United States v. Marine Shale Processors

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 94-30664
UNITED STATES OF AMERICA, ET AL.,
Plaintiffs,
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
Cross-Appellant,
STATE OF LOUISIANA,
Intervenor-Appellee,
Cross-Appellant,
versus
MARINE SHALE PROCESSORS,
Defendant-Appellant,
Cross-Appellee.
Appeals from the United States District Court
for the Western District of Louisiana
April 18, 1996
Before REYNALDO G. GARZA, KING, and HIGGINBOTHAM, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
This case, along with Nos. 94-30419 and 95-60228, concerns the
past actions and future fate of Marine Shale Processors, Inc., a
hazardous waste treatment facility. The cases involve multiple
aspects of each of the federal environmental laws as affecting
disputes between the Environmental Protection Agency and MSP. We
provide a brief explanation of the three cases in this opinion
before discussing the specific issues raised by this appeal.
I
In 1985, Marine Shale Processors, Inc. opened a facility in
Amelia, Louisiana purporting to recycle hazardous waste through its
newly acquired rotary kiln, a mechanism 275 feet long and 11 feet
in diameter with the capacity to heat materials to temperatures in
excess of 2000 degrees Fahrenheit. MSP's treatment process began
with placement of materials in its kiln. From there, most material
traveled through oxidizers and slag boxes. The process generated
significant quantities of smoke, flue gases, and air particles.
Carcinogenic heavy metals tended to concentrate in these air
particles. The air pollutants passed through baghouses, which
collected some of the material in the form of caked dust. The dust
dropped off the bags to the bottom of the baghouse, where it was
collected, run through the oxidizers and slag boxes, then combined
with the rest of the material produced from the primary process.
The nature of MSP's operation made it subject to federal and state
laws limiting pollution of water, air, and land. See The Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901-92k; The Clean Air
Act, 42 U.S.C. §§ 7401-7671q; The Clean Water Act, 33 U.S.C. §§
1251-1376. These laws required MSP to obtain permits specifying
the type and amount of pollutants that it could discharge into the
environment.
RCRA regulations divide facilities using heat to process
hazardous waste into three basic types, incinerators, boilers, and
industrial furnaces. See 40 C.F.R. § 260.10 (defining all three
terms). From 1980 to 1991, the regulations required only
2
facilities engaged in incineration to obtain permits before
operating. See Final Rule, Burning of Hazardous Wastes in Boilers
and Industrial Furnaces, 56 Fed. Reg. 7134, 7138 (1991); 40 C.F.R.
pt. 264 subpt. O. In 1991, EPA amended the regulations to require
all facilities using thermal processes to treat hazardous waste to
obtain one of two types of permits. 56 Fed. Reg. at 7134.
Incinerators needed Subpart O permits, and boilers and industrial
furnaces were required to obtain BIF permits. See 40 C.F.R. pt.
266 subpt H. Since opening operations in 1985, Marine Shale has
claimed that its kiln system constitutes an industrial furnace
under the RCRA regulations. When EPA amended the regulations to
require all thermal treatment facilities to acquire permits, MSP
filed a six volume permit application with EPA Region VI. Four
years later, EPA denied this permit application. Invoking our
authority to set aside final agency action under the Administrative
Procedures Act, 5 U.S.C. § 706(2), MSP appealed the permit denial.
In number 95-60228, we address this denial.
In 1990, the United States sued MSP under RCRA, alleging that
MSP was an incinerator of hazardous waste operating without the
required Subpart O permit and was illegally disposing incinerator
ash on the ground. The United States later amended its complaint
to allege violations of the CWA, the CAA, and other provisions of
RCRA. Southern Wood Piedmont Company, the entity sending the
largest volume of hazardous waste to Marine Shale, intervened and
sought a declaration that all material resulting from the
processing of its waste was exempt from RCRA regulation. The
3
Louisiana Department of Environmental Quality sought to intervene
as a plaintiff; the district court allowed LDEQ to intervene but
prohibited it from asserting claims other than those brought by the
United States.
Early in the litigation, District Court Judge Haik granted the
United States’ motion for a preliminary injunction prohibiting MSP
from transporting the material resulting from its process away from
grounds owned by MSP or its sister corporation, Recycling Park,
Inc. After former representatives of MSP attempted to bribe Judge
Haik, Fifth Circuit Chief Judge Politz ordered the case transferred
to Judge Adrian Duplantier, who has presided since.
Judge Duplantier divided the litigation into phases. In the
first phase, the United States and SWP tried their RCRA claims to
a jury. After a five-week trial, the jury was unable to agree to
answers to four of thirteen interrogatories. Judge Duplantier
declared a mistrial on the claims prosecuted by the United States
and granted SWP’s motion for partial judgment under Fed. R. Civ. P.
54(b). Dissatisfied with the scope of this judgment, SWP appealed
to this court. Contending that the district court erred in
entering the Rule 54(b) judgment, the United States cross-appealed.
In number 94-30419, we address the appeals from this judgment.
After this first attempt to resolve RCRA issues, Judge
Duplantier proceeded to the later phases of the case. The court
conducted a bench trial on the CWA and CAA issues. It also
resolved certain outstanding RCRA claims by summary judgment. The
sum of the district court’s rulings was that MSP had violated
4
several provisions of all three environmental statutes. The
district court fined MSP for each violation and granted the United
States’ request for injunctive relief. Judge Duplantier then
stayed all injunctions pending appeal, and as a condition for this
stay, enjoined MSP from distributing dividends to its shareholders.
Judge Duplantier entered a second Rule 54(b) judgment incorporating
all matters decided at the later phase of the litigation. In this
case, number 94-30664, we address issues arising from this second
Rule 54(b) judgment.
Because of the complexity of the issues involved, we detail
the facts corresponding to each district court ruling with the
relevant legal discussion. We begin with CWA issues, continue with
RCRA questions, and then consider CAA disputes. We conclude with
a discussion of the district court’s injunctions.
II
The district court fined MSP for two types of CWA violations,
thermal pollution and stormwater discharges. MSP appeals both
fines. MSP concedes that it violated the CWA; it argues only that
the fine was too high.
A
MSP used water to cool the material produced from its kiln.
MSP pumped the water from Bayou Boeuf through a series of pipes,
and the water absorbed the heat through the pipes without coming
into direct physical contact with MSP's materials. Water used in
this manner is called “non-contact cooling water.” Since opening
5
operations in 1985, MSP has discharged non-contact cooling water
heated to temperatures at times exceeding 100 degrees Fahrenheit
back into the Bayou Boeuf. The alternative to this type of heat
discharge system is the construction of an expensive form of heat
removal, such as a system of cooling towers.
Shortly after opening, MSP first applied to EPA Region VI for
a National Pollutant Discharge Elimination System permit. 33
U.S.C. § 1342(a). This application did not mention MSP's need for
non-contact cooling water. In July of 1986, MSP received an NPDES
permit that did not include allowances for non-contact cooling
water. MSP continued its discharge of heat into the Bayou Boeuf.
On February 25, 1987, MSP applied for a revision in its NPDES
permit to allow it to discharge hot water into the Bayou. In
response to MSP’s application, Region VI issued a series of three
draft permits, each allowing MSP to discharge non-contact cooling
water at temperatures below 100 degrees Fahrenheit. In July of
1991, Region VI denied MSP's request for a revision to its NPDES
permit and announced that it would terminate the original 1986
permit on the ground that MSP had intentionally included
misinformation in its permit application. Two months later, the
Environmental Appeals Board reversed, holding that Region VI could
not terminate MSP's original permit or deny its request for
revisions on misinformation grounds without granting MPS a hearing.
Marine Shale Processors, Inc., NPDES Appeal No. 91-22 (EPA Sep. 12,
1994). Region VI has not yet scheduled a hearing regarding MSP's
NPDES permit.
6
After the bench trial on the Clean Water Act issues, the
district court found the following facts:
MSP has discharged large quantities of non-contact
cooling water containing heat (by law a pollutant) into
Bayou Boeuf almost daily since it began operating, all
without a permit. . . . Despite the frequency and
duration of MSP's unpermitted discharges, there is
little, if any, evidence of actual damage to Bayou Boeuf.
This is especially so with respect to the discharge of
the non-contact cooling water.
Although the unpermitted discharges did not have a
significant impact on the environment, these water
violations are serious. MSP's actions in discharging
pollutants into Bayou Boeuf have been willful and
flagrant. . . . [T]here is not doubt that MSP knew it
needed an NPDES permit . . . and simply decided to
operate without [one]. MSP not only discharged non-
contact cooling water knowing it did not have a permit to
do so, but in order to increase capacity and thus
maximize profit, substantially increased the amount of
such water that it was discharging.
Such discharges demonstrate a callous disregard for
the regulatory scheme and the purposes of the Clean Water
Act. The court cannot countenance such activity. No one
is above the law. MSP's water violations were profit
driven, and for the most part were purposeful, not
accidental.
I consider as a mitigating circumstance the fact
that since February 1987, MSP has attempted to obtain a
modified NPDES permit, but note that the request for
modification did not come until more than a year after
MSP began operations without the necessary permit.
MSP’s operation also resulted in a number of stormwater
discharges which exceeded the limits specified in its NPDES permit
for oil, grease, and chemical oxygen demand. On appeal, MSP
concedes that four of 430 of its oil and grease readings and
thirty-three of its 431 chemical oxygen demand measurements, during
the period from 1988 to 1992, were higher than its permit limits.
The district court considered MSP's thermal pollution together with
7
its unlawful stormwater discharges in levying a $3,000,000 fine for
all Clean Water Act violations.
B
MSP attacks the portion of the stormwater discharge fine on
several grounds. First, MSP argues that the district court
insufficiently reduced the penalty in light of EPA’s seven-year
delay in ruling on MSP’s NPDES permit amendment application.
Second, MSP urges that the district court erroneously excluded
evidence of measurement error in the process used to assess
stormwater discharges; MSP contends that two-thirds or more of its
stormwater exceedences were within measurement error range of its
NPDES permit limits. Third, MSP draws our attention to the fact
that all of the exceedences were "first flush" readings, readings
taken at the beginning of a storm event where pollutant levels are
highest, and suggests that in 1992 EPA amended its stormwater
regulations so that compliance is now measured according to
readings taken over the entire storm event. Fourth, MSP points out
that the Office of Water, United States Environmental Protection
Agency Training Manual for NPDES Permit Writer EPA 833-B-93-003,
§ 3.3.1 (1993), states that "[I]n any single monitoring
observation, a discharger running a properly operated and
maintained treatment facility has a 95 to 99 percent chance of
complying with its permit limits,” and that its compliance for oil
and grease was within this range. Fifth, MSP contests the fine on
the ground that the district court did not differentiate and define
the number or severity of the various violations.
8
Regarding thermal pollution, MSP contends that the $3,000,000
penalty was too high because the district court based its fine in
part on a clearly erroneous finding of fact, namely, that the
increase in MSP’s discharges of non-contact cooling water were
profit-driven. MSP points to evidence in the record supporting a
different motivation for its increase in hot water discharges.
C
When considering MSP’s argument that the district court fine
was too harsh, we begin by noting that the court had statutory
authority to impose a fine of around $45,000,000 for CWA
violations. The $3,000,000 fine represents less than eight percent
of what the court might have imposed. We note that the evidence
amply supports the district court’s finding that MSP knew it needed
a permit for its thermal discharges and simply decided to operate
without one for several years. The record also discloses that the
district court, at least initially, found that MSP violated the CWA
in a third way by allowing rainwater and waves to wash into and out
of barges on the Bayou that MSP used to hold hazardous waste, but
that the district court apparently later decided not to fine MSP
for these discharges. Finally, we note that when imposing
penalties under the environmental laws, courts often begin by
calculating the maximum possible penalty, then reducing that
penalty only if mitigating circumstances are found to exist. See,
e.g., Atlantic States Legal Foundation, Inc. v. Tyson Foods, Inc.,
897 F.2d 1128, 1142 (11th Cir. 1990). Under such circumstances, we
suggest that MSP may act at its own peril in seeking to upset this
9
fine. See United States v. B & W Investment Properties, 38 F.3d
362, 368 (7th Cir. 1994) (“In considering fines under the [Clean
Air] Act, courts generally presume that the maximum penalty should
be imposed.”), cert. denied, 115 S. Ct. 1998 (1995).1
We find unconvincing MSP’s contention that the district court
insufficiently weighed EPA’s delay in ruling on the NPDES permit
amendment application when imposing the fine. MSP concedes that
the district court considered this mitigating factor in its
analysis. We note also that MSP never sought the aid of the
federal judiciary in compelling EPA to act more expeditiously
“despite the clear availability of this remedy.” United States v.
