Amicus Curiae Brief — Environmental Defense v. Duke Energy Corporation

454¢

(30) FILED

SEP 15 2006

No. 05-848 |

THE CLERK

rte

IN THE 7

Supreme Court of the United States

ENVIRONMENTAL DEFENSE, ET AL.,

Petitioners,

Vv.

DUKE ENERGY CORPORATION,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals for the Fourth Circuit

BRIEF OF WALTER C. BARBER

AS AMICUS CURIAE

SUPPORTING THE RESPONDENT

Robert L. Brubaker

(Counsel of Record)

Eric B. Gallon

Porter Wright Morris & Arthur LLP

41 S. High Street, Ste. 3000

Columbus, Ohio 43215

(614) 227-2000

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TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE |

SUMMARY OF THE ARGUMENT 2

ARGUMENT 2

A.

Mr. Reich Was Not an “Inferior” Official, But

Instead at the Apex of EPA’s Organizational

Structure and in Charge of Clean Air Act

Enforcement for the Nation’s Entire Industrial

Stock 3

During 1981 and Many Other Years, Mr. Reich’s

Office, DSSE, Had Lead Responsibility and

Authority for the Making of Applicability

Determinations for the 1980 NSR Regulations,

and Was Active in Carrying Out That

Responsibility 6

Mr. Reich’s Office, DSSE, Participated Actively in

the Rulemaking That Produced the 1980 NSR

Regulations, Including the Drafting and Internal

Review of the Proposed and Final Versions of

Those Regulations 9

CONCLUSION 11

,

TABLE OF AUTHORITIES

STATUTES

42 U.S.C. § 7601(a)(2 A) (2006)..........cccrceserreeeenes

REGULATIONS

AO C.F.R. §§ 56.1-56.7 (2006) ...cccccsessecsecseeseeessveers

ADMINISTRATIVE MATERIALS

45 Fed. Reg. 52,676 (Aug. 7, 1980)..........eceseeeeees

45 Fed. Reg. 85,400 (Dec. 24, 1980) .........cceceeeee

OTHER MATERIALS

Brief for the United States as Respondent

Supporting Petitioners (July 21, 2006) .............02+0

Brief of Former EPA Administrators Carol

M. Browner and Russell E. Train as Amici

Curiae in Support of Petitioners (July 21,

Brief of the States of New York et al. as

Amici Curiae in Support of the Petitioners

(July 21, 2006) .........cccccssesseressssreeseerserserssseeeressenees

Deposition of Michael Trutna, United States

v. Ohio Edison Co., Nos. C2-99-1181 and

-1182 (S.D. Ohio Jan. 29, 2002) ........cceceeererceeeeeees

Deposition of Ronald Van Mersbergen,

United States v. Ohio Edison Co., Nos. C2-

99-1181 and -1182 (S.D. Ohio Oct. 7, 2002)

Deposition of Winston Smith, United States

v. E. Ky. Power Coop, No. 5:04-CV-0034-

KSF (E.D. Ky. Sept. 7, 2005) .......:ceeererseeees

EPA, NSR/PSD Policy and Guidance

Database, http://www.epa.gov/region7/

programs/artd/ air/policy/search.htm .............

Letter from Edward Reich, Director,

Division of Stationary Source Enforcement,

EPA, to Amasjit Gill, General Electric (June

24, 1981) (Jt. Appx. at 27-34) .......ccecsseeesseees

Memorandum from Edward Reich, Director,

Stationary Source Compliance Division,

EPA, to Directors, Air & Waste

Management Divisions, EPA Regional

ID ertedhcecsconetteteteannacseinisenindientpesios

Memorandum from Edward Reich, Director,

Division of Stationary Source Enforcement,

EPA, to Charles Whitmore, Chief, Technical

Analysis Section, Region VII, EPA (Jan. 22,

1981) (Jt. Appx. at 35-37) 0... ..eceeecssreeeeeeeeees

Memorandum from Edward Reich, Director,

Division of Stationary Source Enforcement,

EPA, to Thomas W. Devine, Chief, Air

Branch — Region I, EPA (Feb. 13, 1978) (Jt.

