CALIFORNIA DEPARTMENT OF TOXIC SUBSTANCES CONTROL v. NL INDUSTRIES INC (2025)

Proceedings: ORDER REGARDING DEFENDANT'S MOTION TO CLARIFY THE SCOPE AND LEGAL STANDARD OF PHASE 4 [1142]

I. Introduction

Before the Court is Defendant Gould Electronics, Inc.’s (“Defendant” or “Gould”) motion to the clarify scope of and legal standard applied to the Court's upcoming Phase 4 bench trial. ECF No. 1142. For the following reasons, the Court will: (1) limit judicial review to the administrative record; and (2) hold that proving that California Department of Toxic Substances Control and the Toxic Substances Control Account (“DTSC” or “Plaintiffs”) response actions were inconsistent with the National Contingency Plan requires proving that they acted in an arbitrary and capricious manner in choosing a particular response action.

II. Background

On December 14, 2020, DTSC brought suit against Defendant and others under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”). ECF No. 1. DTSC sought recovery of environmental cleanup and response costs from a number of owners and operators (including Defendant) and alleged arrangers or transporters of hazardous substances (namely, lead) in connection with a former lead battery recycling plant in Vernon, California (the “Vernon Plant”).

The Court has already held multiple bench trials in this case. In the first (the “Scope Trial”), the Court limited the scope of contamination that could serve as the basis for CERCLA liability to a roughly half-mile radius immediately surrounding the Vernon Plant (the “Industrial Area”). In the second bench trial (the “Liability Trial”), the Court found that Plaintiffs successfully established CERCLA liability against seven defendants (hereinafter, “Defendants”), including Gould. And in the third bench trial, the Court rejected the defendants’ divisibility defense and held that they could be held jointly and severally liable.

Next up for the Court is a fourth bench trial in which the Court will determine the amount of Plaintiffs’ response costs under CERCLA. Plaintiffs’ CERCLA claims arise under Section 107(a)(4)(A). This Section, which the Court already held Defendants violated, states that violating parties are “liable for all costs of removal or remedial action incurred by the United States Government or a State or an Indian Tribe not inconsistent with the national contingency plan.” CERCLA § 107(a)(4)(A) (emphasis added). Which of Plaintiffs’ response costs fit within this category is the subject of the Court's fourth bench trial—i.e., which response actions are “not inconsistent with the National Contingency Plan.” Id.

Gould now moves the Court to clarify what standard of review it will apply when answering that question. It argues that the Court's review should review the question de novo and not limit its review to the administrative record. See Def. Mot., ECF No. 1142. Plaintiffs argue the opposite—that judicial review should be limited to the administrative record. Moreover, they contend that the standard of review is not de novo, but rather whether Plaintiffs’ choice of response action was arbitrary and capricious.

III. Discussion

This order considers just one question: what standard of review will the Court apply when determining whether Plaintiffs’ chosen response actions are “not inconsistent” with the national contingency plan? Answering this question requires a two-part inquiry. First, is there any binding Ninth Circuit authority on this issue? And second, if there is not, what standard of review does CERCLA demand the Court apply?

A. There is no binding Ninth Circuit law on this issue. The only relevant statement by the Ninth Circuit, made in DTSC v. Neville Chemical Company, 358 F.3d 661 (9th Cir. 2004), is non-binding dicta.

As a threshold matter, before engaging in any statutory analysis of CERCLA or Section 107(a)(4)(A), the Court must determine whether it is bound by the Ninth Circuit's statements on this issue in DTSC v. Neville Chemical Company, 358 F.3d 661 (9th Cir. 2004).

In Neville, California's Department of Toxic Substances Control brought Section 107(a)(4)(A) claims against a defendant company, Neville Chemical Co. Neville, 358 F.3d at 665. Neville argued that DTSC could not sue for its recovery costs “because those costs were not consistent with the national contingency plan.” Id. at 673. In addressing this defense, the Ninth Circuit provided the following rule statement: “[t]o show that the Department's actions were inconsistent with the national contingency plan, the burden is on Neville to show that the Department acted in an arbitrary and capricious manner in choosing a particular response action.” Id.

But the Neville Court never ended up applying this rule. Rather, it held that Neville's argument missed the mark entirely, as it brought evidence that the Department's costs were improper, rather than the Department's choice of response action. Id. The court explained that “Neville does not challenge any response action taken by the Department,” and instead challenged “the Department's attempt to recover the full oversight costs.” Id. The Ninth Circuit held that this evidence was irrelevant, as the “pursuit of full costs of oversight cannot be ‘inconsistent with’ the national contingency plan, as the national contingency plan does not direct the state to limit its recovery of response costs in any way.” Id.

