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United States of America and State of Wisconsin v. Ncr Corp. and Appleton Papers Inc. Et

November 21, 2012


The opinion of the court was delivered by: William C. Griesbach, Chief Judge United States District Court


In this CERCLA enforcement action, the United States and State of Wisconsin have moved for summary judgment on the question of the propriety of the remedy they imposed in a Unilateral Administrative Order issued with respect to the Lower Fox River Superfund site. This Court has already ruled that the administrative record pertaining to the remedy is sufficient to allow the deferential review required by statute. Although other rulings have found that limited additional trial testimony could be relevant, I am persuaded that summary judgment in favor of the Plaintiffs is appropriate at this time. Accordingly, the Plaintiffs' motion for summary judgment will be granted. The Defendants have also filed motions for summary judgment; these will be denied.*fn1

I. Background

As recounted elsewhere, the Lower Fox River Site has been the subject of intense governmental scrutiny since it was revealed that significant quantities of sediment containing PCBs exist in the riverbed in both Little Lake Butte des Morts and in the Fox River itself. Because PCBs are now known to cause significant health problems for those who are exposed to the water or who eat fish caught in the river, the Site has been selected for remediation; a herculean and expensive cleanup effort has been underway for several years.

A companion case has focused on a struggle between the various potentially responsible parties ("PRPs") over which of them should bear the brunt of the cost of cleaning up the River. By contrast, this case is not about money so much as it is about action: here, the United States and the State of Wisconsin have sought to enforce the selected remedy against the PRPs.

The remedy-a combination of dredging and capping the riverbed-was selected as the result of a partnership between the Environmental Protection Agency and the Wisconsin Department of Natural Resources ("WDNR"), which was designated as the lead agency in developing the remedial project. The WDNR began investigating the Site in 1998. During its Remedial Investigation, the WDNR noted (among many other things) that the risks to human health relating to PCB's arising out of the consumption of fish were greater than the acceptable levels (despite the fact that eating fish has other health benefits). (ECF No. 507-2 at 5-6.) An extensive feasibility study considered all of the conceivable options. These included everything from "no action" and active monitoring to dredging and capping. (ECF No. 507-5 and 6.) Each alternative was assessed based on a number of criteria, which included key considerations such as effectiveness, feasibility, and cost. The agencies did not rely exclusively on paper analyses, however: they also undertook two studies of the River and removed some 88,000 cubic yards of sediment to determine whether the sediment could be dredged safely.

In addition to the feasibility and health studies, the governments also created models of what they call "fate and transport" of PCBs within the river system. In brief, the PCBs were introduced into the river in a number of different locations, and the vicissitudes of the River's current, dams, weather, and proximity to release sites all played (and continue to play) a role in where the PCBs ultimately ended up. The governments' models were used in an effort to establish how the PCBs were transported throughout the river and Green Bay. The result was a 2,500-page report explaining the models, their use, and the conclusions drawn therefrom. (ECF No. 439-14 at 8.) A summary of the model's use is also part of the administrative record. (ECF No. 439-15.)

The remedy ultimately selected is documented in a number of lengthy public documents, including two Records of Decisions ("RODs"), two ROD Amendments, and an Explanation of Significant Differences. These decisions followed health assessments and feasibility studies designed to link resource expenditures with measurable public impact results. For example, the ROD issued in June 2003 addressed the remedy for areas known as OU3 through OU5, or roughly the part of the Fox River between Little Rapids and Green Bay. (ECF No. 404-2.) The ROD, a 154-page document that is typical of the other public documents addressing the remedy, explains that the remedy selected was the culmination of several years of study, remedial investigations and feasibility studies, many of which were subjected to public comment and input from the PRPs themselves. The ROD concluded that the remedy for OU3-5 would involve dredging some 6.5 million cubic yards of contaminated sediment and taking it to a landfill for disposal. This is what the parties refer to as an "all-dredging" remedy.

