Opposition Brief — Newell Recycling Co. v. Environmental Protection Agency

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Supreme Court, U.S.

FILE D

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\/ JUN 6 2001

No. 00-1534 |

In the Supreme Court of th

NEWELL RECYCLING COMPANY, INC., PETITIONER

Vv.

ENVIRONMENTAL PROTECTION AGENCY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

BARBARA D. UNDERWOOD

Acting Solicitor General

Counsel of Record

JOHN C. CRUDEN

Acting Assistant Attorney

General

CHRISTOPHER B. PEAK

Attorney

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

1. Whether the court of appeals applied the proper

standard of review in affirming the Environmental Pro-

tection Agency’s (EPA’s) determination that petitioner

violated EPA regulations, promulgated pursuant to the

Toxic Substances Control Act, 15 U.S.C. 2601 et seq.,

governing disposal of polychlorinated biphenyl (PCB)

contaminated soil.

2. Whether petitioner’s ongoing failure properly to

dispose of PCB-contaminated soil was a continuing

violation of EPA’s PCB disposal regulations.

3. Whether petitioner was entitled to exclusion of

evidence of petitioner’s involvement in cleanup activi-

ties at the site.

4, Whether the civil penalty imposed on petitioner

violates the Eighth Amendment’s prohibition of exces-

sive fines. :

(I)

TABLE OF CONTENTS

Opinion below

Jurisdiction

Statement

Argument

Conclusion

TABLE OF AUTHORITIES

Cases:

ALM Corp. v. EPA, 974 F.2d 380 (3d Cir. 1992),

cert. denied, 507 U.S. 972 (1993)

Amoco Prod. Co. v. Lujan, 877 F.2d 1243 (5th Cir.),

cert. denied, 493 U.S. 1002 (1989)

Burnett v. New York Cent. R.R., 380 U.S. 424

(1965)

Butz v. Glover Livestock Comm'n Co., 411 U.S. 182

(1978)

Connecticut Coastal Fisherman’s Ass'n v. Reming-

ton Arms Co., 989 F.2d 1805 (2d Cir. 1998) .eccecccccccsccocese

Costle v. Pacific Legal Found., 445 U.S. 198

(1980)

E.I. DuPont De Nemours & Co. v. Davis, 264 U.S.

456 (1924)

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

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

Constitution, statutes, regulations and rule:

U.S. Const. Amend. VIII

Administrative Procedure Act, 5 U.S.C. 706(2)(A) sess.......

Clean Air Act, 42 U.S.C. 7413(b)

Clean Water Act, 33 U.S.C. 1319(d)

Solid Waste Disposal Act, Tit. II, 42 U.S.C. 6901 et seq.:

42 U.S.C. 6928(g) ..

42 U.S.C. 699le

(III)

Statutes, regulations and rule—Continued:

Toxic Substances Control Act, 15 U.S.C. 2601

Ob SOG. ....cscscrrcsrsrsssscsssncsccssecnssscnsecssrerensessrssencorsesersseassoessesosenseoes 1,

15 U.S.C. 2605(a)

15 U.S.C. 2605(e) (§ 6(e))

15 U.S.C. 2605(e)(1)(A) 2,

15 U.S.C. 2605(e)(2)

15 U.S.C. 2605(e)(2)(A)

15 U.S.C. 2605(e)(8) .......

15 U.S.C. 2614 (§ 15)

15 U.S.C. 2614(1)(C) (§ 15(1)(C))

15 U.S.C. 2614-2615 .............

15 U.S.C. 2615 (§ 16) ......

15 U.S.C. 2615(a)

15 U.S.C. 2615(a)(1) 3,7

15 U.S.C. 2615(a)(3) 2,5

28 U.S.C. 2461 note ll

40 C.F.R. (1995):

Pt. 761 3

Section 761.60 3

Section 761.60(a) 7

Section 761.60(a)(4) ... 4,7

& Oo & & Qh AO HM &

—

Section 761.60(a)(4)(i)-(ii)

Section 761.70

Section 761.75

40 C.F.R. (1999):

Pt. 1:

Section 1.25(e)(1) . 5

Pt. 22 4

Section 22.19 4

Section 22.20 6

Section 22.20(a)

Fed. R. Evid. 407 9,1

Miscellaneous:

64 Fed. Reg. 40,138 (1999) 4

Jn the Supreme Court of the Anited States

No. 00-1534

NEWELL RECYCLING COMPANY, INC., PETITIONER

VU.

