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.

Newell Recycling Company, Inc. (“Newell”) appeals a final 1

decision of the Environmental Protection Agency's Environmental 2

Appeals Board (“EAB”) holding Newell liable for violating the 3

disposal requirements for polychlorinated biphenyls (“PCBs”) 4

established in Section 6(e) of t he Toxic Substances Control Act 5

(“TSCA”). The EAB's decision penalized Newell $1.345 million, less 6

an amount paid in settlement by a co-defendant, for violating the 7

TSCA. For the following reasons, we affirm. 82 BACKGROUND 9

Newell owned and operated a recycling facility in Houston, 10

Texas, during the 1 970's and early 1980's. In 1982, Newell sold 11

the facility to Oklahoma Metal Processing, Inc. d/b/a Houston Metal 12

Processing Company (“HMPC”). In the sale, Newell agreed to 13

“specifically assume any liability resulting from an occurrence 14

prior to the closing date of this sale.” 15

Within two years of the sale, the Texas Department of Health 16

sought soil samples to verify its suspicions of lead contamination 17

at the recycling facility site. Shortly thereafter, Newell 18

Enterprises asked HMPC to authorize Newell Recycling Company, Inc. 19

(i.e., “Newell,” the Petitioner in this case), Newell Products of 20

Houston, Inc., and Newell Industries, Inc., to commence testing for 21

lead contamination and cleanup on the site. After the soil samples 22

showed lead contamination, a consultant recommended to Newell that 23

the contaminated soil be removed to a hazardous waste facility for 24

disposal. The consultant noted that HMPC had authorized Newell to 25

perform testing, cleanup, and soil transportation functions at the 26

site. 27

W hile superintending lead cleanup operations there in 198 5

, 28

Newell discovered the PCB contamination that this case concerns. 29

Electric capacitors seeping PCB-contaminated fluids lay buried in 30

the soil unearthed during the lead contamination cleanup. Newell 31

– alt hough advised repeatedly by another consultant it had hired 32

that the PCB-contaminated soil piled at the site had to be treated 333

or disposed of by methods acceptable to the EPA under the TSCA – 34

waited until after the EP A filed an administrative complaint 35

against it in 1995 for violating the TSCA to remove the soil to a 36

disposal fac ility. Approximately ten years elapsed, then, from 37

Newell's discovery of the buried capacitors in 1985 to its proper 38

disposal of the PCB-contaminated soil pile in 1995. The record 39

does not explain this delay. 40

The Presiding Officer granted the EPA an accelerated decision 41

(the equivalent of summary judgment) on its administrative 42

complaint, holding that Newell committed an act of improper 43

disposal by knowingly causing PCB-contaminated soil to be excavated 44

and stockpiled at the site and then “leaving [the soil] there and 45

taking no further clean-up act ion.” I n re Oklahoma Metal 46

Proc essing Co., Inc. , No. VI-659C (EPA April 29, 1997) (order 47

granting partial accelerated decision on issue of liability). The 48

Presiding Officer assess ed Newell a $1.345 million fine for the 49

disposal violation, less the amount HMPC paid the EPA to settle an 50

action regarding its role in the improper disposal at the site. 51

Newell appealed the Presiding Officer's liability rulings and his 52

penalty assessment decision to the EAB. It affirmed the Presiding 53

Officer's decision. Newell appeals the EAB's decision. 54

