Petition for Writ of Certiorari — Navistar International Transportation Corp. v. United States Environmental Protection Agency
Supreme Court brief1989
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Supreme Court of the Gnite
JOSEPH F. SPANIOL, JR.
OCTOBER TERM, 1988
NAVISTAR INTERNATIONAL TRANSPORTATION
CORPORATION,
Petitioner,
vs.
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
STEVEN A. SMITH
(Counsel of Record )
JAMES H. SCHINK
KIRKLAND & ELLIS
200 East Randolph Drive
Chicago, Illinois 60601
(312) 861-2000
Of Counsel:
STEVEN K. COVEY
NAVISTAR INTERNATIONAL
TRANSPORTATION CORPORATION
401 N. Michigan—24th Floor
Chicago, Illinois 60611
DATED: February 7, 1989
Pandick Midwest, Inc., Chicago © (312) 733-6000
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QUESTIONS PRESENTED
The Sixth Circuit’s decision in this Clean Air Act enforce-
ment case raises two fundamental issues concerning the stan-
dards for liability in noncompliance penalty proceedings:
1. Should U.S. EPA’s interpretation of an implemen-
tation plan provision promulgated by a State pursuant to
the Clean Air Act be accorded considerable deference in
the context of an enforcement proceeding?
2. Can U.S. EPA properly determine liability in a
Clean Air Act administrative hearing after excluding evi-
dence that it is technically and economically infeasible for
an air contaminant source to comply with implementation
plan requirements?
The first of these issues presents an important question of law
regarding the scope of this Court’s Cardoza-Fonseca and Texas
Gas decisions.* The second raises a direct conflict in the circuits
that the decision below makes unmistakable.
* INS v. Cardoza-Fonseca, 480 U.S. 421 (1987); and Texas Gas
Transmission Corp. v. Shell Oil Co., 363 U.S. 263 (1960).
‘i
PARTIES TO THE PROCEEDINGS
Petitioner Navistar International Transportation Corpo-
ration was petitioner below on the issues presented for review.
Respondent United States Environmental Protection Agency
was respondent below on the issues presented for review.
Navistar International Transportation Corporation’s par-
ent company is Navistar International Corporation. Navistar
International Transportation Corporation has no non-wholly
owned subsidiaries or affiliates.
Blab moto
TABLE OF CONTENTS
PAGE
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RE RE SR 2
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Reasons for Granting the Wiit....................cccssceseeseeeeeeeeees 5
I. The Court of Appeals Improperly Accorded
Considerable Deference to U.S. EPA’s Inter-
pretation of the Ohio Administrative Regulation. 6
II. The Sixth Circuit’s Considerable Deference
Standard Runs in the Teeth of Prior Supreme
CI aiirtnsicknccthiestisihniticncscntbeeetnistnetiecesces. 8
Ill. The Sixth Circuit’s Decision is Erroneous Be-
cause U.S. EPA’s Interpretation of the Ohio
Administrative Regulation is Inconsistent with
the Terms of that Regulation ...................-ssses0+ 10
IV. The Agency Improperly Excluded Evidence of
Technological and Economic Infeasibility ........... 12
a a adaamanomnenbcnsnduannne 16
Appendix
App. A: Sixth Circuit Opinion, September 23, 1988.
App. B: Sixth Circuit Judgment, September 23, 1988.
App. C: Sixth Circuit Order denying petition for rehearing
and suggestion for rehearing en banc, November
10, 1988.
App. D: U.S. EPA Final Order, March 24, 1987.
App. E: U.S. EPA Initial Decision, December 19, 1986.
App. F: U.S. EPA Order on Motion in Limine, December
13, 1985.
iv
TABLE OF AUTHORITIES
Cases
Adams House Health Care v. Heckler, 817 F.2d
- gh ot 6 SIR Ca 21 at
Bethlehem Steel Corp. v. EPA, 638 F.2d 994 (7th
Be ID in icthiekantssosncennseknsnetnintiinieslidhitinnidiatepineiziii
Bethlehem Steel Corp. v. Gorsuch, 742 F.2d 1028
CHE Ge TOD secksidinnistassssctidsbecnisainicccneistindcnnsiiciegs
Bowles v. Seminole Rock & Sand Co., 325 U.S. 410
POE casdiciesdvedun.bnkcicaieeabiialiebibeamaimmciaiatea akin
Buckeye Power, Inc. v. EPA, 481 F.2d 162 (6th
Ce FOP svaianbemnntinciacdisielliareianenabidiitadanietiaiece
Chevron U.S.A., Inc. v. National Resources De-
fense Council, Inc., 467 U.S. 837 (1984) .............
Cincinnati Gas & Elec. Co. v. Federal Energy
Regulatory Comm’n, 724 F.2d 550 (6th Cir.
Cleveland Electric Illuminating Co. v. EPA, 572
F.2d 1150 (6th Cir. 1978), cert. denied, 439 US.
PE EF i aisnincisbibianstsainncdiiccihtictlasdshiietoantadhinitssienn
Dirks v. Securities and Exch. Comm’n, 463 U:S.
I crete ehlaiack ccc canals ns
Dougherty v. Torrence, 442 N.E. 2d 1295 (1982)...
Duquesne Light Co. v. EPA, 698 F.2d 456 (D.C.
Se TIE sischucdisipcantscapennvincaisteitianeinekisemintiatiaaaneiadinntess
Florida Power & Light Co. v. Costle, 650 F.2d 579
BS) a RE Sea
Hardin v. Kentucky Utils. Co., 390 U.S. 1 (1959)...
Immigration & Naturalization Service v. Cardoza-
Fonseca, 480 U.S. 421 (1987) ......... lipaibiitapanadiiaiies
Indiana & Michigan Electric Co. v. EPA, 509 F.2d
eS Fa ee HT e O aiidatacchceshinesencersinidaaibahiaaperencininaiy
PAGE
13
Cases
Industrial Union Dep’t AFL-CIO v. American Pet-
roleum Inst., 448 U.S. 607 (1980) ...0....... ee eeeeeeeee
International Union, UAW vy. Brock, 816 F.2d 761
CG. Saree BE Dithcsisncintinisaiamictntasionadsieaninninnianions
Lewis v. Buena Vista Mutual Ins. Assoc., 183 N.W.
ie Fe ED a citsiahcthcntaentitesnscncensnatenionine
National Labor Relations Bd. v. Yeshiva Univ., 444
RI Bir oe uethckedilen ddibiceehniceebaiticsimanandinepetaimesones
National Steel Corp., Great Lakes Steel Div. v.
Gorsuch, 700 F.2d 314 (6th Cir. 1983) ................
Newport News Shipbuilding & Dry Dock Co. v.
Equal Employment Opportunity Comm’n, 462
SF ee setietiniratenitenenrssnseittainneisaiennntenes
Northeast Marine Terminal Co. v. Caputo, 432
ee ee etecceekniisdinicinciatabnnnsiciicanaeinbenaptianinintiiens
Piper v. Chris-Craft Industries, Inc., 430 U.S. 1
CEPT Wcciiciteicistalcaiiedincsichadiediciahandcatiunaisnieieainianinnhiedeabatnniitapaiibinn
Texas Gas Transmission Corp. v. Shell Oil Co., 363
SE, Fe CeO ibichasiteccsestisitsiciernnsinnitenniitiinsntint
Udall v. Tallman, 380 U.S. 1 (1965)............ cc eeeeeeeeee
Union Electric Co. v. EPA, 427 U.S. 246 (1976)...
Union of Concerned Scientists v. United States
Nuclear Regulatory Comm’n, 824 F.2d 108
CE Gs BT Wi saishcibcitsitaicctlncinnteehieitiiicsiguestidiance
United States v. Ford Motor Co., 814 F.2d 1099
fe py Fee Re vee Pa A cod eam
United States v. Menasche, 348 U.S. 528 (1955) ....
United States v. Interlake, Inc., 429 F.Supp 193
CFE Bes BOE FM sntetinsesniininstinsinaiicaiiapemnaibaianmininniins
PAGE
15
15
passim
6
14
14
Cases PAGE
United States v. Riverside Laboratories, Inc., 678
F. Supp. 1352 (N.D. Tl. 1988) oes 7
United States v. Town of Hempstead, 610 F.2d
RGES CG Gab, FTF D ccicisnvtscisaeniciiiietininninseeinais 13
United States v. West Penn Power Co., 460 F.
Supp. 1305 (W.D. Pa. 1978) oe. eeceeeceeeeeees 13
University of Cincinnati v. Heckler, 733 F.2d 1171
(GRR IE, FEROS weccncesressevtssetnvientioiinsandnaiidiianmiinian 7
Statutes
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IN THE
Supreme Court of the Gnited States
OcTOBER TERM, 1988
NAVISTAR INTERNATIONAL TRANSPORTATION
CORPORATION,
Petitioner,
vs.
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
Petitioner, Navistar International Transportation Corpo-
ration respectfully requests that a writ of certiorari issue to
review the judgment and decision of the Court of Appeals for
the Sixth Circuit entered on September 23, 1988.
OPINIONS BELOW
The opinion of the Court of Appeals is reported at 858
F.2d 282 and appears as App. A in the Appendix. U.S. EPA’s
unreported final order affirming the administrative law judge’s
initial decision on liability appears as App. D. The U.S. EPA
2
administrative law judge’s unreported initial decision on liabi-
lity appears as App. E. The U.S. EPA administrative law
judge’s unreported ruling excluding evidence of technical and
economic infeasibility appears as App. F.
JURISDICTION
The judgment of the Court of Appeals (App. B) was
entered on September 23, 1988. A timely petition for rehearing
and suggestion that rehearing be en banc, was denied on
November 10, 1988. (App. C) Jurisdiction of this Court is
premised upon 28 U.S.C. § 1254(1).
STATUTE INVOLVED
Section 120 of the Clean Air Act, 42 U.S.C. § 7420,
provides in pertinent part:
... the Administrator shall assess and collect a noncom-
pliance penalty against every person who owns or operates
(i) a major stationary source ... which is not in com-
pliance with any emission limitation. . . .
Rule 3745-21-09(U)(1)(a)(iii) of the Ohio Adminis-
trative Code, provides in pertinent part:
Except where exempted under paragraph (U)(2) of this
rule, no owner or operator of a miscellaneous metal part or
product coating line may cause, allow or permit the
discharge into the ambient air of any volatile organic
compounds ... exceed[ing] ... 3.5 pounds of VOC per
gallon of coating. ...
3
STATEMENT OF THE CASE
This petition seeks review of the Sixth Circuit’s decision: | )
that considerable deference should be paid to U.S. EPA’s
interpretation of an Ohio State Implementation Plan provision
upon which Navistar’s liability was founded, and 2) that U.S.
EPA’s determination of Navistar’s liability was proper despite
the exclusion of evidence that it was technicaily and economic-
ally infeasible for Navistar to comply with the Ohio State
Implementation Plan provision at issue.
After an administrative hearing on March 4-5, 1986,
Navistar’s emissions from its paint coating operations at its
Springfield, Ohio truck assembly plant were found to be in
violation of Section 120 of the Clean Air Act. 42 U.S.C. § 7420.
App. E-17. The particular regulation at issue, Ohio Adminis-
trative Code Rule 3745-21-09(U), was contained within the
Ohio State Implementation Plan. The determination of viola-
tion was appealed to the administrator of U.S. EPA, whose
chief judicial officer entered a final order affirming the liability
determination on March 24, 1987. App. D-7. The appeal to
the Sixth Circuit followed.
_ On appeal to the Sixth Circuit, Navistar argued that the
administrator of U.S. EPA erred in his interpretation of the
Ohio administrative regulation at issue. During the adminis-
trative hearing, Navistar offered evidence that the plain mean-
ing of the regulation excluded by definition two of Navistar’s
coating Operations at its truck assembly plant. This, because
those two operations did not employ bake ovens in the coating
process.
The administrator adopted the ALJ’s determination that,
with respect to the need for bake ovens, the regulation should
be interpreted in the disjunctive as opposed to the conjunctive.
Such an interpretation rendered the presence of bake ovens
unnecessary to the determination of whether any given coating
en ia
4
operation was included within the coating line definition ap-
pearing in the regulation. The administrator then compounded
his erroneous interpretation by adopting the ALJ’s determina-
tion that the definition of coating line could be read as “‘a series
of one.” App. D-2.
Navistar also urged on appeal to the Sixth Circuit that the
administrator, having adopted the ALJ’s interpretation of the
Ohio administrative regulation, erred again in finding that the
refinishing exemption, Ohio Administrative Code Rule 3745-
21-09(U)(2)(c), did not apply to three of Navistar’s coating
operations. Relying on this Court’s decision in United States v.
Menasche, 348 U.S. 528 (1955), Navistar argued that effect
must be given to every word and clause of a statute or
regulation. including the refinishing exemption. Navistar
further argued on appeal that its non-metallic painting oper-
ations were not regulated under Ohio Administrative Code
Rule 3745-21-09( U) which sets limits on emissions of volatile
organic compounds from the coating of miscellaneous metal
parts.
Finally, Navistar urged on appeal that, irrespective of
whether U.S. EPA’s interpretations were plainly erroneous or
inconsistent with the terms of the regulation, the administrator’s
determination on these purely legal questions should not be
accorded considerable deference. Relying on JNS v. Cardoza-
Fonseca, 480 U.S. 421 (1987), Navistar argued that courts
need not defer to agency opinions on pure questions of
interpretation.
On September 23, 1988, the Sixth Circuit affirmed the
administrator’s final order holding Navistar liable for Clean Air
Act violations. The Sixth Circuit held that U.S. EPA’s inter-
pretation of the Ohio administrative regulation should be
accorded considerable deference. 858 F.2d at 286, App. A-7, 8.
Accordingly, the Sixth Circuit reviewed the administrator’s
interpretation with an eye to whether it was plainly erroneous
5
or inconsistent with the terms of the Ohio administrative
regulation. Finding that U.S. EPA’s constructions of the
refinishing exemption, coating line definition and miscellaneous
metal part provision were neither erroneous nor inconsistent,
the Sixth Circuit affirmed the administrator’s opinion that the
Ohio administrative regulation applied to Navistar’s refinishing
and non-metallic part spraying operations as well as to the two
coating operations which did not employ bake ovens. 858 F.2d
at 286-88, App. A-9 to 12.
