Opposition Brief — American Methyl Corp. v. Motor Vehicle Manufacturers Ass'n of the United States

No. 85-718

In the Supreme Court of the Anite g

OCTOBER TERM, 1985

AMERICAN METHYL CORPORATION, PETITIONER

v,

MoTorR VEHICLE MANUFACTURERS ASS’N

OF THE UNITED STATES, INC., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT

IN OPPOSITION

CHARLES FRIED

Solicitor General

F. Henry Hasicnut II

Assistani Attorney General

Davip C. SHILTON

ANNE S. ALMY

Attorneys

Department of Justice

Washington, D.C. 20530

(202) 633-2217

| BEST AVAILABLE COPY" }

QUESTION PRESENTED

Whether the court of appeals erred in setting aside as

arbitrary and capricious a decision by the Administrator of

EPA granting a waiver permitting the introduction of a new

fuel or fuel additive.

(1)

TABLE OF CONTENTS

Page

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CSREES PRES eee ee ae 9

TABLE OF AUTHORITIES

Cases: vA

American Methylé Corp. v. EPA,

Ce | See eee eee eee eee eee 4,6

"’ock v. Community Nutrition Institute,

le EE I UU Sven sen eesssscccses 7

ces A Lk a 6

Motor Vehicle Manufacturers Ass'n v. State

Farm Mutual Automobile Insurance Co.,

LR EE eee 7,8

Vermont Yankee Nuclear Power Corp. v.

EB, I ee ee 7-8

Statutes:

Administrative Procedure Act, 5 U.S.C.

NTS es ee 6

Clean Air Act, 42 U.S.C. 7401 et seq. :

CE SI, TEED wv ces cccsescens 2

ee SE, FE Wit bees ccescenncvass |

POL Oe Rn FIRIUE) voc cncccvcns 2, 4, 6

$ 211(ch(2)(B), 42 U.S.C.

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(IIT)

IV

Page

Statutes—Continued:

§ 211(cX2(C), 42 U.S.C.

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$ 211(f)(1), 42 U.S.C. 7545(f(1) .. 2.2.2.2... 2

§$ 211(f)(4), 42 U.S.C.

po SE ee ey Pe 2, 3,7, %

$ 211(f)(5), 42 U.S.C. 7545(f(5) .......... ae

$ 307(d)(9), 42 U.S.C. 7607(d)(9) ........... 6

Miscellaneous:

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A me tl | re ae 3

Jn the Supreme Court of the Anited States

OCTOBER TERM, 1985

No. 85-718

AMERICAN METHYL CORPORATION, PETITIONER

V.

MorTor VEHICLE MANUFACTURERS ASS’N

OF THE UNITED STATES, INC., ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT

IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. 1a-36a) is

reported at 768 F.2d 385.

JURISDICTION

The judgment of the court of appeals (Pet. App. 37a-38a)

was entered on July 26, 1985. A timely petition for rehear-

ing was denied on September 18, 1985 (Pet. App. 55a). The

petition for a writ of certiorari was filed on October 25,

1985. The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

STATEMENT

1. In the 1970 Amendments to the Clean Air Act, Con-

gress authorized the Administrator of the Environmental

Protection Agency to control or prohibit the manufacture,

(1)

2

introduction into commerce, or sale of any fuel or fuel

additive either to protect public health and welfare or to

guard against impairment of emission control devices or

systems. § 211(c), 42 U.S.C. 7545(c). Before taking action

to control or prohibit a fuel or fuel additive in order to

protect emission control devices, the Administrator is

required to hold a public hearing and consider available

scientific and economic data, including a cost-benefit anal-

ysis of alternative emissions control systems. § 211(c\2)(B),

42 U.S.C. 7545(c)(2)(B). The Administrator must conclude

that the prohibition will not cause the use of other fuels or

additives of equal or greater threat to health or welfare.

$ 211(cK2(C), 42 U.S.C. 7545(cK2)(C).

