Ernie Miller Coal Stoves (Board decision, August 3, 2000)

Plain-English summary

EPA charged Ernie Miller Coal Stoves of Breman, Indiana, with offering about 79 improperly labeled wood heaters and coal-only heaters for sale. EPA sought a $1,351 civil penalty, and the company did not answer the complaint. The Board denied default because the complaint did not specify whether the alleged conduct occurred after the regulatory effective dates and did not clearly allege that the heaters were covered by the standards. The Board dismissed the complaint without prejudice, and the order states that the proposed penalty had already been paid in full.

Decision snapshot

• Cited authorities: 40 C.F.R. §§ 22.17, 22.18, 22.20, 60.530, 60.531, 60.536, and 60.538
• Outcome: Motion for default denied, complaint dismissed without prejudice, and the proposed $1,351 penalty noted as paid in full.
• Key point: A default order requires a complaint that clearly alleges conduct covered by the cited standards during the standards' effective period.

Full text (EPA EAB public release)

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

)
In re: )
)
Ernie Miller Coal Stoves
) CAA Appeal No. 00-(2)
)
Docket No. CAA-HQ-99-02
)
)

ORDER DENYING MOTION FOR DEFAULT ORDER
AND DISMISSING COMPLAINT WITHOUT PREJUDICE

I. Introduction

On July 27, 1999, the U.S. Environmental Protection

Agency’s (“EPA” or “Agency”) Office of Enforcement and

Compliance Assurance filed a complaint against Ernie Miller

Coal Stoves (“EMCS”) of Breman, Indiana, charging that EMCS

had violated the Agency’s Clean Air Act new source performance

standards by offering for sale approximately seventy-nine

improperly labeled wood heaters and coal-only heaters. EPA

proposed that a penalty of $1,351 be assessed against EMCS for

these alleged violations. EMCS did not file an answer to

EPA’s complaint. Accordingly, on February 9, 2000, EPA filed

a motion with the Environmental Appeals Board (“Board”)

seeking a default judgment against EMCS and imposition of the

$1,351 fine. As to the fine, the motion recites that an

installment payment agreement between Mr. Miller of EMCS and

the Agency was entered into on September 1, 1999, providing

for four equal payments of $337.75, becoming due on September

3, 1999, January 3, 2000, May 3, 2000, and August 3, 2000. As discussed later, this fine has now been paid in full by EMCS.

For the reasons set forth below, we deny EPA’s motion and

dismiss the complaint without prejudice.

II. Discussion

Under the Consolidated Rules of Practice governing these

proceedings, “[a] party may be found to be in default: after

motion, upon failure to file a timely answer to the complaint

• • *.” 64 Fed. Reg. 40,138, 40,182 (July 23, 1999) (to be

codified at 40 C.F.R. § 22.17). In this case, it would appear

to be a simple proposition to find EMCS in default, given the

company’s failure to file any answer whatsoever to EPA’s

complaint. However, to enter a finding of default, a

reviewing body should assure itself that the complaint in

question states a claim upon which relief may be granted.1

Cf., e.g., Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1370

n.41 (11th Cir. 1997) (“a default judgment cannot stand on a

complaint that fails to state a claim”); Nishimatsu Constr.

Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)

1The Board has jurisdiction to decide this motion under the Consolidated Rules of Practice, which specify that the Board “acts as Presiding Officer until the respondent files an answer in proceedings under these Consolidated Rules of Practice commenced at EPA Headquarters.” 64 Fed. Reg. at 41,178 (to be codified at 40 C.F.R. § 22.4(a)). Because EPA’s Office of Enforcement and Compliance Assurance (rather than a regional office) initiated this action, and because EMCS failed to answer the complaint, the Board has authority to rule on the motion.

-2-
(“[a] default judgment is unassailable on the merits but only

so far as it is supported by well-pleaded allegations, assumed

to be true”). Our review of the complaint in this case

reveals pleading deficiencies that are fatal to EPA’s cause.

In many respects, the pleading deficiencies are very similar

to those we found earlier this year in another wood/coal stove

case involving the same basic regulations. See In re Mullet

Repair Shop, CAA Appeal No. 00-(2), Order Denying Motion for

Default Order, Dismissing Complaint Without Prejudice (EAB,

Mar. 6, 2000). We dismissed the complaint in that case

because of the pleading deficiencies. That case was decided

on March 6, 2000, approximately two months before the third of

the four penalty installment payments in the present case

became due and payable.

To understand the pleading deficiencies in the present

case, a brief review of the applicable Clean Air Act

regulations is necessary. On February 26, 1988, EPA

promulgated new source performance standards (“NSPS”) for

wood- and coal-burning heaters. See 53 Fed. Reg. 5860 (Feb.

