Amicus Brief — Chevron USA Inc. v. Natural Resources Defense Council, Inc.

| | Office-Suprerme Court, U.S.

) FILED

Nos. 82-1005, 82-1247 and 82-1591 SEP 7 1983

ALEXANDER L. STEVAS,

IN THE CLERK

Supreme Court of the United States

OcToBER TERM, 1983

—

CHEVRON U.S.A. INC., a corporation,

Petitioner,

v.

NATURAL RESOURCES DEFENSE

COUNCIL, INC., et al.

Respondents.

AMERICAN IRON AND STEEL INSTITUTE, et al.

Petitioners,

*

NATURAL RESOURCES DEFENSE

COUNCIL, INC., et al.

Respondents.

WILLIAM D. RUCKELSHAUS, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY,

Petitioner,

v

NATURAL RESOURCES DEFENSE

COUNCIL, INC., et al.

Respondents.

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF OF MID-AMERICA LEGAL FOUNDATION AS

AMICUS CURIAE SUPPORTING THE POSITION

OF PETITIONERS

JOHN M. CANNON

Susan W. WANAT

Attorneys for Amicus Curiae

Chicago,

(312) 263-5163

—— —— —

Pandich Press Midwest. Inc. Chicago ¢ 454-7600

? ; : R

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURA 2

rer 4

ARGUMENT een ee, ee ee . * . * . 5

I. Use of the bubble concept is

consistent with the improvement

0 ( 6

II. The policy judgment of the

Administrator was rejected

in a way that conflicts

with Batterton and Train ....... 14

SO ers 21

TABLE OF AUTHORITIES

Page

Cases

Alabama Power Co. v. Costle,

F. T 5,18

ASARCO, Inc. v. EPA, 578 F.2d 319

,,, 6 6 e bie eee 6 eb 4-6,18-20

Batterton v. Francis, 432 U.S. 416 (19777 § ,15-17,20

Baur v. Mathews, 578 F.2d 228

e ea ane ee 15,16

Train v. NRDC, 421 U.S. 60 (1975) r 5,15, 18

Statutes

Administrative Procedure Act, 5 U.S.C.

, / a ag 15,20

Clean Air Act:

Sections 101-327, 42 U.S.C. §§ 7401-7626

(Supp. IV 1980) A606 Sor 4 @) 6 €. gee. ¢2e 3,4,8,15-20

pene. tam, 42° U.S.6. 3 FOUR a eh 8% 19.20

Part D, 42. U.S.C. 68 7501-7806 % ti 5,14,20

Other

A. Kantrow, D. Dyer, and J. Fox, Armco and

the Bubble Policy, (1981) (distributed by

Case Services, Harvard Business School,

Boston, Mass. 02163) ..... „

Comment, An Overview of the Bubble Concept,

8 Colum. J. Envtl. L. 137 (I)).

EPA's Widening Embrace of the Bubble Concept:

‘The a0 and availability of Intra-

ource lrade-Otis, nvtl. L. Rep. 10027

46 Fed. Reg. 8683 (January 27, 1981)

46 Fed. Reg. 19468 (March 31, 1981)

48 Fed. Reg. 31,400 (July 8, 1983)

7 Ill. Admin. Reg. 8091 (July 8, 1983)

(m. Pollution Control Board)

325 Ind. Admin. Code 2-4 (1983)

(Ind. Air Pollution Control Board)

3,7-13,18

13

Nos. 82-1005, 82-1247, and 82-1591

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1983

CHEVRON U.S.A. INC., a corporation,

Petitioner

V *

NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

AMERICAN IRON AND STEEL INSTITUTE, et al.,

Petitioners,

V .

NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.

Respondents.

WILLIAM D. RUCKELSHAUS, ADMINISTRATOR,

ENVIRONMENTAL PROTECTION AGENCY,

Petitioner,

v.

‘ NATURAL RESOURCES DEFENSE COUNCIL, INC., et al.,

Respondents.

On Writs of Certiorari to the United States Court

of Appeals for the District of Columbia Circuit

This brief amicus curiae in support of the posi-

tion of petitioners is submitted with the writter con-

sent of counsel to all parties filed with the Clerk of

the Court.

