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                   UNITED  STATES DISTRICT COURT
                   WESTERN DISTRICT OF MICHIGAN
UNITED STATES OF AMERICA,

          Plaintiff,

v.

THOMAS SOLVENT COMPANY; et al.

          Defendants.
                                        Civil No. K86-167 CAS
                                        Hon. Richard A. Enslen
FRANK J. KELLEY, Attorney
General of the State of
Michigan and THE STATE OF
MICHIGAN,

          Plaintiffs,

v.

THOMAS SOLVENT COMPANY; et al.

          Defendants.
                                        Civil NO. K86-164 CAS
          MEMORANDUM OF THE UNITED STATES IN SUPPORT OF
            ITS MOTION IN LIMINE TO EXCLUDE EVIDENCE

                              ROGER J. MARZULLA
                              Assistant Attorney General
                              Land, arid Natural Resources Division

                              JOEL M. GROSS
                              NANCY BOYLAND COLLINS
                              MICHAEL J. McNULTY
                              THOMAS A. MARIAXI, JR.
                              SAMUEL BOXERMAN
                              Environmental Enforcement Section
                              Land and Natural Resources Division
                              U.S. Department of Justice
                              Washington, D.C.  20530
                              (202) 633-1307

OF COUNSEL:

ROGER GRIMES
Regional Counsel
Environmental Protection Agency
Region V
230 South Dearborn Street
Chicago, Illinois  60604

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INTRODUCTION	2

     A.  PROCEDURAL POSTURE OF THIS CASE	2

     -B.  SUMMARY OF ARGUMENT	4

     C.  STATUTORY BACKGROUND	7

ARGUMENT   	9

     I.  Introduction	9

     II.  The United States is Entitled to Recover
          Its Actual Costs Incurred in Carrying Out the
          Response Actions Unless the Defendant Proves that
          the Response Actions Were Inconsistent with the
          NCP	  13

          A*    The Plain Language of the statute Provides
               that the United States Shall Recover All
               Costs Incurred in Carrying out Its Response
               Actions	•	13

          B.    If Resort to Materials Beyond the Text of
               CERCLA Section 107(a)(4)(A) Is Needed, Then
               The Structure, and Legislative History of
               CERCLA Also Demonstrate that the United
               States is Entitled to Recover the Actual
               Costs Incurred in Carrying Out
               Its Response Actions	16

               1.   CERCLA Delegates to EPA Broad Discretion
                    to Select and Take Response Actions; the
                    Only Limitation on Recovery of Costs is
                    thi- the Response Action hot Jc-e
                    Inconsistent with the NCP.	17

               2.   The NCP Governs the Selection of
                    Response Actions; It Does Not Govern the
                    Incurrence of Costs in Implementing
                    Response Actions ....... 	  20
                                             \
               3.   Costs are Inconsistent with the NCP under
                    Section 107(a)(4)(A) Only If They were Spent
                    for a Response Action Which Itself was
                    Inconsistent with the National Contingency
                    Plan		27

               4.   Defendants' Challenge to EPA's Implementation
                    Decisions Is Foreclosed By The Different


                              - i -

-------
5.
                    Statutory Standards That Apply to Recovery of
                    Costs Under Other Provisions of CERCLA   . 29
                    Judicial Review of EPA Decision-making
                    is Limited to the Administrative Record
                    for Selection of the Response Action
          III. Construing CERCLA to Preclude Review of
               Implementation Decisions Comports With the
               Response Scheme Established By the Statute
               and With Federal Contract and Procurement
               Law	33

          IV.  Judicial Review of the Response Action Taken
               is Governed by the Provisions of CERCLA and
               not by the Administrative Procedure Act .... 41

          V.   If this Court Determines that Some Review of  •
               Implementation Decisions is Permissible, EPA's
               Decisions Regarding Response Activities are
               Entitled to Great Deference and Should Not Be
               Overturned Unless Arbitrary and Capricious  .  .42

CONCLUSION	49
                              - ii -

-------
                   ,•    ft.        '
                  TABLE OF CASES AND AUTHORITIES
American Paper Institute. Inc . v. American
Electric Power Service Corp. . 461 U.S. 402
(1983)  ..................... ..... 44

Angelina Holly Corp. v. Clark r 587 F. Supp. 1152
(D.C. Cir. 1984)  ....  ................. 46

Baltimore Gas & Electric  Co. v. NRDC,
462 U.S. 87  (1983)  .................... 46

Block v. CoT^pupitv Nut^rJ^tion Institute.
467 U.S. 340 (1984)  ..............  .....  33
                                                •
Camp v. Pitts. 411 U.S. 138 (1973)
(per curiaa) .......  .......  ......  ... 44, 49

Chrysler Corp. v. Brown.  441 U.S. 281  (1979) .......  45

Citizens to Preserve Overton Park v. Voice .
401 U.S. 402 (1971)  .............  ......  43, 44
                                                           45, 49

Compensation Dep't of Dist. Five v. Marshall.
667 F.2d 336 (3d  Cir. 1981) ........ .......  41

Dedham Water Co.  v. Cumberland Farms Dairy. Inc..
805 F.2d 1074 (1st Cir. 1986)  ....... .  .....  .  8,  13

Donaldson. Hoffman & Goldstein v. Gaudio. 260  F.2d  333
(10th Cir. 1958)  .........  .........  ... 31
                                   *

Dov Chemical v. Csstle.
480 F. Supp. 315  (E.D. Mich. 1978),
aff'd. 659 F.2d 724  (6th  Cir.  1981)  .... .......  27

Dunloo v. BachovsV.i. 421  U.S.  560  (1S75)  ......... 4 =

Eaole-Picher Industries.  Inc. v.
United States Environmental Protection Aaencv.
759 F.2d 905 (D.C. Ci-  1985)  ...... . ........  27
                                                             tt
Environmental Defense^Fund. Inc. v. Costle.
657 F.2d 275 (D.C. Cir. 1981)  ......  ......  .  . 49

Ethyl Corp. v. EPA. 541 F.2d 1 (D.C. Cir.)
fen bane) . cert,  denied.  426 U.S. 941  (1976)  ....... 42, 45
                                                           46
                             -  iii -

-------
Falzarano v. Unitedgrates.
607 F.2d 506 (1st Cir. 1979)	33


EloridaPower & LiahtCo. v.'Lorion.
470 U.S. 729 (1985)	44

Hahn v. Gottlieb.
430 F.2d 1243 (1st Cir. 1970)	33

Heckler v. Chanev.
470 U.S. 821 (1985)	-.	33

J.V. Peters S Co. v. Ruckelshaus.
767 F.2d 263 (6th Cir. 1985)	16

Kellev v. Thomas Solvent Co..
146 Mich. .App% 55 (1985)	  12

Lead Industries Association v.
Environmental Protection Aoencv. 647 F.2d  1130
(D.C. Cir.)» cem. denied. 449 U.S. 1042  (1980)  .....  42

Lone Pine Steering Comm. v. EPA. 777 F.2d  882
(3d Cir. 1985), cert, denied. 476 U.S.  1115  (1986)	8

Louisville and Nashville Railroad Co. v. Donovan.
713 F.2d 1243 (6th Cir. 1983), cert, denied.
466 U.S. 936 (1984)	41
                                                                 •~

455 F.2d 1289 (D.C. Cir. 1971)	47

New York v. General Electric Co^f
5?2 F. S'-pp. 231  JN.S.N.v. 1964; .  . . <	  ..... 15    .

