Petitioners Reply Brief — American Iron & Steel Institute v. Natural Resources Defense Council, Inc.

Oftic im: Cout. US.

Phos ee

MAY 18 1983

Alli iniede STEVAS,

No. 82-1247

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1982

AMERICAN IRON AND STEEL INSTITUTE, et al.,

AMERICAN PETROLEUM INSTITUTE, et al.,

CHEMICAL MANUFACTURERS ASSOCIATION,

GENERAL Motors CORPORATION, and

RUBBER MANUFACTURERS ASSOCIATION,

Petitioners,

¥i

NATURAL RESOURCES DEFENSE COUNCIL, INC.,

CITIZENS FOR A BETTER ENVIRONMENT, INC.,

AMERICAN LUNG ASSOCIATION OF NORTHWESTERN

Ou10, INc., and ADMINISTRATOR, U.S.

ENVIRONMENTAL PROTECTION AGENCY,

Respondents.

On Petition For A Writ Of Certiorari To The United States

Court Of Appeals For The District Of Columbia Circuit

PETITIONERS’ REPLY BRIEF

RoBertT A. EMMETT

OF COUNSEL: (Attorney of Record)

BARTON C. GREEN DAVID FERBER

AMERICAN IRON AND REED Smitu SHaw & McCay

STEEL INSTITUTE 1150 Connecticut Avenue, N.W.

Suite 900

Washington, D.C. 20036

(202) 457-6144

May 13, 1983

Additional Counsel listed inside cover.

PRESS OF BYRON S. ADAMS PRINTING. INC.. WASHINGTON, D.C.

Bair S. McMILLIN

REED SMITH SHAW & McC Lay

747 Union Trust Building

Pittsburgh, Pennsylvania 15219

(412) 288-3228

Attorneys for Petitioners

American Iron and Steel

Institute, et al.

STARK RITCHIE

Davip T. DEAL

AMERICAN PETROLEUM INSTITUTE

2101 L Street, N.W.

Washington, D.C. 20037

Attorneys for the American

Petroleum Institute, et al.

THEODORE L. GARRETT

PaTRICcIA A. BARALD

CovINGTON & BURLING

1201 Pennsylvania Avenue, N.W.

P.O. Box 7566

Washington, D.C. 20044

Attorneys for the Chemical

Manufacturers Association

Louis E. Tos!

WILLIAM L. PATBERG

FULLER & HENRY

300 Madison Avenue

Toledo, Ohio 43603

Attorneys for General

Motors Corporation

CHARLES F. LETtrow

CLearRY, GoTTLies, STEEN

& HAMILTON

1752 N Street, N.W.

Washington, D.C. 20036

Attorney for the Rubber

Manufacturers Association

i

TABLE OF CONTENTS

Page

I. The Court Below Has Decided An Important Ques-

tion Of Federal Law Which Should Be Settled By

CDT areas eVinecescoscceeccesess 2

II. The Decision Below Conflicts With Applicable Deci-

cc cswislivsoccccscescerece 4

III. The Decision Below Raises A Fundamental Issue Of

Administrative Law—Whether An Agency Must

Produce More Factual Support To Revise A Rule

PEE BO PAOEIG EU ccc cscevvcccccccccnes 5

IV. The Possibility That Congress Might Amend The

Clean Air Act Is No Basis For Denying Review Of

ese b esc ccerccccescccess 7

Ne cc cebvedecvecccercces s

TABLE OF AUTHORITIES

CASES: Page

a Power Co. v. Costle, 636 F.2d 323 (D.C. Cir.

D pthimecssbibenekirceeercell clk ceisw ileus

Small Refiner Lead Phasedown Task Force v. EPA, ——

F.2d __., 18 ERC 1681 (D.C. Cir. 1988) ........ 4

Train V. NRDC, 421 U.S. 60 (1975) ........ceccccees 2,4

Union Electric Co. v. EPA, 427 U.S. 246 (1976) ..... 2,4

Vermont Yankee Nuclear Power Corp. v. NRDC, 435

Sek Ge MIU cri Sn caccrbbiveesscaeleusecaswen

STATUTES:

Clean Air Act (as amended in 1977):

Section 110(a)(2), 42 U.S.C. § 7410(a)(2) ........... 2,4

Section 110(a)(2)(D), 42 U.S.C. § 7410(a)(2)(D) ..... 4,5

Part D, 42 U.S.C. §§ 7501, et seg. ..........005. 3, 5, 6

Section 307(b), 42 U.S.C. § 7607(b) ............45. 3

FEDERAL REGISTER:

