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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_0106%3A14

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Brief
- **Published:** January 1, 1984
- **Citation:** 467 U.S. 837

## Text

Cuevron U.S.A, Inc., a corporation,
Petitioner,
vB.

Natvurat Resources Derense Councn, Ino., et al.,
Respondents.

Amenican [ron anv Sreex Inetirvte, et al.,
Petitioners,

va.

Natura. Resources Derense Councn, Ino., et al.,
Respondents,

Apmrnistrrator, ExvrronmentaL Protection Acency,
Petitioner,

v6.

Naturat Resources Derznwae Counc, Lxco., e¢ al.,
Respondents.

On Writs of Certiorari to the United States Court
of Appeals for the District of Columbia Circuit

BRIEF AMICUS CURIAE OF
PAOIFIO LEGAL FOUNDATION
IN SUPPORT OF PETITIONERS

Rowavtp A. Zumsruw

Rosin L. Riverr
COUNSEL OF RECORD
Pactrio Lzoat Founpation

455 Capitol Mall, Suite 600
Sacramento, California 95814
Telephone: (916) 444-0154
Attorneys for Amicus Curiae
Pacific Legal Foundation

ee RE A LT
BOWNE OF BAN FRANCIBCO, ING, * 190 NINTH BT. ¢ 8.7., CA 84108 © (418) 064-8800
)
ay

so * 60s

Interest of amicus ..........
EE Ree
i re ES ON

SIND scxcsiccsoucibecincssnsseteitiiennecintitnusmnasiinnitnsiniatinnnnersbitnghbdintiin

The goals.of the nonattainment provisions of the Clean
Air Act include enhancement of this nation’s eco-
ES ED senseecittitcsercennemniineraiteianaisiniaentincenititanaeds

Even environmental and scientific spokesmen agree
that as a matter of policy promulgations of environ-
mental regulations must consider economic needs
GE RE cicitanpsnicecsenteetisins tnadiielinsntehdinnsiiciilatiasdniaiiamiaeiean

Ill

States need flexibility to adopt or not adopt programs
such as the plantwide definition in order to satisfy
their primary responsibility to implement the Clean
BED: DAR <iivcinsiecnntibciiitinninintninaeinainiininadiaaiienia

The plantwide definition complies with the goals of the
nonattainment provisions of the Clean Air Act. The
dual definition preferred by the lower court does not

A. The plantwide definition properly promotes
attaining ambient air quality standards ..............

B. The dual definition of source discourages air
pollution reductions while the plantwide defini-
tion promotes it through incentives ......................

ll

ll

ii

Taste or Contents
Page
C. The dual definition of source has contributed to
a slow growth economy while the plantwide defi-
tion will promote economic growth 2.0... 15

Vv

The lower court ignored the fact that an administra-
tive agency’s discretion in promulgating regulations
is quite wide while a reviewing court’s scope of
NE I anki ssiean ecsenitstneheincctnccnibaniiiaesenqnipeast 19

REAR TON Ts SE SS RI eo SD 26

iii
TABLE OF AUTHORITIES CITED
Cases

Anaconda Company vy. Ruckelshaus, 482 F.2d 1301

Page

§ eA RIESE aa col ee A Ae SL 7
Baltimore Gas & Electric Co., et al. v. NRDC, et al.,

siete. US. ........, 51 U.S.L.W, 4678

CFE GR pesca as enitihtiaitacensnisvsticnivitornses 19, 20, 21, 23
Bessemer and Lake Erie Railroad Co., et al. v. Inter-

State Commerce Commission, 691 F.2d 1104 (3d Cir.

ER RE LO SEL SANDY Fei NT MO ee 22
Bowman ‘Transportation, Inc. v. Arkansas-Best

Freight System, Inc., 419 U.S. 281 (1974) oo... 19
Kenvironmental Defense Fund, Inc. v. Costle, 631 F.2d

Se I oo sccendenutiptnnotinmenisais 7
Environmental Defense Fund, Inc. v. Costle, 657 F.2d

NE iN PIED :ccsscdeecuteninsediistsistathiecsnesvachedtiatctinete 23
Georgia v. Tennessee Copper Co., 206 U.S. 230 (1907) 9
Industrial Union Department, AFL-CIO v. American

Petroleum Institute, 448 U.S. 607 (1980) 2.0... 21
Montana Power Co. v. EPA, 608 F.2d 334 (9th Cir.

LS ae oe Ea ea 23
Motor Vehicle Manufacturers Association v. State

Farm Mutual Automobile Insurance Company,

aT U.S. ........, 51 U.S.L.W, 4953 (June 24, 1983)....21, 23

NRDC v. Gorsuch, 685 F.2d 718 (D.C, Cir. 1982)....10, 21, 24

Pacific Legal Foundation v. Andrus, 657 F.2d 829 (6th
|

Train v. Natural Resources Defense — 421 U.S.
6O (1975) . seacetiaiatiniaiiaaites nate mamatiasinaitidiaaiteaiiitie

7

iv

Tasie or AUTHORITIES

Statutes
Page
Clean Air Act, 42 U.S.C.:
I ec cilet lf nn seesereemalaninnnneeidsadiahdosiaiiiale 14
I i ambiente 3,4
SUITE IPTIIED chs cichessmcsinciicadeinenepnenianianagssisghasnicieseaessinhibeabanh 10
PIII’ sstissrcinintessstcdchancteidiccetpusdilbcunseidimbbeainsaiovenaiadion 10
Section 7501 through 7508 ............scssssssssesesseesenseersees 3, 6, 11
INES DEL LILD sccsicvdcncccotecasiupeaibitsiantnsentsibteiiliiainindabidssntibbiinaed 12
PIL UNIET . ienienesisshstesitcalia sccstensnhssnpdancttdiamsidbsiaiiehictnalsiomieeahidlal ll
Other Authorities
An Overview of the Bubble Concept, 8 Colum. J. of
BG, Tess TE ARG D aivccseseclitticientiosnieviceensstsivinsisitaioibiii 12, 14

