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.

1 Newell Recycling Company, Inc. (“Newell”) appeals a final

2 decision of the Environmental Protection Agency's Environmental

3 Appeals Board (“EAB”) holding Newell liable for violating the

4 disposal requirements for polychlorinated biphenyls (“PCBs”)

5 established in Section 6(e) of the Toxic Substances Control Act

6 (“TSCA”). The EAB's decision penalized Newell $1.345 million, less

7 an amount paid in settlement by a co-defendant, for violating the

8 TSCA. For the following reasons, we affirm. 9 BACKGROUND

10 Newell owned and operated a recycling facility in Houston,

11 Texas, during the 1970's and early 1980's. In 1982, Newell sold

12 the facility to Oklahoma Metal Processing, Inc. d/b/a Houston Metal

13 Processing Company (“HMPC”). In the sale, Newell agreed to

14 “specifically assume any liability resulting from an occurrence

15 prior to the closing date of this sale.”

16 Within two years of the sale, the Texas Department of Health

17 sought soil samples to verify its suspicions of lead contamination

18 at the recycling facility site. Shortly thereafter, Newell

19 Enterprises asked HMPC to authorize Newell Recycling Company, Inc.

20 (i.e., “Newell,” the Petitioner in this case), Newell Products of

21 Houston, Inc., and Newell Industries, Inc., to commence testing for

22 lead contamination and cleanup on the site. After the soil samples

23 showed lead contamination, a consultant recommended to Newell that

24 the contaminated soil be removed to a hazardous waste facility for

25 disposal. The consultant noted that HMPC had authorized Newell to

26 perform testing, cleanup, and soil transportation functions at the

27 site.

28 While superintending lead cleanup operations there in 1985,

29 Newell discovered the PCB contamination that this case concerns.

30 Electric capacitors seeping PCB-contaminated fluids lay buried in

31 the soil unearthed during the lead contamination cleanup. Newell

32 – although advised repeatedly by another consultant it had hired

33 that the PCB-contaminated soil piled at the site had to be treated

2 34 or disposed of by methods acceptable to the EPA under the TSCA –

35 waited until after the EPA filed an administrative complaint

36 against it in 1995 for violating the TSCA to remove the soil to a

37 disposal facility. Approximately ten years elapsed, then, from

38 Newell's discovery of the buried capacitors in 1985 to its proper

39 disposal of the PCB-contaminated soil pile in 1995. The record

40 does not explain this delay.

41 The Presiding Officer granted the EPA an accelerated decision

42 (the equivalent of summary judgment) on its administrative

43 complaint, holding that Newell committed an act of improper

44 disposal by knowingly causing PCB-contaminated soil to be excavated

45 and stockpiled at the site and then “leaving [the soil] there and

46 taking no further clean-up action.” In re Oklahoma Metal

47 Processing Co., Inc., No. VI-659C (EPA April 29, 1997) (order

48 granting partial accelerated decision on issue of liability). The

49 Presiding Officer assessed Newell a $1.345 million fine for the

50 disposal violation, less the amount HMPC paid the EPA to settle an

51 action regarding its role in the improper disposal at the site.

52 Newell appealed the Presiding Officer's liability rulings and his

53 penalty assessment decision to the EAB. It affirmed the Presiding

54 Officer's decision. Newell appeals the EAB's decision.

55 Newell argues that a five-year statute of limitations barred

56 the EPA's TSCA complaint, that on the merits Newell is not liable

57 for an “improper disposal” under the TSCA, and that the Presiding

58 Officer's application of the EPA's 1990 Polychlorinated Biphenyls

3 59 Penalty Policy (the “Penalty Policy”) generated an excessive

60 penalty that violated Newell's constitutional rights.

61 DISCUSSION

62 We must affirm the EAB’s decision unless it is “arbitrary,

63 capricious, an abuse of discretion, or otherwise not in accordance

64 with law.”

(2)(A). See also Amoco Production Co. v.

65 Lujan,

(5th Cir. 1989) (“On review of an agency

66 adjudication, . . . the reviewing court must in general affirm the

67 decision unless the agency’s action was arbitrary, capricious, or

68 otherwise not in accordance with law”).

