Amicus Curiae Brief — General Motors Corp. v. United States

guoreme Court, U.S.

rieren

No. 89-369 JAN 1 B®

SPANIOL, JA.

= mC RK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

GENERAL MOTORS CORPORATION,

7 Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the First Circuit

BRIEF AMICUS CURIAE OF THE

CHAMBER OF COMMERCE OF THE UNITED STATES

IN SUPPORT OF THE PETITIONER

RECEIVED Rosin S. CONRAD

HAND DELIVERED I Counsel of Record

NATIONAL CHAMBER LITIGATION

JAN18 1990 CENTER, INC.

1615 H Street, N.W.

OFFICE OF THE CLERK Washington, D.C. 20062

SUPREME COORT, US. | (202) 463-5337

Counsel for the Amicus Curiae

Chamber of Commerce of the

United States

WILSON - Eres Printing Co... Inc. - 789-0096 - WasHincTron, D.C. 20001

TABLE OF CONTENTS

SUMMARY OF ARGUMENT TT ——— 2

— ——

I. EPA ENFORCEMENT AGAINST COMPA-

II.

NIES IN COMPLIANCE WITH STATE-

APPROVED SIP REVISIONS DISTORTS

THE STATUTORY SCHEME OF THE

SS OL

A. The Clean Air Act Vests The States With

The Right To Make Source Emission Selec-

K ae

B. EPA Usurps The Rightful Role Of The

States Every Time It Delays Review Beyond

The Four-Month Period ..................................

THE COURT SHOULD PROTECT COMPA-

NIES FROM THE REGULATORY LIMBO

EPA’S DELAY CREATES BY PROHIBITING

ENFORCEMENT UNTIL EPA ACTS ON THE

OL ee

A. The Remedies Proposed By The First Circuit

Are An Ineffective Panacea For EPA Delay..

13

14

16

17

ii

TABLE OF CONTENTS—Continued

2. Penalty Reductions Do Not Adequately

Protect Companies From EPA Delay

B. Barring Enforcement Until EPA Acts On

The SIP Revision Is The Only Equitable

iii

TABLE OF AUTHORITIES

CASES: Page

Air Pollution Control District of Jefferson County,

Kentucky v. EPA, No. C-86-0519-L-B (W.D. Ky.

. 8, 19

American Cyanamid Co. v. EPA, 810 F.2d 493

r EEE EE Se ee ee passim

Brock v. Pierce County, 476 U.S. 253 (1986) 11

Chevron L. S.A., Inc. v. Natural Resources Defense

Council, 467 U.S. 837 (1980 8

Council of Commuter Organizations v. Gorsuch,

683 F.2d 648 (2d Cir. 1982ù)) 16

Council of Commuter Organizations v. Thomas,

799 F.2d 879 (2d Cir. 198))))) 16

Dusquense Light Co. v. EPA, 698 F.2d 456 (D.C.

r 6, 7, 16, 22

General Motors Corp. v. United States, 871 F. 2d

EN ~

Train v. Natural Resources Defense Council, 421

e . 14

United States v. Alcan Foil Products, Division of

Alcan Aluminum Corporation, No. 88-6300 (6th

E passim

United States v. Alcan Foil Products, Division of

Alcan Aluminum Corp., 694 F. Supp. 1280

r ̃ Ä 5, 10, 11

United States v. General Dynamics Corporation,

Civil Action No. CA4 87 31K (N.D. Tex. filed

EE IETS 3

United States v. General Motors Corp., 876 F.2d

1060 (ist Cir. 1989957 1 passim

United States v. General Motors Corp., No. 87-

2068-MC (D. Mass. May 16, 1988) 5, 6, 20

United States v. National Steel Corp., 767 F.2d

r 11, 16

STATUTES:

Clean Air Act, 42 U.S.C. § 7401 et seg 2

Section 107 (a), U.S.C. § 7407 (a)... 14

Section 110 (a) (1), U.S.C. § 7410 (a) (j 2

Section 110 (a) (2), U.S.C. § 7410 (a) (2) 2, 4, 5, 15

iv

TABLE OF AUTHORITIES—Continued

Page

Section 110(a) (2) (A), U.S.C.

ees 15

Section 110(a) (2) (B), U.S.C.

§ 7410(a) (2) (g ** 15

Section 110 (a) (3) (A), U.S.C.

K 2, 14, 15, 16

Section 110 (g) (1), U.S.C. § 7410(g) () 16

Section 113 (a) (1), U.S.C. § 7413 (a) () 9

Section 113 (b), U.S.C. § 7413 (( ) 7, 20

Section 113 (e) (1), U.S.C. § 7413 (e) (1) 18

Section 304 (a) (2), U.S.C. § 7604 (a) (2) 7, 12, 18, 19

MISCELLANEOUS MATERIALS:

46 Fed. Reg. 51386 (198fçhy—ʒꝛ——————————— * 4

51 Fed. Reg. 43814 (1986) — 15

Le 15

53 Fed. Reg. 40745 (198)))))))))ꝛ: 10

54 Fed. Reg. 10062 (198899—————————— 10

Review of EPA's Process for Approving/

Disapproving State Implementation Plans and

Revisions, Office of the Inspector General, U.S.

