Beazer East, Inc. v. U.S. E.P.A., Region III

• Decision Date: 12 May 1992
• Docket Number: No. 91-1692,91-1692
• Citation: 963 F.2d 603
• Parties: , 60 USLW 2763, 22 Envtl. L. Rep. 21,161 BEAZER EAST, INC. Appellant, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, REGION III.
• Court: U.S. Court of Appeals — Third Circuit

Page 603

963 F.2d 603

34 ERC 1937, 60 USLW 2763, 22 Envtl.

L. Rep. 21,161

BEAZER EAST, INC. Appellant, v. UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, REGION III.

No. 91-1692.

United States Court of Appeals, Third Circuit.

Argued Feb. 25, 1992.

Decided May 12, 1992.

Kenneth K. Kilbert (argued), Babst, Calland, Clements and Zomnir, P.C., Pittsburgh, Pa., for appellant.

Barry M. Hartman, Acting Asst. Atty. Gen., Martin F. McDermott, Robert L. Klarquist, M. Alice Thurston (argued), Attys., U.S. Dept. of Justice, Washington, D.C., for appellee.

G. William Frick, Ralph J. Colleli, Jr., American Petroleum Institute, Washington, D.C., amicus curiae.

John C. Chambers, Jr., Gordon D. Quin, Gregory J. Madden, McKenna & Cuneo, Washington, D.C., for amicus curiae American Petroleum Institute.

Before: SLOVITER, Chief Judge, SCIRICA and NYGAARD, Circuit Judges.

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Beazer East, Inc. appeals the district court's order granting summary judgment in favor of the Environmental Protection Agency. The EPA cited Beazer for four violations of Subtitle C of the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6921 to 6939b (1983 & Supp 1991) (RCRA). Beazer contested these citations on the grounds that the subjects of the citations, its aeration basins, were not subject to RCRA regulation. We are presented with a single issue: whether Beazer's basins are "tanks" or "surface impoundments" for purposes of 40 CFR § 260.10. If we conclude that the basins are tanks, then they are exempt from RCRA's groundwater monitoring requirements. On the other hand, if the basins are surface impoundments, then they are subject to RCRA regulation.

This issue has two components: first, whether the EPA's interpretation of the "provide structural support" language in § 260.10 to require tanks to be completely self-supporting when removed from the ground and filled to capacity with the material they are intended to contain, was plainly erroneous or inconsistent with the regulation; second, whether the EPA's interpretation of the "designed to contain" language in § 260.10 to require tanks to be watertight was plainly erroneous or inconsistent with the regulation.

We conclude that the basins are surface impoundments and that the EPA's interpretation of the "provide structural support" language of § 260.10 is not plainly erroneous or inconsistent with the regulation. Hence, we do not reach the second component, the "watertight" test. We will affirm the district court's order granting summary judgment in favor of the EPA.

I.

Beazer, a Delaware corporation, operates a coal tar plant in Follansbee, West Virginia, where it produces creosote, coal tar products and industrial chemicals. Wastewater from the plant undergoes microbial treatment and is released into the Ohio river. This treatment system consists of two aeration basins. ¹ Each basin has a capacity of 500,000 gallons. They are built into the ground, are 15 feet deep, approximately 80 feet across, and are constructed of six-inch thick reinforced concrete. The concrete overlies a two-inch thick layer of bank sand, which in turn overlies a three-inch thick layer of compacted crushed slag.

II.

In 1987, EPA Region III filed an Administrative Complaint, Compliance Order, and Notice of Opportunity for Hearing against Beazer, charging it with four violations of RCRA groundwater monitoring requirements. First, the EPA charged that Beazer violated 40 CFR § 265.91(a)(1) by failing to maintain a monitoring well of sufficient depth to yield groundwater samples; second, that Beazer violated 40 CFR § 265.91(a)(2) by failing to maintain a monitoring well of sufficient depth to detect statistically significant amounts of hazardous waste; third, that Beazer violated 40 CFR § 265.92(a) by failing to develop and follow a groundwater sampling plan; and fourth, that Beazer violated 40 CFR § 265.93 by failing to prepare an outline of a groundwater quality assessment program.

Beazer requested a hearing before an administrative law judge to contest the citations. At the outset, Beazer and the EPA stipulated that the only issue to be decided by the ALJ was whether the two basins were "tanks" or "surface impoundments" within the definition of 40 CFR § 260.10. Section 260.10 defines a tank as follows:

Tank means a stationary device, designed to contain an accumulation of hazardous waste which is constructed primarily of non-earthen materials (e.g., wood, concrete, steel, plastic) which provide structural support.