Newell argues that a five-year statute of limitations barred 55

the EPA's TSCA complaint, that on the merits Newell is not liable 56

for an “improper disposal” under the TSCA, and that the Presiding 57

Officer's application of the EPA's 1990 Polychlorinated Biphenyls 584

Penalty Policy (the “Penalty Policy”) g enerated an excessive 59

penalty that violated Newell's constitutional rights. 60

DISCUSSION 61

We must affirm the EAB’s deci sion unless it is “arbitrary, 62

capricious, an abuse of discretion, or otherwise not in accordance 63

with law.” 5 U.S.C. § 706(2)(A). S ee also Amoco Production Co. v. 64

Lujan

, 877 F.2d 1243, 1248 (5th Cir. 1989) (“On review of an agency 65

adjudication,

. . . the reviewing court must in general affirm the 66

decision unless the agency’s action was arbitrary, capricious, or 67

otherwise not in accordance with law”). 68

I. Limitations 69

28 U.S.C. § 2462 supplies the statute of limitations 70

applicable here: 71

Except as o therwise provided by Act of Congress, an action, 72

suit or proceeding for the enforcement of any civil fine, 73

penalty, or forfeiture, pecuniary or otherwise, shall not be 74

entertained unless commenced w ithin five years of the date 75

when the claim first accrued. . . . 76

Newell argues that the EPA’s improper disposal claim “accrued” when 77

the PCBs polluting the soil pile were “taken out of service.” S ee 78

40 C.F.R. § 761.3 (“Disposal means intentionally or accidentally to 79

discard, throw away, or otherwise complete or terminate the useful 80

life of PCBs and PCB Items. Disposal includes spills, leaks, and 81

other uncontrolled discharges of PCBs as well as actions related to 82

containing, transporting, destroying, degrading, decontaminating, 83

or confining PCBs and PCB Items”). Since, Newell asserts, the PCBs 845

were “taken out of service” sometime before 1990, the EPA’s claim 85

accrued more than five years before the filing of its TSCA 86

complaint against Newell in 1995 and is thus time-barred. The EPA 87

argues that Newell’s TSCA violation -- excavating and stockpiling 88

the soil and then leaving it on the site for ten years before 89

disposing of it in accordance with 40 C.F.R. § 761.60(a), which 90

requires that soil contaminated with PCBs above a certa in ppm 91

threshold be disposed of in an EPA-approved incinerator or landfill 92

-- was “continuing” in nature. S ee InterAmericas Investments, Ltd. 93

v. Board of Governors of the Federal Reserve System

, 111 F.3d 376, 94

382 (5th Cir. 1997) (“A continuing violation applies when the 95

conduct is ongoing, rather than a single event”). The EAB agreed 96

with the EPA. The EAB held that the EPA’s TSCA cause of action 97

against Newell did not accrue until the course of conduct 98

complained of no longer continued. See Fiswick v. United States

, 99

329 U.S. 211, 216 (1946) (statute of limitations for continuing 100

offenses runs from the last day of the continuing offense); In re 101

Standard Scrap

, TSCA Appeal No. 87-4, 3 E.A.D. 267, 1997 WL 603524, 102

at *2 (EAB Aug. 2, 1990) (Final Decision) (“Failure to [properly 103

dispose of PCBs] constitutes a violation of the regulation, and the 104

violation continues as long as the PCBs remain out of service and 105

in a state of improper disposal”). That is, it did not accrue 106

until 1995, when Newell properly disposed of the soil. If 107

stockpiling the soil was a disposal, we cannot say the EAB’s 108

conclusion was arbitrary, caprici ous, an abuse of discretion or 1091 See discussion of disposal that follows.

