Petition — Eli Lilly and Company v. Douglas M. Costle, Administrator, Environmental Protection Agency

Supreme Court brief1980

Ask Donna

What actually matters in this document.

Text

‘

FIL

IN THE

Supreme Court of the Uuil

ICHAEL RODAK, JR., CLERK

OCTOBER TERM, 1978 ~

No. 79-485

ELI LILLY AND COMPANY,

Petitioner

DouGLAs M. CosTLE, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FIRST CIRCUIT

‘Of Counsel:

CLEARY, GOTTLIEB, STEEN &

HAMILTON

1250 Connecticut Ave., N.W.

Washington, D.C. 20036

September 21, 1979

DOUGLAS E. KLIEVER

CHARLES F. LETTOW

JOHN S. MAGNEY

WILLIAM N. HALL

1250 Connecticut Ave., N.W.

Washington, D.C. 20036

JOHN C. JENKINS

307 E. McCarty Street

Indianapolis, Indiana 46206

Counsel for Petitioner

Eli Lilly and Company

WILSON -

EPES PRINTING Co., INC. - 789-0096

- WASHINGTON, D.C. 20001

TABLE OF CONTENTS

ahs daceenerneenaicinindepitnecinnctapanesantiinene

Nee iaicidincenncphinniasanastbiceacaencraserioccaseosese

ke gi: | ee

I I oc oscsrcmeninmenatrcnerensoncemmneerenenente

ER see ee

REASONS FOR GRANTING THE PETITION.............

I. THE ISSUES PRESENTED TO THIS COURT

II.

ARE IMPORTANT ISSUES WHICH SHOULD

BE RESOLVED BY THE COURT TO PRO-

VIDE GUIDANCE TO THE COURTS OF AP-

PEALS AND TO THE ADMINISTRATIVE

a reisiaeatih ec eelapinieeinatoncinsstoernnepaanene

THE FIRST CIRCUIT’S DETERMINATION

THAT THE ADMINISTRATOR COMPLIED

WITH THE NOTICE-AND-COMMENT RE-

QUIREMENTS OF THE APA CONFLICTS

WITH THE DECISIONS OF OTHER COURTS

OF APPEALS AND IS INCORRECT ................

A. The Regulations Were Substantially

Changed On The Basis Of New Data ............

B. The Decision Is In Conflict With Decisions

Of The Courts Of Appeals For The Second,

Fourth, And District Of Columbia Circuits..

C. The First Circuit Erred In Deciding That

EPA Had Complied With The APA ..............

D. Eli Lilly Is Particularly Harmed By The

TABLE OF CONTENTS—Continued

III. EVEN IF IT WERE ASSUMED THAT EPA

WAS NOT REQUIRED TO ISSUE NOTICE

FOR PUBLIC COMMENT ON THE REVISED

REGULATIONS, THE COURT OF APPEALS’

DECISION TO DEFER TO EPA’S DETER-

MINATIONS BASED ON AN EXPANDED

DATA BASE WAS INCORRECT AND IN

CONFLICT WITH THE DECISION CF AN-

OTHER COURT OF APPEALS AND RE-

SULTED IN THE COURT SUBSTITUTING

ITS JUDGMENT FOR THAT OF EPA ............

A. The Court Of Appeals Deferred To EPA On

Matters Not Subject To Public Comment,

And Conducted A De Novo Review Of New

Data And Information ....................................

B. The First Circuit Erred In According Judi-

cial Deference To EPA Determinations

Based On Data And Information Which Had

Not Been Tested By Public Comment ............

C. The First Circuit Impermissibly Substituted

Its Judgment For That Of The Agency ..........

CI hi sincsenctnpece ence sneitonnielands euninicmncomaianiien

Page

1b et PONT Oe

iii

TABLE OF AUTHORITIES

CASES:

American Frozen Food Institute v. Train, 539 F.2d

Si tas ING, I hal

American Iron and Steel Institute v. Environmen-

tal Protection Agency, 568 F.2d 284 (8d Cir.

je RRR rae Remini aeet B snr Sil Wiis eA ee

Automotive Parts and Accessories Association V.

Boyd, 407 F.2d 330 (D.C. Cir. 1968) _..0.0.000000.

Bowman Transportation, Inc. Vv. Arkansas-Best

Freight System, Inc., 419 U.S. 281 (1974) ..........

California Citizens Band Association v. United

States, 375 F.2d 43 (9th Cir.), cert. denied, 389

U.S. 844 (1967) -............ PETE CORA ORI CR AT

Camp V. Pitts, 411 U.8..188 (1978) ........................

Citizens to Preserve Overton Park v. Volpe, 401

Sm I a a

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

1 | RR TOI inte Saree N SS OR Bah WR VR na as

Ethyl Corp. v. Environmental Protection Agency,

541 F.2d 1 (D.C. Cir. 1976), cert. denied, 426

CI A

Federal Power Commission v. Transcontinental

Gas Pipe Line Corp., 423 U.S. 326 (1976) ..........

Federal Trade Commission v. Sperry & Hutchin-

rg | | fk Ira ne

Home Box Office, Inc. v. Federal Communications

Commission, 567 F.2d 9 (D.C. Cir. 1977) ..........

International Harvester Co. v. Ruckelshaus, 478

Be Ue ae a aniivetesinccteseunicoceceeenne

Marathon Oil Co. v. Environmental Protection

Agency, 564 F.2d 1253 (9th Cir. 1977) _.............

National Crushed Stone Association v. Environ-

mental Protection Agency, 601 F.2d 111 (4th

ASRS ES Ear EN St Sere EOE ea

Natural Resources Defense Council v. Costle, 12

E.R.C. 18338 (D.D.C. 1979), appeal docketed,

No. 79-1473 (D.C. Cir. May 9, 1979) _.................

Page

13, 18

9,13

TABLE OF AUTHORITIES—Continued

Page

Portland Cement Association v. Ruckelshaus, 486

F.2d 375 (D.C. Cir. 1973), cert. denied, 417 U.S.

GERD (RGD acccareccssiniinsnscsricinendniehabchanaenee 15, 17

Securities Exchange Commission V. Chenery Corp.,

S88 US. 106 (iOGR). cccicciedekee nee 27

South Terminal Corp. v. Environmental Protection

Agency, 504 F.2d 646 (1st Cir. 1974) ............ 12, 16, 17

Texaco, Inc. v. Federal Power Commission, 412

F.28 740 (Ord Gir. TOG) nice 17

United States v. Nova Scotia Food Products Corp.,

i Bf F 8: f+ , , Renee 9, 18, 15

Wagner Electronics Corp. Vv. Volpe, 466 F.2d 1013

(Sed Civ. 1978). 001i eee 19

Weyerhaeuser Corp. V. Costle, 590 F.2d 1011 (D.C.

Cir: BOGS) ..nnccccontincuneeeee 9, 18, 14, 15, 17, 24, 25

STATUTES :

Administrative Procedure Act, 5 U.S.C. §551 et

seq.

