Newell Recycl Co Inc v. EPA ( 2000 )

Revised November 16, 2000
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-60694
NEWELL RECYCLING COMPANY, INC.,
Petitioner,
VERSUS
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,
Respondent.
On Petition For Review of a Final Order of the
Environmental Protection Agency
November 8, 2000
Before DUHÉ, EMILIO M. GARZA and DeMOSS, Circuit Judges.
DUHÉ, Circuit Judge.
1 Newell Recycling Company, Inc. (“Newell”) appeals a final
2 decision of the Environmental Protection Agency's Environmental
3 Appeals Board (“EAB”) holding Newell liable for violating the
4 disposal requirements for polychlorinated biphenyls (“PCBs”)
5 established in Section 6(e) of the Toxic Substances Control Act
6 (“TSCA”). The EAB's decision penalized Newell $1.345 million, less
7 an amount paid in settlement by a co-defendant, for violating the
8 TSCA. For the following reasons, we affirm.
9 BACKGROUND
10 Newell owned and operated a recycling facility in Houston,
11 Texas, during the 1970's and early 1980's. In 1982, Newell sold
12 the facility to Oklahoma Metal Processing, Inc. d/b/a Houston Metal
13 Processing Company (“HMPC”). In the sale, Newell agreed to
14 “specifically assume any liability resulting from an occurrence
15 prior to the closing date of this sale.”
16 Within two years of the sale, the Texas Department of Health
17 sought soil samples to verify its suspicions of lead contamination
18 at the recycling facility site. Shortly thereafter, Newell
19 Enterprises asked HMPC to authorize Newell Recycling Company, Inc.
20 (i.e., “Newell,” the Petitioner in this case), Newell Products of
21 Houston, Inc., and Newell Industries, Inc., to commence testing for
22 lead contamination and cleanup on the site. After the soil samples
23 showed lead contamination, a consultant recommended to Newell that
24 the contaminated soil be removed to a hazardous waste facility for
25 disposal. The consultant noted that HMPC had authorized Newell to
26 perform testing, cleanup, and soil transportation functions at the
27 site.
28 While superintending lead cleanup operations there in 1985,
29 Newell discovered the PCB contamination that this case concerns.
30 Electric capacitors seeping PCB-contaminated fluids lay buried in
31 the soil unearthed during the lead contamination cleanup. Newell
32 – although advised repeatedly by another consultant it had hired
33 that the PCB-contaminated soil piled at the site had to be treated
2
34 or disposed of by methods acceptable to the EPA under the TSCA –
35 waited until after the EPA filed an administrative complaint
36 against it in 1995 for violating the TSCA to remove the soil to a
37 disposal facility. Approximately ten years elapsed, then, from
38 Newell's discovery of the buried capacitors in 1985 to its proper
39 disposal of the PCB-contaminated soil pile in 1995. The record
40 does not explain this delay.
41 The Presiding Officer granted the EPA an accelerated decision
42 (the equivalent of summary judgment) on its administrative
43 complaint, holding that Newell committed an act of improper
44 disposal by knowingly causing PCB-contaminated soil to be excavated
45 and stockpiled at the site and then “leaving [the soil] there and
46 taking no further clean-up action.” In re Oklahoma Metal
47 Processing Co., Inc., No. VI-659C (EPA April 29, 1997) (order
48 granting partial accelerated decision on issue of liability). The
49 Presiding Officer assessed Newell a $1.345 million fine for the
50 disposal violation, less the amount HMPC paid the EPA to settle an
51 action regarding its role in the improper disposal at the site.
52 Newell appealed the Presiding Officer's liability rulings and his
53 penalty assessment decision to the EAB. It affirmed the Presiding
54 Officer's decision. Newell appeals the EAB's decision.
55 Newell argues that a five-year statute of limitations barred
56 the EPA's TSCA complaint, that on the merits Newell is not liable
57 for an “improper disposal” under the TSCA, and that the Presiding
58 Officer's application of the EPA's 1990 Polychlorinated Biphenyls
3
59 Penalty Policy (the “Penalty Policy”) generated an excessive
60 penalty that violated Newell's constitutional rights.
61 DISCUSSION
62 We must affirm the EAB’s decision unless it is “arbitrary,
63 capricious, an abuse of discretion, or otherwise not in accordance
64 with law.” 5 U.S.C. § 706(2)(A). See also Amoco Production Co. v.
65 Lujan, 877 F.2d 1243, 1248 (5th Cir. 1989) (“On review of an agency
66 adjudication, . . . the reviewing court must in general affirm the
67 decision unless the agency’s action was arbitrary, capricious, or
68 otherwise not in accordance with law”).