44 Fed. Reg. 3274 (January 16, 1979) ............... 6

44 Fed. Reg. 51924 (September 5, 1979) ............. 6

46 Fed. Reg. 16280 (March 12, 1981) ................ 5, 6

46 Fed. Reg. 50766 (October 14, 1981) .............. 5, 6

IN THE

Supreme Court of the United States

OCTOBER TERM, 1982

No. 82-1247

AMERICAN IRON AND STEEL INSTITUTE, et al.,

AMERICAN PETROLEUM INSTITUTE, et al.,

CHEMICAL MANUFACTURERS ASSOCIATION,

GENERAL Motors CORPORATION, and

RUBBER MANUFACTURERS ASSOCIATION,

Petitioners,

Ve

NATURAL RESOURCES DEFENSE COUNCIL, INC.,

CITIZENS FOR A BETTER ENVIRONMENT, INC.,

AMERICAN LUNG ASSOCIATION OF NORTHWESTERN

Oun10, INc., and ADMINISTRATOR, U.S.

ENVIRONMENTAL PROTECTION AGENCY,

Respondents.

On Petition For A Writ Of Certiorari To The United States

Court Of Appeals For The District Of Columbia Circuit

PETITIONERS’ REPLY BRIEF

Despite Respondent NRDC’s protestations to the con-

trary, the decision below raises a vital federal question—

whether the Clean Air Act prohibits EPA and the states

from adopting and applying a plantwide definition of

“source” to industrial expansion and modification proj-

ects in nonattainment areas. At issue here are regulatory

measures affecting plant construction and modification in

over 30 of the 50 states. The decision below also conflicts

2

with two prior decisions of this Court, Train v. NRDC

and Union Electric Co. v. EPA, which held that EPA

must approve state plans demonstrating timely attain-

ment of applicable ambient air standards and meeting the

enumerated requirements of Section 110(a)(2) of the Act.

Finally, the decision below raises an important, generally

applicable issue of administrative law—whether an agen-

cy must produce greater factual support to justify revi-

sion of a rule than that required when adopting it.

I. The Court Below Has Decided An Important Question Of

Federal Law Which Should Be Settled By This Court

The D.C. Circuit has addressed the plantwide source

issue' in the context of three different Clean Air Act

programs with confusing, contradictory results. See

Chevron Pet. at 7-10; EPA Pet. at 21-23; AISI Pet. at

15-17. In the instant case, the court below did not even

purport to decide whether the plantwide definition of

“source” should, as a matter of law, be applied to new

‘Respondents charge (NRDC Opp. at 4, footnote 8) that AISI

“mischaracterizes” the EPA plantwide definition. AISI’s

“characterization” of the plantwide definition or the “bubble concept”

associated with it is not in error. AISI’s description of the “netting”

aspects of the “bubble concept” is identical to that used by the court of

appeals in Alabama Power Co. v. Costle, 636 F.2d 323, 401-402(D.C.

Cir. 1979). NRDC is confusing the “netting” of emission increases

and decreases with EPA's decision to specify “significance levels”

below which de minimis plant emission increases do not trigger new

source review. NRDC’s quarrel is with EPA as to whether the

significance level amounts listed at page 4, footnote 9 of its Opposi-

tion are in fact insignificant. NRDC itself, at page 5, footnote 9 of its

Opposition, seriously mischaracterizes EPA’s regulations, however,

when it erroneously states that the de minimis increases can occur

many times at a source rather than, as is in fact the case, as a single,

cumulative total over a five-year period. See Chevron Reply at 4,

footnote 1.

3

source review in nonattainment areas’ but rather held

itself “constrained” to reach the final result based on two

prior decisions which do not support that result. Since no

other courts of appeals can address this issue’ and be-

cause the D.C. Circuit has declined the opportunity to

resolve these inconsistent results, only this Court can

untangle the present morass.

Resolution of the source issue is crucial. If the decision

below is not reversed, the plans of at least 31 states (over

60% of the country) for the cleanup of nonattainment

areas will be overturned. See EPA Pet. at 13-14, 21-22.

Forcing the states to adopt a “dual” definition of the term

“source” will delay plant replacement and modernization

2? NRDC consumes twelve pages of its Opposition (at 10-21) defend-

ing the decision below on the basis of the Act’s legislative history.

