Petition for Writ of Certiorari — Marine Shale Processors, Inc. v. Environmental Protection Agency

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Court, U.S.

FILED

v) 96 430 SEP | 619%

No. 96-

In THE

Supreme Court of the United States

OCTOBER TERM, 1996

MARINE SHALE PROCESSORS, INC.,

- Petitioner,

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

CHRISTOPHER H. MARRARO K. Ertc GISLESON

JERROLD J. GANZFRIED DouGLas L. GRUNDMEYER

DARREN B, BERNHARD Counsel of Record

Howrey & SIMON CHAFFE, MCCALL, PHILLIPS,

1299 Pennsylvania Ave., N.W. ToLerR & Sarpy, L.L.P.

Washington, D.C, 20004 2300 Energy Centre

(202) 783-0800 1100 Poydras Street

New Orleans, LA 70163-2300

(504) 585-7000

it RECEIVED Russ M. HERMAN

SIDNEY COTLAR

SEP 16 1996 HERMAN, HERMAN, KATz

ae AND COTLAR

OFFICE OF IHE CLERK 820 O’Keefe Avenue

SUPREME COURT, U.S. New Orleans, LA 70113

(504) 581-4892

September 16, 1996 Counsel for Petitioner

WILSON - Erase PRINTING Co., Inc. - 789-0006 - WasHincTON, D.C. 20001

QUESTIONS PRESENTED

1. Whether Article II1 and the Seventh Amendment of

the United States Constitution permit a federal agency to

administratively adjudicate factual and legal issues in

direct conflict with a prior jury verdict and judgment of a

federal district court on the same issues in litigation that

the agency had previously initiated?

2. Whether the Fifth Amendment right to procedural

due process permits a federal administrative agency to

utilize as decisionmakers in an agency administrative pro-

ceeding on an application for an operating permit the

same officials who were actively litigating the identical

issues against the permit applicant in federal court?

(i)

LIST OF INTERESTED PERSONS

AND RULE 29.6 NOTATION

The parties to the proceeding below were petitioner,

Marine Shale Processors, Inc., and respondent, the United

States Environmental Protection Agency.

Petitioner certifies under Rule 29.6 that it has no

parent or nonwholly owned subsidiary companies.

TABLE OF CONTENTS

Page

QUBBTIONS PRESENTED .ncncccccccccsccicccscccsececcsscsecsosees i

LIST OF INTERESTED PERSONS AND RULE 29.6

NIT chance tetra Le oe ii

TABLE OF AUTHORITIES .................... bisiinceiakdbiliede’ iv

ag te ie a Ee CR 1

POUR PIIEII shoo ccacseesncecconds eesta tied 2

I URNA AD aca seis nankiiseclnuabaconndbciewe voici 2

INTRODUCTION AND STATEMENT OF THE

A. Regulatory Background .__.. ail 4

B. Prior District Court Proceedings... 5

C. Administrative Proceedings... ws bay

D. Fifth Circuit Proceedings ....................................... 10

REASONS FOR GRANTING THE PETITION 11

I. THE DECISION BELOW CONFLICTS WITH

CONSTITUTIONAL IMPERATIVES AND DE-

CISIONS OF THIS COURT BY PERMITTING

A FEDERAL AGENCY UNILATERALLY TO

REJECT FACTUAL AND LEGAL DETERMI-

NATIONS OF A FEDERAL COURT AND

i | SES ies nab 11

Il. THE COURTS OF APPEALS ARE IN CON-

FLICT ON THE QUESTION WHETHER AN

AGENCY MAY ASSIGN REGULATORY

ADJUDICATION FUNCTIONS TO THE

SAME OFFICIALS ACTIVELY LITIGATING

AGAINST A PARTY IN A RELATED EN-

FORCEMENT ACTTON ..................00.0.000020.0.0..- 16

I iia blentnciin celled Leisnhechabddiediesib-xcSosentsstbe ste 22

TABLE OF AUTHORITIES

CASES Page

Aetna Life Ins. Co. of Hartford, Conn. v. Haworth,

BOO U.S. 227 (1987) ....--------c-cececnerersenneeessenneneranenens 12, 13

Arnett v. Kennedy, 416 U.S. 134 CBOTE) -casecvencsncss 19

Beacon Theatres, Inc. v. Westover, 859 U.S. 500

C1 OGD) ..cinccarerconcsenecnnsesensves pine Ses ee ee ees 12

Bethlehem Steel Corp. v. U.S. E.P.A., 638 F.2d 994

(Tth Cir. 1980) .......-.-------ns--csseescsssssesssecenseceeees Ea ao

Blinder, Robinson & Co., Inc. v. S.E.C., 887 F.2d

1099 (D.C. Cir.), cert. denied, 488 U.S. 869

(19GB) 2. .n.....0cnececeseserneeaeensnenseenensenesee. vosedeatoes scbindialade 13

Bowsher v. Synar, 478 U.S. 714 (1986), quoting

Youngstown Sheet & Tube Co. v. Sawyer, 343

U.S. B79 (1952) -.....------------cecceeeeseeeneeneennneennnnneeee = 11

Dagnall v. Department of Highways, State o

Louisiana, 466 F.Supp. 245 (E.D. La. 1979),

vacated on other grounds, appeal dismissed, 631

F.2d 1195 (5th Cir. 1980) -......-...---------------- jaisehasks 13

Electomec Design & Development Co. v. N.L.R.B.,

409 F.2d 681 (9th Cir. 1969) -.........----------- 19

Goldberg v. Kelly, 397 U.S. 254 (3080) ...<..<.2.-.-- 19

Granfinanciera, S.A. ¥. Nordberg, 492 U.S. 33

CTD) ncaa nanan nnn cnnsnn ssn nnennnsonnsnvnnevonensenroneossnmsnsr tosses 12

Hayburn’s Case, 2 U.S. (2 Dali.) 408, 1 L.Ed. 436

(ATOR) a ..-.e-cesnsensnvcosensnveecersnserensenenseoserensaasuccnnnenazesens 11

Immigration & Naturalization Service v. Chadha,

462 U.S. 919 (1988) ........--------------------- Ses ECSERS 11

J. H. Rutter Rex Mfg. Co. v. N.L.R.B., 473 F.2d

223 (5th Cir.), cert. denied, 414 U.S. 822 (19738) .. 19

Kaoru Yamataya v. Fisher, 189 U.S. 86 (1908) ...... 21

Laird v. Tatum, 409 U.S. 824 (1972) ......----------.-- 19

Littlefield v. City of Afton, 785 F.2d 596 (8th Cir.

ROG) ananassae cap gedrcceeetanbihnnannssnenernonloresichdewcengesinte 20

Lytle v. Household Mfg., Inc., 494 U.S. 545 (1990) .. 12

Marbury v. Madison, 5 US. (1 Cranch) 137, 2

L.Ed. 60 (1808) .............-...-.---...02---- ae tie ha ae 13

Marine Shale Processors, Inc. v. U.S. E.P.A., 81

F.3d 1871 (5th Cir. 1996) ............--------------1enee passim

McClelland v. Andrus, 606 F.2d 1278 (D.C. Cir.

TABLE OF AUTHORITIES—Continued

Page

N.L.R.B. v. Rex Disposables, Div. of DHJ Indus-

tries, Inc., 494 F.2d 588 (5th Cir. 1974) ............. 19

N.L.R.B. v. Valley Mold Co., Inc., 530 F.2d 693 (6th

Cir.), cert. denied, 429 U.S. 824 (1976) ........... 18

Plaut v. Spendthrift Farm, Inc., —— US. ——,

115 S.Ct. 1447, 181 L.Ed.2d 328 (1995)................ 12,13

R.A. Holman & Co. v. S.E.C., 366 F.2d 446 (2d Cir.

1966), cert. denied, 389 U.S. 991 (1967) ............ a 19

Reid v. Covert, 354 U.S. 1 (1957) -~.......... dite distdindaes 21

Southern Co-op. Dev. Fund v. Driggers, 696 F. 2d

1847 (1ith Cir.), cert. denied, 463 U.S. 1208

| RE eit cies ntecinencemanesn anes uenesnenias 20

; Town of Deerfield, N.Y. v. F.C.C., 992 F.2d 420

(2d Cir. 1998) ......... ina aches acuptcaeeiiamiciecbean cae 13

Tull v. United States, 481 U.S. 412 (1987) —......... 12

United States v. Stauffer Chemical Co., 464 U.S.

1 ks BRIERE Nd Se SES ER dino oe NO eenonCe oe 13

Withrow v. Larkin, 421 U.S. 35 CIT sic itatcGiico ce 19

Wolff v. McDonnell, 418 U.S. 539 (1974)........ aiid 21

) Wong Yang Sung v. McGrath, 339 U.S. 33 (1950) .. 19

CONSTITUTIONAL PROVISIONS/STATUTES/

RULES

BO CR. & TDGD (ERGO anise cians nk asics cree Rete en 2

40 C.F.R. § 124.3(c) (1983)... Laaincaioetiadaiatiaiaas 5

MGT ic Re CD pein onc ivrecserscencinsesion 4

40 C.F.R. § 260.10 (1985) ...........................-. 2, 4, 5, 6, 8, 9, 15

aie ae a Beton ieee crecieennecne 2

Pee AMD ORE) 4

40 C.F.R. § 266.20 (1985) ........ SSE sD RS 2

40 C.F.R. § 266.20 (b) (1985) ...... Se ovioediid sabe ohcnpiaiel 4

SC Fe ee SOOO ike 2,5

Popes AS >. 8 Fb.) feeemaenn a mnnsenaresererer sees 2,5

Bip. ose | Le: y | Eau sib lendacbeiaiaainaas 2

Rib Toe fo” yt piteechisueermeusaraeenice surcemmnr worsen 2, 10

SEU EEA Eee Ce oo ites 2

PbS RM 1k peannet a Seenn oe eremnnn cetine Taeerar nan oe 10

4B UA. 5 GORGE) OR) anna see 20

Ferree ee eee

TABLE OF AUTHORITIES—Continued

Page

G6 UES Be en Ee etic eettartcintesenetticneiennnntos 20

PF Ris Foe f | Ys + ff one ie is 2

46 U.S.C. § 6976(b) (RCRA) .......................... Saukeaaial 2

Cree GRMN IRIE, BIE cnencsccnacapieitiokasien PRE RARE ts ..8, 11, 18, 16

if Gs & ene RS

U.S. Const. amend. VII ................. eb keereres ti:

a eee ere —

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

No. 96-

MARINE SHALE PROCESSORS, INC.,

7 Petitioner,

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioner, Marine Shale Processors, Inc. (“MSP”), re-

spectfully asks this Court to grant certiorari to review

the judgment and opinion of the United States Court of

Appeals for the Fifth Circuit in this case.

OPINIONS BELOW

The opinion of the Fifth Circuit, No. 95-60228, is re-

ported at 81 F.3d 1371 and reprinted in the appendix

hereto, pp. la-29a, infra. A jury verdict, judgments,

and orders and reasons of the United States District Court

for the Eastern District of Louisiana in a related proceed-

ing filed by the EPA, which are necessary to ascertain

the grounds of the decision under review, EPA’s state-

ment of the basis for the permit denial dated September

15, 1994, the Environmental Appeals Board’s final deci-

sion and order dated March 17, 1995 affirming the permit

denial, and EPA’s final agency action are reprinted at

pp. 30a-206a, infra.

JURISDICTION

The Fifth Circuit entered its judgment on April 18,

1996 (Appendix, 209a). The timely petition for rehear-

ing was denied on June 18, 1996 (Appendix, 207a-208a).

This Court’s jurisdiction is invoked under 28 U.S.C.

§ 1254(1).

STATUTES INVOLVED

This case implicates Article III and the Fifth and Sev-

enth Amendments of the Constitution of the United States,

5 U.S.C. §§ 702, 704, and 706 (the Administrative

Procedure Act (“APA”)), 46 U.S.C. §§ 6925 and

6976(b) (the Resource Conservation and Recovery Act

(“RCRA”)), and EPA regulations adopted pursuant to

the RCRA, including 40 C.F.R. §§ 124.3 (1983), 260.10

(1985), 261.1 (1985), 266.20 (1985), 266.100

(1991), and 270.10 (1991). The pertinent texts of these

provisions are set forth in the appendix at pp. 210a-239a,

infra.

INTRODUCTION AND STATEMENT OF THE CASE

This case involves extraordinary overreaching by a fed-

eral administrative agency in violation of the doctrine of

separation of powers and the constitutional rights to trial

by jury and due process. These matters of constitutional

dimension affect not only the parties in this proceeding,

but also the entire landscape of federal administrative re-

view. This petition presents issues of truly national mag-

nitude on important questions of federal law that this

Court should settle for the guidance of all administrative

agencies and federal courts.

MSP asks this Court to decide core issues that are

basic to the interaction between federal agencies and fed-

eral courts. EPA filed suit against MSP and asked a

SE eh AON SAR Ra VITRA t 0 or wery

ee eT

federal court and jury to declare MSP to be the opezator

of an “incinerator” without a permit. The Article III

court and the Seventh Amendment jury refused to do so,

finding instead that MSP operated an “aggregate kiln”

that produced “aggregate.” EPA assigned the same per-

sonnel who had been involved in the litigation to consider

MSP’s administrative application for a permit that EPA

regulations afford an operator of an aggregate kiln. EPA

denied the permit application, specifically disagreeing

with the jury and declaring that MSP was not an aggre-

gate kiln but an “incinerator”, the status of MSP that the

agency has wanted all along.

Article III, the Seventh Amendment, and fundamental

principles of due process do not permit such an abuse of

power, but the Fifth Circuit affirmed the EPA’s decision.

Under the Fifth Circuit’s analysis, the same federal admin-

istrators who litigated unsuccessfully in the federal court

can reach a self-serving administrative result in direct

conflict with a jury’s findings on the same issue.

This case presents certworthy questions at the heart of

the basic structure of our tripartite government. Federal

agencies must be scrupulous in separating their enforce-

ment and adjudicatory functions. They must also respect

a citizen’s right to trial by jury under the Seventh

Amendment, which provides that “no fact tried by a jury,

shall be otherwise reexamined in any Court of the United

States, than according to the rules of the common law.”

Administrative agencies have power to determine privileges

and permits within the limits of their statutory authority,

and courts may defer to them in proper cases. But, there

is no wisdom in allowing an administrative agency specifi-

cally to overrule a jury’s findings of a citizen’s status, a

declaration that the administrative agency had itself re-

quested in the first place. Furthermore, there is no con-

stitutional basis under due process for allowing an agency

to set itself up as prosecutor and judge, assign the same

agency personnel to decide the permit application who

had litigated the case in federal court, and deny the permit

by reaching conclusions that contradict the jury’s verdict

on the same issue.

In this case, the Fifth Circuit has reached a result in

conflict with decisions of this Court and the Seventh Cir-

cuit on these very points. This Court should grant re-

view to address these fundamental structural issues involv-

ing the delicate balance of power between courts and ad-

ministrative agencies and the constitutional rights of

regulated citizens.

A. Regulatory Background

Beginning in 1980, EPA promulgated a series of regu-

lations governing the treatment, storage, and disposal of

hazardous waste under RCRA. The initial 1980 rules

required permits for “incinerators”, which EPA defined

as devices using “controlled flame combustion, the pri-

mary purpose of which is to thermally break-down (i.¢.,

destroy) hazardous waste.” 40 C.F.R. § 260.10 (1986).

Facilities that recycled—as opposed to destroyed—

hazardous waste were not subject to permitting require-

ments.

On January 4, 1985, EPA issued amended recycling

rules defining the term “recycle” as material that is “used,

reused, or reclaimed”. 40 C.F.R. § 261.1(c)(7) (1985).

At the same time, EPA promulgated a rule exempting a

“product” from further RCRA regulation if it was pro-

duced for the general public’s use and if the recyclable

materials used to produce it underwent a “chemical reac-

tion” during production “so as to become inseparable by

physical means”. 40 C.F.R. § 266.20(b) (1985). EPA

further defined a new category of thermal combustion de-

vices called “industrial furnaces.” 40 C.F.R. § 260.10

(1985). This term encompassed “any of the following en-

closed devices that are integral components of manufactur-

ing processes and that use thermal treatment to accom-

plish recovery of materials or energy.” 40 C.F.R. § 260.10

(1985). The definition enumerated twelve devices, in-

cluding “[a]ggregate kilns.” /d. A thirteenth category on

the list included “[s]uch other devices” as EPA’s adminis-

trator may add on the basis of specified and appropriate

factors. /d.

Since July 31, 1985, MSP has operated an aggregate

kiln system producing aggregate products in Amelia,

Louisiana. MSP has always contended that as a recycler

producing a product it is therefore exempt from further

RCRA regulation as described above. MSP always has

denied that it operates an “incinerator”, maintaining in-

stead that it operates an “industrial furnace,” specifically

an “aggregate kiln.”

B. Prior District Court Proceedings

EPA disagreed with MSP and on June 14, 1990 filed

suit in the United States District Court for the Western

District of Louisiana in United States of America v. Ma-

rine Shale Processors, Inc., Civil Action No. 90-1240

(E-14). EPA alleged in essence that MSP did not oper-

ate an aggregate kiln or industrial furnace, but rather

operated a regulated incinerator without a necessary

permit.

After it had filed its lawsuit but before trial began, EPA

promulgated new rules in 1991 requiring that all devices

using thermal combustion to treat hazardous waste must

have either an “incinerator permit” or a “boiler and in-

dustrial furnace permit” (“BIF permit”) by August 21,

1991. To qualify for a permit to burn hazardous waste

in boilers and industrial furnaces under the BIF permit,

a facility was required to (1) meet the definitional quali-

fications of an industrial furnace, and (2) satisfy the

specific environmental control and emissions standards.

40 C.F.R. §§ 124.3(c), 266.100, and 270.10. As noted

earlier, under 40 C.F.R. § 260.10, one of the twelve defi-

nitions and examples of an “industrial furance” is an “ag-

gregate kiln”.

In compliance with these rules, MSP filed a BIF permit

application in May 1991, stating as it has since its incep-

tion in 1985 that it is an aggregate kiln and therefore an

industrial furnace. EPA responded to the application by

recognizing the supremacy of the district court and stating

that it would await the district court’s resolution of the

question whether MSP was an incinerator or an aggregate

kiln:

It is the EPA’s position that the MSP kiln is a haz-

ardous waste incinerator, not an industrial furnace.