REASONS FOR GRANTING THE WRIT
The Sixth Circuit’s opinion affirmed the decision of the
administrator of U.S. EPA holding Navistar liable for violating
Section 120 of the Clean Air Act. 42 U.S.C. § 7420. The Sixth
Circuit’s opinion reflects four fundamental errors.
First, while the administrator’s decision states that the
regulations under which Navistar was found liable were formu-
lated and promulgated by the Ohio Environmental Protection
Agency (“Ohio EPA”), not U.S. EPA, the Sixth Circuit applied
a “considerable deference” standard of review assuming that
U.S. EPA’s interpretation deferred to was of its own adminis-
trative regulation. That conclusion rewrites the administrator’s
decision.
Second, the Sixth Circuit mistakenly interpreted several
Supreme Court decisions which hold that where a pure question
of law is addressed, the court need not defer to agency opinion.
The Court of Appeals also disregarded other Supreme Cour:
and Sixth Circuit decisions to the same effect, which hold that
where an agency’s interpretation does not emanate from mat-
ters within its special competence, the agency’s interpretation
need not be deferred to. The Sixth Circuit’s deference to U.S.
EPA’s interpretation of the Ohio administrative regulation is
thus in direct conflict with, and sub silentio overrules, previously
6
decided cases which afford de novo review of certain agency
interpretations. —
Third, the Sixth Circuit concluded that the administrator’s
interpretation of the Ohio administrative regulation was not
plainly erroneous or inconsistent with the terms of that regu-
lation. The plain meaning of that regulation, however, runs in
the teeth of U.S. EPA’s interpretation.
Fourth, the Sixth Circuit affirmed the administrative law
judge’s exclusion of evidence that it was technically and
economically infeasible for Navistar to comply with the Ohio
State Implementation Plan emission limitation. This, despite
the fact that evidence of technical and economic infeasibility
should figure heavily in the determination cf whether an air
contaminant source is liable for exceeding emission limitations.
I. THE COURT OF APPEALS IMPROPERLY ACCORD-
ED CONSIDERABLE DEFERENCE TO U.S. EPA’S
INTERPRETATION OF THE OHIO ADMINIS-
TRATIVE REGULATION
The Court of Appeals deferred to the administrator’s
opinion of the regulation in issue chiefly as a result of the
panel’s view that U.S. EPA was interpreting its own adminis-
trative regulation. The Sixth Circuit determined that the
standard of review “in cases involving conflicting inter-
pretations of an administrative regulation is to give consid-
erable deference to the administrative agency’s interpretation.”
(citation omitted) 858 F.2d at 286, App. A-7.
In reaching this conclusion, the Court of Appeals relied on
two inapt Supreme Court decisions. 858 F.2d at 286, App. A-8.
In the case of Udail v. Tallman, 380 U.S. 1, 16-17 (1965), this
Court accorded deference to the Interior Secretary’s inter-
pretation of his own public land order.’ In the second case
' The Supreme Court later reiterated that the deference standard
found in Udall v. Tallman, 380 U.S. | (1965), should be delimited to
(Footnote continued on following page.)
cited by the Sixth Circuit, Bowles v. Seminole Rock Co., 325
U.S. 410, 413-14 (1945), the Supreme Court paid deference to
the Price Administrator’s construction of his own maximum
price regulation.
In both cases, this Court deferred to an agency’s opinion of
administrative regulations which the agency had promul-
gated.2 The Sixth Circuit’s reliance on these cases was improp-
er since Ohio EPA, not U.S. EPA, formulated and promulgated
the administrative regulation at issue, viz., Ohio Administrative
Code Rule 3745-21-09(U). The manner in which Ohio EPA
formulated and promulgated its Rule 3745-21-09(U) is ex-
‘ plained by the administrator of U.S. EPA in the final order
from which Navistar appealed. App. D-3. In brief, the 1970
Amendments to the Clean Air Act require each state to develop
a state implementation plan for the “implementation, mainte-
nance and enforcement” of national ambient air quality stan-
dards. 42 U.S.C. § 7410.
Accordingly, Ohio EPA promulgated the instant regula-
tion during its formulation of the Ohio State Implementation
Plan for ozone. Air emission regulations promulgated in this
fashion have uniformly been characterized as state law, not as
U.S. EPA legislative rules.? As such, no deference should have
(Footnote continued from preceding page.)
instances in which an agency interprets its own regulation. Piper v.
Chris-Craft Industries, 430 U.S. 36, 41 n.27 (1977).
2 The Court of Appeals also relied on a Sixth Circuit decision,
University of Cincinnati v. Heckler, 733 F.2d 1171 (6th Cir. 1988), for
the proposition that U.S. EPA’s interpretation should be accorded
considerable deference. This decision, however, also involved an
agency’s interpretation of its own regulation, and was thus inapposite
to the Sixth Circuit’s determination to defer to the administrator’s
opinion of the Ohio administrative regulation.
3 See, e.g., Bethlehem Steel Corp. v. Gorsuch, 742 F.2d 1028,
1035-36 (7th Cir. 1984); United States v. Riverside Laboratories, Inc.,
678 F.Supp 1352, 1355-57 (N.D. Ill. 1988); United States v. Inter-
lake, Inc., 429 F.Supp 193, 197 (N.D. Ill. 1977).
8
been accorded U.S. EPA’s interpretation of Rule 3745-21-
09(U). See Florida Power & Light Co. v. Costle, 650 F.2d 579,
588 (Sth Cir. 1981). Rather, the administrator’s opinion of the
Ohio administrative rule should have been subject to de novo
review,-as further explained below.
Il. THE SIXTH CIRCUIT’S CONSIDERABLE DEF-
ERENCE STANDARD RUNS IN THE TEETH OF
PRIOR SUPREME COURT PRECEDENT
The Sixth Circuit mistakenly interpreted several Supreme
Court decisions which hold that where a pure question of law is
addressed, the court need not defer to agency opinion. 858
F.2d at 286, App. A-7. In INS v. Cardoza-Fonseca, 480 U.S.
421, 440 (1987), this Court held that where purely legal
questions are at issue, the court has broad authority to conduct
an independent and de novo review of agency decisions.* In
such instances, the court is to use traditional tools of construc-
tion to ascertain intent. In the instant matter, the Sixth Circuit
addressed just such a legal question, and should have under-
taken a de novo review of the administrator’s opinion of the
Ohio administrative rule.
Instead, the Sixth Circuit attempted to limit the Cardoza-
Fonseca decision to its facts, on the basis that the Cardoza-
Fonseca Court undertook a de novo review of an agency’s
interpretation of statutory law, rather than an administrative
regulation. 858 F.2d at 286, App. A-7. This argument proves
too much, however, since the Cardoza-Fonseca Court unequivo-
cally stated that the rule of deference to agency interpretations
(set forth in Chevron U.S.A., Inc. v. Natural Resources Defense
Council, 467 U.S. 837, 842-43 (1984)) is applicable only in
4 See also Dirks v. SEC, 463 U.S. 646, 655-64 (1983) (Supreme
Court conducted independent and de novo review of legal question,
substituting its judgment for that of agency, whose interpretations
were accorded no deference); Newport News Shipbuilding & Dry Dock
Co. v. EEOC, 462 U.S. 669, 673-84 (1983) (same); NLRB v. Yeshiva
University, 444 U.S. 672, 678-80 (1980) (same); AFL-CIO v. Ameri-
can Petroleum Institute, 448 U.S. 607, 695 n.9 (1980) (same).
ial
9
situations where “the agency is required to apply [legal]
standards to a particular set of facts.” 480 U.S. at 439. See
Union of Concerned Scientists v. United States Nuclear Regu-
latory Comm’n, 824 F.2d 108, 112 (D.C. Cir. 1987); and
International Union, UAW v. Brock, 816 F.2d 761, 766 (D.C.
Cir. 1987). Due to the breadth of the Cardoza-Fonseca Court’s
holding, this would obtain irrespective of whether the agency
interprets statutory law or administrative regulation. 480 U:S. at
440.5 See also Northeast Marine Terminal Co. v. Caputo, 432
U.S. 249, 256-59 (1976).
The Sixth Circuit’s deference to the administrator’s opinion
also cannot be reconciled with this Court’s decision in Texas
Gas Transmission Corp. v. Shell Oil Co., 363 U.S. 263 (1960).
In Texas Gas, this Court upheld a de novo review standard
where “the Commission professed to dispose of the case solely
upon its view of the result called for by the application of
canons of construction employed by the courts, and did not in
any wise rely on matters within its special competence.” 363
U.S. at 270. A de novo review standard was also recently
employed by the Sixth Circuit. Cincinnati Gas & Elec. Co. v.
FERC, 724 F.2d 550, 554 (6th Cir. 1984). In Cincinnati Gas,
the Sixth Circuit noted that “‘[q]uestions of law, unlike
questions of fact, are freely reviewable by the court.’ ” 724 F.2d
at 554. This was found in Cincinnati Gas to be particularly
appropriate where no factual or technical expertise is impli-
cated. 724 F.2d at 555.
Similarly, in the instant matter, the construction of the
refinishing exemption, coating line definition and miscellaneous
metal part provision of Ohio Administrative Code Rule 3745-
21-09(U) did not implicate the administrator’s special com-
5 See also Adams House Health Care v. Heckler, 817 F.2d 587.
589-91 (9th Cir. 1987) (holding that deference to any agency’s
interpretation is unwarranted where the agency applies law to fact or
the construction requires consideration of broad concerns beyond the
agency’s expertise ).
10
petence, and the Sixth Circuit should not have deferred to the
administrator’s opinion. The same argument about the greater
relative expertise of courts in matters of construction has
frequently succeeded. See, e.g., Hardin v. Kentucky Utilities
Co., 390 U.S. 1, 14 (1968). In brief, the Sixth Circuit should
have undertaken a de novo review of the administrator’s
opinion of the Ohio administrative rule. The credulous defer-
ence paid instead by the Court of Appeals to the administrator’s
interpretation presents an important question of law regarding
the scope of this Court’s Cardoza-Fonseca and Texas Gas
decisions.
Ill. THE SIXTH CIRCUIT’S DECISION IS ERRONEOUS
BECAUSE U.S. EPA’S INTERPRETATION OF THE
OHIO ADMINISTRATIVE REGULATION IS INCON-
SISTENT WITH THE TERMS OF THAT REGU-
LATION
The Sixth Circuit held that two of Navistar’s coating
operations were regulated despite the absence of bake ovens in
the coating process. 858 F.2d at 288, App. A-10. This finding
is inconsistent with the terms of Ohio Administrative Code Rule
3745-21-01(D)(8), which makes clear that paint booths must
have bake ovens to be regulated. It is a basic tenet of statutory
construction that, whenever possible, effect must be given to
every word and clause of a statute or regulation. United States
v. Menasche, 348 U.S. 528, 538-39 (1955). “When the
wording of a statute is clear and unambiguous on its face,
judicial interpretation is not required; rather, the court must
give effect to the words used.” Dougherty v. Torrence, 2 Ohio
St. 3d 69, 70, 442 N.E.2d 1295, 1296 (1982).
Here, the Ohio administrative regulation which U.S. EPA
seeks to enforce against Navistar applies only to miscellaneous
metal part or product coating lines. Ohio Administrative Code
Rule 3745-21-09(U)(1)(a)(iii). The coating line definition
specifies that a coating line consists of a series comprised of one
11
or more coating applicators, one or more flash-off areas, and
one or more ovens. Ohio Administrative Code Rule 3745-21-
01(D)(8). The coating line definition is thus unambiguous,
and its plain meaning, requiring the presence of bake ovens,
should be given effect.
The administrator’s interpretation of the refinishing ex-
emption and miscellaneous metal part provision of the Ohio
administrative regulation is also plainly erroneous and incon-
sistent with the terms of that regulation. Nevertheless, the Sixth
Circuit deferred to the administrator’s unsupported opinion that
the refinishing exemption does not apply to Navistar’s coating
operations and that Navistar’s coating of non-metallic parts is
regulated. In this regard, Ohio EPA easily could have defined
“refinishing” in a more limited fashion, but elected to broadly
define this term in its promulgation of the administrative
regulation. The administrator’s finding tnat the refinishing
exemption applies only to body shops is thus plainly erroneous.
Further, certain parts coated on several of Navistar’s lines
are made only of non-metallic materials and have no metal
formed on them. Emissions from these non-metallic painting
operations are clearly not regulated under the Ohio adminis-
trative regulation, which plainly pertains solely to emissions
from the coating of miscellaneous metal parts. The adminis-
trator’s finding that non-metallic coating operations are regu-
lated is again inconsistent with the terms of the Ohio adminis-
trative regulation.
In sum, the Sixth Circuit’s deference to the administrator’s
interpretation of the Ohio administrative regulation is in-
compatible with previous decisions holding that agency opin-
ions should not be deferred to on purely legal questions which
do not implicate the agency’s factual or technical expertise. The
deference extended to the administrator’s opinion effectively
affirmed an interpretation which is plainly erroneous and
inconsistent with the terms of the Ohio administrative regu-
lation.
12
IV. THE AGENCY IMPROPERLY EXCLUDED EVI-
DENCE OF TECHNOLOGICAL AND ECONOMIC
INFEASIBILITY
The Sixth Circuit affirmed the Agency’s liability determina-
tion made after the close of an administrative hearing during
which evidence of technical and economic infeasibility of
compliance with the Ohio State Implementation Plan (“Ohio
SIP”) was improperly excluded. Such evidence is relevant to
the matters at issue in-a Clean Air Act Section 120 enforcement
action and should have been admitted.
On the issue of admissibility of evidence of infeasibility,
the Sixth Circuit’s decision sharpens a clear conflict in the
circuits. The Seventh Circuit held in Indiana & Michigan
Electric Company v. EPA, 509 F.2d 839 (7th Cir. 1975), that
U.S. EPA is not required to consider technological feasibility
and economic reasonableness prior to approval of a state
implementation plan only because arguments concerning tech-
nological feasibility and economic umreasonableness are
allowed to be raised as to a specific source in the course of an
enforcement proceeding:
In our view, these contentions serve to underscore the
appropriateness of considering technological and economic
factors in the course of enforcement proceedings rather
than in connection with approval of a state plan under
§ 110. Many of the very arguments presented by petition-
ers demonstrate that the requirements of a state’s
implementation plan might well be achievable as applied
to most stationary facilities which emit the pollutants
covered under the plan, and yet be technologically impos-
- ~ sible to achieve as applied to a particular source... [Our
holding] does not preclude petitioners from presenting
technological feasibility and economic impact arguments in
the course of enforcement proceedings.