Section 4(b) (3), 5 U.S.C. § 553 (b) (3) -......... 2,8

Section 4(c), 5 U.S.C. § 553 (c) ......................... 3

Federal Water Pollution Control Act, as amended,

33 U.S.C. § 1251 et seq.

Section 301(b), 33 U.S.C. §1811(b) -............ 3

Section 304(b), 33 U.S.C. § 1814(b) —............. 3

Judicial Code, 28 U.S.C. § 1254(1) ~...............-...------

REGULATIONS AND REGULATORY NOTICES:

CODE OF FEDERAL REGULATIONS

4 CFR. § GRRE qe 5

FEDERAL REGISTER NOTICES

41 Fed. Reg. 48087 (Nov. 1, 1976) ................... 3

41 Fed. Reg. 48088 (Nov. 1, 1976) -.................. 3,4

41 Fed. Reg. 48089-90 (Nov. 1, 1976) .............. 5

FT RP ah Pod BEE A BS 2k

TABLE OF AUTHORITIES—Continued

Page

41 Fed. Reg. 48091 (Nov. 1, 1976)... 3, 20

43 Fed. Reg. 17775 (Apr. 25, 1978) _.............. 1,4

43 Fed. Reg. 44875 (Sept. 29, 1978)... 4

44 Fed. Reg. 38745 (July 2, 1979) ............. 10

44 Fed. Reg. 38764 (July 2, 1979) 10

44 Fed. Reg. 38765 (July 2, 1979)... 10

44 Fed. Reg. 38766 (July 2, 1979) ................. 10

IN THE

Siren Court of the United States

OCTOBER TERM, 1978

No.

ELI LILLY AND COMPANY,

Petitioner

V. .

DOUGLAS M. COSTLE, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FIRST CIRCUIT

Eli Lilly and Company petitions for a writ of cer-

tiorari to review the judgment of the United States

Court of Appeals for the First Circuit in this case.

OPINIONS BELOW

The opinion of the Court of Appeals (App. A, infra)

is reported in 598 F.2d 637. The decision of the Admin-

istrator of the Environmental Protection Agency is set

forth in regulations published at 43 Fed. Reg. 17775

(App. C, infra).

JURISDICTION

The judgment of the Court of Appeals (App. B, infra)

was entered on May 7, 1979. A timely petition for re-

hearing was denied on June 25, 1979. The jurisdiction

of this Court is invoked under 28 U.S.C. § 1254(1).

QUESTIONS PRESENTED

1. Whether under Section 4 of the Administrative

Procedure Act EPA was required to provide notice and

an opportunity for public comment before promulgating

final regulations which differed substantially from the

“interim final” regulations, especially where the Agency

had generated a new and more extensive base of data

not previously disclosed for public comment?

2. Assuming that EPA was not required to give notice

and provide opportunity for public comment, whether the

court in carrying out its review of the regulations should

defer to those determinations by the Agency which were

based on new data?

8. Again assuming that EPA was not required to give

notice and provide opportunity for public comment,

whether the reviewing court should conduct its own de

novo review of new data and information, and impute

certain determinations to the Agency, where the Agency’s

determinations are either nonexistence or inadequate to

deal with the issues in dispute?

STATUTE INVOLVED

Sections 4(b) (3) and (c) of the Administrative Pro-

cedure Act, 5 U.S.C. § 553(b) (3), (c), provide in perti-

nent part:

§ 553. Rule making

(b) General notice of proposed rule making shall

be published in the Federal Register ... . The notice

shall include—

(3) either the terms or substance of the proposed

i or a description of the subjects and issues in-

volved.

* « * *

agency shall give interested persons an opportunity

to participate in the rule making through submis-

sion of written data, views, or arguments....

STATEMENT

Section 301(b) of the Federal Water Pollution Control

Act, as amended, 38 U.S.C. §1311(b), authorizes the

Environmental Protection Agency (“EPA” or “Agency”)

to issue regulations establishing effluent limitations for

classes and categories of industrial point sources. Sec-

tion 304(b), 33 U.S.C. § 1314(b), requires EPA to es-

tablish guidelines for the purpose of adopting such efflu-

ent limitation regulations. See E. I. du Pont de Nemours

& Co. v. Train, 430 U.S. 112 (1977).

On November 1, 1976, EPA promulgated “interim

final regulations” for the Pesticide Chemicals Manufac-

turing Point Source Category. 41 Fed. Reg. 48087. The

interim final regulations established effluent limitations

for existing sources implementing the first-stage require-

ment of Section 301(b) for the application of best prac-

ticable control technology currently available by July 1,

1977.

1EPA did not publish the regulations in proposed form. Citing

an order of the United States District Court for the District of

Columbia, EPA determined that the publication of proposed regu-

lations was not practicable and, therefore, promulgated immediately

effective “interim final regulations”. 41 Fed. Reg. at 48088.

The Act also authorizes EPA to establish effluent limitations

implementing the second-stage requirement of the Act, best avail-

able technology economically achievable. See E. I. du Pont de

Nemours & Co. V. Train, 430 U.S. 112, 121 (1977). EPA decided to

propose those regulations separately and at a later date. 41 Fed.

Reg. at 48091.

Petitions for review of the interim final regulations

were filed in the United States Court of Appeals for the

First Circuit by BASF Wyandotte Corporation and five

other companies on January 24, 1977. Subsequently filed

petitions for review were transferred to that court. Eli

Lilly did not file a petition for review of the interim

final regulations.

EPA solicited comments on the interim final regula-

tions. 41 Fed. Reg. at 48088. Comments on the interim

final regulations were filed by a number of persons, in-

cluding various manufacturers of pesticides. App. C,

infra, 82a. Eli Lilly did not comment on the interim

final regulations.

On April 25, 1978, EPA promulgated final regula-

tions for the Pesticide Chemicals Manufacturing Point

Source Category. 43 Fed. Reg. 17775.? On July 18, 1978,

Eli Lilly filed a petition for review of the final regula-

tions in the United States Court of Appeals for the

Seventh Circuit. The petition was thereafter transferred

to the United States Court of Appeals for the First

Circuit.

Both the interim final and the final regulations estab-

lished effluent limitations on the discharge of pesticide

chemicals, five-day biochemical oxygen demand (“BOD,”),

and chemical oxygen demand (“COD”). The effluent

limitations are expressed in terms of pounds of pollutants

discharged for each thousand pounds of pesticide chemi-

cal manufactured (“Ibs./1000 lbs.”) and its metric

equivalent (“kg./kkg.”). Both a daily maximum dis-

charge level and a maximum average discharge level over

a 30-day period are specified.

2 The final regulations were amended subsequently to limit the ap-

plication of the effluent limitations for the discharge of pesticide

chemicals to 49 specified pesticides. 43 Fed. Reg. 44845 ( -pt. 29,

1978).

