Amicus Curiae Brief — Alexander v. Sandoval

ait ee

Supreme Court of the Anited States

JAMES ALEXANDER, IN HIS OFFICIAL CAPACITY AS THE

DIRECTOR OF THE ALABAMA DEPARTMENT OF PUBLIC

SAFETY, AND THE ALABAMA DEPARTMENT OF PUBLIC

SAFETY,

Petitioners,

v.

MARTHA SANDOVAL, INDIVIDUALLY AND ON BEHALF OF ALL

OTHERS SIMILARLY SITUATED,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF OF AMICUS CURIAE

NATIONAL ASSOCIATION OF MANUFACTURERS

IN SUPPORT OF PETITIONERS

MICHAEL W. STEINBERG*

MICHAEL A. McCorD

MorGaNn, LEwis & Bockius LLP

1800 M Street, N.W.

Washington, D.C. 20036

(202) 467-7141

[Additional Counsel Listed on Inside Cover]

November 13, 2000 ~ *Counsel of Record

Ze"

Of Counsel:

JAN AMUNDSON

NATIONAL ASSOCIATION OF MANUFACTURERS

1331 Pennsylvania Avenue, N.W.

Washington, D.C. 20004

(202) 637-3000

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...................... ii

INTEREST OF THE AMICUS CURIAE ............. 2

STATEMENT OF THECASE .................... 4

SUMMARY OF ARGUMENT .................... 5

CTE Te nn. teceecccceves 7

THE DECISION BELOW SERIOUSLY

INTERFERES WITH STATE ENVIRONMENTAL

PERMITTING PROGRAMS AND UNDERMINES

THE GOALS OF THOSE PROGRAMS ............. 7

A. Current Clean Air Act Permitting Programs

Require Facilities to Meet Stringent Requirements

Designed to Reduce Emissions and Protect Public

ESE SS RS 9

1. The NSR Permitting Program ......... 10

2. The Title V Operating Permit Program .. 13

B. The Decision Below Substantially Increases the

Uncertainty and Complexity of the Clean AirAct

Permitting Programs ...................... 15

C. The Resulting Disruption of Clean Air Act Permitting

Processes Would Lead to Adverse Consequences for

the Environment and Local Communities, as Well as

for Sources Seeking Permits ................ 19

ees ee ti cehceengecdaveseececes 22

P

TABLE OF AUTHORITIES

Page

CASES:

Chester Residents Concerned for Quality Living v.

Seif, 132 F.3d 925 (3d Cir. 1997) ............. 2, 3, 5,9

Latimore v. Citibank Federal Savings Bank,

SS ae PUES CEU é vcucecccecsvesceseces 17

Puerto Rican Cement Co. v. EPA, 889 F.2d 292 (1st Cir.

PE ee ee re nn 20

STATUTES AND REGULATIONS:

Civil Rights Act of 1964, Title VI, 42 U.S.C. § 2000d-

ee re eee a passim

Civil Rights Act of 1964, 42 U.S.C. §2000d-1 ......... 5

Clean Air Act, 42 U.S.C. §§ 7401 ef seg. ......... passim

Clean Air Act, 42 U.S.C. § 7407(d)(1 AV) ......... 11

Clean Air Act, 42 U.S.C. § 7409%(b) \............... 11

Clean Air Act, 42 U.S.C.§ 7410 .................. 11

Clean Air Act, 42 U.S.C. §§ 7470-7515............ 7, 10

Clean Air Act, 42 U.S.C.§ 7471 .................. 11

Clean Air Act, 42 U.S.C. § 7475(a) ............. 11, 12

Clean Air Act, 42 U.S.C. § 7475(aX(1).... 2.200000... 11

Clean Air Act, 42 U.S.C. § 7475(a)(2) .............. 12

Clean Air Act, 42 U.S.C. § 7475(e)(3)(B) ........... 12

Clean Air Act, 42 U.S.C. § 7479(3) ................ 13

Clean Air Act, Title V, 42 U.S.C. §§ 7661-7661f. . . . passim

Clean Air Act, 42 U.S.C. § 766la .................. 13

Clean Air Act, 42 U.S.C. § 766la(b)(5)(B) ........... 14

Clean Air Act, 42 U.S.C. § 7661b .................. 14

Clean Air Act, 42 U.S.C. § 7661b(6) ............... 14

TABLE OF AUTHORITIES — Continued

Page

Clean Air Act, 42 U.S.C. § 7661c .................. 14

Clean Air Act Amendments of 1990, Pub. L. No.