69 I. Limitations
70 28 U.S.C. § 2462 supplies the statute of limitations
71 applicable here:
72 Except as otherwise provided by Act of Congress, an action,
73 suit or proceeding for the enforcement of any civil fine,
74 penalty, or forfeiture, pecuniary or otherwise, shall not be
75 entertained unless commenced within five years of the date
76 when the claim first accrued. . . .
77 Newell argues that the EPA’s improper disposal claim “accrued” when
78 the PCBs polluting the soil pile were “taken out of service.” See
79 40 C.F.R. § 761.3 (“Disposal means intentionally or accidentally to
80 discard, throw away, or otherwise complete or terminate the useful
81 life of PCBs and PCB Items. Disposal includes spills, leaks, and
82 other uncontrolled discharges of PCBs as well as actions related to
83 containing, transporting, destroying, degrading, decontaminating,
84 or confining PCBs and PCB Items”). Since, Newell asserts, the PCBs
4
85 were “taken out of service” sometime before 1990, the EPA’s claim
86 accrued more than five years before the filing of its TSCA
87 complaint against Newell in 1995 and is thus time-barred. The EPA
88 argues that Newell’s TSCA violation -- excavating and stockpiling
89 the soil and then leaving it on the site for ten years before
90 disposing of it in accordance with 40 C.F.R. § 761.60(a), which
91 requires that soil contaminated with PCBs above a certain ppm
92 threshold be disposed of in an EPA-approved incinerator or landfill
93 -- was “continuing” in nature. See InterAmericas Investments, Ltd.
94 v. Board of Governors of the Federal Reserve System, 111 F.3d 376,
95 382 (5th Cir. 1997) (“A continuing violation applies when the
96 conduct is ongoing, rather than a single event”). The EAB agreed
97 with the EPA. The EAB held that the EPA’s TSCA cause of action
98 against Newell did not accrue until the course of conduct
99 complained of no longer continued. See Fiswick v. United States,
100 329 U.S. 211, 216 (1946) (statute of limitations for continuing
101 offenses runs from the last day of the continuing offense); In re
102 Standard Scrap, TSCA Appeal No. 87-4, 3 E.A.D. 267, 1997 WL 603524,
103 at *2 (EAB Aug. 2, 1990) (Final Decision) (“Failure to [properly
104 dispose of PCBs] constitutes a violation of the regulation, and the
105 violation continues as long as the PCBs remain out of service and
106 in a state of improper disposal”). That is, it did not accrue
107 until 1995, when Newell properly disposed of the soil. If
108 stockpiling the soil was a disposal, we cannot say the EAB’s
109 conclusion was arbitrary, capricious, an abuse of discretion or
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110 otherwise not in accordance with law.1 Because we hold that the
111 EPA’s TSCA cause of action against Newell did not accrue for
112 limitations purposes until 1995, we also affirm the EAB’s denial of
113 Newell’s request for additional discovery. This discovery, Newell
114 claims, would establish that the EPA had actual notice of
115 conditions at the site earlier than five years before the EPA filed
116 its complaint. Information about when the EPA actually knew of the
117 site’s conditions is not “significant[ly] probative” of any fact
118 relevant to our statute of limitations determination. See 40
119 C.F.R. § 22.19(f).
120 II. Liability
121 Newell challenges its TSCA liability on two grounds. First,
122 Newell argues that the EAB erroneously held that Newell contributed
123 to the creation of the PCB-contaminated soil pile. Second, Newell
124 contends that if, arguendo, it did cause the creation of the soil
125 pile, that act of creation and Newell’s subsequent involvement with
126 the pile did not constitute an improper disposal of PCBs within the
127 meaning of the TSCA.
128 The EAB properly determined that Newell contributed to the
129 creation of the soil pile. The PCB Rule of the TSCA extends civil
130 penalty liability to any “person who violates these regulations.”
131 40 C.F.R. § 761.1(d). “Violators” in this context are those who
132 have “caused (or contributed to the cause of) the [improper]
1
See discussion of disposal that follows.
6
133 disposal.” In re City of Detroit, 3 E.A.D. 514, 526 (CJO 1991).
