Appendix — Union Electric Co. v. Environmental Protection Agency

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‘EILED

JUN 18 1979

ODAK, JR., CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1978

No. 78-1844

UNION ELECTRIC COMPANY,

Petitioner,

v

ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

SUPPLEMENTARY APPENDIX

to

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

for the Eighth Circuit

WILLIAM H. FERRELL

314 North Broadway

St. Louis, Missouri 63102

Counsel for Petitioner

STEWART W. SMITH, JR. and

SCHLAFLY, GRIESEDIECK, FERRELL & TOFT

Of Counsel

ee ee OE ee ITO NS ee

St. Louis Law Printing Co.. Inc.. 812 Olive Street 63101 314-231-4477

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IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1978

No. 78-1844

UNION ELECTRIC COMPANY,

Petitioner,

V

ENVIRONMENTAL PROTECTION AGENCY,

Respondent.

SUPPLEMENTARY APPENDIX

to

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

for the Eighth Circuit

SUPPLEMENTARY APPENDIX

Opinion of the United States District Court for the Eastern

District of Missouri, Entered on March 16, 1978

and Reported at 450 F. Supp. 805

Union Electric Company, a Missouri Corporation, Plaintiff,

v.

Environmental Protection Agency, an agency of the

United States of America, Defendant.

No. 78-164C(A).

United States District Court, E. D. Missouri, E. D.

March 16, 1978.

— SA-2 —

Electric utility brought action seeking declaratory judgment,

preliminary injunction and permanent injunction with respect to

enforcement proceedings by Environmental Protection Agency.

The District Court, Harper, J., held that: (1) under its general

equitable powers, the court had authority to stay EPA enforce-

ment proceedings to prevent irreparable harm while electric

utility sought in good faith a variance under state procedures,

where utility established irreparable harm through potential call-

ing of its bonds, which could force it into bankruptcy, and

threatened enforcement of daily accumulating criminal and civil

penalties, including an injunction not to violate regulation which

could only be accomplished by closing of plant, and (2) as mat-

ter of procedural due process, electric utility was entitled to

seek such a variance.

Preliminary injunction granted.

1. Injunction key 132

General function of preliminary injunction is to maintain

Status quo pending determination of action on its merits.

2. Injunction key 136(3), 137(1, 2, 4)

Traditional requirements necessary for grant of temporary

injunction are: irreparable harm to petitioner unless preliminary

relief is granted; absence of substantial harm to opposing party;

absence of harm to public interests; and likelihood that peti-

tioner will prevail on merits of his case .

3. Health and Environment key 28

District court, under its general equitable powers, had au-

thority to stay EPA enforcement proceedings to prevent irrep-

arable harm while electric utility sought in good faith a vari-

ance under state procedures with respect to clean air standards,

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where utility established irreparable harm through potential

calling of its bonds, which could force it into bankruptcy, and

threatened enforcement of daily accumulating criminal and civil

penalties, including an injunction not to violate regulation which

could only be accomplished by closing of plant. V.A.M.S. §

393.130, subd. 1; Clean Air Act, § 113(b, c) as amended 42

U.S.C.A. § 7413(b, c).

4. Health and Environment key 28

Persons seeking to relax state emission standards more strin-

gent than those required by national standards must obtain

their relief from the state. Clean Air Act, § 101 et seq. as

amended 42 U.S.C.A. § 7401 et seq.

5. Constitutional Law key 318(1)

Due process requires a full and fair hearing before impartial

tribunal at meaningful time and in meaningful manner. U.S.

C.A.Const. Amend. 5.

6. Constitutional Law key 305(2)

Hearing which comports with due process requirements must

ordinarily be accorded before party can be condemned to suf-

fer grievous loss. U.S.C.A.Const. Amend. 5.

7. Constitutional Law key 296(1)

As a matter of procedural due process, electric utility was

entitled to seek variance of applicable state regulations con-

tained in state implementation plan prior to enforcement pro-

ceedings by EPA with regard to emission standards for sul-

phur dioxide and opacity under Clean Air Act. U.S.C.A.Const.

Amend. 5; Clean Air Act, § 101 et seq. as amended 42 US.

C.A. § 7401 et seq.

— SA-4 —

8. States key 4.12

States, which are required to formulate, subject to EPA ap-

proval, an implementation plan designed to achieve national am-

bient air quality standards, are permitted to go beyond national

standards by enacting more strict state standards. Clean Air

Act, § 110(a)(1), (a)(3)(A), (a)(S)(A)(iii) as amended 42 USS.

C.A. § 7410(a)(1), (a)(3)(A), (a)(5)(A)(iii); V.A.M.S. §§ 203.-

040, subd. 1, 203.110.