69 I. Limitations

70

supplies the statute of limitations

71 applicable here:

72 Except as otherwise provided by Act of Congress, an action, 73 suit or proceeding for the enforcement of any civil fine, 74 penalty, or forfeiture, pecuniary or otherwise, shall not be 75 entertained unless commenced within five years of the date 76 when the claim first accrued. . . .

77 Newell argues that the EPA’s improper disposal claim “accrued” when

78 the PCBs polluting the soil pile were “taken out of service.” See

79

(“Disposal means intentionally or accidentally to

80 discard, throw away, or otherwise complete or terminate the useful

81 life of PCBs and PCB Items. Disposal includes spills, leaks, and

82 other uncontrolled discharges of PCBs as well as actions related to

83 containing, transporting, destroying, degrading, decontaminating,

84 or confining PCBs and PCB Items”). Since, Newell asserts, the PCBs

4 85 were “taken out of service” sometime before 1990, the EPA’s claim

86 accrued more than five years before the filing of its TSCA

87 complaint against Newell in 1995 and is thus time-barred. The EPA

88 argues that Newell’s TSCA violation -- excavating and stockpiling

89 the soil and then leaving it on the site for ten years before

90 disposing of it in accordance with

(a), which

91 requires that soil contaminated with PCBs above a certain ppm

92 threshold be disposed of in an EPA-approved incinerator or landfill

93 -- was “continuing” in nature. See InterAmericas Investments, Ltd.

94 v. Board of Governors of the Federal Reserve System,

,

95 382 (5th Cir. 1997) (“A continuing violation applies when the

96 conduct is ongoing, rather than a single event”). The EAB agreed

97 with the EPA. The EAB held that the EPA’s TSCA cause of action

98 against Newell did not accrue until the course of conduct

99 complained of no longer continued. See Fiswick v. United States,

100

(1946) (statute of limitations for continuing

101 offenses runs from the last day of the continuing offense); In re

102 Standard Scrap, TSCA Appeal No. 87-4,

,

,

103 at *2 (EAB Aug. 2, 1990) (Final Decision) (“Failure to [properly

104 dispose of PCBs] constitutes a violation of the regulation, and the

105 violation continues as long as the PCBs remain out of service and

106 in a state of improper disposal”). That is, it did not accrue

107 until 1995, when Newell properly disposed of the soil. If

108 stockpiling the soil was a disposal, we cannot say the EAB’s

109 conclusion was arbitrary, capricious, an abuse of discretion or

5 110 otherwise not in accordance with law.1 Because we hold that the

111 EPA’s TSCA cause of action against Newell did not accrue for

112 limitations purposes until 1995, we also affirm the EAB’s denial of

113 Newell’s request for additional discovery. This discovery, Newell

114 claims, would establish that the EPA had actual notice of

115 conditions at the site earlier than five years before the EPA filed

116 its complaint. Information about when the EPA actually knew of the

117 site’s conditions is not “significant[ly] probative” of any fact

118 relevant to our statute of limitations determination. See 40

(f).

120 II. Liability

121 Newell challenges its TSCA liability on two grounds. First,

122 Newell argues that the EAB erroneously held that Newell contributed

123 to the creation of the PCB-contaminated soil pile. Second, Newell

124 contends that if, arguendo, it did cause the creation of the soil

125 pile, that act of creation and Newell’s subsequent involvement with

126 the pile did not constitute an improper disposal of PCBs within the

127 meaning of the TSCA.

128 The EAB properly determined that Newell contributed to the

129 creation of the soil pile. The PCB Rule of the TSCA extends civil

130 penalty liability to any “person who violates these regulations.”

131

(d). “Violators” in this context are those who

132 have “caused (or contributed to the cause of) the [improper]

1 See discussion of disposal that follows.

6 133 disposal.” In re City of Detroit,

, 526 (CJO 1991).

