Oner II, Inc. v. U.S. Environmental Protection Agency

• Decision Date: 15 May 1979
• Docket Number: No. 77-1100,77-1100
• Citation: 597 F.2d 184
• Parties: ONER II, INC., and Jerry Saylor, its President, Petitioner, v. U. S. ENVIRONMENTAL PROTECTION AGENCY, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 184

597 F.2d 184

ONER II, INC., and Jerry Saylor, its President, Petitioner, v. U. S. ENVIRONMENTAL PROTECTION AGENCY, Respondent.

No. 77-1100.

United States Court of Appeals Ninth Circuit.

May 15, 1979.

Laub, Clark & Hall, Ltd., Reno, Nev., for petitioner.

Alfred H. Rosen, Regional Counsel, San Francisco, Cal., Freddi Lipstein, Appellate Section, Civil Div., Washington, D. C., for respondent.

Petition to Review a Decision of the U. S. Environmental Protection Agency.

Before CHOY and KENNEDY, Circuit Judges, and SCHWARZER, ^* District Judge.

KENNEDY, Circuit Judge:

This is a petition for review of a decision by the regional administrator of the Environmental Protection Agency (EPA) fining petitioners, Oner II, Inc., Jerry Saylor, and Del Chemical Corp. for violations of the Federal Insecticide, Fungicide and Rodenticide Act (Act), 7 U.S.C. §§ 136-136w.

Del Chemical Corporation, wholly owned by one Rocco Youse, sold various pesticides properly registered under the Act. Pursuant to the Act, 7 U.S.C. § 136g, on February 13, 1975 the EPA conducted an inspection of the premises of Del. Its inspectors took samples for later analysis. On January 23, 1976 the EPA filed a complaint charging Del with various violations of the Act. The agency recommended a fine of $20,600, based on the inspection and sampling of the previous February.

In the months between the inspection and the filing of the complaint, major changes had taken place in Del. Rocco Youse was convicted of bribery and income tax evasion and in October 1975 was imprisoned. Thereafter, Del began a steady financial decline until December 31, 1975 when Saylor purchased all of Youse's interest in Del, evidently with the intention of trying to resurrect its business. Saylor, who had been Del's sales manager, became its president. Del's financial situation continued to deteriorate. On March 1, 1976 three persons formed Oner II, Inc., with apparent assistance from Saylor, to acquire Del's assets. In consideration of the acquisition of Del's assets, Oner II agreed to assume all of Del's outstanding trade liabilities, but no mention was made of an agreement to assume liability for the EPA's claim for $20,600 in fines. Saylor became president of Oner II but owned no stock in the corporation. Del was left as a corporate shell.

On August 3, 1976, the EPA, having learned of Del's transaction with Oner II, filed a motion to amend its complaint to include Oner II and Saylor as respondents in the action against Del. The motion was granted by the administrative law judge on August 11, 1976. Saylor and Oner II filed a motion to dismiss the action for lack of jurisdiction, which was denied.

Oner II and Saylor appeal, challenging: (1) the procedural aspects of the administrative hearing; (2) the EPA's decision to extend the liability of Del to the petitioners; and (3) the failure of the EPA to consider the petitioners' financial circumstances in fixing the amount of fines.

Petitioners contend they were denied procedural rights by the failure of the EPA to meet the notice requirements imposed by the Act. The Act requires that notice shall be given to anyone named as a defendant, and such person shall be given an opportunity to present his views. 7 U.S.C. § 136g(c). The record reveals that there was adequate service of process on Oner II. Saylor, President of Oner II, had actual notice since he was represented at the hearing and had the opportunity to defend on the merits. The lack of technical notice does not violate the requirements of procedural fairness in an administrative hearing held by a federal regulatory agency when the parties have a full and fair opportunity to defend on the merits of the case. Slack v. Havens, 522 F.2d 1091, 1095 (9th Cir. 1975). Oner II and Saylor were not prejudiced by the technical lack of notice required by the Act.

The petitioners also claim that the EPA improperly found them liable to pay the fine. The relevant provision of the Act, 7 U.S.C. § 136L, is express in stating those persons to whom it applies. To incur liability for fines, a respondent must be a registrant, private or commercial applicator, wholesaler, retailer, dealer, or other distributor in the pesticide industry. 7 U.S.C. § 136L (a)(1) & (2). Some, if not all, of the penalties of the Act are also applicable to agents, officers, or other persons who by their acts or omissions on behalf of the employer violate its terms. 7 U.S.C. 136L (b)(4). Having considered these provisions, we do not think this record states an adequate basis for imposing penalties upon Saylor. The administrative law judge set forth no findings or conclusions to indicate the theory on which Saylor was held liable for the fines...