0 —————eEE—E————

Te SO a ey ere eee

The interim final regulations established effluent limi-

tations for three separate subcategories of facilities pro-

ducing organic pesticides: halogenated organic pesticides

(Subcategory A), organo-phosphorous pesticides (Sub-

category B), and organo-nitrogen pesticides (Subcate-

gory C). Significantly different effluent limitations were

prescribed for each subcategory,* and different data were

used in deriving the effluent limitations for each subcate-

gory. 41 Fed. Reg. at 48089-90. Eli Lilly manufactures

an organo-nitrogen pesticide, trifluralin, at its Lafayette,

Indiana plant.‘

The final regulations collapsed the separate effluent

limitations for the three categories into a single subca-

tegory of organic pesticides and established a uniform

set of effluent limitations for all organic pesticides. 40

C.F.R. § 455.22, App. C, infra, 105a.

The final effluent limitations for the collapsed subcate-

gory of organic pesticides are substantially more strin-

gent pel the effluent limitations established by the in-

terim final regulations for organo-nitrogen pesticides, in-

cluding trifluralin: nosis

Interim Final Final

(41 Fed. Reg. at 48090) (40 C.F.R. § 455.22, App. C, infra, 105a)

30-Day Average Daily Maximum 30-Day Average Daily Maximum

Pesticides 0.0071 Ibs./1000 Ibs. 0.016 Ibs./1000 Ibs. 0.0018 Ibs./1000 Ibs. 0.01 Ibs./1000Ibs.

BOD. 8.6 Ibs. /1000 Ibs. 15.1 Ibs./1000 Ibs. 1.4 Ibs. /1000 Ibs. 7.4 Ibs./1000 Ibs.

coD 21.1 Ibs./1000 Ibs. 80.4 Ibs./1000 Ibs. 9.0 Ibs./1000 Ibs. 18.0 Ibs./1000 Ibs.

3 80-Day Average

coD BOD5 Pesticides

Halogenated Organic 21.2 Ibs./1000 Ibs. 8.7 Ibs./1000 Ibs. 0.0031 Ibs./1000 Ibs.

Organo-Phosphorus 11.9 Ibs./1000 Ibs. 1.5 Ibs./1000 Ibs. 0.0018 Ibs./1000 Ibs.

Organo-Nitrogen 21.1 Ibs./1000 Ibs. 8.6 Ibs./1000 Ibs. 0.0071 Ibs./1000 Ibs.

(41 Fed. Reg. at 48089-90)

* Trifluralin is the only one of the 49 pesticides covered by the

amended regulations which is produced by Eli Lilly. See Note 2,

supra.

The data used in deriving the final effluent limita-

tions for the collapsed subcategory were different from

those used to derive the interim final effluent limitations

for the organo-nitrogen pesticide subcategory.

In the preamble and appendix to the final regulations,

EPA described the “major changes” in the regulations

and the “expanded data base” upon which those major

changes were premised. App. C, infra, 63a-67a, 87a-89a.

One of the major changes described was the collapsing

of the organic pesticide subcategories. EPA stated that

the revisions to the regulations, including the elimination

of subcategories, were based on the expanded data base

and the Agency’s reexamination of the data. App. C,

infra, 64a. EPA further stated that the decision not to

differentiate among different organic pesticides and to

eliminate the interim subcategories was based on new

data indicating that the “quantities of pollutants in the

effluents of those plants with the properly operated model

technologies installed were similar regardless of the or-

ganic pesticide chemicals manufactured” and that “the

waste waters of all organic pesticide chemicals can be

treated or controlled to the levels documented in the

Agency’s data base.” App. C, infra, 64a.

No opportunity was afforded for comment on the

major changes in the final regulations or on the new

data on which those changes were based. Petitioners

argued in the Court of Appeals that EPA should have

issued notice for public comment on the proposed re-

visions, on the rationale for the revisions, and on the

new, expanded data base said to support the revised

regulations. Eli Lilly argued that it had not commented

on the interim final regulations or filed a petition for

review of those regulations because it considered them

reasonable as applied to its only pesticide manufactur-

ing plant at Lafayette, Indiana; thus, Eli Lilly contended

that, by making the final regulations substantially more

stringent without notice to allow public comment, EPA

deprived Eli Lilly of an opportunity to comment on the

regulations and the basis for those regulations.

In its decision the court of appeals stated the following

principle to be applied in determining whether EPA

had complied with the Administrative Procedure Act

(“APA”) :

Even substantial changes in the original plan may be

made so long as they are “in character with the or-

iginal scheme” and “a logical outgrowth” of the

notice and comment already given. [598 F.2d at 642;

App. A, infra, 7a (citation omitted) .]

The court held that the “essential inquiry is whether

the commenters have had a fair opportunity to present

their views on the contents of the final plan” and whether,

“given a new opportunity to comment, commenters would

not have their first occasion to offer new and different

criticisms which the Agency might find convincing’. Id.

at 642; App. A, infra, 7a-8a (footnote and citation

omitted).

The court of appeals first dealt with EPA’s deter-

mination to combine the three interim final subcate-

gories for organic pesticides into a single subcategory.

The court noted EPA had acted contrary to industry

comments, which had criticized the interim final regula-

tions and which had urged EPA to expand the number

of subcategories. Jd. at 643; App. A, infra, 9a. The

court reasoned that it “should be clear to commenters

when they criticize a regulatory scheme that if the

agency accepts those criticisms, a new scheme will be

substituted” and the “commenters cannot claim they had

no notice to propose and discuss alternatives”. Id. at 643;

App. A, infra, 9a-10a. “[T]hough EPA’s solution was

not the one for which industry argued, it was suggested

by and, in part, a logical outgrowth of industry’s com-

ments.” Jd. at 648; App. A, infra, 10a. Therefore, the

court concluded that EPA was not required to give notice

Ee ee ea’

of the decision to eliminate subcategories for organic

pesticides and the industry was not entitled to comment

thereon.

“For the same reasons,” the court of appeals rejected

the contention that EPA should have allowed further

opportunity to comment on its determination that all

pesticides can be treated to a single level because the

possibility of that determination had been “clearly sig-

nalled in the interim regulations” since the “industry’s

comments plainly suggested that treatability ought to be

taken into account.” Id. at 644; App. A, infra, lla (foot-

note omitted). Therefore, the court concluded that EPA

was not required to permit comment on its determina-

tion or on the data and assumptions underlying that

determination.

The court of appeals also upheld EPA’s failure to

allow comment on the new data relied upon by EPA

and on the inferences from those data which led EPA

to make major changes in the regulations:

We must decide whether using new data that re-

duced the effluent limits for many of the producers

deprived the public of a fair opportunity to present

views on the final data base. If the data used and

disclosed for the interim regulations presented the

issues for comment, then there is no need to seek new

comment even though significant quantitative differ-

ences result. [Id. at 645; App. A, infra, 138a.]

