General Electric Company

Plain-English summary

General Electric operated an industrial service center in Chamblee, Georgia, where it prepared PCB transformers for disposal. It used a freon distillation process to separate PCBs from contaminated solvent, reused the freon, and sent the separated PCBs for incineration without the required approval. The Environmental Appeals Board held that the process did not comply with the prescribed disposal rules, upheld the Count I disposal violation, and reduced the penalty from $40,000 to $25,000. It dismissed Count II because the cited PCB use regulations did not apply to the disposal activities at issue.

Decision snapshot

• Cited authorities: 15 U.S.C. § 2605(e); 40 C.F.R. §§ 22.14, 761.3, 761.20, 761.30, 761.60, 761.70, 761.75, and 761.79
• Outcome: Count I was upheld with a $25,000 civil penalty. Count II was dismissed.
• Key point: Separating PCB liquids by distillation did not replace the prescribed disposal methods, and the PCB use rules did not govern the disposal conduct.

Full text (EPA EAB public release)

884 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
IN THE MATTER OF GENERAL ELECTRIC COMPANY
TSCA Appeal No. 92-2a
FINAL DECISION
Decided November 1, 1993
Syllabus.

General Electric Company (“GE”) appeals an initial decision assessing a $40,000
civil penalty against it under the Toxic Substances Control Act for improperly using
and disposing of PCBs. At issue is GE’s distillation of PCBs drawn from PCB trans-
former carcasses being prepared for disposal, and its use of the distillate to flush
other drained PCB transformers. U.S. EPA, Region IV, alleged, and the initial decision
concluded, that the distillation process is an alternate disposal method requiring EPA
approval under 40 C.F.R. § 761.60(e). Because GE lacked the requisite EPA approval,
its disposal process violates 40 C.F.R. §§ 761.60(a) and 761.60(b)(1)(i)(B) of the disposal
regulations (Count I). Also, GE’s use of the distilled liquid to flush other drained
PCB transformers violates 40 C.F.R. §§ 761.20(a) and 761.30 of the use regulations
(Count II).

Held: The finding of disposal violations alleged in Count I of the complaint
is upheld. By distilling the PCB liquids drawn from the transformers, GE violated
the PCB disposal regulations governing transformer disposal, 40 C.F.R.
§ 761.60(b)(1)(i)(B), which require that the entirety of such PCB liquids, not just the
PCB component thereof, be incinerated in accordance with § 761.60(a). GE is assessed
a penalty of $25,000 for this violation. Count II of the complaint is dismissed. The
regulations governing PCB use have no applicability to disposal activities.

Before Environmental Appeals Judges Nancy B. Firestone,
Ronald L. McCallum, and Edward E. Reich.1

Opinion of the Board by Judge McCallum:

General Electric Company (“GE”) appeals from an initial decision
ordering GE to pay a civil penalty of $40,000 for violating section
6(e) of the Toxic Substances Control Act (TSCA), 15 U.S.C. § 2605(e),
and the rules implementing that section, which are set forth in 40
C.F.R. Part 761. These rules regulate the manufacture, use, and

TA fully transcribed oral argument was held on May 19, 1992, before Judges
McCallum, Reich and Judge Timothy J. Dowling (Acting). Judge Firestone replaces
Judge Dowling.

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GENERAL ELECTRIC COMPANY 885
disposal of polychlorinated biphenyls (“PCBs”), but only the use and
disposal regulations are implicated in this proceeding. Specifically,
the initial decision concludes that GE’s transformer disposal and dis-
tillation activities at its Chamblee, Georgia facility violated
§ 761.20(a) and 761.30 of the use regulations, 40 C.F.R. §§ 761.20(a)
& 761.30, and § 761.60 of the disposal regulations, 40 C.F.R. § 761.60.
For the reasons set forth below, we hold that GE violated the disposal
regulations, but did not violate the use regulations. We also hold
that a $25,000 civil penalty is warranted for the disposal violation.

BACKGROUND
A. The Transformer Disposal Process

GE operates an industrial service center in Chamblee, Georgia,
where it prepares PCB transformers and PCB items for disposal
for its customers. Prior to the events that gave rise to this case,
GE’s process for preparing the transformers for disposal consisted
of draining the PCB mineral oil dielectric fluid from the transformers,
refilling the drained transformers with an oil-based solvent in which
PCBs are readily soluble, and allowing the refilled transformer to
soak for eighteen hours. GE then drained the PCB-contaminated sol-
vent, a so-called “PCB liquid,” from the transformer, and sent the
transformer to an approved chemical waste landfill for disposal. The
PCB-laden dielectric fluid and the drained PCB-contaminated solvent
were incinerated upon their removal from the transformers. None
of the foregoing activities is implicated in any charges of wrongdoing
against GE.

Plans to change the process were first implemented in September
1986 when GE purchased seven freon distillation units from Quadrex
HPS, Inc. for use at various GE facilities, including Chamblee. The
distillation method of preparing PCB transformers for disposal em-
ploys trichlorotrifluoroethane (“freon”) rather than oil as the agent
for soaking drained transformers and, according to the initial deci-
sion, was put into effect at the Chamblee facility for a period of
a few months in 1987. Upon completion of an 18-hour soaking phase
under this method, the PCB-contaminated freon was drained from
the transformer into a storage tank. The PCB-contaminated freon
then entered a distillation still, where heating coils separate the
freon from the PCBs as part of a distillation process. The separated
“clean” freon was captured for reuse as a soaking agent, whereas
the collected PCBs were sent off for incineration. The Presiding Offi-
cer found that the distillation process reduced the PCB concentration
in the freon to “less than the regulatory threshold of 50 ppm, and,

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886 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
most likely to less than the practical detection limit of two ppm.”
Initial Decision at 57. ,

According to GE, its primary purpose for purchasing these units
was to minimize the production of PCB liquids requiring incineration
in the process of preparing PCB transformers for disposal, thereby
reducing costs to GE and risks to the environment. GE installed
these distillation units at its Chamblee facility and at facilities in
Cincinnati, Chicago, Cleveland, Philadelphia, Portland (Oregon) and
Houston.?

Operation of the distillation unit at Chamblee commenced on
March 16, 1987. Approximately one month later, a series of commu-
nications took place between EPA and GE concerning GE’s Cleveland
facility but without either party specifically mentioning or acknowl-
edging the situation at the Chamblee facility. Following an inspection
of the Cleveland facility,s EPA’s Chemical Regulation Branch of the
Office of Toxic Substances at EPA headquarters in Washington, D.C.
informed GE that the separation of PCBs from the solvent is an
“alternate” PCB disposal method requiring a permit, and requested
a description of GE’s use of the distillation unit so that EPA could
determine if GE’s activities required a permit. GE was not required
to have a permit for its former method of disposing of the transform-
ers.

GE responded to EPA’s request by letter dated July 9, 1987,
and acknowledged that “the position of the EPA that physical separa-
tion of PCBs from [the solvent] is an alternate destruction method
required to be permitted * * * is well known.” GE further noted
that before commencing operation of the distillation unit in Cleveland
it discussed the matter with EPA Region V personnel, who opined
that physical separation of PCBs is an alternate destruction method
only when used as an alternative to incineration or other approved
disposal methods. According to GE, because GE did not intend to
avoid incineration of the PCBs, Region V agreed with GE that a
permit was not necessary. Region V's concurrence in this regard
is disputed and is not documented in the record, and thus the basis
and authority for the Region’s statement, if it was made, are com-
pletely unknown. In any event, the concurrence, to the extent it

2GE is subject to separate enforcement actions arising from its use of the distilla-
tion units at these other locations. These proceedings were consolidated in December
1990. GE’s motion for a stay of the other proceedings until this case is decided
is currently pending before the Presiding Officer.

8The Cleveland facility was inspected for compliance with a research and develop-
ment permit pertaining to PCB residues in transformer carcasses.

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GENERAL ELECTRIC COMPANY 887
existed, did not last long. On October 1, 1987, the Chemical Regula-
tion Branch of the Office of Toxic Substances at EPA headquarters
informed GE that based upon GE’s description of its activities involv-
ing the distillation unit, the freon recovery portion of the process
was an alternate method of PCB disposal requiring a permit.