26, 1988) (codified at 40 C.F.R. pt. 60 subpt. AAA). The

standards, called “Standards of Performance for New

Residential Wood Heaters,” impose a number of regulatory

requirements on manufacturers and retailers of certain

categories of wood- and coal-burning heaters. For instance,

heaters must be properly labeled and must comply with specific

-3- limits on emissions of particulate matter. See 40 C.F.R.

§§ 60.532 (emissions limits), .536 (labeling requirements).

For our purposes, the critical provisions in the

regulations set forth the “affected facilities” to which the

heater standards apply. The standards are applicable to “each

wood heater”2 that is: (1) manufactured on or after July 1,

1988, or (2) sold at retail on or after July 1, 1990. 40

C.F.R. § 60.530(a) (1998).

The complaint sets forth in two paragraphs the key

components of EMCS’s alleged violations. The paragraphs

state:

16. The regulation at 40 C.F.R. [s]ection 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

2A “wood heater” is “an enclosed, woodburning appliance capable of and intended for space heating and domestic water heating” that has:

(a) An air-to-fuel ratio in the combustion chamber averaging less than 35-to-1;
(b) A usable firebox volume of less than 20 cubic feet;
(c) A minimum burn rate less than 5 kg/hr; and
(d) A maximum weight of 800 kg.

40 C.F.R. § 60.531.

-4- meeting the requirements of [s]ection

60.536(f)(3).

17. Between February 26, 1988, and May 1, 1998,

Ernie Miller Coal Stoves offered for sale
approximately 79 wood heaters and coal-only
heaters that were not labeled in accordance with
the requirements at [s]ection 60.536(f)(3).

Complaint ¶¶ 16-17.

Upon comparison of the complaint to the regulations,

several problems in the way the violations are pled emerge.

The first problem is identical to one we pointed out in Mullet

on March 6, 2000. Specifically, the problem arises from the

complaint’s lack of specificity regarding the nature and

timing of the alleged violations, which potentially covered a

period of time when no illegal activity would be possible

because no standards would have applied. As we explained in

Mullet,

Complainant alleges that Respondent violated 40 C.F.R. § 60.538(c) when, “Between February 26, 1988, and May 1, 1998, [Respondent] offered for sale approximately 160 coal-only 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,

-5- 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 * * * dismissing Count II without prejudice.

Mullet, Order Denying Motion for Default Order at 9-10

(footnotes omitted). Here, as in Mullet, the complaint

alleges a February 26, 1988 starting date for EMCS’s sales

offers but makes no specific allegations as to whether any of

the purported seventy-nine sales offers occurred after July 1,

1990.

A second pleading problem arises because the wood heater

NSPS is specifically applicable only to wood heaters

manufactured on or after July 1, 1988, or sold at retail on or

after July 1, 1990. 40 C.F.R. § 60.530(a). Coal-only

heaters,3 which are functionally capable of burning wood and

3A “coal-only heater” is “an enclosed, coal-burning appliance capable of space heating, or domestic water heating” that has all of the following characteristics:

(a) An opening for emptying ash that is located near the bottom or the side of the appliance;
(b) A system that admits air primarily up and through the fuel bed;
(c) A grate or other similar device for shaking or disturbing the fuel bed or power-driven
(continued...)

-6- thus able to meet the wood-heater definition, are wood heaters

for purposes of the foregoing applicability requirements.4

There is no allegation in the complaint, however, that the

heaters (both wood and coal-only) purportedly offered for sale

by EMCS were manufactured on or after July 1, 1988.5 Instead,

we are informed only that they were offered for sale sometime

during the ten-year period between February 26, 1988 (the

effective date of the NSPS itself) and May 1, 1998. For the

NSPS to be applicable, and therefore for the complaint to be

viable, the complaint would have to clearly allege that the

violations pertained to heaters that were either sold (not

merely offered for sale) after July 1, 1990, or that the

3(...continued) mechanical stoker;
(d) Installation instructions that state that the use of wood in the stove, except for coal ignition purposes, is prohibited by law; and (e) The model is listed by a nationally recognized safety-testing laboratory for use of coal only, except for coal ignition purposes.

40 C.F.R. § 60.531.
4Coal-only heaters are not required to meet the emission limits and certain other requirements applicable to wood heaters, but instead are chiefly subject to labeling requirements in the NSPS that warn against and prohibit their use as wood heaters. See 40 C.F.R. §§ 60.530(g), .536(f)(3).
5There is also no allegation in the complaint that the heaters purportedly offered for sale by EMCS were sold at retail on or after July 1, 1990. Because there is no allegation that these heaters were ever actually sold but only that they were offered for sale, the manufacturing component of the “affected facility” definition is the only relevant one in this context. See 40 C.F.R. § 60.530(a).

