1998 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

8-5-1998

United States v. Dell'Aquila

Precedential or Non-Precedential:

Docket 96-5761

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Recommended Citation

"United States v. Dell'Aquila" (1998). 1998 Decisions. Paper 183.

http://digitalcommons.law.villanova.edu/thirdcircuit_1998/183
Filed August 5, 1998 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 96-5761 

UNITED STATES OF AMERICA 

v. 

ANTHONY DELL'AQUILLA, Enterprises and Subsidiaries;

HARRY GRANT; SANDALWOOD CONSTRUCTION 

CORPORATION, 

Harry Grant, Sandalwood Construction Corporation, 

 Appellants 

ON APPEAL FROM THE UNITED STATES 

DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY 

(D.C. Civ. No. 88-3232) 

ARGUED 

October 30, 1997 

Before: Nygaard, McKee and Weis, Circuit Judges 

(Filed: August 5, 1998) 

 Roy Alan Cohen 

 Charles E. Erway, III (Argued) 

 Toby A. Holbreich 

 Porzio, Bromberg & Newman, P.C. 

 163 Madison Avenue 

 Morristown, NJ 07962-1997 

 Attorneys for Appellants 
 Faith S. Hochberg 

 United States Attorney 

 Peter G. O'Malley 

 Assistant United States Attorney 

 Susan Handler-Menahem (Argued) 

 Assistant United States Attorney 

 970 Broad Street, Suite 700 

 Newark, New Jersey 07102 

 Attorneys for Appellee 

OPINION OF THE COURT 

McKee, Circuit Judge. 

We are asked to review the district court's grant of 

summary judgment in favor of the United States and 

against Harry Grant and Sandalwood Corporation. The

court ruled that Grant and Sandalwood were liable for 

violations of the Clean Air Act, 42 U.S.C. S 7401 et seq., 

("CAA"), and the National Emission Standard for Hazardous 

Air Pollutants established for asbestos, 40 C.F.R. pt. 61, 

subpt. M. ("NESHAP"), as a matter of law, and assessed 

penalties against Grant and Sandalwood in the amount of 

$2,975,000 under 42 U.S.C. S 7413(b). That sum represents 

the maximum fine for each violation for each day the 

violation existed. 

We will affirm the grant of summary judgment in favor of 

the United States based upon Grant's and Sandalwood's 

non-compliance with an EPA compliance order for each day 

they were "operators" beginning on June 29, 1988. 

However, since we conclude that there is a genuine issue of 

material fact as to the three visible emissions that were 

charged, we will vacate that portion of the district court's 

order that is based upon those three violations, and 

remand for further proceedings consistent with this

opinion. We also conclude that there is a genuine issue of 

material fact as to whether Grant and Sandalwood 

functioned as operators under the CAA until September 14, 

1988. Finally, we hold that the district court erred in 

calculating the fine Grant and Sandalwood must pay.

 2 
Therefore, on remand, the United States must establish the 

number of days that Grant and Sandalwood functioned as 

operators, and the district court will recalculate penalties 

and fines accordingly. 

I. 

This matter concerns approximately sixty-five acres of 

waterfront property located at 1301 Hudson Street, 

Hoboken, New Jersey ("Hoboken property"). It is undisputed 

that Anthony Dell'Aquilla is the owner of this property. On 

May 5, 1988, Dell'Aquilla and Grant entered into an

Agreement to Form Joint Venture ("Agreement") to develop 

the Hoboken property. Under the terms of the Agreement, 

Grant would become the project manager in charge of the 

"overall management and control of the business and

affairs of the venture." App. at 280. The Agreement outlined 

the responsibilities and representations relevant to the 

environmental condition of the property. It provided that, in 

the event that any hazardous environmental condition was 

discovered on the property, Dell'Aquilla would cure the 

condition at his own expense and indemnify Grant against 

any and all "damages, remedial orders, judgments or

decrees, and all costs and expenses related thereto." App. 

at 277. According to Grant, Dell'Aquilla also provided him 

with copies of correspondence from contractors certifying 

that the property and buildings on the property had been 

inspected and were free of asbestos. Id. at 539. The 

Agreement further provided that Grant would receive a joint 

ownership interest in the property contingent upon 

refinancing. However, the refinancing was neverfinalized, 

and Grant also learned that Dell'Aquilla could not convey 

clear title so Grant never obtained an ownership interest 

under the Agreement. 

Grant invested time and money developing the Hoboken 

property in his role as project manager. He and his wife 

were the majority shareholders in Sandalwood. 

Sandalwood's responsibilities included hiring engineers and 

architects to develop the Hoboken property, and contracting 

for the demolition of the buildings already on the property 

and removal of the resulting debris. Id. at 164 & 229. Grant 

 3 
also incorporated Grant Marina Urban Renewal Corporation 

to participate in the development. 

