United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 13, 2019 Decided July 5, 2019

No. 18-7123

UNITED STATES OF AMERICA, EX REL. KASOWITZ BENSON 

TORRES LLP,

AND

KASOWITZ BENSON TORRES LLP,

APPELLANT

v.

BASF CORPORATION, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:16-cv-02269)

Andrew A. Davenport argued the cause for appellant. 

With him on the briefs was Daniel Benson. 

Gregory G. Garre argued the cause for appellees. On the 

brief were Christopher Landau, Alice S. Fisher, Anne W. 

Robinson, Alex Loomis, William F. Goodman III, Raymond 

Cardozo, Brian A. Sutherland, Steven M. Bauer, Fred M. 

Haston III, Lawrence S. Sher, and Seth A. Rosenthal. Ryan 

Baasch entered an appearance.
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Before: HENDERSON, SRINIVASAN and PILLARD, Circuit 

Judges.

Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: “Pecunia 

non satiat avaritiam, sed inritat” translates from Latin to 

English as “money doesn’t satisfy greed; it stimulates it.” 

This case teaches that money also stimulates legal artifice. 

For over one hundred and fifty years, the False Claims Act 

(FCA) has imposed civil liability on anyone who defrauds the 

federal government of money or property. See generally Act 

of March 2, 1863, ch. 67, 12 Stat. 696 (1863) (codified as 

amended at 31 U.S.C. §§ 3729 et seq.). A third party—a 

relator—may bring an FCA lawsuit on behalf of the 

government and collect a substantial bounty if he prevails. 

See 31 U.S.C. § 3730(b), (d). Today we review a relator’s 

novel theory of FCA liability.

The law firm Kasowitz Benson Torres LLP (Kasowitz) 

alleges that a handful of large chemical manufacturers violated 

the Toxic Substances Control Act, Pub. L. No. 94-469, 90 Stat. 

2003 (1976) (codified as amended at 15 U.S.C. §§ 2601 et seq.) 

(TSCA), by repeatedly failing to inform the United States 

Environmental Protection Agency (EPA) of information 

regarding the dangers of isocyanate chemicals. Kasowitz 

claims the defendant-chemical manufacturers’ failure to 

disclose and subsequent actions deprived the government of 

property (substantial risk information) and money (TSCA civil 

penalties and contract damages). Kasowitz demands billions 

of dollars in damages, even though the government openly 

supports the defendants. The district court dismissed its 

lawsuit. Kasowitz now appeals, asking us to become the first 

court to recognize FCA liability based on the defendants’ 

failure to meet a TSCA reporting requirement and on their 
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failure to pay an unassessed TSCA penalty. We decline the 

invitation and affirm the dismissal.

I. BACKGROUND

TSCA requires a chemical manufacturer, inter alia, to 

inform the EPA of substantial risk information—that is, 

“information which reasonably supports the conclusion that [a] 

substance or mixture presents a substantial risk of injury to 

health or the environment.” 15 U.S.C. § 2607(e). TSCA 

authorizes the EPA to take administrative action against any 

individual or entity that violates the duty to disclose and to 

impose a civil penalty on a violator. Id. § 2615(a)(2)(A)–(C). 

As part of its role in implementing TSCA, the EPA established 

the Compliance Audit Program, a “one-time voluntary 

compliance program designed to strongly encourage 

companies to voluntarily audit their files” and disclose 

substantial risk information. Registration and Agreement for 

TSCA Section 8(e) Compliance Audit Program, 56 Fed. Reg. 

4128, 4129 (Feb. 1, 1991). The EPA offered a reduced civil 

penalty for any tardy disclosure made under the Program and 

reserved the right to “take appropriate enforcement action” 

against a violator. Id. The Compliance Audit Program was 

in effect from 1991 to 1996. See TSCA Section 8(e); 

Notification of Substantial Risk; Policy Clarification and 

Reporting Guidance, 68 Fed. Reg. 33,129, 33,131 (June 3, 

2003) (The “EPA reached final settlements with CAP 

participants, announced those settlements on October 15, 1996, 

and collected payment for stipulated penalties.”).