Harrington and Krupnick, Stationary Source Pollution
Policy and Choices for Reform, 21 Nat. Resources J.
BO CRUD ciecniashctnticsiciscssntseiiilcnniiinnsgassataisttbinehiile 13, 16, 17,18

Haveman and Christainsen, Environmental Regula-
tions and Productivity Growth, 21 Nat. Resources J.
OD CI Ds csceiicinttedeneditesiiisiaicaigaatanieiniiaga tigated: 13, 16, 18

H.R. Rep. No. 294, 95th Cong. lst Sess. 211, reprinted
in 1977 U.S. Code Cong. & Ad. News 1290 ..0....0....0.0... 6, 11

The Bureau of National Affairs, Inc., 14 Environment
Reporter 157 (June 3, 1983) .. 5

National Commission on Air Quality, To Breathe
Clean Air: Report of the National Commission on
Bhp Qe TES CITT crtrsrinstqsiimaiincinvnian 17,18

Vv

Taste ory Autnoritizs Crrep
Orner AUTHORITIES

Office of Science and Technology Policy, Executive
Office of the President, General Comments on Acid
Rain, A Summary by the Acid Rain Peer Review
Panel for the Office of Science and Technology
POR (TUG Beg ROOD wedecnctencterstemsdinscissitciliiithaesestacentende 8

Portney, The Macroeconomic Impacts of Federal
Environmental Regulations, 21 Nat. Resources J.
GER CIGD ccccccacususssesinicntennistcahenitintsbicessassipsinicscasilin hiceiaiss 18

Renz, The Effect of Federal Legislation on Historical
State Powers of Pollution Control: Has Congress
Muddied State Waters?, 43 Mont. L. Rev. 199

CEE .. snisinincncenthesentectienbeielacdcigiaiiicabeetiaaed i 9,10
13th Annual Report of the Council on Environmental

Quality, Environmental Quality 1982 000.00... 14
Weekly Comp. Pres. Doc, 1214 (August 15, 1977) .......... 15
Statement of Signing H.R. 6161 Into Law .................... 13
44 Fed. Reg. 71,780 through 71,781 (1979) .........cccccccee 12
45 Fed. Reg. 52,696 through 52,698 (August 7, 1980) .... 25
46 Fed. Reg:

16,281 (March 12, 1981) ................ccceces 13

50,766 (October 14, 1981) ........ A 13

50,767 (October 14, 1981) ...... v2, 18, 20, 21

50,768 (October 14, 1981) ................... 24, 25

123 Cong. Ree. 27,076 (1977) 7

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

In the Supreme Court

OF THE

United States

Octoser Term, 1982

Cuevron U.S.A. Inc., a corporation,
Petitioner,

vs.

Natura Resources Derensz Councn., Inc., et al.,
Respondents.

American Iron anv Sreex Institute, et al.,
Petitioners,

vs.

Natura. Resources Derense Counc, Inc., et al.,
Respondents.

ApMINISTRATOR, ENVIRONMENTAL Protection AGENCY,
Petitioner,

vB.

Natura Resources Derense Councn, Inc., et al.,
Respondents.

On Writs of Certiorari to the United States Court
of Appeals for the District of Columbia Circuit

2

INTEREST OF AMICUS

Pacific Legal Foundation (PLF) respectfully submits
this brief in support of petitioners, Chevron U.S.A. Inc.,
American Iron and Steel Institute, and Administrator,
United States Environmental Protection Agency pursuant
to Rule No. 36 of the revised Rules of the Supreme Court
of the United States. Consent to the filing of this brief has
been granted by counsel for all parties. Copies of these
letters of consent have been lodged with the Clerk of this
Court.

Organized and operating under the laws of California,
PLF is a nonprofit, tax.exempt public interest law firm
with over 18,000 contributors located throughout the coun-
try. Policy is set by a 18-member Board of Trustees, com-
posed of concerned citizens, a majority of whom are
attorneys. PLF’s Board of Trustees evaluates the merits
of any contemplated legal action of the Foundation and
authorizes legal action only where PLF’s position has broad
support within the general community and is in the public
interest. The PLF Board of Trustees has authorized the
filing of this brief amicus curiae.

Due to its unique perspective of representing the public
interest, PLF is most interested in a resolution of the
statutory and public policy issues inherent in application of
the plantwide definition of “source” in nonattainment areas
(areas in which air quality does not meet federal stan-
dards) and thus in the litigation at bar. The interest of
PLF is heightened as a consequence of many PLF con-
tributors and members of PLF’s Board of Trustees
residing in areas subject to the regulations at hand.

3

Further, PLF believes that there is great public interest
in achieving clean air by means which consider the
economic well-being of this nation. Thus, there is also
significant public interest in the activities of Environmen-
tal Protection Agency (KPA) in enforcing the Clean Air
Act. The regulations at issue here are of particular public
interest in that they seek to strike a delicate balance between
the congressionally mandated requirements to attain clean
air and to enhance the economic well-being and productive
capacity of the nation’s population.

OPINION BELOW

The opinion of the United States Court of Appeals for
the District of Columbia Circuit is reported at 685 F.2d
718 (D.C. Cir. 1982).

