Court Opinion

ID: 6958397
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:41:19.447434+00
Date Added: 2024-06-11T16:08:17.801932
License: Public Domain

NIEMEYER, Circuit Judge,
concurring in part and dissenting in part:
I concur in Parts I., II., and III.A., but I find that I must dissent from Part III.B. I believe not only that the regulatory scheme was ambiguous but also that the EPA interpreted its regulations with considerable ambivalence, denying any person seeking to comply with them a consistent and clear course to follow. To penalize a company that, by concession of the majority opinion, was not given fair notice of any EPA interpretation at least until 1989 and then thereafter chose to follow one EPA Region’s interpretation over another would be, in my judgment, fundamentally unfair. I have no difficulty with enforcing any consistent and rational EPA interpretation prospectively, but to impose penalties in the circumstances of this case is tantamount to punishment on the unfocused whim of a bureaucracy that could not itself agree on the proper reading of its own regulation.
The Clean Air Act, 42 U.S.C. § 7401 et seq., creates a diverse regulatory scheme to lessen air pollution and confers broad power on the EPA to draft regulations to implement the statute. In 1984, the EPA published regulations to control the emission standards for equipment leaks of benzene, requiring industrial plants producing or using benzene to monitor for leaks, to repair leaks, and to install equipment to capture benzene emissions. The regulations also impose reporting and record keeping requirements. ■ Violations are subject to civil penalty. Intending to exempt small volume producers and users of benzene because of cost concerns, the regulations exempt those plants that are designed “to produce or use *231less than 1,000 megagrams of benzene per year.” 40 C.F.R. § 61.110(c)(2) (emphasis added). The issues in this case are whether Hoechst Celanese’s Celriver (South Carolina) Plant produces or uses 1,000 mega-grams of benzene per year and whether the EPA’s interpretation of “produces or uses” was sufficiently clear to Hoechst Celanese in 1989 so as to justify imposing on it penalties for not complying with an EPA official’s interpretation of the regulation within 90 days.
Reading the regulation on its face, the words “produces or uses” are complementary terms designed to provide a basis' of measurement for the amount of benzene manufactured by or employed at a plant. The amount of benzene that a plant produces would seem to be a straightforward calculation measured by the amount of benzene that exits from a plant’s manufacturing process. To measure the amount of benzene that a plant “uses” in a year would appear to require a measurement of the amount of benzene introduced into the manufacturing process during the course of a year. This natural reading would thus include in the amount all inventory of benzene in use at a plant during the entire year plus any amounts consumed by the process. If that total were less than 1,000 megagrams per year, one would expect that the plant would be exempt from regulation.
At different times and in different contexts, the EPA has shared in part my natural reading of the regulation. When the EPA first published its regulations, it appears to have assumed that its own regulations were to be read so that “use” means“consumption.” This is reflectéd in the preamble to the regulation as originally published, where the EPA stated:
The possibility that pharmaceutical operations could be adversely affected by the standard is very small. This is true for several reasons. First, most pharmaceutical plants use very little benzene. According to estimates contained in Market Input/Output Studies — Benzene Consumption as a Solvent (EPA-560/6-77-034, October 1978, p. 41), 1978 benzene consumption by pharmaceutical manufacturers was about 0.72 Gg.' No companies consumed more than 1,000 Mg/yr in 1978. The commenter states that they consumed about 325 Mg/yr during 1981. Thus, it is unlikely that pharmaceutical operations would be affected by the standard because the final standard exempts equipment at plant sites that are designed to produce or use 1,000 Mg/yr or less of benzene. Second, Benzene consumption by the pharmaceutical industry is declining' rapidly. The market input/output study just noted estimates that consumption declined from 2.14 Gg in 1976 to 0.72 Gg in 1978, a decline of about 66 percent over the 2-year period.
49 Fed.Reg. 23,510 (June 6, 1984) (emphasis added). But when individual representatives of the EPA interpreted EPA regulations, they recognized that if benzene was introduced into a manufacturing process and exited it, the “throughput” should be the basis for measurement in determining “use.” For example, on October 16, 1984, an internal memorandum from the EPA Standard Development Branch to another section provided:
As you requested, I will articulate our position on the 1,000 Mg/yr plant site cutoff in the bénzene equipment leak standard. This cut-off is based on an analysis showing plants having few [pieces of] equipment in benzene service should not be covered by the standard. This analysis relates the low number of [pieces of] equipment to a process rate in Mg/yr. This process rate is not based on consumption of benzene but rather throughput through the equipment in all process units of a plant site. The .standard requires owners/operators to demonstrate the design capacity for each process unit in a plant, and we should sum these capacities and compare this surq to the 1,000 Mg/yr.