134 Ample evidence indicates that Newell at least contributed to

135 the creation of the soil pile. Newell contends that a Newell

136 affiliate, not Newell itself, created the pile. The record

137 suggests otherwise. The EAB aptly characterized its contents:

138 Newell ”may not have acted alone, but it was certainly an active

139 party in the events constituting the TSCA violation.” Newell

140 Recycling Co., Inc. v. United States Environmental Protection

141 Agency, TSCA Appeal No. 97-7, slip op. at 33 (EAB Sept. 13, 1999).

142 Newell, and not one of its affiliates, owned the Fidelity Road site

143 immediately before conveying it to HMPC. In the sale of the site

144 Newell assumed liability for “occurrence[s] prior to the closing

145 date of th[e] sale.” This covenant produced Newell’s extensive

146 involvement in remedying the lead and PCB contamination at the

147 site. Newell’s involvement included, the EAB correctly found: a

148 visit by Newell’s owner, Alton Newell, to the site in response to

149 HMPC’s demand for remedial action; Newell’s two-time (1987 and

150 1989-90) retention of an environmental consulting firm to recommend

151 remedies for PCB contamination at the site; execution in 1987 of an

152 agreement with HMPC and another party interested in the site

153 tolling the statute of limitations on claims against Newell arising

154 from the site’s contamination; and Newell’s removal in 1995 of the

155 contaminated soil to a disposal facility at its own expense.

156 Moreover, until this enforcement action, Newell never suggested to

157 the Texas or federal authorities involved in decontamination of the

7 158 site that some other Newell entity was responsible for the

159 contaminated soil pile.

160 In view of these facts, the EAB’s determination that Newell

161 contributed to the creation of the soil pile was not arbitrary,

162 capricious, an abuse of discretion or otherwise not in accordance

163 with law.

164 Newell, however, argues that if it contributed to the creation

165 of the soil pile, its contribution was not an improper disposal

166 under the TSCA. Newell argues that PCB disposal is a one-time

167 event occurring, in a case like this one, only when capacitors

168 containing PCBs are buried and their contents released into the

169 surrounding soil. Because, Newell contends, there is no evidence

170 implicating Newell in the original disposal of the capacitors, the

171 EPA failed to establish that Newell improperly disposed of PCBs.

172 The EAB rejected this argument, noting that Newell’s interpretation

173 of “disposal” would have “no TSCA liability . . . attach even if

174 Newell had taken the pile of contaminated soil from the Fidelity

175 Road site and dumped it into the nearest river, stream, or vacant

176 lot.” Newell Recycling Co., Inc. v. United States Environmental

177 Protection Agency, TSCA Appeal No. 97-7, slip op. at 29-30 (EAB

178 Sept. 13, 1999). Such an interpretation, the EAB continued, would

179 subvert the environmental protection goals of the TSCA regime. See

180 In re Samsonite Corp.,

, 199 (CJO 1990) (PCB

181 regulations “should be read in such a way as to further the

182 purposes of the Act, particularly where, as in this case, public

8 183 health and safety are involved”). At any rate, the EAB concluded,

184 Newell’s interpretation of “disposal” fails because it would

185 effectively exclude what the textual definition of disposal cited

186 above indisputably includes: activities undertaken to address known

187 PCB contamination. See

(“[d]isposal includes

188 spills, leaks, and other uncontrolled discharges as well as actions

189 related to containing, transporting, destroying, degrading,

190 decontaminating, or confining PCBs or PCB items”). The EAB

191 determined that Newell’s involvement with the soil pile, described

192 above, fits this definition of “disposal.” Newell Recycling Co.,

193 Inc. v. United States Environmental Protection Agency, TSCA Appeal

194 No. 97-7, slip op. at 31 (EAB Sept. 13, 1999) (“The act of

195 excavating and stockpiling PCB-contaminated soil at the Fidelity

196 Road site is clearly in the nature of an action to 'contain,'

197 'transport,' and 'confine' PCBs. Moreover, leaving the stockpiled

198 waste abandoned there for years is evidence that the PCB-

199 contaminated soil was 'discarded' within the meaning of the rule”).

200 We cannot say that this determination was arbitrary,

201 capricious, an abuse of discretion or otherwise not in accordance

202 with law.

203 III. Penalty

204 Because an agency's selection of an appropriate sanction to

205 effect its policies is an act peculiarly within its institutional

206 competence, our review of the penalty in this case is limited. See

207 Wayne Cusimano, Inc. v. Block,

(5th Cir. 1982).

9 208 An agency's penalty determination “is reviewed with significant

209 deference;” we will not reverse it unless it is arbitrary,

210 capricious, an abuse of discretion or otherwise not in accordance

211 with law. InterAmericas Investments, Ltd.,

.

212 Accordingly, although the penalty here strikes us as severe since

213 there was no actual harm, we cannot disturb it.