SUMMARY OF ARGUMENT

I. The purposes and goals of the nonattainment sections
of the Clean Air Act (42 U.S.C. §§ 7501 through 7508)?
include enhancement of this nation’s economic well-being.
This premise is supported by 42 U.S.C. § 7401(b) (1), which
defines the purpeses of Subchapter I—Programs and
Activities (which encompasses the nonattainment provi-
sions), as well as the legislative history of the bill which
established the nonattainment provisions of the Clean Air
Act. Due to the fact that enhancement of the economy of
the United States is one of the congressionally mandated

Throughout this brief, reference is made to the nonattainment
sections of the Clean Air Act. Such reference is limited herein to
42 U.S.C. §§ 7501 through 7508 and the requirement therein that
nonattainment permits are a prerequisite to the construction and
operation of new or modified major stationary sources.

4

purposes of the nonattainment program administered by
EPA, satisfaction of this goal is properly pursued through
the regulations promulgated by EPA. Pacific Legal Foun-
dation argues that enhancement of national productive
capacity was a proper consideration of the October 14,
1981, EPA regulations in question.

II. Scientific and environmental spokesmen agree with
EPA that the economic needs of the country must be con-
sidered when promulgating environmental regulations.
Their statements reflect a broad consensus for and the
importance of considering the economic needs of the United
States in developing environmental programs and policy.

III. States have the primary responsibility for imple-
menting and meeting the goals of the Clean Air Act, yet to
do so they need substantial flexibility in choosing their
strategies. The latitude to be granted the states must
include the option to adopt a plantwide definition of source.
Allowing the states to adopt a plantwide definition of
source will not permit states to avoid meeting national air
standards, nor will it preclude states from establishing a
more stringent definition of source.

IV. Both goals of the nonattainment provisions of the
Clean Air Act, enhancement of the nation’s productive ca-
pacity, and attainment of ambient air quality standards are
met with EPA’s plantwide source definition. They are not
met by use of the prior dual source definition which is
preferred by the court below. Since EPA will allow a
state to use the bubble concept only if reasonable further
progress toward attainment of air quality standards is
shown through an EPA approved state implementation
plan, the plantwide definition will not negatively impair

5

reaching national air quality standards. This is particularly
true since utilization of the plantwide definition of source
provides industry with the economic incentives to replace
older, polluting equipment with newer less polluting equip-
ment. This economic incentive is noticeably absent in the
use of the dual definition of source which, as a consequence,
has contributed to a slow growth economy. This negative
impact on the economy and on air quality is contrary to
the goals of the nonattainment program and may be
corrected through use of the plantwide definition of source.

V. The court below abused its judicial discretion and
violated the’ applicable standard of review in this case. The
law articulates a standard of wide discretion which is to
be accorded administrative agencies in their promulgation
of regulations. The scope of judicial review is narrow and
a reviewing court may overturn regulations adopted by an
agency only if such regulations are adopted in a manner
which is arbitrary and capricious. EPA substantiated its
promulgation of the regulations at issue and acted within
the wide latitude accorded an agency. The action of the
court below in vacating the October 4, 1981, regulations
violated the standard of review.

6

ARGUMENT
I

THE GOALS OF THE NONATTAINMENT PROVI-
SIONS OF THE CLEAN AIR ACT INCLUDE EN-
HANCEMENT OF THIS NATION'S ECONOMIC
WELL-BEING

The Clean Air Act admonishes that among the purposes
of its programs is the enhancement of economic well-being.

Title 42, United States Code, Section 7401(b)(1) clearly
states:

“The purposes of this subchapter are—to protect and

enhance the quality of the nation’s air resources so as

to promote the public health and welfare and the pro-

ductive capacity of its population.” (Emphasis added.)

Legislative history of the nonattainment provisions of
the Act expressly states that one purpose is “to allow rea-
sonable economic growth to continue in an area while mak-
ing reasonable further progress to assure attainment of the
standards by a fixed date.” H.R. Rep. No. 294, 95th Cong.
1st Sess. 211, reprinted im 1977 U.S. Code Cong. & Ad.
News 1290 (emphasis added). See also H.R. Rep. No. 294
at 13, 1977 U.S. Code Cong. & Ad. News at 1091, for the
proposition that the goals of the nonattainment program
were equivalent to the goals of Subchapter I—Programs
and Activities (42 U.S.C. §§ 7401 through 7508), those goals
being to attain air quality standards and to provide for
new economic growth. Further history of congressional
intent to allow economic development in nonattainment
areas is found in comments made on the floor of the House
by California Congressman Henry Waxman. Representa-
tive Waxman, a noted environmental proponent, stated

7

prior to the vote on the 1977 amendments to the Clean Air
Act that: “We have struck a proper balance between en-
vironmental controls and economic growth in the dirty air
areas of America. ... [NJeither [pollution control nor new
jobs] need be compromised.” 123 Cong. Rec. 27,076 (1977).

Courts have adhered to this statutory mandate. In en-
acting standards for state implementation plans needed to
meet national ambient air quality standards, EPA must
weigh economic factors. Anaconda Company v. Ruckels-
haus, 482 F.2d 1301, 1306 (10th Cir. 1973). See also Pacific
Legal Foundation v. Andrus, 657 F.2d 829 (6th Cir. 1981) ;
Environmental Defense Fund, Inc. v. Costle, 631 F.2d 922
(D.C. Cir. 1980). However, the court below ignored these
precedents and determined that the favorable economic
advantages of the plantwide definition were irrelevant.
This is clear error.

