# Petition for Writ of Certiorari — Alabama Power Co. v. Thomas

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1988
- **Citation:** 488 U.S. 888

## Text

Supreme Court, US.
FILED
JUN 17 1988

87-2068

No. 87-

JOSEPH F SPANIOL, JR.
CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1987

ALABAMA POWER Co., et al., UNITED MINE WORKERS
OF AMERICA, ORMET CORPORATION,
AND NATIONAL COAL ASSOCIATION,
Pi titione rs,
Vi
LEE M. THOMAS, et al..
Re spond nts,

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

DONALD C. WINSON GEORGE C. FREEMAN, JR.
RICHARD S. WIEDMAN HENRY V. NICKEL

ECKERT, SEAMANS, CHERIN Counsel of Record

& MELLOTT I’. WILLIAM BROWNELL

42nd Floor, 600 Grant Street MEL S. SCHULZE

Pittsburgh, PA 15219 HUNTON & WILLIAMS

(412) 566-6000 2000 Pennsyvivania Ave., N.W.
Counsel for Petitioney suite VOUOO

Ormet Corporation Washington, D.C. 20006

202) 955-1500

DAVID C. BRANAND
1130 17th Street, N.W.
Washington, D.C. 20036

’ Ie x.
( ZnSeL TO?) Pe l fione ra

\labama Power Co., et al.

(202) 463-2643 MICHAEL H. HOLLAND
Counse l ] Pe fitioner Nat 1] 900 15th Street. N.W.
Coal Associatio? Washington, D.C. 20005

202) 842-7330

Counsel for Petitioner United
Mine Workers of America

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 26001

QUESTIONS PRESENTED

1. Whether the notice requirement in $4 of the Ad-
ministrative Procedure Act, 5 U.S.C. § 553 (1982), is
satisfied when an agency adopts a final rule that was
suggested in or flows from a public comment that called
for a fundamentally different rule than the agency
proposed?

2. Whether an agency can avoid the obligation imposed
under the Administrative Procedure Act to provide record
support for a factual finding relied upon as the basis for
a final rule whenever the agency includes an “exceptions”
or “safety valve” procedure that purportedly allows a
regulated party to seek a case-specific waiver of the rule?

(i)

il
PARTIES TO THE PROCEEDINGS

This case involves challenges to final regulations prom-
ulgated by the United States Environmental Protection
Agency (EPA) pursuant to § 123 of the Clean Air Act,
42 U.S.C. § 7423 (1982). Petitioners Alabama Power
Co., 63 other electric utilities,* Edison Electric Institute,
National Rural Electric Cooperative Association, and
American Public Power Association were petitioners in
No. 85-1543 below. Petitioner Ohio Power Company was
petitioner in No. 85-1556. Petitioner Ormet Corpora-
tion was petitioner in No. 85-1558. Petitioner Na-
tional Coal Association was petitioner in No. 85-1560.
Petitioners Monongahela Power Co. and Potomae Edison
Co. were petitioners in No. 85-1557. Petitioner United
Mine Workers of America was petitioner in No. 85-1568.

Other petitioners below were the Natural Resources
Defense Council and Sierra Club (No. 85-1488), the
States of New York, Rhode Island, Connecticut, Ver-
mont, Maine, and New Hampshire, and the Common-
wealth of Massachusetts (No. 85-1489), the State of
New Jersey (No. 85-1554), and the Environmental De-
fense Fund (No. 85-1552). Pursuant to Rule 19.6 of
this Court, these other petitioners below are Respondents
in this Court. Respondents Lee M. Thomas, EPA Ad-
ministrator, and EPA were respondents in each of the
proceedings below. The proceedings were consolidated on
October 25, 1985.

Intervening on behalf of respondents in one or more
of the cases filed below by Petitioners here were the
American Paper Institute, National Forest Products
Association, Natural Resources Defense Council, and
Sierra Club. Intervening on behalf of the respondents

* A list of the individual companies that comprise Petitioners
Alabama Power Co., et al., and all parent companies, subsidiaries,
and affiliates is contained in the supplemental appendix attached
to this Petition pursuant to Rule 28 of this Court. Ormet Corpora-
tion is a wholly owned subsidiary of Ohio River Associates, Ine.

ili

below in other petitions were Alabama Power Co., et al.
(Nos. 85-1488, 85-1489, 85-1552, 85-1554), the American
Paper Institute and National Forest Products Associa-
tion (intervenors on all other petitions), the National
Coal Association (Nos. 85-1488, 85-1489, 85-1552, 85-
1554), Kennecott (Nos. 85-1488, 85-1489, 85-1552), the
Natural Resources Defense Council and Sierra Club (in-
tervenors on all other petitions except No. 85-1488), and
the State of Ohio (No. 85-1488). Pursuant to Rule 19.6
of this Court, all intervenors below other than Petition-
ers here are Respondents in this Court. Participating
below as amic? curiae in support of respondents on cer-
tain issues raised in Nos. 85-1488, 85-1489, 85-1552, and
85-1554 were the States of Indiana, Mississippi, and
Georgia.

