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Alm Corp. v. United States Environmental Protection Agency

argued: June 25, 1992.


Appeal from the Decision of the Environmental Protection Agency

Present: Becker, Hutchinson and Alito, Circuit Judges

Author: Hutchinson


HUTCHINSON, Circuit Judge.


Petitioner, ALM Corporation (ALM), asks us to review an order of the Administrator of the United States Environmental Protection Agency (EPA). The EPA's order affirmed an Administrative Law Judge's (ALJ's) assessment of fines in the amount of $19,500.00 against ALM for violations of the Toxic Substances Control Act (TSCA), 15 U.S.C.A. §§ 2601-2629 (West 1982 & Supp. 1992). ALM argues that the Administrator and the ALJ abused their discretion because (1) the certification documents required by 19 C.F.R. § 12.121 are not "reports, notices, or other information" ALM must submit under 15 U.S.C.A. § 2614(3)(B); (2) the Customs Service's regulatory detainment and enforcement procedures preclude EPA from separately enforcing those requirements under 15 U.S.C.A. § 2614(3)(B); and (3) ALM had the right to avoid the civil penalties by belatedly submitting accurate certification documents after EPA discovered ALM's violations. For the reasons stated below, we will deny the petition.


The underlying facts are not in dispute. During late 1985 and early 1986, ALM imported nine shipments of nylon and other plastic pellets, described on the invoices as nylon 6.6 chips polynil P-50 and delrin 100/107. These shipments entered the United States at the port of New York. The pellets are used for injection molding various consumer goods, including plumbing fixtures and kitchen utensils. The first shipment of pellets imported on October 10, 1985 by ALM was not accompanied by a certification stating either that the shipment complied with TSCA or that TSCA did not apply to the shipment. This certification is required by 19 C.F.R. § 12.121(a).*fn1 After learning of the lack of certification, EPA issued a notice of noncompliance to ALM on November 26, 1985. During the first five months of 1986, ALM imported six more shipments of pellets without the certification required by 19 C.F.R. § 12.121(a). The Customs Service did not detain any of the shipments for lack of certification nor demand redelivery of the shipments because of noncompliance.

On June 23, 1986, EPA issued a Complaint, Compliance Order and Notice of Opportunity for Hearing to ALM. This initial complaint alleged that ALM had committed two violations of the reporting requirements of 19 C.F.R. § 12.121. After receiving EPA's complaint, ALM imported two more shipments of pellets in August of 1986, this time accompanied by certifications incorrectly stating that the shipments were not subject to TSCA. EPA subsequently amended the complaint to include all nine of ALM's shipments. The amended complaint alleged that ALM had violated 15 U.S.C.A. § 2614 when it imported nine shipments of a "chemical substance," as that term was defined by 15 U.S.C.A. § 2602 and 40 C.F.R. § 710.2(h), without proper certification that each shipment complied with TSCA, and that ALM had imported two shipments falsely certifying that they were not subject to TSCA. The amended complaint proposed a penalty of $6,000.00 for each of the nine violations, resulting in a total proposed penalty of $54,000.00.

ALM denied having committed any violations, requested a hearing and moved to dismiss the complaint on the following grounds: (1) EPA is not authorized to enforce customs regulations; (2) the exclusive sanctions for failure to certify are refusal of entry and liquidated damages under the importer's surety bond; and (3) the pellets were not chemical substances within the meaning of TSCA. The EPA cross-moved for accelerated Disposition on the question of ALM's liability.*fn2

On November 30, 1989, the ALJ issued an order granting EPA's motion on the issue of liability based on her Conclusions that the pellets were chemical substances subject to TSCA, that ALM's failure to file proper certifications as required by 19 C.F.R. § 12.121(a) constituted a failure to report within the meaning of 15 U.S.C.A. § 2614(3)(B), that civil penalties were assessable under 15 U.S.C.A. § 2615 and that EPA had enforcement authority under TSCA.

Since the parties were unable to agree on the amount of the penalty, the ALJ held an evidentiary hearing on May 2, 1990 to determine the amount of penalties that should be assessed. On August 30, 1990, the ALJ issued an initial decision assessing the penalty at $2,500.00 for each of the seven entries unaccompanied by certification, and $1,000.00 for each of the two entries accompanied by false certifications that the imported materials were not subject to TSCA, resulting in a total penalty of $19,500.00.

ALM appealed the ALJ's decision to the Administrator on two of the grounds advanced in its original motion to dismiss: (1) that failure to certify compliance with TSCA in a customs entry does not constitute a failure to report under TSCA sections 2614 and 2615, and (2) that EPA is without authority to administer the governing customs regulations. In addition, ALM argued that its failure to submit certifications at entry was not an actionable violation of the customs regulations because it had not been afforded an opportunity to cure the defect, as the custom regulations allow, by belatedly filing a certification, especially in light of the fact that the importation of materials did not in and of itself violate TSCA.

On October 11, 1991, the Administrator issued a final decision and order affirming the ALJ's initial decision. ALM timely filed a petition for review of the ...

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