Petitioners Brief — Costle v. Pacific Legal Foundation

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No. 78-1472 | P 4 1979

Eee ROBAK JR., CLERI

Iu the Supreme Court of the United States

OCTOBER TERM, 1978

DOUGLAS M. COSTLE, ADMINISTRATOR OF THE

ENVIRONMENTAL PROTECTION AGENCY, PETITIONER

PACIFIC LEGAL FOUNDATION, JOHN B. KILROY, THE

CITY OF TORRANCE, AND THE CITY OF LOS ANGELES

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF FOR THE PETITIONER

WADE H. MCCREE, JR.

Solicitor General

JAMES W. MOORMAN

Assistant Attorney General

LOUIS F. CLAIBORNE

Deputy Solicitor General

WILLIAM ALSUP

Assistant to the Solicitor General

ANGUS MACBETH

RAYMOND W. MUSHAL

Attorneys

Department of Justice

Washington, D.C. 20530

JOAN Z. BERNSTEIN

General Counsel

WILLIAM F.. PEDERSEN

Deputy General Counsel

LIsA K. FRIEDMAN

Attorney

Environmental Protection Agency

Washington, D.C. 20460

INDEX.

Page

Opinion below ____. 1

5 EER aa or a ET 1

Question presented _.....____.__. 2

Statutes and regulations involved _....__________ 2

SNORE aise acrecttonines 6

Introduction and summary of argument ____. 17

Argument 21

I. An agency may subject a statutory “op-

portunity for public hearing” to reason-

able threshold requirements including a

requirement that the applicant file a

request setting forth a material issue

Oe csicenasatecen 21

II. EPA’s regulations are consistent with

the legislative history of the Act __._. 26

III. There is no presumption that Congress

mandated adjudicatory hearings in all

ee ee iain a 29

Conclusion 37

CITATIONS

Cases:

Bowles v. Willingham, 321 U.S. 503 _._. 34

Camp v. Pitts, 411 U.S. 138. 29, 33

Citizens to Preserve Overton Park, Ine.

v. Volpe, 401 U.S. 402 ; ae 33

Denver Stock Yard v. Livestock Associa-

Cie Ge ee ee 19, 22

Dunlop v. Bachowski, 421 U.S. 650 ___ 33

Cases—Continued Page

Dyestuffs and Chemicals, Inc. v. Flem-

ming, 271 F.2d 281, cert. denied, 362

US. OER nn 25

E. I. duPont de Nemours & Co. v. Train,

430 US. 193 cutee 21, 33, 34, 36

EPA v. State Water Resources Control

Board, 426 U.S. 200 0 10, 36

FCC v. Pottsville Broadcasting Co., 309

110 Se! | nm 19, 21

FCC v. Schreiber, 381 U.S. 279 21, 22

FPC v. Texaco Inc., 377 U.S. 33 — 20, 22

ITT v. Local 134, Int'l Bro. of Elec. Work-

ers, 419 US. 68... 29

Independent Bankers Association of Geor-

gia v. Board of Governors, 516 F.2d

1906 30

Marathon Oil Co. v. EPA, 564 F.2d 1253.. 31

National Coal Operators’ Association v.

Kleppe, 423 U.S. 388 — 20, 23, 24, 34

New England Divisions Case, 261 U.S.

184 te 34

Pacific Legal Foundation v. Quarles, 440

F. Supp. 316, appeal pending, No. 77-

8844 (Sth Clr.) ice. 15

PLF v. Andrus, Civ. No. C-78-3464 AAH

(C.D. Cal., filed Sept. 7, 1978) — 15

Permian Basin Area Rate Cases, 390 U.S.

747 = 34

Seacoast Anti-Pollution League v. Costle,

G73 FBE BiB. cickcncadeeeae 31

Sun Oil Co. v. FPC, 256 F.2d 233, cert.

denied, 358 U.S. 872 25

Touche Ross & Co. v. Redington, No. 78-

30% (June 18, 1979) —... ; 28

Cases—Continued Page

Train v. NRDC, 421 U.S. 60 —. 36

United States v. Allegheny-Ludlum Steel

ANNE MEI IE «cscs cciancesseiansecanseasnees 29, 30

United States v. City of Los Angeles, No.

77-3047 HP eae Cal., filed Aug. 12,

8 es a ie ae 17

United States v. Consolidated Mines &

Smelting Co., 455 F.2d 4382 25

United States v. Florida East Coast Ry.,

teins . 29, 31

United States v. Southwestern Cable Co. “

SIE IR a ee 34

United States v. Storer Broadcasting Co.,

I 19, 22

United States Steel Corp. v. Train, 556

Sa NE 31, 34

Vermont Yankee Nuclear Power Corp. v.

aan Gee Us O10 —.................. 21, 23

Weinberger v. Bentex Pharmaceuticals,

RO RN I cries 34

Weinberger v. Hynson, Westcott & Dun-

ving, Inc., 412 U.S. 609 ——........ 20, 24, 25

Wong Yang Sung v. McGrath, 339 U.S.

3 Oe 30

Statutes, rules and regulations:

Administrative Procedure Act, 5 U.S.C.

551 et seq.:

Saree wears) 32

OS ae 32

ae 31, 32, 35

“SS ae 32

oa 35

| eee 37

Oe 82, 33

5 U.S.C. 706 82

Statutes, rules and

regulations—Continued

Endangered Species Act, 16 U.S.C. 1536..

Federal Coal Mine Health and Safety Act,

ee oe gg oy ee ee

Federal Clean Water Act, Pub. L. No. 95-

217, 91 Stat. 1566 (33 U.S.C. 1251

OS GUE skint Sececaeecenee

Federal Clean Water Act (Federal Water

Pollution Control Act), 33 U.S.C. 1251

et seq.:

Section 101(a)(1), 338 U.S.C. 1251

TD > cineca tecnico

Section 101(e), 33 U.S.C. 1251(e)....

Section 301, 33 U.S.C. 1811 —

Section 301(a), 33 U.S.C. 1311(a)..

Section 301(b), 33 U.S.C. 1311(b)..

Section 301(b)(1)(B), 33 U.S.C.

pi be ok) eae ine ee

Section 301(h), 33 U.S.C. 1311(h)..

Section 307(a) (2), 33 U.S.C. 1317

I ih ise eccsielapintaentorinimnicn 20,

Section 307(b) (1), 33 U.S.C. 1317

(b) (1) —_—______

Section 311(b) (6), 33 U.S.C. 1321

OL | PRs ae ea a Rae

Section 311(h), 33 U.S.C. 1311(h),

as amended by Pub. L. No. 95-217,

Section 44, 91 Stat. 1584

Section 311(i), 33 U.S.C. 1811(i),

as amended by Pub. L. No. 95-217,

Section 45, 91 Stat. 1584

Section 312(g), 33 U.S.C. 1822(g)..

Section 312(j), 33 U.S.C. 1822(j) ~

Section 316(a), 33 U.S.C. 1326(a)..