Environmental Protection Agency (March

KKK B 18

IN THE

Supreme Cuurt of the United States

OCTOBER TERM, 1989

No. 89-369

GENERAL MOTORS CORPORATION,

. Petitioner,

UNITED STATES OF AMERICA,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the First Circuit

BRIEF AMICUS CURIAE OF THE

CHAMBER OF COMMERCE OF THE UNITED STATES

IN SUPPORT OF THE PETITIONER

STATEMENT OF INTEREST

With the written consent of the parties, the Chamber

of Commerce of the United States (“the Chamber“) re-

spectfully submits this brief amicus curiae in support of

the Petitioner.“ The Chamber is the nation’s largest

federation of business and professional! organizations. Its

membership includes more than 180,000 companies, part-

nerships and proprietorships, as well as several thousand

trade and professional associations and state and local

chambers of commerce. The Chamber regularly presents

1 Consent letters have been filed with the Clerk of the Court

pursuant to Supreme Court Rule 37.3.

2

the views of its members before this Court on issues of

national concern to the business community. The Cham-

ber submitted a brief amicus curiae in support of General

Motor’s Petition for Certiorari in this environmental

case.

This case presents the Court with two important issues

regarding the implementation and enforcement of the

Clean Air Act, 42 U.S.C. §§ 7401 et seg. The first issue

concerns the deadline for review by the Environmental

Protection Agency (“EPA”) of revisions to State Imple-

mentation Plans (“SIPs’”)* submitted pursuant to § 110

(a) (3) (A) of the Act. 42 U.S.C. § 7410 (a) (3) (A).

The second issue concerns the consequences of EPA's

failure to meet the four-month deadline. Both issues are

of great concern to the Chamber and its members, many

of which are regulated under the Clean Air Act and ad-

versely affected by the climate of regulatory uncertainty

caused by EPA’s protracted delay in reviewing SIP re-

visions.

In the case below, the U.S. Court of Appeals for the

First Circuit agreed with the district court—and with

every other circuit court to have ruled on the issue—

that the Clean Air Act imposes a four-month deadline on

EPA to approve or deny SIP revisions. The Chamber

supports that ruling, but is deeply troubled by the two

“remedies” proposed by the First Circuit for EPA’s fail-

ure to act within the four-month period.

The Chamber does not believe that either filing a

mandamus action to compel timely EPA review or re-

questing the trial court to reduce the amount of penal-

ties for prejudicial delay adequately protects companies

2 As part of the states’ primary responsibility to assure air

quality, the Clean Air Act requires each state to establish its own

plan for implementing, maintaining and enforcing national air

quality standards. 42 U.S.C. § 7410(a)(1). After formal adoption,

the state must submit the plan to EPA, which is required to approve

or disapprove it within four months. 42 U.S.C. § 7410(a)(2).

from the regulatory limbo EPA creates every time it fails

to act on a SIP revision. Nor do these “remedies” ade-

quately address what the Chamber perceives as the real

reason behind the delay: EPA’s fundamental dissatis-

faction with the secondary role Congress has assigned it

in reviewing SIP revisions.

General Motor’s experience in this case is not the first

instance of an EPA attempt to usurp the primary respon-

sibility of the states to make source emission selections

under the Clean Air Act. Other Chamber members have

had similar experiences as “innocent bystanders” in reg-

ulatory disputes between EPA and the state charged by

statute to assure the attainment of air quality goals.“

A classic example is the company’s experience in United

States v. Alcan Foil Products, Division of Alcan Alu-

minum Corporation, No. 88-6300, (6th Cir. Nov. 21,

1989), a case involving Kentucky’s attempt to obtain EPA

approval of three proposed SIP revisions. To provide this

Court with information not brought to its attention by

the parties, the Chamber’s brief will illustrate—by means

of the Alean experience—how the remedies proposed by

the First Circuit in the case below fail to protect com-

panies from EPA’s recurring efforts to deprive the states

of their rightful role under the Clean Air Act.

STATEMENT

A. The General Motors Case

The General Motors case arises out of an attempt by

the Commonwealth of Massachusetts to revise the Clean

Air Act compliance dates contained in its state imple-

mentation plan (“SIP”) for meeting certain air emission

3 See, e.g., United States of America v. General Dynamics Corpora-

tion, No. CA4 87 31K (N.D. Tex. filed July 28, 1987), involving a dis-

pute between EPA and the state over an interpretation of certain

environmental standards contained in Texas’ SIP. In this enforce-

ment action, EPA sued General Dynamics for noncompliance with

the SIP, despite assurances of full compliance from the state.

4

limits for volatile organic compounds (“VOCs”). The

original SIP contained a compliance date of December 31,

1985.

In October 1981, however, the Environmental Protec-

tion Agency (“EPA”) issued a policy statement support-

ing SIP revisions to extend certain compliance dates for

automobile paint shop operations. 46 Fed. Reg. 51386

(1981). The purpose of the policy was to lighten the

regulatory burden on the automobile industry by encour-

aging the use of more cost-effective ways to reduce VOC

emissions. Id.