The development of the property began on June 10, 

1988, with the demolition of existing buildings. On June 

17, 1988, the Environmental Protection Agency (EPA) sent 

inspectors Robert Fitzpatrick and Jose Rodriguez to the 

property because the EPA had not been notified of the 

demolition as required by law. App. at 483. While there, 

Inspector Fitzpatrick observed insulation that appeared to 

be asbestos containing material ("ACM") covering several 

pipes in one of the demolished buildings. He also noticed 

that the debris from the demolition appeared to contain 

ACM. Id. at 21-22. His observations were corroborated 

when subsequent tests performed upon samples taken from 

the area established they contained asbestos. 

Fitzpatrick returned to the Hoboken property several 

times during the summer of 1988. During these visits, he 

witnessed numerous violations of state and federal 

environmental laws. The violations included the continued 

unauthorized demolition of ACM structures, visible 

emissions of ACM dust, improper removal of ACM, and

inadequate wetting of the ACM which allowed particles to 

become airborne. On June 29, 1988, the EPA issued a

compliance order under S 112 of the CAA in which it

commanded Dell'Aquilla, Grant and Sandalwood to comply 

with all federal asbestos regulations. However, despite the 

notice, the parties continued the demolition in the same 

manner that had given rise to the EPA notification.

On July 22, 1988, the government filed a complaint 

against Dell'Aquilla, Grant and Sandalwood alleging a total 

of 119 violations of asbestos-related regulations, and 

seeking injunctive relief and civil penalties under the CAA 

and NESHAP. Dell'Aquilla settled with the government and 

agreed to pay a disclosed amount in fines ($400,000). The 

government then moved for summary judgment against 

Grant and Sandalwood. Grant and Sandalwood did not 

dispute the violations except for allegations that visible 

emissions of asbestos occurred on three dates (June 27, 

July 7, and July 13, 1988). However, Grant and 

Sandalwood argued that they were not liable under the 

regulations because they were not "owners or operators" of 

 4 
the Hoboken property. See 40 C.F.R. S 61.02. The district 

court held that they were "operators", and found them in 

violation of the regulations.1 

The court imposed the statutory maximum penalty of 

$25,000 per day for each violation for a total fine of 

$2,975,000. Grant and Sandalwood filed a motion to 

amend and alter the judgment seeking to reverse the

penalty amount. However, the court refused to reconsider 

the amount of the penalty because it concluded that Grant 

had initially failed to submit evidence of his finances. This 

appeal followed. 

Grant and Sandalwood argue that: (1) there are genuine 

issues of material fact concerning their status as "owners or 

operators" of the Hoboken property, (2) the government 

failed to make a prima facie case for each of the 119 

violations alleged, and (3) the district court abused its 

discretion in failing to reconsider the $2,975,000 penalty in 

light of Grant's financial situation. We have jurisdiction 

over this appeal pursuant to 28 U.S.C. S1291.2 

II. 

The CAA was enacted, in part, "to protect and enhance 

the quality of the Nation's air resources." 42 U.S.C. 

S 7401(b)(1). In order to meet this objective, Congress 

authorized the EPA to establish emission standards for 

enumerated hazardous air pollutants. 42 U.S.C. 

_________________________________________________________________ 

1. The district court also denied the government's request for injunctive 

relief because it concluded that the government had not established that 

Grant and Sandalwood were currently engaged in or planned to engage 

in activities which would lead to further violations. D. Ct. Op. at 20. 

2. We exercise plenary review. Hamilton v. Leavy, 117 F.3d 742, 745 (3d 

Cir. 1997) (citation omitted). Summary judgment is appropriate when the 

pleadings and other submissions show that there is no genuine issue as 

to any material fact and that the moving party is entitled to judgment as 

a matter of law. Fed. R. Civ. P. 56; see also, Bank of Nova Scotia v. 

Equitable Fin. Management, Inc., 882 F.2d 81, 83 (3d Cir. 1989). The 

"mere existence of some alleged factual dispute between the parties will 

not defeat an otherwise properly supported motion for summary 

judgment; the requirement is that there be no genuine issue of material 

fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). 

 5 
S 7412(d)(1995). The asbestos standards, at 40 C.F.R. pt. 

61, subpt. M, establish mandatory standards for the

renovation and demolition of a facility that contains 

asbestos, and for the disposal of asbestos. A violation of 

this NESHAP constitutes a violation of the CAA. See 42 

U.S.C. S 7412. 