Page

——

28, 31

Statutes, rules and

regulations—Continued Page

Section 316(d), 33 U.S.C. 1326(d).. 28

Section 402, 33 U.S.C. 1342 _6, 7, 20, 22, 24,

26, 29, 30, 32, 35

Section 402(a)(1), 33 U.S.C. 1342

ee ena 2 2, 6, 7, 16, 17

Section 402(b), 38 U.S.C. 1342(b).. 36

Section 402(b)(3), 33 U.S.C. 13842

CORP D _ erniivichissiocssteninisstanagsgene 36

Section 403(a), 38 U.S.C. 1848(a).. 11

Section 404(a), 33 U.S.C. 1844(a).. 27, 28

Section 404(c), 33 U.S.C. 1344(c).. 27

Section 502(7), 33 U.S.C. 1862(7).. 6

Section 502(8), 33 U.S.C. 1862(8).. 6

Section 502(9), 33 U.S.C. 1862(9).. 6

Section 502(10), 33 U.S.C. 13862

CGD ~ insisisaribidinccuiiccigpinniseneiciaeeeeiamaca 6

Section 502(12), 33 U.S.C. 13862

CRIRY .sicasscsbisedblaccoossigninitcelpialicaiamaananemn 6

Section 507(b), 33 U.S.C. 1867(b).. 27, 28

Section 507(e), 33 U.S.C. 1367(e).. 31

Section 509(b), 33 U.S.C. 1869(b).. 17

Section 509(b) (1), 33 U.S.C. 1369

COPE) tinct 9

Section 509(b) (2), 33 U.S.C. 1369

tL} { Spenneer ene te RE a 9,12

Section 511(c), 33 U.S.C. 1371(c).. 15

OG TG, Te ase nctkcne cae 28

ie | eer LE. 28

Cal. Water Code § 13260 (West 1971) _ 10

OG, Te Ss ee tee est 24

Beko ORP fT) | Rca orm oe : 25

GO Gi SE fii ee 36

CP a FOS Se. deh ae

40 C.F.R. 125.32. ne

Statutes, rules and

regulations—Continued

40 C.F.R. 125.32(a)(2)

0 OF R 1M

40 C.F.R. 125.85

40 C.F.R. 125.35(d) (2)

Page

Siidbeias 12, 36

40 C.F.R. 125.36 _

40 C.F.R. 125.36(b)

40 C.F.R. 125.36(b) (1)

40 C.F.R. 125.36(b) (2)

40 C.F.R. 125.36(c) (1) (ii)

40 C.F.R. 125.36(c) (i)

40 C.F.R. 125.36(c) (ii)

40 C.F.R. 125.36(m)

40 C.F.R. Part 133 _

Miscellaneous

A Legislative History of the Water Pollu-

tion Control Act Amendments of 1972,

93d Cong., Ist Sess. (1973) _20, 27, 29, 31, 32

Administrative Procedure Act, Legisla-

tive History, 79th Cong., 2d Sess.

(1944-1946)

Attorney General’s Manual on the Ad-

ministrative Procedure Act (1947) __. 30

39 Fed. Reg. 27079 (1974)

44 Fed. Reg. (1979):

pp. 32884-32885

sisal 2

p. 32885

p. 32887

pp. 32887-32892

pp. 32931-32933 ____

» Oe ee

pp. 32939-32940 ___

co CO GS CO CO CO CO YY

a ee pwrenmnenreaenay

oo Renee

VII

Miscellaneous—Continued

p. 34784

Iu the Supreme Court of the United States

OCTOBER TERM, 1978

No. 78-1472

DOUGLAS M. COSTLE, ADMINISTRATOR OF THE

ENVIRONMENTAL PROTECTION AGENCY, PETITIONER

Vv.

PACIFIC LEGAL FOUNDATION, JOHN B. KILROY, THE

CITY OF TORRANCE, AND THE CITY OF LOS ANGELES

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

BRIEF FOR THE PETITIONER

OPINION BELOW

The opinion of the court of appeals is reported at

586 F.2d 650.

JURISDICTION

The judgment of the court of appeals was entered

on August 9, 1978. The government’s timely petition

for rehearing with suggestion of rehearing cii banc

was denied on November 24, 1978. By order dated

February 12, 1979, Mr. Justice Rehnquist extended

the time within which to file a petition for a writ of

certiorari on March 23, 1979, and the petition was

filed on that date. The petition was granted on June

11, 1979. The jurisdiction of this Court is invoked

under 28 U.S.C. 1254(1).

(1)

QUESTION PRESENTED

Whether Section 402(a)(1) of the Federal Clean

Water Act, 33 U.S.C. 1342(a)(1), which requires

the Environmental Protection Agency to provide “op-

portunity for public hearing” prior to any issuance,

denial, or modification of a discharge permit, requires

EPA to conduct APA-type adjudicatory hearings be-

fore taking acticn on such permits where, after due

notice of the proposed action, the only request for a

hearing raises no material issue of fact.

STATUTES AND REGULATIONS INVOLVED

1. Section 402(a)(1) of the Federal Clean Water

Act, 33 U.S.C. 1342(a)(1), provides in part as

follows:

[T]he Administrator may, after opportunity

for public hearing, issue a permit for the dis-

charge of any pollutant, or combination of pol-

lutants * * *,

2. Sections 125.32, 125.34, and 125.36 of Title 40,

Code of Federal Regulations, as promulgated by the

Environmental Protection Agency on July 24, 1974,

state in part as follows (39 Fed. Reg. 27079) :'

§ 125.32 Public notice.

(a) Public notice of the proposed issuance,

denial or modification of every permit or denial

shall be circulated in a manner designed to in-

1 These regulations have since been revised, but none of the

revisions affects any of the matters at issue here. See 44 Fed.

Reg. 32854 (June 7, 1979) and note 5, infra.

ete

form interested and potentially interested per-

sons of the discharge and of the proposed

determination to issue, deny, or modify a permit

for the discharge. * * * Procedures for the

circulation of public notice shall include at least

the following:

(1) Notice shall be circulated within the geo-

graphical area of the proposed discharge; such

circulation shall include any one of the following:

* * * * *

(iii) Publishing in local newspapers and

periodicals, or, if appropriate, in a daily news-

paper of general circulation.

(2) Notice shall be mailed to the applicant,

Federal and State fish, shellfish and wildlife re-

source agencies, and other appropriate govern-

ment agencies, and to any person or group upon

request and shall provide an opportunity to sub-

mit their written views and recommendations on

each proposed issuance.

* * * * *

§ 125.34 Public hearings.

(a) Except as provided in paragraph (d) of

this section, where the Regional Administrator

finds a significant degree of public interest in a

proposed permit or group of permits, he shall

hold a public hearing to consider such permit or

permits.

* * * * *

§ 125.36 Adjudicatory hearings.

* * * * *

(b) Requests for adjudicatory hearings and

legal decisions. (1) Within 10 days following

the date of determination with regard to a per-

mit pursuant to § 125.35(a) or any modification

thereto, any interested person may submit to the

Regional Administrator a request for an ad-

judicatory hearing pursuant to paragraph (b)

(2) of this section or a legal decision pursuant

to paragraph (m) of this section, to reconsider

the determination with regard to a permit and

the conditions contained therein.

(2) Requests for an adjudicatory hearing

shall:

7 * * ~ *

(v) State with particularity the reasons for

the request;

(vi) State with particularity the issues pro-

posed to be considered at the hearing; and

(vii) Include proposed terms and conditions

which, in the judgment of the requestor, would

be required to carry out the intendment of the

Act.

Within ten (10) days following the expiration

of the time allowed by paragraph (b) of this

section for submitting a request for an adjudica-

tory hearing, the Regional Administrator shall

graut the request and shall promptly assign the

matter for hearing if he determines that a sub-

mitted request:

(i) Meets the requirements of paragraph (b)

of this section and,

(ii) Sets forth material issues of fact relevant

to the questions of whether a permit should be

issued, denied or modified.

(2) If the Regional Administrator determines

that the request fails to meet the requirements

of paragraph (c)(1) of this section, he shall

deny the request.

(m) Decision of the Assistant Administrator

for Enforcement and General Counsel on ques-

tions of law. (1) Issues of law, including ques-

tions relating to the interpretation of provisions

of the Act, and the legality and interpretation of

regulations promulgated pursuant to the Act,

shall be decided in accordance with this subsec-

tion and shall not be considered at the adjudica-

tory hearing.

* * * * *

(2) The Presiding Officer shall determine

which issues, if any, submitted by the parties

fall into the category specified in paragraph

(m)(1) of this section, and shall refer such

issues to the Assistant Administrator for En-

forcement and General Counsel for resolution.

Such referral may be accompanied by briefs,

filed with the Assistant Administrator for En-

forcement and General Counsel within twenty

(20) days of the removal of the referred issues

from the adjudicatory hearing by the Presiding

Officer pursuant to paragraph (m)(2) of this

section. * * *

* * * * *

(3) Where no adjudicatory hearing has been

granted, /issues of law may be referred by the

Regional Administrator to the Assistant Admin-

istrator for Enforcement and General Counsel

for a decision in the manner specified in para-

graph (m) (2) of this section.

(4) The Assistant Administrator for En-

forcement and General Counsel shall provide the

Regional Administrator, the Presiding Officer,

where appropriate, and each party with a writ-

ten decision with respect to each referred issue

of law. A written opinion setting forth the

reasons and basis for the decision shall also be

provided. The decision of the Assistant Admin-

istrator for Enforcement and General Counsel

shall be final with respect to each referred issue

of law as it relates to the particular permit in

question and shall be relied upon by the Regional

Administrator in rendering the initial decision.

