U.S. v. Midwest Suspension and Brake

• Decision Date: 27 March 1995
• Docket Number: No. 93-2359,93-2359
• Citation: 49 F.3d 1197
• Parties: , 32 Fed.R.Serv.3d 582, 25 Envtl. L. Rep. 20,691 UNITED STATES of America, Plaintiff-Appellee, v. MIDWEST SUSPENSION AND BRAKE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1197

49 F.3d 1197

40 ERC 1481, 32 Fed.R.Serv.3d 582, 25

Envtl. L. Rep. 20,691

UNITED STATES of America, Plaintiff-Appellee, v. MIDWEST SUSPENSION AND BRAKE, Defendant-Appellant.

No. 93-2359.

United States Court of Appeals Sixth Circuit.

Argued Jan. 24, 1995.

Decided March 27, 1995.

Andrew C. Mergen (argued and briefed), Peter E. Jaffe, Thomas A. Mariani, Jr., U.S. Dept. of Justice, Land & Natural Resources Div., Washington, DC, for plaintiff - appellee U.S.

Thomas J. Budzynski (argued and briefed), Clinton, MI, for defendant - appellant Midwest Suspension and Brake.

Before: JONES, CONTIE, and MILBURN, Circuit Judges.

CONTIE, Circuit Judge.

Defendant-appellant, Midwest Suspension and Brake ("Midwest"), appeals the judgment in favor of plaintiff-appellee, the United States, in this action for alleged violations of the Clean Air Act and other related environmental regulations.

I.

This is an appeal of a judgment in a civil action for injunctive relief and civil penalties against defendant Midwest pursuant to Section 113 of the Clean Air Act ("the Act"), 42 U.S.C. Sec. 7413, for violations of Sec. 112 of the Act, 42 U.S.C. Sec. 7412 and for violations of the National Emission Standards for Hazardous Air Pollutants for Asbestos, 40 C.F.R. Part 61, Subpart M ("the Asbestos NESHAP"), both of which govern the emission of asbestos. ¹ The action also alleged violations by Midwest of an Administrative Order ("AO") issued by the Environmental Protection Agency ("EPA") pursuant to Sec. 113(a)(3) of the Act, 42 U.S.C. Sec. 7413(a)(3), alleging that Midwest violated waste handling requirements specified in the AO and in the Asbestos NESHAP. These alleged violations occurred at Midwest's place of business located at 3411 West Fort Street, Detroit, Michigan.

Midwest is engaged in the business of supplying parts for heavy duty truck suspensions, steering systems, and brakes. It performs two operations involving brake systems. The first includes the purchase and assembly of component parts into brake shoes. The second, which is the subject of this case, involves the collection and rehabilitation of used brake shoes for resale. During the rehabilitation process, brake shoes are disassembled and parts, which may contain asbestos, are discarded. Some brake shoes are "delined" in the rehabilitation process, a procedure performed by removing rivets that hold the brake lining to the brake table, and then cleaning, sandblasting, painting, and relining the table with a new brake block. Old brake blocks and brake linings, which contain asbestos, and rivets are discarded. ²

During an EPA inspection of the Midwest facility, numerous emissions of asbestos, occurring during the delining process, were documented. Midwest employees also engaged in waste disposal activities causing the release of asbestos. The shop floor also yielded detectable amounts of asbestos.

As a result, EPA issued a "finding of violation." EPA informed Midwest that it (Midwest) violated the "no visible emission requirement" of the Asbestos NESHAP, 40 C.F.R. Sec. 61.152(b). To resolve the matter, Midwest agreed to the issuance of an Administrative Order, No. EPA-5-87-113(A) a-2 (the "AO" referenced above). The AO required that Midwest comply with the Act and the Asbestos NESHAP, including the "no visible emission requirement" of 40 C.F.R. Sec. 61.152(b).

As a preventive measure, the AO specified waste management requirements for Midwest operations including the following: (1) that delining wastes fall into a sturdy cardboard box, instead of falling to the ground; (2) that the box be securely closed and wrapped so that it would not leak when discarded; and (3) that the box bear a warning label. The AO also required that the floor of the delining area be vacuumed, not swept, and that the vacuum residue be tightly sealed before disposal. Finally, the AO required that asbestos waste be segregated and separately disposed of, without compacting, at a landfill.

Subsequent EPA inspections of the Midwest facility found numerous violations of the AO. Asbestos wastes were being compacted, resulting in visible emissions. Vacuum residue was not tightly sealed, and boxes of delining waste were improperly taped, resulting in visible emissions during landfill disposal. EPA testing verified that the emissions were in fact asbestos. ³

The Wayne County Health Department also inspected the Midwest facility in order to check compliance with the AO. Its inspection likewise revealed numerous violations of the AO. Rivets and linings were dropped on the shop floor, constituting violations of both the Asbestos NESHAP regulations and the AO. The shop floor was broom cleaned, and boxes of asbestos waste were not labelled and were not packaged properly. The Health Department notified Midwest of the violations, and Midwest indicated in response by letter that it was taking actions to correct the deficiencies.

