Newell Recycl Co Inc v. EPA

Revised November 16, 2000
UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-60694
NEWELL RECYCLING COMPANY, INC.,
Petitioner,
VERSUS
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,
Respondent.
On Petition For Review of a Final Order of the
Environmental Protection Agency
November 8, 2000
Before DUHÉ, EMILIO M. GARZA and DeMOSS, Circuit Judges.
DUHÉ, Circuit Judge.
Newell Recycling Company, Inc. (“Newell”) appeals a final 1
decision of the Environmental Protection Agency's Environmental 2
Appeals Board (“EAB”) holding Newell liable for violating the 3
disposal requirements for polychlorinated biphenyls (“PCBs”) 4
established in Section 6(e) of the Toxic Substances Control Act 5
(“TSCA”). The EAB's decision penalized Newell $1.345 million, less 6
an amount paid in settlement by a co-defendant, for violating the 7
TSCA. For the following reasons, we affirm. 8

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BACKGROUND 9
Newell owned and operated a recycling facility in Houston, 10
Texas, during the 1970's and early 1980's. In 1982, Newell sold 11
the facility to Oklahoma Metal Processing, Inc. d/b/a Houston Metal 12
Processing Company (“HMPC”). In the sale, Newell agreed to 13
“specifically assume any liability resulting from an occurrence 14
prior to the closing date of this sale.” 15
Within two years of the sale, the Texas Department of Health 16
sought soil samples to verify its suspicions of lead contamination 17
at the recycling facility site. Shortly thereafter, Newell 18
Enterprises asked HMPC to authorize Newell Recycling Company, Inc. 19
(i.e., “Newell,” the Petitioner in this case), Newell Products of 20
Houston, Inc., and Newell Industries, Inc., to commence testing for 21
lead contamination and cleanup on the site. After the soil samples 22
showed lead contamination, a consultant recommended to Newell that 23
the contaminated soil be removed to a hazardous waste facility for 24
disposal. The consultant noted that HMPC had authorized Newell to 25
perform testing, cleanup, and soil transportation functions at the 26
site. 27
While superintending lead cleanup operations there in 1985, 28
Newell discovered the PCB contamination that this case concerns. 29
Electric capacitors seeping PCB-contaminated fluids lay buried in 30
the soil unearthed during the lead contamination cleanup. Newell 31
– although advised repeatedly by another consultant it had hired 32
that the PCB-contaminated soil piled at the site had to be treated 33

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or disposed of by methods acceptable to the EPA under the TSCA – 34
waited until after the EPA filed an administrative complaint 35
against it in 1995 for violating the TSCA to remove the soil to a 36
disposal facility. Approximately ten years elapsed, then, from 37
Newell's discovery of the buried capacitors in 1985 to its proper 38
disposal of the PCB-contaminated soil pile in 1995. The record 39
does not explain this delay. 40
The Presiding Officer granted the EPA an accelerated decision 41
(the equivalent of summary judgment) on its administrative 42
complaint, holding that Newell committed an act of improper 43
disposal by knowingly causing PCB-contaminated soil to be excavated 44
and stockpiled at the site and then “leaving [the soil] there and 45
taking no further clean-up action.” In re Oklahoma Metal 46
Processing Co., Inc., No. VI-659C (EPA April 29, 1997) (order 47
granting partial accelerated decision on issue of liability). The 48
Presiding Officer assessed Newell a $1.345 million fine for the 49
disposal violation, less the amount HMPC paid the EPA to settle an 50
action regarding its role in the improper disposal at the site. 51
Newell appealed the Presiding Officer's liability rulings and his 52
penalty assessment decision to the EAB. It affirmed the Presiding 53
Officer's decision. Newell appeals the EAB's decision. 54
Newell argues that a five-year statute of limitations barred 55
the EPA's TSCA complaint, that on the merits Newell is not liable 56
for an “improper disposal” under the TSCA, and that the Presiding 57
Officer's application of the EPA's 1990 Polychlorinated Biphenyls 58

