A recent federal court of appeals decision provides a rare example of a court overturning an EPA decision on an issue of fact – a decision to place a site on the National Priorities List (NPL).  In Genuine Auto Parts v EPA, 2018 WL  2270186 (D. C. Cir. 2018). the court vacated an EPA decision to place a site on the NPL based on its conclusion that EPA’s decision was “arbitrary and capricious.”  The decision is noteworthy because the “arbitrary and capricious” standard is a very difficult standard and rarely results in overturning an agency decision.

The Genuine Auto Parts case arose out of the EPA listing of the West Vermont Drinking Water Contamination Site, a site of groundwater contamination in Indianapolis, Indiana.  The groundwater contamination at the site was primarily from two source facilities, Genuine Auto Parts and Aimco.  EPA determined that the aquifers contaminated by the two sites were interconnected.  If EPA had treated the aquifers as separate hydrogeologic units, the hazard ranking score would not have resulted in listing the site on the NPL.

Genuine Auto Parts challenged the listing and particularly EPA’s finding that the aquifers were interconnected.  It pointed out that the studies relied on by EPA to support its conclusion that the aquifers were interconnected contained diagrams that showed the opposite, i.e. the diagrams showed the aquifers to be separate.  This issue was raised during the public comment period, but the agency did not respond to the comments.  The court vacated the listing, reasoning that because EPA had failed to consider an important aspect of the problem, the listing of the site was arbitrary and capricious.

What makes the “arbitrary and capricious” standard so difficult for parties who challenge agency action is that the court is not asked to decide whether the agency decision is right or wrong; the court is asked to decide whether the decision was the result of a rational process.  Failure to consider an important aspect of the problem can make a decision arbitrary and capricious, but because most agency actions are subject to public review and comment and regulated parties will usually make their best arguments during the comment period, the likelihood that an agency will  fail to consider of a key issue is greatly reduced.