The court below, however, reviewed this history and the statutory

language and concluded that neither “squarely addressed” Congress’

view of “stationary source” for purposes of the Part D permit process

and construction moratorium. Chev. App. at A-8. NRDC’s emphasis

on legislative history arguments not: relied upon by the court below

suggests that NRDC is not comfortable with the “bright line” test

announced by that court as the basis for its decision. In fact, neither

the statute nor its legislative history requires EPA to adopt a partic-

ular definition of “source” and neither precludes EPA from adopting

the plantwide definition.

3 NRDC misleadingly cites two cases, one each in the Fourth and

Ninth Circuits, as having “rejected” application of the plantwide

definition. NRDC Opp. at 6, footnote 10. At issue in those cases was

not the scope nor even the application of the plantwide source defini-

tion, but rather the commencement date of construction of new

boilers. In any event, both courts lacked jurisdiction to consider the

legality of EPA’s source definition, an issue left by Section 307(b) of

the Clean Air Act to the exclusive purview of the D.C. Circuit.

‘When the court below struck down the plantwide source defini-

tion, it did so by vacating, not remanding, EPA’s October 14, 1981

regulations deleting the “dual” source definition which had been in

4

projects or, where the construction moratorium applies,

can preclude modernization altogether, effectively put-

ting the brakes on economic recovery for large industrial

sectors of the economy.’

II. The Decision Below Conflicts With Applicable Decisions

Of This Court

The decision below requires EPA to disapprove at least

31 state plans demonstrating timely attainment of appli-

cable ambient air standards and meeting the specific re-

quirements of Section 110(a)(2) using the the plantwide

definition of source. In contending that the decision below

does not conflict with this Court’s decisions in Train v.

Natural Resources Defense Council, 421 U.S. 60 (1975),

and Union Electric Co. v. EPA, 427 U.S. 246 (1976),

which held that state plans meeting the above require-

ments must be approved regardless of the means chosen

by the state to achieve attainment, Respondent NRDC

mistakenly equates adoption of the plantwide sourée

definition with failure to establish a Section 110(a)(2)(D)

new source review program. The two are not equivalent.

The plantwide definition affects only the scope of a new

l

effect since August, 1980. In so doing, the court of appeals apparently

intended to reinstate the previous “dual” definition which forced

EPA and the states to define a source as a plant and each component

thereof. See Small Refiner Lead Phasedown Task Force v. EPA,

—— F.2d —, 18 ERC 1681, 1682 (D.C. Cir. 1983) (cites decision

below as “inplicitly assuming that EPA will return to its previous

regulation defining ‘source’ under the Clean Air Act”).

° As statistics cited by NRDC clearly show, virtually all major

industrial development projects undertaken in nonattainment areas

(590 out of 604 such projects—98%—over the five year period be-

tween 1976 and 1980) take place at existing plants rather than at

wholly new sites. NRDC Opp. at 4, footnote 7.

5

source review program, not the existence of such a pro-

gram.

Each of the 31 states that has adopted the plantwide

definition of source was required to demonstrate to EPA

that it has in place a new source review program meeting

the requirements of Section 110(a)(2)(D) and Part D.

Those states were able to make that showing by demon-

strating that they have developed a series of emission

reduction strategies designed to achieve applicable

ambient standards. None of those demonstrations were

dependent upon a new source review program utilizing

the “dual” source definition.

III. The Decision Below Raises A Fundamental Issue Of

Administrative Law—Whether An Agency Must Pro-

duce More Factual Support To Revise A Rule Than In-

itially To Adopt It

NRDC mischaracterizes AISI’s administrative law

argument at 17-19 of AISI’s petition as a claim that “the

lower court applied an improper standard of review when

it failed to defer to EPA’s reversal of position on a factual

assertion. . .” NRDC Opp. at 9. NRDC misses the point

entirely: Both EPA’s August 7, 1980 “dual” definition of

“source” and its October 14, 1981 plantwide “source”

definition were based on policy considerations, not factual

studies.* The lower court objected to what it perceived to

6 In its March 12, 1981 Federal Register proposal, EPA cited seven

reasons for deleting the dual definition, one of which was the

modernization disincentive factual assertion noted by NRDC. 46

Fed. Reg. 16281. In its October 14, 1981 promulgation, however,

EPA itself dismissed this consideration as “speculative” (see AISI

Petition, App. 27a) and instead cited two policy-related concerns for

adopting the plantwide definition: (1) to eliminate confusion and

promote regulatory simplicity by adopting the same definition of

6

be EPA’s lack of factual support for amending the

“source” definition, despite the complete absence of fac-

tual support for the original “dual” definition.’