In 1977, Congress amended the Clean Air Act to afford

the Administrator additional power over the introduction

of new fuels or additives that might damage emission con-

trol systems. Section 21 1(f(1), 42 U.S.C. 7545(f(1), declared

it unlawful, after March 31, 1977, to introduce into com-

merce a fuel or fuel additive that is not substantially similar

to fuels used for emissions testing of prototype vehicles for

certification under the Act (see Section 206(a), 42 U.S.C.

7525(a)). Section 21 1(f)(4) empowered the Administrator to

waive this prohibition upon a determination that the appli-

cant for a waiver “has established that such fuel * * * will

not cause or contribute to a failure of any emission control

device * * * to achieve compliance by the vehicle with the

emission standards * * * to which it has been certified.” If

the Administrator has not acted to grant or deny a waiver

within 180 days, the waiver shall be treated as granted. Ibid.

Section 211(f}(5) provides that no court may stay a waiver

granted by the Administrator under Section 21 1(f)(4) pend-

ing judicial review.

3

2. Petitioner American Methyl Corporation! manufac-

tures a proprietary ingredient for use in a motor vehicle fuel

called “Petrocoal,” which consists of a blend of unleaded

gasoline, methanol, and other alcohols. On February 20,

1981, petitioner applied for a Section 21 i(f)(4) waiver for

Petrocoal. On September 28, 1981, EPA granted a condi-

tional waiver for Petrocoal. Pet. App. 39a-54a; 46 Fed. Reg.

48975 (1981). The waiver conditions included, inter alia,

limits on the concentrations of methanol and of total alco-

hols in the finished fuel.

On December 4, 1981, respondents Motor Vehicle Manu-

facturers Association of the United States (Manufacturers

Ass’n) and the General Motors Corporation filed petitions

to review the grant of the waiver in the court of appeals.

Petitioner intervened as a respondent in those actions. On

that same date, the Manufacturers Ass’n also filed a petition

for administrative reconsideration of the waiver. Lengthy

negotiations between the parties to the administrative and

legal proceedings ensued. On February 22, 1983, the Manu-

facturers Ass’n supplemented its administrative petition

with additional technical data concerning evaporative

emissions of alcohol-blend fuels such as Petrocoal (Pet.

App. 6a). On May 2, 1983, EPA requested public comment

on the supplemented administrative petition, 48 Fed. Reg.

19779, and on March 28, 1984, the Administrator published

a notice proposing revocation of the Petrocoal waiver, 49

Fed. Reg. 11879. Subsequently, counsel for petitionex

‘American Methyl Corporation was previously called Anafuel

Unlimited.

Petitioner and EPA had agreed to extend the 1 80-day deadline (Pet.

App. 41a).

3In January 1984, in its brief in the court of appeals in the instant case,

EPA stated that it had committed at least one fundamental error in

granting the waiver on the origina! record, and it asked the court to

remand the case for reconsideration by the agency.

4

sought and obtained a letter from the General Counsel of

EPA, dated June 8, 1984, expressing the opinion that the

agency had the authority to reconsider and potentially to

revoke the Petrocoal waiver.

3. While the instant case was pending, petitioner filed

petitions for review from both the March 28, 1984, notice of

proposed revocation and from the June 8, 1984, General

Counsel’s letter. The court of appeals denied EPA’s motion

- to dismiss these petitions, stayed administrative proceed-

ings, and heard the petitions on a expedited schedule. On

December 4, 1984, the court of appeals ruled in favor of |

petitioner. American Methyl Corp.. v. EPA, 749 F.2d 826

(D.C. Cir.). The court held that, in the circumstances pre-

sented, the Administrator was not empowered to revoke a

waiver issued pursuant to Section 211(f) of the Clean Air

Act, but rather was required to use the rulemaking provi-

sions of Section 211(c) to control or prohibit the fuel that

had already been the subject of a waiver. Accordingly, the

court of appeals set aside the Administrator’s notice prop-

osing to revoke the Petrocoal waiver and remanded the case

“for further proceedings under section 21 1(c), if the Admin-

istrator deems them desirable” (749 F.2d at 840).

