EPA EAB Board decision
Docket TSCA 97-7
Decided September 13, 1999
Citations affirmed
Newell Recycling Company, Inc.
In re Newell Recycling Company, Inc. (EAB TSCA Appeal No. 97-7): liability and $1.345 million penalty affirmed
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Final EAB decision
This Environmental Appeals Board Final Decision is a final disposition of the Toxic Substances Control Act enforcement appeal. The Board affirmed Newell Recycling's liability for improper disposal of PCB-contaminated soil and affirmed the $1.345 million civil penalty, less the amount paid by a co-respondent in settlement. The full text below is the official EPA release.
About this page: The plain-English summary and decision snapshot below were written by Ezel based on the official EPA EAB release. The full text is the agency's own release.
Read the official release (epa.gov)
Plain-English summary
Newell Recycling was responsible for PCB-contaminated soil that remained stockpiled at a Houston industrial facility for years. The Environmental Appeals Board considered whether the enforcement action was timely, whether the stockpiling was regulated disposal, whether Newell was the proper respondent, and whether the penalty should be reduced. It held that the disposal violation continued while the contaminated soil remained improperly stored, and that the evidence supported Newell's liability under the PCB rules. The Board affirmed liability and the $1.345 million penalty, less the amount paid by a co-respondent in settlement.
Decision snapshot
- Cited authorities: 15 U.S.C. §§ 2605, 2614, and 2615; 28 U.S.C. § 2462; 40 C.F.R. §§ 22.19, 22.22, 22.30, 761.1, 761.3, and 761.60.
- Outcome: Liability and the $1.345 million civil penalty were affirmed, subject to deduction of the co-respondent's settlement payment.
- Key point: A disposal violation continued while PCB-contaminated soil remained on site without proper disposal, so the enforcement action was timely.
Full text (EPA EAB public release)
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598 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
IN RE NEWELL RECYCLING COMPANY, INC.
TSCA Appeal No. 97–7
FINAL DECISION
Decided September 13, 1999
Syllabus
Newell Recycling Company, Inc. (“Newell”) has appealed from orders of
Administrative Law Judge Edward J. Kuhlmann (“Presiding Officer”) dated April 28, 1997,
and October 7, 1997. In his April 28, 1997 order, the Presiding Officer ruled that Newell
had violated the PCB disposal requirements applicable to PCB-contaminated soil, 40 C.F.R.
§ 761.60(a)(4), and had thereby violated TSCA § 15, 15 U.S.C. § 2614, throughout the peri-
od from September 10, 1992 through February 21, 1994. In his October 7, 1997 order, the
Presiding Officer assessed a penalty against Newell for those violations in the amount of
$1.345 million (less the amount of a settlement with EPA entered into by a co-respondent),
pursuant to TSCA § 16, 15 U.S.C. § 2615. In its appeal, Newell also challenges a February
7, 1997 ruling denying Newell’s request for leave to take discovery beyond that generally
contemplated in 40 C.F.R. § 22.19(b).
Newell owned and operated an industrial facility in Houston, Texas during portions
of the 1970s and early 1980s. Newell sold the facility to Oklahoma Metal Processing
Company, Inc. d/b/a Houston Metal Processing Company (“HMPC”) during 1982, with
Newell retaining a contractual responsibility for certain pre-sale environmental problems
associated with the facility. Lead contamination was found to be present at the facility in
1984, and Newell thereafter became involved in the planning and execution of a cleanup
of lead-contaminated soil. During this cleanup, in February 1985, it was discovered that 41
electrical capacitors had been buried at the facility at some earlier time. PCB fluids had
leaked from the buried capacitors into the surrounding soil. The capacitors were excavat-
ed and ultimately removed from the facility. The PCB-contaminated soil was excavated,
gathered into a pile, and stockpiled at the facility. Over the ensuing months and years,
Newell and HMPC failed to agree concerning who should bear the responsibility for
removal and proper disposal of the PCB-contaminated soil. The PCB-contaminated soil,
excavated in February 1985, remained in a pile at the facility until September 1995, more
than ten years later. In March 1995, EPA Region 6 commenced this TSCA enforcement action
against Newell and HMPC. (The Region’s action against HMPC was ultimately settled.)
On appeal, Newell raises the following challenges associated with the Presiding
Officer’s liability ruling: (1) The action is barred by the applicable five-year statute of lim-
itations, 28 U.S.C. § 2462; (2) In that connection, the additional discovery requested by
Newell would have enabled Newell to show that the Region had notice of the presence
of the excavated soil more than five years before it filed this enforcement action;
(3) “Disposal” of the PCBs at issue in the case occurred only at the time the capacitors
were buried, and therefore Newell cannot have engaged in any “disposal”; (4) Regulated
“disposal” occurs under TSCA and its implementing regulations only if preexisting site
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conditions are “exacerbated,” which (according to Newell) did not occur in this case; (5) It
was not Newell Recycling Company that was involved in the events recounted in the com-
plaint, but rather one of its affiliated companies—meaning that the Region named the
wrong party in its complaint; and (6) The Region failed to prove that the soil contained reg-
ulated concentrations of PCBs, either as of September 1992 (the beginning of the period for
which penalties were sought) or as of February 1994 (the end of the penalty period).
Regarding the Presiding Officer’s penalty assessment, Newell argues that the
Presiding Officer was required to hold an evidentiary hearing before assessing a penalty,
and argues as well that the penalty should have been reduced or eliminated in view of a
number of mitigating circumstances.
Held: The Presiding Officer correctly adjudged Newell liable for violating the disposal
requirements applicable to PCB-contaminated soil, and both his liability and penalty
assessment decisions are upheld.
This action is not barred by the five-year statute of limitations. For limitations pur-
poses, the disposal violation at issue in this case continued until the contaminated soil was
properly disposed of. Because the soil was still on-site, and was not properly disposed of,
as of the date of filing of this action, the action was timely filed. Moreover, the discovery
sought by Newell concerning the date or dates on which the Region received notice of
conditions at the facility could not have been relevant to the statute of limitations; hence,
the Presiding Officer did not err in the discovery ruling challenged by Newell in this
appeal.
Newell’s contention that “disposal” occurred only when the capacitors were first
buried and discharged fluids into the soil is rejected. The events at issue here fall within
the regulatory definition of “disposal” at 40 C.F.R. § 761.3. Moreover, nothing in TSCA or
the applicable regulations suggests that regulated disposal has occurred only if site condi-
tions can be shown to have been “exacerbated.” Finally, the Region presented sufficient
evidence to demonstrate both that Newell Recycling Company was a party to this viola-
tion and that the soil pile associated with the violation contained regulated levels of PCBs.
In connection with the amount of the penalty, we conclude that Newell failed to raise
a genuine issue of material fact with respect to the calculation of an appropriate penalty,
and that the Presiding Officer was, therefore, under no obligation to hold an evidentiary
hearing on that subject. We further conclude that the Presiding Officer did not err in declin-
ing to mitigate the penalty based on Newell’s proffered justifications.
Before Environmental Appeals Judges Scott C. Fulton,
Ronald L. McCallum, and Edward E. Reich.
Opinion of the Board by Judge Fulton:
Respondent Newell Recycling Company, Inc. (“Newell”) appeals
from orders of Administrative Law Judge Edward J. Kuhlmann (“Presiding
Officer”) dated April 28, 1997, and October 7, 1997. In his April 28, 1997
order, the Presiding Officer ruled that Newell had, throughout a 529-day
period from September 10, 1992, through February 21, 1994, continuous-
ly violated 40 C.F.R. § 761.60(a)(4), which prescribes disposal require-
ments for soil contaminated with polychlorinated biphenyls (“PCBs”) at
concentrations of 50 ppm or greater. Section 761.60(a)(4) is a rule prom-
ulgated under section 6 of the Toxic Substances Control Act (“TSCA”), 15
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600 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
U.S.C. § 2605; violations of section 761.60(a)(4) are therefore unlawful
acts pursuant to TSCA § 15, 15 U.S.C. § 2614, for which administrative
penalties are assessable pursuant to TSCA § 16, 15 U.S.C. § 2615. In his
October 7, 1997 order, the Presiding Officer assessed a penalty against
Newell in the amount of $1.345 million, less the amount paid to EPA in
settlement by Newell’s co-respondent in this action, Oklahoma Metal
Processing Company, Inc. d/b/a Houston Metal Processing Company
(“HMPC”).
Newell has appealed both the Presiding Officer’s liability decision
and his penalty assessment decision. In addition, Newell challenges a
February 7, 1997 ruling in which the Presiding Officer denied a motion
by Newell for leave to conduct discovery beyond that which is described
in section 22.19(b) of EPA’s Consolidated Rules of Practice Governing the
Administrative Assessment of Civil Penalties, 40 C.F.R. § 22.19(b).1 For the
reasons set forth herein, we affirm the Presiding Officer’s liability deci-
sion and penalty assessment.
I. INTRODUCTION
A. Overview of the Case
A number of years before the actions giving rise to this case, capac-
itors containing PCB-contaminated liquids were apparently buried at the
site located at 5225 Fidelity Road in Houston, Texas, which is currently
owned by HMPC (hereinafter the “Fidelity Road site” or the “HMPC site”).
During a cleanup of lead contamination at the site in February 1985, the
buried capacitors were discovered and then excavated, along with a large
volume of PCB-contaminated soil. While the capacitors themselves were
disposed of off-site, the PCB-contaminated soil was left behind in a large
pile. It is this excavation and stockpiling of PCB-contaminated soil at the
Fidelity Road site that is at the heart of this case.
The complaint in this matter alleges that on September 10, 1992, an
EPA inspector discovered the soil pile at the site. Complaint ¶ 7. Samples
taken from the soil by the inspector revealed PCBs at levels greater than
1
We note that the Consolidated Rules of Practice Governing the Administrative
Assessment of Civil Penalties and the Revocation or Suspension of Permits, 40 C.F.R. pt. 22,
were amended on July 23, 1999, with the amended version of the rules becoming effec-
tive on August 23, 1999. See 64 Fed. Reg. 40,138 (July 23, 1999). All citations to the part 22
rules in this decision refer to the rules that were in effect just prior to the issuance of these
amendments.
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NEWELL RECYCLING COMPANY, INC. 601
50 parts per million—the action level for PCBs under TSCA. Id. ¶¶ 14–15.
As stated in the complaint, PCB-contaminated soil of this kind must be
disposed of either at a TSCA-compliant incinerator or in a chemical waste
landfill approved for disposal of such waste. Id. ¶ 25. Failure to so dis-
pose of such waste is a violation of TSCA, giving rise to liability for civil
penalties. Id. ¶¶ 37–39, Section III (of the Complaint).
The complaint alleges that Newell had been the owner or operator of
the Fidelity Road site “from 1974 until approximately 1982,” and had then
sold it to HMPC. Id. ¶ 3. The PCB-contaminated soil, according to the com-
plaint, had been excavated “by Newell, or by a third party at the direction
of Newell, and placed in [the] pile at the Houston Facility.”
Id. ¶ 10. In view of the alleged failure to remove and properly dispose of
the waste pile, the complaint proposed a civil penalty against Newell and
its co-respondent, HMPC, for the 529-day period running from September
10, 1992, through February 21, 1994, totaling $1.345 million. Id. Section III.2
As discussed more fully below, the Presiding Officer found that the
Region had satisfied the essential elements of its complaint and, accord-
ingly, assessed a penalty in this matter of $1.345 million. He found that
Newell committed an act of improper disposal by knowingly causing
PCB-contaminated soil to be excavated and stockpiled in a corner of the
HMPC site, and then “leaving [the PCBs] there and taking no further
clean-up action.” Partial Accelerated Decision on Issue of Liability at 23.
In this appeal, Newell contends that it was not involved in the excava-
tion and stockpiling of the soil and did not otherwise engage in any act
constituting PCB “disposal.” Newell claims that the soil pile was never
shown to contain regulated levels of PCBs. Newell maintains that any
regulated PCB disposal activity at the HMPC site ended more than five
years before the commencement of this action, and that the action is
therefore untimely. Newell also raises several arguments in opposition to
the Presiding Officer’s civil penalty assessment.
B. Factual Background
The facts of this case, while somewhat complex, are not materially
in dispute. Given their significance to the legal issues raised by appellant,
however, they are set out in some detail below.
2
The February 21, 1994 closing date for the Region’s penalty calculation apparently
derives from the fact that this was the date of HMPC’s response to a subpoena issued by the
Region, which served to confirm that the PCB-contaminated soil was still on-site. As explained
below, the contaminated soil was not actually disposed of until considerably later—between
September 20 and 28, 1995. It is unclear from the record why the Region elected not to seek
penalties for the period running from February 22, 1994, to September 19, 1995.
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602 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
On September 10, 1992, an EPA inspector conducted a PCB compli-
ance inspection at the Fidelity Road site, owned and operated at that time
by HMPC. At the inspection, HMPC Vice President and General Manager
Francis Garrigues related to the inspector that the facility had a “histori-
cal connection * * * with PCB contamination.” Complainant’s Exhibit
(“CX”) 4 at 4 (PCB Compliance Inspection Report).3 Specifically, accord-
ing to the inspection report, Mr. Garrigues advised that the facility had
been purchased by HMPC “in 1982 from Newell Recycling (of San
Antonio) which recycled lead batteries.” Id. He went on to state that soil
sampling by the Texas Water Commission in 1984 had disclosed the pres-
ence of lead contamination, and that during the ensuing excavation of
lead-contaminated soil there were found, among other things, a number
of buried capacitors. He stated that the capacitors themselves had been
removed,4 but that the contaminated soil in which those capacitors had
been buried was still on-site in a pile. The inspector took photographs of
the pile of contaminated soil and collected three samples of the soil for
laboratory analysis.