AISI does not contend and has never contended that

courts must “defer” to unsubstantiated “factual asser-

tions” made by administrative agencies. AISI does con-

tend, however, that where, as here, EPA acknowledges

that its prior policy judgment was incorrec: and, with a

full explanation supported by extensive public comments,

rationally determines that a different policy better imple-

ments Part D, deference should be accorded to the Agen-

cy. By requiring more, the court below impermissibly

imposed procedural obligations on the Agency. See Ver-

mont Yankee Nuclear Power Corp. v. NRDC, 435 U.S.

519, 548 (1978).

An agency revision or rescission of policy should not be °

subjected to a harsher standard than that accorded the

original exercise of the Agency’s policy judgment. If any-

thing, greater deference should be given to the agency’s

subsequent decision, which reflects accumulated knowl-

edge and experience gained from implementing the initial

decision. The heavy burden imposed by the court below

prevents agencies from benefiting from their experience

source for both the PSD and the nonattainment programs, and (2) to

allow states to play their proper primary role in controlling pollution

within state boundaries by giving them flexibility in developing their

nonattainment area new source review programs and attainment

demonstrations. AISI Petition, App. 23a-24a.

7In fact, EPA received public comment on the “source” definition

on three separate occasions. 44 Fed. Reg. 3274 (Jan. 16, 1979), 44

Fed. Reg. 51924 (Sept. 5, 1979), and 46 Fed. Reg. 16280 (March 12,

1981). The overwhelming majority of commentators, including

states, each time supported the plantwide source definition.

7

in administering regulations and correcting their mis-

takes.

IV. The Possibility That Congress Might Amend The Clean

Air Act Is No Basis For Denying Review Of The Decision

Below

NRDC suggests that, because the Congress may while

reviewing and reauthorizing the Clean Air Act amend

that Act, review by this Court is unnecessary. The princi-

ple asserted by NRDC—that parties aggrieved by a low-

er court decision should be denied access to this Court if

the statute in question is subject to amendment—is

fundamentally unsound. Any federal statute may be

amended by the Congress. This possibility is pure

speculation* and provides no basis for precluding

aggrieved parties from obtaining redress from this

Court.

*The fact that the Congress is considering amendments to the

Clean Air Act is no guarantee that such amendments will be enacted

or that any amendments which may be enacted will include a defini-

tion of “source” specifically applicable to the nonattainment program.

The Clean Air Act has been up for reauthorization the last two

sessions of Congress and no new legislation has resulted from either

session.

8

CONCLUSION

For the foregoing reasons, in addition to those stated in

the original petition, the petition for a writ of certiorari

should be granted.

OF COUNSEL:

BARTON C, GREEN

AMERICAN IRON AND

STEEL INSTITUTE

May 13, 1983

Respectfully submitted,

RoBerT A. EMMETT

(Attorney of Record)

DAVID FERBER

REED SMITH SHAW & McCLAy

1150 Connecticut Avenue, N.W.

Suite 900

Washington, D.C. 20036

(202) 457-6144

BLAIR S. MCMILLIN

REED SMITH SHAW & McCLay

747 Union Trust Building

Pittsburgh, Pennsylvania 15219

(412) 288-3228

Attorneys for Petitioners

American Iron and Steel

Institute, et al.

STARK RITCHIE

DaviID T. DEAL

AMERICAN PETROLEUM INSTITUTE

2101 L Street, N.W.

Washington, D.C. 20037

Attorneys for the American

Petroleum Institute, et al.

9

THEODORE L. GARRETT

PaTRICIA A. BARALD

COVINGTON & BURLING

1201 Pennsylvania Avenue, N.W.

P.O. Box 7566

Washington, D.C. 20044

Attorneys for the Chemical

Manufacturers Association

Louis E. Tos!

WILLIAM L. PATBERG

FULLER & HENRY

300 Madison Avenue

Toledo, Ohio 43603

Attorneys for General

Motors Corporation

CHARLES F. LETTow

CLEARY, GOTTLIEB, STEEN

& HAMILTON

1752 N Street, N.W.

Washington, D.C. 20036

Attorney for the Rubber

Manufacturers Association