The court concluded that the disclosure of information

with the interim final regulations permitted the industry

to comment “on the importance of different processes,

products, and volumes” and “to collect data at their own

plants, analyze it, and submit it to EPA.” Id. at 645;

App. A, infra, 14a. “[Wle think it was far more im-

portant for EPA to solicit comments on how it intended

to collect and use data than on the data itself”. Jd. at

645; App. A, infra, 15a. Therefore, the court concluded

that EPA’s reliance on the new data did not require the

issuance of a further notice for public comment.

~ - me -

I at en. ht nt

- Ne nee ee ee te -

In reviewing the regulations and the determinations

underlying the regulations, the court of appeals deferred

to the expertise of the Agency and imposed a “heavy

burden” on petitioners of persuading the court that EPA

had erred. Id. at 649-50, 652; App. A, infra, 28a-24a,

28a. In the absence of an agency determination during

the rulemaking process on issues raised by the petitioners,

the court of appeals conducted its own review of the rec-

ord or assumed that EPA had given appropriate con-

sideration to the matter. Id. at 649, 656 nn. 34, 35 & 37;

App. A, infra, 22a; 37a nn. 34 & 35, 38a-39a n. 37.

REASONS FOR GRANTING THE PETITION

I. THE ISSUES PRESENTED TO THIS COURT ARE

IMPORTANT ISSUES WHICH SHOULD BE RE-

SOLVED BY THE COURT TO PROVIDE GUIDANCE

TO THE COURTS OF APPEALS AND TO THE

ADMINISTRATIVE AGENCIES.

This case raises important issues which have not pre-

viously been addressed by this Court and the resolution

of which is necessary in order to provide guidance to

the courts of appeals and to the administrative agencies.

The courts of appeals have had to deal increasingly with

the notice-and-comment requirements of the APA. See,

e.g., National Crushed Stone Association v. Environ-

mental Protection Agency, 601 F.2d 111 (4th Cir.

1979) ; Weyerhaeuser Corp. v. Costle, 590 F.2d 1011

(D.C. Cir. 1978); United States v. Nova Scotia Food

Products Corp., 568 F.2d 240 (2d Cir. 1977) ; American

Iron and Steel Institute v. Environmental Protection

Agency, 568 F.2d 284 (3d Cir. 1977) ; American Frozen

Food Institute v. Train, 539 F.2d 107 (D.C. Cir. 1976).

There is a high degree of probability that the issue

will arise even more frequently in the future. For ex-

ample, pursuant to an amended Consent Decree entered

by the United States District Court for the District of

Columbia, EPA is obligated to promulgate regulations

establishing effluent limitations and other requirements

for thirty-four major industries by May 1981. Natural

Resources Defense Council v. Costle, 12 E.R.C. 1833

(D.D.C. 1979), appeal docketed, No. 79-1478 (D.C. Cir.

May 9, 1979). In implementing that obligation, the

Agency has initiated the practice of proposing regulations

which broadly suggest that it will consider alternatives

to the proposal and which clearly indicate that it will

compile additional information prior to promulgating

final regulations. See 44 Fed. Reg. 38745, 38764, 38765,

38766 (July 2, 1979) (proposed regulations for the

leather tanning industry). This Court should resolve the

conflict among the courts of appeals and provide guidance

to the Agency and the courts of appeals as to the Agen-

cy’s obligation under the APA to issue notice for public

comment on substantially revised regulations based on

new or additional data and to the courts of appeals on the

appropriate role of the reviewing court when regulations

are based in part on such new data.

II. THE FIRST CIRCUIT’S DETERMINATION THAT

THE ADMINISTRATOR COMPLIED WITH THE

NOTICE-AND-COMMENT REQUIREMENT OF THE

APA CONFLICTS WITH THE DECISIONS OF

OTHER COURTS OF APPEALS AND IS INCOR-

RECT.

A. The Regulations Were Substantially Changed on

_ the Basis of New Data.

The final regulations for the single, collapsed organic

pesticide subeategory are substantially more stringent

than the interim final regulations for the organo-nitrogen

pesticide subcategory and are premised on an expanded

and different data base. The percentage by which the

interim final regulations as applied to waste water from

the manufacture of trifluralin and other organo-nitrogen

pesticides were reduced is shown in the following table:

Reduction in E fluent Limitations

From Interim Final to Final Regulations

30-Day Average Daily Maximum

Pesticides —75 percent —47 percent

BOD, — 84 percent —51 percent

COD —57 percent —57 percent

These major changes in the interim final effluent limi-

tations were premised on an “expanded data base” (App.

C, infra, 64a, 67a) and EPA’s “reexamination” of the

regulations in light of that expanded data base (App.

C, infra, 87a-88a). As noted by the court of appeals, the

expanded data base resulting from EPA’s “further re-

search” was the justification for EPA’s critical determi-

nation that the waste waters of all pesticide plants can

be treated to the same level, for EPA’s elimination of

the interim final subcategories for organic pesticides,

and for EPA’s reduction of the effluent limitations. 598

F.2d at 643; App. A, infra, 9a. A particularly important

basis for the EPA determination was data collected on

existing carbon treatment plants by the Agency’s con-

tractor, ESE, after promulgation of the interim final

regulations. As emphasized by the First Circuit, “[i]f

ESE’s work is not reliable, then the final limitations can-

not stand’. Id. at 646; App. A, infra, 16a. EPA also

relied on its new examination of literature on treatment

by carbon adsorption and hydrolysis,’ on laboratory stu-

dies conducted by ESE, and on other data compiled and

evaluations made subsequent to the publication of the

interim final regulations. EPA did not issue public notice

inviting comment on the expanded data base for the

5 These twc types of treatment were identified by EPA as the

technologies whose use would allow the effluent limitations for

pesticides to be met. Jd. at 651; App. A, infra, 28a. The court of

appeals’ opinion includes a description of these technologies. Jd. at

651; App. A, infra, 27a-28a.

substantially revised regulations. It simply promulgated

final revised regulations relying on that expanded data

base.

In deciding that the Administrator had complied with

the APA, the court of appeals cited its prior decision

in South Terminal Corp. v. Environmental Protection

Agency, 504 F.2d 646 (1st Cir. 1974). At issue in

South Terminal were the EPA regulations for attaining

the Clean Air Act’s national ambient air quality stand-

ards in Boston by reducing vehicular traffic. The notice

of proposed rulemaking included specific measures for

achieving that goal. The notice also stated that alterna-

tives were being considered and identified certain alterna-

tives. Id. at 657. The final regulations adopted alterna-

tives, including a freeze on the number of parking spzces

at Logan Airport and other locations, which had not been

identified in the notice of proposed rulemaking. The

First Circuit held that the Administrator’s notice of the

proposed rules constituted sufficient notice to support his

ultimate decision to adopt a different approach because

the “notice left no doubt that EPA would consider all

reasonable alternatives for cutting down vehicle use.”