9. Health and Environment key 28

Under Clean Air Act, where enforcement proceeding may be

instituted while the polluter is seeking a variance of state im-

plementation plan, a variance proceeding must be allowed to

go first with enforcement action to follow. Clean Air Act, §

101 et seq. as amended 42 U.S.C.A. § 7401 et seq.

William H. Ferrell, Schlafly, Griesedieck, Ferrell & Toft, St.

Louis, Mo., for plaintiff.

Joseph B. Moore, Asst. U. S. Atty., St. Louis, Mo., for de-

fendant.

MEMORANDUM OPINION AND ORDER

HARPER, District Judge.

The plaintiff, Union Electric Company (hereinafter referred

to as UE), has filed a complaint seeking a declaratory judgment

and a preliminary injunction and permanent injunction with

respect to enforcement proceedings by Environmental Protec-

tion Agency (hereinafter referred to as EPA) with regard to

emission standards for sulphur dioxide (hereinafter referred to

as SO2) and opacity under the Clean Air Act, 42 U.S.C. § 7401

et seq. Plaintiff's prayer seeks equitable relief, a stay of any

— SA-5 —

enforcement proceedings by EPA only so long as UE is actively

and in good faith pursuing revisions and/or variance of the

applicable regulations contained in the Missouri Implementa-

tion Plan before administrative agencies and/or courts of the

State of Missouri. Plaintiff seeks no relief beyond the time at

which its request for revisions are finally resolved by the ad-

ministrative agencies and/or courts of the State of Missouri.

Plaintiff does not ask the Court to determine the merits of its

requests for revisions or the applicability of the Implementation

Plan to its present operations.

This matter is before the Court on plaintiff's motion for a

preliminary injunction.

The jurisdiction of this Court exists pursuant to 28 U.S.C. §

1331(a) inasmuch as this is an action brought against EPA,

an agency of the United States.

There is no dispute between the parties with respect to the

facts presented. The pleadings, briefs of the parties, testimony

and exhibits before the Court, and prior history, disclose that

the plaintiff is an electric utility company serving the metropoli-

tan St. Louis area and parts of Illinois and Iowa. Its three coal-

fired generating plants, Labadie, Meramec and Sioux, are sub-

ject to the SO, and opacity restrictions in the Missouri Imple-

mentation Plan as approved by EPA.

UE did not seek review of the Administrator’s approval of the

plan on May 31, 1972, 40 CFR 52.1320, within thirty days, as

it was entitled to do under Section 307(b)(1) of the Act, 42

U.S.C. § 1857h-5(b)(1), but rather applied to the appropriate

state and county agencies for variances from the emission limi-

tations affecting its three plants. UE received a one-year variance

for each of the plants which could be extended upon reapplica-

tion. The variances on two of the three plants had expired and

plaintiff was applying for extensions when on May 31, 1974,

— SA-6 —

the Administrator notified the plaintiff that SO, emissions from

its plants violated the emission limitations contained in the Mis-

souri Implementation Plan.

On August 18, 1974, UE brought suit against the EPA in

the United States Court of Appeals for the Eighth Circuit, con-

tending that they should not have to comply with SO, emission

regulations because of economic reasons and because their SO,

emissions were not interfering with attainment or maintenance

of the National Ambient Air Quality Standards (NAAQS) for

SO,. Therein, UE contended that a claim or economic or tech-

nological infeasibility may be considered upon a petition for re-

view of approval by the Administrator of a state implementation

plan. In Union Electric Co. v. EPA, 515 F.2d 206 (8th Cir.

1975), the Court held that questions of economic and techno-

logical feasibility do not constitute grounds for review and that

the court is without jurisdiction to consider the claim raised by

UE in its petition for review. On October 6, 1975, the Supreme

Court in UE v. EPA, 427 U.S. 246, 265-67, 96 S.Ct. 2518,

2529, 49 L.Ed.2d 474 (1976) held:

“In sum, we have concluded that claims of economic or

technological infeasibility may not be. considered by the

Administrator in evaluating a state requirement that pri-

mary ambient air quality standards be met in the mandatory

three years. And, since we further conclude that the States

may submit implementation plans more stringent than fed-

eral law requires and that the Administrator must approve

such plans if they meet the minimum requirements of § 110

(a) (2), it follows that the language of § 110(a)(2)(B)

provides no basis for the Administrator ever to reject a

state implementation plan on the ground that it is eco-

nomically or technologically infeasible. Accordingly, a

court of appeals reviewing an approved plan under §

307(b) (1) cannot set it aside on those grounds, no matter

when they are raised.

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“Our conclusion is bolstered by recognition that the

Amendments do allow claims of technological and economic

infeasibility to be raised in situations where consideration

of such claims will not substantially interfere with the pri-

mary congressional purpose of prompt attainment of the

national air quality standards. Thus, we do not hold that

claims of infeasibility are never of relevance in the formula-

tion of an implementation plan or that sources unable to

comply with emission limitations must inevitably be shut

down.