INTEREST OF AMICUS CURIAE

Mid-America Legal Foundation ("Mid-America") has

an interest in the disposition of the case which is

before this Court on writs of certiorari to review the

judgment and opinion of the United States Court of

Appeals for the District of Columbia Circuit in Natural

Resources Defense Council, Inc. v. Gorsuch, 685 F.2d

718 (D.C. Cir. 1982), based upon the expertise and

purpose of this organization.

Mid-America was organized in 1975 to engage «in

legal research, study and analysis for the benefit of

the general public as to the effect of evolving concepts

of law on our democratic institutions. Mid-America

takes special interest in issues of a national scope that

originate in or have a direct effect on the mid-America

region, namely TIllincis, Indiana, lowa, Michigan,

Minnesota, Ohio, and Wisconsin.

The mid-America region is one of the most impor-

tant manufacturing areas of the nation. At least three

states in the area have proposed use of the "bubble

concept" in conjunction with the requirements of the

Clean Air Act. l

The decision below, which invalidated

use of the bubble in the context of the new source

review requirements in nonattainment areas, could

hamper seriously the ability of states to accelerate .

compliance with clean air standards.

Amicus presents data from the Harvard Business

School case study of an air pollution control program

utilizing the bubble concept on an existing source at

the Middletown, Ohio steel plant of Armco Inc. Al-

though the issue before this Court for review involves

a somewhat different application of the bubble than

that presented by the Armco experience, the Harvard

Study pinpoints an element common to use of the

bubble in any context; namely, that use of the bubble

1. See 48 Fed. Reg. 31,400 (July 8, 1983) (Ohio); 7

m. Admin. Reg. 8091 (uly @, 1988) (Ill. Pollution

Control Board R81-20 (Docket A)); 325 Ind. Admin.

Code 2-4 (1983) (Ind. Air Pollution Control Board).

'

„ 1

3 “a

9 E

“ts 1 N -#

le, eee 2 ae hy ¥ N 8 otis

can improve air quality and accelerate compliance with

clean air standards.

SUMMARY OF ARGUMENT

The court of appeals has invalidated regulations

of the Environmental Protection Agency that allowed

the application of a bubble concept to new source

review requirements in areas which have not attained .

the national ambient air quality standards under the

Clean Air Act, 42 U.S.C. §§ 7401-7626 (Supp. IV

1980) (the "Act"). It did so by ruling that the

bubble concept is incompatible with those provisions of

the Act that aim toward improving rather than merely

maintaining air quality. 685 F.2d at 726-27; Chevron

Pet. Cert. App. at A-16-18. This ruling rests upon a

misconstruction of both the Clean Air Act and

ASARCO, Inc. v. EPA, 578 F.2d 319 (D.C. Cir.

1978).

First, there is no inconsistency between the

bubble concept and either the language of the Act or

the purpose of Congress in bringing all air quality

regions of the United States into compliance with the

national ambient air quality standards pursuant to Part

D of the Act, 42 U.S.C. §§ 7501-7508. In fact, as the

Harvard Study presented herein demonstrates, consid-

erably greater improvement in air quality may be

achieved with the bubble concept than without it.

Second, absent such inconsistency, the policy

judgment of the Administrator of the Environmental

Protection Agency, which is reflected in the challenged

regulations, must be sustained. Batterton v. Francis,

432 U.S. 416 (1977), and Train v. NRDC, 421 U.S. 60

(1975). Contrary to the decision of the court of

appeals in this case, ASARCO did not hold otherwise

and should not have been dispositive.

ARGUMENT

Mid-America contends that the decision of the

court below rests upon a faulty construction of the

Clean Air Act and upon a misapplication of the court's

earlier decisions in ASARCO and Alabama Power Com-

pany v. Costle, 636 F.2d 323 (D.C. Cir. 1979). The

court below erred when it found a "bright line“

distinction between clean air programs designed to

enhance air quality and those designed to maintain

333

at

Un

2

+

m4

existing air quality (with the bubble concept forbidden

in the first category and mandated in the second).

