Case Title: Gurley v. Mathis

Citation: 313 Ark. 412, 856 S.W.2d 616

Docket Number: 92-1017

State: arkansas

Court: Arkansas Supreme Court

Date: 1993-06-14T00:00:00Z

Document:
856 S.W.2d 616 (1993) 313 Ark. 412 William Martin GURLEY and Gurley Refining Co., Inc., Appellants, v. Randall MATHIS, Director of the Arkansas Department of Pollution Control & Ecology and Arkansas Pollution Control & Ecology Commission, Appellees. No. 92-1017. Supreme Court of Arkansas. June 14, 1993. *617 Elton A. Rieves IV, William J. Stanley, West Memphis, for appellants. Steve Weaver, Little Rock, for appellees. HOLT, Chief Justice. This is a case of first impression involving the Remedial Action Trust Fund Act, Ark.Code Ann. § 8-7-501, et seq. (Repl.1991) (RATFA), which was enacted by the General Assembly in 1985 to provide the state through its environmental agencies with the necessary authority and funds to investigate, control, prevent, abate, treat, or contain releases of hazardous substances, and among other things, to disburse funds required to assure payment of the state's participation in response to environmental actions taken by the federal government, specifically pursuant to the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980. 42 U.S.C. § 9601 et seq. We hold that the state's actions under RATFA were proper and affirm the trial court. In the past, William Martin Gurley and Gurley Refining Co., Inc. (Gurley) operated a motor oil re-refining company. From 1970 to 1975, Gurley disposed of its secondary oil refining waste, which contained PCBs, lead, and zinc, in a pit near Edmondson, Arkansas known as the "Gurley Site." Gurley had obtained a permit issued by the Arkansas Department of Pollution Control and Ecology (hereafter ADPC & E) to place the residues in the pits. Due to overflows from the abandoned pit in 1978 and 1979, the United States Environmental Protection Agency (EPA) undertook periodic enforcement actions. In 1983, following congressional passage of CERCLA, the Gurley Site was added to the National Priority List (NPL) for remedial action mandated by 42 U.S.C. § 9605(c). It remained one of 1,072 such sites listed in the 1991 version of the NPL. Hazardous waste sites are listed by the President on the NPL under CERCLA's National Contingency Plan as a means of prioritizing these sites and designating them for a remedial response under CERCLA. 42 U.S.C. § 9605. The ADPC & E objected to aspects of the Gurley Site's NPL ranking by the EPA and the EPA's proposed remedy for the site. These concerns, however, were never formalized. In 1987, the United States sued the Appellants to recover administrative costs incurred by the EPA during investigation of the Gurley Site. That case resulted in a holding by the U.S. District Court for the Eastern District of Arkansas that the EPA could recover costs despite its dispute with the ADPC & E and that the owners responsible for release of the hazardous substances were liable for response costs. United States v. Gurley Ref. Co., 788 F. Supp. 1473 (E.D.Ark.1992). During the pendency of this federal litigation, ADPC & E and the EPA resolved their differences over the Gurley Site remedy. Hence, in a memorandum dated March 8, 1991, the ADPC & E staff recommended to the Arkansas Pollution Control and Ecology Commission (the Commission) that the Gurley site be added to the Remedial Action Trust Fund Priority List (RATF Priority List) as authorized by Ark.Code Ann. § 8-7-501 et seq. (Repl.1991) as a prerequisite to the ADPC & E Director expending monies from the Hazardous Substance Remedial Action Trust Fund to (1) pay the costs and expenses reasonably necessary for the administration of RATFA, (2) pay the ten percent state share mandated by CERCLA, 42 U.S.C. § 9604(c)(3), or (3) pay for the investigation, identification, containment, abatement, treatment, or control, including monitoring and maintenance of hazardous waste sites within the state. Ark.Code Ann. § 8-7-509(d) (Supp.1991). The Commission held a meeting on March 22, 1991, at which time the ADPC & E staff memorandum and attachments as well as Gurley's written comments in opposition to the proposed action were submitted *618 to the Commission. Gurley's attorney and the Director of the ADPC & E Hazardous Waste Division addressed the Commission. Thereafter, the Commission voted in favor of adding the Gurley Site to the RATF Priority List as recorded in Minute Order No. 91-05. Gurley appealed to Crittenden County Circuit Court from both the ADPC & E staff memorandum (Crittenden County Circuit Court No. CIV 91-177) and the Commission's order pursuant to Ark.Code Ann. § 8-7-519 (1991) (Crittenden County Circuit Court No. CIV 91-178). Following Gurley's request for findings of fact and conclusions of law, the circuit court first found in Case No. CIV 91-177 that the Department's memorandum did not constitute a final, appealable order and then made the following findings of fact with reference to the Commission's order in Crittenden County Circuit Court Case No. CIV 91-178: By separate orders, the court dismissed the appeal from the ADPC & E staff memorandum and affirmed the Commission's Minute Order No. 91-05. From these decisions, this appeal arises. We make short shrift of the appeal from the staff memorandum as it clearly does not constitute a final order but merely a step in the overall administrative proceeding to place the Gurley site on the RATF List. Thus, we affirm the trial court's dismissal of the appeal from the staff memorandum. The balance of this opinion relates to Gurley's appeal from the circuit court rulings with reference to the Commission's Minute Order No. 91-05. As a preliminary matter, Gurley raises a procedural issue concerning its notice of appeal to the trial court and ADPC & E's failure to properly respond as raised in Point V of Gurley's brief. Gurley argues that ADPC & E failed to admit or deny Paragraph 22 of its notice of appeal to the trial court relating to the Commission's orders in case No. CIV-91-178, so it was entitled to a judgment on the pleadings as to that point, and that the trial court erred in denying Gurley's motion in this regard. Paragraph 22 provides: In filing its response to Gurley's notice of appeal, ADPC & E stated: "Appellees need not admit nor deny the declarations of appellants paragraph 22." This being the case, Gurley claims that they are entitled to judgment since Ark.R.Civ.P. 8(d) provides that "averments in pleadings are admitted when not denied either generally or specifically in the responsive pleading" and that under the circumstances their pleadings in paragraph 22 should be deemed admitted and that they are entitled to judgment in this regard. Gurley further argues that the trial court should not permit ADPC & E to amend their response since Ark.Code § 8-4-226(c)(1) (Repl.1991) allows for only thirty days after service in filing a notice of appeal in which to file a return and that any later filing is impermissible. ADPC & E responds that there was excusable neglect and confusion on the part of their counsel in filing its initial response and, for this reason, the trial court was correct in permitting them to amend their pleadings. As an explanation, ADPC & E states that Gurley filed two notices of appeal from the *620 Commission's hearing on April 11, 1991. As discussed above, one challenged the ADPC & E's action (CIV-91-177) and the other challenged the Commission's action (CIV-91-178). During the thirty day response period provided by Ark. Code Ann. § 8-4-226(c)(1), the father of the ADPC & E's attorney handling both cases suddenly died. The attorney was absent for a two week period which extended beyond the time for filing the return, and, in order to file something because of the timeliness issue, the attorney responded to CIV-91-177 and CIV-91-178 as though they were identical pleadings by stating: "Appellees need not admit nor deny declarations of appellants paragraph 22" in both responses. The trial court held a hearing on this matter on May 28, 1991. However, the in-chambers discussion of this matter has not been properly abstracted. At most, we have the trial court finding that under the circumstances, excusable neglect existed which justified a denial of the default motion and that ADPC & E was granted ten days to reform their pleadings. In making its ruling, the trial court recognized "the confusion arose from two different pleadings being filed" in the context of the circumstances (the attorney's father's unexpected death) when ADPC & E's counsel was not "thinking right." We cannot say that the trial court abused its discretion in finding excusable neglect on the part of counsel and in permitting him to amend his pleadings. For its first point of error, Gurley urges us to apply a substantial evidence review to the placement of the Gurley Site on the RATF List pursuant to Ark.Code Ann. § 8-4-227(d)(5) (Repl.1991), which states on appeals from Commission action, a circuit court may affirm or vacate the decision if the Commission action is, among other factors, "not supported by substantial evidence or record." However, this statute addresses appeals from the Commission to circuit court and not appeals to this court. ADPC & E replies that the decision of the Commission