Kasowitz alleges that the defendants—BASF Corporation, 

Covestro LLC, Dow Chemical Company and Huntsman 

International LLC—“manufacture isocyanate chemicals, 

which are used to produce various polyurethane-based 

materials such as paint, adhesives, rigid foam for insulation, 
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flexible foam for mattresses and cushions, and parts for 

automotive interiors.”1

 United States ex rel. Kasowitz Benson 

Torres LLP v. BASF Corp., 285 F. Supp. 3d 44, 47 (D.D.C.

2017). Isocyanate chemicals can, under some circumstances, 

pose a health hazard if inhaled or exposed to skin. Beginning 

in the late 1970s and continuing through the early 2000s, the 

defendants acquired information about the adverse health 

effects of isocyanate chemicals. They did not disclose this 

information to the EPA, however, not even while participating 

in the Compliance Audit Program.

Kasowitz sued the defendants under the FCA, alleging that 

their TSCA violations—and evasion of responsibility for those 

violations—deprived the government of its money and 

property. The defendants allegedly deprived the government 

of money by failing to pay TSCA and Compliance Audit 

Program civil penalties and by concealing their liability from 

the EPA. And the defendants allegedly deprived the 

government of property in the form of undisclosed substantial 

risk information regarding isocyanate chemicals. The 

complaint’s first four counts allege violations of the FCA’s 

reverse false claim provision2 (Counts One, Two and Four) 

 1 Because this appeal comes to us at the motion-to-dismiss 

stage, we “accept as true all of the complaint’s factual allegations.” 

Owens v. BNP Paribas, S.A., 897 F.3d 266, 272 (D.C. Cir. 2018).

2 The reverse false claims provision specifies that: “any person 

who . . . knowingly makes, uses, or causes to be made or used, a 

false record or statement material to an obligation to pay or transmit 

money or property to the Government, or knowingly conceals or 

knowingly and improperly avoids or decreases an obligation to pay 

or transmit money or property to the Government . . . is liable to the 

United States Government.” 31 U.S.C. § 3729(a)(1)(G).
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and conversion provision (Count Three).3 Count Five alleges 

that the defendants engaged in a conspiracy to violate the FCA. 

The defendants moved to dismiss the case for failure to state a 

claim upon which relief can be granted. BASF Corp., 285 F. 

Supp. 3d at 46–47, 49. The district court rejected Kasowitz’s 

legal theories and accordingly granted the motion. Id. at 50–

56. Kasowitz timely appealed.

II. ANALYSIS

To survive dismissal under Federal Rule of Civil 

Procedure 12(b)(6), a complaint must include factual 

allegations that establish a plausible claim to relief. Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007) (plaintiff must 

plead “enough facts to state a claim to relief that is plausible on 

its face”). We consider seriatim and review de novo the five 

counts of Kasowitz’s complaint. See Elec. Privacy Info. Ctr. 

v. IRS, 910 F.3d 1232, 1236 (D.C. Cir. 2018) (“We review the 

district court’s dismissal de novo.”).

A. COUNT ONE

Count One alleges that the defendants violated the FCA’s 

reverse false claim provision by “knowingly conceal[ing] 

or . . . improperly avoid[ing] . . . an obligation to pay” money—

namely, civil penalties under TSCA and the Compliance Audit 

Program. 31 U.S.C. § 3729(a)(1)(G). The TSCA civil 

penalty theory is a non-starter. “[A]n unassessed potential 

penalty for regulatory noncompliance does not constitute an 

obligation that gives rise to a viable FCA claim.” Hoyte v. Am. 

 3 The conversion provision specifies that: “any person who . . . 

has possession, custody, or control of property or money used, or to 

be used, by the Government and knowingly delivers, or causes to be 

delivered, less than all of that money or property . . . is liable to the 

United States Government.” 31 U.S.C. § 3729(a)(1)(D).
6

Nat’l Red Cross, 518 F.3d 61, 67 (D.C. Cir. 2008); see also 

United States ex rel. Schneider v. JPMorgan Chase Bank, Nat’l 

Ass’n, 878 F.3d 309, 315 (D.C. Cir. 2017) (“[W]e have 

previously held that contingent exposure to penalties which 

may or may not ultimately materialize does not qualify as an 

‘obligation’ under the statute.”). It is undisputed that the EPA 

did not assess TSCA penalties against the defendants for failing 

to report substantial risk information regarding isocyanate 

chemicals. There was, thus, no FCA “obligation” for the 

defendants to conceal or avoid.