The court judged irrelevant the fact that the

challenged regulation affects only the amount of bu-

reaucratic review that must be conducted and that the

regulation in no way lessens the obligations of the

States to achieve air quality improvements in nonat-

tainment areas.

By misreading ASARCO, the court was led to.

assume, incorrectly, that the bubble concept is incon-

sistent with the enhancement of air quality. The

result of this error is that the court below not only

undertook an impermissible foray into policy-making,

but did so on the basis of an erroneous assumption

that made its policy decision self-defeating.

I. Use of the bubble concept is consistent with the

improvement of air quality.

Because the challenged regulations operate to

reduce the amount of required bureaucratic review,

there is (not surprisingly) little direct data on the

effects of the bubble under the new source review

program. The logic of the opinion below, however, ;

depends on the proposition that the bubble is incom-

patible with those programs that aim at the improve-

ment (as opposed to the maintenance) of air quality.

For that reason, a compelling analogy is provided by a

case study of the use of the bubble at an existing

source in a nonattainment area. This study, which

involved the air pollution control program at the

Middletown, Ohio steel plant of Armco Inc., was pre-

pared for use at the Harvard Business School.”

The Middletown plant site produced 3

million tons of steel yearly, covered 2,600

acres, employed roughly 7,000 people, and

stockpiled (depending on the season) some-

thing on the order of 670,000 tons of raw

materials. Its various operations were well

monitored by the EPA. Even though mea-

surements at only one of the monitoring

stations on the periphery and in the vicinity

of the plant exceeded the primary TSP [total

suspended particulate) ambient air standard

of 75 ug / m (micrograms per cubic meter, a

measure of density), that single station

resulted in the Middletown area's being

designated a "nonattainment” area.

Harvard Study Part A, at 1 (exhibits and footnotes

r A. Kantrow, D. Dyer, and J. Fox, Armco and

the Bubble „ (1981) (distriduted by HBS Case

a Business School, Boston, Massa- |

chusetts "02163 (herein cited as the "Harvard Study”). 9

omitted).

To deal with Armco's problem and others like it,

Congressional hearings and a White House conference

were held. In addition, Anthony Solomon, the Under-

secretary of the Treasury for Monetary Affairs,

chaired a special task force on industry probiems

whose recommendations appeared in a December, 1977

report, A Comprehensive Program for the Steel Indus-

try. The Committee recommended that government and

industry cooperate in a fresh study of the problems of

pollution control. Harvard Study at 2.

The traditional regulatory approach to particulate

emissions had been based on short-term engineering

convenience. The original regulatory structure under

the Clean Air Act had to be developed quickly and had

to employ then-available engineering techniques which

could be implemented promptly. .This stopgap ap-

proach, however, left room for considerable improve-

ment as a comprehensive program for overall air quali-

ty. Id. at 5.

Emissions standards, as then fixed by

legislation, generally applied on a pro-

cess-by-process basis to each individual

stage of the steelmaking operations. They

also applied, on a point-by-point basis, to

individual sources of pollution. As a result,

plants in violation of ambient air standards

for total emissions could not remedy the

situation merely by undertaking that mix of

corrective actions that would have the great-

est immediate effect on overall ambient air

quality. Even though the problem had to do

with the general level of TSP emissions,

corrective action had to be addressed to

specific contributory sources - whether or

not they were responsible for the bulk of

the problem.

Id. at 5. Thus, the stack by stack control approach

that originally had been adopted merely because it

afforded the easiest method of measuring emissions

from stacks did not necessarily lead to the most

effective reduction of air pollution.

This regulatory scheme contained several flaws

that resulted in counterproductive attempts at pollution

control. For example, the view that success in pol-

lution abatement should be measured solely in terms of

the absolute level of TSP reduction per individual

source ignores the differences in marginal costs for

improvements at a given smokestack. As the Harvard

Study pointed out, the first 95% of TSP reduction for

an electric furnace costs 3.5¢/lb; the next 4%, 30¢/Ib;

and the final 1%, $35.00/Ib. Id. at 6. When

attempting to regulate steel or any financially pressed

industry, such numbers cannot be ignored.

