Little Leaf Farms, LLC (Board decision, April 15, 2024)

Plain-English summary

Little Leaf Farms, LLC imported 742 kilograms of XP40/R-449A refrigerant in 14 cylinders through New York and Newark. EPA alleged that the company imported the bulk regulated HFCs without expending the required allowances or obtaining a non-objection notice. The shipment was valued at $8,570 and had an exchange-value equivalent of 1,036 metric tons; the blend also contained HFO-1234yf, which the agreement states is not regulated under the AIM Act. The settlement approved an $857 civil penalty and corrective action addressing the subject HFCs.

Decision snapshot

• Cited authorities: The AIM Act and Clean Air Act, 42 U.S.C. §§ 7413 and 7675, with implementing regulations in 40 C.F.R. parts 13, 19, 22, and 84
• Outcome: The Expedited Settlement Agreement and Consent Agreement were ratified, Little Leaf Farms was ordered to comply with their terms, and an $857 civil penalty was approved.
• Key point: Importers of bulk regulated HFCs must expend the required allowances or obtain the required EPA non-objection notice.

Full text (EPA EAB public release)

                                                                     F I L E D
                                                                         Apr 15, 2024
                                                                    Clerk, Environmental Appeals Board
                                                                    INITIALS ________________________
                 ENVIRONMENTAL APPEALS BOARD
        UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                        WASHINGTON, D.C.

                                           )
                                           )

In re Little Leaf Farms, LLC ) Docket No. CAA-HQ-2024-008451
)
)
)
)

                                   FINAL ORDER

   Pursuant to 40 C.F.R. § 22.18(b)-(c) of EPA’s Consolidated Rules of Practice, the

attached Expedited Settlement Agreement/Consent Agreement resolving this matter is incorporated by reference into this Final Order and is hereby ratified.

  The Respondent is ORDERED to comply with all terms of the Expedited Settlement

Agreement/Consent Agreement, effective immediately.

   So ordered.1

                                               ENVIRONMENTAL APPEALS BOARD

Dated: April 15, 2024 ________
Mary Kay Lynch
Environmental Appeals Judge

   1
    The three-member panel ratifying this matter is composed of Environmental Appeals

Judges Wendy L. Blake, Mary Kay Lynch, and Ammie Roseman-Orr.
 ENVIRONMENTAL APPEALS BOARD
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.

                                                )

In re: )
) Docket No. CAA-HQ-2024-
Little Leaf Farms, LLC ) 008451
)
)
)

                     EXPEDITED SETTLEMENT AGREEMENT

                                A.      JURISDICTION

1. This is an expedited administrative penalty assessment proceeding brought under Section
   113(d) of the Clean Air Act (the “Act” or “CAA”), 42 U.S.C. § 7413(d), and §§ 22.13 and 22.18 of the Consolidated Rules of Practice Governing the Administrative Assessment of Civil Penalties and the Revocation/Termination or Suspension of Permits (“Consolidated Rules”) as codified at 40 C.F.R. Part 22.

2. Complainant is the United States Environmental Protection Agency (“EPA”). On the EPA’s
   behalf, Mary E. Greene, Director, Air Enforcement Division, is delegated the authority to settle civil administrative penalty proceedings under Section 113(d) of the Act.

3. Respondent is Little Leaf Farms, LLC, identified further in Table 1 of ESA Attachment 1.

4. Complainant and Respondent (together, the “Parties”), having agreed that settlement of this
   action is in the public interest, consent to the issuance of the attached final order (“Final Order” or “Order”) ratifying this expedited consent settlement agreement (“Agreement”) before taking testimony and without adjudication of any issues of law or fact herein, and Respondent agrees to comply with the terms of this Agreement and Final Order.

5. The Environmental Appeals Board is authorized to ratify this Agreement, which
   memorializes a settlement between Complainant and Respondent. 40 C.F.R. §§ 22.4(a) and 22.18(b).