New York v. Shore Realty Corp..
759 F.2d 1032 (2d Cir. 1985)	13

NL Industries. Inc. v. Kaplan.
792 F.2d 896 (9th Cir. 1986)	 20

Panama Canal Co. v. Grace Li •*.  Inc..
356 U.S. 309 (1958) . . . .   	,  .33

Rochester v. Bond. 603 F.2d 927
(D.C. Cir. 1979)	41

Rural Electrification Administration v.
Northern States Power Co.. 373 F.2d 686
(8th Cir. 1967), cert, denied.
387 U.S. 945 (1967) .	33

                              -  IV  -

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SCA Services of Indiana v. Thomas.
634 F. Supp. 1355  (N.D. Ind. 1986)  ............ 27

Sehalk v. Thomas. No. IP 88-344-C
(5.0. Ind. Dec. 6, 1988) .........  ........ 41

Sierra Club v. Costle. 657 F.2d 298
(D.C. Cir. 1981) ..................... 42

Small Refiner Lead Phase-Down Task  Force v.
U.S.E.P.A. . 705 F.2d 506 (D.C. Cir. 1983)  ........  42

Southern Railway Co . v. Seaboard Allied Milling Corp. .
442 U.S. 444 (1979) ...................  33

Sunshine State Bank v. Federal Deposits Ins. Corn. .
  783 F.2d 1580 (llth Cir. 1986) ............. 45

Textron. Inc.. Bell Helicopter Textron
Division v. Adams. 493 F. Supp. 824 (D.D.C. 1980)  ....  40
Town or Orange town v. Gorsuch. 718 F.2d 29
(2d Cir. 1983), cert, denied 465 U.S. 1099  (1984)  ....   49

Union Petroleum Corp. v. United States.
651 F.2d 734  (Ct. Cl. 1981) ................ 14

United States v. Beatty Incorporated. 401 F. Supp.  1040
(W.D. Ky. 1975) .....................   14

United States v. Carlo Bianchi & Co.
373 U.S. 709  (1963)  .............  ......   44

I'T.lts* Ftst?- v. Clark. 454. U.S. 555  (IScI)  .......   .13
United States v. Conservation Chemj.ca| Co..
619 F. Supp. 162 (W.D. Mo. 1985)  .............  16

United States v. Ethvl Ccrs..
761 F.2d 1153 (5th Cir.  1985), cert, denied.
474 U.S. 1070 (1986)  ...................  27

United States v. Menasche. 348 U.S.  »?8  (1955)  ......  31

United States v. Northeastern Pharmaceutical  &
Chemical CO. . "NEPACCO*  810 F.2d  726
(8th Cir. 1986), cert, denied. 108 S.Ct.  146
(1987) .................  ........  passim

United States v. Northernaire Plating Co..
685 F. SUpp. 1410 (W.D.  Mich. 1988),

                              - v -

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appeal docketed. No. 88-2074 (6th Cir. Nov. 1, 1988).

United States v. Shell Oil Co..
605 F. Supp. 1064  (D.Colo. 1985) 	
United States v. Ward.
618 F. Supp. 884 (E.D.N.C. 1985)
16, 23
27
28, 43
United States v. Western Processing.
No. 83-252M (W.D. Hash. Feb. 19, 1986)	,  .  28, 43

Walls v. Waste Resource Corp.,
761 F.2d 311 (6th Cir. 1985)	  8

Wheelabrator Corp. v. Chafee. 455 F.2d 1306
(D.C. Cir. 1971) . .	47

Wickland Oil Terminals v. ASARCO. Inc..
792 F.2d 887 (9th Cir. 1986)	13
                              - vi -

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 STATUTE?

 Administrative  Procedures Act  (APA),
      5  U.S.C. §551  et  sea.	41,44

 Brooks  Architect-Engineers  Act  ('Brooks Bill*),
      40 U.S.C.  f§541-54.4	  .  35

 Clean Water Act,  42 U.S.C.  §7607(d)	42

 Competition in  Contracting  Act  of  1984  (Small  Business and
 Federal Procurement Competition Enhancement Act of 1984),
 41 U.S.C.  §§251 et sea.	35,37

 Comprehensive Environmental Response,
 Compensation, and Liability Act ('CERCLA*), 42 U.S.C. §9601
 et seq^, as amended by the  Superfund Amendment and
 Reauthorization Act
      Section 104, 42 U.S.C. §9604	 7,18
      Section 104(a), 42 U.S.C.  §9604(a) 	 ;  ... 17
      Section 104 (b) , 42 U.S.C.  §9604 (b)	 .  1  . . 17
      Section 104(c)(4), 42  U.S.C.  §9604(c)  .  . 	  .  is
      Section 104 (f) and  '(g) , 42 U.S.C.  §9604(f) and  (g)  .   34,38
      Section 105, 42 U.S.C. §9605  	  ...  .19,21
      Section 105(a), 42 U.S.C.  §9605(a) ......  	 20
      Section 105(a),(7), 42 U.S.C.  §9605(a),  (7)  	  22,23
      Section 106, 42 U.S.C. §9606  ......  	   10
      Section 106(a), 42 U.S.C.  §9606(a) 	   30
      Section 106(b)(2)(D),  42 U.S.C. §9606(b)(2)(D)  . ... .30
      Section 107, 42 U.S.C. §9607	10,14
      Section 107(a), 42 U.S.C.  §9607(a) 	   27
      Section 107(a)(4)(A),  42 U.S.C. §9607(a)(4)(A).  .  .   passim
      Section 107(a)(4)(B),  42 U.S.C. §9607(a)(4)(B)  . .  .  .29,30
      Section 110(32),42 U.S.C.  §9610(32)  	  15
      Section 111, 42 U.S.C. §9611  	   7
      Section lll(k), 42 U.S.C.  §9611(k) 	.39,40
      Section 113(a), 42 U.S.C.  §9613(a) 	 27.
      Section 113(h), 42 U.S.C.  §9613(h) .  . .	41
      Section 113(j)(l), 42  U.S.C.  §9613 (j)(l) 	  9
      Section 113(j)(2), 42  U.S.C.  §9613 (j)(2)	9,31
      Section 113(j)(3), 42  U.S.C.  §9613 (j) (3) .  .....  28,29
      Section 119, 42 U.S.C. §9619	34
      Section 119(f), 42 U.S.C.  §6919(f) .  . .  .•	36
      Section 121, 42 U.S.C. §9621  .  .	32
      Section 122, 42 U.S.C. §9622	 10
      Section 122(h)(2), 42  U.S.C.  §6922(h)(2)  	 47
      Section 310, 42 U.S.C. §9659	.32

Davis Bacon Act,  40 U.S.C.  §276a .	  .36

Oeepwater Port. Act Amendments of 1984,
      33 U.S.C.   §§1501, 1517	 . 14

                             -  vii  -

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Federal Mine Health and Safety Act of 1977, 30 U.S.C. §§801, 931
  30 U.S.C. § 931 si sea.	14

Federal Property and Administrative Services Act of 1949, 40
U.S.C. §§471 et sea.	  35

Federal Water Pollution Control Act, (Clean Water Act),
     33 U.S.C. §1251 et seq.
     Section 311, 33 U.S.C. §1321	14,15

Outer Continental Shelf Lands Act Amendments of 1978, 43 U.S.C.
§§1801, 1814	'.	  14

Truth in Negotiating Act, 10 U.S.C. §2306(f)	36



It£clfrTfATIVE HATTiRTftTn?         ,              •          "

S. Rep. No. 848, 96th Cong., 2d Sess. (1980)	passim
H. R. Rep. No. 1016, 96th Cong., 2d Sess., Part I  (1980)  ...  8
S.-Rep. No. 11, 99th Cong., 1st Sess. (1985)	32
H. R. Rep. NO. 962, 99th Cong., 2d Sess.  (1986)	19,24
126 Cong. Rec. S33834 (daily ed. Dec. 12,  1980)	20
126 Cong. Rec. 30,933 (1980)	15
132 Cong. Rec. S14900 (daily ed. Oct. 3,  1986)	34
132 Cong. Rec. S14903 (daily ed. Oct. 3,  1986)	11
132 Cong. Rec. S14909 (daily ed. Oct. 3,  1986)	10
132 Cong. Rec. S14922 (daily ed. Oct. 3,  1986)	11
132 Cong. Rec. S14935 (daily ed. Oct 3,  1986)  ........
132 Cong. Rec. H9564 (daily ed. Oct. 8,  1986)  	
132 Cong. Rec. H9624 (daily ed. Oct. 8,  1986)	11



REGULATIONS               .

