Zen-Noh Grain Corporation v. Consolidated Environmental Management, Inc./Nucor Steel Louisiana
Filing
283
MEMORANDUM AND OPINION - the Court grants Zen-Noh's motions to exclude the testimony of Timothy Desselles, Stephen Mattison, Kimberly McIntyre, and Anna Migliore. The Court also grants Zen-Noh's motion for summary judgment. Zen-Noh's motion to exclude the testimony of Bill Palermo and Don Elias is denied as moot, and Nucor's motion in limine to preclude Zen-Noh from introducing testimony or other evidence regarding Title V permitting issues or "potential to emit calculations" is also denied as moot.. Signed by Chief Judge Sarah S. Vance on 11/4/13.(jjs, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CONSOLIDATED ENVIRONMENTAL
MANAGEMENT, INC. - NUCOR STEEL
LOUISIANA
CIVIL ACTION
VERSUS
NO: 12-1011 c/w
12-1738
ZEN-NOH GRAIN CORPORATION
SECTION: R(4)
ORDER AND REASONS
Before the Court are defendant Zen-Noh Grain Corporation's
("Zen-Noh") motions to exclude the testimony of Timothy
Desselles,1 Stephen Mattison,2 Kimberly McIntyre,3 Anna Migliore,4
Yousheng Zeng, Ph.D.,5 Bill Palermo,6 and Don Elias,7 as well as
its motion for summary judgment.8 Also before the Court is
plaintiff Consolidated Environmental Management Inc. - Nucor
Steel Louisiana's ("Nucor") motion in limine to preclude Zen-Noh
from introducing testimony or other evidence regarding Title V
1
R. Doc. 220.
2
R. Doc. 221.
3
R. Doc. 222.
4
R. Doc. 223.
5
R. Doc. 224.
6
R. Doc. 218.
7
Id.
8
R. Doc. 225.
permitting issues or "potential to emit" calculations.9 For the
following reasons, Zen-Noh's motions to exclude the testimony of
Timothy Desselles, Stephen Mattison, Kimberly McIntyre, and Anna
Migliore are granted. Zen-Noh's motion for summary judgment is
also granted, and the remaining motions are denied as moot.
I.
STATUTORY BACKGROUND
Congress created the Clean Air Act “to protect and enhance
the quality of the Nation's air resources so as to promote the
public health and welfare.” 42 U.S.C. § 7401(b)(1). The Clean Air
Act, 42 U.S.C. §§ 7401, et seq., is a comprehensive program for
controlling and improving the nation's air quality. Under the
Act, the Environmental Protection Agency ("EPA") identifies air
pollutants that endanger the public health or welfare, determines
the concentrations of those pollutants that are safe and
promulgates those determinations as national ambient air quality
standards (“NAAQS”). See 42 U.S.C. §§ 7408, 7409. Each state must
ensure that its ambient air meets the appropriate NAAQS, see 42
U.S.C. § 7407(a), and must develop a state implementation plan
("SIP") to achieve the standards established by the EPA. See 42
U.S.C. § 7410(a). The Act requires state implementation plans to
include “enforceable emission limitations and other control
measures, means, or techniques . . . as well as schedules and
9
R. Doc. 219.
2
timetables for compliance” to meet the NAAQS. 42 U.S.C. §
7410(a)(2)(A). Upon approval by the EPA, the state implementation
plan becomes federally enforceable. Louisiana Envtl. Action
Network v. EPA, 382 F.3d 575, 579 (5th Cir. 2004); Kentucky Res.
Council, Inc. v. EPA, 304 F.Supp.2d 920, 923 (W.D. Ky. 2004);
Sweat v. Hull, 200 F.Supp.2d 1162, 1164 (D. Ariz. 2001). For
entities regulated under the Act, “[t]he burden is clearly on the
source to do whatever is necessary to assure compliance.”
Emission Offset Interpretative Ruling, 45 Fed. Reg. 59,874,
59,877 (Sept. 11, 1980) (codified at 40 C.F.R. Part 51).
The Act also requires the EPA to develop new source
performance standards to govern emissions of air pollutants from
facilities that are constructed or modified after the publication
of regulations. 42 U.S.C. § 7411(a)(2), (f). After the EPA
promulgates a new source performance standard, it is “unlawful
for any owner or operator of any new source to operate such
source in violation of any standard of performance applicable to
such source.” 42 U.S.C. § 7411(e). Relevant here are the
performance standards for grain elevators set out in 40 C.F.R.
Part 60, Subpart DD, and in particular, the 20% opacity
limitation for fugitive emissions from ship and barge loading
operations set out in 40 C.F.R. § 60.302(c)(4). The EPA developed
and approved “Method 9," incorporated into the federal
regulations at 40 C.F.R. Part 60, App. A, as the appropriate
3
reference test for determining compliance with this 20% opacity
limit. 40 C.F.R. § 60.11(b).
Louisiana's EPA-approved Clean Air Act implementation plan,
which has been incorporated into the federal regulations at 40
C.F.R. § 52.970, requires a permit for the discharge of air
pollutants.
La. Rev. Stat. Ann. § 30:2055. The Secretary of the
Louisiana Department of Environmental Quality (“LDEQ”) issues
permits in accordance with federal and state law and LDEQ
regulations. Id. § 30:2054. Louisiana's implementation plan
prohibits the discharge of “air contaminants ... into the air of
this state in violation of regulations of the secretary or the
terms of any permit, license, or variance.” Id. § 30:2057. The
regulations include a 20% opacity limit for particulate matter
from sources including barge and ship loaders, “except the
emissions may have an average opacity in excess of 20 percent for
not more than one six-minute period in any 60 consecutive
minutes.” La. Admin. Code tit. 33:III § 1311.C. The plan also
provides that “[n]oncompliance with any term or condition of the
permit shall constitute a violation of this Chapter and shall be
grounds for enforcement action, for permit revision or
termination, or for denial of a permit renewal application.” Id.
§ 501.C.4. Finally, Louisiana's implementation plan also
incorporates by reference EPA's new source performance standards,
including the 20% opacity limitation of 40 C.F.R. § 60.302(c)(4).
4
See id. § 3003.
The Clean Air Act includes a citizen suit provision that
allows citizens to request injunctive relief and civil penalties
of up to $32,500 per violation per day, payable to the United
States Treasury, for the violation of any “emission standard or
limitation” under the Act. 42 U.S.C. § 7604(a); see 40 C.F.R. §
19.4. Citizen suits may be brought against any person “who is
alleged to have violated (if there is evidence that the alleged
violation has been repeated) or to be in violation” of “any
emission standard or limitation” under the Clean Air Act. 42
U.S.C. § 7604(a)(1). Emissions standards or limitations include:
(1) any condition or requirement of a permit promulgated under
the Clean Air Act, including provisions of state implementation
programs, and (2) new source performance standards promulgated
under 42 U.S.C. § 7411. 42 U.S.C. § 7604(f); Kentucky Res.
Council, 304 F.Supp.2d at 926. The Act also authorizes federal
district courts to enforce emission standards or limitations and
to impose appropriate civil penalties. 42 U.S.C. § 7604(a).
Louisiana law also contains a citizen suit provision that
allows "any person having an interest, who is or may be adversely
affected, [to] commence a civil action on his own behalf against
any person whom he alleges to be in violation" of Title 30,
Subtitle II of the Louisiana Revised Statutes, which governs
environmental quality, and the regulations promulgated
5
thereunder, including the Louisiana SIP. La. Rev. Stat. Ann. §
30:2026(A)(1). The statute authorizes a court to grant temporary
or permanent injunctive relief and to assess a civil penalty not
to exceed ten thousand dollars for each day of the continued
noncompliance. Id. § 30:20206(A)(2). The court may also award
actual damages, costs, and attorneys fees to the prevailing
party. Id. § 30:20206(A)(3). Like the citizen suit provision
under the Clean Air Act, the Louisiana statute contains a notice
provision that requires the plaintiff to give written notice of
the violation to the Secretary of the LDEQ 30 days prior to
commencing suit. Id. § 30:2026(B)(1).