Under a revised SIP, General Motors would be able to

continue operating the existing paint shop of its Fram-

ingham, Massachusetts automobile assembly plant while

it constructed a new paint facility. At a cost of $200

million, the new facility would use advanced technology

to achieve lower VOC emissions, as well as lower VOC-

content paint.

Consistent with the EPA policy statement, Massachu-

setts extended General Motor’s compliance date to Au-

gust 31, 1987, and submitted the proposed SIP revision

for EPA review on December 30, 1985. On July 7, 1987,

more than a month ahead of schedule, General Motors

permanently shut down the old paint shop.

Instead of promptly reviewing the SIP revision, EPA

filed an enforcement action against General Motors in

district court for noncompliance with the original SIP.

At the time the complaint was filed, the paint shop had

been closed for a month. The SIP revision, on the other

hand, had been pending for nearly two years. Yet EPA

did not choose to act on it for more than a year after-

wards, finally rejecting it the same day it filed its brief

in the First Circuit.

1. The District Court Decision

The district court rejected EPA’s argument that the

four-month rule contained in § 110(a)(2) of the Clean

Air Act does not apply to SIP revisions,‘ and granted

General Motor’s motion for summary judgment. United

States v. General Motors Corp., No. 87-2068-MC (D. Mass.

May 16, 1988), see Supp. App. at SA-4. For authority,

the district court cited the rule in American Cyanamid

Co. v. EPA, 810 F.2d 493 (5th Cir. 1987), which invali-

dated a nearly identical enforcement action because of

EPA failure to act on a SIP revision within four months.“

In American Cyanamid, the Fifth Circuit prohibited

EPA from enforcing the original SIP until it rejected

the proposed revision. Id. at 501. The Fifth Circuit held

that “EPA may not collect a penalty for the period be-

tween (1) four months after a state submits a proposed

revision and (2) the date the EPA finally rejects that

revision.” Jd. at 500. As a “critical element“ of its

decision to bar enforcement pending final action, the

Cyanamid court focused on the state’s interest in prompt

EPA review of a SIP revision “which clearly authorizes

local businesses to act in accordance with it without run-

ning afoul of the Clean Air Act.” Id. at 500. The Fifth

Section 110(a)(2) requires EPA to approve or deny state im-

plementation plans within four months of submission. 42 U.S.C.

$ 7410(a)(2). EPA argued that the four-month rule applied only

to its review of initial SIP submissions.

5 The district court also cited the lower court opinion in the

Alcan case which, at the time, was the most recent decision on the

consequences of EPA failure to review SIP revisions within the

four-month period. United States v. Alcan Foil Products, Division

of Alcan Aluminum Corp., 694 F. Supp. 1280 (W.D. Kentucky

1988). The Sixth Circuit reversed this decision in part on No-

vember 21, 1989. United States v. Alcan Foil Products Division of

Alcan Aluminum, No. 88-6300, slip op. As noted below, the ap-

peals court upheld the application of the four-month rule to SIP

revisions, but refused to bar enforcement pending final action.

The Sixth Circuit also refused to endorse mandamus actions as an

effective remedy for EPA delay. See infra text accompanying

notes 29-30.

Id. at 499.

Circuit believed that without the protection of an enforce-

ment bar, “American Cyanamid and similarly situated

individuals and companies [would be exposed] to the un-

acceptable risk that, contrary to state policy decisions au-

thorized under the Act, they will be fined because of de-

lays within EPA.” /d. at 501.

The district court below was equally distwrbed by the

“unjustifiable state of limbo“ unlimited EPA review

creates for both the states that propose SIP revisions and

the companies that comply with them.

For an indefinite périod, the state would be unable

to act to balance dictated national priorities with

the interests of its citizens and industries as the

Clean Air Act intended. And the industries them-

selves, though fully in compliance with state law,

would face the Scyila and Charybdis choice between

ceasing operations now, or possibly being forced out

of business by heavy fines later.

General Motors, SA-4. According to the district court,

Congress did not intend to “put all the cards in federal

hands.” Id. at SA-5.

2. The First Circuit Decision

The U.S. Court of Appeals for the First Circuit upheld

the four-month deadline for EPA review of SIP revisions,

but rejected the American Cyanamid rule as “too dras-

tic” a remedy for EPA delay. United States v. General

Motors Corp., 876 F.2d 1060 Ist Cir. 1988); App. at

14a. The First Circuit expressed concern that prohibiting

enforcement pending EPA action on a SIP revision would

hurt only the public. Id.

The First Circuit also rejected the deferred penalty

approach in Dusquense Light Co. v. EPA, 698 F.2d 456

™ General Motors at SA-6.

7

(D.C. Cir. 1983), as encouraging denials and providing

too little incentive for timely action.*

In an effort to forge a middle ground, the First Cir-

cuit suggested a two-part remedy for EPA delay. First,

a company adversely affected by EPA’. failure to meet

the four month deadline could sue EPA in district court

under § 304(a)(2) of the Act to compel agency action

any time after the four-month review period has ex-

pired.“ Under this approach, the district court would then

“evaluate the circumstances of each case, with the failure

to observe the four-month deadline being one factor to

consider—a rough guidepost.” App. at 15a.