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Penalty Policy (the “Penalty Policy”) generated an excessive 59
penalty that violated Newell's constitutional rights. 60
DISCUSSION 61
We must affirm the EAB’s decision unless it is “arbitrary, 62
capricious, an abuse of discretion, or otherwise not in accordance 63
with law.” 5 U.S.C. § 706(2)(A). See also Amoco Production Co. v. 64
Lujan, 877 F.2d 1243, 1248 (5th Cir. 1989) (“On review of an agency 65
adjudication, . . . the reviewing court must in general affirm the 66
decision unless the agency’s action was arbitrary, capricious, or 67
otherwise not in accordance with law”). 68
I. Limitations 69
28 U.S.C. § 2462 supplies the statute of limitations 70
applicable here: 71
Except as otherwise provided by Act of Congress, an action, 72
suit or proceeding for the enforcement of any civil fine, 73
penalty, or forfeiture, pecuniary or otherwise, shall not be 74
entertained unless commenced within five years of the date 75
when the claim first accrued. . . . 76
Newell argues that the EPA’s improper disposal claim “accrued” when 77
the PCBs polluting the soil pile were “taken out of service.” See 78
40 C.F.R. § 761.3 (“Disposal means intentionally or accidentally to 79
discard, throw away, or otherwise complete or terminate the useful 80
life of PCBs and PCB Items. Disposal includes spills, leaks, and 81
other uncontrolled discharges of PCBs as well as actions related to 82
containing, transporting, destroying, degrading, decontaminating, 83
or confining PCBs and PCB Items”). Since, Newell asserts, the PCBs 84

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were “taken out of service” sometime before 1990, the EPA’s claim 85
accrued more than five years before the filing of its TSCA 86
complaint against Newell in 1995 and is thus time-barred. The EPA 87
argues that Newell’s TSCA violation -- excavating and stockpiling 88
the soil and then leaving it on the site for ten years before 89
disposing of it in accordance with 40 C.F.R. § 761.60(a), which 90
requires that soil contaminated with PCBs above a certain ppm 91
threshold be disposed of in an EPA-approved incinerator or landfill 92
-- was “continuing” in nature. See InterAmericas Investments, Ltd. 93
v. Board of Governors of the Federal Reserve System, 111 F.3d 376, 94
382 (5th Cir. 1997) (“A continuing violation applies when the 95
conduct is ongoing, rather than a single event”). The EAB agreed 96
with the EPA. The EAB held that the EPA’s TSCA cause of action 97
against Newell did not accrue until the course of conduct 98
complained of no longer continued. See Fiswick v. United States, 99
329 U.S. 211, 216 (1946) (statute of limitations for continuing 100
offenses runs from the last day of the continuing offense); In re 101
Standard Scrap, TSCA Appeal No. 87-4, 3 E.A.D. 267, 1997 WL 603524, 102
at *2 (EAB Aug. 2, 1990) (Final Decision) (“Failure to [properly 103
dispose of PCBs] constitutes a violation of the regulation, and the 104
violation continues as long as the PCBs remain out of service and 105
in a state of improper disposal”). That is, it did not accrue 106
until 1995, when Newell properly disposed of the soil. If 107
stockpiling the soil was a disposal, we cannot say the EAB’s 108
conclusion was arbitrary, capricious, an abuse of discretion or 109