Kasowitz insists that TSCA automatically imposes an 

obligation to pay a civil penalty at the moment a defendant 

commits a violation. The automatic nature of the liability, in 

Kasowitz’s view, makes a TSCA penalty an existing obligation 

to pay under the FCA—not an unassessed, hypothetical penalty 

like those we found inadequate in earlier cases, Hoyte, 518 F.3d 

at 66–67 (alleged noncompliance with administrative consent 

decree); United States ex. rel. Schneider, 878 F.3d at 314–15 

(alleged noncompliance with terms of settlement agreement 

between mortgage lenders and federal government). As the 

Fifth Circuit recently held, however, the EPA—once it has 

taken successful administrative action—has discretion to 

impose either an appropriate civil penalty or no penalty at all. 

United States ex rel. Simoneaux v. E.I. duPont de Nemours & 

Co., 843 F.3d 1033, 1040–41 (5th Cir. 2016). Two TSCA 

provisions make this conclusion inescapable. First, TSCA 

expressly grants the EPA authority to remit or otherwise 

decline to impose a civil penalty. 15 U.S.C. § 2615(a)(2)(C)

(EPA “may compromise, modify, or remit, with or without 

conditions, any civil penalty which may be imposed under this 

subsection.”); see also id. § 2615(a)(2)(B) (“In determining the 

amount of a civil penalty, the Administrator shall take into 

account the nature, circumstances, extent, and gravity of the 

violation or violations and, with respect to the violator, ability 
7

to pay, effect on ability to continue to do business, any history 

of prior such violations, the degree of culpability, and such 

other matters as justice may require.”). Because the EPA can 

remit a civil penalty—that is, “pardon or forgive” it, Black’s 

Law Dictionary 1297 (7th ed. 1999)—TSCA does not create 

an obligation to pay a civil penalty at the moment of a statutory 

violation; an obligation arises only if and when the EPA 

decides to impose a penalty.4 Accord United States ex rel. 

Simoneaux, 843 F.3d at 1040 (“[M]ost regulatory statutes, such 

as the TSCA, impose only a duty to obey the law, and the duty 

to pay regulatory penalties is not ‘established’ until the 

penalties are assessed.”). Second, TSCA itself recognizes that 

not every violation results in a civil penalty. Section 

2615(b)(1) provides that a willful violator, upon conviction, is 

subject to a fine or imprisonment “in addition to or in lieu of 

any civil penalty which may be imposed under subsection (a).” 

15 U.S.C. § 2615(b)(1) (emphasis added). The phrase “in lieu 

of any civil penalty” means that not every TSCA violation 

carries a civil penalty. In short: Kasowitz’s theory of 

automatic civil penalty liability is incorrect.

Kasowitz’s Compliance Audit Program claim fares no 

better. The Compliance Audit Program offered a participating 

company a reduced civil penalty in exchange for making an 

overdue submission of substantial risk information. 

Registration and Agreement for TSCA Section 8(e) 

 4 Our decision in 3M Company (Minnesota Mining & 

Manufacturing) v. Browner, 17 F.3d 1453 (D.C. Cir. 1994), is not to 

the contrary. There we stated that “[b]ecause liability for the 

penalty attaches at the moment of the violation, one would expect 

this to be the time when the claim for the penalty ‘first accrued’” for 

statute of limitations purposes. Id. at 1461. 3M Company

addresses when a defendant becomes liable for a TSCA penalty; it 

says nothing about when a defendant becomes obligated to pay a 

TSCA penalty.
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Compliance Audit Program, 56 Fed. Reg. at 4129–31. A 

participating company that failed to submit substantial risk 

information, however, faced no additional penalty. Instead, 

the EPA reserved its right to initiate administrative action and 

seek an ordinary TSCA civil penalty. Id. at 4129 (“EPA 

reserves its rights under TSCA section 16 to take appropriate 

enforcement action if EPA determines later that the Regulatee 

was required to submit under TSCA section 8(e) a study or 

report determined by the Regulatee to be not reportable and 

therefore not submitted under the TSCA Section 8(e) 

Compliance Audit Program.”). In other words, a 

manufacturer that withheld substantial risk information was in 

the same position it would have been in had it not participated 

in the Compliance Audit Program at all. Kasowitz’s 

Compliance Audit Program claim thus adds nothing to its 

TSCA civil penalty claim, which fails for the reasons just 

described.