However, EPA will continue to process MSP’s indus-

trial furnace Permit Application as it would for any

other facility until the issue of MSP’s status is re-

solved by the Court.

(EAB-66 (emphasis added) ). Consistent with that view,

EPA took no final action on the application for more

than three and one-half years.

MSP’s status as an aggregate kiln was the principal

issue to be resolved in federal district court. EPA moved

for summary judgment, arguing that neither MSP’s

oxidizers nor its rotary kiln was an industrial furnace.

EAB-83, Ex. | at 2. EPA identified as contested issues

for trial whether MSP should be classified as an industrial

furnace, whether MSP was the manufacturer of aggre-

gate, and whether MSP’s oxidizers and kiln met the defini-

tion of an aggregate kiln under 40 C.F.R. § 260.10. Pre-

trial Order at 34, 59. EPA told the jury that “this case

is all about . . . whether or not this company, this plant,

is manufacturing anything, whether or not it is a manu-

facturing process. ...” E-1, (4/18/94) 6.

The jury trial focused squarely on the question whether

MSP was an incinerator or an aggregate kiln. The evi-

dence, arguments of counsel, and the jury instructions all

highlight that very point. Both EPA and MSP called

experts, all of whom testified about the differences and

commonalities between MSP’s kiln system, incinerators,

and other aggregate kilns. E-1l: V.6:35 (4/20/94);

V.7:36-40 (4/20/94); V.15:5-8 (4/26/94); E-l: V.9:32,

34-35, 52-65 (4/21/94); V.46:18, 33, 36-37 (5/16/94);

E-1: V.25:9 (5/4/94); V.30:18, 22, 36-37, 41 (5/5/94);

V.33:36, 105-07 (5/6/94); V.34:22, 54-55 (5/9/94).

Numerous witnesses, including MSP’s customers, testified

concerning the actual and potential commercial use of

MSP’s aggregate. E-1: V.35:9, 16-32 (5/9/94); V.32:41-

43 (5/6/94); V.30:58, 63, 78-79 (5/5/94); V.28:82

(5/5/94); V.34:6-7 (5/9/94); V.29:4-11 (5/5/94);

V.28:52-61 (5/5/94); V.29:30, 35, 56-61 (5/5/94).

MSP introduced into evidence EPA’s own prelitigation

study conducted in March 1991, which found that MSP’s

aggregate is a viable construction material. D-317. In

closing argument, EPA focused on “the question that

the Government has the burden on, whether Marine

Shale’s incinerator, [as] we call it, is an aggregate kiln.

...” B-1, V.54:19 (5/19/94).

The district court instructed the jury on the issue of

what constitutes an aggregate kiln and asked the jury to

resolve three principal issues: (1) whether MSP was en-

titled to the recycling exemption, (2) whether MSP’s ag-

gregate satisfied the product rule’s requirements, and (3)

whether MSP was an incinerator or an aggregate kiln

furnace. On May 24, 1994, the jury answered two pivotal

interrogatories, Numbers 10 and 13, in MSP’s favor:

Is MSP’s rotary kiln an aggregate kiln? Yes.

Are the rotary kiln, Oxidizers Nos. | and 2, and

Slag box part of a kiln system that produces aggre-

gate? Yes.

(EAB-9, Ex. 14; Appendix, 32a). At a hearing on

motions for judgment as a matter of law, the district judge

respected the jury’s findings:

{H]ere, as often is the case, we are presented with

mixed facts and legal issues, and I defer to the jury’s

conclusions.

The legal issues, of course, include the meaning

of the terms used in the statute and regulations. For

example, what does “aggregate kiln” mean? These

legal issues are mixed with fact issues such as the

facts involved in the method by which MSP operates

its facility, the fact issue of whether the industry in-

volved would consider this to be an aggregate kiln,

et cetera.

I conclude, applying the regular test that has been

repeated many, many times in appellate decisions,

that there is sufficient evidence for a reasonable trier

of fact to resolve the issues as the jury did.

To state it differently, after considering all the evi-

dence and reasonable inferences therefrom. I con-

clude that a reasonable jury could arrive at the results

which this one did with respect to Interrogatories 10,

11, 12 and 13.

(E-1, V.II, 17-19, 06/15/94 (emphasis added). Appen-

dix, 35a). In subsequent orders and reasons and judg-

ments, the district judge recognized and adopted the jury’s

findings that MSP was an aggregate kiln (Appendix, 39a-

59a).

C. Administrative Proceedings

Notwithstanding the jury’s findings and the district

court’s orders adopting them, only three months later, on

September 15, 1994, EPA ruled on the identical record

and evidence that MSP is not an aggregate kiln and de-

nied MSP’s BIF permit application. E-27 (Appendix,

60a-129a). Although the jury found that MSP oper-

ates an aggregate kiln, EPA denied the permit because it

“determined” that “MSP does not meet the definition of

aggregate kiln and, therefore, does not meet the definition

of industrial furnace at 40 C.F.R. § 260.10.” EAB-37

at 1 (Appendix, 64a). EPA further rejected the dis-

trict court's ruling that a kiln system qualifies as an indus-

trial furnace, declaring that the district court “misunder-

stood” an EPA memorandum on this issue. EAB-37 at 2

(Appendix, 66a, 116a).

The same officials who were active in the genesis and

prosecution of EPA’s unsuccessful litigation in federal

district court over the same adjudicative issues were the

authors of the agency's findings of fact and conclusions

of law denying MSP’s permit application. Dr. Allyn

Davis, Director of EPA Region VI’s Hazardous Waste

Management Division, was instrumental in EPA’s decision

to sue MSP in 1990. EPA listed Davis, Terry Sykes of

the Office of Counsel of U.S. EPA Region VI, and Steven

Silverman of the EPA’s Office of General Counsel as trial

witnesses against MSP (Pre-Trial Order, at 413, 431, and

433). Silverman and Davis provided deposition testimony;

and Silverman was listed as an expert witness and authored

an expert report used by the Government against MSP

[D-Box 2 (1/31/94); EAB-3, Supp.Ex. 1; B-1]. Sykes

served as trial counsel and argued on EPA’s behalf against

MSP before the district court. Despite playing an active

and principal role in the federal enforcement action from

its inception in 1990, Sykes authored the EPA’s findings

of fact and conclusions of law in the BIF permit proceed-

ing. This role directly conflicted with Sykes’ statement to

the district court in the enforcement case that she was

completely walled-off from the BIF Permit proceeding

(E-1; Hearing Tr., 9/8/83, at 38).

MSP appealed the Region 6 decision to the Environ-

mental Appeals Board (“EAB”). Sykes and Silverman

represented EPA before the EAB at oral argument

(EAB-81). The EAB affirmed EPA’s denial of MSP’s

permit and aggregate kiln status (Appendix, 130a-201a).

Despite substantial record evidence, which the jury had

considered, that MSP’s aggregate was suitable for numer-

ous commercial purposes, the EAB held that MSP does

not produce “commercial-grade aggregate” and cannot be

an “aggregate kiln” or considered an “industrial furnace”

within the meaning of 40 C.F.R. § 260.10. EAB-89 at

2-3. (Appendix, 150a-151a). EAB further recognized

that EPA had committed “a mistake in judgment” by

allowing a member of the civil litigation enforcement

team to write the agency's findings of fact and conclu-

sions of law on the permit denial, but held that this

improper commingling of adjudicative and prosecutorial

functions did not violate MSP’s due process rights. /d.

at 44-45. (Appendix, 191a-192a).

D. Fifth Circuit Proceedings

Invoking jurisdiction under 42 U.S.C. § 6976(b), the

RCRA, and 5 U.S.C. §§ 704-706, the APA, MSP timely

filed a petition for review in the United States Court of

Appeals for the Fifth Circuit from the EPA's final agency

action denying MSP’s application for a BIF permit. The

Fifth Circuit affirmed (Appendix, la-29a; 81 F.3d

at 1371-86). The court of appeals recognized that “EPA

rested upon its finding that MSP’s rotary kiln system did

‘not meet the definition of aggregate kiln and, therefore,

does not meet the definition of industrial furnace’”, that

“EPA has, to be sure, disagreed with several of the con-

clusions of the district court”, and that “[t]he permit ap-

plication and the district court litigation involve common

issues.” (Appendix, 4a and 7a; 81 F.3d at 1375 and

1377). But the appellate court rejected MSP’s arguments

based on Article III, the Seventh Amendment, and prin-

ciples of collateral estoppel (Appendix, 5a-15a; 81 F.3d

at 1375-80). The Fifth Circuit found no due process

violation through EPA’s failure to prevent its personnel

who litigated in the district court action from participat-

ing in the permit denial process, despite recognizing Dr.

Davis’ role in overseeing both the enforcement and per-

mitting issues in Region VI of the EPA and concluding

that “Ms. Sykes’ role in the process was less than ideal

and the EAB correctly labeled it a mistake in judgment.”

(Appendix, 26a; 81 F.3d at 1385).

REASONS FOR GRANTING THE PETITION

I. THE DECISION BELOW CONFLICTS WITH CON-

STITUTIONAL IMPERATIVES AND DECISIONS

OF THIS COURT BY PERMITTING A FEDERAL

AGENCY UNILATERALLY TO REJECT FACTUAL

AND LEGAL DETERMINATIONS OF A FEDERAL

COURT AND JURY

The Constitution separates and divides the powers of

government in order to “diffus[e] power the better to

secure liberty.” Bowsher v. Synar, 478 U.S. 714, 721

(1986), quoting Youngstown Sheet & Tube Co. v. Saw-

yer, 343 U.S. 579, 635 (1952) (Jackson, J., concurring).

This constitutional division seeks “to assure, as nearly as

possible, that each branch of government would confine

itself to its assigned responsibility.” Immigration & Nat-

uralization Service v. Chadha, 462 U.S. 919, 951 (1983).

EPA has overstepped the limits of its power in ways that

call into question the appropriate roles of federal agen-

cies and federal courts. Accordingly, this case is an es-

pecially suitable vehicle for this Court to define the con-

stitutional limits on an administrative agency’s attempt

to usurp the role of the judiciary and jury. Unless the

decision below is reversed, the EPA, SEC, FDA, FTC,

or any other federal agency with enforcement and regula-

tory permitting powers can litigate and lose an issue be-

fore a jury in federal court, and then, unhappy with that

result, simply disregard the jury’s verdict with impunity

and write an administrative opinion that the agency

wanted all along on the very same issue.

The decision below conflicts with this Court’s decisions

under several constitutional provisions. Under Article

III, the controversy that EPA voluntarily brought to the

district court in 1990-—whether MSP produces aggregate

in an aggregate kiln—must be decided by the district

court and not unilaterally by the administrative agency.

See Hayburn’s Case, 2 U.S. (2 Dall.) 408, 1 L.Ed. 436

(1792); Plaut v. Spendthrift Farm, Inc., US. ;

115 S.Ct. 1447, 131 L.Ed.2d 328, 346-47 (1995); Aetna

Life Ins. Co. of Hartford, Conn. v. Haworth, 300 USS.

227, 240-41 (1937). Having asked the district court to

resolve the controversy, EPA cannot anoint itself as the

judge of its own case against MSP.

Moreover, the Seventh Amendment to the U.S. Con-

stitution directly prohibits the agency action that the deci-

sion below confirms:

_. . the right of trial by jury shall be preserved,

and no fact tried by a jury, shall be otherwise re-

examined in any Court of the United States, than

according to the rules of the common law.

(Emphasis added). EPA’s lawsuit asking the federal dis-

trict court to decide whether MSP operates an aggregate

kiln necessarily implicates MSP’s Seventh Amendment

right to trial by jury. Tull v. United States, 481 U.S. 412,

425 (1987). Once the Seventh Amendment is activated

on a factual issue, a party is entitled to have the question

resolved by a jury. Lytle v. Household Mfg., Inc., 49%

U.S. 545, 550-53 (1990). “Congress cannot eliminate a

party’s Seventh Amendment right to a jury trial merely

by relabeling the cause of action to which it attaches and

placing exclusive jurisdiction in an administrative agency.

_. 2” Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 61

(1989). EPA’s attempt to distinguish its adjudicative

function as a “permit proceeding” is precisely the type of

relabeling that this Court condemned in Granfinanciera.

If Congress lacks constitutional authority to strip a party

of those rights, a fortiori an agency lacks such authority.

The same constitutional protection precludes an agency

from usurping the role of the jury on other aspects of the

case that remain pending in the district court. Cf. Beacon

Theatres, Inc. v. Westover, 359 U.S. 500, 508 (1959)

(judicial determinations on equitable claims must await

jury verdicts). The constitutional infirmity in the deci-

sion below is thus one that embraces all federal agencies.

This Court has frequently had to clarify the binding

effect on the government of adverse judicial rulings. See

e.g., United States v. Stauffer Chemical Co., 464 U.S

165 166-67 (1984) (government collaterally estopped

from relitigating “the statutory issue” because “[the gov-

ernment] ha[d] already litigated that question against

Stauffer and lost”). See also Blinder, Robinson & Co.,

Inc. v. S.E.C., 837 F.2d 1099, 1107 (D.C. Cir.), cert.

denied, 488 U.S. 869 (1988) (agency not entitled to

“a second bite at the apple” after it has “failed to con-

vince an Article III judge of the merits of a particular

remedy”). Unless this Court exercises its certiorari juris-

diction and reverses, the decision below creates a road

map giving any federal agency “a ‘no-lose’ posture in this

and all similar cases. If the jury resolves factual issues

in favor of [the agency], the [agency] wins; if against

[the agency],” the agency simply overturns the decisions

in its own administrative proceeding. Dagnall v. Depart-

ment of Highways, State of Louisiana, 466 F.Supp. 245,

248 (E.D.La. 1979), vacated on other grounds, appeal

dismissed, 631 F.2d 1195 (Sth Cir. 1980).

Both the BIF permit proceeding and the district court

enforcement action shared a single major issue: Was

MSP an aggregate kiln? Each proceeding had a single

controversy and issue: the status of MSP. The jury’s

determination of MSP’s status as an aggregate kiln should

have been conclusive in the EPA permit proceedings for

future operations. If, as the jury found, MSP is an aggre-

gate kiln, then MSP’s past operations were lawful and

MSP’s facility is qualified for a BIF permit for future

operations. The fact that two proceedings may be neces-

sary does not mean that two proceedings have a different

question or controversy. See Plaut v. Spendthrift Farm,

Inc., supra; Aetna Life Ins. Co. of Hartford, Conn. v.

Haworth, supra; Marbury v. Madison, 5 U.S. (1 Cranch)

137, 2 L.Ed. 60 (1803): Hayburn’s Case, supra; Town

of Deerfield, N.Y. v. F.C.C., 992 F.2d 420, 427-30 (2d

Cir. 1993).

Consistent with the decision below, a convicted felon,

who administratively contests his resultant inability to

vote or obtain a firearm permit, could argue that his prior

conviction resolved only his prior acts and that subsequent

administrative proceedings to obtain a permit to carry a

firearm or a voter’s registration card (which govern his

future conduct, not his past) are separate and different.

The clear and simple response is that his status as a con-

victed felon, while determined in a proceeding relative to

past conduct, is conclusive of his future entitlements of

rights and permits. So too, the single decision that MSP

had the status of an aggregate kiln was common to both

the district court and EPA proceedings. In its orders of

June 20, 1994 and August 30, 1994 in the proceedings

initiated by the EPA, the district court adopted the jury’s

findings that MSP was an aggregate kiln producing aggre-

gate. Thereafter, in September, 1994, with exactly the

same evidence, witnesses, and issues. EPA in effect over-

ruled the lower court’s finding of status and denied MSP’s

application for a BIF permit, claiming MSP was not an

aggregate kiln.

By initially failing to recognize that the single con-

troversy of MSP’s status determines both the court and

administrative proceedings, the Fifth Circuit stated that

a single proceeding could not resolve both the permit

application and the lawsuit:

In this case, in contrast, the district court may not

grant a permit, and the adjudicatory arm of EPA

may not grant the relief sought in EPA’s district

court complaint. A single proceeding could not re-

solve both issues.

(Appendix, 11a; 81 F.3d at 1379). Yet, a single

proceeding did and could decide the single determinative

issue in both: the status of MSP as an aggregate kiln.

Having resolved that controversy, the district court’s deci-

sion should also automatically resolve the permit proceed-

ings. Although the permit proceedings certainly involved

other issues besides MSP’s status as an aggregate kiln,

there is still simply no way the EPA could have denied

MSP its permit if it abided by the district court’s finding

that MSP was indeed an aggregate kiln. EPA in its

advocacy may say otherwise, but the regulations are

crystal clear that an aggregate kiln is an industrial furnace

entitled to the status of a BIF.

The Fifth Circuit properly observed that 40 C.F.R.

§ 260.10 defines industrial furnace as “any of the follow-

ing enclosed devices that are integral components of

manufacturing processes and that use thermal treatment

to accomplish recovery of materials or energy”, and that

the definition lists a series of twelve devices by name,

referred to as the “twelve apostles” in both the district

court and the Fifth Circuit (Appendix, 12a; 81 F.3d at

1379). “Aggregate kilns” are one of the twelve apostles.

The Fifth Circuit also properly noted:

As applied to this case, then, section 260.10 requires

EPA to grant MSP a permit if Marine Shale’s kiln is

(1) an aggregate kiln, (2) that is an integral com-

ponent of a manufacturing process, and (3) that uses

thermal treatment to accomplish recovery of mate-

rials or energy.

(Appendix, 12a; 81 F.3d at 1379). That should have

ended the inquiry. But the Fifth Circuit then focused

upon paragraph 13 of the definition of “industrial furnace”

in Section 260.10, which allows the EPA to add other

devices to the list of twelve. The court of appeals specifi-

cally focused on the first of the supplemental five factors

—“[t]he design and use of the device primarily to accom-

plish recovery of material products”. The error in con-

sidering paragraph 13 is that once a device is found to

be one of the “twelve apostles”, neither the EPA nor the

Fifth Circuit should ever reach paragraph 13. That is,

paragraph 13 is not an additional requirement that one

of the 12 apostles must meet; paragraph 13 applies only

if you are not one of the twelve apostles and want to

become a thirteenth.