GE stopped using the distillation unit at Chamblee on August
13, 1987 (one-and-one-half months before EPA headquarters issued
its October 1 letter stating that a permit was required for the Cleve-
land facility). GE estimates that between March 16, 1987, and August
18, 1987, it had used the distillation unit 12 times and had flushed
50 transformers, processing approximately 9,600 gallons of fluid. An
EPA inspection of the Chamblee facility took place on August 21,
1987 (again, before EPA headquarters had issued its October 1 let-
ter), in response to a report that GE had been using the distillation
unit without a permit. The PCB facility supervisor at Chamblee testi-
fied that GE had been operating the distillation equipment in the
belief that a permit was not required.
B. The Complaint and Initial Decision

On May 12, 1989, Region IV issued a Complaint charging GE
with violations of the PCB use and disposal regulations at the
Chamblee facility. Count I of the Complaint alleges that GE improp-
erly disposed of 10,126 gallons of PCB liquid through a distillation
method.4 The PCB liquid consisted of the material collected from
the transformers following the soaking period. According to the com-
plaint, disposal of PCB material at concentrations greater than 50
ppm by any method other than in an approved incinerator, a high
efficiency boiler, or a chemical waste landfill is a violation of 40
C.F.R. § 761.60(a), unless authorized by a permit pursuant to 40
C.F.R. § 761.60(e).5 The latter section makes an exception for alter-
native methods of destroying PCBs that are equivalent to the author-
ized incineration techniques. A permit is required for use of an alter-
native method, and since GE did not have a permit for its distillation
process, the Region proposed a $125,000 penalty for the Count I
violation.

4At the hearing, the 10,126 gallon figure was corrected to reflect GE’s approxima-
tion of 9,600 gallons of PCB liquid. See Initial Decision at 9.

6The three specific methods of disposal of PCB liquids at concentrations greater
than 50 ppm but less than 500 ppm are detailed in 40 C.F.R. § 761.60(a)(3)(i)-(iii).
These methods of disposal are: in an incinerator in compliance with § 761.70, in
a chemical waste landfill in compliance with § 761.75, or in a high efficiency boiler
in compliance with § 761.60(a)(3)(iii).

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888 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

Count II of the Complaint alleges that between March 16, 1987,
and August 12, 1987, GE’s processing of the same 10,126 gallons
of PCB material by the distillation method violated the regulations
governing use of PCBs, specifically, 40 C.F.R. § 761.20(a) and § 761.30.
According to the complaint, which cites TSCA Compliance Program
Policy No. 6-PCB-2 (“Policy 6-PCB-2”), distilling PCB solvents re-
quires a permit, and GE had operated without a permit. The Region
proposed a $100,000 penalty for this violation.

GE answered the Complaint and specifically denied that its dis-
tillation activities were unlawful. A hearing on the matter was held
on March 19 through March 22, 1991, before Administrative Law
Judge Spencer T. Nissen (the “Presiding Officer”). In his initial deci-
sion of February 7, 1992, the Presiding Officer found that GE had
violated both the use and disposal regulations. He concluded that
GE had violated § 761.60(a) by distilling the PCB-contaminated freon
(the material drained from the transformers after the soaking period)
without a permit. He arrived at this conclusion by equating distilla-
tion with disposal, and since the method of disposal (distillation)
was not specifically authorized in the regulations, GE was not per-
mitted to distill the material without a permit. In other words, with-
out a permit, the only lawful course of conduct open to GE was
to dispose of the material by means of incineration in an approved
incinerator, chemical waste landfill, or high efficiency boiler.

He rejected GE’s argument that because the distillation process
did not literally “destroy” PCBs, the permit regulation, 40 C.F.R.
§ 761.60(e), was inapplicable. GE made this argument because
§ 761.60(e), only mentions destruction as an alternative method of
PCB disposal:

Any person who is required to incinerate any PCBs
and PCB Items under this subpart and who can dem-
onstrate that an alternative method of destroying
PCBs and PCB Items exists and that this alternative
method can achieve a level of performance equivalent
to § 761.70 incinerators or high efficiency boilers

• • • may submit a written request * * * for an
      exemption from the incineration requirements of
• • • § 761.60. * * * [The Agency may] approve the
      use of the alternate method if [it] finds that the
      alternate disposal method provides PCB destruction
      equivalent to disposal in [an] incinerator or a * * *
      high efficiency boiler and will not present an unrea-
      sonable risk of injury to health or the environment.
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GENERAL ELECTRIC COMPANY 889
40 C.F.R. § 761.60(e) (emphasis added). According to the Presiding
Officer, pursuant to Policy 6-PCB-2, the term “destroying” in
§ 761.60(e) encompasses non-destructive means of PCB disposal. His
decision notes that the interpretation embodied in Policy 6-PCB-
2 has been employed by EPA to require applications under § 761.60(e)
for distillation processes similar to GE’s. The Presiding Officer also
noted that the PCB regulations define “disposal” as including decon-
tamination—“{dlisposal includes * * * actions related to containing,
transporting, destroying, degrading, decontaminating, or confining
PCBs” 6&—and concluded that GE’s distillation process was a method
of decontamination and therefore a method of disposal subject to
the permit requirement.

The Presiding Officer also found GE in violation of the use regu-
lations, 40 C.F.R. §§ 761.20(a) and 761.30, but his theory was slightly
different from the one contained in the Region’s complaint. The Re-
gion, it will be recalled, alleged in Count II that the illegal use
consisted of distilling the 10,126 gallons of PCB liquid, which GE
had collected from the transformers following the soaking period.
The Presiding Officer, while not specifically stating that he was differ-
ing from the Region, found that the illegal use consisted of using
the freon portion of the distilled 10,126 gallons for the purpose of
soaking and flushing other PCB transformers. He found that the
distilled freon, although below the 50 ppm regulatory threshold (as
a result of the distillation process), was nevertheless assumed, for
regulatory purposes, to contain the concentration of PCBs originally
contained in the transformers from which the freon had been
drained.7 Because § 761.30 of the use regulations specifies the only
non-totally-enclosed, permissible uses of PCBs (in concentrations
greater than 50 ppm), and, further, because flushing transformers
that have been designated for disposal is not one of those permissible
uses, the Presiding Officer held that GE had violated the regulations
governing use of PCBs.8

In assessing a penalty for these violations, the Presiding Officer
disregarded the 1980 PCB Penalty Policy9 advocated by the Region
because, in his view, the risks underlying the policy’s assumptions

640 C.F.R. § 761.3,

740 C.F.R. § 761.1(b) provides, in relevant part, that:

No provision specifying a PCB concentration may be avoided as
a result of any dilution, unless otherwise specifically provided.

8The Presiding Officer found that the distillation activity was not totally enclosed.

9Guidelines for the Assessment of Civil Penalties Under Section 16 of the Toxic
Substances Control Act. 45 Fed. Reg. 59770 (Sept. 10, 1980).

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890 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

(actual or potential harm to humans) were not present in this case,
i.e, where the violation resulted from an expansive definition of the
term “disposal” and not from any actual or potential discharge of
PCBs. Instead, the only risk presented was the threat to Agency
control over the regulation of the PCBs. In light of this perceived
relatively small risk, and the environmental benefits gained from
the use of the distillation method, the Presiding Officer reduced the
combined $225,000 proposed civil penalty to $40,000 ($25,000 for
Count I and $15,000 for Count II). He rejected GE’s argument, based
on Rollins Environmental Services (N.J.) Inc. v. EPA, 937 F.2d 649
(D.C. Cir. 1991), that no penalty should be imposed because GE
did not have notice of EPA’s interpretation of the regulations requir-
ing a permit for these activities. This appeal followed.

C. GE’s Appeal

GE maintains that it did not violate the disposal requirements
of § 761.60(a) because, as the record shows, it ultimately incinerated
all material removed from the transformers that contained PCBs
above the 50 ppm threshold. In relevant part, § 761.60(a) says that,
with certain exceptions, “PCBs at concentrations of 50 ppm or greater
must be disposed of in an incinerator which complies with § 761.70.”
In addition, GE argues that it was not required to have a permit
for the distillation unit because the distillation process does not de-
stroy PCBs, and the permit requirement applies only to “alternate
method[s] of destroying PCBs.” 40 C.F.R. § 761.60(e) (emphasis
added). GE challenges EPA’s interpretation of § 761.60(e) as requiring
permits for non-destructive means of disposal, arguing that Policy
6—-PCB-2 adopting this interpretation is arbitrary and capricious,
and is an invalid rule promulgated without notice and comment.
In the alternative, GE argues that Policy 6-PCB-2 states that per-
mits are required only when the alternate methods are used to avoid
incineration requirements, and because GE did not avoid any inciner-
ation requirements, it acted in accordance with the policy.