General Motors Corp., 876 F.2d 1060, 1068 (1st Cir. 1989), aff’d,
496 U.S. 530 (1990); see, e.g., Ingalls Shipbuilding v. Asbestos
Health Claimants, 17 F.3d 130, 132-34 & n.9 (5th Cir. 1994)
(considering remedies for undue agency delay); Atlantic & Gulf
Stevedores, Inc. v. Donovan, 274 F.2d 794, 802 (5th Cir. 1960);
Telecommunications Research & Action Center v. FCC, 750 F.2d 70,
79-81 (D.C. Cir. 1984).2 “There was a simple and straightforward
1
This statement applies with equal force to the district
court’s Clean Air Act fines.
2
Although we note some tension in the cases as to which
court’s aid MSP might have enlisted, compare Telecommunications
Research, 750 F.2d at 74-79 (holding that 5 U.S.C. § 706(1) and 28
U.S.C. § 1651(a) grant exclusive jurisdiction to the courts of
appeals to remedy agency delay under certain circumstances) with
Ingalls Shipbuilding, 17 F.3d at 132-34 (holding that some
challenges to agency delay may proceed in the district court under
28 U.S.C. § 1361), we find no dispute in the case law that MSP had
some judicial remedy available to it. In fact, MSP itself
recognized that such a remedy was available, and at one point
sought an order from the district court directing LDEQ to expedite
consideration of its permit applications.
10
way for [MSP] to avoid paying civil penalties for violations of the
Clean Water Act: After purchasing the plant, [MSP] could have
ceased operations until it was able to discharge pollutants without
violating the requirements of its NPDES permit.” Atlantic States,
897 F.2d at 1141-42.
With these concepts in mind, we reject MSP’s argument that the
district court insufficiently mitigated its fine in consideration
of EPA’s delay in ruling on MSP’s NPDES permit amendment
application. In General Motors Corp. v. United States, 496 U.S.
530, 541 & n.4 (1990), the Supreme Court held that in the CAA
context courts should respond to EPA’s undue agency delay by
reducing penalties in an enforcement action in order to counteract
any incentive the agency might have to place itself in a superior
litigating position.3 The district court considered EPA’s delay in
its calculations and reduced the fine accordingly. We find no
abuse of discretion.
Next, we reject MSP’s argument that the district court abused
its discretion by relying too heavily on MSP’s stormwater discharge
exceedences in calculating its fine. Initially, we note that MSP’s
statement that the district court excluded evidence of measurement
error contradicts the record, which shows that the district court
heard evidence from MSP expert John Wagner on this matter. While
MSP correctly pointed out that many of its stormwater exceedence
3
We note that one of the cases upon which MSP relies for its
argument, American Cyanamid Co. v. EPA, 810 F.2d 493 (5th Cir.
1987), may no longer be good law after General Motors. See 496 U.S.
at 536 n.1.
11
levels were within the range of measurement error of its NPDES
permit, the district court correctly responded that measurement
error is “plus or minus,” and thus that many of MSP’s discharge
samples reading below permit limits could have been exceedences.
In addition, we find unpersuasive MSP’s reliance on the fact that
all of its exceedences were first flush samples, i.e. samples taken
at the beginning of a storm when pollutant readings are highest,
when EPA’s current regulations may rely on readings from the entire
storm event to determine if an exceedence has occurred. MSP admits
that the regulations in force at the time of its discharges
rendered illegal any stormwater discharge in excess of permit
limits, even first flush samples. It does not argue that these
regulations were invalid. Under these circumstances, the district
court did not abuse its discretion by relying on MSP’s stormwater
exceedences.
For similar reasons, we reject MSP’s reliance on EPA
publications stating that a properly operated facility should
achieve a 95-99% rate of compliance with its NPDES permit limits.
MSP does not suggest that EPA’s enforcement authority in some way
turns upon this figure. Moreover, MSP did not achieve this
compliance figure.
We disagree with MSP that the district court’s findings of
fact and conclusions of law were insufficiently specific to support
the fine. The district court’s findings were not as detailed as
some. See, e.g., Hawaii’s Thousand Friends v. City & County of
Honolulu, 821 F. Supp. 1368, 1394-97 (D. Haw. 1993). Nevertheless,
12
calculation of discretionary penalties is not an exact science, and
few courts could comply with MSP’s request that the importance of
each factor be precisely delineated. See Tull v. United States,
481 U.S. 412, 427 (1987) (observing that “highly discretionary
calculations that take into account multiple factors are necessary
in order to set civil penalties under the Clean Water Act”); see
also B & W Investment Properties, 38 F.3d at 368.
Finally, we find some merit in MSP’s attack upon the district
court’s findings of fact, and as a result, we reverse the damage
award and remand for recalculation. MSP argues that the district
court’s penalty calculations were based on clearly erroneous
findings of fact. In particular, MSP attacks the district court’s
conclusions that “MSP’s water violations were profit driven, and
for the most part were purposeful, not accidental,” and that MSP,
“in order to increase capacity and thus maximize profit,
substantially increased the amount of such water that it was
discharging.”
Regarding the first finding, we find no clear error. The
district court could infer that MSP’s water emissions were
purposeful and profit-driven from the substantial evidence before
it that MSP knew it needed an NPDES permit for its thermal
discharges but decided to operate without one. We note that the
district court made an explicit finding, a finding the evidence
supports, that MSP decided to begin operations knowing that it
needed an NPDES permit for hot water discharges that it did not
possess.
13
Regarding the second finding, we agree with MSP. MSP cites to
evidence in the record supporting its contention that the increase
in hot water discharges resulted from technological improvements in
its overall system, and not from a desire to maximize profit by
increasing the amount of waste processed. On August 23, 1989, MSP
informed LDEQ’s Office of Water Resources by letter that it was
replacing two of its oxidizers with more efficient machinery and
that as a result the volume, although not the temperature, of the
hot water discharged would increase. The August 23 letter reminded
LDEQ that MSP had previously provided notice of this change in a
letter to the Air Quality Division of LDEQ dated April 24, 1989.
MSP argues that this evidence shows that MSP’s motive for
increasing its discharge of heat was a desire to make its operation
more efficient. Such self-serving statements are not overwhelming
evidence. Nevertheless, the United States cites to no evidence in
the record to the contrary, and indeed, does not address this point
at all in its brief. Our independent review of the record, which
is admittedly large and difficult to decipher, indicates nothing to
support the district court’s ruling. We note that in the pretrial
order at the RCRA stage, the United States announced its intention
to prove that MSP had added oxidizers and slag boxes to its
facility, and there is some indication in the record that this
addition may have increased MSP’s capacity to process hazardous
waste. Nevertheless, especially with no help whatsoever from
appellees, we are unable to connect these additions to MSP’s
increased discharge of hot water. Under such circumstances, we
14
conclude that the district court’s characterization of MSP’s motive
for increase the volume of its thermal pollution is clearly
erroneous.
We hesitate to vacate such a large fine on the basis of such
insignificant error. The district court did not, however,
differentiate what portion of the fine resulted from each type and
quantity of violation. While this failure to differentiate is not
in itself reversible error, it does render us unable to determine
whether the error was harmless or to dispose of this case by
reducing the amount of the fine on our own. Accordingly, we vacate
the entirety of the fine and remand to the district court for
recalculation.
III
The district court decided all RCRA issues relevant to this
appeal by summary judgment. In particular, the district court held
that MSP had violated land ban regulations on numerous occasions.
In addition, the district court held that MSP had stored K-listed
wastes without a permit or interim status, but ruled that MSP had
interim status to store F-listed wastes. Both the United States
and MSP appeal the district court’s RCRA rulings. We consider the
land ban violations before discussing listed wastes.
A
1
15
RCRA land ban regulations prohibit placement on the land of
material leaching toxic metals in excess of regulatory limits. 40
C.F.R. pt. 268. The district court granted in part the United
States’ motion for summary judgment, finding that MSP had violated
land ban regulations by placing on the ground materials that would
leach lead and other metals in excess of regulatory limits. MSP
appeals this finding, disputing the district court’s holding as to
method by which samples are to be collected and analyzed for
testing purposes.
EPA requires facilities like MSP to test a substance’s
leaching capacity according to the Toxicity Characteristic Leaching
Procedure. See, e.g., 40 C.F.R. § 268.7(a). The parties dispute
the method by which material samples are to be collected for TCLP
testing and the resulting data analyzed. As we understand them,
there are at least three possible methods. In the first, the
analyst collects single samples from random sections of a pile of
material, a form of collection called "grab sampling;" the analyst
then subjects these samples to TCLP testing and compares the raw
numbers generated without a statistical analysis to the regulatory
limits on leaching. In the second, the analyst collects grab
samples, conducts TCLP testing upon them, but then subjects the
numerical results to a statistical analysis before comparing the
results to the regulatory limits on leaching. In the third method,
the analyst combines samples from random sections of a particular
pile of material into a single larger sample, a form of collection
16
called "composite sampling," then subjects the composite sample to
TCLP testing.
MSP processed hazardous waste through its kiln system. As the
material exited the system, MSP took samples every 15 minutes. 24
to 32 samples were combined and thus, in the terminology just
defined, became a single composite sample. MSP placed the exiting
material on the ground in a pile called a “day pile” and sent the
combined samples to an in house laboratory to subject them to TCLP
testing. The TCLP testing of these composite samples took
approximately 24 hours, during which time the day pile remained on
the ground. MSP recorded the results of the TCLP testing on “daily
aggregate control sheets.” It conducted no statistical analysis of
the data on the daily aggregate control sheets. In some cases, the
daily aggregate control sheets showed readings exceeding land ban
regulatory limits. In those instances, MSP reprocessed the
entirety of the day pile from which the offending composite sample
was taken through the kiln system and retested the resulting
material, generating new daily aggregate control sheets.
Once the daily aggregate control sheets showed that no TCLP
readings generated from the composite samples of the day piles
exceeded land ban limits, MSP combined several day piles into
larger “sale piles.” MSP also placed these sale piles on the
ground. An independent laboratory then took numerous samples of
the sale piles and subjected each individually to TCLP testing. In
the terminology defined above, these samples were grab samples.
The independent lab subjected the TCLP results of the grab samples
17
from the sale piles to a statistical analysis of the nature
outlined in Office of Solid Waste and Emergency Response,
Environmental Protection Agency, SW-846, Test Methods for
Evaluating Solid Waste, at nine-14 to nine-17 (3d ed. 1986)
[hereinafter SW-846].
Thus, MSP placed the material coming out of its kiln system on
the ground on two separate occasions, once in the form of day
piles, and again in the form of sale piles. MSP used composite
samples to test the day piles and grab samples with a statistical
analysis to test final sale piles. The parties assume that because
RCRA regulates the placement of hazardous waste on the land
regardless of the point of a treatment process at which such
placement occurs, violations of RCRA could have occurred at either
the interim day pile stage or the more final sale pile stage.
The district court granted summary judgment to the United
States based on violations of RCRA at the day pile stage. It
relied on MSP’s daily aggregate control sheets to find that MSP
placed material violating land ban regulations on the ground on 27
occasions. It fined MSP $500,000 for these violations of RCRA.
2
MSP argues that the district court’s reliance on what it calls
“single sample exceedences” constituted reversible error. It
argues that because EPA documents, especially SW-846, require that
compliance be determined by a statistical analysis of the result of
TCLP testing of grab samples, it lacked fair notice that a
18
violation might be proved by TCLP testing of composite samples
without a statistical analysis.
3
We assume for the sake of argument that MSP is correct that
EPA regulations require a statistical analysis of samples in order
to demonstrate compliance with RCRA. The difficulty is that, as
MSP itself recognizes in its briefs, any proposed statistical
analysis was to be conducted upon the results of TCLP testing of
materials collected by grab, not composite, sampling. See 40
C.F.R. § 268.41(a) (1994), superseded, Final Rule, Land Disposal
Restrictions Phase II, 59 Fed. Reg. 47,982, 48,103 (1994). MSP
contends that it based its compliance program on grab samples, but
concedes that it took grab samples only of sale pile materials,
while the district court’s findings were based entirely on day pile
violations, from which MSP tested only composite samples.4 Because
MSP did not conduct TCLP testing of grab samples from its day piles
before combining the grab samples into composite samples, it its
now impossible to conduct any relevant statistical analysis. Thus,
MSP did not comply with the regulations upon which it now claims it
relied. MSP’s argument boils down to the contention that its
failure to follow EPA’s specified procedures, which prevented the
generation of the evidence normally relied on to test compliance
4
We note that MSP does not divulge what the results of its
proposed statistical analysis might have been, or how one could
conduct a statistical analysis on test results generated by a
single composite sample.
