United States v. Grace & Co. ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
No. 03-35924
v.
W.R. GRACE & CO.; KOOTENAI  D.C. No.
CV-01-00072-DWM
DEVELOPMENT, CORPORATION; W.R.
OPINION
GRACE & CO. CONN.,
Defendants-Appellants.

Appeal from the United States District Court
for the District of Montana
Donald W. Molloy, District Judge, Presiding
Argued and Submitted
February 7, 2005—Seattle, Washington
Filed December 1, 2005
Before: Betty B. Fletcher, M. Margaret McKeown, and
Carlos T. Bea, Circuit Judges.
Opinion by Judge McKeown;
Concurrence by Judge Bea
15531
UNITED STATES v. W.R. GRACE & CO. 15535
COUNSEL
Christopher Landau and John C. O’Quinn, Kirkland & Ellis
LLP, Washington, D.C.; Kenneth W. Lund, Linnea Brown
and Katheryn Jarvis Coggon, Holme Roberts & Owen LLP,
Denver, Colorado, for the defendants-appellants.
John T. Stahr, Environment and Natural Resources Division,
U.S. Department of Justice, Washington, D.C.; James Free-
man, Environment and Natural Resources Division, U.S.
Department of Justice, Denver, Colorado, for the plaintiff-
appellee.
David L. Mulliken, Esq., Latham & Watkins, LLP, San
Diego, California, for the amicus.
OPINION
McKEOWN, Circuit Judge:
Libby, Montana, sits sixty-five miles south of the Canadian
border. The seemingly rustic and picturesque environment of
this area masks a troubling history—the community has been
plagued with asbestos-related contamination. In 1999, the
Environmental Protection Agency (“EPA”) was called in to
address disturbing health reports due to asbestos-related con-
tamination. We must decide whether, in responding to this
threat, the EPA exceeded the bounds of its authority to con-
duct cleanup activities under the Comprehensive Environmen-
tal Response, Compensation, and Liability Act (“CERCLA”),
42 U.S.C. § 9601 et seq. We hold that it did not.
Defendants W.R. Grace & Co.,1 Kootenai Development
1
Although the case caption has remained consistent, we note that the
district court’s order states that the parties stipulated to the dismissal of
W.R. Grace. & Co., a Delaware corporation that was incorporated in 1998
and is the sole shareholder of W.R. Grace & Co.-Conn. United States v.
W.R. Grace & Co.-Conn., 280 F. Supp. 2d 1135, 1139 n.1 (D. Mont.
2002) (“Grace I”).
15536 UNITED STATES v. W.R. GRACE & CO.
Corporation, and W.R. Grace & Co.-Conn. (collectively,
“Grace”) do not dispute that they are financially obligated
under CERCLA to assist with the cleanup of asbestos origi-
nating from their former mining and processing operations
near Libby.2 Instead, Grace contests the EPA’s characteriza-
tion of the cleanup as a removal action rather than a remedial
action under CERCLA. If the cleanup is a remedial action,
which is often characterized as a permanent cleanup, then
Grace argues that the EPA did not fulfill the regulatory
requirements for remedial actions. For example, a remedial
action requires certain analysis of the costs and effectiveness
of the remediation and also requires inclusion on the National
Priority List. See 40 C.F.R. §§ 300.425(b)(1), 300.430(e)(7).
In contrast, the regulatory requirements for removal actions,
which provide the EPA with substantial flexibility to tailor
prompt and effective responses to immediate threats to human
health and the environment, are considerably relaxed.
Grace argues that the EPA circumvented the regulatory
safeguards by conducting a remedial action under the guise of
a removal, thereby giving the EPA free rein to conduct what
Grace styles as “the quintessential remedial action” under the
less-restrictive requirements applied to removals. Grace pre-
sents this as a legal question: Is the EPA’s characterization of
its activities in Libby as a removal action correct as a matter
of law?
Grace further contends that even if the action is appropri-
ately classified as a removal action, the district court erred in
exempting the action from CERCLA’s general 12-month, $2
million cap for removal actions and in granting the EPA over
$54 million in reimbursement plus a declaratory judgment for
2
In February 2005, the United States unsealed a criminal indictment
charging Grace and various of its employees with offenses relating to
knowingly exposing miners and Libby residents to asbestos. See Charges
Issued Over Asbestos at a Mine, N.Y. Times, Feb. 8, 2005, at A16. This
pending indictment does not affect these proceedings.
UNITED STATES v. W.R. GRACE & CO. 15537
future costs. Finally, Grace disputes the accounting methods
used to calculate the EPA’s indirect costs.
The situation confronting the EPA in Libby is truly extraor-
dinary. This cleanup site is not a remote, abandoned mine.
Rather, the population of Libby and nearby communities,
which the EPA estimates at about 12,000, faces ongoing, per-
vasive exposure to asbestos particles being released through
documented exposure pathways. We cannot escape the fact
that people are sick and dying as a result of this continuing
exposure. Confronted with this information, the EPA deter-
mined on the basis of its professional judgment, and in accord
with its administrative interpretation of the scope of removal
actions, that the situation warranted an immediate, aggressive
response to abate the public health threat.
Although we diverge from the district court’s reasoning in
some respects, we reach the same ultimate conclusion: The
EPA’s cleanup in Libby was a removal action that was
exempt from the temporal and monetary cap. In light of the
EPA’s expertise in this area, we owe considerable deference,
albeit not necessarily full Chevron deference, to its character-
ization of the cleanup activities as a removal action. See
Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S.
837 (1984). We therefore affirm the judgment of the district
court.
BACKGROUND
The outcome of this case is controlled by our interpretation
of key provisions of CERCLA, a comprehensive statutory
scheme to respond to environmental threats, obtain compensa-
tion from those responsible for the polluting activities, and
assign liability to responsible parties. See Pub. L. No. 96-510,
94 Stat. 2767 (1980). Before applying CERCLA to the case
at hand, we begin with a brief review of this statute as well
as the background on the hazards afflicting Libby.
15538 UNITED STATES v. W.R. GRACE & CO.
I. CERCLA
A key component of CERCLA was the establishment of a
trust fund, commonly known as “Superfund,” for use when
responding to the release or threat of release of hazardous
substances into the environment. See CERCLA, Subtitle B–
Establishment of Hazardous Substance Response Trust Fund
§ 221, 94 Stat. at 2801-02; see also Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499, 100
Stat. 1613 (1986). Today, Superfund expenditures are directed
by the provisions of CERCLA and the National Oil and Haz-
ardous Substances Pollution Contingency Plan (“National
Contingency Plan”), 40 C.F.R. pt. 300.3
CERCLA and the National Contingency Plan divide
response actions into two broad categories: removal actions
and remedial actions. See 42 U.S.C. § 9601(25). Removal
actions4 are typically described as time-sensitive responses to
3
The National Contingency Plan “specifies procedures for preparing and
responding to contaminations and was promulgated by the [EPA] pursuant
to CERCLA.” Cooper Indus., Inc. v. Aviall Servs., Inc., 543 U.S. ___, 125
S. Ct. 577, 580 n.2 (2004); see also 42 U.S.C. § 9605. Last revised in
1994, see 59 Fed. Reg. 47,384 (Sept. 15, 1994), the National Contingency
Plan has undergone several rounds of revisions since its initial publication.
4
Although “removal action” is not itself defined in CERCLA, “remove”
and “removal” are defined. In light of the central importance of the defini-
tion to this case, it is worth citing the rather cumbersome definition in its
entirety:
The terms “remove” or “removal” means the cleanup or removal
of released hazardous substances from the environment, such
actions as may be necessary [sic] taken in the event of the threat
of release of hazardous substances into the environment, such
actions as may be necessary to monitor, assess, and evaluate the
release or threat of release of hazardous substances, the disposal
of removed material, or the taking of such other actions as may
be necessary to prevent, minimize, or mitigate damage to the
public health or welfare or to the environment, which may other-
wise result from a release or threat of release. The term includes,
in addition, without being limited to, security fencing or other
UNITED STATES v. W.R. GRACE & CO. 15539
public health threats for which the EPA is granted consider-
able leeway in structuring the cleanup. See, e.g., Minnesota v.
Kalman W. Abrams Metals, Inc., 155 F.3d 1019, 1024 (8th
Cir. 1998) (describing “removal actions” as “those taken to
counter imminent and substantial threats to public health and
welfare”). Superfund-financed removal actions generally are
required to “be terminated after $2 million has been obligated
for the action or 12 months have elapsed from the date
removal activities begin on-site.” 40 C.F.R. § 300.415(b)(5).
These limitations are not, however, inviolate. The EPA5 may
exceed this cap if it determines one of two exemptions
applies:
(i) There is an immediate risk to public health or
welfare of the United States or the environment; con-
tinued response actions are immediately required to
prevent, limit, or mitigate an emergency; and such
assistance will not otherwise be provided on a timely
basis; or
(ii) Continued response action is otherwise appro-
priate and consistent with the remedial action to be
taken.
40 C.F.R. § 300.415(b)(5); see also 42 U.S.C. § 9604(c)(1).
Remedial actions,6 on the other hand, are often described as
measures to limit access, provision of alternative water supplies,
temporary evacuation and housing of threatened individuals not
otherwise provided for, action taken under section 9604(b) of this
title, and any emergency assistance which may be provided under
the Disaster Relief and Emergency Assistance Act.
42 U.S.C. § 9601(23).
5
In Executive Orders 12,580 and 12,777, the President delegated most
functions and responsibilities to the EPA that were vested in him by CER-
CLA. See 40 C.F.R. § 300.100.
6
As with “removal,” the definition of “remedial action” has a maze-like
structure:
15540 UNITED STATES v. W.R. GRACE & CO.
permanent remedies to threats for which an urgent response
is not warranted. See, e.g., Pub. Serv. Co. of Colo. v. Gates
Rubber Co., 175 F.3d 1177, 1182 (10th Cir. 1999) (“In broad
contrast, a remedial action seeks to effect a permanent remedy
to the release of hazardous substances when there is no imme-
diate threat to the public health.”).
The distinction between removal and remedial actions is
critical under CERCLA because “[b]oth types of actions have
substantial requirements, but the requirements for remedial
actions are much more detailed and onerous.” Morrison
The terms “remedy” or “remedial action” means those actions
consistent with permanent remedy taken instead of or in addition
to removal actions in the event of a release or threatened release
of a hazardous substance into the environment, to prevent or min-
imize the release of hazardous substances so that they do not
migrate to cause substantial danger to present or future public
health or welfare or the environment. The term includes, but is
not limited to, such actions at the location of the release as stor-
age, confinement, perimeter protection using dikes, trenches, or
ditches, clay cover, neutralization, cleanup of released hazardous
substances and associated contaminated materials, recycling or
reuse, diversion, destruction, segregation of reactive wastes,
dredging or excavations, repair or replacement of leaking con-
tainers, collection of leachate and runoff, onsite treatment or
incineration, provision of alternative water supplies, and any
monitoring reasonably required to assure that such actions protect
the public health and welfare and the environment. The term
includes the costs of permanent relocation of residents and busi-
nesses and community facilities where the President determines
that, alone or in combination with other measures, such reloca-
tion is more cost-effective than and environmentally preferable to
the transportation, storage, treatment, destruction, or secure dis-
position offsite of hazardous substances, or may otherwise be
necessary to protect the public health or welfare; the term
includes offsite transport and offsite storage, treatment, destruc-
tion, or secure disposition of hazardous substances and associated
contaminated materials.