Section 260.10 defines surface impoundment as follows:

Surface impoundment or impoundment means a facility or part of a facility which is a natural topographic depression, man-made excavation, or diked area formed primarily of earthen materials (although it may be lined with man-made materials), which is designed to hold an accumulation of liquid wastes or wastes containing free liquids, and which is not an injection well. Examples of surface impoundments are holding, storage, settling, and aeration pits, ponds and lagoons.

The EPA and Beazer stipulated that if the basins are found to be surface impoundments, Beazer would pay a civil penalty of $30,000 and either comply with RCRA or close the basins.

After the EPA filed its Administrative Complaint, the parties moved for an accelerated decision by the ALJ. The ALJ denied this motion. In his Opinion and Order, the ALJ opined that the foundation test applied by the EPA to the definition of tanks was neither expressed nor implied in the 40 CFR § 260.10 definition of tanks. The ALJ also concluded that the EPA may have violated the Administrative Procedure Act, 5 U.S.C. § 551 to 559 (1977 & Supp 1991), by adopting the "Weddle memorandum," ² as the basis for its foundation test. The ALJ reasoned that the EPA had adopted a rule without subjecting it to the notice and comment procedures required by § 553 of the Administrative Procedure Act. The ALJ scheduled the matter for a full adjudicative hearing.

After hearing extensive testimony from both parties' experts, the ALJ reversed his position. In his Initial Decision, the ALJ concluded that the EPA's reliance on the Weddle memorandum for its foundation test and the EPA's watertightness test were both reasonable interpretations. He held that Beazer's basins did not meet the definition of tanks and were instead surface impoundments subject to RCRA groundwater monitoring requirements. The ALJ assessed a civil penalty of $30,000 against Beazer and entered an order to comply with RCRA monitoring requirements under 40 CFR § 260.90-93. Beazer appealed to the EPA Administrator.

On appeal, the EPA Administrator affirmed the ALJ. The Administrator did not discuss the agency's use of the Weddle memorandum. Instead, the Administrator concluded that both the foundation test and the watertightness test were compatible with the regulatory purpose underlying RCRA, that is, to protect groundwater from contamination by hazardous waste. The Administrator upheld the civil penalty and the compliance order against Beazer. Beazer appealed the Administrator's decision to the U.S. District Court. The district court granted the EPA's motion for summary judgment, concluding that the EPA's interpretation of § 260.10 was neither plainly erroneous nor inconsistent with the regulation.

III.

We review the district court's summary judgment by applying the same standard used by the district court. Childers v. Joseph, 842 F.2d 689, 693 (3d Cir.1988); Equimark Commercial Financial Co. v. CIT Financial Services Corp., 812 F.2d 141, 142 (3d Cir.1987). Because we are reviewing agency action, we shall decide all questions of law, interpret statutory provisions and determine the meaning or applicability of the terms of an agency action. 5 U.S.C. § 706. We can only set aside agency action found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. § 706(2)(A).

As a preliminary matter, Beazer disputes the standard by which we review this agency action. Citing our decision in Bethlehem Steel v. OSHA, 573 F.2d 157, 161-62 (3d Cir.1978) Beazer claims that the standard requires that "the agency's interpretation of a regulation cannot be upheld if the language of the regulation did not provide fair notice of what the regulation prohibits or requires." Brief of Appellant, at 17-18. As such, Beazer contends that the EPA must adhere to the formal "notice and comment" rulemaking procedures found in the Administrative Procedure Act, 5 U.S.C. § 553.

We disagree. Beazer's standard of review argument confuses the distinction between "legislative" rules and "interpretive" rules promulgated by an administrative agency. To be sure, "legislative" rules that impose new duties upon the regulated party have the force and effect of law and must be promulgated in accordance with the proper procedures under the APA. See United Technologies Corp. v. EPA, 821 F.2d 714, 718 (D.C.Cir.1987). The APA requires also that general notice of the proposed regulation be published in the Federal Register and interested persons be given an opportunity to comment on the proposed rule. 5 U.S.C. § 553(b),(e). "Interpretive" rules, on the other hand, seek only to interpret language already in properly issued regulations. United Technologies, 821 F.2d at 718 ("An interpretive rule simply states what the administrative agency thinks the [underlying] statute means, and only "reminds" affected parties of existing duties." quoting Citizens to Save Spencer County v. EPA, 600 F.2d 844, 876 n. 153 (D.C.Cir.1979)); See generally, Weaver, Judicial Interpretation of Administrative Regulations: The Deference Rule, 45 U Pitt L Rev 587, 589 n 13 (Spring 1984). Interpretive rules and statements of policy are exempted from the notice and comment requirement. 5 U.S.C. § 553(b)(A).

Here, the EPA is interpreting language already found in § 260.10. The agency is not adding or amending language to the...