The ramifications of EPA’s flat rejection of the jury

verdicts are magnified by the fact that the record in the

BIF permit proceeding was identical to the record before

the jury in the enforcement proceeding. The exact same

experts relied upon by the EPA had appeared before the

district court and jury a few weeks earlier; the exact same

documents that were submitted to the EPA had been sub-

mitted to the district court and the jury; and the district

court and jury personally “eyeballed” and made credibility

decisions on the exact same experts who “appeared” only

on paper in EPA’s office in Dallas, Texas. Once the dis-

trict court and jury assessed these experts’ opinions in the

crucible of cross-examination, the EPA staff cannot there-

after nullify the decision.

In short, the decision below condones a dangerous in-

cursion of the Executive Branch into the province of a

federal jury. Accordingly, this Court’s review is fully

warranted.

II. THE COURTS OF APPEALS ARE IN CONFLICT ON

THE QUESTION WHETHER AN AGENCY MAY

ASSIGN REGULATORY ADJUDICATION FUNC-

TIONS TO THE SAME OFFICIALS ACTIVELY

LITIGATING AGAINST A PARTY IN A RELATED

ENFORCEMENT ACTION

The reasons for this Court to grant certiorari are espe-

cially compelling in this case because EPA used the same

personnel who had actively litigated the suit in federal

court to decide the administrative permit application.

EPA not only violated Article III and the Seventh Amend-

ment by usurping the federal court and jury’s functions,

but compounded the injustice by infringing on funda-

mental principles of due process in direct conflict with

decisions from this Court and the Seventh Circuit. This

case presents an issue at the heart of administrative

staffing and decisionmaking that this Court should

address.

EPA appointed the same key EPA enforcement person-

nel to decide the permit application and write and finalize

the agency’s findings of fact and conclusions of law while

they were actively litigating the identical issues against

MSP in federal court. The final denial of MSP’s permit

by EPA occurred literally within days of the August 30,

1994 judgment of the di-trict court. The application

rested for mere hours on the desk of the deciding official,

Allyn Davis (RE, Vol. 9, pp. 990). The sheer volume

of the administrative record (which included the entire

trial record) precluded Davis from applying anything but

his oft-proclaimed, previously entrenched view adverse to

MSP.

EPA publicly announced its position that MSP is an

“incinerator” and not an aggregate kiln industrial furnace

when it filed its district court complaint in 1990. Davis

was the Region VI official responsible for deciding to

bring the district court action. EPA affirmed his public

commitment to its case by listing him as a trial witness

(Pre-Trial Order, at 413). He continually reiterated his

set views adverse to MSP in his 1991 initial public letter

responding to the BIF application (EAB-66) and in sub-

sequent deposition testimony (EAB-3, Supp. Ex. 1). At

his July 1993 deposition in the enforcement litigation,

Davis repeatedly admitted that he had conclusively de-

cided that MSP is not an industrial furnace by 1986,

eight years before EPA’s purported “review” of the BIF

administrative record and Davis’ adjudicative decision

that MSP was an incinerator (EAB-3, Supp. Ex. 1 at

54, and 36-37). Having affirmed his personal stake in

and commitment to EPA’s formal litigation positions,

Davis was precluded from any role in the BIF permit

application, much less pivotal decisionmaking responsi-

bility.

Furthermore, Terry Sykes, an enforcement attorney for

EPA in the district court proceeding, wrote the draft de-

cision for the EPA in the BIF permit proceeding. The

Fifth Circuit observed, “Ms. Sykes was one of the United

States’ attorneys in the enforcement action before trial and

early in the trial itself.” (Appendix, 25a; 81 F.3d at

1385). Indeed, Sykes was at the 1991 preliminary injunc-

tion hearing, attended numerous depositions thereafter,

and participated in the district court trial throughout the

entire proceedings. At times during the trial, Sykes was

the only government attorney present to represent the

United States. Trial Tr., Vol. 57, pp. 10-19, 31-32,

5/20/94. A few short weeks later, after the jury returned

verdicts against the government, the EPA draft opinion

she wrote became final. All of this occurred after Sykes

represented to the court that as an enforcement attorney

she was “walled off” from the permitting process (Tr.

9/8/93 at 38).

In allowing such commingling of prosecutorial and

adjudicatory functions, the decision below directly con-

flicts with the Seventh Circuit’s decision in Bethlehem

Steel Corp. v. U.S. E.P.A., 638 F.2d 994 (7th Cir.

1980). In Bethlehem, attorneys “who were in charge of

the ongoing enforcement proceedings against Bethlehem”

were also the “attorneys principally in charge of reviewing

and recommending a disposition of a [delayed compliance

order]” within the agency’s administrative process. 638

F.2d at 1008. In addition, the administrative decision

was “substantially identical to the language used in a

memorandum written by the lead EPA enforcement attor-

ney.” /d. at 1010. The Seventh Circuit concluded that

the joint prosecutorial/adjudicatorial roles played by the

attorneys “cast a shadow over, at least, the appearance of

fairness in the Agency's review procedures. .. .” /d.'

1 The infirmity of the decision below is all the more manifest

because, at the very least, MSP made a prima facie showing of bias

and prejudice that entitled it to discover the identities and roles

of the members of the decisionmaking body in the denial of MSP’s

BIF permit application. A federal agency is “bound to ensure that

its procedures meet due process requirements. Therefore, discovery

must be granted if in the particular situation a refusal to do so

would prejudice a party [so] as to deny him due process.” McClel-

land v. Andrus, 606 F.2d 1278, 1286 (D.C. Cir. 1979); N.L.R.B. v.

Valley Mold Co., Inc., 580 F.2d 698 (6th Cir), cert. denied, 429

The decision in Bethlehem Steel is consistent with this

Court’s repeated admonition that an agency’s decisionmaker

must be unbiased and impartial. Withrow v. Larkin, 421

U.S. 35, 46-47 (1975); Goldberg v. Kelly, 397 U.S. 254,

271 (1970); Wong Yang Sung v. McGrath, 339 US. 33,

50 (1950). A decisionmaker’s disqualification is automat-

ically warranted “in any case in which he has a substan-

tial interest, has been of counsel, [or] is a material wit-

ness... .” Laird v. Tatum, 409 U.S. 824, 828 (1972)

(citation omitted). Even more fundamentally, the Con-

stitution requires that “no man shall be a judge in his

own cause.” Arnett v. Kennedy, 416 U.S. 134, 197

(1974) (quoting Dr. Bonham’s Case, 77 Eng. Rep. 646,

652 (1610)). Accordingly, this case provides an oppor-

tunity for this Court to resolve a recurring issue that has

broad application to all agencies.

Davis, Silverman, and Sykes certainly do not qualify

as unbiased and impartial administrators in this case.

Davis spearheaded EPA’s efforts to sue MSP. Sykes wrote

the enforcement referral. Sykes, Silverman, and Davis

were all listed by EPA as trial witnesses against MSP.

Silverman and Davis provided deposition testimony, and

Silverman authored an expert report used by the Govern-

ment against MSP. Sykes served as trial counsel and

argued on EPA’s behalf against MSP before the district

court. So clear was the impropriety of Sykes’ having any

U.S. 824 (1976); J. H. Rutter Rex Mfg. Co. v. N.L.R.B., 473 F.2d

223 (5th Cir.), cert. denied, 414 U.S. 822 (1973); and Electomec

Design & Development Co. v. N.L.R.B., 409 F.2d 631 (9th Cir.

1969). See also N.L.R.B. v. Rex Disposables, Div. of DHJ Indus-

tries, Inc., 494 F.2d 588, 592 (5th Cir. 1974). Indeed, the refusal

to divulge information about the roles of these individuals in the

denial of MSP’s BIF permit “would be an unfair restriction of an

inquiry into possible disqualification.” See R.A. Holman & Co. v.

S.E.C., 366 F.2d 446, 453 (2d Cir. 1966), cert. denied, 389 U.S. 991

(1967). In conflict with all of these authorities, the Fifth Circuit

did not even remand the case to permit discovery into the potential

bias of the decisionmakers.

role in the permit proceeding that EPA initially barred

her completely from any participation. Yet, the agency

breached that ethical wall when it assigned her to write

its findings of fact and conclusions of law denying MSP’s

BIF application. The participation of these key EPA per-

sonnel in both the court and administrative proceedings

goes beyond a mere appearance of bias. It refutes any

presumption of an administrator's good faith conduct.

This Court should grant certiorari to review this denial

of procedural due process that affects the basic integrity

of administrative review.”

2 Furthermore, EPA violated substantive due process by denying

the permit application under its unbridled notion of “omnibus

authority.” (Appendix, 66a). The RCRA unequivocally states that

the administrator “shall issue a permit for such facilities” upon

determining that the applicant complies with the technical BIF

requirements. 42 U.S.C. §6925(c)(1). This statutory language

is mandatory, not discretionary. It leaves no room for EPA’s

interpretation that it has “omnibus authority” to deny a permit

to a facility that meets BIF’s technical requirements. The statute

further states that “[eJach permit issued under this section shall

contain\such terms and conditions as the Administrator (or the

State) determines necessary to protect human health and the

environment.” 42 U.S.C. § 6925(c) (3). This provision grants EPA

the narrow authority to include additional terms and conditions in

issued permits beyond those found in the regulations where neces-

sary “to protect human health and the environment.” But no

language in the provision authorizes EPA to deny permits. Once

MSP met the technical BIF requirements, the agency had an admin-

istrative duty to issue a permit. See Southern Co-op. Dev. Fund v.

Driggers, 696 F.2d 1347, 1856 (11th Cir.), cert. denied, 463 U.S.

1208 (1983).

EPA’s distortion of the statute would authorize this agency

unilaterally to deny a permit even when it is undisputed that the

facility can meet all the technical requirements established to

safeguard human health and the environment, as long as the

agency in its discretion feels otherwise. That position violates

substantive due process. See Southern Co-op. Dev. Fund, 696

F.2d at 1356 (imposition of requirements upon a permit applicant,

not included in ordinance, violates substantive due process) ; Little-

field v. City of Afton, 785 F.2d 596, 607 (8th Cir. 1986) (“[A]ppel-

lants stated a substantive due process claim when they alleged

As this Court has stated, “The touchstone of due process

is protection of the individual against arbitrary action of

government.” Wolff v. McDonnell, 418 U.S. 539, 558

(1974). Administrative officers executing the provisions

of a statute have no right to disregard the fundamental

principles inherent in due process. Kaoru Yamataya vy.

Fisher, 189 U.S. 86, 100-101 (1903). “The prohibitions

of the Constitution were designed to apply to all branches

of the National Government and they cannot be nullified

by the Executive or by the Executive and the Senate com-

bined.” Reid v. Covert, 354 U.S. 1, 17 (1957). Unless

this Court grants certiorari and reverses, the decision be-

low sets a dangerous precedent for federal agencies to ig-

nore with impunity the limits of their statutory authority.

that the City acted capriciously and arbitrarily” by imposing condi-

tions on the granting of a permit not in the statute).

Lie ee

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

CHRISTOPHER H. MARRARO K. ERIC GISLESON

JERROLD J, GANZFRIED DouGLAs L. GRUNDMEYER

DARREN B. BERNHARD Counsel of Record

HOwREY & SIMON CHAFFE, MCCALL, PHILLIPS,

1299 Pennsylvania Ave., N.W. TOLER & Sarpy, L.L.P.

Washington, D.C, 20004 2300 Energy Centre

(202) 783-0800 1100 Poydras Street

New Orleans, LA 70163-2300

(504) 585-7000

Russ M. HERMAN

SIDNEY COTLAR

HERMAN, HERMAN, KATZ

AND COTLAR

820 O’Keefe Avenue

New Orleans, LA 701138

(504) 581-4892

September 16, 1996 Counsel for Petitioner

APPENDICES

APPENDIX TABLE OF CONTENTS

Page

Marine Shale Processors, Inc. v. United States E'n-

vironmental Protection Agency, No. 95-60228, 81

FR RAPE. COE Ss IED ccietchniceninctaprcipwlaisccins la

Jury Interrogatories in United States of America

v. Marine Shale Processors, Inc., Civil Action No.

90-1240, United States District Court, Western

SS Or Fi iii pr auc, 30a

Daily Copy of Transcript of Jury Trial, June 15,

eB pei eereteahtin vsae eto Siegesdamins ae 33a

District Court Judgment, dated 15 June 1994, on

Jury Interrogatories No. 3 and 4 ~.......0.0000000....... 39a

District Court Order and Reasons: Motions for

Judgment Under Rule 54(b), entered June 21,

AR ete SAN RES RESON cera ont DOE Pao Ne DPSS Se 42a

District Court Order and Reasons denying Plain-

tiff’s Motion for Summary Judgment, entered

MS Fi BO Gate anscveniciledcdahccencacacnacbahide dis centpbtii 47a

District Court Judgment on Main Demand; Judg-

ment on Counterclaim Against Southern Wood

Piedmont Company, entered August 30, 1994... 5la

EPA’s Statement for Denial of Permit Application

by Marine Shale Processors, Inc., dated September

RRR AT BRERA RARE SEAS EEE ce Rtg odio TO AEN 60a

Final Decision and Order, RCRA Appeal No. 94-

28, Geos waren 17, 1008 130a

U.S. Environmental Protection Agency’s letter of

April 11, 1995 to Darren M. Bernhard ................:... 202a

U.S. Environmental Protection Agency’s letter of

April 11, 1995 to George Badge Eldredge ............... 204a

U.S. Fifth Circuit’s Order filed June 18, 1996 deny-

ing MSP’s Petition for Rehearing and Suggestion

Tor eee fe ME ec 207a

U.S. Fifth Circuit’s Judgment filed April 18, 1996

and issued as mandate June 18, 1996.00.00... 209a

TABLE OF CONTENTS—Continued

Page

N. United States Constitution ......................................... 210a

O. Federal Statutes Involved ..........000.00000000000000000 212a

APPENDIX A

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 95-60228

MARINE SHALE PROCESSORS, INC.,

Petitioner,

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

April 18, 1996

Petition for Review of Order of

Environmental Protection Agency

Before REYNALDO G. GARZA, KING and HIG-

GINBOTHAM, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

This case is an appeal of Marine Shale Processors, Inc.

from final agency action of the Environmental Protection

Agency. Specifically, MSP challenges EPA’s decision to

deny MSP’s application for a Boiler and Industrial Fur-

nace Permit required by the Resource Conservation and

Recovery Act, 42 U.S.C. § 6901-92K. This case is one

of the trio described in United States v. Marine,

F.3d —— (Sth Cir.1996). We affirm.

In 1980, EPA promulgated regulations pursuant to

RCRA governing the treatment, storage, and disposal of

hazardous waste. See, e.g., Final Rule, Hazardous Waste

Management: Overview and Definitions; Generator Regu-

lations; Transporter Regulations, 45 Fed.Reg. 12,721

(1980); Final Rule, Interim Final Rule, and Request for

Comments, Hazardous Wasizx Management System: Iden-

tification and Listing of Hazardous Waste, 45 Fed.Reg.

33,082 (1980). These regulations defined two methods

of processing waste, incineration and recycling. The rules

required facilities engaged in incineration to procure a

permit called a Subpart O permit, a reference to 40 C.F.R.

pt. 264 subpt. O. See Proposed Rule and Request for

Comment, /dentification and Listing of Hazardous Waste;

Amendments to Definition of Solid Wastes, 53 Fed.Reg.

519, 522 (1988). Facilities engaged in recycling could

operate without permits. See 45 Fed.Reg. at 33,120

(promulgating 40 C.F.R. § 261.6); see also Final Rule,

Hazardous Waste Management System; Definition of Solid

Waste, 50 Fed.Reg. 614, 626-27 (1985).

In 1985, EPA defined a new category of hazardous

waste professing devices called “industrial furnaces,” a

term defined to include “aggregate kilns” having certain

characteristics. 50 Fed.Reg. at 661. Industrial furnaces

could engage in either incineration or burning for energy

recovery. If the industrial furnace facility engaged in

incineration, then it needed a Subpart O permit. (f the

industrial furnace engaged in recycling, no permit was

necessary. 50 Fed.Reg. at 626-27. MSP began operations

in 1985, claiming an exemption from the Subpart O per-

mit requirement on the grounds that its kiln was an ag-

gregate kiln and that its facility was an industrial furnace

engaged in recycling.

On August 14, 1990, the United States sued MSP in

United States District Court for the Eastern District of

Louisiana in the action giving rise to Nos. 94-30419 and

94-30664, claiming among other things that MSP had

incinerated hazardous waste without a Subpart O permit

since it opened for business in 1985. In 1991, EPA pro-

mulgated new rules requiring that all devices using thermal

combustion to treat hazardous wastes have either a Sub-

part O permit or a new form of permit for recycling facili-

ties called a Boiler and Industrial Furnace permit. Final

Rule, Burning of Hazardous Wastes in Boilers and Indus-

trial Furnaces, 56 Fed.Reg. 7134, 7138 (1991). These

regulations ended the exception from the permit require-

ment for facilities engaged in recycling. MSP submitted

a BIF permit application and a Certification of Compli-

ance with BIF regulations. On the basis of these filings

and its contention that it fit within the previously existing

recycling exemptions, MSP claimed interim status to oper-

ate while EPA considered the permit application. EPA’s

internal consideration of MSP’s application for a BIF per-

mit proceeded simultaneously with litigation of the United

States’ action in Louisiana District Court.

On January 31, 1994, EPA issued a tentative decision

denying MSP’s BIF permit application. EPA rested its

tentative denial decision upon its conclusion that MSP did

not produce aggregate and that its system did not use

thermal treatment to accomplish recovery of materials or

energy within the meaning of 40 C.F.R. § 260.10. EPA

opened its decision for public comment.

A jury trial on the United States’ claim in district court

that MSP had incinerated waste without a permit began

in April, 1994. At the end of a five-week trial, the court

submitted 13 interrogatories to the jury. In late May, the

jury found itself able to agree to the answer to only nine

of the questions. The questions relevant to this appeal,

together with the jury’s answer if any, were as follows:

1. Was MSP entitled to a recycler exemption

from the requirement of a permit as an operator of

an incinerator of hazardous waste? (unable to

answer )

2. Were all of the hazardous wastes accepted

MSP beneficially used or reused or legitimately re-

cycled? (unable to answer)

2(a). Were all of the hazardous wastes accepted

by MSP prior to August 21, 1991, beneficially used

or reused or legitimately recycled? (unable to

answer )

10. Is MSP’s rotary kiln an aggregate kiln? (yes)

13. Are the rotary kiln, oxidizers Nos. 1 and 2,

and slag box part of a kiln system that produces

aggregate? (yes)

Because the jury failed to answer four of the interroga-

tories, the district court declared a mistrial.