The question for the Court is whether it is bound to follow Neville's lead regarding the standard of judicial review in CERCLA § 107(a)(4)(A) cases brought by state agencies. Of course, the Court ordinarily must follow Ninth Circuit precedent. But courts “are not bound to follow ․ dicta in a prior case in which the point now at issue was not fully debated.” Parents Involved Cmty. Sch. V. Seattle Sch. Dist. No. 1, 551 U.S. 701, 737 (2007). So, the two questions for the Court are: (1) is Neville dicta; and (2) if it is, is it binding on this Court?

i. Neville's commentary on the standard of judicial review in CERCLA § 107 cases is dicta.

“A statement is dictum when it is made during the course of delivering a judicial opinion, but ․ is unnecessary to the decision in the case and therefore not precedential.” Cetacean Community v. Bush, 386 F.3d 1169, 1173 (9th Cir. 2004). Neville's rule statement regarding judicial review in Section 107 cases is just that: “unnecessary to the decision in the case.” Id.

At issue in Neville was whether DTSC's actions were not inconsistent with the national contingency plan. 358 F.3d at 673. And certainly, in the process of resolving that issue, the court explained that: “[t]o show that the Department's actions were inconsistent with the national contingency plan, the burden is on Neville to show that the Department acted in an arbitrary and capricious manner in choosing a particular response action.” Id.

But the court never applied this rule in its analysis—i.e., it did not determine whether DTSC acted “in an arbitrary and capricious manner.” Id. The court did not need to, as “Neville [did] not challenge any response action taken by the Department.” Id. Instead, Neville disputed the amount of costs DTSC sought to recover—a separate issue. Because the Ninth Circuit found this argument irrelevant, it never applied the “arbitrary and capricious” standard it laid out. In fact, the court could have reached the same outcome without saying anything at all about the standard of judicial review. After all, it does not matter if the Court applies an “arbitrary and capricious” or “de novo” standard of review of DTSC's choice of response actions if the Defendant does not challenge any response actions in the first place.

Because the Ninth Circuit's position on the level of judicial review in Section 107 cases did not affect Neville's reasoning nor its ultimate result, the court's rule statement was “unnecessary to the decision in the case” and is therefore dictum, not a holding.

ii. The statements in Neville are not well-reasoned dicta.

In the Ninth Circuit, just because statements are dicta does not mean they are not binding on the district courts. Indeed, “where a panel confronts an issue germane to the eventual resolution of the case, and it resolves it after reasoned consideration in a published opinion, that ruling becomes the law of the circuit, regardless of whether doing so is necessary in some strict logical sense.” Cetacean Cmty, 386 F.3d at 1173 (emphasis added). In short, “[w]ell-reasoned dicta is the law of the circuit.” Enying Li v. Holder, 738 F.3d 1160, 1164 n.2 (9th Cir. 2013)

Of course, the corollary is also true: courts are not bound by dicta that is not well-reasoned. As the Ninth Circuit put it, courts “are not bound by a prior panel's comments ‘made casually and without analysis, ․ uttered in passing without due consideration of the alternatives, or ․ done as a prelude to another legal issue that commands the panel's full attention.’ ” United States v. McAdory, 935 F.3d 838, 843 (9th Cir. 2019) (cleaned up).

The Ninth Circuit's statement on the standard of judicial review in Section 107(a)(4)(A) cases is not well-reasoned. Neville provides no explanation for why the courts should apply an “arbitrary and capricious” standard of review to response actions taken by state agencies. See 358 F.3d at 673. The court does not analyze the text of Section 107(a)(4)(A), the text of any other CERCLA sections, or CERCLA's legislative history or purpose. See id. Rather, it simply declares, in one sentence, that courts must apply an arbitrary and capricious standard of review. See id. Courts “are not bound” by statements made “without analysis.” See McAdory, 935 F.3d at 843.

The Neville court appears to replace analysis of its choice of judicial review with a citation to a previous Ninth Circuit case: Wash. St. Dep't of Transp. v. Wash. Natural Gas Co., 59 F.3d 793, 802 (9th Cir. 1995) (“WSDOT”). But WSDOT does not support Neville's assertion.

In WSDOT, like Neville, a state agency brought Section 107(a)(4)(A) claims against a company defendant. Id. at 796. In deciding what standard of review to apply to the agency's choice of response actions, the court noted that “[t]o prove that a response action of the EPA was inconsistent with the NCP, a defendant must prove that the EPA's response action was arbitrary and capricious.” Id. at 802 (emphasis added). It then dodged the question of whether this arbitrary and capricious standard applied to response actions by state agencies. It held: “[w]e need not determine whether WSDOE's involvement with WSDOT establishes agency expertise justifying application of the arbitrary and capricious legal standard, which is more deferential to WSDOT, or whether a legal standard less deferential to WSDOT should be employed. Even under the deferential arbitrary and capricious standard, we conclude that WSDOT's actions were inconsistent with the NCP.” Id. (emphasis added)

In short, WSDOT does not support the conclusion that courts must apply an arbitrary and capricious standard of judicial review to response actions taken by state agencies. See id. It is therefore not “reasoned consideration” for Neville to cite to WSDOT for this assertion.

