Bethlehem Steel Corp. v. E.P.A.
| Decision Date | 04 February 1982 |
| Docket Number | No. 81-1489,81-1489 |
| Citation | 669 F.2d 903 |
| Parties | , 12 Envtl. L. Rep. 20,298 BETHLEHEM STEEL CORPORATION, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent. |
| Court | U.S. Court of Appeals — Third Circuit |
Blair S. McMillin, (argued), Harley N. Trice, II, Thomas L. Allen, Reed Smith Shaw & McClay, Pittsburgh, Pa., for petitioner; Curtis H. Barnette, Gen. Counsel, Brent W. Robbins, Sr. Atty., Bethlehem, Pa., of counsel.
Nancy E. Long (argued), Jose R. Allen, Land & Natural Resources Div., Dept. of Justice, Carol E. Dinkins, Asst. Atty. Gen., Christopher Herman, E.P.A., Washington, D.C., for respondent; Robert M. Perry, Gen. Counsel, E.P.A., Washington, D.C., of counsel.
Before ALDISERT, ROSENN and WEIS, Circuit Judges.
Parties to an agency proceeding generally must exhaust their administrative remedies before they can resort to the courts. In this case, a company that the Environmental Protection Agency charged with exceeding air pollution standards contends it should be excused from the exhaustion requirement. Since a statutory penalty accrues each day the alleged violation continues, the company fears that its potential financial liability may force it to accede to EPA rather than risk an unfavorable outcome after prolonged, good faith litigation. We do not consider this to be undue hardship because the sanction created by Congress was intended to take the profit out of pollution by recouping the economic benefit a firm obtains by violating Clean Air standards. Since the company has not yet completed proceedings before EPA, the petition for review will be dismissed as premature.
On February 2, 1981, EPA served Bethlehem Steel Company with a notice of noncompliance issued pursuant to § 120 of the Clean Air Act, 42 U.S.C. § 7420 (Supp.III 1979). The notice cited Bethlehem for violating a mass emission rate limitation and an opacity limitation at Precipitator No. 2, which is an air pollution control facility regulating the discharge of particulate from the company's sinter plant in Bethlehem, Pennsylvania. The emission standards, codified at 25 Pa. Code § 123.13(b) and § 123.41(l), were enacted by the Commonwealth of Pennsylvania as part of its federally approved State Implementation Plan in order to achieve compliance with national ambient air quality standards. 42 U.S.C. §§ 7409-7410.
EPA alleged that Bethlehem's sinter plant had violated the regulations on May 28 and September 10, 1980. In addition, the notice stated:
The notice informed the company that it must either submit a penalty calculation or file a petition for reconsideration within 45 days.
Bethlehem responded to EPA on February 27, 1981, with a letter captioned "Application For Agency Relief From The Issuance Of A Notice Of Noncompliance." Bethlehem asked for withdrawal of the notice because its issuance exceeded EPA's powers under § 120 of the Clean Air Act and its own regulations in five ways:
1. The notice is based on events which occurred before the effective date of the regulations implementing § 120 and therefore is an impermissible attempt to give them retroactive effect.
2. The statute's enforcement plan does not permit notices to be issued until 18 months after promulgation of the implementing regulations. Since the regulations were not published until July 28, 1980, compliance would not be required until January 28, 1982 at the earliest.
3. The notice was not issued within 30 days after discovery of noncompliance, as mandated by the statute.
4. The findings of noncompliance are not supported by the record to which the notice refers.
5. The notice conflicts with EPA's announcement that it would proceed first against sources that had never complied with the Clean Air Act.
EPA elected to treat Bethlehem's letter as a petition for reconsideration, and suggested that the company supplement its request with data about the compliance status of the sinter plant or its eligibility for an exemption. Bethlehem did so on April 7, 1981, and on July 17, 1981, the Regional Administrator of EPA denied Bethlehem's request to withdraw the notice of noncompliance. He did order a hearing, however, to decide whether the company's facility is violating applicable legal requirements and whether it is entitled to a de minimis exemption. We have not been informed of the progress of that hearing.