GE further argues that the violation of the use regulations found
by the Presiding Officer is factually derivative of, and otherwise in-
separable from, the disposal violation, and therefore improper as a
separate basis of liability. In the alternative, GE asserts that because
it was processing PCB transformers for disposal, the disposal regula-
tions are the only source of authority for regulating its activities.
Furthermore, if the use regulations do apply to its activities, GE
argues, inter alia, that the distilled freon contains PCBs below the
regulatory threshold of 50 ppm, and that the distillation process
is totally enclosed and therefore authorized under the regulations.
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GENERAL ELECTRIC COMPANY 891
Finally, GE maintains that even if liability is found, no penalty
should be imposed because the use and disposal violations are one
and the same, namely the failure to have a permit, and that, citing
Rollins, supra, GE did not have notice of EPA’s interpretation of
the regulations that a permit was required.
ANALYSIS
A. Regulatory Framework
The decision by Congress in 1976 to regulate PCBs represented,
and in many respects still represents, a unique departure from the
manner in which Congress normally enacts environmental legislation.
Usually, when Congress enacts pollution control legislation, it does
so in broad terms by either focussing on a pollution medium—for
example, air, water, and groundwater—or on categories of pollut-
ants—for example, pesticide chemicals, toxic substances, and hazard-
ous wastes. In either instance, it normally delegates the responsibility
for identifying the particular pollutants that contaminate the me-
dium, or that comprise the particular pollutant category, to the regu-
latory agency charged with responsibility for implementing the legis-
lation (most often the Environmental Protection Agency). Congress
departed from this pattern when it enacted TSCA, for it specifically
singled out PCBs for special attention due to the concern it had
over the persistency, ubiquity, and toxicity of PCBs. It imposed a
complete ban on further production, processing, use, and distribution
of PCBs in other than a totally enclosed manner, except in limited
and tightly controlled circumstances, TSCA § 6(e)(2)(A), and directed
the Administrator to prescribe regulations for their disposal, TSCA
§ 6(e)(1)(A). As explained in In re Briggs & Stratton Corporation,
TSCA Appeal No. 81-1, at 2, n.2 (JO, Feb. 4, 1981):
PCBs are singled out for special treatment under
TSCA because of Congressional concern for the ex-
treme hazards they pose to health and the environ-
ment. See Legislative History of the Toxic Substances
Control Act pp. 212-213, 223-240, 508-509 ([Library
of Congress, Environment and Natural Resources
Policy Division] 1976). Before the agency may regu-
late other substances under TSCA, it must first find
that their production or use presents or will present
an unreasonable risk of injury to health or the envi-
ronment, TSCA § 6(a). In the case of PCBs, however,
Congress declared that regulatory action need not
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892 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
be predicated on independent findings of unreason-
able risk.10
The PCB regulations promulgated by EPA mirror the Congres-
sional concern over this family of chemicals and detail that concern
with specific findings regarding their risks:
[T]he Administrator hereby finds, under the author-
ity of section 12(a)(2) of TSCA, that the manufacture,
processing, and distribution in commerce of PCBs
at concentrations of 50 ppm or greater and PCB
Items with PCB concentrations of 50 ppm or greater
present an unreasonable risk of injury to health
within the United States. This finding is based upon
the well-documented human health and environ-
mental hazard of PCB exposure, the high probability
of human and environmental exposure to PCBs and
PCB Items from manufacturing, processing, or dis-
tribution activities; the potential hazard of PCB expo-
sure posed by the transportation of PCBs and PCB
Items within the United States; and the evidence
that contamination of the environment by PCBs is
spread far beyond the areas where they are used.
In addition, the Administrator hereby finds, for pur-
poses of section 6(e)(2)(C) of TSCA, that any exposure
of human beings or the environment to PCBs, as
measured or detected by any scientifically acceptable
analytical method, may be significant, depending on
such factors as the quantity of PCBs involved in
the exposure, the likelihood of exposure to humans
and the environment, and the effect of exposure.
40 C.F.R. § 761.20.
The general ban on the manufacture, processing, use, and dis-
tribution of PCBs in other than a totally enclosed manner is only
10As further explained in Briggs & Stratton, “it is only when an exemption is
sought from the restrictions and prohibitions imposed on PCBs pursuant to § 6(e)
{of TSCA] that EPA must make findings concerning risks, and in those instances,
the findings must clearly indicate that the proposed activity to be carried out pursuant
to the exemption ‘will not present an unreasonable risk of injury to health or the
environment, TSCA § 6(e2XB).” Briggs & Stratton, supra, at 25. It is in part for
this reason that the regulations, which exempt PCBs in quantities of less than 50
ppm from the general prohibitions and requirements of the regulations, set forth
specific findings of unreasonable risk for PCBs in quantities in excess of 50 ppm.
See 40 C.F.R. § 761.20.
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GENERAL ELECTRIC COMPANY 893
lifted when the Administrator of EPA authorizes it, by rule, upon
a finding that “such manufacture, processing, distribution in com-
merce, or use (or combination of such activities) will not present
an unreasonable risk of injury to health or the environment.” TSCA
§ 6(e)(2)(B).

With this background, it is not surprising to find that the PCB
regulations promulgated by EPA are comprehensive in scope, and
are intended to establish prohibitions and requirements to carry out
the congressional policy of only allowing continued manufacturing,
processing, distribution, and use in limited and strictly controlled
circumstances. See generally 40 C.F.R. Part 761. A violation of either
a requirement or a prohibition contained in the regulations con-
stitutes a violation of the Act.11 Seven broad categories of PCB-
related activities are covered by the regulations: manufacturing, proc-
essing, distribution in commerce, use, disposal, storage and marking.
See 40 C.F.R. § 761.1(a). The first four activities (manufacturing, proc-
essing, distribution in commerce, and use) are grouped under Subpart
B of the regulations; one activity—marking—forms a separate group
of its own under Subpart C; and the remaining two (disposal and
storage) are combined in Subpart D. See 40 C.F.R. Part 761. Knowing
exactly which activity is at issue is important since it helps define
which regulatory requirements and prohibitions are applicable to par-
ticular types of conduct.12

GE’s appeal raises questions as to which category or categories
of activities it was engaging in when it installed and operated the
distillation system at its Chamblee facility. Specifically, was GE
“using” PCBs when it reintroduced the distilled freon solvent into
another drained PCB transformer, or was it merely engaging in an
ancillary activity associated with the disposal of the PCB transform-
ers? GE argues that “use and disposal are two separate activities

11 Section 15 of TSCA states, in pertinent part, that it is “unlawful for any person
to)(1) fail or refuse to comply with * * * (B) any requirement prescribed by section

• • • 2605 [TSCA § 6] of this title, (C) any rule promulgated * * * under section
• • • 2605 [TSCA § 6] of this title * * *.”

12]t has been held that the person who engages in the identified activity is
subject to the particular prohibitions and requirements pertaining to that activity.
In re City of Detroit, Public Lighting Department et al., TSCA Appeal No. 89-5 (CJO,
Feb. 6, 1991) (disposal requirements apply to the person who causes the disposal
of PCBs); cf, 40 C.F.R. § 761.1(b). If a person does not engage in a particular activity,
the prohibitions or requirements pertaining to the activity do not apply to that person.
See City of Detroit, supra, at 15, n.24 (“the disposal requirements apply to manufactur-
ers, users, processors, and storers of PCBs only if such persons dispose of PCBs”);
In re Nello Santacroce & Dominic Fanelli, d/b/a Gilroy Associates, TSCA Appeal
No. 92-6, at 10 (EAB, Mar. 25, 1993) (same).

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894 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

which are separately regulated [and] once something crosses the line
from use to disposal there is no return.” GE Brief at 31. GE also
argues, in the alternative, that its activity is exempt from the use
regulations because (i) the concentration of PCBs in the distilled
freon solvent was less than the regulatory threshold of 50 ppm and
(ii) the flushing and distillation took place in a totally enclosed man-
ner, and therefore, is exempt from various prohibitions respecting
use. The Region’s complaint, on the other hand, assumes that GE
was engaging in both categories of activities simultaneously (or nearly
so), and consequently lodges charges against GE under both Subpart
B (manufacturing, processing, etc.) and Subpart D (storage and dis-
posal). Because of the dichotomy in views, it is appropriate to exam-
ine the charges against GE in relationship to these two categories
and, where necessary, the two categories in relationship to each other.
B. Disposal Issue

1.