II

EVEN ENVIRONMENTAL AND SCIENTIFIC SPOKES.-
MEN AGREE THAT AS A MATTER OF POLICY
PROMULGATIONS OF ENVIRONMENTAL REGULA-
TIONS MUST CONSIDER ECONOMIC NEEDS OF
SOCIETY
In addition to Congress and the courts, the scientific

community has also begun to recognize the imperative of

considering the economic needs of society when devising
environmental protection programs.

Recently Mr. Gus Speth, President of World Resources
Institute and former chairman of the Council for Environ-
mental Quality, emphasized that

“(t]he environmental community should realize the
need for considering business and economic concerns.

... Environmental conservation and economic growth
are complementary.” The Bureau of National Affairs,
Inc., 14 Environment Reporter 158 (June 3, 1983).

Dr. S. Fred Singer, Professor of Environmental Sciences
at the University of Virginia, Senior Fellow of the Heri-
tage Foundation, and a member of the Acid Rain Peer
Review Panel of the White House Office of Science and
Technology Policy, recently implored to the American As-
sociation for the Advancement of Science that cost effec-
tiveness of regulatory programs should be considered by
the regulator and that “the ‘serious damage’ caused by acid
rain could be controlled through a ‘least cost approach like
the bubble plans’ now being used for controlling certain air
pollutants in limited geographic areas.” 14 Enviromnent
Reporter at 157.

On June 27, 1983, the Acid Rain Peer Review Panel
issued its General Comments and recommended that “addi-
tional steps should be taken now which will result in mean-
ingful reductions in the emissions of sulphur compounds
into the atmosphere beginning with those steps which are
most cost effective.” Office of Science and Technology Pol-
icy, Executive Office of the President, General Comments
om Acid Rain, A Summary by the Acid Rain Peer Review
Panel for the Office of Science and Technology Policy
(June 27, 1983).

These comments are only a small sampling but they
reflect the serious consideration of the scientific community
regarding the use of concepts such as the bubble approach
not only to meet clean air goals but also to control acid
rain.

9

That EPA properly considered the economic costs as
well as the environmental benefits of its regulations defining
source for nonattainment areas is thus not only supported
by the statute and case law, but also the rational viewpoints
of the scientific community. By all accounts EPA acted
within its congressionally approved role.

Il

STATES NEED FLEXIBILITY TO ADOPT OR NOT
ADOPT PROGRAMS SUCH AS THE PLANTWIDE
DEFINITION IN ORDER TO SATISFY THEIR PRI-
MARY RESPONSIBILITY TO IMPLEMENT THE
CLEAN AIR ACT

It is a basic premise that states historically have had
the primary responsibility for protecting their citizens’
health and welfare.

“The powers of the states to protect the health and
welfare of their citizens by statute, by an action to
abate a nuisance, or by other means is well estab-
lished.” Renz, The Effect of Federal Legislation on
Historical State Powers of Pollution Control: Has
Congress Muddied State Waters?, 43 Mont. L. Rev. 199
(1982).

As far back as 1907, states exercised these powers in the
area of air pollution. Georgia v. Tennessee Copper Co., 206
U.S. 230 (1907). In keeping with this role, states were ex-
pected to continue to have the primary responsibility in
air pollution control through the implementation of the
Clean Air Act. This fact was emphasized in the initial fed-
eral effort to reduce air pollution, where “the Air Pollu-
tion Control Act of 1955, declared that pollution control
was the responsibility of the states.”” Renz, 43 Mont. L.

10

Rev. at 201 (emphasis added). This Court has recognized
that “the prevention and control of air pollution at its
source is the primary responsibility of states and local
governments.” T'rain v. Natural Resources Defense Coun-
cul, 421 U.S. 60, 64 (1975).

In order to be able to fulfill its role in implementing the
Clean Air Act, a state needs sufficient flexibility. “Wide
latitude” is to be accorded the states. Jd. “The states’
powers to guard against these threats [hazards to public
health} cannot be limited if the states are to continue their
historic role... .” Renz, 43 Mont. L. Rev. at 216. Though
Congress and some courts have recognized the state’s pri-
mary role and the need for flexibility, the court below did
not.

In the opinion below, the court narrowly defined that
the purpose of the nonattainment program was “undoubt-
edly to improve air quality in regions lagging behind in
meeting the NAAQS.”* NRDC v. Gorsuch, 685 F.2d 718,
727 (D.C. Cir. 1982). It discounted EPA’s undorstanding
that the purpose and nature of the nonattainment program
was “to afford the states flexibility in designing revised
SIPs* which will attain compliance with the NAAQS.” The
Court simply countered that “offering flexibility to the
states may be a method of attaining that objective, but it
is not an independent goal of the nonattainment scheme.”

This is contrary to the intent and purpose of Congress,
as reflected in House Report No. 294.

*National Ambient Air Quality Standards (NAAQS). Section 109
of the Clean Air Act, 42 U.S.C. § 7409.

*State Implementation Plans (SIPs) for the Attainment, Mainte-
nance and Enforcement of NAAQS. Section 110 of the Clean Air
Act, 42 U.S.C. § 7410.

ll

In discussing the nonattainment provisions of the Clean
Air Act Amendments of 1977, codified at 42 U.S.C. §§ 7501
through 7508, the House committee stated that there are
“two main purposes: (1) to allow reasonable economic
growth to continue in an area while making reasonable
further progress to assure attainment of the standards by
a fixed date; and (2) to allow states greater flexibility for
the former purpose than EPA's present interpretative
regulations afford.” H.R. Rep. No. 294 at 211 (emphasis
added). The lower court’s judicial interpretation to the
contrary simply does not mesh with legislative history, nor
does it mesh with common sense. Congress believed that
flexibility must be afforded a state in order to allow a state
to meet all the purposes of the Clean Air Act. These
purposes include reasonable economic growth. As shown
infra this nation’s economic growth will suffer needlessly
if flexibility and the bubble concept are capriciously
rejected.