6. The Ratification the Final Order, incorporating this Agreement, simultaneously commences
   and concludes this proceeding. 40 C.F.R. § 22.13(b).

                             B.      GOVERNING LAW
   

7. This proceeding arises under the American Innovation and Manufacturing (“AIM”) Act of
   2020, 42 U.S.C. § 7675, and the regulations promulgated thereunder.

                                           1
   

   8. The EPA regulations at 40 C.F.R. Part 84, Subpart A, implement the AIM Act requirement to phase down HFC production and consumption.

8. 40 C.F.R. § 84.5(b)(l) states that “no person may import bulk regulated substances, except by
   expending, at the time of the import, consumption or application-specific allowances in a quantity equal to the exchange-value weighted equivalent of the regulated substances imported.”

9. 40 C.F.R. § 84.5(b)(6) states that “every kilogram of bulk regulated substances imported …
   constitutes a separate violation of this subpart.”

                      C.        ALLEGED VIOLATION OF LAW
   

10. The EPA alleges Respondent violated 40 C.F.R. § 84.5(b) by importing the bulk regulated
    substances identified in Table 1 of ESA Attachment 1 without expending consumption or
    application-specific allowances in a quantity equal to the exchange value equivalent of the
    regulated substances imported.

                            D.     TERMS OF AGREEMENT
    

11. For the purpose of this proceeding, as required by 40 C.F.R. § 22.18(b)(2), Respondent:

    a. admits that the EPA has jurisdiction over the subject matter alleged in this
    Agreement;
    b. admits the facts stipulated in Table 1 of ESA Attachment 1;
    c. consents to the assessment of a civil penalty as stated in Table 3 of ESA
    Attachment 1 and below;
    d. waives any right to contest the alleged violations of law set forth in Section C of
    this Agreement; and
    e. waives its right to appeal the Order accompanying this Agreement.

12. For the purpose of this proceeding, Respondent:

    a. agrees that this Agreement states a claim upon which relief may be granted
    against Respondent;
    b. acknowledges that this Agreement constitutes an enforcement action for purposes
    of considering Respondent’s compliance history in any subsequent enforcement
    actions related to the Respondent;
    c. certifies that it completed the corrective action as set forth in Table 4 of ESA
    Attachment 1;
    d. waives any and all remedies, claims for relief and otherwise available rights to
    judicial or administrative review that Respondent may have with respect to any
    issue of fact or law set forth in this Order, including any right of judicial review
    under Section 307(b)(1) of the Clean Air Act, 42 U.S.C. § 7607(b)(1);
    e. consents to personal jurisdiction in any action to enforce this Agreement or Order,
    or both, in the United States District Court for the District of Columbia; and

                                             2
    

    f. waives any rights it may possess at law or in equity to challenge the authority of
    the EPA to bring a civil action in a United States District Court for the District of
    Columbia to compel compliance with the Agreement or Order, or both, and to
    seek an additional penalty for noncompliance with the Agreement or Order, and
    agrees that federal law shall govern in any such civil action.

13. Penalty Payment. The civil penalty agreed upon by the Parties for settlement purposes is
    stated in Table 3 of ESA Attachment 1. Respondent agrees to:

    a. pay the penalty within 30 calendar days of the Effective Date of this Agreement;
    b. pay the penalty using any method, or combination of methods, provided on the
    website https://www.epa.gov/financial/additional-instructions-making-payments-
    epa#Pay.gov;
    c. identify each and every payment with the Docket No. of this Agreement and Final
    Order; and
    d. within 24 hours of payment of the penalty, send proof of payment via electronic
    mail to the Inspector at the Inspector’s email address identified in Table 1 of ESA
    Attachment 1. “Proof of payment” means, as applicable, a copy of the check,
    confirmation of credit card or debit card payment, confirmation of wire or
    automated clearinghouse transfer, and any other information required to
    demonstrate that payment has been made according to the EPA requirements, in
    the amount due, and identified with the docket number.