Id. at 659. Thus, under the First Circuit’s decision in

South Terminal, a commenter which knew or should

have known that the agency will consider alternatives

to the initial proposal is not entitled to notice of or

to comment on the alternatives finally selected no matter

how much the alternative differs from the proposal.

The court of appeals in this case applied the principle

developed in South Terminal in holding that interested

persons should have anticipated that criticisms of the

EPA’s interim final subcategories could lead to the al-

ternative of eliminating subcategories even though EPA

never disclosed an intent to consider that alternative.

The First Circuit extended the rationale of Sowth Termi-

nal by holding that interested persons are not entitled to

notice of and an opportunity to comment on the new

data relied upon by EPA in establishing the final regula-

a ee acl

gt ech ORR Aa AE ce

te teal de GE ADR SARI aah

——EEEE

tions if the data disclosed with a proposed (or interim

final) regulation reveal the general issues as to the use

of data and provide sufficient information for com-

menters to generate additional data for submission and

use by the agency.

B. The Decision Is In Conflict With Decisions of the

Courts of Appeals for the Second, Fourth, and

District of Columbia Circuits.

The First Circuit’s decision conflicts with National

Crushed Stone Association v. Environmental Protection

Agency, 601 F.2d 111 (4th Cir. 1979), Weyerhaeuser

Corp. v. Costle, 590 F.2d 1011 (D.C. Cir. 1978),

and United States v. Nova Scotia Food Products Corp.,

568 F.2d 240 (2d Cir. 1977), insofar as it holds that

EPA was not required to issue notice and allow public

comment on substantially revised regulations based on

new data and information.®

In National Crushed Stone, the Agency had modified

the interim final regulations for crushed stone and con-

struction sand and gravel facilities by increasing the 30-

day average effluent limitation for total suspended solids

(“TSS”) and by adding a maximum daily effluent limita-

tion for TSS. 601 F.2d at 115. The changes were made

on the basis of data collected by the Agency’s contractor

(Versar) on which there was no opportunity for public

comment. Jd. at 117. The Fourth Circuit held:

The objections go on and on, but enough have been

related to show that they are far from frivolous,

and while EPA will undoubtedly take issue with the

report of [the petitioners’] engineer, we need not,

and do not, decide whether the objections raised in

the engineer’s report are valid. What we do decide

6 The First Circuit’s decision also is contrary to a Ninth Circuit

decision on an analogous issue. See Marathon Oil Co. v. Environ-

mental Protection Agency, 564 F.2d 1253, 1271 (9th Cir. 1977).

is that the mistakes in the use of the Versar data, if

any mistakes there were, were shown by the report

to be of possible significance in the formulation of the

final regulations. ... The fact that the petitioners,

and just as importantly the public, had no opportun-

ity to comment on the use of the Versar data prior to

the promulgation of the final regulations in the face -

of serious questions concerning the validity of their

use is reason to remand the regulations for further

consideration. ]Jd. at 119 (footnote omitted).]

In direct contrast, the First Circuit held that the

APA is satisfied if the notice informs the public of the

general issues relating to data use and provides the

framework for the affected industry to generate data for

submission to EPA. Under the First Circuit’s rule, no

obligation is imposed on the Agency to permit public

comment on its new or expanded data base.

In Weyerhaeuser, EPA secured new data after issu-

ing the interim final effluent regulations and after

the close of the public comment period. 590 F.2d at 1029.

Using that data, it recalculated the biochemical oxygen

demand (BOD) effluent limitation for acetate grade dis-

solving sulfate pulp mills for inclusion in the final

effluent regulations which were the subject of the peti-

tions for review. Jd. at 1029. The court held that the

Agency’s procedures “improperly denied petitioners the

opportunity to comment on a significant part of the

Agency’s decisionmaking process as required by Section

553” because the “figures variously relied upon by the

Agency must be validated, if at all, by reference... to

certain data . . . obtained by the Agency after the op-

portunity for public comment had lapsed... .” Id. at

1030-31 (citations omitted). The court of appeals stated

that the data which “were not subject to prepromul-

gation public scrutiny are factual matters. As such, they

are especially subject to verification through the notice

and comment process and less acceptably removed there-

from.” Id. at 1030 n. 26.

The District of Columbia Circuit’s decision in Weyer-

haeuser follows its prior decision in Portland Cement

Association v. Ruckelshaus, 486 F.2d 375 (D.C. Cir.

1973), cert. denied, 417 U.S. 921 (1974). In Portland

Cement, the court of appeals found “a critical defect in

the decisionmaking process in arriving at the standard

under review in the initial inability of petitioners to

obtain—in timely fashion—the test results and procedures

used on existing plants which formed a partial basis for

the emission control level adopted” in the standard of

performance for new portland cement plants. 486 F.2d

at 392. The court concluded:

It is not consonant with the purpose of a rule-

making proceeding to promulgate rules on the basis

of inadequate data, or on data, that, [in] critical de-

gree, is known only to the agency. [J/d. at 393.]

In direct contrast, the First Circuit held that inviting

comments on new data used by the Agency in establish-

ing revised final regulations is unimportant. The First

Circuit attempted to distinguish Weyerhaeuser on the

ground that the formula used by EPA to calculate the

effluent limitations in that case was not set forth or

explained in the record. 598 F.2d at 646 n. 15; App. A,

infra, 15a n. 15. However, the District of Columbia Cir-

cuit clearly held that an opportunity for public comment

on the data was required by the APA and that the fact

that the calculations were not reflected in the record con-

stituted additional grounds for remand.

In Nova Scotia Food Products, interested persons “were

not informed of the scientific data, or at least a selection

of such data deemed important” by the Food and Drug

Administration in establishing processing standards for

fish products. 568 F.2d at 251. In holding that the notice

of proposed rulemaking was deficient under the APA for

failure to disclose such scientific information, the Second

Circuit found:

Scientific research is sometimes rejected for diverse

inadequacies in methodology; and statistical results

are sometimes rebutted because of a lack of ade-

quate gathering technique or of supportable extra-

polation. Such is the stuff of scientific debate. To

suppress meaningful comment by failure to dis-

close the basic data relied upon is akin to rejecting

comment altogether. [568 F.2d at 252 (emphasis

added) .]

The First Circuit here recognized that the issues posed

difficult scientific questions, including those related to

the validity of the critical ESE data. The court knew it

could not “play the role of Superchemist” to resolve

those issues. 598 F.2d at 649; App. A, infra, 23a. None-

theless, the court held that notice and comment were not

required on fundamental scientific and technical issues

relating to the new data relied upon by EPA.

C. The First Circuit Erred in Deciding that EPA Had

Complied With The APA.

There is substantial agreement among the courts of

appeals that regulations are not necessarily legally de-

fective if they differ, even substantially, from the regu-

latory proposal published for public comment. See, e.g.,

South Terminal Corp., 504 F.2d at 659; International

Harvester Co. v. Ruckelshaus, 478 F.2d 615, 682 (D.C.