The samples were analyzed for PCB content on September 24, 1992,
and the resulting report dated October 7, 1992 (CX 5) states that “[t]here
was Aroclor 1248 detected in all three samples at levels greater than 50
ppm.” Aroclor 1248 is a form of polychlorinated biphenyl subject to reg-
ulation under TSCA, and the EPA regulations promulgated thereunder
governing the manufacturing, processing, distribution in commerce, and
use of PCBs (hereinafter the “PCB Rule”). Significantly, these rules cover,
among other things, soil contaminated with specified levels of PCBs. 40
C.F.R. § 761.1(b); see also 40 C.F.R. § 761.60(a)(4) (providing that “dispos-
al requirements” apply to “[a]ny non-liquid PCBs at concentrations of 50
ppm or greater in the form of contaminated soil, rags, or other debris”)
(emphasis added). The pile of soil observed during the September 1992
inspection of the HMPC facility, and immediately thereafter shown to
contain Aroclor 1248 in concentrations greater than 50 ppm, was there-
fore governed by the disposal requirements of the PCB Rule.
HMPC’s response to a subpoena duces tecum issued to it on or about
January 13, 1994, by U.S. EPA Region 6, provides a chronology that is (for
all purposes material to the present proceeding) essentially undisputed
3
The exhibit numbers cited in this opinion, both for the complainant and the respon-
dent, are the numbers that the parties have assigned to them in their appellate briefs. They
may or may not correspond to the numbers assigned by the parties to the same exhibits
in their pre-hearing exchanges in the proceedings before the Presiding Officer.
4
In reality, six capacitors were still on-site. See CX 8 at 16.
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NEWELL RECYCLING COMPANY, INC. 603
regarding the continued presence of an uncontrolled, PCB-contaminated
soil pile at the HMPC facility.
According to the documents, the Fidelity Road property had been
sold to HMPC during 1982 by a seller identified (in the text of the pur-
chase and sale agreement) as “Newell Recycling Co., a Texas
Corporation.” CX 6 at 1. The purchase and sale agreement contains a
number of representations and warranties by the seller (Newell Recycling
Co.), one of which, in particular, has an important circumstantial bearing
on whether Newell caused, or contributed to the cause of, the unlawful
disposal of PCB-contaminated soil. The agreement provides that Newell
Recycling Co. “specifically assumes any liability resulting from an occur-
rence prior to the closing date of this sale.” CX 6 at 6 (¶ 2.5(a)).5 The
agreement further includes among the seller’s representations and war-
ranties the statement that, to the best of the seller’s knowledge, “all the
property” to be conveyed “conform[ed] in all material respects to appli-
cable * * * environmental (including air, water and solid waste laws and
regulations) * * * laws and ordinances.” CX 6 at 8 (¶ 2.9).
Soil sampling at the Fidelity Road property for suspected lead con-
tamination (based on “the nature of the previous work” performed there)
was apparently first demanded by the Texas Department of Health, with-
in two years after the sale of the property to HMPC. CX 11 (report by
Raba-Kistner Consultants, Inc. [“Raba-Kistner”] dated January 15, 19856 )
at 1. Indeed, a substantial likelihood of finding lead contamination requir-
ing “cleanup” was evidently assumed, both by the current owner and by
the former owner of the property, as of the autumn of 1984. On October
16, 1984, Wayne R. Mathis, Executive Vice President of “Newell
Enterprises, Inc.,” 7 wrote the following letter to Mr. Garrigues of HMPC:
Dear Francis:
In the process of our negotiations with the State on the
proposed cleanup of the site for lead content, the State
5
The purchase and sale agreement, which was executed on September 8, 1982, con-
templated a closing date “not later than October 5, 1982.” CX 6 at 14. The specific date on
which the transaction actually closed is of no particular concern for purposes of this case.
6
To be precise, the first page of this report is dated January 15, 1985, but some sub-
sequent pages are dated December 26, 1984. The document’s authenticity has not been
questioned, and thus the noted discrepancy is of no significance.
7
Although Mr. Mathis first appears in the record as an executive officer of a Newell
entity, he is identified in subsequent correspondence as “of counsel” to the San Antonio
Continued
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604 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
has requested that we provide them with a letter from
your company authorizing Newell to begin testing and
cleanup. Accordingly, if possible, I would appreciate
your providing me with such a letter of authorization for
Newell Recycling Co., Inc., Newell Products of Houston,
Inc., and Newell Industries, Inc.
Respondent’s Exhibit (“RX”) 9 at 7.8 Mr. Garrigues complied with that
request by letter dated October 18, 1994 (CX 14):
As per your request, please find hereby our
authorization to begin testing and perform the clean-up
operation of our property located at 5225 Fidelity Road,
Houston, TX for the following companies:
—Newell Recycling Co., Inc.
—Newell Products of Houston, Inc.
—Newell Industries, Inc.
The testing and the clean-up of the site are for lead
content.
law firm Brock & Kelfer (CX 19, CX 22)—which, by the end of 1989, was evidently
renamed Brock & Mathis. See CX 18. Notwithstanding his apparent departure for private
law practice, however, Mr. Mathis remained closely involved with the situation at the
HMPC site.
8
It is in RX 9 that the Board encounters, for the first time, a reference to several dif-
ferent “Newell” entities. As discussed later in this opinion, Newell Recycling Co. (the appel-
lant in this proceeding) argues that if any violation of the PCB Rule was committed in this
case, the violation was committed by one of the other “Newell” entities or by some other
non-party. The Board will address that contention in due course. For now we note simply
that it is already apparent, from the limited chronology recounted thus far, that appellant
Newell Recycling Co. was the seller of the property to HMPC (and hence the party that
contractually undertook to “assume[] any liability resulting from an occurrence prior to the
closing date” (CX 6 at 6)) and that it was also — logically enough, given its contractual
assumption of liability for pre-sale “occurrences” — among the companies that sought
(RX 9) and obtained (CX 14) authorization from HMPC to conduct the lead cleanup at the
HMPC property.
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The documentary chronology resumes with the January 15, 1985 Raba-
Kistner report (CX 11) alluded to earlier, which reports the following:
Mr. Wayne Mathis of Newell collected twelve soil samples
and submitted these to [Raba-Kistner] for analysis. * * *
Additional samples were collected by [Raba-Kistner] on
August 17, 1984 * * *. These samples reveal that lead con-
tamination is present * * *. Results [of additional testing]
indicated that the mid and high range samples leached at
levels considered hazardous under the provisions of the
Resource Conservation and Recovery Act (RCRA).
CX 11 at 1–2. The report concludes with a tentative recommendation that
soil in the affected areas be removed and taken to a nearby hazardous
waste facility for disposal. CX 11 at 5.
At this point, the documentary record temporarily lapses into silence.
A note composed by Mr. Garrigues — on which we would ordinarily hes-
itate to rely because it is undated, but which is offered for our examina-
tion not only by the Region but also by Newell (RX 6) — recounts that:
Between February and August 1985, clean-up opera-
tions start. Scrapping [sic] 10 inches of soil and piling dirt.
Subsequently, the soil was to be tested again to see if
additional scrapping was necessary. During scrapping,
electric transformers containing PCB oil are found buried.
Newell Enterprises inc. (John) passes the file to
Newell Manufacturing (Scott).
Everything stops.[9]
9
Two points should be noted in connection with this document. First, although the
document refers to buried “transformers,” HMPC’s later response to EPA’s subpoena clear-
ly states that only “[b]uried capacitors were excavated from the HMPC site during the ini-
tial cleanup of lead contaminated soil which was conducted by Newell in February, 1985.”
CX 8 at 16 (emphasis added). HMPC’s account refers to a total of 41 buried capacitors, 35
of which were removed from the site on June 23, 1989, and six of which were still on-site
as of February 10, 1994. Id. at 16–17; see also RX 7 at 1–2 (“waste data profile sheet” dated
June 23, 1989, referring to removal of “35 PCB capacitors” from the site). Second, in a
descriptive index to the exhibits accompanying its appellate brief, Newell asserts that this
note “describes Newell Enterprises involvement in excavation of soil pile in 1985.” Exhibits
to Brief for Appellant at i (filed Nov. 3, 1997). In reality, the note states that an entity called
“Newell Enterprises” passed a “file” to an entity called “Newell Manufacturing” at some
Continued
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606 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
It appears clear, in any event, that by April 24, 1985, Raba-Kistner had
already begun analyzing soil samples from the HMPC site for PCB con-
tent. RX 9 at 16.
The next correspondence between buyer and seller is dated August
19, 1985. In that correspondence, Timothy F. Johnson—identified by his
stationery as General Counsel to “The Newell Companies”—writes to
Mr. Garrigues to “bring you up to date on where we are with the PCB
cleanup.” CX 27 at 1. Mr. Johnson reports, in substance, that the “PCB
cleanup” is going to “take longer * * * than what we had anticipated.” This
is attributed to a delay in obtaining results of a “chemistry analysis that
we needed,” and to an impending change in the State regulatory struc-
ture that was expected to shift “the authority for this problem” from the
Department of Health to the Texas Water Commission. Id. Mr. Johnson
refers briefly to a proposed cleanup plan involving biological treatment
of PCB-contaminated soil, estimates the PCB cleanup cost at “somewhere
around $160,000.00,” and concludes: “I apologize for the delay in this
matter, but I am sure you realize that it is very important to both you and
Newell that it be done right the first time through.” Id. at 1–2.
When the parties next correspond six months later (March 21, 1986),
it appears that a dispute is taking shape. Mr. Garrigues writes directly to
Mr. Alton Newell of Newell Recycling Co., noting that “we have had a
pile of contaminated soil in a corner of our yard for about one year,” and
threatening to turn the matter over to an attorney if “the cleanup program
has not been completed” within the following two months. CX 26.
That letter elicits a response from Mr. Johnson dated April 12, 1986,
acknowledging receipt of Mr. Garrigues’s letter and “assur[ing] you that
we are taking it quite seriously.” CX 25 at 1. Mr. Johnson’s letter makes
no attempt to deflect responsibility for implementation of a cleanup plan
away from Newell Recycling Company. It suggests, rather, that because
the State regulatory structure is still in flux, “we [i.e., Newell] have not
been able to find anyone who will give us final approval on a cleanup
plan.” Id.
point after PCB contamination was first encountered. Neither of the named entities is
described as having any particular role or “involvement” in the “excavation of [the] soil pile
in 1985.” Indeed, neither “Newell Enterprises” nor “Newell Manufacturing” was among the
entities for which authorization was requested (RX 9 at 7) and granted (CX 14) to partici-
pate in the lead cleanup in the first instance.
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The documentary record then advances to August 27, 1986, when
Mr. Johnson writes to the environmental consulting firm Lockwood,
Andrews & Newnam, Inc. (“LAN”). Although not yet willing to execute a
formal agreement for the services of that firm, he writes that “Newell
Recycling Company would like for you to proceed to develop a testing
plan and begin to execute it.” CX 24. Indeed, Mr. Johnson’s August 1986
letter presses the Lockwood firm “to move this project along as quickly
as possible.” Id.
No further correspondence appears in the record until January 22,
1987. On that date, with almost two years having elapsed since the dis-
covery of PCB contamination, Mr. Garrigues again writes directly to Alton
Newell of Newell Recycling Co. Referring back to his letter of March 21,
1986, Mr. Garrigues indicates that Mr. Newell had personally visited the
site shortly after receiving that letter and that “after your personal visit we
were really under the impression that thing[s] would start happening
fast.” Mr. Newell’s site visit notwithstanding, however, “[t]en months have
passed since then and the situation remains the same as far as we are
concerned.” CX 23. Mr. Garrigues concludes by stating that HMPC will
now begin charging Newell Recycling Co. a monthly fee “as compensa-
tion for not being able to use and enjoy freely the contaminated land.
This charge will remain in effect until completion of the clean-up.” Id.
In May 1987, LAN, having apparently been formally retained by
Newell Recycling (see CX 24), issues a “Site Clean-Up Interim Report”
(CX 9). In the Interim Report, LAN solicits additional guidance from the
parties because “the initial sampling results are much higher than antici-
pated”; moreover, there may well be more bad news still to come, given
that “the initial sampling effort did not define the aerial [sic] and vertical
extent of the contamination.” In other words, LAN (and by extension, the
parties) faced a potentially more significant job than expected. But the
Interim Report was clear and unequivocal in asserting that the problem,
whatever its magnitude, absolutely had to be addressed:
PCB clean-up will fall under the Toxic Substances
Control Act (TSCA) Compliance Program. TSCA policy
states that all improperly disposed PCB shall be cleaned
up to background levels. This has also been interpreted
to be the lowest level below 50 ppm practicably attain-
able through the use of normal clean-up methods.
At a minimum, that means the [sic] all soil con-
taminated with greater than 50 ppm PCB must be
removed from the site. Wastes with these concentrations
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608 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
must be incinerated or disposed of in a chemical waste
landfill.
CX 9 at 4 (emphasis added).
Perhaps predictably, the ensuing correspondence is between attor-
neys. At first, however, it appears that Newell Recycling Co. still intends
to move forward with the cleanup in some fashion. Attorney Wayne R.
Mathis (the former Newell Executive Vice-President) writes, on behalf of
Newell Recycling Co., to HMPC’s counsel Mark A. Huvard on June 8,
1987. Counsel have apparently met during the previous month, and
Mr. Mathis writes that after the meeting “I discussed our fact situation
with the consultants I have retained, Lockwood, Andrews & Newnam,
Inc. (‘LAN’).” He indicates that “additional reports” from LAN will be
forthcoming and will be made available to HMPC, and that “[m]y staff is
currently working on the information to be provided to you * * * and I
expect to mail this out sometime next week.” CX 22 at 1–2. Copies of this
letter are also sent to LAN and to a Mr. John Triesch of “Newell Recycling
Co.” Id. at 2.