Id. at 844-45. The Seventh Circuit’s ruling reflects the principle
that due process safeguards require that individual facilities be
ee, a
13
allowed at some juncture to demonstrate the technological
infeasibility and/or economic unreasonableness of their specific
compliance and that a particular legal requirement would be
arbitrary and capricious, and therefore invalid, if applied to
facilities for which compliance could not be achieved for these
reasons.®
The decision in United States v. West Penn Power Co., 460
F. Supp. 1305, 1307-12 (W.D. Pa. 1978) accords with the
Seventh Circuit’s ruling that technological infeasibility and
economic unreasonableness bear heavily on liability determina-
tions in Clean Air Act enforcement actions. In West Penn
Power Co., the court exhaustively canvassed several pollution
control alternatives, rejecting two out of hand as unduly
expensive and technically infeasible. Jd. at 1308. The court
ultimately issued an injunction requiring the defendant to
install a scrubber, but did so only after painstakingly assessing
proofs directed to the technical and economic feasibility of that
proposed scrubber. Jd. at 1308-12. Similarly, the Second
Circuit has stated that proof of relevant circumstances, in-
cluding technical and economic infeasibility, should be consid-
ered in making liability determinations in Clean Air Act
enforcement proceedings. United States v. Town of Hempstead,
610 F.2d 1025, 1027 & n.3 (2nd Cir. 1979) (dictum).
The Seventh Circuit reaffirmed that technological in-
feasibility and economic unreasonableness are relevant in an
enforcement proceeding in Bethlehem Steel Corp. v. EPA, 638
F.2d 994 (7th Cir. 1980):
As stated previously, it is now becoming established that
... the EPA is not free to disapprove a state SIP on the
6 See also Buckeye Power, Inc. v. EPA, 481 F.2d 162, 169 (6th
Cir. 1973) (EPA’s argument that technological infeasibility, high cost-
benefit, and resource unavailability are irrelevant found “devoid of
menit.”’)
14
grounds that its requirements are not technologically fea-
sible... However, because these procedures may result in
the state’s requiring technological innovations that are
infeasible or “border on the impossible,” ... these cases
recognize that the source may raise its infeasibility defense
in the course of enforcement proceedings.
Id. at 1005.
These authorities reflect the basic constitutional tenet that
application of a regulation (whether adopted through the
legislative or administrative process) is permissible only if
reasonable and not arbitrary or capricious as specifically ap-
plied. In this proceeding, Navistar contends that the Ohio Rule
is unreasonable as specifically applied to Navistar because its
compliance with the rule is technologically infeasible and
economically unreasonable. Because compliance with the Ohio
Rule would be infeasible, its provisions cannot be applied to
Navistar.
The Sixth Circuit’s decision affirming the exclusion of
evidence of infeasibility relied heavily on the decision in United
States v. Ford Motor Co., 814 F.2d 1099, 1103 (6th Cir. 1987).
That case is distinguishable on its facts. Unlike the defendant
in Ford Motor Co., Navistar does not desire to invalidate or
nullify a SIP provision; rather, Navistar simply suggests that the
plain meaning of an unambiguous SIP provision be accorded its
proper effect.
Also, unlike the Ford Motor Co. defendant, Navistar had
no meaningful opportunity to raise its claims of technological
and economic infeasibility. In accord with this Court’s ruling in
Union Electric Co. v. EPA, 427 U.S. 246, 266 (1976), U.S.
EPA, in its review of the proposed Ohio SIP, was proscribed
from considering claims of technical and economic infeasibility.
Thus, Navistar could not have brought its claims of tech-
nological and economic infeasibility to EPA or to a federal
ohne, Ae
—— sit Nl. ceil fi oh ein Ml Bil,
15
court of appeals within 60 days of EPA’s approval of the Ohio
SIP. See also National Steel Corp. Great Lakes Steel Div. v.
Gorsuch, 700 F.2d 314, 324 (6th Cir. 1983) (neither EPA nor a
| federal court may reject a SIP provision on grounds of econom-
' ic or technological infeasibility); Cleveland Electric Illuminat-
; ing Co. v. EPA, 572 F.2d 1150, 1164 (6th Cir.), cert. denied,
439 U.S. 910 (1978) (same).
The Agency’s exclusion of evidence of technological and
economic infeasibility derived, in part, from the opinion in
Duquesne Light Company v. EPA, 698 F.2d 456, 463 (D.C. Cir.
; 1983). App. F-2. That decision is inapposite. First, the
| Duquesne court was concerned only with a general review of
the Agency’s procedural regulations promulgated pursuant to
Section 120 and did not directly address the constitutional
| necessity of allowing a respondent to show specific in-
applicability of a particular legal requirement such as the Ohio
Rule. Second, with respect to the issue of technological
infeasibility, the court limited itself solely to an analysis of the
Agency’s exemption requirements and did not consider whether
that issue is relevant to a determination of compliance with a ~
particular legal requirement such as the Ohio SIP. Finally, the
court in Duquesne did not even consider the issue of economic
unreasonableness, an issue that is without doubt relevant to this
proceeding.
Because Navistar had no meaningful opportunity to
present its claims of technical and economic infeasibility during
the Ohio SIP adoption process, constitutional due process
safeguards require that such claims be considered during the
liability phase of this proceeding. The Agency’s exclusion of
evidence on these issues improperly “chok[ed] off an entire
claim or defense,” Lewis v. Buena Vista Mutual Ins. Assoc.,
183 N.W.2d 198, 200-01 (lowa 1971), and rendered arbitrary
and capricious the application of the Ohio Rule to Navistar.
The Sixth Circuit’s decision affirming this exclusion should
therefore be reviewed.
OQ), (, —————e_V<_Vw
16
CONCLUSION
For the foregoing reasons, a wnt of certiorari should issue
to review the judgment and opinion of the Court of Appeals for
the Sixth Circuit. os
STEVEN A. SMITH
(Counsel of Record )
JAMES H. SCHINK
KIRKLAND & ELLIS
200 East Randolph Drive
Chicago, Illinois 60601
(312) 861-2000
Of Counsel:
STEVEN K. COVEY
NAVISTAR INTERNATIONAL
TRANSPORTATION CORPORATION
401 N. Michigan—24th Floor
Chicago, Illinois 606117
DATED: February 7, 1989
APPENDIX A
A-l
APPENDIX A
RECOMMENDED FOR FULL TEXT PUBLICATION
See, Sixth Circuit Rule 24
No. 87-3474
United States Court of Appeals
FOR THE SixTH CIRCUIT
NAVISTAR INTERNATIONAL
TRANSPORTATION CORPORATION, On Petition to Review
Petitioner, an Order from the
v. . United States Envi-
UNITED STATES ENVIRONMENTAL ronmental _Protec-
PROTECTION AGENCY, tion Agency.
Respondent. 7
Decided and Filed September 23, 1988
Before: KENNEDY and RYAN, Circuit Judges; and
PECK, Senior Circuit Judge.
RYAN, Circuit Judge. Petitioner, Navistar International
Transportation Corporation ( Navistar) (formerly International
Harvester), seeks review of the decision of the administrator of
the Environmental Protection Agency finding petitioner liable
for violations of the Clean Air Act. We affirm.
A-2
I.
2
Navistar appeals the decision of the administrator (EPA)
finding Navistar liable for violating § 120 of the Clean Air Act,
42 U.S.C. § 7420. Navistar operates a truck assembly facility in
Springfield, Ohio. Within the assembly plant are located ten
“painting booths” which are used to paint the various parts
which are manufactured or assembled at the plant. Following
the painting, the parts are moved by conveyor into drying and
baking ovens, with the exception of three painting booths which
do not employ ovens. Six of the booths paint only metallic
parts while four paint both metallic and other parts. Three of
the booths are used to touch up paint which has been scratched
or to paint areas that have been missed.
Pursuant to the Clean Air Act, the EPA has set National
Ambient Air Quality Standards (NAAQS). Each state is
responsible for drafting a State Implementation Plan (SIP) to
provide for implementation and enforcement of standards such
as NAAQS. 42 U.S.C. § 7410(a)(1). The SIPs must be
approved by the EPA and meet statutory requirements. A SIP
must include “emission limitations, schedules, and time tables
for compliance for such limitations, and such other measures
as may be necessary to insure attainment.” 42 U.S.C.
§ 7410(a)(2)(B). Emission limitations pursuant to a SIP are
enforceable as federal law. 42 U.S.C. § 7410(d). Violators of
the emission limitations can be penalized pursuant to 42 U.S.C.
§ 7420 which allows a penalty equal to the amount of economic
benefit gained by delaying compliance with a SIP. “A brief but
reasonably specific notice of noncompliance” must be seuit to
one not in compliance with a SIP. 42 U.S.C. § 7420(b)(3).
The particular regulation at issue here is contained within
the Ohio SIP. Section 3745-21-09(U) of the Ohio Adminis-
trative Code provides, in pertinent part:
(U) Surface coating of miscellaneous metal parts and
products.
Po Rta AN AR Rie OE NAOT OO OOOO Ne ON, At a, em a
Sa Seber
A-3
(1) Except where exempted under paragraph
(U)(2) of this rule, no owner or operator of a
miscellaneous metal part or product coating line may
cause, allow or permit the dischare into the ambient
air of any volatile organic compounds from such
coating line after the date specified in paragraph
(C)(28) for rule 3745-21-04 of the Administrative
Code unless the requirements of either paragraph
(U)(1)€a) or (U)(1)(b) of this rule are satisfied.
(a) The volatile organic compound content
of each coating employed in the miscellaneous
metal part or product coating line, as determined
under paragraph (B) of rule 3745-21-10 of the
Administrative Code, does not exceed the least
stringent of any of the following limitations which
are applicable:
(ii) 4.0 pounds per gallon of coating, ex-
cluding water, for a zinc rich primer coating;
(iii) 3.5 pounds per gallon of coating, ex-
cluding water, for an extreme performance coat-
ing;
On September 24, 1984, the EPA notified Navistar that it
was not in compliance with the Ohio SIP, as its painting lines
emitted pollutants beyond the emission limitations. The notice
of noncompliance included a transmittal letter which stated the
following were included in the notice package: (1) the notice of
noncompliance, (2) a technical support document and an
instruction manual, and (3) relevant code of federal regulations
sections. The package, however, did not contain the technical
support document nor the instruction manual. The notice
informed Navistar it could either calculate the penalty owed
and a payment schedule, or file a petition for reconsideration.
After three extensions, Navistar filed its petition for
reconsideration on March 4, 1985. Navistar raised four issues:
(1) that two painting lines were not within the definition of
A-4
“coating lines,” (2) that four painting lines were subject to the
SIP refinishing exemption, (3) that four painting lines were not
subject to regulation as they paint plastic as well as metailic
parts, and (4) that the EPA was without jurisdiction due to
insufficiency of the notice of noncompliance. A hearing was
held before an Administrative Law Judge (ALJ) on March 4
and 5, 1986. The ALJ excluded evidence of technological and
economic infeasability in that it was irrelevant to the issue of
liability. He held that the offer of proof on economic in-
feasability evidence could be retained as proof on the penalty
phase of the hearing.
The ALJ found Navistar in violation of the Ohio SIP
(§ 3745-21-09)(U) of the Ohio Administrative Code). Navi-
star appealed to the administrator, who affirmed the ALJ’s
decision through the EPA’s chief judicial officer. Navistar then
sought review in this court.
Il.
A. Sufficiency of Notice
Before addressing the merits of Navistar’s arguments
regarding the proper interpretation of the Ohio SIP, it is
necessary to discuss whether the notice of noncompliance sent
to Navistar was defective to such a degree as to render the EPA
without jurisdiction in this case. Section 66.12, describing the
contents of a notice of noncompliance, states:
(a) Each notice of noncompliance shall be in writing
and shall include:
(1) A specific reference to each applicable legal
requirement of which the source is in violation;
(2) A brief statement of the factual basis for the
finding of violation, together with a reference to any
supporting materials and a statement of when and
where they may be inspected.
RE AT i OR ORR Cr SORES Pt or etme
A-5
(3) Instructions on calculating the amount of the
penalty owed and the schedule for payments. Such
instructions shall include (i) a statement of the date
from which penalties should be calculated and (ii) a
copy of the Technical Support Document and the
Manual;
(4) Notice of the right to petition for a hearing to
challenge the finding of noncompliance or to claim an
exemption; and
(5) Notice that the penalty continues to accrue
during the pendency of any hearings granted under
this part or Part 67.
(b) Each notice of noncompliance shall be trans-
mitted to the source owner or operator either by personal
service or by registered or certified mail, return receipt
requested.
40 C.F.R. § 66.12.
It is undisputed that the notice of noncompliance sent to
Navistar did not contain the technical support document nor
the instruction manual as required by 40 C.F.R. § 66.12(a)(3).
Navistar argues that the omission of the material required by
§ 66.12(a)(3)(ii) renders the notice defective and leaves the
EPA without jurisdiction in this case.
Several grounds require this court to reject Navistar’s
jurisdictional argument. First, § 66.12 provides no con-
sequences for failure of the notice to comply with its require-
ments. Second, jurisdiction to assess noncompliance penalties is
conferred upon the EPA pursuant to 42 U.S.C. § 7420. 42
U.S.C. § 7420(b)(3) requires only that a “reasonably specific
notice of noncompliance” be sent.