In sum, while Neville certainly takes a position on the standard of judicial review courts must apply when evaluating the response actions taken by state agencies, that position is non-binding dicta the Court is not bound to follow. The Court will therefore analyze the issue below according to standard principles of statutory interpretation.

B. CERCLA § 107(a)(4)(A) requires that Courts apply an arbitrary and capricious standard of review to state agency's choice of response action and limit their review to the administrative record.

i. The text of Section 107(a)(4)(A) supports an arbitrary and capricious standard of review limited to the administrative record.

When analyzing provisions of CERCLA, courts “begin with the language of the statute.” Burlington N. and Santa Fe Ry. Co. v. United States, 556 U.S. 599, 609 (2009). Section 107(a)(4) provides that violating parties are liable for:

“(A) all costs of removal or remedial action incurred by the United States Government or a State or an Indian tribe not inconsistent with the national contingency plan; [and]

(B) any other necessary costs of response incurred by any other person consistent with the national contingency plan.”

Off the bat, Section 107(a)(4)(A)’s language does not provide any explicit guidance as to what standard of judicial review courts should apply when determining whether a state agency's action is “not inconsistent with the national contingency plan.” But there are nonetheless several aspects of Section 107(a)(4)(A)’s language that provide clues as to Congress's intent.

First, Section 107(a)(4)(A)’s language suggests that courts should apply standard principles of administrative law when choosing their standard of review. Section 107(a)(4)(A) demands that courts review whether a State's removal actions were “not inconsistent with the national contingency plan.” In other words, CERCLA requires that a court review a state agency's decision.

Relevantly, “[j]udicial review of agency decisions is generally limited to review of the administrative record.” Morongo Band of Mission Indians v. F.A.A., 161 F.3d 569, 573 (9th Cir. 1998). And generally, an “agency decision should only be set aside only if [it is] arbitrary and capricious.” Alaska Ctr. for the Env't v. West, 157 F.3d 680, 682 (9th Cir. 1998).

Section 107(a)(4)(A) provides no language indicating that these standard principles of administrative law should not apply. Accordingly, it is logical to conclude that Congress intended for courts to review agencies’ choice of response action with the same standard of review that they apply to any other agency action—i.e., a review for arbitrary and capricious action that is limited to the judicial record.

Second, Congress's use of the phrase “not inconsistent” suggests an intent to give deference to a state agency's choice of response action. Section 107(a)(4)(A) provides liability for all response actions by the United States, States, and Indian Tribes “not inconsistent” with the national contingency plan. This contrasts with Section 107(a)(4)(B), which provides liability for response actions by other entities only if they are “consistent” with the national contingency plan. “This [‘not inconsistent’] language requires deference by this court to the judgment of agency professionals.” United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726, 748 (8th Cir. 1986). Applying an arbitrary and capricious standard of review provides this deference. See id. (interpreting Section 107(a)(4)(A)’s use of the phrase “not inconsistent” as requiring an “arbitrary and capricious” standard of review).¹ De novo review does not.

Third, Section 107(a)’s reference to the national contingency plan supports limiting judicial review to the administrative record. Section 107(a)(4)(A) imposes liability for state response actions “not inconsistent with the national contingency plan.” The national contingency plan, in turn, provides that “[i]f a state is the lead agency for a site, the state shall compile and maintain the administrative record for the selection of the response action for that site[.]” 40 C.F.R. § 300.800. This requirement only makes sense if courts are meant to rely on the administrative record when evaluating response actions. There would be little reason to require states to maintain an administrative record if courts were free to conduct a wide-ranging inquiry beyond it.

Fourth, that Section 107(a)(4)(A) groups the United States, States, and Indian tribes together shows an intent for courts to apply the same standard of judicial review to all three entities. After all, the structure of Section 107(a) shows that Congress knows how to explicitly set different standards of judicial review. Indeed, Section 107(a)(4)(A) sets one standard of review of response actions taken by the United States, States, and Indian tribes—i.e., that the actions be “not inconsistent” with the national contingency plan. And Section 107(a)(4)(B) sets a different judicial review standard for all other entities: that the actions be “consistent” with the national contingency plan. Given this explicit distinction between Sections 107(a)(4)(A) and 107(a)(4)(B), that Congress made no similar distinction within Section 107(a)(4)(A) between the United States, States, and Indian Tribes suggests that it wanted to subject them to same, deferential standard of review.

