Mullet Repair Shop

Plain-English summary

EPA charged Mullet Repair Shop with Clean Air Act violations involving wood heaters, combination wood and coal heaters, and coal-only heaters. EPA alleged that the business manufactured or offered the heaters for sale without the required labels or testing and sought a total civil penalty of $6,788. The Board held that the complaint failed to allege that the Count I heaters lacked the required labels and testing, and that the Count II time period began before the cited coal-only-heater rule became effective. The Board denied default and dismissed the complaint without prejudice so EPA could file a corrected complaint.

Decision snapshot

• Cited authorities: 42 U.S.C. § 7413; 40 C.F.R. §§ 22.4, 22.5, 22.15, 22.17, 60.533, 60.536, and 60.538
• Outcome: Motion for default denied, complaint dismissed without prejudice, and no penalty assessed by this order.
• Key point: A default cannot be entered when the complaint does not allege facts establishing each regulatory violation and its effective time period.

Full text (EPA EAB public release)

         BEFORE THE ENVIRONMENTAL APPEALS BOARD
     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                    WASHINGTON, D.C.



                            )

In Re: )
)
Mullet Repair Shop ) Docket No. CAA-00-(1)
Docket No. CAA-HQ-99-01 )
)
)
)

        ORDER DENYING MOTION FOR DEFAULT ORDER,
         DISMISSING COMPLAINT WITHOUT PREJUDICE


For the reasons set forth below, Complainant's Motion for a

Default Order (“Motion”) is denied, and the Complaint is dismissed

without prejudice to the filing of a new complaint that cures the

filing deficiencies discussed below.

                I. PROCEDURAL BACKGROUND

The Complaint in this matter was filed on July 27, 1999, by

John B. Rasnic, Director, Manufacturing, Energy and Transportation

Division, Office of Compliance, Office of Enforcement and Compliance

Assurance, United States Environmental Protection Agency

(“Complainant”). The Complaint alleged that Mullet Repair Shop

(“Respondent”) had violated Sections 113(a)(3)(A) and (d) of the

Clean Air Act (“CAA”), as amended, 42 U.S.C. §§ 7413(a)(3)(A) and

(d), and implementing regulations at 40 C.F.R. §§ 60.538(b) and (c).

More specifically, the Complaint alleges that Respondent violated 40
 2

C.F.R.§ 60.538(b) by manufacturing and offering for sale wood heaters

and combination wood/coal heaters between February 26, 1988, and May

1, 1998. The Complaint further alleges that Respondent violated 40

C.F.R. § 60.538(c) by offering for sale coal-only heaters between

February 26, 1988, and May 1, 1999, that were not properly labeled.

Complainant proposes a total penalty for the two Counts of $6,788.

Respondent was served with the Complaint on August 2, 1999.1

Respondent did not answer the Complaint within the 30 days provided

by the Consolidated Rules of Practice Governing the Administrative

Assessment of Civil Penalties (“CROP”), at 40 C.F.R. § 22.15(a) (64

Fed. Reg. 40817 (July 23, 1999)).2 Complainant's Motion, dated

January 11, 2000, was filed with the Environmental Appeals Board3 on

February 9, 2000.

 1A properly executed return receipt was attached to the

Complainant's Motion. See p.4, infra.
2Revisions to the CROP, 40 C.F.R. Part 22, became effective on
August 23, 1999 for proceedings commenced prior to that date, unless
to do so would cause substantial injustice. The revised rules
expanded from 20 days to 30 days the time during which an Answer must
be filed. Citations to the CROP are to the revised rules, unless
otherwise specified.
3Under 40 C.F.R. § 22.4(a), the Environmental Appeals Board
serves as Presiding Officer in those proceedings under the CROP
commenced at “EPA Headquarters” until the respondent files an answer.
Where, as here, no Answer was filed, the Board serves as Presiding
Officer for purposes of considering Complainant’s Motion.
 3

                 II.   FINDINGS OF FACT

The following facts are set forth in the Complaint and

Complainant's Motion. The Respondent, Mullet Repair Shop, is a sole

proprietorship owned by Mr. Enos Mullet. Respondent is a

"manufacturer" and a “commercial owner” within the meaning of 40

C.F.R. Part 60, Subpart AAA, Section 60.531. Respondent manufactured

new residential wood heaters and coal-only heaters, as defined in

Section 60.531. On June 6, 1997, EPA issued a Section 114 letter

requesting information from Respondent regarding the manufacture and

sale of wood heaters and coal-only heaters. In a letter dated July

30, 1997, Richard K. Muntz, P.C., an attorney at law, acting on

behalf of Mr. Enos Mullet, responded to the Section 114 letter,

providing much of the information requested by EPA. On March 31,

1998, Complainant issued a Notice of Violation to Respondent

informing Respondent that it was in violation of one or more wood

heater regulations at 40 C.F.R. Part 60, Subpart AAA. In a letter

dated May 1, 1998, Richard K. Muntz, P.C. , responded to the Notice

of Violation, citing the Respondent’s inability to pay a “substantial

penalty.” In support of this claim, partial tax returns were

provided for years 1994 through 1997.4

 4Complainant has not provided with its Motion copies of the

Section 114 letter, the Notice of Violation, or Respondent’s letters
in reply.
 4