1980 National Contingency Plan, 40 C.F.R.  Part 1510
     40 C.F.R. §1510.1  (1980) 	   21
     40 C.F.R. §1510.45  (193C)  .	22
     40 C.F.R. §1510.51  (1980)	'.	21
     40 C.F.R. §1510.52  (1980)  	  	  22
     40 C.F.R. §1510.53  (1980)  	  22
     40 C.F.R. §1510.54  (1980)  	  22

National Contingency Plan, 40 C.F.R. Part 300  	  21,25
     40 C.F.R. §300.64  (1982),  (1985) .	21,22
     40 C.F.R. §300.65  (1982J,  (1985) 	'.  .   22
     40 C.F.R. §300.66  (1982)	   22
     40 C.F.R. §300.66  (1985) 	   22
     40 C.F.R. §300.67  (1982)	   22
                             -•Vlll -

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     40 C.F.R. §300.67  (1985)	22
     40 C.F.R. §300.68  (1982),  (1985)	. 22,23,25
     40 C.F.R. §300.68(j)	  19
     40 C.F.R. §300.69  (1982),  (1985) 	 22,23

Federal Acquisition Regulation  (FAR), 48 C.F.R. §1, et sea.
     48 C.F.R. §15.804-2(b)  	  37
     48 C.F.R. §15.904(3)		38
     48 C.F.R. §15.904(d)	37
     48 C.F.R. §16.301.1-3.	37
     48 C.F.R. §16.305	 37
     48 C.F.R. §30.101(b)  	  38
     48 C.F.R. §31.201-2  	 38
     48 C.F.R. §31.201-4  	 38
     48 C;F.R. §31.205	38
     48 C.F.R. §31.203(d)  	  38

Environmental Protection  Agency Acquisition Regulations  (EFAAR),
     48 C.F.R. §1500, et  sea.  (1987)	.37
     48 C.F.R. §1516.404-272  	  ...... 37
     48 C.F.R. §1552.212-70  	  37
MISCELLANEOUS

Exec. Order 12316, §2e, 42 Fed. Reg. 42237  (1981),  reprinted  in
42 U.S.C.A. §9615 app. at 544-48, as amended by  Exec.  Order No.
12418, 48 Fed. Reg. 20891 (1983).  After passage of SARA,
Executive Order No. 12316 was revoked by Exec. Order 12580, 52
Fed. Reg. 2923 (1987), reprinted in 42 U.S.C.A.  §9615  app. art 153
(West Supp. 1988)	9
5 Mezines, Stein, & Gruff, Administrative Law.
     §51.04 (1987) . 	
1 K. Davis, Administrative Lav Treatise.  §1:4  (2d ed.  1978)
                                               44,49
                                                  44
44 Fed. Fea. 31181-311S2  (1982)	*  .  .   25
44 Fed. Reg<
47 Fed. Reg.
47 Fed. Reg.
50 Fed. Reg.
53 Fed. Reg.
21184 (1982)	23,25
31180 (1982)	20,21
55488 (1982) . . .	21
47951 (1985)	21
29428 (1988)	47,48

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                   UNITED STATES DISTRICT COURT
                   WESTERN DISTRICT OF MICHIGAN
UNITED STATES OF.AMERICA,

          Plaintiff,

v.

THOMAS SOLVENT COMPANY;  et  al.

          Defendants.
)     Civil No. K86-167 CAS
     Hon.  Richard A. Enslen
FRANK J. KELLEY, Attorney
General of the State of
Michigan and THE STATE OF
MICHIGAN,
          Plaintiffs,
V.
     Civil No. K86-164 CAS
THOMAS SOLVENT COMPANY;  et  al.      )

          Defendants.               )



          MEMORANDUM OF  THE UNITED STATES' IN SUPPORT OF
            ITS MOTION IN LIMINE  TO EXCLUDE EVIDENCE

          The United States by  this motion seeks to have this

Court rule on the/'S^cope^of  judlr:;! rwie.v of. j^3_tjie_b•.:rd_er-_g_c_f _

procf r&_i.&tLiva tof  decisions made by the. United States

Environmental Protection Agency (*EPA*)  ^n imnlemen'tina clean-up
actions at the Verona  Well  Field site _and of the qiean-up costs

.incurred by the Unitprf g^at«»g aja a
Further, the United  States  seeks a ruling excluding evidence of

certain issues at  the  time  of trial.

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                           INTRODUCTION
                A.   PROCEDURAL  POSTURE OF THIS CASE
           In this  action,  the  United States seeks to recover
 costs  incurred by  EPA in carrying  out clean-up actions at the
 Verona Well  Field  site in  Battle Creek, Michigan.  A proposed
 partial Consent Decree has been lodged with the Court which.
 would,  if  approved,  resolve  the claims of the United States and
 the  State  of Michigan against  Defendant Grand Trunk Western
 Railroad Company for most  costs already incurred at the Verona
 Well Field site.   All claims,  however, against the other
 defendants,  Richard  Thomas,  Thomas Solvent Company and related
 Thcnas  companies,  (collectively the 'Thomas Defendants"), remain.
 The  United states  and Michigan have filed, and briefing is
 completed  on,  two  summary  judgment motions with respect to
 liability.   One  motion would establish the liability of the
 Thomas  Defendants  under the  Comprehensive Environmental ResponseJfe
 Compensation and Liability Act.  The second motion, which has
 been granted by  this Court,  established the liability of the so-
 called  Thomas Solvent spin-offs on fraudulent conveyance ffTV*
.successor  corporation claims.  See this Court's opinion dated
 Dece-iber 2,  1988.  If the  former motion is also granted, the
 remaining  issue  will be the  amount of costs which the United
 States  and the State of Michigan are entitled to recover.  All
 discovery  is completed with  the exception of certain depositions
 of expert  witnesses  on issues  of costs.

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                       ..              .
           The United  States previously filed a motion for a

 ruling as to the  appropriate standard and scope of judicial

 review of EPA's selection  of clean-up actions for the Verona Well

 Field  site,  and defendants filed responsive briefs, as well as

 motions for  a declaration  of the standard of review.1  As set

 forth  in the United States' Memorandum in Support of its Motion

 for a  Ruling as to the  Appropriate Standard and Scope of Review

 of  Agency Action  (hereinafter  'U.S. Brief on Standard and Scope

 of  Review*),  explicit statutory language establishes that

 judicial review of EPA's ^electioiyof clean-up actions2 is

 limited to the administrative  Record of Decision and subject to

 an  arbitrary and  car^g|r»u« Bfranrfin-rt Of review.3  This motion in
     \ The .United States' filed a Memorandum in Support of its
Motion for a Ruling as to the Appropriate Standard and Scope of
Review of Agency Action.  ("U.S. Brief on Standard and Scope of
Review").  Grand Trunk filed a Motion for Declaration on Standard
of Review and supporting brief which incorporates its opposition
to the United States' Motion.  Defendants Richard Thomas and
Thomas Solvent Company joined in the Grand Trunk Motion by a
separate filing.  The United States filed a Reply Memorandum in
Support cf Motion for a Ruling as to the Appropriate Scope and
Standard of Review and in Opposition to Defendants' Motion for
Declaration of Standard of Review (hereinafter 'United States'
Reply Brief*).