-7- offers for sale were for heaters that were manufactured after

July 1, 1988. Unfortunately, there is no legitimate way to

cabin the language of the complaint in this fashion. We

cannot tell from the face of the complaint whether EPA has

targeted heaters that are subject to regulation under the

NSPS. As a consequence, the complaint fails to state a claim

upon which relief can be granted as to any or all of the

seventy-nine alleged violations. Accordingly, the complaint

must be dismissed.6 See 40 C.F.R. § 22.20(a).

III. Conclusion

A. Dismissal of Complaint

Because of the foregoing deficiencies in pleading a claim

for relief, it is our conclusion that the complaint is fatally

defective. EPA has failed to allege a prima facie case of

EMCS’s violation of the wood heater NSPS, and thus we cannot

use the complaint as the basis for a default judgment.

Accordingly, the complaint is dismissed. This dismissal is

without prejudice because, as the Board has stated:

6
We note one other pleading problem as well. The labeling regulation at 40 C.F.R. § 536(f)(3), which is cited as legal authority in ¶ 17 of the Complaint, applies only to coal-only heaters and not to wood heaters in general, whereas ¶ 17 alleges violations for both coal-only heaters and wood heaters. By separately identifying the category of “coal-only heaters,” the logical implication is that the reference to “wood heaters” is to heaters that are not coal-only, but the labeling requirement does not apply to those heaters. See 40 C.F.R. § 536(f)(3).

-8-
 [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 In re Commercial Cartage Co., 5 E.A.D. 112, 118

(EAB 1994) (remanding case to presiding officer with

instructions to dismiss without prejudice so that complainant

may have opportunity to cure pleading deficiencies). We see

no basis here for dismissing the complaint with prejudice

because we have no reason to believe that EPA cannot rewrite

the complaint to state a right to relief. Nor do we have any

reason to believe that EMCS would be prejudiced, because it

has not answered the complaint and no hearing has been held in

this case.

B. Previous Penalty Payments

As noted earlier, the full amount of the penalty sought

by the Agency has now been paid in full,7 one-half of the

7
We became aware of the payment when, in a motion dated June 30, 2000, the Agency asked to withdraw its motion for (continued...)

-9- amount apparently having been paid after the decision in

Mullet was issued. Despite the obvious relevance of our

decision in Mullet to the facts of this case, no steps were

taken by the Agency to amend the complaint in this case to

bring it into conformity with Mullet. Doing so might have

materially altered the outcome of the case, including the

decision by EMCS to continue paying the installments until the

penalty was paid in full.

An administrative issue arises as to the proper

disposition of the payment following the complaint’s

dismissal. Obviously, if a complaint curing the deficiencies

is not filed, the payment should be refunded to the payor

(EMCS or Mr. Miller, as appropriate). On the other hand, if

the Agency intends promptly to refile an enforcement action

7(...continued) default filed with the Board on February 2, 2000. The Agency cites the following reasons for seeking withdrawal of the motion:

Ernie Miller Coal Stoves [EMCS] has paid in full the proposed civil penalty described in the Motion for Default Order. Therefore, the USEPA has no reason to seek relief from the Environmental Appeals Board to ensure payment of the penalty. Accordingly, the USEPA respectfully requests that the Environmental Appeals Board allow the USEPA to withdraw its Motion for Default Order.

Upon consideration of the premises, and more specifically the reasons cited in this order dismissing the complaint without prejudice, the Agency’s motion to withdraw the motion for default is denied.

-10- against EMCS, it may be simpler for the Agency to retain the

payment pending the outcome of the new proceeding. In this

regard, we note that under section 22.18(a)(1) of the

Consolidated Rules of Practice, a “quick resolution” procedure

exists for settlement of cases if EMCS chooses not to contest

the new complaint and any proposed penalty assessment. The

parties could just agree that upon issuance of a new

complaint, the payment already made would be credited under

section 22.18(a)(1). That scenario would permit us to issue a

final order under section 22.18(a)(3).

So ordered.

ENVIRONMENTAL APPEALS BOARD

Dated: 8/03/00 By: /s/
Ronald L. McCallum
Environmental Appeals Judge

-11-
 CERTIFICATE OF SERVICE

I hereby certify that copies of the foregoing Order Denying

Motion for Default Order and Dismissing Complaint Without

Prejudice in the matter of Ernie Miller Coal Stoves, CAA Appeal

No. 00-(2), were sent to the following persons in the manner

indicated:

By First Class U.S. Mail, Return Receipt Requested:

Ernie Miller
Ernie Miller Coal Stoves
2570 Beech Road
Breman, Indiana 46506

John B. Rasnic, Director
Manufacturing, Energy, and Transportation Division Office of Enforcement and Compliance Assurance U.S. Environmental Protection Agency
Ariel Rios Building
1200 Pennsylvania Avenue, N.W.
Mail Code 2223A
Washington, D.C. 20460

Date: 8/04/00
/s/
Annette Duncan
Secretary