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1See discussion of disposal that follows.
6
otherwise not in accordance with law.1 Because we hold that the 110
EPA’s TSCA cause of action against Newell did not accrue for 111
limitations purposes until 1995, we also affirm the EAB’s denial of 112
Newell’s request for additional discovery. This discovery, Newell 113
claims, would establish that the EPA had actual notice of 114
conditions at the site earlier than five years before the EPA filed 115
its complaint. Information about when the EPA actually knew of the 116
site’s conditions is not “significant[ly] probative” of any fact 117
relevant to our statute of limitations determination. See 40 118
C.F.R. § 22.19(f). 119
II. Liability 120
Newell challenges its TSCA liability on two grounds. First, 121
Newell argues that the EAB erroneously held that Newell contributed 122
to the creation of the PCB-contaminated soil pile. Second, Newell 123
contends that if, arguendo, it did cause the creation of the soil 124
pile, that act of creation and Newell’s subsequent involvement with 125
the pile did not constitute an improper disposal of PCBs within the 126
meaning of the TSCA. 127
The EAB properly determined that Newell contributed to the 128
creation of the soil pile. The PCB Rule of the TSCA extends civil 129
penalty liability to any “person who violates these regulations.” 130
40 C.F.R. § 761.1(d). “Violators” in this context are those who 131
have “caused (or contributed to the cause of) the [improper] 132

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disposal.” In re City of Detroit, 3 E.A.D. 514, 526 (CJO 1991). 133
Ample evidence indicates that Newell at least contributed to 134
the creation of the soil pile. Newell contends that a Newell 135
affiliate, not Newell itself, created the pile. The record 136
suggests otherwise. The EAB aptly characterized its contents: 137
Newell ”may not have acted alone, but it was certainly an active 138
party in the events constituting the TSCA violation.” Newell 139
Recycling Co., Inc. v. United States Environmental Protection 140
Agency, TSCA Appeal No. 97-7, slip op. at 33 (EAB Sept. 13, 1999). 141
Newell, and not one of its affiliates, owned the Fidelity Road site 142
immediately before conveying it to HMPC. In the sale of the site 143
Newell assumed liability for “occurrence[s] prior to the closing 144
date of th[e] sale.” This covenant produced Newell’s extensive 145
involvement in remedying the lead and PCB contamination at the 146
site. Newell’s involvement included, the EAB correctly found: a 147
visit by Newell’s owner, Alton Newell, to the site in response to 148
HMPC’s demand for remedial action; Newell’s two-time (1987 and 149
1989-90) retention of an environmental consulting firm to recommend 150
remedies for PCB contamination at the site; execution in 1987 of an 151
agreement with HMPC and another party interested in the site 152
tolling the statute of limitations on claims against Newell arising 153
from the site’s contamination; and Newell’s removal in 1995 of the 154
contaminated soil to a disposal facility at its own expense. 155
Moreover, until this enforcement action, Newell never suggested to 156
the Texas or federal authorities involved in decontamination of the 157

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site that some other Newell entity was responsible for the 158
contaminated soil pile. 159
In view of these facts, the EAB’s determination that Newell 160
contributed to the creation of the soil pile was not arbitrary, 161
capricious, an abuse of discretion or otherwise not in accordance 162
with law. 163
Newell, however, argues that if it contributed to the creation 164
of the soil pile, its contribution was not an improper disposal 165
under the TSCA. Newell argues that PCB disposal is a one-time 166
event occurring, in a case like this one, only when capacitors 167
containing PCBs are buried and their contents released into the 168
surrounding soil. Because, Newell contends, there is no evidence 169
implicating Newell in the original disposal of the capacitors, the 170
EPA failed to establish that Newell improperly disposed of PCBs. 171
The EAB rejected this argument, noting that Newell’s interpretation 172
of “disposal” would have “no TSCA liability . . . attach even if 173
Newell had taken the pile of contaminated soil from the Fidelity 174
Road site and dumped it into the nearest river, stream, or vacant 175
lot.” Newell Recycling Co., Inc. v. United States Environmental 176
Protection Agency, TSCA Appeal No. 97-7, slip op. at 29-30 (EAB 177
Sept. 13, 1999). Such an interpretation, the EAB continued, would 178
subvert the environmental protection goals of the TSCA regime. See 179
In re Samsonite Corp., 3 E.A.D. 196, 199 (CJO 1990) (PCB 180
regulations “should be read in such a way as to further the 181
purposes of the Act, particularly where, as in this case, public 182