ENVIRONMENTAL PROTECTION AGENCY

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE RESPONDENT IN OPPOSITION

OPINION BELOW

The opinion of the of the court of appeals is reported

at 231 F.3d 204 (Pet. App. la-16a).

JURISDICTION

The judgment of the court of appeals was entered on

November 8, 2000. A petition for rehearing was denied

on January 9, 2001 (Pet. App. 91a-92a). The petition for

a writ of certiorari was filed on April 9, 2001. The juris-

diction of the Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

The United States Environmental Protection Agency

(EPA) administers the Toxic Substances Control Act

(TSCA), 15 U.S.C. 2601 et seg. TSCA, and the regula-

tions promulgated thereunder, regulate the disposal of

(1)

polychlorinated biphenyls (PCBs). Disposal of PCBs in

a manner inconsistent with those regulations is unlaw-

ful and subject to civil penalties. 15 U.S.C. 2614-2615.

Petitioner Newell Recycling Company, Inc. (Newell)

illegally disposed of 120 tons of PCB-contaminated soil

in violation of TSCA, for which EPA imposed a civil

penalty of $1.345 million. Petitioner sought review of

EPA’s final order in the United States Court of

Appeals for the Fifth Circuit. See 15 U.S.C. 2615(a)(8).

The court of appeals affirmed EPA’s decision. Pet.

App. la-16a.

1. Congress enacted TSCA to prevent unreasonable

risks of injury to health or the environment associated

with the manufacture, processing, distribution in com-

merce, use, and disposal of certain chemical substances

and mixtures. See 15 U.S.C. 2601 et seg. If EPA finds

that any of those activities (or some combination) pre-

sents an unreasonable risk of injury to human health or

the environment, TSCA authorizes EPA et? protect

adequately against such risk using the least burden-

some requirements.” 15 U.S.C. 2605(a). In contrast

to that general framework, Congress took the extra-

ordinary step, in Section 6(e) of TSCA, of generally

banning the manufacture, distribution, and use of

PCBs. 15 U.S.C. 2605(e). Congress took that step be-

cause it recognized that PCBs pose extraordinary

health risks.’

TSCA directs EPA to “prescribe methods for the

disposal of [PCBs].” 15 U.S.C. 2605(e)(1)(A) and (2)(A).

EPA has promulgated regulations pursuant to that

1 Prior to the enactment of TSCA, PCBs were used for more

than sixty years, primarily in electrical equipment. PCBs are

stable and resistant to fire and electrical current.

authority that are set forth at 40 C.F.R. 761.60.2 Those

regulations require that non-liquid PCBs in the form of

soil at concentrations of 50 parts per million (ppm) or

greater be disposed of in an incinerator complying with

40 C.F.R. 761.70 or a chemical waste landfill complying

with 40 C.F.R. 761.75. 40 C.F.R. 761.60(a)(4)(i)-Gii). A

violation of the disposal regulations carries a civil pen-

alty of up to $25,000, and each day that the violation

continues constitutes a separate violation. 15 U.S.C.

2615(a)(1).

2. From 1974 to 1982, petitioner owned a battery

breaking and recycling facility in Houston, Texas. Peti-

tioner sold the facility to Houston Metal Processing

Company (HMPC) in 1982. In 1984, HMPC discovered

lead contamination in the soil at the facility. In 1985,

pursuant to the purchase agreement between peti-

tioner and HMPC, petitioner undertook the removal of

lead-contaminated soii. While excavating the lead-

contaminated soil, petitioner’s contractor uncovered

numerous buried capacitors containing oil. Sampling by

petitioner confirmed the presence of PCBs in the oil. In

the process of removing the capacitors, petitioner exca-

vated and stockpiled a large volume of PCB-contami-

nated soil and left the soil on site. See Pet. App. 2a-3a,

19a.