Treating the United States and States similarly in this regard makes sense. Both federal and state agencies hold “specialized knowledge and expertise” that justify leaving “the choice of a particular cleanup method [to] the discretion of the government.” WSDOT, 59 F.3d at 802 (quotations omitted) (cleaned up); see also Com. of Mass. v. Blackstone Valley Elec. Co., 867 F. Supp. 78, 81 (D. Mass. 1994) (explaining that the “expertise” of the state agency at issue “should not be second-guessed by the courts”).

Defendant's argument that state agencies lack the same expertise as their federal counterparts is unpersuasive. “Environmental cleanup efforts” are “highly technical” Com. of Mass. v. Blackstone Valley Elec. Co., 867 F. Supp. 78, 81 (D. Mass. 1994) (applying an arbitrary standard of review to state response actions); and require “specialized knowledge and expertise.” State of New York v. Green, No. 01-cv-196A, 2004 WL 1375555, at *8 (W.D.N.Y. June 18, 2004) (same). That “specialized knowledge and expertise” does not lessen just because it is a state agency conducting the cleanup efforts rather than the EPA. Indeed, “[l]ike the EPA, state environmental agencies possess expertise and are charged with protecting the public interest.” Arizona v. City of Tucson, 761 F.3d 1005, 1023 (9th Cir. 2014) (Callahan, J. concurring, in part, and dissenting, in part).

Accordingly, the Court will apply the same standard of judicial review to States and the United States in section 107(a) cases. This means applying an “arbitrary and capricious” standard that is limited to the administrative record, as CERCLA expressly instructs courts to use that standard when reviewing response actions taken by the United States. See CERCLA § 113(j).

Fifth, courts analyzing Section 107(a) prior to Congress enacting Section 113(j)—which set a specific standard of review for actions chosen by “the President”—consistently applied an arbitrary and capricious standard of review limited to the administrative record. For example, in United States v. Ne. Pharm. & Chem. Co., 810 F.2d 726, 748 (8th Cir. 1986),² the Eight Circuit considered what standard of review to apply in Section 107(a)(4)(A) cases. It held that the “applicable standard of review is whether the agency's choice is arbitrary and capricious.” Id. This conclusion was based on two key factors: (1) Section 107(a)(4)(A)’s instruction to consider whether response actions are “not inconsistent” with the national contingency plan; and (2) the “specialized knowledge and expertise” required when choosing a response action. Id.

This analysis applies equally to the question in this case—namely, what standard of review to apply to response actions taken by state agencies. The Eighth Circuit did not limit its holding to EPA-led cleanups. To the contrary, it interpreted Section 107(a)(4)(A) broadly, and its reasoning extends naturally to state agencies. Like the EPA, state environmental agencies possess the “specialized knowledge and expertise” necessary to select appropriate response actions. See id. And both entities are subject to Section 107(a)(4)(A)’s directive that their actions be “not inconsistent” with the national contingency plan. See id. Just as these factors led the Eight Circuit to apply an arbitrary and capricious standard of review in a CERCLA case brought by the EPA, they likewise support applying the same standard in a CERCLA case brought by a state agency.

Moreover, nothing in the language of Section 107(a)(4)(A) precludes applying Ne. Pharm & Chem Co.’s reasoning to the response actions taken by state agencies. Quite the contrary, States and the United States are grouped together in Section 107(a)(4)(A). So while Ne. Pharm & Chem Co. is certainly not binding on this Court, that it applied an arbitrary and capricious standard of review to Section 107(a)(4)(A) cases is yet another piece of evidence supporting the Court's holding.

ii. That Section 113(j) refers only to the United States, and not States, is not sufficient reason to apply different standards of judicial review.

CERCLA § 113(j)(1) states:

“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.” (emphasis added)

CERCLA § 113(j)(2) elaborates by adding:

“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.” (emphasis added)

Defendant contends that because Section 113(j) uses the phrase “the President” and omits any reference to the states, that the Court should apply different standards of review for the federal government and the states. The Court disagrees.

To be sure, that Section 113(j) includes the term “the President,” but not “States,” is a glaring omission. Courts “do not lightly assume that Congress has omitted from its adopted text requirements that it nonetheless intends to apply, and [that] reluctance is even greater when Congress has shown elsewhere in the same statute that it knows how to make such a requirement manifest.” Jama v. Immigration Customs Enf't, 543 U.S. 335, 341 (2005). That is the case here—many other sections of CERCLA specifically refer to states, just not Section 113(j). Thus, in Defendant's telling, if the Court applies Section 113(j)’s standard of review to state agencies, it is improperly “read[ing] into the statute words not explicitly inserted by Congress.” Stanton Road Assocs. v. Lohrey Enters., 984 F.2d 1015, 1020 (9th Cir. 1993).