Two other consolidated petitions for review, one filed
by Ohio Power Co. (No. 86-1331) and the other filed by
Ormet Corporation (No. 86-1362), were decided in the
same judgment of the court below as the preceding peti-
tions. These two petitions, which were not consolidated
with Nos. 85-1488, et al., sought review of EPA’s denial
of an administrative petition for reconsideration of cer-
tain of the § 123 regulations. The respondents in that
proceeding were also Lee M. Thomas, Administrator, and
EPA. The Natural Resources Defense Council and
Sierra Club intervened on behalf of EPA in both peti-
tions. Pursuant to Rule 19.6 of this Court, respondents
and intervenors in these petitions below are Respondents
in this Court.

TABLE OF CONTENTS

Tee OR BAF ee Oe crcrircrcsencccnetieeceneoniion

ORF EEE, SUMAN cincscctvcnversitpincncstinmnenctinameatecneehomnteninaiadinn

Cr I cela iD scedemenscmitiensinnndicnimacinatarennia

STATUTORY AND REGULATORY PROVISIONS
SE I TIP i nsn:ssesascesipssnendcininoninasabenveseusebinsidadaniadnepaaatens

Aa ee RI GNI sii insincentasticcedsscccdcimmasitoias

I.

II.
ITI.

THE STATUTORY CONTEXT OF THIS
SITE widainssskaccsicsd sctanbgeleninanpesendieiaaaeiaecaamios ian

EPA’S § 123 RULEMAKINGS ......... eal moauata
THE D.C. CIRCUIT’S DECISION ..... fare on

REASONS FOR GRANTING THE PETITION ...........

I.

Il.

THIS COURT NEEDS TO RESOLVE A CON-
FLICT IN THE CIRCUITS AND SETTLE
WHAT CRITERIA ARE TO BE APPLIED IN
JUDGING THE ADEQUACY OF RULEMAK-
PEPE SPRUE IPNUE cAscsensssatssnavisteniepeniincanerncicsstieons sdegatniin

THE D.C. CIRCUIT’S HOLDING THAT A
REGULATION CONTAINING AN “EXCEP-
TIONS” CLAUSE NEEDS NO RECORD
SUPPORT CONFLICTS WITH THE LAW OF
THE FOURTH CIRCUIT AND IS A RADI-
CAL DEPARTURE FROM ESTABLISHED
PRINCIPLES OF ADMINISTRATIVE LAW...

CONCLUSION .................... sneaiahs idathdeanoennonipanspnelatenaiaaiane

(v)

11

13

16

28

vi

TABLE OF AUTHORITIES

CASES: Page
AFL-CIO v. Donovan, TH7 F.2d 330 (D.C. Cir.
1985) ..... a 18

American Lron & Steet Puctitute | v. EPA, 568 F.2d
284 (3rd Cir. 1977), cert. denied, 435 U.S. 914

(1978) 17
Appalachian Power Co. v. Train, 515 F.2d 1851
(Ath Cir. 1976) ates 26

BASF Wyandotte Corp. v. Costle, 598 F.2d 637
(Ist Cir. 1979), cert. denied anb nom. Eli Lilly

Co. v. Costle, ALL US. 1096 (1980) 15, 20
Brazos Electrie Power Co-op v. SWPA, 819 F.2d

h37 (5th Cir, 1987) 17, 20
Chocolate Mfrs. Ass'n of United States r. Block.