In 1992, an EPA inspection revealed that neither

petitioner nor HMPC had properly disposed of the soil

pile. In the interim, petitioner had obtained from its —

consultant extensive information about the volume of

the PCB-contaminated soil, the level of PCB contamina-

tion, and the costs of cleanup. Petitioner also received

demands from HMPC that petitioner remove and pro-

2 References to 40 C.F.R. Part 761 herein are to the 1995

edition.

perly dispose of the PCBs. Sampling by EPA during

the 1992 inspection confirmed that the soil pile was

contaminated with PCBs in excess of 50 ppm. Pet. App.

2a-3a, 19a, 21a-37a.

In response to a subpoena duces tecum, HMPC rep-

resented to EPA that the PCB-contaminated soil was

still unaddressed. As a result, EPA initiated an admini-

strative action by issuing a Complaint and Notice of

Opportunity for Hearing pursuant to Section 16 of

TSCA, 15 U.S.C. 2615, alleging that petitioner and

HMPC had improperly disposed of PCBs in violation of

40 C.F.R. 761.60(a)(4) and Section 15(1)(C) of TSCA, 15

U.S.C. 2614(1)(C). See Pet. App. 23a-37a.

3. EPA’s administrative complaint proposed a civil

penalty of $1.345 million for violations of Section 15 of

TSCA. HMPC entered into a settlement with EPA.

EPA and petitioner conducted prehearing information

exchanges pursuant to 40 C.F.R. 22.19,? whereby each

disclosed the evidence upon which it intended to rely.

Following the prehearing exchanges, on EPA’s motion

for accelerated decision (the administrative equivalent

of summary judgment), the administrative law judge

(ALJ) determined that there was no genuine issue

of material fact regarding petitioner’s liability and

entered an accelerated decision holding petitioner liable

for a continuing violation of 40 C.F.R. 761.60(a)(4).* On

3 References to 40 C.F.R. Part 22 are to the 1999 edition. Since

the filing of EPA’s complaint here, the consolidated rules of prac-

tice have been amended, effective August 23, 1999. See 64 Fed.

Reg. 40,138 (1999).

4 Pursuant to 40 C.F.R. 22.20(a), an ALJ may at any time

render an accelerated decision in favor of a party without a hearing

if no genuine issue of material fact exists and a party is entitled to

judgment as a matter of law. Thus, a motion for accelerated de-

cision is akin to a motion for summary judgment under the Federal

EPA’s motion for assessment of civil penalty, the ALJ

imposed a civil penalty of $1.345 million, less the

amount paid by HMPC to settle its liability. Petitioner

appealed to EPA’s Environmentai Appeals Board

(EAB), which affirmed the decision of the ALJ on ©

September 13, 1999.5 See Pet. App. 3a, 37a-39a, 90a.

Petitioner petitioned the court of appeals for review

of the EAB’s decision, see 15 U.S.C. 2615(a)(3), and the

court affirmed that decision in its entirety. Pet. App.

4a-16a. The court upheld the EAB’s conclusions that

the violations by petitioner were continuing in nature,

and, therefore, EPA’s action was not barred by the

statute of limitations. Id. at 4a-6a. The court also up-

held the EAB’s determination that the creation of the

soil pile was a disposal of PCBs, that petitioner caused

or contributed to the disposal, and that petitioner was

therefore liable for the violations. Jd. at 6a-9a. The

court affirmed EPA’s penalty calculation methodology

and further held that the penalty, which was 10% oi the

statutory maximum, did not violate the Eighth Amend-

ment’s prohibition on excessive fines. Jd. at 14a-15a.

Finally, the court of appeals held that petitioner was

afforded due process in the EPA proceedings. Id. at

15a.