134 Ample evidence indicates that Newell at least contributed to
135 the creation of the soil pile. Newell contends that a Newell
136 affiliate, not Newell itself, created the pile. The record
137 suggests otherwise. The EAB aptly characterized its contents:
138 Newell ”may not have acted alone, but it was certainly an active
139 party in the events constituting the TSCA violation.” Newell
140 Recycling Co., Inc. v. United States Environmental Protection
141 Agency, TSCA Appeal No. 97-7, slip op. at 33 (EAB Sept. 13, 1999).
142 Newell, and not one of its affiliates, owned the Fidelity Road site
143 immediately before conveying it to HMPC. In the sale of the site
144 Newell assumed liability for “occurrence[s] prior to the closing
145 date of th[e] sale.” This covenant produced Newell’s extensive
146 involvement in remedying the lead and PCB contamination at the
147 site. Newell’s involvement included, the EAB correctly found: a
148 visit by Newell’s owner, Alton Newell, to the site in response to
149 HMPC’s demand for remedial action; Newell’s two-time (1987 and
150 1989-90) retention of an environmental consulting firm to recommend
151 remedies for PCB contamination at the site; execution in 1987 of an
152 agreement with HMPC and another party interested in the site
153 tolling the statute of limitations on claims against Newell arising
154 from the site’s contamination; and Newell’s removal in 1995 of the
155 contaminated soil to a disposal facility at its own expense.
156 Moreover, until this enforcement action, Newell never suggested to
157 the Texas or federal authorities involved in decontamination of the
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158 site that some other Newell entity was responsible for the
159 contaminated soil pile.
160 In view of these facts, the EAB’s determination that Newell
161 contributed to the creation of the soil pile was not arbitrary,
162 capricious, an abuse of discretion or otherwise not in accordance
163 with law.
164 Newell, however, argues that if it contributed to the creation
165 of the soil pile, its contribution was not an improper disposal
166 under the TSCA. Newell argues that PCB disposal is a one-time
167 event occurring, in a case like this one, only when capacitors
168 containing PCBs are buried and their contents released into the
169 surrounding soil. Because, Newell contends, there is no evidence
170 implicating Newell in the original disposal of the capacitors, the
171 EPA failed to establish that Newell improperly disposed of PCBs.
172 The EAB rejected this argument, noting that Newell’s interpretation
173 of “disposal” would have “no TSCA liability . . . attach even if
174 Newell had taken the pile of contaminated soil from the Fidelity
175 Road site and dumped it into the nearest river, stream, or vacant
176 lot.” Newell Recycling Co., Inc. v. United States Environmental
177 Protection Agency, TSCA Appeal No. 97-7, slip op. at 29-30 (EAB
178 Sept. 13, 1999). Such an interpretation, the EAB continued, would
179 subvert the environmental protection goals of the TSCA regime. See
180 In re Samsonite Corp., 3 E.A.D. 196, 199 (CJO 1990) (PCB
181 regulations “should be read in such a way as to further the
182 purposes of the Act, particularly where, as in this case, public
8
183 health and safety are involved”). At any rate, the EAB concluded,
184 Newell’s interpretation of “disposal” fails because it would
185 effectively exclude what the textual definition of disposal cited
186 above indisputably includes: activities undertaken to address known
187 PCB contamination. See 40 C.F.R. § 761.3 (“[d]isposal includes
188 spills, leaks, and other uncontrolled discharges as well as actions
189 related to containing, transporting, destroying, degrading,
190 decontaminating, or confining PCBs or PCB items”). The EAB
191 determined that Newell’s involvement with the soil pile, described
192 above, fits this definition of “disposal.” Newell Recycling Co.,
193 Inc. v. United States Environmental Protection Agency, TSCA Appeal
194 No. 97-7, slip op. at 31 (EAB Sept. 13, 1999) (“The act of
195 excavating and stockpiling PCB-contaminated soil at the Fidelity
196 Road site is clearly in the nature of an action to 'contain,'
197 'transport,' and 'confine' PCBs. Moreover, leaving the stockpiled
198 waste abandoned there for years is evidence that the PCB-
199 contaminated soil was 'discarded' within the meaning of the rule”).
200 We cannot say that this determination was arbitrary,
201 capricious, an abuse of discretion or otherwise not in accordance
202 with law.
203 III. Penalty
204 Because an agency's selection of an appropriate sanction to
205 effect its policies is an act peculiarly within its institutional
206 competence, our review of the penalty in this case is limited. See
207 Wayne Cusimano, Inc. v. Block, 692 F.2d 1025, 1030 (5th Cir. 1982).
9
208 An agency's penalty determination “is reviewed with significant
209 deference;” we will not reverse it unless it is arbitrary,
210 capricious, an abuse of discretion or otherwise not in accordance
211 with law. InterAmericas Investments, Ltd., 111 F.3d at 384.