During the remainder of June and much of July the attorneys nego-
tiate a three-year tolling agreement (see CX 20 [6/16/87 Huvard to
Garrigues, enclosing draft]; CX 19 [7/6/87 Mathis to Huvard, enclosing
draft]; CX 21 [final agreement with signatures dated as of July 17, 23, and
31, 1987]). A new party has also entered the picture: The parties to the
tolling agreement are Newell Recycling Co., Inc., Oklahoma Metal
Processing Company, Inc. (d/b/a HMPC), and “J.L.B. Investment
Corporation, N.V., a Netherlands-Antilles corporation” (to which “certain
rights [have been] assigned” by HMPC with respect to some or all of the
Fidelity Road site). CX 21 at 1. In substance, the agreement provides that
for the following three years, Newell Recycling Co. will not interpose a
statute of limitations defense to any claim or cause of action that HMPC
(or J.L.B.) might bring against it based on the contamination of the
Fidelity Road property. The agreement is an effort to keep Newell
Recycling’s potential liability to HMPC alive for an additional three years,
but it says nothing about any plan to proceed with site remediation—
even though the agreement, while in draft form, did note that the Fidelity
Road property “has substantial PCB contamination and lead contamina-
tion” and that “the parties acknowledge and agree that the problem pre-
sented by the PCB contamination and lead contamination is a serious
one.” CX 20 at 1.
A lengthy period of apparent inactivity follows the execution of the
tolling agreement. The silence is broken only after EPA Region 6 conducts
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an October 19, 1989 PCB inspection at the Fidelity Road property. In the
report describing that investigation, the EPA inspector notes that the PCB-
contaminated area has not been marked in any way and that it is acces-
sible to HMPC employees and to pets that are living on-site. Having been
advised by HMPC officials that HMPC itself accepts no PCB-contaminat-
ed materials for recycling, the inspector reports making contact with
Newell Recycling:
Mr. Eric Green of Newell Recycling indicated that the
clean-up was being handled by the law firm Rock &
Mathis [sic]. Mr. Wayne Mathis of Rock & Mathis was then
contacted * * *. Mr. Mathis explained that the previous
owner does not feel responsible for the clean-up cost,
but that ENSR consultants had been hired to prepare a
remediation plan of the facility. Mr. Mathis also explained
that Newell Recycling is currently involved in a law suit
with [the Texas Water Commission] and other property
owners regarding a similarly contaminated site in Corpus
Christi and that Newell Recycling is currently waiting for
the lawsuit settlement and TWC approval of the Corpus
site remediation plan before proceeding with any clean-
up efforts of the Houston Metal Processing site.
RX 11 at 9. The inspector’s inquiry leads him to conclude simply that “the
clean-up effort at [HMPC] was dropped for unknown reasons.” He urges
in his report that, once the safety of plant workers and animals has been
ensured, removal and disposal of the contaminated soil should com-
mence right away:
The contaminated area should be made physically inac-
cessible to plant employees and pets and any soil migra-
tion should be minimized as no erosion control measures
have yet been taken. If possible however, the contami-
nated soil should be removed and disposed of as soon as
possible.
RX 11 at 9.
Among the interesting features of the 1989 inspection report is the
fact that, once again, representatives of Newell Recycling are not report-
ed to have pointed to the involvement of any other “Newell” entity.
Rather, Newell Recycling asserts through counsel that it “does not feel
responsible” and has therefore decided to do nothing pending the out-
come of litigation involving a “similarly contaminated” but otherwise
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unrelated site. Other information in the record tends to corroborate the
view that Newell Recycling’s disclaimer of responsibility was predicated
on the company’s belief that an expensive cleanup was beyond its con-
tractual accountability, not because some other Newell entity was the
responsible party. See CX 18 (December 9, 1989 Letter from HMPC
Counsel Mark Huvard to Wayne Mathis).
The record reflects one more effort by LAN to focus the parties’
attention on their TSCA obligations. In a January 1990 “Technology
Assessment and Economic Evaluation,” LAN reminds the parties that its
original recommendations with respect to the HMPC site were presented
in June 1987, and observes that “[r]ecent contact with the U.S. EPA has
prompted renewed interest in cleanup requirements at the site.” CX 17 at
1. After reiterating the findings of its 1987 investigation, LAN advises as
follows:
After contact with the U.S. EPA, it was established that
PCB’s had to be reduced to background levels for a clean
site closure. The site could be remediated to a PCB con-
centration of 25 ppm and deed record [sic] for in place
closure. This is also predicated on a proper in place clo-
sure plan, i.e. groundwater protection and cap. The soil
with PCB concentration has to be treated or disposed of
by methods acceptable to the U.S. EPA under TCSA [sic].
It was determined that for contaminated soil two methods
are allowed by TCSA. The soil either had to be incinerat-
ed or landfilled, both in at [sic] approved facilities.
CX 17 at 3 (emphasis added). LAN’s advice was apparently disregarded.
As recounted at the outset of this discussion, as of September 1992
the pile or piles of contaminated soil were still on-site. Some additional
sampling was conducted by HMPC in late 1993, confirming the presence,
in one of the soil piles, of a PCB concentration (based on a composite of
six samples) of 314 ppm. CX 13. EPA then filed this TSCA enforcement
action in March 1995. On May 24, 1995, HMPC and Newell Recycling
Company executed an agreement wherein Newell Recycling Company10
agreed to “remove and arrange for the proper and lawful disposal of the
120 ton soil pile * * * at its own expense.” RX 15 at 1. On September 22,
1995, HMPC filed a civil action against Newell Recycling Co. and certain
of its affiliates and controlling persons in the U.S. District Court for the
10
Conspicuously absent from this agreement is any reference to any of the other
Newell entities.
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Southern District of Texas, alleging breach of the May 1995 agreement,
breach of the September 1982 agreement for the sale of the Fidelity Road
property, fraud, and causes of action arising under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (“CER-
CLA”). CX 1. Between September 20 and September 28, 1995, 495,000
pounds of contaminated soil were finally removed from the site and trans-
ported, by the American Ecology Transportation Company, to a disposal
facility in Beatty, Nevada. CX 29. The ultimate cost of removal of the con-
taminated soil from the HMPC site was, according to Newell, $84,000.11
C. Proceedings Below
Upon examining the documentary record—which he aptly described
as “a ten year argument over who would pay the cost of removing the
contaminated soil”—the Presiding Officer resolved the liability issues
regarding both respondents on cross-motions by EPA Region 6 and by
HMPC12 for accelerated decision. See 22 C.F.R. § 22.20(a).13 With respect to
Newell Recycling in particular, the Presiding Officer ruled that liability for
improper disposal attached because Newell Recycling, like HMPC, “con-
trolled the improper disposal of the PCBs at the facility”:
Newell Recycling undertook an analysis of the scope of
the problem and had a plan developed for removal of the
contaminated soil. A contractor over which Newell
Recycling had control removed the contaminated soil
into a pile. Newell Recycling knew that the lead-contam-
inated soil would need to be removed and it knew that
the PCB-contaminated soil which it placed in a pile at the
facility was disposed of improperly. The original closure
plan under which excavation was initiated called for dis-
posal [of lead-contaminated soil] at a hazardous waste
11
There is some uncertainty in the record about what the $84,000 actually represents.
In its appellate brief, Newell cites the $84,000 figure, first, as the cost to “remov[e]” the
PCB-contaminated soil, but then (a few sentences later) as the “total disposal cost.” Brief
for Appellant at 47. In a Declaration executed by Newell’s attorney, the attorney states:
“The pile was removed in 1995 with OMP performing the work and Newell Recycling pay-
ing the bill ($84,000).” Nasuti Decl. ¶ P. In any case, the Region has not contested this num-
ber, notwithstanding the fact that far higher estimates of projected costs appear elsewhere
in the record.
12
Newell filed a notice with the Presiding Officer indicating that Newell wished to join
in the Motion for Accelerated Decision that had been filed by HMPC.
13
Section 22.20(a) authorizes the Agency’s Presiding Officers to render an accelerated
decision “as to all or any part of [an enforcement] proceeding * * * if no genuine issue of
material fact exists and a party is entitled to judgment as a matter of law.”
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612 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
disposal facility. Subsequent cleanup plans addressing
PCBs called for offsite disposal of regulated levels of
PCBs. However, rather than completing the requirements
of the original closure plan, or following the later recom-
mendations for site cleanup, Newell discarded the PCBs
at the Fidelity Road facility by leaving them there and tak-
ing no further clean-up action. Newell’s actions in creat-
ing the pile, confining the contaminated soil in a central
stockpile, and abandoning it are actions meeting the
definition of “disposal” in 40 C.F.R. § 761.3.
Partial Accelerated Decision on Issue of Liability at 22–23 (April 28, 1997).
The Presiding Officer denied Newell’s Motion for Reconsideration of the
liability ruling in an order dated June 4, 1997, whereupon HMPC entered
into a settlement with the Region. The Presiding Officer considered briefs
submitted by the Region and by Newell with respect to an appropriate
penalty, but did not conduct an evidentiary hearing on the penalty issues.
Rather, on October 7, 1997, the Presiding Officer issued a Decision on
Complainant’s Motion for Assessment of Civil Penalty, assessing a civil
penalty against Newell Recycling in the total amount of $1.345 million,
which he further ordered to be reduced, dollar-for-dollar, by the amount
paid by HMPC pursuant to its settlement agreement with the Region.
Newell Recycling has appealed the Presiding Officer’s liability rulings
and his penalty assessment decision. In addition, Newell Recycling
appeals an earlier order of the Presiding Officer denying Newell’s request
for leave to take discovery exceeding the parameters of the typical Part
22 exchange of documents. The appeal is timely and the Board has juris-
diction pursuant to 40 C.F.R. § 22.30.
II. DISCUSSION
The Board reviews the Presiding Officer’s factual and legal conclu-
sions on a de novo basis. 40 C.F.R. § 22.31(a). Matters in controversy must
be established by a preponderance of the evidence. Id. § 22.24; see In re
B.J. Carney Indus., 7 E.A.D. 171, 217 (EAB 1997). As the orders from
which appeal is taken are challenged, in part, because they were sum-
mary adjudications rendered without an evidentiary hearing, our review
will consider whether there are any genuine issues of material fact rela-
tive to the issues raised. See In re Green Thumb Nursery, Inc., 6 E.A.D.
782, 792–93 (EAB 1997); see also 40 C.F.R. § 22.20(a) (Presiding Officer
may enter an accelerated decision as to “all or any part” of a proceeding,
“if no genuine issue of material fact exists and a party is entitled to
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NEWELL RECYCLING COMPANY, INC. 613
judgment as a matter of law”).14 In the discussion that follows, we address
the challenged discovery ruling, the applicable statute of limitations, the
issues surrounding Newell’s TSCA liability, and finally the calculation of
the penalty.
A. Discovery
Newell contends that the Presiding Officer committed reversible
error by denying Newell an opportunity to conduct discovery concerning
the Region’s alleged misconduct in commencing this enforcement action.
The applicable regulatory provision is 40 C.F.R. § 22.19(f) (“Other
Discovery”), which states in part:
(1) Except as provided by paragraph (b) of this
section [concerning prehearing exchanges of exhibits and
witness lists], further discovery, under this section, shall
be permitted only upon determination by the Presiding
Officer:
(i) That such discovery will not in any way unrea-
sonably delay the proceeding;
(ii) That the information to be obtained is not other-
wise obtainable; and
(iii) That such information has significant proba-
tive value.
We need not consider issues of obtainability, because the Presiding
Officer was plainly correct in his determination that the information
sought by Newell was not significantly probative.
In its motion for leave to conduct discovery pursuant to section
22.19(f), Newell advised the Presiding Officer that the proposed discov-
ery was intended to demonstrate “an apparent effort [by Region 6] to
avoid being sanctioned since its Complaint was filed March 30, 1995 in
violation of the five (5) year statute of limitations.” Motion for Discovery
at 1 (Jan. 19, 1997). “Respondents’ burden,” Newell explained, “is to
14
We consider the “administrative summary judgment standard, requiring timely pres-
entation [by Newell] of a genuine and material factual dispute, similar to judicial summary
judgment under Rule 56, Fed. R. Civ. P.” Green Thumb, 6 E.A.D. at 793 (citing In re
Mayaguez Reg’L Sewage Treatment Plant, 4 E.A.D. 772, 780–82 (EAB 1993), aff’d sub nom.
Puerto Rico Aqueduct & Sewer Auth. v. EPA, 35 F.3d 300 (1st Cir. 1994)).
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614 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
establish that EPA had notice of the Site and/or its conditions prior to
March 30, 1990.” Id. at 1–2. The proposed discovery would allegedly
have enabled Newell to meet that “burden.”
As the discussion below makes clear, Newell’s proffered grounds for
taking the proposed discovery were flawed. Newell apparently assumed
that the applicable statute of limitations would have been triggered by
EPA’s first “notice” concerning the HMPC site or its “conditions.” That
assumption, as we will show momentarily, was unfounded, and once it
is put aside the discovery proposed to be taken by Newell bears no rela-
tion to any of the matters at issue in this proceeding. The Presiding
Officer, accordingly, did not err by denying Newell’s January 19, 1997
request for leave to pursue discovery.
B. Statute of Limitations
The central issue presented by Newell’s appeal concerns the appli-
cation of the statute of limitations, 28 U.S.C. § 2462, to the essentially
undisputed facts of this case. Section 2462 provides:
Except as otherwise provided by Act of Congress, an
action, suit or proceeding for the enforcement of any civil
fine, penalty, or forfeiture, pecuniary or otherwise, shall
not be entertained unless commenced within five years
of the date when the claim first accrued * * * .