755 F.2d 1098 (ith Cir, 1985). 14,18

Common Carrier Conference v. United States, 534

F.2d 981 (D.C. Cir.), cert. denied, 429 U.S. 921

(1976) 19
EI. du Pont de Nemours & Co. v. . Train, rT F. °d

1018 (4th Cir, 1976), aff'd in part, rev'd in

part, 450 US. 112 (L977) 15, 26
Kennecott Copper Corp. v. EPA, 780 F.2d 415

(ith Cir. 1985), cert. denied, 107 S. Ct. 67

(1986) ao 18
National Black Media Coalition v. FCC, 791 F.2d
1016 (2nd Cir, 1986) 17
ase Cable Television Ass'n v. FCC, 747 F.2d
1n03 (D.C. Cir, 1984) ne 17
National Lime Ass'n v. EPA, 627 F.2d 416 (D.C.
Cir. 1980) RCC
NLRB v. Wyman-Gordon Co., 394 U.S. 759
(1969) ae Ress 16
NRDC v. EPA, S21 F.2d 1258 (ist Cir. 1987) 20
NRDC v. Herrington, 768 F.2d 1855 (D.C. Cir.
1985) ;, 26
NRDC v. Thomas, S388 F.2d 1221 (D.C. Cir.
1988) passim

Portland Cement Ass'n vr. Ruckelshaus, 486 F.2d
375 (D.C. Cir. 1973), cert. denied, 417 U.S. 921
(1974) SERIO air oes 24, 26

vii
TABLE OF AUTHORITIES—Continued

Page
SEC v. Chenery Corporation, 332 U.S. 194
NN acai a aa 16
Sierra Club wv. Costle, 657 F.2d 298 (D.C. Cir.
| ee 26

Sierra Club v. EPA, 719 F.2d 436 (D.C. Cir. 1983),
cert. denied sub nom, Alabama Power Co. v.
Sierra Club, 468 U.S. 1204 (1984) .. 7
Small Refiner Lead Phase-Down Task Foree v
EPA, 705 F.2d 506 (D.C. Cir. 1983)... 18, 19, 20, 26
Union Oil Co. of California v. EPA, #21 F.2d

678 (D.C. Cir. 1987) .. RES 18
United States v. Nova "Scotia: Food Products

Corp., 568 F.2d 240 (2nd Cir. 1977) 26
United States v. Storer Broadcasting, 35 1 U. Ss.

a 16
United Steelworkers of America v. Schuylkill

Metals, 828 F.2d 314 (5th Cir. 1987) . 17
US. Lines v. Federal Maritime Commission, 584

fp Fi 's@: & ee 25

STATUTES:

The Administrative Procedure Act, 5 U.S.C.
§§ 551, et seq., 701, et seq. (1982)

§ 4,5 U.S.C. § 553 (1982) A A

§ 4(a),5 U.S.C. § 553 0b) (1982). 19, 25

§ 4(b), 5 U.S.C. § 5523 (c) (1982). Rs 25

§ 10(e), 5 U.S.C. § 706 (1982) 25
§10(e)(B)M), 5 USC. § 706(2)(A)

(1982) . Ric aac te 5 eS 12, 25

28 U.S.C. § 1254 (1) | (1982) . 2

28 U.S.C. § 2101 (c) (1982). 2
The Clean Air Act, 42 USC. § 7401, et seq.

(1982)

§ 108, 42 U.S.C. § 7408 (1982) 3

§ 109, 42 U S.C. § 7409 (1982) 3

§ 110,42 U.S.C. § 7410 (1982) oe YY %

§ 111, 42 U.S.C. § 7411 (1982)... 4, 8, 22, 24

viii
TABLE OF AUTHORITIES—Continued

Page

§ 111(a) (1) (C), 42 U.S.C. § 7411 (a) (1) (C)
RAS ARENT AS A ie EIR Rs 4
§ 111(a) (2), 42 U.S.C. § 7411(a) (2) (1984). 4
§ 111(b), 42 U.S.C. § 7411(b) (1982) 10
§ 123, 42 U.S.C. § 7423 (1982)... passim
§ 123(¢), 42 U.S.C. § 7423(c) (1982)... 5,11
§ 163, 42 U.S.C. § 7473 (1982). 3
§ 169(3), 42 U.S.C. § 7479(3) (1982) ieeieeiiontias 24

§$ 169A(g)(2), 42 USC. §7491(g) (2)
ee cach RESTS SN SO Te se a 24
§ 307(b) (1), 42 U.S.C. § 7607 (b) (1) (1982)... 2

REGULATIONS:
1 C.F.R. § 305.74-4 (1988) 0 26
40 C.F.R. § 50.4 (1987)... 5
0C.F.R. § 51.166(c) (1987)... 5
FEDERAL REGISTER:

29 Fed. Reg. 8325, et seq. (1965)... sis 16
38 Fed. Reg. 25697, et seq. (1973) .... 5
44 Fed. Reg. 2608, et seq. (1979)... 6
47 Fed. Reg. 5864, et seg. (1982). sis 7
47 Fed. Reg. 35784, et seg. (1982). sis 7
49 Fed. Reg. 44878, et seq. (1984). is 7
50 Fed. Reg. 27892, et seq. (1985). passim