4. Subsequently, the court of appeals heard the instant

case involving the petitions for review challenging the

Administrator's original grant of the waiver for Pet»val.

On July 26, 1985, the court granted those peti «».s for

review although it agreed with EPA’s position in part (Pet.

App. |a-36a). The court agreed with EPA that the Adminis-

trator may grant a waiver if he determines that the use of the

fuel or additive does not cause or contribute to the failure of

a vehicle to achieve compliance with emissions standards,

even if the waiver would result in some increase in emissions

(id. at 9a-l1la). The court further agreed with EPA that

actual, long-term durability testing is not always necessary

to determine whether use of a fuel or additive would cause a

5

vehicle to exceed emissions standards over its useful life

(five years or 50,000 miles) (id. at 1 la-16a). The court stated

that “[{c]lear evidence before the EPA may allow it to con-

clusively rule out the possibility of long-term deteriorative

effects, thus making the EPA’s Deteriorated Emissions Test

sufficient and obviating the need for actually conducting

costly and time-consuming 50,000-mile durability tests” (id.

at 15a (footnote omitted).

The court granted the petitions for review, however,

because it concluded that the Administrator lacked a

rational basis for finding that Petrocoal wouid not contrib-

ute to a vehicle’s failure to comply with emission standards

over its useful life (Pet. App. 16a-32a). First, the court

found that EPA’s decision not to require 50,000-mile dura-

bility testing in this case was not sufficiently supported by

any clear evidence that Petrocoal would not have long-term

deteriorative effects (id. at 16a~23a). Second, the court ruled

that the decision to grant a waiver despite the failure of

Petrocoal to pass the Deteriorated Emissions Test for nit-

rogen oxides was not accompanied by a reasoned explana-

tion of why the established test criteria were not determina-

tive (id. at 28a-31a). Finally, the court agreed with EPA’s

concession (see note 3, supra; Pet. App. 24a) that the admi-

nistrative record apparently did not support a finding that

the test results actually obtained for Petrocoal were based

on fuels meeting the maximum concentration limits speci-

fied in the waiver (id. at 23a-28a). Accordingly, the court of

appeals vacated the Administrator’s decision granting the

waiver and remanded to the Administrator for renewed

consideration of whether a waiver should be granted under

Section 211(f) (id. at 36a).

ARGUMENT

The isst:z addressed in the decision of the court of appeals

is whether the administrative record supports the decision

reached by the Administrator of the EPA in this case. The

A eee ee a RE REO ee TI

6

holding that it does not is a factbound one that does not

conflict with any decision of another court of appeals or of

this Court. Accordingly, there is no reason for review by

this Court of the court of appeals’ decision remanding this

case to the agency for further consideration.

Petitioner’s primary claim (Pet. 11-14, 18-21) is that the

action of the court of appeals in vacating the Section 211(f)

waiver granted for Petrocoal is inconsistent with the earlier

court of appeals ruling that the EPA Administrator lacked

power to revoke a waiver, American Methyl Corp. v. EPA,

supra. In the earlier case, however, the court found that the

Administrator sought to revoke the waiver based on new

information submitted two years after the waiver originally

had been granted and specifically noted that “the Adminis-

trator point[ed] to no defects in his original approval of the

Petrocoal waiver” (749 F.2d at 838). In these circumstances,

the court found that Congress had intended that the Admin-

istrator initiate rulemaking proceedings pursuant to Sec-

tion 211(c) in order to control or prohibit the fuel. 749 F.2d

at 834-840.‘ In the instant case, by contrast, the court of

appeals simply exercised its normal function of reviewing

administrative action on the record created by the agency.

Finding the action of the Administrator here “arbitrary and

Capricious,” it set aside the decision of the Administrator

and remanded for further proceedings. See, e.g., Camp v.

Pitts, 411 U.S. 138, 142 (1973).