42 U.S.C. § 9601(24).
UNITED STATES v. W.R. GRACE & CO. 15541
Enters. v. McShares, Inc., 302 F.3d 1127, 1136 (10th Cir.
2002). For example, remedial actions are only eligible for
Superfund financing when the site is listed on the National
Priorities List.7 See 40 C.F.R. § 300.425(b)(1). Further, the
EPA is required to consider costs when selecting remedial
alternatives whereas “CERCLA contains no corresponding
mandate for removal actions.” United States v. Hardage, 982
F.2d 1436, 1443 (10th Cir. 1992); see also 40 C.F.R.
§ 300.430 (listing requirements for a selection of remedy
including consideration of effectiveness, permanence, and
cost). Because CERCLA provides that responsible parties
shall be liable for “all costs of removal or remedial action
incurred by the United States Government . . . not inconsistent
with the national contingency plan,” this distinction is vital to
those held liable. 42 U.S.C. § 9607(a)(4).
II. HISTORY OF THE EPA’S CLEANUP ACTIVITIES IN LIBBY
The roots of this case stretch back nearly a century to the
beginning of mining operations in the vicinity of Libby. It
was not until the late 1990s, however, that the extent of the
problem came to light fully, leading to the EPA’s cleanup
action.
A. ASBESTOS CONTAMINATION IN LIBBY
From the 1920s until 1990, Grace and its predecessors
mined and processed vermiculite—a mineral containing a
type of asbestos called tremolite—at a mine approximately
seven miles northeast of Libby. See Grace I at 1138-41
(describing factual background in an order granting the EPA’s
motion for summary judgment). Processed ore was trucked to
screening plants and expansion/export plants from which the
7
The National Priorities List is “the list, compiled by EPA pursuant to
CERCLA section 105, of uncontrolled hazardous substance releases in the
United States that are priorities for long-term remedial evaluation and
response.” 40 C.F.R. § 300.5.
15542 UNITED STATES v. W.R. GRACE & CO.
materials were distributed nationwide. Vermiculite was also
available for employees to take home for their personal use,
and Grace donated vermiculite to the local schools.
Although Grace did not cease mining and processing opera-
tions in Libby until 1990, state and federal agencies con-
ducted studies on the health effects of the mining operations
as early as the 1940s. These efforts were, however, focused
on workplace exposure rather than contamination in the
greater Libby community. For example, in the 1940s and
1950s, the Montana State Board of Health issued several
industrial hygiene studies to determine whether the mine’s
operations were detrimental to the employees’ health. In
1992, the EPA issued a written determination on the applica-
bility of the National Emissions Standards for Hazardous Air
Pollutants to a road on the mine property. However, no CER-
CLA activities were performed in Libby prior to the EPA’s
commencement of an investigation in 1999 that led to the cur-
rent cleanup.
B. THE EPA’S INVOLVEMENT IN LIBBY
After beginning its investigation in November 1999, the
EPA issued a Sampling and Quality Assurance Project Plan
in December, followed by a more comprehensive revised plan
in January 2000. The plan “address[ed] questions and con-
cerns raised by citizens of Libby regarding possible ongoing
exposures to asbestos fibers as a result of historical mining,
processing and exportation of asbestos-containing vermicu-
lite.” The EPA’s immediate efforts were directed toward (1)
obtaining information on airborne asbestos levels in order to
judge whether a time-critical intervention was needed to pro-
tect public health, and (2) obtaining data on friable asbestos
levels in potentially contaminated materials around Libby.
The EPA stated that “[t]he first decision to be made is
whether or not time-critical intervention is needed to protect
public health.”
UNITED STATES v. W.R. GRACE & CO. 15543
In his testimony before the Senate’s Environment and Pub-
lic Works Committee in February 2000, the EPA’s regional
administrator attested that the initial investigation confirmed
two things: (1) “a large number of current and historic cases
of asbestos related diseases centered around Libby,” including
“33 incidents of apparently non-occupational exposures”; and
(2) a “high likelihood that significant amounts of asbestos
contaminated vermiculite still remain in and around Libby.”
Vermiculite from the mine’s waste piles was “commonly used
by local residents in their yards and gardens as a soil condi-
tioner.” It was also used to create running tracks and baseball
fields for nearby schools. The residents were particularly con-
cerned because children regularly played in and around piles
of vermiculite. These findings compelled the EPA to under-
take more expansive testing. To put it mildly, subsequent test-
ing showed asbestos contamination to be pervasive.
Because asbestos is generally only harmful if inhaled or
ingested, the mere presence of asbestos does not necessarily
constitute an immediate threat. But the situation in Libby did
not present this benign scenario. Instead, the EPA docu-
mented “complete human exposure pathways” through which
asbestos particles were becoming airborne as a result of nor-
mal human activities, such as foot traffic and vacuuming, and
natural forces, such as wind—especially during the dry sum-
mer months. This migration transformed the latent threat of
undisturbed asbestos into a current hazard to anyone breathing
the airborne particles. For example, residents described halt-
ing baseball games when large dust clouds swept over the
field carrying particles from exposed piles of vermiculite. A
study of Libby residents conducted in 2000 by the Agency for
Toxic Substances and Disease Registry not only found that
most participants reported multiple routes of exposure, but
also that 18% of those x-rayed had abnormalities in the lining
of their lungs—as compared with the expected rate of 0.2%
to 2.3% for groups living in the United States who have no
known asbestos exposures.
15544 UNITED STATES v. W.R. GRACE & CO.
These findings led the EPA to set out the intended removal
action in a series of three memoranda issued between May
2000 and May 2002, which progressively broadened the
scope of the cleanup. The original action memorandum, dated
May 23, 2000 (“First Action Memo”), covered a former ver-
miculite export plant and screening plant, the former of which
was being used as a retail lumber mill and the latter as a com-
bined commercial/residential property.8 The First Action
Memo authorized a time-critical removal action9 to be com-
pleted by spring/summer 2001 with a total project ceiling of
approximately $5.8 million for the two sites. The EPA deter-
mined that the action met the requirements to exceed the $2
million, 12-month cap because the asbestos in the environ-
ment posed an immediate threat to the local population; a
cleanup beyond the cap was required to prevent, limit, or miti-
gate an emergency because of the size of the cleanup and the
short construction season; and assistance from other govern-
ment agencies was not anticipated on a timely basis.
The EPA then broadened the scope of the cleanup in an
action memorandum amendment, dated July 20, 2001
(“Second Action Memo”), which covered “newly identified
risks” at six additional locations and requested increased
funding for costs associated with Grace’s reported denial of
8
Grace largely conducted the cleanup of the export plant in response to
an EPA order dated May 23, 2000.
9
The EPA describes the cleanup in Libby as a single removal action
both in the action memoranda and its briefs to this court: “EPA authorized
a removal action to remove asbestos-contaminated materials from hun-
dreds of homes, businesses, yards, gardens, school athletic fields, drive-
ways, and mining plant facilities.” (emphasis added). Likewise, on appeal,
Grace argues that the district court erred “by granting the United States
summary judgment with respect to the validity of EPA’s characterization
of the Libby response action as a removal rather than a remedial action.”
Accordingly, we analyze the EPA’s activities in Libby as a single response
action rather than a patchwork of discrete smaller actions. Cf. Colorado
v. Sunoco, Inc., 337 F.3d 1233, 1241 (10th Cir. 2003) (concluding that
there can be but one “removal action” per site).
UNITED STATES v. W.R. GRACE & CO. 15545
access to the screening plant. The six sites included two pri-
vate residences, three local schools, and a public road running
past the mine site. Among the EPA’s foremost concerns were
the high asbestos concentrations in the materials at these sites
and the easily crumbled state of the exposed asbestos. For
example, the EPA found nuggets of tremolite around the high
school track that it described as “readily friable, releasing
copious amounts of fibers upon degradation.” The EPA mea-
sured asbestos concentrations of 2% by polarized light
microscopy (“PLM”) at a pile of vermiculite at one residence,
and concentrations up to 1.5% in material scraped off equip-
ment at the other residence.10 Samples taken from materials
visible outside the elementary school indicated that the area
contained asbestos at levels between 3% to 8% by PLM, and
testing at the road showed asbestos concentrations up to 5%.
As with the First Action Memo, the EPA determined that the
situation warranted an exemption from the cap and, conse-
quently, authorized a total site removal ceiling of approxi-
mately $20.1 million with an estimated completion date for
most of the work by winter 2001/02.
The EPA expanded the removal action again in an action
memorandum amendment, dated May 2, 2002 (“Third Action
Memo”), which brought a number of homes and businesses in
10
To put these numbers into perspective, in the First Action Memo, the
EPA explained how asbestos concentrations in soil translate into risks to
the public health:
Currently EPA has not established, under any of its regulatory
programs, an asbestos level in soil below which an exposure does
not pose a risk. The 1% cut-off level for regulation under the
Toxic Substances Control Act abatement program was estab-
lished on the basis of analytical capability at the time, and was
not established based on the level of risk represented. To the con-
trary, at Superfund sites in California EPA Region IX found in
certain settings that concentrations of asbestos less than 1%
posed unacceptable inhalation risks when subject to disturbance
by traffic.
Significantly, the asbestos was in a friable state.
15546 UNITED STATES v. W.R. GRACE & CO.
Libby within the ambit of the removal action. The EPA again
determined that an exemption from the statutory cap was war-
ranted. In addition, although Libby was not added to the
National Priorities List until October 2002, see 67 Fed. Reg.
65,315 (Oct. 24, 2002), the EPA proposed that the site be
added in February 2002. The Third Action Memo also
explained that the removal action was consistent with a
planned future remedial action.11 The EPA estimated that the
proposed work would take two to three construction seasons,
and it raised the total project ceiling to approximately $55.6
million. The EPA continued removal activities consistent with
its various Action Memos.12
C. COST-RECOVERY ACTION AGAINST GRACE
The EPA filed suit against Grace in March 2001 seeking
recovery of all response costs incurred by the government and
a declaration that Grace would be liable for future costs. See
42 U.S.C. §§ 9607, 9613(g)(2). In December 2002, the district
court granted the EPA summary judgment on the liability
issue but determined that there were material issues of fact
regarding costs associated with certain properties. Grace I,
280 F. Supp. 2d at 1148.
After a three-day bench trial, the district court issued an
order awarding the EPA the full $54.53 million in reimburse-
ment requested, including $11.32 million in indirect costs,
and granting a declaratory judgment that Grace would be lia-
ble for future cleanup costs. United States v. W.R. Grace &
11
The EPA proposed that the Libby site be added to the National Priori-
ties List in February 2002 so that a remedial response action could be con-
ducted. In October 2002, the site was officially added to the List. See 67
Fed. Reg. 65,315 (Oct. 24, 2002).
12
According to the EPA’s CERCLIS database, the EPA currently is in
the study and remedy selection phase and a final remedy has not been
selected for the Libby site. See http://cfpub1.epa.gov/supercpad/cursites/
csitinfo.cfm?id=0801744 (last visited July 26, 2005).
UNITED STATES v. W.R. GRACE & CO. 15547
Co., 280 F. Supp. 2d 1149 (D. Mont. 2003) (“Grace II”). This
appeal followed.
