Court Opinion

ID: 22509
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:58:54+00
Date Added: 2024-06-11T13:29:59.285361
License: Public Domain

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

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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

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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

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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.

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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

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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).

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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

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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.

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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

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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).

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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”).

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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

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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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