19
with RCRA land ban restrictions, should immunize it from a finding
of liability.
We disagree. 40 C.F.R. § 268.40 (1994), superseded, 59 Fed.
Reg. at 48,046, stated that wastes like those at issue here “may be
land disposed only if an extract of the waste . . . developed using
. . . the [TCLP] does not exceed” the values specified in the
regulations. At the times relevant to this litigation, 40 C.F.R.
§ 268.41(a) stated that “[c]ompliance with these concentrations is
required based on grab samples.” MSP placed hazardous waste on the
land without following these specified testing procedures,
procedures the D.C. Circuit labeled “graphically self-defining.”
Chemical Waste Management, Inc. v. EPA, 976 F.2d 2, 34 (D.C. Cir.
1992), cert. denied, 507 U.S. 1057 (1993).
Moreover, the district court did not presume a violation of
land ban regulations because of MSP’s failure to comply with
applicable testing procedures. Rather, the court below reasoned as
follows. The mixing inherent in composite sampling necessarily has
an averaging effect and will almost always result in a reading
lower than that generated by the most toxic grab sample.
Therefore, TCLP tests of composite samples cannot demonstrate
compliance with land ban limits in most cases, but they might well
demonstrate a violation, if the composite sample’s TCLP reading
were high enough. MSP’s own daily aggregate control sheets showed
TCLP results from testing of day piles showed leaching of greater
than the land ban standard for certain metals. Accordingly, the
district court granted summary judgment to the United States.
20
Under such circumstances, we are unpersuaded by MSP’s argument
that it lacked fair notice that a court, because of MSP’s own
failure to follow graphically self-defining procedures, might focus
on reliable, alternative evidence that MSP placed materials on the
ground capable of leaching toxins in excess of regulatory limits.
Had MSP followed the authority cited in its brief, perhaps it might
not have been subject to penalties. Cf. Gates & Fox Co. v. OSHRC,
790 F.2d 154, 156-57 (D.C. Cir. 1986) (overturning a penalty on
fair notice grounds when an employer followed the most reasonable
interpretation of a regulation and received no contrary
interpretation from any authoritative source). We express no view
on this question. This is not a case of a court construing a
regulation “to mean what an agency intended but did not adequately
express.” Diamond Roofing Co. v. OSHRC, 528 F.2d 645, 649 (5th
Cir. 1976). The regulations were clear, MSP did not follow them,
and it cannot now be heard to complain on the ground of lack of
fair notice that a court would rely on other means of proof. We
find no error in the district court’s fine.
B
1
Congress passed the current version of RCRA in 1976. 42
U.S.C. § 6925(a) directed EPA to promulgate regulations governing
the issuance of permits to store hazardous wastes on the ground.
Realizing that EPA could not issue permits to all existing
facilities simultaneously with the promulgation of these
regulations, Congress created a grandfathering scheme granting
21
interim status to certain facilities. 42 U.S.C. § 6925(e). In
order to achieve interim status, a facility must have (1) existed
at the time it was rendered subject to a storage regulation, (2)
filed a hazardous waste notification form and, (3) filed a permit
application with either EPA or the relevant state regulatory body.
42 U.S.C. §§ 6925(e)(1), 6930(a). RCRA treated facilities that had
taken these three steps as though they had been issued permits
until EPA had finally resolved the pending permit application.
In 1980, EPA promulgated regulations requiring facilities to
obtain permits covering storage before storing F- or K-listed
wastes, but not for certain other types of waste. Final Rule,
Interim Final Rule, and Request for Comments, Hazardous Waste
Management System: Identification and Listing of Hazardous Waste,
49 Fed. Reg. 33,082, 33,123 (1980).5 At this same time, EPA
promulgated the “Mixture Rule,” which defined a hazardous waste
subject to regulation under RCRA to include “a mixture of solid
waste and one or more hazardous wastes listed in Subpart D . . .
not excluded from this paragraph . . . .” 45 Fed. Reg. at 33,119.
The D.C. Circuit declared the Mixture Rule void ab initio in Shell
Oil v. EPA, 950 F.2d 741 (D.C. Cir. 1991), on grounds of inadequate
notice. EPA repromulgated the Mixture Rule regulations in 1992.
Final Rule, Hazardous Waste Management System; Definition of
5
We assume, with the parties, that the permit requirement in
Louisiana did not extend to D- and U-listed wastes until 1986
because of MSP’s claimed status as a recycler, although we note
that EPA promulgated the U-listing on the same date that it
promulgated the K- and F-listings. See 45 Fed. Reg. at 33,123-24,
33,126-27.
22
Hazardous Waste; “Mixture” and “Derived-From” Rules, 57 Fed. Reg.
49,278 (1992).
In 1984, EPA certified LDEQ's state hazardous waste program,
allowing LDEQ to regulate the storage of hazardous waste on its own
and placing primary responsibility for RCRA enforcement with LDEQ.
See Approval of State Hazardous Waste Program, Hazardous Waste
Program, Louisiana, 49 Fed. Reg. 2893 (1984); see 42 U.S.C. §
6926(b). MSP asserts, and EPA does not dispute, that Louisiana’s
regulations initially allowed recycling facilities to store wastes
other than those included in the K- and F-listings without permits.
MSP began operations in 1985 without a RCRA storage permit.
Shortly after opening, MSP began accepting D- and U-listed
wastes. It also began receiving material manifested as "K001"
from two customers, Colfax Creosoteing Co. and Durawood Treating
Co. The manifest “K001" refers to the first of the wastes
specified as K-listed wastes in 40 C.F.R. § 260.10. Colfax and
Durawood had hired MSP to clean up large wastewater treatment
ponds. These ponds contained primarily water, creosote, and
pentachlorophenol. Also present were trace amounts of chrome,
copper, arsenic, along with unspecified quantities of debris. MSP
pumped the water from these ponds and removed it to MSP’s rotary
kiln site. MSP then added absorbent materials, composed in part of
material previously generated from MSP’s rotary kiln, to solidify
what remained and removed the entirety of the pond site material by
bulldozer. Materials arriving at MSP’s rotary kiln site from
Colfax and Durawood remained there partially on a cement pad.
23
MSP's treatment of the Colfax and Durawood materials led the
United States four years later to file an information alleging that
MSP “did knowingly store and cause to be stored hazardous wastes
identified or listed pursuant to Title 42, United States Code,
Section 6921, namely, bottom sediment sludge from the treatment of
wastewaters from wood preserving facilities using creosote and/or
pentachlorophenol.” The United State’s indictment covered MSP’s
activities only in 1985. MSP pled guilty to this charge.
Sometime in 1985, LDEQ and MSP entered into discussions
concerning whether MSP's activity constituted "storage" under the
relevant regulations. In these discussion, LDEQ suggested that MSP
apply for a storage permit under forthcoming regulations requiring
facilities to obtain a permit to store all listed wastes, as
opposed to just K- and F-listed wastes. MSP and EPA agree that on
January 1, 1986, LDEQ promulgated these storage regulations, which
required all facilities to obtain RCRA permits before storing any
type of listed waste. In response, MSP submitted to LDEQ a
notification form and Part I of a permit application to store U-
and D-listed wastes in early January, 1986. On January 31, 1986,
MSP amended its application to include a request for permission to
store F- and K-listed wastes.6 Two months later, MSP began
accepting F-listed wastes. On June 9, 1986, LDEQ wrote MSP a
6
MSP completed its permit application by submitting Part II
in 1988. LDEQ never ruled on this application. At oral argument
in this case, counsel for MSP and the State of Louisiana informed
this court that LDEQ requested that MSP reapply for a RCRA storage
permit. MSP’s first attempt to reapply resulted in a notice by
LDEQ of 137 deficiencies in the application.
24
letter stating its view that MSP had obtained interim status and
could store any hazardous waste listed in its application form
until LDEQ ruled on the application. LDEQ's letter included the
following language:
This letter confirms that the rotary kiln operated by
Marine Shale Processors, Inc. . . . has interim status as
a storage facility and may receive any hazardous waste
for storage prior to reuse and/or recycling if such waste
has been listed in the facility's Part I Permit
Application or in any subsequent approved revisions to
that application.
In this action, the United States alleged that MSP stored K-
and F-listed wastes without a permit or interim status. Initially,
the district court granted summary judgment to the United States,
holding that MSP’s actives did constitute storage of hazardous
waste. It further held that because MSP was not in existence in
1980 or in 1984, when EPA initially required recycling facilities
for storage permits and when EPA certified LDEQ’s identical
regulations, MSP did not have interim status to store K- and F-
listed wastes in 1985, when MSP began to receiving the materials
manifested K001. The court rejected MSP's arguments that the
materials manifested K001 received from the Colfax and Durawood
operations were not pure K-listed wastes but were rather mixtures
of K-listed and other wastes covered only by the Mixture Rule,
commenting that "the interpretations urged by MSP would produce the
ridiculous result that one could receive a listed hazardous waste,
add a drop of water to it, and store that waste without having
either a storage permit or interim status." The court further
stated, "If these wastes fail to qualify as K001 wastes, I cannot
25
envision what wastes would." The district court also rejected
MSP's collateral estoppel defense, reasoning that interim status
could be granted only by statute, not by regulatory agencies, and
that estoppel does not lie against the government. In imposing a
penalty, the court counted as one violation each day upon which MSP
received either a K- or F-listed waste and counted as two
violations those days upon which MSP received both types of waste.
See 42 U.S.C. § 6928(g). In passing, the district court found that
even after EPA repromulgated the Mixture Rule in 1992, MSP stored
F-listed wastes on 185 occasions and K-listed wastes on 49
occasions. The court’s minute entry also found that MSP had stored
K-listed wastes on 107 occasions before receiving LDEQ’s June 9
letter.
Shortly thereafter, the district court sua sponte reversed its
decision regarding F-listed wastes and granted summary judgment to
MSP on that issue. In this second ruling, the court stated that
MSP's January, 1986 notice form and application gave it interim
status to store D- and U-listed wastes. The court further reasoned
that the RCRA regulations allowed MSP to piggyback interim status
to store F-listed wastes upon this previously achieved D- and U-
listed interim status by amending its permit application to include
F-listed wastes. The court, however, refused to modify its ruling
that MSP had no interim status to store K-listed wastes, reasoning
that the piggybacking theory did “not apply where, as here, a
facility stores a regulated waste at a time when it lacks interim
status to store any waste.” The court then calculated the number
26
of violations for K-listed wastes alone. Apparently on double
jeopardy grounds, the court excluded violations occurring in 1985,
the period covered by MSP’s prior guilty plea. It then found that
MSP had stored K-listed wastes on 354 occasions.
The court concluded by readdressing the issue of whether MSP’s
activities constituted “storage.” It found no evidence that MSP
either fed the K-listed wastes directly into its kiln or kept the
wastes in a holding container for brief period of time before
placement into the kiln. In spite of this finding, the district
court went on to comment that "if there were such evidence, those
days would not be counted as violations" because "storage" under
RCRA excluded "a reasonable period of time between the unloading of
the wastes and their placement in the kiln."
In a later order, the district court fined MSP $1,000,000 for
storing K-listed wastes without a permit. In assessing this fine,
the court considered as a mitigating factor LDEQ's communications
to MSP in 1986 and thereafter, finding,
On June 9, 1986, LDEQ represented to MSP in writing that
the facility was an interim status storage facility.
MSP's reliance on that representation was reasonable.
Moreover, because LDEQ never disavowed its previous
confirmation, MSP's reliance on LDEQ's representation
continued to be reasonable even after LDEQ expresses
concern about whether MSP had interim status as a storage
facility.
