Reply Brief — General Motors Corp. v. Costle

Court, U. &

FILED

1980

a

IN THE

AEL RODAK, JR., CLERK

Supreme Court of the Unite States

OcToBER TERM, 1979

No. 79-1262

GENERAL Motors Corporation, et al., Petitioners,

V

Dovatas M. CostLt£, Administrator of the

Environmental Protection Agency,

ENVIRONMENTAL PROTECTION AGENCY, and

STATE OF CALIFORNIA, Respondents.

Reply To Federal Respondents

And Supplemental Brief

In Support Of Petition For A Writ Of Certiorari

Petitioners

General Motors Corporation

Chrysler Corporation

Motor and Equipment Manufacturers Association

Automobile Importers of America, Inc.

Automotive Service Industry Association, et al.

Of Counsel: Wruuiam T. CoLteMAn, JR.

Dona.p T. Buiss

Ot1s M. Samir Caru R. ScHENKF2, JR.

General Counsel

Wasa, Wom, sn, QUURLYENY ES

Maynard L. Tram reet, N.W.

' Suite 500 South

GENERAL MOTORS Washington, D.C. 20036

CORPORATION

3044 West Grand Blvd. (202) 457-5300

Detroit, Michigan 48202 Counsel for General Motors

Corporation

Additional Counsel Listed on Inside Cover

Press oF Byron S. ADAMS PRINTING, INC., WASHINGTON, D. C.

Hira D. ANDERSON, JR.

MicHaEL W. GRICE

Office of the General Attorney

CHRYSLER CORPORATION

P.O. Box 1919

Detroit, Michigan 48121

(313) 956-2075

Counsel for Chrysler Corporation

Mark R, JOELSON

Marc L, FLEISCHAKER

ARENT, FOX, KINTNER,

PLOTKIN & KAHN

1815 H Street, N.W. -

Washington, D.C. 20006

(202) 857-6053

Counsel for Motor and Equipment

Manufacturers Association

Mitton D. ANDREWS

DonaLp M. SCHWENTKER

Dennis A. ADELSON

RIVKIN SHERMAN and LEVY

900 17th Street, N.W.

Washington, D.C. 20006

(202) 347-6007

Counsel for Automobile Importers

of America, Inc.

Haroup T. HALFPENNY

JAMES F’. FLANAGAN

HALFPENNY, HAHN &

ROCHE

111 West Washington Street

Chicago, Illinois 60602

(312) 782-1829

Counsel for Automotive

Service Industry Association, et al.

ET eT

TABLE OF CONTENTS

ne I IR i a ew 8 ee 08 i

I. ResponpENTs ErroneousLy Derenp THE LOWER

Court’s ExtTraorDINARY DEFERENCE TO THE

Statutory INTERPRETATIONS BY WHICH THE

ApMINISTRATOR« Has Aspicatep His Responsi-

BILITY TO Protect AiR QUALITY ............ 2

II. Responpents Have ATTEMPTED TO DisauIsE THE

Fact Tuat THE HoupinGs or THE Court BELOW

Cowrtict WitH Virginia State Board anp

OvHerR RELEVANT PRECEDENTS ..........++++- 6

III. Matermat Not AvartaBLeE WHEN THE PETITION

Was Firep UnprErscores THE Lower Covurt’s

Ergor IN ALLOWING THE ADMINISTRATOR TO

DisrEGARD CoMPLETELY F'epERAL STATUTORY

Pouicres OrHER Tr wn Arm QuaLity .......... 8

Ba IRL 9 STI ds iy ei me SL 11

TABLE OF AUTHORITIES

Cases CiTepD:

Banzhaf v. FCC, 405 F.2d 1082 (D.C. Cir. 1968), cert.

Gomted, 306 UG. BES (ISEB) occ cect cccc cases. 7

Ford Motor Company v. EPA, 606 F.2d 1293 (D.C.

SN Se Wee edals ib poo bn ed cub bance Seuee ss 4)

Linmark Associates, Inc. v. Township of Willingboro,

ek ee il i cae ke ede ecko bad abee

Midwest Video Corp. v. FCC, 571 F.2d 1025 (8th Cir.