IV
THE PLANTWIDE DEFINITION COMPLIES WITH
THE GOALS OF THE NONATTAINMENT PROVI-
SIONS OF THE CLEAN AIR ACT. THE DUAL DEFI-
NITION PREFERRED BY THE LOWER COURT
DOES NOT
A. The Plantwide Definition Properly Promotes Attain.
ing Ambient Air Quality Standards
EPA has frequently articulated that if a state chooses
to define “source” on a plantwide basis that state is still
subject to the requirements of 42 U.S.C. § 7502: The SIP
must continue to demonstrate attainment of NAAQS and,
in the interim until such standards are met, reasonable

12

further progress (RFP)* toward attainment by the statu-
tory deadlines must be demonstrated (46 Fed. Reg. 50,767
(October 14, 1981)). Since a nonattainment state must
demonstrate RFP, by definition that state must prove
actual reductions in air pollution. And as stated above,
demonstration of RFP is not precluded by use of the
plantwide definition but, on the contrary, it is required.

For existing sources, EPA restricts the use of the alter-
native emissions approach in a nonattainment area to the
situation where the source does not increase pollution:
“TA)ll emissions under the bubble must be quantifiable and
trade-offs among them must be equal in order to prove that
the alternative emissions approach does not increase the
level of overall emissions.” Note, An Overview of the
Bubble Concept, 8 Colum. J. of Envtl. L. 137, 142 (1982),
which relies on 44 Fed. Reg. 71,780 through 71,781 (1979).
Essentially, these EPA restrictions are present “to ensure
that the bubble concept ... [is] used to improve air quality
rather than to continue air pollution.” Jd. As a result, the
bubble concept furthers the goals of the nonattainment pro-
gram by leading to attainment of NAAQS and simultane-
ously providing for economic growth, the same goals the
plantwide definition would accomplish.

‘Title 42, United States Code, Section 7501(1) defines reasonable
further progress as: “annual incremental reductions in emissions of

the applicable air pollutant.”

13

B. The Dual Definition of Source Discourages Air Pollu-
tion Reductions While the Plantwide Definition Pro-
motes It Through Incentives

As EPA has repeatedly stated, “the dual definition was
discouraging replacement of older, dirtier processes with
new cleaner ones. It thereby acted as a disincentive to new
investment and modernization and retarded progress to-

ward clean air.” 46 Fed. Reg. 50,766 (October 14, 1981)

and 46 Fed. Reg. 16,281 (March 12, 1981). Quite simply,

the current “technology-based standards provide little in-
centive for innovations that reduce emissions below state-
of-the-art.” Harrington and Krupnick, Stationary Source

Pollution Policy and Choices for Reform, 21 Nat. Re-

sources J. 539, 544 (1981). Similarly, clean air legislation

has “led to serious delays and ‘stretch-outs’ in investment
plans, delays which have the inevitable effect of extending
the use of outmoded facilities and retarding technical
change and economic growth.” Haveman and Christainsen,

Environmental Regulations and Productivity Growth, 21

Nat. Resources J. 489, 507 (1981). One of the primary

reasons for this effect is due to the current regulations

under which new sources of pollution are subjected to more
stringent standards than existing sources. “This discrep-
ancy between old and new plant requirements tends to
reduce investment in plant and equipment, and remaining
investment is diverted away from new plant construction
and toward rehabilitation of older equipment. Innovation
is retarded ... .” Harrington and Krupnick, 21 Nat. Re-
sources J. at 544.

Alternatively, the alternative emissions approach is
believed by many, including EPA, to “actually have a
beneficial effect on the development of pollution control

14

technology [since] the bubble would serve as an incentive
for developing cost effective pollution control technology.”
Note, 8 Colum. J. of Envtl. L. at 155. Distinct from the
current technology based pollution control standards, EPA
has developed an “emissions trading policy” as an alterna-
tive for controlling emissions, which is a market approach
to air pollution control. The bubble concept, one of four
innovative regulatory mechanisms, takes advantage of mar-
ket incentives to reduce air emissions at the lowest possible
cost.

The Council on Environmental Quality (CEQ) has stated
that these innovative regulatory mechanisms, including the
bubble concept, “are needed in the 1980’s if further gains
are to be made at reasonable costs.” 13th Annual Report
of the Council on Environmental Quality, Environmental
Quality 1982, 8. To illustrate that the bubble concept does
meet the goals established by Congress for the nonattain-
ment program, including reducing air emissions, CEQ
cited a 3M factory in Bristol, Pennsylvania, which “used
an innovative manufacturing process to overcontrol vola-
tile organic compound (VOC) emissions in return for less
control on other sources. This bubble reduced VOC emis-
sions 1,000 tons per year more than would have been
achieved through conventional compliance.” Jd. Evidence
that the dual goals of reaching attainment and enhancing
the productive capacity of the population (42 U.S.C.
§ 7401(b)) are met by the bubble concept is manifest in that
“(bly the end of 1982, EPA’s efforts to encourage emis-
sions trading had resulted in a number of concrete cases
where industry had reduced air emissions while simulta-
neously reducing capital and/or operating costs.” 13th An-
nual Report of the Council on Environmental Quality at
76 (emphasis added). Overall, 21 of the 34 bubbles

15

approved or proposed by EPA reduce emissions further
than legally required by NAAQS. /d. at 185. As shown by
these figures, the bubble concept provides crucial environ-
mental benefits for “through emissions trading, every firm
has economic incentives to reduce its pollution beyond the
requirements of the law.” Jd. at 184. The plantwide defini-
tion for new and modified sources would act in a similar
fashion.