But the Court is not trying to read the word “State” into Section 113(j). Rather, the Court agrees with Defendant on this matter: Section 113(j) does not apply to the States. It applies, as its plain language suggests, to “the President” and only the President.

But that Section 113(j) sets the standard of review applicable to EPA response actions says nothing about the operative question before the Court: what standard of review should the Court apply to response actions taken by the states? Section 113(j) is silent on this issue.

Defendant would have the Court hold that, by omitting the word “State,” Congress instructed courts to review state response actions through a de novo standard of review not limited to the administrative record. But this is too large a leap. Section 113(j) does not instruct courts to use de novo review or to abandon the administrative record for state agencies. In fact, it says nothing at all about the standard of review for state response actions. Accordingly, accepting Defendant's reading of Section 113(j) would require “read[ing] into the statute words not explicitly inserted by Congress”—exactly what Defendant warns the Court against. See Stanton Road Assocs. v. Lohrey Enters., 984 F.2d 1015, 1020 (9th Cir. 1993).

Indeed, it would be especially strange for Congress to silently impose a different standard of review for state response actions given how consequential that standard of review would be. “In general, judicial review of agency action is limited to review of the administrative record.” Oregon Nat. Res. Council v. Lower, 109 F.3d 521, 526 (9th Cir. 1997) (quotations omitted). And sure enough, that is the standard of review that courts applied to Section 107(a)(4)(A) cases prior to Section 113(j)’s enactment in 1986. See, e.g., United States v. Ward, 618 F. Supp. 884, 900 (E.D.N.C. 1985) (“Defendants may only show that the EPA's decision about the method of cleanup was ‘inconsistent’ with the NCP in that the EPA was arbitrary and capricious in the discharge of their duties under the NCP.”). Surely if Congress intended to change that well-established standard, it would have said so directly—not left it to be inferred from omission.

In fact, that is exactly what Congress did in a different section of CERLCA: Section 121. Section 121 explains that if a state wishes to challenge a remedial action chosen by the President (an action that is allowed under certain circumstances outlined in Section 121),³ it must “establish[ ], on the administrative record, that the finding of the President was not supported by substantial evidence.” Id. § (f)(2)(B) (emphasis added).

All this to say, Section 121 shows that Congress knew how to explicitly define a standard of review different from the administrative law baseline (i.e., whether an administrative decision, based on the administrative record, is arbitrary and capricious). It did not do so in Section 113(j).

To be sure, both parties’ interpretations of Section 113(j) require overlooking something that the statute does not say. If the Court adopts Plaintiffs’ view, it must overlook that Section 113(j) does not expressly mention state agencies. But if the Court adopts Defendant's view, it must overlook that Section 113(j) also does not instruct courts to apply a different standard of review—such as de novo review—for state-led cleanups. In fact, it does not address the standard of review for state response actions at all. Essentially, whether the Court sides with Plaintiffs or Defendant, it will have to overlook an omission in Section 113(j).

But the omission in Defendant's argument is harder to overlook. Defendant wants the Court to believe that Congress changed the default legal standard for reviewing state agency decisions—but didn't say so. Plaintiffs, on the other hand, ask the Court to assume that Congress left the usual standard in place, even though it didn't spell that out either. Both sides are pointing to something the statute doesn't say, but only Defendant is asking the Court to read in a significant change in law. For that reason, and for the reasons explained below, the Court finds Plaintiffs’ interpretation of Section 113(j) more persuasive.

a. Applying a de novo standard of review to state response actions is inconsistent with the legislative history of Section 113(j).

“If [a] statute is ambiguous,” as is the case here with Section 113(j),⁴ “then [courts] consult legislative history.” Hawkins v. Franchise Tax Bd. of California, 769 F.3d 662, 666 (9th Cir. 2014). Here, Section 113(j)’s legislative history supports the Court's conclusion that state response actions are reviewed under an arbitrary and capricious standard of review.

Congress inserted section 113(j) in CERCLA as part of the 1986 SARA amendments. SARA's legislative history explains that section 113(j) was meant to memorialize court decisions that had limited judicial review of response actions to the administrative record. One committee report noted:

“Although CERCLA does not explicitly state how decisions concerning response actions will be judicially reviewed, courts have suggested that review of decisions concerning the response, like other administrative decisions, is on the basis of the administrative record. This amendment [(Section 113(j))] clarifies and confirms that judicial review of a response action is limited to the administrative record and that the action shall be upheld (and all government response costs shall be awarded) unless the action was arbitrary and capricious or otherwise not in accordance with law.”

SARA-LH 3, 1985 WL 728142 (A.&P.L.H.), 52 (March 18, 1985). Notably, the report does not specify that Section 113(j) is intended to apply a different standard of judicial review to state response actions than federal response actions. Quite the contrary, the report notes that “judicial review of a response action is limited to the administrative record” without specifying whether the response action was taken by a state or the EPA.

