U.S. v. Marine Shale Processors

• Citation: 81 F.3d 1329
• Decision Date: 18 April 1996
• Docket Number: No. 94-30664,94-30664
• Parties: , 26 Envtl. L. Rep. 21,012 UNITED STATES of America, et al., Plaintiffs, United States of America, Plaintiff-Appellee, Cross-Appellant, State of Louisiana, Intervenor-Appellee, Cross-Appellant, v. MARINE SHALE PROCESSORS, Defendant-Appellant, Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1329

81 F.3d 1329

42 ERC 1481, 26 Envtl. L. Rep. 21,012

UNITED STATES of America, et al., Plaintiffs United States of America, Plaintiff-Appellee, Cross-Appellant State of Louisiana, Intervenor-Appellee, Cross-Appellant, v. MARINE SHALE PROCESSORS, Defendant-Appellant, Cross-Appellee.

No. 94-30664.

United States Court of Appeals Fifth Circuit.

April 18, 1996.

Jerrold J. Ganzfried, Christopher H. Marraro, Howrey & Simon, Washington, DC, K. Eric Gisleson, Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, LA, Sidney A. Cotlar, New Orleans, LA, Russ Herman, Herman, Herman, Katz & Collar, New Orleans, LA, for appellant.

Peter Appel, David C. Shilton, Steven C. Silverman, Environmental Enforcement Section, Dept. of Justice, Appellate Section, Washington, DC, for USA.

John Baird King, Christopher A. Ratcliff, La. Dept. of Env. Quality, Legal Affairs Div., Baton Rouge, LA, for State of La., Dept. of Environmental Quality.

Appeals from the United States District Court for the Western District of Louisiana.

Before REYNALDO G. GARZA, KING and HIGGINBOTHAM, Circuit Judges.

PATRICK E. 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 baghouses, 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 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 finally 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 that appeal.

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 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 allegations that 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 unsuccessful 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 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 the 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 material. Water used in this manner is called "non-contact cooling water." Since opening 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 a more 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. See 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. In re 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.

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...