     2 This case involves a number cf clean-up ri.e.. 'removal*
and 'remedial') actions at the Verona Well Field site.  EPA has
undertaken, and is undertaking, removal and remedial actions at
both the Well Field itself, and at the identified sources of
contamination, including the Thomas Solvent Raymond Road facility
and the Annex operated by Thomas Solvent.  Clean-up .actions are
called 'response actions* and as that term is used in this brief,
it includes all response actions at both the Well Field and the
identified sources.

     3 v  The United States' Reply Brief discussed very generally
the scope of review of implementation decisions made by EPA in
carrying out the Record of Decision ('ROD') and indicated its
                                                 (continued...)
                                3

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 limine focuses on the reviewability of EPA activities that

 follow the selection of tha ramarty	thA jmplgTOgntalH

 selected clean-upy^respojise* actions and the costs inenT-refj in

 doing so.              '

           The United States has recently filed a motion for

 partial summary judgment on certain actual incurred costs.

 Through that motion, as well as this one, the United States seeks

 to narrow substantially, in accordance with the provisions and

 policies of CERCLA, the issues remaining for trial.

                      B.  SUMMARY OF ARGUMENT

           The United States expects defendants in this case to

 argue at trial for de novo. micro-review of the myriad of

                                  :al ludoments made by EPA in
rimplementinqlresnanse actions.
it  and  around the Verona Well
 Field site.  The Thomas Defendants seek jludicial review of the

jsosts incurred for .the j-gsponso »<~t- ir.no purportedly to
 if the project was prudently effectively a** rff 1r1 mifly manr>grr!

 by EPA and its contractors ._, See Supplemental Designation of Cost

 Expert Opinions of Defendants Thomas Solvent Company and Richard

 Thomas, February 12, 198? (*Surp. Desic.*)? Deposition of Thosas

 Dakar {'Dekar'), pp. 237 to 288.  Per exacpie, tne Inooas
      ^(...continued)
 intention to file this motion and brief.  Reply Brief pp. 13-16.
 In addition, in their brief the defendants touched upon but did
 not directly address the standard of review to be applied to
 costs incurred by the United States in carrying out the remedial
 and removal actions in this case.  Opposition of Defendants'
 Thomas Solvent Company and Richard Thomas to United States'
 Motion for a Ruling as to the Appropriate Standard and Scope of
 Review.

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 Defendants question 'whether cost efficiencies were realized  from
 the project management and control,* including questioning the
 scheduling of work and its impact on cost effectiveness.   Supp.
 Desig.  1 2.  Defendants seek judicial review of the prudency  and
 efficiency of contractors' use of their employees.   Supp.  Desig.
 12.   In addition,  defendants have asked that the court review the
 prudency of terms  of cen^yaefca under WH^VI ^fae. ^^"pTnse— acfe-i-errs
 were carriedL^ut.  Jjl^l^J.^jJ^hfL^"*1?."^ rtf._r^''^t1-*'h^r"7 ""*"* r*TLti*"
jnarg.in  in those contracts and whether the fee structure selected
     a disincentive to efficiency. . Supp. Desig. 12.  The detailed
 judicial  review defendants seek would even extend to the
  *                          "
 appropriateness of the number of contractor staff who worked on
 the  response actions and the amount of time each employee worked
 on the  project to determine whether each was sufficiently
 dedicated or efficient. Dekar, pp. 330 to 335. 4  In short, the
 Thomas  Defendants would ask this Court to become an after-the-
 fact auditor,  efficiency consultant and contract manager,
 substituting its judgment for EPA's .in determining how the Agency
 went about fulfilling its task of protecting public health and
 the  environment in Battle Creek.
           But defendants' position is flatly inconsistent with
 the  exp-^ss .terms of CERCLA and, if adopted, would frustrate the
 principal objectives of the statute:  (1) to place the ultimate
 financial burden of hazardous waste cleanup on those parties
 responsible for the problem, and (2) to assure prompt
           See Section III,  p. 40 infra.
                                 5

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 replenishment of the Superfund so that monies can be rededicated
 to response work at the thousands of other hazardous waste  sites
 in the country that remain unaddressed.   See,  e_.g..  S. Rep.  No.
 848,  96th Cong.,  2d Sess.  98  (1980).   With these  objectives in
 mind,  Congress has  strictly limited  judicial  review  in cost
 cases.   As discussed in the U.S.  Brief on Standard of Scope of
 Review,  judicial review of EPA'a/selection of remedial actions^
                                /^^	  -x   -~^   	.	'
 is quite limited.   Review  of  thte^imBleroentatiQn^ieeisiQns is even
 more  limited.   Unless theCJselectio.nVgt response action is
 determined to be /arbitrary and
violation  of  lav.  EPA is  entitled to  recover its  actual  easts
implementation;  technical •^dermenfcg »«s  veil .as  managerial  »r>rt
                                             --»»-"°
^rm*T-a,-t: decisions  mAJe  during  the course of^^plementatlorgfrre
committed to the  discretion  of  the Aoencv.   Judicial, review of
(Implementation decisions and cost^ is  confined to proof that the
implemented cleanup wasConsistent with the respons^ action
selected by EPA,  that  the (response action^was performed and that
the claimed (costs/were Actually incurred^  This reading of the
statute is compelled by  the  language of CERCLA,  its legislative
history, the relevant  case law  under CERCLA,  and general
principles of federal  contract  and procurement law.
          Alth ~igh  Congress  has removed the thousands of
implementation decisions from the  purview of judicial review,
this does not suggest  that EPA  does, or may,  incur costs in an
unreasonable or imprudent manner.   To  the contrary, we contend
that EPA incurred costs  at these sites in a reasonable and

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  prudent manner. ,However,  in order to ensure the Superfund  is
  replenished expeditiously and not bogged down in needless
  litigation Congress created a system which limited judicial
  review, but required various non-judicial safeguards.   It
  provided judicial review of the remedy selection decision,
                                            requiring the exacting
C^scrutiny of federal contract law^yicluding its audit
  requirements,  and required regular audits of the Superfund
  program as a whole.  This system^in lieu of judicial  reviev^ of
  each of the thousands of implementation decisions, -protects the
  interests of the public as well as those of responsible parties.
            Given the obvious and substantial implications that
  determination of the standard of review issue has for the nature
  and scope of the evidence to be presented at trial, the United
  States is filing this motion so that the Court can decide these
  issues in advance of trial.
                      C.  STATUTORY  BACKGROUND
            Congress established through CERCLA, and reauthorized
  through the Superfund Amendment and Reauthorization Act, ("SARA")
  the Hazardous Substances Response Trust Fund ("Superfund*}  to
  provide a pool of working capital that would enable EPA to
  address expeditiously >he hazards at problem .waste site's.   42
  U.S.C. § 9611.  CERCLA authorizes the EPA to conduct such
  investigations as it believes necessary to evaluate potential
  hazards and to take appropriate removal and remedial actions
  where necessary.  42 U.S.C. § 9604.