The "remedial action level" ("RAL") that would trigger the need for sediment removal was established at 1 part per million, meaning that sediment containing that amount or more would be targeted for removal. (Id. at 14.) Other action levels considered were 0.125 ppm, 0.25 ppm, 0.5 ppm, 5 ppm, and, of course, the "no action" alternative that would leave the PCBs untouched. Naturally, the action level would dictate how much sediment needed to be removed-a higher action level would require much less dredging than a more stringent threshold. The governments determined that 1 ppm was an appropriate benchmark. For example, at a concentration of 1 ppm, walleye would be safe for consumption within one year, whereas at the 5 ppm level they would not be safe to eat for 29 years. (ECF No. 439-12 at 98-100.) On the other side of the coin, the ROD observed that concentrations lower than 1 ppm would have only marginal reductions on PCBs in fish tissue, and thus concluded that "there is limited risk reduction achieved by selecting an RAL of less than 1 ppm." (Id. at 99; ECF No. 404-2 at 155.)*fn2

The 2003 ROD estimated that the cost of the dredging remedy would be approximately $325 million, with an understanding that the estimate could be off by as much as minus-30 percent and plus-50 percent. (ECF No 404-2 at 151.) On a per-unit basis, this figure was actually lower than might otherwise be expected. In response to public comments, the agencies explained that the lower-than-expected costs would arise out of economies of scale; the theory was that a project as large as this one would produce efficiencies not present in smaller dredging projects, and of course almost every other project had been smaller than this one. (ECF No. 439-5 at 24.)

Circumstances changed after NCR and Georgia-Pacific (two of the key PRPs) undertook extensive sampling work, the upshot of which was that the governments determined that a much larger volume of sediment would need to be removed in order to achieve the PCB reductions set out in the earlier RODs. The two companies proposed a new remedy that incorporated a hybrid approach to the problem, namely, a mixture of dredging, sand covering, and capping. Their proposal indicated that the new cost estimate would reach some $432 million (in 2009 dollars). Following public comment, the agencies issued a ROD Amendment in 2007 that incorporated the proposed changes. (ECF No. 404-3.) A hybrid remedy for OU1 was also adopted in a later ROD. In response to comments questioning the viability of capping, the agencies observed that capping could effectively contain sediments and would improve water quality.

By 2009, however, it became clear that even the recently-increased cost estimates had been overly optimistic. New estimates, based on "real world" bids from contractors, showed that the remedy would now cost some $701 million dollars, roughly 62 percent more than estimated in the 2007 ROD. Estimates prepared by defense expert Jeffrey Zelikson demonstrate how the cost estimates of capping-versus-dredging remedies changed over time. (ECF No. 501-1 at 21.) By 2009, it had become clear that capping, which was estimated to cost $484 million, would have been much cheaper than the $701 million hybrid remedy. (Had the agencies pressed for the full dredging remedy, that cost had now skyrocketed to $957 million, or almost one billion dollars.)

Despite the 62 percent cost increase, the agencies decided not to issue an ROD amendment, as they had in 2007. An ROD amendment is a formal process requiring reevaluation of circumstances and opening up the process to public comment; it is required when a new approach fundamentally changes a remediation project. Instead of issuing an ROD, the agencies issued an "Explanation of Significant Differences" ("ESD"), which is a more streamlined approach. See 40 C.F.R. § 300.435. The 2010 ESD noted the large increase in cost, but found that because the increase was close to the 50 percent overrun already built into the original estimate, the cost increase did not pose a "fundamental" change to the project and thus did not require an ROD amendment. (ECF No. 147-1 at 15.) The ESD, along with a Criteria Analysis Memorandum, explained several areas on which the original estimates proposed by Georgia-Pacific and NCR understated the actual costs. These included increased costs for site support costs, residual dredging, and shoreline caps. (Id. at 13-14.) The ESD also noted the complexities inherent in such a project, given the lengthy time span and the combination of capping, dredging and sand covering. (Id. at 14.) The remedy described in the 2010 ESD is the essence of the remedy the governments are now seeking to impose.

II. Analysis

At issue are four separate motions for summary judgment: one filed by the United States and the State of Wisconsin, and three filed by the Defendants. Because the burden is on the Defendants, I concentrate my focus on their arguments.

A. Arbitrary and Capricious Standard

Section 113(j) of CERCLA provides that judicial review of response actions is based on the administrative record and is limited to determining whether the response action is arbitrary and capricious. 42 U.S.C. § 9613(j). Specifically, it provides that "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." Id. at (j)(2). This means that the government's selected response action is presumed valid unless the Defendants can meet their burden to demonstrate otherwise. United States v. Burlington Northern R. Co., 200 F.3d 679, 692 (10th Cir. 1999).