212 Accordingly, although the penalty here strikes us as severe since
213 there was no actual harm, we cannot disturb it.
214 The Penalty Policy limns a two-part process for PCB penalty
215 assessment. First, the Penalty Policy requires the administrative
216 law judge (the “Administrator”) to examine the nature,
217 circumstances, gravity and extent of the violation. Those factors
218 suggest a gravity-based penalty. After the Administrator
219 determines the gravity-based penalty, he or she considers (the
220 second part of the process) the violator's ability to pay the
221 penalty, the effect of the penalty on the violator's ability to
222 continue to do business, the violator's history (if any) of such
223 violations, the degree of culpability, and “such other matters as
224 justice may require.” POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY
225 (1990). The Administrator may adjust the gravity-based penalty in
226 view of these factors.
227 A. The Gravity-Based Penalty
228 The Penalty Policy makes the gravity-based penalty
229 determination process mostly mechanical by pegging the above-
230 described factors (the nature, circumstances, gravity and extent of
10
231 the violation2) to statistical benchmarks or fixed formulations.
232 So, for example, the Presiding Officer did not err by concluding
233 that the “extent” of Newell's violation was “major;” the Penalty
234 Policy expressly defines violations involving more than 300 cubic
235 feet of contaminated soil as “major,” and the soil pile here was
236 approximately 540 cubic feet in size. Id. Similarly, the
237 Presiding Officer correctly characterized the “circumstances” of
238 Newell's violation as “High Range, Level One” under the Penalty
239 Policy.3 The Penalty Policy states that “any disposal of PCBs or
240 PCB Items in a manner that is not authorized by the PCB
241 regulations” is automatically ranked “High Range, Level One.” Id.
242 Because discarding and abandoning PCB-contaminated soil in a pile
243 is a disposal not authorized by the PCB regulations, the Presiding
244 Officer rightly characterized Newell's as a “High Range, Level One”
245 violation.
246 B. Adjustment of the Gravity-Based Penalty
247 The Presiding Officer may adjust the gravity-based penalty in
248 view of the violator's ability to pay it, the effect the penalty
249 might have on the violator's ability to continue to do business,
250 the violator's history (if any) of prior such violations, the
251 violator's degree of culpability, and such other matters as justice
2
Newell challenges the Presiding Officer's treatment of the “circumstances”
and “extent” factors, but not his treatment of the “nature” and “gravity” ones.
3
The Penalty Policy ranks the “circumstances” of a violation as Low,
Medium, or High Range, and subdivides each of these categories into two Levels.
11
252 may require. 15 U.S.C. § 2615(a)(2)(B). The “as justice may
253 require” rubric includes whether the violator voluntarily disclosed
254 the violation, any economic benefits the violator reaped from the
255 violation, and any environmentally beneficial measures a violator
256 may perform in exchange for penalty reduction. Newell argues that
257 some of these factors counsel reduction of its penalty, and that
258 the Presiding Officer's refusal to reduce it, in turn, was error.
259 1. Culpability
260 The Presiding Officer's determination that the “culpability”
261 factor did not recommend mitigation of Newell's penalty was sound.
262 The “two principal criteria” in the Penalty Policy for assessing
263 culpability are: 1) the violator's knowledge of the particular
264 requirement; and 2) the degree of the violator's control over the
265 violative condition. POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY
266 (1990). As noted above, Newell knew the TSCA required more than
267 the excavation and complete abandonment of the PCB-contaminated
268 soil; Newell's environmental consultants repeatedly told Newell as
269 much. Even though Newell did not own the property on which the
270 soil lay, Newell had extensive control, described above, over the
271 violative condition here. The record does not explain to our
272 satisfaction why Newell waited years to properly dispose of the
273 soil. The Presiding Officer, therefore, appropriately declined to
274 mitigate Newell's penalty on culpability grounds.
275 2. Voluntary Disclosure
276 The Presiding Officer correctly declined to adjust the penalty
12
277 in view of Newell's alleged4 voluntary disclosure of the TSCA
278 violation. Newell waived this argument by failing to request in
279 its submissions to the Presiding Officer a reduction in the penalty
280 for voluntary disclosure. See In re Britton Construction Co., CWA
281 Appeal Nos. 97-5 & 97-8, slip op. at 22-23 (EAB, Mar. 30, 1999), 8
282 E.A.D._ (under 40 C.F.R. § 22.30, appellant “may not appeal issues
283 that were not raised before the presiding officer. As a result,
284 arguments raised for the first time on appeal . . . are deemed
285 waived”) (citations omitted).
