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Bethlehem Steel Corp. v. Environmental Protection Agency

decided: February 4, 1982.


Before Aldisert, Rosenn and Weis, Circuit Judges.

Author: Weis


Parties to an agency proceeding generally must exhaust their administrative remedies before they can resort to the courts. In this case, a company that the Environmental Protection Agency charged with exceeding air pollution standards contends it should be excused from the exhaustion requirement. Since a statutory penalty accrues each day the alleged violation continues, the company fears that its potential financial liability may force it to accede to EPA rather than risk an unfavorable outcome after prolonged, good faith litigation. We do not consider this to be undue hardship because the sanction created by Congress was intended to take the profit out of pollution by recouping the economic benefit a firm obtains by violating Clean Air standards. Since the company has not yet completed proceedings before EPA, the petition for review will be dismissed as premature.

On February 2, 1981, EPA served Bethlehem Steel Company with a notice of noncompliance issued pursuant to § 120 of the Clean Air Act, 42 U.S.C. § 7420 (Supp.III 1979). The notice cited Bethlehem for violating a mass emission rate limitation and an opacity limitation at Precipitator No. 2, which is an air pollution control facility regulating the discharge of particulate from the company's sinter plant in Bethlehem, Pennsylvania. The emission standards, codified at 25 Pa. Code § 123.13(b) and § 123.41(l), were enacted by the Commonwealth of Pennsylvania as part of its federally approved State Implementation Plan in order to achieve compliance with national ambient air quality standards. 42 U.S.C. §§ 7409-7410.

EPA alleged that Bethlehem's sinter plant had violated the regulations on May 28 and September 10, 1980. In addition, the notice stated:

"It is the Agency's finding that sufficient action has not been taken by the Company at the subject facility to remedy the performance of the existing control devices as represented by the above referenced data. As a result of this inaction it is further concluded that such performance in violation of the stated Pennsylvania rules and regulations is continuing."

The notice informed the company that it must either submit a penalty calculation or file a petition for reconsideration within 45 days.

Bethlehem responded to EPA on February 27, 1981, with a letter captioned "Application For Agency Relief From The Issuance Of A Notice Of Noncompliance." Bethlehem asked for withdrawal of the notice because its issuance exceeded EPA's powers under § 120 of the Clean Air Act and its own regulations in five ways:

1. The notice is based on events which occurred before the effective date of the regulations implementing § 120 and therefore is an impermissible attempt to give them retroactive effect.

2. The statute's enforcement plan does not permit notices to be issued until 18 months after promulgation of the implementing regulations. Since the regulations were not published until July 28, 1980, compliance would not be required until January 28, 1982 at the earliest.

3. The notice was not issued within 30 days after discovery of noncompliance, as mandated by the statute.

4. The findings of noncompliance are not supported by the record to which the notice refers.

5. The notice conflicts with EPA's announcement that it would proceed first against sources that had never complied with the Clean Air Act.

EPA elected to treat Bethlehem's letter as a petition for reconsideration, and suggested that the company supplement its request with data about the compliance status of the sinter plant or its eligibility for an exemption. Bethlehem did so on April 7, 1981, and on July 17, 1981, the Regional Administrator of EPA denied Bethlehem's request to withdraw the notice of noncompliance. He did order a hearing, however, to decide whether the company's facility is violating applicable legal requirements and whether it is entitled to a de minimis exemption. We have not been informed of the progress of that hearing.

Without waiting for a response to its first letter, Bethlehem filed this petition for review on March 30, 1981. The company raises before us the same objections that it presented to EPA. The agency's threshold argument is that the petition should be ...

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