STATEMENT

1. The Federal Clean Water Act (also known as

the Federal Water Pollution Control Act),? 33 U.S.C.

1251 et seg., establishes “the national goal that the

discharge of pollutants into the navigable waters be

eliminated by 1985.” 33 U.S.C. 1251(a) (1). Section

301(a) of the Act, 33 U.S.C. 1811(a), makes un-

lawful the discharge of any pollutant into the naviga-

ble waters of the United States, the contiguous zone,

or the ocean,*® except in compliance with the specific

requirements of the Act. One such requirement is to

obtain a permit issued by the Administrator under

Section 402 of the Act, 33 U.S.C. 1342 and adhere

to its terms.

Section 402 establishes the National Pollutant Dis-

charge Elimination System (NPDES). Section 402

(a)(1) authorizes the Administrator, “after oppor-

tunity for public hearing,” to issue a permit for the

discharge of any pollutant, on the condition, among

others, that the discharge will meet the requirements

2See 91 Stat. 1566.

8 See the definitions in Section 502(7), (8), (9), (10), and

(12) of the Act, 33 U.S.C. 1862(7), (8), (9), (10), and (12).

of Section 301(b) of the Act, 33 U.S.C. 1811(b). At

all times material to this case, Section 301(b) (1) (B)

required that no later than July 1, 1977, “publicly

owned treatment works” meet “effluent limitations

based upon secondary treatment” as defined by the

Administrator (see 40 C.F.R. Part 133).*

In 1973 EPA promulgated regulations, 40 C.F.R.

Part 125, implementing the “opportunity for pub-

lic hearing” required by Section 402(a)(1).° The

*On October 18, 1977, Congress amended the Act to permit

the Administrator to grant extensions of this deadline

through, but no later than, July 1, 1983. Pub. L. No. 95-217,

Section 45, 91 Stat. 1584 (33 U.S.C. 1311(i)). The amend-

ment also permits the Administrator to modify the effluent

limitations of Section 1311(b)(1)(B) with respect to dis-

charges by publicly owned treatment works into marine

waters. Section 44, 91 Stat. 1584 (33 U.S.C. 1811(h)). Al-

though in September 1978 Los Angeles submitted to EPA a

preliminary request for a waiver under Section 301(h), it

has yet to submit a final request under the regulations imple-

menting that statutory provision, which were published on

June 15, 1979 (44 Fed. Reg. 34784). EPA’s regulations re-

garding “effluent limitations based upon secondary treatment”

appear at 40 C.F.R. Part 133. They are not at issue in this

suit.

Section 402 requires that NPDES permitees who discharge

into “the contiguous zone” meet certain additional ‘ocean

discharge” criteria. See Section 402(a) (1). When the sub-

stantive permit terms were set, EPA had promulgated valid

regulations defining these criteria. They were withdrawn for

revision at the time of the permit extension at issue here, how-

ever. PLF argued below that EPA had no authority to impose

any conditions on ocean discharges in the absence of such

regulations. The court of appeals found against it on this

point, on which no cross-petition was filed.

5 EPA’s NPDES regulations have been comprehensively

amended since the events at issue here, but these amendments

do not affect the present or future importance of the issues

regulations provide for three types of hearings. First,

public notice is given of EPA’s proposed issuance,

denial, or modification of a permit and comments are

solicited. 40 C.F.R. 125.32. If EPA’s regional ad-

ministrator finds that there is “a significant degree

of public interest” in the proposed action, he must

hold a public hearing of the “legislative” type (at

which any interested person may submit oral or writ-

involved in this case. These amendments retain the “material

issue of fact” test for granting a hearing which is at issue

here. See Section 124.75, 44 Fed. Reg. 329389 (1979). Evi-

dentiary proceedings will therefore still be denied where (or

to the extent that) no factual issues are raised, see 44 Fed.

Reg. 32887 (1979). Concerning legal objections to proposed

permits, the regulations specifically provide that where the

regional administrator denies a hearing, he must state the

reasons, see Section 124.75(d), that this denial may then be

appealed to the Administrator, that the administrator may

review and change “policy or legal conclusions” on which the

regional administrator relied in deciding not to grant a hear-

ing, see Section 124.101(a) (3), 44 Fed. Reg. 32944 (1979),

and that the General Counsel’s office shall have lead responsi-

bility for deciding these legal issues, see Section 124.101(e).

Beyond this preservation of the essentials of the previous

regulations at issue here, the new regulations go further

than the old in adapting the traditional form of evidentiary

hearing to better fit with EPA’s experience. They now require

points to be raised at the “notice-and-comment,” informal

stage of permit issuance before they may be raised at an

evidentiary hearing, see Section 124.76, 44 Fed. Reg. 32884-

32885, 32939-32940 (1979), provide for automatic admission

in the evidence at the “evidentiary” stage of the process of the

“administrative record” of the earlier, informal, proceedings,

see Section 124.85(d) (2), 44 Fed. Reg. 32885, 32942 (1979),

and, most significantly, establish new, less formal hearing pro-

cedures for “initial licensing,” see 44 Fed. Reg. 32887-32892,

32944-32947 (1979).

ten statements and data). 40 C.F.R. 125.34. Second,

after that hearing, if one is held (or, if not, after the

notice), the regional administrator must determine

what action to take with respect to the proposed per-

mit. 40 C.F.R. 125.35. Within ten days after this

determination, any interested person may request an

adjudicatory hearing with respect to any “material

issues of fact relevant to the questions of whether a

permit should be issued, denied or modified.” 40

C.F.R. 125.36(b), (c) (i). A request for an adjudica-

tory hearing must state with particularity the rea-

sons for the request and the issues proposed to be

considered. 40 C.F.R. 125.86(b)(2). Third, any

interested person may also request legal rulings by

EPA’s General Counsel with respect to the proposed

action pursuant to 40 C.F.R. 125.36(m), under which

hearing requests which raise only legal issues in effect

are treated as requests for legal opinions.

Within 90 days after EPA makes a final determi-

nation, any interested person may obtain judicial re-

view in the appropriate court of appeals of the

Administrator’s issuance, denial, or modification of

a permit. 33 U.S.C. 1869(b)(1). Otherwise, the

terms and conditions of the permit are not subject to

judicial review. 33 U.S.C. 1369(b) (2).

2. Since 1960, sewage from Los Angeles has been

processed at the Hyperion Wastewater Treatment

Plant in Los Angeles and discharged into the Pacific

Ocean. Most of the sewage has received only primary

treatment. About one-third of the sewage has re-

ceived additional secondary treatment. The metals

and other solids removed during treatment, called

“sludge,” have been pumped through a seven-mile

outfall pipe and discharged into the Pacific Ocean.

The treated sewage has been discharged into the

ocean through a five-mile outfall. A one-mile outfall

has been used only in emergencies. (See Pet. App.

3a-6a).

In November 1974 EPA issued to respondent City

of Los Angeles a permit to discharge treated sewage

from its Hyperion treatment plant into the Pacific

Ocean. EPA published notice of its intent to issue

® Section 402(b) provides that the responsibility for issuing

NPDES permits for discharges into navigable waters may be

assumed by a state if it has an approved program, as Cali-

fornia does. See generally EPA vy. State Water Resources

Control Board, 426 U.S. 200, 202-209 (1976). A federal per-

mit is still required for discharges more than three miles from

the coastline. Therefore, EPA permits are required for

Hyperion’s discharges through its five- and seven-mile out-

falls. The California Water Quality Control Board also

requires a state permit for these outfalls under a state

water pollution statute. Cal. Water Code § 13260 (West

1971).

Altogether there have been twelve actions by federal and

state authorities affecting the Hyperion discharge permit—

four by EPA and eight by the California Regional Water

Quality Control Board (the Board). All four of the federal

actions were taken jointly with four of the state actions.