“Perhaps the most important forum for consideration of

claims of economic and technological infeasibility is before

the state agency formulating the implementation plan. So

long as the national standards are met, the State may select

whatever mix of control devices it desires, Train v. NRDC,

supra, 421 U.S. 60, at 79 [95 S.Ct. 1470, 43 L.Ed.2d

731,] and industries with particular economic or techno-

logical problems may seek special treatment in the plan it-

self. Cf. 40 CFR §§ 51.2(b), (d) (1975); S. Rep. No. 91-

1196, p. 36 (1970). Moreover, if the industry is not

exempted from, or accommodated by, the original plan,

it may obtain a variance, as petitioner did in this case; and

the variance, if granted after notice and a hearing, may be

submitted to the EPA as a revision of the plan.'® § 110

(a) (3) (A), as amended, 88 Stat. 256, 42 U.S.C. § 1857c-

5(a) (3) (A) (1970 ed., Supp. IV.) Lastly, an industry de-

nied an exemption from the implementation plan, or denied

a subsequent variance, may be able to take its claims of

economic or technological infeasibility to the state courts.

See, e.g., § 203.130, Mo.Rev.Stat. (1972); Cal. Health &

Safety Code § 39506 (1973); Pa.Stat.Ann., Tit. 71, §

1710.41 (1962).'®” (Emphasis added. )

In February, 1975, while the case of UE v. EPA was in the

Eighth Circuit Court of Appeals, the U. S. Environmental Pro-

— SA-8 —

tection Agency filed a report titled “Implementation Plan Review

as required by the Energy Supply and Environmental Coordi-

nation Act” (PIffs Ex. 2). On page 4 of the report the EPA

had this to say in part:

“The State Implementation Plan for Missouri has been

reviewed for the most prevalent causes of over-restrictive

fuel combustion emission limiting regulations. The major

findings of the review are:

“* * * For sulfur dioxide, there are indications that emis-

sion limiting regulations for very large fuel burning sources

may be overly-restrictive. '

* * * * * * *

“Missouri has direct fuel combustion regulations for SO,

only in the Metropolitan St. Louis Area. Except in St.

Louis, therefore, fuel switching is not hindered by SO,

emissions regulations. Current air quality sampling data

for St. Louis indicate high isolated SO, concentrations in

the Missouri portion of the metropolitan area. However,

sources of SO, other than power plants are in the immediate

vicinity of these ‘hot spots’. Since these sources are pres-

ently meeting existing emission regulations, there are strong

indications that regulations affecting these sources must be

tightened.”

The report continues on page 5:

“There are currently no indications that SO, emissions

from power plants in the Missouri portion of the St. Louis

area are causing violations of SO, air quality standards.”

The Supreme Court handed down its decision in UE v. EPA

on June 25, 1976. UE filed a motion for rehearing. On July 22,

1976, following the Supreme Court’s decision, Jerome H. Svore,

Regional Administrator for EPA, wrote a letter to the Chairman

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of the Missouri Air Quality Commission (PIff's Ex. 3), which

stated in part as follows:

“The EPA has reviewed the SO, monitoring data for the

area around three UECO plants and performed some diffu-

sion modeling calculations. The results of this review and

these calculations indicates that UECO was correct in the

contention that its SO, emissions were not interfering with

the attainment or maintenance of the NAAQS for SO,

“The EPA sent a letter to Governor Christopher S. Bond

on March 28, 1975, a copy of which you have, transmitting

a copy of a report entitled ‘Implementation Plan Review for

Missouri as Required by the Energy Supply and Environ-

mental Coordination Acts.’ This report stated that the

State of Missouri could relax the SO, emission standard

which applies to the three UECO plants mentioned previ-

ously, without violating the ambient air quality standards.

“The EPA has no objections to your amending Regula-

tion X to relax the SO, emission standard for the three

UECO plants which were mentioned previously. The new

SO, emission standard must still provide for attainment and

maintenance of the NAAQS and this must be demon-

strated by a revision to the Centrol Strategy Section of the

Missouri State Implementation Plan.

“If you decide not to follow the above course of action

or place the UECO on a compliance schedule to comply

with Regulation X, the EPA has no alternative but to issue

an Administrative Order, pursuant to Section 113 of the

Clean Air Act, which requires the UECO to comply with

the SO, emission standard specified by Regulation X. This

enforcement action is necessary because the EPA cannot

allow an emission source to violate an emission standard

in a federally approved SIP unless there is an approved

expeditious compliance schedule.

— SA-10 —

“Because of the seriousness and magnitude of this prob-

lem, it is imperative for the Missouri Air Conservation

Commission (MACC) and the EPA to be on the same

wave length. I will be looking forward to hearing from

you on any decisions the MACC may make. If we can

help, let me know.”