ANALYSIS
The EPA’s ability to recover the costs of its cleanup in
Libby hinges on whether its response is properly character-
ized as a removal action, as argued by the EPA and found by
the district court, or a remedial action, as argued by Grace.13
The tangled language of CERCLA hardly lends itself to clear-
cut distinctions between the two types of actions. Nonethe-
less, certain overarching attributes emerge with the time-
sensitivity of the threat and the significance of the public
health threat as key factors underlying removal actions. In
Libby, the EPA determined that there was a serious threat to
public health that required a time-sensitive response, and it
acted on this information.
We emphasize at the outset that the EPA’s response action
in Libby is no mere run-of-the-mill CERCLA cleanup. As the
EPA itself recognizes, the Libby cleanup is a unique removal
action of a size and cost not previously seen. But the situation
in Libby was, and remains today, truly extraordinary.
13
Under CERCLA’s burden-shifting procedures, once the EPA estab-
lishes its prima facie case for response costs, the burden shifts to Grace
to prove that the response was inconsistent with the National Contingency
Plan. See United States v. Chapman, 146 F.3d 1166, 1169 (9th Cir. 1998).
Specifically, CERCLA provides that responsible parties shall be liable for
“all costs of removal or remedial action incurred by the United States
Government . . . not inconsistent with the national contingency plan.” 42
U.S.C. § 9607(a)(4). Because the National Contingency Plan prescribes
heightened requirements for a remedial action, a threshold inquiry is
whether the action was a removal or remedial action. The EPA does not
dispute that the cleanup did not meet the National Contingency Plan’s pro-
cedural requirements for a remedial action.
15548 UNITED STATES v. W.R. GRACE & CO.
I. REMOVAL OR REMEDIAL ACTION: STRUCTURE OF THE
TWO-STEP INQUIRY AND APPLICATION TO THE CLEANUP IN
LIBBY
The district court concluded, based on an arbitrary and
capricious standard of review, that “[the EPA’s] decision to
conduct a removal action rather than a remedial action is con-
sistent with the [National Contingency Plan] and cannot be
second-guessed by this Court.” Grace I, 280 F. Supp. 2d at
1143. We take a slightly different tack. CERCLA provides
that the selection of response actions shall be upheld “unless
arbitrary and capricious or otherwise not in accordance with
the law.” 42 U.S.C. § 9613(j)(2). We agree that it was not
arbitrary and capricious for the EPA “to approve a time-
critical removal action.” Id. at 1144. However, the statutory
scheme compels us to take the inquiry one step further. See
Martinez-Villareal v. Lewis, 80 F.3d 1301, 1305 (9th Cir.
1996) (“We may affirm on any ground supported by the
record even if it differs from the rationale of the district
court.”).
[1] Under CERCLA, once the response action is selected—
in this case as a removal based on “an imminent and substan-
tial danger to the public health”—then the EPA is authorized
to take necessary actions consistent with the National Contin-
gency Plan. See 42 U.S.C. § 9604(a)(1). Regulations imple-
menting the Plan provide that “[i]f the [EPA] determines that
a removal action is appropriate, actions shall, as appropriate,
begin as soon as possible to abate, prevent, minimize, stabi-
lize, mitigate, or eliminate the threat to public health or wel-
fare of the United States or the environment.” 40 C.F.R.
§ 300.415(b)(3). Thus, even if the EPA’s selection of a
removal action was proper, the question remains whether the
actions actually taken by the EPA to combat the threat are
properly categorized as such.
We agree with Grace that this second step of our inquiry is
a question of law: Does the EPA’s response action in Libby
UNITED STATES v. W.R. GRACE & CO. 15549
fall within the statutory limits of a removal action? Grace’s
challenge is built on the premise that the EPA termed its
cleanup in Libby a removal action as a subterfuge when the
response was, in substance, a remedial action.14 To resolve
this question, we must explore the statutory confines of
removal actions under CERCLA and, within this legal struc-
ture, ask to what extent we should defer to the EPA’s interpre-
tation based on the agency’s expertise.
A. DECISION TO CONDUCT A REMOVAL ACTION IN LIBBY
The EPA’s initial decision to conduct a removal action
must be upheld unless Grace can demonstrate on the adminis-
trative record that the decision was arbitrary and capricious or
otherwise not in accordance with law. 42 U.S.C. § 9613(j)(2).
Grace has not met this burden.
[2] The National Contingency Plan requires the EPA to
consider a series of factors15 to determine that it was appropri-
14
Grace attributes the timing and scope of the EPA’s cleanup to intense
media attention regarding conditions in Libby. We have previously
rejected an “ulterior motive” analysis in a challenge to whether CERCLA
response costs incurred by a private landowner were necessary: “The issue
is not why the landowner decided to undertake the cleanup, but whether
it was necessary. To hold otherwise would result in a disincentive for
cleanup.” Carson Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 871-
72 (9th Cir. 2001) (en banc) (citation omitted). This logic applies with
equal force when the EPA is a party. We therefore do not inquire into the
EPA’s subjective motives behind the cleanup, but rather ask if the objec-
tive evidence supports the response.
15
40 C.F.R. § 300.415(b)(2) provides that “[t]he following factors shall
be considered in determining the appropriateness of a removal action
. . . :”
(i) Actual or potential exposure to nearby human populations,
animals, or the food chain from hazardous substances or pollu-
tants or contaminants;
(ii) Actual or potential contamination of drinking water supplies
or sensitive ecosystems;
15550 UNITED STATES v. W.R. GRACE & CO.
ate to initiate a removal action. Cf. Chapman, 146 F.3d at
1171-73 (holding that the EPA did not act arbitrarily or capri-
ciously in ordering a removal action after considering the
§ 300.415(b)(2) factors). The EPA did so and its findings are
extensively documented.
The First Action Memo discusses five of the eight factors16
in concluding that the conditions in Libby presented an immi-
nent and substantial threat to human health and the environ-
ment that met the regulatory criteria. Chief among the factors
was that complete exposure pathways existed through which
people were being exposed to asbestos. The First Action
Memo details specific threats, including that “there are over
3000 three gallon buckets of unexpanded Libby vermiculite”
being used at a mushroom farm at the former screening plant,
and that surface soils contained visible vermiculite that could
readily migrate.
The magnitude of the current and potential impact on pub-
lic health resulting from the widespread use of vermiculite by
Libby residents led the EPA in its Second Action Memo to
(iii) Hazardous substances or pollutants or contaminants in
drums, barrels, tanks, or other bulk storage containers, that may
pose a threat of release;
(iv) High levels of hazardous substances or pollutants or contam-
inants in soils largely at or near the surface, that may migrate;
(v) Weather conditions that may cause hazardous substances or
pollutants or contaminants to migrate or be released;
(vi) Threat of fire or explosion;
(vii) The availability of other appropriate federal or state
response mechanisms to respond to the release; and
(viii) Other situations or factors that may pose threats to public
health or welfare of the United States or the environment.
16
Specifically, the memo invokes the first, third, fourth, fifth, and sev-
enth factors listed in 40 C.F.R. § 300.415(b)(2).
UNITED STATES v. W.R. GRACE & CO. 15551
invoke the catch-all eighth factor—“[o]ther situations or fac-
tors that may pose threats to public health or welfare of the
United States or the environment,” 40 C.F.R. § 300.415(b)
(2)(viii):
The sheer magnitude of the medical impact in Libby
dictates the need for an expedient and thorough
response. Unfortunately, because of the latencies of
asbestos related diseases there is no easy way to
directly correlate exposure to amphibole asbestos
today to the direct development of an asbestos
related disease. The only way to determine this for
certain is to observe an individual for 10 to 40 years
after exposure to see if they become sick. However,
waiting for this type of certainty is unconscionable.
CERCLA was designed and enacted to prevent ill-
ness and death resulting from exposure to hazardous
substances, not wait for its occurrence to prove a
threat.
[3] Finally, the Third Action Memo cites several factors in
support of the EPA’s decision to expand the removal action
and asserts that “[t]he significant medical impact of asbestos
exposure in Libby dictates the need for an expedient and thor-
ough response.” In light of the EPA’s carefully documented
reasoning in the three Action Memos, we agree with the dis-
trict court that the EPA’s decision to approve a removal action
was not arbitrary and capricious. See 42 U.S.C. § 9613(j)(2).
This threshold decision does not, however, end our inquiry.
We must consider how to classify the EPA’s action.
B. CHARACTERIZATION OF THE EPA’S RESPONSE ACTION
The question remains whether the steps actually taken by
the EPA to combat the threat are properly characterized as a
removal action. Whether the EPA’s cleanup activity was a
removal action—or, on the other hand, a remedial action in
removal action’s clothing—is a question of statutory interpre-
15552 UNITED STATES v. W.R. GRACE & CO.
tation. “Congress provided definitions for ‘removal’ and
‘remedial action,’ and the classification of the activity is
determined as a matter of law.” Geraghty & Miller, Inc. v.
Conoco Inc., 234 F.3d 917, 925-26 (5th Cir. 2000) (footnotes
omitted); see also Sunoco, 337 F.3d at 1242 (“Nothing in [42
U.S.C.] § 9613(j)(2) refers to the EPA’s characterization of a
particular action [as a removal or remedial action].”). The
decision to select a removal or remedial action is therefore
distinct from the question whether the action carried out was,
in fact, the action selected. It is to this crucial inquiry that we
now turn.
The statutory interpretation of “removal” is a legal issue
that we review as a matter of law. See Carson Harbor Vill.,
270 F.3d at 870. But in addressing the statute, the parties dis-
agree as to the level of deference, if any, that we should grant
the EPA’s formulation of the term “removal.” Resolving this
question requires that we consider the Supreme Court’s recent
refinement of the traditional agency-deference analysis under
Chevron. See 467 U.S. at 842-45; United States v. Mead
Corp., 533 U.S. 218, 226-27 (2001) (Chevron applies “when
it appears that Congress delegated authority to the agency
generally to make rules carrying the force of law, and that the
agency interpretation claiming deference was promulgated in
the exercise of that authority.”).
Following Mead, the continuum of agency deference has
been fraught with ambiguity. Compare Barnhart v. Walton,
535 U.S 212, 221 (2002) (applying Chevron deference even
though the EPA reached its interpretation through means less
formal than “notice and comment” rulemaking) with Mead,
533 U.S. at 226-27 (agency’s tariff classification had “no
claim to judicial deference under Chevron, there being no
indication that Congress intended such a ruling to carry the
force of law”). Our decisions understandably have been con-
flicted as to whether Chevron deference only applies upon
formal rulemaking and whether lesser deference applies in
other situations. See, e.g., Cal. Dep’t of Soc. Servs. v. Thomp-
UNITED STATES v. W.R. GRACE & CO. 15553
son, 321 F.3d 835, 847-48 (9th Cir. 2003) (discussing how
Mead and Walton have “further obscured the already murky
administrative law surrounding Chevron”); Davis v. United
States EPA, 348 F.3d 772, 779 n.5 (9th Cir. 2003) (“The mere
fact that the EPA engaged in informal agency adjudication . . .
does not vitiate the Chevron deference owed to the agency’s
interpretation . . . .”). As Justice Scalia presciently noted in his
dissent in Mead, “We will be sorting out the consequences of
the Mead doctrine, which has today replaced the Chevron
doctrine, for years to come.” 533 U.S. at 239 (Scalia, J., dis-
senting).
