NO. 1 tions of the same case was inconsistent with applicable regulations. Accordingly, I remanded the case to the Region so that all issues, both legal and factual, could be resolved in the same forum, i.e., in the evidentiary hearing before the presiding officer.5 If Mr. Helbing's request for evidentiary hearing raises both factual and legal issues, the Placer Mines case is dispositive and Mr. Helbing's request for a legal opinion is referred to the Region for appropriate disposition.6 On the other hand, it is possible that Mr. Helbing's request for an evidentiary hearing did not raise any factual issues but rather raised only a legal issue, i.e., what is the proper legal interpretation of the anti-backsliding regulation. If that is the case the Region should never have granted Mr. Helbing's request for an evidentiary hearing. The Agency regulations are clear on this point. 40 CFR § 124.74 states: NOTE: This paragraph allows submissions of re- 5 In the Placer Mines case the following statement is relevant to the case sub judice since both Mr. Helbing's attorney and Region VI have evidently confused current Agency procedures with the Agency's past procedure of referring to the General Counsel legal questions raised in an evidentiary hearing: Several years ago the rules governing evidentiary hearings for *40 CFR § 125.36(m) (1978) contained the relevant provision of * (m) Decision of * * General Counsel on Questions of Law. "If an Administrative Law Judge has been appointed, appropriate disposition would, of course, be referral of the legal issues in question to him or her for resolution in the course of the evidentiary hearing. issues were raised, the Regional Administrator would Denial of a request for an evidentiary hearing which raises only a legal issue would trigger the Administrator's review authority pursuant to 40 CFR §§ 124.91(a) and (b). Those sections provide for appeal to the Administrator of denial of a request for evidentiary hearing; appeal can be taken by the requestor or it can be sua sponte in the absence of an appeal by the requestor. However, if a request for evidentiary hearing is granted, § 124.91 review is not authorized and the Administrator is without review authority until after the presiding officer's initial decision is issued. Accordingly, if Mr. Helbing's request for an evidentiary hearing raises only a legal issue, i.e., the proper interpretation of 40 CFR § 122.44(1), the Administrator is without jurisdiction to review such issue in its current procedural posture since Mr. Helbing's evidentiary hearing request has been granted. In that regard the parties may wish to collaborate on the most effective and efficient means of putting this proceeding in a procedural posture so that the Administrator may properly review it. I will not suggest how that should be done, because any suggestions in that regard would necessitate my assuming who has current jurisdiction over this proceeding, a matter which I believe is best left to the parties to resolve. If the parties are successful in placing this proceeding in the proper procedural posture, it is quite possible that the legal question Mr. Helbing raises will be before me in the future. If that occurs, the Region is required to provide a response to Mr. Helbing's interpretation of 40 CFR § 122.44(1)—the Agency's anti-backsliding regulation. For all the foregoing reasons the request for legal opinion is denied. So ordered. 740 CFR § 124.90 also provides for interlocutory appeal to the Administrator upon certification by the Presiding Officer. Here, nothing in the record indicates that the Presiding Officer certified the legal issue in question to the Administrator for interlocutory review. IN THE MATTER OF J.V. PETERS & COMPANY, INC. RCRA (3008) Appeal No. 85-4 ORDER UPON RECONSIDERATION Decided October 23, 1986 Before the Administrator, U.S. Environmental Protection Agency Opinion by Ronald L. McCallum, Chief Judicial Officer: By motion dated June 2, 1986, Complainant, U.S. EPA, Region V, seeks reconsideration of an order remanding the above-captioned case. In that Remand it was held that David B. Shillman and J.V. Peters and Company, a partnership, had not received sufficient notice of the complaint so as to be held liable for the violations charged therein. In this motion, EPA argues that Shillman and the partnership were on constructive notice of their joint and several liability; that the rules of administrative procedure do not require strict conformity to the requirements of the Federal Rules of Civil Procedure, Rule 15(b); and that any defense of want of personal jurisdiction was waived by Respondent's failure to raise the defense in its answer to the complaint or by appropriate motion. After consideration of EPA's argument, I must affirm the order remanding this case. Complainant has not raised any new matters or pointed to any facts in the record that did not receive consideration previously. At issue is a judgment as to what constitutes due process and fundamental fairness in a controversy that has spanned five years, spawned at least four actions at law, and spread a web of facts and inferences through administrative and court records. In my judgment, based solely upon the record of this administrative proceeding, Shillman and the partnership were never on notice, prior to or during the hearing, that they should present a defense to the violations