14. If Respondent fails to timely pay any portion of the penalty assessed under this Agreement,
    the EPA may:

    a. request the Attorney General to bring a civil action in the United States District
    Court for the District of Columbia to recover: the amount assessed; interest at
    rates established pursuant to 26 U.S.C. § 6621(a)(2), the United States’
    enforcement expenses, and a 10 percent quarterly nonpayment penalty, 42 U.S.C.
    § 7413(d)(5);
    b. refer the debt to a credit reporting agency or a collection agency, 40 C.F.R.
    §§ 13.13, 13.14, and 13.33;
    c. collect the debt by administrative offset (i.e., the withholding of money payable
    by the United States to, or held by the United States for, a person to satisfy the
    debt the person owes the Government), which includes, but is not limited to,
    referral to the Internal Revenue Service for offset against income tax refunds,
    40 C.F.R. Part 13, Subparts C and H; and
    d. (1) suspend or revoke Respondent’s licenses or other privileges, or (2) suspend or
    disqualify Respondent from doing business with the EPA or engaging in
    programs the EPA sponsors or funds, 40 C.F.R. § 13.17.

15. By signing this Agreement, Respondent certifies that the information it has supplied
    concerning this matter was at the time of submission true, accurate, and complete for each
    such submission, response, and statement. Respondent acknowledges that there are

                                             3
    

    significant penalties for submitting false or misleading information, including the possibility of fines and imprisonment for knowing submission of such information, under 18 U.S.C.
    § 1001.

16. By signing this Agreement, Respondent acknowledges that this Agreement and Order,
    including identifying information such as name, federal tax ID number, mailing and e-mail
    address, will be available to the public when the Agreement and Certificate of Service are
    filed and uploaded to a searchable database and agrees that this Agreement does not contain
    any confidential business information or other personally identifiable information.

17. By signing this Agreement, the undersigned representative of Complainant and the
    undersigned representative of Respondent each certify that he or she is fully authorized to
    execute and enter into the terms and conditions of this Agreement and has the legal capacity
    to bind the party he or she represents to this Agreement.

18. By signing this Agreement, Respondent agrees to acceptance of the Complainant’s: (a)
    digital or an original signature on this Agreement; and (b) service of the fully executed
    Agreement on the Respondent by mail or electronically by e-mail. Complainant agrees to
    acceptance of the Respondent’s digital or an original signature on this Agreement.

19. Each party shall bear its own attorney’s fees, costs, and disbursements incurred in this
    proceeding.

        E.      EFFECT OF AGREEMENT AND ATTACHED FINAL ORDER
    

20. In accordance with 40 C.F.R. § 22.18(c), completion of the terms of this Agreement and
    Final Order resolves only Respondent’s liability for federal civil penalties for the violations
    identified in Section C of this Agreement.

21. Penalties paid pursuant to this Agreement shall not be deductible for purposes of federal
    taxes.

22. This Agreement constitutes the entire agreement and understanding of the Parties and
    supersedes any prior agreements or understandings among the Parties with respect to the
    subject matter hereof.

23. The terms, conditions, and compliance requirements of this Agreement may not be modified
    or amended after it is ratified except upon the written agreement of both parties, and approval
    of the Environmental Appeals Board.

24. Any violation of this Order may result in a civil judicial action for an injunction, or civil
    penalties of up to $121,275 per day per violation (with each kilogram a separate violation), or
    both, as provided in Section 113(b)(2) of the Act, 42 U.S.C. § 7413(b)(2), as well as criminal
    sanctions as provided in Section 113(c) of the Act, 42 U.S.C. § 7413(c). The EPA may use
    any information submitted under this Order in an administrative, civil judicial, or criminal
    action.

                                              4
    

    26. Nothing in this Agreement shall relieve Respondent of the duty to comply with all applicable
    provisions of the Act and other federal, state, or local laws or statutes, nor shall it restrict the
    EPA’s authority to seek compliance with any applicable laws or regulations, nor shall it be
    construed to be a ruling on, or determination of, any issue related to any federal, state, or
    local permit.