Regulations under subsection (a) of this section shall—
A-6
(3) require the States, or in the event the States fail to
do so, the Administrator, to give a brief but reasonably
specific notice of noncompliance under this section to each
person referred to in subsection (a)(2)(A) of this section
with respect to each source owned or operated by such
person which is not in compliance as provided in such
subsection, not later than July 1, 1979, or thirty days after
the discovery of such noncompliance, whichever is later;
42 U.S.C. § 7420(b)(3).
The notice sent to petitioner notified it of each painting
activity that was in violation of the SIP. It notified petitioner of
its rights under the statute and of a right to a hearing. The only
documents missing had to do with penalty calculations which
would not be relevant as the liability hearing pursuant to 40
C.F.R. § 66.41-43 but would be relevant only later at the
penalty hearing pursuant to 40 C.F.R. § 66.51-54. Thus, the
notice complied with the “brief but reasonably specific”
requirement-of 42 U.S.C. § 7420(b)(3).
Finally, Brock v. Pierce County, 426 U.S. 253 (1986),
instructs that failure to follow all procedural requirements does
not automatically render an agency without jurisdiction to
proceed. In Brock, a statute required that the agency must
make a final determination within 120 days after receiving the
complaint. Although this requirement was in mandatory
language, no consequences for failure to comply were listed.
The Court found that the failure of the agency to meet the 120-
day requirement did not divest it of the power to seek penalties
under the statute. The Court stated:
We would be most reluctant to conclude that every failure
of an agency to observe a procedural requirement voids
subsequent agency action, especially when important pub-
lic rights are at stake.
Id. at 255. Therefore, the failure of the notice of noncom-
pliance to contain the instruction manual or the technical
ct
A-7
support document does not prevent the EPA from proceeding
with the liability hearing.
B. Standard of Review
Our standard of review in cases involving conflicting
interpretations of an administrative regulation is to give consid-
erable deference to the administrative agency’s interpretation.
University of Cincinnati v. Heckler, 733 F.2d 1171 (6th Cir.
1988). “{A]n administrative agency’s interpretation of its own
regulation is accorded considerable deference on judicial review
unless it is inconsistent with the terms of the regulation. . . .” Jd.
at 1173-74.
Navistar argues that this court may subject administrative
regulations to de novo review given the Supreme Court’s
decision in INS v. Cardoza-Fonseca, 94 L. Ed. 2d 434 (1987).
Cardoza-Fonseca, however, is limited in its scope and does not
justify de novo review of the regulations at issue in the instant
case. The Cardoza-Fonseca case, resolving conflicting inter-
pretations of a statute enacted under the Immigration and
Naturalization Act, involved the question whether the stan-
dards for withholding of deportation and granting asylum were
identical. The Court held that the agency interpretation of a
Statute is a matter of construction for the Court where the
agency interpretation is contrary to clear congressional intent,
and the agency itself has given the statute inconsistent inter-
pretations. Cardoza-Fonseca, 94 L. Ed. 2d at 457-58.
We note first that this case involves an agency’s inter-
pretation of a regulation and not a statute.
When faced with a problem of statutory construction,
this Court shows great deference to the interpretation given
the statute by the officers or agency charged with its
administration.
A-8
When the construction of an administrative regulation
rather than a statute is in issue, deference is even more
clearly in order.
“Since this involves an interpretation of an adminis-
trative regulation a court must necessarily look to the
administrative construction of the regulation if the mean-
ing of the words used is in doubt. ... [T]he ultimate
criterion is the administrative interpretation, which be-
comes of controlling weight unless it is plainly erroneous or
inconsistent with the regulation.” Bowles v. Seminole Rock
Co., 325 U.S. 410, 413-14, 89 L.Ed. 1700, 1702, 65 S.Ct.
1215.
Udall v. Tallman, 380 U.S. 1 (1965).
Second, Navistar has not shown that the EPA has been
inconsistent in its interpretation of the Ohio SIP. Finally, the
EPA’s interpretation of the Ohio SIP is in keeping with
congressional intent, as more fully discussed in section C below.
C. SIP Provisions Violated
Navistar raises three arguments regarding the EPA’s inter-
pretation of the Ohio SIP. First, Navistar argues that two of its
painting lines are not within the definition of “coating lines” for
purposes of the SIP, because the painting lines do not have
ovens for drying or baking. Significantly, the two painting lines
emit more pollutants than allowed by the emission limitations
under Ohio Administrative Code § 3745-21-09( a), which limits
emissions from “coating lines.”
Coating line is defined in the Ohio SIP as follows:
“Coating line” means a series of one or more coating
applicators, flash—off areas and ovens wherein a surface
coating is applied, dried and/or cured.
Ohio Administrative Code § 3745-21-01(D)(8). Navistar
argues that the definition requires that a coating line contain at
A-9
least one applicator, one flash—off area, and one oven. If
Navistar’s interpretation is correct, the two painting lines are
not “coating lines” for purposes of the Ohio SIP, because they
do not have ovens. The ALJ found the definition ambiguous, in
that it could be read to mean one or more applicators, or one or
more flash—off areas, or one or more ovens, or any of the
combination of the above. “The definition can result,” the ALJ
stated, “in a series of one.” While we would not be inclined to
read the sentence that way, we cannot say, as a matter of law,
that the sentence is so crystal clear as to allow only the meaning
given it by Navistar. Neither can we ignore the ALJ’s finding
that the Environmental Protection Agency received numerous
inquiries from industry sources inquiring “whether or not ovens
were required in order to come within the definition.”
The ALJ’s more compelling reason for finding the meaning
of “coating line” ambiguous is the fact that Ohio Adminis-
trative Code § 3745-21-09( U)( 1) regulates emissions resulting
from the application of surface coatings described in both
(U)(1)(a)(ili) “Zine rich primer” coatings, and
(U)(1)(a)(iti), “extreme performance” coatings. (Text
quoted supra.) “Zinc rich primer” coatings, (ii), are not dried
by ovens, but at in-plant temperatures, while “extreme per-
formance” coatings, (iii), are oven dried. The definition of
“coating lines” applies to both, however. This suggests, as the
ALJ held, that the listing of component elements in the
definition of a coating line, should be read in the disjunctive not
the conjunctive. We agree that the language defining “coating
lines,” is ambiguous.
A court may go beyond the express language of a statute or
regulation to determine the intent of the draftsman if the
language is ambiguous or if it would work against the purpose
of the statutory goal. See Int'l T & T Corp. v. General T& E
Corp., 518 F.2d 913, 917-18 (9th Cir. 1975). When that is
done in this case, the intent of the regulation and the goals of
the Clean Air Act provide further support for the agency’s
interpretation.
A-10
The ALJ heard testimony from the draftsman of the
relevant portion of the Ohio SIP. The draftsman, Mr. Juris,
testified that “coating lines” was meant to include painting
booths without ovens.’ Furthermore, one of the fundamental
purposes of the Clean Air Act is to maintain air quality
standards by requiring emission reductions of organic com-
pounds from major sources. The two painting lines at issue
emitted 315 tons of compounds in 1985, nearly 200 tons above
the allowable level. It would be an anomalous result to
interpret the regulation so as to exclude coating lines without
ovens when they contribute so greatly to the undesired pollu-
tants in the air that are to be reduced by the regulations.
Mindful “that an agency’s ... interpretation of its own
regulation is accorded considerable deference,” University of
Cincinnati, 733 F.2d at 1173, we find the ALJ’s interpretation
to be consistent with the terms of the regulation.
Second, Navistar argues that three of its painting lines are
subject to the refinishing exemption of the Ohio SIP. Section
3745-21-09(U)(2)(c) of the Ohio Administrative Code ex-
empts “application of a refinishing coating to motor vehicles.”
The ALJ found that the petitioner’s processes do not involve -
refinishing.
Navistar’s “refinishing lines” are used to correct paint
defects on newly manufactured trucks prior to releasing them
for sale. The EPA argues that the refinishing exemption does
not apply to newly manufactured trucks but to body shops in
the motor vehicle aftermarket.
Again, the intent behind the regulation supports the EPA’s
interpretation as evidenced by the testimony of the draftsman
who stated that the refinishing exemption applies cnly to the
' The ambiguity over whether “coating lines” includes painting
booths has been resolved by a subsequent revision of the language,
according to the testimony of the draftsman.
ee
A-11
motor vehicle aftermarket. In addition, the EPA has con-
sistently interpreted the refinishing exemption to apply only to
the aftermarket as evidenced by a 1981 letter to Navistar
indicating that the exemption was not applicable to Navistar’s
operations. “Ordinarily we defer to an agency’s consistent
interpretation of its own regulations unless ‘plainly erroneous or
inconsistent with the regulations.’” Patton v. National Mines
Corp., 825 F.2d 1035, 1038 (6th Cir. 1987) (quoting Bowles v.
Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945)).
Navistar responds that the regulations applicable to sur-
face coating of automobiles and light duty trucks specifically
exempt aftermarket body shops whereas the regulations appli-
cable to surface coating of heavy duty trucks contain no such
specific exclusion. The difference in language evidences an
intent that the exemption governing surface coating of heavy
duty trucks is not to be limited to the aftermarket, according to
Navistar. However, because of the deference owed to an
agency’s interpretation of its own regulations, and because that
interpretation is not inconsistent with the terms of the regu-
lation, University of Cincinnati v. Heckler, supra, it must be
upheld.
Finally, Navistar argues that four of its lines are used to
paint metal and nonmetal parts. The emissions limitations of ©
the SIP apply to “miscellaneous metal part or product coating
lines.” Section 3745-20-09( U)( 1). One painting line uses five
percent of its paint on non-metal parts; the other three painting
lines use thirty-one percent of their paint on non-metal parts.
Emissions from these processes should be excluded from regu-
lation, according to Navistar.
The EPA argues that “coating lines” are regulated by the
SIP, and that petitioner’s concession that the coating lines are
used, in part, to paint metallic parts renders them subject to
regulation.
The EPA’s interpretation is consistent with the plain
language of the SIP. Further, it is in keeping with the goal of
A-12
the Clean Air Act to reduce emission of organic compounds
from operations such as those employed by Navistar. Again,
the deference due the agency’s own interpretation requires this
court to affirm the administrator’s decision as to this issue.
D. Evidence of Technological and Economic Infeasibility
Prior to the hearing before the ALJ, the EPA filed a
motion in limine to exclude from the liability hearing evidence
by Navistar of the technological and economic infeasibility of
compliance with the SIP. The ALJ excluded the evidence from
the liability hearing. He found, and the parties had earlier
agreed, that the hearing before the ALJ was only to determine
whether petitioner was liable for not being in compliance with
the Ohio SIP. 40 C.F.R. § 66.41-43. A second hearing would
be held to determine what the penalty for non-compliance
would be. 40 C.F.R. § 66.41-54. The ALJ ruled that the
evidence of infeasibility ““may be retained in the record as an
offer of proof on the issue of liability for a penalty (second
stage of hearing).”
Technological and economic infeasibility arguments were
first raised in Union Electric Co. v. EPA, 427 U.S. 246 (1976),
by a petitioner who was challenging the SIP itself as opposed to
that petitioner’s compliance with the SIP. In that context, the
Court held that technological and economic infeasibility argu-
ments were not to be heard. The Court found that such a
requirement would thwart the goals of and legislative intent
behind the Clean Air Act. Jd. at 269. The Court specifically left
open the question of whether due process requires the claims of
technological and economic infeasibility be heard at some time.
Id. at 269, n.19.
This court spoke to the due process issue in United States v.
Ford Motor Co., 814 F.2d 1099 (6th Cir. 1987). In Ford, the
company had challenged a SIP provision on infeasibility
grounds in state court. This court held that a state court
eee eee
ee ee eee
Se te ee
oo a,
A-13
judgment does not preclude federal enforcement of the SIP.
The company then argued that due process is violated by such a
holding in that the state forum is the only forum in which to
raise the infeasibility claims. This court stated:
Ford’s contention can best be answered by noting that
the Clean Air Act envisions situations where standards
currently economically or technologically infeasible will
nonetheless be enforced. See Union Electric Co. v. EPA,
427 U.S. 246, 258-59, 96 S.Ct. 2518, 2526, 49 L.Ed.2d 474
(1976); National Steel Corporation Great Lakes Steel
Division v. Gersuch, 700 F.2d 314, 324-25 (6th Cir. 1983).
Congress has the authority to demand that “existing
sources of pollutants either should meet the standard of the
law or be closed down....”, regardless of whether such
standards are currently feasible. S.Rep. No. 91-1196, p. 2-
3 (1970), quoted in Union Electric Co., supra, 427 U.S. at
259, 96 S.Ct. at 2526.
In addition, we note that meaningful opportunities for
raising claims of technological and economic infeasibility
have been provided by the Act.
[T]echnical infeasibility coupled with good faith ef-
forts can be considered by the district court as a factor
mitigating against the imposition of monetary penalties in
the enforcement action.
Ford Motor Co., 814 F.2d at 1103-04. See also, United States v.
Wheeling-Pittsburgh Steel Corp., 818 F.2d 1077, 1087 (3rd Cir.
1987).
Given Congress’ intent to obtain compliance or require
that facilities be shut down, regardless of feasibility, and given
that due process concerns are satisfied by allowing infeasibility
arguments at the penalty stage, we affirm the ALJ’s decision to
exclude evidence of technological and economic infeasibility at
the liability hearing. As the evidence was retained in the record
for purposes of the penalty hearing, any due process require-
ments were met.
III.
For the reasons stated above, the administrator’s decision
finding Navistar in violation of the Ohio SIP is AFFIRMED.
SN a
APPENDIX B
APPENDIX B
No. 87-3474
United States Court of Appeals
FOR THE SixTH Circuit
NAVISTAR INTERNATIONAL TRANSPORTATION CORPORATION,
Petitioner,
¥:
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY.
Respondent.
Before: KENNEDY and RYAN, Circuit Judges; and PECK,
Senior Circuit Judge.
JUDGMENT
ON PETITION TO REVIEW a decision of the United
States Environmental Protection Agency.
THIS CAUSE came on to be heard on the transcript of
record from the said agency and was argued by counsel.
ON CONSIDERATION WHEREOF, It is now here or-
dered and adjudged by this court that the decision of the said
agency in this cause be and the same is hereby affirmed.
IT IS FURTHER ORDERED that Respondent recover
from Petitioner the costs on appeal, as itemized below.
ENTERED BY ORDER OF THE
COURT
Leonard Green, Clerk
/s/ Leonard Green, Clerk
Issued as Mandate: November 23, 1988
A True Copy.