A. Liability as Operator 

The CAA imposes strict liability upon owners and 

operators who violate the Act. See United States v. B & W 

Inv. Properties, 38 F.3d 362, 367 (7th Cir. 1994). Therefore, 

although Grant and Sandalwood argue that Dell'Aquilla 

and/or his agents led them to believe that any asbestos on 

the property had properly been removed and all necessary 

permits had been obtained, see Appellants' Br. at 8-10, 

those assertions are not relevant to our analysis, and we 

need not respond. 

The CAA defines an "owner or operator" as "any person 

who owns, leases, operates, controls, or supervises a 

stationary source." 40 C.F.R. 61.02. A stationary source is 

"any structure, facility, or installation which emits any air 

pollutant which has been designated as hazardous by the 

Administrator." Id. Grant and Sandalwood concede that the 

property is a "stationary source" and only challenge their 

status as "owners or operators" of the property. 

It is clear that neither Grant nor Sandalwood were 

owners of the Hoboken property. Under the Agreement, 

Grant's procurement of refinancing for the property was a 

condition precedent to the fruition of his ownership 

interest. In addition, as mentioned above, the contemplated 

conveyance of an ownership interest under the Agreement 

never occurred because Dell'Aquilla could not convey clear 

title. Accordingly, Dell'Aquilla remained the sole owner of 

the property. However, it is now axiomatic that a non-owner 

can still be liable as an "operator." Moreover, our

determination of whether one is an operator or owner under 

the CAA must be conducted in a manner consistent with 

the broad reach of the statute. See, e.g., United States v. 

Tzavah Urban Renewal Corp., 696 F. Supp. 1013, 1021 (D. 

N.J. 1988) (" `[O]wner or operator' is defined broadly for 

purposes of asbestos regulations."). 

 6 
Here, the district court relied in part upon United States 

v. Walsh, 783 F. Supp. 546 (W.D.Wash. 1991), aff'd, 8 F.3d 

1013 (9th Cir. 1993), to conclude that Grant and 

Sandalwood were not shielded from liability merely because 

they never acquired legal title. In Walsh, the court opined 

that a person is strictly liable under the CAA if he or she 

had "significant or substantial or real control and

supervision over a project." Id. at 548. Although we are not 

bound by the holding in Walsh, we agree with the district 

court that the analysis in Walsh is correct. 

The control and supervision that Grant and Sandalwood 

exercised over the project was more than sufficient to 

support the district court's conclusion that they were 

operators under the CAA. For instance, Grant negotiated 

the contracts for the demolition work that was done on the 

project. App. at 183-85. During his deposition, Grant 

described his role in the project as follows: "I met the 

[contractors], I review which price is better. We discussed 

with our people which [sic] better to hire, et cetera, et 

cetera." Id. at 184. See Tzavah Urban Renewal Corp., 696 

F. Supp. at 1021 (finding that defendants who were 

charged with hiring and firing contractors were "operators" 

under the CAA). Grant signed the demolition contracts on 

behalf of Sandalwood and Grant Marina. The contractors 

he retained were involved with all aspects of the project 

from demolition to asbestos clean-up. In addition, Grant 

was regularly on the property and witnessed the demolition 

of several of the asbestos-infested buildings. App. at 244. 

Grant argues that much of what he said during his 

deposition should have been disregarded because he does 

not have a strong command of the English language. 

However, the district court properly rejected that assertion. 

Grant was represented by counsel during all phases of 

these proceedings. Moreover, he had a sufficient command 

of English to enter into an intricate agreement with 

Dell'Aquilla, incorporate two companies, and negotiate 

construction contracts as well as contracts with engineers 

and architects. 

Grant clearly possessed "significant or substantial or real 

control and supervision" and was therefore an "operator" 

within the meaning of the CAA. Walsh, 783 F. Supp. at 

 7 
548. Even though his formal role as owner or project 

manager never materialized, he clearly functioned in that 

capacity as evidenced by the control he exercised over the 

project. Therefore, the district court properly concluded 

that he was the functional equivalent of an "owner" or 

"manager." 

Sandalwood attempts to evade liability by shifting 

responsibility to Grant Marina. Sandalwood argues that 

even if Grant was an operator of the property, Sandalwood 

was not an operator because Grant Marina was specifically 

created to participate in the Hoboken development.3 The 

precise point at which Grant Marina began to exercise 

responsibility over the property is unclear. However, it is 

clear that Sandalwood was in existence prior to Grant 

Marina and was active in the daily operations of the 

property. Grant stated that Sandalwood's responsibilities in 

the project included: "hir[ing] attorney[s], engineer[s], 

architect[s] or anything like that to work on the site." App. 

at 163. There is also uncontradicted evidence that 

Sandalwood continued to be involved in the project after 

the issuance of the compliance order on June 29, 1988. For 

example, a check dated July 11, 1988, in the amount of 

$25,000 payable to cash was signed by Sandalwood, and 

the checkbook register indicates that the proceeds of that 

check were intended for one of the contractors. App. at 256. 