101-549, 104 Stat. 2399 ............ ip Doe 13

Clean Water Act, 33 U.S.C. §§ 125l efseg. ........ 3, 10

Resource Conservation and Recovery Act,

42 U.S.C. §§ 6901 ef seg. ................ 3, 10

EI ET OT eT PET eT 5

GIG DERE occ Se cccccccccccceces 10

ee a concekccdetecessedsoane 11

EE ie de ee ce peaks bunns 14

a ee 5

MISCELLANEOUS:

Marla Cone, Civil Rights Suit Attacks Trade in Pollution

Credits, Los Angeles Times, July 23, 1997, at1 ....... 17

Michael Mattheisen, 7he U.S. Environmental Protection

Agency's New Environmental Civil Rights Policy, 18 Va.

es ele i ce eenebekes 4

U.S. Chemical Industry Handbook, Chemical Manufacturers

i ns ct ths Sucee ene lee ebeteses 15

IN THE

Supreme Court of the United States

OCTOBER TERM, 2000

No. 99-1908

JAMES ALEXANDER, IN HIS OFFICIAL CAPACITY AS THE

DIRECTOR OF THE ALABAMA DEPARTMENT OF PUBLIC

SAFETY, AND THE ALABAMA DEPARTMENT OF PUBLIC

SAFETY,

Petitioners,

v.

MARTHA SANDOVAL, INDIVIDUALLY AND ON BEHALF OF ALL

OTHERS SIMILARLY SITUATED,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF OF AMICUS CURIAE

NATIONAL ASSOCIATION OF MANUFACTURERS

IN SUPPORT OF PETITIONERS

INTEREST OF THE AMICUS CURIAE'

The interest of Amicus Curiae National Association of

Manufacturers arises from the far-reaching consequences of any

decision regarding a private right of action based on Title VI

“disparate impact” regulations issued by federal funding

agencies. Amicus Curiae is particularly concerned about

“disparate impact” claims in the context of environmental

permitting decisions made by state agencies.

Just two years ago, the Court considered the same question

presented in this case, but in the context of a “disparate impact”

challenge to an environmental permit issued by the

Pennsylvania Department of Environmental Protection.

Chester Residents Concerned for Quality Living v. Seif, 132

F.3d 925 (3d Cir. 1997), cert. granted, 118 S. Ct. 2296, vacated

as moot, 524 U.S. 974 (1998). Although the factual context of

the present case is plainly different,” the concerns exemplified

by the Chester Residents case are just as pressing today as they

were two years ago. As set forth below, those concerns warrant

very careful consideration in reaching any conclusion about

private nghts of action under Title VI “disparate impact”

regulations.

The National Association of Manufacturers is the nation’s

oldest and largest broad-based industrial trade association. Its

nearly 14,000 member companies and subsidiaries, including

10,000 small manufacturers, employ approximately 85 percent

' Letters from all parties consenting to the filing of this brief have been filed

with the Clerk of this Court. Counsel for a party did not author this brief in

whole or in part. No person or entity, other than the Amicus Curiae, its

members, or its counsel, made a monetary contribution to the preparation

and submission of this brief.

* Amicus Curiae takes no position on Alabama’s English-only drivers

of all manufacturing workers and produce over 80 percent of

the nation’s manufactured goods. More than 158,000 additional

businesses are aifiliated with the NAM through its Associations

Council and National Industrial Council.

The decision of the court of appeals adversely affects the

ability of members of Amicus Curiae to obtain needed permits

under key federal environmental statutes such as the Clean Air

Act, the Clean Water Act, and the Resource Conservation and

Recovery Act (RCRA). These statutes require most major

manufacturing facilities to obtain one or more environmental

permits, which typically expire unless renewed every few years.

Significant changes to the manufacturing facilities, in turn,

typically require either new permits, or modifications to

existing permits, before the changes may be put into effect.

These federal statutes ultimately delegate to state or local

permitting agencies the authority to issue all or most

environmental permits. However, the Eleventh Circuit's

decision, by concluding that there is a private right of action in

federal court based on “disparate impact” regulations under

section 602 of the Civil Rights Act of 1964, interjects into the

states’ established permitting processes a wholly new set of

issues.