FR FF chctntctnctcitnstchercccinssinentscntinnees

iv

United States’ Petition for Panel Rehearing

and Petition for Rehearing En Banc, United

States v. Duke Energy Corp., No. 04-1763

GEDA. Fay BD, BEGGS) cccccocccscarccesctssscesscccsocstensse

INTEREST OF AMICUS CURIAE’

Amicus curiae, Walter C. Barber, was the Director of

the Office of Air Quality Planning and Standards

(“OAQPS”) at the Environmental Protection Agency

(“EPA”) from 1976 to early 1982.7 In that capacity, he was

in charge of staff involved in the development of the Clean

Air Act regulations at issue in the present case, i.e., the

regulations governing pre-construction review and

permitting of new and modified sources of air pollution, 45

Fed. Reg. 52,676 (August 7, 1980), commonly referred to as

the 1980 “New Source Review” (“NSR”) regulations.’

While serving as Director of OAQPS, Mr. Barber also served

as EPA’s Acting Administrator from January to May 1981.

During the time Mr. Barber was Director of OAQPS, Mr.

Edward E. Reich, as Director of EPA’s Division of

Stationary Source Enforcement (“DSSE”), issued two

applicability determinations regarding the NSR regulations

that are at the heart of this case.‘ Due to his first-hand

‘All parties have consented to the filing of amicus briefs in letters that

are on file with the Clerk. Amicus, Walter C. Barber, is receiving no

payment of any kind in connection with this brief. Mr. Barber,

however, served as a paid expert witness for Respondent Duke Energy

Corporation in the trial court proceedings below with respect to issues

other than those addressed in this brief. This brief was not authored in

whole or in part by any attorney who is serving or has served in this

case as counsel for a party.

? Mr. Barber has worked in the private sector since he left EPA. Since

2000, he has been a Group Vice President for Jacobs Engineering

Group, Inc., with responsibility for its busimesses in Asia and the

Middle East.

> The term “New Source Review” is intended here to refer both to

EPA’s regulations for the Prevention of Significant Deterioration

(“PSD”) in so-called “clean air” areas and to the regulations governing

pre-construction review in “nonattainment” areas.

* See Letter from Edward Reich, Director, Division of Stationary Source

Enforcement, EPA, to Amasjit Gill, General Electric (June 24, 1981)

(Jt. Appx. at 27-34); Memorandum from Edward Reich, Director,

2

knowledge of Mr. Reich’s position within the Agency at that

time, Mr. Barber is able to clarify the role that Mr. Reich and

his office played in the development and implementation of

the 1980 NSR regulations. Mr. Barber, in the interest of

justice, respectfully wishes to assist the Court in gauging the

significance of Mr. Reich’s two determir:‘ons in 1981.

SUMMARY OF THE ARGUMENT

The various interpretations of the 1980 NSR

regulations that Mr. Reich issued during 1981 in his capacity

as Director of DSSE were authoritative. First, during the

1979-80 rulemaking and then during 1981, Mr. Reich was

the top civil servant at EPA in charge of setting national

policy for stationary source enforcement under the Clean Air

Act. Second, Mr. Reich’s office, DSSE, was the office

within EPA that had primary responsibility and authority

both for making applicability determinations under those

regulations and for overseeing EPA’s regional offices in

following such determinations and referring requests for

determinations. Finally, DSSE staff participated on the

internal EPA working group that drafted the proposed and

final versions of the 1980 NSR regulations.

ARGUMENT

In its Brief in Support of Petitioners, the United

States characterized Mr. Reich as “a mid-level EPA

official”’ and his interpretations as “not authoritative.”

Indeed, in its petition to the U.S. Court of Appeals for the

Division of Stationary Source Enforcement, EPA, to Charles

Whitmore, Chief, Technical Analysis Section, Region VII, EPA (Jan.

22, 1981) (“Cargill Memo”) (Jt. Appx. at 35-37).

* Brief for the United States as Respondent Supporting Petitioners (July

21, 2006) at 13, 28.

* Id. at 14.

3

Fourth Circuit for rehearing in this case, the United States

went so far as to describe Mr. Reich as “an inferior EPA

official” during the relevant timeframe.’ In a similar vein,

some of the amici curiae supporting Petitioners in this case

described Mr. Reich in their briefs as merely “a single EPA

staff member” and “a single agency employee.”

These characterizations by the United States and

certain amici are factually incorrect and misleading, for the

following reasons.

A. Mr. Reich Was Not an “Inferior” Official, But

Instead at the Apex of EPA’s Organizational

Structure and in Charge of Clean Air Act

Enforcement for the Nation’s Entire Industrial

Stock

First, it is critical to understand the organizational

structure of EPA as it existed during the relevant period,

1979-81. Then, as now, the foremost authority to direct

EPA’s operations resided in the President and his appointees,

especially the EPA Administrator, Deputy Administrator,

and various Assistant Administrators. In 1979-81, the total

number of such appointees was relatively small — fewer than

20. The next layer of management under those presidential

appointees consisted of the top ranks of the career civil

service, generally members of the Senior Executive Service

(“SES”). Members of the SES also constituted a relatively

small percentage of EPA’s workforce. Beneath them were

” United States’ Petition for Panel Rehearing and Petition for Rehearing

En Banc, United States v. Duke Energy Corp., No. 04-1763 (M.D.N.C.