II.
FACTUAL BACKGROUND
The parties in this case are feuding neighbors with property
next to each other on the Mississippi River in St. James Parish.
Nucor is constructing a steel production facility that Zen-Noh
has vigorously opposed. Zen-Noh was the first to bring the
conflict between the parties into federal court. In 2009, Zen-Noh
sought to enjoin the LDEQ from issuing air permits for a pig iron
plant to Nucor. Then, in 2012, Zen-Noh sought to enjoin Nucor
from constructing the first of two direct reduced iron plants
under authority of other air permits issued by LDEQ to Nucor.
Zen-Noh has also contested LDEQ actions granting Nucor permits
for its steel plants and sued the EPA for objecting to, but
6
failing to revoke, Nucor's air permits.
Seizing the offensive, Nucor filed the complaint in this
action alleging that Zen-Noh has itself run afoul of federal and
state air quality laws in the operation of its grain elevator. On
April 30, 2012, Nucor issued a notice letter to Zen-Noh, the
LDEQ, and the EPA alleging violations of the CAA and the
Louisiana SIP. Nucor filed its original complaint against Zen-Noh
on July 3, 2012. That suit, Civil Action No. 12-1738, was
consolidated with Zen-Noh's suit against Nucor under Civil Action
No. 12-1011. Zen-Noh moved to dismiss the Nucor complaint.10
Nucor then filed its 38-page, nine-count First Amended
Complaint.11 Relevant here are the allegations of Counts IV and
VI of the Amended Complaint.
Count IV alleged that Method 9 opacity readings of Zen-Noh’s
ship and barge loading operations revealed “significant
violations” of the 20% opacity standards found at 40 C.F.R. §
60.302(c)(4) and La. Admin. Code tit. 33:III, § 1311.C. Because
Specific Condition No. 4 of the Air Permit issued to Zen-Noh by
the LDEQ required Zen-Noh to comply with the new source
performance standards for grain elevators, including Section
60.302(c)(4), Nucor also alleged a violation of the Air Permit.
Similarly, Specific Condition No. 12 required Zen-Noh to comply
10
R. Doc. 42.
11
R. Doc. 46.
7
with the Louisiana SIP provisions governing particulate
emissions, including Section 1311.C, so Nucor also alleged a
violation of the Air Permit on that basis. Nucor further alleged
that the violations of the Air Permit violated La. Rev. Stat.
Ann. §§ 30:2055 and 2057, and that the violations of the
Louisiana SIP provisions and emissions limits incorporated into
the Air Permit violated Sections 110 and 113 of the CAA, 42
U.S.C. §§ 7411 and 7413.
Count VI and the supporting allegations focus on Zen-Noh's
emissions of particulate matter with a diameter less than 10µ
("PM-10"). Nucor contends that Zen-Noh “overestimated the
particulate control efficiency of several of its loading and
unloading operations in its permit application upon which the
current Air Permit is based and thus, underestimated both its
potential and actual emissions.”12 Nucor alleges that “[t]o the
extent that inaccurate emission factors were used in developing
the permit, the actual emissions are likely to have exceeded the
permitted emissions, especially with regard to maximum pound per
hour (lb/hr) Air Permit limits from the ship loading operations
and barge unloading operations during topping off.”13 Nucor
alleges that these violations of the emissions limits in the Air
Permit are also a violation of General Condition 1 of the Permit,
12
R. Doc. 46 at 24.
13
Id. at 33.
8
La. Admin. Code tit. 33:III, § 501, La. Rev. Stat. Ann. §§
30:2055 and 2057, and Sections 110 and 113 of the CAA, 42 U.S.C.
§§ 7411 and 7413.
The Court determined that Zen-Noh's motion to dismiss
applied to Nucor's First Amended Complaint as well as its
original complaint14 and dismissed all but Counts IV and VI.15
Zen-Noh now moves for summary judgment on the remaining claims.
It argues that summary judgment should be granted on Count IV
because Nucor has no expert testimony or other competent evidence
to prove a violation of the opacity standards in 40 C.F.R. §
60.302(c)(4) and La. Admin. Code tit. 33:III, § 1311.C.16 Nucor
argues that the environmental consultants it engaged to conduct
Method 9 observations should be able to testify as fact
witnesses, and that their observations create a question of
material fact as to whether Zen-Noh exceeded the 20% opacity
limit.
Zen-Noh argues that summary judgment is also appropriate as
to Count VI because Nucor has no expert opinion or other
14
R. Doc. 101.
15
R. Doc. 206.
16
Nucor has since conceded that because La. Admin. Code
tit. 33:III, § 1311.C permits opacity in excess of 20% for one
six-minute period every sixty minutes, it cannot prove a
violation of that provision, or, by extension, of Specific
Condition No. 12 of Zen-Noh’s Air Permit. However, Nucor
maintains that it is able to demonstrate a violation of 40 C.F.R.
§ 60.302(c)(4), which contains no six-minute exception. R. Doc.
273 at 5.
9
competent evidence that actual (as opposed to potential)
emissions of PM-10 violated the limits of the Air Permit. In
response, Nucor has presented evidence that certain emissions
sources exceeded their permitted hourly operating rates on
numerous occasions.
III. LEGAL STANDARD
Summary judgment is warranted when “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
When assessing whether a dispute as to any material fact exists,
the Court considers “all of the evidence in the record but
refrains from making credibility determinations or weighing the
evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins.
Co., 530 F.3d 395, 398 (5th Cir. 2008). All reasonable inferences
are drawn in favor of the nonmoving party, but “unsupported
allegations or affidavits setting forth ultimate or conclusory
facts and conclusions of law are insufficient to either support
or defeat a motion for summary judgment.” Galindo v. Precision
Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985) (internal
quotation marks omitted).
If the dispositive issue is one on which the moving party
10
will bear the burden of proof at trial, the moving party “must
come forward with evidence that would entitle it to a directed
verdict if the evidence went uncontroverted at trial.” Int’l
Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th
Cir. 1991)(citation omitted). The nonmoving party can then defeat
the motion by either countering with sufficient evidence of its
own, or “showing that the moving party’s evidence is so sheer
that it may not persuade the reasonable fact-finder to return a
verdict in favor of the moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in
the record is insufficient with respect to an essential element
of the nonmoving party’s claim. See Celotex, 477 U.S. at 325. The
burden then shifts to the nonmoving party, who must, by
submitting or referring to evidence, set out specific facts
showing that a genuine issue exists. See id. at 324.
The nonmovant may not rest upon the pleadings, but must
identify specific facts that establish a genuine issue for trial.
Id. at 325. See also Little, 37 F.3d at 1075 (“Rule 56 ‘mandates
the entry of summary judgment, after adequate time for discovery
and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to
that party’s case, and on which that party will bear the burden
11
of proof at trial.’”) (citing Celotex, 477 U.S. at 332).
IV.
DISCUSSION
A.
Count IV
In 2011, Nucor hired Environmental Resources Management
("ERM"), an environmental consulting firm, to observe the Zen-Noh
facility and conduct observations of the fugitive emissions
emanating from Zen-Noh's barge and ship loading operations. In
order to determine whether Zen-Noh was operating in violation of
the 20% opacity limitation for fugitive emissions set forth in §
40 C.F.R. 60.302(c)(4), a number of ERM employees underwent
training and testing to become certified Method 9 observers.
Method 9 is the reference method designated in 40 C.F.R. § 60.11
for use in determining compliance with the 20% opacity limitation
of 40 C.F.R. § 60.302(c)(4). After conducting a series of
observations in 2011, ERM was retained by Nucor's counsel in 2013
and began a second round of observations. In support of its
claim, Nucor seeks to introduce observation forms completed by
ERM employees Anna Migliore, Timothy Desselles, Kimberly
McIntyre, Stephen Mattison, and Sean Brennan. It also plans to
introduce the testimony of each of these individuals except
Brennan, who is no longer an ERM employee.