Specifically, the decision below opens environmental

permits to collateral attacks in federal court on the ground that

they may have a “disparate impact” on a racial or ethnic group,

based on criteria that are not clearly delineated, understood, or

agreed upon. In the Chester Residents case, for example, the

claim was that the Pennsylvania Department of Environmental

Protection violated EPA’s Title VI regulations by issuing a

permit for a facility in an area with a higher percentage of

minority residents than the percentage found in the county as a

whole.’ The alleged violation was not the environmental

performance of the facility, but rather its proximity to minority

residents.

The uncertainty and delay in the permitting process caused

by these “disparate impact” challenges will make it extremely

difficult for companies to make essential planning decisions and

will prevent or discourage the companies from obtaining

permits necessary to modernize existing facilities in a timely

manner, to construct new facilities, or even to continue

operation of existing facilities. Local communities, as a result,

may suffer increased pollution, loss of jobs, and a reduced tax

base.

Amicus Curiae National Association of Manufacturers is

committed to federal, state, and local environmental permitting

programs that provide meaningful opportunities for community

involvement and input. It believes that environmental permits

should protect public health and the environment and that

permits not meeting the relevant criteria should not be issued.

However, the decision of the court of appeals will not result in

more protective permits or foster greater compliance. Instead,

it will cause significant uncertainty to be overlaid on the

existing permitting processes, thereby undermining the

environmental protection goals of the programs and making it

more difficult for facilities to make beneficial changes.

STATEMENT OF THE CASE

Amicus Curiae National Association of Manufacturers

adopts the statement of the case contained in the brief of

Petitioners, as supplemented by the following summary.

> Michael Mattheisen, The U.S. Environmental Protection Agency's New

Environmental Civil Rights Policy, 18 Va. Env’t! L.J. 183, 199-206 (1999).

In the decision below, the Eleventh Circuit ruled that

private parties can bring actions in federal court based on

“disparate impact” regulations issued by federal agencies under

Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d -

2000d-7 (1994). Section 602 of Title VI, 42 U.S.C. § 2000d-1,

provides that federal agencies are to promulgate regulations

denying federal financial assistance to recipients who

discriminate against persons on the basis of “race, color, or

national origin.”

The Title VI “disparate impact” regulations issued by many

federal agencies state, in relevant part, that the agencies will

withhold federal financial assistance if they find that the

recipient is using “criteria or methods of administering its

program which have the effect of subjecting individuals to

discrimination” based on race, color, or national origin. In

Chester Residents, supra, the private right of action was based

on the regulations issued by the Environmental Protection

Agency (EPA). 40 C.F.R. § 7.35(b). In this case, the private

right of action was based on the regulations issued by the

Department of Transportation. 49 C.F.R. § 21.5(b)(2). The

relevant language in both sets of regulations is virtually

identical.

SUMMARY OF ARGUMENT

The Eleventh Circuit’s decision, unless reversed, will have

a profoundly adverse impact on permitting programs

established by the federal environmental statutes and

administered primarily by state regulatory agencies. The

conclusion that parties can challenge state permitting decisions

implementing federal environmental programs on “disparate

impact” grounds makes the process of obtaining valid

environmental permits substantially more difficult for reasons

unrelated to protecting human health and the environment. It

will also introduce tremendous amounts of uncertainty and

delay into the overall permitting process. Moreover, it will

likely burden the federal courts with a vast number of

challenges to such state permitting decisions.

To illustrate the potential impact of the Eleventh Circuit’s

reasoning, this brief focuses on two related permitting programs

administered primarily by the states under one of the major

federal environmental statutes — the Clean Air Act. These two

programs govern the activities of a broad range of industrial

facilities throughout the country, and the ability of companies

to obtain permits under the programs in a reasonable manner is

vital to the continued operation of those facilities. Both

programs impose stringent pollution control requirements on

applicants seeking permits and involve detailed permitting

procedures, including extensive opportunities for public

participation. However, the Eleventh Circuit’s decision will

wreak havoc on these Clean Air Act permitting programs by

allowing parties to bring federal court challenges to final state

permitting decisions on ill-defined “disparate impact” grounds.

Although permitting requirements under the various Clean

Air Act programs are by now generally well understood and

predictable, the Eleventh Circuit’s decision would inject a great

deal of uncertainty into these permitting programs. Because of

the nature and variety of the claims that might later be raised,

neither the permit applicant nor the state permitting authority

could anticipate what showing must be made by the applicant

to avoid having the final permit subsequently overturned by a

federal court for causing a “disparate impact” on a particular

group.