6 otherwise not in accordance with law. 1 Because we hold that the 110

EPA’s TSCA cause of action against Newell did not accrue for 111

limitations purposes until 1995, we also affirm the EAB’s denial of 112

Newell’s request for additional discovery. This discovery, Newell 113

claims, would establish that the EPA had actual notice of 114

conditions at the site earlier than five years before the EPA filed 115

its complaint. Information about when the EPA actually knew of the 116

site’s conditions is not “significant [ly] probative” of any fact 117

relevant to our statute of limitations determination. S ee 40 118

C.F.R. § 22.19(f). 119

II. Liability 120

Newell challenges its TSCA liability on two grounds. First, 121

Newell argues that the EAB erroneously held that Newell contributed 122

to the creation of the PCB-contaminated soil pile. Second, Newell 123

contends that if, arguendo , it did cause the creation of the soil 124

pile, that act of creation and Newell’s subsequent involvement with 125

the pile did not constitute an improper disposal of PCBs within the 126

meaning of the TSCA. 127

T he EAB properly determined that Newell contributed to the 128

creation of the soil pile. The PCB Rule of the TSCA extends civil 129

penalty liability to any “person who violates these regulations.” 130

40 C.F.R. § 761.1(d). “Violators” in this context are those who 131

have “caused (or contributed to the c ause of) the [improper] 1327

disposal.” In re City of Detroit , 3 E.A.D. 514, 526 (CJO 1991). 133

Ample evidence indicates that Newell at least contributed to 134

the creation of the soil pile. Newell contends that a Newell 135

affiliate, not Newell itself, created the pile. The record 136

suggests otherwise. The EAB aptly characterized its contents: 137

Newell ”may not h ave acted alone, but it was certainly an active 138

party in the events constituting the TSCA violation.” Newell 139

Recycling Co., Inc. v. United States En v ironmental Protection 140

Agency

, TSCA Appeal No. 97-7, slip op. at 33 (EAB Sept. 13, 1999). 141

Newell, and not one of its affiliates, owned the Fidelity Road site 142

immediately before conveying it to HMPC. In the sale of the site 143

Newell assumed liability for “occurrence[s] prior to the closing 144

date of th[e] sale.” This covenant produced Newell’s extensive 145

involvement in remedying the lead and PCB contamination at the 146

site. Newell’s involvement included, the EAB correctly found: a 147

visit by Newell’s owner, Alton Newell, to the site in response to 148

HMPC’s demand for remedial action; Newell ’s two-time (1987 and 149

1989-90) retention of an environmental consulting firm to recommend 150

remedies for PCB contamination at the site; execution in 1987 of an 151

agreement wit h HMPC and another party interested in the site 152

tolling the statute of limitations on claims against Newell arising 153

from the site’s contamination; and Newell’s removal in 1995 of the 154

contaminated soil to a disposal facility at its own expense. 155

Moreover, until this enforcement action, Newell never suggested to 156

the Texas or federal authorities involved in decontamination of the 1578

s ite that some other Newell entity was responsible for the 158

contaminated soil pile. 159

In view of these facts, t he EAB’s determination that Newell 160

contributed to the creation of the soil pile was not arbitrary, 161

capricious, an abuse of discretion or otherwise not in accordance 162

with law. 163

Newell, however, argues that if it contributed to the creation 164

of the soil pile, its contribution was not an improper disposal 165

u nder the TSCA. Newell argues that PCB disposal is a one-time 166

event occurring, in a case like this one, only when capacitors 167

containing PCBs are buried and their contents released into the 168

surrounding soil. Because, Newell contends, there is no evidence 169

implicating Newell in the original disposal of the capacitors, the 170

EPA failed to establish that Newe ll improperly disposed of PCBs. 171

The EAB rejected this argument, noting that Newell’s interpretation 172

of “disposal” would have “no TSCA liability

. . . att ach even if 173

Newell had taken the pile of contaminated soil from the Fidelity 174

Road site and dumped it into the nearest river, stream, or vacant 175

lot.” N ewell Recycling Co., Inc. v. United States Environmental 176

Protection Agency

, TSCA Appeal No. 97-7, slip op. at 29-30 (EAB 177

Sept. 13, 1999). Such an interpretation, the EAB continued, would 178

subvert the environmental protection goals of the TSCA regime. S ee 179

In re Samsonite Corp.

, 3 E.A.D. 196, 199 (CJO 1990) (PCB 180

regulatio ns “should be read in such a way as to further the 181

purposes of the Act, particularly where, as in this case, public 1829

health and safety are involved”). At any rate, the EAB concluded, 183

Newell’s interpretation o f “disposal” fails because it would 184

effectively exclude what the textual definition of disposal cited 185

above indisputably includes: activities undertaken to address known 186

PCB contamination. S ee 40 C.F.R. § 761.3 (“[d]isposal includes 187

spills, leaks, and other uncontrolled discharges as well as actions 188

related to containing, transporting, destroying, degrading, 189

decontaminating, or confining PCBs or PCB items”). The EAB 190

determined that Newell’s involvement with the soil pile, described 191

above, fits this definition of “disposal.” Newell Recycling Co., 192

Inc. v. United States Environmental Protection Agency

, TSCA Appeal 193

No. 97- 7, slip op. at 31 (EAB Sept. 13, 1999) (“The act of 194

excavating and stockpiling PCB-contaminated soil at the Fidelity 195

Road site is clearly in the nature of an action to 'contain,' 196

'transport,' and 'confine' PCBs. Moreover, leaving the stockpiled 197

waste abandoned there for years is evidence that the PCB198

contaminated soil was 'discarded' within the meaning of the rule”). 199

We cannot say that this determination was arbitra ry, 200

capricious, an abuse of discretion or otherwise not in accordance 201

with law. 202

III. Penalty 203

Because an agency's selection of an appropriate sanction to 204

effect its policies is an act peculiarly within its institutional 205

competence, our review of the penalty in this case is limited. S ee 206

Wayne Cusimano, Inc. v. Block

, 692 F.2d 1025, 1030 (5th Cir. 1982). 20710

An agency 's penalty determination “is reviewed with significant 208

deference;” we will not reverse it unless it is a rbitrary, 209

capricious, an abuse of discretion or otherwise not in accordance 210

with law. I nterAmericas Investments, Ltd.