During the time period at issue GE was preparing PCB trans-
formers for disposal and was therefore subject to the disposal regula-
tions of Subpart D, 40 C.F.R. Part 761. Section 761.60(b)(1) author-
izes two basic methods of transformer disposal: incineration in an
approved incinerator or disposal in an approved chemical waste land-
fill.13 No specific approval is required to implement either choice.
Subpart D also makes provision, in § 761.60(e), for alternative meth-
ods of “destroying” PCBs and PCB transformers, provided the person
proposing a particular alternative method “demonstrate[s] that [the]

• • • alternative method can achieve a level of performance equiva-
      lent to § 761.70 incinerators or high efficiency boilers as specified
      in [§§ 761.60(a)(2)(iv) and 761.60(a)(3)iv)] * * *.” Unlike the two basic
      methods of disposal, selection of an alternative method of disposal
      requires advance EPA approval; in effect, the applicant must obtain
      a permit from EPA as a prerequisite to qualifying under § 761.60(e).

GE did not apply for or obtain a permit before it started using
its distillation system.14 As a result, its compliance with Subpart
D must be evaluated under the applicable regulations governing dis-
posal without a permit. An examination of those regulations reveals

18See note 17, infra, for text of relevant portions of 40 C.F.R. § 761.60(b)(1).

14 Although GE has subsequently applied for and obtained a permit, that fact
is irrelevant to the liability determination in this proceeding. GE submitted a formal
application for approval of all of its distillation units. It did this to avoid controversy,
but without conceding that approval was necessary. The application as amended was
approved by EPA on November 14, 1989.

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GENERAL ELECTRIC COMPANY 895
that the disposal of PCB transformers in a chemical waste landfill
is specifically addressed in the regulations in § 761.60(b)(1)(i)(B), and
that the requirements of this section are mandatory.!5 It provides
that the transformer must first be “drained of all free flowing liquid,
filled with solvent, allowed to stand for 18 hours, and then drained
thoroughly.” Next, “PCB liquids that are removed [from the trans-
former] shall be disposed of in accordance with paragraph (a) of
this section [§ 761.60].” Id. Paragraph (a), in turn, prescribes a choice
of three separate methods of disposal for such liquids: incineration
in an approved incinerator, disposal in an approved chemical waste
landfill, or disposal in an approved high efficiency boiler. 40 C.F.R.
§ 761.60(a)(3).

There is no dispute that GE’s PCB transformers were properly
drained before being sent to an approved chemical waste landfill
for disposal. In addition, there is no question that the high-concentra-
tion PCBs first drained from the transformers were sent directly
to an approved incinerator for disposal.16 The issue of GE’s compli-
ance focusses instead on how to interpret GE’s handling of the
drained PCB-contaminated soaking fluid—referred to as “PCB liq-
uids” in § 761.60(b)(1)(i)(B). This fluid, which consists of the solvent
(freon) and the residues of PCBs washed from the previously drained
transformer, was not sent directly to an approved incinerator, chemi-
cal waste landfill, or high efficiency boiler for disposal. Rather, the
fluid was drained from the transformers and put through GE’s dis-
tillation process during which the freon and PCBs were separated
from each other, with the PCBs being sent off for disposal in an
approved incinerator and the freon being reused for soaking other
PCB transformers.

The term PCB liquids is not defined in the regulations, but
there can be little doubt that the natural reading of the term in
the context of § 761.60(b)(1)(i)(B)17 encompasses the mixture of sol-

15In its brief, GE acknowledges that its disposal activities were conducted pursu-
ant to § 761.60(b)(1)()(B). GE Brief at 28-29, 32, and 34.

16PCB mineral oil dielectric fluid drained from PCB transformers must be inciner-
ated in an approved incinerator in accordance with § 761.6Q(a)(1). The options of
disposing of such liquids in a high efficiency boiler or in a chemical waste landfill

are not available. See 40 C.F.R. § 761.60(a)(3).

17 The complete text of the regulation provides as follows:

(b) PCB Articles—(1) Transformers. (i) PCB transformers
shall be disposed of in accordance with either of the fol-
lowing:
(A) In an incinerator that complies with § 761.70; or
(B) Ina chemical waste landfill which complies with § 761.75;
‘Continued
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896 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

vent liquid and the PCB fluids rinsed from the transformers, i.e.,
the whole of what is drained from the transformers at the conclusion
of the 18-hour soaking period. To read “PCB liquids” as referring
to just one of two components of these liquids suggests an ease
of divisibility that has no support in the language of
§ 761.60(b)(1)(i(B).18 Nor does it have any support in physical reality,
as evidenced by the necessity of subjecting the liquids to a complex
distillation process in order to divide them into their constituent
components. Thus, to qualify under § 761.60(b)(1)i)(B), GE must dem-
onstrate that it incinerated the mixture identified as PCB liquids,
rather than any single component of the mixture or both components
individually over a span of time.

GE argues that all PCBs, including the PCB liquids, were eventu-
ally disposed of in an incinerator in accordance with § 761.60. This
argument ignores the plain language of § 761.60(b)(1)(i(B). The fact
that the PCB-contaminated component of the mixture may have been
immediately incinerated in accordance with § 761.60(a) is irrelevant
to whether the mixture itself, i.e., the “PCB liquids,” was incinerated.
The same reasoning applies to the solvent component of the mixture.
Thus, even though GE eventually disposed of the solvent component
by incineration (after recycling it several times through several soak-
ing operations),19 that fact is irrelevant to whether the mixture itself
was incinerated. The duty to incinerate applies to the PCB liquids
themselves, as a mixture; no division of the mixture into separate
“Provided, That the transformer is first drained of all free

flowing liquid, filled with solvent, allowed to stand for
at least 18 hours, and then drained thoroughly. PCB lig-
uids that are removed shall be disposed of in accordance
with paragraph (a) of this section. Solvents may include
kerosene, xylene, toluene and other solvents in which
PCBs are readily soluble. Precautionary measures should
be taken, however, that the solvent flushing procedure
is conducted in accordance with applicable safety and
health standards as required by Federal or State regula-
tions.
(ii) [Reserved]
40 C.F.R. § 761.60(b)(1)(i)(B) (emphasis added).

18]f there had been an intention on the part of the Agency to require incineration
of just the PCB component of the PCB liquids, the thought was left unexpressed,
even though it would have been a simple matter to accomplish. For example, rather
than directing the disposal of “PCB liquids,” the regulation could have simply directed
the disposal of “PCBs contained in the solvent.”

19In the course of the distillation process, approximately 10% of the solvent re-
mains with the PCBs in the still bottom. Thus, after a series of distillation runs,
all of the solvent is incinerated with the PCBs. Oral Arg. Tr. at 48.

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GENERAL ELECTRIC COMPANY 897
components is reasonably contemplated by the language of
§ 761.60(b)(1)(i)(B).

Our reading of the term PCB liquids as referring to the mixture
rather than its components means that, as a practical matter, use
of a distillation system without special permission, i.e., without a
permit, is foreclosed to GE and all others who might wish to employ
the same or similar processes for disposing of transformers. That
this result flows from a reading of the language of the regulation,
rather from any specific concern over the inherent safety of the proc-
ess, is not particularly unexpected or problematic in view of the
fact that techniques for safely separating such mixtures into their
constituent parts were evidently either unknown or not sufficiently
developed for inclusion in the regulation at the time it was written.
See, eg., Oral Arg. Tr. at 33 (May 19, 1992); EPA App. Brief at

18. In other words, the possibility of being able to safely separate
    the PCB liquids into PCB and non-PCB components, whereby the
    decision to dispose of the non-PCB component in an incinerator could
    be postponed indefinitely (perhaps forever) by GE and other similarly
    situated persons, was probably a remote consideration, if it existed
    at all. Tr. at 35-36.

Our conclusion that no division of the mixture into components
is permissible is reinforced by the fact that those who wrote the
regulation knew how to make specific provision for, and authorize,
the reuse of the solvent rinsate in appropriate circumstances. In
40 C.F.R. § 761.79, the reuse of solvent used for the decontamination
of PCB containers is specifically authorized.2° There is however, as
we know, no such comparable reuse provision respecting the solvent

2040 C.F.R. § 761.79 provides, in relevant part, as follows:

Decontamination

(a) Any PCB Container to be decontaminated shall be decon-
taminated by flushing the internal surfaces of the con-
tainer three times with a solvent containing less than
50 ppm PCB. The solubility of PCBs in the solvent must
be five percent or more by weight. Each rinse shall use
a volume of the normal diluent equal to approximately
ten)(10) percent of the PCB Container capacity. The sol-
vent may be reused for decontamination until it contains
50 ppm PCB. The solvent shall then be disposed of as
a PCB in accordance with § 761.60(a). Non-liquid PCBs
resulting from the decontamination procedures shall be
disposed of in accordance with the provisions of
$761.60(aX)(4).