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health and safety are involved”). At any rate, the EAB concluded, 183
Newell’s interpretation of “disposal” fails because it would 184
effectively exclude what the textual definition of disposal cited 185
above indisputably includes: activities undertaken to address known 186
PCB contamination. See 40 C.F.R. § 761.3 (“[d]isposal includes 187
spills, leaks, and other uncontrolled discharges as well as actions 188
related to containing, transporting, destroying, degrading, 189
decontaminating, or confining PCBs or PCB items”). The EAB 190
determined that Newell’s involvement with the soil pile, described 191
above, fits this definition of “disposal.” Newell Recycling Co., 192
Inc. v. United States Environmental Protection Agency, TSCA Appeal 193
No. 97-7, slip op. at 31 (EAB Sept. 13, 1999) (“The act of 194
excavating and stockpiling PCB-contaminated soil at the Fidelity 195
Road site is clearly in the nature of an action to 'contain,' 196
'transport,' and 'confine' PCBs. Moreover, leaving the stockpiled 197
waste abandoned there for years is evidence that the PCB- 198
contaminated soil was 'discarded' within the meaning of the rule”). 199
We cannot say that this determination was arbitrary, 200
capricious, an abuse of discretion or otherwise not in accordance 201
with law. 202
III. Penalty 203
Because an agency's selection of an appropriate sanction to 204
effect its policies is an act peculiarly within its institutional 205
competence, our review of the penalty in this case is limited. See 206
Wayne Cusimano, Inc. v. Block, 692 F.2d 1025, 1030 (5th Cir. 1982). 207

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An agency's penalty determination “is reviewed with significant 208
deference;” we will not reverse it unless it is arbitrary, 209
capricious, an abuse of discretion or otherwise not in accordance 210
with law. InterAmericas Investments, Ltd., 111 F.3d at 384. 211
Accordingly, although the penalty here strikes us as severe since 212
there was no actual harm, we cannot disturb it. 213
The Penalty Policy limns a two-part process for PCB penalty 214
assessment. First, the Penalty Policy requires the administrative 215
law judge (the “Administrator”) to examine the nature, 216
circumstances, gravity and extent of the violation. Those factors 217
suggest a gravity-based penalty. After the Administrator 218
determines the gravity-based penalty, he or she considers (the 219
second part of the process) the violator's ability to pay the 220
penalty, the effect of the penalty on the violator's ability to 221
continue to do business, the violator's history (if any) of such 222
violations, the degree of culpability, and “such other matters as 223
justice may require.” POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY 224
(1990). The Administrator may adjust the gravity-based penalty in 225
view of these factors. 226
A. The Gravity-Based Penalty 227
The Penalty Policy makes the gravity-based penalty 228
determination process mostly mechanical by pegging the above- 229
described factors (the nature, circumstances, gravity and extent of 230

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2 Newell challenges the Presiding Officer's treatment of the “circumstances”
and “extent” factors, but not his treatment of the “nature” and “gravity” ones.
3 The Penalty Policy ranks the “circumstances” of a violation as Low,
Medium, or High Range, and subdivides each of these categories into two Levels.
11
the violation2) to statistical benchmarks or fixed formulations. 231
So, for example, the Presiding Officer did not err by concluding 232
that the “extent” of Newell's violation was “major;” the Penalty 233
Policy expressly defines violations involving more than 300 cubic 234
feet of contaminated soil as “major,” and the soil pile here was 235
approximately 540 cubic feet in size. Id. Similarly, the 236
Presiding Officer correctly characterized the “circumstances” of 237
Newell's violation as “High Range, Level One” under the Penalty 238
Policy.3 The Penalty Policy states that “any disposal of PCBs or 239
PCB Items in a manner that is not authorized by the PCB 240
regulations” is automatically ranked “High Range, Level One.” Id. 241
Because discarding and abandoning PCB-contaminated soil in a pile 242
is a disposal not authorized by the PCB regulations, the Presiding 243
Officer rightly characterized Newell's as a “High Range, Level One” 244
violation. 245
B. Adjustment of the Gravity-Based Penalty 246
The Presiding Officer may adjust the gravity-based penalty in 247
view of the violator's ability to pay it, the effect the penalty 248
might have on the violator's ability to continue to do business, 249
the violator's history (if any) of prior such violations, the 250
violator's degree of culpability, and such other matters as justice 251