Ironically, Title VI “disparate impact” claims such as these

— will frequently harm the minority communities that the

proponents of the claims seek to benefit. Judicial actions based

on such “disparate impact” claims will make it impossible or

extremely difficult for companies to obtain, in a timely fashion,

final environmental perniits that can be relied upon. This will

cripple the ability of a company to make the essential planning

and investment decisions necessary to modernize existing

facilities, or to construct newer and cleaner facilities near

minority communities. As a consequence, such claims — or the

threat of such claims - will eliminate jobs in the local

community, lower the local tax base, and in many instances

actually cause greater pollution in the area in question.

ARGUMENT

THE DECISION BELOW SERIOUSLY INTERFERES

WITH STATE ENVIRONMENTAL PERMITTING

PROGRAMS AND UNDERMINES THE GOALS OF

THOSE PROGRAMS.

The Clean Air Act establishes two principal permitting

programs that are generally applicable to stationary sources of

air emissions: a preconstruction permit program under the New

Source Review (NSR) provisions of the Act (42 U.S.C. §§

7470-7515) and an operating permit program under Title V of

the Act (42 U.S.C. §§ 7661-7661f). Among other things, the

NSR program requires sources planning to undertake significant

physical or operational changes in existing facilities to install

more stringent pollution controls. The Title V program is

primarily intended to incorporate all applicable clean air

requirements governing the operation of a major source in one

permit so that the permittee, the permitting authority, and the

public will have a clearer understanding of the source’s

compliance obligations. Both permitting programs require

sources seeking permits to comply with detailed, demanding

requirements and f0 participate in extensive, time-consuming

permit proceedings. The programs also have an extremely

broad reach — thousands of emissions sources across the nation

must obtain permits under one or both programs, and those

sources obtaining Title V operating permits must renew them

every five years.

As currently constituted, the two permitting programs are

relatively stable programs. They produce reasonably

predictable results that protect human health and the

environment. Permit applicants are ordinarily aware of the

procedural and substantive requirements they must meet to

secure a usable permit and are able to make key business

decisions well in advance.

However, the Eleventh Circuit’s decision, by allowing

parties to raise “disparate impact” issues in federal court after

a state permit has been issued, would severely disrupt the two

permitting programs by causing an intolerable amount of

uncertainty and delay. The vague and fluid nature of “disparate

impact” claims will make it impossible for the permit recipient

or the permitting authority to anticipate what claims could

conceivably be raised. Because a final permit could later be

challenged and overturned at some indefinite time for reasons

unrelated to meeting environmental standards and protecting

public health, the permit recipient cannot reasonably rely on

that final permit.

As discussed below, these elements of uncertainty and

delay will severely interfere with the ability of companies to

obtain environmental permits critical to modernizing aging

facilities and/or making changes necessary to respond to rapidly

changing market demands. A company cannot reasonably make

the investment and planning decisions necessary to proceed

with a project if a final permit can later be collaterally attacked

on “disparate impact” grounds under Title VI regulations — with

no clear indication of what issues might be raised or how long

the litigation might last.

Finally, the fact that the Eleventh Circuit’s decision will

make it much more difficult for companies to obtain Clean Air

Act permits will adversely affect the minority communities

located near the facilities in question. If a plant is unable to

modernize and remain competitive, it will ultimately provide

fewer jobs and perhaps close altogether. The result will be

abandoned industrial sites and economic harm to the minority

community.

A. Current Clean Air Act Permitting Programs Require

Facilities to Meet Stringent Requirements Designed to

Reduce Emissions and Protect Public Health.

Both the NSR and Title V permitting programs reflect a

regulatory approach based on principles of federalism. The

statute provides that EPA is to delegate to state or local

permitting agencies the authority to issue permits under the

programs once the permitting agency has satisfied detailed

requirements for establishing permit programs. Thus, in states

or localities with approved programs, the state or local

permitting authority is responsible for granting or denying

permit applications, and judicial review of such decisions must

be sought in state courts, not federal courts.

These state and local permitting agencies typically receive

federal funds from EPA to assist them in implementing the

Clean Air Act, including the Prevention of Significant

Deterioration (“PSD”) and Title V permitting programs. As a

result, the Eleventh Circuit’s decision would presumably allow

parties to bring federal court “disparate impact” challenges to

state or local permitting decisions made under those programs.

See generally Chester Residents, supra.