The question, then, is when the claim for which the Region sought a
penalty in this case first “accrued”—specifically, whether the Region’s
claim in this case is or is not governed by the doctrine of “continuing vio-
lations.” As the Board has previously explained:
The limitations period begins to run when a violation first
accrues. The doctrine of continuing violations provides a
special rule for determining when a violation first
accrues. Under the special accrual rule, the limitations
period for continuing violations does not begin to run
until an illegal course of conduct is complete. Thus, if the
doctrine of continuing violations applies * * * , an action
for civil penalties may be initiated during the period of
continuing violations and up to five years after the viola-
tions have ceased.
In re Lazarus, Inc., 7 E.A.D. 318, 364 (EAB 1997) (citations omitted). The
Board has noted that the special accrual rule for continuing
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NEWELL RECYCLING COMPANY, INC. 615
violations is potentially applicable both to violations of “continuing
obligations” and to violations of “continuing prohibitions.” See Lazarus,
7 E.A.D. at 366 n.84; In re Harmon Indus., Inc., 7 E.A.D. 1, 39 n.41 (EAB
1997).15 The focus, then, is on determining whether a particular regulato-
ry obligation or prohibition is, or is not, “continuing in nature.” Lazarus,
7 E.A.D. at 366–67.
We begin by examining the statutory enactment underlying the reg-
ulation allegedly violated. In the TSCA context, the Board has previous-
ly undertaken such an examination in the Lazarus proceeding. The
Board there examined both the statutory provision (TSCA § 6(e)) direct-
ing EPA to promulgate PCB disposal rules and the statutory provision
(TSCA § 16(a)(1)) authorizing EPA to impose administrative penalties for
violation of the rules.
The relevant portion of section 6(e) states only that “the
Administrator shall promulgate rules to * * * prescribe methods for the dis-
posal of polychlorinated biphenyls.” It is silent concerning whether vio-
lations of those rules should be deemed continuing in nature. See
Lazarus, 7 E.A.D. at 377–78. The administrative civil penalty provision,
section 16(a)(1), is somewhat more illuminating. That provision begins by
stating that anyone who violates TSCA section 15—by, for example, fail-
ing to comply with any PCB disposal rule promulgated under TSCA sec-
tion 6—“shall be liable to the United States for a civil penalty in an
amount not to exceed $25,000 for each such violation.” Section 16(a)(1)
then proceeds to explain that, for purposes of applying the $25,000-per-
violation civil penalty cap, “[e]ach day such a violation continues shall
* * * constitute a separate violation of section 15.”
In Lazarus, the Board recognized that “section 16(a)(1) is evidence
that Congress contemplated the possibility of continuing violations of
TSCA.” Lazarus, 7 E.A.D. at 368 (emphasis in original). But the Board fur-
ther concluded that section 16(a)(1) alone “does not transform every vio-
lation of TSCA into a continuing violation.” Id. The Board therefore found
it appropriate, in the TSCA context, to examine separately each regulato-
ry requirement or prohibition allegedly violated for indicia of whether
that particular requirement or prohibition is “continuing” in nature. In this
analysis, “[w]ords and phrases connoting continuity and descriptions of
activities that are typically ongoing are indications of a continuing nature
15
The Board’s decision in Harmon was reversed, on grounds unrelated to the statute
of limitations, in Harmon Indus., Inc. v. Browner, 19 F. Supp. 2d 988 (W.D. Mo. 1998). A
challenge to the District Court’s decision is currently pending before the Court of Appeals
for the Eighth Circuit. Harmon Indus., Inc. v. Browner, No. 98–3775.
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616 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
* * * [whereas] a continuing nature may be negated by requirements that
must be fulfilled within a particular time frame.” Id. at 367 (footnotes
omitted). Lazarus demonstrates that, within the confines of the TSCA PCB
regulations, certain regulatory provisions exhibit indicia of “continuity”
whereas others implicate a “particular time frame,” leading to divergent
applications of the limitations bar. See id. at 372 (obligation to register
PCB transformer with local fire response personnel held continuing in
nature); id. at 373 (obligation to mark transformer room access door with
a prescribed symbol held continuing in nature); id. at 377–79 (obligation
to prepare and maintain yearly records “on the disposition of PCBs and
PCB Items” held not continuing in nature). The Board has not previously
undertaken such an analysis with respect to 40 C.F.R. § 761.60(a)(4), which
Newell is alleged to have violated. The question whether violations of sec-
tion 761.60(a)(4) are “continuing” in nature, for statute of limitations pur-
poses, is therefore one of first impression.
We are not without reliable guideposts, however, given the outlines
of an analytical framework that emerge from Lazarus and, more impor-
tantly, the detailed attention that matters involving PCB disposal have
already received in the Agency’s administrative case law. The provision
at issue in this case, 40 C.F.R. § 761.60(a)(4), has been interpreted in sev-
eral previous Agency decisions concerning matters other than the statute
of limitations. The reasoning in those decisions, when combined with a
close reading of the regulatory text, illumines the issue at hand.
Our point of departure is the text of section 761.60(a)(4):
Any non-liquid PCBs at concentrations of 50 ppm
or greater in the form of contaminated soil, rags, or other
debris shall be disposed of:
(i) In an incinerator which complies with § 761.60; or
(ii) In a chemical waste landfill which complies
with § 761.75.
Previous Agency case law has tended to focus on which parties are
responsible for compliance (and hence potentially liable for failure to
comply). We put that question aside for the moment, although we will
revisit the matter at some length in a subsequent section of this opinion.
For present purposes, a different feature of the regulation is noteworthy:
The regulation contains elements of both obligation and prohibition. It is
written in the affirmative—disposal shall occur in one of two specified
way—but also delivers, clearly and unmistakably, the message that
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NEWELL RECYCLING COMPANY, INC. 617
disposal shall not occur in any other way. In addressing whether viola-
tions of this regulation are continuing in nature, we consider both the
obligation and the prohibition. Both aspects of the regulation direct us
toward the same result.
Viewed as an obligation, the regulation on its face carries no tem-
poral limitation. It does not, as we expressed the idea in Lazarus, pre-
scribe a “requirement[] that must be fulfilled within a particular time
frame.” On the contrary, nothing in the regulation remotely suggests that
the obligation described is discharged or extinguished simply with the
passage of time. Instead, the obligation is discharged only with the occur-
rence of a specified event—the proper disposal of PCB-contaminated soil
at an incinerator or a chemical waste landfill. Until this occurs, compli-
ance with the regulatory mandate has not been achieved, and the respon-
sible party commits, each day, a violation of section 761.60(a)(4). The
regulatory text, accordingly, suggests that an administrative enforcement
action for violation of section 761.60(a)(4) is timely if commenced with-
in five years after the noncompliance ends with the lawful disposal of the
contaminated material.
The same result obtains if we regard section 761.60(a)(4) as a prohi-
bition against methods of disposal other than those specifically author-
ized. It is useful in this regard to examine the broader Subpart D
(“Storage and Disposal”) regulatory framework, and to identify the cir-
cumstances in which the prohibition does not apply, i.e., when it is per-
missible to do something with PCB-contaminated soil other than inciner-
ation or landfilling. There are only two such circumstances. First, if con-
taminated soil was placed in a “disposal site” (which need not be an
incinerator or a chemical waste landfill) before the PCB disposal rules
were enacted, it is sometimes permissible simply to leave the contami-
nated soil in place; such soil is, in effect, not regulated under Part 761.
See 40 C.F.R. § 761.60 (Note). Alternatively, if PCBs in the form of con-
taminated soil are housed in a storage facility meeting stringent regulato-
ry requirements, the soil may be kept in that facility for up to a year; tem-
porary “storage for disposal,” in other words, is a permissible method of
handling PCB-contaminated soil until the end of the one-year grace peri-
od. See 40 C.F.R. § 761.65(a). All other PCB-contaminated soil, however
generated or encountered, is governed by section 761.60(a)(4), and may
not be addressed in any manner other than incineration or landfilling.
Thus, in toto, by forbidding all methods of disposal other than incinera-
tion and landfilling, section 761.60(a)(4) effectively divides the universe
of PCB-contaminated soil among four mutually exclusive categories: (1)
pre-rule, conditionally unregulated soil (largely unaffected by section
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618 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
761.60(a)(4));16 (2) soil lawfully held in storage for disposal (temporarily
unaffected by section 761.60(a)(4)); (3) soil lawfully disposed of in com-
pliance with section 761.60(a)(4); and (4) noncompliant PCB-contami-
nated soil.
In its administrative case law, EPA has treated this fourth category of
soil—that which is subject to TSCA regulation, is not lawfully in storage
for disposal, and has not been lawfully disposed of in an incinerator or
in a chemical waste landfill—as being “in a state of improper disposal.”
In re City of Detroit, 3 E.A.D. 514, 518 (CJO 1991); In re Standard Scrap
Metal Co., 3 E.A.D. 267, 270 (CJO 1990). This is the category of material
with which we are concerned in this case.
What is it that terminates a “state of improper disposal”? The answer
is not, based on anything stated or implied in the regulations, simply the
passage of time. A “state of improper disposal” logically persists until
proper disposal occurs, and, indeed, Agency case law so states: “If [PCBs]
have been taken out of service for disposal, the responsible party must
dispose of the PCBs in accordance with the requirements [of section
761.60(a)(4)]. Failure to do so constitutes a violation of the regulation,
and the violation continues as long as the PCBs remain out of service and
in a state of improper disposal.” Standard Scrap Metal Co., 3 E.A.D. at
269–70. While Standard Scrap did not specifically address this issue in
the context of a statute of limitations dispute,17 we find its logic equally
compelling here.
Thus, in the final analysis, we simply discern no textual or logical
basis—nor does Newell suggest one—for regarding unremedied viola-
tions of section 761.60(a)(4) as being limited, for accrual purposes, to a
single instant, a single day, or any other particular period of time. Indeed,
to conclude otherwise would produce an outcome difficult to reconcile
with the policy thrust of the statute and the regulations. A party legally
16
The record is unclear as to whether the contaminated soil at issue here was, prior
to the February 1985 excavation, in this nonregulated category of material. This is, in any
case, immaterial, as we find that it was Newell’s excavation and stockpiling of the con-
taminated soil that both subjected the material to regulation and established Newell’s
responsibility for proper disposal.
17
Standard Scrap addressed the burden of proof with respect to the applicability of the
“disposal site” exemption from the PCB disposal regulations. The disposal site exemption
appeared in a Prefatory Note preceding 40 C.F.R. § 761.60 and it provided, in part, that “[t]his
subpart does not require PCBs or PCB Items landfilled prior to February 17, 1978 to be
removed for disposal.” The disposal site exemption, which is not at issue in the present
case, was deleted from part 761 effective August 28, 1998. See 63 Fed. Reg. 35,384 (1998).
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NEWELL RECYCLING COMPANY, INC. 619
responsible for ensuring the proper disposal of PCB-contaminated mate-
rial, but disinclined to incur the expense, might well have good reason
simply to do nothing for five years.
We are mindful of the important purposes served by statutes of lim-
itations generally and by section 2462 in particular—including, notably,
the preclusion of enforcement actions based on claims that have become
“stale” with the passage of time. As we recognized in Lazarus, “[p]assage
of time between the date of a violation and the date of prosecution may
serve to obscure basic facts through lost evidence and faded memories.”
Lazarus, 7 E.A.D. at 365. But as we further explained, “[c]oncerns about
staleness * * * are much less compelling when a violative course of con-
duct that began in the past continues unabated into the five-year period
immediately preceding the filing of the complaint.” Id. at 366.
The latter observation brings into focus a second central issue pre-
sented by this appeal: specifically, Newell’s contention that “disposal” is,
by definition, a one-time event that occurs only at the moment when
PCBs are first taken out of service. If Newell’s contention in that regard
were correct, improper disposal logically could never “continue” over
time or be regarded as a “course of conduct,” and the Region’s enforce-
ment action against Newell would not only be time-barred, but would
also fail for lack of any evidence of Newell’s direct involvement in the
original burying of these capacitors at the Fidelity Road site (the moment
at which, according to Newell, the PCBs were first taken out of service).
Having disposed of Newell’s statute of limitations arguments, we there-
fore turn our attention now to this question of the meaning of “disposal”
under 40 C.F.R. part 761, subpart D, and the other related liability issues
that Newell has raised.
C. “Disposal” and Other Liability Issues
1. “Disposal” of PCBs Occurred
Newell raises an extensive series of objections to the Presiding
Officer’s liability ruling, none of which raises a genuine issue of material
fact. First, and most prominently, Newell contends that the Presiding
Officer committed reversible error when he concluded that Newell had
engaged in conduct meeting the definition of “disposal” under the PCB
Rule. Newell’s specific contention in this regard is that “disposal” consti-
tutes a one-time occurrence, and that in this case disposal occurred only
when the capacitors containing PCBs were originally buried and their con-
tents released into the surrounding soil. According to Newell’s theory, the
subsequent excavation and stockpiling of PCB-contaminated soil could
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620 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
thus not constitute “disposal” within the meaning of the PCB Rule.
Because the Region did not produce evidence implicating Newell in the
original disposal of the capacitors, Newell argues, the Region failed to
establish that Newell committed an act constituting unlawful disposal
under 40 C.F.R. § 761.60(a)(4).
We note at the outset that, if Newell’s interpretation of disposal as a
one-time occurrence were correct, no TSCA liability would attach even if
Newell had taken the pile of contaminated soil from the Fidelity Road site
and dumped it into the nearest river, stream, or vacant lot. Such an inter-
pretation would be difficult to reconcile with the environmental protec-
tion goals of the TSCA regulatory regime. See In re Samsonite Corp.,
3 E.A.D. 196, 199 (CJO 1990) (PCB regulations “should be read in such a
way as to further the purposes of the Act, particularly where, as in this
case, public health and safety are involved”) (citing TSCA § 6(e)(2)(B), 15
U.S.C. § 2615(e)(2)(B)); 15 U.S.C. § 2601(b)(2) (calling for regulation of
“chemical substances and mixtures which present an unreasonable risk
of injury to health or the environment”).