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may require. 15 U.S.C. § 2615(a)(2)(B). The “as justice may 252
require” rubric includes whether the violator voluntarily disclosed 253
the violation, any economic benefits the violator reaped from the 254
violation, and any environmentally beneficial measures a violator 255
may perform in exchange for penalty reduction. Newell argues that 256
some of these factors counsel reduction of its penalty, and that 257
the Presiding Officer's refusal to reduce it, in turn, was error. 258
1. Culpability 259
The Presiding Officer's determination that the “culpability” 260
factor did not recommend mitigation of Newell's penalty was sound. 261
The “two principal criteria” in the Penalty Policy for assessing 262
culpability are: 1) the violator's knowledge of the particular 263
requirement; and 2) the degree of the violator's control over the 264
violative condition. POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY 265
(1990). As noted above, Newell knew the TSCA required more than 266
the excavation and complete abandonment of the PCB-contaminated 267
soil; Newell's environmental consultants repeatedly told Newell as 268
much. Even though Newell did not own the property on which the 269
soil lay, Newell had extensive control, described above, over the 270
violative condition here. The record does not explain to our 271
satisfaction why Newell waited years to properly dispose of the 272
soil. The Presiding Officer, therefore, appropriately declined to 273
mitigate Newell's penalty on culpability grounds. 274
2. Voluntary Disclosure 275
The Presiding Officer correctly declined to adjust the penalty 276

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4 Waiver aside, nothing in the record indicates that Newell, in fact,
voluntarily disclosed the violation here before the EPA initiated its TSCA
action. Newell tacitly admits as much in its brief, but argues that the
Presiding Officer erroneously denied Newell discovery that “would have provided
conclusive evidence that the remediated soil pile was reported to the Texas
Department of Health and to EPA [sic].” See Petitioner's Brief at 48. The EAB
found this claim “a disingenuous proposition. If Newell had indeed made a
voluntary disclosure, 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 credibly revive this argument on appeal.”
Newell Recycling Co., Inc. v. United States Environmental Protection Agency, TSCA
Appeal No. 97-7, slip op. at 60 (EAB Sept. 13, 1999).
13
in view of Newell's alleged4 voluntary disclosure of the TSCA 277
violation. Newell waived this argument by failing to request in 278
its submissions to the Presiding Officer a reduction in the penalty 279
for voluntary disclosure. See In re Britton Construction Co., CWA 280
Appeal Nos. 97-5 & 97-8, slip op. at 22-23 (EAB, Mar. 30, 1999), 8 281
E.A.D._ (under 40 C.F.R. § 22.30, appellant “may not appeal issues 282
that were not raised before the presiding officer. As a result, 283
arguments raised for the first time on appeal . . . are deemed 284
waived”) (citations omitted). 285
3. Ability to Pay / Continue to Do Business 286
The Penalty Policy requires the EPA to assume that an alleged 287
TSCA violator has the ability to pay any fine assessed under the 288
Penalty Policy and, therefore, to continue in business. 289
POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY (1990). The alleged TSCA 290
violator may raise the issue of its ability to pay in its answer to 291
the EPA's administrative complaint and “shall present sufficient 292
documentation to permit the Agency to establish such inability.” 293
Id. If “the alleged violator fails to provide the necessary 294