The strategy of providing industry with economic incen-
tives to reduce their pollution was thus an important ele-
ment of the Clean Air Act Amendments of 1977. President
Carter actually highlighted this strategy when he signed
the 1977 amendments into law: “The Act provides us with
a new tool to help abate industrial sources of pollution by
authorizing use of economic incentives to reduce noncom-
pliance.” Statement of Signing H.R. 6161 Into Law, 13
Weekly Comp. Pres. Doc. 1214 (August 15, 1977). Such
important incentives, however, are conspicuously missing
from the lower court’s prefered approach to the non-
attainment program. The plantwide definition strategy to
reduce air pollution may be good, or bad, but it is not the
court’s role to disapprove it because the court prefers
another strategy. The evidence shows that EPA’s selected
strategy not only works to reduce air pollution but also
gives a needed boost to economic growth. Congress asked
for no more. Neither should the Court.

©. The Dual Definition of Source Has Contributed to a
Slow Growth Economy While the Plantwide Definition
Will Promote Economic Growth

The environmental regulations promulgated under the

Clean Air Act, particularly those which define “source” for

16

nonattainment areas on a dual basis, have resulted in the
impairment of productivity and have contributed to dimin-
ished economic growth over the past several years.

The general premise is supported by findings of several
legal and economic scholars:
“Many causes have been suggested for stagflation and
declining productivity growth, including ... regulatory
activities—in particular environmental regulations.”
Haveman and Christainsen, 21 Nat. Resources J. at
489 (emphasis added).

“The environmental policies with the greatest impact on
the national economy are probably those that limit indus-
trial air and water pollution.” Harrington and Krupnick,
21 Nat. Resources J. at 539 (emphasis added). Further, “it
is reasonable to suggest that between 12 and 25% of the
slowdown in productivity growth in the private sector of
the economy between the early 1960's and the mid-1970’s
can be atttributed to the entire bundle of federal regula-
tions.” Haveman and Christainsen, 21 Nat. Resources J. at
498, And of those federal regulations, a reasonable estimate
is that 8% to 12% of the slowdown in productivity is
atttributable to environmental regulations. Jd. at 508.
Clearly, our nation’s economy has not escaped unharmed
from the extensive regulations promulgated by government
at all levels and, particularly, the environmental regulations
concerning air pollution.

The 8% to 12% loss in the productivity of the economy
attributable to environmental regulation directly contra-
venes the purposes of Subchapter I of the Clean Air Act.
This. negative impact is partially attributable to the eco-
nomie disadvantages in the existing approach of imple-
menting the Clean Air Act for, “the existing structure of

=

17

air and water pollution regulation, particularly the preven-
tion of significant deterioration and nonattainment provi-
sions of the Clean Air Act, is a potentially serious obstacle
to economic growth in the United States.” Harrington and
Krupnick, 21 Nat. Resources J. at 548.

Contrary to the current regulatory scheme, there are
many positive aspects of the bubble concept. The National
Commission on Air Quality (NCAQ) indicated that EPA
adopted the bubble concept

“as a result of studies suggesting that substantial cost
savings could be achieved [through its utilization]. One
study, completed by Maloney and Yandle (1979) for
52 DuPont Corporation plants, showed that allowing
the use of the bubble concept at each of the plants to
achieve 85 per cent emission reductions would reduce
costs of emission control by 35 per cent over point
source controls.’ National Commission on Air Quality,
To Breathe Clean Air: Report of the National Com-
mission on Air Quality 276 (1981).

NCAQ went on to state that the “resulting emissions will
be equal to the emissions that would have occurred if
specific point-source reduction had been required, however,
substantial savings in costs should be realized.” Jd. at 276-
77. The positive aspects of the bubble concept are further
illustrated by the fact that during 1981, over 40 companies
were developing bubble applications “showing savings of
several million dollars each in either capital or operating
costs.” Harrington and Krupnick, 21 Nat. Resources J. at
557. Overall use of the bubble concept wonld result in im-
proved alloc, cion of resources, increased productivity and
innovation, and reduced inflation. Jd. at 558. It also is seen
as “the means to a considerable reduction in the cost of

18

environmental policy with little, if any, sacrifice in environ-
mental quality,” id. at 562, as the bubble concept has been
determined to be “environmentally benign,” id. at 563.

One way to judge air pollution policy is to examine its
cost effectiveness, which in this context has been defined as
“the ability to achieve given environmental quality goals
for the lowest possible costs.” Jd. at 542. In teiims of cost
effectiveness, NCAQ was correct in their assessment that
the bubble policy is “perhaps the best known economic
incentive approach to air pollution control.” National Com-
mission on Air Quality at 276. NCAQ further stated that
utilization of the bubble concept would allow a facility to
use a more cost-effective mix of emission reduction meas-
ures. 7d. Thus, use of the bubble concept, which would be
allowed only in those state implementation plans which
provide for attainment of national ambient air quality
standards while showing reasonable further progress, 46
Fed. Reg. 50,767 (1981), would result in reaching air quality
standards in a more cost-effective manner. This is also
underscored by CEQ’s estimation that by “1988, expendi-
tures for pollution abatement and other environmental
quality programs will grow to nearly $70 billion in constant
(1979) dollars. This represents an estimated annual real
rate of growth of 6.6 percent... .” Portney, The Macro-
economic Impacts of Federal Environmental Regulations,
21 Nat. Resources J. 468 (1981). CEQ also estimates that
$31.5 billion will be the cost by 1988 (in 1979 dollars) for
water and stationary air quality controls alone. Haveman
and Christainsen, 21 Nat. Resources J. at 495.