The Supreme Court’s most recent pronouncement in
National Cable & Telecommunications Ass’n v. Brand X
Internet Services, 125 S. Ct. 2688 (2005), calls into question
whether Mead in fact “replaced” Chevron as Justice Scalia
contends. Perhaps because Brand X involved formal rulemak-
ing, see id. at 2699, the Court did not clarify whether there is
a “deference distinction” between Chevron and Mead. None-
theless, in Brand X the majority’s language explaining Chev-
ron is quite broad and does not come with a proviso that the
Chevron deference is limited to agency interpretations
expressed through formal rulemaking. See id. (“In Chevron,
this Court held that ambiguities in statutes within an agency’s
jurisdiction to administer are delegations of authority to the
agency to fill the statutory gap in reasonable fashion.”); id. at
2700 (“Chevron’s premise is that it is for agencies, not courts,
to fill statutory gaps.”).
The interplay between Chevron and Mead is highlighted in
Justice Breyer’s concurrence, in which he writes that “the
existence of a formal rulemaking proceeding is neither a nec-
essary nor a sufficient condition for according Chevron defer-
ence to an agency’s interpretation of a statute.” Id. at 2712
(Breyer, J., concurring). This explanation stands in contrast to
Justice Scalia’s dissents in Brand X and Mead. See id. at
2713-21; Mead, 533 U.S. at 239-61. Echoing his dissent in
Mead, Justice Scalia proffers in his Brand X dissent that
15554 UNITED STATES v. W.R. GRACE & CO.
“Mead drastically limited the categories of agency action that
would qualify for deference under Chevron.” 125 S. Ct. at
2718 (Scalia, J., dissenting). Rather than clarifying what these
categories are, Justice Scalia advances that, in Brand X, the
Court “continues the administrative-law improvisation project
it began four years ago in [Mead].” Id.
Because the discussion in Brand X leaves some doubt as to
the degree of formality of the underlying agency interpreta-
tion that is required for Chevron deference, we look to the
post-Mead Supreme Court decision that most closely resem-
bles the circumstances we face here. The Court explained last
year in Alaska Department of Environmental Conservation v.
EPA, 540 U.S. 461, 487-88 (2004), that the EPA’s interpreta-
tion of a statute in internal guidance memoranda warrants
respect but does not qualify for Chevron deference. Although
the Court cited Mead in rejecting Chevron deference, it
accorded “respect” to the “EPA’s reading of the relevant stat-
utory provisions.” Id. at 488. Accordingly, at a minimum, we
impose a modified deference standard affording respect to the
EPA’s informal interpretations here. But either under modi-
fied deference or full Chevron deference, the result would be
the same: The EPA’s cleanup activities in Libby are properly
categorized as a removal action.
[4] Despite the EPA’s insistence that arbitrary and capri-
cious review applies to all aspects of our inquiry, the statute
does not support this reading. CERCLA requires that we
uphold the EPA’s “decision in selecting the response action”
unless arbitrary and capricious or otherwise not in accordance
with the law. 42 U.S.C. § 9613(j)(2). Here we address not the
EPA’s selection of its remedy, but rather whether the actions
taken fall within the statutory definition of a removal. Thus,
we consider whether the statutory construction that the EPA
advances in this litigation is correct as a matter of law. The
degree of deference granted to the EPA’s interpretation of a
statute is considered in light of Chevron and its progeny. See
Alaska Dep’t of Envtl. Conservation, 540 U.S. at 487-88. In
UNITED STATES v. W.R. GRACE & CO. 15555
contrast, an agency’s actions exercised under its statutory
authority are generally subject to arbitrary and capricious
review. See id. at 496-97 (applying arbitrary and capricious
review to the EPA’s taken actions under the Clean Air Act);
see also 5 U.S.C. § 706(2) (applying arbitrary and capricious
review to agency conclusions and findings).
With the Supreme Court’s recent agency-deference cases as
a backdrop, we begin with Chevron’s first step and ask
“whether Congress has directly spoken to the precise question
at issue,” Chevron, 467 U.S. at 842, i.e., whether a response
action such as the one carried out in Libby is a removal or
remedial action.17 If Congress has “unambiguously expressed
[its] intent,” then our inquiry ends there, for that intent must
be given effect as law. Id. at 842-43. If, however, the statute
is ambiguous, then we look to the EPA’s interpretation of the
statute. Even if full-blown Chevron deference is not due
because of the informal nature of the interpretation, we will
still accord a modified level of respect because “Chevron did
nothing to eliminate Skidmore’s[18] holding that an agency’s
17
Although we have touched on the interplay between removal and
remedial actions under CERCLA in prior decisions, the specific contexts
in which those cases arose render them of limited use to our decision here.
See California v. Neville Chem. Co., 358 F.3d 661, 667, 670 (9th Cir.
2004) (concluding that for the purposes of “the onset of the limitations
period for recovery of remedial action costs under CERCLA,” no action
can be “remedial” until adoption of a final remedial action plan); Hanford
Downwinders Coalition, Inc. v. Dowdle, 71 F.3d 1469, 1475, 1477 n.10
(9th Cir. 1995) (holding that a government health assessment was a “re-
moval or remedial action entitled to the protection of [42 U.S.C.]
§ 9613(h)” without the need to clarify the distinction between the two
types of actions).
18
The Court explained in Skidmore v. Swift & Co. that “[t]he weight
[accorded to an administrative] judgment in a particular case will depend
upon the thoroughness evident in its consideration, the validity of its rea-
soning, its consistency with earlier and later pronouncements, and all those
factors which give it power to persuade, if lacking power to control.” 323
U.S. 134, 140 (1944); see also Sunoco, 337 F.3d at 1243 (concluding that
the EPA’s characterization of a response action deserves Skidmore defer-
ence).
15556 UNITED STATES v. W.R. GRACE & CO.
interpretation may merit some deference whatever its form.”
Mead, 533 U.S. at 234; see also Wilderness Soc’y v. United
States Fish & Wildlife Serv., 353 F.3d 1051, 1059-62 (9th Cir.
2003) (en banc), amended by 360 F.3d 1374 (2004) (applying
this analytical framework to review of an agency’s interpreta-
tion). Put simply, even if EPA manuals, policy statements,
and other pronouncements “are beyond the Chevron pale,”
Mead, 533 U.S. at 234, they are not beyond the reach of our
deference.
As elaborated below, the statutory definition of “removal”
is vague and, consequently, the EPA’s construction of this
statutory term warrants our deference. In light of this defer-
ence and the well-documented record of the scope of cleanup
activity, we hold that the EPA’s action in Libby is properly
characterized as a removal action. In so holding, we recognize
that the emphasis on time-sensitivity both in the EPA’s selec-
tion of a removal action and in our decision whether the
action carried out actually was a removal action threatens to
collapse the two issues into a single “immediacy” inquiry.
Our review of the EPA’s decision to conduct a removal action
is limited to whether the EPA considered the eight factors
under 40 C.F.R. § 300.415(b)(2). In contrast, although imme-
diacy is a paramount consideration when evaluating whether
the action indeed was a removal, this second phase of our
inquiry is not bound by those eight factors. For example, we
also consider, among other things, the interplay between a
removal and remedial action conducted at a single site and
whether the action comports with the examples in 40 C.F.R.
§ 300.415(e).
Grace contests the denomination of the action as a removal
by cherry-picking discrete cleanup activities which, standing
alone, might fall within the ambit of a remedial action. We
refrain from slicing and dicing the EPA’s single, cohesive
removal action into a myriad of fractured parts. Such atomiza-
tion would undermine the EPA’s scientific and administrative
expertise by requiring us to second-guess whether, for exam-
UNITED STATES v. W.R. GRACE & CO. 15557
ple, the excavation of soil at the local elementary school was
a remedial action because 1000 cubic yards of soil was
removed when perhaps removal of less soil or less drastic
measures could have been employed to counteract the imme-
diate threat. Instead, we take a more comprehensive view of
the administrative record in concluding that the EPA’s
response was a removal action.
1. STATUTORY INTERPRETATION: REMOVAL AND
REMEDIAL ACTIONS
[5] The first step under Chevron requires a straightforward
exercise in statutory interpretation: “If a court, employing tra-
ditional tools of statutory interpretation, ascertains that Con-
gress had an intention on the precise question at issue, that
intention is the law and must be given effect.” Chevron, 467
U.S. at 843 n.9.
We begin with the statutory definitions because “[w]hen a
statute includes an explicit definition, we must follow that
definition, even if it varies from that term’s ordinary mean-
ing.” Stenberg v. Carhart, 530 U.S. 914, 942 (2000). It has
become de rigueur to criticize CERCLA as a hastily passed
statute that is far from a paragon of legislative clarity. See,
e.g., Exxon Corp. v. Hunt, 475 U.S. 355, 363 (1986) (com-
menting that a provision in CERCLA “is not a model of legis-
lative draftsmanship”); Carson Harbor Vill., 270 F.3d at 883
(“Clearly, neither a logician nor a grammarian will find com-
fort in the world of CERCLA.”). The definitions of removal
and remedial action exemplify this muddled language. See 42
U.S.C. § 9601(23) (defining “removal”); id. § 9601(24)
(defining “remedial action”); id. § 9601(25) (defining “re-
sponse”); see also supra notes 4, 6 (quoting definitions).
The definition of “removal” is written in sweeping terms.
It begins with the general statement that “removal” means
“the cleanup or removal of released hazardous substances
from the environment.” 42 U.S.C. § 9601(23). The definition
15558 UNITED STATES v. W.R. GRACE & CO.
goes on to describe three categories of events that trigger
removal: (1) “such actions as may be necessary [sic] taken in
the event of the threat of release of hazardous substances into
the environment”; (2) “such actions as may be necessary to
monitor, assess, and evaluate the release or threat of release
of hazardous substances”; and a third catch-all category,
(3) “such other actions as may be necessary to prevent, mini-
mize, or mitigate damage to the public health or welfare or to
the environment, which may otherwise result from a release
or threat of release.” Id.
Finally, the definition lists a number of specific activities
that fall within the definition of “removal”—“alternative
water supplies,” “temporary evacuation and housing,” and
“emergency assistance.” Although at first glance this half of
the definition appears to provide concrete guidance by listing
identifiable activities such as “security fencing,” this part too
is left vague by the opening caveat that the term “removal”
“includes, in addition, without being limited to, security fenc-
ing . . . .” Id. Consequently, “these examples serve only as a
guide to what activities may appropriately be classified as
‘removal action.’ ” Hanford Downwinders Coalition, 71 F.3d
at 1478 n.13.
The definition of “remedial action” is similarly broad, but
can be distinguished from “removal” because it refers to “per-
manent” remedies and its list of specific actions is, in large
part, distinct from the list included under “removal.” (For
example, “removal” is focused on temporary and emergency
activities.) To begin, the definition states that a “remedial
action” is an action “consistent with permanent remedy taken
instead of or in addition to removal actions.” 42 U.S.C.
§ 9601(24). Although the section begins with this clear lan-
guage, it threatens to collapse into the definition of “removal”
because it includes those actions “taken instead of or in addi-
tion to removal actions” and is triggered “in the event of a
release or threatened release of a hazardous substance into the
environment, to prevent or minimize the release of hazardous
UNITED STATES v. W.R. GRACE & CO. 15559
substances so that they do not migrate to cause substantial
danger to present or future public health or welfare or the
environment.” Id. Thus, the triggering factors begin to sound
virtually similar to the triggering factors for a “removal”
action. In fact, two of the triggering factors for “removal” are
almost identical to the factors for “remedy”:
Removal — 42 U.S.C. Remedy — 42 U.S.C.