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          In creating the.Superfund, however, Congress
recognized that the amount of capital in the pool would be
inadequate to accomplish the nationwide task at hand.5  CERCLA,
therefore, places the ultimate financial burden of toxic waste
cleanup on those responsible for creating the harmful conditions.
See. e.a.. Dedham Water Co. v. Cumberland Farms Dairy. Inc.. 805
F.2d 1074, 1081 (1st Cir. 1986); Lone Pine Steering Comm. v. EPA.
777 F.2d  882, 886 (3d Cir. 1985), cert, denied. 476 U.S. 1115
(1986)? Walls v. Waste Resource Corp.. 761 F.2d 311, 318 (6th
Cir. 1985).
          Since Congress sought to ensure *that those responsible
for any damage, environmental harm or injury from chemical
poisons bear the cost of their actions,*6 it authorized the
Attorney General to recover from responsible parties al\ of the
monies expended by EPA from the Superfund for site investigation,
studies, cleanup and the cost of enforcing the provisions of
CERCLA.  Specifically, Section 107(a) of the Act provides for
reimbursement from such responsible parties of "all costs of
removal or remedial action incurred by the United States
Government or a State not inconsistent with the National
Contingency Plan.*  42 U.S.C. § 9607(a)(4)(A).  EPA's regulations
in the National Contingency PI^n (*NCP*), (40 C.F.R. Part 300  et.
seo.) guides the Agency's response actions.
     5 See. S. Rep. No. 848, 96th Cong., 2d Sess.  18; H.R. Rep.
No. 1016, 96th Cong., 2d Sess., Pt. I 22 (1980).
     6 S. Rep. No. 848, 96th Cong., 2d Sess. 13.
                                8

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          .Section  113  (j)(l) of SARA explicitly provides that

 "judicial review of  any  issues concerning the adequacy of ariy

 response  action taken  or ordered by EPA7 shall be limited to the

 administrative record.*  CERCLA § 113(j)(l), 42 U.S.C. § 9613

 (j)(l)  (1986)(emphasis supplied).  Section 113(j)(2) of CERCIA

 provides  further that  •£&«. court shall uphold rthe EPA's?  .

 decision  irMselectino^fche 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.)  This basic statutory

 background provides  the  framework for the relief requested by the

 United States.

                            ARGUMENT

                         I.  Introduction

           From the inception of the Superfund program. Congress

 sought to  place the  financial burden of hazardous waste cleanups

directly on those who  created the toxic perils and to recover all

 response costs incurred  by the government.  Congress sought to

make certain that:
     7 The President delegated this authority, as well as
other authorities conferred upon the "resident in CERCLA, to the
Administrator of EPA.  Exec. Order 12:v.6'> §.2e, 46 Fed. Reg.
42237 (1981), reprinted in 42 U.S.C.A. § 9615 app. at 544-48, as
amended by Exec. Order No. 12418, 48 Fed. Reg. 20891  (1983)
(•Executive Order No. 12316*).  After passage of SARA, Executive
Order No. 12316 was revoked by Exec. Order 12580, 52 Fed. Reg.
2923 (9187), reprinted in 42 U.S.C.A. §9615 app. at 153  (West
Supp. 1988).  The EPA Administrator has further delegated this
authority to the EPA Regional Administrators and others via'
CERCLA delegations number 14-1-A through 14-8-B.

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          society  [w]ould not bear the costs of
          protecting the public from hazards produced
          in the past by a generator, transporter,
          consumer, or dumpsite owner or operator who
          has profited or otherwise benefited from
          commerce involving these substances and now
          Wishes to be insulated from any continuing
          responsibilities from the present hazards to
          society that have been created.

S. Rep. No. 848, 96th Cong., 2d Sess. 98.  To achieve this

purpose, Congress enacted the Section 107 strict, joint and

several liability and cost recovery provisions, as well a's

Section 106, which gives EPA a means to compel a responsible

party to perform the remedy itself, and Section 122, which

outlines procedures which facilitate settlements with potentially

responsible parties.

          Indeed, when Congress reauthorized the Superfund in

1986, it was reemphasized that Congress had re-enacted the CERCLA

strict liability and related sanctions provisions in order to

encourage responsible parties to accept their responsibilities

quickly and avoid the costly and lengthy guagmire of litigation:

          [We gave EPA] sweeping authority to respond  •
          to virtually any type of release of virtually
          any harmful substances whether it is released
          or only threatened to be released.  He put in
          piece a legal regime of strict liability
          whicr-. v*> believed vo'jld encourage responsible
          parries tc- rapidly resolve their
          responsibilities in order to avoid
          potentially enormous litigation cos^s.
          potentially large penalties associa-od with
          the failure to respond to site cleanup
          activities under a regime that largely is
.          weighted toward the Federal Government*

132 Cong. Rec. S14909, (daily ed. Oct. 3, 1986)  (remarKs.of Sen.

Bentsen) (emphasis added).  The Superfund 'was designed to be


                                10  .

-------
available to the, President to respond instantly where necessary
and to handle those situations where responsible parties were
unavailable for cleanup action.*  Id. (emphasis added).   It was
not to be expended primarily in litigation.  132 Cong. Rec.
S14922 (daily ed. Oct. 3, 1986)(remarks of Sen. Simpson) ('We
must work to have more societal resources spent on necessary and
effective cleanup of Superfund sites, and less on convoluted
litigation which merely extends any public health threat that
exists from-these sites.*).
          Finally, and most importantly, Congress left little
doubt that it intended that all costs incurred by the United
States in responding to the dangers of hazardous wastes would be
recovered.  In the words of Senator Stafford, Senate  floor
manager of SARA:
          The theory underlying Superfund's liability
          scheme was and is, that the Government should
          obtain the full costs of cleanup ....
132 Cong. Rec. S14903  (daily ed. Oct. 3, 1986)  (remarks of
Ser.atcr Stiffcrf,} (Irphasis idded).  .See alro  i:i Cong. Rec.
S14935 (daily ed. Oct  3, 1986)  ('The President can recover every
dollar of the broad-based tax  inposed by the  Act by pursuing the
poilurers in cost-recovery cases.*) (remarks of Sen. Dure.ibergsr.)
(Emphasis added); 132  Cong. Rec. H9624  (daily ed. Oct. 8,  1986)
("it is expected that  the EPA  and the Department of Justice will
vigorously pursue cost recovery actions for all moneys  expended
pursuant to the act where responsible parties can be  identified*)
(remarks of Rep. Eckart.)  (Emphasis  added).

                                11

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          At the Verona Well Field site, the issue of liability
and duty to implement cleanup of the site had initially-been
litigated by the State of Michigan, and Thomas Solvent Company
had been ordered to clean up the site in May of 1984.8  Faced
with the refusal of the Thomas Defendants to implement the
cleanup, the United States incurred all the costs of the Verona
Well Field response actions while the Thomas Defendants sat idly
by and waited.  If judicial review of thousands of<[imp 1 ementatioit)
decisions is permitted, responsible parties, like the Thomas
Defendants here, will have every incentive to sit back and wait
to be sued in a cost recovery action rather than perform the
cleanup themselves.  At the time of trial the once idle
defendants would challenge the government's response costs by
questioning each and every one of EPA's technical and n^naggrift''
             m decisions — judgments which the responsible part
                                                                i,
could have made and paid for while performing the cleanup on itj
own.  The responsible parties must be required to reimburse the
United States for its actual incurred costs.  A contrary reading
of the statute might well force the public to foot the bill for
the unwilling responsible party and undermine the intent of
Congress and jeopardize the viability of the Superfund.
     8    See Kellev v. Thomas Solvent Co.. 146 Mich. App. 55
(1985) (attached hereto)..