Similarly, the traditional approach tended to

overlook the fact that pollution control requires energy

and that the production of energy itself causes

pollution. There is a law of diminishing returns in

control activity, and there is even a point where

additional pollution control equipment indirectly creates

more pollution than it prevents. For example, Armco

noted that:

to produce the electricity to run the fans

and the motors to clean up the scarfing

machines [at the Kansas City plant] meant

that the local power plant would produce

more pollution than [the control devices

would] capture.

Id. at 6-7 (footnote omitted).

In search of alternatives to this kind of self-

defeating regulation, EPA hired the Midwest Research

Institute to develop a scientific basis for accurately

estimafing pollution from open dust sources, which

hitherto had escaped control simply because such

pollution was hard to measure. By 1978, the Institute

hed developed a series of emissions factor equations

that made possible for the first time a full inventory of

10

— 1

pollution sources at an industrial site. This new

technique, using a methodology called "exposure

profile sampling", disclosed some surprising facts

about Armco's Middletown plant.

Contrary to expectations, roughly 60%

of particulates came neither from stack nor

process emissions but, instead, from open

dust sources. Even when differential parti-

cle size was taken into account, the result

remained pretty much the same. For all

particulates less than 30 um (microns), open

dust emissions were six times gre iter than

process fugitive emissions, which were the

focus of EPA concern. For particulates less

than 5 um (the size most responsible for

ambient air quality more than 1 mile from an

industrial site), open dust emissions were

still three times greater than process fugi-

tive emissions.

Given these figures, [Armcc officials]

realized that "there [was] very little room

for further reduction [in TSP levels] from

presently controlled sources by adding more

efficient controls." To attack the remaining

smokestack or process emissions would be to

direct Armco's efforts toward a relatively

minor part of the problem

.. To cite the most striking example,

controlling windblown emissions from raw

materials piles would remove 284 tons of

particulates from the air each year (a re-

duction of some 60%) at a capital cost of

$200,000 - or $704 per ton - and with an

energy expenditure of 46 KWH per ton. By

contrast, controlling fugitive emissions from

open hearth operations would remove only 64

tons of particulates from the air each year

(a reduction of 80%) at a capital cost of

$4,000,000 - or $63,992 per ton - and with

an a expenditure of 179,700 KWH per

ton. ese were staggering numbers

) 11

indeed. By 8 efforts on open dust

instead of process fugitive sources, Armco

could get more particulates out of the air at

1/89th the cost per ton and with 1/3906th

the energy.

Id. at 8-9 (exhibit and footnote omitted).

After a thorough study and on-site monitoring of

a pilot project for the Middletown plant, EPA

announced the expected approval of Armco's bubble by

EPA Administrator, Douglas M. Costle. In a press

release issued October 20, 1980, EPA stated:

It is our judgment that Armco will be

able to satisfy the bubble requirements and

EPA will be able to act favorably on Ohio's

State Implementation Plan for the area af-

fected by the plant when it is submitted by

the State, Costle said.

.. A joint air monitoring study by federal,

state and local governments and Armco has

confirmed in a pilot project that this bubble

is effective and has resulted in sigvificant

improvements in air —

rmco's ubble ust control plan

would eliminate 4,000 tons year of par-

ticulates as compared to 652 tons per year

under existing regulations.

Harvard Study, Part D, Ex. 2, p. 2-3 (quoting EPA

"Environmental News") (emphasis added).

Following submission of the required technical

support documents, EPA formally proposed the condi-

tional approval of the Ohio plan on January 27, 1981,

12

46 Fed. Reg. 8683, and gave that approval on March

31, 1981, 46 Fed. Reg. 19468. The Harvard Study

and the data obtained by EPA in support of the Ohio

plan illustrate that a policy allowing use of the bubble

concept can provide significantly greater improvement

in air quality than a policy which precludes it.

In addition to providing greater improvements in

air quality, the bubble policy may also speed up the

achievement of clean air standards because it enables

firms operating the sources of air pollutants to revise

their control policies to achieve the most cost effective

method of meeting the requirements of the Act. Plant

engineers are thus encouraged to invent new and more

effective pollution control devices.