() + **

(Emphasis added.)
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898 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

flushing procedure for PCB transformers prior to their disposal. Thus,
we may presume that had the regulations been intended to allow
reuse of GE’s solvent in connection with the disposal of its PCB
tranformers, they would have contained an explicit authorization to
that effect, just as they do with respect to the decontamination of
PCB containers. See 42 Fed. Reg. 26,524-569 (May 24, 1977) (PCB
transformer disposal rules intentionally lack a decontamination rule
similar to that for PCB containers “due to limited information on
successful decontamination techniques for transformers.”). Therefore,
we are not inclined to look upon our reading of the term PCB liquids
as being overly strict.

Accordingly, in view of the fact that the PCB regulations are
written to regulate virtually every aspect of PCBs in a comprehensive
manner, we reject an interpretation of § 761.60(b)(1)(i)(B) that would
allow GE to separate the PCB liquids into separate components prior
to disposal. To comply with the landfill disposal option, it is necessary
to dispose of the entirety of the PCB liquids in accordance with
the authorized disposal methods specified in § 761.60(a).21 GE did
not do that, at least not directly. Instead, by a series of additional
steps, it took an unauthorized detour by sending part of the separated
PCB liquids to an incinerator and retaining the remainder for reuse
in rinsing additional transformers. As a consequence, GE did not
comply with § 761.60(b)(1)(i(B) and was therefore properly charged
with, and found guilty of, violating the disposal regulations. This
conclusion is based on the plain language of § 761.60(b)(1)(i)(B); GE’s
arguments that it did not have fair notice of what the law requires
are rejected.

2.

GE’s proffered defenses are purely legal in nature and, for the
most part, are not even relevant to these charges; they in no way
disprove or offset any of the elements that make up a violation
of this regulatory requirement. For example, GE contends that the
“central issue” of the case is whether it is required to have a permit
issued under § 761.60(e).22 This theory of the case is actually a dis-
traction from the real issue, which is whether GE has satisfied the
regulations for disposing of PCB transformers in a chemical waste
landfill, of which the disposal procedures for PCB liquids are an
integral part. See § 761.60(b)(1)(i)(B). A permit is not necessary to
comply with the landfill disposal option or, for that matter, with

21 See note 5, supra.

22GE Brief at 11 (March 9, 1992); Oral Arg. Tr. at 49-50 (May 19, 1992).
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GENERAL ELECTRIC COMPANY 899
any other requirement respecting the disposal of PCBs and PCB
Items under Part 761 of the regulations. Indeed, the formal complaint
that instituted this enforcement action against GE nowhere alleges
that GE is required to have a permit before it can avail itself of
the landfill disposal option. There are lawful procedures and proc-
esses for GE and others to follow without a permit if they wish
to dispose of PCB transformers, including disposal pursuant to the
landfill disposal option. To comply, GE and others may simply follow
the disposal procedures for PCB transformers and PCB liquids speci-
fied in § 761.60(b)(1)(i)(B).23 A permit, on the other hand, is a regu-
latory tool that allows EPA to conduct a case-by-case evaluation of
alternative disposal techniques prior to their implementation by the
permit applicant. If EPA approves the alternative technique, the per-
mit authorizes the permittee to deviate from the regular (non-permit)
requirements for disposal that would otherwise be applicable. As
such, possession of a permit protects a permittee from charges of
noncompliance with regulatory requirements that could otherwise be
lodged against it.24 Without having applied for a permit, however,
the protection afforded by a permit is obviously unavailable and,
therefore, can have no material bearing on a case in which a non-
permittee is charged with such a violation of the regular (non-permit)
requirements for disposal. This is the situation in which GE finds
itself. Under the circumstances, GE’s efforts to convince us that the
central issue in the case is whether it is required to have a permit
are utterly without force.

Since GE did not have a permit, GE is forced to argue that
none is required for it to employ a distillation system in disposing
23The Complaint does not specifically mention this section number of the regula-
tions; rather, it refers to the landfill option requirement descriptively, i.e., as a “chemi-
cal waste landfill that complies with 40 C.F.R. § 761.75.” Complaint at 1 (Count
1, 44); Although a Complaint is supposed to contain a reference to “each provision
of the Act and the implementing regulations which respondent is alleged to have
violated,” 40 C.F.R. § 22.14(a)(2), the fundamental purpose of the Complaint is to
give the respondent notice of the charges against it. We think that based on the
record of this proceeding there is no reasonable basis for doubting that GE received
such notice in this case. Indeed, as established in note 15 supra, GE acknowledged
that its disposal activities were conducted pursuant to § 761.60(b)(1)(iB).
24The relationship of the permit to the alleged disposal violation is abundantly
clear from the complaint, where it cites § 761.60(e), the permitting provision for alter-
native disposal technologies.
Disposing of PCBs at concentrations greater than 50 ppm in any
manner other than referenced for disposal in a high efficiency
boiler, or chemical waste landfill that complies with 40 C.F.R.
§ 761.75 * * * violates 40 C.F.R. § 761.60(a), unless authorized
at 40 C.F.R. § 761.60(e).
Complaint at 1 (Count I, 14) (emphasis added).
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900 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
of PCB transformers. In so arguing, however, GE is immediately
confronted with the fact that it is unable to cite any regulatory
language that specifically authorizes its distillation activities without
a permit (for the obvious reason that there is none, as explained
previously). To shift attention away from this unpleasant reality,
GE has chosen to indulge in yet another effort at distraction, this
one consisting of an attempt to shift attention to the details of EPA’s
permitting policy. Basically, GE contends that (i) EPA’s policy re-
specting permitting is flawed, or (ii) alternatively, use of its distilla-
tion system is actually consistent with EPA’s policy respecting permit-
ting. It is not necessary, however, to delve into each of the arguments
GE musters in support of these two themes. It suffices to discuss
the highlights since, as previously explained, permitting is not the
issue. Indeed, GE did not have a permit, and the disposal count
of the complaint did not charge GE with violating the terms of a
permit.25

3.

According to GE, EPA’s permitting policy misinterprets the dis-
posal regulations and was adopted without appropriate notice and
opportunity for comment. Before addressing these contentions di-
rectly, it will be helpful to briefly examine the background and scope
of the policy, which is embodied in a document referred to as Policy

25Jt is true that the Presiding Officer makes the statement that GE is required
to have a permit. Initial Decision at 41. Properly read, however, this statement is
simply dictum explaining that GE is required to have a permit if it wishes to employ
its distillation process to dispose of its PCB-filled transformers. As explained in the
text, supra, no permit is required to dispose of the transformers if GE complies
fully with the landfill disposal option specified in § 761.60(b 1)(B), including dispos-
ing of the drained PCB liquids in accordance with § 761.60(a).

‘As a separate but related matter, the Presiding Officer’s analysis of the permit
provision, § 761.60(e), is rightly subject to criticism for having indulged in a small,
but ultimately immaterial measure of flawed logic to arrive at that conclusion. Specifi-
cally, GE explains that the Presiding Officer’s analysis proceeded as follows: (i) the
regulatory definition of disposal in § 761.3 includes destruction, the term used in
§ 761.60(e); (ii) the regulatory definition of disposal also includes the term decontamina-
tion, such as by distillation; and (iii) therefore, destruction and distillation are equiva-
lent for purposes of § 761.60(e), thus allowing EPA to authorize GE’s distillation process
under that section even though the section speaks only of alternate methods of destroy-
ing PCBs. GE correctly points out that simply because the terms destruction and
decontamination (distillation) appear in the definition of the term “disposal” in § 761.3
does not mean that the two terms can be equated with each other for purposes
of § 761.60(e), which speaks only of alternate methods of destroying PCBs. Apart
from agreeing that there is a flaw in this logic, we need not carry it to the point
of agreeing with GE that § 761.60(e) does not authorize EPA to issue permits for
alternate disposal processes, such as GE's, that employ distillation as part of the
process leading to the ultimate destruction of PCBs.