286 3. Ability to Pay / Continue to Do Business
287 The Penalty Policy requires the EPA to assume that an alleged
288 TSCA violator has the ability to pay any fine assessed under the
289 Penalty Policy and, therefore, to continue in business.
290 POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY (1990). The alleged TSCA
291 violator may raise the issue of its ability to pay in its answer to
292 the EPA's administrative complaint and “shall present sufficient
293 documentation to permit the Agency to establish such inability.”
294 Id. If “the alleged violator fails to provide the necessary
4
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 Newell 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).
13
295 information, and the information is not readily available from
296 other sources, then the violator will be presumed to be able to
297 pay.” Id. Newell's brief candidly states (and the Presiding
298 Officer and EAB both held) that the record here features “a
299 complete absence of evidence as to Newell's ability to pay and any
300 effect on it's [sic] ability to do business.” Petitioner's Brief
301 at 39. Surely Newell was in possession of such information if
302 anyone was. Nothing in the record, moreover, intimates that
303 information regarding Newell's ability to pay is readily available
304 from a source other than Newell. The Presiding Officer, therefore,
305 correctly declined to mitigate the penalty on the basis of Newell's
306 putative inability to pay it.
307 IV. Constitutional Concerns
308 Newell also argues that the penalty violated the Eighth
309 Amendment's proscription of excessive fines and Newell's due
310 process rights. Newell's constitutional claims fail.
311 A. Eighth Amendment Concerns
312 Newell's argument that the penalty is excessive,5 and
313 therefore a violation of its Eighth Amendment rights, is erroneous.
314 Newell argues that the Excessive Fines Clause of the Eighth
315 Amendment requires us to consider the value of its fine ($1.345
5
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”).
14
316 million) in relation to the magnitude of the offense inspiring it
317 (Newell suggests that the $84,000 it paid to dispose of the soil
318 accurately indicates the magnitude of its offense). See U.S. CONST.
319 amend. VIII (“Excessive bail shall not be required, nor excessive
320 fines imposed, nor cruel and unusual punishments inflicted”). No
321 matter how excessive (in lay terms) an administrative fine may
322 appear, if the fine does not exceed the limits prescribed by the
323 statute authorizing it, the fine does not violate the Eighth
324 Amendment. Here, the fine assessed against Newell is only about
325 10% of the maximum fine for which Newell was eligible under the
326 TSCA. Newell's fine, therefore, does not violate the Eighth
327 Amendment. See Pharaon v. Board of Governors of Federal Reserve
328 System, 135 F.3d 148, 155-57 (D.C. Cir. 1998) (finding no Eighth
329 Amendment violation because the penalty was within the limits
330 established by the applicable statute).
331 B. Due Process Concerns
332 Newell's due process argument also fails. Newell argues that
333 an evidentiary hearing was “required” in this matter, and that the
334 absence of one violated Newell's right to due process of law.
335 Petitioner's Brief at 55. EPA regulations require that a hearing
336 be held at a respondent's request if the party requesting the
337 hearing has raised a genuine issue of material fact. 40 C.F.R. §
338 22.15; see also In re Green Thumb Nursery, Inc., FIFRA Appeal No.
339 95-42, 6 E.A.D. 782, 1997 WL 131973, at *8 (EAB Mar. 6, 1997)
340 (Final Order). Similarly, constitutional due process doctrine
15
341 requires that the person claiming the benefit of due process
342 protections place some relevant matter into dispute. See Codd v.
343 Velger, 429 U.S. 624, 627 (1977) (“[I]f the hearing mandated by the
344 Due Process Clause is to serve any useful purpose, there must be
345 some factual dispute. . . .”); Costle v. Pacific Legal Foundation,
346 445 U.S. 198, 213 (1980) (permitting the EPA to condition an
347 adjudicatory hearing on “identification of a disputed issue of fact
348 by an interested party”). The Presiding Officer's accelerated
349 decision held that Newell raised no genuine issue of material fact
350 that would necessitate an evidentiary hearing. The EAB agreed. We
351 find no contested issue of fact on penalty in the record. We
352 decline to set aside the penalty on due process grounds.
353 CONCLUSION
354 Because the applicable five-year statute of limitations does
355 not bar the EPA's TSCA complaint, because Newell was liable for an
356 “improper disposal” under the TSCA, and because the Presiding
357 Officer's application of the EPA's 1990 Polychlorinated Biphenyls
358 Penalty Policy generated a penalty that was not arbitrary,
359 capricious, an abuse of discretion, constitutionally infirm or
360 otherwise illicit, we affirm.
361 AFFIRMED.
362
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