was a rulemaking function and not a judicial one so the less strict "arbitrary and capricious" standard of review applies instead, citing Beverly Enters. v. Arkansas Health Serv. Comm., 308 Ark. 221, 824 S.W.2d 363 (1992) and Baxter v. Arkansas State Bd. of Dental Examiners, 269 Ark. 67, 598 S.W.2d 412 (1980). ADPC & E quotes Department of Human Serv. v. Berry, 297 Ark. 607, 609, 764 S.W.2d 437, 438 (1989) for this rule: We agree with ADPC & E. We find further support for the treatment of the Commission's decision as rulemaking by virtue of the holdings in various federal cases involving CERCLA as to placement of sites by the EPA on the NPL. The NPL is promulgated in the form of a final rule under informal notice-and-comment rulemaking procedures. 42 U.S.C. § 9605; 5 U.S.C. § 553(c). The initial version of the NPL was promulgated as a final rule of the EPA on September 8, 1983, and the list, as required by Congress, is reviewed to include new sites "no less often than annually." 42 U.S.C. § 9605(8)(B). The Circuit Court of Appeals for the District of Columbia is the statutory court of review for any regulation promulgated under CERCLA. 42 U.S.C. 9613(a). That court has repeated the standard of review for decisions to place sites on the NPL numerous times: The EPA's decision to place a hazardous waste site on the NPL is the product of informal notice and comment rulemaking, reviewable under the arbitrary and capricious standard. Eagle-Picher Indus., Inc. v. EPA, 822 F.2d 132, 137 n. 7 (D.C.Cir.1987) (Eagle-Picher III.) We will uphold the EPA's decision if it is "consistent with the Act and the regulations *621 promulgated thereunder, and is not arbitrary." City of Stoughton v. EPA, 858 F.2d 747, 749 (internal quotation omitted). As the agency consistently reminds us, listing on the NPL does not require any action by any party, and does not determine any party's liability for cost of cleanup at the site. See Eagle-Picher I ... It is intended to be a "rough list" or prioritized hazardous waste sites; a "first step in a process-nothing more, nothing less." Eagle-Picher Indus. v. EPA, 759 F.2d 922, 932 (D.C.Cir.1985) (Eagle-Picher II). Therefore, we have recognized the EPA's interest in reconciling "the need for certainty before action with the need for inexpensive, expeditious procedures to identify potentially hazardous sites ..." Eagle-Picher I, 759 F.2d at [905] 921 [ (D.D.Cir.1985) ]. But the agency must remain aware that placement on the NPL has serious consequences for a site's owner. See B & B Tritech, Inc. v. EPA, 957 F.2d 882, 885 (D.C.Cir.1992) (placement on the NPL has "considerable costs"); SCA Servs. of Indiana v. Thomas, 634 F. Supp. 1355, 1361-1366 (N.D.Ind.1986) (recognizing the potential for damage to business reputation and loss of value in property, as well as other harmful consequences, when site is listen on NPL). While we do not require the EPA's decisions to be perfect, or even the best, see City of Stoughton, 858 F.2d at 756, we do require that they not be arbitrary or capricious. See Kent County, Del. Levy Court v. EPA, 963 F.2d 391, 393-4 (D.C.Cir.1992). In Northside Sanitary Landfill, Inc. v. Thomas, 849 F.2d 1516 (D.C.Cir.1988), the District of Columbia Circuit Court repeated the standard of review for placement on the NPL holding the District of Columbia Circuit Court held that Northside did not properly present its objection to the EPA during the rulemaking process, so it would not address the merits of their objections: However, we note that were we to reach those merits, we would still deny Northside's petition for review because the EPA's decision to place the Northside site on the NPL finds ample support in the record before us. Thus, in our view, the EPA's decision was in no way arbitrary or capricious. See Eagle-Picher I, 759 F.2d at 921 (setting forth the standard of review for decisions concerning NPL). Northside, 849 F.2d at 1521. See also Washington State Dept. of Transp. v. EPA, 917 F.2d 1309 (D.C.Cir.1990). Stoughton v. EPA, 858 F.2d 747 (D.C.Cir. 1988). We choose to treat our Remedial Action Trust Fund Act, Ark.Code Ann. § 8-7-501, et seq. (Repl.1991), as the federal courts treat NPL for several reasons. First, we have long held that the federal courts' construction of federal statutes upon which state statutes have been patterned should be accorded "great weight" in our own construction of those state statutes. Dicken v. Missouri, Pacific Railroad Co., 188 Ark. 1035, 1039, 69 S.W.2d 277, 279 (1934). The Remedial Action Trust Fund was created by our General Assembly to meet the ten percent state contribution required by Congress