Source: http://www.dentons.com/en/insights/alerts/2014/november/4/eab-may-avoid-tsca-statute-of-limitations-ruling
Timestamp: 2017-01-16 12:50:01
Document Index: 93379387

Matched Legal Cases: ['§ 2462', '§ 2607', '§ 2607', '§ 16', '§ 16', '§ 8']

Dentons - EAB may avoid TSCA statute of limitations ruling
EAB may avoid TSCA statute of limitations ruling
On October 30, 2014, the Environmental Appeals Board (“EAB” or “the Board”) of the U.S. Environmental Protection Agency (“EPA” or “the Agency”) heard oral argument regarding whether the five-year federal statute of limitations, 28 U.S.C. § 2462, applies to violations of the reporting requirements of section 8(e) of the Toxic Substances Control Act (“TSCA”), 15 U.S.C. § 2607(e). The EAB’s forthcoming ruling in Elementis Chromium Inc., f/k/a Elementis Chromium, L.P., TSCA Appeal No. 13-03, will be the first time that the EAB has addressed the issue. Questions from the bench at hearing suggest, however, that the EAB may be seeking to avoid the issue entirely and, instead, be poised to issue a ruling not requested by either of the parties. Section 8(e) of TSCA requires any “person” (including companies) to report “immediately” to EPA any information that “reasonably supports the conclusion” that a chemical substance or mixture such persons manufacture, process, or distribute “presents a substantial risk to human health or the environment.” 15 U.S.C. § 2607(e). In 2010, EPA’s Office of Civil Enforcement filed a complaint charging that in 2002, Elementis Chromium Inc. (“Elementis”) had violated section 8(e) by failing to submit to EPA an epidemiological study of the possible effects on lung cancer mortality risk of workers’ exposure to hexavalent chromium at four facilities. Elementis denied that the study was reportable and further argued that EPA’s action was barred by the statute of limitations, because the Agency had not filed the complaint within five years of the date on which any reporting obligation might have first accrued. Chief Administrative Law Judge (“ALJ”) Susan L. Biro, following a hearing, issued an Initial Decision holding that Elementis had violated section 8(e). She also held that section 8(e) violations are “continuing” in nature and, therefore, subject to an exemption from the statute of limitations, and she proposed assessing Elementis a civil penalty of $2,571,800. Elementis appealed the Initial Decision to the EAB, asserting that violations of section 8(e) are not “continuing” in nature, because the statute requires a regulated entity to report within a particular timeframe, i.e., “immediately,” which EPA has defined as within 30 calendar days after receiving the information. Elementis argued that applicable case law holds that the statute of limitations applies to statutes that set such a particular timeframe for compliance. EPA responded that Elementis’s violation began the moment that the company failed to report the study “immediately” and that the violation continued until the company provided the Agency with the study in 2008. Elementis requested oral argument on the issue. In a pre-hearing order, EAB signaled that the Board might consider positions not espoused by either of the parties. Elementis Chromium, Inc. f/k/a Elementis Chromium, L.P., Corrected Order Requiring Additional Information, TSCA Appeal 13-03 (Oct. 9, 2014). Specifically, the EAB ordered both parties to be prepared to do the following:
[a]ddress the following scenario: If the Board were to conclude that Elementis’ failure to submit to [EPA] the epidemiology study in question here constitutes a series of separate violations, for what period would Elementis be liable for per[-]day penalties? For example, would Elementis be liable only for the five-year period immediately preceding the filing of the complaint….; or, would Elementis also be liable for violations that occurred outside this five[-]year window[,] based on the continuing violation exception to the statute of limitations….?
The EAB’s order also directed the parties to file briefs addressing this question and others that might surface during oral argument.
Environmental Appeals Judges Leslye M. Fraser and Kathie A. Stein presided over the October 30 hearing, at which counsel for Elementis asserted that the statute of limitations bars any penalty whatsoever, repeatedly citing Gabelli v. S.E.C., 133 S.Ct. 1216 (2013), in which the Supreme Court emphasized the importance of deadlines to civil penalty actions, except where Congress has clearly made an exception to the statute of limitations. Counsel for EPA argued that the ALJ had ruled correctly that section 8(e) violations are “continuing” in nature and, therefore, entirely exempt from the statute. EAJ Stein, however, continued to pursue the concept of an alternative theory. Noting that TSCA § 16(a) states that each day a violation continues is a “separate” violation, she posed for EPA a hypothetical in which the EAB held that the Elementis’s failure to report the study consisted of a series of repeated violations. She asked whether, in that instance, the Board would not need to reach the question of whether section 8(e) violations were continuing in nature and, therefore, subject to a broad exemption from the statute of limitations. EPA counsel appeared to avoid the issue, but EAJ Stein later forced EPA to admit that the TSCA legislative history contains nothing relevant regarding the issue of “continuing” violations or the statute of limitations. When Elementis’s counsel later pointed out that EPA’s complaint alleged only a single violation, not a repeated series, EAJ Stein countered that regardless of the wording of the complaint, the ALJ’s penalty assessment was based on multiple days of violation. The EAB’s Order and questions at oral argument suggest that the Board is at least considering a ruling that neither EPA nor Elementis has requested, as follows: (1) TSCA § 16(a)(1)’s declaration that each day a violation continues is a “separate violation” allows EPA to designate a single, long-term violation of section 8(e) as a series of discrete, separate violations, one occurring on each passing day; (2) it is not necessary to reach the question of whether the five-year federal statute of limitations applies to violations of section 8(e); and (3) because a violation of section 8(e) can be designated as a series of discrete violations, even if the statute of limitations applies, it would not bar EPA from assessing penalties for any portion of the series that occurred in the five years immediately before the filing of the complaint. Such a ruling might allow the EAB to uphold the Initial Decision’s proposed civil penalty, which is well below the maximum statutory penalty that could be assessed for a five-year period of daily violations. As a practical matter, such a ruling also might do little to limit future penalties for section 8(e) violations. Under the current statutory maximum, even a single year of per-day violations could yield a civil penalty of over $13 million, exceeding any prior penalty imposed under TSCA § 8(e).
The EAB has ordered the parties to submit additional briefs on the issue by November 17, 2014.