Cir. 1973); California Citizens Band Association v.

United States, 375 F.2d 48, 48 (9th Cir.), cert. denied,

389 U.S. 844 (1967). However, no other case invoking

the notice-and-comment issue has concerned a change in

regulations which appears comparable in magnitude to

the 50 to 85 percent reduction in allowable discharges

from organo-nitrogen pesticide manufacturing plants as

occurred in this case. The substantiality of the modifi-

cation of a regulation must be a factor to be considered

in applying the APA. The First Circuit erred in failing

to consider that factor.

The First Cireuit construed the APA as not requiring

notice for comment prior to adoption as a final regulation

of an alternative that is radically different from the pro-

posed regulation as long as the Agency indicates in the

initial notice that it will consider all possible alternatives.

Such an interpretation provides an agency with an un-

limited opportunity to preclude public comment by the

simple expedient of issuing a “comprehensive notice”

that it is considering all possible alternatives to its pro-

posal. See South Terminal Corp., 504 F.2d at 659.

Most importantly, the First Circuit’s decision in this

case obviates the purpose and function of the notice-and-

comment requirements of the APA. This Court has not

had occasion to provide specific guidance on the legisla-

tive purpose of the notice-and-comment requirement.

The courts of appeals, however, have identified three

important functions of Section 4. First, the notice allows

interested parties an opportunity to offer informed criti-

cism and comments. See, e.g., Ethyl Corp. v. Environ-

mental Protection Agency, 541 F.2d 1, 48 (D.C. Cir.

1976), cert. denied, 426 U.S. 941 (1976); Portland Ce-

ment Association, 486 F.2d at 392-94. Second, giving

interested persons a meaningful opportunity to comment

enables the Agency promulgating the rules “to educate

itself before establishing rules and procedures which

have a substantial impact on those regulated”. Texaco,

Ine. v. Federal Power Commission, 412 F.2d 740, 744

(8d Cir. 1969). Third, the dialogue of comment and

agency response to comment assists the reviewing court in

deciding difficult issues. Home Box Office, Inc. v. Federal

Communications Commission, 567 F.2d 9, 35-36 (D.C.

Cir. 1977) ; see Weyerhaeuser Corp., 590 F.2d at 1028;

cf. Marathon Oil, 564 F.2d at 1271 n. 54. (“[C]omment

is often an invaluable source of information to a review-

ing court attempting to evaluate complex statistical and

technological decisions.’’)

The decision of the First Circuit in this case is not

consistent with those objectives. The First Circuit per-

ceived the principle role of industry member comment as

narrowly confined to providing the Agency with addi-

tional information and data on their plants in order to

provide the Agency with the broadest possible data base.

The First Circuit considered it far less important, and

not sufficiently important to require further notice for

comment, that the industry and other interested persons

comment on the data compiled by the Agency (including

the validity of that data) or on the Agency’s scientific

and technical inferences from the data. As a result, the

First Circuit’s decision unnecessarily cribs the scope of

the subject matter which should be subject to informed

criticism and comment.

The First Circuit assumes that the Agency is not in

need of and would not benefit from the education result-

ing from comment, favorable or critical, on the data be-

fore it and the conclusions which reasonably can be drawn

from that data.

Finally, the First Circuit’s decision deprives a review-

ing court of a balanced and complete record upon which

to assess sometimes difficult and complex issues. This

latter point is demonstrated dramatically in this case by

the difficulty which the First Circuit had in resolving the

issues before it and by its unique and inappropriate ap-

proaches toward resolving these issues on the basis of an

administrative record which had not been subject to

public scrutiny and comment. See pages 22-27 infra.

D. Eli Lilly is Particularly Harmed By The First

Circuit’s Ruling.

The First Circuit’s decision applies with particular

inequity to Eli Lilly. Eli Lilly’s concern was for a single

pesticide, trifluralin. Upon review of the interim final

effluent limitations, Eli Lilly concluded that they were

reasonable as applied to the production of trifluralin at

its Lafayette, Indiana plant. Eli Lilly was not in a posi-

tion to comment on whether the interim final regulations

were reasonable or unreasonable for the industry as a

whole or as applied to the production of pesticides by

other manufacturers in a diverse industry. Therefore,

Eli Lilly did not file comments on the interim final regu-

lations or a petition for review of the interim final

regulations.

Although those facts specific to Eli Lilly were set forth

for the First Circuit, the court of appeals did not spe-

cifically address them.’ By necessary implication, the

First Circuit held that the interim final regulations con-

stituted sufficient notice of the final regulations to permit

Eli Lilly an adequate opportunity to participate in the

rulemaking for the same reasons that it concluded that

those who did comment and criticize the interim final

regulations had sufficient notice of the possible outcome

of their comments: “The commenters cannot claim they

had no notice to propose and discuss alternatives.” 598

F.2d at 648; App. A, infra, 10a. It is unreason-

7 The court did state that “[rJegulatory targets have no guaran-

tee that proposed effluent limits, which they are capable of meeting,

will stay the same.” 598 F.2d at 646; App. A, infra, 15a. The issue,

however is not whether Eli Lilly could rest in complete assurance

that the effluent limitations applicable to its plant would remain the

same. Rather the issue is whether, under the procedures adopted by

the Agency, Eli Lilly was accorded the opportunity to participate in

the rulemaking required by the APA.

8 Any suggestion that Eli Lilly should have recognized that the

Agency might collapse the subcategories because one commenter, as

the court of appeals read its remarks, saw that possibility would be

unreasonable and contrary to the Third Circuit’s decision in Wagner

Elec. Corp. v. Volpe, 466 F.2d 1018, 1019 (3d Cir. 1972).

able to expect that Eli Lilly should have hypothesized

alternative schemes which EPA might adopt to the de-

triment of Eli Lilly; that Eli Lilly should have sub-

mitted comments in opposition to those schemes; or that

Eli Lilly should have developed alternative approaches

to the interim final subcategories which would result in

reasonable effluent limitations for trifluralin.

Most importantly, however, the First Circuit’s decision

deprived Eli Lilly of the opportunity to comment on the

determination which had an adverse impact on Eli Lilly

—the determination based on an expanded data base to

collapse the three interim final subcategories into one

subeategory and dramatically reduce the effluent limita-

tions for trifluralin. In short, according to the court of

appeals’ theory, Eli Lilly was obligated to assume that

the Agency would alter its course in a manner contrary

to Eli Lilly’s interests and to comment accordingly on in-

terim final regulations to which it did not object. But Eli

Lilly was not entitled to comment on the changes in

methodology, assumptions, or data which were the basis

for the final regulations which Eli Lilly did find unrea-

sonable and objectionable.®

® The fact that data from Eli Lilly’s plant was part of the Agen-

cy’s expanded data base tends to reinforce the conclusion that the

First Circuit has unjustifiably narrowed the notice-and-comment

requirements of the APA. Eli Lilly operates a carbon treatment

system for waste water from its trifluralin process. At EPA’s re-

quest, ESE sampled the waste water going to Eli Lilly’s ..rbon

treatment system and the treated effluent from the carbon treatment

system in January 1977. Eli Lilly believed that carbon treatment

was being considered by EPA as a basis for the second-stage regu-

lations implementing requirements for best available technology and

that the information was being collected for the purpose of prepar-

ing such proposed regulations. See note 1 supra. In announcing

the interim final regulations, EPA “emphasized” that it planned to

issue “in the near future” second-stage regulations which would

require ‘substantial further reductions in pollutants discharged” by

the use of “advanced technology.” 41 Fed. Reg. at 48091. One of the

advanced technologies cited was carbon adsorption. 7d. at 48091.