Costs: Respondent to recover costs Attest:
from petitioner
a $ None
Prindiie ae $252.00 /s/ George McCarthy
es $252.00 Deputy Clerk
C-1
APPENDIX C
No. 87-3474
United States Court of Appeals
For THE SixtH Circuit
NAVISTAR INTERNATIONAL
TRANSPORTATION CORPORATION,
Petitioner,
v. 5 Order
UNITED STATES ENVIRONMENTAL
PROTECTION AGENCY,
Respondent.
Before: KENNEDY and RYAN, Circuit Judges, and PECK,
Senior Circuit Judge
The Court having received a petition for rehearing en
banc, and the petition having been circulated not only to the
original panel members but also to all other active judges of
this Court; and no judge of this Court having requested a vote
on the suggestion for rehearing en banc, the petition for
rehearing has been referred to the original hearing panel.
The panel has further reviewed the petition for rehearing
and concludes that the issues raised in the petition were fully
considered upon the orginal submission and decision of the
case. Accordingly, the petition is denied.
ENTERED BY ORDER OF THE
COURT
/s/ Leonard Green
Leonard Green, Clerk
» Gd ll ernie ee aie
ils w= «CC Pc doo roe
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- Ai a
APPENDIX D
ae
APPENDIX D
BEFORE THE ADMINISTRATOR
U.S. ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C.
In the Matter of: :
INTERNATIONAL HARVESTER
Company, - CAA (120) Appeal No. 87-1
Respondent
Docket No. CAA-120-V-84
FINAL ORDER
International Harvester Company ( Harvester or Respond-
ent)’ owns and operates a truck assembly plant in Springfield,
Ohio. On September 28, 1984, EPA Region V issued a notice
of noncompliance against Harvester under section 120 of the
Clean Air Act, 42 U.S.C. § 7420, and the Agency’s implement-
ing regulations, charging that it failed to comply with certain
emission limitations for volatile organic compounds set forth in
the Ohio State Implementation Plan (SIP) at OAC § 3745-21-
09(U).
After an evidentiary hearing in which Respondent chal-
lenged the notice of noncompliance, the Administrative Law
Judge (ALJ or Judge Vanderheyden) found that Respondent
violated the Ohio SIP, as charged by EPA Region V (Com-
plainant). Prior to the hearing the ALJ had granted Com-
plainant’s motion in limine to preclude Respondent from
' Shortly after these proceedings began International Harvester
changed its name to Navistar International Corporation. To maintain
consistency with~the pleadings and record below, Harvester or
Respondent will be the appellation used in this decision.
D-2
submitting evidence relating to its claim that it could not
comply with the Ohio SIP because of technological and/or
economic infeasibility.
Respondent appeals? the ALJ’s decision granting the mo-
tion in limine, and the initial decision in which the ALJ found
EPA had jurisdiction to proceed against Respondent under
section 120 and that Respondent was in violation of OAC
§ 3745-21-09-( U).3
The initial decision and the ruling on the motion in limine
are affirmed, and all findings of fact, conclusions of law and
reasons therefor in these decisions are adopted and _ in-
corporated by reference in this final decision.4 The parties have
not raised any new matters on appeal that are material to the
outcome; the discussion below is provided only to expand upon
the ALJ’s ruling on the motion in limine.
Discussion
Judge Vanderheyden granted Region V’s motion in limine
to exclude from this stage of the proceedings (which is con-
2 Respondent hand-delivered its appeal to the EPA hearing clerk
on February 17, 1987. However, contrary to its certificate of service,
Respondent did not hand-deliver the appeal brief to the Chief Judicial
Officer on February 17, 1987. The Chief Judicial Officer received
Respondent’s appeal on February 20, 1987.
3 On March 9, 1987, EPA Region V submitted a motion to file a
reply brief to Harvester’s appeal. Since Region V has the right to file
a response to Harvester’s appeal pursuant to 40 CFR §§ 66.91 and
22.30(a)(2), I do not find it necessary to rule on this motion.
* That an appellate administrative tribunal may adopt the find-
ings, conclusions, and rationale of a subordinate tribunal without
extensive restatement is well-settled. United States v. Orr, 474 F.2d.
1365 (2d Cir. 1973); Carolina Freight Carrier Corporation v. United
States, 323 F. Supp. 1290 (W.D.N.C. 1971); In re Electric Service
Company, TSCA Appeal No. 82-4, Final Decision (January 7, 1985:
In re Chemical Waste Management, Inc., RCRA (3008) Appeal No.
84-8, Order Adopting the Presiding Officer’s Initial Decision as Final
Agency Action (September 5, 1984); and cases cited in Ciba Geigy v.
Farmland industries, FIFRA Comp. Dkt. Nos. 33, 34 and 42 (Op. of
the Judicial Officer, April 30, 1981).
Pre a
eth awe 1
D-3
cerned solely with the question of liability, not with assessment
of a penalty) any evidence regarding the alleged technological
and/or economic infeasibility of Respondent complying with
the Ohio SIP. Judge Vanderheydan found nothing in the
language of section 120 that would allow Respondent to assert
technological and/or economic infeasibility as a defense to
liability for noncompliance penalties. In ruling against admis-
sion of Respondent’s evidence on infeasibility, he also relied on
a decision by Administrative Law Judge Harwood, which held
that claims of economic unreasonableness and technological
infeasibility are beyond the scope of section 120 proceedings.
Dietzgen Corp., Docket No. CAA-120-V-84-1 (Oct. 18, 1985)
(Decision on Motion in Limine).
In addition, Judge Vanderheyden noted that confining the
hearing to the issue of liability would serve judicial economy,
and accord with the Congressional intent that section 120
proceedings be resolved within an expedited time frame. See
42 US.C. § 7420(b)(5) (directing EPA to promulgate regu-
lations calling for the Administrator to make decisions on
petitions challenging a notice of noncompliance within 90
days). The ALJ did, however, allow the Respondent to submit
evidence of infeasibility as an offer of proof to be retained in the
record.
I conclude that the ALJ properly excluded the evidence of
infeasibility for the above reasons. Furthermore, since |
construe the section 120 regulations as precluding any consid-
eration of infeasibility for purposes of determining liability, any
claim by Respondent to the contrary must be regarded, in
effect, as an attack on the validity of the regulations, which, of
course, Respondent cannot do now, for the regulations are final
and will not be reconsidered here. Harvester could have
challenged the section 120 regulations in the appropniate circuit
court of appeals within 60 days of promulgation, but is now
precluded by the passage of time from seeking judicial review
of any regulations issued under section 120.5 42 U.S.C.
5 EPA’s section 120 regulations were challenged by industry
( Footnote continued on following page. )
D-4
§ 7607(b)(1). Because Congress thus prohibited untimely
challenges to the validity of section 120 regulations in judicial
proceedings, EPA will not now entertain an attack on the
validity of the regulations in these administrative proceedings.
A major purpose of rulemaking “is to narrow the inquiry”
conducted in adjudications. See National Petroleum Refiners
Association v. FTC, 482 F.2d 672, 675 (D.C. Cir. 1973). If
Harvester or others could attack at will the validity of regu-
lations in administrative proceedings, the scope of the inquiry
would not be narrowed and the rule would not be a rule at all.
The section 120 regulations address technological and
economic infeasibility in a specific and limited manner; there-
fore, it is reasonable to conclude that this is the only manner in
which these claims can be raised in a section 120 proceeding.
The regulations, which appear at 40 CFR Part 66, estab-
lish a two-step procedure that addresses liability and penalties
separately. The instant proceedings involve the first phase only,
that is, whether Respondent is liable for violating the Ohio SIP
and whether Respondent qualifies for an exemption from
paying noncompliance penalties. After a source is determined
to be in violation of the SIP and not exempt, then the parties
proceed to the second phase, wherein a source can challenge
the amount of penalties it owes.® It is during the second phase
that the regulations permit consideration of technological in-
feasibility.
(Footnote continued from preceding page.)
petitioners under 42 U.S.C. § 7607(b). The court, in Duquesne Light
Co. v. EPA, 698 F.2d 456 (D.C. Cir. 1983), upheld the regulations,
and in particular approved EPA’s refusal to promulgate an exemption
from noncompliance penalties for technological infeasibility. The
court did remand some of the regulations, but the matters remanded
are not relevant here.
6 Section 120 directs EPA to assess a penalty against a non-
complying source equal to any economic benefit the source receives by
remaining in noncompliance. 42 U.S.C. § 7420(d).
D-5
EPA recognized the difficulty of assessing a penalty if there
is no existing technology to meet a SIP requirement, and
provided in 40 CFR § 66.21(b) that EPA would calculate the
penalty in such situations based on the cost of control that best
approximates the degree of control required. Thus, a source
that has taken and is continuing to take all possible steps to
achieve compliance, including the installation of the best avail-
able controls, would be considered to be deriving no economic
benefit from its failure to comply. 45 Fed. Reg. 50,096 (July
28, 1980) (preamble to the final § 120 regulations). Since the
regulations specifically allow consideration of a claim of tech-
nological infeasibility during the penalty phase, the omission of
technological infeasibility from the liability stage strongly
implies that it should not be considered for purposes of
determining liability.
Economic infeasibility, in contrast, can be considered
during the liability phase under EPA regulations, but only in the
context of seeking an exemption from noncompliance penalties,
and only if the prerequisite for obtaining an exemption is first
satisfied. An exemption is available for a source unable to
comply with a SIP requirement because of reasons entirely
beyond its control, provided the source has first obtained a
delayed compliance order under section 113(d) of the Act, or a
federal or EPA-approved state judicial decree or order that has
the effect of delaying compliance. 42 U.S.C. § 7420(a)(2)-
(B)(iv); 40 CFR § 66.31. EPA implemented this “inability to
comply” exemption provision in a carefully restricted manner,
in keeping with the Congressional intent that the exemption be
narrowly construed.” 40 CFR § 66.31; See H.R. Report 95-294,
7 During the section 120 rulemaking proceedings, commenters
argued that sources subject to SIP requirements that are tech-
nologically infeasible and sources unable to obtain capital for pollu-
tion control equipment should be exempt from non-compliance
penalties. After considering both comments, EPA rejected the
(Footnote continued on following page. )
D-6
95th Cong., Ist Sess 76 reprinted in 4 A LEGISLATIVE
HISTORY OF THE CLEAN AIR ACT AMENDMENTS OF
1977 at 2543 (1978); 40 CFR § 66.31(c)(5)( 1984) (Inability
to obtain financing for pollution control equipment constitutes a
reason beyond the control of the owner to the extent that such
inability resulted from temporary, verifiable, general market
conditions.). So, if a source meets the prerequisite for the
“inability to comply” exemption, then economic infeasibility
that results from reasons entirely beyond the control of the
source can be raised in these proceedings.
In this case Respondent’s evidence of economic in-
feasibility cannot be considered relevant to show entitlement to
an “inability to comply” exemption because Respondent has
not met the prerequisite for this exemption, i.e., Respondent has
not received a delayed compliance order under section 113(d)
of the Act, or judicial decree allowing it to delay compliance
beyond the deadline in the SIP. In fact, Respondent conceded
that it did not meet the prerequisite for this exemption in the
Joint Pretrial Submittal at 13. Jt. Ex. 1 at 13-14.
Since the statute and regulations bestow this opportunity
for a source to raise economic infeasibility claims in a limited
and specific manner, the conclusion is that such claims cannot
otherwise be raised during these section 120 proceedings.
This conclusion is bolstered by the fact that the Clean Air
Act allows claims of technological and economic infeasibility to
be considered in other situations. For example, Respondent
could have raised its claims of infeasibility with the Ohio
( Footnote continued from preceding page.)
suggestions as contrary to Congressional intent. 45 Fed. Reg. 50,096-
97 (July 28, 1980). Regarding economic infeasibility, EPA stated:
“There is no indication that Congress meant to exempt sources that
were experiencing economic difficulties except where those difficulties
are due to temporary, verifiable market conditions.” Jd. at 50,097. As
previously noted, the regulations were upheld on judicial review.
D-7
Environmental Protection Agency when that agency was
formulating the state implementation plan, see generally 42
U.S.C. § 7410(a), for as long as the national standards are met,
a state can seek to accommodate industries with particular
economic or technological problems by selecting whatever mix
of control devices it desires. Union Electric Co. v. EPA, 427
U.S. 246, 266 (1976). Failing to get an accommodation in the
plan, Respondent could have sought a variance from the SIP
requirement from the state.® Jd.; 42 U.S.C. § 7410(a)(3)(A).
In addition, in an enforcement action under section 113(b), 42
U.S.C. § 7413(b), federal district courts can consider economic
and technological factors, not as a defense to the violation, but
in fashioning the appropriate relief.®
For all the foregoing reasons, I conclude that evidence of
alleged technological and economic infeasibility was properly
excluded from the liability phase of these proceedings. The
initial decision and ruling on the motion in limine are affirmed.
So ordered.
/s/ Ronald L. McCallum
Ronald L. McCallum
Chief Judicial Officer
Dated:
8 Respondent did seek a variance from Ohio EPA after EPA
issued the notice of noncompliance in this case. According to
Respondent, the Ohio EPA approved a variance from the SIP
requirement at issue on February 19, 1986, and subsequently sub-
mitted the variance to EPA for approval.
9 Union Electric v. EPA, 593 F.2d 299, 306 (82h Cir. 1979);
Friends of the Earth v. Potomac Electric Power Co., 419 F. Supp. 528,
535 (D.D.C. 1976); see also Complainant’s Reply Brief at 57.
APPENDIX E
APPENDIX E
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
BEFORE THE ADMINISTRATOR
In the Matter of: :
INTERNATIONAL HARVESTER ; Docket No. CAA-120-V-84-1
COMPANY,
Respondent |
Clean Air Act (Act), Section 120: Respondent held to be a
major stationary source under Section 302 of Act, and as
defined in 40 C.F.R. § 66.3(g), and to be in violation of
applicable emission limitations contained in Ohio State Imple-
mation Plan, Ohio Administration Code (OAC), § 3745-21-
09(U), regarding coating (painting) operations at its
Springfield, Ohio, facility; :* being further held that service of
Notice of Noncompliance aot jurisdictionally defective; that
respondent’s coating lines are subject to regulation under OAC
whether or not they contain ovens, and when coating nonmetal
as well as metal parts; and that respondent not entitled to a
refinishing exemption.