On November 18, 1974, a permit which covered the one-

and five-mile outfalls, but not the seven-mile sludge out-

fall, was issued jointly by EPA and the State (Board

Order No. 74-329) (see Pet. App. 4a). On August 18, 1975,

the 1974 permit was rescinded by the two authorities and was

replaced by a joint permit which included the requirement

of a gradual elimination of the secondary sludge discharge

from the seven-mile outfall (Board Order No. 75-100) (App.

the permit, provided an opportunity to submit writ-

ten comments, and held a public hearing on its action.

(Id. at 4a.)

On August 18, 1975, EPA rescinded the 1974 per-

mit and issued a new permit with a compliance

schedule that gradually reduced the amount of sewage

sludge which could be discharged from the Hyperion

plant (A. 3-50). EPA published advance public

notice of its tentative determination to revise the

permit and held a hearing on the proposed revisions

8-50). On January 24, 1977, the two authorities extended

the 1975 permit until June 30, 1977 (A. 93-95), and on

June 2, 1977, they extended the expiration date of that same

permit until December 17, 1979 (Board Order Nos. 77-1 and

77-84) (A. 149-156). (The federal permit has retained the

same number, CA0109991, throughout.)

During this time the Board also issued four other orders

which affected only the state’s compliance schedule for the

sludge management project. On December 1, 1975 (Order No.

75-165), the State substituted definite dates for the measured

time periods in that compliance schedule (A. 51-53). On

May 24, 1976 (Order No. 76-80), the compliance dates in the

schedule were extended because the City had failed to meet

the initial deadlines (A. 54-58). On November 22, 1976

(Order No. 76-202), the State again extended the compliance

schedule because of delays by the City (A. 59-62). On

February 28, 1977 (Order No. 77-29), a progress reporting

requirement was added to the State permit (A. 102-107).

7The 1975 permit set target dates for eliminating the

sludge in three phases: (a) elimination of no less than one-

third of the sludge by April 1, 1977; (b) elimination of no

less than an additional one-third by October 1, 1977, and

(A. 18). This schedule would have resulted in compliance

with Section 301 effluent limitations and Section 403 ocean-

discharge criteria. 33 U.S.C. 1811, 1343.

(App. 6). None of the respondents presented either

written or oral objections to the new permit or re-

quested an adjudicatory hearing. No one sought

judicial review of EPA’s issuance of this permit, and

90 days thereafter its terms and conditions were no

longer subject to judicial review. 33 U.S.C. 1369

(b) (2).

3. On April 26, 1977, EPA advised the City of

Los Angeles that EPA proposed to modify the 1975

permit by extending its expiration date to December

17, 1979, without otherwise disturbing its terms and

conditions (A. 115-120).* Public notice of EPA’s

proposed action, including an invitation to submit

comments and to request a hearing, was published in

the Los Angeles Times, April 27, 1977 (A. 117-120,

126-128).° Neither respondents nor anyone else filed

written comments or requested a hearing, and no

hearing was held (Pet. App. 6a). On June 2, 1977,

EPA issued a final determination to extend the per-

mit (A. 149-150).

8 Permits may be issued for any period up to five years. 33

U.S.C. 1342(b) (1) (B). The 1975 permit originally had an

expiration date of February 1, 1977. On January 24, 1977,

EPA extended the permit to June 30, 1977 (A. 93-95).

*In addition to requiring EPA to publish its notice in a

newspaper of general circulation, 40 C.F.R. 125.32(a) (2)

permits any person to request in advance that EPA send him

individual notice of any proposed action within a designated

state or geographical area. Respondents made no such request

for individual notice of proposed actions concerning the

Hyperion plant. The City of Los Angeles, as the permittee,

received an individual notice (A. 115-120). The other respond-

ents received no notice other than the published notice

(A. 117-120, 126-128).

On June 13, 1977, respondent John B. Kilroy, Sr.,

represented by attorneys for respondent Pacific Legal

Foundation (PLF), filed a timely “request for an

adjudicatory hearing pursuant to 40 CFR Section

125.36” (A. 159-165). A hearing request was filed

only by Kilroy, a resident of the Los Angeles area

(PLF Pet. For Review 2). None of the other re-

spondents—PLF, the City of Los Angeles, and the

City of Torrance—made such a request. Kilroy’s

request automatically stayed the effectiveness of the

permit modification pending disposition of the re-

quest. See 40 C.F.R. 125.35(d) (2).

The regional administrator determined that Kil-

roy’s request raised only issues of law, which he

certified to the EPA General Counsel in accordance

with 40 C.F.R. 125.36(m) (A. 168-170). Kilroy

then submitted a brief to the General Counsel in

support of his argument that the permit modification

was defective as a matter of law (A. 173-180).

His brief did not contend that he desired to raise

anything other than the following issues of law (A.

173-174) :

1. Whether there is authority under either the

applicable statutes or regulations to extend

10The request stated (A. 160) that the “issues to be

raised” at the adjudicatory hearing would be (1) “whether

the requirements of the permit should be modified in that the

project that is the subject of the compliance schedule set

forth in the NPDES permit * * * is being evaluated in an EIS

and * * * [whether] the compliance schedule should not be

mandated * * * until the EIS is completed,” and (2) “whether

the procedures used and the record developed were adequate

[to issue] an NPDES permit.”

the expiration date of an existing National

Pollutant Discharge Elimination System

(NPDES) permit, or whether the action

taken by EPA with regard to Permit No.

CA0109991 was the issuance of a new per-

mit; and

2. Whether EPA should require that a permit-

tee go forward with a project contained in an

NPDES compliance schedule when that proj-

ect is being studied in an environmental

impact statement (EIS) pursuant to the re-

quirements of the National Environmental

Policy Act (NEPA), 42 U.S.C. §§ 4332, et

seq., and Federal Water Pollution Control

Act (FWPCA), 33 U.S.C. §§ 1281, et seg."

The General Counsel ruled (A. 194-199) that

EPA may extend the expiration date of a permit

through a modification. Section 402 permits may be

issued for terms up to five years. As long as the total

duration of the extended permit does not exceed

five years, she reasoned, a modification may include

a time extension. The General Counsel also held

that the fact that an environmental impact statement

was being prepared in connection with the funding

11 Kilroy’s brief made four arguments (A. 173-180): (1)

EPA has no authority to extend the expiration date of a

permit because it is authorized only to issue a new permit,

(2) although the Act permits “modifications,” a time exten-

sion is not a “modification,” (3) the action taken by the

regional administrator therefore was the issuance of a new

permit, and (4) the permit contained a sludge-out schedule

that was then under evaluation in an environmental impact

statement in connection with the funding of the ijandfill, and

no decision on the schedule should be made pending comple-

tion of the environmental impact statement.

of the landfill project did not preclude extension of

the permit. The Act expressly provides that EPA’s

actions on permits (other than permits to industrial

dischargers which are “new sources”) are exempt

from NEPA. 33 U.S.C. 1871(c).

4. A petition for review of the administrator’s

action was filed in the court of appeals by PLF,

Kilroy, and the City of Torrance (No. 77-2909).”

A similar petition was filed by the City of Los

12 The present proceeding is the second of three proceedings —

PLF has brought against EPA regarding sludge disposal by

the City of Los Angeles wherein it has sought to prevent the

City of Los Angeles from using a landfill located in Palos

Verdes for the disposal of sludge. The first lawsuit unsuc-.

cessfully sought to enjoin EPA from funding the iandfill

project on the theory, among others, that no environmental

impact statement was prepared by EPA with respect to its

decision to fund the project. EPA voluntarily agreed, how-

ever, to prepare such a statement. Pacific Legal Foundation

v. Quarles, 440 F.Supp. 316 (C.D. Cal. 1977), appeal pending,

No. 77-3844 (9th Cir.). PLF’s third action (the instant one

being the second) was filed in the district court in Los

Angeles. PLF v. Andrus, Civ. No. C-78-3464 AAH (C.D. Cal.,

filed Sept. 7, 1978). It alleged, among other things, that di-

version of sludge from the ocean to the landfill, allegedly due

to the sludge-out schedule in the 1975 permit, violated the En-

dangered Species Act, 16 U.S.C. 1536, because gray whales

feed on plankton, which feeds on the sludge; because brown

pelicans feed on anchovies, which feed on plankton, which feed

on the sludge; and because trucks going to and from the land-

fill kill the E] Segundo Butterfly. On May 3, 1979, the district

court entered an order granting PLF’s motion for partial sum-

mary judgment and requiring, inter alia, that a hearing on

the NPDES permit extension, at issue here, be extended to

include considerations under the Endangered Species Act.

