Rogers Corp. v. Environmental Protection Agency, 00-1542

• Decision Date: 04 January 2002
• Docket Number: No. 00-1542,00-1542
• Citation: 275 F.3d 1096
• Parties: (D.C. Cir. 2002) Rogers Corporation, Petitioner v. Environmental Protection Agency, Respondent
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1096

275 F.3d 1096 (D.C. Cir. 2002)

Rogers Corporation, Petitioner v. Environmental Protection Agency, Respondent

No. 00-1542

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 8, 2001

Decided January 4, 2002

Petition for Review of an Order of the Environmental Protection Agency

Steven Ferrey argued the cause for petitioner. With him on the briefs was Lee D. Hoffman.

D. Judith Keith, Attorney, U.S. Department of Justice, argued the cause for respondent. With her on the brief was John C. Cruden, Acting Assistant Attorney General.

Before: Ginsburg, Chief Judge, Rogers and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Rogers.

Rogers, Circuit Judge:

The Rogers Corporation ("the company") petitions for review of the decision of the Environmental Appeals Board assessing a penalty of $281,400 for violation of section 15 of the Toxic Substances Control Act, 15 U.S.C. 2614 (1994). The company challenges the decision on a variety of grounds. Suffice it to say, the company contends that the Board's affirmance of the grant of the agency's motion for partial accelerated decision, which requires a finding that "no genuine issue of material fact exists," 40 C.F.R. 22.20(a), was arbitrary and capricious. We agree, and, accordingly, we grant the petition and remand the case to the Board for further proceedings.

I.

The parties stipulated to the following facts: The company, a Massachusetts corporation that has its principal place of business in Connecticut, owns and operates a manufacturing facility that produces polyurethane elastomers and foams. During the relevant time period, the company used a heat transfer system known as "HTS 975," which was located in a basement room. The HTS 975 used oil as a heat transfer medium, and oil occasionally dripped or wept from the pump bearings and then collected on the concrete floor beneath the HTS 975 in a shallow concrete berm. From time to time, the company pumped the oil from the berm under the HTS 975 into drums, sampled the contents of the drums for hazardous waste constituents, and shipped the drums off-site for disposal. From at least 1988 to at least March 1992, analysis of the samples of residual heat transfer fluid taken from the berm did not reveal concentrations of polychlorinated biphenyls ("PCBs") equal to or greater than 50 parts per million ("ppm"). In April 1993, however, sampling of 16 drums of waste oil revealed PCBs in excess of 50 ppm in nine drums. The company was notified of the excessive PCBs in June 1993, and the sixteen drums were shipped off-site for disposal in September 1993. In December 1993, the Connecticut Department of Environmental Protection inspected the company, found PCBs in excess of 50 ppm in two of five samples of oil taken from the HTS 975 room, and cited the company. Four months later, the Department ordered the company to conduct certain studies and to take remedial actions. In response, the company continued to investigate the source of the excessive PCBs and undertook remedial actions.

In September 1994, the Environmental Protection Agency ("the agency") charged the company with improper disposal of PCBs from June 16, 1993, until on or around December 1, 1993 in violation of 40 C.F.R. 761.60 and 15 of the Toxic Substance Control Act, 15 U.S.C. 2614, and proposed a civil penalty of $226,750. The company filed an answer in October 1994, and, pursuant to 40 C.F.R. 22.15(c), requested a hearing. In its prehearing memorandum, the company stated that it would offer evidence that it had not used any PCBcontaining heat transfer fluids since 1972, and that the only logical source of the PCBs in the residual heat transfer fluid was the concrete floor and soil underneath the HTS 975. In a supplemental prehearing memorandum, the company proffered Robert S. Potterton as an expert witness who would "provide an opinion as to the physical/chemical basis for the unexpected appearance, in or about 1993, of PCB concentrations equal to or greater than 50 ppm in the fluid that was pumped from the bermed containment area in the vicinity of HTS 975...." Mr. Potterton would also testify about remediation efforts by the company.