Without waiting for a response to its first letter, Bethlehem filed this petition for review on March 30, 1981. The company raises before us the same objections that it presented to EPA. The agency's threshold argument is that the petition should be dismissed since Bethlehem failed to exhaust administrative remedies.
EPA emphasizes that issuance of a noncompliance notice is only the first step of a process determining whether § 120 penalties will be assessed. As the agency sees it, judicial review is not available until-and unless-the administrative proceedings conclude with the assessment of a penalty. Therefore, says EPA, the court should not intervene until after the agency completes its hearing on whether Bethlehem has complied with the requirements of the Act or qualifies for a de minimis exemption, and then only if a penalty is fixed.
Bethlehem responds that the exhaustion doctrine does not apply here because the five issues raised by its petition for review are not related to compliance or exemption and therefore will not be considered during the administrative hearing. Accordingly, it is argued, the agency has already taken its "final action" with respect to the specific challenges raised here. Bethlehem also contends that the controversy is ripe for review because these issues are purely legal in nature, and the company is threatened by the penalties that began accruing upon receipt of the notice in February 1981.
We look first at the relevant part of the Act, since "the doctrine of administrative exhaustion should be applied with a regard for the particular administrative scheme at issue." Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975). Section 120 was enacted in 1977 as an amendment to the Clean Air Act, 42 U.S.C. §§ 7401-7642 (Supp. I 1977) . It assesses an administrative penalty against air polluters equal to the economic value the violator derives from continuing noncompliance after the date of notification by EPA. The statute directs that not later than six months after August 7, 1977, the Administrator shall promulgate regulations governing the procedures for assessment and collection of the noncompliance penalty. Id. at § 7420(a)(1)(A), § 7420(b).
The Administrator must send a notice to violators not later than 30 days after the agency discovers the noncompliance. Id. at § 7420(b)(3). Upon receipt of the notice, the offender must either calculate the penalty and payment schedule in accordance with a specified formula, or else submit a petition within 45 days challenging the notice of noncompliance or alleging entitlement to an exemption. Id. at § 7420(b)(4). The Administrator may exempt a source if he finds that a particular instance of noncompliance is de minimis in nature and duration. Id. at § 7420(a)(2)(C). The petitioner is entitled to a hearing on the record and a decision within 90 days. Id. at § 7420(b)(5). In addition, the Administrator is authorized to adjust the penalty or payment schedule if he finds after notice and a hearing that the proposal submitted by the violator does not satisfy the requirements of the statute. Id. at § 7420(b)(8).
Judicial review is provided by § 7420(e): "Any action pursuant to this section ... shall be considered a final action for purposes of judicial review of any penalty under section 7607 of this title." A petition for review of "any rule issued under section ... 7420 of this title, or any other nationally applicable regulations promulgated, or final action taken, by the Administrator under this chapter may be filed only in the United States Court of Appeals for the District of Columbia." Id. at § 7607(b)(1). However, attacks on "any order ... under section 7420 of this title ... or any other final action of the Administrator under this chapter ... which is locally or regionally applicable may be filed only in the United State Court of Appeals for the appropriate circuit." Id. In either event, the court is barred from granting "any stay, injunctive, or similar relief before final judgment by such court in such action." Id. at § 7607(g).
The Administrator adopted the regulations mandated by § 7420(b) nearly two and one-half years after the six month period specified in § 7420(a)(1)(A)-on July 28, 1980, and with an effective date of October 27, 1980. 40 C.F.R. §§ 66.1-66.95. The regulations provide that alleged violators must be notified of their right to petition for a hearing at which they may challenge the finding of noncompliance or claim an exemption. Id. at § 66.12(a)(4). A source owner or operator whose penalty calculation has not been accepted by the Administrator may also petition for a hearing to challenge the agency's recomputation. Id. at § 66.52.
The regulations further provide that agency action shall be considered final for purposes of judicial review "only if all administrative remedies have been exhausted." Id. at § 66.81(b). This requirement is set out in detail:
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