U.S. V. HENRY LINK CORPORATION AND DIXIE FURNITURE COMPANY, INC. DEFENDANTS OWN AND OPERATE A FURNITURE PLANT IN LEXINGTON, NORTH CAROLINA - PLANT NO. 2 (HL2), WHICH WAS CONSTRUCTED IN 1980 WITHOUT RECEIVING A PREVENTION OF SIGNIFICANT DETERIORATION (PSD) PERMIT AS REQUIRED UNDER THE CLEAN AIR ACT, THE DEFENDANTS HAD OBTAINED A NORTH CAROLINA PERMIT WHICH RESTRICTED HL2 EMISSIONS TO LESS THAN THE APPLICABILITY LEVEL OF PSD. HOWEVER, THE DEM FOUND HL2 OPERATED IN EXCESS OF ITS PERMIT LIMITS AND HL2'S ACTUAL EMMISSIONS SUBJECTED IT TO PSD. THE DEM ASSESSED AND COLLECTED A $12,640 PENALTY FOR THE PSD VIOLATIONS. HOWEVER, UNDER EPA'S PENALTY POLICY THIS AMOUNT IS INADEQUATE FOR THE VIOLATIONS. AFTER MEETING WITH THE HL2 OWNERS AND CONFERRING WITH DEM, REGION IV DECIDED TO OVERFILE AGAINST HL2, FOR A LARGER PENALTY AND INJUNCTIVE RELIEF (A PSD PERMIT). THE REGION WILL ATTEMPT TO NEGOTIATE A SETTLEMENT BEFORE ACTUALLY FILING THIS ACTION.