United States v. Trident Seafoods Corporation, and Tom Stakkeland James Hinton

60 F.3d 556, 95 Cal. Daily Op. Serv. 5394, 95 Daily Journal DAR 9193, 25 Envtl. L. Rep. (Envtl. Law Inst.) 21419, 40 ERC (BNA) 2121, 1995 U.S. App. LEXIS 16842, 1995 WL 408527

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 12, 1995
• Docket: 94-35178
• Status: Published

Opinions

Opinion by Judge Skopil; Dissent by Judge Ferguson.

SKOPIL, Senior Circuit Judge:

Trident Seafoods Corporation (“Trident”) appeals a civil penalty imposed for violating the Clean Air Act. The issue presented is whether Trident’s failure to notify officials of its intent to remove asbestos constitutes a “one-time” violation or a “continuous” violation for purposes of determining a lawful penalty. The district court concluded that Trident’s violation was continuous. We conclude that the regulation governing the notice requirement is not sufficiently clear to permit imposing a penalty greater than the statutory maximum for a single violation. We reverse and remand.

I.

Trident purchased and renovated an abandoned fish cannery in Anacortes, Washington. Asbestos was removed from the cannery site during five days in August and September 1988. A state official learned of the asbestos removal and inspected the site. Trident was cited by the state for failing to give advance notice of the company’s intent to remove asbestos, and paid a $250 fine to the state. The Environmental Protection Agency (“EPA”) was informed of the violation.

Over three years later, EPA gave notice of its intent to charge Trident with one notice violation and four substantive violations of the Clean Air Act unless Trident paid a civil fine of $346,000. Trident refused to pay, and the United States commenced this action. The district court entered summary judgment in favor of the government on the charge that Trident violated the Act by failing to provide written notice before removing asbestos. The remaining four substantive charges were submitted to a jury following an eight-day trial. The jury rejected the government’s case and found in favor of Trident on all four remaining counts.

The district court imposed a civil fine for the notice violation. The court rejected Trident’s argument that failure to give notice is a single violation occurring on a single day, and thus subject to a statutory maximum penalty of “$25,000 per day of violation.” Rather, the court held “as a matter of law that failure to comply with the notice requirement is a continuing violation.” The court concluded that Trident’s violation extended from the date that Trident should have reasonably given notice (10 days before the work began) to the date that the state official learned of the asbestos removal. This 44 day period subjected Trident to potential civil liability of $1,100,000. The district court, however, considered mitigating factors and reduced Trident’s fine to $64,750.

II.

Our starting point is the language of the statute and implementing regulations. See Gwaltney v. Chesapeake Bay Foundation, Inc., 484 U.S. 49, 56, 108 S.Ct. 376, 380-81, 98 L.Ed.2d 306 (1987); Reno v. National Transp. Safety Bd., 45 F.3d 1375, 1379 (9th Cir.1995). A provision of the Clean Air Act, 42 U.S.C. § 7412 (1988), authorizes EPA to identify hazardous pollutants and to develop National Emission Standards for Hazardous Air Pollutants (“NESHAP”). See United States v. Walsh, 8 F.3d 659, 661 (9th Cir.1993), cert. denied, — U.S. -, 114 S.Ct. 1830, 128 L.Ed.2d 459 (1994). The asbestos NESHAP applicable to this appeal, 40 C.F.R. Part 61, Subpart M (1988), provided procedures to be followed in removing and disposing of asbestos. Section 61.146(b)(4) required written notice to the EPA “as early as possible” of any plan to renovate a structure containing asbestos. Violation of NESHAP constitutes a violation of the Act. 42 U.S.C. § 7412(c) & (e) (1988). Violations are punishable by penalties of “not more than $25,-000 per day of violation.” 42 U.S.C. § 7413(b) (1988).

