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FAIRCHILD SEMICONDUCTOR CORP. v. UNITED STATES EPA

July 22, 1991

FAIRCHILD SEMICONDUCTOR CORPORATION, Plaintiff,
v.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY; and DANIEL McGOVERN, in his official capacity as Regional Administrator of Region IX, Defendants



The opinion of the court was delivered by: WEIGEL

 STANLEY A. WEIGEL, UNITED STATES DISTRICT JUDGE

 The issue in this case is whether the Court may review and enforce an Administrative Order on Consent ("Consent Order") entered into by plaintiff Fairchild Semiconductor Corporation ("Fairchild") and defendant United States Environmental Protection Agency ("EPA"). The Consent Order, executed in August 1985, relates to the study of hazardous waste cleanup alternatives for the industrial Middlefield-Ellis-Whisman area of Mountain View, California. The area is a large one in which many industrial firms are now or have been located.

 The Consent Order was issued by EPA pursuant to its power to abate environmental hazards under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), 42 U.S.C.A. § 9601 et seq. (West 1983). CERCLA was subsequently amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA" or "Superfund Amendments"), 42 U.S.C.A. § 9601 et seq. (West Supp. 1991).

 Fairchild moves for partial summary judgment on its claim that EPA arbitrarily and capriciously breached the Consent Order. *fn1" EPA moves for "summary judgment of dismissal" of the entire complaint on the ground that CERCLA deprives this Court of subject matter jurisdiction. In the alternative, EPA moves to dismiss portions of the complaint for failure to state a claim. Because the facts of this case and the statutory framework of CERCLA are complex, a prefatory discussion is in order.

 I. OVERVIEW OF CERCLA, AS AMENDED BY SARA

 Removal refers to short-term action taken to halt the immediate risks posed by hazardous wastes. 42 U.S.C. § 9601(23). Remedial action refers to permanent remedies taken instead of or in addition to removal, including the destruction of hazardous wastes. § 9601(24); see also Barmet, 927 F.2d at 291; Schalk v. Reilly, 900 F.2d 1091, 1092 n. 1 (7th Cir.), cert. denied, 498 U.S. 981, 112 L. Ed. 2d 521, 111 S. Ct. 509 (1990). Removal action is taken before remedial action. During the removal action phase, a site posing a risk of hazardous waste release is studied and various cleanup options considered. § 9604(a). The ensuing site-specific study is called a Remedial Investigation/Feasibility Study ("RI/FS"). The study may be performed either by EPA or by a potentially responsible party ("PRP"), once EPA has determined that the PRP will properly perform the study. Id. This was also the case before the enactment of the Superfund Amendments. § 9604(a) (West 1983).

 Once the RI/FS has been completed, EPA will choose the remedial action appropriate for the site. Before finalizing its choice, EPA is required to submit a proposed plan to the public for comment. § 9617(a). In connection with its choice, EPA must develop an administrative record upon which it has based its decision, including what is known as a Record of Decision. § 9613(k). *fn2" If, after EPA approves a final plan, it takes any remedial action which differs in any significant respect from this plan, it is required to publish "an explanation of significant differences," which explains and justifies the changes. § 9617(c).

 Pursuant to Section 106 of CERCLA, 42 U.S.C. § 9606, EPA has power to take actions and issue orders designed to abate "an imminent and substantial endangerment to the public health or welfare or the environment because of an actual or threatened release of a hazardous substance from a facility." § 9606(a). Violations of these orders may subject responsible parties to substantial fines. § 9606(b). Finally, EPA may enter into settlement agreements with PRPs in which the PRPs agree to perform some or all of the cleanup of the site. § 9622. The Superfund Amendments require that such agreements be approved by the Attorney General, be open to public comment, and ultimately be entered in the appropriate United States District Court. § 9622(d). *fn3"

 II. FACTS

 As noted earlier, in August 1985, EPA entered into a Consent Order with Fairchild. Other parties to that Order were: Intel Corporation; Raytheon Company; the California Regional Water Quality Control Board; and the California Department of Health Services. *fn4" The Consent Order concerned investigation, study, and cleanup of the industrial Middlefield-Ellis-Whisman area of Mountain View, California ("MEW site"). It called for preparation of both a Remedial Investigation ("RI") and of a Feasibility Study ("FS") by the PRPs, including plaintiff, at their own expense. According to the Consent Order, the purpose of the RI was "to determine fully the nature and extent of any threat to the public health or welfare or the environment caused by the release or threatened release of hazardous substances, pollutants or contaminants" at the MEW site. Consent Order, Part II. A., at 3. The purpose of the FS was "to evaluate alternatives for the appropriate nature and extent of remedial action to prevent or mitigate the migration or the release or threatened release of hazardous substances, pollutants, or contaminants" at or from the MEW site. Id., Part II. B., at 3. The Consent Order expressly stated that it was issued by EPA pursuant to enforcement authority under Section 106(a) of CERCLA, 42 U.S.C. § 9606(a).