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          II.  The United States is Entitled to Recover
               Its Actual Costs Incurred in Carrying Out the
               Response Actions Unless the Defendant Proves that
               the Response Actions Were Inconsistent with the
               NCP      	
               A;   The Plain Language of the Statute Provides
                    that the United States Shall Recover All
                    Costs Incurred in Carrying out Its Response
                    Actions	
          Under generally accepted principles of statutory
construction, the United States is entitled to recover all of its
costs incurred in carrying out the cleanup at the Verona Well
Field site unless defendants can establish that those costs were '
incurred in a manner inconsistent with the NCP.  The language of
the statute is clear and unambiguous in this regard and it must
therefore be followed.  United States v. Clark. 454 U.S. 555, 560
(1982) (*if the statutory language is clear, it is ordinarily
conclusive*).9  Pursuant to Section 107(a)(4)(A) of CERCLA
defendants are liable for *all costs of removal or remedial
action incurred bv the United States Government or a State not
     9   Moreover, even if there were any ambiguity, the court
should construe the statute in accordance with CERCLA/s'broad
remedial purpose.  Wickland Oil Terminals v. ASARCO Int.. 792
F.2d 887, 892  (9th Cir. 1986); See also. Dedham Water Co. v.
Cumberland Farms Dairy. Inc...805 F.2d at 1081;  New York v.
Shore Realty Corp.. .759 F.2d  1032, 1045  (2d Cir. 1985)., The
general rule to be applied is that remedial statutes are to be
liberally construed to give effect to the remedial provisions.
CERCLA is no exception.  Id.
                                13

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inconsistent with the national contingency plan.*1**  (Emphasis

added.)

          This 'actual cost* standard of recovery is not unique

to CERCLA.  It is the standard of the oil spill response

provision of Section 311 of the Federal Water Pollution Control

Act  (also known as, the Clean Water Act), 33 U.S.C. § 1321,  after

which CERCLA Section 107, 42 U.S.C. § 9607, is patterned.11   As

stated by Senator Randolph, a sponsor of the amended bill that

became CERCLA: •                                  .      '

          The purposes of the bill were: ... to make those who
          release hazardous substances .strictly liable for
          cleanup costs' ....
     10  The actions of EPA in carrying out response actions and
in incurring consequent costs are presumed to be consistent with
the NCP unless otherwise shown.  United States v. Northeastern
Pharmaceutical & Chemical Co.  f'NEPACCO*!. 810 F.2d 726, 747
(8th Cir. 1986), cert, denied. 108 S.Ct. 146 (1987).
     11  See e.g. . United States v. Beatty Incorporated. 401 F.
Supp. 1040, 1045  (W.D. Ky. 1975), in that Clean Water Act case,
the court refused to entertain allegations by the defendant that
government clean-up costs were excessive.  CERCLA and the Water
Act are hardly unusual statutes.  Congress has frequently imposed
strict liability  schemes under which the United States can
recover all costs incurred in responding to hazardous materials-
released to the environment.  These include the Deepwater Port
Act Amendments of 1984, 33 U.S.C. §§ 1501, 1517, the Outer
Continental Shelf Lands Act Amendments of 1978, 43 U.S.C. § 1801,
1814,- and the Federal Nine Health and Safety Act of 1977, 30
U.S.C. §§ 801, 931; see S. Rep. No. 848, 96th Cong. 2d Session
34-35 (1980).  See also:  Union Petroleum Corp. v. United States.
651 F.2d 734, 744 (Cl. Ct. 1981) (construing *actual costs
incurred* in 33 U.S.C. § 1321 (f) to apply conclusive presumption
of reasonableness to government's clean-up costs under Section
311 of Clean Water Act).
                                14

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           Unless  otherwise  provided  in  this  act,  the  standard of
           liability is  intended  to be the  same  as that  provided
           in section 311  of the  Federal Water Pollution Control
           Act (33 U.S.C.  §  1321).

 126  Cong.  Rec.  30,933 (1980).12

           In construing the language of Section 107(a)(4)(A),

 courts  have held  that the United States is entitled to  recover

 alx/costs  incurred in implementing r«»«spr»r.c.n  »^tion6__wj[**'">'^ proof
(s^£___x,                                               _

 of the  rgJigrmafrdftTWgff Qf  t^"co '*"e^e 	In  NEPACCO, the  Eighth
""""       ~   —                             %           .
 Circuit stated:             '        ' -

                The statutory language also supports the
                district court's  reasoning  that  under
                CERCLA § 107(a)(4)(A), 42 U.S.C. §
                9607(a)(4)(A), 'all costs'  incurred by
                the government that are  not inconsistent
                with the NCP are  conclusively presumed
             •*  to be reasonable.  CERCLA does not refer
                to 'all  reasonable costs' but simply to
                'all costs.'

 810  F.2d at  747-748.13

           Moreover,  it  is well established that where the United

 States  seeks  to recover its response costs under CERCLA §

 107(a)(4)(A), 42  U.S.C. § 9607 (a; (4)(A), the burden rests upon

 the  defendant .tg^  demonstrate as  a defense  to the action that

 government response costs were incurred in a manner  ineons i

 with the^NCP.-  NEPACCO. 810 F.2d at  747; United States  v.
     1242 U.S.C.  §  9610(32)  provides  that the terms 'liable or
liability  .  .  .shall  be  construed to be that standard of
liability which obtains under Section 1321 of title 33.*


     13   In reaching  the conclusion, the Court of Appeals cited
authority interpreting Section 311 of the Clean Water Act,
emphasizing  that  'case law interpreting the [Clean Water Act] is
relevant because  CERCLA defines the NCP by referring to the NCP
mandated by  the  [Clean Water Act].'

                                15

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Northernaire Plating Co.. 685 F. Supp. 1410 (W.D. Mich. 1988),

appeal docketed. No. 88-2074 (6th Cir. Nov. 1, 1988);  United

States v. Ward. 618 F. Supp. 884, 899 (E.D.N.C. 1985)  ("The

burden of raising and proving inconsistency with the NCP is,

however, on the . . . defendants.*); United States v.

Conservation Chemical Co. . 619 F. Supp. 162, 186 (W.D. Mo. 1985)

("the burden of proving, that the costs incurred were

inconsistent with the National Contingency Plan is on the

defendants . .  . .*); J.V. Peters & Co. v. Ruckelshaus. 767 F.2d
                   *
263, 266 (6th Cir.  1985) ; New York v. General Electric Co.. 592

F. Supp. 291, 303-304 (N.D.N.Y.  1984).

          Any suggestion by defendants that the United States has

the burden of establishing as part of its case that  each dollar

of costs was reasonable and prudently incurred and that the

response actions were efficiently and cost-effectively managed by

EPA and its contractors runs counter to the express  language of

Section '107 (a) (4) (A) .  Thus the  United States  is entitled to

recover (all 'ccsts^} incurred unless defendants can meet their

burden of establishing that those costs were  incurred  in a manner

i r-rs^s i?t snt vfth ths KCP.
          B.   li" Ktsorv to Materials beyond the Text of  CEriCLA
               Section 107(a)(4)(A) Is Needed, Then The
               Structure, and Legislative History of CERCLA Also
               Demonstrate that the United States is Entitled to
               Recover the Actual Costs Incurred in Carrying Out
               Its Response Actions _

          The structure and legislative history of CERCLA confirm

that the United States is entitled to recover  all costs  incurred

in carrying out its response actions.  As will be detailed in

                                16                       .  .