, 111 F.3d at 3 84. 211

Accordingly, although the penalty here strikes us as severe since 212

there was no actual harm, we cannot disturb it. 213

The Penalty Policy limns a two-part process for PCB penalty 214

assessment. First, the Penalty Policy requires the administrative 215

law judge (the “Administrator ” ) to examine the nature, 216

circumstances, gravity and extent of the violation. Those factors 217

suggest a gravity-based penalty. After the Administrator 218

determi nes the gravity-based penalty, he or she considers (the 219

second part of the process) the violator's ability to pay the 220

penalty, the effect of the penalty on the violator's ability to 221

continue to do business, the violator's history (if any) of such 222

violations, the degree of culpability, and “such other matters as 223

justice may require.” P OLYCHLORINATED B IPHENYLS (PCB) P EN ALTY P OLICY 224

(1990). The Administrator may adjust the gravity-based penalty in 225

view of these factors. 226

A. The Gravity-Based Penalty 227

The Penalty Policy makes the gravity-based penalty 228

determination process mostly mechanical by pegging the abov e

229

described factors (the nature, circumstances, gravity and extent of 2302 Newell challenges the Presiding Officer's treatment of the “circumstances”

and “extent” factors, but not his treatment of the “nature” and “gravity” ones.

3 T he Penalty Policy ranks the “circumstances” of a viola tion as Low,

Medium, or High Range, and subdivides each of these categories into two Levels.

11 the violation 2 ) to statistical benchmarks or fixed formulations. 231

So, for example, the Presiding Officer did not err by concluding 232

that the “extent” o f Newell's violation was “major;” the Penalty 233

Policy expressly defines violations involving more than 300 cubic 234

feet of contaminated soil as “major,” and the soil pile here was 235

approximately 540 cubic feet in size. I d. Similarly, the 236

Presiding Officer correctly characterized the “circumstances” of 237

Newell's violation as “High Range, Level One” under the Penalty 238

Policy. 3 The Penalty Policy states that “any disposal of PCBs or 239

PCB Items in a manner that is not authorized by the PCB 240

regulations” is automatically ranked “High Range, Level One.” I d. 241

Because discarding and abandoning PCB-contaminated soil in a pile 242

is a disposal not authorized by the PCB regulations, the Presiding 243

Officer rightly characterized Newell's as a “High Range, Level One” 244

violation. 245

B. Adjustment of the Gravity-Based Penalty 246

The Presiding Officer may adjust the gravity-based penalty in 247

view of t he violator's ability to pay it, the effect the penalty 248

might have on the violator's ability to continue to do business, 249

the violator's history (if any ) of prior such violations, the 250

violator's degree of culpability, and such other matters as justice 25112

may require. 15 U.S.C. § 2615(a)(2)(B). The “as justice may 252

require” rubric includes whether the violator voluntarily disclosed 253

the violation, any economic benefits the violator reaped from the 254

violation, and any environmentally beneficial measures a violator 255

may perform in exchange for penalty reduction. Newell argues that 256

some of these factors counsel reduction of its penalty, and that 257

the Presiding Officer's refusal to reduce it, in turn, was error. 258

1. Culpability 259

The Presiding Officer's determination that the “culpability” 260

factor did not recommend mitigation of Newell's penalty was sound. 261

The “two principal criteria” in the Penalty Policy for assessing 262

culpabi lity are: 1) the violator's knowledge of the particular 263

requirement; and 2) the degree of the violator's control over the 264

violative condition. P O LYCHLORINATED B IPHENY LS (PCB) P ENALTY P OLICY 265

(1990). As noted above, Newell knew the TSCA required more than 266

the excavation and compl ete abandonment of the PCB-contaminated 267

soil; Newell's environmental consultants repeatedly told Newell as 268

much. Even though Newell did not own the property on which the 269

soil lay, Newell had extensive control, described above, over the 270

violative condition here. The record does not explain to our 271

satisfaction why Newell waited years to properly d ispose of the 272

soil. The Presiding Officer, therefore, appropriately declined to 273

mitigate Newell's penalty on culpability grounds. 274

2. Voluntary Disclosure 275

The Presiding Officer correctly declined to adjust the penalty 2764 W aiver 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].” S ee 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 in view of Newell's alleged 4 voluntary disclosure of the TSCA 277

violation. Newell waived this argument by failing to request in 278

its submissions to the Presiding Officer a reduction in the penalty 279

for voluntary disclosure. S ee In re Britton Construction Co.