APPEARANCES:
For Complainant: Carey S. Rosemanin, Esquire
Stephen P. Mendoza, Esquire
Patricia L. Winfrey, Esquire
Assistant Regional Counsel
U.S. Environmental Protection
Agency
Region V
230 South Dearborn Street
Chicago, Illinois 60604
For Respondent: Donald W. Rupert, Esquire
James H. Schink, Esquire
Jonathan B. Newcomb, Esquire
Kirkiand & Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
E-2
INITIAL DECISION
Introduction
International Harvester’s primary business activity consists
of the manufacture and sale of medium size and heavy duty
trucks. It engages in certain painting activities associated with
its truck body and manufacturing facilities in Springfield, Ohio.
(Ex. R-10 at 2) It is these painting or coating activities which
are the subject of this litigation. The State of Ohio promulgated
a rule or regulation dealing with the control of volatile organic
compounds (sometimes VOC) which was formally submitted
to the U. S. Environmental Protection Agency (sometimes U. S.
EPA or complainant) as a revision to its State Implementation
Plan (SIP). Upon approval by U. S. EPA it became a federally
enforceable portion of the Ohio SIP. That portion of the SIP in
issue, which will be addressed with particularity below, is found
in the Ohio Administrative Code (OAC) 3745-21-09-(U). On
September 28, 1984, U. S. EPA issued a Notice of Noncom-
pliance (sometimes NON) to respondent* pursuant to Section
120 of the Clean Air Act, 42 U.S.C. 7420 (Act). The complaint
charged that certain painting operations at respondent’s
Springfield, Ohio, plant were in violation of the Ohio SIP. The
OAC 3745-2109-(U) provides, in short, that no owner or
operator of a miscellaneous metal part coating ( painting) line
may permit the discharge into the ambient air of any VOC from
such coating line unless the requirements of either subsections
(U)(1)(a) or (b) are met. The former provides for VOC
emission limitations for various types of coating operations.
The latter provides for equipping the miscellaneous metal part
or product coating line with a capture system and associated
control efficiencies for VOCs. Subsection (U)(2) provides for
*Shortly before the hearing, respondent changed its name to
Navistar International Corporation. In the interest of consistency and
clarity, either “respondent” or “International Harvester” will be used
in this decision.
PN aie ea a i ANB.
re
E-3
certain exemptions. Specificaly at issue here is subsection
(1)(a) (iii) which provides that the VOC content for each
coating employed in the miscellaneous metal part or product
coating line should not “3.5 pounds per gallon of coating,
excluding water, for an extreme performance coating.” Addi-
tionally, the “refinishing” exemption under subsection ( U)(2)
is in contention.
The parties entered into a stipulations of facts which, in
pertinent part, established the following: Respondent operates
10 coating lines at its facility which are alleged to be in violation
of the SIP. These are:
1. POOL (#57 Paint Spray Booth and Bake Oven)
2. POO2 (#58 Medium Duty Body Spray Booth and
3. POO3 (#59 Two-Tone and Repair Spray Booth and
4. P0O4 (#61 Two-Tone and Repair Spray Booth)
5. POO7 (#64 Parts Spray Booth and Bake Oven)
6. POO8 (#77 Paint Repair Booth and Oven)
7. POO8 (#78 Paint Repair Booth and Oven)
8. POO9 (#26 Wheel Paint System)
9. ROO4 (Line | Chassis Spray Booth)
10. ROOS (Line 2 Chassis Spray Booth) (J. Ex. | at 11-12)
Each of the above coating lines paints metal parts and
products. The metal parts and products do not include cans;
coils; metal furniture; large appliances; aluminum or copper
wire prior to its formation into an electromagnetic coil; or the
frame, main body or other exterior sheet metal of an automo-
bile or light duty truck while it is located at an automobile or
light duty truck assembly plant. (J. Ex. 1 at 14) Respondent
stipulated that neither the bake ovens nor water wash systems
E-4
of any of the above mentioned coating lines constitute capture
systems or associated control systems within the meaning of
OAC § 3745-21-09( U)(1)(b); and that there currently exists
no equipment at respondent’s facility that constitute such
systems within the meaning of the provision. (J. Ex. 2 at 1-2)
The coatings used on the above 10 lines are designed for
exposure to year round, outdoor weather; detergents; scouring;
solvents; corrisive materials; corrosive atmospheres; and similar
harsh conditions, which coating may be described as extreme
performance coatings. From January 14, 1983, to the date of
the stipulation, respondent has used coatings on the coating
lines listed below, which coatings have VOC emissions as
follows:
VOC Content, Excluding
Line Water (lbs/ gal. )
POO! (#57) 4.44
POO2 (#58) 4.86
3.92
POO3 ( #59) 4.86
3.92
P004 ( #61) 4.44
POO7 ( #64) 4.86
3.92
POO8 (#77) 3.92
4.44
5.32
POO8 (#78) 3.92
4.44
5.31
POO9 ( #26) 4.86
3.92
R004 ( Chassis #1 ) oar
1
ROOS ( Chassis #2 } 3.92 ui
5.31
Each of these lines emits, and since September 28, 1984, the
date of the NON, continues to emit VOCs into the ambient air.
re
E-5
(J. Ex. 2 at 14-16)* In 1985, respondent emitted approxi-
mately 650 tons of VOCs into the ambient air. (Ex. R-6 at Ex.
A)
ANALYSIS AND FURTHER FINDINGS OF FACT
1. Notice of Noncompliance
Brent Marable (Marable) is an environmental engineer
with complainant. He examined the NON (and other related
documents ) prior to its issuance by the Regional Administrator.
At that time, it contained the “entire package.” It included the
Technical Support Document, and the Instruction Manual for
Section 120 noncompliance penalties. There was an unspeci-
fied time lapse between Marable’s review and mailing of the
envelope. He did not put the package together and mail it to
respondent; nor did he know who mailed the envelope and it
probably was not his secretary. (Ex. C-1 at 2; Tr. 101, 114)
Steven Covey (Covey) is a senior attorney at the respondent’s
headquarters since 1981, working in its law department. He is
the attorney having primary responsibility concerning the
receipt of documents. Incoming mail to respondent is first
sorted in the main mailroom, then sent to the appropriate
departmental mailroom where it is placed in the addressee’s
mailbox. After that, the U. S. EPA envelope in question was
handled by at least two, but no more than three, people before
it was delivered to Covey. In late September or early October
1984, Covey received a letter, and certain documents from
complainant, addressed to Jack Rutherford ( Rutherford), the
then President of respondent. When Covey received the
envelope it had been opened by Rutherford’s secretary. The
documents were paper clipped to the outside of the original
* In the stipulation line ROOI (#92) with a VOC content of 3.92,
4.44 and 5.31 was included. In a pretrial submittal of March 4, 1986
(J. Ex. 2), complainant dismissed with prejudice its claim that line
ROO! at any time since commencement of this action was in violation
of OAC § 3745-21-09( U).
E-6
envelope. The letter referred to various items that were
enclosed. The materials received by Covey contained the NON
and certain sections of the Code of Federal Regulations and the
Rules of Practice, 40 C.F.R. Part 22. The documents received
by Covey did not include copies of the noncompliance penalty
regulations, Technical Support Document and Instruction Man-
ual that were mentioned in the covering letter. Covey reopened
the envelope, and tore it apart before discarding it to make
certain it contained no other materials. He got in touch with
each person who handled the materials to determine whether or
not they removed anything from the envelope. These included
secretaries who handled the opened envelope and Covey was
told that they neither discarded or retained any of the enve-
lope’s enclosures. In Covey’s five year tenure at respondent’s
headquarters he is not aware of any occasion where an item
addressed or directed to him in the respondent’s intra-office
mail was lost. It is found that the Technical Support Document
and the Instruction Manual were not enclosed with the NON
sent to respondent. Covey had the telephone number of
complainant’s counsel, but he did not call him concerning the
missing documents. The missing material related to penalty
calculations. The pleadings show that the missing documents
had been published officially. (45 Fed. Reg. 50122-50240, July -
20, 1980) This citation and its reference to penalty were cited in
both the NON and the transmittal covering letter. Covey
acknowledged that he read the documents sometime after
receiving the NON. Additionally, the pleadings show that
counsel for respondent had dealings with complainant follow-
ing receipt of NON, moving for extensions of time on three
occasions. Further, discovery between the parties was under-
taken following the NON and notwithstanding the absence of
the documents. The pleadings also addressed the penalty
calculations. The missing documents were subsequently sent to
respondent’s counsel. Counsel for respondent admitted that he
was subsequently provided with missing material by com-
plainant’s counsel. Covey stated that he did not know of any
|
E-7
harm that came to respondent as a respondent as a result of the
omission of the documents. (Ex. R-1; Tr. at 101, 114, 122-127,
131-133, 138, 139)
2. Coating Line:
Lines ROO4 and ROOS do not have ovens. William Juris
(Juris ) an official in the Ohio Environmental Protection Agency
(OEPA) drafted Section 38745-21-09( U) and the definition of
“coating line” in the OAC. For the year 1985, ROO4 and ROOS
emitted 236 tons and 79 tons of VOC, respectively, for a total of
315 tons. This accounts for about 50 percent of the total VOC
emissions of all respondent’s lines. (Ex. R-6, Ex. A).
James Nooks (Nooks) is employed by respondent as a
supervisor, Plant Equipment and Layout, and the employee
chiefly responsible for environmental matters. (Ex. R-6; Tr.
219-220). In 1985, respondent, in the perssu of Nooks, applied
to the OEPA for a variance for lines ROO4, ROOS and other
lines, from the requirements of Section 3745-21-09( U), stating
that higher emission limits were needed than that prescribed. A
variance was granted until December 31, 1987. With reference
to ROO4 and ROOS, the “Equipment Description” in the van-
ance states “Miscellaneous Metal parts coating line” (emphasis
supplied ), and the Special Terms and Condition of the variance
state that it is in lieu of the requirements of 3745-
2109(U)(1)(a)(iii). (Ex. C-l, attachments G, H, I) The
resolution of the “coating line” question, however, is essentially
one of legal interpretation and will be treated more fully below
under Discussion and Conclusions of Law.
3. Coating Operations
The second and third issues in this proceeding concern the
painting of non-metallic parts and the question of respondent’s
refinishing operations. Respondent’s operations concerning
these questions will be addressed below.
E-8
Respondent’s facility consists of one building being ap-
proximately 2,000,000 square feet in area, of which about
60,000 square feet are used for two offices. The remainder is
devoted to manufacturing activity, of which the painting
department is one of the discrete units. The coating or painting
operations are conducted in different areas of the plant. The
painting booths in issue vary in size from approximately 1,000
to 9,000 square feet. The coating booths or lines perform the
following operations with reference to the parts that are
painted.
Line No. Parts Coated
POO! Cabs, hoods, etc., 5 percent non-metallic parts
P002 Cabs, hoods, etc., 31 percent non-metallic parts
P003 Cabs, hoods, etc., 50 percent refinishing, 31
percent non-metallic parts
P004 Heavy duty cabs; multi-tone systems; 50 percent
refinishing
P007 Miscellaneous small metal parts; 31 percent
-non-metallic parts
P008 100 percent refinishing of all parts
PO009 Wheels
R004 Medium duty chassis
ROOS Heavy duty chassis
Parts to be coated in the coating lines are conveyed into the
respective booths on overhead conveyor lines. In the case of
lines ROO4 and ROOS the conveyor is installed in the floor.
Once the parts are in the painting booth an operator paints
them with a paint applicator or spray gun. Except for the parts
painted on lines ROO4 and ROOS, the parts are then conveyed
into ovens for drying and baking. Lines R004 and ROOS5 do not
have ovens.
Some of the lines or booths are used to paint non-metallic
parts. Non-metallic parts are made only from non-metallic
materials and have no metal formed on them. The table above
sets forth the percent of non-metallic parts painted in the
respective lines. The percentage was determined by respondent
E-9
on the basis of the surface area of non-metallic parts painted to
the total surface area of all parts painted in the designated
booth.
Some of respondent’s painting booths also serve the func-
tion of “refinishing.” The refinishing operations in terms of the
amount of paint used on the respective lines is also set out on
the table above.
The total amount of paint used by respondent for 1985, its
total VOC emissions, and other pertinent data is reflected in
Exhibit A attached to respondent’s Exhibit 6. With reference to
this, respondent represents that the amount of VOC accounted
for in painting non-metallic materials, and in the refinishing
process, was 104.1 tons in 1985, as reflected in the following
table:
VOC Attn-
Percent Percent buted to Non-
Non- Re- Total Metal and
Line No. Metallic finishing VOC(Tons) Refinishing
POO 1 5 0 83.8 4.2
P002 31 0 125.1 38.8
P003 31 50 18 14.6
P004 0 50 19.7 9.6
P007 31 0 52 16.1
P008 0 100 20.8 20.8
104.1
(Ex. R-6 at 2-6, 11; Tr. 186)
The percentages of non-metallic parts painted and that
used for refinishing varies. Respondent was unable to provide
these percentages for on or about September 28, 1984. It would
have been basically the same as 1985, however, as the same
types of products went through the system. The same paint is
sprayed on metallic parts as on non-metallic parts. Respond-
ent’s lines POO1, POO2, POO3 and POO7 coat or paint both
metallic and non-metallic parts. When the hanger is traveling
through the spray booths on these lines, there are times when
ii ii aii antes rae
E-10
both metal and non-metal parts are attached to it. This would
also have been the case on or about September 29, 1984. (Tr.
187-209, 258-259)
Concerning “refinishing,” respondent’s lines PO03 and
P004 are used 50 percent of the time for this process, and it is
100 percent in the case of line POO8. (Ex. R-6 at 5).
Respondent’s “refinishing”’ process is the touching-up of missed
areas and scratches that occur on its newly painted trucks. It
also embraces quality problems in the paint such as it being too
thin or dirt on the finish. Until these problems are corrected the
trucks are not completed, finished or ready for delivery. (Tr.
221-226) a r
DISCUSSION AND CONCLUSIONS OF LAW
1. Notice of Noncompliance
The pertinent regulation, 40 C.F.R. § 66.12, addresses the
content of the NON. In significant part it provides as follows:
(a) Each notice of noncompliance shall be in writing
and shall include:
* bal *
(3) Instructions on calculating the amount of penal-
ty owed and the schedule for payments. Such
instructions shall include (1) a statement of the
date from which penalties should be calculated
and (ii) a copy of the Technical Support Docu-
ment and the Manual.