In September, 1976, after receipt of the Supreme Court

decision, but before the motion for rehearing was overruled on

October 4, 1976, UE filed a petition with the Missouri Air Con-

servation Commission for a relaxation of the existing regulations

for SOz or in the alternative for a variance from the existing

regulations for the individual UE plants. UE secured expert

witnesses and prepared to submit evidence to support the

petition.

The Missouri Air Conservation Commission in April, 1977,

tabled the request of UE to change the SO, emission limitation

(testimony of witness Smith), or voted not to change the SO

emission limitations for the St. Louis metropolitan area (PIff’s

Ex. 4), but indicated it would consider the Company’s petition

for a variance for the Sioux and Labadie plants. A Mr. Sander-

son, a representative of the EPA, was present and indicated

such would be agreeable.

There was a later meeting attended by representatives of the

Commission, EPA and UE with respect to the problem, in which

it was stated a variance would be granted. Plaintiff's Exhibit

6, a copy of a letter written by Charles V. Wright, Acting

Regional Administrator, sent to James P. Odendahl, P.E., Act-

ing Director of the Division of Environmental Quality, dated

May 31, 1977, subsequent to the above occurrence states in part:

“I am pleased to respond to Mr. Michael T. Marshall’s

letter of May 28, 1977, regarding the Commission's intent

to grant a variance to Union Electric (UE) for the operation

~~ SA-11 —

of their Portage Des Sioux and Labadie power plants. You

requested information on the requirements regarding the

approvability of a variance by the Environmental Protec-

tion Agency (EPA) as a revision to the State Implementa-

tion Plan (SIP).”

The letter sets out various information with respect to the ap-

plicable statutory and regulatory requirements. In the first para-

graph on page 3 of the letter, it is stated as follows:

“Since the Commission has now voted not to change

the SO. emission limitations in the St. Louis regulations, I

will expect the State to act promptly to bring the UE plants

into compliance with the existing limitations or to adopt

and justify less stringent limitations in accordance with

Federal requirements.”

UE has complied with the SO» requirements at the Meramec

plant by burning low sulphur coal, but in doing so has reduced

the efficiency of existing particulate controls and gone out of

compliance with the state and county particulate and visible

emission regulations.

On November 11, 1977, Kathleen Q. Camin, Regional Ad-

ministrator of EPA, wrote a letter to James P. Odendahl, Di-

rector of the Division of Environmental Quality (PIff's Ex. 4).

The letter in part states:

“As you know, Union Electric petitioned the Missouri

Air Conservation Commission in the fall of 1976 for a

relaxation of the existing regulation for SO, or, in the

alternative, for a variance from the existing regulation for

the individual Union Electric plants. The Commission

voted not to change the SO» emission limitations for the

St. Louis metropolitan area, but indicated they would con-

sider the company’s petition for a variance for the Sioux

and Labadie plants.”

— SA-12 —

“In a letter to you dated May 31, 1977, Mr. Charles V.

Wright, Acting Regional Administrator, stated that since

the Commission had voted not to change the SO, emission

limitation in the St. Louis regulation, the State was ex-

pected to act promptly to either bring the Union Electric

plants into compliance with the existing limitation or to

adopt and justify less stringent limitations in accordance

with Federal requirements. Five months have passed and

the State has yet to take any action with regard to the

Labadie and Sioux power plants.”

During all of this period the UE stood ready to present testi-

mony to support its petition for relaxation of existing regula-

tions or for variance, but the Commission has not acted upon

the petition.

Thereafter, the Missouri Commission set a hearing for Feb-

ruary 13, 1978, on said application, and then over the objec-

tion of UE reset the hearing for March 6, 1978.

On January 13, 1978, after the hearing before the Missouri

State Commission had been set, EPA sent notices of violation

to UE (Plff’s Ex. 1). In the notice, the EPA charged the UE

Labadie and Sioux power plants with violation of SO, and

opacity regulations, and also charged the Meramec plant with

violation of opacity regulations. 10 CSR 10-5.110(2) and 10

CSR 10-5.090. These regulations are contained in the Missouri

Implementation Plan as approved by the EPA. The notice

further pointed out certain penalties and injunctions shall be

invoked thirty days after notification of violation. Indeed,

§ 113(b) of the Clean Air Act, as revised by the 1977 amend-

ments, now provides that whenever any person violates a re-

quirement of an applicable implementation plan for more than

thirty days after having been notified of the violation, the Ad-

ministrator shall, in the case of a major stationary source com-

mence a civil action for a permanent or temporary injunction

— SA-13 —

or to assess and recover a civil penalty of $25,000 per day of

violation. 42 U.S.C. § 7413(b)(2)(B). Additionally, any. person

who knowingly violates any requirement of an applicable im-

plementation plan more than thirty days after having been noti-

fied of its violation by the Administrator is subject to criminal

action involving a penalty of $25,000 per day of violation, or

by imprisonment of not more than one year or both. Such a

criminal action may be brought against both the company and

its “responsible officers.” 42 U.S.C. § 7413(c)(3), 42 U.S.C.