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this subsection, the only limitation in CERCLA on the recovery of
response costs is that the response action must not be
inconsistent with the NCP. (The NCPJ however, governs the
selectioj of response actions.  Thus, costs nay be found
inconsistent with the NCP under section 107 (a) (4) (A) of CERCLA
only if they were spent for a /response actiorMwhich itself was
inconsistent with the NCP basedLon the administrative record.
Any other reading of CERCLA would be contrary to Congress'
expressed intent that the government shall recover alj its
response costs unless it acted in a manner that was arbitrary and
capricious, and would ignore the fact that Congress imposed an
  w         .
entirely different standard of scrutiny when private parties are
seeking recovery of response costs incurred.
               1.   CERCLA Delegates to EPA Broad Discretion to
                    Select and Take Response Actions; the Only
                    Limitation on Recovery of Costs is that the
                    Response Action Not be Inconsistent with the
                    NCP _

          The limited judicial review of EFA's selection of
response actions and the Agency's costs incurred for those
acticr.s finds its' origin in the discretion which Congress granted
and necessary to respond to releases or threatened releases of
h« • ardous substances.  Sections 104 (a) and  (b) of the Act, 42
U.S.C. § 9604, grant broad discretion to EPA in undertaking
response actions:
          (a) (1) (B)
               . . .,  [EPA] is authorized to act, consistent with
               the national contingency plan, to remove or
                                17

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          (b)
               arrange fortheremoval of.  and provide for
               remedial action relating to such hazardous
               substance, pollutant, or contaminant at any time
               . .  ., or takeany other response measure
               consistent with the nationalcontingency plan
               which fEPAl deems necessary to protect the public
               health or welfare or the environment. . .
               Whenever [EPA] is authorized to act pursuant to
               subsection (a) of this section, ...  it may
               undertake such investigations, monitoring,
               surveys, testing, and other information gathering
               as fitl mav deem necessary or appropriate to
               identify the existence and extent of the release
               or threat thereof, the source and nature of the
               hazardous substances, pollutants or contaminants
               involved, and the extent of danger to the public . '
               health or welfare or to the environment.  In
               addition, [EPA] may undertake such planning,
               legal, fiscal, economic, engineering, architec-
               tural, and other studies or investigations as
               [itl may deen necessary or appropriate to plan and
               direct response actions, to recover the costs
               thereof, and to enforce the provisions of this
               Act.  42 U.S.C. § 9604.

(Emphasis added) .

          Moreover, Congress has delegated to EPA broad

to select remedies:  Section 104 (c) (4) provides that:
shzll select arrrr-rists remedial
                                                  actions
          determinedto be necessary to carry out this section
          which are to the extent practicable-in accordance with.
          the national contingency plan and which provide for the
          cost-effective- response which provides a balance
          Fund
                         i.-± i.ie availability of amounts from the
          Under the clear language of Section 104, Congress

placed within the discretion of EPA the implementation of

response actions and conferred upon EPA extremely broad authority

to investigate, plan, contract for and direct the work of

contractors with respect to those response actions.

                                18

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 Implementation,  management and technical decisions are subsumed
 within this broad grant of authority to take and pay for response
 actions which EPA determines to be necessary,  appropriate and
 cost effective.14
           The only limitation which Congress placed on the .
 recovery of (response, cos ta bv the United States under Section
 107 (a) (4) (A) , is that the costs be^ot inconsistent with the
' National Contingency J>lan. *  The requirement for an NCP
 originates in Section 105 of CERCLA,  42 U.S.C.  § 9605, which
 requires EPA to  adopt a National Contingency Plan that provides
 more detailed guidance for responding to problems posed by
 releases of hazardous substances.  However.,  even Section 105
 builds  in a certain measure of flexibility in EPA's adherence
 with the NCP. It highlights Congress' recognition of the need
 to provide for flexibility:  "actions to minimize damages from
 hazardous substances release shall, to the greatest ...extent
 pos s ib^e ,_ b^in  accordance with _the provisions of jthe^NCP] . *  42
 U.S.C.  § 9605 (emphasis supplied).  This flexibility and emphasis
 on the^ protection of the public rather than -on blind adherence
 to the  NCP has been rerrr-ired by t^e courts,  SJP* Kl^lndustries ,
                                              ^    s~    -__
          'The requirement of ycost effectiveness isx4J.mited__t
          a'ctl'oris^ and does not ajjpl v "to "re^ov*^ agt- i on«t .   see f n
 19,  infra.   Morec-v er the "cost-effective* requirement of CERCLA
 does not mean cost-effectiveness in a lay sense, i.e. ,  spending
 money and incurring costs in an effective and economical manner.
 Rather,  cost-effective is a term defined by Congress and
 interpreted  by EPA regulation as the selection of the lowest cost
 alternative  to achieve the clean-up standards necessary to
 protect  human health and the environment.  See H.R. Rep. No. 962,
 99th Cong.,  2d Session 245 (19861 .  NEPACCO. 810 F.2d 748; 40
 C.F.R. §300.68(j).   This is discussed more fully at pp. 24-26 infra,
                                 19

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Inc. v. Kaplan. 792 F.2d 896, 898-99 (9th Cir. 1986), and is

expressly stated in the legislative history of-CERCLA, see,  e.g.

126 Cong. Rec. S33834  (daily ed. Dec. 12, 1980) (comments of

Senator Stafford); S. Rep. No. 96-848,  96th Cong., 2d Sess.  at 55

(July 13, 1980); see also 47 Fed. Reg.  31180  (1982)  (1982 NCP

states that it "does not contain unnecessarily rigid or

cumbersome provisions.*).
               2.   The^HCJvfeoverns theC^Select
                    Actions} It Does NotGuverrrthe  nCUirtmUSe of
                          ^in Implementin  Response Actions
          An examination of the statutory requirements relating

to the NCP in CERCLA and a review of the NCP itself demonstrate

that the^NCp)was intended by Congress to be almost exclusively a

regulation governing theC technical recruirementsJfor the selection

of response actions.  Section 105(a) requires that the NCP

include, inter alia;

          (1) methods for discovering and investigating
          facilities at which hazardous substances have been
          disposed of or otherwise cc=e 10 be located;

          (2) methods for evaluating, including analyses of
          relative cost, and remedying any releases or threats of
          releases from facilities which pose substantial danger
          to the public health or the environment;

          (3) methods and criteria for determining the
          appropriate extent of removal, remedy, and other
          measures autho 'ized by this Act;

                              *  *  *

          (7)  means of assuring that remedial action measures
          are cost-effective over the period of potential
          exposure to the hazardous substances or contaminated
          materials;
                                20

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           (8)(A)  criteria  for determining priorities among
           releases  or  threatened releases throughout the United
           States  for the purpose of taking remedial action, and
           to the  extent practicable taking into account the
           potential urgency  of  such action,  for the purpose of
           taking  removal action .  . .;

 Section  105  further provides' that  'the plan  shall specify

 procedures,  techniques, materials, equipment, and methods to b.e

 employed in  identifying, removing  or  remedying releases of

 hazardous .substances comparable to those required under [the

 Clean Water  Act]  .  . . .*

           The NCP adopted  pursuant to Section 105 is an EPA

 regulation.  It establishes  the procedures for selection of

 response  actions  of the 'Federal and state governments.15  Thus,

 the/NCP  sets^step-by-step  technical directions and limitations
        j^"*      ^\                              • *^M*
 for_the ^selection) of appropriate response actions,(beginning with

 the discover yt5r  hazardous.releases through  each stage of

 response  to  final cost recovery.16
     1? . The N'CP first utilizer fcy E?A under CEPCLJ". v?.s ths
'National oil and Hazardous Substances Pollution Contingency
Plan* that was developed .in compliance with the Federal Water
Pollution Control Act, as amended, 33 U.S.C. §§ 1251 et seq.  See
1980 NCP, 40 C.F.R. §1510.1 (1980).  The  revised plan was
promulgated on July 16, 1962, 47 Fed. Reg. 31180, and appears at
40 C.F.R. Part 300.  The revised plan was made effective as of
December 10, 1982.  47 Fes. P.eg. 55435..  The 1SS2 KC? was the
first NCP which specifically *effectuate[d] the new
responsibilities and powers ere.-ted by CERCLA."  47 Fed. Reg.
31180.  The NCP was again revised in 1985, 50 Fed. Reg. 47951,
and codified at 40 C.F.R. Part 300.  The  United States undertook
response.actions at this site in accordance with the NCP which
governed at the time of each action.
         -*      • •

     16  The phases in the NCP have remained very similar in  •
various versions:  Step I:  Discovery and Notification, 40 C.F.R.
§1510.51 (1980),  40 C.F.R. §300.63 . (1982) , (1985).  Step II:
Evaluation and Initiation of Action, 40 C.F.R. .§1510.52 (1980);
                                                 (continued...}
                                21

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          The courts have agreed that the^NCP^fs a regulation

which guides(technical decisionmakingp  As the Court stated in

Western Processing;

               It seems clear that the statutory scheme affords
               EPA the flexibility to proceed to address
               hazardous waste sites in a variety of ways, at its
               discretion; that it has the ability to proceed
               quickly in conjunction with the State, using
               government funds;-and that Congress contemplated
               that technical expertise repose withthe EPA to
               make cleanup decisions consistent with the
               National Contingency Plan  fNCPl.