[Footnote continued on page 21]

Oe he IATA

® [Continued ]

At no time did EPA inform Eli Lilly that the ESE data would be

used in the final first-stage regulations or would be cited as evidence

that substantially reduced first-stage limitations were attainable

because, on their face, the data indicated that Eli Lilly’s discharge

of pesticides is below the level permitted by the final effluent

limitations.

Eli Lilly was afforded only a limited opportunity to comment on

the ESE numbers and no opportunity to comment on EPA’s inter-

pretation and use of the data. The ESE data were furwarded to

Eli Lilly and Eli Lilly, noting the differences between its analytical

results and ESE’s, suggested further dialegue on the analytical

validity of the survey data. The invitation was not accepted and

the matter remained unresolved when the final regulations were

promulgated.

Eli Lilly argued in the court of appeals (1) that the ESE data

should not have been used because of their possible analytical in-

validity; (2) that data from a survey covering the first four days

of a seven-day treatment cycle of a new carbon treatment system

should not have been cited as representing consistent, long-term

performance of the treatment system; and (3) that, because ESE’s

survey conducted in accordance with EPA’s request, covered only

treated effluent from the carbon system and did not include certain

waste streams which bypassed the carbon system, the ESE data

did not demonstrate that Eli Lilly could achieve the final effluent

limitations. The First Circuit rejected these arguments in large

part because it found the record to be ambiguous and without sup-

port for them. Jd. at 648, 653; App. A, infra, 20a, 3la. Had EPA

issued a further notice for public comment on the revised regula-

tions and on the expanded data base, Eli Lilly could have provided

further information on the analytical invalidity of the data and

would have had its first opportunity to comment on EPA’s interpre-

tation and use of that data.

ne ee ae ae deren mannan an Reh en SS a — ———

Ill. EVEN IF IT WERE ASSUMED THAT EPA WAS

NOT REQUIRED TO ISSUE NOTICE FOR PUBLIC

COMMENT ON THE REVISED REGULATIONS,

THE COURT OF APPEALS’ DECISION TO DEFER

TO EPA’S DETERMINATIONS BASED ON AN EX-

PANDED DATA BASE WAS INCORRECT AND IN

CONFLICT WITH THE DECISION OF ANOTHER

COURT OF APPEALS AND RESULTED IN THE

COURT SUBSTITUTING ITS JUDGMENT FOR

THAT OF EPA.

A. The Court of Appeals Deferred to EPA on Matters

Not Subject to Public Comment, and Conducted a

De Novo Review of New Data and Information.

The First Circuit recognized that the notice-and-com-

ment requirements are linked to the standard to be

applied in reviewing the Agency’s action because that

requirement “supports the assumption we make with

regard to EPA’s substantive decisions that those decisions

are in fact the product of informed, expert reasoning

tested by exposure to diverse public comment.” 598 F.2d

at 641; App. A, infra, 6a. The court stated:

We will not remand [to the Agency] so long as the

Agency has explained the facts and policies on which

it relied; the facts have some basis in the record;

and a reasonable person could make the judgment

the Agency made. [J/d. at 652; App. A, infra, 28a.]

The court held, erroneously, that interested persons

had an opportunity to comment on alternative sub-

categorization schemes that EPA might adopt. The court

of appeals did not, and could not, suggest that the

expanded data base upon which EPA relied and the tech-

nical and scientific inferences which it drew from those

data were “tested by exposure to diverse public com-

ment.” Nonetheless, the court deferred to determina-

tions made by EPA which were based on such untested

data and inferences.

SPAR AMES ih 13 2. ASAIO BZ

0s) SBS Ltey

The following are illustrative of the court’s deference

to EPA:

Petitioners argued that, at best, EPA had data on

only a few of the forty-nine pesticides covered by the

regulations (see note 2 supra) and, therefore, could not

reach the critical conclusior that all pesticides can be

treated to the same level. Noting that EPA’s expanded

data base included technical literature references on

the treatment of pesticides, the court deferred to EPA’s

judgment, stating: ;

[T]he Agency is entitled to use its chemical exper-

tise to conclude that compounds’ manufacturing proc-

esses, chemical structures, and physical properties

are sufficiently related so that if one is treatable the

others are likely to be as well.... We conclude...

that the Agency permissibly decided that the tech-

niques are broadly applicable to facilities manufac-

turing the 49 pesticides discharge of which is regu-

lated. [598 F.2d at 656; App. A, 36a-37a. (foot-

note and paragraphing omitted).]

The court rejected petitioners’ arguments that EPA erred

in inferring from the literature, particularly literature

on laboratory studies, the result which could be achieved

by full scale treatment systems. The court responded that

it is “up to the Agency experts to decide whether relaxing

the laboratory conditions would so change the result

that the pesticide could not be treated by industry.” Id.

at 652 n. 27; App. A, infra, 29a-30a n. 27. Most astonish-

ing, the court of appeals conceded that it could find “no

mention” in the expanded data base or EPA’s evaluation

of that data base of ten of the forty-nine regulated pesti-

cides, but was “willing to assume from EPA’s general

language that it reached a similar conclusion as to these

ten pesticides as well.” Jd. at 656 n. 34; App. A, infra,

37a n. 34 (emphasis added) .’®

1 The court of appeals made a number of additional ‘“assump-

tions” that EPA had properly applied its expertise in evaluating and

using the information before it. See id. at 656-57 nn. 35 & 37; App.

A, infra, 37a n. 35, 38a-39a n. 37.

iii

Petitioners challenged the validity of the data collected

by EPA’s contractor, ESE. The court of appeals con-

cluded that “[i]Jf ESE’s work is not reliable, then the

final limitations cannot stand.” Jd. at 646; App. A,

infra, 16a. The ESE data, and particularly the labora-

tory documents from which their validity must be as-

sessed, were not made available for public review during

the rulemaking." The court of appeals found EPA’s

response in its brief and supplemental memorandum to

be an inadequate response to petitioners’ arguments.

Rather than remand the regulations, the court adopted

a new and unique approach toward reviewing agency

action: “We have therefore conducted our own review.”