§ 7413(C)(1)(A)ii). Each of UE’s power plants involved herein

are major stationary sources as defined in § 302(j) of the Act,

42 U.S.C. § 7602(j).

Thus, the plaintiff is presently in an unenviable position in

which daily penalties for noncompliance with the state imple-

mentation plan are accruing while it seeks variances pursuant

to the statutorily authorized procedure contained in V.A.M.S.

§ 203.110. Additionaily, Union Electric’s first mortgage and

deed of trust (PIff's Ex. 7), under which $1,078,000,500 prin-

cipal amount of its bonds are outstanding, provide that the

failure of Union Electric to comply with any governmental di-

rectives could constitute an act of default and make all such

bonds callable. A calling of all bonds could force the plaintiff

into bankruptcy.

Immediate compliance with the applicable regulations is not

possible. The testimony before the Court indicated that the

only way compliance with the SO, regulation could be achieved

at those plants would be by the installation of flue gas de-

sulphurization (FGD) equipment or by the use of low sulphur

coal, The installation of FGD equipment on those plants would

require a capital expenditure over the next four to five years

of over $713,000,000 and annual operating costs of $137,000,-

000 as of the assumed 1983 start-up year. Such equipment

would not produce any electricity. The construction of such

equipment would require at least five years at Union Electric’s

— $4 -—

plants. Additionally, testimony indicated that FGD equipment

cannot be relied on, even with the best of maintenance, to

Operate continually or satisfactorily. As stated by Justice Pow-

ell, VE v. EPA, supra, 427 U.S. at 271 n. 2, 96 S.Ct. at 2532,

“[T]he burden of these extraordinary capital and operating

costs, even if the technological infeasibility problems could

be solved, would fall necessarily on the consumers of electric

power.”

The annual cost of low sulphur coal over that now being

used at the Labadie and Sioux plants would be almost $179,-

000,000 plus capital investment of $49,000,000. This would

cause a rate increase of approximately twenty-five percent if

there were no decrease in the use of electricity. Further, testi-

mony indicated that it is presently impossible to obtain a suf-

ficient supply of low sulpliur coal to meet the SO, emission

regulation.

Compliance could be achieved only by a shutdown of its

plants. The Labadie and Sioux plants alone constitute more than

fifty percent of the base generating capacity of the plaintiff. A

shutdown of these plants could result in a widespread electrical

breakdown throughout the Midwest and would result in drastic

financial consequences to the plaintiff. Justice Powell in UE v.

_ EPA, supra at 272, 96 S.Ct. at 2532, said:

“(T]he shutdown of an urban area’s electrical service

could have an even more serious impact on the health of the

public than that created by a decline in ambient air quality.

The result apparently require by the legislation [Clean Air

Act] in its present form could sacrifice the well-being of a

large metropolitan area through the imposition of inflexible

demands that may be technologically impossible to meet and

indeed may no longer even be necessary to the attainment of

the goal of clean air.

“I believe that Congress, if fully aware of this draconian

possibility, would strike a different balance.”

-~SA-15 —

Further, it is conceivable that a voluntary shutdown by the

plaintiff would violate its statutory duty to provide such service

facilities as shall be safe and adequate, and in all respects just

and reasonable. V.A.M.S. § 393.130.1. The Missouri Public

Service Commission has held that a public utility may not

abandon service except for sound and equitable reasons after a

fair and reasonable trial at operation. 6 Mo.P.S.C. 681.

[1,2] At the outset it is important to note that the general

function of a preliminary injunction is to maintain the status quo

pending determination of the action on its merits. Blaylock v.

Cheker Oil Co., 547 F.2d 962, 965 (6th Cir. 1976). The tra-

ditional requirements necessary for the grant of a temporary

injunction are: (1) Irreparable -harm to the petitioner unless

preliminary relief is granted; (2) absence of substantial harm

to the opposing party; (3) absence of harm to the public interest;

and (4) a likelihood that the petitioner will prevail on the merits

of his case. See Doran v. Salem Inn, Inc., 422 U.S. 922, 931, 95

S.Ct. 2561, 45 L.Ed.2d 648 (1975); Mo. Portland Cement Co.

v. H. K. Porter Co., 535 F.2d 388, 392 (8th Cir. 1976); Wash-

ington v. Walker, 529 F.2d 1062, 1065 (7th Cir. 1976); A. O.

Smith Corp. v. FTC, 530 F.2d 515, 525 (3rd Cir. 1976); Canal

Authority v. Callaway, 489 F.2d 567, 572 (Sth Cir. 1974).