The purpose of enhancing the productive capacity of the
nation cannot be accomplished under the current

19

environmental regulatory scheme. EPA’s adherence to the
bubble concept recognizes its statutory charge to consider
the economic impacts as well as health benefits. The plant-
wide definition of source is one application of this concept.
It is a step in the right direction fully within the authority
of the Clean Air Act and should be upheld.

Vv
THE LOWER COURT IGNORED THE FACT THAT AN
ADMINISTRATIVE AGENCY'S DISCRETION IN
PROMULGATING REGULATIONS IS QUITE WIDE
WHILE A REVIEWING COURT'S SCOPE OF RE-
VIEW IS VERY NARROW

The decision of the Court of Appeals below can only be
viewed as another attempt by that court to substitute its
judgment on the propriety of environmental regulatory
programs for the judgment of EPA. The Court of Appeals
disagrees with EPA’s policy decision and has improperly
dissected the decision to ascribe an improper administra-
tive motive behind the adoption of the plantwide defini-
tion. The court asks too much of itself and gives too little
to EPA and such conduct by the court constitutes reversi-
ble error. As Justice Douglas stated: “The Court is not
empowered to substitute its judgment for that of the
agency.” Bowman Transportation, Inc. v. Arkansas-Best
Freight System, Inc., 419 U.S, 281, 285 (1974).

On June 6, 1983, this Court affirmed a basic premise of
administrative law that an agency is to have wide discre-
tion in promulgating regulations and a reviewing court
is to have a very narrow seope of review. In Baltimore
Gas & Electric Co., et al. v. NRDC, et al, ........ Se ‘

51 U.S.L.W. 4678 (June 6, 1983), writing for an eight to

zero Court, Justice O'Connor stated :
“Congress has assigned the courts only the limited,
albeit important, task of reviewing agency action to
determine whether the agency conformed with con-
trolling statutes. .. .‘[a]dministrative decisions should
be set aside in this context, as in every other, only
for substantial procedural or substantive reasons as
mandated by statute ... not simply because the court
is unhappy with the result reached. Vermont Yankee,
435 U.S. at 558.’

“...'™he role of the courts is simply to ensure that
... the [agency’s] . . . decision is not arbitrary or
capricious.” Baltimore Gas & Electric Co. v. NRDC,
Sabianh USS. ........, 51 U.S.L.W. at 4680.

The Court continued, stating, “it is not our task to deter-
mine what decision we, as Commissioners, would have
reached. Our only task is to determine whether the Com-
mission has considered the relevant factors and articulated
a rational connection between the facts found and the
choice made.” Baltimore Gas & Electric Co. v. NRDC, ......
US. ......, 51 U.S.L.W. at 4683.

Unquestionably an administrative agency is granted
broad discretion to promulgate regulations. In defining
source on a plantwide basis, EPA properly considered all
the relevant factors including the economic impact of its
action and articulated a rational connection between the
facts found and the choice made. EPA carefully articulated
that one policy it was pursuing in defining source on a
plantwide basis was the attainment of NAAQS in those
designated areas that had not yet achieved those standards
(nonattainment areas). See 46 Fed. Reg. 50,767 through

21

50,768 (October 14, 1981). A relevant factor considered in
promulgating the plantwide definition—state flexibility—
likewise comports with the congressional mandate by
enhancing productive capacity as well as promoting public
health and welfare. Jd. Moreover, EPA was “correct to
look at the costs as well as the benefits” of the regulation
involved. Motor Vehicle Manufacturers Association v. State
Farm Mutual Automobile Insurance Company, ........ US.
yeuk , 51 U.S.L.W. 4953, 4959 (June 24, 1983).

The Baltimore Gas case and the instant case are factually
similar—both concern the findings of an administrative
agency which are within the agency’s area of special exper-
tise. In Baltimore Gas the Court stated its scope of review
when an agency is acting within its area of special exper-
tise. “When examining this kind of scientific determination,
as opposed to simple findings of fact, a reviewing court
. must generally be at its most deferential.” Baltimore Gas
€& Electric Co. v. NRDC, ...... US. ......, 51 U.S.L.W. at 4682.
Herein EPA made the expert determination that imple-
mentation of the plantwide definition would not only pro-
mote public health and welfare by improving the quality
of the nation’s air but also would promote the productive
capacity of this nation’s people. Though a reviewing court
is required “to give [the agency] some leeway where its
findings must be made on the frontiers of scientific knowl-
edge.” Industrial Union Department, AFL-CIO v, Ameri-
can Petroleum Institute, 448 U.S. 607, 656 (1980), the
lower court nevertheless discounted EPA’s finding that
the plantwide definition would properly promote clean air
in nonattainment areas because of its belief EPA improp-
erly considered the economic impact of its nonattainment
program, 685 F.2d at 726-27. The court did not find, nor

could it, that the purpose of meeting NAAQS would not be
met but nevertheless rejected the plantwide definition, This
amounts to a dispute over the type of program selected by
EPA to meet the objective of the Clean Air Act and is
clearly outside the scope of judicial review. Unfortunately,
the Court of Appeals improperly deferred to its predisposi-
tions and ignored EPA’s expertise.