§ 9601(23) § 9601(24)
“such actions as may be “those actions consistent
necessary [sic] taken in the with permanent remedy
event of the threat of release taken in the event of a
of hazardous substances into release or threatened release
the environment” of hazardous substances into
the environment”
“such other actions as may “those actions consistent
be necessary to prevent, with permanent remedy
minimize, or mitigate dam- taken to prevent or mini-
age to the public health or mize the release of hazard-
welfare or to the environ- ous substances so that they
ment, which may otherwise do not migrate to cause sub-
result from a release or stantial danger to present or
threat of release” future public health or wel-
fare or the environment”
The definition concludes with three lists of specific exam-
ples classified as a remedy, such as “segregation of reactive
wastes.” The first list details various locations of the release.
As with the term “removal,” the definition for the first list
diminishes the examples’ guidance with the qualifying lan-
guage that the term “includes, but is not limited to,” the listed
examples. Id. The second list spells out when permanent relo-
cation of residents, businesses, and community facilities is
15560 UNITED STATES v. W.R. GRACE & CO.
appropriate. Finally, the third list is a list of actions included
within “remedy,” ranging from offsite storage to disposition
of hazardous substances.
Adding to the confusion is the overlap between the two def-
initions. See Neville Chem. Co., 358 F.3d at 667 (noting list-
ing of “provision of alternative water supplies” under both
“remedial action” and “removal”); Geraghty & Miller, 234
F.3d at 927 (noting overlap). Attempting to untie the Gordian
knot of these definitions solely based on their plain meanings
is thus unavailing.19
In interpreting “removal” and “remedial,” we next follow
the Supreme Court’s guidance in taking a comprehensive,
holistic view of CERCLA because it is a “fundamental canon
of statutory construction that the words of a statute must be
read in their context and with a view to their place in the over-
all statutory scheme.” FDA v. Brown & Williamson Tobacco
Corp., 529 U.S. 120, 133 (2000) (quoting Davis v. Mich.
Dep’t of Treasury, 489 U.S. 803, 809 (1989)).
[6] CERCLA makes clear that the EPA has the tools of
both removal and remedial actions at its fingertips when there
is a release or threatened release of a hazardous substance.
Specifically, the EPA is authorized “to remove or arrange for
the removal of, and provide for remedial action relating to
19
Other courts have similarly been unable to extract answers from the
statute’s plain meaning:
[T]hose courts which have attempted to unravel CERCLA’s defi-
nitions have found no solace in either the “plain meaning” of the
statute or the reams of legislative history. Instead, in an attempt
to glean legislative intent, courts seem to resort to a sort of “Pur-
kinje phenomenon,” hoping that if they stare at CERCLA long
enough, it will burn a coherent afterimage on the brain.
CP Holdings, Inc. v. Goldberg-Zoino & Assocs., Inc., 769 F. Supp. 432,
435 (D.N.H. 1991) (footnote omitted) (referring to “[a]n optical illusion
named for Johannes E. Purkinje (1787-1869), whereby the eye retains an
afterimage of an object in a different color from the original”).
UNITED STATES v. W.R. GRACE & CO. 15561
such hazardous substance, pollutant, or contaminant at any
time . . . , or take any other response measure consistent with
the national contingency plan which the [EPA] deems neces-
sary to protect the public health or welfare or the environ-
ment.” 42 U.S.C. § 9604(a)(1). The statute as a whole,
however, does little to clarify how to categorize a given
response action except to suggest that remedial actions may
be “long term.” See, e.g., id. § 9604(a)(2) (indicating that any
removal action should contribute to the efficient performance
of any “long term” remedial actions without further elabora-
tion).
Nor does the purpose of the statute provide definitive guid-
ance, though it points towards a liberal reading of “removal”
in order to effectuate CERCLA’s underlying purpose of “pro-
tect[ing] and preserv[ing] public health and the environment
by facilitating the expeditious and efficient cleanup of hazard-
ous waste sites.” Carson Harbor Vill., 270 F.3d at 880 (quot-
ing Pritikin v. Dept of Energy, 254 F.3d 791, 794-95 (9th Cir.
2001) (internal quotation marks and citation omitted)); see
also, e.g., Sierra Club v. Seaboard Farms, Inc., 387 F.3d
1167, 1172 (10th Cir. 2004) (advocating that CERCLA be
interpreted liberally so as to accomplish its remedial goals).
Specifically, because a removal action can be initiated
promptly after notification of a threat, a liberal reading pro-
vides the EPA with greater flexibility to use this tool for the
protection of the public health.
Last, we turn to CERCLA’s legislative history for guid-
ance. See BedRoc Ltd. v. United States, 541 U.S. 176, 187 n.8
(2004) (noting “longstanding precedents that permit resort to
legislative history only when necessary to interpret ambigu-
ous statutory text”). But see Johnson v. United States, 529
U.S. 694, 723 (2000) (Scalia, J., dissenting) (criticizing
majority’s reliance on legislative history because “[o]ur obli-
gation is to go as far in achieving the general congressional
purpose as the text of the statute fairly prescribes—and no
further”).
15562 UNITED STATES v. W.R. GRACE & CO.
[7] Unfortunately, legislative history is particularly unhelp-
ful because of the haphazard passage of CERCLA with many
of the more lucid descriptions of the statute falling under the
oxymoronic category of post-enactment “history.” See, e.g.,
126 Cong. Rec. S16,428 (daily ed. Dec. 12, 1980), reprinted
in 1 The Environmental Law Institute, Superfund: A Legisla-
tive History 87 (Helen Cohn Needham & Mark Menefee eds.,
1982) (hereinafter “Superfund History”) (post-passage “clari-
fication” by Sen. Stafford that “the purpose of [CERCLA] and
the response plan is to protect the public health and welfare
in its broadest sense”); see also Alfred R. Light, CERCLA
Law and Procedure 12-18 (1991) (describing the “unusual
back-room congressional compromise process” behind CER-
CLA); 1 Superfund History, supra, at xiii (“The emergence of
this last-minute compromise hampers the ability of research-
ers to draw definitive conclusions from the otherwise exten-
sive legislative history of CERCLA.”). Considering that no
committee or conference reports address the version of CER-
CLA that ultimately became law, it is apt to describe the
search for legislative history as “somewhat of a snark hunt.”
Carson Harbor Vill., 270 F.3d at 885.
Without the benefit of a definitive committee report or
other deliberate congressional documents describing the gene-
sis of the final bill, we are hesitant to rely on legislative his-
tory for guidance, especially in regard to the nuanced inquiry
as to which side an action falls on the removal/remedial line.
See United States v. Adams, 343 F.3d 1024, 1032 n.8 (9th Cir.
2003) (warning that subsequent legislative history is a “haz-
ardous basis for inferring the intent of an earlier Congress”)
(quoting United States v. McCoy, 323 F.3d 1114, 1121 (9th
Cir. 2003)).
What we can take away from the legislative history is the
drafters’ overarching concern that aggressive action be taken
to protect the public health. See, e.g., 126 Cong. Rec. S14,714
(daily ed. Nov. 19, 1980), reprinted in 1 Superfund History,
supra, at 90 (statement of Sen. Mitchell) (“The Surgeon Gen-
UNITED STATES v. W.R. GRACE & CO. 15563
eral of the United States has stated that toxic wastes may be
the most serious threat to public health in our country in the
next decade. So it is in this spirit of urgency that I cosponsor
this substitute [bill] today.”); S. Rep. No. 96-848, at 2 (1980)
(stating in report for unadopted draft of CERCLA that “the
potential impact of toxic chemicals on the general public and
environment through unsound hazardous disposal sites and
other releases of chemicals is tremendous”); see also 55 Fed.
Reg. 8666, 8725 (Mar. 8, 1990) (statement in comments to
1990 amendments to the National Contingency Plan that
“Section 121 of CERCLA makes clear, and the legislative his-
tory confirms, that the overarching mandate of the Superfund
program is to protect human health and the environment from
the current and potential threats posed by uncontrolled haz-
ardous waste sites.”). Such statements encourage us to con-
strue “removal” liberally to effectuate CERCLA’s remedial
purpose, but they do not illuminate the removal/remedial dis-
tinction. Cf. Seaboard Farms, 387 F.3d at 1172 (“[CERCLA]
must be interpreted liberally so as to accomplish its remedial
goals.”); Kelley v. E.I. DuPont de Nemours & Co., 17 F.3d
836, 843 (6th Cir. 1994) (“We conclude that Congress
intended that the term ‘removal action’ be given a broad inter-
pretation.”).
[8] In sum, we are unable to discern Congress’s clear intent
through the normal tools of statutory interpretation. The
meanings of “removal” and “remedial action” under CER-
CLA are inescapably vague.
2. DEFERENCE TO THE EPA’S CHARACTERIZATION
Having concluded that Congress did not draw a clear line
between removal and remedial actions, we turn to the second
step under Chevron and ask whether, in view of the deference
owed to the EPA, the Libby cleanup was a removal action as
a matter of law. As noted earlier, the level of deference we
accord to a given agency interpretation is directed by its form.
15564 UNITED STATES v. W.R. GRACE & CO.
[9] The administrative posture of CERCLA presents two
types of agency interpretations. One is the National Contin-
gency Plan, which carries the force of law.20 The second
relates to informal agency interpretations, which at a mini-
mum receive respect and, depending on the interplay of Mead
and Brand X, may even deserve Chevron deference. Which-
ever of these applies, we reach the same result: We hold that
the EPA has rationally construed CERCLA and that construc-
tion deserves our respect. Cf. Alaska Dep’t of Envtl. Conser-
vation, 540 U.S. at 485-88 (EPA “rationally construed” Clean
Air Act in internal guidance memoranda, which construction
deserved “respect and approbation” but not Chevron defer-
ence). As interpreted by the EPA, the removal/remedial dis-
tinction boils down to whether the exigencies of the situation
were such that the EPA did not have time to undertake the
procedural steps required for a remedial action, and, in
responding to such a time-sensitive threat, the EPA sought to
minimize and stabilize imminent harms to human health and
the environment. The EPA did so here.
The definitions of “removal” and “remedial action” in the
EPA-promulgated National Contingency Plan merely parrot
CERCLA’s definitions, aside from a few minor revisions for
the National Contingency Plan context. See, e.g., 40 C.F.R.
§ 300.5 (replacing “EPA” for “the President” in definition of
“remedial action” and noting that, for the purpose of the
National Contingency Plan, “remedial” and “removal”
include enforcement activities related thereto). Because these
definitions do nothing to interpret the definitions in CERCLA,
they are unhelpful to our inquiry.
20
40 C.F.R. § 300.2 explains that the President delegated to the EPA
“the responsibility for the amendment of the [National Contingency
Plan].” See also id. (“The [National Contingency Plan] is applicable to
response actions taken pursuant to the authorities under CERCLA . . . .”);
Vigil v. Leavitt, 381 F.3d 826, 834 (9th Cir. 2004) (“Congress has given
EPA general rulemaking authority, which, when exercised, requires our
deference in accordance with Chevron.”) (citation omitted).
UNITED STATES v. W.R. GRACE & CO. 15565
That being said, other parts of the National Contingency
Plan offer some guidance. For instance, 40 C.F.R.