In September, 1994, EPA issued a final decision deny-

ing MSP’s application for a BIF permit. EPA rested upon

its finding that MSP’s rotary kiln system did “not meet

the definition of aggregate kiln and, therefore, does not

meet the definition of industrial furnace.” EPA also cited

MSP’s poor history of compliance with the environmental

laws, as well as its finding that MSP could not qualify as

an aggregate kiln because it destroyed hazardous waste.

MSP appealed to the Environmental Appeals Board, rely-

ing on principles of Article III, the seventh amendment,

collateral estoppel, due process, and the Administrative

Procedures Act, 5 U.S.C. §§ 701-06.

In March, 1995, after a review of the record, the EAB

affirmed EPA’s denial. in re Marine Shale Processors, Inc.,

Dkt. No. 06900009, RCRA Appeal No. 94-12, 1995 WL

135572 (EPA 1995). The EAB stated that MSP did not

produce “commercial-grade aggregate” from its system and

thus that its-facility could not qualify as an aggregate kiln.

The EAB questioned EPA’s reliance on MSP’s compliance

history and on MSP’s destruction of hazardous waste, but

ultimately affirmed the decision in its entirety. In April,

1995, EPA finally denied MSP’s BIF permit application

on all grounds stated in its September, 1994 ruling. MSP

appeals the denial of its permit, invoking our authority

under 5 U.S.C. § 706(2) to set aside final agency action.

We affirm.

MSP invokes Article ITI, the Seventh Amendment, and

collateral estoppel principles to attack EPA’s permit denial.

MSP begins its assault upon the permit denial with con-

stitutional arguments based on Article III and the Seventh

Amendment. Its first argument is that Article III and the

Seventh Amendment prevent EPA from ruling on its per-

mit application. Its second argument is that the United

States, by filing its lawsuit and thus invoking the judicial

power of an Article III court, could not continue to con-

sider in an internal administrative proceeding issues iden-

tical to those being litigated in the Article III court. With

cites to Montesquieu and Madison, MSP argues that the

moment the United States filed suit the district court ob-

tained exclusive power to decide any issue before it and

that EPA’s permitting staff could not resolve any legal

question pending before the district court without running

afoul of the constitutional prohibition forbidding Execu-

tive Branch review of Article III court decisions. In a

similar vein, MSP invokes the Seventh Amendment, con-

tending that once the Seventh Amendment is activated as

to an issue, a party is entitled to have the issue resolved

by a jury.

With regard to both MSP’s Seventh Amendment and

Article III arguments, we begin with the proposition that,

in the absence of a simultaneous district court proceeding,

Congress violated neither constitutional principle by pro-

viding that EPA should adjudicate -MSP’s permit applica-

tion. See In re Texas General Petroleum Corp., 52 F.3d

1330, 1336 (Sth Cir.1995) (“Whether an Article III

court is necessary involves the same inquiry as whether a

litigant has a Seventh Amendment right to a jury trial.”)

(citing Granfinanciera, S.A. v. Nordberg, 492 U.S. 33,

53-54, 109 S.Ct. 2782, 2796, 106 L.Ed.2d 26 (1989)).

MSP’s contention to the contrary comes decades, perhaps

centuries, too late. Congress’s choice to grant EPA auth-

ority over the permit proceeding represents a classic con-

stitutional example of the public rights doctrine.

Viewing our inquiry as governed by “practical attention

to substance rather than doctrinaire reliance on formal

categories,” Thomas v. Union Carbide Agricultural Prod-

ucts Co., 473 U.S. 568, 587, 105 S.Ct. 3325, 3336, 87

L.Ed.2d 409 (1985), we note the following characteris-

tics of the permit proceeding. First, it is a dispute to

which the sovereign is a party. See Crowell v. Benson,

285 U.S. 22, 50, 52 S.Ct. 285, 292, 76 L.Ed. 598 (1932);

Murray's Lessee v. Hoboken Land & Improvement Co.,

59 U.S. (18 How.) 272, 284, 15 L.Ed. 372 (1855).

Second, the permit requirement “serves a public purpose

as an integral part of a program safeguarding the public

health.” Thomas, 473 U.S. at 589, 105 S.Ct. at 3337.

Third, the scientific and technical nature of the decisions

iu this permit proceeding make the decision “peculiarly

suited to examination and determination by an adminis-

trative agency specially assigned to that task.” Crowell,

285 U.S. at 46, 52 S.Ct. at 290. Fourth, the permit pro-

ceeding, and indeed most of RCRA itself, deals with a

narrowly cabined area of the law. See Commodity Futures

Trading Commission v. Schor, 478 U.S. 833, 852, 106

S.Ct. 3245, 3257, 92 L.Ed.2d 675 (1986) (referring to

a “particularized area of law”) (internal quotation marks

omitted). Fifth, the permit application implicates a fed-

eral right not immediately analogous to the state common

law causes of action “assumed to be at the ‘core’ of mat-

ters normally reserved to Article III courts.” 478 U.S. at

853, 106 S.Ct. at 3258. Sixth, EPA, “unlike the bank-

ruptcy courts under the 1978 Act, does not exercise ‘all

ordinary powers of district courts’, and thus may not, for

instance, preside over jury trials or issue writs of habeas

corpus.” 478 U.S. at 853, 106 S.Ct. at 3258 (quoting

Northern Pipeline Construction Co. v. Marathon Pipe Line

Co., 458 U.S. 50, 85, 102 S.Ct. 2858, 2878, 73 L.Ed.2d

598 (1982) (plurality opinion) ). Seventh, Congress has

provided for judicial review over the agency’s permit de-

nial under 5 U.S.C. §§ 704-06. See 478 U.S. at 854-55,

106 S.Ct. at 3258-59. Under such circumstances, Con-

gress violated neither the Seventh Amendment nor Article

III in delegating the permitting decision to EPA.

Having established that EPA could constitutionally ad-

judicate the permitting proceeding in the absence of a

suit by the United States, we address MSP’s argument that

the enforcement action altered the constitutional landscape.

We find MSP’s contention convincing in neither the Ar-

ticle III nor the Seventh Amendment context. At bottom,

both arguments fail for the same reason: This is not a case

in which EPA has sought to review or alter the decision

in the district court, to reverse the district court's findings,

or to interfere with the judiciary’s ability to issue a binding

decision. Cf. Hayburn’s Case, 2 U.S. (2 Dall.) 408 (1792)

(suggesting that the judiciary could not render an opinion

as to whether a citizen was entitled to a pension when both

the Secretary of War and the Congress retained power to

decide whether to honor the judiciary’s judgment); Town

of Deerfield v. FCC, 992 F.2d 420 (2d Cir.1993) (reject-

ing the FCC’s attempt to alter or amend a federal court

judgment). EPA has, to be sure, disagreed with several

of the conclusions of the district court, but it has never

sought to interfere with the effect that these conclusions

have upon the causes of action being adjudicated there.

The permit application and the district court litigation in-

volve common issues, but the two proceedings are deciding

different questions, the most important of which is that

the permit proceeding concerns whether MSP may oper-

ate legally in the future, while the district court proceeding

concerns whether MSP has operated legally in the past.

Should EPA attempt to use the rulings in the permit

proceeding to collaterally estop MSP in the district court

action, MSP’s argument may have force; we make no com-

ment on this question. Cf. Parklane Hosiery Co. v. Shore,

439 US. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979)

(holding that the Seventh Amendment does not prevent

an equity court’s determination of legal issues from estop-

ping relitigation of the same issues in a subsequent action

at law). But given that EPA could constitutionally adjudi-

cate the permit application in the absence of the district

court litigation, MSP can make no argument until the per-

mitting proceeding has some effect upon the issues being

decided in the district court litigation. When and if MSP

feels that effect, it may litigate these issues.

Accordingly, EPA has never sought to judge its own

case any more than it does in any normal permit appli-

cation proceeding. If the permitting arm of the agency

could constitutionally exercise jurisdiction over MSP’s per-

mit application in the absence of a district court proceed-

ing, as we have held, then nothing in Article III prevented

EPA’s permit staff and the district court from proceeding

simultaneously. Having established this general principle,

we examine MSP’s arguments in detail.

MSP argues that as a result of EPA’s suit, Article III

gave the district court exclusive power to decide the con-

troversy between MSP and EPA. MSP points to no statute

or constitutional provision granting exclusive jurisdiction

to the federal district courts to decide all disputes between

EPA and entities like MSP. Its argument assumes that

there would be no Article III bar had EPA denied the

permit and then filed the district court suit, or if EPA had

litigated the suit to completion and then denied the permit.

We find MSP’s Article III arguments unconvincing.

State courts are not Article IIT courts, yet nothing in Arti-

cle III prevents a state court from litigating the same con-

troversy pending before a district court. Kline v. Burke

Construction Co., 260 U.S. 226, 230, 43 S.Ct. 79, 81, 67

L.Ed. 226 (1922). In such cases, if the state court

reaches final judgment first, its disposition may preclude

further litigation in the district court without violating

Article III. /d. at 233-34, 43 $.Ct. at 82: Wayside Trans-

portation Co. v. Marcell’s Motor Express, Inc., 284 F.2d

868, 870-71 (1st Cir.1960). MSP cites to no case sug-

gesting that this principle would change if the state itself

were a party to both the state court and federal court liti-

gation. Like the Sixth Circuit,

We see no reason why the rule permitting a second

tribunal to proceed to the decision of an in personam

matter within its jurisdiction, in spite of the fact that

another action between the same parties is pending in

another tribunal, should not be applicable as between

a United States District Court and a federal adminis-

trative agency in which Congress expressly has placed

responsibility for regulation in a specific area.

Ashland Oil & Refining Co. y. FPC, 421 F.2d 17, 21 (6th

Cir.1970).

MSP cites California v. FPC, 360 US. 482, 82 S.Ct.

901, 8 L.Ed.2d 54 (1962), for the broad proposition that

any time a federal court has jurisdiction over a controversy

in which an agency is a party, the agency must withhold

administrative action until the court has reached a deci-

sion. We do not read California so broadly. In that case,

the Supreme Court held that the FPC should not have ap-

proved a merger while a suit challenging the merger, filed

by the United States, was pending in federal district court.

Justice Brennan’s majority opinion does not mention Ar-

ticle III. Instead, it justifies its holdings with “practical

reasons,” primarily the difficulty of unscrambling an al-

ready consummated merger.

10a

MSP points out no analogous practical considerations in

this case. To the contrary, EPA could reasonably decide

that the district court litigation promised to continue for

years. The EAB, for instance, considered MSP official

George Eldredge’s statement that “whatever action EPA

proposes, and whatever the outcome of the lawsuit, the

case is going to drag on for years. In the mean{]time,

we'll be doing business as usual.” Jn re Marine Shale

Processors, Inc., Dkt. No. 0690009, RCRA Appeal No.

94-12, 1995 WL 135572, at *17 (EPA 1994) (internal

quotation marks omitted). EPA could conclude that

awaiting the decision of the judiciary on those issues com-

mon to the district court litigation and the permit proceed-

ing would unduly delay resolution of the important ques-

tions in the latter and would allow an admitted violator of

the environmental laws to continue operating, perhaps in

further violation of these laws, until the conclusion of the

litigation and the inevitable appeal. Normally, speedy ad-

judication from an administrative agency is something to

be encouraged, and we cannot fault EPA’s decision not

to await the unavoidably ponderous progress of the district

court litigation. |

For similar reasons, we reject MSP’s seventh amend-

ment argument. As EPA acknowledges, MSP has a right

to a jury trial in the district court proceeding. See Tull v.

United States, 481 U.S. 412, 107 S.Ct. 1831, 95 L.Ed.2d

365 (1987). But because the permit application triggered

a public rights dispute, MSP has no right to a jury trial in

this proceeding. Atlas Roofing Co. v. OSHRC, 430 USS.

442, 445, 97 S.Ct. 1261, 1269, 51 L.Ed.2d 464 (1977);

see also id. at 450, 97 S.Ct. at 1266 (noting that jury trials

may be incompatible with agency processes). MSP cites

no case holding that the pendency of an action in one tri-

bunal in which a jury trial right attaches prevents another

tribunal from proceeding without a jury. Unless and until

MSP is prevented from litigating its defenses in the district

lla

court to a jury, no arguable jury trial violation has oc-

curred.

Nothing in Beacon Theaters, Inc. v. Westover, 359

U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959), requires

a different result. In Beacon Theaters, the plaintiff filed an

action seeking an injunction prohibiting the defendant

from prosecuting an antitrust suit. The defendant counter-

claimed in a complaint stating the antitrust cause of ac-

tion and demanded a jury trial. The trial judge sched-

uled the hearing on the plaintiff's request for injunctive

relief ahead of the jury trial on the defendant’s antitrust

claim. The Supreme Court held that the trial court abused

its discretion in scheduling the equity suit first because

such scheduling would have the effect of depriving the

defendant of its right to a jury trial in the counterclaim.

Crucial to this holding was the fact that modern rules of

civil procedure allowed joinder and joint resolution of mul-

tiple claims of multiple parties, thus in effect giving the

plaintiff an adequate remedy at law by joining all involved.

See id. at 507, 509, 511, 79 S.Ct. at 954, 955, 957; see

also Dairy Queen, Inc. v. Wood, 369 U.S. 469, 472-73,

82 S.Ct. 894, 896-97, 8 L.Ed.2d 44 (1962) (interpreting

Beacon Theaters in this manner); Lytle v. Household

Manufacturing, Inc., 494 U.S. 545, 550-52, 110 S.Ct.

1331, 1335-36, 108 L.Ed.2d 504 (1990) (discussing the

importance of the fact that legal and equitable claims were

tried in the same lawsuit in applying the Beacon Theaters

rule). In this case, in contrast, the district court may not

grant a permit, and the adjudicatory arm of EPA may not

grant the relief sought in EPA’s district court complaint.

A single proceeding could not resolve both issues.”

MSP next argues that EPA’s premit denial violated the

principle of collateral estoppel. In order to invoke col-

lateral estoppel, however, “the issue under consideration

[must be] identical to that litigated in the prior action.”

12a

Copeland v. Merrill Lynch & Co., 47 F.3d 1415, 1422

(Sth Cir. 1995). MSP’s collateral estoppel argument fails

because the jury was either not asked to resolve or unable

to resolve questions crucial to EPA’s decision to deny

MSP’s permit application.

MSP based its BIF permit application to EPA upon

the contention that its kiln system constituted an indus-

trial furnace. 40 C.F.R. § 260.10 defines industrial fur-

nace as “any of the following enclosed devices that are

integral components of manufacturing processes and that

use thermal treatment to accomplish recovery of ma-

terials or energy.” The definition then lists a series of

twelve devices by name, which Judge Duplantier referred

to as the “twelve apostles.” “Aggregate kilns” are one of

the twelve apostles. As applied to this case, then, section

260.10 requires EPA to grant MSP a permit if Marine

Shale’s kiln is (1) an aggregate kiln, (2) that is an in-

tegral component of a manufacturing process, and (3)

that uses thermal treatment to accomplish recovery of

materials or energy.

In addition, paragraph thirteen of the definition pro-

vides that EPA may add other devices to the list of the

twelve apostles after consideration of five enumerated

factors with a sixth catchall statement that EPA might

consider “other factors, as appropriate.” The first of

these five factors is “the design and use of the device pri-

marily to accomplish recovery of material products.” The

remaining four generally focus on the inquiry of whether

a facility makes a product..

In an interpretive step that MSP has not challenged,

EPA analyzed MSP’s permit application in terms of the

five factors articulated in paragraph thirteen and did not

directly focus on the narrative criteria preceding the list

of the twelve apostles. We note that the first of the five

factors mimics the second of the narrative criteria and

that both focus on whether a facility recovers energy or

materials.

13a

EPA denied MSP’s permit application on the basis of

its finding that MSP’s kiln system met none of the five

factors enumerated in paragraph thirteen.’ In particular,

EPA discussed extensively its grounds for finding that the

majority of the hazardous waste processed by MSP con-

tributed nothing to the production of a product and were

not recovered or recycled, and therefore that MSP did not

use thermal treatment to recover energy or materials. In

addition, EPA found that MSP’s kiln did not produce ag-

gregate after defining aggregate according to commercial

specifications.

The jury’s findings covered only a portion of the indus-

trial furnace inquiry considered in terms of either the nar-

rative criteria and the twelve apostles or the five factors

in paragraph thirteen. The jury found that MSP’s rotary

kiln was an aggregate kiln, and that MSP’s kiln, oxidizers,

and slag box were part of a system that produced ag-

gregate. For whatever reason, the jury was not asked

whether MSP uses thermal treatment to recover energy

or materials. The interrogatories most analogous to the

thermal treatment inquiry were questions 2 and 2(a),

which asked the jury whether the hazardous wastes re-

ceived by MSP were beneficially used or reused or legiti-

mately recycled. The jury failed to reach a verdict on

these interrogatories. Accordingly, EPA decided issues

1 Although the EAB affirmed Region VI’s initial decision to deny

the permit primarily upon the ground that MSP’s kiln was not an

aggregate kiln, it “recognize[d] that the Region based its decision

on other grounds as well” and clarified that “to the extent we

have not ruled on those other grounds, nothing in this decision

should be construed as preventing the Region from basing its final

permit decision on these other grounds.” 1995 WL 135572, at

*24. The final agency action of which MSP complains is Region

VI’s formal denial of its permit application. This denial makes

clear that one of the bases of Region VI’s denial was MSP’s failure

to meet the criteria stated above. MSP has not argued to this

court that our review is limited to the grounds articulated in the

EAB’s decision.

——

14a

that the jury did not, and collateral estoppel does not

apply.

MSP seeks to avoid the force of this argument by con-

tending that the jury decided whether MSP used thermal

processes to recover energy or materials when it decided

that MSP produced aggregate. This argument is struc-

tually identical to SWP’s contention, which we rejected

in United States v. Marine Shale Processors, Inc., No.

94-30419, at 11, F.3d : , that producing

a product is necessarily recycling, and we disagree for the

same reason here. A reasonable trier of fact could find

that, to the extent that MSP produced aggregate, it did

so without recovering the energy or materials in the haz-

ardous wastes that it accepted.

MSP’s brief suffers from the assumption that the only

issue in the permit application proceeding was whether

its rotary kiln constituted an aggregate kiln. That as-

sumption is incorrect. Not all aggregate kilns are indus-

trial furnaces, as the narrative criteria of the definition

of industrial furnace and the first of the five factors in

paragraph thirteen make clear.”