2
MSP urges that the district court erred in reading the ban on
the storage of K-listed wastes to cover the Colfax and Durawood
materials, and that in fact these materials were waste mixtures
covered only by the Mixture Rule regulations declared invalid in
27
Shell Oil. MSP also argues that the court should have accepted its
estoppel defense.7
The United States, in its cross appeal, claims that the
district court erroneously granted MSP summary judgment on the
question of illegal storage of F-listed waste. The United States
argues that RCRA prevents a facility from obtaining interim status
once it has illegally stored hazardous waste. Accordingly, the
district court should have granted summary judgment to the United
States on its claim that MSP stored F-listed waste without interim
status or a permit. MSP admits, the argument runs, that it had no
permit when it began to receive the K001 manifested materials; its
guilty plea establishes the status of these materials as K-listed
wastes, and in any event these materials were K-listed wastes as a
matter of law. Accordingly, MSP could not, by amending its permit
application, piggyback interim status to store F-listed wastes onto
its interim status for D- and U-listed wastes because it lacked
such status in the first place. Finally, the United States, with
support from the State of Louisiana, claims on cross-appeal that
the district court erroneously interpreted the word "storage" to
include a reasonable amount of time between the unloading of the
waste and its placement in processing machinery.
7
MSP does not contest the district court’s finding,
referring to MSP’s storage of K-listed wastes alone, that “dozens
of the violations occurred prior to receipt of LDEQ’s letter.”
Indeed, the district court found that MSP stored K-listed waste on
96 occasions between December 31, 1985, the last day covered by the
United States’ previous criminal indictment, and June 9, 1986, the
date of LDEQ’s letter. These violations alone would support a fine
of $2,400,000. MSP’s estoppel defense would not affect these
violations.
28
3
We organize our discussion of RCRA issues in four steps. We
begin with MSP’s Mixture Rule defense before considering the
interim status dispute. We then discuss MSP’s estoppel defense,
and conclude with the storage issue. On the merits, we hold that
both of MSP’s arguments lack merit, that the district court
erroneously interpreted RCRA in holding that MSP had interim status
to store F-listed wastes, and that the current appeal provides us
with no reason to reach the storage issue.
a
We reject MSP’s contention that the materials manifested K001
were waste mixtures subject to regulation only under the Mixture
Rule invalidated in Shell Oil. MSP contends that the material
ultimately stored at MSP as a result of the Colfax and Durawood
cleanups included soil, debris, creosote, copper, chrome, arsenic,
wastewater, and the absorbent material it added to the bottom of
the pond before bulldozing. Accordingly, MSP argues, these
materials contained matter not included in K001 definition, and
thus constituted matter subject to regulation only pursuant to the
Mixture Rule.
Excepting the absorbent material, all other results of the
Colfax and Durawood cleanup operations easily meet the definition
of a K-listed waste. A K001 waste is a “[b]ottom sediment sludge
from the treatment of wastewaters from wood preserving processes
that use creosote and/or pentachlorophenol.” 40 C.F.R. § 261.32.
The evidence established that the materials in the pond came from
29
the treatment of wastewaters from wood preserving processes that
used creosote. For instance, Clyde M. Norton, the Vice-President
of the corporation that owned Colfax and Durawood, stated in an
affidavit that the materials originally in the pond before MSP
began its cleanup had been generated from the two companies’ wood
treating operations.
MSP’s primary argument is that extraneous matter in the
materials it received prevented those materials from falling within
the regulatory definition of a “sludge.” We do not agree. The
regulations define a “sludge” as “any solid, semi-solid, or liquid
waste generated from a[n] . . . industrial wastewater treatment
plant.” 40 C.F.R. § 260.10. Thus, the definition of a sludge,
like the definition of a K001 waste, focuses primarily on the
origin of the material at issue, not, as MSP contends, on its
composition. Moreover, a sludge is a waste generated from a
wastewater plant, not as MSP contends, from a wastewater operation.
“The word ``plant’ denotes an entire facility, a collection of
units, machines, land, buildings, and fixtures used in a trade or
business, not a single intermediate unit in the treatment process.”
In re Brown Wood Preserving Co., No. RCRA-84-16-R, 1989 WL 253215,
at * 6 (EPA May 3, 1989). MSP’s own evidence established that the
entirety of the material, except for the absorbent material MSP
added to the bottom of the ponds after removing the wastewater
itself, came from the industrial wastewater treatment plants
located on the Colfax and Durawood sites.
30
We have more difficulty characterizing the results of MSP’s
bulldozing, after it had added absorbent materials to the Colfax
and Durawood wastewater ponds, but we ultimately agree with the
district court that the addition of these absorbent material did
not cause the Colfax and Durawood wastes to lose their K-listed
character. As the district court noted, MSP’s interpretation of
the definition of K001 waste leads to absurd results. Under its
interpretation, MSP could have transformed the Colfax and Durawood
materials into mixtures, regulable only by the Mixture Rule
invalidated in Shell Oil, by adding a drop of water or a speck of
dust to every barrel of waste it received, so long as the drop or
speck did not come from a wastewater treatment facility. Indeed,
although MSP repeatedly contends that the K001 listing applies only
to “pure” substances of the nature described in that regulation,
such purity exists only in theory. Rudimentary chemical principles
establish that a liquid absorbs gases from the surrounding air and
trace amounts of impurities from the container in which the liquid
resides. Thus, had MSP added nothing at all to the soils it
bulldozed from the Colfax and Durawood sites, the resulting
material would still not have been pure K001 waste within MSP’s use
of the phrase. Instead, the arriving material would have consisted
of a mixture of K001 waste, dissolved gas molecules from the air,
trace amounts of whatever metal or ceramic or synthetic housed the
waste in transit, and impurities stuck to the inside of the
container. MSP’s brand of purity exists only in the hypotheticals
31
of chemistry classrooms, and its interpretation of the regulations
would render them meaningless.
We hold that a substance does not lose its character as a K-
listed waste, and thus does not become regulable only by the
previously invalid Mixture Rule, unless the materials added to it
change its basic composition in some significant way. We draw
support from the D.C. Circuit’s decision in Chemical Waste
Management, Inc. v. Environmental Protection Agency, 869 F.2d 1526,
1539 (D.C. Cir. 1989). In upholding EPA’s “contained-in” policy,
the D.C. Circuit rejected the argument that “an agglomeration of
soil and hazardous waste is to be regarded as a new and distinct
substance” and instead accepted EPA’s position that “hazardous
waste cannot be presumed to change character when it is combined
with an environmental medium.” 869 F.2d at 1539. Under the
circumstances of this case, we decline MSP’s invitation to hold
that the addition of an absorbing agent or other inert debris to a
K001 waste transforms the waste into a new and distinct substance
regulable only through the Mixture Rule. We hold that a K001 waste
remains a K001 waste after the addition of a substance that results
in no significant change in composition.
We need not specify exactly where the line between a
significant and insignificant alteration lies.8 The addition of
the absorbent agent did not cause a significant alternation of the
Colfax and Durawood materials for several reasons. First, from the
8
EPA’s 1992 repromulgation of the Mixture Rule suggests that
few future courts will confront this question.
32
standpoint of their toxic composition, these materials were in the
heart of the definition of the K001 listing. As the district court
observed, “[i]f these wastes fail to qualify as K001 wastes, I
cannot envision what wastes would.” Second, evidence in the record
strongly suggested that at the time these wastes were being
shipped, those in the industry considered them K001 sludges. Huey
Stockstill, the MSP officer in charge of the Colfax and Durawood
cleanup, repeatedly characterized the material brought to MSP’s
kiln site as a sludge. The materials were manifested as K001
wastes. The contract between Colfax and Marine Shale described the
wastes as “creosote waste that has been generated during wood
treating operations at the Colfax wood preserving facility.”
Third, MSP pled guilty to storing K-listed waste upon its premises
without a permit as a result of charges focusing on its storage of
the Colfax and Durawood materials, suggesting that it too thought
these materials constituted K001 waste, although in the face of
litigation it has changed its position. MSP argues that its guilty
plea was also based on the Mixture Rule, but the charges to which
MSP pled recite the definition of a K001 waste without mentioning
this rule. Fourth, the addition of the absorbent was entirely
incidental to a cleanup operation, and thus resembles the
impurities a waste might absorb from its container during transport
and storage.
We reject MSP’s contention that our decision places us in
conflict with the Seventh Circuit’s holding in United States v.
Bethlehem Steel Corp., 38 F.3d 862, 865, 868-71 (7th Cir. 1994).
33
In Bethlehem Steel, the defendant had mixed an F006 waste with
“other kinds of wastewater,” 38 F.3d at 865, before the addition of
a thickener allowed a sludge to precipitate to the bottom. The
addition of these other wastewaters so changed the basic
composition of the substance at issue that EPA resorted to
arguments found unpersuasive in Shell Oil in an attempt to place
the wastewaters within the F006 listing. We find no conflict
between our holding and that of Bethlehem Steel.9
b
We hold that a facility may not achieve interim status under
RCRA if it has illegally stored listed waste without a permit prior
to the time it seeks to achieve interim status. Such a facility
was not in existence at the time it was required to have a permit,
and the facility has rendered itself subject to the permit
requirement. Accordingly, we affirm the district court’s K-listed
waste ruling and reverse its decision that MSP possessed interim
status to store F-listed waste.
The interim status dispute in this case centers on the
following statutory language:
Any person who owns or operates a facility required to
have a permit under this section which facility . . . is
in existence on the effective date of statutory or
regulatory changes under this chapter that render the
facility subject to the requirement to have a permit . .
. shall be treated as having been issued a permit until
9
Because we find no error in the district court’s conclusion
that the Colfax and Durawood materials were K-listed waste, we do
not address the United States’ argument that MSP’s prior guilty
plea estopped it from denying that the wastes it stored were K-
listed wastes.
34
such time as final administrative disposition of [the
permit] application has been made.
42 U.S.C. § 6925(e).
Three concepts from this portion of the statute resolve the
case before us. First, section 6925(e) refers to “a permit.”
Under RCRA, EPA issues a particular facility one permit only. If
a facility treats, stores, and disposes of hazardous waste, a
single permit covers all of these activities. If it engages in any
of these activities with respect to more than one type of waste, a
single permit covers all wastes specified in that permit.
Second, section 6925(e) grants interim status to persons
operating a “facility.” As we will explain, the district court’s
holding implies that the statute grants interim status on a
wastestream by wastestream basis, but the statute’s plain language
contemplates a grant or denial of interim status on a facility by
facility basis.
Third, section 6925(e) focuses on whether a facility was in
existence at the time it was “render[ed] . . . subject” to the
statutory requirement that it obtain a permit. The crucial point
in time under RCRA is the moment at which the law required the
facility to have a permit. Section 6925(e) grants interim status
only to facilities that were “in existence” at this moment.
With these three concepts firmly in mind, we conclude that
MSP’s storage of K-listed wastes rendered it unable to achieve
interim status to store any type of waste. In 1980, EPA required
that all facilities, including recycling facilities, have RCRA
permits before storing K-listed waste. When Louisiana took over
35
the administration of its own RCRA program in 1984, it also
required facilities storing K-listed waste to obtain a RCRA permit.
In 1985, MSP stored the K-listed wastes from the Colfax and
Durawood cleanup operations. MSP had no RCRA permit at this time.
It could not obtain interim status because it was not in existence
in either 1980 or 1984, the promulgation dates for the regulations
requiring a permit for the storage of K-listed wastes, and because
it had no pending permit application. In 1985, therefore, MSP
lacked interim status.
An alternative application of the statute to these facts
yields an identical result. The section 6925(e) exception to the
permit requirement applies only when “statutory or regulatory
changes . . . render the facility subject” to the necessity that
the facility obtain a permit. In this case, statutory and
regulatory changes did not render MSP subject to the permit
requirement; rather, MSP rendered itself subject to this
requirement by storing a listed waste. Either way, because the
section 6925(e) exception does not apply, MSP needed a permit to
store waste, and its failure to procure one prior to its storage
activity resulted in a RCRA violation.
Our difficulty with the district court’s holding lies in its
assumption that MSP could achieve interim status by applying for a
permit to store F-listed waste when it became subject to
regulations corresponding to that type of waste. This holding
presumes that MSP was rendered subject to the requirement that it
obtain a permit in 1986. In essence, the district court held that
36
RCRA operates on a wastestream by wastestream basis. But MSP
needed a permit to cover its storage of K-listed waste several
months before. MSP did not need one permit to store K-listed
wastes and a second to store F-listed wastes. RCRA contemplates
that a facility will receive a single permit to cover storage of
all types of waste, and that this permit will govern the storage at
the entire facility. RCRA permitting does not operate on a
wastestream by wastestream basis.