1978), aff'd, 440 U.S. 689 (1979) .............. 6

Motor and Equipment Manufacturers Association, Inc.

v. Costle, No. 78-1896 (D.C. Cir. Aug. 3, 1979). . passim

Plano v. Baker, 504 F.2d 595 (2d Cir. 1974)

ii Table of Authorities Continued

Page

Red Lion Broadcasting Co. v. FCC, 395 U.S. 367

SOREN AG's Lacie xh neo Gaia's bw Oh 6.02ee bah wae Oe 2

Spiegel, Inc. v. FTC, 540 F.2d 287 (7th Cir. 1976) .... 7

Train v. Natural Resources Defense Council, Inc., 421

Rey REOEOE Ar Cea hae rach etebdeneeadens 2

Virginia State Board of Pharmacy v. Virginia Citizens

Consumer Counct, Inc., 425 U.S. 748 (1976) ....7,11

FreperaL Statutes CITED:

Clean Air Act, 42 U.S.C. § 7401 et seq.

Ps ee Us, BUOEE sche cee ev cscs cecceesasve 7

Oe Me I DTU. Niece cd vecsccwedeedce passim

Ser, EE WRN: SUMEE, Soc dvachstenesoestegbace 5

ConGREssiIonaAL MaTeErRiaAts CITED:

H.R. Rep. No. 728, 90th Cong., Ist Sess. (1967) ...... 3

H.R. Rep. No. 95-294, 95th Cong., Ist Sess. (1977) .... 4

MisceLLANgEous Sources Cirep:

FTC, Bureau of Competition, “Comments Regarding

California Automobile Emission Control System

Warranty Regulations” (March 31, 1980) ....... 8-11

memes» ter pain ace Veh OR ent tae net maar tl lel I et bn aE Bt me

en

IN THE

Supreme Court of the United States

OcTOBER TERM, 1979

No. 79-1262

GENERAL Motors CorporaTION, et al., Petitioners,

Vv.

Dovatas M. Coste, Administrator of the

Environmental Protection Agency,

ENVIRONMENTAL PROTECTION AGENCY, and

STaTE OF CALIFORNIA, Respondents.

Reply To Federal Respondenis

And Supplemental Brief

In Support Of Petition For A Writ Of Certiorari

The brief in opposition of the federal respondents

(Opp. Br.) attempts to obscure them, but the issues

in this case are important questions of first impression

and of national significance, involving the proper in-

terpretation of Section 209(b) of the Clean Air Act,

the constitutional rights of automakers to dissemi-

nate—and consumers to receive—information, and the

duty of the court below to interpret Section 209(b)

without slavish deference to the erroneous statutory

interpretations of the EPA Administrator. The case

highlights the pressing need for this Court to insist

that reviewing courts require administrative agencies

to consider and weigh the effects of their regulations

on affected statutory and constitutional policies, in-

stead of obliviously pursuing the single-purpose mission

that is at the core of their statutory responsibilities.

Pursuant to Rule 24(4)-(5) of this Court, petitioners

submit this brief to address arguments first raised in

the brief in opposition, and petitioners Motor and

Equipment Manufacturers Association and Automo-

tive Service Industry Association call to the Court’s

attention supplemental matters not available when the

petition was filed.

I. Respondents Erroneously Defend the Lower Court's Extraordi- »

nary Deference to the Statutory Interpretations by Which the

Administrator Has Abdicated His Responsibility to Protect Air

Quality.

The court below adopted an extraordinarily sweep-

ing standard of deference to the statutory interpreta-

tions of the Administrator, a standard the federal re-

spondents can defend only by cobbling together, out

of their separate contexts, considerably narrower

standards announced by this Court. Opp. Br. at 17-18."