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5 Newell also argues that the penalty is excessive when compared to
penalties in similar cases. The penalty here, however, need not resemble those
assessed in similar cases. See Butz v. Glover Livestock Comm'n Co., 411 U.S.
182, 187 (1973) (“[t]he employment of a sanction within the authority of an
administrative agency is . . . not rendered invalid in a particular case because
it is more severe than sanctions imposed in other cases”).
14
information, and the information is not readily available from 295
other sources, then the violator will be presumed to be able to 296
pay.” Id. Newell's brief candidly states (and the Presiding 297
Officer and EAB both held) that the record here features “a 298
complete absence of evidence as to Newell's ability to pay and any 299
effect on it's [sic] ability to do business.” Petitioner's Brief 300
at 39. Surely Newell was in possession of such information if 301
anyone was. Nothing in the record, moreover, intimates that 302
information regarding Newell's ability to pay is readily available 303
from a source other than Newell. The Presiding Officer, therefore, 304
correctly declined to mitigate the penalty on the basis of Newell's 305
putative inability to pay it. 306
IV. Constitutional Concerns 307
Newell also argues that the penalty violated the Eighth 308
Amendment's proscription of excessive fines and Newell's due 309
process rights. Newell's constitutional claims fail. 310
A. Eighth Amendment Concerns 311
Newell's argument that the penalty is excessive,5 and 312
therefore a violation of its Eighth Amendment rights, is erroneous. 313
Newell argues that the Excessive Fines Clause of the Eighth 314
Amendment requires us to consider the value of its fine ($1.345 315

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million) in relation to the magnitude of the offense inspiring it 316
(Newell suggests that the $84,000 it paid to dispose of the soil 317
accurately indicates the magnitude of its offense). See U.S. CONST. 318
amend. VIII (“Excessive bail shall not be required, nor excessive 319
fines imposed, nor cruel and unusual punishments inflicted”). No 320
matter how excessive (in lay terms) an administrative fine may 321
appear, if the fine does not exceed the limits prescribed by the 322
statute authorizing it, the fine does not violate the Eighth 323
Amendment. Here, the fine assessed against Newell is only about 324
10% of the maximum fine for which Newell was eligible under the 325
TSCA. Newell's fine, therefore, does not violate the Eighth 326
Amendment. See Pharaon v. Board of Governors of Federal Reserve 327
System, 135 F.3d 148, 155-57 (D.C. Cir. 1998) (finding no Eighth 328
Amendment violation because the penalty was within the limits 329
established by the applicable statute). 330
B. Due Process Concerns 331
Newell's due process argument also fails. Newell argues that 332
an evidentiary hearing was “required” in this matter, and that the 333
absence of one violated Newell's right to due process of law. 334
Petitioner's Brief at 55. EPA regulations require that a hearing 335
be held at a respondent's request if the party requesting the 336
hearing has raised a genuine issue of material fact. 40 C.F.R. § 337
22.15; see also In re Green Thumb Nursery, Inc., FIFRA Appeal No. 338
95-42, 6 E.A.D. 782, 1997 WL 131973, at *8 (EAB Mar. 6, 1997) 339
(Final Order). Similarly, constitutional due process doctrine 340

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requires that the person claiming the benefit of due process 341
protections place some relevant matter into dispute. See Codd v. 342
Velger, 429 U.S. 624, 627 (1977) (“[I]f the hearing mandated by the 343
Due Process Clause is to serve any useful purpose, there must be 344
some factual dispute. . . .”); Costle v. Pacific Legal Foundation, 345
445 U.S. 198, 213 (1980) (permitting the EPA to condition an 346
adjudicatory hearing on “identification of a disputed issue of fact 347
by an interested party”). The Presiding Officer's accelerated 348
decision held that Newell raised no genuine issue of material fact 349
that would necessitate an evidentiary hearing. The EAB agreed. We 350
find no contested issue of fact on penalty in the record. We 351
decline to set aside the penalty on due process grounds. 352
CONCLUSION 353
Because the applicable five-year statute of limitations does 354
not bar the EPA's TSCA complaint, because Newell was liable for an 355
“improper disposal” under the TSCA, and because the Presiding 356
Officer's application of the EPA's 1990 Polychlorinated Biphenyls 357
Penalty Policy generated a penalty that was not arbitrary, 358
capricious, an abuse of discretion, constitutionally infirm or 359
otherwise illicit, we affirm. 360
AFFIRMED. 361
362

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