ARGUMENT

The court of appeals correctly rejected petitioner’s

challenge to the EPA’s assessment of civil penalties for

petitioner’s improper disposal of PCB-contaminated

Rules of Civil Procedure. See ALM Corp. v. EPA, 974 F.2d 380,

382 n.2 (3d Cir. 1992), cert. denied, 507 U.S. 972 (1993).

5 The EAB is a permanent body consisting of three administra-

tive judges who act as the final agency decision-maker over admin-

istrative appeals under a variety of EPA-administered statutes.

40 C.F.R. 1.25(e)(1) (1999).

soil. The court’s decision does not conflict with any

decision of this Court or another court of appeals and

does not present any issue otherwise warranting this

Court’s review.

1. Petitioner contends (Pet. 8-10) that the court of

appeals erred in applying the Administrative Pro-

cedure Act’s (APA’s) standard of review in assessing

EPA’s administrative decision. That contention is

without merit. As the court of appeals correctly recog-

nized, the APA explicitly directs a reviewing court to

hold unlawful and set aside agency action, findings, and

conclusions that are “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.”

5 U.S.C. 706(2)(A). See Pet. App. 4a; e.g., Amoco Prod.

Co. v. Lujan, 877 F.2d 1248, 1248 (5th Cir.), cert.

denied, 493 U.S. 1002 (1989). Petitioner acknowledges

(Pet. 9) that it cannot cite any law requiring courts to

apply a different standard. The court of appeals’ appli-

cation of the APA standard does not present “a matter

of first impression” (Pet. 8), but is instead a matter of

settled law.®

6 Petitioner also asserts in passing that it was entitled to an

evidentiary hearing before the ALJ. See Pet. 19-20. EPA’s regu-

lations governing its adjudications allow an accelerated decision

where there is no genuine issue of material fact. 40 C.F.R. 22.20.

The ALJ, upon reviewing the record and the briefs of the parties,

determined that petitioner raised no genuine issue of material fact,

and thus an accelerated decision was appropriate. Both the EAB

and the court of appeals, upon reviewing the record, agreed that

petitioner failed to place a material fact in genuine dispute. Pet.

App. 15a, 21a. Having failed to meet that threshold, petitioner

errs in asserting that a hearing was required. Costle v. Pacific

Legal Found., 445 U.S. 198, 213 (1980). Moreover, this fact-specific

claim does not present the kind of issue that would warrant review

by this Court.

2. Petitioner contends (Pet. 12-17) that the court

erred in holding that petitioner’s actions—excavating

PCB-contaminated soil and stockpiling it on-site in

violation of EPA’s disposal requirements, 40 C.F.R.

761.60(a)—constituted a “continuing” violation of

EPA’s regulations. See Pet. App. 5a-6a. The court’s

decision is correct. TSCA provides that violations

carry a “civil penalty in an amount not to exceed

$25,000 for each such violation” and that “{eJach day

such a violation continues shall * * * constitute a

separate violation of section 2614.” 15 U.S.C.

2615(a)(1). That language expressly recognizes that a

course of conduct that presents a continuing threat,

such as a failure properly to dispose of PCBs, may be

subject to cumulative penalties as a continuing viola-

tion.

EPA’s PCB disposal regulations properly implement

the statutory language. The disposal requirement set

forth in 40 C.F.R. 761.60(a)(4) “contains elements of

both obligation and prohibition,” requiring explicitly

that disposal “shall” occur only in one of two specified

ways. Pet. App. 46a (emphasis omitted). The disposal

obligation “is discharged only with the occurrence of

a specified event—the proper disposal of PCB-con-

taminated soil at an incinerator or a chemical waste

landfill.” Jbid. Until that occurs, therefore, the respon-

sible party has not complied with the regulatory man-

date and the responsible party commits, each day, a

new violation of Section 761.60(a)(4). Pet. App. 46a.

EPA’s interpretation of 40 C.F.R. 761.60(a)(4) is con-

sistent with TSCA’s remedial goals. Congress ex-

pressed particular concern over the nature and risks

posed by use and improper disposal of PCBs. 15 U.S.C.

