U.S. v. Hoechst Celanese Corp.
| Decision Date | 27 October 1997 |
| Docket Number | Nos. 96-2003,96-2051,s. 96-2003 |
| Citation | 128 F.3d 216 |
| Parties | , 28 Envtl. L. Rep. 20,236 UNITED STATES of America, Plaintiff-Appellant, v. HOECHST CELANESE CORPORATION, Defendant-Appellee. Chemical Manufacturer's Association; Corporate Environmental Enforcement Council; National Association of Manufacturers; Pharmaceutical Research and Manufacturers of America; Commonwealth of Virginia; Virginia Department of Environmental Quality; Science & Environmental Policy Project; Texas Institute for Advancement of Chemical Technology Incorporated; National Society of Professional Engineers; Texas Natural Resource Conservation Commission (TNRCC), Amici Curiae. UNITED STATES of America, Plaintiff-Appellee, v. HOECHST CELANESE CORPORATION, Defendant-Appellant. Chemical Manufacturer's Association; Corporate Environmental Enforcement Council; National Association of Manufacturers; Pharmaceutical Research and Manufacturers of America; Commonwealth of Virginia; Virginia Department of Environmental Quality; Science & Environmental Policy Project; Texas Institute for Advancement of Chemical Technology Incorporated; National Society of Professional Engineers; Texas Natural Resource Conservation Commission (TNRCC), Amici Curiae. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: David Carlisle Shilton, United States Department of Justice, Washington, DC, for Appellant. Andrea Bear Field, Hunton & Williams, Washington, DC, for Appellee. ON BRIEF: Peter Coppelman, Acting Assistant Attorney General, Environment & Natural Resources Division, John A. Bryson, Paul G. Wolfteich, United States Department of Justice, Washington, DC; Charles Garlow, Mary Ellen Levine, United States Environmental Protection Agency, Washington, DC; David Savage, United States Environmental Protection Agency, Atlanta, GA, for Appellant. David F. Geneson, Lee A. Casey, Hunton & Williams, Washington, DC; Douglas W. Davis, John Charles Thomas, Claudia T. Farr, Hunton & Williams, Richmond, VA, for Appellee. Paul G. Wallach, Wendy E. Anderson, Hale & Dorr, Washington, DC; David F. Zoll, General Counsel, James W. Conrad, Jr., Assistant General Counsel, Chemical Manufacturers Association, Arlington, VA; Jan S. Amundson, General Counsel, Quentin Riegel, Deputy General Counsel, National Association of Manufacturers, Washington, DC; Russel A. Bantham, General Counsel, Marjorie E. Powell, Assistant General Counsel, Pharmaceutical Research and Manufacturers of America, Washington, DC, for Amici Curiae Chemical Manufacturers of America, et al. James S. Gilmore, III, Attorney General of Virginia, Roger L. Chaffee, Senior Assistant Attorney General, Mary Jo Leugers, Assistant Attorney General, Office of the Attorney General, Richmond, VA, for Amici Curiae Commonwealth of Virginia Before NIEMEYER and MOTZ, Circuit Judges, and STAMP, Chief United States District Judge for the Northern District of West Virginia, sitting by designation.
et al. Scott M. DuBoff, John W. Heiderscheit, III, Wright & Talisman, P.C., Washington, DC, for Amici Curiae Science and Environmental Policy Project, et al. Geoffrey S. Connor, General Counsel, Texas Natural Resource Conservation Commission, Austin, TX, for Amicus Curiae Commission.
No. 96-2003 affirmed in part and reversed and remanded in part and No. 96-2051 affirmed by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Chief Judge STAMP joined. Judge NIEMEYER wrote separately, concurring in part and dissenting in part.
In 1984, pursuant to its authority under the Clean Air Act, the Environmental Protection Agency (EPA) promulgated regulations governing fugitive emissions of benzene, a carcinogenic pollutant posing significant risk to human health. This case involves the proper interpretation of those regulations, which impose numerous preventative and reporting requirements on industrial plants emitting benzene, but exempt plants designed to use less than 1,000 megagrams of benzene a year from these requirements. The issue here is whether a plant owned by Hoechst Celanese Corporation (HCC) is exempted from the requirements of the regulations. If not, that plant (one of the largest sources of fugitive benzene emissions in the United States from 1987 through 1993) indisputably violated the regulations in numerous respects.
