Rollins Environmental Services (NJ) Inc. v. U.S. E.P.A.

• Citation: 937 F.2d 649
• Decision Date: 05 July 1991
• Docket Number: No. 90-1508,90-1508
• Parties: , 290 U.S.App.D.C. 331, 21 Envtl. L. Rep. 21,353 ROLLINS ENVIRONMENTAL SERVICES (NJ) INC., Petitioner, v. U.S. ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 649

937 F.2d 649

33 ERC 1543, 290 U.S.App.D.C. 331, 21

Envtl. L. Rep. 21,353

ROLLINS ENVIRONMENTAL SERVICES (NJ) INC., Petitioner, v. U.S. ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 90-1508.

United States Court of Appeals, District of Columbia Circuit.

Argued May 14, 1991.

Decided July 5, 1991.

Petition for Review of a Final Decision of the Environmental Protection Agency.

Louis A. Minella, with whom Michael W. Steinberg was on the brief, Washington, D.C., for petitioner.

Mary Ellen M. Levine, Atty., E.P.A., with whom, James C. Nelson, Acting Associate Gen. Counsel, Patricia A. Roberts, Acting Asst. Gen. Counsel, E.P.A., Michael A. McCord and Kaye Allison, Attys., Dept. of Justice, were on the brief, Washington, D.C., for respondent.

Ashley Doherty, Atty., Dept. of Justice, Washington, D.C., also entered an appearance for respondent.

Before EDWARDS, BUCKLEY and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

Opinion dissenting in part and concurring in part filed by Circuit Judge HARRY T. EDWARDS.

RANDOLPH, Circuit Judge:

Rollins Environmental Services (NJ) Inc. owned and operated a hazardous waste facility in Logan Township, New Jersey. In August 1982, Rollins began closing the facility's Basin 210, a concrete basin with a hypalon liner containing some 35,000 pounds of liquids and sludges with a PCB concentration of 1874.8 parts per million (ppm). Rollins removed the liquids and sludges, shipped them to Texas, and incinerated them at a Rollins facility approved for PCB disposal under the Toxic Substances Control Act (TSCA), 15 U.S.C. Sec. 2601 et seq. See 40 C.F.R. Sec. 761.70. Rollins also removed the hypalon liner and sent it to a secure land-fill in compliance with the applicable TSCA regulation, 40 C.F.R. Sec. 761.75.

Rollins then triple-rinsed the basin with a solvent, as required by the following Environmental Protection Agency decontamination regulation, the meaning of which gives rise to the present controversy:

Any PCB container to be decontaminated shall be decontaminated by flushing the internal surfaces of the container three times with a solvent containing less than 50 ppm PCB. The solubility of PCBs in the solvent must be five percent or more by weight. Each rinse shall use a volume of the normal diluent equal to approximately ten (10) percent of the PCB container capacity. The solvent may be reused for decontamination until it contains 50 ppm PCB. The solvent shall then be disposed of as a PCB in accordance with Sec. 761.60(a).

40 C.F.R. Sec. 761.79(a) (italics added).

After each rinse, including the final rinse, the company's analysis indicated that the solvent contained PCB concentrations of less than 50 ppm. When finished, the company incinerated the solvent, along with some rainwater that had accumulated during the operation, at an on-site facility meeting the requirements of the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Sec. 6928 et seq., but not those contained in EPA's TSCA regulations, 40 C.F.R. Sec. 761.70. Rollins followed this course because it believed, in light of the italicized portion of section 761.79(a), that only solvents having a PCB concentration of 50 ppm or more had to be disposed of as PCBs. (Wastes with PCB concentrations under 50 ppm are not regulated by TSCA. See 40 C.F.R. Sec. 761.60(a).)

Six years later, EPA issued an administrative complaint charging Rollins with violating TSCA by incinerating liquid PCBs in an incinerator not approved for that purpose. The complaint cited 40 C.F.R. Sec. 761.1(b), a TSCA "anti-dilution" regulation specifying that a particular PCB concentration cannot "be avoided as a result of dilution." Because the dregs in the basin contained PCBs at a concentration of 1874.8 ppm, the complaint attributed the equivalent PCB concentration to the 22,700 gallons of solvent used to rinse the basin. The complaint proposed a civil penalty of $25,000, the maximum amount under the statute.

Rollins requested a hearing. The ALJ, in an interlocutory order, agreed with EPA that Rollins had violated the PCB disposal regulations. When the parties were unable to come to an agreement regarding the amount of the penalty, a hearing was held before a second ALJ who, finding unusually compelling mitigating circumstances, assessed a civil penalty of zero. The ALJ stressed that the decontamination regulation was unclear, which EPA itself recognized, and that Rollins' "reading of the Regulations had a definite plausibility." He further noted that Rollins had "proceeded with care, by burning the rinse in an incinerator approved under RCRA," and that no unacceptable pollution had occurred.