? We also reject MSP’s implication that the district court’s rul-

ing that MSP had interim status as a BIF estopped EPA from

denying the permit. Interim status is designed to last only until

EPA rules on a permit application.

Because of our disposition of MSP’s collateral estoppel argu-

ment on the grounds of lack of identity of the legal issues in-

volved, we do not reach EPA’s argument that the jury’s findings

cannot support collateral estoppel because they have not been

incorporated into a final judgment. We note, however, the tension

between the dictum in RecoverEdge L.P. v. Pentecost, 44 F.3d 1284,

1295 (5th Cir. 1995), which suggests that jury findings are suffi-

cient to support collateral estoppel even if the verdict has not yet

resulted in a final judgment, and the holding of Avondale Ship-

yards, Inc. v. Insured Lloyd's, 786 F.2d 1265, 1272 (5th Cir.1986),

which suggests that partial summary judgments are insufficient.

Under Fed.R.Civ.P. 54(b), both jury findings and partial summary

judgments are subject to revision before entry of final judgment.

Even when, as here, a trial judge has rejected a motion for a judg-

ee ee

15a

MSP argues that EPA’s findings of fact and conclusions

of law were arbitrary and capricious. We do not agree.

We limit our review in this case to sections III.A and

III.B of EPA’s September 15, 1994 Statement of Basis

for Denial of Permit Application by Marine Shale Proc-

essors, Inc. The findings of fact and conclusions of law

included in these two sections are sufficient to uphold

EPA’s decision. Although we find none of EPA’s findings

of fact or conclusions of law in these two sections arbi-

trary, capricious, or contrary to law, we focus our dis-

cussion here on the evidence underpinning the finding that

MSP’s system does not use thermal processes to accom-

plish recovery of energy or materials and on certain deter-

minations EPA made in deciding that MSP’s material does

not qualify as aggregate within the meaning of 40 C.F.R.

§ 260.10.

EPA’s finding that MSP has not designed or used its

facility to accomplish recovery of material products and

thus that MSP does not use thermal treatment to accom-

plish recovery of materials or energy is not arbitrary or

capricious. As our discussion will make clear, EPA’s

decisions are highly technical and scientific and are not

readily susceptible to lay review. Most of these decisions

are factual. We bear these considerations firmly in mind

when considering MSP’s request that we upset EPA’s con-

ment as a matter of law seeking to upset the jury’s findings, Rule

54(b) provides that this rejection is itself subject to revision at

any time before final judgment. We thus have some difficulty

justifying a rule, if in fact it exists in this circuit, allowing issue

preclusion to attach to jury verdicts but not to summary judg-

ments, when neither has been incorporated into a final judgment.

We do not seek to resolve this tension in this case.

Given our disposition of this case, we also do not reach EPA’s

argument that the different burdens of proof and nature of the

proceedings precludes invocation of collateral estoppel.

16a

clusions in an area in which Congress has chosen to trust

the experts.

Throughout this section, we assume that MSP produces

something its calls aggregate and that its kiln system is

an integral component of the process for this aggregate’s

production. We focus entirely on the question of whether

EPA could conclude that MSP does not use thermal

treatment to accomplish recovery of materials or energy,

or that the design and use of MSP’s device is not pri-

marily to accomplish recovery of material products. i

EPA considered evidence that MSP processed quantities

of “lab packs” containing wastes that could contribute

nothing to the production of a product. The lab packs

were packages of kitty litter and other absorbent material

surrounding glass or plastic containers of toxic chemicals.

For example, Dr. Douglas Kendall, an EPA chemist, used

MSP’s manifests and Material Characterization Data

Sheets to determine that MSP processed sulfur, toluene

solution, ammonium hydroxide, hydrochloric acid solu-

tions and mixtures, nitric acid, and sulfuric acid. Dr.

Kendall confirmed that these wastes do not release sig-

nificant energy when burned and, because they react to

form gases at high temperatures, could not provide bulk

for MSP’s product. EPA considered similar evidence re-

garding such materials as poisons, pesticides, other acids,

and bases; specific substances included methylene chloride,

trichlorotrifluoroethane, cholorform, perchloroethylene, tri-

chloroethylene, nitric oxide, fluorotrichloromethane, pen-

tachlorophenol, ethylenediamine, formaldehyde, carbon

tetrachloride, and phosgene. MSP’s experts could not

specify how many of these substances contributed to a

manufacturing process. MPS’s handling of these sub-

stances also suggests that they contribute nothing to pro-

duction. MSP employee Annika Keslick told EPA that

MSP normally opened ten percent of these lab packs, and

MSP’s examination upon opening was limited to matching

17a

the name on the glass or plastic container within the pack

to the information contained on the MCDS or manifest.

EPA could find that MSP was not accomplishing, re-

covery of energy or materials from these wastes. The

composition of the wastes themselves did not allow their

combustion to contribute to any production process, and

we cannot understand how MSP could have recovered

energy or materials from these wastes without sampling

them to verify their contents. MSP’s only defense of its

treatment of the lab pack wastes is that the kitty litter and

other packaging provide mass for its aggregate. EPA

could conclude that this argument misconstrues the regu-

lations and is wrong as a matter of law. One does not

recycle hazardous waste by placing that waste into a con-

tainer and then recycling the container.

MSP correctly points out that the lab packs constitute

only around one percent of the total volume of wastes

processed at its facility. Nevertheless, the amount of ma-

terial is significant in absolute terms in that MSP process

an average to three to four hundred of the lab packs per

week, and MSP’s cavalier treatment of these “feedstocks”

gives us pause when we consider the remainder of MSP’s

claim that all of its wastes contribute in some way to

its process.

EPA considered evidence that MSP processed large

quantities of waste with metal contaminants that con-

tribute in no legitimate way to any manufacturing process

and thus that MSP’s use of these wastes did not constitute

recovery of energy or materials. The metallic composition

of these wastes spanned the periodic table and included

highly variable quantities of lead, barium, cadmium, iron,

silicon, aluminum, manganese, copper, zinc, bromine, stron-

tium, calcium, and chromium. MSP’s kiln did not de-

stroy these metals. The residue from the process of metal-

bearing waste, which MSP calls primary aggregate, nor-

mally requiring slagging to reduce leaching potential.

18a

MSP suggests that it used these metals for two pur-

poses. First, all provide mass for the ultimate product.

Second, some compounds from these metals had other

properties useful to the manufacturing process or the ulti-

mate product. Dr. Paul Queneau, a metallurgical en-

gineer, told EPA that iron oxide and alumina and titanium

are “chain formers, and they very much enhance the en-

vironmental stability of the slag.” Other metallic oxides

lower the melting point of the mixture and decrease its

“melt viscosity.”

EPA's disbelief of these justifications was not arbitrary

or capricious. EPA scientists stated that the metal content

of the waste necessitated slagging before the ultimate prod-

uct could be legally placed on the ground and that the

slagging process significantly reduced the mass produced.

Dr. Terrance McNulty, an expert in extractive metallurgy,

also provided evidence that many of these metals im-

peded production of the slag. Barium, for instance, which

at times constituted fourteen to sixteen percent of the slag

mass, impeded production because the high melting points

of its compounds made liquification more difficult. Most

importantly, EPA considered evidence suggesting that

while many of the metal compounds do exhibit some of

the desirable properties that Dr. Queneau identified, they

do so only when present in certain concentrations. Chem-

ist Stanley Wrobleski confirmed that Marine Shale made

no attempt to control the metallic composition of its pri-

mary or slagged material and that metal concentrations

varied widely. Moreover, EPA considered evidence such

as a letter from Woodward-Clyde Consultants, MSP’s pri-

mary environmental consultant, to George Eldredge, an

MSP officer, stating that many of the metal compounds

“are not introduced specifically or purposefully into the

raw product in order to incorporate a particular physical

characteristic into the product aggregate but are inherent

elements of the raw materials used in the manufacture of

19a

the aggregate.” * Under such circumstances, EPA could

conclude that MSP’s process did not recover of these metal-

bearing wastes or their metallic constituents.‘

The largest percentage of MSP’s wastes consists of soil

contaminated by organic compounds. MSP contends that

the soil provides raw material, or mass, for its aggregate

and that the organic compounds release heat when burned.

* Although this same letter concluded that “these elements are

beneficial in enhancing the quality of the produced aggregate,” it

apears that this conclusion was based entirely upon the coincidence

that “the majority of the elements of the produced aggregate are

also the major constituents in some of the more common and

select construction materials in use today.” Nothing in this letter

sought to match the concentration of metals in MSP’s material to

that in the more common and select construction materials. Marine

Shale’s argument would lead to the conclusion that any material

containing sugar, butter, eggs, and flour is a cake.

* EPA warned the regulated community about this type of “use”

of metallic compounds shortly after filing the lawsuit in this case.

The Agency notes in addition that it ordinarily does not con-

sider metal-bearing hazardous wastes to be used as ingredients

when they are placed in industrial furnaces purportedly to con-

tribute to producing a product. .. . To be considered legitimate

use as an ingredient, it would normally need to be demon-

strated to EPA (or an authorized State) pursuant to § 261.2(f)

that the hazardous metal constituents in the waste are neces-

sary for the product (i.e. are contributing to product quality)

and are not present in amounts in excess of those necessary to

contribute to product quality. This would normally require

some demonstration that these hazardous metal constituents

do not render the product unsafe for its intended use. (The

other sham recycling criteria discussed frequently by EPA

would have also to be satisfied). The types of uses of hazard-

ous wastes in industrial furnaces to produce waste-derived

products of which the Agency is aware, such as using hazard-

ous wastes to produce aggregate or cement[,] . . . do not

appear to satisfy these criteria.

Final Rule, Burning of Hazardous Wastes in Boilers and Industrial

Furnaces, 56 Fed.Reg. 7183, 7185 (1991).

20a

Accordingly, MSP argues that both the soil and the waste

contribute to its aggregate production process.

EPA's rejection of these arguments was not arbitrary

or capricious. EPA considered evidence that some of

these wastes consisted of soil contaminated with penta-

chlorophenol, which it specifically labeled a low energy

hazardous waste.constituent. In addition, EPA could con-

clude that MSP’s process generates heat far in excess of

that needed to make its product. Ronald Corwin, an EPA

expert witness, suggested that the vast majority of the

heat MSP produced from its burning travels in non-

contact cooling water through MSP’s facility and out into

Bayou Boeuf. While MSP correctly points out that no

recycling process is one hundred percent efficient, EPA’s

assessment of whether this heat is used or wasted is a

particularly technical judgment about the overall effi-

ciency of MSP’s process. We will not disturb this judg-

ment in this case.

At oral argument, MSP strenuously contended that

EPA’s permit denial decision rested on the conclusion

that EPA could reject the application if MSP burned a

thimbleful of hazardous waste for destruction, and thus

that EPA had imposed an unreasonable burden in requir-

ing a potential BIF to prove that it was recovering every

atom or every bit of heat from waste in order to claim

entitlement to a BIF permit. We make no comment on

this argument; this is simply not a thimbleful case. EPA

has concluded that the overwhelming majority of MSP’s

wastes are burned for destruction, not used for recovery

of energy or materials. The findings of fact and conclu-

sions of law underlying these decisions are not arbitrary

or capricious. EPA could conclude that to the extent that

MSP produced a product, it did so in spite of the wastes

it purported to recycle.

2la

MSP’s final attack on this analysis is that a focus upon

recovery of energy or materials constitutes an analysis

of the role that each material plays in the manufacturing

process and of the purpose the particular facility serves.

After the promulgation of the BIF regulations, MSP ar-

gues, a focus on purpose is improper, In particular, MSP

quotes the EAB’s statement that “we have serious doubts

as to whether after promulgation of the BIF rule the

purpose for which MSP is burning hazardous waste at the

facility is relevant to the determinant of whether MSP’s

facility meets the industrial furnace definition.” Jn re

Marine Shale Processors, Inc., Dkt. No. 06900009.

RCRA Appeal No. 94-12, 1995 WL 135572, at *25,

n. 32 (EPA 1995). MSP also notes that 40 C.F.R.

§ 266.100 establishes that the BIF rules regulate BIFs

without regard to whether the particular facility is burning

for destruction or is recycling.

MSP’s argument fails to separate two analytically dis-

tinct issues and regulations. 40 C.F.R. § 260.10 governs

whether a facility definitionally qualifies as a BIF. Once

a facility has definitionally qualified as a BIF, 40 C.F.R.

pt. 266 subpt. H governs most aspects of its operations,

including burning for destruction. Although we note that

some tension might arise if EPA were to interpret section

260.10’s definition of BIF to exclude a facility that burns

a thimbleful of waste for destruction, EPA has not done

so here, as is made clear by EPA’s focus on whether MSP

uses its kiln system “primarily to accomplish recovery of

material products.” 40 C.F.R. § 260.10 (emphasis

added). We cannot conceive of an interpretation of “to

accomplish recovery of materials or energy” and other

similar phrases in section 260.10 that does not focus on

purpose.

An analysis of the preambles to the regulations defining

BIFs supports our conclusion. In distinguishing between

boilers and incinerators, EPA did seek to shift the initial

22a

focus of the definitional inquiry from primary purpose to

structural design. Thus, EPA considered and eventually

adopted a definition of boiler depending on whether the

facility “achieve[s] heat transfer within the combustion

chamber itself, generally by exposing the heat recovery

surface to the flame.” Proposed Rule, Hazardous Waste

Management System: General, 48 Fed.Reg. 14,472,

14,483 (1983); see Final Rule, Hazardous Waste Man-

agement System; Definition of Solid Waste, 50 Fed.Reg.

614, 626-27 (1985).° But EPA recognized that some

facilities normally engaging in recycling lacked this dis-

tinguishing characteristic of boilers, and therefore chose

to rely in part upon the primary purpose test in defining

industrial furnaces. 50 Fed.Reg. at 626-27. Thus, the

language of the rules and the preambles support our con-

clusion that EPA may interpret 40 C.F.R. § 260.10 to

include a focus on the primary purpose of the facility or

the role played by wastes processed within it.

We hold that EPA’s refusal to label MSP’s kiln an

aggregate kiln was not arbitrary or capricious. MSP’s

primary attack upon this portion of EPA’s reasoning is

that EPA erred by narrowing its definition of “aggregate”

to “commercial grade aggregate.” In particular, MSP dis-

putes EPA’s reliance upon standards promulgated by the

Louisiana Department of Transportation in reaching its

decision that MSP’s material does not constitute commer-

cial grade aggregate. EPA’s interpretations of its own

regulations are entitled to substantial deference. Ford

Motor Credit Co. v. Milhollin, 444 U.S. 555, 566, 100

S.Ct. 790, 797, 63 L.Ed.2d 22 (1980). We find no error.

In making its adjudicative decision, EPA had to employ

some set of standards to distinguish aggregate from any

5 Even in the boiler context, EPA used the integral design test

as a proxy for discovering the primary purpose of the facility.

See, e.g., 50 Fed.Reg. at 626 (“The definition of boilers focuses

on physical indicia of their legitimate use for energy recovery.”).

23a

material, like cigarette ash, capable of occupying space.

The history of EPA’s focus on recycling of hazardous

wastes to produce a commercial product, as well as the

use of commercial terms like “manufacturing” process

and “industrial” furnace, suggests that EPA’s decision to

employ commercial criteria in its decision was reasonable

at least.

EPA considered factual evidence from witnesses knowl-

edgeable in the construction field that aggregate pur-

chasers typically employ at least some specifications for

the product they purchase. In addition, EPA heard evi-

dence that a material must meet LaDOT specifications

before the State of Louisiana will buy it for state con-

struction projects and that many private commercial

contractors adopt these specifications as well. In the

face of this legal history, regulatory language, and factual

evidence, we cannot fault EPA’s choice to rely on com-

mon commercial specifications to define the term “aggre-

gate kiln” in 40 C.F.R. § 261.10.

We also find nothing wrong with EPA’s decision to

consider LaDOT criteria as highly indicative, though not

conclusive, of the content of common commercial specifi-

cations. MSP has proposed no alternative set of standards

or definition. Federal courts give deference to an agency's

interpretation of its own rules; under the circumstances

of this case, however, we seriously doubt that such def-

erence is necessary. We find no error in EPA’s choice of

legal standard.

Given EPA’s legal interpretation of its own regulation,

we find nothing arbitrary or capricious in its application

of this interpretation to the facts at hand, and we refuse

to upset its conclusion that MSP’s materia! is not com-

mercial grade aggregate. MSP concedes that its material,

and substances made from it, could not comport with

many of the LaDOT standards. In addition, MSP con-

cedes that it conducts no tests at all on its material to

determine strength, size, shape, specific gravity, absorb-

24a

necy, durability, compaction, or texture. Although MSP

presented expert studies suggesting that its slagged and

primary material could be useful in the production of

certain concrete and asphaltic products, other experts dis-

agreed. The choice of which expert opinions to credit

belongs to the EPA permitting staff. Like the Environ-

mental Appeals Board, we are struck by the fact that

MSP has never field tested any of the products that its

experts testified might possibly be manufactured in part

from its slagged and primary material and that none of

MSP’s product has ever been commercially used for these

purposes. In re Marine Shale Processors, Inc., Dkt. No.

06900009, RCRA Appeal No. 94-12, 1995 WL 135572,

at *12 (EPA 1994). Under such circumstances, EPA's

application of the law to the facts is not arbitrary or

capricious.

MSP continues its attack on the permit denial process

by alleging that EPA’s failure to insulate fully the per-

sonnel litigating the district court action from those par-

ticipating in the permit denial process rendered the latter

deficient under the Due Process Clause. MSP highlights

the roles of two individuals, Dr. Allyn Davis and Ms.

Terry Sykes.* We find no due process violation.

Dr. Davis was the Director of EPA Region VI’s

Hazardous Waste Management Division, which has over-

sight of both enforcement and permitting issues within

Region VI. Dr. Davis referred MSP’s facility to EPA’s

enforcement arm. He later made the initial determination

that MSP should not receive a BIF permit. MSP also

attacks Dr. Davis’s adjudicative role on the grounds that

®MSP also devotes a footnote to an allegation of misconduct

by Mr. Steven Silverman, an attorney in EPA’s Office of General

Counsel, labeling him the “finalizer” of EPA’s permit denial deci-

sion. This portion of MSP’s argument lacks merit.

25a

his deposition testimony showed that he had prejudged

certain key issues.

We find nothing remarkable in Dr. Davis’s role in the

permitting process.