10

Amicus Curiae briefly describes the permitting programs

below and then discusses the adverse impacts that the Eleventh

Circuit’s decision would have upon them. It is important to

recognize that the Clean Air Act permitting programs are

discussed as examples of the wide range of federal and state

permitting programs that will be disrupted by the Eleventh

Circuit’s decision. Similar serious problems will arise in

permitting programs under the Clean Water Act, RCRA, and

other environmental programs involving permit requirements.

Furthermore, the Eleventh Circuit’s decision would extend even

beyond these fundamental permitting programs and interfere

with federal, state, and local government efforts to revitalize

urban areas by locating new industrial facilities on previously

contaminated waste sites that have been cleaned up.

1. The NSR Permitting Program

Under the Clean Air Act, companies that seek to make

changes at existing facilities or to construct new facilities may

trigger NSR requirements under Parts C or D of Title I of the

Act. 42 U.S.C. §§ 7470-7515. The question of whether a

particular project will trigger NSR requirements depends on (1)

whether the facility in question constitutes a “major stationary

source”* and (2) whether the project will cause an emissions

increase for a pollutant in excess of specified threshold levels.

If a proposed project is determined to be subject to NSR, the

company must obtain a preconstruction permit before

undertaking the project.

The type of NSR permit required depends on whether or

not the facility is located in an area which meets the national

* The terms “major emitting facility” and “major stationary source” are

generally used interchangeably in the NSR program. The term “major

stationary source” is defined at 40 C.F.R. § 51.166(b)(1)(D.

11

ambient air quality standard (“NAAQS”) for the pollutant in

question. Such standards, which are promulgated by EPA

pursuant to section 109(b) of the Act, 42 U.S.C. § 7409(b), are

designed to protect the public health and welfare in the area in

question. For emissions sources located in “attainment areas,”

the preconstruction permit is referred to as a Prevention of

Significant Deterioration (“PSD”) permit. See sections 161 and

165(a\(1) of the Clean Air Act, 42 U.S.C. §§ 7471, Toran?)

The principal purpose of the PSD permitting program is

ensure that attainment areas remain in compliance with the

relevant NAAQS and that the existing clean air is not gradually

degraded through increased pollution.

The states are primarily responsible for implementing the

PSD permitting program. Sections 161 and 165(a) of the Act

provide that each state 4. > ape ot ptncanay So = a

Implementation Plan (“S ensure

program is carried out. 42 U.S.C. §§ 7471, 7475(a). EPA

administers the PSD program within a state only if that portion

of the state’s SIP is not approvable. 40 C.F.R. § 52.21(a).

To obtain a PSD permit, an applicant must satisfy a number

of demanding, highly technical requirements. Among other

things, the applicant must (1) demonstrate that emissions from

the facility will not cause, or contribute to, pollution in excess

of the NAAQS or any other emissions standard under the Act,

(2) conduct and submit an extensive air quality impact analysis

* An “attainment area” is “any area . . . that meets the primary or secondary

ambient air quality standard fo: the pollutant” in question. Section

107(d)(1)(A)(ii), 42 U.S.C. § 7407(¢)(1 (A)(ii).

. Pursuant to section 110 of the Act, each state is to adopt and submit to

EPA a plan which provides for the ruplementation, maintenance, and

enforcement of the NAAQS for each pollutant in every region in the state.

42 U.S.C. § 7410.

12

for the area in question;’ and (3) conduct monitoring to

determine the effect which emissions from the facility may have

on air quality in any area which may be affected by those

emissions. See generally section 165(a).

Each proposed PSD permit is subject to an array of

procedural requirements, including extensive public

participation and comment requirements, before the state

permitting authority may make a final decision granting or

denying the permit. Among other things, the permitting

authority must hold a “public hearing . . . with [an] opportunity

for interested persons including representatives of the [EPA]

Administrator to appear and submit written or oral presentations

on the air quality impact of such source, alternatives thereto,

control technology requirements, and other appropriate

considerations.” Section 165(a)(2).

Moreover, each final PSD permit must contain stringent

emissions control requirements. For a source subject to PSD

require-meats, the permit must require the use of the Best

” The air quality impact analysis referred to above must include

an analysis of the ambient air quality, climate and

at the site of the proposed major emitting facility and in

the area potentially affected by the emissions from such

facility for each pollutant regulated under this [Act]

which will be emitted from, or which results from the

construction or operation of, such facility, the size and

nature of the proposed facility, the degree of continuous

emission reduction which could be achieved by such

facility, and such other factors as may be relevant in

determining the effect of emissions from a proposed

facility on any air quality control region.

