Court Holds Failed Stack Test Creates Presumption of Continuing Violation

December 10, 2012
Legal Updates

On December 6, 2012, the Ohio Supreme Court issued an important decision involving civil penalties in an air enforcement case.  State ex rel. Ohio Atty. Gen. v. Shelly Holding Co., Slip Opinion No. 2012-Ohio-5700.  The issue before the Court was whether, for purposes of calculating a civil penalty, violations of an emission limit in an air permit based on a failed stack test should be deemed to have occurred only on the day of the failed stack test or whether the violation continues until a new stack test demonstrates compliance with the permit. 

Under the Clean Air Act, a continuing violation is presumed if the State: (1) establishes there was a violation of the permit requirements; (2) establishes that the permit holder was notified of the violation; and (3) makes a "prima facie showing that the conduct or events giving rise to the violation are likely to have continued or recurred past the date of notice."  A permit holder may rebut this presumption by proving "by a preponderance of the evidence that there were intervening days during which no violation occurred or that the violation was not continuing in nature."

The Court held that when the State establishes that a permit holder failed to pass a stack test required by its permit, the required demonstration is made that the violation is likely to continue.  Thus, Shelly had to rebut the presumption. 

Shelly relied on a "normal operations defense" to rebut the presumption of a continuing violation. The premise of Shelly's argument was that operation at maximum capacity with worst-case fuels for the purpose of a stack test was only a snapshot of the plant's emissions, and did not represent normal operating conditions, and thus did not represent normal emissions.  The Court acknowledged that fewer pollutants are emitted when a facility is operated at less-than-maximum capacity.  However, because Shelly declined to present any evidence that emissions released during normal operations comply with the permit's emission limit, Shelly failed to meet its burden of proof.  The Supreme Court affirmed the Tenth District's decision to remand the case to the trial court to calculate the penalty, and ordered the record be reopened to allow Shelly the opportunity to identify evidence demonstrating that the permit violation did not continue. 

This decision provides useful guidance to minimize exposure to mounting civil penalties from alleged continuing violations, by: (1) performing and passing a retest, (2) receiving a new permit limit, or (3) showing that some change in conditions has occurred to preclude the violation from continuing.  With respect to failed stack tests, the third option may be the most expedient method because the timing and scheduling of the first two options are not necessarily in a permit holder's control.  The Ohio Supreme Court suggests types of evidence that could rebut the presumption that a violation continues, including:  data from a continuous emission monitoring system, expert testimony, evidence that control equipment malfunctioned during the test, evidence that operating conditions documented during the stack test no longer exist, evidence that mechanical failures have been repaired, and evidence that raw materials and fuels have changed from what was used in the test. Importantly, this case supports the government's position that unless and until a facility demonstrates that it has returned to compliance, each day after failing a stack test is another day of violation and a potentially higher civil penalty. 

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