214 The Penalty Policy limns a two-part process for PCB penalty

215 assessment. First, the Penalty Policy requires the administrative

216 law judge (the “Administrator”) to examine the nature,

217 circumstances, gravity and extent of the violation. Those factors

218 suggest a gravity-based penalty. After the Administrator

219 determines the gravity-based penalty, he or she considers (the

220 second part of the process) the violator's ability to pay the

221 penalty, the effect of the penalty on the violator's ability to

222 continue to do business, the violator's history (if any) of such

223 violations, the degree of culpability, and “such other matters as

224 justice may require.” POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY

225 (1990). The Administrator may adjust the gravity-based penalty in

226 view of these factors.

227 A. The Gravity-Based Penalty

228 The Penalty Policy makes the gravity-based penalty

229 determination process mostly mechanical by pegging the above-

230 described factors (the nature, circumstances, gravity and extent of

10 231 the violation2) to statistical benchmarks or fixed formulations.

232 So, for example, the Presiding Officer did not err by concluding

233 that the “extent” of Newell's violation was “major;” the Penalty

234 Policy expressly defines violations involving more than 300 cubic

235 feet of contaminated soil as “major,” and the soil pile here was

236 approximately 540 cubic feet in size.

Similarly, the

237 Presiding Officer correctly characterized the “circumstances” of

238 Newell's violation as “High Range, Level One” under the Penalty

239 Policy.3 The Penalty Policy states that “any disposal of PCBs or

240 PCB Items in a manner that is not authorized by the PCB

241 regulations” is automatically ranked “High Range, Level One.”

242 Because discarding and abandoning PCB-contaminated soil in a pile

243 is a disposal not authorized by the PCB regulations, the Presiding

244 Officer rightly characterized Newell's as a “High Range, Level One”

245 violation.

246 B. Adjustment of the Gravity-Based Penalty

247 The Presiding Officer may adjust the gravity-based penalty in

248 view of the violator's ability to pay it, the effect the penalty

249 might have on the violator's ability to continue to do business,

250 the violator's history (if any) of prior such violations, the

251 violator's degree of culpability, and such other matters as justice

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.

11 252 may require.

(a)(2)(B). The “as justice may

253 require” rubric includes whether the violator voluntarily disclosed

254 the violation, any economic benefits the violator reaped from the

255 violation, and any environmentally beneficial measures a violator

256 may perform in exchange for penalty reduction. Newell argues that

257 some of these factors counsel reduction of its penalty, and that

258 the Presiding Officer's refusal to reduce it, in turn, was error.

259 1. Culpability

260 The Presiding Officer's determination that the “culpability”

261 factor did not recommend mitigation of Newell's penalty was sound.

262 The “two principal criteria” in the Penalty Policy for assessing

263 culpability are: 1) the violator's knowledge of the particular

264 requirement; and 2) the degree of the violator's control over the

265 violative condition. POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY

266 (1990). As noted above, Newell knew the TSCA required more than

267 the excavation and complete abandonment of the PCB-contaminated

268 soil; Newell's environmental consultants repeatedly told Newell as

269 much. Even though Newell did not own the property on which the

270 soil lay, Newell had extensive control, described above, over the

271 violative condition here. The record does not explain to our

272 satisfaction why Newell waited years to properly dispose of the

273 soil. The Presiding Officer, therefore, appropriately declined to

274 mitigate Newell's penalty on culpability grounds.

275 2. Voluntary Disclosure

276 The Presiding Officer correctly declined to adjust the penalty

12 277 in view of Newell's alleged4 voluntary disclosure of the TSCA

278 violation. Newell waived this argument by failing to request in

279 its submissions to the Presiding Officer a reduction in the penalty

280 for voluntary disclosure. See In re Britton Construction Co., CWA

281 Appeal Nos. 97-5 & 97-8, slip op. at 22-23 (EAB, Mar. 30, 1999), 8

282 E.A.D._ (under

, appellant “may not appeal issues

283 that were not raised before the presiding officer. As a result,

284 arguments raised for the first time on appeal . . . are deemed

285 waived”) (citations omitted).