Secondly, the First Circuit suggested that companies

could apply for relief under § 113(b) of the Act, which

requires trial courts in enforcement actions to calculate

penalties by taking] into consideration (in addition to

other factors) the size of the business, the economic im-

pact of the penalty on the business, and the seriousness

of the violation.” 42 U.S.C. § 7413(b). According to the

First Circuit, this provision authorizes trial courts to re-

duce penalties according to the “reasonableness of the

Agency’s delay and the prejudice, if any, suffered by the

company as a result“ of enforcing an old SIP while a

SIP revision is still pending. A variation of this remedy

was endorsed by the Sixth Circuit in Alcan.

® Dusquense allows EPA to enforce an old SIP pending review

of a SIP revision, but holds penalties in abeyance until final action.

The amount of penalties increase the longer EPA takes to deny

a revision, since penalties are calculated back to the four-month

deadline upon denial but no penalties are assessed if approved.

*42 U.S.C. 8 7604(a)(2). Under this section “any person may

commence a civil action against the Administrator [for] failure

to perform any act or duty under this chapter which is not

discretionary ... .”

% App. at 15a.

8

B. The Alcan Case

The Alcan case involves Kentucky’s attempt to obtain

EPA review of three SIP revisions submitted over the

course of nearly a decade. These revisions critically af-

fect the operation of Alcan’s laminating facility in Louis-

ville, Kentucky, an independent economic unit of the

company’s Foil Products Division.

Kentucky submitted the first SIP revision (SIP I) to

EPA on behalf of the local air pollution control author-

ity—the Air Pollution Control District of Jefferson County

(“Jefferson County”)—on July 19, 1982. This revision

authorized Jefferson County to issue permits for “emis-

sion trading” pursuant to the so-called “bubble” concept

of air pollution control.'' At the time of submission, the

laminating facility was owned by the Atlantic Richfield

Company (“ARCO”).

On January 19, 1985, ARCO sold the marginally profit-

able facility to Alean, which planned on operating it un-

der the state-authorized bubble. Brief for Defendant at

3, United States v. Alcan Foil Products, Division of Al-

can Aluminum Corp., No. 88-6300 (6th Cir. Nov. 21,

1989). Shortly after acquiring the facility, however, Al-

can discovered that the SIP I revision was the subject of

an ongoing dispute between EPA and Jefferson County.”

1 The “bubble” concept controls air emissions on a facility-wide

basis. Specifically, it treats all the pollution-emi‘ting devices in

the facility as if encased in a bubble. Thus, a company can “off-

set” noncompliance at one source of pollution in the facility with

“emission credits” earned from supercompliance at another source.

“Bubbling” has been viewed by many commentators as a “superior

long-term strategy for reducing overall emissions.” See, ¢.¢., Chev-

ron U.S. A., Inc. v. Natural Resources Defense Council, 467 U.S.

837 n.37 (1984); General Motors Corp. v. EPA, 871 F.2d 495, 500

(Sth Cir. 1989).

12 This dispute ultimately resulted in a lawsuit filed by Jefferson

County against EPA to compel agency action on the SIP I revision.

See Air Pollution Control District of Jefferson County, Kentucky

v. EPA, No. C-86-0519-L-B (W.D. Ky 1986), This case has been

pending for four years.

On July 14, 1986, EPA issued Alcan a notice of non-

compliance with the original SIP, despite the fact that

the SIP II revision had been pending for more than four

months. Rather than approve the SIP II revision as be-

ing consistent with applicable law at the time, EPA de-

layed an additional five months (until December 4, 1986)

to revise the procedures and criteria for approving bubble

plans. On February 18, 1987, EPA staff informally noti-

fied Alean that the SIP II revision failed to meet the new

emission trading policy, and would need to be revised. No

formal action was taken to deny the revision at that time.

Instead, on July 15, 1987, EPA filed an enforcement

action against Alcan in district court for noncompliance

It would have cost Alcan three times the net profits earned in

1989 to upgrade the laminating facility to meet point-source com-

pliance Moreover, it would have cost an additional 25% of Alcan’s

1989 net profits to operate the upgraded facility each year.

™ The notice, issued under § 113(a)(1) of the Act, 42 U.S.C.

§ 7413(a)(1), is a jurisdictional prerequisite to filing a federal

enforcement action. If the violation continues beyond 30 days,

EPA can either issue a compliance order or file a civil action.

1% See infra note 24.

10

with the original SIP. EPA finally denied the SIP II re-

vision on March 16, 1989, more than three years after

submission. EPA has yet to act on the revision to SIP I,

with which Alcan has complied in full ever since it took

over the laminating plant in 1985. A request for a third

SIP revision (SIP III) is now pending before Jefferson

County, as part of Alcan’s latest effort to obtain final

action on the bubble proposal which has been lingering

before EPA for nearly a decade.

1. The District Court Decision

Invoking the American Cyanamid rule, the district

court granted Alcan’s motion for summary judgment.

United States v. Alcan Foil Products, Division of Alcan

Aluminum Corp., 694 F. Supp. 1280, 1283 (W.D. Ky.