(Emphasis added). This position was reiterated a month later by the EPA’s Office of Air Quality Planning and Standards which issued a memorandum to all EPA Regional Air Program Branch Chiefs as follows:
The question is whether the cut-off total is based on consumption or processing rate. We have determined the cut-off is based *232on the throughput or processing rate, rather than consumption.
While various persons at the EPA were debating whether “consumption” of benzene or the “throughput” was to be the basis for measurement, the EPA Regional Director from Region VI took the position that the benzene used was to be quantified in the same way as any inventory of a plant normally would be quantified:
After .review of [the regulatory provision], and based on our discussion with Headquarters’ staff, we differ from you [Texaco] in our interpretation of the provision. It is EPA’s position that the word use is not meant to imply consumption, but rather is meant to reflect the overall quantity of benzene used in equipment at a facility. In determining the environmental, health, economic and energy impacts in setting the benzene standard, estimates were based on the number of pieces of equipment utilizing benzene and the quantity of benzene in use, rather than on the overall plant consumption (conversion) rate of benzene. Therefore, to determine if a plant produces or uses greater than 1000 megagrams per year of benzene, the total quantity of benzene in use at the facility needs to be considered, not the consumption.
(Emphasis in original). Region VI, thus, required the amount of benzene used to be measured by the “total quantity in use” at the facility — i.e., an inventory measurement. This letter, originally written to Texaco, was provided to Hoechst Celanese by the Texas Air Control Board in the course of giving Hoechst Celanese an exemption for its Bishop Plant in Texas, as it was authorized to do under the Act.
The EPA thus had at least three different approaches for measuring use: (1) the consumption of benzene in a year, (2) the throughput of benzene through a plant for a year, and (3) the total quantity in use at the plant.
In June 1989, the EPA Regional Director in Region IV, which included jurisdiction over Hoechst Celanese’s Celriver Plant, wrote Hoechst Celanese that the Celriver Plant “may be subject” to benzene regulation and requested data on Celriver’s benzene“throughput on an annual basis.” When Hoechst Celanese responded that the Celriver Plant was exempt because it consumed less than 1,000 megagrams, per year, the Region IV Director sent a letter stating that “it appears that you are unaware of EPA’s interpretation of benzene usage as the term is used to determine applicability.” The Region TV Director then explained:
[B]enzene usage is intended to mean total cumulative flow through equipment in benzene service rather than net consumption[.][Y]ou reported your benzene usage for the years 1984 through 1989 in terms of the amount of benzene added to maintain the levels in your closed recirculation system. Therefore, the paragraph below provides an example of how to calculate benzene usage for a hypothetical example. After reviewing the example, you should have a better understanding of how the term benzene usage is to be interpreted.
The letter then described. how in-a closed recirculation system, the benzene should be measured at a single point so that it is counted every time it passes a fixed point. The Region TV Director considered that this form of measurement was an acceptable interpretation of “throughput.”
Up until this point, the EPA as an agency had not addressed how to measure benzene in a closed recirculation system. While the EPA Region VI Director applied the regulation to a closed system .by directing the measurement of the “total quantity in use” at the plant, the Region IV Director was interpreting it as the rate of flow through a single point in a closed system. Thus, Region TV proposed re counting the benzene every time it passed the single point. EPA Region IV did not, however, explain how many measuring points should be utilized. In a complex recirculation system made up of a grid of thousands of pieces of equipment, as was involved at the Celriver Plant, there are theoretically an unlimited number of measuring points at each joint and valve.. Under this method, virtually any plant with a closed recirculation system would never qualify for the 1,000-megagram-per-year usage exemption.
*233While I agree with the majority that Hoechst Celanese had notice of the position of the EPA Region IV in August 1989; this notice should not, against the background of inconsistent EPA interpretations over time and throughout the different regions, constitute a definitive agency-wide EPA notice such that penalties could be imposed for noncompliance with one interpretation. For these reasons, I firmly believe that the district court properly concluded that the 1989 Region IV notice should not be considered the “authoritative interpretation” of the EPA.
I would go yet further and question whether the Region IV Director’s notice is at all meaningful in view of the ambiguity about his interpretation.
For the foregoing reasons, I would affirm the district court’s findings in their entirety.