2605(e)(2) and (3). Congress directed EPA to prescribe

methods for the disposal of PCBs, which are to be con-

sistent with the requirements relating to the ban on

PCBs. 15 U.S.C. 2605(e)(1)(A). Those provisions

demonstrate a congressional objective to eliminate

PCBs from the environment through strong incentives

for proper disposal—an objective that would be

thwarted if the ongoing abandonment of PCB-

contaminated soil, in the face of a continuing threat to

public health and the environment, were viewed as a

one-day violation of TSCA’s requirements.

Petitioner is therefore wrong in suggesting (Pet. 16)

that a policy of repose supports its construction of

TSCA’s penalty provisions. As this Court has recog-

nized, a policy of repose is “frequently outweighed

* * * where the interests of justice require vindication

of the plaintiffs rights.” Burnett v. New York Cent.

R.R., 380 U.S. 424, 428 (1965). See also E.J. DuPont De

Nemours & Co. v. Davis, 264 U.S. 456, 462 (1924)

(statutes of limitations sought to be applied to bar

rights of the government must receive strict

construction in favor of the government). Finding that

petitioner’s violations were continuing, and therefore

not barred by the statute of limitations, is neither

unfair nor harsh. Petitioner is not entitled to repose

where its knowing failure properly to dispose of the

PCB-contaminated soil created and perpetuated the

ongoing risk that TSCA was designed to prevent.

Petitioner is mistaken in suggesting (Pet. 13) that

there is a conflict among the courts of appeals concern-

ing what constitutes a continuing violation of TSCA’s

PCB disposal requirements. The court of appeals’ rul-

ing in this case is the only appellate decision addressing

that question. Petitioner simply lists (Pet. 13-15)

various cases involving regulatory infractions that were

decided under different statutes, such as the Clean

Water Act, and that involved readily distinguishable

factual situations, such as discrete discharges of pollu-

tants. See, e.g., Connecticut Coastal Fisnerman’s

Ass’n v. Remington Arms Co., 989 F.2d 1305, 1311-1313

(2d Cir. 1998) (rejecting a citizen suit alleging that a

gun club that ceased operation is nevertheless in con-

tinuing violation of Clean Water Act’s pollutant dis-

charge prohibitions). None of those cases presents a

situation comparable to petitioner’s continuing dis-

regard of its obligation properly to dispose of PCBs.’

3. Petitioner contends (Pet. 17-19) that the court of

appeals improperly allowed EPA to consider evidence

of petitioner’s eventual cleanup of the site as evidence

of “subsequent remedial measures” that should have

been excluded under the public policy that animates

Federal Rule of Evidence 407. As petitioner concedes,

Rule 407 does not apply to EPA’s administrative pro-

ceedings. But even if Rule 407 applied and petitioner’s

actions could be considered “subsequent remedial mea-

sures,” Rule 407 would not have precluded admission of

the evidence at issue, which was considered for pur-

poses other than to prove “culpable conduct.” Fed. R.

Evid. 407. See ibid. (“This rule does not require the

exclusion of evidence of subsequent measures when

offered for another purpose, such as proving ownership,

control, * * * or impeachment.”).

The EAB and the court of appeals properly con-

sidered evidence of petitioner’s eventual cleanup of the

PCB-contaminated soil in connection with petitioner’s

contention that other entities conducted activities at

the site without petitioner’s involvement. The EAB

and the court of appeals made reference to petitioner’s

7 Petitioner is also mistaken in suggesting that there is a con-

flict among EAB decisions. See Pet. App. 42a-50a (describing the

EAB’s prior decisions and analysis).

eventual cleanup in concluding that, contrary to peti-

tioner’s contention, “the actual physical undertaking of

the removal work was performed pursuant to [peti-

tioner’s] direction and control.” Pet. App. 57a; accord

id. at 7a. Petitioner invokes Rule 407’s underlying

policy of encouraging personal injury defendants to

undertake voluntary “remedial measures” to prevent

future injury. But petitioner did nothing of that kind.