This is consistent with the pre-1986 court decisions that Section 113(j) was meant to memorialize. Prior to Section 113(j)’s enactment in 1986, many courts evaluated CERCLA actions brought by the EPA and held that courts should apply an arbitrary and capricious standard of review limited to the administrative record. See, e.g., Indus. Park Dev. Co. v. E.P.A., 604 F. Supp. 1136, 1142-43 (E.D. Pa. 1985) (“[T]here is no dispute that, if judicial review [under CERCLA] is available, the scope of review is the arbitrary and capricious standard provided by the Administrative Procedure Act.”); United States v. Ward, 618 F. Supp. 884, 900 (E.D.N.C. 1985) (“Defendants may only show that the EPA's decision about the method of cleanup was ‘inconsistent’ with the NCP in that the EPA was arbitrary and capricious in the discharge of their duties under the NCP.”); United States v. W. Processing Co., No. C83-252M, 1986 WL 15691, at *2 (W.D. Wash. Feb. 19, 1986) (“The remedy of the Governments will be reviewed on the basis of EPA's administrative record ․ its remedy must be upheld unless the agency was ‘arbitrary and capricious’ in selecting it.”).

These decisions did not specify that courts should apply a different standard of review to state response actions. Nor did they limit their holdings to actions taken by the EPA. So, since Section 113(j) is meant to memorialize these cases, it would be improper to interpret Section 113(j) as implementing a different standard of review for state response actions. Such a broad interpretation is beyond the scope of the cases Section 113(j) was based on.

Limiting judicial review to the administrative record is also consistent with the purpose of Section 113(j), which was enacted to make CERCLA litigation more efficient. In the process of drafting the 1986 SARA amendments to CERCLA, a congressional committee report noted that:

“Reliance on an administrative record helps assure that the basis for the response decision is clearly articulated and open to scrutiny by the public and responsible parties. Limiting judicial review of response actions to the administrative record also expedites the process of review, avoids the need for time-consuming and burdensome discovery, and assures the reviewing court's attention is focused on the information and criteria used in selecting the response.”

SARA-LH 3, 1985 WL 728142 (A.&P.L.H.), 52 (March 18, 1985). These benefits extend equally to state and federal response actions. Accordingly, if Congress enacted Section 113(j) streamline CERCLA litigation, applying a more burdensome standard of review to state actions—without clear statutory instruction to do so—would undermine that goal.

b. EPA guidance further supports applying the same standard of review to federal and state response actions.

In 1990, the EPA issued guidance regarding the “establishment of administrative records under Section 113 of [CERCLA].”⁵ In its opening paragraphs, the guidance explained that while it was “written for use by the [EPA], it can be adapted for use by state and federal agencies required to establish administrative records for the selection of CERCLA response actions.” Id. That the EPA's guidance on Section 113 and administrative records does not distinguish between state and federal response actions further bolsters the Court's conclusion on this matter.

iii. Applying a deferential standard of review is consistent with CERCLA's broad remedial purpose.

In passing CERCLA, “Congress intended to facilitate the prompt cleanup of hazardous waste sites by placing the ultimate financial responsibility for cleanup on those responsible for hazardous wastes.” United States v. Chapman, 146 F.3d 1166, 1175 (9th Cir. 1998). Applying an “arbitrary and capricious” standard of review limited to the administrative record is consistent with this “broad remedial purpose.” Id. Indeed, a deferential standard of review creates a presumption that the liable parties will bear the cost environmental cleanup. By contrast, applying de novo review gives liable parties an additional avenue to avoid financial responsibility. The former, not the latter, is most consistent with the Ninth Circuit's instruction that CERCLA “should be construed liberally to carry out its purpose.” Id.

iv. Most other courts apply an arbitrary and capricious standard of review limited to the administrative record when evaluating the response actions of state agencies.

There is no binding Ninth Circuit holding on the question of what standard of judicial review to apply when evaluating the response actions of state agencies. That said, almost every other court to consider the issue has applied an arbitrary and capricious standard of review limited to the administrative record. Admittedly, only one ⁶ of these cases attempts to reconcile their holding with the use of the phrase “the President” in Section 113(j). Nonetheless, that the vast majority of courts to consider this issue have applied the same standard of review to federal and state response actions further bolsters the Court's holding.

Ninth Circuit

• State of Ariz. v. Motorola, Inc., 139 F.R.D. 141, 149 (D. Ariz. 1991) (“[I]t is clear that judicial review of the adequacy of the remedy proposed in the State/City Consent Decree is limited to the administrative record.”).

• California Dep't of Toxic Substances Control v. Alco Pac., Inc., 317 F. Supp. 2d 1188, 1193 (C.D. Cal. 2004) (“[J]udicial review will be limited to the administrative record.”).