As I concluded in a previous ruling, arbitrary and capricious are terms that describe the manner of remedy selection more than they do the result, although the two are often intertwined. "Arbitrary means the Government simply threw darts or flipped a coin, selecting the remedy without a basis in reason or science. Capricious means it rushed through the process or made a sudden, knee-jerk decision without hearing enough evidence." (ECF No. 498 at 7.) Of course no one expects that government officials are actually flipping coins or throwing darts; the point is that courts give the government agency significant discretion to select a remedy and will only overturn that remedy if it appears to be outside the bounds of what is reasonable. Moreover, the statute requires the challenging party to show that the remedy is arbitrary and capricious. This is perhaps a technical point, as the two often go hand-in-hand, but it underscores Congress' sensible policy of leaving decisions like remedy selection to agencies that have the technical expertise and experience to render them. As this particular administrative record reveals, no court in the land has the ability or expertise to even scratch the surface of the detail and study needed to craft a remedy in the first instance. Instead, judges are asked merely to provide a check on what would otherwise be the largely unrestrained power of the executive agency. I now turn to the motions filed by three separate groups of defendants.*fn3


Defendant NCR focuses its remedy challenge on the process the agencies used to impose its most recent remedy changes. Specifically, it argues that the changes imposed in 2010 were "fundamental" changes that required the issuance of a formal ROD amendment rather than the Explanation of Significant Differences the agencies used.

As suggested above, the applicable regulations provide for two alternatives when a remedy requires significant changes:

(2) After the adoption of the ROD, if the remedial action or enforcement action taken, or the settlement or consent decree entered into, differs significantly from the remedy selected in the ROD with respect to scope, performance, or cost, the lead agency shall consult with the support agency, as appropriate, and shall either:

(i) Publish an explanation of significant differences when the differences in the remedial or enforcement action, settlement, or consent decree significantly change but do not fundamentally alter the remedy selected in the ROD with respect to scope, performance, or cost. To issue an explanation of significant differences, the lead agency shall:

(A) Make the explanation of significant differences and supporting information available to the public in the administrative record established under §300.815 and the information repository; and

(B) Publish a notice that briefly summarizes the explanation of significant differences, including the reasons for such differences, in a major local newspaper of general circulation; or

(ii) Propose an amendment to the ROD if the differences in the remedial or enforcement action, settlement, or consent decree fundamentally alter the basic features of the selected remedy with respect to scope, performance, or cost.

40 C.F.R. § 300.435.

Thus, under subsection (ii), an amendment to the ROD is required if the differences "fundamentally alter the basic features of the selected remedy." Id. In a previous decision and order addressing the governments' motion for a preliminary injunction, I agreed with the governments that the cost increases adopted in the ESD likely did not amount to a fundamental change in the basic features of the remedy and thus found that the Defendants had a low likelihood of success on that argument. Little has changed since then.

NCR argues that a 62 percent increase over prior estimates-more than a quarter of a billion dollars-is a fundamental enough change to require issuance of a ROD amendment. In fact, the cost of the increase is itself greater than the cost for almost every CERCLA cleanup ever undertaken, and, according to NCR's expert, the increase exceeds that of all cost increases combined on Superfund sites between 2004 and 2005. (ECF No. 501-1 at 10 n.25.) In Mr. Zelikson's opinion, based on more than 25 years at EPA, a cost increase of this magnitude would require an ROD amendment, public comment, and review of other remedial options. The EPA's own guidance suggests that an amendment would be required when there was "an appreciable change or changes, in the scope, performance, and/or cost."*fn4 In fact, he suggests, the governments implicitly conceded as much when they issued an ROD amendment in 2007, which had the same 62 percent cost increase.

Although the experts Jeffrey Zelikson and Paul Fuglevand add more context to the issue, I remain satisfied than an ROD amendment was not required and that genuine issues of material fact do not exist. (ECF No. 501-1; 519-2.) First, the key language in the regulation uses not one but two stark and related terms: "fundamental" and "basic." For an amendment to "fundamentally alter the basic features" of a remedy, the change must be so drastic that the essence of the remedy-its basic features-has been "fundamentally" changed. Such a change is not just significant or even crucial, but must go to the very core or definition of what the remedy is. When something is merely more expensive than predicted, it does not change the "basics" of the remedy unless the change is truly a drastic one.