Just short of three years after the agency filed its charge, on September 12, 1997, the company filed a motion for an accelerated decision, pursuant to 40 C.F.R. 22.20(a). The company sought application of the agency's historic waste exemption for PCB-containing fluids placed in a disposal site prior to February 17, 1978. Anticipating that the agency would rely on In the Matter of Standard Scrap Metal Company, TSCA Appeal No. 87-4, 1990 E.P.A. App. LEXIS 8 (E.P.A. Aug. 2, 1990), the company argued that the phrase "disposal site" did not refer to a narrow subcategory of places for containing PCB-waste spilled or released prior to February 17, 1978. The company pointed to agency regulations proposed December 6, 1994, clarifying that PCBs disposed of prior to April 18, 1978, do not require further disposal action unless a Regional Administrator finds that such historic waste presents a risk to health or the environment from exposure. See Disposal of Polychlorinated Biphenyls, 59 Fed. Reg. 62,788 (proposed Dec. 6, 1994) (codified at 40 C.F.R. 761.50(b)(3)). The company asserted that this court had acknowledged the validity of the proposed rule as a statement of agency policy in General Electric Co. v. EPA, 53 F.3d 1324 (D.C. Cir. 1995), and that the Environmental Appeals Board had relied on the proposed rule as support for the respondent's position in In re CWM Chemical Services, Inc., TSCA Appeal No. 93-1, 1995 E.P.A. App. LEXIS 20 (E.P.A. May 15, 1995). As evidentiary support for application of the historic waste exemption, attached to the company's motion for accelerated decision was an affidavit of Gerry L. Langelier, an engineer at the company for 33 years, stating that the company had ceased using PCB-based oil in 1972, and that, since then, oil seepage from the wet seals into the bermed containment area under the HTS 975 had never before the 1993 tests contained PCB concentrations above 50 ppm.

The agency filed an opposition to the company's motion for accelerated decision, a motion to file an amended complaint to increase the duration of the charged violation and the proposed penalty to $300,300 (based on evidence that the spill remained from June 16, 1993, until March 29, 1994, or later), as well as its own motion for a partial accelerated decision on liability. The company opposed the agency's motion for a partial accelerated decision, renewed its argument based on the agency's interpretation of its regulations as reflected in the proposed regulations, and also argued that the agency's inference that a disposal took place in 1993 was unwarranted in light of the undisputed fact that there was no ongoing source of PCBs in the HTS 975. Asserting that the question of why PCBs suddenly showed up in 1993 berm samples was a matter of speculation, the company stated that question was irrelevant because there was no evidence of any spill or leak at the company in 1993. An attached affidavit from its engineer stated that no piping containing PCB had been connected to the HTS 975 after the system was drained of PCB oils in 1972 and that, upon cleaning the HTS 975 room floor and the discovery of cracks in the sump area, the company discovered PCB contaminated soil underneath the floor.

By Order of November 13, 1997, an administrative law judge ("ALJ") granted the agency's motions to amend the complaint and for partial accelerated decision on liability. The ALJ denied the company's motion for accelerated decision, and the company's request for oral argument, inasmuch as the company had not set forth a basis for the request "other than its generalized assertion that it is entitled to judgment as a matter of law in this matter." 1997 Order on Liability at 2. The ALJ summarized the stipulated facts and observed that the parties disagreed as to the legal inferences to be drawn therefrom. Noting that the company had offered "no direct evidence showing when the uncontrolled discharges at issue took place or how these discharges were caused," the ALJ concluded that "the only plausible explanation for the presence of PCBs at regulated levels in 1993 after years of lower levels ... is that there was an uncontrolled discharge in 1993." Id. at 23. Because the company failed to dispose of the PCB-contaminated oil in the prescribed manner, the ALJ found that there was an ongoing violation of the disposal requirements of 761.60(a). The ALJ rejected the company's attempt to invoke the historic waste exemption because (1) the berm under the HTS 975 was not a disposal site within the meaning of the exemption; and (2) the company had failed to carry its burden of showing that the PCB spill occurred prior to February 17, 1978. Of the two causation theories suggested to the ALJ upon review of the evidence, the ALJ concluded that the company's leaching-up theory, whereby PCBs had leached up from the concrete floor and soil into the oil in the berm, "strains the imagination to envision," while the agency's theory that increased production had dislodged residual PCBs remaining inside the HTS 975 "appears far more likely." Id. at 24-25. The ALJ accordingly found that there were no genuine issues of material fact, and, upon rejecting the company's statute of limitations and due process arguments, concluded that the agency was entitled to judgment as a matter of law on liability.

During the penalty phase of the proceedings in April 1998, the company attempted to introduce new, exculpatory evidence that would show that the excessive PCBs in 1993 resulted from contamination of the samples by pre-1978 PCBs that had collected in the concrete and soil beneath the berm. The company proffered, consistent with the ALJ's ruling that the new evidence would be considered only with regard to the...