Section 165(e)(3)(B).

13

Achievable Control Technology (“BACT”), which is defined,

in relevant part, as

an emissions limitation based on the maximum

degree of reduction of each pollutant subject to

regulation under this [Act] emitted from or

which results from any major-emitting facility,

which the permitting authority, on a

case-by-case basis, taking into account energy,

environmental, and economic impacts and other

costs, determines is achievable for such facility

Section 169(3), 42 U.S.C. § 7479(3).

2. The Title V Operating Permit Program

In the Clean Air Act Amendments of 1990," Congress

created a comprehensive operating permit program in Title V of

the Clean Air Act, 42 U.S.C. §§ 7661-7661f. The primary

purpose of that program is to require “major sources” for the

first time to obtain federal operating permits that incorporate all

existing Clean Air Act requirements applicable to each source.

The Title V permit program is regarded as one of the most far-

reaching and resource-intensive regulatory programs ever

implemented by EPA under the Clean Air Act. EPA has

estimated that 20,000 facilities throughout the nation will need

to obtain Title V permits —- many of which have not yet been

issued.

In accordance with section 502 of the Act, state or local air

agencies may obtain approval from EPA to administer the Title

V program within their jurisdictions. 42 U.S.C. § 766la. EPA

* Pub. L. No. 101-549, 104 Stat. 2399.

14

has promulgated a detailed set of regulations in 40 C.F.R. Part

70 describing what permitting requirements and procedures

State programs must contain. Upon EPA’s approval of a

proposed state program, the state is authorized to administer the

Title V program in that state. At this point, virtually all states

have had their Title V programs approved by EPA.

A source that is subject to the Title V program must submit

a detailed permit application to the state permitting authority

pursuant to section 503 of the Act. 42 U.S.C. § 7661b. Among

other things, such applications must identify all relevant

emissions units and all applicable requirements. At a large

facility, there may be hundreds of individual emissions units

and scores of requirements applicable to those units. Many

Title V permit applications have been several inches thick.

Final Title V permits must set forth all applicable

requirements as well as an array of inspection, entry,

monitoring, compliance certification, recordkeeping, and

reporting provisions. Section 504, 42 U.S.C. § 766l1c. Title V

permits must also be revised as necessary to reflect changes in

the source’s applicable requirements or other significant

changes in status. For example, relevant applicable

requirements contained in a PSD permit for a new project must

also be incorporated in the source’s Title V operating permit.

In addition, all Title V permits expire after five years and must

be renewed through new permit proceedings. Section

502(b)(5)(B), 42 U.S.C. § 7661a(b)(5)(B).

Each state’s Title V program must provide for extensive

public participation in the development of individual Title V

permits. Section 502(b)(6) requires that state programs contain

procedures for public notice and comment and an opportunity

- for a public hearing. 42 U.S.C. § 7661(b)(6). In addition, the

The Eleventh Circuit’s decision seriously disrupts the

a particular racial or ethnic group. The claims raised in these

judicial challenges would create a new set of issues that have

little or nothing to do with whether the final permits meet all

relevant Clean Air Act and state environmental requirements

and will protect the public health. As discussed below,

overlaying the existing permitting programs with an entirely

separate, ill-defined set of issues would interfere with the

effectiveness of those environmental protection programs and

would likely have adverse consequences for the local

Pe oe, Meer ee

The current PSD and Title V permitting processes already

impose very demanding requirements on applicants, and the

comic themselves are frequently very time-

’ ies from the Bureau of the Census show that the chemical industry

lone spent approximately $45 billion in 1994 in capital expenditures and

control and not the significant additional costs of obtaining permits. U.S.

Chemical Industry Handbook, Chemical Manufscturers Association (1997),

16

generally understand what procedural and substantive steps they

must take to obtain a permit and what criteria will be used to

judge whether a permit should be issued. As a result, the

outcome of the permit proceeding ordinarily is reasonably

predictable, and applicants are able to develop plans and make

investments based on their expectations.

However, the Eleventh Circuit’s decision would create

tremendous uncertainty as to what is required to obtain a permit

that can be relied upon and would make the task of obtaining

such a permit infinitely more difficult. A serious threshold

problem is that the very concept of a “disparate impact” in this

context is vaguely defined and almost completely open-ended.

The Title VI regulations themselves, which would be the basis

for the private mght of action, provide no meaningful

definitions.