The district court rejected the position we adopt here on the
grounds that “[i]t is unreasonable to suggest that an operator who
has once violated a regulation is thereafter precluded from ever
lawfully operating. One could argue with equal force that any
permittee who violates an environmental regulation would as a
result lose his permit . . . .” We do not believe that our holding
implies that any operator once violating a RCRA regulation may
never lawfully operate. Such a violator may operate after it has
applied for and obtained a RCRA permit.
We note that our holding does not conflict with the district
court’s construction of La. Haz. W. Reg. § 23.2, superseded,
counterpart codified at L.A.C. § 33:V:4303.A.1, which allows a
facility to piggyback interim status to store a second type of
waste onto its interim status to store a first by amending its
pending permit application to cover the second waste. See 40
C.F.R. § 270.72(a)(1) (suggesting that EPA allows use of the
piggybacking theory as well). MSP argues that it could piggyback
interim status to store K- and F-listed wastes onto its status to
37
store D- and U-listed wastes. The piggybacking theory can apply,
however, only if a facility has achieved interim status in the
first place. See 40 C.F.R. § 270.72(a) (“[T]he owner or operator
of an interim status facility may make the following changes . . .
.”). MSP did not have interim status to store any type of
hazardous waste when in 1985 it rendered itself subject to the
requirement that it obtain a permit, and thus it could not take
advantage of the piggybacking theory. We reject MSP’s attempt to
confuse the issues of when a facility needed and attained interim
status with what wastes it was entitled to store.
c
MSP’s estoppel defense is no more availing. We agree with the
district court that equitable estoppel will not lie against the
United States under the facts of this case. We hold that MSP’s
reliance on LDEQ’s June, 1986 letter was not reasonable and
therefore that it has failed to prove a traditional element of the
estoppel defense. We also agree with the United States that MSP
has not shown that LDEQ’s letter constituted affirmative
misconduct.
The district court denied MSP’s estoppel defense on the
grounds that Congress, not EPA or LDEQ, grants interim status. See
State of New Mexico v. Watkins, 969 F.2d 1122, 1130 (D.C. Cir.
1992). Although the district court’s reasoning contains a valuable
insight, its conclusion is not technically correct. Equitable
estoppel does not rest on the grounds that the claimant is in
reality entitled to the benefit or status in question. Rather,
38
equitable estoppel responds to the unfairness inherent in denying
the claimant some benefit after it has reasonably relied on the
misrepresentations of the adverse party. Thus, at least in its
estoppel defense, MSP does not contend that it in reality was
entitled to interim status, and LDEQ’s June 9 letter may have been
no defense had the issue of interim status arisen in a citizen suit
under 42 U.S.C. § 6972. Rather, MSP claims that the United States
should not be allowed to deny that MSP has interim status because
MSP reasonably relied on the representations of government agents.
Nevertheless, we agree with the district court’s refusal to
estop the government in this situation. Recently, the Supreme
Court cast further doubt on the proposition that equitable estoppel
runs against the United States. In Office of Personnel Management
v. Richmond, 496 U.S. 414 (1990), the Supreme Court emphasized the
separation of powers difficulties inherent in an estoppel of the
United States. It noted, for instance, that while Congress may
create a remedy for a federal employees’ issuance of erroneous
legal advice, “[j]udicial adoption of estoppel based on agency
misinformation would, on the other hand, vest authority in these
agents that Congress would be powerless to constrain.” 496 U.S. at
429. Were courts to estop the United States readily, the executive
branch could use this doctrine strategically to achieve results
Congress intended to prevent, thus delivering lawmaking power to
the executive in a manner that the first sentence of Article I does
not contemplate. Although the Court made its observations in the
context of the Appropriations Clause, the principles it articulated
39
are more generally applicable and have particular force when a
private party seeks to avoid the force of an otherwise applicable
law because of a government agent’s representation that the law
does not apply. Since Richmond, the circuits have repeatedly
acknowledged the importance of separation of powers principles to
claims of estoppel against the government. See, e.g., FDIC v.
Hulsey, 22 F.3d 1472, 1489 (10th Cir. 1994) (stating that courts
should allow an estoppel, if at all, only when such a ruling “would
not frustrate the purpose of the statutes expressing the will of
Congress”); United States v. Guy, 978 F.2d 934, 938 (6th Cir.
1992); Kennedy v. United States, 965 F.2d 413, 419-21 (7th Cir.
1992); Transohio Savings Bank v. Director, 967 F.2d 598, 622-23
(D.C. Cir. 1992).
In addition, estoppel of the United States implicates the
President’s power and duty under the Take Care Clause. When a
court refuses to enforce the law on the basis of a previous
representation from a government official, it renders the current
executive unable to enforce the law and thus discharge its
responsibilities under the Take Care Clause. Although courts
rarely trace this responsibility to its constitutional roots,
several cases have articulated this interest and given it
substantial weight. See, e.g., Heckler v. Community Health
Services, 467 U.S. 60 (1984) (“When the Government is unable to
enforce the law because the conduct of its agents has given rise to
an estoppel, the interest of the citizenry as a whole in obedience
to the rule of law is undermined.”); Hulsey, 22 F.3d at 1489
40
(stating that courts should refuse to apply the estoppel doctrine
when to do so would “unduly undermine the enforcement of the public
laws”).
The threat to both sets of constitutional principles in this
case is obvious. We recall the district court’s observation that
Congress, not EPA or LDEQ, grants interim status. Outside of the
context of a citizen suit, an estoppel here would effectively allow
LDEQ to grant MSP interim status in sharp tension with the
principles of Articles I and II. Finally, we note the threat to
the RCRA dual enforcement scheme posed by a decision allowing an
estoppel in this case. Allowing state representations to estop the
federal government in this case would provide the states with a
mechanism for going below the federal floor of regulation required
by RCRA. See, United States v. Marine Shale Processors, Inc., No.
94-30419, at 12-13.
Courts have reacted to the danger that estoppel of the United
States poses to these values in several ways. First, courts have
applied the elements of traditional equitable estoppel against the
government rather narrowly. See, e.g., Heckler, 467 U.S. at 61-62
(holding that the estoppel claimant had shown no possibility of
detriment in spite of the fact that denying its claim might force
it into bankruptcy). Second, courts have insisted that any
estoppel against the government result from a representation of an
official acting within the scope of her official authority, thus
implying that the concept of apparent authority does not apply in
the case of a government estoppel. See, e.g., United States v.
41
Walcott, 972 F.2d 323, 325 (11th Cir. 1992).10 Third, courts have
required that a party seeking to estop the United States show some
sort of “affirmative misconduct,” an element normally not required
to estop private parties. See, e.g., Fano v. O’Neill, 806 F.2d
1262, 1265-66 (5th Cir. 1987); Cadwalder v. United States, 45 F.3d
297, 299 (9th Cir. 1995). We rely on the first and third of these
principles to reject MSP’s estoppel defense. MSP’s reliance on
LDEQ’s June 9 letter was unreasonable as that term is used in the
estoppel doctrine,11 and in addition, MSP has not met its burden to
show affirmative misconduct.
Courts considering estoppel claims against the government
involving an official’s misstatement that a particular statute or
regulation does not apply to the claimant have read the element of
reasonable reliance in light of the principle that all citizens,
especially citizens dealing with the government, are presumed to
10
Because of our disposition of this case on other grounds,
we do not reach Louisiana’s argument that the officer issuing the
letter upon which MSP relied lacked actual authority under
Louisiana law to bind LDEQ.
11
We do not imply a reversal of the district court’s finding
that “MSP’s reliance on [LDEQ’s] representation was reasonable.”
The district court made this statement in the context of its
penalty calculation, not its estoppel holding. We believe the
district court intended this sentence as a restatement of its
finding that MSP did not “store K wastes after June 9, 1986 with
disdain for the requirements of a storage permit.” As we have
explained, the elements of estoppel are narrowly construed when a
claimant seeks to estop the government. The district court
followed the proper course of action by refusing to estop the
government and by considering the LDEQ letter as a mitigating
factor in its penalty calculations. See Rollins Environmental
Services (NJ), Inc. v. EPA, 937 F.2d 649, 652-54 (D.C. Cir. 1991);
United States v. Production Plated Plastics, Inc., 742 F. Supp.
956, 961 (W.D. Mich. 1990), aff’d, 955 F.2d 45 (6th Cir.), cert.
denied, 506 U.S. 820 (1992).
42
know the law. See, e.g., Breath v. Cronvich, 729 F.2d 1006, 1011
(5th Cir.), modified by, 734 F.2d 225, cert. denied, 469 U.S. 934
(1984); United States Fidelity & Guaranty Co. v. Bass, 619 F.2d
1057, 1077 (5th Cir. 1980). Courts have translated this
reasonableness requirement into the rule that a party’s reliance on
a government employee’s misstatement concerning the coverage or
application of a law will rarely be reasonable if a clear statute
or regulation provided otherwise. See, e.g., Federal Crop
Insurance Corp. v. Merrill, 332 U.S. 380, 381-82, 384 (1947)
(refusing to invoke estoppel to require the government to insure
crops when the relevant statue “by explicit language” did not
provide for insurance under the circumstances); United States v.
Perrez-Torres, 15 F.3d 403, 407 (5th Cir. 1994) (rejecting an
estoppel argument when the terms of a statute provide in “clear and
unambiguous” terms that the alleged official misrepresentation was
incorrect), cert. denied, 115 S. Ct. 125 (1994); see also Guy, 978
F.2d at 937-38; Kennedy, 965 F.2d at 419-21.
42 U.S.C. § 6925(e) provides clear guidance regarding interim
status. In the previous section, we went no further than the plain
language of the statute to decide that MSP lacked interim status
once it illegally stored K-listed wastes. MSP makes no compelling
argument excusing its failure to read section 6925(e) in accordance
with its straightforward terminology. MSP’s reliance on the June
9 LDEQ letter was unreasonable.
Even if MSP’s reliance on the LDEQ letter had been reasonable,
MSP has failed to show that LDEQ’s June 9 letter constituted the
43
kind of affirmative misconduct necessary to estop the United
States. Although courts have been less than forthcoming in
defining what a government official must do to satisfy the
affirmative misconduct element of an estoppel defense, the cases
support the conclusion that at minimum the official must
intentionally or recklessly mislead the estoppel claimant.12 In
REW, Enterprises, Inc. v. Premier Bank, N.A., 49 F.3d 163, 170 (5th
Cir. 1995), for instance, we considered the absence of any evidence
that an agent “deliberately” misled a company as a reason not to
estop the government. And in Ingalls, we refused to estop the
government in part because there was no allegation that an
official’s misstatement was made with knowledge of its falsity or
with intent to mislead. 976 F.2d at 938; see also Fano, 806 F.2d
at 1265 (remanding for a hearing on the issue of estoppel in part
on the basis of allegations that an agency “willfully, wantonly,
recklessly, and negligently” misled a citizen) (internal quotation
marks omitted); Kennedy, 965 F.2d at 421 (Affirmative misconduct
“is something more than mere negligence.”) (internal quotation
marks omitted); SIU de Puerto Rico, Caribe y Latinoamerica v.
Virgin Islands Port Authority, 42 F.3d 801, 803-04 (3d Cir. 1994);
12
We reserve two issues for another day. First, we do not
decide whether a showing of intent to mislead is sufficient in
itself to discharge an estoppel claimant’s burden to prove
affirmative misconduct. Second, we do not decide whether
representations made with reckless disregard for their truth are
sufficient to support a finding of affirmative misconduct. We hold
only that affirmative misconduct is something more than merely
negligent conduct.
44
Hulsey, 22 F.3d at 1490 (“[T]he erroneous advice of a government
agent does not reach the level of affirmative misconduct.”).
Requiring an estoppel claimant to prove that the government
agent intended to mislead has a sound basis in policy and
constitutional values. As we have explained, a citizen’s first
defense to misstatements from a government official regarding the
scope and applicability of a particular law is self-help, that is,
her own research to discover the applicable legal principles. An
official bent upon misleading a citizen is more likely to
anticipate and seek to neutralize any factors that might put the
citizen on notice of the deception, thus undermining the citizen’s
self-help defense to official error. In addition, intentionally
deception is more reprehensible than negligent error and implicates
the Due Process Clause value of fair dealing between the sovereign
and the citizen. See Richmond, 496 U.S. at 435-36 (Stevens, J.,
concurring) (discussing a hypothetical highlighting the special
harshness inherent in intentionally duplicitous conduct by
government officials); see also Oliver W. Holmes, The Common Law 3
(1881) ”[E]ven a dog distinguishes between being stumbled over and
being kicked.”).