It is also very typical for the members of adminis-

trative agencies to receive the results of investiga-

tions, to approve the filing of charges or formal

complaints instituting enforcement proceedings, and

then to participate in the ensuing hearings. This

mode of procedure does not violate the Administra-

tive Procedure Act, and it does not violate due

process of law.

Withrow v. Larkin, 421 U.S. 35, 56, 95 S.Ct. 1456,

1469, 43 L.Ed.2d 712 (1975). In his depositions, Dr.

Davis repeatedly testified that he had not prejudged issues,

that his decisions were based on information available

at the time, and that he had decided to refuse MSP’s

permit application after an unbiased review of the evi-

dence involved in the case. The fact that Dr. Davis came

to one conclusion based on some evidence did not at all

prevent him from deciding the issue fairly when con-

fronted with all the evidence. See NLRB vy. Donnelly

Garment Co., 330 U.S. 219, 236-37, 67 S.Ct. 756, 765,

91 L.Ed. 854 (1947) (holding that a hearing examiner’s

prior adverse ruling did not prevent him from adjudi-

cating the same case on retrial even though the examiner’s

initial decision had been reversed for improper exclusion

of evidence).

Ms. Sykes was one of the United States’ attorneys in

the enforcement action at pretrial and early in the trial

itself. After Dr. Davis and permit staff determined ini-

tially that EPA should deny MSP’s permit application

and identified the grounds for that determination, Ms.

Sykes wrote a draft of the findings of fact and conclusions

of law that served as the basis for EPA’s statement justify-

26a |

ing the permit denial. Permit staff official Elaine Taylor

provided evidence that Ms. Sykes became involved only

after the permitting branch had completed an exhaustive

review of MSP’s six volume application, after Dr. Davis

had approved the staff recommendation to deny the per-

mit, after the staff had identified the grounds for the

refusal, and several months after Ms. Sykes resigned from

the district court litigation team. EPA relied on Ms.

Sykes because of the illness of another attorney.

Ms. Sykes’ role in the process was less than ideal, and

the EAB correctly labeled it a mistake in judgment. /n re

Marine Shale Processors, Inc., Dkt. No. 06900009,

RCRA Appeal No. 94-12, 1995 WL 135572, at *23

(EPA 1994). The question, however, is whether Ms.

Sykes’ role denied MSP due process. We think not.

Ms. Sykes “is entitled to the normal presumption of

good faith that, in courts of law, government officials still

enjoy, that must be refuted by well-nigh irrefragable

proof.” Starr v. FAA, 589 F.2d 307, 315 (7th Cir.1979);

see Schweiker v. McClure, 456 U.S. 188, 195-96, 102

S.Ct. 1665, 1669-70, 72 L.Ed.2d 1 (1982). MSP’s bur-

den is to persuade us that the use of Ms. Sykes posed

“such a risk of actual bias of prejudgment that the prac-

tice must be forbidden if the guarantee of due process is

to be adequately implemented.” Withrow, 421 U.S. at

47, 95 S.Ct. at 1464. In this case, Ms, Sykes’ made no

decision at all. She had no power to decide whether to

grant MSP its permit, nor did she have power over those

making that decision. Her role consisted entirely of ar-

ticulating the thoughts and decisions of others. Even if

Sykes’ mind were “irrevocably closed,” FTC v. Cement

Institute, 333 U.S. 683, 701, 68 S.Ct. 793, 803, 92 L.Ed.

1010 (1948), she had a small role in the decision making

process.

MSP analogizes Sykes’ role to that of a federal court

law clerk and argues that our decision in Hall v. SBA,

695 F.2d 175 (5th Cir.1983), mandates reversal here.

27a

In Hall, we remanded a judgment for a new trial because

a magistrate judge used a law clerk who from previous

experience possessed intimate knowledge of the facts of

the case and who had previously written a letter to the

defendants stating that she agreed with the plaintiff.

Hall does not control our decision in this case for two

reasons. First, Hall was a decision under 28 U.S.C.

§ 455, which governs judicial conduct. “As this and

several other circuits have recognized, section 455 estab-

lishes a statutory disqualification standard more demand-

ing than that required by the Due Process Clause.” United

States v. Couch, 896 F.2d 78, 81 (Sth Cir.1990); see

also Dirt, Inc. v. Mobile County Commission, 739 F.2d

1562, 1566 (11th Cir.1984) (“Although such an appear-

ance of bias is clearly present in this case, the standards

governing administraitve proceedings are far more re-

laxed than those controlling judicial hearings.”). Second,

the Hall Jaw clerk was involved throughout the entirety

of the trial; she wrote bench memoranda, administered the

case until the end of litigation, and had daily informal

access to the magistrate. The danger existed that her bias

affected the decision itself. In this case, the record shows

that EPA used Sykes only after unbiased staff had reached

the tentative decision to deny MSP’s permit and had iden-

tified the grounds for the denial, and that Sykes had no

role in the process beyond providing a draft of the even-

tual findings of fact and conclusions of law.

By comparison, we note that district courts occassion-

ally adopt wholesale the findings of fact and conclusions

of law written by a victorious litigant. While we dis-

courage this practice, we have never radically altered the

standard of review in such cases, much less concluded that

such an adoption results in a per se due process violation.

See Lewis v. NLRB, 750 F.2d 1266, 1272 n. 5 (Sth Cir.

1985); James v. Stockham Valves & Fittings Co., 559

F.2d 310, 314 n. 1 (5th Cir.1977) cert. denied, 434 USS.

1034, 98 S.Ct. 767, 54 L.Ed.2d 781 (1978). We tolerate

the occasional use of this device because of our trust that

28a

district courts will closely examine the proposed findings

and will carefully consider the objections and arguments

of the opposing party. In this case, EPA formalized ex-

actly this sort of review process. After Sykes wrote the

proposed findings, EPA gave MSP an opportunity to criti-

cize her work. MSP took full advantage of this oppor-

tunity by filing 18 boxes of argument. EPA’s permitting

staff then reexamined the findings and adhered.

These facts distinguish this case from Bethlehem Steel

Corp. v. EPA, 638 F.2d 994, 1009 (7th Cir.1980), upon

which MSP principally relies. MSP does not allege that

EPA failed to disclose the grounds for its decision, that

prosecutorial staff sought to delay the timing of an ad-

judication in order to gain a tactical advantage, or that

adjudicatory staff sought to force MSP to waive certain

litigation defenses in return for favorable treatment on

its permit application. It was the combination of all of

these factors, together with the improper mixing of ad-

judiciary and prosecutorial staff, that concerned the Sev-

enth Circuit in Bethlehem Steel.

We question whether the use of Sykes as a federal law

clerk would have passed the muster under section 455,

given our statement in Hall that “[e]very judge has suf-

fered a change of heart after reaching a tentative decision.

Much might happen during the research and writing to

affect the decision. Until the decision was signed and

rendered, it was in pectore judicis, subject to possible in-

fluence.” 695 F.2d at 179. Nevertheless, the constitu-

tional standard for agency adjudication is not as stringent,

and we hold that EPA provided MSP due process of law

in its review of the permit application.

MSP makes one final argument. It contends that EPA

exceeded its statutory authority by basing the permit de-

nial in part on MSP’s poor history of compliance with

environmental laws. We refuse to reach this argument.

29a

We have upheld EPA’s denial of MSP’s permit on other

grounds, and MSP does not argue that the inclusion of

this alternative grounds for decision renders the permit

denial infirm.

AFFIRMED.

30a

APPENDIX B

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE DIVISION

Civil Action No. 90-1240

SECTION “H”

UNITED STATES OF AMERICA

versus

MARINE SHALE PROCESSORS, INC.

JURY INTERROGATORIES

1. Was MSP entitled to a recycler exemption from the

requirement of a permit as an operator of an incinerator

of hazardous wastes?

YES —— NO ——

GO ON TO QUESTION 2

2. Were all of the hazardous wastes accepted by MSP

beneficially used or reused or legitimately recycled?

YES NO

If your answer to question No. 2 is “YES”, skip ques-

tion 2(a) and go on to Question No. 3.

If your answer to question No. 2 is “NO”, answer the

following question No. 2(a).

2(a). Were all of the hazardous wastes accepted by

MSP prior to August 21, 1991, beneficially used or re-

used or legitimately recycled?

3la

YES —— NO ——

GO ON TO QUESTION NO. 3

3. Was the material produced by MSP from Southern

Wood Piedmont Company’s waste a “product” produced

for the general public’s use?

YES NO ——

GO ON TO QUESTION NO. 4

4. Did the waste material received by MSP from South-

ern Wood Piedmont Company undergo a chemical reac-

tion in the course of processing the material so as to be-

come inseparable by physical means?

YES NO ——

GO ON TO QUESTION NO. 5

5. Was the material produced by MSP from waste

other than Southern Wood Piedmont Company’s waste a

“product” produced for the general public’s use?

YES NO

GO ON TO QUESTION NO. 6

6. Did the waste material received by MSP from waste

other than Southern Wood Piedmont Company’s waste

undergo a chemical reaction in the course of processing

the material so as to become inseparable by physical

means?

YES —— NO —

GO ON TO QUESTION NO. 7

7. Did any sample of material which was placed on the

ground after going through the full MSP process leach

the constituents indicated in excess of the levels indicated?

5.0 ppm lead YES NO

1.0 ppm cadmium YES ¥ NO —

GO ON TO QUESTION NO. 8

32a

8. Did materials in pile 108 leach the constituents in-

dicated in excess of the levels indicated?

.37 ppm lead YES ¥ NO ——

.51 ppm lead YES ¥ NO ——

.094 ppm chromium YES “ NO ——

.066 ppm cadmium YES “ NO ——

GO ON TO QUESTION NO. 9

9. After January 29, 1990, did materials in pile 3

leach lead in excess of .51 ppm?

YES #” NO ——

GO ON TO QUESTION NO. 10

10. Is MSP’s rotary kiln an aggregate kiln?

YES NO ——

GO ON TO QUESTION NO. 11

11. Are Oxidizers | and 2 aggregate kilns?

YES —— NO #4

GO ON TO QUESTION NO. 12

12. Is MSP’s slag box an aggregate kiln?

YES —— NO ¥

GO ON TO QUESTION NO. 13

13. Are the rotary kiln, Oxidizers Nos. 1 and 2, and

Slag box part of a kiln system that produces aggregate?

YES NO ——

DATE AND SIGN THIS FORM AND

RETURN TO THE COURTROOM

May 24, 1994 /s/ (IMegible]}

Foreperson

33a

APPENDIX C

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

Docket No. 90-CV-1240

UNITED STATES OF AMERICA and

STATE OF LOUISIANA

-versus-

MARINE SHALE PROCEsSORS, INC.,

RECYCLING Park, INC., and

SOUTHERN Woop PIEDMONT COMPANY

New Orleans, Louisiana

June 15, 1994

3:00 p.m.

VOLUME 2

DAILY COPY TRANSCRIPT OF JURY TRIAL

BEFORE THE

HONORABLE ADRIAN G. DUPLANTIER

UNITED STATES DISTRICT JUDGE

* * * *

eae 34a

There are a number of legal issues involved in determin-

ing whether these conclusions give interim status eligibility

as a BIF (assuming compliance with other requisites) to

MSP’s facility pending final action on its BIF application.

These issues are as follows: First, the government

argues that an aggregate kiln which is not a lightweight

aggregate kiln is not entitled to interim status.

I had decided this issue earlier in favor of Marine Shale,

essentially concluding that the regulation, which is 40

CFR 266.10, which defines industrial furnaces, refers to

an “aggregate kiln,” not a “lightweight aggregate kiln.”

The other regulation in 40 CFR 266.103 grants interim

status and refers back to the regulation which defines boil-

ers and industrial furnaces. That reference back regula-

tion states that boilers and industrial furnaces are entitled

to interim status if they were in operation at the time the

permit requirement went into effect, provided they comply

with other stated requisites. For purposes of this discus-

sion, we assume that the other requisites have been com-

plied with.

On the issue of whether the aggregate kiln has to be a

lightweight aggregate kiln, I fully recognize that there is

some preamble language in which EPA discusses at length

a “lightweight aggregate kiln.” It is arguable that when

they do this, EPA is interpreting the words “aggregate

kiln” to be restricted solely to “lightweight aggregate kiln.”

And that is, in essence, what the government argues to me.

I realize it argues other things as well. However, I

point out that you could equally argue that whatever re-

strictions are proposed in the preamble language concern-

ing “lightweight aggregate kilns” apply only to lightweight

kilns and not to other aggregate kilns. In other words,

one could argue that the regulation itself speaks of aggre-

gate kilns. The preamble language about lightweight ag-

gregate kilns is restricted to lightweight aggregate kilns,

not to other types of aggregate kilns.

In any event, I am absolutely satisfied that if the agency

had wanted to restrict interim status entitlement to light-

35a

weight aggregate kilns, it certainly knew how to do so,

and would have done so. It knew how to spell the word

“lightweight” in issuing the regulations.

For example, it exempted “lightweight aggregate kilns,”

but not all aggregate kilns, from certain requirements. I

refer here to 40 CFR 266.102(e) (3) (iii).

As an aside, I think that citation beats even the Internal

Revenue code.

Therefore, the restrictive interpretation urged by the

plaintiff, the United States Government, that “aggregate

means only lightweight aggregate,” is either an unreason-

able interpretation or it is legislative in nature in restrict-

ing the regulations, or it is both.

The second issue is that MSP argues that notwithstand-

ing the jury’s answer that the oxidizers and the slag box

were not aggregate kilns, I should rule that they are as a

matter of law, I decline to do that.

I note once again, as I said before in various stages of

this litigation, that it is certainly arguable that there is no

fact issue concerning any of these interrogatories. And

this is, indeed, a close question. I conclude, however, that

here, as often is the case, we are presented with mixed facts

and legal issues, and I defer to the jury’s conclusions.

The legal issues, of course, include the meaning of the

terms used in the statute and regulations. For example,

what does “aggregate kiln” mean? These legal issues are

mixed with fact issues such as the facts involved in the

method by which MSP operates its facility, the fact issue

of whether the industry involved would consider this to be

an aggregate kiln, et cetera.

I conclude, applying the regular test that has been re-

peated many, many times in appellate decisions, that there

is sufficient evidence for a reasonable trier of fact to re-

solve the issues as the jury did.

To state it differently, after considering all the evidence

and reasonable inferences therefrom, I conclude that a

reasonable jury could arrive at the results which this one

did with respect to Interrogatories 10, 11, 12 and 13.

36a

The third and remaining issue is the legal effect to be

given to the jury’s answer. The effect which I give to the

jury’s conclusion that the rotary kiln is an aggregate kiln

is to decide as a matter of law that the rotary kiln, as such,

is entitled to interim status as a BIF notwithstanding that

it is not a lightweight aggregate kiln. The last issue is

whether the entire system, including the oxidizers, the slag

box, which otherwise would be required to be permitted as

incinerators, is entitled to interim BIF status as an aggre-

gate kiln system. I have no difficulty concluding that each

of these devices is an integral component of a manufac-

turing process; they are all essential to the production of

MSP’s slagged aggregate, whatever that slagged aggregate

is, and whatever status it may be entitled to.

The real difficulty involved is whether the regulation

which defines industrial furnaces as including “aggregate

kilns” meant to confer interim status not only upon the

kiln, but also upon other devices which would otherwise

have to be permitted as incinerators if those devices are

an integral part of a process involving an aggregate kiln.

As I have indicated in conferences with counsel both on

and off the record, I have expressed significant reservations

about MSP’s contention on this issue. Only recently was

my attention called to EPA’s interpretation involving Giant

Cement. See the memorandum dated August 11th, 1992

from the Deputy Director of the Office of Solid Waste con-

cerning the “combined operation of the resource recovery

kilns and cement kilns at Giant Cement Company”, and

the January 25, 1994 letter from the Chief of the RCRA

branch addressed to Giant Resource Recovery Company.

It is clear to me that in this instance EPA acknowledged

interim BIF status with respect to a device which would

otherwise be required to be permitted as a hazardous waste

incinerator on the basis that the device was “operating in

series with a cement kiln,” and because it was an integral

part of a manufacturing process.

I understand the argument which I hear today, and I

concede that I looked at the submission only today during

37a

oral argument from, I guess, the Region to Ms. Lowrance

that lead to the initial memo. It seems to me that it makes

no difference for purposes of the logic involved in the

memo from the deputy director of the Office of Waste

Management—-did I get that right?

MR. BUCKHEIT: Office of Solid Waste.

THE COURT: Office of Solid Waste. What he was

saying was “we will henceforth regulate otherwise incinera-

tors as interim BIF’s. Whether he was saying they don’t

need an incinerator permit, or whether he was saying

simply “we are going to regulate them as if they are

BIF’s” the effect is the same. He said that because they

were an integral part of the manufacturing process involv-

ing a cement kiln, and that they were operated in a series

—his words—that they are part of a system, and they are,

therefore, part of a BIF, and to be treated as such.

It is clear that in this instance the device would other-

wise have been regulated as an incinerator. But, while

regulations or interpretations of what a lightweight aggre-

gate kiln is, | have heard nothing in the trial nor at any

time that would indicate any reasonable basis for conclud-

ing that the slagged aggregate is lightweight aggregate.

What is the result of that failure to comply? I am not

ready to rule at this time. My inclination is to follow the

Third Circuit, which seems to say that if MSP is otherwise

entitled to interim status and I have decided that the jury

has decided that it is BIF, I have no right to terminate that

status, that only EPA can do that in an agency process.

And once that is done, it goes directly then to the court of

appeal.

I am persuaded to that view because of the specific ap-

pellate review. The Third Circuit made clear that the

revocation of interim status is like a revocation of a per-

mit, and that can only be done by agency action. And

that never gets into the district court. It goes right up to

the court of appeal.

I have already spoken to the issue about the mystery

involved and why this hasn’t been done earlier if, indeed,

38a

it is EPA’s position, as their counsel have repeatedly stated

to me, that during the three years which this application

has been pending, it was, in fact, incomplete, inaccurate

or false. I am also persuaded to that * * * * * * *

* * * *

39a

APPENDIX D

[Filed Jun. 15, 1994]

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE DIVISION

Civil Action No. 90-1240

UNITED STATES OF AMERICA

versus

MARINE SHALE PROCESSORS, INC.