Summary judgment on Count IV is warranted for three reasons:
First, although Nucor claims to have evidence of thirteen
12
distinct opacity violations, it has produced evidence of only
four instances in which opacity is alleged to have exceeded 20%.
Second, because Nucor failed to designate the ERM observers as
experts and to furnish expert reports in accordance with the
Court's scheduling order, the observers will not be permitted to
testify regarding the four potential violations.
Finally, absent
the observation forms and observer testimony, Nucor lacks
competent evidence in support of its claim.
1.
Of the thirteen claimed violations, Nucor has
competent evidence of only four potential
violations.
Nucor alleges that the ERM employees observed emissions in
excess of 20% opacity on 13 occasions. However, Nucor's
Memorandum in Opposition identifies only six "potential
violations" in which opacity is alleged to have exceeded 20%.17
Nucor does not identify the remaining seven observations in its
memorandum18 and advances a responsive argument that can apply to
17
R. Doc. 273 at 9-11.
18
Moreover, other than the six observation forms
specifically discussed in plaintiff's opposition memorandum,
plaintiff's Exhibit IV-1 contains only four additional
observation forms showing a potential opacity violation. R. Doc.
273-2. These observations took place on April 5, 2011, April 7,
2011, April 12, 2013, and April 20, 2013 and are mentioned
nowhere in Nucor's brief. Additionally, the report for April 7,
2011, clearly identifies the activity observed as barge
unloading, which Nucor concedes is not subject to the 20% opacity
limitation. R. Doc. 273 at 5; see 40 C.F.R. § 60.302(c)(4)
(setting a 20% opacity limit for barge and ship loading stations
only) and § 60.302(d) (governing barge and ship unloading).
13
only one of the seven.19 Accordingly, Nucor has abandoned six of
the thirteen alleged exceedances. See Criner v. Texas--New Mexico
Power Co., 470 F. App'x 364, 367-68 (5th Cir. 2012) (finding
abandonment of one of plaintiff’s theories of liability when
plaintiff failed to address that theory in opposition to summary
judgment). See also Fed. R. Civ. P. 56(c)(1)(A) ("A party
asserting that a fact cannot be or is genuinely disputed must
support the assertion by . . . citing to particular parts of
materials in the record.").
Moreover, two of the six observations identified in Nucor's
brief were conducted by former ERM employee Sean Brennan, who
will not testify at trial. Zen-Noh argues that the observation
forms, which constitute the only evidence of these potential
violations, are inadmissible hearsay.
19
Nucor seeks to introduce
In its motion for summary judgment, Zen-Noh identified
three observation forms attached to Nucor's Answers to Zen-Noh's
Second Set of Interrogatories that were the product of
observations made during periods in which the observed equipment
was starting up or shutting down. These observations took place
on April 5, 2011, April 7, 2011, and April 9, 2013. Zen-Noh
argued that because the opacity standards do not apply during
periods of startup, shutdown, or malfunction ("SSM"), 40 C.F.R.
60.11(c), the observations could not serve as evidence of a
violation. As discussed in note 18, the April 7, 2011,
observation involved barge unloading, which is not subject to the
20% opacity limitation, and there is no observation report in
Exhibit IV-1 corresponding to the April 9, 2013, observation. To
the extent that Nucor's general objection to Zen-Noh's SSM
defense may be construed as an argument in support of the April
5, 2011, observation, that alleged opacity exceedance remains on
the table along with the six observations discussed in Nucor's
opposition memorandum. For the reasons that follow, however,
Nucor has no competent evidence in support of this or any alleged
violation.
14
them under either Federal Rule of Evidence 803(6), the business
records hearsay exception, or 803(1), the "present sense
impression" exception.
Rule 803(6) requires that "neither the source of information
nor the method or circumstances of preparation indicate a lack of
trustworthiness." Fed. R. Evid. 803(6)(E). Because of this
concern for trustworthiness, it has long been the rule that the
business records exception does not apply to records prepared in
anticipation of litigation. Palmer v. Hoffman, 318 U.S. 109, 114
(1943); Broadcast Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 238
(5th Cir. 1988). That ERM was hired first by Nucor and then by
its attorneys in this matter solely to observe Zen-Noh's
operations serves as a clear indication that the observation
forms were prepared solely for the purpose of this litigation.
The business records exception therefore does not apply.
Rule 803(1) creates a hearsay exception for "a statement
describing or explaining an event or condition, made while or
immediately after the declarant perceived it." The rationale
behind the exception is that when the event under consideration
and the statement describing that event occur almost
simultaneously, there is almost no "likelihood of [a] deliberate
or conscious misrepresentation." Rock v. Huffco Gas & Oil Co.,
922 F.2d 272, 280 (5th Cir. 1991) (quoting Fed. R. Evid. 803(1)
advisory committee's note).
15
That rationale clearly does not apply in this case. When a
statement is made for a specific purpose such as litigation, it
lacks the indicia of reliability that motivate the rule. See
United States v. Woods, 301 F.3d 556, 562 (7th Cir. 2002)("A
declarant who . . . provides statements for a particular reason
creates the possibility that the statements are not
contemporaneous, and, more likely, are calculated interpretations
of events rather than near simultaneous perceptions."); United
States v. Orm Hieng, 679 F.3d 1131 (9th Cir. 2012) (discounting
"calculations derived from [the declarant's] observations" as
"purposeful analysis of sense impressions" and excluding the
statements as inadmissible hearsay)(emphasis in original).
Accordingly, the present sense impression exception does not
apply, and Brennan's observation forms are inadmissible.
The exclusion of Brennan's forms leaves only five forms that
could potentially serve as evidence of a violation. Of those,
Migliore's observation form dated June 28, 2011 clearly states
that the activity observed was barge unloading,20 which, as
discussed supra in note 18, is not subject to the 20% opacity
limitation. Nucor speculates in its brief that because the
Control Room Activity Report indicates that a ship was present at
Zen-Noh's facility at the time the observation occurred, it is
possible that Migliore was actually watching the ship being
20
R. Doc. 273-2 at 3.
16
loaded, rather than watching a barge (which the activity report
indicates was also present) being loaded. If Nucor is suggesting
that Migliore could not tell whether she was looking at a barge
or a ship, then it is rather troubling that Nucor now seeks to
base its claim on her ability to accurately conduct a Method 9
observation. Furthermore, the only evidence Nucor presents in
support of this theory is the Control Room Activity Report,21
which merely indicates that a ship was present at the facility.
Nucor argues that while "the report does not indicate that a
barge was being unloaded to the ship during the specific time
period of the observation, the ship could have been being loaded
from storage silos or shipping bins as such activities are not
shown on these reports."22 Such speculation, entirely unsupported
by documentary evidence, will not suffice to withstand a motion
for summary judgment.
2.
Because Nucor failed to designate the ERM
observers as experts and to furnish expert reports
in accordance with the Court's scheduling order,
the observers will not be permitted to testify as
to the contents of the observation forms.
The only observation forms that could potentially support a
finding of a violation are the April 5, 2011 form completed by
Desselles, the March 19, 2013 form completed by Mattison, and the
two observation forms completed by McIntyre on May 24, 2013. With
21
R. Doc. 273-3 at 1.
22
R. Doc. 273 at 10 (emphasis added).
17
the exception of the form completed by Desselles (which, as
discussed in note 19, supra, was not mentioned in Nucor's
opposition to summary judgment), Zen-Noh did not receive any of
these forms until its June 18, 2013 deposition of Migliore and
Mattison, which was one day before it deposed Desselles and four
days after the deadline for expert reports.23 Zen-Noh did not
even learn of McIntyre's existence until the day of the
depositions and was unable to depose her in time for its expert
to include an evaluation of her opacity readings in his own
report, which was due July 15.24 Nucor never submitted expert
reports for any of the observers.