July 29, 2005), at 13 n.6, excerpt attached as Appendix A.

* Brief of Former EPA Administrators Carol M. Browner and Russell E.

Train as Amici Curiae in Support of Petitioners (July 21, 2006), at 19.

” Brief of the States of New York ef al. as Amici Curiae in Support of

the Petitioners (July 21, 2006), at 18.

4

multiple layers of middle managers, career civi! servants,

and other staff. During 1979-81, the total number of EPA

employees nationwide was approximately 8,000-9,000.

Thus, just below the thin layer of presidential appointees was

a large number of civil servants supervised by a small cadre

of SES-level professional managers.

Mr. Barber was the Director of OAQPS, with the

responsibility for developing regulations to govern air

pollution from stationary sources. He reported to the

Assistant Administrator for the Office of Air & Radiation

(“OAR”), a presidential appointee, who in tur reported

directly to the EPA Administrator. Thus, Mr. Barber was

only the second layer down from the Administrator in terms

of setting national policy for stationary sources.

During the key period, 1979-81, Mr. Reich held a

position that was comparable to Mr. Barber’s, but it was in

the parallel chain of command devoted to enforcement. That

chain of command was known as the Office of Enforcement

(“OE”). It had its own Assistant Administrator, who also

reported directly to the Administrator. Thus, like Mr.

Barber, Mr. Reich was only the second level down from the

Administrator of EPA. Within OE, Mr. Reich was the

Director for stationary source enforcement, responsible for

communicating national policy on implementation and

enforcement of the NSR program, and for ruling on NSR

applicability determinations. Thus, Mr. Barber and Mr.

Reich were peers who complemented each other

functionally. Mr. Barber was responsible for leading the

development of rules for air pollution from stationary

sources, and Mr. Reich was responsible for leading the

enforcement of those rules. Moreover, Messrs. Barber and

Reich were the persons slated to provide continuity for the

regulation of stationary sources as_ presidential

administrations came and went.

From the standpoints of the Nation’s environment

and economy, the positions of Messrs. Barber and Reich

were of critical importance and high prominence within the

field of air quality management. The term “stationary

sources” encompasses electric utilities, all manner of

manufacturing plants, and the rest of the Nation’s industrial

capacity. The policies governing air pollution from such

capital stock have profound implications for the health of

citizens and the economy. Messrs. Barber and Reich were

the top civil servants in charge of implementing those

policies and, hence, uniquely positioned to have a significant

impact on air quality and the economy.

In sum, Mr. Reich, along with Mr. Barber, were at

the apex of the large body of civil servants at EPA who were

responsible for controlling emissions from stationary

sources. Below the thin layer of presidential appointees, no

one in the field of stationary source enforcement had a

position of greater authority, importance, and prominence

than Mr. Reich. To say, as the United States does now, that

he was merely a “mid-level” or “inferior” official, and that

his interpretations were not authoritative, is simply wrong.

Likewise, Mr. Reich was not just “a single agency

employee,” as certain amici would have it, but rather among

the most senior of all the career employees in the chain of

command devoted to stationary sources under the Clean Air

Act.

6

B. During 1981 and Many Other Years, Mr. Reich’s

Office, DSSE, Had Lead Responsibility and

Authority for the Making of Applicability

Determinations for the 1980 NSR Regulations,

and Was Active in Carrying Out That

Responsibility

Implementation of the Clean Air Act for stationary

sources has involved not only a hierarchy of officials at

EPA’s headquarters, but also officials in various sub-offices

in each of EPA’s ten regional offices (e.g., offices that

process “State Implementation Plans” or engage in

enforcement activities) and in air pollution programs at the

state, tribal, and territorial levels. Given the extensive

variety of federal and non-federal offices involved, the vast

number of stationary sources under regulation, and the

diversity of source-specific circumstances, EPA from its

inception has tried to ensure even-handed and consistent

treatment of such sources, including such treatment under the

NSR regulations." One way EPA tried to do this during

1981 and surrounding years was to designate a single EPA

Headquarters office as having the lead in issuing

applicability determinations on behalf of Headquarters. For

the 1980 NSR regulations, and for the relevant period (1979-

81), that office was DSSE.

