United States v. Nicolet, Inc.

No. 85-3060 (E.D. Pa. May 12, 1987)

The court holds that the government is entitled to a protective order to prevent a defendant in a cost recovery action under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) from taking certain depositions because judicial review is limited to the administrative record under CERCLA § 113(j). The court holds that § 113(j), added by the Superfund Amendments and Reauthorization Act of 1986, applies retroactively to this action filed before the amendments were passed. None of the limited exceptions that would allow the court to supplement the administrative record are present. Defendant's allegations that the administrative record does not disclose the factors considered by the Environmental Protection Agency (EPA) or its construction of the evidence, and that the reasons given by EPA are inadequate, are unfounded. Defendant has not asserted sufficient justifications for its motions to depose a laboratory that conducted tests on samples taken from the site, members of EPA's response team, an official with the Centers for Disease Control, and a representative of an EPA contractor that performed testing and sampling at the site.

[Related decisions are published at 17 ELR 21085 and 21088.]

Counsel are listed at 17 ELR 21085.

[17 ELR 21091]

Broderick, J.:

Opinion

In this action brought by the United States pursuant to the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601, et seq., the defendant, Nicolet, Inc., has noticed the depositions of Rob Turpin, Dr. Joseph LaFornara, Andrew Zownir, Tim Travers, Charles Walters and the Franklin Institute Research Laboratories. The United States has moved for protective orders to prevent the depositions on the ground that the depositions are being sought for the purpose of taking discovery beyond the administrative record on issues for which review is limited to matters covered by the administrative record. Nicolet contends that judicial review in this action cannot be limited to the administrative record "since no record exists and Nicolet must be given an opportunity to present evidence in support of its defense." For the reasons that follow, the government's motions for protective orders will be granted.

This action was brought by the United States pursuant to CERCLA to recover approximately $700,920.96 expended by the United States Environmental Protection Agency ("EPA") in removal and response costs associated with two asbestos-containing waste piles known as the "Locust Street Pile" and the "Plant Pile" on Nicolet's property in Ambler, Pennsylvania. In prior litigation between the United States and Nicolet, Nicolet v. Eichler, No. 84-0271, in the Eastern District of Pennsylvania, Judge Newcomer entered an order on March 26, 1984, giving the United States access to premises owned by Nicolet in Ambler, Pennsylvania pursuant to CERCLA. The United States entered the property pursuant to the order and, among other measures, covered over and hydroseeded a 16-acre "mountain" of asbestos-containing material. The present litigation seeks recovery of costs incurred by the United States at the Nicolet property.

Prior to obtaining the order in aid of access to the Nicolet site in 1984, the EPA compiled an administrative record in support of its position that it had the right to enter the premises and take the proposed action. That administrative record was filed with the court prior to the hearing held March 26, 1984. Nicolet received a copy of the administrative record on March 23, 1984. The administrative record contains the factual basis for EPA's determination that there was a release or threat of release of hazardous substances from the Nicolet site and that there existed an imminent and substantial endangerment to health and the environment. The administrative record was compiled by EPA staff attorney Joseph Melvin, with assistance from EPA On-Scene Coordinator Bruce Potoka, both of whom have been deposed by Nicolet. The administrative record includes documents to which Mr. Melvin had access and memoranda of meetings in connection with the action at the Nicolet site prepared by EPA employees who were involved in those meetings. The administrative record appears to include all documents, even those which might be considered as unfavorable to the EPA's determination to enter the site and incur removal and response costs.

On December 29, 1986, Nicolet noticed the depositions of Rob Turpin, Dr. Joseph LaFornara, Tim Travers, Charles Walters and Andrew Zownir. Turpin, LaFornara and Zownir are former employees of the EPA and were members of an Environmental Response Team. Nicolet wants to depose them to determine the basis of their opinions and to learn what information they relayed to Mr. Potoka and Mr. Pike, the EPA On-Scene Coordinators. Mr. Walters was the Region III representative of the Centers for Disease Control and worked with Dr. Jeffrey Lybarger, who issued a health advisory in connection with the Nicolet site. Nicolet seeks Mr. Walters' deposition in order to discern what information was exchanged between Mr. Walters and Dr. Lybarger. Mr. Travers was a representative of the contractor who worked with the EPA On-Scene Coordinators at the Nicolet site. Nicolet states that Mr. Travers directed and conducted the testing and sampling at the Nicolet site, was involved in the negotiations with Nicolet, and played a key role in determining what action the government would take. Nicolet alleges that it needs to take Mr. Travers' deposition in order to clarify the critical role he played in this case, to obtain a more detailed description of the sampling protocol used and to learn whether Mr. Travers had the benefit of historical information which indicated that no danger existed at the Nicolet site.