• Voggenthaler v. Md. Square, LLC, 2012 WL 1815651, at *5-9 (D. Nev. May 17, 2012) (“In order to show that NDEP's actions were inconsistent with the NCP, the burden is on the defendant to show that NDEP acted in an ‘arbitrary and capricious manner in choosing a particular response action.’ ”), aff'd in part and rev'd in part on other grounds, 724 F.3d 1050 (9th Cir. 2013).

• Confederated Tribes & Bands of the Yakama Nation v. City of Yakima, 2022 WL 4596633, at *4 (E.D. Wash. Aug. 1, 2022) (holding that to rebut the presumption that a response action is consistent with the national contingency plan, “the defendant must prove the response action was arbitrary and capricious”).

Second Circuit

• New York v. Green, 2004 WL 1375555, at *8 (W.D.N.Y. June 18, 2004) (“[T]he defendants must show that the plaintiff's actions were arbitrary and capricious in choosing a particular response action to respond to a hazardous waste site.”) (cleaned up).

• New York v. Adamowicz, 932 F. Supp. 2d 340, 344-45 (E.D.N.Y. 2013) (“Courts presume that actions undertaken by a state government are consistent with the National Contingency Plan. Therefore, the defendants bear the burden of proving inconsistency by showing that the State acted arbitrarily and capriciously in choosing a particular response action.”) (cleaned up).

• New York v. Realty, LLC, 160 F. Supp. 3d 485, 511 (E.D.N.Y. 2016) (same).

Seventh Circuit

• Illinois v. Grigoleit Co., 104 F. Supp. 2d 967, 980 (C.D. Ill. 2000) (“[T]he issue of inconsistency with the NCP will be judicially reviewed under the arbitrary and capricious standard of review for agency action.”).

First Circuit

• Massachusetts v. Blackstone Valley Elec. Co., 867 F. Supp. 78, 80-81 (D. Mass. 1994) (“In order to show that a clean up procedure was inconsistent with the NCP, a defendant must establish that an agency acted arbitrarily and capriciously in choosing a particular response action.”).

Fourth Circuit

• S.C. Dep't of Health & Env't of Control v. Atl. Steel Indus., Inc., 85 F. Supp. 2d 596, 602 (D.S.C. 1999) (“Congress has specifically limited judicial review of a proposed CERCLA consent decree or settlement agreement to the administrative record prepared by the agency seeking approval of the same.”).

Sixth Circuit

• Ohio v. Breen, 2022 WL 2586477, at *6 (S.D. Ohio July 7, 2022) (“When a state brings a cost-recovery action under § 9607(a)(4)(A), the parties ‘responsible’ for those costs ․ bear the burden of showing that the state's response activities were inconsistent with the NCP. Such entails a showing that the state's actions were arbitrary and capricious or otherwise not in accordance with the law.”) (cleaned up), aff'd, 2023 WL 3918496 (6th Cir. June 9, 2023).

Eighth Circuit

• Minnesota v. Kalman W. Abrams Metals, Inc., 155 F.3d 1019, 1023-24 (8th Cir. 1998) (holding that whether Minnesota's response actions were “inconsistent with the NCP’ is “an issue that is judicially reviewed under the arbitrary and capricious standard of review for agency action”).

Tenth Circuit

• Colorado v. Idarado Mining Co., 707 F. Supp. 1227, 1231-32, 1246 (D. Colo. 1990) (holding, in a CERCLA case, that “Defendants, of course, had the burden of proving that costs incurred, or to be incurred, by the State for soils cleanup in the town were not justified because arbitrary or capricious, or not according to law”), rev'd on other grounds as to injunctive relief claim only, 916 F.2d 1486 (10th Cir. 1990).

In contrast to the litany of cases listed above, Defendant identifies just two cases going the other way. Neither is persuasive.

The first, United States v. Akzo Coatings of Am., Inc., 949 F.2d 1409, 1425 (6th Cir. 1991), noted in a footnote that “if [the] EPA plays only a limited role in formulating a plan, then the President cannot be deemed to have taken or ordered the remedy, and a reviewing court would not be bound by the administrative record and the arbitrary and capricious standard.” In support of this assertion, the court cites United States v. Allied-Signal Corp., 736 F. Supp. 1553 (N.D. Cal. 1990). But Allied-Signal Corp. does not stand for the proposition asserted by the Sixth Circuit. That case did not consider what standard of review courts should apply to the response actions chosen by state agencies. Rather, it considered the rare situation where (1) the remedial action plan was designed by the same entity (the Navy) that in part caused the pollution at issue; and (2) “the EPA had virtually no input in formulating the Final Plan.” Allied-Signal Corp., 736 F. Supp. at 1558. Given that Allied-Signal Corp. is an idiosyncratic case that does not involves state agencies, that the Sixth Circuit relied on it in Akzo Coatings undermines the case's persuasiveness.