The Government is appealing that ruling.

Angeles (No. 77-3008), and the petitions were con-

solidated (A. 1).

The court of appeals did not question that EPA

had complied with its notice-and-hearing regulations

(see 586 F.2d at 653-654). Neither did the court

take issue with EPA’s interpretation of Kilroy’s

hearing request as raising only legal issues, or with

the ruling of EPA’s General Counsel rejecting Kil-

roy’s legal arguments (see 7d. at 654).

Nonetheless, the court held that EPA had denied

petitioners an “opportunity for public hearing”

within the meaning of Section 402(a) (1) (id. at 657-

660). The court held that EPA, before it may issue,

‘evoke, or modify an NPDES permit, generally must

hold an adjudicatory hearing, even when no one has

requested one. For EPA to escape this general rule

in a particular case, ‘“[i]t must be shown that the

material facts supporting the decision are not subject

to dispute” (7d. at 658-659) and that a hearing would

be “futile” and would serve “absolutely no purpose”

(id. at 659). The court acknowledged that “this is a

not inconsiderable burden to place on the agency,”

but considered it “appropriate in view of the strong

policy in favor of holding public hearings before an

adjudicative decision is made” (ibid.).

The court suggested that there were certain facts

“that may be disputed and with respect to which

the record in this case is silent” that would affect

the reasonableness of the compliance schedule in the

extended permit (ibid.). The court said it could

“conclude unequivocally neither that the parties have

no dispute about these matters nor that they do”

(ibid.). Consequently, the court was “unable to deny

an adjudicatory hearing on the ground that none of

the material facts upon which the EPA’s decision

rests are disputed” (ibid.). In remanding the pro-

ceeding to the administrator to conduct such a hear-

ing, the court did not limit the remand to the factual

issues it had suggested. Perding the disposition of

the case on remand, the court continued its stay of

the compliance schedule embodied in the extended

NPDES permit for the Hyperion plant.”

INTRODUCTION AND SUMMARY OF ARGUMENT

The issue presented in this case is whether EPA’s

regulations (40 C.F.R. Part 125) provide a sufficient

“opportunity for public hearing” within the meaning

of Section 402(a)(1) of the Act, 33 U.S.C. 1342

(a)(1). Those regulations provide for three types

of “hearings”: (1) a “legislative-type” hearing at

which interested persons may submit information

and comments to the agency, 40 C.F.R. 125.34; (2)

13 The court also continued its stay (by orders dated De-

cember 23, 1977, and March 29, 1978) of EPA’s separate

enforcement action against the City of Los Angeles for

alleged violations of that schedule. United States v. City of

Los Angeles, No. 77-8047 HP (C.D. Cal., filed Aug. 12, 1977).

The court of appeals stayed that action, despite the fact that

the enforcement action involved violations of the Hyperion

permit which predated any of the governmental actions at

issue in this case (the latest of those dates being January 1,

1977). Thus, it involves enforcement of permit conditions

which never were challenged under 33 U.S.C. 1369(b) (see

A. 1, 2, 181-191).

an “adjudicatory” hearing for the trial-type determi-

nation of “material issues of fact relevant to the

questions of whether a permit should be issued, de-

nied or modified,” 40 C.F.R. 125.36(b), (c) (ii); and

(3) a procedure for the submission to and determi-

nation by the agency of any issue of law concerning

the issuance, revocation, denial or modification of

permits, 40 C.F.R. 125.36(m).

Each type of hearing has its own prerequisites.

A legislative-type hearing is required only when the

regional administrator finds that there is enough

public interest in the proposed action, after public

notice, to warrant such a hearing. 40 C.F.R. 125.34.

An adjudicatory hearing is required only if an in-

terested person presents a request for an adjudicatory

hearing which states with particularity the reasons

for the request and the factual issues to be con-

sidered (40 C.F.R. 125.36(b) (1), (b)(2)), and the

regional administrator determines that the request

presents material issues of fact concerning whether

a permit should be issued, denied or modified. 40

C.F.R. 125.36(c) (1) (ii). Determinations of issues

of law are made only upon request by an interested

party who sets forth the legal ground for objection

to the agency actions. 40 C.F.R. 125.36(m).

In the present case, EPA determined, after public

notice, that a legislative-type hearing on its time

extension of the Hyperion permit was not warranted.

The agency held no adjudicatory hearing because no

one tendered a request presenting material issues of

fact. The only request for a hearing raised only

questions of law, not of fact?-The agency considered

the issues and resolved them on the merits. No other

objection—factual or legal—was presented. The

court of appeals did not question EPA’s decision not

to hold a legislative-type hearing or its resolution of

the issues of law presented to it.

Accordingly, had the court of appeals confined its

review to those issues tendered to the agency, it would

have affirmed EPA’s extension of the Hyperion per-

mit. Instead, the court construed the phrase “op-

portunity for public hearing” to require an auto-

matic adjudicatory hearing in virtually all instances

—even when no one advances any factual issue ma-

terial to the case. Where the agency does not hold

such a hearing, any person—even a stranger to the

administrative proceedings—may, under the decision

below, successfully set aside the administrative action

by plausibly suggesting in the court of appeals that

an adjudicative hearing could have uncovered a ma-

terial issue of fact.

This holding was error. First, absent constitutional

or specific statutory constraints, agencies are “free to

fashion their own rules of procedure * * *.” FCC v.

Pottsville Broadcasting Co., 309 U.S. 184, 148

(1940). Accordingly, even when a statute calls with

seemingly unequivocation for a “full hearing” before

denial of a license, the agency may condition such a

hearing on filing an application that pleads facts that

would warrant a license. Denver Stock Yard v. Live-

stock Association, 356 U.S. 282, 287 (1958); United

States v. Storer Broadcasting Co., 351 U.S. 192, 204-

205 (1956). Otherwise, there might be a “vast

proliferation of hearings” serving no purpose, a result

Congress could not have intended. FPC v. Texaco

Ine., 377 U.S. 38, 39, 44 (1964). Where the statute

merely calls for an “opportunity” for a hearing, it is

all the clearer that the agency may impose reasonable

threshold requirements. Specifically, the Court has

held that a statutory “opportunity” for a hearing

may be conditioned by an agency (i) on the submis-

sion of a request for a hearing, National Coal Opera-

tors’ Association v. Kleppe, 423 U.S. 388, 398 (1976),

and (ii) on the submission of a request or application

that sets forth material issues of fact. Weinberger

v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609,

620-621 (1973). These holdings are dispositive here.

Second, nothing in the legislative history of the

Act suggests that Congress intended to depart from

these holdings or to preclude EPA’s regulations. To

the contrary, the only committee report to address

Section 402’s hearing provision stressed the word

“opportunity.” A Legislative History of the Water

Pollution Control Act Amendments of 1972, 93d

Cong., 1st Sess. 1490 (1973) (‘‘Leg. Hist.”). More-

over, Congress clearly knew how to require a hearing

in all instances when it wanted to. The pre-1977 Act

elsewhere (Section 307(a) (2) ) plainly stated that the

administrator “shall” hold a hearing and the legisla-

tive history correspondingly recognized that a hearing

was “required.” Id. at 312. Section 402 significantly

avoids such mandatory language. Finally, the Court

has traditionally refused to impute to Congress any

intent to impose an “impossible burden” on an agency.

E.. I. duPont de Nemours & Co. v. Train, 430 U.S.

112 (1977). EPA normally grants about 100 re-

quests for adjudicatory hearings per year in NPDES

cases. The decision below would require thousands

per year—even though in the vast majority no re-

quest for a hearing is ever made. Congress could not

have intended to handicap the agency by imposing

such a burden.

ARGUMENT

I. An Agency May Subject A Statutory “Opportunity

For Public Hearing” To Reasonable Threshold Re-

quirements Including A Requirement That The Appli-

cant File A Request Setting Forth A Material Issue

Of Fact

Absent constitutional or specific statutory con-

straints, administrative agencies are “free to fashion

their own rules of procedure and to pursue methods

of inquiry capable of permitting them to discharge

their multitudinous duties.” FCC v. Pottsville Broad-

casting Co., 309 U.S. 134, 148 (1940); FCC v.