The record also contains a letter dated July 28, 1988, from 

Sandalwood to L. Corio & Sons, Inc. The letter states, in 

part, that: "[t]his letter constitutes a modification of the 

contract between Sandalwood Construction Corp., 

contractor, and L. Corio and Sons, Inc., sub-contractor, for 

demolition work at [the Hoboken property]." This letter was 

signed by Sandalwood, and there is no reference 

whatsoever to Grant Marina. Id. at 415. Sandalwood clearly 

exercised sufficient control over the development of the 

property to qualify as an "operator." See generally, B & W 

Inv. Properties, 38 F.3d at 367 ("B & W exercised control 

over the parcel sufficient to bring [it] within the scope of 

`owner or operator' designation because its name appeared 

on court papers and on a contract with an asbestos cleanup company."). Thus, the district court correctly concluded 

_________________________________________________________________ 

3. Grant Marina was not a named party in this action. 

 8 
that there were no genuine questions of material fact as to 

the operator status of either Grant or Sandalwood. 

The 119 charged violations include a violation for each of 

the sixty-seven days of non-compliance from June 29, 

1988, until the Agreement was terminated on September 

14, 1988. Grant testified at his deposition that, to the best 

of his knowledge, he visited the site each day from the 

beginning of the demolition until the demolition was 

completed; however, the record is unclear as to when 

demolition was completed. Although it may have continued 

until September 14, 1988, there is nothing to establish that 

its duration was coterminous with the Agreement. 

Similarly, although Sandalwood clearly functioned as an 

operator, this record also fails to establish how long 

Sandalwood acted in that capacity. 

In United States v. Bestfoods, ___ S. Ct. ___, 1998 WL 

292076*7 (1998), the Supreme Court stated: 

 under CERCLA, an operator is simply someone who 

 directs the workings of, manages, or conducts the 

 affairs of a facility. To sharpen the definition[of 

 operator] for purposes of CERCLA's concern with 

 environmental contamination, an operator must 

 manage, direct, or conduct operations specifically 

 related to pollution, that is, operations having to do 

 with the leakage or disposal of hazardous waste, or 

 decisions about compliance with environmental 

 regulations. 

Although the Court was there addressing the definition of 

"operator" in CERCLA, and not the CAA, the purposes of 

the two statutes is the same, and the language in question 

is nearly identical. Accordingly, the Court's gloss on the 

CERCLA definition is relevant to our inquiry. Grant and 

Sandalwood were clearly involved with contracts relating 

directly to the polluting activity beginning with the first 

notice on June 29, 1988. However, that does not mean that 

either or both continued to function in that capacity until 

the Agreement terminated.4 Thus, we conclude that the 

_________________________________________________________________ 

4. In United States v. Bestfoods, et al., S. Ct., 1998 WL 292076 (1998), 

the Supreme Court analyzed the liability of a parent corporation for a 

 9 
district court erred in assuming that Grant and 

Sandalwood could be held liable for each violation for every 

day until September 14, 1988. 

Grant and Sandalwood also challenge six violations of 40 

C.F.R. S 61.146 concerning notice to the EPA based upon 

their assertion that they were not "owners or operators" of 

the Hoboken property. As discussed above, we find they 

were operators; accordingly, this challenge is without merit. 

Moreover, as we discuss infra, it was not preserved. 

B. Waiver 

On appeal, Grant and Sandalwood attempt to argue that 

the government did not present a prima facie case for 34 

demolition related NESHAP violations, and 18 disposalrelated violations. See Appellants' Br. at 27-37, Points II & 

III. The government asserts that this attack has been 

waived, except insofar as appellants challenge violations for 

visible emissions related to disposal on June 27, July 7, 

and July 13, 1998. See Appellee's Br. at 19. Appellants' 

attempt to counter the government's assertion of waiver by 

arguing that they "maintained throughout their briefs below 

that the asbestos NESHAPs did not apply," and that their 

general assertion before the district court is sufficient to 

preserve the more specific argument raised here. Reply Br. 

at 6. 

Third Circuit Court of Appeals Local Appellate Rules 

require that each appellant's brief contain "a designation by 

reference to specific pages of the appendix or place in the 

proceedings at which each issue on appeal was raised, 

objected to, and ruled upon . . . ." 3d Cir. L.A.R. 23.1. 

Appellants' brief states that the insufficiency of the 

_________________________________________________________________ 

subsidy under the analogous Comprehensive Environmental Response, 

Compensation and Liability Act of 1980 ("CERCLA"). The Court held that 

a parent corporation can be liable "both directly, when the parent itself 

operates the facility, and indirectly, when the corporate veil can be 

pierced under state law." 1998 WL 292076 *4. Although we are not 

confronted with issues of separate corporate identity, we mention 

Bestfoods because it illustrates that the issue of Sandalwood's tenure as 

an operator is not as "clear cut" as the United States suggests. 