§ 300.415(e) sets forth examples of activities that are “as a
general rule,” appropriate as part of a removal action, but
notes that the list “is not exhaustive and is not intended to pre-
vent the lead agency from taking any other actions deemed
necessary under CERCLA.” See also 42 U.S.C. § 9601(23)
(providing that the scope of removals is not limited to the
examples in the statutory definition). The examples include,
among others, fences or other site control precautions; cap-
ping of contaminated soils to reduce migration; excavation,
consolidation, or removal of highly contaminated soils; and
removal and treatment of hazardous materials where it will
reduce the likelihood of human exposure. 40 C.F.R.
§ 300.415(e). The bulk of activities carried out in Libby easily
fall within the scope of the listed examples. For instance, the
EPA removed hazardous soil from the screening plant,
restricted access to contaminated roads, installed a temporary
cover on a school’s ice skating rink, excavated and backfilled
contaminated soil, and removed exposed piles of vermiculite.
[10] Although “immediacy” is not used in the definition of
“removal” either in CERCLA or the National Contingency
Plan, the examples in 40 C.F.R. § 300.415(e) imply a level of
urgency in addressing the threat both by expressly using the
word “immediately,” see id. § 300.415(e)(9) (providing alter-
native water supply “where necessary immediately to reduce
exposure to contaminated household water”), and by describ-
ing looming threats against which prompt action is needed,
see, e.g., id. § 300.415(e)(4) (capping contaminated soils
“where needed to reduce migration of hazardous substances
. . . into soil, ground or surface water, or air”). Not surpris-
ingly, the criteria used to determine whether the selection of
a removal action is appropriate are similarly infused with this
sense of immediacy. See, e.g., id. § 300.415(b)(2)(iv) (factors
include whether there are hazardous substances in soils
“largely at or near the surface, that may migrate”).
15566 UNITED STATES v. W.R. GRACE & CO.
The need for immediate action permeates the EPA’s activi-
ties in Libby. The toxicologist’s May 17, 2000, report that
was attached to the First Action Memo concludes that
“[a]irborne fiber concentrations in the residential area of
Libby exceeded the present occupational Permissible Expo-
sure Level (PEL) of 0.1 fiber/cubic centimeter established by
OSHA 1994 (MRI, 1982).”21 These levels translated into an
immediate public health threat because, as documented in the
health consultation by the Agency for Toxic Substances and
Disease Registry, complete exposure pathways were present
around Libby. For example, EPA investigations found deteri-
orating bags of vermiculite at the former screening plant, as
well as vermiculite tailings at the surface of a walking path
next to the Libby High School track. And the dilapidated con-
dition of houses was such that “[i]n some Libby homes, ver-
miculite insulation is literally falling out into the living space
from gaps around light fixtures and electrical switches.” That
these particles were present in people’s homes and schools is
especially troubling because, in contrast to standards set by
OSHA for workers who are exposed to particles during an
eight-hour workday, home and school contamination could
result in exposure for twenty-four hours per day. In short, the
carcinogenic fibers were widespread and, contrary to Grace’s
assertions, were not contained such that they would not be
inhaled. As ominously observed by the EPA, “Of course once
airborne, the fibers will migrate whichever way the wind
blows.”
The sequence of activities in Libby further comports with
the EPA’s description in the National Contingency Plan of the
preferred development of response actions. The National Con-
tingency Plan provides that the agency should orderly transi-
21
The Permissible Exposure Level is for eight hours, not twenty-four.
Although Grace argues that the EPA’s toxicologist’s report is incorrect, it
does not cite to the report of any other experts who concluded otherwise.
Nor does Grace cite to any provisions of OSHA that require a different
protocol for the taking of samples which the EPA’s expert did not follow.
UNITED STATES v. W.R. GRACE & CO. 15567
tion from a removal to a remedial action if it “determines that
the removal action will not fully address the threat posed by
the release.” 40 C.F.R. § 300.415(g). This progression is evi-
denced by the three Action Memos for Libby, which began by
calling for a removal action but later paved the way for a
remedial action.22 Indeed, the First Action Memo notes that
the proposed removal action “should compliment and contrib-
ute to the overall success of any remedial actions in the
future.” The Third Action Memo further states, “Continued
response actions are appropriate and consistent with the reme-
dial actions to be taken.” Thus, the EPA conducted its
removal action in Libby not in lieu of a remedial action, but
rather as a prelude to a comprehensive remedial action.
Looking beyond the National Contingency Plan, the EPA’s
characterization of response actions in documents that do not
have the heft of regulations still carry weight because
“[c]ogent ‘administrative interpretations . . . not [the] products
of formal rulemaking . . . nevertheless warrant respect.’ ”
Alaska Dep’t of Envtl. Conservation, 540 U.S. at 488 (quoting
Wash. State Dep’t of Soc. & Health Servs. v. Guardianship
Estate of Keffeler, 537 U.S. 371, 385 (2003) (alterations in
original)); see also FTC v. Garvey, 383 F.3d 891, 903 (9th
Cir. 2004) (where Chevron deference does not apply, “[an
agency’s] pronouncement’s persuasiveness may nevertheless
entitle it to respect”). The need for agency expertise is partic-
ularly acute when we are faced with a complex regulatory
regime, such as CERCLA. In this situation, we recognize that
the “well-reasoned views of an expert administrator rest on a
body of experience and informed judgment to which courts
and litigants may properly resort for guidance.” Alaska Dep’t
of Envtl. Conservation, 540 U.S. at 487 (internal citations and
quotation marks omitted).
22
We note, however, that there need not be a linear progression from a
removal to a remedial action. For example, “removal actions may be con-
ducted in response to a time-critical situation at a remedial response site.”
53 Fed. Reg. 51,394, 51,405 (Dec. 21, 1988) (comment in the EPA’s pro-
posed revisions to the National Contingency Plan).
15568 UNITED STATES v. W.R. GRACE & CO.
Most notably, the EPA issued a memo in 2000 to guide
project managers during the decisionmaking process of select-
ing between remedial and removal actions. See Stephen Luf-
tig, Director, Office of Emergency and Remedial Response,
Use of Non-Time-Critical Removal Authority in Superfund
Response Actions (Feb. 14, 2000), available at http://
www.epa.gov/superfund/resources/remedy/pdf/memofeb
2000-s.pdf (last visited July 26, 2005) (hereinafter “Removal
Memo”). Amplifying the National Contingency Plan’s focus
on the immediacy of the threat, the Removal Memo empha-
sizes “time sensitivity,” i.e., “the need to take relatively
prompt action,” as a key characteristic of removal actions:
“[E]ven expensive and complex response actions may be
removal action candidates if they are relatively time-
sensitive.” Removal Memo, supra, at 3-4 (“For example,
dredging large quantities of contaminated sediment could be
conducted using removal authority where such action was the
appropriate course for abating or controlling a time-sensitive
threat.”).23 An EPA report published in 2000 describing the
removal program reiterates that “[t]he critical element in
all cases is time—prompt action is crucial.” Office of Emer-
gency and Remedial Response, EPA, EPA 540-K-00-002,
The Emergency Response and Removal Program 3 (2000),
available at http://www.epa.gov/superfund/resources/emer_
res.htm (last visited July 26, 2005) (hereinafter “Removal
Program Report”).
Courts have also stressed the immediacy of a threat in
23
The three Action Memos all categorize the action in Libby as “Time
Critical.” The EPA may also choose to conduct “non-time-critical”
removal actions “when the lead Agency determines, based on the site eval-
uation, that a removal action is appropriate, and a planning period of at
least six months is available before on-site activities must begin.” Office
of Emergency and Remedial Response, EPA, Conducting Non-Time-
Critical Removal Actions Under CERCLA, EPA/540/F-94/009, at 1(Dec.
1993), available at http://www.epa.gov/superfund/resources/remedy/pdf/
540f-94009-s.pdf (last visited July 26, 2005). This subset of removal
actions is subject to more stringent procedural requirements.
UNITED STATES v. W.R. GRACE & CO. 15569
deciding whether a cleanup is a removal action. See, e.g., City
of Wichita v. Trs. of APCO Oil Corp. Liquidating Trust, 306
F. Supp. 2d 1040, 1077-78 (D. Kan. 2003) (city’s cleanup was
“remedial in nature” under CERCLA where “[t]he court has
heard no evidence that the contamination at the Site posed a
threat to human health or the environment which required an
immediate response”); Carson Harbor Vill., Ltd. v. Unocal
Corp., 287 F. Supp. 2d 1118, 1157 (C.D. Cal. 2003) (finding
action was remedial where “[t]here is no evidence in the
record that the materials posed the type of threat to human
health and welfare that required immediate action”); Hatco
Corp. v. W.R. Grace & Co.-Conn., 849 F. Supp. 931, 963
(D.N.J. 1994) (in finding response was a removal, placing
“significant weight upon the fact that the release of [the haz-
ardous substance] was not only imminent, but actually occur-
ring”).
While stressing time sensitivity, the Removal Memo down-
plays the importance that some courts have placed on dura-
tion, i.e., “how long the response action will take to build or
implement,” because “removal actions are most often of short
duration, but they certainly can be long-running responses,
too, thereby undercutting the probative value of duration . . .
in deciding whether an action is removal rather than remedial
in nature.” Removal Memo, supra, at 3 n.2. But see Sherwin-
Williams Co. v. City of Hamtramck, 840 F. Supp. 470, 475-76
(E.D. Mich. 1993) (“[T]he extended and protracted nature of
the cleanup indicate that the City has engaged in a remedial
action.”). Accordingly, the action in Libby is not disqualified
from being a removal action just because it took several years.
Cf. Vill. of Milford v. K-H Holding Corp., 390 F.3d 926, 934
(6th Cir. 2004) (explaining that the court has “never held” that
the short-term nature of an action is required for finding costs
recoverable as removal costs). The length of the cleanup in
Libby is especially understandable given that harsh winters
truncated the construction season and that the sheer magni-
tude of the initial cleanup far exceeded the normal situation
faced by the EPA. Cf. Sunoco, 337 F.3d at 1244 (concluding
15570 UNITED STATES v. W.R. GRACE & CO.
that action was a removal in part because it was finished in
about 14 months, “a relatively short time frame in the context
of a clean-up lasting more than a decade in a harsh environ-
ment” (internal quotation marks omitted)).
Likewise, the Removal Memo describes courts’ reliance on
the “permanence” of the response as “sometimes misleading”:
“As a practical matter, removal actions are often permanent
solutions such as can be the case in a typical soil or drum
removal.” Removal Memo, supra, at 3 n.3; cf. Geraghty &
Miller, 234 F.3d at 927 (“Even if the replacements for these
wells are integral to the long-term remediation of the site, that
does not mean that their initial placement cannot be catego-
rized as removal.”). This observation seems logical, as we do
not want to tie the EPA’s hands or compel it to adopt short-
term remedies for fear that any more permanent solutions
automatically will be dubbed “remedial actions.” Nor would
it make economic or practical sense to impose a requirement
that removal actions must be only temporary in nature. The
Removal Memo instead uses the term “comprehensiveness”
to distinguish between the use of removal authority to conduct
interim or partial response actions that are focused on imme-
diate risk reduction as compared with a final or “comprehen-
sive” response at the site. Removal Memo, supra, at 3 n.3.
