 9/13/99

Newell bears no relation to any of the matters at issue in this

proceeding. The Presiding Officer, accordingly, did not err

by denying Newell's January 19, 1997 request for leave to

pursue discovery.

B. Statute of Limitations

The central issue presented by Newell's appeal

concerns the application of the statute of limitations, 28

U.S.C. § 2462, to the essentially undisputed facts of this case.

Section 2462 provides:

Except as otherwise provided by Act of

Congress, an action, suit or proceeding for the

enforcement of any civil fine, penalty, or

forfeiture, pecuniary or otherwise, shall not be

entertained unless commenced within five

years of the date when the claim first accrued

* * *

The question, then, is when the claim for which the Region

sought a penalty in this case first "accrued" -- specifically,

whether the Region's claim in this case is or is not governed

by the doctrine of "continuing violations." As the Board has

previously explained:

The limitations period begins to run when a

violation first accrues. The doctrine of

continuing violations provides a special rule

for determining when a violation first accrues.

Under the special accrual rule, the limitations

period for continuing violations does not begin

to run until an illegal course of conduct is

42a

SERENA IS AY IEMA DN ee ar AR ca eaiers' ot

Environmental Appeals Bd. Final Decision - 9/13/99

complete. Thus, if the doctrine of continuing

violations applies * * *, an action for civil

penalties may be initiated during the period of

continuing violations and up to five years after

the violations have ceased.

In re Lazarus, Inc., TSCA Appeal No. 95-2, slip op. at 63

(EAB, Sept. 7, 1997),7E.A.D. (citations omitted). The

Board has noted that the special accrual rule for continuing

violations is potentially applicable both to violations of

"continuing obligations" and to violations of "continuing

prohibitions." See Lazarus, slip op. at 65 n.84; Jn re Harmon

Industries, Inc., RCRA (3008) Appeal No. 94-4, slip op. at

50 n.41 (EAB, Mar. 24, 1997),7E.A.D. _.’° The focus,

then, is on determining whether a particular regulatory

obligation or prohibition is, or is not, "continuing in nature."

Lazarus, slip op. at 65-66.

We begin by examining the statutory enactment

underlying the regulation allegedly violated. In the TSCA

context, the Board has previously undertaken such an

examination in the Lazarus proceeding. The Board there

examined both the statutory provision (TSCA § 6(e)) directing

EPA to promulgate PCB disposal rules and the statutory

provision (TSCA § 16(a)(1)) authorizing EPA to impose

administrative penalties for violation of the rules.

5 @ —

‘> The Board's decision in Harmon was reversed, on

grounds unrelated to the statute of limitations, in Harmon Indus.,

Inc. v. Browner, 19 F. Supp. 2d 988 (W.D. Mo. 1998). A

challenge to the District Court's decision is currently pending

before the Court of Appeals for the Eighth Circuit. Harmon Indus.,

Inc. v. Browner, No. 98-3775.

43a

Environmental Appeals Bd. Final Decision - 9/13/99

The relevant portion of section 6(e) states only that

"the Administrator shall promulgate rules to * * * prescribe

methods for the disposal of polychlorinated biphenyls." It is

silent coneeming whether violations of those rules should be

deemed continuing in nature. See Lazarus, slip op. at 80. The

administrative civil penalty provision, section 16(a)(1), is

somewhat more illuminating. That provision begins by stating

that anyone who violates TSCA section 15 - by, for example,

failing to comply with any PCB disposal rule promulgated

under TSCA section 6 "shall be liable to the United States for

a civil penalty in an amount not to exceed $25,000 for each

such violation." Section 16(a)(1) then proceeds to explain

that, for purposes of applying the $25,000-per-violation civil

penalty cap, "[eJach day such a violation continues shall

* * * constitute a separate violation of section 15."

In Lazarus, the Board recognized that "section 16(a)(1)

is evidence that Congress contemplated the possibility of

continuing violations of TSCA." Lazarus, slip op. at 67

(emphasis in original). But the Board further concluded that

section 16(a)(i) alone “does not transform every violation of

TSCA into a continuing violation." /d., at 68. The Board

therefore found it appropriate, in the TSCA context, to

examine separately each regulatory requirement or prohibition

allegedly violated for indicia of whether that particular

requirement or prohibition is "continuing" in nature. In this

analysis, "[wWjords and phrases connoting continuity and

descriptions of activities that are typically ongoing are

indications of a continuing nature * * * [whereas] a continuing

nature may be negated by requirements that must be fulfilled

within a particular time frame." /d. at 66 (footnotes omitted).

Lazarus demonstrates that, within the confines of the TSCA

PCB regulations, certain regulatory provisions exhibit indicia

44a

Environmental Appeals Bd. Final Decision - 9/13/99

of "continuity" whereas others implicate a “particular time

frame," leading to divergent applications of the limitations

bar. See id. at 73 (obligation to register PCB transformer with

local fire response personnel held continuing in nature); id. at

78 (obligation to mark transformer room access door with a

prescribed symbol held continuing in nature); id. at 82-83

(obligation to prepare and maintain yearly records "on the

disposition of PCBs and PCB Items" held not continuing in

nature). The Board has not previously undertaken such an

analysis with respect to 40 C.F.R. § 761.60(a)(4), which

Newell is alleged to have violated. The question whether

violations of section 761.60(a)(4) are "continuing" in nature,

for statute of limitations purposes, is therefore one of first

impression.

We are not without reliable guideposts, however,

given the outlines of an analytical framework that emerge

from Lazarus and, more importantly, the detailed attention

that matters involving PCB disposal have already received in

the Agency's administrative case law. The provision at issue

in this case, 40 C.F.R. § 761.60(a)(4), has been interpreted

in several previous Agency decisions concerning matters other

than the statute of limitations. The reasoning in those

decisions, when combined with a close reading of the

regulatory text, illumines the issue at hand.

Our point of departure is the text—of section

761 .60(a)(4):

Any non-liquid PCBs at concentrations

of 50 ppm or greater in the form of

contaminated soil, rags, or other debris shall

be disposed of:

45a

Environmental Appeals Bd. Final Decision - 9/13/99

(i) In an incinerator which complies

with § 761.60; or

(ii) In a chemical waste landfill which

complies with § 761.75.

