United States v. Coffeyville Res. Ref. & Mktg.
| Decision Date | 03 October 2022 |
| Docket Number | 04-cv-1064-JAR-KGG |
| Court | U.S. District Court — District of Kansas |
| Parties | UNITED STATES OF AMERICA and ATE OF KANSAS ex rel. KANSAS UNITED STATES OF AMERICA and STATE OF KANSAS ex rel. KANSAS DEPARTMENT OF HEALTH AND ENVIRONMENT, Plaintiffs, v. COFFEYVILLE RESOURCES REFINING & MARKETING, LLC, Defendant. |
This civil action was brought by Plaintiffs United States of America and the State of Kansas by and through the Kansas Department of Health and Environment (the “State”) against Defendant Coffeyville Resources Refining & Marketing, LLC (“CRRM”) under Section 113(b) of the Clean Air Act (“CAA”) and K.S.A. § 65-3005, for violations of the CAA, the Kansas Air Quality Act (“KAQA”), various federal and state regulations, and federal and state permits at CRRM's petroleum refinery located in Coffeyville, Kansas (“Refinery”).
On April 19, 2012, the parties entered into their Second Consent Decree (“2012 Consent Decree”), which was approved by the Court.[1] On June 19, 2020, pursuant to paragraph 202 of the 2012 Consent Decree, Plaintiffs demanded stipulated penalties from Defendant for violations of federal CAA regulations. The parties engaged in informal dispute resolution as required, but were unable to resolve the disputes informally, and Defendant sought judicial review of the dispute. On March 30, 2022, this Court denied Defendant's petition for judicial review.
In the meantime, on December 28, 2021, Plaintiffs filed a First Supplemental Complaint under Fed.R.Civ.P. 15(d), alleging nine new claims “based on transactions, occurrences and events that occurred after the filing of the original Complaint.”[2] On February 17, 2022, Plaintiffs filed a First Amended Supplemental Complaint (“FASC”) alleging an additional eight claims.[3]Before the Court is Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P 12(b)(6) (Doc. 91), in which it seeks to dismiss the State's claims for civil penalties under K.S.A. § 65-3018 in Counts 1 through 17, to dismiss Count 9 in its entirety, and to partially dismiss Count 17. The motion is fully briefed and the Court is prepared to rule. As explained more fully below, the Court grants Defendant's motion to dismiss the State's civil penalty demands, but denies its motion to dismiss Count 9 and to partially dismiss Count 17.
CRRM's Refinery processes crude oil into refined petroleum products, including propane, gasoline, distillates, and petroleum coke. Among numerous process units at the Refinery are the following three flares: the Coker flare (“Coker Flare”), cold water pond flare (“CWP Flare”), and an alky flare. Flares are open air combustion devices that destroy refinery waste gas, resulting in emissions of various air pollutants including sulfur dioxide (“SO2”).
Title V of the CAA,[4] establishes an operating permit program for certain sources that are subject to various CAA requirements including New Source Performance Standards (“NSPS”) and National Emission Standards for Hazardous Air Pollutants (“NESHAP”) requirements.[5]Under the Title V operating permit program all “applicable requirements” for compliance with the CAA, including NSPS and NESHAP requirements, are set forth in one operating permit known as a Title V permit.[6] The Environmental Protection Agency (“EPA”) has approved the State's regulations implementing Title V of the CAA, which are codified at K.A.R. §§ 28-19-500 through 28-19-564.
The Kansas Department of Health and Environment (“KDHE”), acting on behalf of the State of Kansas, issued, modified, and/or reissued the following Refinery Class I operating permits pursuant to Title V of the CAA: Permit No. 265, issued on August 8, 2006, (“2006 Permit”), and Permit No. 9458, issued on January 17, 2017 (“2017 Permit”). The 2017 Permit incorporated the federal and state air pollution-related requirements that apply to CRRM's flares, process heaters, petroleum refining process units, FCCU, fugitive equipment leaks, process vents, and gas loading racks.
Relevant to this motion, the State seeks civil penalties in Counts 1 through 17 under K.S.A. § 65-3025 for violations of the KAQA. In Count 9, Plaintiffs allege that Defendant failed to report exceedances of the H2S the concentration limit on the Coker and CWP flares in violation of the 2017 Permit. And in Count 17, Plaintiffs allege that Defendant failed to report, among other things, deviations of the gasoline loading rack emission standards as required by the 2017 Permit.
To survive a motion to dismiss brought under Fed.R.Civ.P. 12(b)(6), “the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.”[7] The plausibility standard does not require a showing of probability that a defendant has acted unlawfully, but it requires more than “a sheer possibility.”[8]“[M]ere ‘labels and conclusions,' and ‘a formulaic recitation of the elements of a cause of action' will not suffice; a plaintiff must offer specific factual allegations to support each claim.”[9]Finally, the Court must accept the plaintiff's factual allegations as true, view those facts in the light most favorable to the plaintiff, and assess whether they give rise to a reasonable inference that the defendant is liable in light of the applicable law.[10]
“The nature of a Rule 12(b)(6) motion tests the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true.”[11] If the Court looks to matters outside the pleadings, it generally must convert the motion to a Fed.R.Civ.P. 56 motion for summary judgment.[12] However, the Court may consider documents that are referred to in the complaint if they are central to the plaintiff's claim and the parties do not dispute their authenticity.[13] Here, the Court considers the Title V permits because they are central to the claims in this case.[14]
Defendant moves to dismiss the State's claim for civil penalties in Counts 1 through 17, arguing that under K.S.A. § 65-3018, Kansas can only bring civil penalty claims through the state administrative process. Additionally, Defendant moves to dismiss Count 9 on the basis that it was only required to report the alleged emission exceedances semi-annually, not by the shorter deadlines alleged in the FASC. Finally, Defendant moves to dismiss a portion of Count 17 because EPA failed to provide it with the requisite 30 days' notice under the CAA before bringing suit. The Court addresses each asserted basis for dismissal below.
In Counts 1 through 17, Plaintiffs allege violations of the CAA, federal and state regulations, and the 2006 and 2017 Permits. Each count seeks an “assessment of civil penalties to the State of Kansas of not more than $10,000 per day for each violation,” under the KAQA.[15]Defendant moves to dismiss on the basis that the State may only pursue civil penalties under the KAQA through the State's administrative process.
The KAQA is a regulatory scheme to promote air quality conservation and control air pollution in the State of Kansas.[16] The KDHE is responsible for administering the KAQA.[17] Under the KAQA, Kansas has adopted by reference Part 63 NESHAP Subpart CC and UU. And the KDHE has adopted regulations implementing and enforcing the KAQA.[18] The KAQA makes it unlawful for any person to:
K.S.A. § 65-3018 provides for administrative penalties as follows:
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