1988). In so doing, it upheld the four-month rule and

prohibited EPA from enforcing the original SIP until it

acted on the SIP II revision. As did the lower court in

the General Motors case, the district court here empha-

sized the important role the state plays in defining au-

thorized emissions. The court also noted the logical corol-

lary of that role, that is—the “state of regulatory limbo”

EPA creates for companies operating in compliance with

revised SIPs.

Due to its inaction on the proposed SIP III revision,

the EPA may not bring an enforcement action

against Alcan under the existing [SIP] since Alcan

has been operating in reliance upon assurances by

[Jefferson County] that its emissions are acceptable

and in compliance with the proposed [SIP II] re-

% The Sixth Circuit erroneously stated that EPA disapproved

the revision on October 18, 1988. United States v. Alean Foil Prod-

ucts, Division of Alcan Aluminum Corp., No. 88-6300, slip op. at

5 (Nov. 21, 1989). EPA only proposed to disapprove the revision on

that date. 53 Fed. Reg. 40745. It did not take final action until five

months later. 54 Fed. Reg. 10982.

* The district court did not mention EPA's failure to act on

the March 3, 1982, revision to SIP I. Nor did EPA refer to the

SIP I revision in its statement of facts.

f

5

quandry is of EPA’s own .

694 F. Supp. at 1284 (emphasis added

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12

on EPA to justify its failure to comply with the statu-

tory four-month period.

SUMMARY OF ARGUMENT

Companies subject to SIP requirements need to know

on a timely basis whether a revision proposed by the

state will be approved or denied. In the General Motors

case below, EPA took nearly three years to deny the SIP

revision proposed by Massachusetts. By that time, EPA

had already filed an appellate brief in an enforcement ac-

tion brought against the company for noncompliance with

the original SIP.

In the Alcan case—which involves three proposed re-

visions to Kentucky’s clean air program—EPA never

even acted on the first revision that was submitted for

review nearly ten years ago. In an effort to eliminate

the uncertainty created by EPA's failure to act on that

revision, the state submitted a second revision specific-

ally addressing Alcan’s problem. EPA took more than

three years to review the second revision—finally reject-

ing it only after the trial court dismissed an enforcement

action against Alcan for failing to comply with the orig-

inal SIP. As grounds for the rejection, EPA cited a new

policy that did not exist at the time of submission.

As a remedy for EPA's protracted delay in reviewing

SIP revisions, the First Circuit has suggested that com-

panies either file a mandamus action under 304% 2

of the Act to compel EPA review or move the trial

court in an enforcement action to reduce penalties for

prejudicial delay. Alcan’s experience, however, proves

both options to be an ineffective panacea for EPA's fail-

ure to act.

In the Alcan case, a mandamus action filed by the local

pollution control district failed to compel EPA to review

the SIP I revision. It is doubtful that a different resuit

21 42 U.S.C. § 7604(a)(2).

13

would have obtained if a similar action had been fi

Alcan instead. Moreover, with civil penalties of — 1

per day, it is economically impractical for any company

to risk filing time-consuming mandamus actions against

EPA, and thereby subject itself to potentially enormous

fines as well as unnecessary litigation expenses. This is

especially true for companies that can not afford to oper-

ate their facilities without the benefit of the state-

approved SIP revision. Under those circumstances—

when a company must decide between shutting down

now or being forced out of business later—even a reduc-

tion of penalties in an ensuing enforcement action (as-

suming the trial court chooses to exercise such discretion-

ary authority) fails to adequately protect it from EPA

‘ Penalty reductions are equally ineffective in discourag-

ing EPA from usurping the primary role of the states

to decide how best to achieve the goals of the Clean Air

Act. The only way to safeguard the rightful role of the

states—while adequately protecting corporate interests—

is to prohibit EPA from bringing an enforcement action

under the old SIP until it acts on the SIP revision.

ARGUMENT

I. EPA ENFORCEMENT AGAINST COMPANIES IN

COMPLIANCE WITH STATE-APPROVED SIP RE-

VISIONS DISTORTS THE STATUTORY SCHEME

OF THE CLEAN AIR ACT.

Both the First Circuit in the General Motors case and

the Sixth Circuit in Alcan premise their rejection of the

American Cyanamid rule on the harm the public would

suffer by prohibiting EPA from enforcing the original

SIP until it denies the SIP revision. This concern about

public harm ignores the rightful role of the states to as-

sure attainment of air quality goals. It also wrongly

See General Motors, App. at 14a; Alcan, slip op. at 14.

14

disregards the fact that SIP revisions are promulgated

by the states, and not by the companies that comply with

them. Allowing EPA to file enforcement actions against

these companies before acting on the SIP revision perpet-

uates a state of regulatory limbo that violates the spirit

and intent of the Clean Air Act.

A. The Clean Air Act Vests The States With The Right

To Make Source Emission Selections.

Section 107(a) of the Clean Air Act expressly provides

that el ach state shall have the primary responsibility

for assuring air quality within the entire geographic

area comprising such state.” 42 U.S.C. § 7407(a) (em-

phasis added). This Court acknowledged the state’s pri-

mary role in Train v. Natural Resources Defense Coun-

cil, 421 U.S. 60, where it also described EPA’s conversely

limited role in reviewing state choices for assuring air

quality.

