Formosa Plastics Corp. v. Wilson

• Decision Date: 04 November 1985
• Citation: 504 A.2d 1083
• Parties: , 54 USLW 2455, 16 Envtl. L. Rep. 20,602 FORMOSA PLASTICS CORPORATION, Delaware, a Delaware corporation, Plaintiff Below, Appellant, v. John E. WILSON, III, Secretary of the Department of Natural Resources and Environmental Control, and the Department of Natural Resources and Environmental Control, Defendants Below, Appellees. . Submitted:
• Court: Supreme Court of Delaware

Page 1083

504 A.2d 1083

23 ERC 2030, 54 USLW 2455, 16 Envtl.

L. Rep. 20,602

FORMOSA PLASTICS CORPORATION, Delaware, a Delaware corporation, Plaintiff Below, Appellant, v. John E. WILSON, III, Secretary of the Department of Natural Resources and Environmental Control, and the Department of Natural Resources and Environmental Control Defendants Below, Appellees.

Supreme Court of Delaware.

Submitted: Nov. 4, 1985.

Oral Decision: Nov. 4, 1985.

Written Decision: Feb. 12, 1986.

Upon appeal from the Court of Chancery. AFFIRMED.

Stephen E. Herrmann (argued), Richard J. Abrams and Richard G. Elliott, Jr. of Richards, Layton & Finger, Wilmington, for appellant.

Jeanne L. Langdon (argued), Fred S. Silverman and Loren C. Meyers, Dept. of Justice, Wilmington, for appellees.

Before CHRISTIE, C.J., HORSEY and MOORE, JJ.

MOORE, Justice:

The appellant Formosa Plastics Corporation, Delaware (Formosa) petitioned the Court of Chancery to preliminarily enjoin the emergency revocation of its environmental permits ordered by the Secretary of the Department of Natural Resources and Environmental Control (the Department). Injunctive relief was denied Formosa and this interlocutory appeal followed. ¹ Formosa contends that: (1) it would be irreparably harmed if the injunction did not issue, (2) the Secretary lacked authority to revoke the permits under the Environmental Control Act, 7 Del.C. § 6001 et seq. (the Act), (3) the Secretary's order, revoking the permits without a hearing, violated due process standards of the United States and Delaware Constitutions, and (4) the Secretary's actions violated the Delaware Administrative Procedures Act, 29 Del.C. § 10101 et seq. While we agree that Formosa faced irreparable injury, we conclude that the Secretary had full power to act in these circumstances, and properly did so. Accordingly, we affirm.

I.

Formosa manufactures polyvinyl chloride, a product which can pose certain health dangers to those who work in or live near the facility. The plant's operations, therefore, are subject to strict regulation by the Department. Formosa's operating permits cover the manufacture, storage and shipment of polyvinyl chloride, as well as the discharge of effluents into the Delaware River. Each of these permits relates to a specific plant function: boilers, storage tanks, pulverizers, product collection, bagging, product transfer, bulk loading, ventilation, unloading, conveyers, and effluent discharge, etc. Moreover, the permits impose certain specific conditions and limitations upon these operations. Common to those permits, regulating functions posing a danger of air pollution, are the following provisions;

1--The permit is issued subject to certain enumerated conditions.

2--Among the conditions imposed are:

(a) air contaminant emission levels shall not exceed those stated either in the permit or otherwise prescribed by the Department in its Regulations Governing the Control of Air Pollution.

(b) emergency conditions that require venting of materials to the atmosphere or create a condition of air pollution shall be reported to the Division of Environmental Control immediately. (Emphasis added).

(c) failure to comply with the provisions of the permit shall be ground for suspension or revocation.

The permit regulating the discharge of effluents into the Delaware River is also quite detailed. It applies to and sets limitations upon the quantities of discharge and maximum concentrations of pollutants in the discharge. It imposes monitoring and reporting requirements, including notification by Formosa of non-compliance, and provides for the modification, revocation, reissuance and termination of the permit.

The most recent chapter in the controversial history of Formosa's plant began on October 25, 1985, when the Secretary notified the company by letter that all of its 37 operating permits would be revoked effective midnight, November 1, 1985. The Secretary's letter detailed a consistent pattern of environmental regulation violations by Formosa since it acquired the plant in May, 1981. The letter also advised Formosa that it could request a pre-revocation hearing before the order was effective.