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GENERAL ELECTRIC COMPANY 901
6-PCB-2. Specifically, the Policy addresses the following question:
“Does the physical separation of PCBs from liquids and solids require
EPA approval?” Policy 6-PCB-2 at 1. It concludes that approval
is required for “physical separation activities that can be construed
to be part of, or an initiation of a disposal activity.” It also concludes
that no approval is required in a non-disposal context, as when trans-
formers are being serviced, since servicing of in-use transformers
is not governed by the disposal regulations.26 The Policy notes that
from 1979 to 1982 the Agency interpreted “disposal” differently than
it does now, and physical separation was not considered to be a
disposal activity in the absence of any alteration or destruction of
PCB molecules.2? According to the Policy, the previous interpretation
had “the potential to create a major avenue for avoiding the PCB
disposal requirements.” Because of that, “EPA reviewed its interpre-
tation of the PCB regulations regarding physical separation and
found that the original PCB rules clearly do not exempt PCB process-
ing activities (including physical separation techniques) from the dis-
posal requirements.” The author of the Policy reasoned that “unless
an activity [e.g., physical separation] is authorized by the disposal
regulations, one must obtain specific approval for the activities * * *
in accordance with section 761.60(e) (1982).” Policy at 2. Since this
aspect of the Policy comports with the interpretation of the regula-
tions contained in this decision, we obviously find no fault in it
and believe that its authors were fully justified in changing the
Agency’s previous view towards physical separation of liquids and
solids in the context of disposal activities.

Absent from Policy 6-PCB-2, however, is any detailed or compel-
ling explanation of how EPA can give its approval under § 761.60(e)
for an alternative method of disposing of PCBs which does not involve
destruction of PCB molecules. In other words, insofar as an examina-
tion of the Policy reveals, the Agency’s authority to approve such
a method of disposing of PCBs rests on the unstated assumption
that physical destruction of the molecules is not an essential element
of the approval process under § 761.60(e). GE’s attack on Policy 6—
PCB-2 can best be understood as a challenge to that unstated as-

26Policy 6-PCB-2 states that EPA approval is not required for “activities which
process PCBs during [certain] authorized servicing activities.” The fact that the answer
to the question posed in the Policy varies, depending on the nature of the activity
(use versus disposal), is not unsurprising in view of the separate, and sometimes,
mutually exclusive, regulatory regimes established in Part 761 for disposal and use
activities. See text under the heading, “A. Regulatory Framework.”

27 Policy 6-PCB-2 nevertheless provides scant details regarding (i) who was re-
sponsible for the adoption of the previous interpretation, (ii) its legal or analytical
basis, or (iii) even whether it had ever been reduced to writing.

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902 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

sumption, even though as explained earlier, an attack on EPA’s
stance vis-a-vis permitting is actually a diversion from the real
central issue in the case, namely, did GE comply with the disposal
requirements of § 760.60(b)(1)(i(B), not was GE required to have a
permit.

GE claims that authorizing non-destructive distillation tech-
nologies pursuant to permits under § 761.60(e) is contrary to the
plain language of that provision, which, in its opinion, limits issuance
of permits to persons who employ destructive technologies. In effect,
GE is arguing that the regulations pose a dilemma for the Agency:
the Agency must either adopt GE’s preferred interpretation, which
views distillation as an unregulated adjunct of disposal, or, because
the plain language of § 761.60(e) refers only to destructive alter-
natives, the Agency must recognize that it has no authority under
§ 761.60(e) to grant permits for non-destructive technologies. See, e.g.,
GE Brief at 24-25. The first half of the dilemma is obviously contrary
to the Agency’s current position in this case, whereas the second
half is contrary to the Agency’s current practice of issuing permits
for non-destructive alternative technologies. If the Agency follows ei-
ther course, therefore, it will have to concede that Policy 6-PCB-
2 is in error.

Despite the prominence given by GE to the dilemma and the
unstated assumption that underlies Policy 6-PCB-2, the Board does
not consider it necessary to plumb the depths of these matters. We
reach this conclusion for the reasons previously indicated, namely,
the Agency’s authority to authorize alternative methods of destroying
PCBs and PCB Items under § 761.60(e) has not been shown to have
any material bearing on a case in which a non-permittee (GE) is
charged with a violation of the non-permit disposal requirements.
The regulations are structured to require compliance with the specific
disposal methods set forth in the regulations unless a permit is ob-
tained to use an alternative disposal method. GE did not have a
permit and therefore whatever doubts it might wish to create or
raise regarding the Agency’s authority to issue a permit in any spe-
cific set of circumstances are irrelevant to the charges brought
against GE. Even if we were to assume that the Agency lacks the
authority to authorize distillation as an alternative disposal method
(for example, because § 761.60(e) might be crafted too narrowly to
embrace non-destructive techniques), that would not excuse GE from
complying with the regular (non-permit) disposal requirements. It
would merely call into question the Agency’s authority to excuse
others, who have applied for and obtained permits, from the duty
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GENERAL ELECTRIC COMPANY 903
to comply with those requirements. It might also suggest a need
for the Agency to amend the alternative disposal regulation. But
it most certainly would not legitimize unauthorized disposal methods
that are contrary to the regular (non-permit) disposal requirements.
Therefore, whether Policy 6-PCB-2 misinterprets the meaning of the
term disposal, as GE alleges, and whether it is also a substantive
rule adopted without notice and opportunity for comment, or applied
arbitrarily, as GE also alleges,2® is not critical to the analysis of
the disposal violations with which GE has been charged in this case.

4,

GE also argues, in the alternative, that its distillation process
is consistent with Policy 6-PCB-2 (assuming that it can legally apply
to non-destructive technologies), even without a permit. GE Brief
at 15-19. Among other things, GE maintains that the Agency is
ignoring the language of the Policy when it attempts to subject all
physical separation methods that are part of a PCB disposal process
to the permit requirements of § 761.60(e). GE points to the following
two sentences in Policy 6-PCB-2, and asserts that EPA lays too
much emphasis on the second sentence while ignoring the plain
meaning of the first:

The physical separation of PCBs from liquids and
solids requires an approval if the use or disposal
of these liquids and solids avoids, or is an alternative
to, the disposal requirements that would have ap-
plied to the original material before separation. An
approval is required for physical separation activities
that can be construed to be part of, or an initiation
of a disposal activity.
Policy 6-PCB-2, at 1. According to GE, when the first sentence is
given appropriate weight, no permit is required because its disposal
process, including its solvent distillation system, was not used as
an alternative to ultimate incineration. In making this argument,
however, GE conveniently ignores the fact that the first sentence
is not limited in scope to incineration, i.e., it does not say that
physical separation requires an approval if the disposal of the PCBs
“avoids, or is an alternative to, incineration.” Rather, the first sen-
tence plainly speaks of avoidance of disposal requirements. In this
28GE Brief at 19 et seq. (asserting that Policy 6-PCB-2 is an invalid legislative
rule issued without complying with the requirements of the Administrative Procedure
Act); see also id. at 25 (asserting that Policy 6-PCB-2, as construed by the ALJ,
is arbitrary and capricious).
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904 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

case, the disposal requirements applicable to GE, as previously estab-
lished, include disposing of the PCB liquids, as a whole, in an ap-
proved incinerator, an approved landfill, or an approved high effi-
ciency boiler, in accordance with § 761.60(a)(3). See 40 C.F.R.
§ 761.60(b)(1)GXB). There is no authority to dispose of PCB liquids
by separating the mixture into its component parts and then using
or disposing of the parts individually. Thus, GE’s disposal process,
“avoids, or is an alternative to, the disposal requirements,” and there
is no merit to GE’s contention that the Policy condones implementa-
tion of its process without a permit, merely because all PCBs eventu-
ally reach an incinerator where they are destroyed.

GE also maintains that its distillation process is consistent with
Policy 6-PCB-2 because it is wrong to assume that its distillation
process falls within the definition of disposal. GE Brief at 15. GE’s
analysis in support of this contention is not easy to discern, see
GE Brief at 15-19, but we believe it runs along the following lines:
Policy 6-PCB-2 does not require approval for the GE distillation
process under § 761.60(e) because (i) the process is non-destructive
and (ii) avoidance of PCB disposal requirements is neither the intent
nor the result of the distillation process. See 40 C.F.R.
§ 761.60(b)(1)(i)(B). Further, because of the foregoing, the distillation
process itself is not subject to the disposal requirements set forth
in § 761.60(a). We reject this analysis.