The latter documents were not included with the NON. For the
reasons stated in its brief respondent’s position is that com-
plainant did not follow its own regulations to include the
documents; that because an incomplete NON was sent to
respondent it was a fatal omission, jurisdictional in nature; and
U.S. EPA lost jurisdiction to proceed to have the matter
adjudicated. (R. Op. Br. at 13-16) Respondent draws a parallel
—
Pie NCI STD Te ATA A Me PE GB SUTIN I CRS AOMIAY 40 a1 a0 ee
E-11
between a civil complaint and the NON, stating “... just as a
civil complaint is invalid where service of process is not proper,
the incomplete NON sent to [respondent] was not sufficient to
confer jurisdiction on [U.S. EPA].” (R. Op. Br. at 13)
Respondent’s comparision to a civil complaint is not persuasive.
Fed. R. Civ. P. 4 provides for the service of process in the
federal courts and it may be used as an analogy. Rule 4 should
be liberally construed in the interest of doing substantial justice
and the propriety of service in each case should turn on its own
facts. This is consistent with the modern concept that service of
process is primarily a notice giving device. United Food and
Commercial Workers Union v. Alpha Beta Company, 736 F.2d
1371, 1382 (9th Cir. 1984); FTC v. Compagnie de
Saint—Gobain Point-A-Mousson, 636 F.2d 1300, 1312, n. 61
(D.C. Cir. 1980); 4 Wright and Miller, Federal Practice and
Procedure, Civil § 1083. “The Federal Rules reject the
approach that pleading is a game of skill in which one misstep
by counsel may be decisive to the outcome and accept the
principle that the purpose of pleading is to facilitate a proper
decision on the merits.” Conley v. Gibson, 355 U.S. 41, 48
(1957); Hildebrand v. Honeywell, Inc., 622 F.2d 179, 181 (Sth
Cir. 1980). The transmittal letter with the NON provided
adequate notice to respondent referring to the official citation
where the penalty calculations were cited. Respondent’s coun-
sel was subsequently provided with the missing documents and
Covey admitted that no harm befell respondent from the
omission of the documents. Absent a showing of prejudice
resulting from such a procedural defect a dismissal is not
warranted. United Food & Commercial Workers Union v. Alpha
Beta Company, supra. Additionally, respondent had dealings
with complainant following the defective service, applying for
and receiving three extensions. In a similar situation, when the
summons served on defendant did not bear a facsimile of the
clerk’s signature, the seal of the court, or defendant’s name, was
undated, and required a response to the complaint service was
void. However, discovery was going forward and defendant
E-12
obtained three stipulations extending the time to answer. It was
held that defendant would be estopped to deny service of
process. Maricopa County v. American Petrofina, Inc., 322 F.
Supp. 467 (D. C. Cal. 1971). The service of the NON was
sufficient, on the facts of this case, to confer jurisdication on
U.S. EPA to proceed with adjudication.
2. Coating Line
The pertinent language of OAC § 3745-21-09(U) is as
follows:
(U) Surface coating of miscellaneous metal parts and
products.
(1) Except where exempted under paragraph (U)(2) of
this rule, no owner or operator of a miscellaneous
metal parts or product coating line may cause allow or
permit the discharge into the ambient air of any
volatile organic compounds from such coating line,
after the date specified in paragraph (c)(28) of Rule
3745-21-04 of the Administrative Code unless the
requirements of either paragraph (U)(1)(a) or
(U)(1)(b) of this rule are satisfied. (Emphasis
supplied )
(a) The volatile organic compound content of each
coating employed ... does not exceed the least
stringent of any of the following limitations which
= are applicable:
* * *
(iii) 3.5 pounds per gallon of coating, excluding
water, for an extreme performance coating;
To come within the purview of OAC § 3745-21-09( U), some-
times hereinafter Section, there most exist a “coating’line.” The
definition of “coating line” is found in Section 3745-21-01-
(D)(8) of the OAC and reads:
“Coating line” means a series of one or more coating
applicators, flash-off areas and ovens wherein a surface
coating is applied, dred, and/or cured.
E-13
Section 3715-21-01-(D)( 32) defines “oven” to mean “a cham-
ber within which heat is used for one or more of the following
purposes: dry, bake, cure or polymerize a surface coating.”
Respondent argues that a plain reading of the definition of
“coating line” requires that it contain three separate com-
ponents, a coating application, a flashoff area and an oven; that
in any event it must contain an oven. In that lines ROO4 and
ROOS5S do not have ovens respondent’s view is that they do not
come within the scope of the Section. Complainant urges that
the definition is ambiguous; that the definition can be read to
include or not include coating lines that lack ovens; and that the
evidence shows that an oven is not required to bring the coating
activity within the definition.
sbilsoabphin
A quick, surface reading of the definition of “coating line”
) would seem to indicate that its meaning is plain and clear and
that an oven is required. A closer examination shows, however,
that there is some confusion and conflict within the definition.
For example, while the definition appears to demand a “series”
of components it also requires “one or more” of the three
components, applicators, flash-off areas and ovens. The defini-
tion can result in “a series of one.” Ambiguity did and does
exist concerning the definition of “coating line.” Juris is the
| person who drafted the definition of “coating line.”” He pro-
; vided evidence that OEPA field offices had received inquiries
from sources who believed the definition to be unclear con-
cerning whether or not ovens were required in order to come
within the definition. (Ex. C-2, at 3) Where such ambiguity
exists it is incumbent to make a search for legislative intent.
The purpose of the Act and the apparent goal of the OAC is to
provide, among others, for the enhancement of the quality of
the Nation’s air resources so as to promote the public health
} and welfare. Section | of Act, 42 U.S.C. § 7401.
eet
Pe,
Where the language of a statute, as in the case of “coating
line,” may be susceptible of two interpretations, it should be
interpreted in a manner which effectuates rather than frustrates
E-14
the purpose of the legislative draftsman. Shapiro v. United
States, 335 U.S. 1, 31 (1948). This is particularly true where,
as here, remedial legislation is involved. Construction should
be broad in order to effectuate its purposes. Tcherepnin v.
Knight, 389 U. S. 332, 336 (1967). Even assuming, without
concluding, that the definition were clear, respondent’s argu-
ment is unconvincing. Where to follow the plain meaning of
words in a statute will lead, though not to absurdities, to an
unreasonable result, plainly at variance with the policy of the
legislation as a whole, the purpose of the statute, rather than the
literal words, is followed. United States v. American- Trucking
Association 310 U.S. 534, 543 (1940). When aid to construc-
tion of the meaning of words, as used in a statute is available,
there can be no rule of law which forbids its use, however clear
words may appear on superficial examination. Train v. Colora-
do Public Interest Group, 426 U.S. 1, 10 (1976).
The intent of the Ohio legislative is found in part from the
evidence provided by Juris that the definition was not intended
to exclude coating lines which lacked ovens. To eliminate any
ambiguity and concerning the definition, in 1985 Juris revised
the definition to clarify OEPA’s intent that a “coating line”
need not have an oven. In further support of its intent and
interpretion of the definition in issue, in a communication dated
March 3, 1986, OEPA advised the U. S. Department of Justice
that it interpreted “coating line” to apply to coating activities
which do not make use of either flash-off areas or ovens. (Ex.
C-5) An administrative agency’s interpretation is entitled to
great deference. Chevron U.S.A. Inc. v. National Resources
Defense Council Inc., U. 3. my OF & Bead 694,
(1984). The Agency’s interpretation is controlling unless
plainly enroneous. United States v. City of Painesville, 644 F.
2d 1186, 1190 (6th Cir. 1981), cert. denied, 454 U.S. 894
(1981).
Respondent’s argument contains an additional frailty. To
illustrate, Section 3745-21-09(U)(1)(a)(ii) concerns mis-
E-15
cellaneous metal part or product coating lines that apply “zinc
rich primer coating.” This term is defined to mean “any coating
which contains primarily zinc pigment . . . and which is dried at
ambient or inplant temperature.” Section 3745-2i1-01-(D)(51).
Such drying occurs without an oven. It, therefore, follows by
definition that Section 374§-21-09(U) applies to: coating lines
that do not have ovens.
Respondent’s coating lines without ovens, more particu-
larly lines ROO4 and ROOS, come with the scope of the
definition of “coating line” and are subject to the: requirements
of OAC § 3745-21-09( U).
3. Coating Operations
OAC § 3745-21-09(u)(2) provides that the requirements
of the Section shall not apply to certain operations. Among
such operations is “the application of a refinishing coating to
motor vehicles.” Section 3745-21-09( U)(2)(c). “Refinishing”
and “motor vehicles” are not defined. Coating lines P003, P004
and P008 are involved in respondent’s refinishing operations.
In seeking exemption to the Section respondent relies
principally upon the dictionary definition of “refinish” to
support its position, which definition means “to give a new
surface.” It is argued that the common meaning of “refinish-
ing’ encompasses the application of paint to give a new surface
to a previously painted surface; that trucks that have been
“finished” are inspected before they are marked for delivery;
that trucks with scratches or other problems in the paint finish
are then refinished to correct these defects; and that respond-
ent’s operations come within the common meaning of “refinish-
ing.”” (Resp. Op. Br. at 25-27) However, the black and white of
the refinishing exemption lends credence to complainant’s
interpretation that respondent is not engaged in “refinishing.”
In short, respondent’s additional operations are necessary to
complete or finish the product, not to refinish it.
E-16
The position taken by the respondent is somewhat surpris-
ing in that it had been advised previously of the interpretation
of OEPA concerning “refinishing coating.” In 1981, the Region-
al Air Pollution Control Agency wrote to Nooks responding to
his question concerning “refinishing.” The respondent, through
Nooks, was advised that the intent and interpretation of OEPA
concerning the refinishing exemption were that “refinishing
coating” refers to work done by body shops during the repair of
damaged vehicles and it did not apply to work done by a
vehicle manufacturer who performed top coat repair, and that
the refinishing exemption did not apply to these operations of
respondent. (Ex. C-3; Tr. 271) This position is reinforced by
Juris, who drafted the refinishing exemption. His testimony
showed that the intent of the “refinishing” exemption was that
it apply to body shops in the motor vehicle after market, and
OEPA did not mean that the exemption apply to paint repair by
assembly plants prior to delivery and sale of the motor vehicle.
(Ex. C-2 at 5) Assuming, without concluding, that there exist
some question concerning the meaning of “refinishing” as used
in the exemption, such doubt must be resolved in favor of
complainant because of the evidence offered by Juris and that
expressed in Exhibit C-3. For the reasons mentioned above
concerning coating lines, great weight and deference must be -
accorded to the intent and interpretation of OEPA, the drafters
of the refinishing exemption. Lines P003, P004, and P008 do
not come within the “refinishing” exemption of OAC § 3745-
09-(U)(2)(c) and such lines are subject to OAC § 3745-21-09-
(U)(1).
The Section and its subsections (1) and (a) apply to
“miscellaneous metal part or product” coating lines. The
testimony of Juris showed OEPA intent and interpretation to
be: (1) That the Section does not regulate coating of pure non-
metallic parts; (2) This is so even if the non-metallic part is
attached to the same hanger as the metal part during the
coating or painting process; and (3) The Section does not
E-17
regulate coating of non-metallic parts where these parts are not
physically attached to the metallic parts. (Ex. R-13 at 2; Tr.
291-296) It does not necessarily follow, however, that because
non-metallic parts within a coating line are not regulated that
the entire coating lines does not come within the purview of the
Section. OEPA interpretation of the Section is that coating lines
which coat both metallic and non-metallic parts are subject to
regulation under the Section. (Exs. C-l, attachment J; C-6 at
7) This is the case even though the coating line coats 90 percent
non-metallic parts and 10 percent metal parts;—it remains a
“miscellaneous metal part or product coating line.” (Tr. 339)
Also to be considered on this issue is the opinion of Nooks.
Though a non-lawyer, he was perforce well acquainted with,
and had a working knowledge of, the Section as it applied to his
employer’s facility. He had informed his superiors that in his
opinion all the lines* listed on page five of his verified affidavit
were in violation of the Section. (Tr. 219-220) OAC § 3445-21-
09(U) applies to respondent’s coating lines POO1, POO2, P003
and P007.
ULTIMATE CONCLUSIONS ‘
1. Respondent’s coating lines 57 (P0011), 58 ( P002), 59 ,
(P003), 61 (P004), 64 (P007), 77 ( P008), 26 ( P009), chassis
line | (ROO4) and chassis line 2 (ROO5) at its Springfield,
Ohio, Assembly Plant are subject to the Ohio Administrative
Code § 3745-21-09(U)(1).
2. Respondent caused, allowed and permitted the dis-
charge of volatile organic compounds into the ambient air from
* This is respondent’s Exhibit 6. Among the lines listed on page
five are POO!, P0O2, POO3 and POO7, which lines are used in part to
paint non-metal parts. -
esimenenennnineaeieasaaa
E-18
the aforementioned coating lines which exceed the emission
limitation of 3.5 pounds per gallon of coating for extreme
performance coatings.
3. Respondent’s coating lines do not meet the require-
ments of Ohio Administrative Code §§ 3745-21-09( U)(1)(a)
or (b); nor are any of the respondent’s coating lines exempt
under § 3745-21-09( U)(2) of the aforementioned Code.
4. Respondent is a major stationary source under section
302 of the Act, 42 U.S.C. § 7602, and as defined in 40 C.F.R.
§ 66.3(g) because it directly emits on has the potential to emit,
over 100 tons of volatile organic compounds into the ambient
air.
5. The failure of complainant to enclose a copy of the
penalty calculation Technical Support Document and Instruc-
tion Manual with the Notice of ‘Noncompliance at the time of
its service upon respondent had no effect on the validity of the
Notice of Noncompliance, and did not impair the jurisdiction of
U.S EPA to proceed with adjudication of the proceeding.
6. Respondent’s coating lines ROO4 and ROOS are subject
to the Ohio Administrative Code § 3745-21-09(U)(1) in that
coating lines are subject to regulation whether or not they have
ovens.