In any case, Newell’s interpretation of “disposal” is inconsistent with
the regulatory definition of “disposal” at 40 C.F.R. § 761.3, and thus must
fail. This section provides:
Disposal means intentionally or accidentally to dis-
card, throw away, or otherwise complete or terminate the
useful life of PCBs and PCB Items. Disposal includes
spills, leaks, and other uncontrolled discharges of PCBs
as well as actions related to containing, transporting,
destroying, degrading, decontaminating, or confining
PCBs and PCB Items.
It is true, as Newell emphasizes, that an act of “disposal” occurs
when the “useful life” of PCBs is first brought to an end. Newell is cor-
rect, therefore, in asserting that PCB “disposal” occurred when the capac-
itors were buried at the Fidelity Road site and their contents leaked into
the surrounding soil. Section 761.60(d)(1) of the PCB Rule expressly
confirms that this is so: “Spills and other uncontrolled discharges of PCBs
at concentrations of 50 ppm or greater constitute the disposal of PCBs.”
40 C.F.R. § 761.60(d)(1). But the regulatory definition of disposal includes
far more than spills and other uncontrolled discharges, and it expressly
embraces activities undertaken to address known PCB contamination.
Thus, 40 C.F.R. § 761.3 states that “[d]isposal includes spills, leaks, and
other uncontrolled discharges as well as actions related to containing,
transporting, destroying, degrading, decontaminating, or confining PCBs
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NEWELL RECYCLING COMPANY, INC. 621
or PCB items.” The act of excavating and stockpiling PCB-contaminated
soil at the Fidelity Road site is clearly in the nature of action to “contain,”
“transport,” and “confine” PCBs. Moreover, leaving the stockpiled waste
abandoned there for a period of years is evidence that the PCB-contam-
inated soil was “discarded” within the meaning of the rule. Accordingly,
the Presiding Officer correctly applied the regulatory definition by hold-
ing that Newell committed an act of improper disposal by knowingly
causing PCB-contaminated soil to be excavated and stockpiled in a cor-
ner of the HMPC site, and then “leaving [the PCBs] there and taking no
further clean-up action.” Partial Accelerated Decision on Issue of Liability
at 23.18
2. PCB “Disposal” Need Not Involve “Exacerbation”
of Pre-Existing Site Conditions
Newell next argues that even if stockpiling and abandonment of
PCB-contaminated soil does satisfy the regulatory definition of disposal,
that definition should be supplemented by an implied requirement of
“exacerbation.” According to this argument, EPA cannot establish a viola-
tion of the disposal rules unless it can show conduct meeting the
definition in section 761.3 and, in addition, show that the conduct “exac-
erbated” the environmental conditions at the site by, for example, caus-
ing contamination of previously uncontaminated areas of the affected
site. Because we find nothing in section 761.3 that supports augmenta-
tion with this additional requirement, we reject Newell’s argument that
proof of “exacerbation” is required.19
18
Also supportive of the Presiding Officer’s analysis is the Note preceding the dispos-
al regulations in Part 761, Subpart D. (Although it has since been deleted, see supra
note 17, the interpretive Note prefacing the disposal rules was in effect throughout the
period of the violations at issue in this case.) Among other things, the Note indicates that
PCBs “landfilled” before February 17, 1978 need not be “removed for disposal.” The Note
makes clear, however, that those PCBs become subject to the Subpart D disposal require-
ments if they are excavated: “[I]f such PCBs or PCB Items are removed from the disposal
site, they must be disposed of in accordance with this subpart.”
19
In support of its contention that exacerbation should be regarded as an element of
a PCB disposal violation, Newell cites four cases, all arising under the Comprehensive
Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §§ 9601 et
seq.: Alcan-Toyo Am., Inc. v. Northern Ill. Gas Co., 881 F. Supp. 342 (N.D. Ill. 1995); Ganton
Tech., Inc. v. Quadion Corp., 834 F. Supp. 108 (N.D. Ill. 1993); Kaiser Aluminum & Chem.
Corp. v. Catellus Dev. Co., 976 F.2d 1338 (9th Cir. 1992); and Tanglewood East Homeowners
v. Charles-Thomas, Inc., 849 F.2d 1568 (5th Cir. 1988). Based as they are on a different
statutory scheme and text, we find them inapposite to the matter at hand. We also note
arguably stands for the proposition for which it is advanced. Even that case, however, that,
Continued
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622 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
3. There Was Sufficient Evidence of Newell Recycling Company’s
Involvement in the Disposal Violation
An introductory provision of the PCB Rule (40 C.F.R. § 761.1
[“Applicability”]), citing the relevant statutory language, states that civil
penalty liability extends to “any person” who fails to comply with the reg-
ulatory requirements:
Section 15 of the Toxic Substances Control Act
(TSCA) states that failure to comply with these regula-
tions is unlawful. Section 16 imposes liability for civil
penalties upon any person who violates these regula-
tions, and the Administrator can establish appropriate
remedies for any violations subject to any limitations
included in section 16 of TSCA.
40 C.F.R. § 761.1(d). With respect to cases involving improper disposal of
PCBs, administrative case law supports the view that, “violators” in such
cases include those who have “caused (or contributed to the cause of)
the disposal.” In re City of Detroit, 3 E.A.D. 514, 526 (CJO 1991). With that
in mind, we turn now to Newell’s claim that the evidence before the
Presiding Officer in this case was not sufficient to establish Newell’s
responsibility for a disposal violation.
Newell contends that the Presiding Officer committed error by con-
cluding that Newell Recycling Company, rather than one of its affiliates,
was a party responsible for any violation of the PCB disposal rules that
may have occurred at the Fidelity Road site. That contention is untenable
when viewed against the undisputed facts. Newell Recycling Company
may not have acted alone, but it was certainly an active party in the
events constituting the TSCA violation. Newell Recycling Company was
the owner of the Fidelity Road site immediately before its conveyance to
HMPC. In conveying the property, Newell Recycling contractually
of the cases cited, only one, Alcan-Toyo, even stands for the narrow proposition that one
court, in assessing relative fault for purposes of an equitable allocation of response costs
in a CERCLA contribution action between responsible parties, considered excavation and
stockpiling of tainted soil that causes exacerbation of site conditions materially more
blameworthy than similar activity that does not cause such exacerbation. There is nothing
in Alcan that persuades us that there is or should be an implied “exacerbation” require-
ment in all environmental statutes and regulations that employ the term “disposal.” Thus,
Alcan notwithstanding, we conclude that Region 6 was not required to produce evidence
of exacerbation in order to establish Newell’s liability for violating 40 C.F.R. § 761.60(a)(4).
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NEWELL RECYCLING COMPANY, INC. 623
assumed responsibility for on-site “occurrences.” Indeed, the 1985
cleanup of lead contamination, the attendant discovery of PCB contami-
nation and creation of the PCB waste pile, and the subsequent efforts to
remediate PCB contamination all flowed proximately from this covenant
by Newell Recycling. Newell Recycling’s owner, Alton Newell, was
shown to have visited the site in response to HMPC’s demand for a reme-
dial response. Until this enforcement case, Newell Recycling never so
much as suggested that some other Newell entity was actually responsi-
ble for the contaminated soil pile, and the record is devoid of any evi-
dence that the work in 1985 was undertaken without Newell Recycling’s
participation. Newell Recycling executed a tolling agreement with respect
to claims arising from the contamination of the HMPC site in July 1987.
Newell Recycling, through Wayne Mathis, hired LAN to make recom-
mendations with respect to a PCB cleanup both in 1987 and in 1989–90.
Newell Recycling was contacted by the EPA inspector in October 1989
and did not, so far as the record discloses, point the inspector toward one
of its affiliates. Finally, it was Newell Recycling that entered into an agree-
ment, in May 1995, to undertake the removal of the PCB-contaminated
soil at its own expense. Given Newell’s multiple contacts with this mat-
ter, including contractual and other undertakings to do removal work, we
conclude that it is more likely than not that the actual physical under-
taking of the removal work was performed pursuant to Newell’s direc-
tion and control. Accordingly, we find that Newell Recycling did, indeed,
cause, or contribute to the cause of, the unlawful disposal of PCB-con-
taminated soil. Thus, the Presiding Officer did not err in concluding that
Newell Recycling was a liable party for the PCB disposal violation at issue
in this case.
4. There Was Sufficient Evidence of Regulated PCB
Concentrations in the Soil Pile
Newell claims that Region 6 failed to prove a violation of the PCB
disposal rules because it did not sufficiently establish the presence of reg-
ulated PCB concentrations in the soil at the Fidelity Road site either as of
September 1992 or as of February 1994. Significantly, Newell cites neither
expert opinion nor probative evidence in support of its contentions. With
respect to the September 1992 soil sampling results, Newell speculates
that the samples might either have been taken improperly or analyzed
improperly. With respect to the PCB concentration as of February 1994,
Newell speculates that “natural bioremediation, dilution or other factors
may have teamed up to modify any contaminant levels that might have
existed in 1992.” Brief for Appellant at 23–24. Newell’s speculation is
inadequate to create a genuine issue of material fact regarding the pres-
ence or absence of regulated PCB concentrations in the soil.
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624 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
As to the September 1992 testing, Newell complains that “it was pro-
vided with no hearing at which Region 6 experts could be cross-exam-
ined.” Brief for Appellant at 23. Newell misconstrues the nature of sum-
mary adjudication. As the Board observed in In re Dos Republicas Res.
Co., 6 E.A.D. 643 (EAB 1996), it is necessary to oppose a properly sup-
ported motion for summary adjudication “by referencing probative evi-
dence in the record, or by producing such evidence.” Id. at 662 (citations
omitted). “Summary judgment may not be avoided by merely alleging
that a factual dispute may exist, or that future proceedings may turn
something up.” Id. (citing United States v. Potamkin Cadillac Corp., 689
F.2d 379, 381 (2d Cir. 1982)). See also In re Clarksburg Casket Co.,
8 E.A.D. 496, 504–09 (EAB 1999) (respondent’s defense, though “theo-
retically possible,” could not prevent the entry of an accelerated decision
against respondent, where respondent failed to produce probative evi-
dence in support of the defense). Here, Region 6 produced evidence in
support of its Motion for Accelerated Decision demonstrating the pres-
ence of regulated concentrations of PCBs in the soil pile as of September
1992. With the Region having produced such evidence, it was incumbent
upon Newell—to avoid summary adjudication of that particular issue—to
go beyond mere allegation and speculation by presenting some evidence
indicating possible sampling improprieties and/or laboratory errors. The
Presiding Officer was not required to conduct an evidentiary hearing
based solely on Newell’s unsubstantiated concern that it might uncover
such evidence in the course of cross-examination.
The same analysis holds true with respect to Newell’s conclusory
assertion that “natural bioremediation” or other means of dilution “may
have” reduced PCB concentrations in the soil pile below regulated levels
before February 21, 1994, i.e., the end of the period for which Region 6
sought penalties in this action. Newell could not avoid summary adjudi-
cation by offering sheer speculation concerning what “may have” hap-
pened to the contaminated soil between September 1992 and February
1994. It was incumbent upon Newell to offer countervailing evidence
sufficiently probative to create a genuine issue for resolution at a hear-
ing, but Newell made no attempt to do so.
We note that Newell, having managed the disposal of the PCB-con-
taminated material in 1995, was in a position to conduct its own tests of the
material at that time. Had Newell come forward with evidence that, at that
later date, PCBs were no longer present at levels of concern, its contentions
might have greater force. But this Newell did not do. Because Newell failed
to offer any such evidence, the Presiding Officer did not err when he
resolved the issue in the Region’s favor by means of summary adjudication.
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NEWELL RECYCLING COMPANY, INC. 625
D. Penalty Issues
1. Evidentiary Hearing
Newell argues, preliminarily, that it was per se impermissible for the
Presiding Officer to assess a penalty against it without first conducting an
evidentiary hearing. Newell relies on 40 C.F.R. § 22.15, which states that
“[a] hearing upon the issues raised by the complaint and answer shall be
held upon request of respondent in the answer.” We have held, howev-
er, that an oral hearing (as opposed to an opportunity to obtain a ruling
from the Presiding Officer on the documentary record) is required only
if the party requesting the hearing raises a genuine issue of material fact.
In re Green Thumb Nursery, Inc., 6 E.A.D. 782, 792–93 (EAB 1997).20 As
explained fully below, we find that Newell’s penalty arguments fail to
raise a genuine issue of material fact and that, consequently, Newell was
not entitled to an evidentiary hearing. We similarly find that the Presiding
Officer did not err in applying the law to the unrefuted facts before him.
2. Gravity Based Penalty
Pursuant to EPA’s April 9, 1990 Polychlorinated Biphenyls Penalty
Policy (“Penalty Policy”), which the Presiding Officer applied in this case,
penalties for PCB Rule violations are calculated in two stages: “(1) deter-
mination of a ‘gravity based penalty’ (GBP), and (2) adjustments to the
gravity based penalty.” Penalty Policy at 1. The Penalty Policy implements
the requirements set forth in TSCA section 16(a)(2)(B), which provides:
In determining the amount of a civil penalty, the
Administrator shall take into account the nature, circum-
stances, extent, and gravity of the violation or violations
and, with respect to the violator, ability to pay, effect on
ability to continue to do business, and history of prior
such violations, the degree of culpability, and such other
matters as justice may require.
20
EPA’s use of an “administrative summary judgment” procedure was expressly
approved by the First Circuit in Puerto Rico Aqueduct & Sewer Auth. v. EPA, 35 F.3d 300
(1st Cir. 1994), aff’g In re Mayaguez Reg’ Sewage Treatment Plant, 4 E.A.D. 772 (EAB 1993).