B. COUNT TWO

Count Two alleges that the defendants violated the reverse 

false claim provision by “knowingly conceal[ing] or . . . 

improperly avoid[ing] . . . an obligation to pay or transmit” 

property in the form of substantial risk information. 31 U.S.C. 

§ 3729(a)(1)(G). We assume, without deciding, that the 

substantial risk information identified in the complaint 

constitutes the defendants’ property. And there is no doubt 

that TSCA establishes an “obligation” to inform the EPA of 

substantial risk information. 15 U.S.C. § 2607(e) (“Any 

person who manufactures . . . a chemical substance or mixture 

and who obtains information . . . that such substance or mixture 

presents a substantial risk of injury to health or the environment 

shall immediately inform the Administrator.” (emphasis 

added)). The issue is whether the TSCA obligation to inform 

the EPA of substantial risk information qualifies as an 
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obligation to transmit property. See 31 U.S.C. 

§ 3729(a)(1)(G) (making liable anyone who “knowingly 

conceals or knowingly and improperly avoids or decreases an 

obligation to pay or transmit money or property to the 

Government” (emphasis added)). We conclude that it does 

not and therefore affirm the dismissal of Count Two.

The starting place is the United States Supreme Court’s 

decision in Cleveland v. United States, 531 U.S. 12 (2000), 

which considered whether “making false statements in 

applying to the Louisiana State Police for permission to operate 

video poker machines” defrauded the State of Louisiana of 

property, id. at 15. The Court stated that the gaming license 

regime at issue was a “typical regulatory program”: it governed 

“engagement in pursuits that private actors may not undertake 

without official authorization,” id. at 21, and aimed to maintain 

“public confidence and trust that gaming activities . . . are 

conducted honestly,” id. at 20 (quoting La. Stat. Ann. 

§ 27:306(A)(1) (2000)). Louisiana’s “core concern,” then, 

was “regulatory.” Id. The Court compared Louisiana’s 

gaming license interest to those interests traditionally protected 

by property law and found no analog. Id. at 21–24. 

Accordingly, the Court concluded that Louisiana lacked a 

property interest. Id. at 24 (“We reject the Government’s 

theories of property rights,” in part, “because they stray from 

traditional concepts of property.”).

For similar reasons, we conclude that TSCA does not 

require the transmission of a property interest. TSCA gives 

the EPA one—and only one—interest in substantial risk 

information: the right to be informed of it. 15 U.S.C. 

§ 2607(e). And the EPA’s “core concern is regulatory.” 

Cleveland, 531 U.S. at 20 (emphasis omitted). It does not 

acquire information for its own economic benefit but to carry 

out its regulatory mission. TSCA’s substantial-risk-reporting 
10

requirement facilitates the EPA’s role in “regulat[ing] chemical 

substances and mixtures which present an unreasonable risk of 

injury to health or the environment.” 15 U.S.C. § 2601(b)(2). 

Like the gaming license at issue in Cleveland, moreover, the 

EPA’s statutory right to be informed of substantial risk 

information does not constitute a traditional property right. 

Granted, the law has long protected property interests in limited 

forms of information. E.g., Carpenter v. United States, 484 

U.S. 19, 26 (1987) (“Confidential business information has 

long been recognized as property.”); Ruckelshaus v. Monsanto 

Co., 467 U.S. 986, 1002 (1984) (trade secrets). But the EPA’s 

statutory right to be informed of information is not among 

them. Indeed, Kasowitz cites no precedent that recognizes as 

a property right a government agency’s statutory entitlement to 

receive information from a regulated party. Accordingly, 

TSCA’s command to “inform” the EPA of substantial risk 

information is not an obligation to “transmit” an interest in 

“property.” Cf. Patrick v. Comm’r of Internal Revenue, 799 

F.3d 885, 889 (7th Cir. 2015) (information did not constitute 

property because plaintiff “had no right to stop anyone else 

from using it”).