MSP cannot prove on these facts that LDEQ’s June 9
representations regarding its interim status was the result of
anything other than a negligent interpretation of section 6925(e).
The circumstances in this case suggest simply that LDEQ made an
honest mistake, a mistake that the district court considered as a
mitigating factor when fining MSP. We hold that the district court
45
correctly refused to estop the United States from disputing MSP’s
interim status.
MSP’s citation to United States v. Pennsylvania Industrial
Chemical Corp., 411 U.S. 655 (1973), is unavailing, even if this
case remains good law after Richmond and Heckler. See Richmond,
496 U.S. at 426-27 (noting some dispute over whether Pennsylvania
Chemical was an estoppel case). In Pennsylvania Industrial, an
agency repeatedly reaffirmed in published regulations that a
statute did not apply to a certain type of conduct. The defendant
engaged in this conduct during the period in which these
regulations remained in force. The agency then reversed its
position, published new regulations providing that the statute did
apply to conduct of the nature engaged in by the defendant, and
sought to hold the defendant criminally liable for actions taken
while the old regulations remained in force. The Supreme Court
held that the defendant was entitled to an opportunity to prove
that it “was affirmatively misled by the responsible administrative
agency into believing that law did not apply to this situation” on
the grounds that “traditional notions of fairness inherent in our
system of criminal justice prevent the Government from proceeding
with the prosecution.” 411 U.S. at 674.
Pennsylvania Industrial does not contradict our holding in
this case. The Pennsylvania Industrial defendant availed itself of
its self-help remedy and discovered regulations providing that the
conduct was legal, regulations to which courts would in appropriate
circumstances defer. See Chevron, U.S.A., Inc. v. Natural
46
Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984).
While a citizen might reasonably rely on the regulations of the
agency charged with the administration of the statutory scheme.
MSP has cited no case holding that a official’s non-adjudicative
statements regarding the applicability of a statute to a particular
set of facts are entitled to similar deference.
We acknowledge that this case presents several factors
favoring estoppel. LDEQ’s representation to MSP was written, not
oral. Cf. Heckler, 467 U.S. at 65 (stating that courts should be
especially reluctant to estop the government of the basis of oral
statements). Although the district court made no findings as to
intent, the fact that LDEQ issued its letter in the context of
negotiations allegedly designed to bring MSP into compliance with
RCRA’s storage regulations suggest that LDEQ intended for MSP to
rely on the letter. Although MSP’s extensive storage of K-listed
wastes prior to receiving the June 9 letter suggests that it might
have continued to behave in the same manner regardless of what LDEQ
said, at least one of MSP’s customers, Southern Wood Piedmont
Company, did in fact rely on LDEQ representations regarding the
status of MSP’s facilities. Nevertheless, the burden on a party
seeking to estop the United States is heavy indeed, and MSP has not
met its burden in this case.13
13
To the extent that MSP has properly appealed the district
court’s $1,000,000 fine as too high, we affirm. The district court
considered the LDEQ’s letter as a mitigating factor and reduced its
fine accordingly. As the district court noted, however, numerous
violations occurred before June 9, 1986. We believe on these facts
that MSP has little cause for complaint.
47
4
The United States appeals the district court’s definition of
the word “storage” as “excluding a reasonable period of time
between unloading of the wastes and their placement in the kiln.”
The district court defined storage in an order granting summary
judgment to the United States on the issue MSP’s storage of K-
listed wastes. Immediately preceding this definition, the district
court found that “there was no evidence that the wastes were ever
fed into the kiln either directly from the transport vehicle or
after only a brief period of containment in an MSP tank for the
purposes of conveyance to the kiln. If there had been, those days
would not be counted as violations.” Indeed, a September 15, 1989
Marine Shale response to an EPA demand for information suggests
that hazardous wastes often spend at least ten to 15 days in MSP’s
blending tanks before being placed into the kiln.
In light of the district court’s finding that MSP never kept
K-listed waste on site for only a brief period of time, a finding
that neither party disputes, we do not see how the district court’s
definition of storage affects any issue properly before this court.
The storage issue did not affect the fine, and the parties may
litigate the meaning of storage as the term appears in the
injunction in a contempt proceeding. We decline to issue an
advisory opinion on this matter.
IV
48
The United States charged MSP with operating several minor
emission sources without a permit in violation of the Clean Air Act
and accompanying regulations. It also alleged that MSP had
exceeded the limits specified in the permit for its kiln stack on
numerous occasions. The district court held for the United States
regarding minor emission sources but agreed with MSP that the
United States could not enforce the kiln stack permit. Both
parties appeal.
A
The Clean Air Act's Prevention of Significant Deterioration
Program governs the emission of air pollutants in states that have
attained CAA National Ambient Air Quality Standards. The PSD
portion of the CAA divides emission sources into major and minor
emitting facilities. 42 U.S.C. § 7479(1). The CAA and its
regulations classify a source as minor if either of two different
forces limit its rate of emission of air pollutants to below a
specified amount: first, physical or mechanical limits
constraining its rate of emission; and second, legal limits, in the
form of legal restrictions on its rate of emission or hours of
operation. 40 C.F.R. § 51.166(b)(4). The industry uses the term
“synthetic minor source” to refer to a facility subject to this
second type of limit but nevertheless possessing the physical and
mechanical potential to emit above the statutorily specified rate.
The CAA requires facilities constructing or modifying major sources
to obtain a preconstruction permit from agencies administering EPA-
49
approved state implementation programs. 42 U.S.C. §§ 7475(a)(1),
7479(2)(C).
Since opening for business in 1985, MSP has operated at least
one source with the mechanical potential to emit sufficient
pollutants to qualify as a major source: its kiln stack. It has
also operated several emission sources without such potential.
When MSP originally bought the rotary kiln in 1984, LDEQ
transferred to MSP the air permit previously governing the
facility, Permit 722 M-1, with the stipulation that MSP add a
baghouse to its kiln stack. Disputes as to the status of MSP's air
emissions led LDEQ to issue a compliance order in December, 1985.
MSP and LDEQ sought to resolve their differences and in early 1986
settled. As part of this settlement agreement, LDEQ issued a
second air permit, Permit 1036 M-1. Permit 1036 M-1 did not
include provisions addressing 29 minor sources that MSP operated at
the time. In issuing Permit 1036 M-1, LDEQ did not follow the
procedural requirements in its regulations governing the issuance
of air permits; in particular, LDEQ did not provide public notice
and an opportunity for comment regarding MSP's second permit.
In 1986, LDEQ issued a second compliance order addressing
MSP's admitted operation of minor emission sources without a
permit. LDEQ and MSP apparently continued discussions until April,
1988, when LDEQ ordered MSP to fill out a questionnaire requiring
identification of all emission sources in its facility. MSP’s
response to the questionnaire identified the 29 unpermitted minor
sources, from which MSP was still discharging air pollutants.
50
Shortly thereafter, MSP filed two applications with LDEQ. The
first sought to modify Permit 1036 M-1 to legalize MSP’s discharges
from its currently operating 29 minor sources. The second
requested a variance to continue operations until LDEQ ruled on the
permit amendment application. Throughout this time, MSP was still
emitting from its minor sources.
LDEQ acted on MSP’s variance application while requesting
further information from MSP on the permit amendment application.
After a public hearing, LDEQ denied the variance application on
February 1, 1989. The next day, MSP requested an additional
hearing on the variance denial, a request LDEQ denied.
MSP appealed the variance denial to the Court of Appeal of
Louisiana. After holding that it had jurisdiction over an appeal
of a variance denial, In re Marine Shale Processors, Inc., 563 So.
2d 278 (La. Ct. App. 1990), the court affirmed LDEQ’s denial of
MSP’s variance application on June 26, 1990. In re Marine Shale
Processors, Inc., 566 So. 2d 994 (La. Ct. App. 1990). Before the
Court of Appeal of Louisiana, MSP argued that the variance denial
would “result in a practical closing and/or elimination of a
significant portion of its lawful business without corresponding
benefit to the people of Louisiana.” 566 So. 2d at 996. The court
rejected this argument, holding that MSP could continue operations
in conformity with Permit 1036 M-1 and that the people of Louisiana
would benefit from avoiding what LDEQ called “an unacceptable risk
to those working and residing in the vicinity of MSP[’s] facility.”
566 So. 2d at 998 (internal quotation marks and emphasis omitted).
51
MSP’s arguments regarding the effect of the variance denial on
its operations did not prove prophetic. It continued to operate
after the ruling of the Louisiana Court of Appeals, and it
continued to discharge from its 29 unpermitted minor sources.
Regarding the application to amend Permit 1036 M-1, MSP
responded to LDEQ’s request for additional information on several
occasions and completed its application on December 7, 1989.
Thirteen months later, LDEQ denied MSP's application to amend
Permit 1036 M-1. MSP invoked LDEQ's appeals process, and the
appellate authority remanded on the grounds that LDEQ had failed to
adhere to required procedures in denying MSP's application to
amend. On remand, LDEQ denied the application anew. MSP requested
reconsideration of this denial. On February 11, 1992, LDEQ noted
that the pending motion for reconsideration prevented the denial
order from becoming final. Since that time, LDEQ has taken no
action on the permit amendment application. MSP continues to
operate its 29 unpermitted minor sources.
The district court held that Permit 1036 M-1 was not federally
enforceable because LDEQ did not issue it in accordance with its
own procedural requirements. As a corollary, it held that MSP
could not rely on the pollution control devices specified in the
permit to transform its kiln stack into a synthetic minor source,
and thus that MSP had operated a major source without a permit.
The court found that MSP had operated one major and twenty-nine
minor emission sources without a permit.
52
The district court then articulated several factors relevant
to the imposition of a civil fine:
MSP's motion for reconsideration of the denial of the air
permit, which the state has notified MSP has the effect
of suspending the denial of the permit, has been pending
since January 15, 1992, despite my repeated statements to
the Assistant Attorney General that the state should take
final action on the permit application. While the state
has been unreasonably dilatory in acting on MSP's motion
for reconsideration, it is significant that MSP has
failed to install on [its facilities] the very pollution
control devices which, in its amended permit application,
it proposed to install.
The court fined MSP $1,000,000 for the major source violation and
$2,500,000 for the twenty-nine minor source violations.
B
MSP challenges the fine of $1,000,000 for a major source
violation, arguing that while the court below correctly ruled that
Permit 1036 M-1 was not federally enforceable, it erred in not
allowing MSP to rely on the legal limits imposed by Permit 1036 M-1
in order to classify the kiln stack as a synthetic minor source.
MSP further contends that the statute of limitations bars any
penalty for the minor source violations because MSP began emitting
from these sources more than five years ago. Finally, MSP argues
that the district court's fine was too heavy. MSP contends that
the district court's reliance on MSP's failure to install certain
pollution control devices constituted reversible error because
Louisiana law prohibited the installation of these devices without
a permit. MSP also claims that the district court failed to place
sufficient emphasis on LDEQ's delay in ruling on MSP's application
to amend its permit.
53
In its cross appeal, the United States contends that the
district court erred in holding that LDEQ's failure to follow its
permit issuance guidelines rendered the federal government unable
to enforce Permit 1036 M-1. In the alternative, the United States
argues that if it cannot enforce Permit 1036 M-1, it can enforce
the predecessor and more restrictive Permit 722 M-1.
C
We resolve the issues in the following order. First, we
discuss whether the district court erred in ruling that procedural
defects in the issuance of Permit 1036 M-1 rendered the United
States unable to enforce the permit. Second, we consider whether
the district court properly rejected MSP’s statute of limitations
defense to the minor source violations. Third, we address MSP’s
challenge to the amount of the minor source fine.
1
We reverse that portion of the district court’s fine dealing
with MSP’s kiln stack. We hold that the United States may enforce
Permit 1036 M-1. We remand for further proceedings consistent with
this opinion.
The Permit 1036 M-1 portion of the dispute centers on the
definition of “federally enforceable” in the CAA regulations
dealing with regions that have attained CAA air quality standards.
These regulations state that the United States may enforce “any
permit requirements established . . . under regulations approved
pursuant to 40 C.F.R. part 51, subpart I.” 40 C.F.R. §§
51.166(b)(17); see also 40 C.F.R. § 51.165(a)(1)(xiv) (providing an
54
identical definition). The regulations in 40 C.F.R. pt. 51, subpt.