On January 21, 1987 Nicolet noticed the depositions of Franklin Institute Research Laboratories, Princeton Testing Laboratory and Kaselaan & D'Angelo Associates. These three companies conducted testing on samples taken from the Nicolet site. The depositions of Princeton Testing and Kaselaan & D'Angelo have already been taken. The Franklin Institute Research Laboratories analyzed waste pile materials and soil samples collected on or near the Nicolet site prior to the EPA decision to take action at the site. The administrative record compiled by the EPA in support of its decision to take action at the Nicolet site contains the reports from all three of these testing laboratories. In addition, Nicolet has taken a three-day deposition of the EPA's On-Scene Coordinator, Bruce Potoka, concerning his request for analyses from the three laboratories, the results of the analyses, the use he made of the results and the persons he consulted with respect to the results. Nicolet contends that the results of the Franklin Institute's report reveal that no asbestos [17 ELR 21092] was present in a sample fiber removed from a picnic table adjacent to the Locust Street Pile. Nicolet asserts that a deposition of the Franklin Institute is necessary to determine if and when the government was informed of the test results.

The initial inquiry, which must precede a determination of the government's motions for protective orders, must focus on the scope of this court's review. It is clear that this Court is not empowered to substitute its judgment for that of the agency and that an agency's decision is entitled to a presumption of regularity. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415-17, 91 S. Ct. 814, 823-24 [1 ELR 20110] (1971). Evidence weighing must be left to the agency making the decision. Ethyl Corp. v. Environmental Protection Agency, 541 F.2d 1 [6 ELR 20267] (D.C. Cir.), cert. denied, 426 U.S. 941 (1976). As stated by Judge Skelly Wright in Ethyl Corp., "It is settled that we must affirm decisions with which we disagree . . . ." Id. at 36. However, the deference owed to an agency by a reviewing court does not shield the agency's action from a thorough, probing and in-depth review. Overton Park, 401 U.S. at 415, 91 S. Ct. at 823; American Iron & Steel Institute v. Environmental Protection Agency, 568 F.2d 284, 296 [7 ELR 20738] (3d Cir. 1977). Section 10(e)(2)(A) of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), provides that the reviewing court shall:

(2) hold unlawful and set aside agency action, findings, and conclusions found to be —

(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; . . .

In delineating this standard of review the Supreme Court in Overton Park stated:

To make this finding the court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. . . . Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency.

491 U.S. at 416-17, 91 S. Ct. at 823-24. Accord Lukens Steel v. Klutznick, 629 F.2d 881, 885 (3d Cir. 1980); Doraiswamy v. Secretary of Labor, 555 F.2d 832, 840 (D.C. Cir. 1976). There can be no doubt, and the parties do not dispute, that this is the standard to be used by the court in reviewing the EPA's decision to take action at the Nicolet site. Lukens Steel, supra, 629 F.2d at 885; United States v. Ward, 618 F. Supp. 884, 900 [16 ELR 20127] (E.D.N.C. 1985); United States v. The Western Processing Co., No. C83-252M (W.D. Wash. Feb. 19, 1986). The parties disagree, however, as to whether the Court is limited to the administrative record, or whether material outside of the record should be considered.

It is clear that in applying the arbitrary and capricious standard, "the focal point should be the administrative record already in existence, not some new record made initially in the reviewing court." Camp v. Pitts, 411 U.S. 138, 142, 93 S. Ct. 1241, 1244 (1973). An administrative agency's action is to be reviewed on the basis of that which is in the administrative record. Florida Power and Light Company v. Lorion, 105 S. Ct. 1598 [15 ELR 20321], on remand, 785 F.2d 1038 [16 ELR 20788] (D.C. Cir. 1985); American Iron & Steel, supra, 568 F.2d at 296. The reviewing court cannot supply alternative reasons for agency action, nor can it attack or support the agency action with new evidence. Dry Color Manufacturers' Association, Inc. v. Department of Labor, 486 F.2d 98, 104 n.8 (3d Cir. 1973); Doraiswamy, supra, 555 F.2d at 840.

Subsequent to the commencement of this action, Congress amended CERCLA with the Superfund Amendments and Reauthorization Act which became effective on October 17, 1986. Section 113(j) of CERCLA, 42 U.S.C. § 9613(j), as amended, now provides:

(j) Judicial review

(1) Limitation

In any judicial action under this chapter, judicial review of any issues concerning the adequacy of any response action taken or ordered by the President shall be limited to the administrative record. Otherwise applicable principles of administrative law shall govern whether any supplemental materials may be considered by the court.