Previous Agency case law has tended to focus on

which parties are responsible for compliance (and hence

potentially liable for failure to comply). We put that question

aside for the moment, although we will revisit the matter at

some length in a subsequent section of this opinion. For

present purposes, a different feature of the regulation is

noteworthy: The regulation contains elements of both

obligation and prohibition. It is written in the affirmative --

disposal shall occur in one of two specified ways -- but also

delivers, clearly and unmistakably, the message that disposal

shall not occur in any other way. In addressing whether

violations of this regulation are continuing in nature, we

consider both the obligation and the prohibition. Both aspects

of the regulation direct us toward the same result.

Viewed as an obligation, the regulation on its face

Carries no temporal limitation. It does not, as we expressed

the idea in Lazarus, prescribe a "requirement[] that must be

fulfilled within a particular time frame." On the contrary,

nothing in the regulation remotely suggests that the obligation

described is discharged or extinguished simply with the

passage of time. Instead, the obligation is discharged only

with the occurrence of a specified event -- the proper disposal

of PCB-contaminated soil at an incinerator or a chemical

waste landfill. Until this occurs, compliance with the

regulatory mandate has not been achieved, and the responsible

party commits, each day, a violation of section 761 .60(a)(4).

46a

Environmental Appeals Bd. Final Decision - 9/13/99

The regulatory text, accordingly, suggests that an

administrative enforcement action for violation of section

761.60(a)(4) is timely if commenced within five years after

the noncompliance ends with the lawful disposal of the |

contaminated material.

The same result obtains if we regard section

761.60(a)(4) as a prohibition against methods of disposal

other than those specifically authorized. It is useful in this

regard to examine the broader Subpart D ("Storage and

Disposal") regulatory framework, and to identify the

circumstances in which the prohibition does not apply, i.e.,

when it is permissible to do something with PCB-

contaminated soil other than incineration or landfilling. There

are only two such circumstances. First, if contaminated soil

was placed in a "disposal site" (which need not be an

incinerator or a chemical waste landfill) before the PCB

disposal rules were enacted, it is sometimes permissible

simply to leave the contaminated soil in place; such soil is, in

effect, not regulated under Part 761. See 40 C.F.R. § 761.60

(Note). Alternatively, if PCBs in the form of contaminated

soil are housed in a storage facility meeting stringent

regulatory requirements, the soil may be kept in that facility

for up to a year; temporary "storage for disposal," in other |

words, is a permissible method of handling PCB-contaminated |

soil until the end of the one-year grace period. See 40 C.F.R. |

§ 761.65(a). All other PCB-contaminated soil, however |

generated or encountered, is governed by section

761.60(a)(4), and may not be addressed in any manner other

than incineration or landfilling. Thus. in toto, by forbidding

all methods of disposal other than incineration and landfilling,

section 761.60(a)(4) effectively divides the universe of PCB-

contaminated soil among four mutually exclusive categories:

47a

Environmental Appeals Bd. Final Decision - 9/13/99

(1) pre-rule, conditionally unregulated soil (largely unaffected

by section 761 .60(a)(4));'° (2) soil lawfully held in storage for

disposal (temporarily unaffected by section 761 .60(a)(4)); (3)

soil lawfully disposed of in compliance with section

761.60(a)(4); and (4) noncompliant PCB-contaminated soil.

In its administrative case law, EPA has treated this

fourth category of soil -- that which is subject to TSCA

regulation, is not lawfully in storage for disposal, and has not

been lawfully disposed of in an incinerator or in a chemical

waste landfill -- as being "in a state of improper disposal." /n

re City of Detroit, 3 E.A.D. 514, 518 (CJO 1991); In re

Standard Scrap Metal Co., 3 E.A.D. 267, 270 (CJO 1990).

This is the category of material with which we are concerned

in this case.

What is it that terminates a "state of improper

disposal"? The answer is not, based on anything stated or

implied in the regulations, simply the passage of time. A

"state of improper disposal" logically persists until proper

disposal occurs, and, indeed, Agency case law so states: "If

[PCBs] have been taken out of service for disposal, the

responsible party must dispose of the PCBs in accordance

with the requirements [of section 761 .60(a)(4)]. Failure to do

sO constitutes a violation of the regulation, and the violation

soil at issue here was, prior to the February 1985 excavation, in

this nonregulated category of material. This is, in any case,

immaterial, as we find that it was Newell's excavation and

stockpiling of ine contaminated soil that both subjected the material

to regulation and established Newell's responsibility for proper

disposal.

48a

Environmental Appeals Bd. Final Decision - 9/13/99

continues as long as the PCBs remain out of service and in a

state of improper disposal." Standard Scrap Metal Co., 3

E.A.D. at 269-70. While Standard Scrap did not specifically

address this issue in the context of a statute of limitations

dispute,'’ we find its logic equally compelling here.

Thus, in the final analysis, we simply discern no

textual or logical basis -- nor does Newell suggest one -- for

regarding unremedied violations of section 761.60(a)(4) as

being limited, for accrual purposes, to a single instant, a

single day, or any other particular period of time. Indeed, to

conclude otherwise would produce an outcome difficult to

reconcile with the policy thrust of the statute and the

regulations. A party legally responsible for ensuring the

proper disposal of PCB-contaminated material, but disinclined

to incur the expense, might well have good reason simply to

do nothing for five years.

We are mindful of the important purposes served by

Statutes of limitations generally and by section 2462 in

particular -- including, notably, the preclusion of enforcement

actions based on claims that have become "stale" with the

passage of time. As we recognized in Lazarus, "[p]assage of

'7 Standard Scrap addressed the burden of proof with

respect to the applicability of the "disposal site" exemption from the

PCB disposal regulations. The disposal site exemption appeared in

a Prefatory Note preceding 40 C._F.R. § 761.60 and it provided, in

part, that "[t]his subpart does not require PCBs or PCB Items

landfilled prior to February 17, 1978 to be removed for disposal."

The disposal site exemption, which is not at issue in the present

case, was deleted from Part 761 effective August 28, 1998. See 63

Fed. Reg. 35,384 (1998).

49a

Environmental Appeals Bd. Final Decision - 9/13/99

time between the date of a violation and the date of

prosecution may serve to obscure basic facts through lost

evidence and faded memories." Lazarus, slip op. at 64. But

as we further explained, "[c]oncerns about staleness * * * are

much less compelling when a violative course of conduct that

began in the past continues unabated into the five-year period

immediately preceding the filing of the complaint." /d. at 64-

65.