The Agency is plainly charged by the Act with the

responsibility for setting national ambient air stand-

ards. Just as plainly, however, it is relegated by the

Act to a secondary role in the process of determin-

ing and enforcing the specific, source-by-source emis-

sion limitations which are necessary if the national

standards it has set are to be met... The Act

gives the Agency no authority to question the wis-

dom of a State’s choice of emission limitations if

they are part of @ plan which satisfies the stand-

ards of Section 110(a) (2) ... So long as the ulti-

mate effect of a State’s choice of emission limitations

is in compliance with the national standards for am-

bient air, the State is at liberty to adopt whatever

mix of emission standards it deems best suited to its

particular situation.

421 U.S. at 79 (1975) (emphasis added).

Section 110(a)(3)(A) of the Act, on the other hand,

limits EPA to an essentially supervisory role—not unlike

the role corporate management plays when determining

15

compliance with company policy. Specifically, it

that “(t}he Administrator nel eat a 33

if he determines that it meets the requirements of para-

graph 2 and has been adopted by the State after reason-

able notice and public hearings.” 42 U.S.C. § 7410 (a

(3)(A). Section 110(a)(2) contains a checklist of

= — all SIPs must meet. 42 U.S.C. § 7410

a :

In the Alcan case, only two of those criteria a

related to EPA’s review of the SIP II revision. —

theless, it took EPA more than three years to disapprove

the revision. Moreover, none of legal bases for disap-

proving the SIP II revision existed at the time of sub-

mission. Nor were these bases even promulgated until

well after the end of EPA’s four-month review period.“

Alean's experience evidences calculated conduct on the

part of EPA to intentionally deprive the states of their

statutory prerogatives to make their own source emis-

sion choices. Because the SIP II revision fully complied

with current regulatory requirements, EPA was legally

obligated to approve it on July 3, 1986—four months

after submission, just as it had been legally obligated to

approve the SIP I revision in 1982. Under both the

SIP I and SIP II revisions, the state had decided how it

wished to implement its regulatory obligations under the

Act. Moreover, these choices were fully consistent with

EPA had to determine whether the SIP II revision contained

(1) emission limitations, schedules and timetable for compliance

and (2) appropriate devices for monitoring, compiling and analyzing

ambient air quality data. See 42 U.S.C. § 7410(a)(2)(B) and (C).

EPA did not promulgate two of the grounds for denial (the

24-hour averaging requirement and the requirement for using

surplus reductions as credits) until December 4, 1986—nine months

after the SIP II revision was submitted and five months after the

statutory review period had expired. 51 Fed. Reg. 43814; 43831.

EPA did not issue the third requirement (for 20% reduction in over-

all emissions) until May 26, 1988. This was more than two years

after submission.

16

applicable law at the time. Yet EPA—apparently decid-

ing that it did not like the state’s choices or the current

law (or both)—simply refused to act. EPA’s conduct

makes a mockery of the Clean Air Act’s statutory scheme

and should not be condoned.

B. EPA Usurps The Rightful Role Of The States Every

Time It Delays Review Beyond The Four-Month

Period.

Every court of appeals to have ruled on the issue has

held that the Clean Air Act imposes a four-month dead-

line on EPA to review SIP revisions. See Council of

Commuter Organizations v. Gorsuch, 683 F.2d. 648, 651-

52 n.2 (2d Cir. 1982): Council of Commuter Organiza-

tions v. Thomas, 799 F.2d 879, 888 (2d Cir. 1986);

Dusquense Light Co. v. EPA, 698 F.2d 456 (D.C. Cir.

1983); American Cyanamid Co. v. EPA, 810 F.2d 493

(5th Cir. 1987); United States v. General Motors Corp.,

876 F.2d 1060 (1st Cir. 1989); United States v. Alcan

Foil Products, Division of Alean Aluminum Corporation,

No. 88-6300, (6th Cir. Nov. 21, 1989).” * Each of these

courts has acknowledged, as did the government in the

25 In Alcan, the Sixth Circuit revisited the language in United

States v. National Steel Corp., 767 F.2d 1176, 1182-83 n. 1 (6th

Cir. 1985), which the government cites as contrary authority. In

that case, the Sixth Circuit had stated:

National claims that section 110(a)(2) of the Clean Air Act

requires the EPA to approve or disapprove SIP revisions

with four months of their submittal by the state. Section

110(a)(2) requires action within four months for general state

plans submitted under section 110(a)(1), not for revisions to

state plans governed by section 110(a)(3)(A).”

Upon reexamination, the Sixth Circuit found the four-month rule

to be incorporated “at least by implication” in § 110(a)(3)(A)

of the Act. Slip op. at 7. In support of that reading of the statute,

the Sixth Circuit also cited § 110(g)(1), which was added to the

Act in 1977 but not cited in National Steel. Slip op. at 8.

17

Alcan case,“ that EPA does not have an unlimited time

to act. As stated by the Sixth Circuit in Alcan, “[(g]iven

the primary role of the states in implementing air qual-

ity standards, it is difficult to conclude that EPA is not

required to act with dispatch on a revision proposed by a

state.” Slip op. at 9. The First Circuit in General Motors

even more explicitly expressed its concern about EPA’s

unbridled ability to interfere with the rightful role of the

states.