What GE is attempting to do by this line of reasoning is to
focus exclusively on the distillation phase of its disposal activities
so that GE can characterize it to suit its purposes. For example,
because no destruction is actually involved in distilling the PCB liq-
uids, that step is supposedly benign and not subject to the disposal
regulations. In this manner GE hopes that we will overlook the
overall design of its disposal activities and thereby escape regulation.
Plainly, however, there is no basis in the regulations for such a
divide and conquer strategy. There are at least two bases for rejecting
it.

First, as noted above and elsewhere in this decision, the entire
process of disposing of PCB transformers in a chemical waste landfill
is addressed in a comprehensive manner in the regulations at
§ 761.60(b), which includes disposing of the drained PCB liquids, as
a whole, in an approved incinerator, an approved landfill, or an
approved high efficiency boiler, in accordance with § 761.60(a)(3). See
40 C.F.R. § 761.60(b)(1)(i(B). GE did not do that; instead, it distilled
the PCB liquids for the purpose of separating the solvent from the
PCBs so that it could then dispose of the PCBs and reuse the solvent
VOLUME 4

‘ 905
to rinse PCB transformers designated for disposal. As explained be-
fore, no such division of the PCB liquids is contemplated by the
regulations; they must be left intact.

Second, even if division of the PCB liquids were otherwise per-
missible under the regulations, the process of distilling them is itself
a form of disposal when undertaken to remove contaminants. The
definition of disposal in § 761.3 includes “actions related to containing,
transporting, destroying, degrading, decontaminating, or confining
PCBs.” 40 C.F.R. § 761.3 (emphasis added). The distillation phase of
GE’s disposal activities clearly fits within this definition of disposal
because the objective of the process is to remove contaminating PCBs
from the drained PCB liquids (so that the solvent can be reused
in other transformers). Therefore, even though we do not believe
that it is either appropriate or necessary to separate the distillation
phase of GE’s disposal activities from the other phases, it can be
seen that this phase is also properly characterized as disposal under
§ 761.60(a).2° Consequently, there is no merit to GE’s assertion that
it is wrong to assume that its distillation process falls within the
definition of disposal.

Accordingly, for the reasons stated, we conclude that GE violated
the disposal requirements, as alleged in Count I of the complaint.
We turn next to the use violations alleged in Count II of the com-
plaint.

C. Use Issue

GE makes several arguments in defense of the use violations
alleged in the complaint. For example, it argues that the activities
associated with the alleged use violations (namely, reintroduction
of distilled solvent into other transformers) were carried out in a
totally enclosed manner and are exempt from the various use require-

29 At oral argument before the Board, counsel for GE rejected this interpretation
on the grounds that, under the definition of disposal, disposal does not occur unless
the useful life of the PCBs has been terminated. (The first sentence of the disposal
definition in § 761.3 provides that disposal “means intentionally or accidentally to
discard, throw away, or otherwise complete or terminate the useful life of PCBs
and PCB Items.”) Counsel further contended that the useful life of the distilled PCBs
in GE's case did not end in the distillation unit, but rather occurred when the distilled
PCBs were incinerated. Tr. at 11 (“{tJhere’s no ending the useful life here in this
distillation unit * * * [it] “occurred * * * in an incinerator.”). We reject this argument.
The useful life of the PCBs ended, at the very latest, when the transformer owners
decided to dispose of the transformers. At that point, the original use for which
the PCBs were employed in the transformers came to an end and no further legitimate
use of the PCBs was permissible under the law.

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906 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

ments and prohibitions contained in the regulations. GE Brief at
34 et seq. It also contends that the alleged use violations lack any
merit because the Agency failed to establish that the PCB content
of the reintroduced solvent was at or above regulated levels, whereas
the ALJ found that the solvent in fact had “less than the regulatory
threshold of 50 ppm, and, most likely * * * less than the practical
detection limit of two ppm.” Id. at 27-28. GE further contends that
the alleged use violations are entirely derivative of the alleged dis-
posal violations and therefore does not constitute a separate offense
under the law. It is not necessary for us, however, to address all
of the foregoing defenses to the alleged use violations, for GE also
argues in the alternative that because it was processing PCB trans-
formers for disposal, its activities are regulated only by the disposal
regulations. Because we agree with this alternative argument, it ef-
fectively renders further discussion of any other aspect of the parties’
use arguments moot. Accordingly, the remaining discussion in this
part will focus on GE’s alternative argument.

In our opinion, the regulations governing PCB use and disposal
are intended to be mutually exclusive concepts as they apply to GE
and similarly situated persons: PCBs are either in use or they are
in some state of disposal, but they are not both simultaneously.3°
As GE explains, “use and disposal are two separate activities which
are separately regulated [and] once something crosses the line from
use to disposal there is no return.” GE Brief at 31. The Region
does not respond to this assertion. Nevertheless, the underlying truth
of the assertion is borne out by an examination of the disposal regula-
tions, see generally, 40 C.F.R. Part 761, Subpart D (Storage and
Disposal), which by their terms are not activated until PCBs are
removed from service and designated for disposal. Once disposal is
undertaken, the PCBs and PCB Items are governed by the disposal
regulations. As explained in a prefatory note to the disposal regula-
tions,

Note: This subpart [Storage and Disposal] does not
require removal of PCBs and PCB Items from service

30In contrast, some of the other categories of activities covered by 40 C.F.R. Part
761 are not mutually exclusive. For example, the transportation category will apply
whenever PCBs are being transported, regardless of whether the PCBs are in use
or designated for disposal. See, e.g., Hearing Tr. at I-38. A similar lack of mutual
exclusivity applies to the storage regulations. Id.

The only explanation in the PCB regulations of the interrelationship of the various
subparts of Part 761 of the PCB regulations appears in a brief passage in 40 C.F.R.
§ 761.1(c). Unfortunately, it does not shed any light on the issues raised in this
proceeding.

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GENERAL ELECTRIC COMPANY 907
and disposal earlier than would normally be the case.
However, when PCBs and PCB Items are removed
from service and disposed of, disposal must be under-

taken in accordance with these regulations. * * *

Other subparts are directed to the manufacture,

processing, distribution in commerce, and use of

PCBs and may result in some cases in disposal at

an earlier date than would otherwise occur.
40 C.F.R. § 761.60 (1986) (prefatory note) (emphasis added). Although
this language does not, by its terms, explicitly preclude the Subpart
B use regulations from coming into play after PCBs and PCB Items
have been “removed from service and disposed of,” such a possibility
seems remote in light of the specific statement in the prefatory note
that disposal of such PCBs and PCB Items “must be undertaken
in accordance with these regulations,” ie., referring specifically to
the disposal regulations. In other words, the prefatory note expresses
the notion, consistent with the phasing-out of PCBs as contemplated
by the enabling legislation, that these potentially hazardous materials
are to be eliminated once their permissible uses have ended. As
explained by Dr. John Smith, one of the Region’s witnesses, “[t]he
ultimate objective of the regulations * * * for the allowed uses was
to allow use of PCB material for the length of their usefulness as
long as that use didn’t present a risk. * * * But once those author-
ized uses ended, they were to be disposed of. Once there was a
determination for disposal, there was no going backwards from dis-
posal to use.” Tr. at I-31, 32; see also 44 Fed. Reg. 31529 (May
31, 1979) (“the intent of the law is for PCB activities to be banned”).
In other words, the disposal determination signals that the PCBs
are entering a one way street for purposes of further regulatory
analysis. Therefore, it would be inconsistent with the governing
theme of TSCA § 6(e) to assume that the draftsmen of the regulations
contemplated any reactivation of the Subpart B use regulations once
the PCBs and PCB Items had been “removed from service and dis-
posed of.” The Subpart B use regulations are designed to prescribe
prohibitions for the use of PCBs and PCB Items that are legitimately
in use prior to their removal from service and disposal. See generally
40 C.F.R. Part 761, Subpart B.31 There is no suggestion anywhere
31There is one place in the Subpart B regulations, 40 C.F.R. Part 761, Subpart
B (Manufacturing, Processing, Distribution in Commerce, and Use of PCBs and PCB
Items), that mentions disposal of PCBs, but it serves to highlight the contrasting
treatment of disposal activities compared to nondisposal activities such as manufactur-
ing and use. See 40 C.F.R. § 761.20(c). Nondisposal activities are subject to a strict
prohibition against processing and distribution unless there is a specific exemption
Continued

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908 ENVIRONMENTAL ADMINISTRATIVE DECISIONS

that the prohibitions contained in these Subpart B regulations should
govern illegitimate “uses” of PCBs and PCB Items that have been
removed from service and disposed of, i.e., uses that are illegitimate
in the sense of being inconsistent with the requirements for disposal
in the Subpart D regulations. Rather, such uses become unlawful
by reason of their inconsistency with the disposal regulations.