I, require CAA State Implementation Plans to include a program of
review of proposed construction or modification of stationary
sources, a process called “preconstruction review.” 40 C.F.R. §§
51.160-.166. Louisiana’s version of this process led LDEQ to issue
Permit 1036 M-1, a “preconstruction permit.” MSP argues that LDEQ
issued Permit 1036 M-1 without following the procedure contained in
the Louisiana SIP for the issuance of preconstruction permits and,
thus, that Permit 1036 M-1's requirements were not established
under the SIP. The United States responds that the regulations
refer not to procedure but to the authority under which the state
issued the permit.
Although the parties focus their attention on the phrase
“pursuant to” in the regulation, their dispute may require us to
interpret the phrase “established under” in section 51.166(b)(17).
The parties have not disputed that EPA approved Louisiana’s SIP
pursuant to the relevant regulations. See 40 C.F.R. § 52.972. The
phrase “pursuant to” does appear in 40 C.F.R. § 52.23, providing
that “[f]ailure to comply . . . with any permit condition or permit
denial issued pursuant to approved or promulgated regulations for
the review of new or modified stationary or indirect sources . . .
shall render the person or governmental entity so failing to comply
. . . subject to enforcement action under section 113 of the Clean
Air Act.” The arguments upon which we rely do not depend on
whether the relevant regulatory phrase is “established under” or
55
“pursuant to,” and we thus decline to consider whether the relevant
provision is 40 C.F.R. § 51.166(b)(17) or 40 C.F.R. § 52.23.
We agree with the United States for three reasons. First, the
common meaning of the phrases “established under” and “pursuant to”
provide little guidance regarding federal enforceability; plain
language supports neither party. Second, the CAA provides EPA with
broad authority to enforce state air permits. Section 113 of the
CAA provides, “The Administrator . . . may commence a civil action
. . . [w]henever [a person] . . . has violated, or is in violation
of, any requirement or prohibition of an applicable implementation
plan or permit.” 42 U.S.C. § 7413(b)(1) (emphasis added).
Although MSP’s argument is based on CAA regulations, not the
statute, and although EPA may by rule limit its own ability to
enforce state air permits, the broad enforcement powers Congress
intended to confer upon EPA aids our interpretation of the
ambiguous regulatory language. We are reluctant to construe such
language as preventing the agency from exercising the enforcement
power that Congress intended it to have.
Third, MSP’s argument leads to the conclusion that it has no
federally enforceable preconstruction permit, a conclusion
inconsistent with the nature of the dual enforcement scheme
contemplated in the CAA. Congress gave the United States the power
to enforce state air permits in part in order to prevent a
destructive race among states to attract industry by adopting the
least stringent emissions limits. As the Sixth Circuit has
explained,
56
[S]tandards for purification of the ambient air simply
cannot be set along the boundaries of our 50 states. The
winds, of course, recognize no such boundaries. The 50
states of this union compete intensely with one another
for industry. As Congress has recognized, if state
control of ambient air emissions were final, in short
order, major shifts of smoke stack industries to states
with the most lenient pure air standards would inevitably
take place. Absent final authority in the United States
EPA, the attainment goal of the Clean Air Act would prove
ephemeral.
United States v. Ford Motor Co., 814 F.2d 1099, 1102 (6th Cir.),
cert. denied, 484 U.S. 822 (1987); see also Sierra Club v. Indiana-
Kentucky Electric Corp., 716 F.2d 1145, 1154 (7th Cir. 1983)
(Congress “rather clearly embraced the general proposition that
federal action was intended to remedy any problem with a state
implementation plan.”) (emphasis removed).14
In contrast, MSP’s construction of the relevant regulations
would allow states to undermine the United States’ section 113
power to enforce preconstruction permits by issuing such permits in
violation of the relevant procedural requirements. Worse yet,
sources themselves would have an incentive to insert procedural
irregularities into permit processes, since doing so would allow
them to avoid a federal enforcement action under section 113. Our
concern for the integrity of the dual enforcement scheme that the
CAA contemplates leads us to reject MSP’s argument.
14
Some commentators have questioned the “race to the bottom”
rationale for federal enforcement. See, e.g., David Shapiro,
Federalism: A Dialogue (1995) (collecting and discussing sources).
While these arguments may have considerable force in some areas,
their persuasive value is less in an area fraught with the
externalities commonly associated with air pollution.
57
MSP responds to this third argument by contending that no hole
in the regulatory scheme exists because Louisiana can enforce
Permit 1036 M-1 in a state court action. Even if MSP’s contention
were correct, section 113 embodies Congress’s decision that state
enforcement would not always be sufficient to ensure attainment of
CAA ambient air standards. In addition, we are uncertain whether
Louisiana law would allow the state to enforce the permit. MSP
provides no citations to Louisiana law to support its contention.
MSP’s arguments to this court, if accepted, might prevent it from
defending against an action by Louisiana in state court to collect
penalties for violations of Permit 1036 M-1 on the basis of
procedural irregularities. But other entities could use this
defense in other cases, and some states might construe state law to
bar state enforcement of permits issued in violation of the
relevant procedural requirements. Such a ruling could cause a
situation in which a source operates under and violates a permit
that no authority, state or federal, can enforce. We refuse to so
endanger the statutory enforcement scheme.
MSP also relies upon a series of quotations to the Federal
Register, specifically to Final Rule, Requirements for the
Preparation, Adoption, and Submittal of Implementation Plans, 54
Fed. Reg. 27,274 (1989), purportedly illustrating that EPA
explicitly recognized that states might choose to issue air permits
which are not federally enforceable. These quotations include
language like the following: “[P]ermits which do not conform to
operating permit program requirements and the requirements of EPA’s
58
underlying regulations may not be deemed ``federally enforceable.’”
54 Fed. Reg. at 27,282. Later, EPA added, “States are free to
continue issuing operating permits that do not meet the above
requirements. However, such permits would not be ``federally
enforceable’ . . . .” Id.
MSP lifts quotations out of context. The CAA statutory scheme
contemplates at least two different types of air permits unhappily
named “preconstruction permits” and “operating permits,” with
confusion easily resulting from the fact that preconstruction
permits often include limits upon a source’s operations.
Preconstruction permits result from a review process that occurs
before construction of or major modification to a stationary
source. At this stage, the permitting authority must determine
whether the proposed construction or modification would violate a
state’s emissions control strategy or interfere with the attainment
or maintenance of CAA air quality standards. 40 C.F.R. §
51.160(a)(1-2). In contrast, operating permits focus on a source’s
current emissions, even if the source has not recently undergone
construction or major modification. See 40 C.F.R. § 70.1(b) (“All
sources subject to these regulations shall have a permit to operate
. . . .”).15 The distinction between preconstruction and operating
permits is critical. Before 1990, no federal law required states
to maintain operating permit programs, but the CAA has always
15
40 C.F.R. pt. 70 provides a model of the nature of state
operating programs pre-1990 programs.
59
compelled states to administer a program of preconstruction review.
See 42 U.S.C. §§ 7410(a)(2)(C), 7475(a).
In 1986, when LDEQ issued Permit 1036 M-1, the CAA and its
regulations conditioned approval of SIPs upon a state’s maintenance
of an effective program of preconstruction review. 40 C.F.R. §
51.160(a). At that time, however, the CAA did not require states
to maintain an operating permit system. Some states chose to do
so; EPA informs us, and MSP does not dispute, that Louisiana was
not among those states. Our brief search of the Louisiana
Administrative Code has unearthed no operating permit program in
force at this time.
All of the quotations upon which MSP relies occurred in the
context of a discussion of state operating permits, not
preconstruction permits. In the pre-trial order in this case,
Marine Shale affirmatively argued that any failure on its part to
obtain air permits constituted noncompliance with “a
‘preconstruction’ permit application requirement,” thus in effect
conceding that Permit 1036 M-1 was a preconstruction permit. MSP
does not argue otherwise on this appeal. MSP cites to no authority
supporting the proposition that EPA has limited its ability to
enforce state preconstruction permits. Although EPA argues that
states cannot render the United States unable to enforce
preconstruction permits, we need not address this broad contention
to decide this case. We hold only that, in light of the statutory
scheme, the phrase “established under” contained in the 40 C.F.R.
§§ 51.166(b)(17)’s definition of “federally enforceable” refers
60
more naturally to the source of the authority upon which the state
relied to issue the permit than it does to conformity with
appropriate procedures.
MSP’s final argument is that even if the phrases “established
under” or “pursuant to” refer to the authority upon which a state
relied to issue a permit, Permit 1036 M-1 is still not federally
enforceable because the LDEQ did not issue this permit under the
authority of the Louisiana SIP. According to MSP, EPA recognized
in the federal register portion quoted above that states might
employ some portion of their police power other than that embodied
in the SIP to issue air permits and that LDEQ’s failure to follow
the procedural steps for issuing a preconstruction permit
illustrates that the Permit 1036 M-1 was an “off-the-SIP” permit.
The source of a state agency’s authority to take particular
action is a matter of state law. The State of Louisiana refers us
to La. Rev. Stat. Ann. § 30:2011(D)(2), which provided the LDEQ
power to issue air permits. The United States and LDEQ assert that
LDEQ responded by promulgating L.A.Q.R. § 6.0, superseded,
counterpart codified at L.A.C. § 33:III:501.C.2., at that time the
portion of the Louisiana SIP dealing with the issuance of
preconstruction permits, and MSP does not dispute these assertions.
While nothing in these sections compels the conclusion that LDEQ
lacked power from some other source to issue such permits, MSP has
not identified what this other source might be. Most importantly,
however, we agree with the United States that Permit 1036 M-1
itself provides the best evidence that LDEQ did not attempt to
61
issue an off-the-SIP permit. Permit 1036 M-1 incorporates by
reference a series of Standard Air Emission Permit Conditions, the
first of which provides that “[f]ailure to install, properly
operate and/or maintain all proposed control measures and/or
equipment as specified in the application shall be considered a
violation of the permit and regulation 6.0.” In other words,
Permit 1036 M-1 provided that a violation of the permit constituted
a violation of the SIP. This reference provides strong evidence
that LDEQ used its powers under the SIP to issue Permit 1036 M-1,
and in the absence of state authority to the contrary, we hold that
Permit 1036 M-1 was established under LDEQ’s regulations approved
pursuant to 40 C.F.R. pt. 51, subpt. I.
Our decision here does not conflict with National Mining Ass’n
v. United States Environmental Protection Agency, 59 F.3d 1351
(D.C. Cir. 1995), decided shortly before oral argument in this
case. In National Mining Ass’n, the D.C. Circuit held that EPA had
to consider limits in permits unenforceable by the United States
and issued pursuant to effective state permitting programs when
deciding whether a source with the physical and mechanical
potential to emit pollutants above the floor rate for major
stationary sources could avoid preconstruction review as a
synthetic minor source. 59 F.3d at 1361-65. In other words,
National Mining Ass’n addressed the consequences attaching to
federal enforceability. This case concerns the analytically prior
question of whether a particular permit is federally enforceable.
To the extent that the D.C. Circuit discussed procedural
62
requirements necessary to make a permit federally enforceable, see
59 F.3d at 1362, it spoke of operating permits, not preconstruction
permits.
2
We affirm the district court’s rejection of MSP’s statute of
limitations defense to the allegations of minor source violations.
The United States concedes that the five-year limitations period in
28 U.S.C. § 2462 bars all fines for minor source emissions
occurring more that five years before the filing of this lawsuit.
MSP contends, however, that because emissions from each minor
source began more than five years before the United States filed
suit, section 2462 bars all minor source fines, even those
occurring within five years of the filing of the complaint. MSP’s
argument is frivolous. 42 U.S.C. § 7413(b) states that the United
States may sue to collect penalties of $25,000 “per day for each
violation.” Section 7413(b) contemplates a fine for each day a
minor source operates in violation of law, and section 2462 limits
the number of days to five years before the filing of the
complaint. The district court properly rejected MSP’s statute of
limitations defense.
3
MSP argument that the district court’s $2,500,000 minor source
fine was too harsh rests on two grounds. First, MSP contends that
the district court did not sufficiently mitigate the penalty in
light of LDEQ’s delay in ruling on MSP’s application to amend its
permit to include these emissions sources. Second, MSP argues that
63
the district court erroneously relied on MSP’s failure to install
the pollution control devices mentioned in its permit amendment
application.