We reject Newell’s suggestion that the procedure violates the Administrative Procedure Act
or works a denial of due process. See Green Thumb, 6 E.A.D. at 792 (“Even the constitu-
tional right to due process requires that the person claiming the benefit of that due process
must first place some relevant matter into dispute.”) (citing Codd v. Velger, 429 U.S. 624,
627 (1977)).
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626 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
Under the Penalty Policy framework, the first four statutory factors—
nature, circumstances, extent, and gravity—are reflected in the proposed
GBP, whereas the remaining statutory factors (the specified characteris-
tics of the violator and “such other matters as justice may require”) are
reflected in adjustments to the proposed GBP.
Before the Presiding Officer, Newell Recycling made the following
arguments in response to the gravity based penalty proposed by Region 6:
(1) Region 6 failed to quantify, or failed to reliably quantify, the
amount of material involved in the violation, and should therefore, by
default, have characterized the violation as “minor” in extent for purpos-
es of a GBP calculation. Opposition by Respondent Newell Recycling
Company, Inc. to Region 6’s Proposed Penalty at 2 (Aug. 8, 1997)
(“Penalty Opp.”);
(2) The Region should not have characterized the “circumstances” of
the violation, for purposes of applying the Penalty Policy’s GBP matrix,
as “High Range, Level One,” because that characterization “bears no
rationale [sic] relationship to any human health concerns.” Penalty Opp.
at 3. See also id. at 12 (arguing that the Region’s penalty proposal is “out-
rageous” in the context of this “piddling little case”).
The Presiding Officer concluded that neither of those contentions
created a genuine issue of material fact with respect to the appropriate-
ness of the Region’s penalty proposal, and that both contentions were
erroneous as a matter of law. Newell advances both contentions again in
its appellate brief. Brief for Appellant at 41–44. For the following reasons,
the Board holds that the Presiding Officer did not err on either point.
a. Extent
As a general matter, the Penalty Policy provides for three possible
“extent” classifications: Minor, Significant, and Major. According to the
Penalty Policy, “extent,” as used in the statute, is understood to refer to
“the ‘extent’ of potential or actual harm from a given violation.” Penalty
Policy at 1. In order to classify disposal violations, in particular, with
respect to extent of potential or actual harm, the Penalty Policy looks to
the amount of material involved in the violation and adjusts that amount,
in certain circumstances, to account for the material’s PCB concentration.
Where, as here, the volume of PCB fluid involved in a disposal violation
is not ascertainable, the amount of material for penalty calculation pur-
poses is measured either in terms of surface area (i.e., square footage of
contamination, for fresh spills onto the ground or some other surface) or
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NEWELL RECYCLING COMPANY, INC. 627
volume of material contaminated (i.e., cubic feet). Because this case
involved soil contaminated over time as a result of the burial and leakage
of PCB articles rather than a spill onto a measurable surface, the Region
appropriately looked to the volume of the soil involved in the improper
disposal. When soil volume is used, the “extent” classifications are:
• less than 60 cubic feet = Minor
• between 60 and 300 cubic feet = Significant
• more than 300 cubic feet = Major.
Penalty Policy at 6–7. Finally, the Penalty Policy states that no concen-
tration adjustment is to be applied “when the PCB material is measured
by a measure for solids other than weight. * * * The cost of disposal of
such materials is not dependent on their concentration of PCBs.
Accordingly, to allow adjustments for lower concentration might remove
the economic incentives to dispose of these materials properly.” Id. at 9.
As noted previously, during an October 1989 inspection of the HMPC
site, EPA’s inspector observed “two soil piles contain[ing] approximately
20 cubic yards each.” See RX 11 at 8. With its brief to the Presiding Officer
concerning penalty issues, Region 6 submitted the Declaration of EPA
environmental scientist Jeffrey Jay Robinson dated July 18, 1997.
Robinson states that he determined the “extent” of Newell’s disposal vio-
lation based on one of the two 20-cubic-yard soil piles shown to have
been present at the HMPC site during October 1989. Robinson explains
that “the 20 cubic yards exceeded the 300 cubic feet waste quantity for
Major Extent Disposal Violations (a cubic yard equals 27 cubic feet; 20
cubic yards x 27 cubic feet per cubic yard equals 540 cubic feet).
Therefore, the extent of the disposal is Major under the Penalty Policy.”
Robinson Declaration at 2.
Newell claims on appeal, as it did before the Presiding Officer, that
a penalty could not properly be based on the 540-cubic-foot volume of
the soil pile because the record contains “insufficient data for an expert
opinion to be formulated regarding the quantity of regulated substances
involved.” Brief for Appellant at 42. To support that contention, Newell
restates an argument that we have previously encountered among
Newell’s defenses to liability, namely, that EPA’s sampling of the soil pile
in September 1992 was inadequate to establish contamination of the soil
with regulated levels of PCBs.
As we have already held in connection with Newell’s defense to lia-
bility, Newell cannot avoid summary adjudication simply by speculating
that the 1992 sampling and analysis of the soil pile may have produced
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an erroneous result. Newell must offer probative evidence indicating that
improper sampling and/or faulty laboratory analysis may in fact have
occurred. Newell offers no such evidence. Accordingly, the Presiding
Officer did not err by ruling that, for purposes of applying the Agency’s
PCB Penalty Policy, Newell’s violation should properly be characterized
as “major” in extent.21
b. Circumstances
The circumstances of the violation must also be classified in order to
arrive at a gravity based penalty under the Penalty Policy framework. The
Penalty Policy creates six different classifications, labeled, in decreasing
order of the violation’s “probability of causing harm to human health or
the environment,” as follows: High Range—Level 1, High Range—Level
2, Medium Range—Level 3, Medium Range—Level 4, Low Range—Level
5, and Low Range—Level 6. Penalty Policy at 9. All disposal violations are
classified under the Penalty Policy as either High Range—Level 1 or
Medium Range—Level 3. Penalty Policy at 10–11. The Policy refers to the
Level 1 disposal violations as “major disposal” violations and to the Level
3 disposal violations as “minor disposal” violations. These “major” and
“minor” designations are unrelated to the “major” and “minor” designa-
tions used in classifying the extent of a violation. Id. at 9 (footnote). As
discussed previously, the extent of a disposal violation is based on the
quantity of material involved in the violation combined, in certain
instances, with the PCB concentration present in that material. The “cir-
cumstances” of a disposal violation—level 1 or level 3—are determined
quite differently.
The Penalty Policy describes level 3 disposal violations only by
example: “An example of a [level 3] disposal violation is a leak in which
a PCB Article has PCBs on any portion of its external surface, but the
PCBs did not run off the surface.” Penalty Policy at 11. That example cer-
tainly does not seem to capture the essence of the violation at issue
here, in which PCBs surely did not remain confined to the surface of a
particular article without “running off” or otherwise escaping into the
surrounding environment. The violation must therefore be assigned to
circumstance level 1, which includes:
21
Because the 1989 inspection report contains sufficient evidence of the volume of soil
involved in this violation, we do not consider or address the Presiding Officer’s suggestion
that, in the alternative, evidence of soil volume could be derived from the September 1995
hazardous waste manifests prepared in connection with the ultimate removal of the soil
from the HMPC site.
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NEWELL RECYCLING COMPANY, INC. 629
any significant uncontrolled discharge of PCBs, such as
any leakage or spills from a storage container or PCB
Item, failure to contain contaminated water from a fire-
related incident, or any other disposal of PCBs or PCB
Items in a manner that is not authorized by the PCB reg-
ulations * * * .
Penalty Policy at 10 (emphasis added). Because the discarding and aban-
donment of PCB-contaminated soil in a pile constitutes “disposal * * * in
a manner that is not authorized by the PCB regulations,” the Presiding
Officer did not err by classifying the circumstances of this violation as
“High Range—Level 1.”
Newell’s only contention to the contrary is essentially a legal argu-
ment—that the level 1 versus level 3 distinction should depend, at least
in part, on the PCB concentration of the material involved in the viola-
tion. Brief for Appellant at 44. What Newell’s argument overlooks is that
the “extent” component of the gravity based penalty is where concentra-
tion adjustments, if any, are made. No such adjustment was made in the
“extent” component in this case because, as explained in the relevant sec-
tion of the Penalty Policy, disposal costs for a given volume of PCB-con-
taminated soil do not vary with the specific concentration of PCBs that
are present; concentration adjustments are unwarranted where, as in this
case, the “extent” of the violation is measured in cubic feet. See Penalty
Policy at 9.
For all of the foregoing reasons, the Presiding Officer did not err in
determining that there were no genuine issues of material fact in dispute
relative to the calculation of a gravity based penalty or when, having con-
sulted the “matrix” at page 9 of the Penalty Policy, he concluded that
$25,000 was an appropriate gravity based penalty for each violation at
issue in this case.
3. Separate Penalty for Each Day of Violation
Section 16(a)(1) of TSCA provides for administrative civil penalties
not to exceed $25,000 “per violation,” and it provides that for purposes
of applying the penalty limit, “[e]ach day such violation continues shall
* * * constitute a separate violation.” In this action Region 6 alleged that
Newell had continuously violated the PCB disposal requirements from
September 10, 1992 through February 21, 1994—a period of 529 days.
It requested a full $25,000 penalty for the first day of violation, and
ten percent of that amount ($2,500) for each of the 528 subsequent
days. Although Newell objected to the proposed imposition of per-day
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630 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
penalties before the Presiding Officer,22 the Presiding Officer turned aside
that objection, Penalty Decision at 7–8, and Newell has not made any
similar argument on appeal. Accordingly, the total gravity based penalty
assessment stands at $1,345,000 ($25,000 + [528 x $2,500]), less a reduc-
tion based on the settlement between EPA and HMPC, as discussed infra.
We now turn to Newell’s claims for downward adjustments to the gravi-
ty based penalty.
4. Adjustments Proposed by Newell
On appeal, Newell identifies nine factors that, in its view, warrant
downward adjustment of the civil penalty. These factors are: (1) the
Region’s failure to join other “responsible parties” in its enforcement
action; (2) disclosure of “the alleged problem” to “the State of Texas (and
EPA) in 1985 and again in 1987”; (3) lack of environmental harm result-
ing from the disposal violation; (4) the eventual removal of the soil pile
at an alleged cost of $84,000; (5) the Region’s refusal to “credit” Newell
with the alleged $84,000 removal cost; (6) the size of the payment
required to be made by HMPC under its settlement with the Region; (7)
the Region’s “refusal to use the BEN model” in calculating a proposed
penalty; (8) the Region’s “inaction” between 1985 and the date of com-
mencement of the enforcement action; and (9) the fact that lower penal-
ties have been assessed in certain other TSCA penalty actions that have
been the subject of administrative appeals.
a. Estoppel Arguments (Factors 5 and 8)
We first address a pair of mitigation arguments raised by Newell that
are in the nature of estoppel claims, specifically (1) the claim that Region
6 acted inequitably by commencing the enforcement process after a peri-
od of inaction, and (2) the claim that Region 6 “reneged” on a commit-
ment to deduct Newell’s cleanup costs from whatever civil penalty the
Region might seek in an enforcement action. Brief for Appellant at 48.
We conclude that there are no genuine issues of material fact in dispute
relative to these claims and that, consistent with the Presiding Officer’s
analysis, the conduct alleged by Newell does not give rise to an estoppel
against the government.
22
Newell’s objection was erroneously based on a superseded 1980 penalty policy. See
Penalty Opp. at 7–8.
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This Board examined equitable estoppel principles in In re B.J.
Carney Indus., 7 E.A.D. 171 (EAB 1997). There, the Board explained that
the circumstances in which the government may be equitably estopped
are extremely limited, and “‘it is well settled that the Government may
not be estopped on the same terms as any other litigant.’” Id. at 196
(quoting Heckler v. Cmty. Health Serv., 467 U.S. 51, 60 (1984)).23 The
Board further explained:
A party seeking to estop the government bears a heavy
burden of demonstrating the traditional elements of
estoppel and some “affirmative misconduct” on the part
of the government. United States v. Hemmen, 51 F.3d 883,
892 (9th Cir. 1995). This means that “a party asserting
equitable estoppel against the United States must demon-
strate that there was affirmative misconduct upon which
the party reasonably relied to its detriment. In re Wego
Chemical & Mineral Corp., 4 E.A.D. 513, 522 (EAB 1993).
Id. see also Linkous v. United States, 142 F.3d 271, 277 (5th Cir. 1998)
(“Courts have applied estoppel to the federal government only in the nar-
rowest of circumstances. In order to establish estoppel against the gov-
ernment, a party must prove affirmative misconduct by the government
in addition to the four traditional elements of the [equitable estoppel]
doctrine.”).24 Against the backdrop of these principles, as discussed
below, we think it apparent that Newell’s two estoppel arguments are
unavailing.
Credit for Cleanup Cost Ultimately Incurred—Newell argues that
Region 6 committed misconduct by “refus[ing] to credit [Newell] for the
$84,000 expended to remove the soil pile.” Brief for Appellant at 48. In
its brief, Newell claims that representatives of the Region “presented to
[Newell] that such remediation, if accomplished, would be factored into
23
There are sound reasons for limiting estoppel claims against the government: “When
the Government is unable to enforce the law because the conduct of its agents has given
rise to an estoppel, the interest of the citizenry as a whole in obedience to the rule of law
is undermined.” Heckler v. Cmty. Health Serv., 467 U.S. at 60, quoted in B.J. Carney,
7 E.A.D. at 196.
24
“Affirmative misconduct” in this context refers to “an affirmative misrepresentation
or affirmative concealment of a material fact by the government.” Linkous, 142 F.3d at 278.