MISCELLANEOUS:
H.R. Rep. No. 294, 95th Cong., Ist Sess. (1977)... 5, 10

S. Rep. No. 752, 79th Cong., Ist Sess. (1945). 13
S. Rep. No. 284, 97th Cong., Ist Sess. 165-166
(1981) . eee 26
K.C. Davis, Administrative Law Treatise, ‘Vol. 1
Be th SEE Licssccenseidiecttabeersnate ee 13, 16

Robinson, The Making of Administrative Policy:
Another Look at Rulemaking and Adjudication
and Administrative Procedure Reform, 118 U.
Pa. L. Rev. 485 (1970) 00 16

IN THE
Supreme Court of the United States

OCTOBER TERM, 1987

No. 87-

\

ALABAMA POWER Co., et a/., UNITED MINE WORKERS
OF AMERICA, ORMET CORPORATION,
AND NATIONAL COAL ASSOCIATION,
= Petitioners,
LEE M. THOMAS, et al.,
Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Alabama Power Co., 63 other individual electric utili-
ties,' Edison Electric Institute, National Rural Electric
Cooperative Association, American Public Power Asso-
ciation, United Mine Workers of America, Ormet Cor-
poration, and National Coal Association respectfully pe-
tition for a writ of certiorari to review the judgment of
the United States Court of Appeals for the District of
Columbia Circuit entered in this proceeding on Jan-
uary 22, 1988.

OPINION BELOW

The opinion of the U.S. Court of Appeals in Natural
Resources Defense Council, et al. v. Thomas, et al., Nos.
85-1488, et a/. (D.C. Cir. January 22, 1988), is reported
at 838 F.2d 1224. A copy of the opinion appears in the

' The 64 individual utility petitioners and their parent companies,
subsidiaries, and affiliates are set forth in the supplemental appendix
attached to the Petition pursuant to Rule 28 of this Court. Ormet
Corporation is a wholly owned subsidiary of Ohio River Associates,
Inc.

nn

2

Appendix (hereinafter referred to as “App. —’’) at
la-64a.
JURISDICTION

The judgment of the U.S. Court of Appeals for the
D.C. Circuit was entered on January 22, 1988.° Three
timely Petitions for Rehearing and Suggestions for Re-
hearing En Bane, and two timely Petitions for Rehear-
ing, were denied on April 13, 1988, App. 65a-68a. This
petition for a writ of certiorari is being filed within
ninety days of that date pursuant to 28 U.S.C. § 2101(c)
(1982) and Rules 20.2 and 20.4 of this Court. This
Court’s jurisdiction is invoked pursuant to 28 U.S.C.
§$ 1254(1) (1982).

STATUTORY AND REGULATORY
PROVISIONS INVOLVED

The following statutory and regulatory provisions are
set forth in the Appendix:

1. Clean Air Act §§ 110(a) (1)-(a) (2) (K), 123, 42
U.S.C. §§ 7410(a) (1)-(a) (2) (K), 7423 (1982),
App. 172a-177a.

2. 49 Fed. Reg. 44878-44887 (1984) (Proposed Stack
Height Regulations), App. 134a-171a.

3. 50 Fed. Reg. 27892-27907 (1985), recodified at 40
C.F.R. §§ 51.100(tf)-(kk) (1987) (Final Stack
Height Regulations), App. 7la-1338a.

4. Administrative Procedure Act §§ 4, 10(e), 5 U.S.C.
$§ 553, 706 (1982), App. 178a-180a.

*The court below had jurisdiction of these cases under § 307
(b)(1) of the Clean Air Act, 42 U.S.C. § 7607(b) (1) (1982), which
provides tne District of Columbia Circuit with exclusive jurisdiction
to review any “nationally applicable regulations . . . promulgated
by the Administrator ... .”

3

STATEMENT OF THE CASE

This case concerns two fundamental principles of ad-
ministrative law that are important in virtually all in-
formal rulemaking proceedings conducted by EPA and
other federal agencies. It arises in the context of EPA’s
implementation of § 123 of the Clean Air Act.*

First, the D.C. Circuit in this case held that an agency
is not required by the Administrative Procedure Act
(APA) to provide notice of a rule in its rulemaking
proposal so long as the final rule was suggested in or
flows from a public comment that called for a funda-
mentally different rule than the agency proposed. Sec-
ond, the court’s decision establishes the novel principle
that a federal agency may promulgate a final rule with-
out record support for the factual finding asserted as the
basis for the rule, so long as that rule contains a “safety
valve” or “excepticns” procedure that purportedly allows
a regulated party to seek a case-specific waiver of the
rule.

