Energy and Environmental Law Alert: Federal Court Rejects Attempt to Amend $700 Million Cleanup Remedy in Wisconsin

by Stinson Leonard Street
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[author: Andrew W. Davis]

On November 21, 2012, a federal court in Wisconsin refused to allow a group of defendants to force the EPA to formally amend a cleanup remedy issued under the federal Superfund law to allow for a $269 million cost increase. The case involves environmental enforcement and cleanup efforts in the Lower Fox River in northeastern Wisconsin, which was contaminated by PCBs from the recycling of carbonless paper by pulp and paper mills located along the river in the 1950s and 1960s. The case is important because it shows that cost overruns, even those that add literally hundreds of millions of dollars to the remedy, may not trigger additional procedural safeguards associated with a formal EPA amendment to the remedy.

Cleanup Remedy Could Reach $1 Billion

The potential cost of the cleanup remedy is estimated to reach nearly $1 billion, making it one of the most costly remedies ever imposed under Superfund. The defendants in the case, led by NCR Corporation, argued that a 62% cost increase in the selected remedy, from approximately $432 million in 2007 to $701 million in 2012, was so substantial that it fundamentally changed the character of the remedy. NCR, citing EPA regulations and guidance documents, asserted that a change of that magnitude required a formal amendment to the remedy, which would impose a new public comment period and a renewed evaluation of alternative remedies. According to NCR, the cost of the increase alone was greater than the cost of almost every CERCLA cleanup ever undertaken.

Increased Costs Do Not Fundamentally Alter the Selected Remedy

The federal court rejected these arguments and refused to require EPA to formally amend the remedy. The court held that cost increases alone do not fundamentally alter the selected remedy, for three primary reasons:

  • Cost increases by themselves do not change the essence or the basic features of the remedy.
  • EPA guidance documents indicate by example that for a change in the remedy to be fundamental, there must be changes in the nature of the remedy performed, not merely in the cost incurred to perform the remedy.
  • The initial cost estimates for the remedy had built in a "fudge factor" that anticipated as much as a 50% cost overrun.

The decision shows that substantial cost increases may not be sufficient to fundamentally change the remedy and trigger additional procedural safeguards. It also demonstrates the importance of court deference to agency decision-making and agency expertise related to the selected remedy. Ultimately, the court determined that EPA's decision not to issue a formal amendment of the remedy was neither arbitrary nor capricious.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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