Congress clearly was concerned with preserving the

state’s ability to tailor SIPs to local needs and con-

ditions and, just as plainly, did not care what con-

trols states chose, so long as they were

reduce emissions to nationally acceptable The

states’ freedom to make such choices obviously is

curtailed to the extent that SIPs must be consistent

with federal standards. It seems unlikely, however,

that Congress also intended for the states’ legitimate

policy choices to be held hostage ty the EPA’s schedule.

General Motors, App. 12a.

Under the Clean Air Act, the states are free to alter or

fine tune their air quality program as often as necessary

to accommodate changing economic, technological or air

quality conditions. Only by upholding the four-month

deadline for reviewing SIP revisions can this Court re-

move the threat of protracted delay, and thus prevent

EPA from depriving the states of their legitimate statu-

tory role.

II. THIS COURT SHOULD PROTECT COMPANIES

FROM THE REGULATORY LIMBO EPA’S DELAY

CREATES BY PROHIBITING ENFORCEMENT

UNTIL EPA ACTS ON THE SIP REVISION.

The protracted EPA delays experienced by General

Motors and Alcan are not aberrations. According to a

26 See Government's brief at 22, “Finally, the absence of a four-

month deadline does not allow the EPA to postpone a decision

indefinitely.”

18

recent Inspector General report, it takes EPA an average

of 30 months to review a proposed SIP revision—more

than two years longer than the review period required

by statute.”

As a result of EPA delay, companies that comply with

the new rule changes approved by their state face the

threat of federal enforcement actions for noncompliance

with the original SIP. With statutory civil penalties of

$25,000 per day of violation,” the longer EPA waits to

review a SIP revision, the greater the amount of penal-

ties recoverable—and, consequently, the greater the in-

centive for EPA to deny the revision and enforce the

original SIP. Forcing companies to linger in this kind

of regulatory limbo not only undermines the Act, but also

is fundamentally unfair to those who have relied on state

assurances that their emissions are acceptable and in

compliance with state-authorized revisions.

A. The Remedies Proposed By The First Circuit Are

An Ineffective Panacea For EPA Delay.

As a remedy for EPA failure to meet the four-month

deadline, the First Circuit has suggested that companies

either file a mandamus action under § 304(a) (2) of the

Act to compel EPA review or move the trial court in

an enforcement action to reduce penalties for prejudicial

delay. General Motors at App. 14a-l6a. Alcan’s experi-

ence, however, proves both options to be an ineffective

panacea for EPA’s failure to act.

* Report of Audit, Review of EPA’s Process for Approving/

Disapproving State Implementation Plans and Revisions, Office

of the Inspector General, U.S. Environmental Protection Agency

(March 1989).

28 42 U.S.C. § 7413(c) (1).

29 42 U.S.C. § 7604(a) (2).

19

1. Mandamus Does Not Work.

_ The Sixth Circuit expressly rejected the mandamus op-

tion as “not very effective” in the Alcan case. Slip op. at

14. There, the local pollution control district filed suit

under § 304(a)(2) to compel agency action four years

after the SIP I revision was submitted for EPA review.

See Air Pollution Control District of Jefferson County,

Kentucky v. EPA, No. C-86-0519-L-B (W.D. Ky. 1986).

This case has been pending for four years, with no action

in sight.” It is highly unlikely that a different result

would have obtained if the mandamus action been filed by

Alcan instead of Jefferson County.

1 addition * proven ineffectiveness, a mandamus

suit to compel EPA action is also highly impractical

Ironically, the time it takes to compel agency action (and

to defend against such a suit) may cause even further

delays. At the risk of incurring civil penalties of up to

$25,000 per day of violation, companies can ill afford to

let the meter run by invoking such time-consuming pro-

ceedings. This is especially true for marginally profitable,

— economic units like Alean's Foil Products

vision.

EPA's denial of the SIP revision, on the other hand, it

The Sixth Circuit apparently was referring to the SIP Il revi-

Slip op. at 12. Regrettably for Alcan, EPA has yet to act on the

SIP I revision, nearly a decade later. The agency did act on the

SIP Il revision, albeit more than three years late. What com-

pelled EPA action there, however, was not a mandamus suit filed by

the local authority, but rather the dismissal of its enforcement

action against Alcan for noncompliance with SIP I.

20

would have served only to increase the penalty EPA could

assess against the company in an ensuing enforcement

action.

2. Penalty Reductions Do Not Adequately Protect

Companies From EPA Delay.

The second remedy proposed by the First Circuit—

penalty reductions in enforcement actions filed under

£113(b) ™ of the Act—also fails to adequately protect

companies that have operated in reliance on state-

authorized SIP revisions. Allowing EPA to enforce orig-

inal SIPs prior to acting on SIP revisions turns Clean

Air Act regulation into a game of chance. It forces com-

panies, like Alcan, that cannot afford to operate without

the benefit of the SIP revision to choose between volun-

tarily shutting down now—even though the state has au-

thorized continued operation—or being shut down by EPA

by heavy fines later.“ Contrary to the First Circuit's

suggestion, the possibility that penalties may be reduced

in an ensuing enforcement action does little to remove the

“Scylla and Charybdis choice” companies face whenever

EPA takes longer than four months to review a SIP re-

vision. Penalty reductions do even less to compensate the

states whose responsibilities for balancing national prior-

ities with local interests have been totally usurped by the

enforcement action. Companies that have complied with

SIP revisions—and the states that have promulgated them

n Section 113(b) of the Act requires that district courts “shall

take into consideration (in addition to other factors) the size of the

business, the economic impact of the penalty on the business, and

the seriousness of the violation.” 42 U.S.C. § 7413(b).