 10 
government's prima facie case was raised at "Add-2, pp.3-4, 

14." See Appellants' Br. at 2. Those references are to the 

district court's opinion. At the relevant portions of those 

pages the district court stated that Grant and Sandalwood 

"do not contest" several of the government's allegations, see 

D. Ct. Op. at 4, "nor do the defendants deny the presence 

of ACM . . . [t]hus, the demolition of structures containing 

verified ACM and the witnessed emissions support the 

Court's conclusion that visible emissions of asbestos 

occurred on all of the days alleged." Id. at 14. The 

appellants' brief also states the following: "[o]n summary 

judgment below, the government incorrectly claimed that 

appellants were not challenging any of the alleged NESHAP 

violations other than the visible emissions. (CITE) That is 

incorrect." Appellants' Br. at 31. Appellants apparently had 

no more success finding a reference where the argument 

was preserved than we did as no "cite" is provided.

Moreover, we have reviewed the Appendix submitted by the 

appellants in its entirety, and we do not find any assertion 

sufficient to preserve this issue on appeal. 

We have previously noted that, absent exceptional 

circumstances, an issue not raised in district court will not 

be heard on appeal. Fleck v. KDI Sylvan Pools, Inc., 981 

F.2d 107, 116 (3d Cir. 1992). "Exceptional circumstances 

have been recognized when the public interest requires that 

the issue[s] be heard or when a manifest injustice would 

result from the failure to consider the new issue[s]." Altman 

v. Altman, 653 F.2d 755, 758 (3d Cir. 1981) (citations 

omitted). We find no such exceptional circumstances here. 

Accordingly, appellants have waived much of their 

challenge to the sufficiency of the government's evidence to 

support the NESHAP violations. However, the government 

concedes that appellants did not waive their challenge to 

the three visible emissions of asbestos in violation of 40 

C.F.R. S 61.152(b). Accordingly, we turn our attention to 

those violations. 

C. Visible Emissions 

The district court held that the government had 

established that Inspector Fitzpatrick witnessed visible 

emissions on June 27, 1988, July 7, 1988, and July 13, 

 11 
1988. The court cites "Plaintiff's Exhibit 5, 73-74, 77-79, 

89-90, 92-94" for that finding. D. Ct. Op. at 14. Neither 

appellants nor the government have included that exhibit in 

the Joint Appendix filed in this court. We have, however, 

reviewed Inspector Fitzpatrick's affidavit, and the portions 

of the transcript from his deposition that are included in 

the Joint Appendix. That evidence establishes that the 

inspector saw what he believed to be visible emissions of 

asbestos on June 27, 1988 (Fitzpatrick Aff. P 7), and July 

7, 1988 (Fitzpatrick Aff. P 11), but it does not mention 

witnessing any emissions on July 13, 1988 (Fitzpatrick Aff. 

P 12). App. at 22-23. Samples that the inspector took on 

June 27 and July 7 tested positive for asbestos. Although 

we find evidence of only two visible emissions, Grant and 

Sandalwood do not dispute that there were three. Rather, 

they contend that the government failed to establish as a 

matter of law that the three emissions were covered by 

NESHAP. We agree. 

Section 61.152(b) of the asbestos NESHAP states that 

each owner or operator of any source shall "[d]ischarge no 

visible emissions to the outside air during the collection, 

processing (including incineration), packaging, 

transporting, or disposition of any asbestos-containing 

waste material generated by the source." 40 C.F.R. 

S 61.149. "Visible emissions" are "any emissions containing 

particulate asbestos material that are visually detectable 

without the aid of instruments." 40 C.F.R. S 61.141 (1988).5 

Grant and Sandalwood argue that, even though the 

inspectors saw dust and debris, the government did not 

establish that the emissions contained asbestos, or even 

that they came from asbestos-infested buildings. 

Appellants' Br at 34. 

_________________________________________________________________ 

5. The current regulations clarify this definition. "Visible emissions" is 

currently defined as "any emissions, which are visually detectable 

without the aid of instruments, coming from RACM or asbestoscontaining waste material, or from any asbestos milling, manufacturing, 

or fabricating operation." 40 C.F.R. S 61.141 (1997). For purposes of this 

appeal, however, the more ambiguous definition found in the regulations 

that were in place at the time of the Hoboken property development is 

applicable. 

 12 
The district court relied upon United States v. Midwest 

Suspension and Brake, 824 F. Supp. 713, 730 (E.D. Mich. 