Id. at 649; App. A, infra, 22a. The court conceded that

its independent review was “necessarily superficial” and

inconclusive:

We cannot be sure that these references [to the

ESE records] are an adequate response to criti-

cisms levied at ESE’s general control procedures.

But we cannot play the role of Superchemist. Peti-

tioners bear an extremely heavy burden if they desire

to demonstrate that the results of a rulemaking pro-

cedure are infested with fatal flaws of laboratory

practice. Our review, partial and facial though it

is, satisfies us of the probability that EPA was jus-

tified in basing its regulations on ESE’s work. [Jd.

at 649-50; App. A, infra, 23a-24a (footnote omit-

ted) .]

B. The First Circuit Erred in According Judicial

Deference to EPA Determinations Based on Data

and Information Which Had Not Been Tested By

Public Comment.

The First Circuit’s decision conflicts with the District

of Columbia Circuit’s decision in Weyerhaeuser Corp. V.

11 Indeed, a complete set of laboratory documents was not turned

over to EPA or petitioners by ESE until after oral argument before

the First Circuit. Jd. at 646; App. A, infra, 16a.

;

Costle, 590 F.2d 1011 (1978). The First Circuit cited

Weyerhaeuser in support of the standard of review to be

applied. 598 F.2d at 647; App. A, infra, 18a-19a. How-

ever, the First Circuit declined, without explanation, to

follow the rule in Weyerhaeuser that an agency determi-

nation is not entitled to a presumption of rationality

when the data upon which that determination is based

have not been subject to public scrutiny. The court in

Weyerhaeuser stated:

This denial of an opportunity for comment on these

facts further undermines our usual assumption that

notice and comment rulemaking, by virtue of its ac-

cessibility to public scrutiny, achieve rational re-

sults.

27... [I]t is our place only to review actions

actually and properly taken by the Agency. If that

action is improper and if we cannot be sure that un-

der correct procedures the Agency would have

reached the same conclusion, we cannot characterize

that defect as harmless. [590 F.2d at 1931 & n. 27

(original emphasis) .]

The District of Columbia Circuit’s decision in Weyer-

haeuser is analogous to this Court’s decision in Citizens

to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971).

If the reviewing court determined that the explanation

accompanying the initial agency decision was deficient,

this Court suggested that the reviewing court require the

agency to prepare additional findings explaining the basis

for its action. The Court recognized that such findings

would be prepared outside the normal course of agency

proceedings and cautioned that they should not be ac-

corded the usual deference: the findings “will, to some

extent, be ‘post hoc rationalizations’ and thus must be

reviewed critically”. 401 U.S. at 421.

C. The First Circuit Impermissibly Substituted Its

Judgment for That of the Agency.

On a number of occasions, this Court has emphasized

that a reviewing court may not substitute its judgment

for the judgment of the agency whose action is under

review. Bowman Transportation, Inc. v. Arkansas-Best

Freight Systems, Inc., 419 U.S. 281, 285 (1974); Fed-

eral Trade Commission v. Sperry & Hutchinson Co., 405

U.S. 233, 249 (1972) ; Citizens to Preserve Overton Park,

401 U.S. at 416.

The First Circuit was propelled into that forbidden

role by its decision to review the regulations on the basis

of a record incompletely tested by exposure to public

comment and often devoid of EPA response to the com-

ments which would have been made.

The court made “assumptions” that EPA had ration-

ally resolved issues raised by petitioners when there was

no evidence in the record that EPA had even considered

the issues. The court conducted an unprecedented inde-

pendent review of laboratory documents which EPA did

not receive until after it had promulgated the final

regulations. Even then, the court failed to reach a defini-

tive conclusion as to the validity of the critical laboratory

data. Yet, it upheld EPA’s use of the data on the ground

that petitioners had not carried their heavy burden of

persuading the court that EPA had acted impermissibly.”

EPA did not reach a judgment that data supported by

its contractor, ESE, were reliable. The court of appeals

made that judgment after a “partial! and facial” review.

12The First Circuit’s procedure contrasts with the following

cbservation of Judge McGowan: “[T]he realities of judicial scru-

tiny . . do not contemplate that the court itself will, by a laborious

examination of the record, formulate in the first instance the sig-

nificant issues faced by the agency and articulate the rationale of

their resolution.” Automotive Parts & Accessories Ass’n. Vv. Boyd,

407 F.2d 330, 338 (D.C. Cir. 1968).

Mah icieh, CaS rsearwee: 6? he

598 F.2d at 650; App. A, infra, 24a. The court then

upheld EPA’s use of the data because the petitioners had

not carried their heavy burden of persuading the court

that the court’s uncertain conclusion as to the reliability

of the ESE data was in error.

This Court rejected judicial excursions into the admin-

istrative domain in Federal Power Commission v. Trans-

continental Gas Pipe Line Corp., 423 U.S. 326 (1976):

At least in the absence of substantial justification

for doing otherwise, a reviewing court may not after

determining that additional evidence is requisite for

adequate review, proceed by dictating to the agency

the methods, procedures, and time dimension of the

needed inquiry and order the results to be reported

to the court without opportunity for further con-

sideration on the basis of the new evidence by the

agency. Such a procedure clearly runs the risk of

‘propel [ling] the court into the domain which Com-

gress has set aside exclusively for the administrative

agency.’ SEC v. Chenery Corp., 332 U.S. 194, 196

(1947).” [Jd. at 333 (emphasis added and footnote

omitted) ; cf. Camp v. Pitts, 411 U.S. 188, 141-43

(1973) .]

The First Circuit’s decision amounts to nothing less

than the substitution of its own uncertain judgment for

that which EPA should have made after notice and op-

portunity for comment in accordance with the APA o1

upon remand by the court of appeals.

CONCLUSION

For the foregoing reasons, Eli Lilly prays that the

Court grant this petition for a writ of certiorari to re-

view the judgment of the United States Court of Appeals

for the First Circuit in this case.

Of Counsel:

CLEARY, GOTTLIEB, STEEN &

HAMILTON

1250 Connecticut Ave., N.W.

Washington, D.C. 20036

September 21, 1979

Respectfully submitted,

DOUGLAS E. KLIEVER

CHARLES F. LETTOW

JOHN S. MAGNEY

WILLIAM N. HALL

1250 Connecticut Ave., N.W.

Washington, D.C. 20036

JOHN C. JENKINS

307 E. McCarty Street

Indianapolis, Indiana 46206

Counsel for Petitioner

Eli Lilly and Company

Appendices

- ee ao Ss = ~~ ais : fe spr. Pimp a

ee ee

waa -

> ee

APPENDIX A

Nos. 77-1042, 77-1059, 77-1085, 77-1153,

78-1417, 78-1428, 78-1454 and 78-1462.

UNITED STATES COURT OF APPEALS,

FIRST CIRCUIT

BASF WYANDOTTE Corp. et al.,

Petitioners,

DOUGLAS M. COSTLE, as Administrator,