Athletics Investment Group, LLC v. Schnitzer Steel Industries, Inc.

Background

Athletics Investment Group, LLC (AIG) alleged that Schnitzer Steel Industries, Inc. operated a scrap-metal recycling facility in Oakland, California, in violation of the Clean Air Act. AIG asserted four claims: (1) Schnitzer operated a major source without a required Title V permit; (2) Schnitzer failed to install required Best Available Control Technology (BACT) for precursor organic compounds; (3) Schnitzer violated limits in its permit for those emissions; and (4) Schnitzer operated stockpiles and torch-cutting activities without required permits. AIG sought civil penalties and an injunction.

The court held a bench trial from November 12 through November 21, 2024, and heard closing arguments in March 2025. AIG owns and operates the major league baseball team formerly known as the Oakland Athletics and leased property approximately one mile from Schnitzer’s facility. AIG claimed that light fibrous material (LFM), containing pollutants regulated by the Clean Air Act, had migrated from Schnitzer’s facility onto AIG’s property.

Standing

To establish Article III standing, AIG had to show a concrete injury, a connection between that injury and Schnitzer’s conduct, and a likelihood that a court decision could remedy the injury. The court found that LFM collected at AIG’s headquarters matched LFM known to have come from Schnitzer’s facility. Because the facility continued to have potential sources of LFM, including an enclosed shredder with openings and uncovered non-ferrous material stockpiles, the court found a sufficient likelihood of future injury for injunctive relief.

The court found that AIG had standing to pursue the first, second, and third claims, all of which challenged operation of the shredder. AIG also had standing for the fourth claim to the extent it challenged the non-ferrous material stockpiles. AIG did not show that LFM came from other stockpiles or from torch-cutting operations, so it lacked standing to pursue those portions of the fourth claim. The court also rejected AIG’s alternative theories based on increased health risks to employees and money spent investigating Schnitzer for a proposed environmental report. AIG did not show that its employees faced a genuine obstacle to bringing their own claims, and the Clean Air Act did not make AIG’s unrelated pre-lawsuit investigation expenses recoverable through this action.

First Claim: Title V Permit

Title V of the Clean Air Act requires a major source to operate with a permit. The court found that Schnitzer should have applied for a Title V permit in 2010 because evidence from later source tests showed that the shredder’s potential emissions exceeded the applicable thresholds, and there had been no modifications to the shredder between 2009 and 2017. The court also held that the permit requirement imposed strict liability, meaning Schnitzer’s knowledge of the requirement was not necessary to establish the violation.

Schnitzer submitted a Title V application in October 2018. Although the application was untimely, the court interpreted an applicable Bay Area Air Quality Management District rule as ending Schnitzer’s period of noncompliance when the application was submitted. Because AIG did not claim or prove that Schnitzer had repeatedly violated the permit requirement, and the violation was not ongoing when AIG filed suit, the court held that AIG lacked statutory standing to pursue this claim. The court entered judgment for Schnitzer on the first claim.

Second Claim: Best Available Control Technology

AIG argued that Schnitzer’s 2009 permit should have required BACT for precursor organic compounds and that the BACT determination was based on inaccurate 2007 testing. AIG’s proposed control system consisted of regenerative thermal oxidizers used with an enclosure meeting EPA Method 204 specifications.

The court found that AIG did not prove that this system had been successfully used with a shredder, as required by one BACT pathway. AIG also did not prove that the Air Quality Management District had determined that this system was technologically feasible under another pathway. The court therefore entered judgment for Schnitzer on the second claim.

Third Claim: Violation of Permit Limits

Schnitzer’s permits limited the shredder’s precursor organic compound emissions to 112 pounds per hour and 85 tons per year. The parties stipulated that the shredder exceeded those limits between November 1, 2020, and April 2022. Schnitzer argued that the claim became moot after it installed regenerative thermal oxidizers and acid gas scrubbers, which reduced emissions below the permit limits.

The court rejected that argument because AIG sought civil penalties, not an injunction, on this claim. The court held that the claim for penalties remained available for violations that occurred before the emissions were reduced. The court entered judgment for AIG on the third claim.

Fourth Claim: Non-Ferrous Stockpiles and Other Activities

The court found that the non-ferrous material stockpiles were sources of air pollution and that Schnitzer did not have operating permits for them. Schnitzer argued that the stockpiles fell within an exemption for a “storage or weigh hopper/bin system.” The court rejected that interpretation, finding that it would make other parts of the regulation unnecessary and that the exemption referred to hopper or bin systems, not stockpiles generally.

Schnitzer also relied on an exemption for sources that the Air Pollution Control Officer determines to be equivalent to expressly exempted sources. The court found no evidence that the Air Pollution Control Officer or another agency official had made that determination for the non-ferrous stockpiles. The court therefore entered judgment for AIG on the fourth claim to the extent it concerned the non-ferrous stockpiles. It entered judgment for Schnitzer on the portions concerning other stockpiles and torch-cutting activities because AIG lacked standing to pursue them.

Remedies and Disposition

The court ordered Schnitzer, within 90 days of the order, to submit to the Bay Area Air Quality Management District an application for a permit to operate the non-ferrous stockpiles and to provide a copy to AIG’s counsel. Schnitzer could also apply at the same time for a certificate of exemption. The court declined to order additional relief that would have delayed further injunctive action for 90 days or potentially prevented use of the stockpiles while the agency considered the application.

The court imposed a $400,000 civil penalty payable to the United States Treasury. In setting the amount, the court considered Schnitzer’s business size, recent financial losses, compliance efforts, the duration and seriousness of the permit violation, deterrence, and an earlier $400,000 penalty paid to the Air Quality Management District for a similar violation. The court declined to direct any part of the penalty toward beneficial mitigation projects.

Judge Maxine M. Chesney’s final disposition was judgment for AIG on the third claim and on the fourth claim to the extent based on non-ferrous stockpiles; judgment for Schnitzer on the first and second claims and on the fourth claim to the extent not based on non-ferrous stockpiles; an order requiring Schnitzer to submit the stockpile permit application; and a $400,000 penalty.