Foundation Challenges Criminal Prosecution for Violation of Ambiguous EPA Regulation

The Foundation recently filed an amicus brief in the U.S. Court of Appeals for the 9th Circuit on behalf of the National Association of Manufacturers and the National Federation of Independent Business Small Business Legal Center opposing the Governments appeal from an order for a new trial in a criminal prosecution for violation of EPA regulations, in U.S. v. San Diego Gas & Electric, et al. The case involves novel issues under the Clean Air Act and an important fair notice issue under the Due Process Clause of the Fifth Amendment.

San Diego Gas & Electric Company (‘SDG&E’) sold a decommissioned natural gas storage facility to a real estate developer. As part of the transaction SDG&E removed all of its equipment from the site, including miles of underground pipes covered with multi-layered coating, one of which layers contained asbestos. Licensed asbestos abatement contractors and experts retained by SDG&E concluded that the coating material was not subject to federal regulation. Local, state and federal government inspectors were on site more than 20 times during the course of the removal operations. Nevertheless, the federal government criminally charged SDG&E and three individual defendants with violating federal regulations.

After a jury trial (at which SDG&E introduced air and soil samples showing that not a single fiber of asbestos was released from the site) one count of the indictment was dismissed after the close of the government’s case. One of the individual defendants was acquitted, but SDG&E was convicted on three counts alleging violations of the Clean Air Act (CAA) asbestos National Emissions Standard for Hazardous Air Pollutants (NESHAP) work practice standards and of making a false statement and the two remaining individual defendants were convicted on some counts and acquitted on others. The governments case rested on a method for calculating the asbestos content of multiple-layer materials that was first articulated in this case, and differed from testing standards EPA had previously approved. On defendants motion, the trial court granted a new trial on every count and the government appealed.

Our brief supports defendants argument that they did not have fair notice of EPAs change in testing standards because (i) the asbestos NESHAP does not specify how the test results are to be combined, (ii) nothing in the regulation addresses multi-layered materials and (iii) the government argued for the first time in this criminal case that the regulation permits only one method of calculating the amount of asbestos in the material being removed.

The regulatory fair notice doctrine has emerged in a line of cases (embraced by the Ninth Circuit after the district courts post-trial orders in this case) holding that a regulation does not provide sufficient notice of prohibited conduct unless ‘by reviewing the regulations and other public statements issued by the agency, a regulated party acting in good faith would be able to identify, with ‘ascertainable certainty,’ the standards with which the agency expects parties to conform’ and ‘To provide sufficient notice, a statute or regulation must give the person of ordinary intelligence a reasonable opportunity to know what is prohibited so that he may act accordingly.’

The Foundation participated in this case because the regulatory fair notice issue is of increasing importance in a legal environment in which more activities are affected by often intricate, highly technical and sometimes obscure regulations and in which government agencies often do not provide clear interpretations or guidelines. The problem is aggravated when violation of the regulations in question carries criminal as well as civil penalties.

To view the Foundations brief, click here