Neither the statute nor the regulation expressly addresses whether the failure to comply with the notice requirement is a one-time violation or a continuing violation. This is not a case where “limpid prose puts an end to all dispute.” Gwaltney, 484 U.S. at 57, 108 S.Ct. at 381. Moreover, no case law directly confronts the issue. The Fourth Circuit has held that violations of discharge limits under the Clean Water Act are daily violations even though reports of such discharges were required on a monthly or quarterly basis. See Sierra Club v. Simkins Indus., Inc., 847 F.2d 1109, 1114 (4th Cir.1988), cert. denied, 491 U.S. 904, 109 S.Ct. 3185, 105 L.Ed.2d 694 (1989); see also Chesapeake Bay Foundation v. Gwaltney, 791 F.2d 304, 314-15 (4th Cir.1986), vacated on other grounds, 484 U.S. 49, 108 S.Ct. 376, 98 L.Ed.2d 306 (1987). The court reasoned that the Clean Water Act “speakfs] in terms of penalties per day of violation, rather than penalties per violation.” Chesapeake Bay, 791 F.2d at 314 (emphasis in original). “This language strongly suggests that where a violation is defined in terms of a time period longer than a day, the maximum penalty assessable for that violation should be defined in terms of the number of days in that time period.” Id.

In Trident’s case, however, there were no specific time periods defined by the statute or regulation. Trident’s only obligation under the clear language of the regulation then in effect was to notify EPA before renovation began. This could reasonably be interpreted to mean that the only “day of violation” occurred on the day before Trident commenced renovation.

The district court acknowledged the ambiguity of the regulatory scheme and the lack of ease law, and turned to an examination of the policy considerations underlying the Clean Air Act. The court determined that “the self-evident purpose of notification [is] to enable the enforcement agency to monitor asbestos removal and assure effective compli-anee with work rules.” The court reasoned that “[o]nee the renovation is completed, it may be impossible to determine whether or not proper methods were employed.” The conclusion that only timely notice assures compliance is unassailable, and thus we have no quarrel with the district court’s analysis of the policy considerations supporting advance notification.

There is a competing argument, however, that notwithstanding policy concerns, the agency had both the opportunity and the obligation to state clearly in its regulations either that there is a continuous duty to notify or that a failure to notify gives rise to a penalty based on the length of time that the breach exists. We have reasoned that when “violation of a regulation subjects private parties to criminal or civil sanctions, a regulation cannot be construed to mean what an agency intended but did not adequately express.” Phelps Dodge Corp. v. Federal Mine Safety and Health Review Comm’n, 681 F.2d 1189, 1193 (9th Cir.1982) (internal quotation omitted). Thus, “[t]he responsibility to promulgate clear and unambiguous standards is on the [agency]. The test is not what [the agency] might possibly have intended, but what [was] said. If the language is faulty, the [agency] had the means and obligation to amend.” Marshall v. Anaconda Co., 596 F.2d 370, 377 n. 6 (9th Cir.1979) (internal quotation omitted). Thus, reliance on policies underlying a statute cannot be treated as a substitute for the agency’s duty to promulgate clear and definitive regulations. Id.

We are persuaded by this line of reasoning, and we conclude that Trident should not be subject to a “continuous violation” penalty that is not clearly applicable either by statute or by regulation to Trident’s conduct. Our conclusion is not inconsistent with the proposition that deference is ordinarily owed to an agency’s interpretation of its own regulations. See Providence Hosp. of Toppenish v. Shalala, 52 F.3d 213, 216 (9th Cir.1995). No deference is owed when an agency has not formulated an official interpretation of its regulation, but is merely advancing a litigation position. See Idaho Dep’t of Health & Welfare v. United States Dep’t of Energy, 959 F.2d 149, 153 (9th Cir.1992).

III.

Trident should be penalized only for a single violation. A remand is required to allow the district court to impose a lawful fine. We reverse and remand to the district court for imposition of a civil penalty not to exceed the statutory maximum amount of $25,000.

REVERSED and REMANDED.