The latter observation brings into focus a second

central issue presented by this appeal: specifically, Newell's

contention that "disposal" is, by definition, a one-time event

that occurs only at the moment when PCBs are first taken out

of service. If Newell's contention in that regard were correct,

improper disposal logically could never "continue" over time

or be regarded as a "course of conduct," and the Region's

enforcement action against Newell would not only be time-

barred, but would also fail for lack of any evidence of

Newell's direct involvement in the original burying of these

capacitors at the Fidelity Road site (the moment at which,

according to Newell, the PCBs were first taken out of

service). Having disposed of Newell's statute of limitations

arguments, we therefore turn our attention now to this

question of the meaning of "disposal" under 40 C.F.R. Part

761, Subpart D, and the other related liability issues that

Newell has raised.

50a

“

MERI Py LION PRE He ALE

Environmental Appeals Bd. Final Decision - 9/13/99

C. "Disposal" and Other Liability Issues

1. "Disposal" of PCBs Occurred

Newell raises an extensive series of objections to the

Presiding Officer's liability ruling, none of which raises a

genuine issue of material fact. First, and most prominently,

Newell contends that the Presiding Officer committed

reversible error when he concluded that Newell had engaged

in conduct meeting the definition of "disposal" under the PCB

Rule. Newell's specific contention in this regard is that

"disposal" constitutes a one-time occurrence, and that in this

case disposal occurred only when the capacitors containing

PCBs were originally buried and their contents released into

the surrounding soil. According to Newell's theory, the

subsequent excavation and stockpiling of PCB-contaminated

soil could thus not constitute "disposal" within the meaning of

the PCB Rule. Because the Region did not produce evidence

implicating Newell in the original disposal of the capacitors,

Newell argues, the Region failed to establish that Newell

committed an act constituting unlawful disposal under 40

C.F.R. § 761.60(a)(4).

We note at the outset that, if Newell's interpretation of

disposal as a one-time occurrence were correct, no TSCA

liability would attach even if Newell had taken the pile of

contaminated soil from the Fidelity Road site and dumped it

into the nearest river, stream, or vacant lot. Such an

interpretation would be difficult to reconcile with the

environmental protection goals of the TSCA regulatory

regime. See Jn re Samsonite Corp., 3 E.A.D. 196, 199 (CJO

1990) (PCB regulations "should be read in such a way as to

Sla

Environmental Appeals Bd. Final Decision - 9/13/99

further the purposes of the Act, particularly where, as in this

case, public health and safety are involved") (citing TSCA

§ 6(e)(2)(B), 15 U.S.C. § 2615(e)(2)(B)); 15 U.S.C. § 2601

(b)(2) (calling for regulation of"chemical substances and

mixtures which present an unreasonable risk of injury to

health or the environment").

In any case, Newell's interpretation of "disposal" is

inconsistent with the regulatory definition of "disposal" at 40

C.F.R. § 761.3, and thus must fail. This section provides:

Disposal means intentionally or

accidentally to discard, throw away, or

otherwise complete or terminate the useful life

of PCBs and PCB Items. Disposal includes

spills, leaks, and other uncontrolled discharges

of PCBs as well as actions related to

containing, transporting, destroying,

degrading, decontaminating, or confining

PCBs and PCB Items.

It is true, as Newell emphasizes, that an act of

"disposal" occurs when the “useful life" of PCBs is first

brought to an end. Newell is correct, therefore, in asserting

that PCB "disposal" occurred when the capacitors were buried

at the Fidelity Road site and their contents leaked into the

surrounding soil. Section 761.60(d)(1) of the PCB Rule

expressly confirms that this is so: "Spills and other

uncontrolled discharges of PCBs at concentrations of 50 ppm

Or greater constitute the disposal of PCBs." 40 C.F.R.

§ 761.60(d)(1). But the regulatory definition of disposal

includes far more than spills and other uncontrolled

discharges, and it expressly embraces activities undertaken to

52a

Environmental Appeals Bd. Final Decision - 9/13/99

address known PCB contamination. Thus, 40 C.F.R. § 761.3

States that "[dJisposal includes spills, leaks, and other

uncontrolled discharges as well as actions related to

containing, transporting, destroying, degrading,

decontaminating, or confining PCBs or PCB items." The act

of excavating and stockpiling PCB-contaminated soil at the

Fidelity Road site is clearly in the nature of action to

"contain," "transport," and "confine" PCBs. Moreover,

leaving the stockpiled waste abandoned th-re for a period of

years is evidence that the PCB-contaminated soil was

"discarded" within the meaning of the rule. Accordingly, the

Presiding Officer correctly applied the regulatory definition

by holding that Newell committed an act of improper disposal

by knowingly causing PCB-contaminated soil to be excavated

and stockpiled in a corner of the HMPC site, and then

"leaving [the PCBs] there and taking no further clean-up

action.” Partial Accelerated Decision on Issue of Liability at

'§ Also supportive of the Presiding Officer's analysis is the

Note preceding the disposal regulations in Part 761, Subpart D.

(Although it has since been deleted, see supra note 17, the

interpretive Note prefacing the disposal rules was in effect

throughout the period of the violations at issue in this case.) Among

other things, the Note indicates that PCBs "landfilled" before

February 17, 1978 need not be "removed for disposal." The Note

makes clear, however, that those PCBs become subject to the

Subpart D disposal requirements if they are excavated: "[I]f such

PCBs or PCB Items are removed from the disposal site, they must

be disposed of in accordance with this subpart."

53a

Environmental Appeals Bd. Final Decision - 9/13/99

2. PCB "Disposal" Need Not Involve "Exacerbation"

of Pre-Existing Site Conditions

Newell next argues that even if stockpiling and

abandonment of PCB-contaminated soil does satisfy the

regulatory definition of disposal, that definition should be

supplemented by an implied requirement of "exacerbation."

According to this argument, EPA cannot establish a violation

of the disposal rules unless it can show conduct meeting the

definition in section 761.3 and, in addition, show that the

conduct "exacerbated" the environmental conditions at the site

by, for example, causing contamination of previously

uncontaminated areas of the affected site. Because we find

nothing in section 761.3 that supports augmentation with this

additional requirement, we reject Newell's argument that

proof of "exacerbation" is required."