United States v. Western Processing. No. 83-252M, slip op. at 6

(W.D. Wash. Feb.. 19, 1986) (emphasis added, attached hereto).

          TherfNCpJsets limits .on the (selection/ of technically  '

appropriate response actions, but jppt on the costs in_c_urred__fey.

EPA in executing response decisions.  Nowhere in Section  105 did

Congress suggest that the NCP include cost standards with respect

to implementation of response decisions.17  The provisions of the
     *^(...continued)
Preliminary Assessment, 40 C.F.P.. §300.64  (199?),  (1985).   Step
III:  Containment and Counter-measures, 40  C.F.R.  §1510.53  (1980);
Immediate Removal, 40 C.F.R. §300.65  (1982),  (1985).  Step  IV:
Cleanup,  Mitigation and Disposal, 40  C.F.R.  §1510.54  (1980);
Evaluation and Determination of Appropriate  Response-Planned
Removal and Remedial Action 4C C.F.R.  §300.66  (1982); Site
I-a.uc;^ic.r. F;.ase £:.u Sdticr.a- r^r r.itier List  Determination,,  40
C.F.R. §200.66 (1955).  Step V:  Planned Removal,  40  C.F.-R.
§300.67 (1982); Community Relations 40 C.F.R.  §300.67.  (1985).
Step VI:   Remedial Action 40 C.F.R. §300.68  (1982),  (1985).   Step
VII:  Documentation and Cost Recovery, 40  C.F.R.  §1510.45
(1980), 40 C.F.R. §300.69 (1982), (1985).

     17  The requirement of cost-effectivesness articulated in
§ 105 (a)(7) is not a standard.applied to  implementation
decisions.  In selecting the most cost-effective  alternative  for
remedial action, both the statute and the  NCP  require that  the
alternative be cost effective during  the entire period  from
selection through the end of the "period of  potential exposure."
                                                  (continued...)
                                22                         .

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NCPDelate to jsosta in only^'tao^respectst^> first, Section 300.69
                                                 -i
requires EPA to keep documentation to support cost/recovery
actions and, second, Section 300.68 requires that |cost-

effectiveness of every remedial action b«» Mng-^Hgred as a

criterion in selection of the remedial alternative, 40 C.F.R.

§300.68.

          With respect to cost documentation, §300.69 of the NCP

requires only that:

          'documentation shall be collected and
          maintained to support all actions taken under
          this Plan and to support cost recovery.  In
          general, documentation shall be sufficient to
          provide  . . . accurate accounting of Federal
            , . . costs incurred. . .18
     ^(...continued)                .         •
42 U.S.C. §9605(a)(7), 40 C.F.R..{300.68.  The sections of the
NCP relating to remedy selection were specifically adopted to
address the requirement of § 105 of cost effectiveness throughout
the implementation and operation phases:

          EPA notes tr.it., in both the initial
          screening and the detailed analysis o-f
          alternatives, the cost alternatives must be
          compared -over time and must include operation
          and maintenance costs .(§300.68(h)(1) and
          (i)(2)(ii).  This ensures that the statutory
          requirement for consideration of the Gyration
          of cos^s is satisfied.

Preamble to NCP. 44 Fed. Reg. 31184 (July 16, 3?82).
     18   In a recent decision, the Court held.that the cost
records and summaries of EPA were sufficient to withstand  a
challenge to those records under.Section 300.69 of the NCP.
United States v. Northernaire. 685 F. Supp. at 1415.  The.cost
summaries and documentation in the instant case has been  far  more
extensive than in Northernaire.

                                23

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           'Cost-effectiveness*  is a tern of art in both CERCLA
              .        «t
 and  the  NCP,  used  to.describe the means employed by EPA to

 evaluate whether or  not  alternate options  for remediation meet

 statutorily defined  clean-up goals.  Cost-effectiveness under

 CERCLA is not a measure  of whether items of cost were  incurred in

 an economical or efficient manner.  Congress clearly limited

f*cost-efffeetiyenesaJ to  theCselectipn of the reme
                                                     as a means

of assuring that after EPA chose the appropriate cleanup level,

it would select a cost-effective remedy.  It did not extend this

requirement to the thousands of implementation decisions made by

EPA and its contractors.  The Conference Report on Section 121 of

CERCLA made clear that, cost-effective was a term of art

applicable to selection of response actions:

          The provision that actions under both
          sections 104 and 106 must be cost-effective
          is a recognition of EPA's existing policy as
          embodied in the_National Contingency Plan.
          The term fcbst-effectiyB* means that in   _  .
          tjigEarTBjning.^fche ajgpZPJr 1aj^g_level Of Cleanug>
          the President first determines the*
          appropriate level of environmental and health
          protection to be achieved and then selects a
          cost-efficient means of achieving' that goal.
         /Only after the President determines, by the
         jselection of applicable or relevant and
     ^  /appropriate requirements, that adequate
         | protection of human health and the
         / environment will ce achieved, is it  '
         (appropriate to consider cost effectiveness.


See H.R. Rep. No. 962,*99th Cong., 2d Session 245 (1986)

          The NCP requires that EPA examine and weigh the cost

effectiveness of. the various alternatives as one 'criterion in

their selection of the appropriate remedial action.  40 C.F.R.
                                24

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t
§300.68.  Section 300.68 of the NCP is intended to implement a

process which 'will insure the cost effectiveness of remedial

action measures."  44 Fed. Reg. 31184 (July 16,  1982).19

          The Court of 'Appeals in NEPACCQ. agreed that cost

effectiveness is an issue which is subsumed within EPA's

selection of a remedial action and is not an .issue to be
  V                               .
analyzed apart .from that selection process:

          Appellants also argue, the district court
          erred in requiring them to establish that the
          government's cleanup .actions were not cost-
          effective and necessary.  This argument
          challenges the government's choice of a
          particular method.  We note, however,  that
          CERCLA § 105(3),  (7), 42 U.S.C. § 9605(3),
    i  ^     19   The NCP does not require that EPA evaluate the cost of
    *"*"> removal actions, as with respect to removals, there is no .
      / requirement of cost effectiveness.  The Preamble to the 1982 NCP
      Vpointed out:

                 ... once the Agency determines that an
                 immediate removal is necessary, the Plan
                 vests in the lead agency the authority to
                 take whatever action the lead agency deems
                 necessary to abate the emergency.  In an
           t      emergency, it is not possible to require"
                 detailed cost evaluation because of the
                 critical need to act as rapidly as possible.

       44 Fed; Reg. 31181-31182 (July 16, 1982).

                 EPA used even stronger language in the Preamble to the
       1985 NCP in eliminating ccst as an issue in removal actions:
       "Requiring costs to be considered in determining whether a threat
       necessitates a removal action. . . is neither desirable nor
       authorized by CERCLA.*  50 Fed. Reg. 47930 (Nov. 20, 1985).
       Thus,  with respect to removal actions, including, the remedial
       investigations and feasibility studies done at the Verona Well
       Field site (which are removal actions under the statutory:
       definitions), there is no requirement that the actions of EPA be
       cost effective and no inquiry into the. costs is permitted unless
       the defendant can establish that theLremoval activities were   __
       inconsistent with the NCP on some technical or scientific basisTl


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