The “traditional elements” required to be proved in addition to affirmative government mis-
conduct are: “(1) that the party to be estopped was aware of the facts, and (2) intended
his act or omission to be acted upon; [and] (3) that the party asserting estoppel did not
have knowledge of the facts, and (4) reasonably relied on the conduct of the other to his
substantial injury.” Id. (citing United States v. Bloom, 112 F.3d 200, 205 (5th Cir. 1997)).
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632 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
the overall civil penalty that Region 6 was seeking.” Id. Newell concludes
that “Region 6 and [Newell] had an agreement, and Region 6 is estopped
from reneging on its agreement.” Id.
Newell made the same argument in the penalty brief that it filed with
the Presiding Officer. See Penalty Opp. at 5–6. The Presiding Officer
addressed the argument and concluded that:
[Newell’s] assertions are not sufficient to establish that it
relied to its detriment on complainant’s alleged represen-
tations where [Newell] was under an obligation to com-
ply with the PCB disposal rule whether or not com-
plainant pursued an action against it.
Penalty Decision at 10.25
Remarkably, on appeal Newell completely ignores the issue of detri-
mental reliance that the Presiding Officer considered dispositive. In the
absence of any argument to the contrary, we conclude—as did the
Presiding Officer—that compliance with a legal obligation does not con-
stitute a “detriment” and cannot, therefore, support Newell’s promissory
estoppel claim against Region 6.
Region’s Alleged Delay in Filing the Complaint—Newell also con-
tends that Region 6 refrained from taking any action for several years26
and thereby impermissibly allowed Newell’s violations (and the associat-
ed penalties) to accumulate. Newell states that “[i]t is a violation of pub-
lic policy for a regulatory agency to sit back and allow penalties to
accrue, instead of taking action.” Brief for Appellant at 50. Further,
Newell claims that only a “nominal” penalty is warranted here based on
the reasoning of a federal district court in a case decided in 1958, United
25
Following Supreme Court precedent, this Board similarly emphasized, in B.J.
Carney, that a failure to prove detrimental reliance is “fatal” to an estoppel claim against
the government:
Also fatal to [appellant’s] estoppel claim is the fact that it has not suffered
any detriment from the Region’s conduct in this matter. As explained by the
Supreme Court, “the party claiming the estoppel must have relied on its adver-
sary’s conduct ‘in such a manner as to change his position for the worse.’”
B.J. Carney, 7 E.A.D. at 202 (quoting Heckler v. Cmty. Health Serv., 467 U.S. at 59).
26
Before the Presiding Officer, Newell argued that there had been “6 years of inaction”
on the part of the Region. Penalty Opp. at 7. On appeal, Newell instead cites “10 years of
inaction.” Brief for Appellant at 50. Otherwise, Newell’s argument to the Presiding Officer
is identical to Newell’s argument on appeal.
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NEWELL RECYCLING COMPANY, INC. 633
States v. Am. Greetings Corp., 168 F. Supp. 45 (N.D. Ohio 1958), aff’d, 272
F.2d 945 (6th Cir. 1959).
In American Greetings, a company subject to a Federal Trade
Commission cease and desist order filed a required “Report of
Compliance,” advising the FTC that it was engaged in a practice of
“remounting” competitors’ greeting cards on mounts that did not identify
the original manufacturer. The FTC did not initially question the practice,
and an FTC representative actually “suggested means of improving” the
remounting procedure. 168 F. Supp. at 50. Subsequently, however, the
FTC enforcement staff characterized the remounting process as a viola-
tion of the cease and desist order, and sought penalties for the alleged
violation in a judicial enforcement action. The court concluded that the
agency was not estopped from characterizing the remounting practice as
a violation of its order, but the court also concluded that the agency’s ini-
tial failure to question the practice was relevant in calculating a penalty
for the violation. The court fixed the penalty at $200, reasoning that the
Government “might [have led] the defendant to believe that the
Government was not objecting” to the practice at issue. Id.
Newell’s reliance on American Greetings is decidedly misplaced.
Here, Newell was at all times aware of the improper disposal of PCBs at
the HMPC site and the need for their removal and lawful disposal. There
is no allegation, and no evidence, that anyone from Region 6 said any-
thing at any time that might have confused the issue. See, e.g., CX 27
(8/19/85 letter from Timothy Johnson to Francis Garrigues concerning the
status of the “PCB cleanup”); CX 25 (3/21/86 letter from Mr. Garrigues to
Alton Newell, noting that HMPC has had “a pile of contaminated soil in
a corner of [its] yard for about one year”). This case is therefore readily
distinguished from American Greetings.
Similarly, Newell cites no authority for the companion proposition
that agency inaction in responding to a violation, which may have the
effect of allowing penalties to “accrue” is contrary to “public policy,” and
that an enforcement action to collect such penalties is automatically
barred. The Board rejected that proposition in B.J. Carney, pointing out
that it had also emphatically been rejected by the courts:
The Region did not [by an alleged five-year delay]
waive any right to bring this enforcement action.
“[G]enerally speaking[,] public officers have no power or
authority to waive the enforcement of the law on behalf
of the public.” United States v. Amoco Oil Co., 580 F.
Supp. 1042, 1050 (W.D. Mo. 1984). * * * Likewise, in
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634 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
United States v. Chevron U.S.A., Inc., 757 F. Supp. 512
(E.D. Pa. 1990), the court held that “the fact that the EPA
did nothing for four years to enforce the regulations
against Chevron would not be considered an affirmative
misrepresentation and does not satisfy the first require-
ment of the equitable estoppel defense.” Id. at 515.
“Simply put, the government may not be estopped from
enforcing the law, even following an extended period of
no enforcement or underenforcement.” Washington Tour
Guides Ass’n v. National Park Service, 808 F. Supp. 877,
882 (D.D.C. 1992).
B.J. Carney, 7 E.A.D. at 202.
Thus, it is clear that Region 6 was not estopped or otherwise barred
from instituting this action against Newell based on any alleged delay in
doing so. We note in this regard that it seems clear that Region 6 did not
affirmatively seek to maximize the accumulation of penalties by either of
the respondents. If that had been the Region’s intention, the Region
would presumably have sought penalties for the entire five-year period
preceding the commencement of the action. The Region did not do so;
rather, the Region dramatically narrowed the scope of its action, seeking
penalties only for a 529-day period starting September 10, 1992 and con-
cluding February 21, 1994. There being no genuine issue of material fact
on this point and, finding no legal argument that would justify reversing
the Presiding Officer on this issue, we uphold the Presiding Officer’s con-
clusion that Region 6 did not commit misconduct by failing to file this
enforcement action earlier than it did.
b. “Selective Prosecution”
Newell asserts that the Region improperly engaged in “selective pros-
ecution” by filing an enforcement action against Newell and HMPC with-
out also filing an action against J.L.B. Investment Corporation, which
owned the HMPC site at one time but which has not otherwise been
implicated in the excavation and wrongful disposal of PCB waste at issue
here, and against the contractor who moved the contaminated soil at the
site into a pile, apparently at Newell Recycling’s direction. Brief for
Appellant at 45. In attempting to establish such a defense, Newell con-
fronts a “daunting burden.” In re B&R Oil Co., 8 E.A.D. 39, 50–51 (EAB
1998). “[C]ourts have traditionally accorded governments a wide berth of
prosecutorial discretion in deciding whether, and against whom, to
undertake enforcement actions.” Id.
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NEWELL RECYCLING COMPANY, INC. 635
To substantiate a claim of selective enforcement or selective prose-
cution, Newell must therefore establish “(1) [that it has] been singled out
while other similarly situated violators were left untouched, and (2) that
the government selected [Newell] for prosecution ‘invidiously or in bad
faith, i.e., based upon such impermissible considerations as race, religion,
or the desire to prevent the exercise of constitutional rights.’” United
States v. Smithfield Foods, Inc., 969 F. Supp. 975, 985 (E.D. Va. 1997)
(quoting United States v. Prod. Plated Plastics, Inc., 742 F. Supp. 956, 962
(W.D. Mich. 1990)); accord, Amato v. Sec. & Exch. Comm’n, 18 F.3d 1281,
1285 (5th Cir. 1994) (defendant claiming selective prosecution “must
establish that he was singled out for prosecution while others similarly
situated were not, and that the action against him was motivated by an
arbitrary or unjustifiable consideration, such as race, religion, or the
desire to prevent the exercise of a constitutionally-protected right, such
as freedom of speech”).
It is quite apparent that Newell has not met its burden. Newell has
not suggested that the enforcement action against it was motivated by
any consideration akin to racial or religious bias or a desire to prevent
the exercise of a constitutional right. Newell certainly points to no evi-
dence of such an impermissible motive. Moreover, Newell has failed to
proffer any facts that would persuade us that either of the other parties
to which it points are, indeed, “similarly situated” in terms of culpability
for the violations at issue in this case. Therefore, Newell has raised no
genuine issue of material fact with respect to its claim of selective pros-
ecution, and the Presiding Officer committed no error by rejecting the
claim as a basis for penalty mitigation.
c. Economic Benefit of Noncompliance
Newell intimates that Region 6 committed misconduct by “refus[ing]
to use the BEN model due to the low penalty it would generate.” Brief
for Appellant at 49. According to Newell, application of this model for
calculating the economic benefit of noncompliance would have required
Region 6 to lower its penalty proposal to approximately $4,480.00,
allegedly the amount of Newell’s savings resulting from noncompliance
with the PCB disposal regulation. Id.
The Presiding Officer addressed this argument and concluded as follows:
This argument is flawed in two respects. First, under the
Penalty Policy economic benefit is only one element to
be considered in calculating a civil penalty. Second, and
more significantly, the economic benefit component of
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636 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
the penalty calculation is employed to ensure that a
penalty assessment will provide adequate deterrence,
and is therefore used only to adjust a penalty upward,
not downward.
Penalty Decision at 11.
The Presiding Officer’s application of the Penalty Policy is indis-
putably correct. The relevant portion of the Penalty Policy states:
In some cases, the [gravity based penalty] may not be
sufficient to deter in the face of strong economic incen-
tives to violate. Where a violation involves significant
economic benefit, the Agency will assess penalties that
remove any benefit, subject to the statutory limitation of
$25,000 per day. This will be in addition to the GBP and
any relevant adjustment factors.
Penalty Policy at 19 (emphasis added). Thus, the role that economic
benefit plays in penalty assessment under the Policy is to establish the
penalty floor—the penalty assessment must at least capture the econom-
ic benefit of noncompliance, even if other penalty adjustment factors
would eliminate a gravity based penalty computation. The Presiding
Officer therefore did not err by finding the absence of a genuine issue of
material fact relative to this argument and declining to reduce Newell’s
penalty based on Newell’s calculation of the economic benefit associat-
ed with its violations.
d. Voluntary Disclosure
On appeal, Newell argues that it should have received a 25% penalty
reduction for voluntary disclosure of its violations. The PCB Penalty Policy
addresses penalty reductions for voluntary disclosure under the heading of
“other factors as justice may require.” The Penalty Policy states that:
To be eligible for a penalty reduction for voluntary dis-
closure, a firm must make the disclosure prior to being
notified of a pending inspection. The disclosure cannot
be one that is required by the PCB regulations or that is
made after EPA has received information relating to the
alleged violation.
Penalty Policy at 18.
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NEWELL RECYCLING COMPANY, INC. 637
We will not consider Newell’s eligibility for a penalty reduction for
voluntary disclosure, because Newell failed to request such a reduction
in its submissions to the Presiding Officer. The issue was directly
addressed in the Region’s penalty brief, which stated (citing the
Declaration of Jeffrey Jay Robinson) that “[n]o downward adjustment was
made for ‘voluntary disclosure’ because neither Newell nor HMPC vol-
untarily disclosed the violations.” Region’s Memorandum in Support of
Proposed Civil Penalty at 13 (July 23, 1997). In its response, Newell did
not point to any evidence suggesting that it had, in fact, voluntarily dis-
closed its violations, nor did Newell argue that it should receive a penal-
ty reduction for voluntary disclosure pursuant to the Penalty Policy. The
argument has, accordingly, been waived. See, e.g., In re Britton Const.
Co., 8 E.A.D. 261, 277–78 (EAB 1999) (under 40 C.F.R. § 22.30, appellant
“may not appeal issues that were not raised before the presiding officer.
As a result, arguments raised for the first time on appeal * * * are deemed
waived.”) (citations omitted).27
e. Lack of Environmental Harm
Newell argues that the “lack of any environmental harm is a mitigat-
ing factor” that the Presiding Officer erroneously failed to consider in
assessing a penalty against it. Brief for Appellant at 46–47 (citing Penalty
Decision at 9).28 In the very portion of the Penalty Decision cited by
Newell, however, the Presiding Officer does in fact consider the issue of
environmental harm. Specifically, the Presiding Officer states:
Harm is given consideration under the [PCB] Penalty
Policy only in instances where a violator has taken
actions to minimize harm caused by its violation. [Newell]
27
We note that Newell did make reference to the disclosure question in footnote num-
ber 5 of its penalty brief below, albeit not in the context of arguing for penalty mitigation.
Rather, Newell raised it as part of its argument that it should have been allowed to con-
duct discovery because it could not obtain evidence of voluntary disclosure except by
cross-examining the Region’s own witnesses at an evidentiary hearing or in depositions.
This strikes us as a disingenuous proposition. If Newell had indeed made a voluntary dis-
closure, 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 cred-
ibly revive this argument on appeal.
28
We decline Newell’s invitation to consider correspondence generated by its own
attorney, along with the absence of a rebuttal by the Presiding Officer, as proof that the
Presiding Officer somehow “admitted” the absence of any environmental harm in this case
during a telephone conference. See Brief for Appellant at 46 (citing RX 24). The Presiding
Officer is not a party to this action and is under no obligation to respond to correspon-
dence from the litigants, even if that correspondence seeks to attribute factual “admissions”
to the Presiding Officer for later use in an appeal.