‘9 In support of its contention that exacerbation should be

regarded as an element of a PCB disposal violation, Newell cites

four cases, all arising under the Comprehensive Environmental

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

U.S.C. §§ 9601 et seqg.: Alcan-Toyo America, Inc. v. Northern

Illinois Gas Co., 881 F. Supp. 342 (N.D. Ill. 1995); Ganton

Technologies, Inc. v. Quadion Corp., 834 F. Supp. 108 (N.D. Ill.

1993); Kaiser Aluminum & Chemical Corp. v. Catellus

Development Co. , 976 F.2d 1338 (9th Cir. 1992); and Tanglewood

East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568 (Sth

Cir. 1988). Based as they are on a different statutory scheme and

text, we find them inapposite to the maner at hand. We also note

that, of the cases cited, only one, Alcan-Toyo, even arguably stands

for the proposition for which it is advanced. Even that case,

however, stands for the narrow proposition that one court, in

assessing relative fault for purposes of an equitable allocation of

S4a

Environmental Appeals Bd. Final Decision - 9/13/99

3. There Was Sufficient Evidence of Newell Recycling

Company's Involvement in the Disposal Violation

An introductory provision of the PCB Rule (40 C.F.R.

§ 761.1 ["Applicability"]), citing the relevant statutory

language, states that civil penalty liability extends to “any

person” who fails to comply with the regulatory requirements:

Section 15 of the Toxic Substances

Control Act (TSCA) states that failure to

comply with these regulations is unlawful.

Section 16 imposes liability for civil penalties

upon any person who violates these

regulations, and the Administrator can

establish appropriate remedies for any

violations subject to any limitations included in

section 16 of TSCA.

40 C.F.R. § 761.1(d). With respect to cases involving

improper disposal of PCBs, administrative case law supports

the view that, "violators" in such cases include those who

have "caused (or contributed to the cause of) the disposal." /n

response costs in a CERCLA contribution action between

responsible parties, considered excavation and stockpiling of tainted

soil that causes exacerbation of site conditions materially more

blameworthy than similar activity that does not cause such

exacerbation. There is nothing in Alcan that persuades us that there

is or should be an implied “exacerbation” requirement in all

environmental statutes and regulations that employ the term

"disposal." Thus,Alcan notwithstanding, we conclude that Region

6 was not required to produce evidence of exacerbation in order to

establish Newell's liability for violating 40 C.F.R. § 761.60(a)(4).

55a

Environmental Appeals Bd. Final Decision - 9/13/99

re City of Detroit, 3 E.A.D. 514, 526 (CJO 1991). With that

in mind, we turn now to Newell's claim that the evidence

before the Presiding Officer in this case was not sufficient to

establish Newell's responsibility for a disposal violation.

Newell contends that the Presiding Officer committed

error by concluding that Newell Recycling Company, rather

than one of its affiliates, was a party responsible for any

violation of the PCB disposal rules that may have occurred at

the Fidelity Road site. That contention is untenable when

viewed against the undisputed facts. Newell Recycling

Company may not have acted alone, but it was certainly an

active party in the events constituting the TSCA violation.

Newell Recycling Company was the owner of the Fidelity

Road site immediately before its conveyance to HMPC. In

conveying the property, Newell Recycling contractually

assumed responsibility for on-site "occurrences." Indeed, the

1985 cleanup of lead contamination, the attendant discovery

of PCB contamination and creation of the PCB waste pile, and

the subsequent efforts to remediate PCB contamination all

flowed proximately from this covenant by Newell Recycling.

Newell Recycling's owner, Alton Newell, was shown to have

visited the site in response to HMPC's demand for a remedial

response. Until this enforcement case, Newell Recycling

never so much as suggested that some other Newell entity was

actually responsible for the contaminated soil pile, and the

record is devoid of any evidence that the work in 1985 was

undertaken without Newell Recycling's participation. Newell

Recycling executed a tolling agreement with respect to claims

arising from the contamination of the HMPC site in July

1987. Newell Recycling, through Wayne Mathis, hired LAN

to make recommendations with respect to a PCB cleanup both

in 1987 and in 1989-90. Newell Recycling was contacted by

56a

Environmental Appeals Bd. Final Decision - 9/13/99

the EPA inspector in October 1989 and did not, so far as the

record discloses, point the inspector toward one of its

affiliates. Finally, it was Newell Recycling that entered into

an agreement, in May 1995, to undertake the removal of the

PCB-contaminated soil at its own expense. Given Newell's

multiple contacts with this matter, including contractual and

other undertakings to do removal work, we conclude that it is

more likely than not that the actual physical undertaking of the

removal work was performed pursuant to Newell's direction

and control. Accordingly, we find that Newell Recycling did,

indeed, cause, or contribute to the cause of, the unlawful

disposal of PCB-contaminated soil. Thus, the Presiding

Officer did not err in concluding that Newell Recycling was

a liable party for the PCB disposal violation at issue in this

case.

4. There Was Sufficient Evidence of Regulated PCB

Concentrations in the Soil Pile

Newell claims that Region 6 failed to prove a violation of

the PCB disposal rules because it did not sufficiently establish

the presence of regulated PCB concentrations in the soil at the

Fidelity Road site either as of September 1992 or as of

February 1994. Significantly, Newell cites neither expert

opinion nor probative evidence in support of its contentions.

With respect to the September 1992 soil sampling results,

Newell speculates that the samples might either have been

taken improperly or analyzed improperly. With respect to the

PCB concentration as of February 1994, Newell speculates

that "natural bioremediation, dilution or other factors may

have teamed up to modify any contaminant levels that might

have existed in 1992." Brief for Appellant at 23-24. Newell's

speculation is inadequate to create a genuine issue of material

57a

Environmental Appeals Bd. Final Decision - 9/13/99

fact regarding the presence or absence of regulated PCB

concentrations in the soil.

As to the September 1992 testing, Newell complains

that "it was provided with no hearing at which Region 6

experts could be cross-examined." Brief for Appellant at 23.