The Third Cireuit Court of Appeals gives further insight
into the role of a reviewing court within the limits of the
highly deferential scope of review to be accorded agency
promulgated regulations. NRDC complained below that
EPA’s promulgation of a plantwide definition of source
was a substantial departure from the agency’s prior defini-
tions and course of rulemaking. Even if this assertion were
true, there still is a wide degree of deference to be accorded
to the agency’s actions. Although the following language
regards regulations promulgated by the Interstate Com-
merce Commission, it is insightful when applied to any
administrative agency. “[E]ven when . . . rulemaking rep-
resents a departure from [an] agency’s prior position, so
long as the policies it is pursuing can be discerned from its
opinion, and those policies are consistent with congres-
sional directives, we must defer to the... agency judg-
ment.” Bessemer and Lake Erie Railroad Co., et al. v.
Interstate Commerce Commission, 691 F.2d 1104, 1110 (3d
Cir. 1982).

Bessemer also held that “(t]he choice by an agency
among alternative means for satisfying a statutory man-
date is exclusively for that agency.” Bessemer, 691 F.2d at
1110. Congress directed EPA through the Clean Air
Act to promulgate regulations to meet NAAQS’s in

nonattainment areas. The choice for a plantwide definition
of source among several alternatives is exclusively for
EPA; and the court has not demonstrated that the plant-
wide definition will not satisfy the required statutory man-
date. Thus, the court must accord great deference to EPA’s
program adoption, yet has failed to do so.

Moreover, contrary to the imputation of the lower court,
“(t)he agency is not absolutely bound by its prior deter-
minations, but rather may adjust its policies and rulings
in light of experience.” Montana Power Co. v. EPA, 608
F.2d 334, 347 (9th Cir. 1979), “EPA is free to make rea-
sonable changes in the interpretation of its regulations
.. +’ Montana Power Co, v. EPA, 608 F.2d at 348, See also
Environmental Defense Fund, Inc. v. Costle, 657 F.2d 275,
289 (D.C, Cir, 1981).

In order to have properly overturned EPA’s nonattain-
ment program using the plantwide definition, the court
must have found the implementing regulations were arbi-
trary and capricious. Baltimore Gas, 51 U.S.L.W. at 4680.

“Normally, an agency rule would be arbitrary and
capricious if the agency has relied on factors which
Congress has not intended it to consider, entirely
failed to consider an important aspect of the problem,
offered an explanation for its decision that runs
counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference
in view or the product of agency expertise.” Motor
Vehicle Manufacturers Association, 51 U.S.L.W. at
4956.

24

The lower court relied on two of these factors to find
the plantwide definition for air pollution source in non-
attainment areas arbitrary and capricious. First, the court
points primarily to economic considerations as a factor
Congress intended EPA not to consider. On the contrary,
EPA's consideration of economic factors was intended by
Congress to be considered by EPA in meeting NAAQS’s in
nonattainment areas. See Arguments I and IV, supra.

The second basis found by the lower court for over-
turning the plantwide definition was EPA’s failure to sup-
port its action with evidence. In Footnote No. 41 of the
opinion below, Circuit Judge Ginsburg criticized EPA for
not basing its October, 1981, amendment of its regulations
on any “study, survey, or support for the opposite posi-
tion, now tendered by EPA, that the dual definition would
indeed retard improvement of air quality in the aggre-
gate.” NRDC v. Gorsuch, 685 F.2d at 727. However, the
court’s statement ignored the facts articulated by EPA,
46 Fed. Reg. 50,768 (October 14, 1981), that comprehensive
written comments with implementation examples were con-
sidered, “EPA believes that the examples provided by the
commentators support its statement in the proposal that
the dual definition impedes legitimate efforts to modernize
existing plants. (See, ¢.g., comments of Crown Zellerbach ;
Union Oil Corporation.)”

Additionally, EPA stated as of March, 1981, when it
initially proposed the changes in the regulations, that it
had reevaluated all of the arguments and facts on all sides

of the nonattainment issues and had concluded that the
elimination of the dual definition requirement will remove
a barrier to modernization of the nation’s industrial base.
46 Fed. Reg. 50,768 (October 14, 1981). Such a conclusion
of EPA, based upon comments and surveys from inter-
ested parties, reevaluation of all arguments on the issues,
and its own expert judgment is not arbitrary and ca-
pricious.

As a side note, it is curious that the October, 1981, reg-
ulations were struck down due to a lack of evidence that
the dual definition would retard growth and the plantwide
definition would not adequately achieve ambient air quality
standards. When promulgating the August 7, 1980, dual
definition of source for nonattainment areas (45 Fed.
Reg. 52,696 through 52,698 (August 7, 1980)), EPA failed
to cite any study or survey supporting the definition’s
efficacy yet the court finds this fact of no interest. The
court below was not at liberty to substitute its opinion
for that of the agency, yet the above dichotomy suggests
that this is precisely what the court did.

EPA's decision was based upon relevant considerations,
did not run counter to the evidence before the agency, is
plausible, and may be ascribed as the product of sgency
expertise. Based on these factors, the action of EPA can-
not be considered arbitrary and capricious.

26

CONCLUSION

PLF respectfully submits that based on the foregoing
arguments, the decision of the court below was contrary to
the law and therefore is in error. The August 17, 1982,
decision rendered by the United States Court of Appeals
for the District of Columbia Circuit should be reversed
and the regulations promulgated by EPA on October 14,
1981, should be reinstated. Such action by this Court will
enable EPA and the states to more fully comply with the
congressional mandates of the nonattainment provisions of
the Clean Air Act.

August, 1983.
Respectfully submitted,

Ronautp A. ZuMBRUN

Rost L. Riverr
COUNSEL OF RECORD
Pacific Legal Foundation

455 Capitol Mall, Suite 600
Sacramento, California 95814
Telephone : (916) 444-0154
Attorneys for Amicus Curiae
Pacific Legal Foundation

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_0106%3A14. Public record. Not legal advice.