On the last possible day, EPA filed an administrative appeal of the zero penalty assessment. In a lengthy opinion, the Chief Judicial Officer (CJO) held that the decontamination regulation was "clear," and that Rollins' reading was at best superficial. The CJO thought it "inaccurate to describe Rollins' interpretation of the rules as having 'a definite plausibility,' " and finding no other mitigating circumstances, assessed a penalty of $25,000, as EPA had originally proposed.

Rollins seeks review not only of the $25,000 penalty, but also of the finding that it violated the regulation. ¹ It is true, as EPA argues, that Rollins failed to file an administrative appeal to the CJO from the ALJ's finding of a violation. But this is of no moment. The finding depended entirely on the validity of EPA's interpretation of its regulation. The CJO reviewed the interpretation and sustained it in the process of finding no ambiguity in the regulation warranting mitigation of the proposed $25,000 penalty. No useful purpose would therefore be served by invoking the exhaustion doctrine against Rollins. The issue was fully considered and decided. Natural Resources Defense Council v. EPA, 824 F.2d 1146, 1151 (D.C.Cir.1987) (en banc).

The decontamination regulation on which the finding of violation rests is confusing. The problem stems from the word "then" near the end of section 761.79(a): companies may reuse a solvent "until it contains 50 ppm PCB" and the solvent "shall then be disposed of as a PCB...." If "then" refers to the point at which the solvent reaches a concentration of 50 or more ppm PCB, a company would not be required to dispose of the solvent as a PCB if it never reaches that level. That at least is the way Rollins read the regulation. The other interpretation, endorsed by EPA, is rather more strained. EPA reads "then" to refer to the time when the rinsing is over and the solvent is no longer being reused. "Then," regardless of the level of PCB concentration, the solvent must be treated as a PCB. EPA explains that it considers all solvents to be diluents and, as such, to have the same PCB concentration as the waste they dilute. EPA's anti-dilution regulation (40 C.F.R. Sec. 761.1(b)), which applies not just to decontamination through rinsings but generally, so indicates. As EPA now sees it, section 761.79(a) therefore means that for the purpose of reusing solvents, PCB concentration should be measured on the basis of what the solvent actually contains, while for purposes of disposal, the solvent shall be assumed to contain a concentration of PCB equal to the PCB level of the container before it was flushed.

EPA's interpretation would not exactly leap out at even the most astute reader, particularly since the decontamination regulation does not refer to the anti-dilution provision. Still, we must sustain it. It is logically consistent with the language of the regulation and it serves a permissible regulatory function. The same of course can be said about Rollins' interpretation. But in a competition between possible meanings of a regulation, the agency's choice receives substantial deference. Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566, 100 S.Ct. 790, 797, 63 L.Ed.2d 22 (1980); Western Union Telegraph Co. v. FCC, 815 F.2d 1495, 1503 (D.C.Cir.1987). Rollins' only argument against the finding of violation was that EPA misconstrued its regulation. ² Since we reject that argument we turn to the remaining issue concerning the penalty.

The second ALJ determined that the appropriate penalty should be zero, primarily on the ground that Rollins had reasonably relied on an interpretation of the regulation that not only had a "definite plausibility," but also had substantial support within EPA itself. The ALJ pointed out that as late as November 1989--more than a year after EPA brought the complaint against Rollins--considerable disagreement remained within the agency about the meaning of section 761.79(a). After the first ALJ issued the initial interlocutory order in this case, EPA prepared an internal document pursuant to the agency's Expedited PCB-Rule Interpretation Process (EPIP), titled "Determination Regarding Disposal of PCB Container Rinsate (Less Than 50 PPM)--Final Issue Resolution Decision." In that report, EPA acknowledged that "[t]here has been significant disagreement among various headquarters and regional offices as to whether such rinsate is regulated for disposal." ³ The report specifically mentioned the first ALJ's holding in this case, but added: "However, various EPA offices have been giving conflicting guidance regarding this issue. The Office of General Counsel has stated that either interpretation can be supported by the regulatory language." After analyzing the two options, the report concluded that solvent contaminated with less than 50 ppm PCBs nevertheless must be disposed of as a PCB.

In the face of this report and the ambiguous language of the regulation, the CJO's decision that the regulation was "clear" and that Rollins should therefore pay a $25,000 penalty cannot be sustained. When the agency itself is uncertain of the meaning of its regulation, when agency personnel give conflicting advice to private parties about how to comply with it, and when the agency's chief...