Kasowitz’s property claim has a second major flaw: the 

FCA is not “a vehicle for punishing garden-variety . . . 

regulatory violations.” Universal Health Servs., Inc. v. United 

States, 136 S. Ct. 1989, 2003 (2016). Keeping with that 

principle, in United States ex rel. Bahrani v. Conagra, Inc., 465 

F.3d 1189 (10th Cir. 2006), the Tenth Circuit rejected an FCA 

relator’s effort to locate a government property right in a 

prosaic regulatory requirement, id. at 1205. The relator there 

sued Conagra for modifying export certificates issued by the 

United States Department of Agriculture (Agriculture). Id. at 

1192–95. Under applicable regulations, Conagra had to return 

the certificates to Agriculture once it concluded that the 

modifications were necessary. See id. at 1204–05. The 
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relator claimed that “[b]y making changes on the original 

certificates instead of returning them . . . Conagra employees 

avoided an obligation to ‘transmit . . . property to the 

Government.’” Id. at 1205 (third alteration in original) (quoting 

31 U.S.C. § 3729(a)(7)). The Tenth Circuit rejected the 

relator’s novel idea that the certificates constitute government 

property, explaining that “applying the [FCA] in this fashion 

would stretch it far beyond its intended purpose.” Id. So too 

here. Regulatory reporting requirements, including TSCA’s 

requirement to report substantial risk information, are a 

mainstay of regulatory agencies. E.g., 29 U.S.C. § 1024(a)(1) 

(ERISA); 42 U.S.C. § 7671b(b) (Clean Air Act); 42 U.S.C. 

§ 11004 (EPCRA). And Kasowitz’s property rights theory, if 

adopted, would make any violation of countless reporting 

requirements actionable under the FCA. Absent ample 

evidence of congressional intent, we will not interpret the term 

“property” in a way that fundamentally changes the 

relationship between the FCA and “garden-variety . . . 

regulatory violations.” Universal Health Servs., Inc., 136 S. 

Ct. at 2003.

C. COUNTS THREE, FOUR AND FIVE

Count Three alleges that the defendants violated the 

FCA’s conversion provision by failing to deliver money 

(TSCA civil penalties) or property (substantial risk 

information) to the EPA. To be liable under the conversion 

provision, however, a defendant must possess “property or 

money used, or to be used, by the Government.” 31 U.S.C. 

§ 3729(a)(1)(D). But the defendants did not possess any such 

money or property. The EPA did not assess civil penalties 

against the defendants and no obligation to pay the EPA any 

money automatically arose based on the defendants’ alleged 

TSCA violations: they did not possess money to be used by the 

government. See supra Section II.A. Likewise, TSCA did 
12

not require the defendants to transmit any property interest in 

the alleged substantial risk information to the EPA: they did 

not possess property to be used by the government. See supra

Section II.B. Count Three was therefore properly dismissed.

The remaining counts merit only brief discussion. 

Kasowitz made no argument in its opening brief that the district 

court erred in dismissing Count Four and, accordingly, any 

challenge to Count Four is forfeit. Al-Tamimi v. Adelson, 916 

F.3d 1, 6 (D.C. Cir. 2019) (“A party forfeits an argument by 

failing to raise it in his opening brief.”). To succeed on Count 

Five, which alleges that the defendants violated the FCA 

conspiracy provision, Kasowitz had to establish an underlying 

FCA violation. 31 U.S.C. § 3729(a)(1)(C) (“[A]ny person 

who . . . conspires to commit a violation of” other FCA 

provisions “is liable to the United States Government.”); cf.

Halberstam v. Welch, 705 F.2d 472, 479 (D.C. Cir. 1983) 

(“Since liability for civil conspiracy depends on performance 

of some underlying tortious act, the conspiracy is not 

independently actionable; rather, it is a means for establishing 

vicarious liability for the underlying tort.”). Our rejection of 

all of Kasowitz’s underlying theories of liability mandates that 

we affirm the dismissal of Count Five. 

For the foregoing reasons, we affirm the judgment of the 

district court dismissing the complaint.

So ordered.