JUDGE DUPLANTIER (EDLA)

MAG. JUDGE AFRICK (EDLA)

JUDGMENT

Considering the jury’s answers to interrogatories Nw. 3

and 4, and considering the Court’s Reasons for Judgment

this date expressly directing entry of judgment;

IT IS ORDERED, ADJUDGED and DECREED that

all material produced by Marine Shale Processors, Inc.

from Southern Wood Piedmont Company materials pro-

cessed separately from other material satisfies all criteria

of 40 CFR § 266.20(b) and corresponding Louisiana

regulations, and, as such, is not subject to regulation as

a hazardous waste under the Resource Conservation and

Recovery Act, 42 U.S.C. § 9601, et seq., Part 40 of the

Code of Federal Regulations, or any corresponding fed-

eral or Louisiana regulations.

Dated this 15th day of June, 1994.

/s/ [Illegible]

United States District Judge

40a

{Filed Jun. 15, 1994]

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE DIVISION

Civil Action No. 90-1240

SECTION “H”

UNITED STATES OF AMERICA

versus

MARINE SHALE PROCESSORS, INC.

REASONS FOR JUDGMENT

For the following reasons, as well as those stated on the

record on June 1, 1994, I grant the motion of Southern

Wood Piedmont Company (SWP) for entry of judgment

pursuant to Rule 54(b) of the Federal Rules of Civil

Procedure on Count 1 of its Complaint of Intervention.

SWP’s complaint in intervention alleges that “MSP has

taken delivery of certain material from Piedmont (the

‘Material’) and, using its thermal process, has made a

product from that Material (the ‘Product’).” The com-

plaint in intervention also alleges that “[t]he Material is

and at all times has been processed by MSP separately

from material from other sources.” Count 1 of the com-

plaint seeks a declaration that the “Product” is not a

“hazardous waste” and that the “Product” is “a ‘product’

within the meaning of 40 C.F.R. § 266.20(b) and is not

required to be disposed of as a ‘hazardous waste’.” SWP’s

sole claim for relief under Count | relates to its material

which was unmixed with any other generator’s material

prior to its exit from MSP’s kiln.

4la

The jury’s answers to Interrogatories Nos. 3 and 4

fully dispose of all fact issues related to Count 1 of SWP’s

intervention. Those interrogatories address only the SWP

material which exited MSP’s rotary kiln without having

been mixed with material from other sources. Any SWP

material which was mixed with other waste material prior

to exiting the kiln was no longer SWP’s Count | material

and therefore was not encompassed by Interrogatories

Nos. 3 and 4. Interrogatory No. 3 addressed only “ma-

terial produced by MSP from Southern Wood Piedmont

Company’s waste”, not material produced from SWP’s

waste and other waste. “Mixed” material is not included

in Count | of SWP’s intervention, nor in Interrogatories

Nos. 3 and 4, Because the jury reached no verdict as to

Interrogatories 5 and 6, there has been no determination

that such “mixed” material is a “product”.

Count | of SWP’s intervention is one of many claims

for relief presented in this action. Because there is no just

reason for delay in entering judgment on that claim, I

expressly direct entry of judgment in favor of SWP on

Count | of its complaint in intervention. Fed. R. Civ. P.

54(b).

June 15, 1994 /s/ [Illegible]

United States District Judge

42a

APPENDIX E

{Filed Jun. 20, 1994]

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE DIVISION

Civil Action No. 90-1240

SECTION “H”

UNITED STATES OF AMERICA, et al

vs.

MARINE SHALE PROCESSORS, ef al

ORDER AND REASONS: MOTIONS FOR

JUDGMENT UNDER RULE 54(b)

The United States has moved for judgment as a matter

of law as to its Count One claim; MSP has moved for

judgment on the same count, based upon the partial ver-

dict of the jury, and SWP has moved for judgment on the

counterclaim of the United States against it, also based

upon the partial verdict of the jury. For the reasons as-

signed orally at the hearing on June 15, as hereby sup-

plemented, I DENY all such motions.

Stripped of regulatory “fuzz”, the government’s Count

One claim is that MSP should be enjoined from further

operation essentially on two bases:

(1) MSP is not and never has been a legitimate

recycler, and therefore must have a permit as

an incinerator of hazardous wastes, which it

never has had.

(2) Conceding, arguendo, that MSP is a legitimate

recycler, subsequent to August 2!, 1991, the

effective date of the BIF permit requirement,

MSP is in violation of RCRA because it does

43a

not have a BIF permit nor interim status as a

BIF.

Prior to the BIF permit requirement, a facility which

burned hazardous waste was required to have an incinera-

tor permit, unless it was exempt therefrom as a recycler,

in which case it needed no permit. When the BIF permit

requirement became effective, the only change was that

recyclers who until then needed no permit were required

to obtain a BIF permit. Recyclers were granted interim

status as a BIF pending processing of their BIF permit

applications.

What complicates the analysis required to dispose of

the pending 54(b) motions is the method by which EPA

chose to grant interim BIF status: it listed twelve types

of operations in 40 C.F.R. 260.10 (which we have dubbed

the “twelve apostles”), which EPA considered as engaged

in legitimate recycling of hazardous wastes. Apparently

conceding that it was not omniscient, EPA included in the

“twelve aposiles” section a provision that other operations

could be added to the list under certain circumstances,

and thereby be granted interim status. Government coun-

sel have suggested that this procedure cured the problem

created for a lawful recycler whose operation was not

listed among the twelve. What it did not cure was his

status pending action upon either his BIF application or

his request to be added to the list of twelve. Either action

could take several years, based upon the backlog of other

similar matters pending before EPA. The regulation (40

C.F.R. 260.10) conceded the possibility that there may

exist a legitimate recycler who was not included on the

“apostle” list. However, such a legitimate recycler would

be effectively precluded by 40 C.F.R. 225.103(a) from

doing business until his membership application was acted

upon. It is doubtful that the right to continue business

as a recycler without a permit, certainly a valuable prop-

erty right, could be taken away, even temporarily, by

simply not including that recycler on the list of twelve,

with no opportunity for a hearing. In this particular case,

that issue is removed by the jury’s answer to Interroga-

44a

tories 10 and 13 and the legal effect which I have given

thereto: interim status. I cbserve parenthetically the

fundamental principle that-statutes and regulations should

be construed, if possible, in a manner which avoids con-

stitutional issues.’

EPA could have taken a much simpler and, I submit,

more sensible approach by granting interim BIF status to

any operator, including MSP, which, prior to the effective

date of the BIF permit requirement, claimed the right,

as a recycler, to operate without a permit. This would

have left the determination of recycler status to the BIF

permit process, which has involved delays of several years.

Instead, EPA limited interim status to the “twelve

apostles” and any others who might be added later. More-

over, EPA apparently equates BIF status, interim or by

permit, to lawful recycler status. If one accepts that

equation, then every reference to interim status in my

oral reasons at the June 15 hearing would have to be

changed. Instead of interim BIF status, MSP would be

entitled only to have its system and all of its components

declared to be an industrial furnance as an aggregate kiln

within Section 260.10. The anomaly is that Section

1 Unless every legitimate recycler upon whom the new BIF

permit requirement was imposed is given interim status pending a

decision on its BIF application, there may be a constitutional prob-

lem involved. Assuming that MSP was a legitimate recycler before

the BIF permit requirement went into effect, if it is not given

interim status as a BIF applicant, it is effectively shut down until

the government acts on its BIF permit application. My “knee-jerk”

reaction is that this would be unconstitutional. I do not think that

the government can regulate business activity in this fashion.

I recognize that it can criminalize conduct which was previously

not criminal and effectively prohibit repetition of the conduct.

However, it is doubtful that the government could constitutionally

impose a permit requirement upon activity which previously. did

not need to be permitted and prohibit the business from continuing

that activity pending a lengthy permit process. This is what would

happen if we assume arguendo that MSP was legitimately recycling

before the BIF permit requirement was imposed and if, because its

aggregate kiln system was not included within the “twelve apostles”,

it is denied interim status.

45a

260.10, read with Section 266.103(a), confers interim

BIF status on the listed operations. In my view, BIF

interim status does not equate to legitimate recycler status.

Conferring of interim BIF status simply permits an opera-

tor to continue to operate without a BIF permit pending

action upon his BIF application. If that operator was not

. a legitimate recycler before acquiring interim BIF status,

it remains unlawful.

I conclude that interim BIF status can be and has been

granted to operators such as MSP who claim to be re-

cyclers but who in the permitting process may be denied

a BIF permit because EPA determines that they are not

lawful recyclers.

None of the foregoing says anything about the conten-

tion of the United States that MSP is not and never has

been a lawful recycler, nor has the jury spoken to that

issue. Because that contention is one of the bases for

the government’s claim that MSP is operating without 4

required RCRA permit, the conclusion that MSP is en-

titled to interim BIF status does not dispose of that claim

against MSP or of the government’s counterclaim against

SWP.

THE GOVERNMENT'S MOTION

The government claims that it is entitled to a 54(b)

judgment on Count One, based upon its contention that,

even if MSP achieved BIF interim status, it forfeited that

status because of a faulty BIF application. I remain

convinced, as I indicated in my June 15 oral reasons,

that the decision of the Third Circuit, Vineland Chemical

Co., Inc. vs. United States Environmental Protection

Agency, 810 F.2d 402 (3rd 1987) is correct and that its

reasoning applies here. If MSP achieved interim BIF

status, that status can be revoked by reason of an applica-

tion violation only by administrative agency action, ap-

pealable to the Circuit Court of Appeals.

June 20, 1994 /s/ ({Illegible}

United States District Judge

46a

The above observation lends support to the conclusion

that the list in 40 CFR 260.10 should be interpreted

broadly so as to encompass all legitimate recyclying ac-

tivity which was being conducted at the time that the BIF

permit regulation went into effect. The purpose of the

new regulation was simply to impose BIF permit require-

ments upon legitimate recyclers. EPA should not be able

to shut down a legitimate recycler until EPA has proc-

essed its BIF application. There may be reasons for deny-

ing a BIF permit, including sham recycling, but this would

be done only after due process.

Therefore, it may be of no consequence how the jury

answered Interrogatories 10 through 13. The only real

issue concerning interim BIF status may be whether

Marine Shale was a legitimate recycler before the BIF

regulation went into effect.

47a

APPENDIX F

[Filed Aug. 30, 1994]

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

Civil Action No. 90-1240

SECTION “H”

UNITED STATES OF AMERICA

versus

MARINE SHALE PROCESSORS

ORDER AND REASONS

Sua sponte, I reconsider the Order and Reasons dated

July 29, 1994, insofar as I granted summary judgment to

plaintiffs on their claim with respect to storage of F

wastes. For the following reasons, I deny plaintiffs’ mo-

tion for summary judgment as to that claim and grant

MSP’s motion for summary judgment on plaintiffs’ storage

claims insofar as it relates to F wastes.

I have struggled mightily for nearly a year to under-

stand the logic behind many of the regulations and agency

interpretations involved in this litigation. Over twenty-five

years of a quite active law practice and over twenty years

of a quite active judicial career have availed me little in

this struggle. I have attempted unsuccessfully to discern

some pattern in the regulatory scheme.

I previously rejected MSP’s contention that it has interim

status to store F and K wastes by virtue of its Jan-

uary 6, 1986, permit application to store U and D wastes

and its amendment thereto dated January 31, 1986, add-

48a

ing F and K wastes. In rejecting that contention, im-

plicitly, if not explicitly, I determined that EPA’s inter-

pretation of its own regulation’ (identical for our pur-

poses to the state regulation at issue)’ and the state’s own

interpretation manifested by LDEQ’s written pronounce-

ments confirming MSP’s interim status were unreasonable.

During the period since the last hearing on remedy and

the most recent conference with counsel, I have re-read

the various memoranda on this issue as well as jurispru-

dence concerning the deference due to agencies’ interpre-

tations of their regulations and have attempted to discern

the reasoning behind the interpretations which I rejected.

I now conclude that it is not unreasonable for EPA to

acknowledge interim status for storage of any regulated

hazardous waste for a facility which has obtained interim

status to store some other regulated hazardous waste. As

applied to the situation involved in this case, it is not

unreasonable for EPA and LDEQ to interpret the regula-

tions governing “changes during interim status” in the

following manner: MSP, having obtained interim status

to store D and U wastes by filing the January 6, 1986

permit application also secured interim status to store

regulated wastes which it had not previously stored, such

as F wastes, by simply amending its January 6, 1986

application. Because MSP began to store F wastes only

after it filed a Part 1 storage application for D and U

wastes and an amended application to store F wastes, it

satisfies the requirements of the regulation as so inter-

preted.

My conclusion that the regulatory interpretation is not

unreasonable is based on two significant points. First, an

operator who has achieved interim status to store hazard-

ous wastes is bound by all of the regulations concerning

the storage of those wastes; thus, there seems to be little

serious objection to permitting that operator to store

wastes previously regulated (but not handled by that

240 C.F.R. § 122.23 (c) (1).

2? LHWR 23.2(a).

49a

operator) as well as those newly added to the list, pending

processing of its application for a permit. Second, if the

regulatory agencies are concerned about the operation of

any interim status storage facility, the agency can either

take action to terminate status or expedite the application

and if necessary deny the permit, either of which can be

done promptly.

The foregoing has no effect upon my conclusion that

plaintiffs are entitled to summary judgment against MSP

for storage of K wastes without a permit because MSP

lacked interim status for K storage. LHWR 23.2(a) and

its federal counterpart 40 C.F.R. § 122.23(c)(1) do not

apply where, as here, a facility stores a regulated waste

at a time when it lacks interim status to store any waste.

MSP stored regulated K wastes beginning in July 1985,

prior to filing its Part 1 storage application. Thus, MSP’s

storage of K wastes does not fall within the regulation’s

window of opportunity for interim status offered for previ-

ously regulated wastes.

In reaching the foregoing conclusion, I have not over-

looked the government’s argument that MSP is not en-

titled to interim status to store any wastes because it was

a storage violator prior to filing its application to store

D and U wastes. Finding no statutory or regulatory basis

for that contention, nor logic to support it, I decline to

follow the one district court decision to that effect. Sierra

Club v. Chemical Handling Corp., 1992 U.S. Dist. Lexis

21791 (D. Colo. 1992). It is unreasonable to suggest

that an operator who has once violated a regulation is

thereafter precluded from ever lawfully operating. One

could argue with equal force that any permittee who vio-

lates an environmental regulation would as a result lose

his permit, a position never advocated by EPA or LDEQ.

There is no reason for delay in entering judgment on

behalf of defendant on the plaintiffs’ claim with respect

to storage of F wastes; I expressly direct entry of judg-

ment on said claim.

50a

My minute entry dated August 8, 1994, dealt with

F and K wastes jointly and determined that there were

1520 storage violations. It is now necessary to determine

the number of violations for storage of K wastes. I use

the same methodology employed in the August 8, 1994,

minute entry. I have excluded all violations which oc-

curred in 1985, the period covered by the criminal bill of

information for which a fine has already been imposed

and paid. Commencing with violations occurring in 1986,

I conclude that there are 354 violations. :

In reaching this conclusion I note that there was no

evidence that wastes were ever fed into the kiln either

directly from the transport vehicle or after only a brief

period of containment in an MSP tank for the purpose

of conveyance to the kiln. If there were such evidence,

those days would not be counted as violations. “Storage

does not necessarily begin the instant that wastes are un-

loaded from the transport vehicle and placed in some

form of containment. I interpret the term “storage” in

RCRA as excluding a reasonable period of time between

the unloading of the wastes and their placement in the

kiln.

August 30, 1994,

/s/ [Mllegible]

United States District Judge

Sla

APPENDIX G

[Filed Aug. 30, 1994]

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF LOUISIANA

LAFAYETTE DIVISION

Civil Action No. 90-1240

SECTION “H”

UNITED STATES OF AMERICA, ef al

MARINE SHALE PROCESSORS, INC., et al

JUDGMENT ON MAIN DEMAND: CLEAN AIR

ACT, CLEAN WATER ACT, STORAGE OF “F”

AND “K” WASTES AND LAND BAN VIOLATIONS

JUDGMENT ON COUNTERCLAIM AGAINST

SOUTHERN WOOD PIEDMONT COMPANY

Considering the court’s directions as to entry of judg-

ment and the oral reasons therefor at the conclusions of

the trials before the court without a jury on July 7, 8,

and 11, 1994, and August 15 and 16, 1994, on the

claimed violations of the Clean Air Act and Clean Water

Act, and on the counterclaim against Southern Wood

Piedmont Company, and further considering the order

granting plaintiffs’ motion for summary judgment on lia-

bility regarding storage of K wastes and land ban viola-

tions, entered on July 29, 1994, the order related thereto

52a

entered on August 8, 1994, the order entered this date

granting defendant’s motion for summary judgment on

the storage of F wastes and directing entry of judgment

thereon, the order entered this date assessing fines, and

the trial on remedy on August 15, and 16, 1994,

And further considering the court’s minute entry dated

August 18, 1994, expressly directing the entry of judg-

ment as to each of these claims;

IT IS ORDERED, ADJUDGED AND DECREED

that there be judgment as follows:

CLEAN AIR ACT

In favor of defendants, Marine Shale Processors, Inc.

and against plaintiffs, the United States of America and

the State of Louisiana, dismissing the United States’

Tenth Claim for Relief for alleged exceedances of Permit

1036 M-1, without prejudice to state court or adminis-

trative enforcement action.

In favor of defendant Marine Shale Processors, Inc.

and against plaintiffs the United States of America and

the State of Louisiana dismissing the United States’

Eleventh Claim for Relief.

In favor of plaintiffs, the United States of America and

the State of Louisiana and against defendant Marine

Shale Processors, Inc., upon the United States’ Ninth

Claim for Relief in its Second Amended and Supplemental

Complaint:

(a) Ordering Marine Shale Processors, Inc to pay

a civil penalty to the United States of America and

the State of Louisiana in the amount of $3,500,000

for violations of the Clean Air Act, with interest

thereon from date of judgment at the rate provided

by law, all payments on said fine to be apportioned

50% to the United States and 50% to the State of

Louisiana.

53a

(b) Permanently enjoining Marine Shale Processors,

Inc. from:

(1) causing, suffering, or permitting emissions

from its facility that are not authorized by a

Major Source permit duly issued pursuant to the

Prevention of Significant Deterioration provi-

sions of the Clean Air Act, §§ 160-167, 42

U.S.C. §§ 7470-7479 and regulations promul-

gated thereunder, or a federally enforceable

Minor Source permit that restricts Marine Shale

Processors, Inc.’s emissions such that the facility

is not a Major Source; and

(2) operating, or using for storage, treatment, or

blending of any waste, feedstock, fuel, ash or

aggregate, any miscellaneous unpermitted source

of air emissions including but not limited to

tanks or barges.