Typically, a stationary source or a state official would

present an NSR applicability question to an EPA regional

office. If the regional office could not answer the question

confidently on the basis of the regulatory language or prior

© Congress directed EPA to provide national uniformity and fairness in

the criteria and policies applied by the various EPA regions in

implementing and enforcing the Clean Air Act. See § 301(a(2)(A) of

the Act, 42 U.S.C. § 7601(a)(2)(A) (2006), and EPA’s implementing

“regional consistency” regulations at 40 C.F.R. §§ 56.1-56.7 (2006),

promulgated at 45 Fed. Reg. 85,400 (Dec. 24, 1980).

7

determinations, then the regional office would refer the

question to Mr. Reich’s office. DSSE was understood within

EPA and by state air pollution control officials to be the lead

office for resolving applicability questions under the 1980

NSR regulations.'' DSSE’s determinations were binding on

the regional offices and the states, subject only to

reconsideration or appeal to the relevant presidential

appointees.

"' The definitiveness of Mr. Reich’s NSR guidance and interpretations

around the 1981 time period is corroborated by contemporaneous

documents and deposition testimony from two EPA career employees

intimately involved in the NSR programs from their inception. In late

1983, for instance, Mr. Reich's office sent the appropriate directors in

each of EPA’s regional offices “a summary of all PSD determinations

of applicability made by {his office] between May 1, 1983 and

September 30, 1983,” with instructions to “take note of the

determinations and assure that affected agencies in your Region are

aware of them as well.” Mr. Reich commented that the summary

would be his office’s last, as the Comptroller’s Office had “eliminated

{his office’s] applicability determination function.” Memorandum

from Edward Reich, Director, Stationary Source Compliance Division,

EPA, to Directors, Air & Waste Management Divisions, EPA

Regional Offices (1983), excerpt attached as Appendix B.

Michael Trutna, the chief of EPA's NSP. section in the early 1980s,

affirmed in deposition that, in mid-1983, Mr. Reich was “the ranking

official that made [PSD] applicability determinations.” Deposition of

Michael Trutna, United States v. Ohio Edison Co., Nos. C2-99-1181

and -1182, at 290 and 292 (S.D. Ohio Jan. 29, 2002), excerpts attached

as Appendix C. Ronald Van Mersbergen, the regional NSR specialist

for EPA Region V, also affirmed that Mr. Reich’s office was the EPA

office responsible for making applicability determinations in the early

years of NSR. See Deposition of Ronald Van Mersbergen, United

States v. Ohio Edison Co., Nos. C2-99-1181 and -1182, at 203-06

(S.D. Ohio Oct. 7, 2002), excerpts attached as Appendix D. Mr. Van

Mersbergen further affirmed that compilations of DSSE’s applicability

determinations would have been sent to, and binding upon, states with

delegated authority to administer the PSD program on behalf of EPA.

See id. at 207-12.

Under the organizational structure at the time, the

enforcement function was separated from the air program

rulemaking development function. The air program

rulemaking responsibility was assigned to OAQPS, and the

enforcement responsibility was assigned to DSSE.

Responsibility for NSR applicability determinations was

assigned to Mr. Reich’s office. Mr. Reich and his DSSE

staff could consult, and did consult, with OAQPS, the Office

of General Counsel, and other relevant offices as they

deemed necessary in making applicability determinations. '”

DSSE performed the job of making applicability

determinations for the 1980 NSR regulations frequently. Its

staff, under Mr. Reich’s direction, was in the business of

making NSR_ determinations, both under the 1980

regulations, but also under the predecessor regulations.'°

' DSSE’s 1981 applicability determination for Cargill, Inc. (see Jt.

Appx. at 35-37), for example, states, “This determination has been

made with the concurrence of the Office of Air Quality Planning and

Standards and the Office of General Counsel.”

" DSSE emphasized its role with respect to those predecessor

regulations in a February 13, 1978 memorandum to EPA Region I, as

follows:

Further, it is the function of DSSE to provide guidance for

interpretations which address the implementation of these

regulations [i.e., the NSR regulations for the Prevention

of Significant Deterioration (“PSD”) in effect at the time].

Reliance upon opinions obtained from other EPA offices

without consulting DSSE will not ensure uniform national

policy for implementation of these regulations. Agency

policy requires that DSSE, after consulting with other

EPA offices, make the final recommendation for

interpretation of these requirements.

