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United States v. Chapman



Harold B. Chapman, Jr. manufactured small metal collars and stored and sold military and commercial surplus chemicals on his land in Washoe County, Nevada. The United States Environmental Protection Agency (EPA) began an investigation of his facility in 1989 at the request of the county. The EPA conducted a preliminary assessment of the site to determine if a removal action pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)[1] was necessary. The site contained approximately two thousand five-gallon containers of paint, insulating oil, sulfuric acid, chloroform, alcohols, and other military surplus chemicals, plus more than one hundred fifty-five-gallon drums of unknown substances. Most of the drums were stored outside in an unprotected storage yard, and many of the drums were leaking into the soil, which was stained in several areas.

After the preliminary assessment, Washoe County issued orders directing Chapman to bring his property into compliance. In April 1990, the county issued a misdemeanor citation to Chapman for failure to comply with county orders, and in May 1990, the County Commissioner revoked Chapman’s business license. The county then called on EPA for assistance.

On May 24, 1990 EPA issued Order 90-10. In this order, EPA stated that the site posed an “imminent and substantial endangerment to the public health or welfare or the environment because of the release or threatened release of hazardous substances.”[2] The agency claimed that the site posed a substantial risk of fire and/or explosion, that many of the drums were leaking into the soil and could migrate into groundwater, that groundwater contamination could result in contamination of the domestic and agricultural aquifer (endangering residents and crops), and that the site was a danger to the Bureau of Land Management’s Wild Horse and Burro Adoption Center located nearby. The order required Chapman to take immediate action to secure the site, to submit a detailed site removal and stabilization plan, and to contain or prevent the release of hazardous substances. It also required him to remove hazardous substances from the site.

EPA deemed subsequent compliance documentation prepared by Chapman inadequate and incomplete, and on January 8, 1991, EPA conducted another inspection and found containers of paint waste and flammable liquids remaining on the property. Some of the containers were open and leaking, and soil stains remained where other drums had been stored outside. Because Chapman had not complied with EPA’s order, the agency initiated a response action. Chapman began to comply with the order one month later by removing the containers from the site and submitting soil samples to EPA.

In April 1992, EPA requested $33,946.00 from Chapman for response costs it had incurred. Chapman refused to pay and the United States brought this action against Chapman to collect. The district court granted summary judgment in favor of the government and Chapman appealed.

To establish a prima facie case to recover response costs, the government must prove that 1) the site is a “facility,” 2) a “release” or “threatened release” of a hazardous substance has occurred, 3) the government incurred costs in responding to the release or threatened release, and 4) the defendant is a liable party.[3] Once these elements are established, the burden shifts to the defendant to prove that the government’s response action was inconsistent with the National Contingency Plan (NCP), which guides federal and state response actions.[4] Consistency with this plan is presumed, and the burden is on the defendant to prove that EPA’s response action was arbitrary and capricious.[5] Chapman first claimed that the EPA’s response action was arbitrary and capricious because it ordered removal of material without determining whether the material was hazardous. However, because 1) EPA inventoried and sampled the containers at the site and identified hundreds of drums and containers of chemicals and oils and 2) because the drums were stored outside in an unprotected storage yard, 3) soil samples showed the substances were hazardous, and 4) the drums had deteriorated, the court held that EPA did not act arbitrarily or capriciously in ordering removal of the material.

CERCLA allows for the recovery of “all costs” of a removal or remedial action, including attorney fees attributable to cost-recovery litigation.[6] The court held that because Chapman initially did not comply with EPA’s order, the agency had to begin recovery operations and litigation. Therefore, the court noted that EPA could recover legal costs associated with the removal action. EPA claimed attorney fees of over $400,000 and removal costs of $34,000. The Ninth Circuit remanded the case to the district court to consider the reasonableness of the government’s requested litigation expenses. The court stated that the district court should “provide a concise but clear explanation of its reasons for the fee award.”[7]

Second, Chapman claimed that there was a genuine issue of material fact as to whether he caused a release or threatened release of a hazardous substance on his property, and that the government failed to establish a prima facie case sufficient for the district court to grant summary judgment. The Ninth Circuit disagreed, citing the evidence in the administrative record as satisfying the government’s burden of proof. The record showed that there were visible soil stains and contamination and that some of the two thousand drums stored on the property were rusted and corroded, without tops, and in poor condition. Additionally, the record showed that hazardous substances were found on the premises.

In his defense, Chapman stated that he did not directly manage the facility. The appellant claimed that his environmental consultant assured him that all the containers on the property were properly packaged with no leakage. The Ninth Circuit rejected this claim, noting that the assertions were hearsay and inadequate to rebut the evidence in the record presented by EPA. As a result, the government’s evidence established a prima facie case under CERCLA.

Third, Chapman argued that because EPA did not maintain appropriate documentation of its response action and costs incurred, he should not have been held responsible for them. The appellate court disagreed, noting that the government gave detailed cost summaries to the district court showing costs incurred by the EPA. EPA staff, attorneys, accountants and supervisors had provided declarations regarding the work they performed and the time spent on the Chapman site, and documentation of costs in the form of timesheets and payroll documents were found in the record. The court held that this evidence showed that EPA had adequately documented its expenditures.

Fourth, Chapman claimed that EPA did not review the preliminary assessment and current site conditions before determining that a removal action was appropriate, thereby violating CERCLA.[8] The Ninth Circuit rejected this contention, pointing to the extensive evidence in the preliminary assessment and the record as a whole. It was therefore appropriate for EPA to determine a removal action was in order.

In a related issue, Chapman argued that EPA did not consider the following appropriate factors when it determined a removal action was in order: 1) actual or potential exposure to nearby human population, animals, or the food chain; 2) actual or potential contamination of the water supply; 3) hazardous substances in drums, barrels, or containers that may pose a threat of release; 4) hazardous substances in soils near the surface that may migrate; 5) weather conditions that may cause migration; 6) threat of fire or explosion; 7) the availability of other federal or state response mechanisms; and 8) other factors that may pose threats to public health or welfare.[9] The court explained that Order 90-10 specifically considered all of these elements except the availability of other federal or state response mechanisms factor. Nevertheless, the court held that because EPA worked in conjunction with the county prior to issuing the order and acted consistently with the NCP, EPA had considered all the required factors.

Finally, Chapman alleged that EPA was required to issue a community relations plan according to the 1985 version of the NCP. That version required a formal community relations plan if on-site removal activities are expected to extend beyond forty-five days. The court held that the order to remove all hazardous substances was issued in May 1990, and that the 1990 version of the NCP–requiring a community relations plan if hazardous substances were not removed within 120 days–applied. Because EPA ordered the substances removed within 120 days, and because the 1990 version of the NCP applied, EPA’s actions were consistent with the NCP.

[1] Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601-9675 (1994 & Supp. III 1997).

[2] Id. § 9606(a) (1994).

[3] Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1152-53 (9th Cir. 1989).

[4] 42 U.S.C. § 9605 (1994).

[5] Id. § 9613(j)(2).

[6] Id. § 9607(a)(4)(A).

[7] Hensley v. Eckerhart, 461 U.S. 424, 437 (1933).

[8] 40 C.F.R. § 300.415(a)(1) (1998).

[9] Id. § 300.415(b)(2).

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