Schreiber, 381 U.S. 279, 290 (1965) ; Vermont Yankee

Nuclear Power Corp. v. NRDC, 435 U.S. 519, 524-

525, 543 545 (1978). This principle of administra-

tive law derives from “the congressional determination

that administrative agencies and administrators will

be familiar with the industries which they regulate

and will be in a better position than [the] federal

courts or Congress itself to design procedural rules

adapted to the peculiarities of the industry and the

tasks of the agency involved.” FCC v. Schreiber,

supra, 381 U.S. at 290.

Only where Congress has unmistakably directed an

agency to follow certain procedures is an agency

deprived of its traditional authority to fashion its

own procedure. Even then, the agency may adopt a

practical view of the procedural directive. Thus,

where a statute requires “a full hearing” before a

license may be denied, the agency is free to deny the

license without a hearing when the application shows

an essential prerequisite cannot be met. United States

v. Storer Broadcasting Co., 351 U.S. 192, 204-205

(1956). Even where the statute seemingly directs a

“full hearing in all instances” the Court “never pre-

sume[s] that Congress intended an agency ‘to waste

time on applications that do not state a valid basis

for a hearing.’” Denver Stock Yard v. Livestock As-

sociation, 356 U.S. 282, 287 (1958). The agency may

thus impose a procedural prerequisite to such a

seemingly mandatory hearing, such as a requirement

that the applicant plead facts that would warrant an

administrative waiver of its substantive rules pre-

cluding substantive relief. FPC v. Texaco Inc., 377

U.S. 33, 39-41 (1964). Otherwise, there might be a

“vast proliferation of hearings” serving no useful

purpose. Jd. at 44.

In Section 402, Congress directed that EPA may

grant or deny an NPDES permit after “opportunity

for public hearing.” Although the statute itself does

not state whether the “hearing” must be a legisla-

tive-type or an adjudicatory-type hearing, EPA’s reg-

ulations provide both if certain threshold requirements

are met. Assuming arguendo that the statute refers

to an adjudicatory hearing—as the Ninth Circuit has

held—the cases just cited establish that EPA may con-

dition the “opportunity” on (i) the presentation of

a request (ii) which sets forth a material issue of

fact.

First, as explained, even where the statute literally

insists on a “full hearing,” it is well established that

the agency may condition the hearing on a request.

A fortiori, where the statute merely requires the

agency to provide an “opportunity,” the agency may

key the hearing to a request. Any other construction

would read the word “opportunity” out of the Act.

National Coal Operators’ Association v. Kleppe, 423

U.S. 388, 389 (1976)."* Indeed, Kleppe forecloses any

challenge to EPA’s request requirement. There,

are the statute required an “opportunity for a public

144The court of appeals’ decision, in practice, will require

EPA routinely to hold adjudicatory hearings on NPDES

permit actions, even where no one requests a hearing and even

where, as here, the proposed action is, for example, only a

time extension of a permit whose conditions have been fully

considered at previous “legislative” hearings. Thus, if EPA

holds no adjudicatory hearing, all a complainant need do in

order to set aside the agency’s action, under the court’s de-

cision, is to suggest plausibly in the court of appeals that

some members of the public might disagree concerning fac-

tual matters relevant to the Agency’s action. Compare Ver-

mont Yankee Nuclear Power Corp. v. NRDC, supra, 435 U.S.

at 553-554. This effectively means that EPA must hold an

adjudicatory hearing in every instance and reduces the word

“opportunity” to a nullity.

hearing” before the agency fined mine operators for

violations of the Federal Coal Mine Health and

Safety Act, 30 U.S.C. 801 et seg. The agency adopted

a regulation providing that its proposed determina-

tion of a violation and proposed fine would become

final without a hearing if the operators did not re-

quest an administrative adjudication within 15 days

after receipt of the proposed order. The Court held

that this procedure provided operators with an “op-

portunity” for a hearing within the meaning of the

statute. Likewise, Section 402 of the Clean Water

Act requires “no more than ‘an opportunity’ for a

hearing.” National Coal Operators’ Association v.

Kleppe, supra, 423 U.S. at 398.

Second, EPA is similarly entitled to condition an

adjudicatory hearing on the identification of a dis-

puted issue of material fact. The whole point of an

adjudicatory hearing is to resolve issues of contested

fact. If the material facts are not disputed, no ad-

judicatory hearing is needed. Cf. Fed. R. Civ. P. 56.

Precisely such a threshold requirement was sustained

in Weinberger v. Hynson, Westcott & Dunning, Inc.,

412 U.S. 609 (1973). There, the statute required the

FDA to give “ ‘due notice and opportunity for hear-

ing to the applicant’ ” before withdrawing a new drug

application (id. at 620). In a threshold regulation

serving the identical screening purpose as EPA’s

regulation, however, the FDA required any applicant

who desired a hearing to submit reasons “ ‘why the

application * * * should not be withdrawn, together

with a well-organized and full-factual analysis of the

clinical and other investigational data he [was] pre-

pared to prove in support of his opposition to the

notice of opportunity for a hearing * * *. When it

clearly appear[ed] from the data in the application

and from the reasons and factual analysis in the re-

quest for the hearing that there [was] no genuine

and substantial issue of fact * * *, e.g., no adequate

and well-controlled clinical investigations to support

the claims of effectiveness,’” the FDA was free to

deny a hearing and enter an order withdrawing the

application based solely on these data. 21 C.F.R.

130.14(b). (Emphasis added.) 412 U.S. at 620.

The Court sustained this regulation against the

challenge that it denied the statutory “opportunity”

for hearing. The Court held that the type of regula-

tion was well within the authority of agencies under

Storer and Texaco to particularize statutory stand-

ards and to bar “at the threshold those who neither

measure up to them nor show reasons why in the

public interest the rule should be waived.” Jbid. The

Court refused to “impute to Congress the design of

requiring * * * a hearing when it appears conclu-

sively from the applicant’s ‘pleadings’ that the ap-

plication cannot succeed.” Jd. at 621. Accord, United

States v. Consolidated Mines & Smelting Co., 455

F.2d 432, 453 (9th Cir. 1971) ; Dyestuffs and Chemi-

cals, Inc. v. Flemming, 271 F.2d 281, 286-287 (8th

Cir. 1959), cert. denied, 362 U.S. 911 (1960); Sun

Oil Co. v. FPC, 256 F.2d 238, 240-241 (5th Cir.),

cert. denied, 358 U.S. 872 (1958).

The same is true here. EPA’s regulation condi-

tions a hearing on the presentation of a “material

issue[] of fact relevant to the questions of whether a

permit should be issued, denied or modified.” 40

C.F.R. 125.36(c) (1) (ii). As in Hynson, this re-

quirement avoids unnecessary and time-consuming

hearings where, as here, no one challenges proposed

agency action on disputed factual grounds.

In sum, in construing administrative statutes the

Court has regularly construed them to permit agencies

to condition statutory hearings on reasonable thres-

hold requirements. Even where an act provides for

a “full hearing” this canon of construction has been

consistently applied. Here the language is even

plainer—all that the agency need provide is an “op-

portunity” for a hearing. Unless that word is read

out of Section 402, EPA is entitled to condition the

right to an adjudicatory hearing (i) on the presen-

tation of a request (ii) that frames a material issue

of fact.

Il. EPA’s Regulations Are Consistent With The Legis-

lative History Of The Act

Several pointers in the legislative history support

the Administrator’s regulations. First, nothing in it

suggests that Congress meant to dispense with the

traditional power of an agency to impose reasonable

threshold requirements for a hearing. To the con-

trary, the Senate Report—the only report to address

the phrase as used in Section 402—while stressing

the importance of public participation in the permit-

ting process, also stressed the word “opportunity”:

SS eee

An essential element in any control program

involving the nation’s waters is public partici-

pation. The public must have a genuine oppor-

tunity to speak on the issue of protection of its

waters. The Committee has therefore estab-

lished requirements to provide opportunity for

public hearing by the Federal Government, or

if State participation is approved by the Admin-

istrator, the State, and other provisions to make

available to the public all relevant information

surrounding a discharge source and the control

requirements placed on it.