7. The exemption in the Ohio Administrative Code
§ 3745-21-09(U)(2)(c) for “the application of a refinishing
coating to motor vehicles” does not apply to any coating line
involved in this proceeding.
8. Coating lines which coat both metal and non-metal
parts or products are “miscellaneous metal part or product
coating line[s|” subject to Ohio Administrative Code § 3745-
21-09( U).
E-19
Respondent has violated the Ohio Administrative Code
§ 3745-21-09(U)(1)(a)(ili) concerning each of the coating
lines mentioned above in paragraph “1” since the issuance of
the Notice of Noncompliance on September 24, 1984, and is
subject to a penalty under Section 120 of the Clean Air Act.
/s/ Frank W. Vanderheyden
Frank W. Vanderheyden
Administrative Law Judge
Dated: December 19, 1986
APPENDIX F
F-]
APPENDIX F
UNITED STATES
ENVIRONMENTAL PROTECTION AGENCY
ENVIRONMENTAL PROTECTION |
AGENCY
Complainant
A Docket No. CAA-120-V-84-1-A
INTERNATIONAL HARVESTER
CORPORATION,
Respondent
RULING
This confirms the oral ruling of the undersigned of Novem-
ber 7, 1985 GRANTING complainant’s motion in limine ( mo-
tion) served September 9, 1985, which ruling was iterated in a
prehearing conference report of November 12, 1985. The
respondent’s Motion for Reconsideration of November 11.
1985 is DENIED, and its submission of December 3, 1985 has
been reviewed. The parties are well aware of their arguments
advanced concerning the motion and they will not be repeated
here, except to the extent deemed necessary by the undersigned
for the purposes of this ruling.
By way of background, the present proceeding originates
under the Clean Air Act, 42 U.S.C. § 7401, et seg. (Act), more
specifically, Section 120 thereof, 42 U.S.C. § 7420. The motion
sought to preclude the introduction into evidence, in the liability
stage of the Section 120 proceeding, of any evidence regarding
alleged technical or economic infeasibility of respondent to
comply with the state implementation plan (SIP) of the State
of Ohio.
F-2 ;
As amended in 1970,'! the Act gave to the states the
responsibility for formulating pollution measures; they had to
establish minimum compliance requirements. Union Electric
Co. v. EPA, 427 U.S. 246, 256-257 (1976). However, the
complainant (sometimes U.S. EPA) has the ultimate responsi-
bility for the attainment of air quality standards. Train v.
National Resources Defense Council, 421 U.S. 60, 78-79
(1975); Ohio Environmental Council v. EPA, 593 F.2d 24, 31
(6th Cir. 1979). The Act contains two civil penalty provisions.
One of these gave the federal court jurisdiction, Section 113(b),
42 U.S.C. § 7413(b) and, pertinent to this ruling, Section 120,
which provides for an administrative proceeding. U.S. EPA has
the option, however, as it chose here, of proceeding under both
sections. 42 U.S.C. § 7420(f). Congress has precluded federal
courts from staying Section 120 proceedings prior to the court’s
final determination.2
One of the main purposes of Section 120 was to enable
complainant to recover from an alleged violator any economic
benefit it may have derived by noncompliance. That section
was added because Congress anticipated that even the aug-
mented civil and criminal arrangement may not create
sufficient incentives for source or alleged violators to comply
with the air quality standards. Duquesne Light v. EPA, 698
F.2d 456, 463 (D.C. Cir. 1983). To implement Section 120, the
complainant promulgated regulations,3 which provide for two
separate hearings. The first hearing would address the issue of
liability, or whether or not source was in violation of applicable
legal requirement or entitled to certain specified exemptions.
(40 C.F.R. § 66.41). Should it be determined that a source is
‘Pub. L. 91-604, 84 Stat. 1676, 1680.
2“In any action respecting . . . the administration or enforcement
of Section 7420... no court shall grant any stay, injunctive or similar
relief before final judgment by such court in such action.” 42 U.S.C.
7607(g).
340 C.F.R. Part 66, effective October 27, 1980.
F-3
in violation of the SIP, it is required to submit a penalty
calculation as set out in 40 C.F.R. Part 67, Appendices A and B.
A second hearing may be granted by complainant to determine
whether or not respondent’s penalty calculations were per-
formed correctly. 40 C.F.R. Part 66, Subpart F. Early in the
proceeding, respondent conceded that the hearing was to be
bifurcated and that the underlying issue was the extent to which
it was not in compliance with the Ohio Rule, and that any final
determination of penalty owed should “‘await the conclusion of
that proceeding,” and that the Regional Administrator of
complainant “stay further penalty calculation procedures untl
the proceeding before Judge Vanderheyden is finally adjudi-
cated.” (Petition for Reconsideration of Penalty Calculation,
May 20, 1985, at 8, 9). The Regional Administrator concurred
in this position. (Decision of Petition for Reconsideration of
Penalty Calculation and Recommended Disposition, July 8,
1985, at 4). The parties have thus agreed that a Section 120
proceeding contemplates a bifurcated hearing, first addressing
liability and thereafter the penalty queston if required.
From the inception of this matter on September 28, 1984,
when the Regional Administrator of the complainant issued his
Notice of Noncompliance, it has had a long and agonizing
journey. Alongthe way, the Regional Administrator granted a ;
hearing to respoudent confined solely to the issues of whether
or not the latter was in violation of certain provisions of the
Ohio Rules and whether or not it was entitled to an exemption
under 40 C.F.R § 66.31. The claims of respondent that it may
assert claims concerning either technical or economic in-
feasibility as a defense in the liability stage of the proceeding
rest upon a soggy legal basis. On the facts herein, one will
search Section 120 in vain to find support for this thesis.* This is
4 Any reliarce by respondent upon 42 U.S.C. 7420(a)(2)(B)-
(iv) would be misplaced. First, it would have to demonstrate that
(Footnote continued on following page.)
F-4
butressed by the legislative history, in which Senator Muskie, in
a dialogue with Senator Stafford, stated that the question of
feasibility may not be raised as a defense to a delayed
compliance penalty or other enforcement action. 3 A LEGIS-
LATIVE HISTORY OF THE CLEAN AIR ACT AMEND-
MENTS OF 1977, 341, 346-7; Friends of the Earth v. Potomac
Electric Power Co., 419 F. Supp. 528, 535 (D.D.C. 1976).
Respondent’s claims of technical or economic infeasibility
are not defenses in the liability portion of the hearing, and
evidence pertaining thereto is not germane to the question of
whether or not respondent is in violation of the Ohio Rule in
contention and whether or not it is entitled to an exemption
under 40 C.F.R. § 66.31. It may be apposite at this juncture to
observe that granting the motion expedites the proceeding and
thus serves the public interest. A proceeding confined to
respondent’s liability should presumptively be concluded with
greater alacrity than one where a blizzard of data on the issue
of infeasibility would most certainly impede and protract the
litigation. Such factors of economy, efficiency and time, in
addition to the legal authority mentioned above, have weighed
heavily in favor of granting the motion.
Turning now to the matter of offer of proof, respondent’s .
thinking that it may make same in any manner it selects is
rejected. To accede to respondent’s thinking, including making
(Footnote continued from preceding page.)
“inability” to comply resulted from reasons “entirely beyond the
control” of the source. Additionally, however, the subsection contains
the condition, that the source shall be exempt from a noncompliance
penalty if it can demonstrate that the failure to comply was due solely
to “an inability to comply ... for which inability the source received
an order under Section 7413 (d) ... (or an order under 7413 of this
title issued before August 7, 1977)....” (emphasis supplied) This
condition is echoed in 40 C.F.R. § 66.31(a)(4). Respondent con-
ceded that it does not meet these qualifications. (Joint Pretrial
Submittal Facts That Have Been Established by the Pleadings,
Stipulations or Admissions by Parties. June 14, 1985, at 13, par. 9).
F-5
offers of proof by oral testimony, is like an elephant sitting ina
rowboat. It is just not the right vehicle. Among its numbing
liabilities is that it would increase the size of the transcript, the
costs associated with same, burden and confuse the record, and
inordinately lengthen the hearing. Common garden in-
telligence commands that offers of proof, with particular refer-
ence to technical or economic infeasibility, be governed by the
C.F.R. § 22.20(b). This section of the Consolidated Rules of
Practice provides, in short, that such offers for excluded oral
testimony shall consist of a brief statement describing the nature
of the evidence excluded. Concerning offers of proof for
excluded documents or exhibits, these shall be in the form of
insertion into the record as excluded or rejected documents or
exhibits. This procedure is adequate to protect any real or
imagined procedural due process rights of the respondent, and
also to provide the Administrator on appeal with sufficient
knowledge to make a determination concerning whether or not
the evidentiary rulings were erroneous and prejudicial.
Administrative agencies are not bound by the standards of
the Federal Rules of Civil Procedure. (Fed. R. Civ. P.). They
enjoy “wide latjtude” to fashion their own rules of procedure
for the discharge of their duties. Oak Tree Farm Dairy, Inc. v.
Block, 544 F. Supp. 1351, 1356, n.3 (E.D. N.Y. 1982).
Discovery is controlled essentially by 40 C.F.R. § 22.19(f).
Though not mandatory, and where appropriate, the Fed. R.
Civ. P., more particularly Sections 26(b)(c), however, are
guidelines in discovery issues. In pertinent part, Fed. R. Civ. P.
26(b)( 1) provides that: “The .. . extent of use of the discovery
methods ... (a) shall be limited by the court if it determines
that... . (iii) the discovery is unduly burdensome or expensive,
taking into account the needs of the case .. . and the importance
of the issues at stake in litigation .. . .” (emphasis supplied) In
that evidence of infeasibility is inadmissible in the liability
hearing, it does not serve the “needs of the case” and is of little
“importance.” Most important, however, is that to permit
F-6
discovery on the issue of infeasibility would, under the Rules of
Practice of U.S. EPA, “unreasonable delay the proceeding” and
not have “significant probating value.” 40 C.F.R.
§ 22.19(f)(1), (iii). For the foregoing reasons discovery should
be denied even where alleged evidence is sought for the
purposes of making offers of proof concerning purported in-
feasibility. To permit an exception for such purposes would
vitiate a large part of this ruling in that it would either protract
the proceeding or be unduly burdensome.
There is abundant and persuasive authority to confine
discovery solely to the issue of respondent’s liability and
postponing any discovery regarding infeasibility until such time
when, and if, it is necessary to enter the penalty phase of the
hearing. Sinclair Refining Company v. Jenkins Petroleum
Process Company, 289 U.S. 689, 693-694 (1933); Orgel v. Clark
Boardman Co., 20 F.R.D. 31, 32 (S.D. N.Y. 1956); 4 Moore’s
Federal Practice, par. 26.56[5]; Wmght and Miller, Federal
Practice and Procedure, § 2040. Discovery by the parties shall
be confined to the issue of respondent’s liability and its
entitlement to an exemption pursuant to C.F.R. § 66.31. No
discovery will be ordered on the questions of technical or
economic infeasibility. However, much discretion is accorded
the undersigned in matters of discovery. Where appropriate,
some flexibility should be applied in order not to have a party
return to the same source for discovery in the penalty phase of
the hearing for possible evidence that could have been obtained
during discovery in the liability stage. Judicial discretion and
economy would suggest that discovery on infeasibility not be
foreclosed completely, and that some balance be struck where
possible, consonant with the thrust of this ruling. Therefore,
discovery will be permitted to the following extent only. If a
witness voluntarily wishes to provide information on in-
feasibility he may do so, provided this does not impede the
proceeding generally, and in particular with reference to the
pretrial schedule and date for commencement of the hearing
—————— ee
| F-7
which will be set out in an order to be issued shortly by the
undersigned.
IT IS RULED, for the reasons mentioned above, that the
undersigned’s rulings and order set out in his PHC report of
November 12, 1985 are confirmed, as modified by the order of
i December 10, 1985 canceling the previously scheduled hearing
| date. It is reiterated that complainant’s motion is GRANTED.
IT IS FURTHER RULED that:
1. The hearing shall consist of two phases. The first phase
of the hearing shall be exclusively with the question of respond-
ent’s liability, concerning whether or not it violated certain
provisions of State Air Laws of Ohio, and whether or not the
| respondent is entitled to an exemption pursuant to 40 C.F.R.
| § 66.31, as set out by the Regional Administrator of the -
complainant on page five of his Decision on Petition for
Reconsideration dated April 3, 1985.
2. In the first phase of the hearing, any evidence offered by
respondent concerning claims of technical or economic in-
feasibility in complying with the Ohio SIP do not constitute
defenses to liability for violation thereof.
3. Claims of technical and/or economic infeasibility with
the Ohio SIP are irrelevant to a determination of liability for
violation, and that they shall not be admitted into evidence
during the first phase of the hearing.
4. Upon motion by respondent, evidence that is rejected
for the reason that it concerns infeasibility may be retained in
the record as an offer of proof on the issue of liability for a
penalty (second stage of hearing). The rejection of such
evidence shall be without prejudice to respondent’s mght to
reoffer such evidence in the event the proceeding enters the
second phase, addressed to the amount of penalty.
5. Respondent may make an offer of proof only in strict
conformance with 40 C.F.R. § 22.23(b). Specifically, respond-
aie
F-8
ent may not make an offer of proof in any manner it selects and
may not make an offer of proof by means of live testimony.
6. Discovery shall be limited to the issue of respondent’s
liability for violation of Ohio Rule 3745-21-09(U). Nor may
discovery be used to obtain evidence concerning infeasibility for
the purposes of making offers of proof on such question.
Notwithstanding this limitation, if a witness voluntarily wishes
to provide information on both the liability and penalty issues,
including infeasibility, the witness may do so. However, such
voluntary discovery may in nowise impede the liability phase of
the hearing, or the commencement of same, and must be
accomplished within the pretrial discovery schedule set by the
undersigned. No order will issue compelling discovery on
either technical or economic infeasibility, questions reserved
solely for the second phase of the hearing concerning penalty
calculation.
7. All direct testimony shall be in the form of verified
written statements instead of direct oral testimony.
/s/ Frank W. Vanderheyden
Frank W. Vanderheyden
Administrative Law Judge
Dated: December 13, 1985
Washington, D.C.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.