As noted by the district court below, even if heavy fines do not

force companies into bankruptcy, “that would be cold comfort to

workers who might be laid off while a new plant was being built or

because the plant was moved out of state General Motors, SA-7.

33 General Motors at SA-6.

21

— remain in the regulatory limbo created by EPA’s

Aside from the inequities of allowing EPA to enforce

of EPA’s delay and the prejudice suffered by the com-

pany as “among these ‘other factors’ the court may con-

sider.” General Motors, App. at 15a (emphasis added).

The discretionary nature of this remedy is emphasized

in the court’s description of how it would work.

117

§

it

if

uy

i

Fi

i

:

.

:

18

FH

ti

i

1

; 710

Id. emphasis added. Assuming the

exercises its discretionary authority to

duced penalties are of slight consolation to marginally

economic companies which cannot afford to pay them.

For example in the Alcan case, it is unlikely that the

company could absorb even the twelve-month reduction

i

3

in fines the Sixth Circuit suggested the trial court con-

sider on remand.”

B. Barring Enforcement Until EPA Acts On The SIP

Revision Is The Only Equitable Remedy For EPA

Delay.

The only effective, practical and fair remedy for EPA’s

failure to comply with the four-month rule is to invoke

the American Cyanamid rule and prohibit EPA from en-

forcing the original SIP until it acts on the SIP revision.

Of all the other circuit court suggestions, the Cyanamid

rule provides the most equitable remedy for all parties af-

fected by a SIP revision.

By requiring EPA to reject a SIP revision before it

enforces the original SIP, the Cyanamid rule provides

EPA with an incentive to abide by the four-month rule.

The Fifth and First Circuits both found the lack of such

an incentive critical to their rejection of the deferred

penalty approach of the D.C. Circuit in Dusquense Light

Co. v. EPA, 698 F.2d 456 D.C. Cir. 1983). Both courts

feared that the Dusquense approach of holding penalties

in abeyance would encourage EPA to reject revisions it

should have approved since the longer EPA delayed re-

view, the greater the penalties it could collect in an en-

forcement proceeding. According to the Fifth Circuit,

“EPA loses nothing by its contumaciousness” under the

Dusquense approach. American Cyanamid, 810 F.2d at

499.

Nor will the threat of reduced penalties, as suggested

by the First and Sixth Circuits, sufficiently modify EPA’s

0 Instead of assessing penalties from January 19, 1985, the date

Alcan bought the laminating facility, the Sixth Circuit suggested

that they be calculated from December 4, 1986, the effective date

of EPA’s new emissions trading policy upon which the SIP II

revision was ultimately denied. The Sixth Circuit based this sug-

gestion on the assumption that EPA would not be able to satisfy its

burden of proving reasonable delay. Alcan, slip op. at 15.

W

contumacious behavior in refusing to honor the four-

month rule. As noted by the Fifth Circuit in American

Cyanamid, “EPA’s statutory noncompliance affects not

at 493. So long as EPA retains the power to enforce orig-

inal SIP’s prior to acting on SIP revisions, it will con-

tinue to exercise “pocket vetoes” of state air quality de-

cisions.

EPA’s deliberate distortion of the statutory scheme

was of particular concern to the Cyanamid court and a

“critical element“ in its adoption of the enforcement

bar:

Where, as here, the state has proposed a revision to

its SIP which clearly authorizes local businesses to

act in accordance with it without running afoul of

Sr

deeply involved in required four month

or disapproval of the proposed revision. 8

the statutory scheme to place virtually full

a8

luter. The emphasis of the statute, rather, is upon

the important role which the state plays in defining

72

7

much pollution by American Cyanamid but

fault of the EPA in carrying out the congressional

intent to work in close cooperation with the

= 5 standards and enforeing the

r Act.

American Cyanamid, 810 F.2d at 500.

Of all the remedies for EPA delay suggested by the

courts of appeals, the American Cyanamid rule alone rec-

ognizes the inequities of allowing EPA to bring enforce-

ment actions against companies that are in compliance

with state-authorized SIP revisions. Until EPA rejects

American Cyanamid, 810 F.2d at 499.

24

the SIP revision, a company should be allowed to rely on

the state’s determination of compliance with

CONCLUSION

For the reasons stated above, the Chamber respectfully

urges this Court to uphold the four-month rule and pro-

hibit EPA from enforcing the original SIP until it denies

the SIP revision.

Respectfully submitted,

Rosin S. CONRAD

Counsel of Record

NATIONAL CHAMBER LITIGATION

CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5337

Counsel for the Amicus Curiae

Chamber of Commerce of the

United States

January 18, 1990