These requirements have undisputably been met in the present

case.

[3] Plaintiff has established irreparable harm through the po-

tential calling of its bonds, which could force plaintiff into bank-

ruptcy, and the threatened enforcement of daily accumulating

criminal and civil penalties, including an injunction not to vio-

late the regulation which could only be accomplished by closing

the plant, under 42 U.S.C. § 7413(b) and (c). Abbott Labora-

tories v. Gardner, 387 U.S. 136, 152-56, 87 S.Ct. 1507, 18 L.

Ed.2d 681 (1967); Hynes v. Grimes Packing Co., 337 US.

86, 99-100, 69 S.Ct. 968, 93 L.Ed. 1231 (1949).

~ SA-16 —

The injury to the defendant is not substantial, and is certainly

outweighed by the injury to the plaintiff. Indeed, as previously

referred to, Jerome H. Svore, the Regional Administrator for the

EPA, in a letter (PIff's Ex. 3) to the Chairman of the Missouri

Air Quality Commission, conceded that the UE’s Sioux and

Labadie plants do not violate NAAQS for SO, and that the EPA

would be amenable to a revision of state standards by the Mis-

souri Air Conservation Commission. The plaintiff is in violation

of the implementation plan only because Missouri standards ex-

ceed those necessary for compliance with the National Standards

(NAAQS), as the states are free to adopt stricter standards than

the national standards under § 116 of the Clean Air Act, 42

U.S.C. § 1857d-1 (1970 Ed. Supp. IV). See also UE v. EPA,

supra, 427 U.S. at 261-66, 96 S.Ct. 2518.

The public interest is manifestly in favor of continued oper-

ation by the plaintiff. UE v. EPA, supra at 272, 96 S.Ct. 2518

(Powell concurring).

In American Home Products Corp. v. Finch, 303 F.Supp.

448, 456 (D.Del.1969), it was held that a substantial likeli-

hood of success need not be demonstrated where:

“The question is not of court interference with ‘ordinary

processes of administration’ pending judicial review, but

rather one of insuring the functioning of the ‘ordinary

processes of administration’ necessary to protect the pro-

cedural rights of the plaintiff and prevent irreparable in-

jury to him. Further, in contrast to a determination of

probable success on appeal, this Court does not possess

the necessary expertise to determine, in advance of a hear-

ing before the appropriate administrative body, whether

the plaintiff will have a ‘substantial likelihood of success’

_ before that body.”

In the present case, the petitioner does not request this Court

to determine the merits of its request for a variance. Rather,

=,

it seeks only a maintenance of the status quo while pursuing

administrative and/or judicial procedures, to which it is statu-

torily authorized under V.A.M.S. § 203.110 et seg. The deci-

sion in American Home Products, supra, would thus be ap-

plicable, however this Court is not compelled to rely upon it.

The magnitude of the injury posed to the public and the peti-

tioner, the absence of any violation of national standards, and

the previous gronts of variances by the Missouri Air Conser-

vation Commission indicate a substantial likelihood of success

here. The Court doubts that the Commission would require the

shutdown of a regional power company, with the subsequent

devastating effects on this area to achieve air quality standards

that have specifically been determined unnecessary by EPA.

The plaintiff principally argues that it is entitled to a stay of

enforcement proceedings while it is pursuing in good faith state

procedures for a change in regulations or a variance as a mat-

ter of procedural process, citing Ex Parte Young, 209 U.S. 123,

28 S.Ct. 441, 52 L.Ed. 714 (1908). Therein the Supreme

Court held that state statutes establishing maximum rail rates

and providing for daily accumulating penalties, including im-

prisonment for violation thereof, were constitutionally invalid,

since the parties have been given no opportunity to contest the

validity of the rates, and were effectively denied judicial review

of the rates by the magnitude of the penalties.

“Now to impose upon a party interested in the burden

of obtaining a judicial decision of such a question (no

prior hearing having ever been given) only upon the con-

dition that, if unsuccessful, he must suffer imprisonment

and pay fines, as provided in these acts, is, in effect, to

close up all approaches to the courts, and thus prevent any

hearing upon the question whether the rates as provided

by the acts are not too low, and therefore invalid. The dis-

tinction is obvious between a case where the validity of

the act depends upon the existence of a fact which can

— SA-18 —

be determined only after investigation of a very compli-

cated and technical character, and the ordinary case of a

statute upon a subject requiring no such investigation, and

over which the jurisdiction of the legislature is complete

in any event.”