It is only by such an expedient that respondents could

hope to defend the statutory holding below that the

Administrator may ‘“‘sit back, ‘like an umpire, and

1 The court below stated: ‘‘For us to conclude that the Admin-

istrator misconstrued section 209 petitioners must show by clear

and convincing evidence that [the Administrator’s] construction

[of the statutory language] is unreasonable.’’ Slip op., App. at

17a (emphasis added). Respondents can defend this holding only

by citing in combination the alternative standards of deference

announced in Train v. Natural Resources Defense Council, Inc.,

421 U.S. 60, 75 (1975) (courts to defer to ‘‘sufficiently reasonable’’

agency interpretation) and Red Lion Broadcasting Co. v. FCC,

395 U.S. 367, 381 (1969) (courts to defer to agency interpretation

absent ‘‘compelling indications it is wrong’’).

FO et eee ee

3

[merely] resolve adversary contentions.’’’ Slip op.,

App. at 55a n.56.

In demonstrating that Section 209(b) charges the

Administrator affirmatively to represent and protect

the federal statutory interest in air quality, petitioners

cited H.R. Rep. No. 728, 90th Cony., Ist Sess. 96

(1967) (emphasis added) :

‘‘fUnder Section 209(b) t]he burden would be on

the [Administrator] to show why California...

should not be allowed to go beyond the Federal

limitations in adopting and enforcing its own

standards.’’

The federal respondents contend that ‘‘the discussion

in the House Report . . . accompanied a proposal which

ultimately was rejected in favor of the Senate ver-

sion.’’ Opp. Br. at 10 n.8 (emphasis in original). Re-

spondents are in error. Not only did the quoted legis-

lative history address the Senate version of Section

209(b), but its very point was that Congress sought

to allocate responsibilities between only the federal

agency and California. Congress never assigned any

role to private opponents, much less imposed the in-

ordinate burden upheld by the court below.

The federal respondents similarly misuse a frag-

ment of legislative history concerning the 1977 amend-

ments to Section 209(b). Prior to 1977 California

regulations could be waived only if they were ‘“‘more

stringent’’ than applicable federal standards. In 1977

Congress amended the section to permit waiver if the

California regulations were ‘‘as protective” as federal

standards so that California could relax federal carbon

monoxide standards in a technological ‘‘tradeoff’’ for

establishing particularly stringent standards for oxides

4

of nitrogen. See H.R. Rep. No. 95-294, 95th Cong.,

1st Sess. 301-302 (1977). Citing the explanatory legis-

lative history, respondents argue that California is to

have the ‘‘broadest possible discretion in establishing

regulations designed to mitigate the effects of the

State’s unique air pollution problems.’’ Opp. Br. at 9.

But there is notning in the legislative history that

suggests a congressional intent to relieve the Adminis-

trator of his statutory duty affirmatively to protect

the federal interests embodied in the Clean Air Act,

including air quality.

The federal respondents also suggest that the court

below, and the Administrator, addressed petitioners’

evidence concerning the effect of the in-use maintenance

regulations on air quality, so ‘‘[t]here is no occasion

for further review of this factual determination.’’

Opp. Br. at 12. But petitioners did not ask the court

below, and do not ask this Court, to review factual

considerations, but rather to confirm that Section

209(b) requires the Administrator to consider evidence

that a waiver will denigrate air quality. Such con-

firmation is required because, as shown in the petition,

the court below tolerated waiver proceedings in which

the Administrator stated that he was statutorily pro-

hibited from considering evidence relevant to air

quality. Pet. at 16-17. As a result, the waiver stands

today even though California conceded that it cannot

estimate the potential beneficial effect of the regula-

tions on air quality, EPA conceded that there is evi-

dence of adverse effects on air quality, and the court

below conceded that there was ‘‘room for disagreement

about the potential benefits of the in-use maintenance

regulations.’’ Pet. at 17-18. Stated differently, the

point is not merely that the Administrator’s factual

4)

findings were erroneous, but that his alleged factual

inquiry was illusory. Pet. at 16-17. The federal re-

spondents have completely failed to explain just what,

if any, factual inquiry the Administrator is required

to conduct,’ and respondents thus apply the last brush

strokes to the portrait of the Administrator that has

emerged from this case. Unfortunately, that portrait

evokes the Wizard of Oz, displaying a figure claimed

to be of Solomonic grandeur until the curtain is pulled

aside and a little man is seen mechanically manipulat-

ing levers in preparation for the announcement of a

predetermined conclusion—the grant of a waiver.’