1993), aff'd, 49 F.3d 1197 (6th Cir. 1995), for support of its 

conclusion that summary judgment was warranted as to 

these visible emissions. In Midwest Suspension, the

government had proven through circumstantial evidence 

that visible emissions, as defined under NESHAP, had been 

observed on three occasions. During the first occasion, an 

EPA inspector observed emissions while a dumpster was 

being unloaded at a landfill. Id. at 729. After this emission 

settled on top of a box, a sample was taken and that 

sample later tested positive for asbestos. On the second 

occasion, the government presented evidence that a sample 

of material that had been lying loose in a dumpster prior to 

transport tested positive for asbestos. An EPA inspector 

followed that dumpster as it was being transported and he 

observed a dust emission from the dumpster while it was 

being unloaded. Id. The court noted that although that dust 

was not tested, it could reasonably be inferred that the 

discharge came from the lose material that had been tested. 

The last visible emissions observed were discharged from a 

dumpster as it was being emptied in a landfill. The EPA 

inspector did not take samples of those emissions, but he 

testified that the emissions were "rust colored, which 

suggests that significant component of the emission was 

shot blast waste." Id. at 730. According to the inspector, 

this type of waste usually contains asbestos. Based on this 

evidence, the court concluded that the government had met 

its burden at trial. See also, United States v. Hugo Key and 

Son, Inc., 731 F. Supp. 1135, 1271 (D. R.I. 1989) (finding 

a S 61.141 violation where evidence that friable asbestos 

material fell to the ground and remained there with no 

precautions to contain the material). 

Here, the inspector saw ACM in dry debris on the 

ground, app. at 22-23, and contractors loading demolition 

debris into dumpsters, id. at 23. The debris in the area was 

not wet down. id. Samples, which later tested positive for 

asbestos, were taken on June 27 and July 7. However, the 

samples that were taken were not samples of the "dust" 

from the emissions. Moreover, the government did not show 

the proximity of the visible emissions either to the area 

where the contractors were loading debris or to the area 

 13 
where the asbestos-infested buildings were being 

demolished. Inspector Fitzpatrick also failed to describe the 

emissions as containing any specific type of "rust color" 

waste that may suggest the presence of asbestos. Moreover, 

unlike Midwest Suspension, there is no indication that the 

two positive test samples were taken from settled 

emissions. The evidence does not even establish that the 

samples were taken in the vicinity of the visual emissions. 

The inspector's affidavit is certainly consistent with a 

conclusion that the visible emissions contained asbestos. 

However, summary judgment requires more than a 

possibility or even a probability that it was asbestos. The 

government's proof must be sufficient to establish that fact 

as a matter of law. The proof here is too tenuous to pass 

that test. Moreover, we must draw all reasonable inferences 

in favor of Grant and Sandalwood, the nonmoving parties. 

Josey v John R. Hollingworth Corp. 996 F. 2d 632, 634 (3d 

Cir. 1993). 

Accordingly, the government did not establish that the 

visible emissions contained asbestos, and summary 

judgment as to those violations was inappropriate. See 

generally, United States v. Owens Contracting Servs., Inc., 

884 F. Supp. 1095 (E.D. Mich. 1994) (concluding that there 

must be some proof that the visible emissions contained 

asbestos). 

III. Maximum Penalty 

42 U.S.C. S 7413(b) was amended in 1990 to read, in

part, as follows: 

 The Administrator shall, as appropriate . . . commence 

 a civil action . . . to assess and recover a civil penalty 

 of not more than $25,000 per day for each violation. 

42 U.S.C. S 7413(b) (West 1995) (emphasis added). Prior to 

the 1990 Amendments, the CAA provided that the civil 

penalty would not exceed "$25,000 per day of violation." 42 

U.S.C. S 7413(b) (West 1988) (emphasis added). Thus, it is 

not clear whether the pre-Amendment maximum fine of

$25,000 could be imposed on each violation for every day 

of the violation, or if it was to be limited by the number of 

days the owner/operator was in violation regardless of the 

 14 
number of violations on a given day. However, the district 

court concluded that either version of the statute allowed it 

to impose the maximum fine for each violation, for each day 

the violation existed, and that the 1990 Amendments

merely clarified that congressional intent. See D. Ct. Op. at 

15. That conclusion is not challenged on appeal.6 

Appellants do argue that the district court abused its 

discretion in determining the amount of the fine, but they 

do not challenge the court's interpretation of the statute. 

Since appellants do not challenge that ruling here, we will 

proceed on the assumption that the 1990 Amendments 

apply. We will limit our inquiry to whether the court abused 

its discretion in setting the amount of the fine at the 

statutory maximum. 