, CWA 280

Appeal Nos. 97-5 & 97-8, slip op. at 22-23 (EAB, Mar. 30, 1999), 8 281

E.A.D._ (under 40 C.F.R. § 22.30, appellant “may not appeal issues 282

that were not raised before the presiding officer. As a result, 283

arguments raised for the first time on appeal . . . are deemed 284

waived”) (citations omitted). 285

3. Ability to Pay / Continue to Do Business 286

The Penalty Policy requires the EPA to assume that an alleged 287

TSCA violator has the ability to pay any fine assessed under the 288

Penalty Policy and, therefore, to continu e in business. 289

P OLYCHLORINATED B IPHENYLS (PCB) P ENALTY P OLICY (1990). The alleged TSCA 290

violator may raise the issue of its ability to pay in its answer to 291

the EPA's administrative complaint and “shall present sufficient 292

documentation to permit the Age ncy to establish such inability.” 293

Id. If “the alleged violator fails to provide the necessary 2945 N ewell also argues that the pen alty is excessive when compared to

penalties in similar cases. The penalty here, however, need not resemble those

assessed in similar cases. S ee 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 information, and th e information is not readily available from 295

other sources, then the violator will be presumed to be able to 296

pay.” I d. Newell's brief candidly states (and the Presiding 297

Officer and EAB both held) that the record here features “a 298

complete absence of evidence as to Newell's ability to pay and any 299

effect on it's [sic] ability to do business.” Petitioner's Brief 300

at 39. Surely Newell was in possession of such information if 301

a nyone was. Nothing in the record, moreover, intimates that 302

information regarding Newell's ability to pay is readily available 303

from a source other than Newell. The Presiding Officer, therefore, 304

correctly declined to mitigate the penalty on the basis of Newell's 305

putative inability to pay it. 306

IV. Constitutional Concerns 307

Newell also argues that the penalty v iolated the Eighth 308

Amendment's proscriptio n of excessive fines and Newell's due 309

process rights. Newell's constitutional claims fail. 310

A. Eighth Amendment Concerns 311

New ell's argument that the penalty is excessive, 5 and 312

therefore a violation of its Eighth Amendment rights, is erroneous. 313

Newell argues that the Excessive Fines Clause of the Eighth 314

Amendment requires us to consider the value of its fine ($1.345 31515

million) in relation to the magnitude of the offense inspiring it 316

(Newell suggests that the $84,000 it paid to dispose of the soil 317

accurately indicates the magnitude of its offense). S ee U.S. C ONST

. 318

amend. VIII (“Excessive bail shall not be required, nor excessive 319

fines imposed, nor cruel and unusual punishments inflicted”). No 320

matter how excessive (in lay terms) an administrative fine may 321

appear, if the fine does not exceed the limits prescribed by the 322

s tatute authorizing it, the fine does not violate the Eighth 323

Amendment. Here, the fine assessed against Newell is only about 324

10% of the maximum fine for which Newell was eligible under the 325

TSCA. Newell's fine, therefore, does not violate the Eighth 326

Amendment. S ee Pharaon v. Board of Governors of Federal Reserve 327

System

, 135 F.3d 148, 155-57 (D.C. Cir. 1998) (finding no Eighth 328

Amendment violation because the penalty was within the limits 329

established by the applicable statute). 330

B. Due Process Concerns 331

Newell's due process argument also fails. Newell argues that 332

an evidentiary hearing was “required” in this matter, and that the 333

absence of one violated Newell's right to due process of law. 334

Petitioner's Brief at 55. EPA regulations require that a hearing 335

be held at a respondent's request if the party requesting the 336

hearing has raised a genuine issue of material fact. 40 C.F.R. § 337

22.15; see also In re Green Thumb Nursery, Inc. , FIFRA Appeal No. 338

95-42, 6 E.A.D. 782, 1997 WL 131973, at *8 (EAB Mar. 6, 1997) 339

(Final Order). Similarly, constitutional due process doctrine 34016

requires that the person claiming the b enefit of due process 341

protections place some relevant matter into dispute. See Codd v. 342

Velger

, 429 U.S. 624, 627 (1977) (“[I]f the hearing mandated by the 343

Due Process Clause is to serve any useful purpose, there must be 344

some factual dispute.

. . .”); Costle v. Pacific Legal Foundation

, 345

445 U.S. 198, 213 (1980) (permitting the EPA to condition an 346

adjudicatory hearing on “identification of a disputed issue of fact 347

by an interested party”). The Presiding Officer's accelerated 348

decision held that Newell raised no genuine issue of material fact 349

that would necessitate an evidentiary hearing. The EAB agreed. We 350

find no contested issue of fact on penalty in the record. We 351

decline to set aside the penalty on due process grounds. 352

CONCLUSION 353

Because the applicable five-year statute of limitations does 354

not bar the EPA's TSCA complaint, because Newell was liable for an 355

“improper disposal” under the TSCA, and because the Presiding 356

Officer's application of the EPA's 1990 Polychlorinated Biphenyls 357

Penal ty Policy generated a penalty that was not arbitrary, 358

capri cious, an abuse of discretion, constitutionally infirm or 359

otherwise illicit, we affirm. 360

AFFIRMED. 361

362