Zen-Noh has therefore moved to exclude the testimony of all
four observers based on Nucor's failure to designate them as
expert witnesses and to provide expert reports by the June 14
deadline established in this Court's scheduling order. Zen-Noh
also claims that the observers are not qualified under Federal
Rule of Evidence 702 to testify as experts on the issue of
opacity violations.
In response, Nucor argues that the ERM employees are merely
fact witnesses who will testify to the procedures they followed
and to the information they observed and collected on the
observation forms. Nucor contends that because the employees will
23
R. Doc. 222-1 at 2-3.
24
Id.
18
not testify as to the ultimate issue–that is, whether Zen-Noh is
in violation of its Air Permit–they are not rendering an opinion
requiring expert testimony. The plaintiff also argues that
testimony regarding opacity observations is not expert testimony
because performing the observations requires no expertise or
specialized knowledge.
a.
The observers' proposed testimony qualifies
as expert testimony.
Federal Rule of Evidence 701 governs the admissibility of
opinion testimony by lay witnesses. It provides:
If a witness is not testifying as an expert, testimony in
the form of an opinion is limited to one that is:
(a) rationally based on the witness's perception;
(b) helpful to clearly understanding the witness's testimony
or to determining a fact in issue; and
(c) not based on scientific, technical, or other specialized
knowledge within the scope of Rule 702.
Fed. R. Evid. 701. In contrast, Federal Rule of Evidence 702
permits expert testimony "in the form of an opinion or otherwise"
by any witness whose "knowledge, skill, experience, training, or
education" qualifies him or her to provide such testimony and
whose "scientific, technical, or other specialized knowledge"
will assist the trier of fact. Fed. R. Evid. 702.
In Daubert v. Merrell Dow Pharmaceuticals, 509 U.S. 579
(1993), the Supreme Court charged trial judges with the
responsibility of acting as gatekeepers to exclude unreliable
expert testimony. In Kumho Tire Co. v. Carmichael, 526 U.S. 137
19
(1999), it clarified that this gatekeeper function applies to all
expert testimony, not just testimony based in science. Fed. R.
Evid. 702 advisory committee's note. Rule 702 in its current form
thus "affirms the trial court's role as gatekeeper and provides
some general standards that the trial court must use to assess
the reliability and helpfulness of proffered expert testimony."
Fed. R. Evid. 702 advisory committee's note.
After Daubert and Kumho, Rule 701 was amended to include the
current provision forbidding lay witnesses from offering opinions
based on scientific, technical, or other specialized knowledge.
The Advisory Committee indicated that the purpose of the
amendment was to "eliminate the risk that the reliability
requirements set forth in Rule 702 will be evaded through the
simple expedient of proffering an expert in lay witness
clothing." Fed. R. Evid. 701 advisory committee's note.
Today, "any part of a witness's opinion that rests on
scientific, technical, or specialized knowledge must be
determined by reference to Rule 702, not Rule 701," United States
v. Yanez Sosa, 513 F.3d 194, 200 (5th Cir. 2008)(emphasis in
original), and must comport with the corresponding disclosure
requirements of the Civil and Criminal Rules. Fed. R. Evid. 701
advisory committee's note. Whether opinion testimony rests on
scientific, technical, or other specialized knowledge turns on
"whether the testimony falls within the realm of knowledge of the
20
average lay person." United States v. Caldwell, 586 F.3d 338, 348
(5th Cir. 2009). In other words, a person may testify as a lay
witness only if his "opinions or inferences. . . could be reached
by any ordinary person." Doddy v. Oxy USA, Inc., 101 F.3d 448,
460 (5th Cir. 1996)(quoting Brady v. Chemical Constr. Corp., 740
F.2d 195,200 (2d Cir. 1984)).
Method 9 is codified at 40 C.F.R. pt. 60, app. A. It
includes procedures for the training and certification of
qualified observers, as well as the procedures to be used by the
observers to determine plume opacity. The EPA has issued a 63page Quality Assurance Handbook to guide observers in conducting
reliable observations.25 It also published a 48-page Visible
Emissions Field Manual to serve as a "simplified" observation
guide derived from the numerous published technical guides,
manuals, and reports on Method 9.26
The method requires observers to take opacity readings of
plumes at 15-second intervals, measured in increments of five
percent. The observer averages 24 consecutive readings to obtain
the six-minute average of the plume's opacity. The method
contains specifications regarding the observer's position in
relation to the sun, his or her location and elevation in
25
Envtl. Prot. Agency, Quality Assurance Handbook for Air
Pollution Measurement Systems: Volume III: Stationary Source
Specific Methods (1984). R. Doc. 265-2.
26
Envtl. Prot. Agency, Visible Emissions Field Manual: EPA
Methods 9 and 22 (1993). R. Doc. 238-1 at 5.
21
relation to the emission source, the angle of his or her line of
vision to the plume direction, the point of observation within
the plume, and the types of plumes that may be observed for
purposes of determining compliance.
The appearance of a plume of smoke depends on a number of
variables, some of which can be controlled by the observer, and
others that must be taken into account by the properly trained
observer when estimating plume opacity. Factors influencing plume
opacity include particle density, particle refractive index,
particle size distribution, particle color, plume background,
pathlength, distance and relative elevation to stack exit, sun
angle, luminous contrast and color contrast between the plume and
the background against which the plume is viewed.27
To become certified in Method 9, an observer views a series
of 25 white plumes and 25 black plumes emitted by a smoke
generator designed and calibrated according to Method 9's
specifications. Opacity of the plumes is randomized. The
observer's level of error may not exceed 15% opacity for any one
reading, and his or her average error must not exceed 7.5%
opacity for each type of plume. Most observers attend a two-day
training before taking the certification test, and observers must
renew their certification every six months. The Quality Assurance
Handbook indicates that "[p]roper application of Method 9 . . .
27
Id. at 9.
22
often involves a number of administrative and technical
procedural steps not specifically addressed in the Federal
Register method. Experience has shown these steps are necessary
to lay a proper foundation for any subsequent enforcement
action."28 The Handbook also identifies 11 "special observation
problems" that may make it "difficult or impossible to conduct a
technically defensible visible emissions observation," including
the presence of multiple plumes or emissions sources, wind and
background conditions, factors affecting visibility such as
humidity and fog, and the presence of water vapor in the plume.29
Given the certification requirements and the overall
complexity of the procedures for obtaining "technically
defensible" opacity observations, there is simply no question
that the observers' statements concerning the opacity of the
emissions they observed are based on precisely the type of
"technical or specialized knowledge" that Rule 701 contemplates.
Nor can it be said that the myriad factors affecting the observed
opacity of dust emissions are within the realm of knowledge of
the average lay person. Cf. Doddy, 101 F.3d at 459-60
(determining that witness' claim of personal knowledge of
28
R. Doc. 265-2 at 8.
29
Id. at 32-36. The last factor is of particular importance
given the deposition testimony of Zen-Noh's shift foremen, which
revealed the frequent use of water cannons, sprinkler systems,
and foggers, which blow a fine mist into the dust cloud, to help
control emissions. See R. Doc. 273-8 at 42-47; R.Doc. 273-9 at
38.
23
presence of toxic chemicals in oil well could not be made by an
ordinary person or in the absence of specialized training or
expertise). Plaintiffs have cited no cases that would support
their position, and indeed, the cases discussing the testimony of
Method 9 observers all involve witnesses who were designated as
experts. See Lloyd A. Fry Roofing Co. v. State, 524 S.W.2d 313,
320 (Tex. Civ. App. 1975); City of Cleveland v. Cleveland Elec.
Illuminating Co., 448 N.E.2d 130, 133 (Ohio 1983); State ex rel.