Leg. Hist. 1490. The word “opportunity” in both the

statute and its legislative history cannot be ignored.

An opportunity is provided by granting a hearing

when reasonable threshold requirements are satisfied.

That the public fails to make a satisfactory request

does not mean that it was not provided with an oppor-

tunity to do so. To the contrary, the opportunity was

provided, but not accepted. The legislative history

uses the word “opportunity” in this traditional and

natural sense.

S--ond, Congress used the phrase “opportunity for

[public] hearing[s]” seven other times in the 1972

Act (see Sections 307(b) (1); 311(b) (6); 312(g);

316(a); 404(a) and (c); 507(b)). Nowhere in the

legislative history of these seven provisions is there

the slightest suggestion that EPA could not impose

threshold requirements or condition the hearing on a

request. Instead, in discussing Section 311(b) (6),

which also used the phrase, the relevant report recites

that EPA should adopt “procedures which are expe-

ditious” and specifically disclaims any intent to apply

the strict adjudicatory hearing requirements of 5

U.S.C. 554. Leg. Hist. 804 (House Report). Al-

though the comment does not address our specific

issue, the committee’s statement plainly evidences an

intent not to dispense with the administrative flexi-

bility this Court has long recognized in the phrase

“opportunity for public hearing.” *®

Third, where Congress intended elsewhere in the

Act to require hearings, it said so. For example,

Section 307(a) (2), as originally enacted, provided

that EPA, after publishing certain proposed effluent

standards, “shall publish a notice for a public hearing

on such proposed standard[s] to be held within thirty

days.” 86 Stat. 857. The Conference Report recog-

nized that the agency was “required to hold a hear-

ing” by this language. Leg. Hist. 312.*° Congress’

differentiation of “required” hearings and “opportu-

nities” for hearings—both in the statutory language

and the legislative history—makes clear that Congress

understood the distinction. Cf. Touche Ross & Co. v.

Redington, No. 78-309 (June 18, 1979), slip op. 11.

15 Otherwise the committee reports ignored the phrase, e.g.,

Leg. Hist. 313, 800, 1479 (Section 307 (b) (1) ) ; 317-318, 805,

1485 (Section 312(j)); 329, 822, 1500-1501 (Section 507

(b)); or simply repeated the statutory language, 746 (Sec-

tion 316(d)); 324, 817 (Section 404(a)); 324-325 (Section

404(c)).

16 Section 307 (a) (2) was amended in 1977 to eliminate the

mandatory hearing requirement. The amended provision ex-

pressly makes a hearing available only on request. 91 Stat.

1589.

et ee

In sum, the indications in the legislative history

are all to the effect that Congress did not intend, in

Section 402, to shackle the agency with a needless re-

quirement in all cases. It remains only to determine

whether such a mandate can be derived—as the court

of appeals believed—from some generalized “strong

policy” in favor of adjudicatory hearings.

III. There Is No Presumption That Congress Mandated

Adjudicatory Hearings In All Situations

A. The court below based its interpretation prin-

cipally on “the strong policy in favor of holding

[formal] public hearings before an adjudicative deci-

sion is made” (586 F.2d at 659). The origins of

this policy were not identified except by a citation

to the discussion concerning the Administrative Pro-

cedure Act in the court’s earlier opinion in Marathon

Oil. The APA, however, does not establish any such

policy. With certain exceptions not material here

(see note 21, infra), the APA merely describes the

rulemaking or adindicatory procedures to be followed

when the relevant substantive statute provides for

such hearings. Camp v. Pitts, 411 U.S. 188, 141 n.3

(1973); United States v. Allegheny-Ludlum Steel

Corp., 406 U.S. 742, 757 (1972); United States v.

Florida East Coast Ry., 410 U.S. 224, 238-246

(1973); ITT v. Local 134, Intl Bro. of Elec. Work-

ers, 419 U.S. 428, 488-441 (1975). A hearing vol-

untarily provided by agency regulation is not gov-

erned by the APA. Wong Yang Sung v. McGrath, 339

U.S. 38, 50 (1950).

As we have seen, there is no suggestion in the

statutory language or the legislative history estab-

lishing any public policy in favor of adjudicatory

hearings in derogation of agencies’ traditional power

to set reasonable threshold requirements. To the con-

trary, the substantive statute provides only for an

“opportunity” for a public hearing. That does not

connote any automatic requirement of an adjudica-

tory hearing. “[T]he formal procedural require-

ments of the [APA] are invoked only where agency

action ‘on the record after opportunity for an agency

hearing’ is required by some other statute.” Attor-

ney General’s Manual on the Administrative Proce-

dure Act 41 (1947) (emphasis in original) ; see also

Administrative Procedure Act, Legislative History,

79th Cong., 2d Sess. 22, 79, 226, 260, 359 (1944-

1946). The absence of the phrase “on the record”

from Section 402 demonstrates that Congress did not

intend the APA-trial-type procedures for adjudica-

tory hearings to apply. See United States v. Alle-

gheny-Ludlum Steel Corp., 406 U.S. 742, 757 (1972) ;

17The Ninth Circuit’s reliance (586 F.2d at 658) on

Independent Bankers Association of Georgia Vv. Board of Gov-

ernors, 516 F.2d 1206 (D.C. Cir. 1975), is misplaced. There,

a request was made which set forth material issues of fact.

The court acknowledged that even where a statute confers a

right to “a full hearing” the agency need not provide one

where the agency’s action does not rest on disputed issues of

fact. Id. at 1220. As the concurrence in that decision put it,

Congress normally does not require a hearing “that will be

an empty sound, * * * signifying nothing.” Jd. at 1227.

United States v. Florida East Coast Ry., 410

U.S. 224, 288 (1973).*° Any doubt on this score is

eliminated by the fact that twice elsewhere the 1972

Act explicitly requires proceedings to be “on the rec-

ord” and subject to 5 U.S.C. 554” and by the fact

that the legislative history specifically disclaims that

the phrase “opportunity for public hearing” (used

in a different section of the same Act) is intended to

invoke the “on the record” provisions of 5 U.S.C.

554.” Thus, contrary to the Ninth Circuit’s starting

18 But see United States Steel Corp. v. Train, 556 F.2d 822

(7th Cir. 1977) ; Marathon Oil Co. v. EPA, 564 F.2d 1253

(9th Cir. 1977); Seacoast Anti-Pollution League v. Costle,

572 F.2d 872 (1st Cir. 1978).

19 Prior to the 1977 Amendments, Section 307(a) (2) re-

quired toxic pollutant effluent standards to be set “on the

record.” Section 507(e) specifically requires hearings under

that subsection to be “of record and * * * subject to section

554 of title 5 * * *. The authors of the FWPCA clearly knew

how to invoke the APA’s formal adjudication requirements

when they wished to.

20 The phase “opportunity for a [public] hearing[s]” is used

in seven other provisions in the 1972 Act (see page 27).

The only passage in the committee reports to discuss the

phrase (as used in Section 311(b) (6)) was “not intended to

impose in every instance the complex procedural requirements

associated with formal adjudicatory hearings on the record

* * *. The committee believes that effective administrative

enforcement will be enhanced by assessment procedures which

are expeditious.” Leg. Hist. 804 (House Report).

The report goes on to state that “[p]rovisions of title 5 of

the United States Code commonly referred to as the Adminis-

trative Procedure Act, as amended, will nevertheless apply

to assure due process and protection of a respondent’s rights.”

Leg. Hist. 804. In view of the prior sentence’s disclaimer that

premise, the Section 402 hearing is not an APA-type

adjudicatory hearing.”

Instead, the hearing contemplated by Section 402

combines both elements of a rulemaking proceeding

and an adjudicatory hearing. Congress’ emphasis on

an opportunity for public participation in determin-

ing whether applicants may pollute the navigable

waters illustrates the rulemaking aspects of the pro-

ceeding (see 33 U.S.C. 1251(e). The possible ex-

istence of factual issues and the fact that it is a

permitting proceeding illustrate the adjudicatory

aspects of the proceeding (see 5 U.S.C. 551(6), (7)).