* The federal respondents attempt to breathe life into the Ad-

ministrator’s role by a semantic game, insisting that the court

below defined his ‘‘ ‘task [as] something more than ministerial.’ ’’

Opp. Br. at 12, quoting slip op., App. at 49a. But the court also

specified just what that ‘‘something’’ was. The opinion stated that

the Administrator’s review is to be ‘‘largely ministerial.’’ Slip op.,

App. at 55a n.56. And, in a companion case, the court stated that

his review is to be ‘‘cursory.’’ Ford Motor Co. v. EPA, 606 F.2d

1293, 1302 (D.C. Cir. 1979).

* The federal respondents suggest that ‘‘[tjhere is no possibility

that another Court of Appeals will reach a different interpretation

of Section 209, because exclusive review of California waiver de-

cisions rests with the District of Columbia Circuit under Section

307(b) of the Clean Air Act.’’ Opp. Br. at 18 n.16. Respondents

misstate Section 307(b), 42 U.S.C. § 7607(b). Judicial review of

waiver decisions is in the District of Columbia Circuit only if a

waiver is ‘‘nationally applicable,’’ as the Administrator determined

this waiver to be (incidentally belying the respondents’ contention

that this case concerns only California, see Opp. Br. at 7-8). But

some Section 209(b) waivers may be of local or regional impact,

in which case review will be in the Ninth Circuit. See Section

307(b). When the Ninth Circuit is called upon to consider Section

209(b) proceedings, it should have the guidance of this Court, not

that of the opinion below.

6

Il. Respondents Have Attempted to Disguise the Fact That the

Holdings of the Court Below Conflict With Virginia State

Board and Other Relevant Precedents.

Petitioners contend that during waiver proceedings

the Administrator must consider First Amendment

questions, especially since his constitutional inquiry

would illuminate subsequent judicial proceedings. In

conflict with the principles of relevant precedents, the

court below held that the Administrator need not ad-

dress First Amendment objections. See Pet. at 21-22.

The federal respondents attempt to deny this conflict

by misstating the relevant case law. They claim that

Plano v. Baker, 504 F.2d 595 (2d Cir. 1974), “[cor-

rected] any possible misconccptions . . . that an ad-

ministrative agency may . . . consider constitutional

challenges on the merits.” Opp. Br. at 14 n.13. The

Plano court held, rather, that because of the severely

limited factfinding capacity of the agency in question,

constitutional issues were not required to be presented

to that particular agency even though such exhaustion

would be required in other cases. Here the Adminis-

trator is the acknowledged federal expert on air pol-

lution and is statutorily empowered to conduct hear-

ings adequate to address the factual issues relevant to

First Amendment analysis. He should therefore have

considered the constitutional issues.‘

‘The federal respondents also misstate the holding of Midwest

Video Corp. v. FCC, 571 F.2d 1025, 1042-1043 (8th Cir. 1978),

aff’d, 440 U.S. 689 (1979). See Opp. Br. at 14 n.13. The court held

that the FCC could not assert regulatory jurisdiction over cable

broadcasting simply to advance First Amendment interests, where-

as here the Administrator has unquestioned regulatory authority

over waiver requests and the issue is whether a request should be

denied if its approval would result in a violation of First Amend-

ment rights. Similarly, the Seventh Circuit did not ‘‘[rule] that

7

On the merits of the First Amendment issue, the

federal respondents cite Banzhaf v. FCC, 405 F.2d

1082, 1102 (D.C. Cir. 1968), cert. dented, 396 U.S. 842

(1969), to support the lower court’s holding that re-

strictions on communications between automakers and

consumers are constitutional if they have ‘‘a reason-

able basis in a legitimate governmental policy.’’ Slip

op., App. at 64a. This holding, however, directly con-

flicts with the holding in Virginia State Board of

Pharmacy v. Virginia Citizens Consumer Council, Inc.,

425 U.S. 748 (1976). The constitutional test announced

there is whether the state needs its regulations to ac-

complish a legitimate state interest. See id. at 769-70;

Innmark Associates, Inc. v. Township of Willingboro,

431 U.S. 85, 95 (1977).°

federal administrative agencies cannot pass upon the constitution-

ality of administrative or legislative action’’ in Spiegel, Inc. v.