 The Consent Order set forth the procedures which would govern the performance of the RI/FS by the PRPs. It contained no suggestion of what remedial action EPA would ultimately select for the MEW site.

 The final draft of the FS set forth several specific soil and groundwater "cleanup goals " for the PRPs to meet, to bring the site into compliance with CERCLA, 42 U.S.C. § 9621 (setting forth cleanup requirements). Feasibility Study Report, at 243. The final draft was approved by EPA in November 1988, subject to possible modification in the future. See Letter from EPA to George Gullage (Nov. 23, 1988). The FS noted in a few places that the desired levels of remediation may not be achievable. See id. at 85, 145. It further provided that "final clean up levels and times will depend upon the technical practicability of achieving the clean up goals. Technical practicability will be determined based on evaluation of performance data generated during the first five years of operation of the selected remedial actions. This evaluation will be conducted in accordance with § 121(c) and (d) of CERCLA, 42 U.S.C. § 9621(c) and (d), to determine if modification of any of the selected remedial actions or the clean up goals is warranted." Id. at 243; see also § 9621(c) (providing for EPA review of hazardous waste cleanup sites every five years).

 Based on the FS, EPA developed a cleanup plan for the MEW site. It issued its CERCLA Record of Decision ("ROD") in June 1989, setting forth the soil and groundwater remedial actions to be taken there. Throughout the ROD, EPA refers both to cleanup "goals," Record of Decision, at iii, iv, v, and cleanup "levels," "standards," and "enforceable limits." Id. at iv, 15, 20. It further noted that "because of the anticipated length of time to achieve the cleanup goals and the uncertainty whether the cleanup goals can be achieved, both the technologies and the cleanup goals will be reassessed every 5 years." Id. at v.

 In September 1990, EPA issued an Explanation of Significant Differences ("ESD"), pursuant to 42 U.S.C. § 9617(c). The ESD provided that "the cleanup 'goals' established for both groundwater and soil contamination at the MEW Site are hereby set as final cleanup standards." ESD, at 11. The ESD clarified that what EPA had previously referred to as "cleanup goals" were actually enforceable "cleanup levels," under CERCLA, unless it had reason to invoke a statutory waiver of the required standards under Section 9621(d), which it believed it did not. *fn5" The ESD superseded the ROD with respect to the change from cleanup goals to cleanup levels, thereby creating enforceable obligations for the parties at the MEW site, including plaintiff. See ESD, at 14. *fn6"

 In November 1990, after EPA and Fairchild reached an impasse in their efforts to reach a consent decree, embodying a final settlement of the parties' respective cleanup obligations, EPA issued a second Administrative Order to Fairchild and other parties, pursuant to Section 9606(a), setting forth their remedial obligations and incorporating by reference the ROD and ESD. This Order is enforceable in federal district court. See 42 U.S.C. § 9613(h)(2).

 Fairchild maintains that this change from "goals" to "levels" constituted an arbitrary and capricious breach of the Consent Order. Apparently, it fears that it is now being held, subject to substantial penalties, to levels of remediation that it may not be able to achieve, due to the limits of current technology. It claims that EPA breached the Consent Order in three respects: First, the Consent Order provided that EPA would approve or disapprove each "technical report" within thirty days of receipt. Consent Order, Part VI. F., at 9. Fairchild contends that the FS was a "technical report," and that through the ESD, EPA disapproved the report nearly two years after its creation. Second, Fairchild insists that EPA was in breach of the Consent Order by refusing to submit to the Dispute Resolution provision found in Part XII. C. This provision requires informal negotiations between the parties to resolve a dispute arising from a formal disapproval of a technical report by the EPA. It provides for judicial review in the event the parties are unable to resolve their differences. Finally, Fairchild charges that EPA's new requirement that the PRPs meet cleanup "standards" is in violation of the National Contingency Plan, 42 U.S.C.A. § 9605 (West 1983 and Supp. 1991); 40 C.F.R. § 300 et seq. (1990). The Consent Order expressly provided that the activities conducted pursuant to that Order "are and shall be consistent with the National Contingency Plan." Consent Order, at 3.

 III. SUBJECT MATTER JURISDICTION

 The initial question presented is the most difficult. That question is whether or not under CERCLA the Court has subject matter jurisdiction to determine whether EPA's modification of the ROD, as embodied in the ESD, was an arbitrary and capricious breach of the Consent Order or inconsistent with the National Contingency Plan. The Superfund Amendments to CERCLA narrowly circumscribe the circumstances in which federal courts may review EPA response actions. Although the Court's power to review this dispute is not free from ambiguity, both the plain language of the statute and the ...


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