Similar violations were noted during subsequent inspections, and efforts were made to have Midwest comply with applicable laws and regulations and AO requirements. Those efforts failed, and the government filed the present lawsuit.

On January 11, 1991, the United States filed suit against defendant Midwest pursuant to Section 113 of the Clean Air Act, 42 U.S.C. Sec. 7413, claiming that Midwest violated Section 12 of the Act, 42 U.S.C. Sec. 7412, and certain air pollution control regulations, 40 C.F.R. Sec. 61, Subpart M, including the Asbestos NESHAP, which govern the standards concerning the emission of asbestos, a listed air pollutant. The government further alleged that Midwest violated the Administrative Order ("AO") previously issued to Midwest pursuant to Sec. 113(a)(3) of the Act, 42 U.S.C. Sec. 7413(a)(3). The United States sought injunctive relief and civil penalties of up to twenty-five thousand ($25,000) dollars per day for each violation.

Following the completion of discovery, on September 9, 1991, the United States filed a Motion for Summary Judgment as to Midwest's liability, which the district court granted on August 17, 1992. On September 15, 1992, Midwest submitted a Motion for Reconsideration. On November 13, 1992, the court granted Midwest's Motion for Reconsideration, reversed its former order by denying the United States' motion for summary judgment, and set the case for trial.

The district court presided over a bench trial from April 1, 1993 to April 6, 1993. On June 16, 1993, the district court issued its findings of fact and conclusions of law in favor of the United States, finding that Midwest had violated 42 U.S.C. Sec. 7413 and the Asbestos NESHAP. The district court ordered Midwest to pay a $50,000 civil penalty, but declined to award the government the injunctive relief it sought. On June 28, 1993, Midwest moved for a new trial. The district court denied this motion and entered its decision on September 16, 1993. Midwest timely appealed both the judgment and the district court's denial of its motion for a new trial.

II.

We must first decide whether the district court abused its discretion in denying defendant leave to amend its amended answer to the United States' complaint shortly before trial was to begin. Defendant contends that Midwest falls under the exemption to being regulated by the Asbestos NESHAP, because the exemption permits businesses that primarily install asbestos-containing materials ("ACMs") in motor vehicles to continue installing ACMs unregulated until 1995. 40 C.F.R. Sec. 61.149(a). Defendant argues that the trial court ruled in error that Midwest had admitted in its pleadings that it was not primarily an installer of ACMs in motor vehicles and thus was not exempt from regulation under the Act.

Paragraph 27 of the government's complaint had alleged:

The standards for fabrication of commercial asbestos apply to Midwest pursuant to 40 C.F.R. Sec. 61.149(a), because Midwest does not primarily install asbestos friction materials [ACMs] on motor vehicles.

Midwest, both in its original answer and in its amended answer, stated in response to this allegation: "Admit, but affirmatively state that they do install friction materials on motor vehicles." The district court and the United States both construed this answer to be an admission by Midwest that it was not exempt from regulation because it did not primarily install asbestos friction materials on motor vehicles. The district court would not allow Midwest to amend its pleadings shortly before trial in order to change its answer to Paragraph 27 and to contend that it was exempt from regulation under the Act because the Company no longer admitted that it was not primarily an installer of ACMs in motor vehicles.

We review the decision of the district court to deny defendant's motion to amend its answer under an abuse of discretion standard. Martin v. Associated Truck Lines, Inc., 801 F.2d 246, 248 (6th Cir.1986). The amendment of pleadings is governed by Rule 15 of the Federal Rules of Civil Procedure, which states that courts shall permit amendment "when justice so requires." The district court in the present case concluded that justice precluded amendment because Midwest's undue delay in moving to amend its answer to the government's complaint would have unfairly prejudiced the United States.

We agree. Although Rule 15(a) indicates that leave to amend shall be freely granted, a party must act with due diligence if it intends to take advantage of the Rule's liberality. Troxel Mfg. Co. v. Schwinn Bicycle Co., 489 F.2d 968 (6th Cir.1973), cert. denied, 416 U.S. 939, 94 S.Ct. 1942, 40 L.Ed.2d 290 (1974). Midwest filed an answer to the government's complaint in February 1991 and an amended answer in April 1991. It was not until February 1993, two years after the complaint was filed, that Midwest sought to amend its amended pleadings. Midwest thus failed to proceed with due diligence and this delay would have unduly prejudiced the United States for the following reason....