EPA did the practical thing and provided for both

types of hearings, depending on what is appropriate

in the circumstances of the case. The threshold re-

quirements merely insure that the type of hearing,

if any, provided fits the occasion. This type of hybrid

procedure, which assimilates the statutory require-

ment into the practical administration of the statute,

illustrates the wisdom of the Court’s traditional

deference to agencies in devising practical proce-

dures to carry out their substantive duties. There

is, however, no overriding public policy in favor of

the proceeding would be “on the record,” this reference to the

APA was presumably to 5 U.S.C. 555(e), 558(c), and 706

(see note 21, infra).

21 Although the rigid strictures of Section 554 do not apply

to NPDES proceedings, other provisions of the APA are

applicable: Notice of the denial of an NPDES application

made in connection with any agency proceeding must be made

promptly and accompanied by a brief statement of the

grounds for denial (Section 555(e)) and licenses, once

APA-type adjudicatory hearings in licensing pro-

ceedings.”

B. Far from indulging a presumption that Con-

gress always insists on full adjudicatory hearings,

the Court has regularly refused to impute to Congress

any rule that would place an “impossible burden” on

the agency. Thus, in E. I. duPont de Nemours &

Co. v. Train, 480 U.S. 112 (1977), the industrial

petitioner argued that in issuing permits under the

Federal Water Pollution Control Act Amendments

of 1972 EPA was required to give individual con-

sideration to the circumstances of each of the more

than 42,000 dischargers who have applied for NPDES

granted, may be revoked or suspended only. after notice

by the agency in writing of the facts which warrant the

action and an opportunity to demonstrate or achieve compli-

ance with all lawful requirements (Section 558(c))}. These

provisions do not apply here because the city’s application was

not denied, revoked or suspended.

22The court also reasoned (586 F.2d at 660) that an

adjudicatory hearing would yield a record “that will provide

the reasons” for the agency’s action. This ignores a number

of points. To begin with, the agency stated, in general, the

reasons for the proposed extension in its initial notice of the

proposed extension (A. 117). When Kilroy made legal

objections to the proposed action, the agency fully explained

its reasons for rejecting those legal grounds (A. 194-199).

Thus, the agency stated its reasons for rejecting every ob-

jection presented to it. Furthermore, even if a sufficient basis

for the agency’s action was not clear to the court of appeals,

the proper procedure was to remand to the agency for an

explanation of its decision to extend the permit not to require

a hearing on unrelated (and unspecified) issues. See Citizens

to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420

(1971) ; Camp v. Pitts, 411 U.S. 188, 148 (1973) ; cf. Dunlop

v. Bachowski, 421 U.S. 560, 572-574 (1975).

permits rather than set effluent limitations primarily

by classes and categories. Jd. at 132-133. This con-

struction, the Court said, would “place an impos-

sible burden on EPA.” Such “considerations of feas-

ibility and practicality” led the Court to conclude

“that Congress would [not] have failed so conspic-

uously to provide EPA with the authority needed to

achieve the statutory goals.” Jd. at 133. Accord,

New England Divisions Case, 261 U.S. 184, 197

(1923); Bowles v. Willingham, 321 U.S. 5038, 517

(1944); Permian Basin Area Rate Cases, 390 U.S.

747, 777 (1968); United States v. Southwestern

Cable Co., 392 U.S. 157, 177-178 (1968) ; Weinberger

v. Bentex Pharmaceuticals, Inc., 412 U.S. 645, 653

(1973); National Coal Operators’ Association v.

Kleppe, supra, 423 U.S. at 399; United States Steel

Corp. v. Train, 556 F.2d 822, 834 n.14 (7th Cir.

1977).

The court of appeals’ decision, if followed, would

place an intolerable burden on EPA. In United States

Steel Corp. v. Train, supra, 556 F.2d at 834 n.14,

the Seventh Circuit noted that of more than 42,000

dischargers who had applied for NPDES permits,

only a “relatively small percentage of cases”—“about

2,000”—had involved requests for adjudicatory hear-

ings. In fact, EPA now grants about 100 requests

per year for adjudicatory hearings under the NPDES

program. The court observed that if EPA were re-

quired to conduct an adjudicatory hearing on “a

substantia! proportion” of permit proceedings, “the

entire permit program would have become hopelessly

bogged down before the agency * * *.”

It is easy to see why this would be so. All NPDES

permits involve at least the potential for factual dis-

pute. For example, questions can arise concerning the

nature of given industrial processes, their similarity

to or difference from other industrial processes, and

how this should affect control requirements or classi-

fication under effluent guidelines; concerning the eco-

nomic impact of the proposed discharge requirement,

and alternative discharge requirements; concerning

the plant itself and the company and community in-

volved; concerning the dispersal and persistence of

the discharge in the receiving waters, and its effect

there on numbers of different species and concerning

the eco-system generally. Therefore, if the court of

appeals’ decision stands and “[i]t must be shown

that the material facts supporting the decision are

not subject to dispute,” 586 F.2d at 558-659, EPA

would be required to hold an APA-type adjudicatory

hearing covering such issues on every permit issued

by it.** The court of appeals’ ruling would require

EPA to hold adjudicatory hearings in tens of thou-

sands of cases whether or not such hearings were

requested. The Court should not impute to Congress

an intent to weaken enforcement of the Act by plac-

ing such an intolerable burden on EPA.

C. Finally, EPA’s consistent interpretation of the

Act--that the statutory “opportunity” for a hearing

23 In this case and in Marathon Oil Co. v. EPA, supra, the

Ninth Circuit has held that the “hearing” referred to in

Section 402 must comply with the full panoply of procedural

rights provided by the Administrative Procedure Act, 5 U.S.C.

554, 556 and 557. 586 F.2d at 658.

is satisfied by requiring parties to request a hearing

and to identify in advance material issues of desig-

nated fact—is entitled to deference. This is particu-

larly appropriate where, as here, the statutory scheme

is characterized by an unusual “complexity and tech-

nical nature,” and “there has undoubtedly been re-

liance upon [the agency’s] interpretation by the

States” in implementing parallel provisions for State

NPDES programs under Section 402(b).% Train v.

NRDC, 421 U.S. 60, 87 (1975); EF. I. duPont de

Nemours & Co. v. Train, supra, 430 U.S. 134-135 &

n.26; see EPA v. State Water Resources Control

Board, 426 U.S. 200 (1976).

We conclude that, once EPA published notice of

its proposed action,” it was not required to hold any

adjudicatory hearing at all unless one was requested

to determine a material issue of fact. No such issue

was tendered. As a result, the court of appeals should

2 Under Section 402(b) (3) of the Act, 33 U.S.C. 1842

(b) (3), a state which administers an approved NPDES pro-

gram must

insure that the public, and any other State the waters

of which may be affected, receive notice of each applica-

tion for a permit and * * * provide an opportunity for

public hearing before a ruling on each such application.

[Emphasis added. ]

25 EPA’s notice-and-hearing regulations, as mentioned above

(note 9, swpra), give any person or organization the right

to request in advance that EPA mail them individual notice

concerning any matter. 40 C.F.R. 125.32(a) (2). Respondents

made no such request. Persons who choose not to make such

a request rely on newspaper notice. Jbid. The new regula-

tions continue this basic structure. See 40 C.F.R. 124.41, 44

Fed. Reg. 32931-32933 (1979).

have confined its review to the legal issues properly

presented to the agency. Because the court of ap-

peals did not disagree with EPA’s resolution of these

legal issues, the court should affirm EPA’s extension

of the Hyperion permit.

CONCLUSION

For the foregoing reasons, petitioner respectfully

requests that the decision below be reversed and that

this case be remanded to the court of appeals.

Respectfully submitted.

WADE H. MCCREE, JR.

Solicitor General

JAMES W. MOORMAN

Assistant Attorney General

LOUIS F.. CLAIBORNE

Deputy Solicitor General

WILLIAM ALSUP

Assistant to the Solicitor General

ANGUS MACBETH

RAYMOND W. MUSHAL

Attorneys

JOAN Z. BERNSTEIN

General Counsel

WILLIAM F.. PEDERSEN

Deputy General Counsel

LIsA K. FRIEDMAN

Attorney

Environmental Protection Agency

SEPTEMBER 1979

WW ov. S. GOVERNMENT PRINTING orrice; 1979 300120 65

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.