FTC, 540 F.2d 287, 294 (7th Cir. 1976). Opp. Br. at 14 n.13.

Rather, the court held that the constitutional issue considered by

the agency must be addressed on a case-by-case basis, whereas the

agency had purported to reach a per se constitutional ruling.

ay The federal respondents suggest that no First Amendment

issue exists because, after amendment of the in-use maintenance

regulations, ‘‘{m]anufacturers are free to recommend any main-

tenance they deem appropriate.’’ Opp. Br. at 16. Such ‘‘freedom,’’

however, does,not include the right to inform consumers that manu-

facturers’ warranty obligations are conditioned on performance of

all recommended maintenance, as Congress intended. Section 207

(a), (¢)(3) of the Clean Air Act, 42 U.S.C. § 7541(a), (c)(3).

Moreover, these regulations, hastily amended after litigation com-

menced, Pet. at 11-12, impede and frustrate communications with

consumers by creating powerful incentives for the consumer to

disregard mere ‘‘recommendations.’’ Pet. at 23-24.

8

III. Material Not Available When the Petition Was Filed Under-

scores the Lower Court’s Error in Allowing the Administrator

to Disregard Completely Federal Statutory Policies Other

Than Air Quality.

Petitioners Motor and Eouipment Manufacturers

Association and Automotive Service Industry Associ-

ation are representatives of the ‘‘aftermarket’’ (busi-

nesses that supply parts and services for automobiles

in use). They wish to call to the Court’s attention a

document recently filed by the Bureau of Competition

of the Federal Trade Commission (FTC) with the

California Air Resources Board (CARB), entitled

‘‘Comments Regarding California Automobile Emis-

sion Control System Warranty Regulations” (March

31, 1980).° The document is of interest because it dem-

onstrates a disagreement within the Federal Govern-

ment itself concerning whether the Administrator’s

waiver proceedings may disregard relevant federal

statutory policies such as competition, as the ccxvrt

below held. See Pet. at 18-21.’

The Bureau of Competition comments are addressed

to a set of regulations closely related to the in-use

maintenance regulations in question here. The in-use

maintenance regulations prohibit automobile manu-

facturers from ‘‘requiring’’ (as a precondition of

emissions warranty coverage) the performance of any

maintenance except nine discrete items during the first

50,000 miles of vehicle usage, although additional

maintenance may be ‘‘recommended.”’ Pet. at 6-7,

* For the convenience of the Court, 10 copies of this document

have been lodged with the Clerk.

*The federal respondents devote a scant page of discussion to

this issue, a reticence perhaps explained by the disagreement dis-

cussed in the text.

9

11-12. The warranty regulations actually impose the

obligation to warrant emissions-related parts against

defects during the first 50,000 miles of usage (if the

limited ‘‘required’’ maintenance has been performed).

The Bureau of Competition notes that ‘‘EPA studies

have shown that most vehicles meet federal standards

at the time they are produced and, moreover, that

emission control devices are ‘reasonably durable.’ ”’

Comments at 13. ‘‘[I]f properly maintained, [current

vehicle models] will meet emission standards,’’ id. at

11 (emphasis in original), and ‘‘poor maintenance

practices by consumers [, not equipment design, are]

the chief cause of excessive automobile emissions.”’

Id. at. 6.° As a result, regulations reducing in-use main-

tenance will probably have adverse air quality results,

while also reducing competition in the maintenance

aftermarket, to the detriment of consumers and com-

petitors. £.g., id. at 8. Dramatically better air quality

and competitive results can be achieved by inspection

and maintenance (I/M) programs, already in use out-

side California. Under such programs, cars are in-

spected annually, and drivers must bring noncomply-

ing vehicles into compliance. The basic premise is that

*These EPA findings belie the litigative posture adopted here

by the federal respondents, who suggest it is surprising that manu-

facturer petitioners believe more maintenance is required for vehi-

cles in actual use than is required during certification testing. See

Opp. Br. at 5 n.5. In other contexts, EPA has recognized the

commonsensical—a controlled four-month certification test cannot

simulate five years or 50,000 miles of driving under the widely

divergent conditions encountered in vehicle usage. The mainte-

nance reasonable during certification testing therefore is not ipso

facto the maintenance reasonable during vehicle usage.