Fisher v. Cleveland Trinidad Paving Co., No. 65889, 1994 WL
463810 (Ohio Ct. App. Aug. 25, 1994). See also United States v.
Comunidades Unidas Contra La Contaminacion, 106 F.Supp.2d 216,
222-23 (D.P.R. 2000) (referring to question of plant's compliance
with opacity limit as "highly technical and specific," and to EPA
officials who determined proper observation point within plumes
as experts). One scholar devoted the bulk of her article on the
admissibility of scientific evidence in environmental litigation
to conducting a Daubert analysis of Method 9, without giving a
passing nod to the notion that a Method 9 observer could pass for
a fact witness. See Susan Norton, Factors for Determining
Validity of Evidence in Clean Air Act Litigation, 15 J. Land Use
& Envtl. L. 235 (2000).
That a Method 9 observer could be characterized as a fact
witness is even less plausible in a case such as this one, in
which the observers are not EPA or LDEQ officials but rather paid
24
consultants who underwent training and certification and
conducted Method 9 observations exclusively for the purposes of
this litigation. Nucor came close to acknowledging this in its
response to Zen-Noh's first motion for partial summary judgment,
filed on January 15, 2013.30 After Zen-Noh raised the same
argument that it makes now–namely, that Nucor had no competent
evidence of opacity violations because it failed to identify the
observers as expert witnesses in accordance with the original
scheduling order–Nucor did not contend that the observers were
not experts. Rather, it merely argued that the exclusion of any
evidence "not properly designated or submitted pursuant to the
scheduling order" was not warranted in light of the parties'
prior agreement to request an amended scheduling order.31
Based on the factors discussed above, the Court concludes
that Nucor should have disclosed the observers as expert
witnesses and furnished Zen-Noh with expert reports by the June
14 deadline established in the scheduling order.
b.
The appropriate sanction for Nucor's failure
to designate the observers as experts is
exclusion of their testimony.
30
R. Doc. 75. This motion, along with Zen-Noh's first
motion in limine to exclude the observers' testimony, R. Doc. 74,
were mooted by the Court's grant of Nucor's motion to continue
the March 4, 2013 trial date and to amend the initial scheduling
order.
31
R. Doc. 86 at 9.
25
Federal Rule of Civil Procedure 16(b) authorizes district
courts to control and expedite the discovery process through a
scheduling order. See Fed. R. Civ. P. 16(b). Consistent with this
authority, the Court has "broad discretion" to enforce its
scheduling order. See Geiserman v. MacDonald, 893 F.2d 787, 790
(5th Cir. 1990) ("[O]ur court gives the trial court 'broad
discretion to preserve the integrity and purpose of the pretrial
order.'") (quoting Hodges v. United States, 597 F.2d 1014, 1018
(5th Cir. 1979)). The Federal Rules of Civil procedure
specifically authorize the Court to sanction a party for failing
to comply with its scheduling order by excluding evidence. See
Fed. R. Civ. P. 16(f), 37(b)(2).
In Geiserman, the Fifth Circuit listed four factors that a
court should consider in exercising its discretion to exclude
evidence: (1) a party's explanation for its failure to timely
identify its witnesses and exhibits; (2) the importance of the
proposed evidence; (3) potential prejudice in allowing the
admission of the exhibits or testimony; and (4) the availability
of a continuance to cure such prejudice. 893 F.2d at 790. See
also Betzel v. State Farm Lloyds, 480 F.3d 704, 707 (5th Cir.
2007). The Court now addresses each factor in turn and concludes
that exclusion of the ERM employees' testimony is warranted.
i.
Nucor's explanation for its failure to
designate the ERM employees as experts:
26
Nucor gives no reasons for its failure to comply with the
scheduling order other than its dogged insistence that the
observers are not experts. Rather than providing evidence to
support this position, Nucor relied on its own conclusory
representations that opacity observations "do[] not require any
expertise or other specialized knowledge" and that "the industry
views the observations as a non-expert task . . . ." Nucor's
argument defies reason given the certification requirements and
the hundreds of pages that have been written on conducting Method
9 observations capable of supporting an enforcement action.
Nucor was aware of Zen-Noh's position that the ERM observers
should be designated as experts, and it had five months from the
time that position was made known to furnish expert reports from
the ERM employees. Instead of doing so, Nucor chose to take its
chances, presumably in an attempt to avoid the scrutiny that
precedes the admission of expert testimony. Accordingly, this
factor weighs in favor of exclusion.
ii.
The importance of the proposed evidence:
There is no question that the testimony of the ERM employees
is vital to Nucor's claim that Zen-Noh violated the 20% opacity
limit. The Fifth Circuit has previously interpreted a finding of
importance to weigh in favor of exclusion, as it is arguably even
more important that a plaintiff comply with scheduling orders and
the Federal Rules' disclosure requirements when the evidence is
27
materially prejudicial to the defendant's case. See Barrett v.
Atl. Richfield Co., 95 F.3d 375, 381 (5th Cir. 1996); Geiserman,
893 F.3d at 791. In its latest discussion of this factor,
however, the Court held that, while not dispositive, the
importance of the evidence to the plaintiff's case weighs in
favor of admitting the testimony. Betzel, 480 F.3d at 707-08.
The Court in Betzel acknowledges, however, that "[t]he
importance of such proposed testimony cannot singularly override
the enforcement of local rules and scheduling orders." Id. at 708
(quoting Geiserman, 893 F.2d at 792). Since Betzel, the Fifth
Circuit has routinely upheld the exclusion of important or even
vital testimony where other considerations weigh in favor of
exclusion. See Garza v. Allstate Texas Lloyd's Co., 284 F.App'x
110, 112-13 (5th Cir. 2008) (upholding exclusion of expert
testimony, although proffered testimony was the only evidence of
damages to foundation of plaintiff's home); Guidry v. Georgia
Gulf Lake Charles L.L.C., 479 F. App'x 642, 644 (5th Cir. 2012)
(affirming the exclusion of plaintiff's experts without which the
plaintiffs "could not prove their case"); Borden v. United
States, --- F.App'x ---, No. 12-10903, 2013 WL 3971458, at *2-3
(5th Cir. Aug. 5, 2013) (upholding district court's refusal to
extend expert designation deadline although plaintiff's lack of
expert testimony was fatal to her claim).
28
Though the testimony is important to Nucor's claim, it is
also important to recall that Count IV is but one of nine claims
originally brought in this action. That Nucor's other eight
claims are also deficient does not elevate the significance of
this testimony by default. Because other factors weigh in favor
of exclusion, the significance of the testimony to one of the
numerous allegations lodged against the defendant does not
militate in favor of admission.
iii. Prejudice to the defendant:
With the exception of the April 5, 2011 observation form
completed by Timothy Desselles, Zen-Noh did not receive any of
the observation forms that could potentially support a finding of
a violation until the day it deposed Migliore and Mattison, which
was four days after the deadline for expert reports. Of the three
other observation forms that could potentially support a finding
of a violation, two were completed by Kimberly McIntyre. Zen-Noh
did not learn of McIntyre's existence until the day of the
depositions and was unable to depose her in time for its expert
to include an evaluation of her opacity readings in his own
report, which was due July 15.
This Court has found prejudice when a party submitted its
expert report as few as three days late, leaving the opposing
party with less than a month before the close of discovery to
depose the expert, hire its own expert, and obtain a written
29
report from him. See Joshua v. State Farm Fire and Cas. Co.,
CIV.A. 06-8603, 2008 WL 145095, at *3 (E.D. La. Jan. 14, 2008)
(Barbier, J.) (citing Standard Servs. Co. v. Witex USA, Inc.,
CIV.A. 02-537, 2003 WL 2004442, at *3 (E.D. La. Apr. 30, 2003).
In this case, the discovery deadline has long since passed, and
no expert reports were ever provided.
