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United States v. Hoechst Celanese Corp.

ELR Citation: 27 ELR 20487
Nos. 0:92-1879-17, 964 F. Supp. 967/(D.S.C., 05/10/1996)

The court holds that a manufacturer that failed to apply for, but nevertheless claimed, an exemption from the national emission standard for hazardous air pollutants (NESHAPs) for benzene leaks is not liable for civil penalties resulting from violations of that NESHAP at its South Carolina plant. The NESHAPs provided that any equipment in benzene service that is located at a plant designed to produce or "use" less than 1,000 megagrams of benzene per year is exempt from the requirements of the benzene leaks NESHAP. The manufacturer, which recycled benzene in its manufacturing process, argued that the benzene should be counted only once. The U.S. Environmental Protection Agency (EPA), on the other hand, considered benzene to be used each time that it was recycled. The court first holds that EPA's interpretation of the NESHAP is permissible and should be sustained. Although the manufacturer's interpretation of the regulation is also reasonable, the court must defer to the reasonable judgment of the Agency. The court next holds that a formal application was not a necessary prerequisite for the South Carolina plant to qualify for the NESHAP exemption. The regulatory language did not give EPA discretion in determining who qualifies for the exemption. And although the manufacturer did not formally apply to EPA for an exemption for its South Carolina plant, it did so indirectly through its communications with EPA regarding its Texas plants that used essentially the same process.

The court next holds that the manufacturer is not liable and is not subject to penalties for violations of the NESHAP. Even though the court deferred to EPA's interpretation of the NESHAP as permitting a multiple counting of recycled benzene, the regulatory record does not provide fair notice of this interpretation. Moreover, various EPA offices understood the exemption in a variety of different ways and on various occasions EPA advised some facilities that they were exempt based on a single counting of recycled benzene. The court next holds that the manufacturer did not have actual notice of EPA's interpretation of the benzene leaks NESHAP from a letter forwarded to its Texas plant by the Texas Air Control Board (TACB). The manufacturer sought and received confirmation of the exempt status of its Texas plant from both state regulators and EPA Region VI. The court holds meritless EPA's argument that the TACB's reading of the regulation was irrational and thus should have prodded the manufacturer to seek further guidance from EPA. Even if the manufacturer had asked more individuals within EPA about the meaning of the exemption, it is far from clear that it would have been told about EPA's multiple counting interpretation of the rule. Last, the court holds that it is inappropriate to hold the manufacturer liable for actions it took after EPA began enforcement actions against the South Carolina plant. The interpretation in letters from EPA Region IV was contrary to statements in the NESHAP's preamble and contrary to the interpretations of the exemption the company received from EPA Region VI. Thus, the manufacturer had a legitimate basis to believe that EPA's Region IV office was not speaking for the EPA Administrator. Moreover, even if the manufacturer had received actual notice, it is undisputed that the manufacturer acted responsibly to meet and far exceed the terms of the NESHAP, in advance of EPA-accepted deadlines.

[A brief in this litigation is digested at ELR BRIEFS & PLEADS. 66493.]

Counsel for Plaintiff
Ben A. Hagood Jr., Ass't U.S. Attorney
U.S. Attorney's Office
170 Meeting St., Charleston SC 29402
(803) 727-4381

Counsel for Defendant
Paul G. Wolfteich
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000