25. Nothing herein shall be construed to limit the power of the EPA to undertake any action
    against Respondent or any person in response to conditions that may present an imminent
    and substantial endangerment to the public health, welfare, or the environment.

26. The EPA reserves the right to revoke this Agreement and settlement penalty if and to the
    extent that the EPA finds, after signing this Agreement, that any information provided by
    Respondent was materially false or inaccurate at the time such information was provided to
    the EPA, and the EPA reserves the right to assess and collect any and all civil penalties for
    any violation described herein. The EPA shall give Respondent notice of its intent to revoke,
    which shall not be effective until received by Respondent in writing.

                                 F.      EFFECTIVE DATE
    

27. Respondent and Complainant agree to the Environmental Appeals Board’s issuance of the
    attached Final Order ratifying the Agreement. The effective date of the Agreement shall be
    the date of issuance of the Final Order. The EPA will transmit a copy of the Final Order and
    ratified Agreement to the Respondent.

                                               5
    

    ESA ATTACHMENT 1
    AMERICAN INNOVATION AND MANUFACTURING (“AIM”) ACT
    OFFSITE COMPLIANCE MONITORING ACTIVITY OR INSPECTION FACTS,
    ALLEGED VIOLATIONS, PENALTY, AND CORRECTIVE ACTION FORM

     Table 1 – Offsite Compliance Monitoring Activity or Inspection Stipulated Facts
    

    Offsite Compliance Monitoring Activity Docket Number:
    or Inspection Date(s):
    10/27/2022 CAA-HQ-2024-008451
    Offsite Compliance Monitoring Activity Entry/Shipment Number(s):
    or Inspection Location:
    New York/ Newark 16313975610
    1
    Person/Importer Name (“Respondent”) Inspector(s) Name(s) and Email Address:
    and Importer Number:
    Little Leaf Farms, LLC, Amelie Isin
    47-439351200 [email protected]

    Respondent Address: Date of Detention or Hold:
    18 E. Kline Rd. 10/4/2022
    McAdoo, PA 18237
    Value of Goods: Arrival Date:
    $8,570 9/25/2022
    Subject HFCs2 and Mass (in kg): MTEVe3:
    XP40/R-449A (742 kg total, 14 cylinder(s) at 1,036
    approx. 53 kg each),
    containing HFC-134a (25.7% or 190.7kg),
    HFC-32 (24.3% or 180.3kg), and HFC-125
    (24.7% or 183.3kg)4

    Did the importer have and expend Container and Quantity:
    allowances equal to the imported HFCs?
    No 14 cylinders, 53 kg each
    Did the importer receive any non-objection The EPA Delegated Official:
    notices from the EPA?
    No Mary E. Greene

1
“Person” and “Importer” are defined in 40 C.F.R. § 84.3.
2
“Subject HFCs” are Bulk Regulated Substances, subject to 40 C.F.R. § 84.5. “Bulk” and “Regulated Substance” are defined in 40 C.F.R. § 84.3. 3 The EPA calculates metric tons of EVe (“MTEVe”) by multiplying X kg (the mass of the regulated substance) by Y (the exchange value (EV) of the bulk regulated substance, as reflected in Appendix A of 40 C.F.R. Part 84), and dividing the product by 1,000 to obtain metric tons. The formula for calculating the EV of an HFC blend is set forth in footnote 5. 4 Also contains 25.3% or 187.7kg of HFO-1234yf, which is not regulated under the AIM Act.

                                               1

Table 2 – Description of Alleged Violation Based on the facts in Table 1, the EPA alleges that the Subject HFCs are bulk regulated substances that were imported without the importer expending consumption or application-specific allowances in a quantity equal to the exchange-value weighted equivalent of the regulated substances imported, a violation of the HFC Allocation regulations at 40 C.F.R. § 84.5(b).