In a letter dated June 1, 1999, EPA requested a waiver from the

United States Department of Justice (“DOJ”) of the twelve-month

limitation on the EPA’s authority to initiate an administrative case

against the Respondent. CAA, Section 113(d). On July 1, 1999, DOJ

concurred on EPA’s waiver request. The Complainant filed the

Complaint in this action on July 27, 1999, alleging violations of the

regulations at 40 C.F.R. Part 60, subpart AAA, and proposing a total

penalty of $6,788.5 The Complaint in this action was served upon the

Respondent by certified mail on August 2, 1999. In late August 1999,

the Respondent's attorney contacted Robert C. Marshall, Jr., who

manages the Wood Heater Program for EPA, to discuss amelioration of

the penalty. The possibility of making installment payments over a

one-year period was discussed. Mr. Mullet’s attorney said he would

call Mr. Marshall within one week, if Mr. Mullet wanted to pursue

this option. Mr. Mullet’s attorney did not contact Mr. Marshall

again with regard to this matter.

The Complaint contains two counts.       Count I provides, in

pertinent part:

18.   The regulation at 40 C.F.R. Section 60.538(b)
      prohibits the advertising for sale, offer for

 5The title of the Complaint incorrectly identifies the

Respondent as Mullett Repair Shop, rather than Mullet Repair Shop.
(emphasis added). However, the body of the Complaint correctly
identifies and describes Respondent as Mullet Repair Shop.
 5

      sale, or sale of an affected facility by a
      manufacture[r] that: (1) does not have affixed
      to it a permanent label pursuant to Section
      60.536; and (2) has not been tested as required
      by Section 60.533(n).


19.   Between February 26, 1988, and May 1, 1998,
      Mullet Repair Shop manufactured and offered for
      sale approximately 70 wood heaters or
      combination wood/coal heaters that are affected
      facilities as defined under Section 60.531.


Count II provides, in pertinent part:



21.   The regulation at 40 C.F.R. Section 60.538(c)
      prohibits the advertising for sale, offer for
      sale, or sale of a coal-only heater by a
      commercial owner on or after July 1, 1990, that
      does not have affixed to it a permanent label
      meeting the requirements of Section
      60.536(f)(3).


22.   Between February 26, 1988, and May 1, 1998,
      Mullet Repair Shop offered for sale
      approximately 160 coal-only heaters that were
      not labeled in accordance with the requirements
      at Section 60.536(f)(3).


                II.   CONCLUSIONS OF LAW

The Complaint in this action was lawfully and properly served

upon the Respondent, in accordance with 40 C.F.R.

§ 22.5(b)(1). Section 22.15(a) requires the Respondent to file an

Answer to the Complaint within thirty (30) days of the service of the

Complaint. To date, the Respondent has failed to file an Answer to
 6

the Complaint.

Under 40 C.F.R. Section 22.15(d), the Respondent's failure to

admit, deny, or explain any material factual allegation contained in

the Complaint constitutes an admission of the allegation. Under 40

C.F.R. Section 22.17(a), the Respondent's failure to file an Answer

to the Complaint may be deemed a default by the Respondent. Such

"[d]efault by respondent constitutes, for purposes of the pending

action only, an admission of all facts alleged in the complaint and a

waiver of respondent's right to a hearing on such factual

allegations." 40 C.F.R. § 22.17(a) (emphasis added). Under 40

C.F.R. Section 22.17, the Respondent's failure to file a timely

Answer to the Complaint is grounds for the entry of a Default Order

against the Respondent assessing civil penalties for the violations

alleged in the Complaint.

 Because Respondent’s failure to answer is grounds for a default

judgment, the facts as presented by Complainant are accepted as

unchallenged. Where a respondent has failed to file an answer, the

Presiding Officer “shall issue a default order against the defaulting

party * * * unless the record shows good cause why a default order

should not be issued.” 40 C.F.R. § 22.17(c). However, even though

all of Complainant's factual assertions are presumed true, a motion
 7

for default judgment must also "specify the penalty or other relief

sought and state the legal and factual grounds for the relief

requested.” 40 C.F.R. § 22.17(b). For the reasons discussed below,

due to deficiencies in the Complaint, Complainant has failed to set

forth adequate legal grounds in its Motion in this matter. We find

pleading deficiencies in the Complaint that warrant our dismissal of

the Complaint without prejudice, and accordingly Complainant’s Motion

is denied for good cause.

A.        Deficiency of Count I

The paragraphs applicable to Count I of the Complaint, while

deemed admitted under 40 C.F.R. § 22.17 because Respondent failed to

answer the Complaint, are not sufficient to find a violation in this

case. Complainant does not allege all facts necessary to establish a

prima facie case for Count I. There are three critical elements that

Complainant must allege in order for the Presiding Officer to find a

violation under 40 C.F.R. § 60.538(b).6 First, Complainant must, and

    6The cited regulation, 40 C.F.R. § 60.538(b) provides:

          No manufacturer shall advertise for sale, offer
          for sale, or sell an affected facility that –

          (1) Does not have affixed to it a permanent
          label pursuant to § 60.536, and

          (2) Has not been tested when required by
          § 60.533(n).