See Memorandum from Edward Reich, Director, Division of

Stationary Source Enforcement, EPA, to Thomas W. Devine, Chief,

Air Branch — Region I, EPA (Feb. 13, 1978) (Jt. Appx. at 477-483).

Winston Smith, who was chief of the Air Programs Branch of EPA’s

Region 4 office in Atlanta, Georgia in the late 1970s and early 1980s

9

During the six-year period from 1978 to 1983, DSSE made

at least 94 NSR applicability determinations.'* Plainly,

DSSE had a substantial amount of experience handling NSR

applicability determinations during the relevant period.

In sum, Mr. Reich was not just one air pollution

manager at EPA among many managers all having some

responsibility for implementing the 1980 NSR regulations.

To the contrary, he was the manager who had the lead

responsibility for making applicability determinations that

were to govern the behavior of EPA regional offices and

states in their implementation of those regulations.

Moreover, he and his staff typically carried out that

responsibility through consultation and the building of

consensus as necessary, and they had a substantial amount of

experience in issuing such applicability determinations.

Against this background, it is incorrect to say that Mr.

Reich’s NSR determinations were not authoritative.

C. Mr. Reich’s Office, DSSE, Participated Actively in

the Rulemaking That Produced the 1980 NSR

Regulations, Including the Drafting and Internal

Review of the Proposed and Final Versions of

Those Regulations

During Mr. Barber’s tenure at EPA, the Agency used

a working-group system for developing rules. For example,

and is currently director of the waste management division there,

affirmed in deposition that DSSE regularly sent guidance on PSD to

all of the EPA regional offices, so as to share information with them

and ensure the uniform interpretation and application of the rules.

Deposition of Winston Smith, United States v. E. Ky. Power Coop.,

No. 5:04-CV-0034-KSF, at 7-9 and 23-25 (E.D. Ky. Sept. 7, 2005),

excerpts attached as Appendix E.

'* These statistics are the result of searches in EPA’s central web-based

collection of NSR determinations, located at http://www.epa.gov/

region7/programs/artd/air/policy/search. htm.

10

if EPA undertook a rulemaking, it would first form a

working group made up of representatives of each office that

had an institutional interest in the outcome. The group

would prepare the necessary Federal Register notices and

supporting analyses, and then push the notices up through

the appropriate chains of command, and eventually to the

Administrator, for signature. During the review and

signature phase, each office director, such as Mr. Reich,

would be asked to concur, concur with comments, or non-

concur in the package of notices and analyses.

This system was used to develop the 1980 NSR

regulations. The working group would have included

representatives from OAQPS, DSSE, the Office of General

-- Counsel, and certain other offices. During the rulemaking

process from 1979-80, the group held frequent meetings to

discuss specific issues. The representatives of particular

offices were expected to contribute from the standpoint of

the particular interests of their office. Fo: instance, the

DSSE representatives would have been expected to help and

comment primarily with respect to enforcement policy.

Moreover, the proposed and final rules would not have

reached the Administrator’s desk unless Mr. Reich had

reviewed and commented on the Federal Register packages

containing them.

Having participated in the rulemaking for the 1980

NSR regulations, the DSSE representatives on the working

group would have gained an expert level of knowledge about

the format and enforceability of the regulations, putting them

in a good position to formulate authoritative interpretations

of the regulations. Both the United States and the amici in

question overlook this important reality when they suggest

that Mr. Reich’s office was just one ordinary office among

several having some NSR responsibility.

11

CONCLUSION

Mr. Barber respectfully submits, based on his

personal knowledge as Mr. Reich’s peer during the

formation of the 1980 NSR regulations, that Mr. Reich’s

applicability detertninations and underlying interpretations of

the 1980 NSR regulations were in fact authoritative, contrary

to the suggestions of the United States and certain amici.

Mr. Reich in 1981 was the top civil servant for stationary

source enforcement under the Clean Air Act. The Agency

had given him, as DSSE Director, the lead responsibility for

making applicability determinations that were to govem

implementation of the 1980 NSR regulations by EPA’s

regional offices and state, tribal and territorial agencies

across the Nation. DSSE as an office and its director, Mr.

Reich, had extensive experience making NSR applicability

determinations. Finally, DSSE participated in the

development of the 1980 NSR regulations.

Respectfully Submitted,

Robert L. Brubaker

(Counsel of Record)

Eric B. Gallon

PORTER WRIGHT

Morris & ARTHUR LLP

41 S. High Street, Ste. 3000

Columbus, Ohio 43215

(614) 227-2000

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