The assumption apparently underlying such “disparate

impact” claims is that facilities that give rise to pollution should

be located so that all identifiable racial or ethnic groups are

exposed more or less equally to the pollution. Accordingly,

there are numerous theories and arguments that conceivably

could be advanced as to why a permitting decision for a

particular facility somehow creates a “disparate impact” with

regard to a racial or ethnic group in a particular area."®

p. 136.

'° Claims based on alleged “disparate impacts” have recently been raised in

many different situations. For example, a pollution reduction program

developed by the South Coast Air Quality Management District in California

has been judicially challenged by groups on “disparate impact” grounds.

The goal of the program is to promote early retirement of heavily polluting

automobiles by allowing businesses to pay into a fund that is used to buy old

vehicles. | However, the plaintiffs contend that the program has

discriminatory effects because industrial plants located near minority

communities would allegedly use credits generated from the program to

17

On a practical level, it would be almost impossible to

anticipate what specific showing a permit applicant would be

required to make so that its permit would survive a post-

issuance “disparate impact” challenge. For example, it would

be unclear what ZIP code, census tract, or other geographic area

should be used as the basis for comparison; what constitutes the

target population; what is the “appropriate” reference area; what

are the numerical criteria for establishing a “disparate impact”;

and, finally, whether any disparity reflects impermissible

discrimination, on the one hand, or reflects permissible

socioeconomic and other factors, on the other.'' Rather than

addressing environmental issues, the Title VI court challenge

may focus on such matters as census data, statistical analyses,

historical studies, zoning decisions, and growth and land use

patterns. Even if a source attempted to anticipate the kind of

showing it must make to prove a negative — to prove the

absence of any “disparate impact” — the plaintiffs can simply

adopt a different approach and then demand that the source

refute the different approach. Moreover, given the lack of clear

criteria for determining what constitutes a “disparate impact” in

the context of environmental permitting, federal courts

presented with such “disparate impact” claims will likely

struggle to develop uniform guiding principles for addressing

the claims.

The uncertainty and complexity which will be engendered

by “disparate impact” issues will substantially delay the

issuance of numerous Clean Air Act permits. Even when a

increase their emissions. Marla Cone, Civil Rights Suit Attacks Trade in

Pollution Credits, Los Angeles Times, July 23, 1997, at 1.

'"' See generally Latimore v. Citibank Federal Savings Bank,151 F.3d 712,

713-15 (7* Cir. 1998) (describing origins, purposes, and limitations of

disparate impact analysis).

18

permit has been issued, the filing of a subsequent “disparate

impact” challenge in federal court — or the threat of such a

challenge — would significantly delay the time when a permittee

could actually rely on the permit in order to make necessary

investment, production, and marketing decisions.

The problem of delay is particularly crucial with regard to

many PSD permits and for requested revisions to Title V

permits. Sources frequently need to obtain PSD permits or

Title V permit revisions relatively quickly because they must

make physical or operational changes to respond to rapidly

changing market conditions and remain competitive. For

example, a pharmaceutical company may need to change its

production processes or install new equipment at a facility in

order to rapidly meet the demand for a newly-approved,

important drug. If the company is unable to secure the

necessary permit or permit revision in a reasonably expeditious

way and rely upon it to take action, the company will suffer

economic harm and the benefits of the drug to consumers will

be postponed indefinitely. The interjection of “disparate

impact” issues in federal court litigation after the conclusion of

state permit proceedings would have a crippling effect on the

ability of sources to meet market demands in a timely manuer

or simply to modernize an aging facility.

Moreover, under the Eleventh Circuit’s decision, any

person can challenge, on “disparate impact” grounds, a source’s

Title V permit renewal (required every five years). The source

would then be forced to defend its continuing operation of the

facility even if no significant changes had been proposed and no

environmental standards had ever been violated. Conceivably,

the facility could be forced to cease operating based on

“disparate impact” grounds even though it had operated in

accordance with all environmental laws for years.

19

It is important to recognize that the plaintiffs in a “disparate

impact” challenge would have every incentive to make the

proceedings last as long as possible. The source cannot

commence construction on a new project until it has received

the necessary final permit or permit revision and cannot

reasonably rely on a permit or permit revision if it has been — or

could be — collaterally challenged on grounds that are distinct

from the basis on which the permit was granted. The longer the

entire process takes, the greater the negotiating leverage gained

by the plaintiffs. Bluntly put, a plaintiff may be able to force

the permittee or permitting authority to make “concessions” —

perhaps not related to environmental concerns — even though

the plaintiff's substantive position lacks any merit whatsoever.