‘The court there did recognize “an inherent power” of agencies to

correct their mistakes by reconsidering decisions within the period for

taking an appeal. 749 F.2d at 835. It also suggested that EPA would be

able to revoke a waiver obtained by means of fraud or misrepresenta-

tion. Jd. at 834 1.51.

‘The court of appeals found it unnecessary to decide here whether

review lay under the Administrative Procedure Act, 5 U.S.C. 706(2), or

under the special provisions for judicial review of the Clean Air Act, 42

U.S.C. 7607(d)(9), because the standards for judicial review are the

same. Both provisions embody the arbitrary and capricious standard.

See Pet. App. 8a n.6.

7

Petitioner’s claim that the court of appeals lacked power

to vacate the decision granting the Section 211(f)(4) waiver

boils down to an assertion that waiver actions by the

Administrator are unreviewable. This contention is without

foundation. There is a presumption of judicial review of

final agency action unless Congress either explicitly, or

through the statutory scheme it enacted, precludes judicial

review. Block v. Community Nutrition Institute, No. 83-

458 (June 4, 1984), slip op. 5. There is no such preclusion

here; rather, Congress clearly intended that rulings on

waivers under Section 21 1(f)(4) would be subject to judicial

review. Indeed, Congress directly addressed that subject by

modifying the normal incidents of judicial review by prec-

luding the courts from staying a waiver decision pending

review. See Section 21 1(f)(5), 42 U.S.C. 7545(f)(5). In light

of Congress’s specific attention to this issue, it is plainly

inappropriate to infer a greater and different restriction on

the normal powers of a reviewing court. Accordingly, the

court of appeals was empowered to vacate the waiver deci-

sion upon its determination that the Administrator “acted

arbitrarily, capriciously, and abused her discretion” (Pet.

App. 36a).

There is no inherent inconsistency between the two court

of appeals decisions concerning the Petrocoal waiver. One

concerns the proper mechanism to be used by the agency

itself to revoke a waiver on the basis of new information.

The decision here concerns the action to be taken by a

reviewing court upon concluding that the original grant of a

waiver was arbitrary and capricious. Indeed, the difference

in the relief at issue in the respective decisions further shows

the lack of any legal inconsistency.

Petitioner also asserts (Pet. 14-18) that the court of

appeals’ decision is inconsistent with this Court’s rulings in

Motor Vehicle Manufacturers Ass'n v. State Farm Mutual

Automobile Ins. Co., 463 U.S. 29 (1983), and Vermont

8

Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519

(1978). Petitioner claims that the court of appeals imper-

missibly imposed an additional procedural requirement on

EPA in finding that the agency acted arbitrarily and capri-

ciously in granting a waiver despite Petrocoal’s failure of

the Deteriorated Emissions Test for oxides of nitrogen. We

do not agree that the court of appeals has imposed any new

or additional procedural obligation on the agency. The

EPA has used the Deteriorated Emissions Test in consider-

ing Section 211(f)(4) waivers in the past, and the court of

appeals’ decision thus reaffirms the agency’s existing proce-

dures. Here, the court of appeals simply found that the

agency did not adequately explain its departure from exist-

ing criteria when it granted Petrocoal a waiver despite

failure of that test (Pet. App. 30a-31la). Compare Motor

Vehicle Manfacturers Ass'n v. State Farm Mutual Auto-

mobile Ins. Co., 463 U.S. at 57 (holding agency abandon-

ment of passive restraint regulations invalid for lack of

“reasoned analysis” and adequate explanation).®

®We note that the agency’s treatment of Petrocoal’s failure of the

Deteriorated Emissions Test was only one of several reasons given by

the court of appeals for finding the waiver decision arbitrary and

capricious (see Pet. App. 16a-28a). Thus, even if this Court were to find

that the appellate court overstepped the bounds of judicial review on

this particular point, the judgment below would not be altered. |

9

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

CHARLES FRIED

Solicitor General

F. HENRY HABICcHT I!

Assistant Attorney General

Davip C. SHILTON

ANNE S. ALMY

Attorneys

DECEMBER 1985

DOJ-1985-12

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