The violations cited by the Secretary show an almost complete disregard by Formosa of the State's environmental regulations. Some of the enumerated reasons for the revocations are that: (1) on at least 40 separate dates vinyl chloride monomer (VCM), an explosive gas and known carcinogen, was released into the atmosphere from equipment at the plant; (2) following the issuance of a cease and desist order, requiring Formosa to stop violating air pollution regulations, VCM was released on 10 separate occasions; (3) chronic breakdowns occurred in the plant's emission monitoring system; (4) since December, 1984, the State had filed two suits to require Formosa to comply with environmental regulations; (5) there were violations of a consent order entered in settlement of one of the suits; and (6) there were releases of VCM on October 15 and October 17, 1985, the latter being severe enough to activate the plant's sprinkler system and to force employees to use breathing equipment. The October 15 VCM release was not reported until more than seven hours had elapsed; the October 17 release was not reported at all, and the Department only learned of the violation through an anonymous source.

However, there is more. At one point the Department discovered that a segment of the emission monitoring equipment, an integral part of the self-reporting system required by regulations, was missing, and the system was thereby rendered inoperable. As for the discharge of wastewater from the manufacture of polyvinyl chloride resin, it was found that Formosa had been in violation of permit limits in 16 of the 24 months from October 1983 to September 1985. Regarding the discharge of sanitary wastewater, the permit limits had been violated in 44 of the 45 months between January 1982 and September 1985. Moreover, when a hurricane passed through Delaware in September 1985, Formosa did not adequately prepare for the storm, and was the only operator of a wastewater treatment plant, out of hundreds in the State, to report overflows of treatment lagoons due to the abnormal rains.

As the final reason for revoking the permits, the Secretary concluded from these repeated violations that Formosa could not, or would not, comply with State environmental laws, and could not reasonably be expected to comply in the future. The Department stated that the letter of October 25 was a determination by the Secretary that Formosa's operations were a continuing threat to the safety and welfare of the local citizens, thereby creating an emergency which justified the action taken. That was so, despite the fact that the plant was not then known to be in current violation of any environmental standards.

On October 29, Formosa asked the Secretary to stay his action, and appealed the revocations to the Environmental Appeals Board (the Board) pursuant to 7 Del.C. § 6008. ² The stay was denied, but the Secretary granted Formosa a pre-revocation hearing to be held by his designate on October 31, and in a letter to Formosa's counsel noted that "[i]t is clear from past experience ... that Formosa's ... plant cannot be operated in a safe and environmentally sound manner."

Formosa then declined the pre-revocation hearing and promptly filed suit in the Court of Chancery to enjoin the Secretary's action. The Chancellor refused the injunction, and this interlocutory appeal followed.

II.

In his ruling, the Chancellor acknowledged that Formosa faced imminent irreparable injury but rejected its other claims. On appeal Formosa presses its contentions that the Secretary lacked authority to revoke the permits, or at least lacked the power to revoke the permits without first affording Formosa a meaningful hearing. The company asserts that: (1) the Secretary's powers are clearly delineated and limited under the Act, 7 Del.C. ch. 60, and that nothing therein authorizes the Secretary to revoke a permit; (2) the deprivation of Formosa's valuable interests (the permits) without a prior hearing violated its right to procedural due process under Fuentes v. Shevin, 407 U.S. 67, 91, 92 S.Ct. 1983, 2000, 32 L.Ed.2d 556 (1972); (3) any revocation procedures must conform to the Delaware Administrative Procedures Act, 29 Del.C. ch. 101; and (4) the Secretary violated Formosa's procedural due process rights to notice and an opportunity to defend by failing to identify any statute or regulation establishing an applicable standard of care. Finally, Formosa argues that 7 Del.C. § 6008(f) entitles it to a stay for good cause pending its appeal to the Board. ³

A.

To obtain injunctive relief, a plaintiff must show a reasonable probability of success on the merits and the likelihood of irreparable injury absent the injunction. In deciding the matter the Court may balance the conveniences of and the possible injuries to the parties. Gimbel v. Signal Cos., Del.Ch., 316 A.2d 599 (1974), aff'd, Del.Supr., 316 A.2d 619 (1974). In short, an injunction must be earned. It does not issue on any less significant basis.

There is little doubt that revocation of the permits will cause Formosa substantial and irreparable harm. It must close its plant at considerable cost. Moreover, if the closure is improper, any resultant damages sustained by Formosa are not recoverable in light of Delaware's sovereign immunity. Department of Community Affairs v. M. Davis & Sons, Inc., Del.Supr., 412 A.2d 939 (1980). Clearly, such a shut-down would adversely affect Formosa's business, its business reputation and its employee relationships. The Chancellor observed that "it would offend commonplace understanding to deny that an unplanned closure of an essential plant could be accomplished without significant injury to business relationships of various kinds." Formosa v. Wilson, Del.Ch., C.A. No. 8216, slip op. at 11...