ELR Citation: ELR 20678
No(s). 83-1600 (6th Cir. Jul 26, 1985)

The court holds appellant steel company liable for penalties stipulated in a Clean Air Act consent decree, which appellant violated while unsuccessfully seeking approval for an alternative compliance scheme under the Environmental Protection Agency's (EPA's) emissions trading (bubble) policy. The court first upholds the district court's finding that appellant made a business decision to delay installation of pollution control equipment and risk liability under the decree based on its expectation that EPA would approve its bubble. Approval of the bubble would have saved appellant a substantial amount in equipment expenditures and would have released it from liability for penalties for failure to meet the decree's construction deadlines. Appellant argues, however, that it would not have risked exposure to the penalties if it had not been misled by EPA into believing its bubble would be approved. While agreeing that agency conduct in processing bubble applications can become so egregious as to amount to a deprivation of substantive due process, the court holds that EPA's activities here were not unreasonable under the circumstances. Although there is evidence that EPA's staff gave off mixed signals during the application process, EPA always indicated that appellant was bound by the terms of the consent decree, which clearly stated that an application for a bubble would not be grounds for delaying the requirements of the decree. The court next rejects appellant's argument that EPA's enforcement personnel improperly interfered with the agency's decisionmaking process on the bubble application in violation of its due process. The court reasons that a certain amount of commingling of enforcement and policymaking functions is acceptable, the enforcement personnel did not review the application, the policy staff became involved due to appellant's intervention in the application process, and appellant does not challenge EPA's ultimate rejection of their application. In a footnote, the court summarily rejects appellant's claims that as one of three plaintiffs, the United States could only seek one third of the stipulated penalties and that EPA violated Clean Air Act §110(a)(2) when it failed to act on the proposed SIP revision within four months.

The court next holds that the district court erred in calculating appellant's penalties by not limiting appellant's liability for failure to meet the emission limitation to 180 days after the compliance deadline as provided in the consent decree. Although the United States argues that the 180-day limit was intended to limit only appellant's liability if the installed equipment fails to achieve the required emissions reduction, not for failure to meet construction or installation deadlines, the structure and language of the decree indicate that this limitation applies to penalties for failure to meet both construction and emissions reduction schedules.

District Judge Wiseman, dissenting in part, would affirm the district court's full assessment of over $5 million in penalties.

[The lower court opinion is digested at 14 ELR 20481.]

Counsel for Appellees
John R. Barker
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-3907

Stephen F. Schuesler, Ass't Attorney General
774 Law Bldg., Lansing MI 48913
(517) 373-1110

Counsel for Appellant
Clyde W. Armstrong, Chester R. Babst, Dean A. Calland
Thorp, Reed & Armstrong
One Riverfront Ctr., Pittsburgh PA 15222
(412) 394-7711

Douglas H. West
Hill, Lewis, Adams, Goodrich & Tait
100 Renaissance Ctr., 32d Floor, Detroit MI 48243
(313) 259-3232

Counsel for Intervenors
David G. Hawkins
Natural Resources Defense Council, Inc.
1725 I St. NW, Suite 600, Washington DC 20006
(202) 223-8210

Steven E. Chester
Air Pollution Control Division
Wayne Cty. Department of Health, 1311 E. Jefferson St., Detroit MI 48207
(313) 224-4650

Before: ENGEL and MERRITT, Circuit Judges; and WISEMAN, District Judge.^*