10

more, rather than less, maintenance should be per-

formed to benefit air quality. Id. at 4-9.

Against this background, the Bureau of Competition

expressly rejects the Administrator’s complete dis-

regard of relevant federal statutory policies other than

air quality, arguing that Section 209(b) requires con-

sideration of both air quality and competition in

waiver proceedings. Noting that the FTC had submit-

ted comments emphasizing competitive issues in waiver

proceedings, the Bureau states:

‘‘The FTC [comments were] submitted... prior

to the court of appeals’ ruling [in the instant

case]. The Commission relied on the Congressional

design in enacting the Clean Air Act Amendments

of 1977 ‘to protect the automotive aftermarket

parts and service industry from any potential

anticompetitive impacts of the auto emission war-

ranty requirements.’ S. Rep. No. 95-127, 95th

Cong., Ist Sess. 15 (1977). See also, H.R. Rep. No.

95-294, 95th Cong., Ist Sess. 291-97 (1977). Al-

though the statutory waiver criteria do not ez-

pressly include antitrust considerations, potential

anticompetitive effects could warrant the conclu-

sion that the CARB regulations are ‘arbitrary

and capricious’ or are not necessary ‘to meet com-

pelling and extraordinary conditions,’ both of

which are grounds for denying a Clean Atr Act

waiver. 42 U.S.C. § 7543(b) (1).’’ Comments at 3

n.9 (emphasis added).

The disarray within the Government itself under-

scores the need for this Court’s review—not to resolve

the underlying factual issues, but to determine whether

the court below erred in allowing the Administrator

11

to disregard completely relevant federal statutory

policies.’

IV. Conclusion

For the reasons stated herein and in the petition,

petitioners respectfully pray that a writ of certiorari

issue to review the judgment and opinion of the United

States Court of Appeals for the District of Columbia

Circuit.

Respectfully submitted,

Of Counsel: Wu.uiaM T. CoLEMaAN, JR.

Otis M. Smita ea R. Bcc JR

a Counsel O'MELVENY & MYERS

ILLIAM L. WEBER, JR. 1800 MS

Maynarp L. Timm treet, N.W.

Suite 500 South

GENERAL MOTORS Washington, D.C. 20036

CORPORATION (202) 457-5800

3044 West Grand Blvd. oat

Detroit, Michigan 48202 Counsel for General Motors

Corporation

*The Bureau’s comments also demonstrate that California’s

regulations do not meet the ‘‘need’’ test established by Virginia

State Board for permissible restrictions on automakers’ First

Amendment rights. Restrictions on in-use maintenance simply do

not ‘‘address the major causes of cars exceeding emission stand-

ards—poor maintenance and tampering,’’ and EPA itself ‘‘believes

the I/M strategy [, not restrictions on maintenance,} offers the

most effective solution to these problems.’’ Comments at 7, 14.

May 12, 1980

12

Hira D. ANDERSON, JR.

MicHakEu W. Grice

Office of the General Attorney

CHRYSLER CORPORATION

P.O. Box 1919

Detroit, Michigan 48121

(313) 956-2075

Counsel for Chrysler Corporation

Mark R. JOELSON

Marc L. FLEISCHAKER

ARENT, FOX, KINTNER,

PLOTKIN & KAHN

1815 H Street, N.W.

Washington, D.C. 20006

(202) 857-6053

Counsel for Motor and Equipment

Manufacturers Association

Miuton D. ANDREWS

DoNaLpD M. SCHWENTEKER

Dennis A. ADELSON

RIVKIN SHERMAN and LEVY

900 17th Street, N.W.

Washington, D.C. 20006

(202) 347-6007

Counsel for Automobile Importers

of America, Inc.

Haro.p T, HALFPENNY

JAMES F’, FLANAGAN

HALFPENNY, HAHN &

ROCHE

111 West Washington Street

Chicago, Illinois 60602

(312) 782-1829

Counsel for Automotive

Service Industry Association, et al.