The Libby cleanup exhibits this two-tier approach of an
interim removal action that the EPA transforms into a com-
prehensive remedial action. Cf. Geraghty & Miller, 234 F.3d
at 926 (noting that “removal actions generally are immediate
or interim responses”).
These informal interpretations combined with the descrip-
tions in the National Contingency Plan provide a persuasive
interpretation that removal actions encompass interim, partial
time-sensitive responses taken to counter serious threats to
public health. As the EPA explained in the Second Action
Memo, “CERCLA was designed and enacted to prevent ill-
ness and death resulting from exposure to hazardous sub-
stances, not wait for its occurrence to prove a threat.”
UNITED STATES v. W.R. GRACE & CO. 15571
Grace attempts to add another layer of complexity to our
analysis by challenging various scientific and other methodol-
ogy judgments made by the EPA as part of the cleanup. Once
we determine that a response action on the whole is, by
nature, classified as a removal action under the law, we will
not delve further to second-guess the underlying data absent
a showing of specific evidence that the EPA’s conclusions
were not warranted. See Balt. Gas and Elec. Co. v. Natural
Res. Def. Council, 462 U.S. 87, 103 (1983). (“When examin-
ing this kind of scientific determination, as opposed to simple
findings of fact, a reviewing court must generally be at its
most deferential.”). Although Grace argues in its briefs that
the EPA’s data and conclusions were wrong, it did not present
evidence to support its claim that the EPA’s selection of a
removal action was arbitrary and capricious, see 42 U.S.C.
§ 9613(j)(2), or that its characterization of the action as a
removal action did not comport with the statutory definition,
see 42 U.S.C. § 9601(23). Of course, the EPA does not have
free rein to ignore accepted scientific principle or to adopt
findings that are wholly at odds with the record evidence. See
Great Basin Mine Watch v. United States EPA, 401 F.3d
1094, 1098 (9th Cir. 2005) (court will overturn a final agency
action if the agency “entirely failed to consider an important
aspect of the problem, offered an explanation for its decision
that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in
view or the product of agency expertise”) (quoting Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463
U.S. 29, 43 (1983)). But such is not the case here. Nor can it
be said that the EPA’s conclusions are arbitrary and capri-
cious. See Envtl. Def. Ctr., Inc. v. EPA, 344 F.3d 832, 858
n.36 (9th Cir. 2003) (an agency decision is arbitrary and
capricious if there is no rational connection between the deci-
sion and the facts in the record).
The disputes between Grace and the EPA regarding testing
methodology and data analysis are exceedingly complex. The
administrative record includes, for instance, the EPA’s
15572 UNITED STATES v. W.R. GRACE & CO.
response to Grace’s contention that the EPA “inappropriately
calculated PCMEs [phase contrast microscopy equivalents] if
those findings are going to be compared to the OSHA PEL
[Occupational Safety & Health Administration permissible
exposure limits].” We are not scientists, nor do we intend to
play armchair EPA administrator. But we are judges and it is
our role to evaluate the record evidence against the standard
of review. We defer to the EPA’s reasoned judgment. See
Sunoco, 337 F.3d at 1243 (“[Skidmore] deference seems par-
ticularly appropriate where an action reasonably can be classi-
fied as both ‘removal’ and ‘remedial’ under CERCLA’s
complex definitional provisions.”).
The EPA’s scientific basis for finding an immediate threat
to the public health is thoroughly documented over thousands
of pages. In addition to the detailed evaluation of the threat in
the three Action Memos, the administrative record includes,
for example, comprehensive reports by both the EPA’s
regional toxicologist and senior toxicologist explaining the
imminent and substantial endangerment to public health in
Libby, extensive responses by the EPA to Grace’s comments
on the cleanup, and lengthy findings by the Agency for Toxic
Substances and Disease Registry on medical testing con-
ducted on Libby residents. In particular, the Agency’s Febru-
ary 22, 2001, report documents findings from its study
conducted from July through November 2000 in which 1,078
people participated. Of those participants, the findings can be
summarized as follows:
UNITED STATES v. W.R. GRACE & CO. 15573
Type of Possible Exposure Percentage who had a pleu-
ral abnormality24 on the
chest radiograph that could
be seen by at least two certi-
fied specialists
Grace Workers and second- 37%
ary contractors
Other work-related contacts 18%
with vermiculite
Household contacts with 20%
Grace Workers
Vermiculite insulation in 14%
home
Some recreational contact 16%
with vermiculite
No apparent exposure, but 14%
lives in or around Libby
In comparison, the report recites the following statistics:
24
According to the report, “Asbestos exposure is associated with several
changes in the pleura (lining of the lungs and internal chest wall). . . .
They indicate past exposure to asbestos, and can often be detected in chest
radiographs (CXW), also known as X-rays.” The report goes on to explain
that “[t]he presence of any of these pleural abnormalities on chest radio-
graph, associated with asbestos exposure, indicates increased risk for
mesothelioma and lung cancer.”
15574 UNITED STATES v. W.R. GRACE & CO.
Studies of differing groups within the United States
believed to have no substantive work-related asbes-
tos exposures have found the prevalence of pleural
abnormalities ranging from 0.02% among blue-collar
workers in North Carolina [Castellan 1985], to 0.9%
among loggers in Washington and Oregon [Stilbolt
1991], to 1.8% among New Jersey residents [Ander-
son 1979], and 2.3% among patients at Veterans
Administration hospitals in New Jersey [Miller JA
1996].
Further, in response to the EPA’s request that the Agency
for Toxic Substances and Disease Registry comment on
whether the proposed removal action was appropriate to pro-
tect the public health, the Agency concluded in a May 17,
2000, report that “Asbestos contamination is present at the
screening plant and export plant at levels that pose a public
health hazard. The time critical removal action proposed by
EPA is warranted to protect the public health.”
Beyond the findings that prompted the EPA to undertake
the removal action, the administrative record also documents
the concrete steps taken to combat this threat, such as remov-
ing vermiculite tailings from under and around running tracks
at local schools, covering and demarcating major contami-
nated areas at residential properties, and cleaning the interiors
of infected homes.
[11] In sum, given the sweeping language in the definition
of “removal,” the significant deference due to the EPA’s
interpretation of this language, and the scope of the interim
cleanup, we hold that the EPA’s cleanup in Libby falls within
the bounds of a removal action. The EPA “has rationally con-
strued the Act’s text and [the] EPA’s construction warrants
our respect and approbation.” Alaska Dep’t of Envtl. Conser-
vation, 540 U.S. at 485. This holding comports with CER-
CLA’s fundamental goal of protecting the public health. See,
e.g., Hanford Downwinders Coalition, 71 F.3d at 1481
 UNITED STATES v. W.R. GRACE & CO. 15575
(“[T]his circuit has joined others in recognizing that protec-
tion of the public health was one of the remedial goals of
CERCLA.”). Considering the chaotic history behind CER-
CLA’s passage, we are particularly sensitive not to adopt a
reading that would undermine its remedial purpose. See Clark
v. Uebersee Finanz-Korporation, 332 U.S. 480, 488 (1947)
(advising that courts should not adopt an interpretation of stat-
utory language that would “run counter to the policy of the
Act and be disruptive of its purpose . . . [when] dealing with
hasty legislation which Congress did not stop to perfect as an
integrated whole”).
[12] In so holding, we recognize that Congress created a
bifurcated scheme of removal and remedial actions and,
accordingly, there must be outer limits to removal actions.
But the EPA did not exceed these limits in this case. Nor need
we delineate the outer parameters. We simply conclude that
the EPA’s characterization of the cleanup in Libby as a
removal action is amply supported by the administrative
record and easily withstands scrutiny under the modified level
of interpretive deference afforded by Mead and Alaska
Department of Environmental Conservation. Although defer-
ence to the EPA’s interpretation is significant, it is not blind.
Courts must, as a matter of law, ultimately determine that the
EPA’s characterization of a given response action accords
with CERCLA, as we so determine here.
[13] Crucial to our determination is the documented evi-
dence that, absent immediate attention, the airborne toxic par-
ticles would continue to pose a substantial threat to public
health. To combat this widespread, looming threat, the EPA
had no choice but to undertake an aggressive removal action
of an expansive scope. The removal activities easily fall
within the statutory definition of removal. Notably, the defini-
tions for removal and remedial actions consciously include
some overlap. Because of the nature of the contaminant, some
of the measures taken by the EPA as part of the removal
action might also effect a permanent solution for a particular
15576 UNITED STATES v. W.R. GRACE & CO.
location (e.g., removing exposed piles of vermiculite). But by
no means did the removal action fully eliminate the public
health threat or amount to a full-blown remediation. Accord-
ing to the EPA’s CERCLIS database, the EPA is continuing
work to ensure that potential or actual human exposures are
under control. See http://cfpub1.epa.gov/supercpad/cursites/
csitinfo.cfm?id=0801744 (last visited July 26, 2005).
Although Libby’s problems appear far from solved, the EPA
is making progress. As envisioned by CERCLA, the EPA
plans to effect a comprehensive resolution to the asbestos
contamination through the pending remedial action.
II. EXEMPTIONS FROM THE $2 MILLION, 12-MONTH
STATUTORY CAP APPLICABLE TO REMOVAL ACTIONS
Having determined that the action is properly characterized
as a removal action, the inquiry turns to whether the EPA can
recover costs in excess of the $2 million, 12-month statutory
cap on removal actions. See 40 C.F.R. § 300.415(b)(5). The
district court found persuasive the EPA’s explanations in the
Action Memos of the immediate risk to public health. Grace
I, 280 F. Supp. 2d at 1144. We agree and hold that, consider-
ing the widespread and pervasive asbestos contamination and
the potential for further migration of asbestos fibers as docu-
mented in the Action Memos, the EPA’s decision to exceed
the statutory cap was not arbitrary and capricious.
[14] We begin with the language of 42 U.S.C. § 9604(c)(1):
Unless (A) [the EPA] finds that (i) continued
response actions are immediately required to pre-
vent, limit, or mitigate an emergency, (ii) there is an
immediate risk to public health or welfare or the
environment, and (iii) such assistance will not other-
wise be provided on a timely basis, . . . obligations
from the Fund . . . shall not continue after
$2,000,000 has been obligated for response actions
or 12 months has elapsed from the date of initial
UNITED STATES v. W.R. GRACE & CO. 15577
response to a release or threatened release of hazard-
ous substances.
See also 40 C.F.R. § 300.415(b)(5) (limiting actions to $2
million and 12 months “unless the lead agency determines
that” one of the exemptions applies). Despite Grace’s asser-
tion that the decision to exceed the cap is not subject to arbi-
trary and capricious review, the fact that the statute allows the
EPA to invoke the exemptions when it “finds” certain condi-
tions counsels otherwise. See 5 U.S.C. § 706(2) (courts should
set aside agency conclusions and findings where “arbitrary,
capricious, an abuse of discretion, or otherwise not in accor-
dance with law”). The EPA’s determinations in this case that
there was an emergency, that the risk to public health was
immediate, and that the assistance would not otherwise be
forthcoming are inherently fact-based.