This injunction is STAYED during the pend-

ency of any appeal by defendant from that part

of this judgment granting this injunction or until

further order of the court on motion of plain-

tiffs based upon action concerning MSP’s air

quality permit applications.

IT IS FURTHER ORDERED, ADJUDGED AND DE-

CREED that during the period that this injunction is

stayed, Marine Shale Processors, Inc. shall comply with

the following interim terms and conditions of operation

until further order of the court:

1) MSP shall comply with the following emission

limitations: ;

NOx 63 pounds per hour on a 1 hour rolling aver-

age, and further limited to no more than 19.5

tons per rolling thirty day period.

54a

SO2 53 pounds per hour on a 1 hour rolling aver-

age, and further limited to no more than 18

tons per rolling thirty day period.

HCl 100 pounds per hour on a 1 hour rolling

average, and further limited to no more than

32 tons per rolling thirty day period.

CO 40 pounds per hour on a 1 hour rolling aver-

age basis.

HC 9.9 pounds per hour on a 1 hour rolling aver-

age basis.

TSP Particulate emissions shall not exceed 9.5

pounds per hour on a rolling 1 hour basis.

2) MSP shall comply with the limits set forth above

within 30 days of the entry of this Judgment, except for

the limits applicable to HC] and SO2. MSP shall comply

with the limits for HCl and SO2 within 120 days unless

the Court, for geod cause shown, allows MSP additional

time for the engineering and construction necessary as

set forth in paragraph (3) below relating to removal

of baghouse dust from the system.

3) MSP shall within 120 days undertake the necessary

engineering and construction to effectuate the removal, on

a monthly basis of baghouse dust from the system for

disposal in an appropriate landfill.

4) MSP shall report the operational parameters that

are recorded by the Bailey computer to the United States

Environmental Protection Agency and LDEO on a

monthly basis Such data shall be submitted in an IBM

PC compatible format that is acceptable to the parties.

5) Within 30 days of entry of this Judgment, MSP

shall retain at its expense an impartial environmental con-

sultant, acceptable to the EPA and LDEQ (such accept-

ance not to be unreasonably withheld), to have access

to the data provided pursuant to paragraph (4) above,

55a

and who will, for one week a month, monitor MSP’s op-

erations and confirm the accuracy of the data being col-

lected and submitted to EPA and LDEQ, and otherwise

monitor MSP’s compliance with all environmental reg-

ulations including, but not limited to, the Clean Air Act,

the Clean Water Act, and the management of F and K

wastes, in accordance with the terms and conditions set

out in this Judgment.

6) Within 30 days of the entry of this Judgment, MSP

shall submit to EPA and LDEQ for their review and

approval enforceable protocols for determining the ac-

curacy of the CEMS used to determine compliance with

this order. Such protocols shall include provisions relat-

ing to calibration, scaling, operational readiness, redun-

dancy, precision and accuracy.

7) MSP shall take appropriate engineering measures

within 60 days to render physically impossible any volun-

tary bypass of the facility’s baghouses such that particu-

late matter is emitted to the atmosphere.

CLEAN WATER ACT

In favor of plaintiff, United States of America, and

against defendant Marine Shale Processors, Inc., upon

the United States’s Seventh and Eighth Claims for relief

in its Second Amended and Supplemental Complaint:

(a) Ordering Marine Shale Processors, Inc. to pay

a civil penalty to the United States of America

in the amount of $3,000,000 for violations cf the

Clean Water Act, with interest thereon from date of

judgment at the rate provided by law.

(b) Permanently enjoining Marine Shale Processors,

Inc. from discharging pollutants from its facility

except as authorized by a valid NPDES permit.

This injunction is STAYED during the pendency

of any appeal by defendant from that part of this

56a

judgment granting this injunction or until further

order of the court on motion of plaintiffs based

upon action concerning MSP’s NPDES permit.

IT IS FURTHER ORDERED, ADJUDGED AND

DECREED that during the period that this injunction is

stayed, Marine Shale Processors, Inc. shall comply with

the following interim terms and conditions of operation

until further order of court:

(1)

(2)

(3)

(4)

Subject to Paragraph (2) below, MSP shall

comply with the discharge limits proposed by

in its January, 1991, NPDES permit applica-

tion. The sampling location for each outfall

shall be such that stormwater discharges are

not commingled with water from Bayou Boeuf

or fire protection water;

MSP has represented, and the United States has

agreed, that MSP must construct a stormwater

treatment plant in order to comply with the

limits ordered herein. MSP shall install the

necessary facility as quickly as possible, and

be prepared to justify, 90 days hence, any fur-

ther extension for the enforcement of permit

limits proposed by MSP in 1991 of time beyond

90 days from the date of entry of this Order.

For all parameters other than heat, MSP shall

also identify and thereafter utilize a measuring

point for determining compliance with limits

ordered herein for the effluent from outfall 002, ~

that is upstream of any dilution.

The discharge from outfall 002 shall not ex-

ceed 100 degrees F, on an instantaneous basis.

MSP shall maintain complete records of the

source, prior use and quantity of any water used

to reduce the temperature of cooling water

prior to discharge to the Bayou and shall pro-

57a

vide a copy of such records to EPA on a

monthly basis. MSP shall continuously monitor

the temperature and discharge rate of cooling

water, after mixing with other water to reduce

its temperature, but upstream of any influence

of water in Bayou Boeuf.

STORAGE OF F AND K WASTES

In favor of plaintiffs United States of America and the

State of Louisiana and against defendant Marine Shale

Processors, Inc., upon the United States’ Fifth Claim for

Relief in its Second Amended and Supplemental Com-

plaint, as to K wastes:

(a) Ordering Marine Shale Processors, Inc. to

pay a civil penalty in the amount of $1,000,000 for

violations of Section 3005(a) of the Resource Con-

servation and Recovery Act, 42 U.S.C. § 6925(a),

LHWR Chapter 3.2(h) and LAC 33.V.303.B

(1990), with interest thereon from date of judgment

at the rate provided by law, all payments on said

fine to be apportioned 50% to the United States and

50% to the State of Louisiana.

(b) Permanently enjoining Marine Shale Proces-

sors, Inc. from storing K wastes at its facility in any

tanks, barges, or other containers except as author-

ized by a valid RCRA storage permit.

This injunction is STAYED during the pendency of

any appeal by defendant from that part of this Judgment

granting this injunction.

In favor of defendant Marine Shale Processors, Inc.

and against plaintiffs United States of America and the

State of Louisiana upon the United States’ Fifth Claim

for Relief in its Second Amended and Supplemental Com-

plaint, as to F wastes, dismissing said claim.

58a

LAND DISPOSAL OF

CHARACTERISTIC WASTES

In favor of the plaintiff United States of America and

against defendant Marine Shale Processors, Inc., upon the

United States’ Third Claim for Relief ordering Marine

Shale Processors, Inc. to pay a civil penalty to the United

States of America in the amount of $500,000 for viola-

tions of Section 3004(d) of the Resource Conservation

and Recovery Act, 42 U.S.C. 6924(d), with interest

thereon from date of judgment at the rate provided by

law.

IT IS FURTHER ORDERED, ADJUDGED AND

DECREED that prior to MSP filing a notice of appeal

in this action and during the pendency of any stay granted,

MSP shall not disburse funds to or on behalf of its share-

holders by way of dividends, royalties, loans, debentures

or otherwise, except as follows: (1) The normal salaries

which have been paid to Mr. John M. Kent, Sr. and Mr.

John M. Kent, Jr. for services to MSP, may continue to

be paid, without increase, during the period of the stay;

(2) MSP may create a reserve on its books which will

reflect the royalties due and payable to Mr. John M. Kent,

Sr., which reserve shall be conditioned so that no monies

may be disbursed unless and until all financial obliga-

tions under this judgment are satisfied and said disburse-

ment is approved by the court, and (3) MSP may make

disbursements to shareholders for the purpose of pay-

ment of MSP’s local, state and federal taxes.

MSP shall not engage in any extraordinary disburse-

ment which may impair its ability to satisfy any judg-

ment which may be obtained by the United States without

providing 15 days prior notice to the parties.

we =

Spt "9 CAUSE i tae. es

59a

COUNTERCLAIM AGAINST

SOUTHERN WOOD PIEDMONT COMPANY

In favor of plaintiff United States of America and

against defendant Southern Wood Piedmont Company,

upon the United States’ Counterclaim, ordering Southern

Wood Piedmont Company to pay a civil penalty to the

United States of America in the amount of $25,000 for

violations of Section 3002(a)(5) of the Resource Con-

servation and Recovery Act, 42 U.S.C. § 6922(a)(5),

with interest thereon from date of judgment at the rate

provided by law.

August 30, 1994 /s/ [Illegible]

United States District Judge

APPENDIX H

[Loco]

UNITED STATES

ENVIRONMENTAL PROTECTION AGENCY

REGION 6

1445 ROSS AVENUE, SUITE 1200

DALLAS, TX 75202-2733

STATEMENT OF BASIS FOR DENIAL OF

PERMIT APPLICATION BY

MARINE SHALE PROCESSORS, INC.

September 15, 1994

6la

TABLE OF CONTENTS

I. SUMMARY OF THE DECISION .......................

RR ket

ITI.

A. Description of the MSP Facility 2.000000...

B. The History of Hazardous Waste Combustion

RAE IRE NER: TC

C. EPA’s Interpretation of the Definition of

SR I i in

EPA’S RATIONALE FOR DENYING MSP’s

FREE GA EME ccbitnnsdbidiiceweesstneensmmnencnerens

1. MSP’s Rotary Kiln is Not Designed or

Used Primarily to Accomplish Recovery

TRE SEE a

2. MSP Does Not Use Its Rotary Kiln to

Burn or Reduce Raw Materials to Make

3. MSP Does Not Use Its Rotary Kiln to

Burn or Reduce Secondary Materials as

Effective Substitutes for Raw Materials

in a Process Using Raw Materials as

Principal Feedstocks ...0.0.000.0.0..00..ccccccccen ee

4. MSP Does Not Use Its Rotary Kiln to

Burn or Reduce Secondary Materials as

Ingredients in an Industrial Process to

Make a Material Product 200.000.0000...

i. Determining Whether a Facility is In-

volved in an Industrial Process ............

8 ile eet. Se

b. When a secondary material is inef-

fective or only marginally effective

for the claimed use, the activity may

not be recycling but surrogate dis-

62a

TABLE OF CONTENTS—Continued

Page

ce. Sham recycling may occur when

secondary materials are used in ex-

cess of the amount necessary for

operating @ PYOCeSS ...............-.c.0----00

d. A process may be sham recycling if

the secondary material used is not

as effective as the material it re-

e. Wastes may be burned for destruc-

tion if the operator receives a

greater percentage of income from

being paid to burn waste than it

makes from producing a product......

f. Wastes may be burned for destruc-

tion if they are solicited and ac-

cepted indiscriminately and are not

selected to meet specifications re-

lated to a recycling purpose. A proc-

ess so operating is not an integral

part of a manufacturing process....

g. Wastes are burned for destruction

if the toxic constituents in the waste

do not contribute to the product......

h. Careless handling of hazardous

wastes by an alleged recycler may

indicate that the materials are being

disposed of rather than recycled......

i. Hazardous wastes may be burned

for destruction if there are inade-

quate records to document alleged

recycling activities ............................

j. Similarities between MSP’s opera-

tions and those of hazardous waste

incinerators support classification of

MSP as an incinerator ......................

63a

TABLE OF CONTENTS—Continued

k. MSP cannot demonstrate a known

market or disposition for its “aggre-

tlt alle DS AS a ae

B. MSP’s “aggregate” is not a Legitimate Prod-

uct (MSP fails to satisfy the use constituting

disposal regulations even if they were sub-

ject to those regulations) —..........

1, MSP cannot demonstrate that the “aggre-

gate” is produced for the general asa s

2. MSP cannot demonstrate that the hazard-

ous waste used to produce the “aggregate”

has undergone a chemical reaction and

has become “inseparable by physical

ee RS lie SAI I

3. MSP cannot demonstrate that the “ag-

gregate” “oe Aggaag meets the applicable

EET

C. Marine Shale’s Oxidizer Units Themselves

I i

D. Marine Shale’s Prior History Does Not War-

rant Issuance of Another Environmental Per-

NW I cate - Ne

1. MSP’s History of Misrepresentations

When Applying for Permits, or not Apply-

ing at all for Needed Permits...

2. Termination of MSP’s NPDES Permit...

3. MSP’s Continuing Air Permit Violations.

4. MSP’s Criminal Convictions and Ongoing

Debarment from Federal Participation...

5. MSP’s Misrepresentations in its Initial

BIF Certification of Compliance .........

eo antonio lade a

Page

64a

STATEMENT OF BASIS FOR DENIAL

OF PERMIT APPLICATION BY

MARINE SHALE PROCESSORS, INC.

I. SUMMARY OF THE DECISION

In April 1992, Marine Shale Processors, Inc. (“MSP”)

submitted a six-volume permit application to the U.S.

Environmental Protection Agency, Region 6 (“EPA”).

The application was filed pursuant to the Resource Con-

servation and Recovery Act’s (“RCRA”) Boiler and In-

dustrial Furnace (“BIF”) regulations at 40 C.F.R. Pari

266. MSP is seeking to operate as an industrial furnace,

specifically, an aggregate kiln. EPA has determined that

it will deny the permit application because MSP does not

meet the definition of aggregate kiln and, therefore, does

not meet the definition of industrial furnace at 40 C.F.R.

§ 260.10.* As a result, because the MSP facility treats

hazardous waste in an enclosed device using controlled

flame combustion, but does not meet the definition of an

industrial furnace or a boiler, the facility is an incinerator

subject to regulation under 40 C.F.R. Part 264, Subpart

O.* In addition, MSP operates oxidizer units at the same

facility in which hazardous waste is directly burned. These

units are not an enumerated type of industrial furnace and

consequently are subject to regulation as incinerators.

' EPA issued a proposed denial of MSP’s BIF permit applica-

tion on January 31, 1994. The Statement of Basis For Proposed

Denial of Permit Application by MSP is hereby incorporated into

this document by reference.

2 See 40 C.F.R. § 260.10 definition of incinerator. The State of

Louisiana has been delegated the authority by EPA to issue or

deny incinerator permits under the State’s authorized hazardous

waste regulatory program. The BIF regulations were promulgated

pursuant to the Hazardous and Solid Waste Amendments of 1984

(“HSWA”) to the Resource Conservation and Recovery Act. Be-

cause Louisiana has not yet been authorized to enforce HSWA

regulations, issues regarding the granting or denial of BIF per-

mits for facilities located in Louisiana are properly before EPA.

65a

company’s history of misrepresentation and noncompliance

with environmental permits and regulations.

EPA notes that since June, 1990, it has been involved

with MSP in litigation regarding, in part, whether MSP’s

combustion of hazardous waste constitutes legitimate re-

cycling or incineration. The civil enforcement trial on this

issue recently concluded without the jury being able to

reach a verdict on the issue of whether MSP is a sham

recycler. Contrary to intimations in MSP’s short written

comment in this proceeding, the Agency does not regard

the inconclusive trial as in any way foreclosing its ability

to reach a final determination on the permit application,

or obviate the need to do so.

First, the jury failed to resolve the central issue of

whether MSP had carried its burden of proving that it is

recycling legitimately, i.e. that it is not incinerating haz-

ardous waste. The jury’s finding with respect to the wastes

that MSP receives from Southern Wood Piedmont applies

only to those wastes when managed in isolation. This jury

finding thus affects, at most, a very small percentage of

the hazardous wastes that MSP burns.

Second, the District Court entered no judgments on key

issues in the case that are common to the civil enforce-

ment action and this permit proceeding. With respect to

rulings made by the District Court, the Court declined to

issue jury instructions with respect to two of the so-called

sham recycling criteria (those relating to revenues and to

contributions to recycling made by hazardous constituents

in hazardous wastes) which EPA has indicated are rele-

vant to the issue of whether an entity is destroying the

waste by incineration or whether the waste is recycled.

The Court did not dispute the relevance of these criteria

(given that evidence on these issues was admitted, and the

inference that this evidence allowed a finding of sham

recycling was argued by the government to the jury), but,

in declining to issue jury instructions, evidently viewed the

criteria as binding tests. They are not binding tests. EPA

66a

does, however, continue to view them as relevant criteria

and is so indicating in this document. The Court also

declined to set aside a jury finding with respect to MSP’s

hazardous waste-fired oxidizers. The Court’s action was

based on a misunderstanding of a particular EPA docu-

ment. EPA’s Director of the Office of Solid Waste has

issued a public memorandum clarifying how EPA’s regu-

lations apply and thus, is correcting a misinterpretation

the Court has made in its reading of that earlier docu-

ment. Accordingly, EPA believes as a matter of law

under the applicable rules, the hazardous waste-fired oxi-

dizers are not industrial furnaces.

EPA notes that the civil enforcement proceedings have

established that MSP has committed significant and per-

sistent violations of all of the major federal environmental

laws. This suports EPA’s determination to invoke its

RCRA section 3005(c)(3) omnibus authority to deny

MSP’s permit application.

Finally, EPA rejects MSP’s suggestion that the civil

enforcement action somehow “obviates” the need to proc-

ess this permit application. Determining whether or not

to issue permits is the statutorily-delegated means of as-

suring whether and how hazardous waste management

facilities are capable of complying with applicable regu-

lations to assure that their operations are conducted so as

to protect human health and the environment. This is the

Agency’s paramount task, which it is fulfilling here.

Il. BACKGROUND

A. Description of the MSP Facility

According to MSP’s BIF application, the MSP facility

presently consists of a rotary kiln (PK-1), followed by

two hazardous waste-fired oxidizers (called #1 and #2),

a vitrification furnace, a wet scrubbing system with dry

lime capability (also called oxidizers #3 and #4), a bag-

house, and an emissions stack (the transition section pass-

ing between the bottom of oxidizers #1 and #2 is called

67a

the vitrification furnace). MSP claims the kiln is an

“aggregate manufacturing kiln.”

Rotary kiln PK-1 is 275 feet long and has been in

operation since 1985 (another kiln, called PK-2 exists

but is not in operation). The PK-1 unit was

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.