MSP’s first argument is, to say the least, unconvincing. MSP
began to operate unpermitted minor sources in violation of the CAA
when it first opened for business. It continued for years to
operate these sources and did not apply for a permit for them until
after LDEQ ordered it to complete a questionnaire identifying all
emission source on the site. It continued to operate these sources
while LDEQ considered its request for a variance to render these
emissions legal. Emissions did not cease after LDEQ denied the
variance, during the pendency of judicial review of the variance
denial, or even after the Louisiana courts affirmed the denial,
despite MSP’s arguments to the Louisiana judiciary that the
variance denial would require MSP to shut down. In light of MSP’s
disregard for the requirement that it obtain the very permit that
has been the subject of unreasonable delay, we do not find
persuasive the argument that the district court’s refusal to
further mitigate the fine constituted an abuse of discretion. We
note further that the statutory maximum fine for MSP’s minor source
violations is $1,560,000,000, and that the maximum fine for the
operation of these sources after the variance denial became final
is $1,175,000,000. Thus, the district court’s fine represents
around one tenth of one percent of what it might have imposed, and
around two tenths of one percent of what it might have imposed for
64
the time period during which MSP operated in flagrant and willful
violation of the permit requirement.
We reject MSP’s second contention as well. MSP argues that
L.A.C. 33:III:505.A.1, superseded, 21 La. Reg. 878 (July 20, 1995),
counterpart codified at L.A.C. § 33:III:501.C.2, prevented it from
installing pollution control devices without permission from LDEQ.
Section 505.A.1 applied, however, only to “[a]ny person planning to
initiate[] or increase the emission of air contaminants.” The
regulation’s current incarnation, section 501.C.2, applies only to
construction, modification, or operation “which may ultimately
result in an initiation or increase in emission of air
contaminants.” This plain language suggests that MSP could have
installed devices resulting in the reduction of air pollutants at
any time without permission from LDEQ. We find no error in the
district court’s reliance on the fact that MSP did not follow its
proposed course of action.
V
We consider together MSP's appeal from the district court's
permanent injunctions prohibiting MSP from discharging non-contact
cooling water into Bayou Boeuf, storing K-listed wastes, and
operating major or minor air emission sources, all unless MSP
obtained permits for these activities. MSP asserts that all three
injunctions suffer a common defect, namely, that the district court
abused its discretion by failing to support its decision to issue
an injunction with a discussion of traditional equitable factors,
65
such as the balance of the harms and benefits to each party, the
adequacy of legal remedies, and the presence of irreparable harm.
MSP also argues that the district court failed to articulate
findings and reasons with sufficient specificity to support the
injunctions. See Fed. R. Civ. P. 65(d). MSP supports its
arguments primarily with cites to two Supreme Court decisions,
Amoco Productions Co. v. Village of Gambell, 480 U.S. 531 (1987),
and Weinberger v. Carlos Romero-Barcelo, 456 U.S. 305 (1982).
We do not agree that Amoco and Weinberger require a court to
balance the equities and make findings regarding irreparable harm
and adequacy of legal remedies in all cases arising under the
environmental statutes. Amoco and Weinberger both hold that a
federal statute's authorization of injunctive relief does not
remove an equity court's traditional discretion over the decision
to issue an injunction. In both cases, the Court was "explicitly
reject[ing] the notion that an injunction follows as a matter of
course upon a finding of statutory violation." Town of Huntington
v. Marsh, 884 F.2d 648, 651 (2d Cir. 1989), cert. denied, 494 U.S.
1004 (1990); see also Natural Resources Defense Council, Inc. v.
Texaco Refining and Marketing, Inc., 906 F.2d 934, 939-40 (3d Cir.
1990) (collecting cases). Neither decision directs courts to
abandon traditional principles of equity jurisprudence in
environmental cases. To the contrary, the Court identified the
error in both cases as the lower courts’ departure from these
traditional principles; while recognizing that Congress could
circumscribe a court's reliance upon the traditions of equity in a
66
particular context, the Court held that Congress had not intended
to do so in the environmental statutes at issue. Weinberger and
Amoco allow a court to issue an injunction without making findings
of irreparable harm, inadequacy of legal remedy, or the balance of
convenience, provided that traditional equitable principles permit
such a course of action.
At least two traditional principles of equity are relevant to
this case. First, a court need not balance the hardship when a
defendant's conduct has been willful. United States v. Pozsgai,
999 F.2d 719, 736 (3d Cir. 1993), cert. denied, 114 S. Ct. 1052
(1994); EPA v. Environmental Waste Control, Inc., 917 F.2d 327, 332
(7th Cir. 1990), cert. denied, 499 U.S. 975 (1991). This doctrine
evolved in part from cases involving willful encroachments onto
neighboring real estate, see, e.g., 5 John N. Pomeroy & John N.
Pomeroy, Jr., Pomeroy's Equity Jurisprudence § 1922, at 4362-64 (2d
ed. 1919), and it remains good law today in a variety of contexts.16
MSP offers no reason why this traditional principle of equity
should not relieve a court of its normal obligation to balance the
16
Louis W. Epstein Family Partnership v. K-mart Corp., 13
F.3d 762, 769-70 (1994) (Pennsylvania law, encroachment on land);
Kratze v. Independent Order of Oddfellows, 500 N.W.2d 115, 121 &
n.10 (Mich. 1993) (land encroachment); Amabile v. Winkles, 347 A.2d
212, 216-17 (Md. 1975) (land); Normandy B. Condominium Ass'n, Inc.
v. Normandy C. Ass'n, Inc., 541 So. 2d 1263 (Ct. App. Fla. 1989)
(interference with an easement); Barrett v. Lawrence, 442 N.E.2d
599, 603 (Ill. App. 1982) (failure to deposit money in an escrow);
Christensen v. Tucker, 250 P.2d 660, 665-66 (Cal. App. 1952) (land
encroachment). Federal courts have applied this doctrine in the
intellectual property context as well. See, e.g., Helene Curtis
Industries, Inc. v. Church & Dwight Co., 560 F.2d 1325, 1333-34
(7th Cir. 1977) (trademark infringement), cert. denied, 434 U.S.
1070 (1978); E.F. Johnson Co. v. Uniden Corp. of America, 623 F.
Supp. 1485, 1504 (D. Minn. 1985) (patent infringement).
67
equities when dealing with a defendant who has willfully and
repeatedly violated the environmental laws.
Second, when the United States or a sovereign state sues in
its capacity as protector of the public interest, a court may rest
an injunction entirely upon a determination that the activity at
issue constitutes a risk of danger to the public. United States
Steelworkers of America v. United States, 361 U.S. 39, 60-61 (1959
(Frankfurter, J., concurring) (discussing the judiciary's historic
use of equity powers, at the request of the sovereign, to enjoin
activity found to be a public nuisance); Environmental Waste
Control, 917 F.2d at 332; Environmental Defense Fund, Inc. v.
Lamphier, 714 F.2d 331, 337-38 (4th Cir. 1983); see also Alabama v.
United States, 304 F.2d 583, 591 & n.24 (5th Cir.), aff'd, 371 U.S.
37 (1962). But see United States v. Lambert, 695 F.2d 536, 540
(11th Cir. 1983) (upholding a district court's denial of the United
State's request for a preliminary injunction without discussing
this doctrine). In Georgia v. Tennessee Copper Co., 206 U.S. 230,
237-38 (1907), for instance, Justice Holmes's stated that when a
sovereign state is the plaintiff, "[t]his court has not quite the
same freedom to balance the harm that will be done by an injunction
against that of which it would have in deciding between two
subjects of a single political power." 206 U.S. at 238. This
doctrine draws support from the extraordinary weight courts of
equity place upon the public interests in a suit involving more
than a mere private dispute, see, e.g., Virginian Railway v. System
Federation No. 40, AFL, 300 U.S. 515, 552 (1937), and from the
68
deference courts afford the political branches in identifying and
protecting the public interest.
In the final analysis, however, unless Congress has narrowed
an equity court's flexibility in the context of a particular
statutory scheme, the issuance of an injunction remains an exercise
of the district court's discretion. See Tennessee Copper, 206 U.S.
at 238 (refusing to abandon "the considerations that equity always
takes into account" even in the context of a suit by a state to
protect the public interest). Weinberger and Amoco remind us that
the hallmark of equity is flexibility and that courts should not
lightly presume that Congress intended to narrow an equity court's
traditional exercise of discretion.
Relying on United States v. Bethlehem Steel Corp., 38 F.3d
862, 868 (7th Cir. 1994), the United States argues that Congress
has in fact narrowed judicial discretion in the context of RCRA, if
not in the CAA or CWA. In Bethlehem Steel, the Seventh Circuit
applied the second of these two doctrines to a suit involving
unpermitted disposal of hazardous waste on the land. The court
held that because the case involved a suit by the United States to
protect the public interest, and because Congress when passing RCRA
found that "disposal of solid waste and hazardous waste in or on
the land without careful planning and management can present a
danger to human health and the environment," 42 U.S.C.
§ 6901(b)(2), an injunction could issue "without undertaking a
weighing of the equities or making a finding of irreparable harm."
38 F.3d at 867. The United States seeks to bolster its reliance on
69
Bethlehem Steel by pointing out that RCRA's interim status
requirements are fairly specific, and that 40 C.F.R.
§ 265.112(d)(3)(I) requires facilities lacking permits or interim
status to close.
Although the United States’ argument has some force, we do not
read Bethlehem Steel to hold that the United States is entitled to
an injunction whenever it proves a violation of RCRA. We find
nothing in RCRA which, “‘in so many words, or by necessary and
inescapable inference, restricts the court's jurisdiction in
equity.'" Weinberger, 456 U.S. at 313 (quoting Porter v. Warner
Holding Co., 328 U.S. 395, 398 (1946)). To be sure, a court of
equity must exercise its discretion with an eye to the
congressional policy as expressed in the relevant statute, but some
of Bethlehem Steel's language may tread too closely to the view,
rejected in Weinberger, that a court is "mechanically obligated to
grant an injunction for every violation of law" when the United
States is the plaintiff. 456 U.S. at 313.
Applying these traditional equitable principles here is not
without difficulty. The district court's Order and Reasons
included findings of fact and conclusions of law concerning
remedies for MSP's violations of the environmental laws, but in its
findings and conclusions the district court discussed only the
fines levied against MSP. The district court then attached a
Judgment on Main Demand ordering MSP to pay fines and enjoining
future statutory violations. We find few indications in either the
Order and Reasons or the Judgment on Main Demand that the district
70
court considered the equitable theory supporting its injunctions.
The district court did not explicitly make findings as to
willfulness, risk of danger to the public interest, balance of the
equities, irreparable harm, or adequacy of legal remedies, although
it did address facts tantalizingly similar to these factors.
Regarding willfulness, for instance, the court found that MSP's
violations of the CAA were "serious because they have continued for
long periods of time and result[ed] to some extent from MSP's
deliberate indifference to the necessity of having a permit before
commencing or continuing operations." But it also found that "MSP
and LDEQ were of the opinion that no PSD permit was required
because of the pollution control devices installed by MSP." In
addition, the district court found that, overall, MSP's violations
of the environmental laws had as yet caused little perceivable harm
to the environment. That finding does not, however, compel the
conclusion that MSP's illegal activity could continue indefinitely
without causing a risk to the public health. See Amoco, 480 U.S.
at 545 ("Environmental injury, by its nature, can seldom be
adequately remedied by money damages and is often permanent or at
least of long duration, i.e, irreparable. If such injury is
sufficiently likely, therefore, the balance of harms will usually
favor the issuance of an injunction to protect the environment.")
In short, we are uncertain as to whether and in what manner
the district court exercised its equitable discretion in this case.
On the basis of the findings and record before us, we lack a
sufficient basis for appellate review. We have discretionary power
71
to leave the injunction in place, without or without the stay,
while requesting the district court to issue a supplemental
opinion, Allied Marketing Group, Inc. v. CDL Marketing, Inc., 878
F.2d 806, 814 (5th Cir. 1989), and we believe it appropriate to do
so and remand for further proceedings consistent with this opinion.
See Sierra Club Lone Star Chapter v. FDIC, 992 F.2d 545, 552 (5th
Cir. 1993). On remand, the district court should exercise
discretion as to whether to enjoin MSP from its continuing
violation of the environmental laws, and accompany any order issued
with an explanation of the relevant facts and legal theories.
VI
We AFFIRM the district court’s land ban, K-listed waste, and
CAA minor source fines. We VACATE the district court’s decision
regarding F-listed waste, CWA violations, and Permit 1036 M-1 and
REMAND for further proceedings consistent with this opinion. We
hold in place the injunctions and the conditions issued below and
REMAND to allow the district court to exercise its discretion
regarding their maintenance and for entry of explicit findings and
conclusions.
72