Newell misconstrues the nature of summary adjudication. As

the Board observed in /n re Dos Republicas Resources Co.,

6 E.A.D. 643 (EAB 1996), it is necessary to oppose a

properly supported motion for summary adjudication "by

referencing probative evidence in the record, or by producing

such evidence.” /d. at 662 (citations omitted). "Summary

judgment may not be avoided by merely alleging that a factual

dispute may exist, or that future proceedings may turn

something up." /d. (citing United States v. Potamkin Cadillac

Corp., 689 F.2d 379, 381 (2d Cir. 1982)). See also In re

Clarksburg Casket Co., EPCRA Appeal No. 98-8, slip op. at

2-19 (EAB, July 16, 1999), 8 E.A.D. __ (respondent's

defense, though "theoretically possible,” could not prevent the

entry of an accelerated decision against respondent, where

respondent failed to produce probative evidence in support of

the defense). Here, Region 6 produced evidence in support of

its Motion for Accelerated Decision demonstrating the

presence of regulated concentrations of PCBs in the soil pile

as of September 1992. With the Region having produced such

evidence, it was incumbent upon Newell -- to avoid summary

adjudicaton of that particular issue -- to go beyond mere

allegation and speculation by presenting some evidence

indicating possible sampling improprieties and/or laboratory

errors. The Presiding Officer was not required to conduct an

evidentiary hearing based solely on Newell's unsubstantiated

concern that it might uncover such evidence in the course of

cross-examination.

Environmental Appeals Bd. Final Decision - 9/13/99

The same analysis holds tree with respect to Newell's

conclusory assertion that “natural bioremediation” or other

means of dilution "may have" reduced PCB concentrations in

the soil pile below regulated levels before February 21, 1994,

i.e., the end of the period for which Region 6 sought penalties

in this action. Newell could not avoid summary adjudication

by offering sheer speculation concerning what "may have"

happened to the contaminated soil between September 1992

and February 1994. It was incumbent upon Newell to offer

countervailing evidence sufficiently probative to create a

genuine issue for resolution at a hearing, but Newell made no

attempt to do so.

We note that Newell, having managed the disposal of

the PCB-contaminated material in 1995, was in a position to

conduct its own tescs of the material at that time. Had Newell

come forward with evidence that, at that later date, PCBs

were no longer present at levels of concern, its contentions

might have greater force. But this Newell did not do. Because

Newell failed to offer any such evidence, the Presiding

Officer did not err when he resolved the issue in the Region's

favor by means of summary adjudication.

D. Penalty Issues

1. Evideniiary Hearing

Newell argues, preliminarily, that it per se

impermissble for the Presiding Officer to assess a penalty

against it without first conducting an evidentiary hearing.

Newell relies on 40 C.F.R. § 22.15, which states that "[a]

heating upon the issues raised by the complaint and answer

shall be held upon request of respondent in the answer." We

59a

Environmental Appeals Bd. Final Decision - 9/13/99

have held, however, that an oral hearing (as opposed to an

opportunity to obtain a ruling from the Presiding Officer on

the documentary record) is required only if the party

requesting the hearing raises a genuine issue of material fact.

In re Green Thumb Nursery, Inc., 6 E.A.D. 782, 792-93

(EAB 1997).” As explained fully below, we find that

Newell's penalty arguments fail to raise a genuine issue of

material fact and that, consequently, Newell was not entitled

to an evidentiary hearing. We similarly find that the Presiding

Officer did not err in applying the law to the unrefuted facts

before him.

2. Gravity Based Penalty

Pursuant to EPA's April 9, 1990 Polychlorinated

Biphenyls Penalty Policy ("Penalty Policy"), which the

Presiding Officer applied in this case, penaities for PCB Rule

violations are calculated in two stages: "(1) determination of

a ‘gravity based penalty' (GBP), and (2) adjustments to the

gravity based penalty." Penalty Policy at 1. The Penalty

0 EPA's use of an “administrative summary judgment”

procedure was expressly approved by the First Circuit in Puerto

Rico Aqueduct & Sewer Authority v. EPA, 35 F.3d 300 (1st Cir.

1994), aff'g In re Mayaguez Regional Sewage Treatment Plant, 4

E.A.D. 772 (EAB 1993). We reject Newell's suggestion that the

procedure violates the Administrative Procedure Act or works a

denial of due process. See Green Thumb, 6 E.A.D. at 792 ("Even

the constitutional right to due process requires that the person

claiming the benefit of that due process must first place some

relevant matter into dispute.") (citing Codd v. Velger, 429 US.

624, 627 (1977)).

60a

Environmental Appeals Bd. Final Decision - 9/13/99

Policy implements the requirements set forth in TSCA section

16(a)(2)(B), which provides:

In determining the amount of a civil

penalty, the Administrator shall take into

account the nature, circumstances, extent, and

gravity of the violation or violations and, with

respect to the violator, ability to pay, effect on

ability to continue to do business, and history

of prior such violations, the degree of

culpability, and such other matters as justice

may require.

Under the Penalty Policy framework, the first four statutory

factors -- nature, circumstances, extent, and gravity -- are

reflected in the proposed GBP, whereas the remaining

Statutory factors (the specified characteristics of the violator

and "such other matters as justice may require") are reflected

in adjustments to the proposed GBP.

Before the Presiding Officer, Newell Recycling made

the following arguments in response to the gravity based

penalty proposed by Region 6:

(1) Region 6 failed to quantify, or

failed to reliably quantify, the amount of

material involved in the violation, and should

therefore, by default, have characterized the.

violation as "minor" in extent for purposes of

a GBP calculation. Opposition by Respondent

Newell Recycling Company, Inc. to Region

6's Proposed Penalty at 2 (Aug. 8, 1997)

("Penalty Opp.");

6la

Environmental Appeals Bd. Final Decision - 9/13/99

(2) The Region should not have

characterized the “circumstances” of the

violation, for purposes of applying the Penalty

Policy's GBP matrix, as "High Range, Level

One," because that characterization "bears no

rationale [sic] relationship to any human health

concerns." Penalty Opp. at 3. See also id. at

12 (arguing that the Region's penalty proposal

is "outrageous" in the context of this "piddling

little case").

The Presiding Officer concluded that neither of those

contentions created a genuine issue of material fact with

respect to the appropriateness of the Region's penalty

proposal, and that both contentions were erroneous as a

matter of law. Newell advances both contentions again in its

appellate brief. Brief for Appellant at 41-44. For the

following reasons, the Board holds that the Presiding Officer

did not err on either point. |

a. Extent

As a general matter, the Penalty Policy provides for

three possible "extent" classifications: Minor, Significant, and

Major. According to the Penalty Policy, "extent," as used in

the statute, is understood to refer to "the ‘extent’ of potential

or actual harm from a given violation." Penalty Policy at 1.