Traditional command and control“ regulations

may actually deter the development of new

technology because firms, fearing that new

items of capital equipment will be specifically

required, may hide information about more

effective means of pollution reduction. By

contrast, the bubble would serve as an

incentive for developing cost-effective pol-

lution control technology since, when not

forced to use particular technologies, a

buyer will choose the least expensive means

of satisfying emissions limitations.

Comment, An Overview of the Bubble Concept, 8

Colum, J. Envtl. L. 137, 155 (1982).

13

It should also be pointe* out that the bubble

concept is not a device that substitutes control of less

harmful emissions in a tradeoff for more hazardous air

pollutants. The equivalence of tradeoffs can and

should be addressed directly. Limitations designed to

ensure that the facility-wide definition of stationary

source is used to improve air quality and meet other

requirements of the Act are quite compatible with the

bubble concept. See EPA's Widening Embrace of the

Bubble Concept: The Legality and Availability of

Intra-Source Trade-Offs, 9 Envtl. L. Rep. 10027,

10029 (1979).

Thus, since the use of the bubble concept has

been shown to be capable of improving air quality, use

of the bubble in nonattainment areas is not inconsis-

tent with the purpose of Congress in enacting Part D

of the Act.

II. The policy judgment of the Administrator was

8 in a way that conflicts with Batterton and

It is well established both by principles of admin-

istrative law and by the decisions of this Court that in

14

the absence of a conflict between the policy judgment

of an agency administrator charged with responsibility

for implementing a federal statute and either the

language or purpose of the statute, the agency deci-

sion must be sustained. See Administrative Procedure

Act, 5 U.S.C. § 706 (1976); Batterton v. Francis, 422

U.S. 416 (1977); and Train v. NRDC, 421 U.S. 60

(1975). In the decision below, that principle was

turned on its head when the court of appeals sub-

stituted its judgment for the policy decision of the EPA

Administrator to approve state implementation plans

allowing the use of a bubble concept which is based on

the language of the Act itself.

The presumption in favor of the agency's policy

judgment is based on practical concerns about the

proper utilization of agency expertise. As noted in

Baur v. Mathews, 578 F.2d 228, 233 (9th Cir. 1978):

The administrative agency clothed with

responsibility for implementing congressional

pronouncements is generally well acquainted

with the policy of the statute it administers.

This is particularly true when the agency

has long been involved in the construction

and administration of a given statute or its

predecessors. Where, as here, the agency

has extensive experience, has relied on the

common meaning of the relevant - statute's

specific language, and can point to important

15

congressional purposes furthered by its

interpretation, only a clear showing of a

contrary intent by Congress will justify

overruling the agency's regulations.

The special competence of EPA to interpret its

mandate under the Clean Air Act is well recognized.

In Train, this Court sustained an EPA regulation as

"sufficiently reasonable" without going so far as to

hold that such construction was "the only one it

permissibly could have adopted.“ 421 U.S. at 75.

This Court has also noted that judicial review

should allow a proper degree of flexibility for adminis-

trative proceedings:

The fact that the interpretation placed on

the section by the Agency may on occasion

require administrative flexibility and ingenu-

ity to a greater degree than would a more

rigid alternative is not, of course, a reason

for rejecting the Agency's otherwise reason-

able construction.

421 U.S. at 94 n. 28.

The limitations on judicial review of administrative

action were reiterated by this Court in Batterton as

follows:

In a situation of this kind, Congress en-

trusts to the Secretary, rather than the

courts, the primary responsibility for inter-

preting the statutory term. In exercising

that responsibility, the Secreta adopts

regulations with legislative effect. A

16

reviewing court is not free to set aside those

regulations simply because it would have

interpreted the statute in a different man-

ner.

432 U.S. at 426.8

Under these circumstances, where there is no

conflict with the language of the Act, a reviewing

court should confine itself to deciding whether the

Administrator "exceeded his statutory authority" and

whether the "regulation is ‘arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance

with law.'" Id. The decision below clearly failed to do

so. As a result, the court of appeals substituted its

judgment for a_ policy judgment of the EPA

Administrator that does not conflict with either the

language or the purpose of the Act.