286 3. Ability to Pay / Continue to Do Business

287 The Penalty Policy requires the EPA to assume that an alleged

288 TSCA violator has the ability to pay any fine assessed under the

289 Penalty Policy and, therefore, to continue in business.

290 POLYCHLORINATED BIPHENYLS (PCB) PENALTY POLICY (1990). The alleged TSCA

291 violator may raise the issue of its ability to pay in its answer to

292 the EPA's administrative complaint and “shall present sufficient

293 documentation to permit the Agency to establish such inability.”

294

If “the alleged violator fails to provide the necessary

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).

13 295 information, and the information is not readily available from

296 other sources, then the violator will be presumed to be able to

297 pay.”

Newell's brief candidly states (and the Presiding

298 Officer and EAB both held) that the record here features “a

299 complete absence of evidence as to Newell's ability to pay and any

300 effect on it's [sic] ability to do business.” Petitioner's Brief

301 at 39. Surely Newell was in possession of such information if

302 anyone was. Nothing in the record, moreover, intimates that

303 information regarding Newell's ability to pay is readily available

304 from a source other than Newell. The Presiding Officer, therefore,

305 correctly declined to mitigate the penalty on the basis of Newell's

306 putative inability to pay it.

307 IV. Constitutional Concerns

308 Newell also argues that the penalty violated the Eighth

309 Amendment's proscription of excessive fines and Newell's due

310 process rights. Newell's constitutional claims fail.

311 A. Eighth Amendment Concerns

312 Newell's argument that the penalty is excessive,5 and

313 therefore a violation of its Eighth Amendment rights, is erroneous.

314 Newell argues that the Excessive Fines Clause of the Eighth

315 Amendment requires us to consider the value of its fine ($1.345

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.,

(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”).

14 316 million) in relation to the magnitude of the offense inspiring it

317 (Newell suggests that the $84,000 it paid to dispose of the soil

318 accurately indicates the magnitude of its offense). See U.S. CONST.

319 amend. VIII (“Excessive bail shall not be required, nor excessive

320 fines imposed, nor cruel and unusual punishments inflicted”). No

321 matter how excessive (in lay terms) an administrative fine may

322 appear, if the fine does not exceed the limits prescribed by the

323 statute authorizing it, the fine does not violate the Eighth

324 Amendment. Here, the fine assessed against Newell is only about

325 10% of the maximum fine for which Newell was eligible under the

326 TSCA. Newell's fine, therefore, does not violate the Eighth

327 Amendment. See Pharaon v. Board of Governors of Federal Reserve

328 System,

(D.C. Cir. 1998) (finding no Eighth

329 Amendment violation because the penalty was within the limits

330 established by the applicable statute).

331 B. Due Process Concerns

332 Newell's due process argument also fails. Newell argues that

333 an evidentiary hearing was “required” in this matter, and that the

334 absence of one violated Newell's right to due process of law.

335 Petitioner's Brief at 55. EPA regulations require that a hearing

336 be held at a respondent's request if the party requesting the

337 hearing has raised a genuine issue of material fact.

22.15; see also In re Green Thumb Nursery, Inc., FIFRA Appeal No.

339 95-42,

,

, at *8 (EAB Mar. 6, 1997)

340 (Final Order). Similarly, constitutional due process doctrine

15 341 requires that the person claiming the benefit of due process

342 protections place some relevant matter into dispute. See Codd v.

343 Velger,

(1977) (“[I]f the hearing mandated by the

344 Due Process Clause is to serve any useful purpose, there must be

345 some factual dispute. . . .”); Costle v. Pacific Legal Foundation,

346

(1980) (permitting the EPA to condition an

347 adjudicatory hearing on “identification of a disputed issue of fact

348 by an interested party”). The Presiding Officer's accelerated

349 decision held that Newell raised no genuine issue of material fact

350 that would necessitate an evidentiary hearing. The EAB agreed. We

351 find no contested issue of fact on penalty in the record. We

352 decline to set aside the penalty on due process grounds.

353 CONCLUSION

354 Because the applicable five-year statute of limitations does

355 not bar the EPA's TSCA complaint, because Newell was liable for an

356 “improper disposal” under the TSCA, and because the Presiding

357 Officer's application of the EPA's 1990 Polychlorinated Biphenyls

358 Penalty Policy generated a penalty that was not arbitrary,

359 capricious, an abuse of discretion, constitutionally infirm or

360 otherwise illicit, we affirm.

361 AFFIRMED.

362

16