In order to classify disposal violations, in particular, with

respect to extent of potential or actual harm, the Penalty

Policy looks to the amount of material involved in the

violation and adjusts that amount, in certain circumstances, to

account for the material's PCB concentration. Where, as here,

the volume of PCB fluid involved in a disposal violation is not

62a

Environmental Appeals Bd. Final-Decision - 9/13/99

ascertainable, the amount of material for penalty calculation

purposes is measured either in terms of surface area (i.e.,

square footage of contamination, for fresh spills onto the

ground or some other surface) or volume of material

contaminated (i.e. , cubic feet). Because this case involved soil

contaminated over time as a result of the burial and leakage of

PCB articles rather than a spill onto a measurable surface, the

Region appropriately looked to the volume of the soil

involved in the improper disposal. When soil volume is used,

the "extent" classifications are:

eless than 60 cubic feet = Minor

*between 60 and 300 cubic feet = Significant

more than 300 cubic feet = Major.

Penalty Policy at 6-7. Finally, the Penalty Policy states that

no concentration adjustment is to be applied "when the PCB

material is measured by a measure for solids other than

weight. * * * The cost:of disposal of such materials is not

dependent on their concentration of PCBs. Accordingly, to

allow adjustments for lower concentration might remove the

economic incentives to dispose of these materials properly."

Id. at 9.

As noted previously, during an October 1989

inspection of the HMPC site, EPA's inspector observed "two

soil piles contain[ing] approximately 20 cubic yards each."

See RX 11 at 8. With its brief to the Presiding Officer

concerning penalty issues, Region 6 submitted the Declaration

of EPA environmental scientist Jeffrey Jay Robinson dated

July 18, 1997. Robinson states that he determined the "extent"

of Newell's disposal violation based on one of the two 20-

cubic-yard soil piles shown to have been present at the HMPC

63a

Environmental Appeals Bd. Final Decision - 9/13/99

site during October 1989. Robinson explains that "the 20

cubic yards exceeded the 300 cubic feet waste quantity for

- Major Extent Disposal Violations (a cubic yard equals 27

cubic feet; 20 cubic yards x 27 cubic feet per cubic yard

equals 540 cubic feet). Therefore, the extent of the disposal is

Major under the Penalty Policy." Robinson Declaration at 2.

Newell claims on appeal, as ‘t did before the Presiding

Officer, that a penalty could not properly be based on the 540-

cubic-foot volume of the soil pile because the record contains

"insufficient data for an expert opinion to be formulated

regarding the quantity of regulated substances involved."

Brief for Appellant at 42. To support that contention, Newell

restates an argument that we have previously encountered

among Newell's defenses to liability, namely, that EPA's

sampling of the soil pile in September 1992 was inadequate to

establish contamination of the soil with regulated levels of

PCBs.

__ As we have already held in connection with Newell's

defense to liability, Newell cannot avoid summary

adjudication simply by speculating that the 1992 sampling and

analysis of the soil pile may have produced an erroneous

result. Newell must offer probative evidence indicating that

improper sampling and/or faulty laboratory analysis may in

fact have occurred. Newell offers no such evidence.

Accordingly, the Presiding Officer did not err by ruling that, |

for purposes of applying the Agency's PCB Penalty Policy,

Environmental Appeals Bd. Final Decision - 9/13/99

Newell's violation should properly be characterized as

"major" in extent.”

b. Circumstances

The circumstances of the violation must also be

classified in order to arrive at a gravity based penalty under

the Penalty Policy framework. The Penalty Policy creates six

different classifications, labeled, in decreasing order of the

violation's "probability of causing harm to human health or

the environment," as follows: High Range - Level 1, High

Range - Level 2, Medium Range - Level 3, Medium Range -

Level 4, Low Range - Level 5, and Low Range - Level 6.

Penalty Policy at 9. All disposal violations are classified

under the Penalty Policy as either High Range - Level 1 or

Medium Range - Level 3. Penalty Policy at 1011. The Policy

refers to the Level 1 disposal violations as "major disposal"

violations and to the Level 3 disposal violations as "minor

disposal" violations. These "major" and "minor" designations

are unrelated to the "major" and "minor" designations used in

classifying the extent of a violation. Jd. at 9 (footnote). As

discussed previously, the extent of a disposal violation is

based on the quantity of material involved in the violation

combined, in certain instances, with the PCB concentration

present in that material. The"circumstances" of a disposal

21 Because the 1989 inspection report contains sufficient

evidence of the volume of soil involved in this violation, we do not

consider or address the Presiding Officer's suggestion that, in the

alternative, evidence of soil volume could be derived from the

September 1995 hazardous waste manifests prepared in connection

with the ultimate removal of the soil from the HMPC site.

65a

Environmental Appeals Bd. Final Decision - 9/13/99

violation -- level 1 or level 3 -- are determined quite

differently.

The Penalty Policy describes level 3 disposal

violations only by example:"An example of a [level 3]

. disposal violation is a leak in which a PCB Article has PCBs

on any portion of its external surface, but the PCBs did not

run off the surface." Penalty Policy at 11. That example

certainly does not seem to capture the essence of the violation

at issue here, in which PCBs surely did not remain confined

to the surface of a particular article without “running off” or

otherwise escaping into the surrounding environment. The

violation must therefore be assigned to circumstance level 1,

which includes:

any significant uncontrolled discharge of

PCBs, such as any leakage or spills from a

storage container or PCB Item, failure to

contain contaminated water from a fire-related

incident, or any other disposal of PCBs or

PCB Items in a manner that is not authorized

by the PCB regulations * * *

Penalty Policy at 10 (emphasis added). Because the discarding

constitutes "disposal * * * in a manner that is not authorized

by the PCB regulations," the Presiding Officer did not err by

classifying the circumstances of this violation as "High Range

- Level 1."