Ex Parte Young, supra at 148, 28 S.Ct. at 449. Accord. Wad-

ley Southern Ry. v. Geogia, 235 U.S. 651, 669, 35 S.Ct. 214,

59 L.Ed. 405 (1915).

In St Regis Paper Co. v. United States, 368 U.S. 208, 82

S.Ct. 289, 7 L.Ed.2d 240 (1961), the Supreme Court held that

daily accumulating penalties for failure to file special reports

in compliance with FTC orders were not invalid where “peti-

tioner did not try to obtain judicial review prior to the com-

mencement” of the government's enforcement action, and where

the petitioner did not “seek a stay once the litigation had be-

gun.” St. Regis Paper Co. v. United States, supra, at 225, 82

S.Ct. at 299. See also United States v. Morton Salt Co., 338

U.S. 632, 654, 70 S.Ct. 357, 94 L.Ed. 401 (1950); United

States v Pacific Coast European Conference, 451 F.2d 712 (9th

Cir. 1971); Genuine Parts Co. v. F. T. C., 445 F.2d 1382

(Sth Cir. 1971). This line of cases holds that a party whose

conduct is made subject to administrative action must be given

an opportunity to obtain a judicial test of the validity of such

action and, as a matter of due process of law, cannot be sub-

jected to the risk that substantial penalties will accumulate dur-

ing the course of the judicial proceeding

[4] The plaintiff is presently pursuing the only method by

which it can achieve compliance with state standards without

violating its statutory duty to provide service. V.A.M.S. § 393.-

130.1. Persons seeking to relax state emission standards more

stringent than those required by the National Standards must

obtain their reiief from the state. UE v. EPA, supra, at 263

n. 10, 265 n. 14, 96 S.Ct. 2518.

=

[5-7] Due process requires a full and fair hearing before an

impartial tribunal “at a meaningful time and in a meaningful

manner.” Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct.

1187, 1191, 14 L.Ed.2d 62 (1965). See also Goldberg v.

Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970).

A hearing which comports with due process requirements must

ordinarily be accorded before a party “can be condemned to

suffer a grievous loss.” Joint Anti-Fascist Refugee Comm. v.

McGrath, 341 U.S. 123, 168, 71 S.Ct. 624, 647, 95 L.Ed.

817 (1951) (Frankfurter concurring). The Court concedes

that there is little precedent in the environmental area for its

decision herein due to the relative newness of the Clean Air

Act. However, the enforcement of certain orders by the Food

and Drug Administration have been temporarily stayed, upon

considerations of procedural due process, until a hearing before

that agency on the merits of the case, where the petitioner

presented reasonable grounds for objecting to the order and

also established the traditional requirements for a temporary

injunction. American Home Products Corp. v. Finch, 303 F.

Supp. 448 (D.Del. 1969). See also Upjohn Co. v. Finch, 303

F.Supp. 241 (W.D.Mich. 1969). This Court concludes that as

a matter of procedural due process, as guaranteed by the 5th

Amendment, the plaintiff is entitled to seek a variance under

state proceedings prior to the institution of enforcement pro-

ceedings.

[8] The Clean Air Act, 42 U.S.C. § 7401 et seq. (1977

amendments) has delegated a considerable amount of responsi-

bility to the states for achieving its purposes and goals. See

Luneburg, Federal-State Interaction Under the Clean Air

Amendments of 1970, 14 B.C.Ind. & Com.L.Rev. (1973). The

1970 amendments reflect congressional dissatisfaction with the

progress of existing air pollution programs and a determination

to “take a stick to the States.” Train v. Natural Resources De-

fense Council, 421 U.S. 60, 64, 95 S.Ct. 1470, 1474, 43 L.Ed.

2d 731 (1975). The states are required to formulate, subject

— SA-20 —

to EPA approval, an implementation plan designed to achieve

national ambient air quality standards. 42 U.S.C. § 7410(a)

(1). The states are further permitted to go beyond national

standards by enacting more strict state standards. VE v. EPA,

supra at 261-65, 96 S.Ct. 2518. The states may also enact a

procedure to revise its plan. 42 U.S.C. §§ 7410(a)(3)(A),

7410(a)(5) (A) (iii). A variance approved as a revision of a

plan under § 110(a)(3)(A) of the Act, 42 U.S.C. § 7410(a)

(3)(A) must be honored by the EPA as part of the applicable

implementation plan. VE v. EPA, supra at 266 n. 15, 96 S.Ct.

2518. It would be incongruous to permit the EPA to pursue

enforcement while a variance is being sought as to a state

standard, especially in light of the magnitudinous ire parable

harm posed to the plaintiff as heretofore discussed. Assuming

that a variance is granted, the EPA will find itself enforcing

or having enforced a regulation that is no longer in effect.

Indeed, it has been interpreted that an application for a

variance under the provisions of V.A.M.S. § 203.110 stays

enforcement of the regulation at issue as to the person filing

the petition. Op. (Mo.) Atty. Gen. No. 281, Shell, 4-14-70.