Moreover, the Fifth Circuit in Betzel expressed its
continued receptiveness to assertions that allowing the late
designation of experts would increase the defendant's litigation
expenses because the defendant had already prepared its motion
for summary judgment in reliance on the plaintiff's lack of
expert testimony. See Betzel, 480 F.3d at 708 (citing Geiserman,
893 F.2d at 791-93). In Betzel, the defendant's argument to that
effect was rejected only because its motion for summary judgment
"trivially relied on Betzel's lack of expert testimony." Id.
In contrast, Zen-Noh relies heavily on the inadmissibility
of the expert testimony. In Betzel, "[o]nly four sentences of
[the defendant's] motion for summary judgment [were] dedicated to
the argument that Betzel ha[d] 'no evidence' on his breach of
contract claim." Id. The remainder of the motion was dedicated to
an entirely separate legal argument that would independently
dispose of the claim. Id. In the present action, Zen-Noh leads
with the argument that Nucor lacks an expert opinion to prove an
opacity violation and argues only in the alternative that the
30
observation forms do not prove a violation. Zen-Noh also
dedicated four separate motions to excluding the testimony of the
four observers based on their designation as fact witnesses and
Nucor's failure to furnish expert reports. These facts alone
demonstrate sufficient prejudice should the testimony be admitted
for this factor to weigh in favor of exclusion.32
iv.
Availability of a continuance to cure the
prejudice:
The Fifth Circuit has "emphasized that a continuance is the
preferred means of dealing with a party's attempt to designate a
witness out of time." Betzel, 480 F.3d at 708. Nucor, however,
has made no such attempt. Nucor does not seek to designate the
ERM observers as experts at all; rather, it refuses to
acknowledge that it cannot base its entire opacity claim on the
testimony of Method 9-certified consultants hired for the express
purpose of litigation without first undergoing the scrutiny that
Rule 702 requires. In fact, Nucor has not even requested a
continuance in the event that this Court finds the observers were
improperly designated.
32
Even if the prejudice to the defendant were not great, "a
district court still has the discretion to control pretrial
discovery and sanction a party's failure to follow a scheduling
order." Exclusion is "particularly appropriate . . . where the
defendants have failed to provide an adequate explanation for
their failure to identify their expert within the designated
timetable." 1488, Inc. v. Philsec Inv. Corp., 939 F.2d 1281,
1288-89 (5th Cir. 1991).
31
Moreover, the Fifth Circuit acknowledges the propriety of
exclusion even when "[a] continuance might have cured any
prejudice arising from the defendants' late designation, [if]
such a remedy would have entailed additional expense to the
[defendant]. . . ." 1488, Inc., 939 F.2d at 1289. It has further
observed that "a continuance would not deter future dilatory
behavior, nor serve to enforce local rules or court imposed
scheduling orders." Betzel, 480 F.3d at 709 (quoting 1488, Inc.,
939 F.2d at 1288); see also Sierra Club, Lone Star Chapter v.
Cedar Point Oil Co., Inc., 73 F.3d 546, 573 (5th Cir. 1996)
(noting that a continuance "would neither punish [the plaintiff]
for its conduct nor deter similar behavior in the future")
(quoting Bradley v. United States, 866 F.2d 120, 126 (5th Cir.
1989)).
The scheduling order in this case set a hard deadline for
the disclosure of expert witnesses and their reports and stated
that "[t]he Court will not permit any witness, expert or fact, to
testify or any exhibits to be used unless there has been
compliance with this Order as it pertains to the witness and/or
exhibits, without an order to do so issued on motion for good
cause shown."33
The pretrial notice that accompanied the order
further emphasized that "[e]xpert witnesses whose reports have
not been furnished opposing counsel shall not be permitted to
33
R. Doc. 137 at 2.
32
testify . . . ." and that "[e]xcept for good cause shown, the
Court will not permit any witness to testify unless with respect
to such witness there has been complete compliance with all
provisions of the pre-trial order and prior court orders."34
Good cause exists only when the schedule "cannot be reasonably
met despite the diligence of the party" that failed to comply.
Borden, 2013 WL 3971458 at *3 (quoting Fed. R. Civ. P. 16(b)
advisory committee's note (1983)).
This Court already granted Nucor a six month continuance,
over Zen-Noh's objection, after Zen-Noh had filed a motion in
limine and motion for partial summary judgment raising the exact
argument that it raises now: that no competent evidence of
opacity violations existed because Nucor failed to designate the
observers as expert witnesses and had not provided expert reports
in accordance with the original scheduling order. As previously
discussed, this means that Nucor was already on notice that
Zen-Noh viewed the observers as experts and fully intended to
seek exclusion of their testimony if they were not designated as
such.
In light of these facts, Nucor obviously had plenty of time
to meet the expert deadlines after the Court granted a
continuance. That it chose not to do so and took the untenable
position that these individuals were fact witnesses suggests that
34
R. Doc. 137-1 at 7.
33
Nucor was seeking nothing more than to avoid Rule 702 scrutiny.
The risks that scrutiny posed for Nucor are palpable. This
follows because numerous factors undermine the reliability of the
proposed testimony. First and foremost, Method 9 was designed to
test the opacity of emissions from stationary sources such as
rectangular smoke stacks, not clouds of grain dust thrown into
the air by ship loading operations. The method is known to have
an error rate of up to 7.5% when observing stationary source
emissions under relatively ideal conditions.35 In contrast, the
grain dust that permeates the air during ship loading operations
would be considered a type of fugitive emissions, which are
"those emissions that do not emanate from a conventional smoke
stack or vent."36
The Quality Assurance Handbook counts the
observation of fugitive emissions among the "special observation
problems" that may make it "difficult or impossible to conduct a
technically defensible visible emissions observation."37 Though
the handbook does recommend minor adjustments to ensure the
accuracy of fugitive emissions observations, the Court is not
aware of any tests indicating the accuracy of Method 9 when used
to observe fugitive as opposed to stationary source emissions.
35
Visible Emissions Field Manual, EPA Methods 9 and 22, R.
Doc. 238-1 at 10.
36
EPA, Quality Assurance Handbook for Air Pollution
Management Systems: Volume III. Stationary Source Specific
Methods, R. Doc. 265-2 at 35.
37
Id. at 32, 35.
34
Also of concern is that the observations were performed not
by EPA or LDEQ officials but by consultants hired, trained, and
certified in Method 9 for the purposes of this litigation.38 See
Fed. R. Evid. 702 advisory committee's note (citing Daubert v.
Merrell Dow Pharmaceuticals, Inc., 43 F.3d 1311, 1317 (9th Cir.
1995) (evaluating whether experts are "proposing to testify about
matters growing naturally and directly out of research they have
conducted independent of the litigation, or whether they have
developed their opinions expressly for purposes of testifying,"
in determining whether the testimony is sufficiently reliable to
be considered by the trier of fact)). Compounding these concerns,
Nucor hangs its hat on the observations of the ERM employees when
it cannot even say with certainty what type of activities they
were observing.39
By choosing not to designate the observers as experts and to
furnish expert reports, Nucor was at best engaging in dilatory
tactics and at worst trying to avoid the scrutiny of Rule 702
altogether. The Court will not reward such behavior with a
continuance. To do so would not deter Nucor from future attempts
38
The EPA's Quality Assurance Handbook for Air Pollution
Measurement Systems recommends independent audits of observers in
their first year and notes that "routine [quality assurance]
checks for proper observer positioning and documentation are
necessary to obtain good quality data." R. Doc. 265-2 at 47.
There is no indication that the observations of any ERM employee
were ever audited or supervised in any way.
39
See discussion supra p. 16.