before the Superfund monies could be expended to cleanup a hazardous waste site. 42 U.S.C. § 9604(c). Indeed, the legislative intent section of our act lists CERCLA, among other things, as a reason for its enactment: Ark.Code Ann. § 8-7-502(a) (Repl.1991). Also, Ark.Code Ann. § 8-7-509(d)(2) (Repl.1991) specifically provides that monies in the Hazardous Substance Remedial Action Trust Fund are to be used, among other things, to pay the state share mandated *622 by 42 U.S.C. § 9604(c)(3), or CERCLA. Further support for this argument is found at Ark.Code Ann. § 8-7-507 (Repl.1991), "Compliance of federal and state entities": And in Ark.Code Ann. § 8-7-701 (Repl.1991), the legislative intent section of the "Federally Listed Hazardous Sites" chapter: Additionally, the state mechanism works like the NPL; there can be no expenditures from the Hazardous Substance Remedial Action Trust Fund prior to the approval by the Commission of a prioritized listing of hazardous substance sites at which remedial actions are authorized through the use of Hazardous Substances Remedial Action Trust Fund monies. Ark.Code Ann. § 8-7-509(e) (Repl.1991). As with the federal list, the state list must be revised annually by the ADPC & E and submitted to the Commission for approval after public notice and opportunity for hearing. Id. Given our comparison of the RATFA List to the NPL, we consider placement on the RATF List to also be a rulemaking function. As we said in Berry, supra, in reviewing the adoption of regulations by an agency under its informal rulemaking procedures, we are limited to considering whether the administrative action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. Under the circumstances of this case, we hold that the actions of the Commission were none of the above and we will not attempt to substitute our judgment for that of the Commission. ADPC & E argues that Gurley's claims are barred by res judicata since Judge Howard ruled on the same issues as those raised here in United States v. Gurley Ref. Co., 788 F. Supp. 1473 (E.D.Ark. 1992). Res judicata bars relitigation of a subsequent suit when (1) the first suit resulted in a final judgment on the merits; (2) the first suit was based upon proper jurisdiction; (3) the first suit was fully contested in good faith; (4) both suits involve the same claim or cause of action; and (5) both suits involve the same parties or their privies. Great Dane Trailer Sales, Inc. v. Malvern Pulpwood, Inc., 301 Ark. 436, 785 S.W.2d 13 (1990). In order for a federal court judgment to be res judicata in an action in state court the parties must be the same; the judgment is conclusive only against parties or their privies or others who sufficiently participate, or are represented, in the action. Id. Clearly, these are not the same parties or their privies although some of the same issues were previously litigated. This does not rise to the level of res judicata. Gurley next argues that they were never afforded an opportunity for a meaningful hearing or an opportunity to cross-examine the witnesses in violation of their due process rights. Gurley cites Ark.Code Ann. § 8-7-506 and § 8-7-509(e) (Repl.1991) for support of his right to a hearing. These read: (Emphasis added.) The regulations adopted by the ADPC & E pursuant to Ark.Code Ann. § 8-7-506 (Repl.1991) are entitled "Regulation No. 8." Gurley argues that since Regulation No. 8 became effective prior to the enactment of RATFA it is not applicable and since Regulation No. 8 makes no reference to RATFA, it is inapplicable. We see little substance in this argument as we have determined that the actions of the Commission were an exercise of its rulemaking powers as opposed to an adjudicative hearing. The issue before the Commission was whether or not public funds should be dedicated to one site or another, not the assignment of liability on the part of property owners. In this instance it was a matter of whether or not the Commission would decide to commit its remedial action funds to a ten percent share of the ultimate cost of a federally funded remedy. 42 U.S.C. § 9604(c). Under CERCLA, the NPL listing process is considered to be a rulemaking function. Washington State Dept. of Transp. v. Environmental Protection Agency, supra. RATFA, as the statutory purpose of statement explains, is an extension of CERCLA. Ark.Code Ann. § 8-7-502(a) (Repl.1991). Thus, the Commission's discretion in exercising its rulemaking powers did not violate Gurley's statutory right to a hearing and review or interfere with his substantive and procedural due process rights. In sum, we affirm the trial court's holding.