42 U.S.C. S 7413(e)(1) provides in relevant part as follows: 

 In determining the amount of any penalty to be 

 assessed . . . the administrator or the . . . court shall 

 take into consideration (in addition to such other 

 factors as justice may require) the size of the business, 

 the economic impact of the penalty on the business, 

 the violator's full compliance history and good faith 

 efforts to comply, the duration of the violation . .. 

 payment of the violator of penalties previously assessed 

 for the same violation, the economic benefit of the 

 noncompliance, and the seriousness of the violation.7 

(emphasis added). The total amount of the fines resulting 

from assessing $25,000 per day for each of 119 violations 

the court found from June 28, 1988 (the date of thefirst 

compliance order) to September 14, 1988 (the date the 

Agreement was terminated) was $2,975,000. The district 

_________________________________________________________________ 

6. Although we need not decide this issue in this appeal, we note that 

there is substantial precedent supporting the district court's 

interpretation. E.g. Midwest Suspension, 824 F. Supp. at 733-34; United 

States v. A.A. Mactal Constr. Co., 22 Envtl L Rep. 21200 (applying the 

1990 amended Act to violations that occurred in 1988 and 1989); 

Atlantic States Legal Found., Inc. v. Tyson Foods, Inc., 897 F.2d 1128 

(11th Cir. 1990) (applying a similar provision in the Clean Water Act). 

7. The government misquotes this statute in its brief. It sets forth the 

factors included in the statute, but omits "the economic impact of the 

penalty on the business," from the quotation. See Appellee's Br. at 36. 

 15 
court relied upon our holding in Public Interest Research 

Group of New Jersey, Inc. v Powell Duffryn Terminals, Inc., 

913 F.2d 64 (3d Cir. 1990) ("PIRG"), to begin with this 

maximum amount, and proceeded by determining whether 

any of the specified considerations in S 7413(e)(1) justified 

mitigation of that total. The court stated "[w]hen imposing 

a penalty, courts may start with the statutory maximum 

and then consider factors in mitigation of the maximum." 

D. Ct. Op. at 16 (citing PIRG). The court concluded that 

neither the elaborated factors, nor the interests of justice 

supported mitigating the fine. The court specifically refused 

to mitigate the fine based on Grant's bankruptcy. 

The Court will not mitigate the civil penalty based upon 

 Grant's filing for Chapter 11 Bankruptcy . . . There is 

 nothing to indicate that Grant cannot afford the 

 penalty other than Grant's conclusory statement that 

 he has lost all of his assets. Grant has not submitted 

 tax records or findings of the bankruptcy court 

 regarding his financial condition. Without such 

 financial records, the Court cannot accurately 

 determine that the fine would be too great. 

D. Ct. Op. at 19. 

Thereafter, Grant filed a motion to amend the judgment 

under Fed. R. Civ. P. 59(e), and included copious financial 

records with that motion. However, the district court, 

accepting the recommendation of the magistrate judge, 

denied that motion because the records had not been

submitted previously, and nothing in the record suggested 

that the records had been unavailable when the court 

decided the summary judgment motion. The court stated, 

"[i]ndeed, defendants admit that the evidence was available, 

but claim that they did not submit it because they were not 

on notice that the Court would address both liability and 

penalty aspects of the case. The record belies this claim." 

App. at 2. Accordingly, we must address the district court's 

failure to reconsider the fine based upon the additional 

financial information.8 However, before addressing that 

_________________________________________________________________ 

8. Our standard of review for the district court's denial of the 

appellants' 

motion to alter or amend a judgment under Fed. R. Civ. P. 59(e) is for 

an abuse of discretion because the underlying order was an assessment 

of monetary penalties. See B & W Properties, 38 F.3d at 368 (citation 

omitted). 

 16 
issue, we will comment upon the process used by the

district court to determine the appropriate amount of the 

fine. 

Courts usually calculate a fine under the CAA by starting 

with the maximum penalty. See, e.g., B & W Investment 

Properties, 38 F.3d at 368 ("[I]n considering fines under the 

Act, courts generally presume that the maximum penalty 

should be imposed."); Tyson Foods, Inc. 897 F.2d 1128, 

1141 ("Upon remand, the district court should first

determine the maximum fine. . . . it must reduce the fine 

in accordance with the factors spelled out in [the statute].").9 

As noted above, the district court here relied upon our 

decision in PIRG to state: "courts may start with the 

statutory maximum and then consider factors in mitigation 

of the maximum." D. Ct. Op. at 16. However, although 

courts may, and frequently do, begin at the maximum, we 

have never suggested that such a procedure is always 

appropriate. Moreover, our research has not found any 

appellate decision that would suggest that method of 

determining a fine under the Clean Air Act is always the 

best way of proceeding. 