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638 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
makes no claim, and the facts show no indication, that
respondent took any measures to minimize any harm or
risk of harm. The mere fact that no harm may have
occurred is not a reason to lower the penalty where
chance and not respondent’s actions are responsible for
such an outcome.
Penalty Decision at 9 (citing Penalty Policy at 17).
In addition, environmental harm was addressed through the
Presiding Officer’s application of the PCB Penalty Policy, since consider-
ation of environmental harm is inherent in the policy’s penalty recom-
mendations. The “degree and likelihood of harm from the conduct or
activity violating the PCB rules” is incorporated into a penalty, in the first
instance, in the calculation of the “extent” of the violation or violations.
See Penalty Policy at 3. The Presiding Officer thus considered “environ-
mental harm” in that sense by calculating a gravity based penalty predi-
cated on the volume of contaminated soil involved in Newell’s violations.
Penalty Decision at 4–6. In sum, the Presiding Officer plainly did not
“ignore” the issue, as Newell erroneously argues on appeal. Brief for
Appellant at 47. The Board finds no error in the Presiding Officer’s treat-
ment of this issue.
f. Cost of Remediation
Newell contends that the eventual cost of the soil removal—which
Newell claims was $84,000—should be considered as a mitigating factor,
and that the Presiding Officer committed a “clear abuse of discretion” by
failing to consider it as such. Newell points out that, according to the
Penalty Policy, “[p]enalties for * * * disposal violations are based on the
approximate cost of cleanup and disposal of the materials contaminated
by PCB.” Penalty Policy at 5 (quoted in Brief for Appellant, at 47). Newell
thus appears to argue that the amount of the penalty assessed in indi-
vidual cases should be geared to the cost of the cleanup itself.
Newell misapprehends the guidance appearing in the Penalty Policy.
The passage quoted by Newell is not an instruction regarding assess-
ments in individual cases; it is rather background information introduc-
ing and explaining how the calculations in the Penalty Policy associated
with the “extent” factor were developed. As we have seen, the Penalty
Policy advocates distinguishing between “major” and “minor” disposal
violations quantitatively, classifying the extent of a disposal violation
based on the quantity of contaminated material involved in the violation.
The passage quoted by Newell simply reflects the correlation which
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NEWELL RECYCLING COMPANY, INC. 639
would ordinarily be expected between the cost of cleanup and proper
disposal and the amount of contaminated material involved. The amount
of the contamination, and remedial costs associated therewith, have been
taken into account in developing the Policy’s base penalty assessment
framework. Indeed, the policy states clearly that “the objective [of the
‘extent’ framework] is not to estimate actual costs for a specific case, but
to provide a sufficient and reasonable basis for calculating penalties that
will encourage compliance with the PCB rules.” Penalty Policy at 7.
Accordingly, we agree with the Presiding Officer that the Penalty Policy
should not be read to advocate that, separate and apart from the “extent”
calculation, penalties in individual cases correspond to the actual costs of
cleanup and proper disposal. Indeed, to conclude otherwise could, by
suppressing penalty assessments in cases involving less-expensive
cleanups, serve to undermine the role of penalties as an incentive for
prompt cleanup. Failure to respond expeditiously to an environmental
condition that can be inexpensively addressed is particularly inexcusable
and should be subject to penalties sufficient to discourage such behavior.
We thus find no error in the Presiding Officer’s rejection of Newell’s argu-
ment for mitigation on this ground. Moreover, we find no genuine issue
of material fact with regard to this issue.
g. Effect of Settlement
In its penalty brief to the Presiding Officer, Newell argued that it was
necessary to deduct the amount received by EPA in its settlement with
HMPC from the penalty ultimately assessed against Newell. Penalty Opp.
at 6. The Presiding Officer did so. In his Penalty Decision, he directed
that Region 6 “should notify respondent Newell immediately of the
amount of respondent [HMPC’s] settlement and that amount shall be
deducted from the penalty assessed against respondent Newell.” Penalty
Decision at 13. The Presiding Officer further ordered, however, that no
other consideration would be given the settlement amount, in recogni-
tion of the requirements of 40 C.F.R. § 22.22(a). That provision of the
Consolidated Rules states, in relevant part, that “evidence relating to set-
tlement which would be excluded in the federal courts under Rule 408
of the Federal Rules of Evidence is not admissible.” Thus, the Presiding
Officer explained, “[s]ettlement offers or terms are not indicative of, and
should not be used as evidence of, the amount of the appropriate penal-
ty in a proceeding to determine a penalty.” Penalty Decision at 12 (citing
McInnis v. A.M.F., Inc., 765 F.2d 240, 247–48 (1st Cir. 1985); McHann v.
Firestone Tire & Rubber Co., 713 F.2d 161, 165–66 (5th Cir. 1983);
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640 ENVIRONMENTAL ADMINISTRATIVE DECISIONS
Quad/Graphics Inc. v. Fass, 724 F.2d 1230, 1235 (7th Cir. 1983); United
States v. Contra Costa County Water Dist., 678 F.2d 90, 92 (9th Cir. 1982)).29
In its appellate brief, Newell does not challenge the Presiding
Officer’s ruling with respect to the effect of 40 C.F.R. § 22.22(a).
Nonetheless, seemingly with complete disregard for that ruling, Newell
cites the settlement amount in its appellate brief and argues that the
Presiding Officer committed an abuse of discretion by failing to consider
the settlement amount “in his assessment of the fairness and propriety of
his penalty award” against Newell. Brief for Appellant at 49. In response,
Region 6 has filed a motion, based on 40 C.F.R. § 22.22(a), to strike all
references to the settlement amount from the record of the proceedings
before the Board. Newell opposes the motion to strike, and addresses the
Rule 408 issue only in that context.
Both the Region’s motion to strike and Newell’s claim of error based
on the Presiding Officer’s failure to consider the settlement amount turn
on the admissibility of the settlement evidence; obviously, if the settle-
ment amount was not admissible the Presiding Officer cannot have erred
by failing to consider it. We therefore turn to the evidentiary issue and to
Rule 408 of the Federal Rules of Evidence, which states in part:
Evidence of (1) furnishing or offering or promising to fur-
nish, or (2) accepting or offering or promising to accept,
a valuable consideration in compromising or attempting
to compromise a claim which was disputed as to either
validity or amount, is not admissible to prove liability for
or invalidity of the claim or its amount. Evidence of con-
duct or statements made in compromise negotiations is
likewise not admissible.
Fed. R. Evid. 408 (emphasis added).
In its Opposition to the Region’s Motion to Strike, Newell makes
three assertions: (1) “It is EPA policy to consider other penalties when cal-
29
Each of these cases involves the admissibility of a settlement between a plaintiff and
a third person—a joint tortfeasor or former defendant—when offered into evidence by the
remaining defendant or defendants. The cases are therefore procedurally indistinguishable
from the present case, involving a settlement between the complainant and one of two co-
respondents being offered into evidence by the second co-respondent. Rule 408 is fully
applicable to settlements of this nature. See, e.g., McHann, 713 F.2d at 166 (“Under Rule
408, ‘a defendant cannot prove the invalidity or amount of a plaintiff’s claim by proof of
plaintiff’s settlement with a third person * * *.’”) (quoting 2 D. Louisell & C. Mueller, Federal
Evidence § 171, at 290 (1978 & Supp. 1983)).
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NEWELL RECYCLING COMPANY, INC. 641
culating what is a fair, uniform and consistent penalty”; (2) “Rule 408
applies to liability issues and not to penalty considerations”; and (3) “Rule
408 does not apply in civil penalty cases.” Opposition to Motion to Strike
at 6 (emphasis in original).
Newell’s first and third assertions are negated by the very existence
of 40 C.F.R. § 22.22(a). Whether or not Rule 408 applies in civil penalty
cases generally, section 22.22(a) dictates that it applies in EPA administra-
tive civil penalty actions that are governed by part 22. And the general
policy noted by Newell—which does not, in any event, imply any require-
ment to examine settlements when calculating penalties in litigated
cases30—is necessarily trumped to the extent that a specific regulation such
as section 22.22(a) precludes a presiding officer’s receipt of particular evi-
dentiary material in calculating a penalty.
Newell’s assertion that Rule 408 applies only to liability rulings is also
incorrect. The rule expressly bars the use of settlement evidence to prove
the “amount” of a claim. United States v. Contra Costa County Water
District illustrates the principle. There, the United States filed two sepa-
rate actions to recover the cost of repairs to a retaining wall. The first
action, against an adjoining landowner whose conduct had imperiled the
wall, was settled, nominally, for $75,000—but only $30,000 was actually
paid to the United States. In the second action, against a user of the wall
contractually obligated to pay for maintenance, the United States sought
to recover the balance of its repair cost after deducting the $30,000
received in the first action. The defendant believed itself entitled to a
credit in the full amount of the prior settlement ($75,000) and urged the
district court, for that reason, to take judicial notice of the settlement.
Relying on Rule 408, however, the Ninth Circuit upheld the district court’s
refusal to admit the settlement into evidence. 678 F.2d at 92.
Accordingly, we conclude that the Presiding Officer did not err by
declining to consider the settlement involving HMPC as a basis for penal-
ty mitigation in favor of Newell. We further conclude that the Region’s
motion to strike all references to the amount of the HMPC settlement
30
We note that in its Opposition to the Motion to Strike, Newell acknowledges that it
“makes sense” to conclude that “negotiated settlements with the agency cannot be com-
pared to penalties imposed by an administrative law judge after hearing.” Opposition to
Motion to Strike at 4 (citing In re Briggs & Stratton Corp., 1 E.A.D. 653 (JO 1981)). We agree.
As the Judicial Officer remarked in Briggs & Stratton, it “seems obvious” that comparisons
between payments made in settled cases and penalties assessed in litigated cases cannot
establish “that the penalties assessed * * * are inconsistent with EPA’s policy favoring uni-
form penalties for like violations.” 1 E.A.D. at 666.
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from the record of these proceedings is well founded, and the motion is
therefore granted.
h. Penalties in Other Cases
Finally, Newell offers a comparison of its own case with other TSCA
administrative penalty cases that have, for various reasons, come before
the Board and/or its predecessors. Newell claims that the penalties ulti-
mately imposed in those other cases were much lower than the penalty
being assessed against Newell, but that its own conduct is far less aggra-
vated than the conduct described in those other cases. We note that the
outcomes in these other cases are not in dispute—only their significance
to the question at hand. Newell concludes that the Presiding Officer
abused his discretion by failing to address the other cases cited by Newell
when calculating a penalty in this case. Brief for Appellant at 41.
Newell’s characterization notwithstanding, the Presiding Officer did
not treat the evidentiary significance of other TSCA cases as a matter
of discretion. He noted, rather, that existing EPA administrative case
law specifically addresses the effect of evidence concerning penalties in
other cases:
As complainant correctly notes, penalties assessed in
other cases have no bearing on the penalty assessment in
this case. As the [Chief Judicial Officer] has stated, quot-
ing the Supreme Court, “The employment of a sanction
within the authority of an administrative agency is thus
not rendered invalid in a particular case because it is
more severe than sanctions in other cases.”
Penalty Decision at 11 (quoting In re Chautauqua Hardware Corp., 3
E.A.D. 616, 627 n.14 (CJO 1991); Butz v. Glover Livestock Comm’n Co.,
411 U.S. 182, 187 (1973)). See also In re Spang & Co., 6 E.A.D. 226, 242
(EAB 1995) (where we held, quoting Koch, 1 Administrative Law and
Practice § 5.20 at 361 (1985), that “‘generally speaking, unequal treatment
is not an available basis for challenging agency law enforcement pro-
ceedings’”). Cf. In re SchoolCraft Constr., Inc., 8 E.A.D. 476, 487 (EAB
1999) (penalty assessed against one respondent held not erroneous
despite lower penalty assessed against a second respondent).
We continue to hold to the principle that penalty assessments are
sufficiently fact- and circumstance-dependent that the resolution of one
case cannot determine the fate of another. Accordingly, the Board
VOLUME 8
187-274/Sections25-28 10/15/01 4:23 PM Page 643
NEWELL RECYCLING COMPANY, INC. 643
upholds the Presiding Officer’s decision not to adjust the penalty in this
case based on penalties assessed in other cases.
For all of the foregoing reasons, the Board concludes that Newell did
not raise any genuine issue of material fact with respect to the appropri-
ateness of the penalty proposed to be assessed against it. The Presiding
Officer did not err or abuse his discretion by assessing a penalty against
Newell by means of an accelerated decision.
5. Penalty Amount
As the preceding discussion indicates, the Presiding Officer did not
err in determining that the proposed $1.345 million civil penalty was
an appropriate one. The preceding discussion further makes clear
that Newell has not established any valid grounds for mitigation of the
penalty. The Board finds no other reason to disturb the Presiding
Officer’s recommended civil penalty assessment; that assessment is,
accordingly, upheld.31
III. CONCLUSION
The Initial Decision is affirmed with respect to Newell’s liability, and
Newell is assessed a civil penalty of $1,345,000 (less the amount paid by
Oklahoma Metal Processing Company, Inc. d/b/a Houston Metal
Processing Company pursuant to its settlement in this matter). Payment
of the full amount of the penalty assessed shall be made by forwarding
a cashier’s or certified check, payable to the Treasurer of the United
States, to the following address within sixty (60) days of the date of
receipt of this decision:
EPA-Region VI
Regional Hearing Clerk
P.O. Box 360582
Pittsburgh, PA 15251–6582
So ordered.
31
We note in this regard that the Region’s decision to establish February 21, 1994, as
its penalty cut-off date, rather than the date that the waste pile was ultimately removed and
properly disposed of (September, 1995), served to reduce dramatically the amount of the
penalty to which Newell would have otherwise been subject. Viewed in this light, Newell’s
penalty has, in effect, been substantially mitigated in the original framing of the case.
VOLUME 8
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