A Finding as Rare as a Unicorn: EPA’s Emhart Remedy is Arbitrary and Capricious

In Emhart Industries, Inc., v. New England Container Company, Inc., 2017 Wl 3535003 (D. RI 2017), the U.S. District Court found the Environmental Protection Agency (“EPA”) remedy was arbitrary and capricious. 

Administrative Record

Judicial review under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) is strictly limited to reviewing the administrative record to determine if EPA’s action was arbitrary and capricious, but the court ruled it could review EPA’s key assumptions based on evidence outside of the administrative record.

Substantial Basis Test

EPA need only show that it’s decision was “plausible in light of the record as a whole” and “supported by substantial evidence in the record.” Leahy v. Raytheon Co., 315 F.3d 11, 17 (1st Cir. 2002)  (citations omitted). Importantly, the court is not permitted “to substitute its judgment for that of the agency.” Fox Television Stations, 556 U.S. 502, 513–14 (2009) (quoting Bowman Transp., Inc. v. Arkansas–Best Freight Sys., Inc., 419 U.S. 281, 286 (1974)). When reviewing a purely factual question within the area of the agency’s competency, the court must “recognize the relevant agency’s technical expertise and experience, and defer to its analysis unless it is without substantial basis in fact.” Browning–Ferris Indus. of S. Jersey, Inc. v. Muszynski, 899 F.2d 151, 160 (2d Cir. 1990)  (quoting Federal Power Commission v. Florida Power & Light Co., 404 U.S. 453, 463, 92 S.Ct. 637, 30 L.Ed.2d 600 (1972)).

An action may be considered arbitrary and capricious if the agency: (1) “relied on factors which Congress has not intended it to consider,” (2) “entirely failed to consider an important aspect of the problem,” (3) “offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise,” or (4) sought to have its action upheld based on “post hoc rationalizations.” Motor Vehicle Mfrs. Ass’n of U.S., Inc., 463 U.S. 29, 43 (1983).

In this case, although EPA followed the basic steps mandated by CERCLA and the National Contingency Plan (NCP) when it selected its remedy for the Site, the court found that EPA’s subsequent decisions were arbitrary and capricious or not consistent with the NCP.

Compliance with the NCP

The NCP directs EPA “to return usable ground waters to their beneficial uses wherever practicable, within a timeframe that is reasonable given the particular circumstances of the site.” 40 C.F.R. § 300.430(a)(1) (iii)(F). Where restoration is “not practicable” EPA need not restore the groundwater, but must instead take steps to “prevent further migration of the plume, prevent exposure to the contaminated ground water, and evaluate further risk reduction.” Id.

In the Emhart case, EPA classified a portion of the groundwater at the Site as a Class II potential source of drinking water based on EPA guidelines that place groundwater into different classes based on the water’s potential as a source of drinking water. Class II is a “potential” source of drinking water. Class III is not a “potential” source of drinking water. Once classified, the NCP still requires EPA to determine whether it is technically impracticable to apply drinking water standards. 40 C.F.R. § 300.430(f)(1)(ii) (C)(3); 42 U.S.C. § 9621(d)(4)(C) . If restoration of Class II groundwater is technically impracticable, then EPA will modify the end use. According to EPA guidelines, which are non-mandatory, Class III is applied to groundwater only where groundwater is so contaminated by naturally occurring conditions or the effects of broad-scale human activity that it cannot be cleaned up using treatment methods reasonably employed in public water supply systems.

To survive judicial scrutiny for this decision, EPA was required to demonstrate that it complied with the NCP; however, EPA’s guidance in this instance and the NCP are not consistent. The NCP requires that EPA determine whether it is “practicable” to restore groundwater to its “beneficial use.” 40 C.F.R. § 300.430(a)(1)(iii)(F). In addition, EPA is required to collect sufficient information to determine whether the remedy is likely to be “effective” in restoring the groundwater to any such use. Id. §300.430(d)(1). The NCP does not look at the “naturally occurring conditions” or the “effects of human activity.” 

When looking at the evidence, including EPA’s Record of Decision (ROD), the court found that it is not practicable to restore the groundwater EPA classified as Class II to its beneficial use. The ROD recognized that off-Site sources of contamination contributed to the contamination and the “vertical extent” of the contamination was uncertain.

What is Relevant and Appropriate?

In addition, the court scrutinized EPA’s decision that the federal Resource Conservation and Recovery Act (RCRA) was an applicable or relevant and appropriate requirement (ARAR) for the site under 42 U.S.C. § 9621(d). Section 121(d) of CERCLA requires that on-site remedial actions attain or waive federal environmental ARARs, or more stringent state environmental ARARs, upon completion of the remedial action. 

The court found that EPA’s decision to include a RCRA C cap as part of the remedy was an integral part of EPA’s decision that a Class II classification was appropriate for the end use. The court found that EPA cannot justify the RCRA C cap absent further analysis of EPA’s groundwater remediation goals at the site.

Next Steps

The court noted that EPA has broad discretion to determine how best to characterize the Site and make any necessary adjustments to the remedy. However, the court also noted that EPA must have sufficient evidence and analysis to justify that restoration of the groundwater to beneficial use is “practicable” and that the remedy will be “effective” in bringing about that restoration, if EPA continues to assert the Class II designation.  In addition, to the extent EPA makes a significant change to the remedy, EPA must provide additional notice and comment period as required by the NCP.

The court also stayed the Unilateral Administrative Order until EPA completed the review of the remedy. 

The California environmental attorneys at Bick Law LLP will continue to monitor EPA’s review of the remedy and the next steps taken by the court.