Obviously there is no conflict with the language

of the Act, which was used verbatim by the EPA

5 Here, the court of appeals noted specifically that

"EPA, it is not disputed, has authority to define the

constituent terms of source enumerated in the statute

(building, structure, facility or installation“) in a

manner that will best effectuate the expressed

purposes of the Act.“ 685 F.2d at 723 n. 22; Chevron

Pet. Cert. App. at A-9 n. 22.

17

Administrator. Nor is there any conflict with any

purpose of the Act. The challenged regulations in

absolutely no way reduce the obligations of the States

or the affected industries to proceed with the cleanup

of the air in nonattainment areas. Indeed, as the

Harvard Study demonstrated, the bubble actually may

speed up the attainment of air quality standards in

such areas.

Instead of pointing to a conflict with the language

or purpose of the Act, the court relied solely on its

prior decision in ASARCO, Inc. v. EPA, 578 F.2d 319

(D. C. Cir. 1978), as having established that the

bubble concept is inconsistent with the improvement of

air quality.“ AS ARCO, however, held neither that the

bubble concept is incompatible with improving air

quality, nor that use of the bubble is forbidden in

nonattainment areas.” The regulation involved in

4 . 685 F.2d at 727-28; Chevron Pet. Cert. App. at

A-16-17, "We express no view on the decision we

would reach if the iine drawn in Alabama Power and

ASARCO did not control our judgment.” Id. at 720 n.

7; Chevron Pet. Cert. App. at A-4 n.7.

5 Amicus here assumes arguendo that ASARCO was

18

ASARCO sought to redefine the statutory term "facili-

ty" in Section 111 of the Act to mean "a combination of

such units." 578 F.2d at 327. This was rejected as

"inconsistent with the language of the Act.“ Id.

(emphasis supplied). The ASARCO court clearly

stated that its consideration of "the purpose of the

Clean Air Act and Section 111" merely "reinforced" its

decision, which was based on this conflict between the

language of the regulation involved in that case and

the language of the Act. Id. No such conflict exists

in the present case. The regulation here at issue

incorporates the relevant statutory language verbatim.

It does not redefine facility“ or any other statutory

term.° Accordingly, since the basis of the ASARCO

decision is completely inapplicable to this case, it

should not have been dispositive here.

correctly decided on its own terms. The alternative

argument that ASARCO should not be dispositive here

because it was Incorrectly decided and conflicts with

Alabama Power must also be noted. See Chevron Pet.

Cert. pp. 7-10.

6 ASARCO expressly noted that, in proper

circumstances, the statutory term "facility" could cover

an entire plant. 578 F.2d at 324 n. 17.

19

The reinforcing dictum of ASARCO that the

bubble concept is inconsistent with "the purpose of the

Clean Air Act and Section 111," could not and did not

establish that the different application of the bubble

concept which the Administrator here adopted in the

verbatim language of Section 111 is inconsistent with

the improvement of air quality under Part D of the

Act.“ By ruling otherwise, the court below failed to

make even one of the rulings or findings required to

set aside the action of the Administrator under the

Administrative Procedure Act, 5 U.S.C. § 706. Policy

decisions of an agency are "entitled to more than mere

deference or weight" and can be set aside only if the

Administrator "exceeded his statutory authority or if

the regulation is ‘arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.“

Batterton v. Francis, 432.U.S. at 416, 426.

7 378 F.2d at 327-30 (emphasis added). Even if

ASARCO had done so, such a conclusion would be

subject to. reconsideration as inconsistent with the

factual data subsequently developed by EPA, including

the measurement techniques developed for EPA by the

Midwest Research Institute and the joint monitoring

study at Middletown. See pp. 11-14 supra.

CONCLUSION

For the reasons set forth above, the decision of

the United States Court of Appeals for the District of

Columbia Circuit should be reversed.

Respectfully submitted,

n M. Cannon

usan W. Wanat

Attorneys for Amicus Curiae

OF COUNSEL:

Ann P. Sheldon

Mid-America Legal Foundation

Suite 842

20 North Wacker Drive

Chicago, Illinois 60606

(312) 263-5163

¥ "We wish to acknowledge the assistance of Nelson

Lund and Robert Barnes, students at The University

of Chicago Law School, and Adrienne Naumann, stu-

dent at IIT/Chicago-Kent College of Law.

21