In the First Action Memo, the EPA determined that the
removal action met the three statutory elements required to
exceed the cap. See § 9604(c)(1)(A). Namely, (1) the asbestos
in the environment posed an immediate threat to the local
population; (2) a cleanup beyond the cap was required to pre-
vent, limit, or mitigate an emergency25 because of the size of
25
The term “emergency” is not defined in CERLCA or the National
Contingency Plan, and the EPA has interpreted it to include a range of
time-sensitive threats:
Not all actions begin under what are commonly thought of as
“emergency” conditions. Though events such as tire fires, train
derailments, and chemical explosions require immediate action,
other less dramatic threats to public health are addressed under
EPA’s Emergency Response and Removal Program. Such threats
include the discovery of leaking drums or tanks at an abandoned
factory or complaints of tainted drinking water near a landfill.
Regardless of the circumstances, quick and efficient cleanup of
hazardous material eliminates risks to people and the environ-
ment and minimizes the stigma contamination can bring to prop-
erties and communities.
Removal Program Report, supra, at 3.
15578 UNITED STATES v. W.R. GRACE & CO.
the cleanup and the short construction season; and (3) assis-
tance from other government agencies was not anticipated on
a timely basis. The Second Action Memo reiterated this reli-
ance on the “emergency exemption,” explaining that “[a]t all
the locations discussed in this Action Memorandum if
Removal Actions are not initiated or continued then people
will be exposed to unsafe levels of amphibole asbestos.” In
light of the EPA’s documentation of complete exposure path-
ways and the resulting continuing threat to public health, we
hold that the EPA “articulate[d] a rational connection between
the facts found and the conclusions made.” Envtl. Def. Ctr.,
344 F.3d at 858 n.36.
Turning to the Third Action Memo, the EPA continued its
reliance on the emergency exemption, once again citing the
statutory factors and explaining that a continued removal
action was necessary to prevent exposure to unsafe levels of
asbestos. In addition, the EPA relied on the “consistency
exemption,” which allows for a continued removal action
over the cap when it is “otherwise appropriate and consistent
with the remedial action to be taken.” 42 U.S.C.
§ 9604(c)(1)(C); see also 40 C.F.R. § 300.415(b)(5)(ii) (corre-
sponding provision). At the time the Third Action Memo was
released, the EPA had proposed Libby to the National Priori-
ties List but it had not yet been listed. Thus, as envisioned in
the Action Memos, the removal action in Libby was not an
exhaustive cleanup effort. Rather, the EPA has segued into
the remedial phase and, in the interim, found that “[c]ontinued
response actions are appropriate and consistent with the reme-
dial actions to be taken.”
On a practical level, the need to exceed the cap is not sur-
prising given the urgency, magnitude, and long-standing
nature of the problem. First, the tremendous scope of the
removal in Libby made the $2 million ceiling unworkable. An
entire town needed to be cleaned up, not just a mobile home
park, Carson Harbor Vill., 270 F.3d at 867, or a “five-acre
parcel of land,” Chapman, 146 F.3d at 1168. In contrast to
UNITED STATES v. W.R. GRACE & CO. 15579
these localized threats, the EPA explained in its response to
comments received from Grace in December 2001 that it still
had more than 2000 properties to sample around Libby.
The 12-month limit was also impractical given both the
scale of the effort and the meteorological reality of the harsh
conditions, which result in a short construction season and
thus necessitate several years to complete cleanup activities
that might be completed considerably faster in a more temper-
ate climate. The severe winters and hot summers are further
problematic in that they exacerbate the spread of asbestos par-
ticles through wind and erosion. Cleansing the site of these
widespread particles requires such labor-intensive acts as bulk
removal of contaminated materials followed by thorough
cleaning and vacuuming of the houses.
[15] Given these daunting realities and the EPA’s careful
documentation of its reasons for invoking the emergency and
consistency exemptions, we hold that the EPA’s decision to
exceed the statutory cap was based on the relevant factors,
there has been no clear error of judgment, and the decision
was not arbitrary and capricious. See Marsh v. Or. Nat’l Res.
Council, 490 U.S. 360, 378 (1989); Envtl. Def. Ctr., 344 F.3d
at 858 n.36. Therefore, the EPA is entitled to recover the full
costs of its removal action in Libby as found by the district
court.
III. INDIRECT COSTS CALCULATION
Finally, Grace complains that the methodology used to cal-
culate indirect costs of $11,322,226 overstated the EPA’s
costs attributable to the Libby response action. See Grace II,
280 F. Supp. 2d at 1173, 1187 (calculating indirect costs).
Grace disputes the use of total site-specific costs as the basis
for calculating indirect costs, arguing that because the EPA
delegated substantial authority to the U.S. Department of
Transportation, the EPA’s overhead was substantially lower
15580 UNITED STATES v. W.R. GRACE & CO.
than it would have been had the EPA administered the entire
project directly.
After review of the district court’s extensive findings on the
indirect costs methodology and its application to this particu-
lar case, see id. at 1167-73, we conclude that the district court
did not err in its award of indirect costs. See W. Props. Serv.
Corp. v. Shell Oil Co., 358 F.3d 678, 685 (9th Cir. 2004)
(“The district court’s findings of fact can be reversed only if
clearly erroneous, and not merely because we might have
found otherwise on the same evidence.”).
[16] CERCLA authorizes the EPA to recover “all costs of
removal or remedial action . . . [that are] not inconsistent with
the national contingency plan.” 42 U.S.C. § 9607(a)(4)(A).
“All costs” include indirect costs such as administrative and
other overhead costs incurred in managing the greater Super-
fund program. See, e.g., United States v. Dico, 266 F.3d 864,
878 (8th Cir. 2001) (concluding that “oversight and indirect
costs are recoverable in remedial actions under CERCLA”).
In order to capture these costs from disparate CERCLA
response actions, “Allocating indirect costs that cannot be
directly accounted for as costs of a specific project is a well-
established accounting practice.” Kennecott Utah Copper
Corp. v. United States DOI, 88 F.3d 1191, 1224 (D.C. Cir.
1996).
Grace maintains that the EPA should have used the “labor
hour” approach that the EPA abandoned in 2000. Under the
labor hour method, the indirect costs attributable to each site
were calculated based on the number of hours that EPA per-
sonnel charged to a site during a fiscal year. Cf. United States
v. R.W. Meyer, Inc., 889 F.2d 1497, 1503-04 (6th Cir. 1989)
(calculating indirect costs using labor hours method). In con-
trast, the new “full cost” methodology allocates indirect costs
based on the total site-specific expenditures incurred for a
particular site.
UNITED STATES v. W.R. GRACE & CO. 15581
The EPA explains that the labor hours method was rejected
because it did not identify the full costs of Superfund site
cleanups, and the revised methodology is a better process for
estimating and allocating the total Superfund overhead costs.
The revised methodology is also supported by reports from
the General Accounting Office and the accounting firm
KPMG, which found that the full cost approach complies with
the federal government’s costs accounting standards. See
Grace II, 280 F. Supp. 2d at 1171-72; see also Guidance on
Exercising CERCLA Enforcement Discretion in Anticipation
of Full Cost Accounting Consistent With the “Statement of
Federal Financial Accounting Standards No. 4,” 65 Fed. Reg.
35, 339 (EPA June 2, 2000).
[17] In awarding the EPA $11.32 million in indirect costs,
the district court found that the “EPA’s revised methodology
is an appropriate accounting measure of its indirect costs
charged to Superfund sites, including the Libby Asbestos
Site.” Grace II, 280 F. Supp. 2d at 1169. The district court
reached this conclusion after a three-day trial and detailed
findings. Grace characterizes this conclusion as a legal error
meriting de novo review. We disagree. The district court’s
approach comports with the statute; the court’s findings on
the methodology and its application to this case are supported
by the record, id. at 1167-73, and we will not overturn them
except for clear error. See W. Props. Serv. Corp., 358 F.3d at
685. Besides, we do not think it is in anyone’s interest to have
appellate courts step into the accountants’ shoes and deter-
mine the accuracy of accounting calculations de novo.
Grace’s arguments do not rise to the level of demonstrating
that the district court’s findings were clearly erroneous. We
are particularly hesitant to second-guess the district court’s
judgment on this issue where the court specifically found that
Grace’s accounting expert was “not credible.” Grace II, 280
F. Supp. 2d at 1169, 1171 (“[Grace’s] accounting expert . . .
does not know what methodology the EPA should use to
recover its indirect costs.”).
15582 UNITED STATES v. W.R. GRACE & CO.
CONCLUSION
We AFFIRM the district court’s order granting the EPA
summary judgment on the liability issue. We also AFFIRM
the district court’s order awarding the EPA $54,527,081.11 in
costs and a declaratory judgment on the liability of Grace for
future costs.
AFFIRMED.
BEA, Circuit Judge, concurring:
I concur in the result that the majority reaches. The EPA’s
activities in Libby, Montana, when taken as a whole, are
properly classified as a removal action in response to the
immediate threat posed by the large quantities of friable
asbestos found in Libby. See, e.g., Majority Opinion at
p.15576 ante (noting that EPA toxicologist reported that
Libby residents were being exposed to airborne asbestos in
excess of OSHA’s permissible occupational exposure level).
Accordingly, I would uphold the EPA’s classification of its
Libby response action under Mead as opposed to Chevron
deference. See United States v. Mead Corp., 533 U.S. 218,
234-35 (2001).
Under CERCLA, the EPA can recover “all costs of removal
or remedial action . . . not inconsistent with the national con-
tingency plan.” 42 U.S.C. § 9607(a)(4)(A). The regulations
set forth the national contingency plan standards governing
the EPA’s selection of a response action. See 40 C.F.R.
§ 300.415. In conducting judicial review, this 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 the law.” 42
U.S.C. § 9613(j)(2).
UNITED STATES v. W.R. GRACE & CO. 15583
The national contingency plan regulations governing
removal action also provide that “[i]n determining the appro-
priate extent of action to be taken in response to a given
release, the lead agency shall first review the removal site
evaluation, any information produced through a remedial site
evaluation . . . and the current site conditions, to determine if
removal action is appropriate.” 40 C.F.R. § 300.415(a)(1).
Thus, the regulations govern not only the EPA’s selection of
a response action, but also its determination of the extent of
a response action. Id. at 300.415(a)(1). I would also review
this latter determination under the arbitrary and capricious
standard stated in 42 U.S.C. § 9613(j)(2).
For example, the EPA’s decision to excavate the vermicu-
lite tailings buried beneath the Libby Middle School track
warrants scrutiny. According to a letter from the superinten-
dent of Libby’s schools, the EPA had concluded that “[s]ince
the asbestos . . . detected is all at depth and, in some cases,
covered by the track,” “there is not currently a risk of expo-
sure.” Were this the only finding in the record, I would be
hard pressed to see any rational connection between this find-
ing and the decision to include the Middle School track in the
EPA’s removal action.
However, the record contains additional findings that sup-
ply a rational reason for removing the track. Specifically, the
EPA found that “there was some amount of the [asbestos-
containing] material readily exposed in high traffic areas” and
a risk of exposure to workers performing routine maintenance
on the track. Soil samples from the Middle School track also
show a 2-8% asbestos concentration at a depth of between 2
and 24 inches in the soil surrounding the track. ER 388. Thus,
after a careful review of the record, I would conclude the EPA
has made a reasoned decision in including the Libby Middle
School in its removal action and would allow recovery of
costs incurred there.
Thus, while I concur in the result of the majority’s decision,
I write separately to emphasize that this court should stand
15584 UNITED STATES v. W.R. GRACE & CO.
ready to review separately the EPA’s actions at different loca-
tions at a removal site under the “arbitrary and capricious”
standard stated in 42 U.S.C. § 9613(j)(2).