                                          2

Table 3 – Civil Penalty5
$857, where

   $8,570 * 10% = $857


   Monetary Value of Goods * Percentage Multiplier = Penalty, where

 EV6               Percentage                    HFC                   EV
                   Multiplier                    HFC–152                               53
 < 1,400           10%                           HFC–41                                92
 • 1,400 ” 5,000   20%                           HFC–152a                             124
 > 5,000           30%                           HFC–143                              353
 ”14,800                                         HFC–32                               675
                                                 HFC–245ca                            693
                                                 HFC–365mfc                           794
                                                 HFC–245fa                          1,030
                                                 HFC–134a                           1,100
                                                 HFC–236cb                          1,340
                                                 HFC–236ea                          1,370
                                                 HFC–134a                           1,430
                                                 HFC–43–10mee                       1,640
                                                 HFC–227ea                          3,220
                                                 HFC–125                            3,500
                                                 HFC–143a                           4,470
                                                 HFC–236fa                          9,810
                                                 HFC–23                            14,800

5
To determine the EV of a HFC blend, calculate the contribution of each HFC to the total EV of the blend and calculate a case-specific EV multiplier by: multiplying the percentage of the blend made up of each HFC by its EV and summing the resulting blend constituent products to calculate the blend EV. For example, if the percentages of the blend and the EVs (in parentheses) of the constituents are: 55 percent HFC-32 (675), 16 percent HFC-125 (3,500), and 29 percent HFC-134a (1,430), the EV would be (0.55 × 675) + (0.16 × 3,500) + (0.29 × 1,430)) = 1345.95 EV. Where the exact amount or percentage of each HFC in a blend is unknown, the case team shall use the highest EV associated with a HFC in the blend as a multiplier to calculate the penalty. 6 EVs are found in Appendix A of 40 C.F.R. Part 84.

                                                3

Table 4 – Corrective Action Respondent certifies that it has:

Ƒ exported the Subject HFCs to
[________]
VB Greenhouses Galgeweg 55 2671 MT Naaldwijk The Netherlands [name and address
(including country) of the recipient of the exports], a country other than Canada or
Mexico (unless the point of entry to the U.S. for the Subject HFCs was through Canada
or Mexico) and

Ƒ paid $[_________]
$42,036.87 to perform the above action to address the
Subject HFCs, and enclosed a record documenting such payment.

Respondent must check the boxes, fill in all relevant blanks, and return any enclosures and this Attachment 1 with the signed Agreement.

                                            4

The foregoing Agreement In the Matter of Little Leaf Farms, LLC, Docket No. CAA-HQ- 2024-008451, is Hereby Stipulated, Agreed, and Approved.

FOR COMPLAINANT:

MARY GREENE Digitally signed by MARY GREENE
Date: 2024.03.15 17:36:15 -04'00'

Signature

Mary E. Greene
Director, Air Enforcement Division
Office of Enforcement and Compliance Assurance
U.S. Environmental Protection Agency

FOR RESPONDENT:

                                                                                                                                                                            _03/27/2024

Terence Kelley Digitally signed by Terence Kelley
Date: 2024.03.27 11:48:00 -04'00'
______

Signature Date
Terence Kelley
Printed Name: ____ __________

Title: Director
___of
Logistics
__________________
PO
_Box
Address: _ ____2069
___Devens
_____MA
__01434
_________________________
47-4393512
Federal Tax Identification Number: _________ CERTIFICATE OF SERVICE

  I certify that copies of the foregoing “Expedited Settlement Agreement/Consent

Agreement” and “Final Order,” in the matter of Little Leaf Farms, LLC, Docket No. CAA-HQ- 2024-008451, were sent to the following persons in the manner indicated:

By E-mail:

Tahani Rivers, Attorney Advisor
Office of Regional Counsel
U.S. Environmental Protection Agency, Region 1
e-mail: [email protected]

Terence Kelley
Logistics Director
Little Leaf Farms
105 Walker Road
Shirley, MA 01464-2901
e-mail: [email protected]

Dated: ____
Apr 15, 2024 ______
Emilio Cortes
Clerk of the Board