The district court sustained EPA's interpretation of its own regulations, an interpretation that did not exempt the HCC plant. United States v. Hoechst Celanese Corp., 964 F.Supp. 967, 971-76 (D.S.C.1996). Nevertheless, because the court concluded that the EPA did not provide HCC with "fair notice" of EPA's interpretation, the court declined to find HCC liable for any regulatory violations. Id. at 979-986. Both EPA and HCC appeal. In most respects, we affirm the judgment of the district court. That court correctly concluded that EPA's interpretation of its own regulations is entitled to deference. The district court also correctly held that EPA did not initially afford HCC fair notice of that interpretation and so the company cannot be held liable for violations of the regulations during the period (1984 to 1989) when it lacked fair notice. However, the court erred in concluding that HCC could rely on a fair notice defense for violations that occurred after 1989--when EPA provided the company with actual notice of EPA's interpretation of the regulations. Accordingly, we reverse the judgment of the district court in this single respect and remand the case for further proceedings consistent with this opinion.
The United States, on behalf of EPA, initiated this action against HCC for alleged violations of the National Emission Standard for Equipment Leaks (Fugitive Emission Sources) of Benzene (NESHAP or regulations), 40 C.F.R. pt. 61, subpts. A, J, and V (1996), at HCC's Celriver plant in Rock Hill, South Carolina. The NESHAP provides controls on the amount of benzene that can be emitted into the atmosphere. EPA propounded these controls because it concluded that they could substantially "reduce the estimated annual incidence of leukemia" for persons living within 20 kilometers of plants with equipment that leaked benzene--roughly twenty to thirty million people. NESHAP preamble, 49 Fed.Reg. 23, 498, 23,501 (1984). Specifically, the NESHAP requires industrial plants that are designed to produce, use, or otherwise have in service benzene to monitor equipment regularly for leaks, repair leaks promptly, and install equipment that prevents, captures, or destroys benzene emissions. The regulations include reporting and recordkeeping requirements and provide that violations are to be punished by civil penalties.
The regulations, however, exempt "[a]ny equipment in benzene service that is located at a plant site designed to produce or use less than 1,000 megagrams of benzene per year." 40 C.F.R. § 61.110(c)(2) (1996) (emphasis added). 1 The exemption reflects EPA's conclusion that the benefit achieved by regulating small volume users of benzene does not justify the cost involved. See NESHAP preamble, 49 Fed.Reg. at 23,510. The question that divides the parties is what does "use" mean in the exemption.
The EPA defines "use" broadly to mean utilization, employment, or putting in place; this definition includes but is not limited to "consumption" of benzene, i.e., the overall amount needed to keep processes operational. The Celriver plant was designed to utilize benzene as a "quench" to cool hot ketene gases and as a "reflux agent" to help separate water and other compounds from acetic anhydride and acetic acid; after each of these uses the benzene was cooled, purified, and then recirculated as a "quench" or "reflux agent." Under EPA's definition of "use," counting each time benzene circulated through pipes and valves capable of leaking, the Celriver plant was designed to "use" more than a million megagrams of benzene a year, and was not exempt from the NESHAP. Indeed, the Celriver plant not only "used" vast amounts of benzene, it also leaked substantial amounts of the carcinogen: as the district court noted, "the Celriver plant ranked in the top 5% of all plants reporting benzene fugitive emissions in every year between 1987 and 1993." Hoechst Celanese, 964 F.Supp. at 974.
Nevertheless, HCC claims the Celriver plant was exempt from the NESHAP. The company asserts that "use" in the exemption has only a single narrow meaning--"consumption." Since the Celriver plant continually recycled benzene, the total quantity it"used," under the company's theory, never exceeded 1,000 megagrams a year and thus the plant qualified for the exemption under 40 C.F.R. § 61.110(c)(2). The company concluded that the exemption was self-executing and for this reason HCC neither filed reports for the Celriver plant nor complied with any of the monitoring or other requirements of the regulations.
Because HCC never applied for an exemption for the Celriver plant or filed any reports as to its benzene usage, EPA did not become aware of the possibility of substantial benzene emissions at the Celriver plant until 1989. At that time, EPA's Region 4 office, which exercised enforcement authority over plants located in South Carolina, expressly notified the company in writing that if "benzene is recycled or reused in any process ... the total cumulative flow through the process rather than net benzene consumption or usage" is to be counted as "use" of benzene for purposes of the regulations. After further communications between the parties, EPA determined that the Celriver plant had violated the NESHAP and so initiated this action.
EPA alleged that HCC, at its Celriver plant, violated NESHAP leak detection and repair requirements as well as requirements related to the installation of control devices, reporting, and recordkeeping. EPA asserted the Celriver plant did not qualify for the exemption and, even if it did, HCC could not claim this...
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