Second, the EPA's own guidance document, relied on by Zelikson, does not suggest that the recent changes were fundamental. In a non-exclusive set of examples, the document lists only as "significant" a situation involving a "large increase in cost." Id. (see footnote 2) at Highlight 7-1. For example, if "[s]ampling during the remedial design phase indicates the need to significantly increase the volume of contaminated waste material to be incinerated . . . thereby increasing the estimated cost of the remedy," that would constitute a "significant" but not "fundamental" change. By contrast, the guidance lists a number of examples of "fundamental" changes, but none of these are based solely on cost overruns. Instead, the examples of fundamental changes tend to involve changes to the nature of the remedy, for example, from a soil-washing or natural attenuation remedy to an excavation remedy. Id. Thus, when in 2007 the EPA decided to issue an amendment rather than an ESD, it likely did so because it had changed from a purely dredging remedy to a hybrid remedy employing capping as well. The fundamentals of the remedy were changed in 2007. Here, by contrast, there were no material changes to the nature of the remedy, the changes only went to estimates of what the remedy would cost. Thus, the very guidance NCR relies on does not support its argument that the cost increase was per se a fundamental change. Ultimately, it is doubtless true that the cost of the remedy is everything if you're the one paying for it, and 62 percent is undeniably a very expensive change. But cost is hardly dispositive of the triggers set forth in the applicable regulations, which consider many things other than cost, including the method of remediation, the public impact, feasibility, and the like. After all, these are the sorts of other factors that might be amenable to public comment, which is the very purpose of the ROD amendment procedures in the first place. Public comments on increased cost are likely to be limited to the predictable and well-known protests from the companies who have to shoulder the burden.

United States v. Burlington Northern is not to the contrary. There, the Tenth Circuit determined that a cost overrun of roughly 60% fundamentally altered the remedy and that the EPA should have issued an ROD amendment. 200 F.3d 679, 694 (10th Cir. 1999). But once again, the remedy change there was not a "mere" cost increase but a change in the nature of the remedy itself. For example, instead of remediating tar sludge, the sludge was incinerated at an increased cost of roughly one million dollars. Incineration had been part of the original ROD, but it was eliminated in an amendment after it proved too costly. Thus, the change to the incineration remedy that had already been rejected, was, in the district court's words, a "significant deviation from the selected remedy." Id. at 692. The Tenth Circuit agreed: "[t]he EPA acted arbitrarily and capriciously by failing . . . to propose an amendment regarding the significant cost increase associated with the additional boxes of liners and the tar heels and by failing to propose an amendment regarding the decision to incinerate rather than remediate a significant amount of the impoundment sludge." Id. Thus, the change in Burlington Northern involved not just cost but a fundamental change in the nature of the remedy itself-just as in 2007, when the agencies in this action issued a ROD amendment.

Finally, as I found in a previous decision, the 62 percent cost increase does not stand in a vacuum. Recall that the original estimates had already built in a very large "fudge factor" that would account for as much as a 50 percent cost overrun. The original 2007 estimate was $432 million in 2009 dollars. (ECF No. 501-1 at 18, Table 1.) Adding 50 percent onto that figure results in a maximum estimate of $648 million. In the 2010 Explanation of Significant Differences, the new estimate was $701 million, "only" $53 million more than the original estimate, or about eight percent.*fn5 Thus, when we include the original fudge factor into the comparison, the 2010 cost increase was only eight percent higher than originally proposed. NCR has not cited any cases or guidance that would even come close to suggesting that an eight-percent overrun constituted a "fundamental" change in the project.

Perhaps recognizing that the math is against it, NCR argues that by 2007 the remediation process had become much more concrete and thus it was not reasonable to build such a large amount of wiggle room into the estimates. The estimate, in its view, should have only included a percent figure, not percent. But that is nothing more than Monday morning quarterbacking. The fact is that, by NCR's own admission, this is a project of unique scale and complexity, and the percent range was built into the 2007 estimates. The question in 2010 was not what the estimate range in 2007 should have been, it was whether the new estimates were fundamental changes to the estimate that had actually been provided in 2007. When we are reviewing changes to estimates to determine how large the change is, it does not make sense to go back and re-examine the original estimate to determine what it should have been. The only salient question is what that original estimate was. In sum, the language of the regulations and the EPA's own guidance suggests that a cost increase, even a "significant" one, does not necessarily trigger the need to issue a ROD. And the fact that the applicable estimate included a very large amount of flexibility brings the changes proposed in 2010 much closer to that estimate. In sum, I conclude that the EPA did not err in issuing an ESD rather than an amendment to the ROD.

C. Glatfelter and Other ...

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