Newell's only contention to the contrary is essentially

a legal argument -- that the level 1 versus level 3 distinction

should depend, at least in part, on the PCB concentration of

66a

Environmental Appeals Bd. Final Decision - 9/13/99

the material involved in the violation. Brief for Appellant at

44. What Newell's argument overlooks is that the "extent"

component of the gravity based penalty is where concentration

adjustments, if any, are made. No such adjustment was made

in the "extent" component in this case because, as expiained

in the relevant section of the Penalty Policy, disposal costs for

a given volume of PCB-contaminated soil do not vary with the

specific concentration of PCBs that are present; concentration

adjustments are unwarranted where, as in this case, the

"extent" of the violation is measured in cubic feet. See Penalty

Policy at 9.

For all of the foregoing reasons, the Presiding Officer

did not err in determining that there were no genuine issues

of material fact in dispute relative to the calculation of a

gravity based penalty or when, having consulted the "matrix"

at page 9 of the Penalty Policy, he concluded that $25,000

was an appropriate gravity based penalty for each violation at

issue in this case.

3. Separate Penalty for Each Day of Violation

Section 16(a)(1) of TSCA provides for administrative

civil penalties not to exceed $25,000 "per violation,” and it

provides that for purposes of applying the penalty limit,

"{eJach day such violation continues shall * * * constitute a

separate violation." In this action Region 6 alleged that

Newell had continuously violated the PCB disposal

requirements from September 10, 1992 through February 21,

1994 -- a period of 529 days. It requested a full $25,000

penalty for the first day of violation, and ten percent of that

amount ($2,500) for each of the 528 subsequent days.

Although Newell objected to the proposed imposition of per-

67a

Environmental Appeals Bd. Final Decision - 9/13/99

day penalties before the Presiding Officer,” the Presiding

Officer turned aside that objection, Penalty Decision at 7-8,

and Newell has not made aty similar argument on appeal.

Accordingly, the total gravity b ced penalty assessment stands

at $1,345,000 ($25,000 + [528 x $2,500]), less a reduction

based on the settlement between EPA and HMPC, as

discussed infra. We now turn to Newell's claims for

downward adjustments to the gravity based penalty.

4. Adjustments Proposed by Newell

On appeal, Newell identifies nine factors that, in its

view, warrant downward adjustment of the civil penalty.

These factors are: (1) the Region's failure to join other

"responsible parties" in its enforcement action; (2) disclosure

of "the alleged problem" to "the State of Texas (and EPA) in

1985 and again in 1987"; (3) lack of environmental harm

resulting from the disposal violation; (4) the eventual removal

of the soil pile at an alleged cost of $84,000; (5) the Region's

refusal to "credit" Newell with the alleged $84,000 removal

cost; (6) the size of the payment required to be made by

HMPC under its settlement with the Region; (7) the Region's

"refusal to use the BEN model" in caiculating a proposed

penalty; (8) the Region's "inaction" between 1985 and the

date of commencement of the enforcement action; and (9) the

fact that lower penalties have been assessed in certain other

TSCA penalty actions that have been the subject of

administrative appeals.

22 Newell's objection was erroneously based on a

superseded 1980 penalty policy. See Penalty Opp. at 7-8.

68a

Environmental Appeals Bd. Final Decision - 9/13/99

a. Estoppel Arguments (Factors 5 and 8)

We first address a pair of mitigation arguments raised

by Newell that are in the nature of estoppel claims,

specifically (1) the claim that Region 6 acted inequitably by

commencing the enforcement process after a period of

inaction, and (2) the claim that Region 6 "reneged" on a

commitment to deduct Newell's cleanup costs from whatever

civil penalty the Region might seek in an enforcement action.

Brief for Appellant at 48. We conclude that there are no

genuine issues of material fact in dispute relative to these

claims and that, consistent with the Presiding Officer's

analysis, the conduct alleged by Newell does not give rise to

an estoppel against the government.

This Board examined equitable estoppel principles in

In re B.J. Carney‘Industries, CWA Appeal No. 96-2 (EAB,

June 9, 1997), 7 E.A.D. _. There, the Board explained that

the circumstances in which the government may be equitably

estopped are extremely limited, and “‘it is well settled that the

Government may not be estopped on the same terms as any

other litigant.’” /d., slip op. at 39 (quoting Heckler v.

Community Health Services, 467 U.S. 51, 60 (1984)).” The

Board further explained:

23 There are sound reasons for limiting estoppel claims

against the government: “When the Government is unable to

enforce the law because the conduct of its agents has given rise to

an estoppel, the interest of the citizenry as a whole in obedience to

the rule of law is undermined." Heckler v. Community Health

Services, 467 U.S. at 60, quoted in B..J. Carney, slip op. at 39.

69a

Environmental Appeals Bd. Final Decision - 9/13/99

A party seeking to estop the government bears

a heavy burden of demonstrating the traditional

elements of estoppel and some "affirmative

misconduct" on the part of the government.

United States v. Hemmen, 51 F.3d 883, 892

(9th Cir. 1995). This means that "a party

asserting equitable estoppel against the United

States must demonstrate that there was

affirmative misconduct upon which the party

reasonably relied to its detriment. /n re Wego

Chemical & Mineral Corp.,4 E.A.D. 513, 522

(EAB 1993).

Id. See also Linkous v. United States, 142 F.3d 271,277 (Sth

Cir. 1998) ("Courts have applied estoppel to the federal

government only in the narrowest of circumstances. In order

to establish estoppel against the government, a party must

prove affirmative misconduct by the government in addition

to the four traditional elements of the [equitable estoppel]

doctrine.").7* Against the backdrop of these principles, as

discussed below, we think it apparent that Newell's two

estoppel arguments are unavailing.

4 Affirmative misconduct” in this context refers to “an

affirmative misrepresentation or affirmative concealment of a

material fact by the government." Linkous, 142 F.3d at 278. The

“traditional elements" required to be proved in addition to

affirmative government misconduct are: "(1 ) that the party to be

estopped was aware of the facts, and (2) intended his act or

omission to be acted upon; [and! (3) that the party asserting

estoppel did not have knowledge of the facts, and (4) reasonably

relied on the conduct of the other to his substantial injury." /d.

(citing United States v. Bloom, 112 F.3d 200, 205 (Sth Cir. 1997)).