8

did here, allege that Respondent was a manufacturer. See Complaint ¶

11. Second, Complainant must allege that Respondent either

advertised for sale, offered for sale, or sold “affected facilities”

as defined by the regulation. Here, Complainant alleged that

Respondent offered for sale 70 “affected facilities.” See Complaint

¶ 19. Third, for Respondent’s alleged sales activity to be unlawful,

the affected facilities offered for sale must not have been labeled

and tested as prescribed by sections 60.536 and 60.533(n),

respectively. Complainant failed to allege that the 70 affected

facilities offered for sale were not labeled and tested as required

by the regulation. Without this allegation, Complainant has not

alleged a prima facie case establishing a violation of 40 C.F.R.

§ 60.538(b) by Respondent. In light of this pleading deficiency,

Count I of the Complaint is dismissed.

  This dismissal is without prejudice.   The dismissal is without

prejudice because, as this Board has stated:

  [D]ismissal with prejudice under the Agency’s rules should
  rarely be invoked for the first instance of a pleading
  deficiency in the complaint; instead, it should be
  reserved for repeat occasions or where it is clear that a
  more carefully drafted complaint would still be unable to
  show a right to relief on the part of the complainant.

In re Asbestos Specialists, Inc., 4 E.A.D. 819, 830 (EAB 1993);

see also In re Commercial Cartage Co., Inc., 5 E.A.D. 112, 118 (EAB
 9

1994) (remanding case to Presiding Officer with instructions to

dismiss without prejudice so that complainant has opportunity to cure

pleading deficiencies). We see no basis here for dismissing the

Complaint with prejudice since we have no reason to believe that

Complainant cannot rewrite the Complaint to state a right to relief.

Nor do we have any reason to believe that Respondent would be

prejudiced since it has not answered the Complaint and no hearing has

occurred in this case.

B.   Deficiency of Count II

The paragraphs applicable to Count II of the Complaint, while

deemed admitted, are not sufficient to permit a finding of violation.

There is a discrepancy between the alleged time period during which

the alleged activity occurred, and the date when the regulations

became effective. Complainant alleges that Respondent violated 40

C.F.R. § 60.538(c)7 when, “Between February 26, 1988, and May 1,

1998, [Respondent] offered for sale approximately 160 coal-only

 7The cited regulation, 40 C.F.R. § 60.538(c) provides, in

pertinent part that:

     On or after July 1, 1990, no commercial owner
     shall advertise for sale, offer for sale, or
     sell an affected facility that does not have
     affixed to it a permanent label pursuant to 40
     C.F.R. § 60.536(b), (c), (e), (f)(1), (g)(1) or
     (g)(2).

(emphasis added).
 10

heaters that were not labeled in accordance with the requirements at

Section 60.536(f)(3).” Complaint ¶ 22. While the regulation, by its

terms, clearly makes unlawful such activity occurring on or after

July 1, 1990, Complainant has alleged that Respondent’s actions took

place beginning in February 26, 1988. Thus, there are approximately

two and one-half years of possible alleged sales offers that occurred

prior to the effective date of the regulation. Those sales offers

are not subject to the regulation specified by Complainant. Because

the record before us neither expressly states that there were sales

after July 1, 1990, nor includes sufficient documentation, or

specificity, as to the actual number of sales offers that Respondent

allegedly conducted on or after July 1, 1990, we are also dismissing

Count II without prejudice.8

                     IV.   CONCLUSION

For these reasons, we are dismissing the Complaint without

prejudice to the filing of a new complaint that cures the filing

deficiencies identified above. Accordingly, we also deny

 8We note that the time period during which Respondent allegedly

violated section 60.538(b) and (c) begins with the date the
regulations were promulgated, February 26, 1988, and ends with the
date that Respondent’s counsel responded to the Notice of Violation
(May 1, 1998). Complainant has not provided, in the Complaint, any
specific dates of Respondent’s allegedly unlawful sales offers.
 11

Complainant’s Motion for Default Order for good cause, having

dismissed the Complaint without prejudice.

SO ORDERED.




                        ENVIRONMENTAL APPEALS BOARD

Date: 3/6/2000 By: /s/
Edward E. Reich
Environmental Appeals Judge
 CERTIFICATE OF SERVICE

 I hereby certify that copies of the foregoing Order in

the matter of Mullet Repair Shop, CAA Docket No. 00-1, were
sent to the following persons in the manner indicated:

By Certified Mail
Return Receipt Requested:

     Enos Mullet
     Mullet Repair Shop
     7705 E. 450 N.
     Shipshewana, IN 46565

By Interoffice Mail:

     John B. Rasnic
     Director
     Manufacturing, Energy & Transportation
       Division (2223A)
     United States Environmental Protection Agency
     Ariel Rios Building
     1200 Pennsylvania Avenue
     Washington, DC 20460

Dated: 3/6/2000 /s/
Annette Duncan
Secretary