C. The Resulting Disruption of Clean Air Act Permitting

Processes Would Lead to Adverse Consequences for the

Environment and Local Communities, as Well as for

Sources Seeking Permits.

The disruptions in the Clean Air Act permitting processes

caused by interjection of entirely separate “disparate impact”

issues after permit issuance will also lead to many other adverse

results. Indeed, “disparate impact” claims will actually be

counterproductive in many instances by causing — greater

pollution and doing economic harm to local communities.

These adverse results follow primarily from the fact that

“disparate impact” claims will make it much more difficult and

time-consuming for sources to obtain PSD permits or Title V

permit revisions in order to modernize their facilities or to

respond quickly to market demands. The filing of a federal

court challenge based on “disparate impact” claims may prevent

a source from receiving a necessary permit or permit revision in

a timely manner — or receiving it at all. Beyond that, the very

real possibility that such a challenge could be brought even

20

though the source satisfies all applicable environmental

requirements may be enough to discourage the source from

making improvements and changes at the facility in question.

If a facility is unable to make changes because of

uncertainty resulting from “disparate impact” claims, it will

operate less efficiently and become less competitive. Indeed, if

a company cannot make needed changes at a particular facility,

e.g., changes enabling the company to produce a new product,

the company will likely make those changes at another facility.

If the company is unable to keep a particular facility operating

efficiently because of the inability to make physical or

operational changes, the company will likely be forced to close

the facility and move its operations elsewhere. As a result, jobs

would be lost in the local community and the industrial site

would be abandoned. The local tax base would also be

reduced, thereby making it more difficult to provide services to

residents in the community.

Moreover, “disparate impact” challenges to PSD permits

would in many instances actually prevent emissions reductions

from being made at a facility. This result may come about for

either or both of two reasons. First, PSD permitting

requirements are frequently triggered under the applicable

regulations even though the proposed change will not, in fact,

cause a significant increase in actual emissions.'* Second,

'2 To determine whether a PSD permit is required for a proposed

modification, EPA believes that the facility’s pre-change actual emissions

should be compared to its post-change potential emissions, regardless of

whether the post-change actual emissions would even approach the

theoretical potential emissions. In calculating potential emissions, EPA

generally assumes that the source will be operating continuously at full

capacity and that it will not be using the stringent control technology it

would have to use if PSD applies. This “actual-to-potential” approach was

addressed in Puerto Rican Cement Co. v. EPA, 889 F.2d 292 (ist Cir.

21

once the Act’s PSD requirements are determined to apply, the

source’s later-issued PSD permit will require the use of BACT.

This very stringent control technology requirement will result

in actual emissions being substantially reduced — many times to

levels lower than the pre-change levels. By making it much

more difficult or even impossible for facilities to obtain PSD

permits, challenges based on “disparate impact” grounds would

destroy the environmental benefits to be gained by such

permits.

In summary, under the approach taken in the Eleventh

Circuit’s decision, environmental permits issued by state

agencies can be collaterally attacked in federal court even

though the facilities satisfy all requirements for obtaining the

permits, would comply with all environmental laws, and would,

in fact, provide net environmental benefits. Because of the

uncertainty and delay engendered by this approach, companies

would be prevented or discouraged from modernizing their

plants, and those plants would be unable to remain competitive

in the marketplace. As a result, jobs would be lost in the

affected communities. At the end of the day, everyone would

lose — the local communities, the companies duly seeking

environmental permits, and the state or local permitting

authorities attempting to administer these programs.

1989). There the court recognized that, under this approach, PSD

requirements could be triggered even though actual emissions at a facility

would be reduced by a new operational process. Jd. at 293-94.

22

CONCLUSION

For the foregoing reasons, the judgment below should be

reversed.

Respectfully submitted,

MICHAEL W. STEINBERG*

MICHAEL A. MCCORD

MORGAN, LEWIs & BOCKIUS LLP

1800 M Street, N.W.

Washington, D.C. 20036

(202) 467-7141

*Counsel of Record

Of Counsel:

JAN AMUNDSON

NATIONAL ASSOCIATION OF

MANUFACTURERS

1331 Pennsylvania Avenue, N.W.

Washington, D.C. 20004

(202) 637-3000

November 13, 2000