70a

Environmental Appeals Bd. Final Decision - 9/13/99

Credit for Clean up Cost Ultimately Incurred -- Newell

argues that Region 6 committed misconduct by "refus[ing] to

credit [Newell] for the $84,000 expended to remove the soil

pile." Brief for Appellant at 48. In its brief, Newell claims

that representatives of the Region "presented to [Newell] that

such remediation, if accomplished, would be factored into the

overall civil penalty that Region 6 was seeking." Jd. Newell

concludes that "Region 6 and [Newell] had an agreement, and

Region 6 is estopped from reneging on its agreement." /d.

Newell made the same argument in the penalty brief

that it filed with the Presiding Officer. See Penalty Opp. at 5-

6. The Presiding Officer addressed the argument and

concluded that:

[Newell's] assertions are not sufficient to

establish that it relied to its detriment on

complainant's alleged representations where

[Newell] was under an obligation to comply

with the PCB disposal ruie whether or not

complainant pursued an action against it.

Penalty Decision at 10.”

" Following Supreme Court precedent, this Board

similarly emphasized, in B.J. Carney, that a failure to prove

detrimental reliance is "fatal" to an estoppel claim against the

government:

Also fatal to [appellant's] estoppel claim is

the fact that it has not suffered any detriment from

the Region's conduct in this matter. As explained

by the Supreme Court, "the party claiming the

Tla

Environmental Appeals Bd. Final Decision - 9/13/99

Remarkably, on appeal Newell completely ignores the

issue of detrimental reliance that the Presiding Officer

considered dispositive. In the absence of any argument to the

contrary, we conclude -- as did the Presiding Officer -- that

compliance with a legal obligation does not constitute a

“detriment” and cannot, therefore, support Newell's

promissory estoppel claim against Region 6.

Region's Alleged Delay in Filing the Complaint-

Newell also contends that Region 6 refrained from taking any

action for several years” and thereby impermissibly allowed

Newell's violations (and the associated penalties) to

accumulate. Newell states that "[iJt is a violation of public

policy for a regulatory agency to sit back and allow penalties

to accrue, instead of taking action." Brief for Appellant at 50.

Further, Newell claims that only a "nominal" penalty is

warranted here based on the reasoning of a federal district

court in a case decided in 1958, United States v. American

Greetings Corp., 168 F. Supp. 45 (N.D. Ohio 1958), aff'd,

272 F.2d 945 (6th Cir. 1959).

estoppel must have relied on its adversary's

conduct ‘in such a manner as to change his position

for the worse.*”

B.J. Carney, slip op. at 48 (quoting Heckler v. Community Health

Services, 467 U.S. at 59).

had been "6 years of inaction” on the part of the Region. Penalty

Opp. at 7. On appeal, Newell instead cites "10 years of inaction.”

Brief for Appellant at 50. Otherwise, Newell's argument to the

Presiding Officer is identical to Newell's argument on appeal.

72a

Environmenial Appeals Bd. Final Decision - 9/13/99

In American Greetings, a company subject to a

Federal Trade Commission cease and desist order filed a

required "Report of Compliance," advising the FTC that it

was engaged in a practice of “remounting" competitors’

greeting cards on mounts that did not identify the original

manufacturer. The FTC did not initially question the practice,

and an FTC representative actually “suggested means of

improving” the remounting procedure. 168 F. Supp. at 50.

Subsequently, however, the FTC enforcement staff

characterized the remounting process as a violation of the

cease and desist order, and sought penalties for the alleged

violation in a judicial enforcement action. The court

concluded that the agency was not estopped from

characterizing the remounting practice as a violation of its

order, but the court also concluded that the agency's initial

failure to question the practice was relevant in calculating a

penalty for the violation. The court fixed the penalty at $200,

reasoning that the Government "might [have led] the

defendant to believe that the Government was not objecting"

to the practice at issue. /d.

Newell's reliance on American Greetings is decidedly

misplaced. Here, Newell was at all times aware of the

improper disposal of PCBs at the HMPC site and the need for

their removal and lawful disposal. There is no allegation, and

no evidence, that anyone from Region 6 said anything at any

time that might have confused the issue. See, e.g., CX 27

(8/19/85 letter from Timothy Johnson to Francis Garrigues

concerning the status of the "PCB cleanup"); CX 25 (3/21/86

letter from Mr. Garrigues to Alton Newell, noting that HMPC

has had “a pile of contaminated soil in a comer of [its] yard

for about one year"). This case is therefore readily

distinguished from American Greetings.

73a

Environmental Appeals Bd. Final Decision - 9/13/99

Similarly, Newell cites no authority for the companion

proposition that agency inaction in responding to a violation,

which may have the effect of allowing penalties to "accrue"

is contrary to "public policy," and that an enforcement action

to collect such penalties is automatically barred. The Board

rejected that proposition in B.J. Carney, pointing out that it

had also emphatically been rejected by the courts:

The Region did not [by an alleged five-year

delay] waive any right to bring this

enforcement action. "[G]enerally speaking[,]

public officers have no power or authority to

waive the enforcement of the law on behalf of

the public." United States v. Amoco Oil Co.,

580 F. Supp. 1042, 1050 (W.D. Mo. 1984). *

* * Likewise, in United States v. Chevron

U.S.A., Inc., 757 F. Supp. 512 (E.D. Pa.

1990), the court held that "the fact that the

EPA did nothing for four years to enforce the

regulations against Chevron would not be

considered an affirmative misrepresentation

and does not satisfy the first requirement of the

equitable estoppel defense." /d. at 515.

"Simply put, the government may not be

estopped from enforcing the law, even

following an extended period of no

enforcement or underenforcement."

Washington Tour Guides Ass'n v. National

Park Service, 808 F. Supp. 877, 882 (D.D.C.

1992).

B.J. Carney, slip op. at 46-47.

74a

Environmental Appeals Bd. Final Decision - 9/13/99

Thus, it is clear that Region 6 was not estopped or

otherwise barred from instituting this action against Newell

based on any alleged delay in doing so. We note in this regard

that it seems clear that Region 6 did not affirmatively seek to

maximize the accumulation of penalties by either of the

respondents. If that had been the Region's intention, the

Region would presumably have sought penalties for the entire _

five-year period preceding the commencement of the action.

The Region did not do so; rather, the Region dramatically

narrowed the scope of its action, seeking penalties only for a

529-day period starting September 10, 1992 and concluding

February 21, 1994. There being no genuine issue of material

fact on this point and, find

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.