It should also be noted that the members of the Missouri Air

Conservation Commission are statutorily required to be “per-

sons experienced in the field of air pollution,” and hence the

commission may constitute a more knowledgeable forum than

any court of law. V.A.M.S. § 203.040.1.

The cases cited by the defendant are inapposite. The EPA

relies upon Lloyd A. Fry Roofing Co. v. EPA, 554 F.2d 885

(8th Cir. 1977). Therein, the plaintiff sought pre-enforcement

review of the EPA's Notice of Violation and Compliance Order,

challenging their validity and merits. Here, no compliance order

has been issued and plaintiff secks only a stay of enforcement

proceedings until it has exhausted its request for a variance,

which can only be obtained under state law. UE v. EPA, supra.

_This same consideration is applicable to West Penn Power Co.

— SA-21 —

v. Train, 522 F.2d 302 (3rd Cir. 1975). The Court in Fry

was particularly concerned that “[p]re-enforcement review would

severely limit the effectiveness of the conference procedure as

a means to abate violations of the Act without resort to judicial

process.” Lloyd A. Fry Roofing Co. v. EPA, supra at 891. The

1977 amendments to the Clean Air Act effectively dispose of the

consideration by requiring the commencement of a civil action

against any operator of a major stationary source for violations

occurring thirty days after notification by the Administrator. 42

U.S.C. § 7413(b)(2)(B). The Court of Appeals also stated,

lc. 891:

“[WlJe are persuaded by the legislative history of the

Clean Air Act amendments of 1970 to hold that plaintiff

lacks authority to initiate and maintain litigation to chal-

lenge the EPA’s order issued on March 9, 1976, and that

plaintiff must assert its claims as a defense or counterclaim

in any action brought by the Administrator of EPA under

section 113 of the Clean Air Act. 42 U.S.C. § 1857c-8.”

However, the Supreme Court in UE v. EPA, supra at 266-7,

96 S.Ct. 2518, clearly established that claims of economic and

technological infeasibility may be raised in state proceedings.

The defendant also places considerable reliance upon a state-

ment contained in Train v. NRDC, 421 U.S. 60, 92, 95 S.Ct.

1470, 1488, 43 L.Ed.2d 731 (1975). Therein, the Court stated:

“As made clear in the Getty case [Getty Oil Co. v.

Ruckelshaus, 342 F.Supp. 1006 (D.Del.), remanded with

directions, 467 F.2d 349 (3rd Cir. 1972)] * * * a polluter

is subject to existing requirements until such time as he ob-

tains a variance, and variances are not available under the

revision authority until they have been approved by both

the State and the Agency. Should either entity determine

that granting the variance would prevent attainment or

SA-22 —

maintenance of national air standards, the polluter is pre-

sumably within his rights in seeking judicial review. This

litigation, however, is carried out on the polluter’s time,

not the public’s, for during its pendency the original regu-

lations remain in effect, and the polluter’s failure to comply

may subject him to a variety of enforcement procedures.”

Initially, it should be noted that the Getty case has overruled

in UE v. EPA, supra at 254, 96 S.Ct. 2518. Secondly, this Court

deems it unlikely that the statement made above was intended

to preclude the exercise of this Court's equitable powers in the

face of extraordinary irreparable harm, without an express intent

to that effect. Third, the plaintiff herein seeks only a stay of en-

forcement proceedings by the EPA until pending state processes

are exhausted.

[9] In conclusion this Court holds:

(1) That considerations of procedural due process require

that the plaintiff be permitted to seck a variance under state

procedures prior to suffering a grievous loss which may result

from an enforcement proceeding by the EPA;

(2) That this Court under its general equitable powers has

the authority to stay an enforcement proceeding to prevent ir-

reparable harm while the plaintiff seeks in good faith a variance

under State procedures; and

(3) That the only fair interpretation of the Clean Air Act,

where an enforcement proceeding may be instituted while the

polluter is seeking a variance of the state implementation plan,

is to allow the variance proceeding to go first with any enforce-

ment action to follow.

Accordingly, pending final determination of this litigation,

but in no event beyond the final determination of the plantiff's

pending request for a revision variance of the applicable Missouri

SA-23

Implemenation Plan, the defendant, Environmental Protection

Agency, and its officers and employees, are hereby enjoined

from instituting any enforcement proceedings against the plain-

tiff, Union Electric, and/or its responsible officers while Union

Electric is actively and in good faith pursuing a revision or vari-

ance of the sulphur dioxide regulations of the Missouri Imple-

mentation Plan in the administrative agencies and/or courts of

the State of Missouri pursuant to V.A.M.S. §§ 203.110 and

203.130.

This preliminary injunction is granted on the condition that

plaintiff post within three (3) days a bond in the amount of

$500,000.00 for the payment of such costs and damages as may

be incurred or suffered by the defendant if it is found to have

been wrongfully enjoined or restrained.