35
to dress its experts in laymen's clothing in order to prevent the
Court from performing its important gatekeeping function with
respect to expert testimony. See Fed. R. Evid. 701, advisory
committee's note (observing that the language of Rule 701
"ensures that a party will not evade the expert witness
disclosure requirements set forth in Fed.R.Civ.P. 26 . . . by
simply calling an expert witness in the guise of a layperson,"
and urging courts to "be vigilant to preclude manipulative
conduct designed to thwart the expert disclosure and discovery
process.") (quoting Joseph, Emerging Expert Issues Under the 1993
Disclosure Amendments to the Federal Rules of Civil Procedure,
164 F.R.D. 97, 108 (1996)). For all these reasons, the Court
determines that exclusion of the ERM employees' testimony is
appropriate.
3.
Nucor has no other competent evidence in support
of Count IV.
Exclusion of the observers' testimony leaves the observation
forms as the only evidence of their observations, but they, like
the forms completed by Sean Brennan, are inadmissible hearsay and
cannot serve as competent evidence capable of precluding summary
judgment.
The only other evidence Nucor provides in support of Count
IV is a collection of dock foreman shift reports, along with the
deposition testimony of some of the foremen, describing the
sometimes dusty conditions of Zen-Noh’s loading and unloading
36
operations. Nucor does not contend that the reports and testimony
are independent evidence of opacity violations; rather, it
asserts that the documents “corroborate” the ERM employee’s
opacity observations.40 Irrespective of their purpose, the
reports cannot alone create an issue of material fact as to Count
IV.
The Credible Evidence Revisions to 40 C.F.R. Part 60,
promulgated by the EPA in 1997, clarified that evidence other
than reference tests such as Method 9 could be used to
demonstrate compliance, or the lack thereof, with emissions
limits such as the 20% opacity standard of 40 C.F.R. §
60.302(c)(4). However, the revisions make clear that Method 9
“remains the benchmark against which other emissions or
parametric data, engineering analyses, or other information will
be evaluated.” Notice of Final Rulemaking, 62 Fed. Reg. 8314,
8317 (Feb. 24, 1997). Ultimately, to qualify as “credible
evidence,” the proffered data must be “relevant to whether a
source would have been in compliance with applicable requirements
if [Method 9] had been performed.” Id. (quoting 40 C.F.R. §
60.11(g)). The discussion of § 60.11(g) concludes by stating that
“other emissions or parametric data, or engineering analyses, may
be considered if relevant to the results that would have been
40
R. Doc. 273 at 17.
37
obtained by the appropriate, properly conducted reference test
methods.” Id. (emphasis added).
Zen-Noh argues that the foreman shift reports are poor
evidence of opacity violations because they exist only to inform
supervisors that equipment was slowed down by the foremen in
response to dusty conditions, and to indicate to the next shift's
employees that dust has accumulated on equipment and needs to be
cleaned up.41 Whether or not that is the case, it is clear that
comments on equipment conditions made by shift foremen are not
the type of “emissions or parametric data, or engineering
analyses” permitted under the credible evidence rule. While the
reports may be cause for concern that Zen-Noh’s equipment is not
up to par, they are not enough, standing alone, to spare Count IV
from summary judgment. Accordingly, this Court holds that Nucor
has failed to produce competent evidence capable of demonstrating
a genuine issue of material fact as to Count IV and grants
summary judgment against them on that Count.
B.
Count VI
Count VI alleges that Zen-Noh used inaccurate emissions
factors in developing its Air Permit, and as a consequence, its
actual emissions exceed the permitted emissions.
41
R. Doc. 258-2 at 6-7.
38
Nucor issued a notice of intent to sue on April 30, 2012.42
The notice letter alleged violations corresponding to Counts I-VI
in the First Amended Complaint. The relevant part of the letter
for Count VI of the First Amended Complaint alleged that Zen-Noh
had overestimated the particulate control efficiency of several
of its loading and unloading operations in the permit application
upon which the current permit was based. Nucor also alleged that
Zen-Noh had utilized emissions factors43 published by the EPA
that A) did not apply to Zen-Noh's ship loaders and barge
unloader (abbreviated as "SHIPLDR" and "B-UNLDR" in Nucor's
Memorandum in Opposition), and B) were significantly revised
shortly after Zen-Noh's permit was issued, demonstrating the
inaccuracy of Zen-Noh's calculations. The notice letter
concludes:
To the extent that inaccurate emission factors were
used in developing the permit, the actual emissions are
likely to have exceeded the permitted emissions,
especially with regard to the maximum lb/hr. limits for
the Ship loading operations and barge unloading
operations during topping off. Upon information and
belief, Zen-Noh's actual emissions exceed the following
permit limits:
42
R. Doc. 46-1.
43
An emissions factor is a representative value that
attempts to relate the quantity of a pollutant released to the
atmosphere with an activity associated with the release of that
pollutant. See Emissions Factors and AP 42, Compilation of Air
Pollutant Emissions Factors, EPA.gov,
http://www.epa.gov/ttnchie1/ap42/ (last visited September 24,
2013).
39
Source
Maximum
Average lb/hr
TPY limit
Identification
lb/hr
limit PM10
PM10
limit
PM10
SHIPLDR1
7.10
6.4
10.84
SHIPLDR2
7.10
6.4
10.84
SHIPLDR3
7.10
6.4
10.84
SHIPLDR4
7.10
6.4
10.84
B-UNLDR
1.9
1.8
1.944
Count VI survived Zen-Noh's motion to dismiss because Nucor
alleged that actual emissions of PM-10 exceeded permit limits,
based on information provided by Zen-Noh in its permit
application, "corrected to utilize appropriate emission factors,
capture efficiencies, and control efficiencies . . . ."45 In its
motion for summary judgment, Zen-Noh argues that Nucor "[n]ever
made any of these 'corrections' and never determined actual
emissions from any of the sources at the Elevator."46
In response, Nucor abandoned its argument that Zen-Noh used
inaccurate control efficiencies or emissions factors for the
44
R. Doc. 46-1 at 7. Based on the information contained in
the permit, this number should actually be 7.98, not 1.9.
45
R. Doc. 206 at 38 (quoting R. Doc. 46 at 17).
46
R. Doc. 225-1 at 15-16.
40
barge loader and ship loaders 1-4. Instead, it now claims that
Zen-Noh's Control Room Activity Reports and monthly "EMC" reports
indicate that Zen-Noh’s barge unloader, dust filters 5 and 6,
truck unloading hopper, and rail unloading hopper exceeded the
maximum operating rates47 listed for them in Zen-Noh's permit
application. Zen-Noh objects to Nucor’s new theory as “too late”
and argues that it impermissibly contradicts prior deposition
testimony of Jeff Braun indicating that the company had no
evidence of “actual emissions” violations.48 The Court need not
decide whether the new allegations contradict Braun’s testimony,
as they are outside the scope of the notice provided to defendant
in accordance the CAA and Louisiana citizen suit provisions.
In general, a plaintiff must provide specific notice of
intent to sue at least 60 days before filing a citizen suit. See
Hallstrom v. Tillamook Cnty., 493 U.S. 20, 31 (1989). Under the
Clean Air Act's citizen suit provision, at least 60 days before
filing suit, the citizen plaintiff must give “notice of the
violation (i) to the Administrator, (ii) to the State in which
the violation occurs, and (iii) to any alleged violator of the
standard, limitation, or order” allegedly violated. 42 U.S.C. §
7604(b)(1)(A). The notice must contain:
47
The operating rate is the rate at which grain or grain
product is channeled through a piece of equipment, such as a
barge or ship loader. This is also known as "throughput."
48
R. Doc. 258-2 at 7-10.
41
sufficient information to permit the recipient to
identify the specific standard, limitation, or order
which has allegedly been violated, the activity alleged
to be in violation, the person or persons responsible
for the alleged violation, the location of the alleged
violation, the date or dates of such violation, and the
full name and address of the person giving the notice.