Rather, petitioner simply responded, belatedly, to its

ongoing legal obligation to dispose of the PCB-con-

taminated soil. Even if petitioner’s characterization of

its actions were accurate, petitioner’s fact-based ob-

jection to the consideration of particular evidence

would not present an issue of general importance war-

ranting this Court’s review.

4, Petitioner contends (Pet. 10-12) that the court of

appeals erred in ruling that the penalty imposed by

EPA does not violate the Eighth Amendment’s pro-

hibition on excessive fines. See U.S. Const. Amend.

VIII (“Excessive bail shall not be required, nor exces-

sive fines imposed, nor cruel and unusual punishments

inflicted.”). Petitioner’s contention is without merit.

This Court has ruled that a criminal penalty is

“excessive” under the Eighth Amendment only if it is

“grossly disproportional” to the offense. United States

v. Bajakajian, 524 U.S. 321, 336-337 (1998). The Court

has emphasized that “judgments about the appropriate

punishment for an offense belong in the first instance to

the legislature” and that “any judicial determination

regarding the gravity of a particular criminal offense

will be inherently imprecise.” Jd. at 336. “Both of these

principles counsel against requiring strict proportional-

ity between the amount of a punitive forfeiture and the

gravity of a criminal offense.” Ibid.

Contrary to petitioner’s contentions, the application

of Bajakajian here compels the conclusion that peti-

tioner’s civil penalty is not excessive. TSCA, like other

federal environmental statutes, authorizes a civil

penalty of up to $25,000 per day of violation. 15 U.S.C.

2615(a). See, e.g., Clean Water Act, 33 U.S.C. 1319(d);

Solid Waste Disposal Act, 42 U.S.C. 6928(g), 6991e;

Clean Air Act, 42 U.S.C. 7413(b). See also 28 U.S.C.

2461 note (referencing legislation providing for upward

inflation adjustments to those penalties). Congress’s

judgment to set civil penalties at that level, which has

been in place for many years, is unquestionably rea-

sonable. As the court of appeals correctly noted, the

penalty actually assessed is only 10% of the amount

Congress authorized in TSCA and similar statutes.

Pet. App. 14a.

EPA carefully considered and weighed the relevant

factors, including objective criteria set out in TSCA and

EPA’s penalty policy, in determining the amount of the

penalty. See Pet. App. 10a-13a, 59a-89a. The amount of

the penalty is reasonable in light of petitioner’s actions

in illegally disposing of a substantial amount of PCB-

contaminated soil, abandoning the soil pile for a period

of ten years, and ignoring the urgings of HMPC and its

8 Additionally, EPA assessed a penalty for only a fraction of the

time period that petitioner was in violation of TSCA. As the EAB

noted, for penalty calculation purposes, EPA established February

21, 1994, as the cut-off date of Newell’s violation, despite the fact

that the PCB-contaminated soil was not removed and properly

disposed of until over a year and a half later. Pet. App. 89a n.31.

Furthermore, EPA did not count the seven-year period of violation

from the time the PCB-contaminated soil was stockpiled in 1985

until 1992. EPA thus substantially mitigated petitioner’s penalty,

at the outset of the case, through the exercise of its enforcement

discretion.

own consultant to comply with the law. The magnitude

of the civil penalty, which is only a fraction of the

statutory maximum, provides no basis for an extended

comparative analysis. See generally Harmelin v.

Michigan, 501 U.S. 957 (1991). Even if such an analysis

revealed that similarly situated parties received lower

penalties than petitioner, the penalty would not neces-

sarily be invalid. As the EAB noted, “penalty assess-

ments are sufficiently fact- and circumstance-depen-

dent that the resolution of one case cannot determine

the fate of another.” Pet. App. 88a-89a. See Butz v.

Glover Livestock Comm’n Co., 411 U.S. 182, 187 (1973)

(“The employment of a sanction within the authority of

an administrative agency is thus not rendered invalid in

a particular case because it is more severe than

sanctions imposed in other cases.”).

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.