(2) Standard

In considering objections raised in any judicial action under this chapter, the court shall uphold the President's decision in selecting the response action unless the objecting party can demonstrate, on the administrative record, that the decision was arbitrary and capricious or otherwise not in accordance with law.

(3) Remedy

If the court finds that the selection of the response action was arbitrary and capricious or otherwise not in accordance with law, the court shall award (A) only the response costs or damages that are not inconsistent with the national contingency plan, and (B) such other relief as is consistent with the National Contingency Plan.

As a general rule, a court must "apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary." Bradley v. Richmond School Board, 416 U.S. 696, 711, 94 S. Ct. 2006, 2016 (1974). Nothing in the amendments or the legislative history indicates that the amendments were not intended to be applied retroactively. Statutory amendments making procedural changes that do not affect substantive or vested rights are applied to pending cases. Sperling v. United States, 515 F.2d 465, 473-4 (3d Cir. 1975), cert. denied, 426 U.S. 919 (1976); Koger v. Ball, 497 F.2d 702 (4th Cir. 1974). Because the amendments in question merely clarify the limitation on judicial review, the applicable standard of review and the remedies available upon judicial review, no substantive or vested rights are affected and the amendments are applicable to this action. There can be no doubt that Congress intended that EPA action taken pursuant to CERCLA be reviewable based upon the administrative record under the arbitrary and capricious standard. The case law and statutes make it clear that the Court is required to confine its review of the EPA's action to the administrative record.

The Supreme Court has recognized certain limited circumstances in which the reviewing court may order supplementation of the administrative record. One such circumstance is when the administrative record does not disclose the factors that were considered or the agency's construction of the evidence. Overton Park, 401 U.S. at 420, 91 S. Ct. at 825. The court may require the officials who made the decision to give testimony explaining this action. Id. However, where the agency has compiled an administrative record contemporaneously with its administrative decision, "there must be a strong showing of bad faith or improper behavior before such inquiry may be made." Id. Another circumstance recognized by the Supreme Court where the court may order supplementation of the administrative record is whenever, after reviewing the record, the court finds that the agency's asserted reasons for its decision are inadequate. Camp v. Pitts, 411 U.S. at 142-43, 93 S. Ct. at 1244. If the court finds the reasons asserted are inadequate, it may either remand the matter to the agency, or it may "obtain from the agency either through affidavits or testimony, such additional explanation of the reasons for the agency decision as may prove necessary." Id. at 143, 93 S. Ct. at 1244. In both circumstances, the court may obtain from the agency supplemental reasons for its decision.

Nicolet's vague assertions that the administrative record does not disclose the factors considered by the EPA or the agency's construction of the evidence, and that the reasons given by the agency are inadequate, are unfounded. Indeed, Nicolet seeks discovery on a broad range of issues far beyond those contained in the administrative record which do not fall within the exceptions discussed above. The reasons for taking the Franklin Institute Laboratories' deposition, i.e., to determine if and when the government was informed of the test results, do not provide a basis for permitting that deposition. As heretofore pointed out, the Franklin Institute report is in the administrative record and the government's use of it will be reviewed on the basis of other information in the record. Neither the government nor Nicolet is permitted to present post hoc rationalizations concerning the decision to take action at the Nicolet site. The Court will only consider the factual findings and reasoning of the agency contained in the administrative record. Similarly, the reasons offered in support of taking the five individuals' depositions — i.e., to determine the basis of their opinions, to learn what information they give to the EPA, to learn what sampling protocol was utilized — are insufficient. Again, the agency action must [17 ELR 21093] stand on that which is in the administrative record. Evidence outside of the record, offered by either party, may not be considered by the court in reviewing the agency decision. Nicolet has presented no compelling reason why in this case the Court should allow the depositions to proceed. The governments' motions for protective orders will be granted.

As heretofore pointed out, the three exceptions for supplementation of the administrative record are not present here. Although we are not now ruling on the propriety of the EPA's actions, the Court has made a cursory review of the administrative record, which appears to be a detailed compilation of the facts, evidence and circumstances leading up to the EPA's decision to take action at the Nicolet site. The depositions sought by Nicolet would not shed any light on the construction of the evidence by the EPA, on factors not relied upon by the EPA or on the adequacy of the EPA's explanation. If, upon review by this Court, supplementation of the administrative record becomes necessary, the Court will take the appropriate action.