40 C.F.R. § 54.3(b). Although "the notice requirement does not
demand that a citizen plaintiff “list every specific aspect or
detail of every alleged violation,” it must provide enough
information to permit the defendant to identify the standards
allegedly violated and the relevant activities with the degree of
specificity required by the regulations. Nat'l Parks &
Conservation Ass'n v. Tennessee Valley Auth., 502 F.3d 1316, 1329
(11th Cir. 2007). "The notice requirements are strictly construed
to give the alleged violator the opportunity to correct the
problem before a lawsuit is filed." Id. (citing Gwaltney of
Smithfield, Ltd. v. Chesapeake Bay Found., Inc., 484 U.S. 49, 60
(1987)).49
As an initial matter, the allegations in Nucor's Memorandum
in Opposition relate to five different emissions sources, only
one of which–the barge unloader–was named in the notice letter.
Nucor failed to provide any notice whatsoever of potential
49
Nucor also brings this suit under Louisiana’s citizen
suit provision, discussed supra. The Court has found no cases
discussing the specificity required by that notice provision.
Accordingly, recognizing the common structure and purpose of the
two provisions, the Court construes the Louisiana provision to
require a comparable level of specificity when providing notice
to the secretary of the LEDQ and the potential defendant.
42
emissions violations originating from dust filters 5 and 6, the
truck unloading hopper, and the rail unloading hopper. As
previously noted, the notice letter states that "[u]pon
information and belief, Zen-Noh's actual emissions exceed the
following permit limits: . . ." thereby indicating that the
limits listed were those about which Nucor intended to sue.
Zen-Noh lists 47 sources of PM-10 emissions in its permit
application. They differ in function, operating rate, and annual
hours of operation. The federal regulations make clear that a
plaintiff must "identify the specific . . . limitation . . .
which has allegedly been violated." 40 C.F.R. § 54.3(b) (2004). A
claim that five out of forty-seven total emissions limits were
exceeded and a general allegation of inaccuracies in the permit
application do not serve as notice of alleged violations of four
different permit limits originating from different emissions
sources. See Nat'l Parks & Conservation Ass'n, Inc. v. Tennessee
Valley Auth., 502 F.3d 1316, 1329-30 (11th Cir. 2007) ("The
language of the regulation does not suggest that the notice may
be good enough if it generally orients the agency or violator as
to the type of violation . . . . [T]he recipient of the notice
must understand from the notice what the citizen is alleging-not
what the citizen could allege if the citizen knew more or cared
about other possible transgressions.") (quoting Karr v. Hefner,
475 F.3d 1192, 1201 (10th Cir. 2007)); cf. St. Bernard Citizens
43
for Envtl. Quality, Inc. v. Chalmette Ref., L.L.C., 500 F.Supp.2d
592, 609 (E.D. La. 2007) (finding notice requirement satisfied as
long as subsequently alleged violations were “of the same type
(same parameter, same outfall)”50 as the violations included in
the notice letter)(quoting Pub. Interest Research Grp. of New
Jersey, Inc. v. Hercules, Inc., 50 F.3d 1239, 1250 (3d Cir.
1995)); Cmty. Ass'n for Restoration of the Env't v. Henry Bosma
Dairy, 305 F.3d 943, 953 (9th Cir. 2002) (finding notice
requirement satisfied "based on the fact that the violations
originated from the same source, were of the same nature, and
were easily identifiable . . . .") (emphasis added). For this
reason, the Court determines that Nucor failed to provide
adequate notice of the alleged violations of the permit limits
associated with dust filters 5 and 6, the truck unloading hopper,
and the rail unloading hopper.
Also problematic is that Nucor now relies on an entirely new
theory of how Zen-Noh exceeded the permitted emissions limits:
Nucor now argues that the sources in question violated the
emissions limits by surpassing their maximum operating rates,
when the notice letter alleged that the violations resulted from
the use of inaccurate emissions factors and capture efficiencies.
50
“Outfall” is a term used to describe emissions sources
under the Clean Water Act. Though St. Bernard Citizens was a
Clean Air Act case, it borrowed its reasoning and language from
the Third Circuit’s Hercules decision involving the Clean Water
Act.
44
This defect applies not only to the four emissions sources not
named in the original notice letter, but also to the barge
unloader described in both the letter and Nucor’s Memorandum in
Opposition.
As 40 C.F.R. § 54.3(b) requires evidence of the “activity
alleged to be in violation,” it is difficult to see how
allegations that Zen-Noh used improper emissions factors and
control efficiencies could suffice as notice that the company
actually exceeded the emissions limits through overuse of its
grain handling equipment. “In practical terms, the notice must be
sufficiently specific to inform the alleged violator about what
it is doing wrong, so that it will know what corrective actions
will avert a lawsuit.” Natural Res. Def. Council v. Sw. Marine,
Inc., 236 F.3d 985, 996 (9th Cir. 2000) (quoting Atlantic States
Legal Found., Inc. v. Stroh Die Casting Co., 116 F.3d 814, 819
(7th Cir.1997)) (emphasis added). By informing Zen-Noh that it
had utilized improper emissions factors in its permit
application, Nucor suggested that correcting its emissions
factors would be the appropriate response going forward. The
notice provided did not suggest, however, that the hourly
throughput of the emissions sources was the problem.51
51
It is of no consequence that Zen-Noh was already in
possession of the records forming the basis of Nucor's new theory
of violations. See Save Our Health Org. v. Recomp of Minn.,
Inc., 37 F.3d 1334, 1337-38 (8th Cir.1994) (complaint dismissed
because plaintiff failed to include alleged violations in notice,
even though defendant likely had independent knowledge of
45
Moreover, “[a]n important interconnection exists between the
proper exercise of our jurisdiction over claims raised in a
[Clean Air Act] citizen suit and the role of federal and state
agencies in monitoring such suits.” ONRC Action v. Columbia
Plywood, Inc., 286 F.3d 1137, 1144 (9th Cir. 2002) (citing
Hallstrom, 493 U.S. at 29). The purpose of the notice requirement
is to avoid a lawsuit altogether by allowing agencies to step in,
investigate, and bring the defendant into compliance. Cmty. Ass'n
for Restoration of the Env't, 305 F.3d at 953. Had Nucor’s notice
letter alleged that Zen-Noh was exceeding some of the operating
rates included in its permit application, either the LDEQ or the
EPA “might well have decided that those theories had sufficient
merit to call for agency action.” ONRC Action, 286 F.3d at 1144.
Nucor suggests that it learned of the alleged operating rate
exceedances only after a lengthy discovery battle. The Court does
not grant summary judgment as to Count VI as punishment for
Nucor’s failure to allege violations about which it was not yet
aware. Rather, the Court does so because the notice requirement
of § 7604 is a strictly construed prerequisite designed to afford
the alleged violator an opportunity to correct the violations
before a lawsuit is filed, as well as to give state and federal
agencies the opportunity to bring an enforcement action first.
violations, because provision of notice may have led to a quicker
resolution of the claim); Nat'l Parks & Conservation Ass'n, Inc.,
502 F.3d at 1329-30 (same).
46
Until Zen-Noh has an opportunity to correct any possible
violations outside the context of litigation, and until the EPA
and LDEQ have the opportunity to evaluate these allegations and
determine their own course of action, this Court cannot and will
not determine if the alleged operating rate exceedances resulted
in violations of the emissions limits of the permit.
V. CONCLUSION
Accordingly, the Court grants Zen-Noh's motions to exclude
the testimony of Timothy Desselles, Stephen Mattison, Kimberly
McIntyre, and Anna Migliore. The Court also grants Zen-Noh's
motion for summary judgment. Zen-Noh's motion to exclude the
testimony of Bill Palermo and Don Elias is denied as moot, and
Nucor's motion in limine to preclude Zen-Noh from introducing
testimony or other evidence regarding Title V permitting issues
or "potential to emit calculations" is also denied as moot.
New Orleans, Louisiana, this 4th day of November, 2013.
__
_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
47
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