The second case is City of Wichita, Kansas v. Trs. of APCO Oil Corp. Liquidating Tr., 306 F. Supp. 2d 1040, 1082 (D. Kan. 2003). There, the court applied de novo review to the response actions chosen by the City of Wichita. This case is unpersuasive for two reasons.

To start, it involves response actions taken by a city, not a state. Section 107(a)(4)(A) does not provide that response actions by cities need only be “not inconsistent” with the national contingency plan—that level of deference is reserved only for “the United States Government or a State or an Indian Tribe.” CERCLA § 107(a)(4)(A). Because cities do not fall into those categories, they fall within Section 107(a)(4)(B), which provides a lower level of deference: that response actions be “consistent” with the national contingency plan. This lower level of deference in the language of Section 107(a)(4)(B) could open the door to a lesser standard of review. This reasoning, however, does not apply to the present case, which involves actions taken by a state agency under Section 107(a)(4)(A).

Additionally, the only case City of Wichita cites in support is United States v. Akzo Coatings of Am., Inc., 949 F.2d 1409 (6th Cir. 1991). For the reasons already explained, the Court finds this case unpersuasive.

IV. Conclusion

For the foregoing reasons, the Court holds that it will apply the following standard of judicial review in the Phase IV trial: to prove that one of Plaintiffs’ response actions was inconsistent with the national contingency plan, Defendants must show, based on the administrative record, that Plaintiffs acted in an arbitrary and capricious manner in choosing a particular response action.

IT IS SO ORDERED.

FOOTNOTES

1.   The Court acknowledges that Ne. Pharm & Chem. Co. involved a CERCLA case brought by the EPA, rather than a state agency. Today, that is a meaningful difference, as CERCLA § 113(j), which was added to CERCLA in 1986, spells out a specific standard of review for CERCLA actions brought by the EPA but is silent as to the standard that courts should apply to CERCLA actions brought by states. Ne. Pharm & Chem. Co., however, reviewed a district court decision that predated Section 113(j), and it did not consider Section 113(j) in its analysis. So its analysis of Section 107(a) applies equally to CERCLA actions brought by states and the EPA.

2.   Technically, Ne. Pharm & Chem. Co. was issued in December 1986, less than two months after Section 113(j) was passed. But the ruling makes no mention of Section 113(j). This makes sense, as it was reviewing a district court decision made prior to Section 113(j)’s enactment. The Court will accordingly view Ne. Pharm & Chem. Co. as an example of a court evaluating Section 107(a)(4)(A) independent of Section 113(j).

3.   Section 121 explains that the President's choice of remedial action under Sections 104 and 106 (which govern federal response and abatement actions respectively) must “attain a degree of cleanup of hazardous substances” that satisfies various federal standards and requirements. CERCLA § 121(d). It then provides that Presidents may choose remedial actions that do not meet these standards under certain circumstances. Id. § (d)(4). For example, if “compliance with such requirements ․ will result in greater risk to human health and the environment than alternative options.” Id. § (d)(4)(B). If the President chooses a remedial action that does not meet the outlined standards, states can choose to challenge that selection and force compliance. To do that, CERCLA explains that states must “establish[ ], on the administrative record, that the finding of the President [that compliance with the outlined standards was not required] was not supported by substantial evidence.” Id. § (f)(2)(B).

4.   To be clear, the Court does not think the language of Section 113(j) itself is ambiguous. Rather, the implication of Section 113(j)—i.e., whether it implicitly changes the standard of review for state response actions—is ambiguous.

5.   Final Guidance On Administration Records For Selecting CERCLA Response Actions, OSWER 9833, 3A-1, 1990 WL 608656, at *1 (Dec. 3, 1990).

6.   That one case is California Dep't of Toxic Substances Control v. Alco Pac., Inc., 317 F. Supp. 2d 1188, 1193 (C.D. Cal. 2004). The court reasoned that, while the first sentence of Section 113(j)—that “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”—is limited to the EPA, the second sentence—that “Otherwise applicable principles of administrative law shall govern whether any supplemental materials may be considered by the court”—applies to all agencies. The Court finds this reasoning unpersuasive. The word “otherwise” simply modifies the phrase “applicable principles of administrative law.” It is not meant to indicate that the second sentence applies to alternative scenarios other than when the court is reviewing the President's actions. If that were the case, the second sentence would more likely read: “Otherwise, applicable principles of administrative law shall govern․” Despite finding Alco Pac.’s specific reasoning unpersuasive, the Court nonetheless agrees with its ultimate holding.

STEPHEN V. WILSON, UNITED STATES DISTRICT JUDGE