Accordingly, for the reasons stated, we do not believe that the
use violations alleged in the complaint, and upheld in the Initial
Decision, can be sustained. As discussed above, GE’s activities are
related solely to disposal.

PENALTY

Count I of the Complaint alleges that between March 16, 1987
and August 13, 1987, GE violated 40 C.F.R. § 761.60(a) by disposing
of the PCB-contaminated freon in the distillation unit without a per-
mit. The Region proposed a $125,000 penalty for this violation. Count
II of the Complaint alleges that between March 16, 1987 and August
13, 1987, GE violated 40 C.F.R. § 761.20(a) and § 761.30 by using
the distilled freon to soak PCB transformers. The Region proposed
a $100,000 penalty for this violation.

The Presiding Officer sustained the violations alleged in both
counts of the complaint, but he reduced the penalties in each in-
stance. In assessing a penalty for the alleged violations, the Presiding
Officer disregarded the 1980 PCB Penalty Policy because the risks
underlying its assumptions (actual or potential harm to humans)
were not present in this case where, in his view, the violation resulted
from an expansive definition of the term “disposal” and not from
any actual or potential discharge of PCBs. Instead, according to the
Presiding Officer, the only risk presented was the threat to Agency
control over the regulation of the PCBs. In light of this relatively
small risk, and the environmental benefits gained from the use of
the distillation method, the Presiding Officer reduced the civil penalty
to $25,000 for Count I and $15,000 for Count II, for a total aggregate
penalty amount of $40,000.
in place or they are otherwise exempted in the regulation. Id. Disposal activities
in contrast are identified as activities that may be undertaken without any specific
exemption. See 40 C.F.R. §§ 761.20(c)(2) and (c)(4); 40 C.F.R. § 761.20(c) (disposal activi-
ties may be conducted “without an exemption [from a general ban on processing
or distributing PCBs], under the conditions specified [in subparagraphs (c1)-(6) of
§ 761.20].”) This separate (and special) treatment of disposal activities further serves
to emphasize the mutually exclusive relationship of the use and disposal regulations.
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GENERAL ELECTRIC COMPANY 909

Based on our dismissal of Count II of the complaint, the only
remaining task before us is to decide what penalty amount is appro-
priate for the disposal violations in Count I of the Complaint. Since
the Region did not appeal the Presiding Officer's reduction of the
proposed penalty, our focus is necessarily limited to GE’s appeal
of the penalty portion of Count I of the complaint.5?

GE first argues that no penalty should be imposed because no
violation occurred. Since we have determined that the violation al-
leged in Count I should be sustained, we reject this argument as
grounds for not imposing a penalty. GE next argues that, even if
the violation is sustained, we should nevertheless not impose any
penalty, citing several reasons, including the lack of environmental
harm and the environmental benefits that are supposedly derived
from use of the distillation process. As to these contentions, we be-
lieve they were adequately taken into account by the Presiding Officer
by reducing the proposed penalty from $125,000 to $25,000. GE also
argues that no penalty should be imposed because the regulations
do not give sufficient notice that a permit is required before engaging
in the distillation activities. GE relies on Rollins Environmental Serv-
ices (N.J.) Inc. v. EPA, 937 F.2d 649 (D.C. Cir. 1991), in support
of this contention. Although that case upheld an Agency finding that
Rollins Environmental Services (NJ), Inc. had violated an Agency
regulation, the court nevertheless nullified the Agency’s penalty as-
sessment against Rollins on the grounds that the meaning of the
regulation was uncertain and therefore failed to provide adequate
notice of the regulation’s substance. The court appeared to be saying

32 As noted in the Board’s April 20, 1992 order granting oral argument, the Region
did not appeal the initial decision despite the significant reduction in the penalty
amount. The Board therefore denied the Region’s request that the $40,000 penalty
assessed by the Presiding Officer be increased to the amount proposed in the Region's
complaint, $225,000. The Region requested reconsideration of this order, which the
Board denied by order dated May 6, 1992. Two considerations entered into that conclu-
sion. First, unlike the Federal Rules of Appellate Procedure (Rule 4(a)(3)), the Agency's
rules do not provide additional time for the filing of a cross-appeal. Second, the
Agency’s rules do, however, provide in 40 C.F.R. § 22.30(a)(2) that “Reply briefs shall
be limited to the scope of the appeal brief.” Taken together, these two considerations
make clear that the omission from the Agency’s rules of a provision similar to the
Federal Rules of Appellate Procedure was no accident, and a party desiring to change
the judgment contained in initial decision is obligated to file its own appeal to secure
such review as of right. As a practical matter, that may mean that a party who
is dissatisfied with a small portion of the judgment, but who is otherwise willing
to accept the judgment if the other party accepts it, may have to file a protective
appeal to preserve its right to contest the portion of the decision that is not to
its liking. Otherwise, it will be foreclosed from contesting that, or any other, aspect
of a judgment in the event the other party does appeal the decision. See Robert
L, Stern, Appellate Practice in the United States)(2d ed. 1989), at 123-126.

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910 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
that to assess a penalty under these circumstances would deprive
Rollins of due process. Id. at 654.
The Presiding Officer rejected the application of Rollins to this
case and so do we. Our reasons for doing so, however, are based
on the discussion previously set forth in this opinion. Specifically,
the regulation requiring GE to dispose of the PCB transformers and
PCB liquids by one of the methods specified in § 761.60(a) is unambig-
uous. Even if the Board or a reviewing court subsequently determined
that the Agency lacks the authority to authorize distillation as an
alternative disposal method (for example, because § 761.60(e) might
be crafted too narrowly to embrace non-destructive techniques), we
do not believe that such a result is relevant to the penalty determina-
tion based on Rollins. As previously explained, whenever one wishes
to dispose of PCBs the regulations are structured to require compli-
ance with the specific disposal methods set forth in the regulations,
unless a permit is obtained to use an alternative disposal method.
This structure is the result of a comprehensive regulatory scheme
for a special, congressionally-targeted class of chemicals, the ultimate
fate of which is its destruction following the useful life of the equip-
ment in which the PCBs are used. The handling of the PCBs and
related equipment is intended to be regulated in a comprehensive
manner, with no room for deviation from prescribed disposal proce-
dures except under the strict supervision of a pre-approved permit
system. Thus, persons handling these materials have a choice of
either following the prescribed procedures or obtaining a permit to
deviate from them. There is no third option of improvising without
a permit while complying with some but not all of the prescribed
procedures. Thus, when GE elected to dispose of the PCB transform-
ers in an approved chemical waste landfill without a permit, it was
required to follow the prescribed procedures for disposal of PCB
transformers in a chemical waste landfill. See § 761.60(b)(1)(i)(B)
(landfill disposal of PCB transformers). In accordance with
§ 761.60(b)(1)(i)(B), these procedures direct GE to dispose of the PCB
liquids as a mixture, in accordance with § 761.60(a), which provides
for three methods of disposal, as prescribed in § 761.60(a)(3). GE
did not have the option of improvising on these procedures by first
distilling the PCB liquids, reusing the non-PCB component of the
distillate, and disposing of both components separately and in stages.
Without a permit, GE’s choices were narrowly limited but, above
all, clear. Therefore, even if it were subsequently held that the Agen-
cy lacked the authority to authorize a distillation process pursuant
to the permit procedures, that result is irrelevant to GE’s responsibil-
ity to follow the prescribed procedures for disposal of the PCB trans-
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GENERAL ELECTRIC COMPANY 911
formers in a chemical waste landfill in the absence of a permit.
Accordingly, there is no basis for applying Rollins to the disposal
violation committed by GE.

CONCLUSION
For the reasons stated herein, we uphold the disposal violation
alleged in Count I of the complaint and dismiss the use violation
alleged in Count II of the complaint.3* GE shall pay a civil penalty
in the amount of $25,000 within sixty (60) after receipt of this deci-
sion unless otherwise agreed by the parties. Payment shall be made
by forwarding a cashiers check or certified check, payable to the
Treasurer, United States of America to:
U.S. EPA—Region IV
Regional Hearing Clerk
P.O. Box 100142
Atlanta GA 30384
So ordered.
33The findings and conclusions of the Initial Decision are adopted and incorporated
in this decision to the extent that they are consistent with this decision.
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