charged in the complaint; therefore, as a matter of law they cannot be held accountable for those violations. Shillman and the partnership did not have constructive notice of their potential joint and several liability. The complaint and amended complaint named J.V. Peters & Company, Inc., the corporation, as the sole party-Respondent. EPA did not file its motion to amend the complaint to add additional parties-respondent until months after the hearing had been adjourned. The corporation's responsibility, at the hearing, was to defend its interests and that of its shareholders against administrative sanctions. Shillman and the partnership were never called upon to defend their respective interests against those administrative sanctions. EPA renews its argument that Shillman had constructive notice of his potential party status because he signed the partnership's Notice of Hazardous Waste Activity and Part A application as well as Respondent's Answer to the original complaint. The short answer to this argument is that Shillman's acts on behalf of the partnership and his preparation of the corporation's Answer simply did not place Shillman on notice that he should put on a defense against the violations charged against the corporation. EPA also suggests that the Chief Judicial Officer "ignored" evidence that Shillman personally held a lease for the facility's site with an option to purchase and evidence that the corporation was undercapitalized. In point of fact, although not discussed in the Remand, that order is the end-product of a careful consideration of the entire record, including those factors allegedly ignored by the Chief Judicial Officer. Upon reconsideration, the same flaw in EPA's argument is apparent: the complaint and the hearing never put Shillman and the partnership on notice of their potential liability for the alleged violations, or, stated differently, of their need to present a defense against the charges in the complaint. Consequently, they did not receive a fair opportunity at the hearing to contest the evidence and the conclusions propounded by EPA. EPA's argument that the Chief Judicial Officer misinterpreted Rule 15(b) of the Federal Rules of Civil Procedure is unavailing. The Rule allows for the trial of issues, not raised by the pleadings, by the express or implied consent of the parties. In the instant case, the parties sought to be charged, Shillman and the partnership, were neither represented at the hearing nor apprised of the issue of their potential party status until EPA filed its post-hearing motion to amend the complaint. Any question of express or implied consent is meaningless in this context. The cases which EPA has cited in support of its argument are inapposite. In each case, the proper parties were named in the com plaint: the dispute in each was as to the sufficiency of the complaints in providing notice of the issues raised by the violations charged.1 For example, In Sunshine Art Studios, Inc., et al. v. Federal Trade Commission, 481 F.2d 1171 (1st Cir. 1973), all of the proper parties were named in the complaint. The error alleged on appeal was that the Federal Trade Commission, seeking a cease and desist order for unfair trade practices, failed to specify which named party was liable for each of the alleged violations. In the case sub judice, the proper parties were not named in the complaints. It is true that administrative agencies need not require formal adherence to the Federal Rules of Civil Procedure. Unimportance of pleadings is indeed a virtue. However, neither EPA's nor my own research has produced a case on point that would allow amendment of a complaint to add new parties after a hearing has been adjourned. While the record strongly suggests that Shillman and the partnership should have been aware of their potential party status, they were never called upon to defend that status until EPA's post-hearing motion to amend. More than a "procedural nicety" requires that these parties be given an opportunity to present a case against joint and several liability. The rules of administrative procedure are not formalistic; however, there are fundamental principles of constitutional due process that must be observed to sustain the rule of law. While EPA must vigorously pursue its statutory mission to protect the environment, the credibility of the Agency depends upon the availability of fair notice and procedure to all parties sought to be charged with liability for environmental offenses. Finally, EPA is correct in asserting that an affirmative defense of lack of personal jurisdiction must be raised in an answer or by appropriate motion. 40 CFR §22.15(b). In this case, however, Shillman and the partnership were never served with a complaint and therefore had no reason to answer or defend against the charges that were never made against them. It was Respondent J.V. Peters & Company, Inc., the corporation, that raised the defense in an untimely fashion. The corporation had no duty to and did not raise 1 See Golden Grain Macaroni Company v. Federal Trade Commission, 472 F.2d 882 (2d Cir. 1976); National Realty and Construction Company, Inc. v. OSHA Review Commission, 489 F.2d 1257 (D.C. Cir. 1973); ITT Continental Baking Company, Inc. v. Federal Trade Commission, 532 F.2d 207 (2d Cir. 1976); Sunshine Art Studios, Inc. v. Federal Trade Commission, 481 F.2d 1171 (1st Cir. 1973). |