In PIRG, the district court assessed the maximum penalty 

allowed under the Act and then reduced that amount based 

upon some of the mitigating factors. We reversed based 

upon our conclusion that the district court erred in 

mitigating the fine because of the violator's good faith, and 

the regulatory agency's inaction. We reasoned that,

although such a reduction may be appropriate when it is in 

the interests of justice, the record before the district court 

did not support a reduction for the particular violator's 

good faith nor the "nonfeasance" of the regulatory agency. 

Id. at 80-1. We did not suggest that courts should always 

begin a fine assessment at the maximum. There will be 

instances when doing so will initially set the bar so high 

_________________________________________________________________ 

9. Tyson Foods dealt with fines for violations of the Clean Water Act. 

However, the Clean Water Act and the Clean Air Act are in pari materia, 

United States v. Stauffer Chemical Co., 684 F.2d 1174 (6th Cir. 1982) 

aff'd, 464 U.S. 165 (1984), and courts often rely upon interpretations of 

the Clean Water Act to assist with an analysis under the Clean Air Act. 

See, e.g., Midwest Suspension, 824 F. Supp. at 733.

 17 
that it will remain at a height that is inconsistent with the 

mitigating factors in S 7413(e)(1) even after it is lowered. 

Here, for example, the fine of nearly $3,000,000 bore no 

relationship to the violators' ability to pay. This is contrary 

to Congress' mandate that courts consider "the economic 

impact of the penalty on the business." 42 U.S.C. 

S 7413(e)(1). The fine that is imposed must have some 

reasonable, and proportionate "nexus" to the violations and 

the violators. See Midwest Suspension, 49 F.3d at 1204 

("Midwest's argument that the district court did not 

establish any nexus whatsoever between the violations 

claimed and the penalties assessed has no merit."). Such a 

nexus is implicit in Congress' command that courts include 

within their mitigation analysis "other factors as justice 

may require." 42 U.S.C. S 7413(e)(1). 

Courts can achieve an equitable mitigation (if any is 

warranted in a particular case) either by starting at the 

maximum penalty and mitigating it downward based upon 

the factors in S 7413(e)(1), or simply relying upon those 

factors to arrive at an appropriate amount without starting 

at the maximum. The statute only requires that thefine be 

consistent with a consideration of each of the factors the 

court is obligated to evaluate. 

Here, appellants' financial condition was relevant to a 

determination of the appropriate penalty, and the district 

court abused its discretion in refusing to consider it. The 

court justified its refusal for the reasons stated above, 

however, the court had a legal obligation to consider each 

of the factors set forth in the Act. As noted above, Congress 

stated that a court "shall take into consideration" each of 

the factors set forth in that Act. 42 U.S.C. S 7413(e)(1). 

Here, the court's refusal to consider Grant's bankruptcy is 

inconsistent with that mandate. Accordingly, the court 

abused its discretion in refusing to consider appellants' 

financial records. See Midwest Suspension, 824 F. Supp. at 

735 (rejecting government's request to adopt a rule of law 

requiring a violator to have "burden of presenting evidence 

to support a reduction from the statutory maximum 

penalty" or pay maximum amount). 

Dell'Aquilla settled with the government for $400,000. 

The evidence that the appellants attempted to introduce via 

 18 
their Rule 59(e) motion could have (if accepted by the court) 

established their utter inability to pay the fine that was 

imposed. That fine was nearly 750% greater than the

settlement the government accepted from Dell'Aquilla, the 

owner of the property.10 We do not mean to suggest that the 

district court was somehow limited by the government's 

settlement. It may well be that a court would be justified in 

imposing such a disparate fine because of the policy 

considerations that favor settlements as well as the 

particular circumstances in a given prosecution under the 

CAA. However, the district court should have considered 

appellants' financial records before concluding that such a 

disparity was consistent with its obligation to consider the 

mitigating factors set forth in the statute. Since the court 

failed to consider appellants' financial condition, we will 

remand for further proceedings consistent with this

opinion. At those proceedings, the court will consider the 

financial records previously offered by appellants. Since the 

government may not be able to establish that the three 

visible emissions constituted violations or that Grant and 

Sandalwood are liable for all of the period from June 29, 

1988 to September 14, 1988, the resulting fine may be 

smaller than the one originally imposed regardless of how 

the court calculates the fine. However, any fine that is 

imposed must be consistent with the command of 42 

U.S.C. S 7413(e)(1). 

IV. 

 For the foregoing reasons, we will affirm in part, reverse 

in part, vacate the court's order as to the penalty, and 

remand for further consideration. 

_________________________________________________________________ 

10. In addition, to Grant's financial problems, including bankruptcy, 

there is evidence in the record that the economic benefit gained by Grant 

and Sandalwood was just $100,000 -- the amount expended to the 

cleanup cost of ACM on the Hoboken property. See Report and 

Recommendation of the Magistrate Judge at 6. 

 19 
A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 20