I. THE STATUTORY CONTEXT OF THIS CASE

Sections 109 and 110 of the Clean Air Act establish a
system of regulation of ambient pollutant concentrations
that is based upon “National Ambient Air Quality Stand-
ards” (“ambient standards”) and “Prevention of Signifi-
eant Deterioration” increments (“PSD increments’’).*

242 U.S.C. § 7423 (1982), App. 176a-177a. The Clean Air Act,
42 U.S.C. § 7401, et seq. (1982), will be referred to as “CAA” or
“the Act.” For convenience, all further citations will be to the
Act. Parallel citations to the U.S. Code are given in the Table of
Authorities.

4The ambient standards define maximum ground level concen-
trations of pollution which, if attained, will assure protection of
public health and welfare. CAA §§ 108, 109. The PSD increments
define the maximum increases in ground level concentrations that
are allowed to occur as a result of new construction in areas where
the ambient standards are met. CAA § 163.

4

Under the Act, EPA is also authorized to establish tech-
nology-based emission standards that apply only to new
sources and that must be met without regard to the im-
pact of the new source on ambient air quality. For
example, under § 111, new source performance standards
(NSPS) define an emission level that reflects

the degree of emission reduction achievable through
the application of the best system of continuous emis-
sion reduction which (taking into consideration the
cost of achieving such emission reduction, and any
nonair quality health and environmental impact and
energy requirements) the Administrator determines
has been adequately demonstrated for that category
of [new] sourcees.°

While NSPS prescribe a level of control that must be
met regardless of a source’s ambient air quality impacts,
emission limitations developed pursuant to §110 are
based upon a scurce’s ambient impacts. Thus, under
$ 110 of the Act, the states must set emission limitations
for individual sources to ensure that their emissions will
not cause or contribute to ground-level pollutant concen-
trations that exceed the ambient standards or PSD
increments.

Dispersion of emissions from the point of release to
ground level where people breathe is integral to the op-
eration of the § 110 state programs. If emissions from
a fuel burning facility were released at ground level, they
could create pollutant concentrations that exceed ambient
air quality standards and PSD increments by factors of
many thousands.* In other words, for there to be in-

5CAA §111(a)(1)(C). Under § 111(a)(2), a “new source” is
one that commenced construction after proposal of an applicable

NSPS.

6 For example, if the emissions from a well-controlled source
(e.g., a power plant meeting the stringent EPA new source stand-

5

dustrial activity that does not threaten public health,
there must be dispersion. Under the § 110 programs, the
amount of dispersion will govern the type of fuel a scurce
can use, what control technologies the source must install,
and where the source can be built consistent with the
protection of public health.

By including $123 in the 1977 Amendments to the
Act, Congress recognized that reliance on dispersion is
a legitimate and necessary aspect of achieving compli-
ance with the ambient standards and PSD increments at
ground level. On the other hand, Congress was concerned
that excessive reliance on dispersion might be used by
regulated sources to avoid reducing the volume of pollut-
ant emissions.‘ To preclude excessive reliance on disper-
sion, Congress in § 123 directed EPA to develop a program
similar to one previously proposed by EPA in 1973°
that would limit the use of dispersion “credit” to that
provided by stack height conforming to “good engineer-
ing practice” (“GEP stack height’’).

GEP stack height is defined in § 123(c) of the Act as

the height necessary to insure that emissions from
the stack do not result in excessive concentrations
of any air pollutant in the immediate vicinity of the
source as a result of atmospheric downwash, eddies
and wakes which may be created by the source itself,
nearby structures or nearby terrain obstacles (as
determined by the Administrator).

ards) were released at ground level, they would create ambient
concentrations of sulfur dioxide (SO,) in the range of 900,000
micrograms per cubic meter in the vicinity of the source. By com-
parison, the primary (public health) ambient standard for SO, is
565 micrograms per cubic meter (24-hour calendar day average),
and the Class II PSD increment is 91 micrograms per cubic meter
(24-hour calendar day average). 40 C.F.R. §§ 50.4, 51.166(c)
(1987).

7H.R. Rep. No. 294, 95th Cong., Ist Sess. 81-93 (1977).

8 38 Fed. Reg. 25697 (1973).

6

Congress explicitly limited GEP stack height to 2.5
times the height of the source (“2.5H’’), unless the
source owner or operator demonstrates, to the satisfac-
tion of the Administrator, that a taller stack height is
needed to ensure against excessive pollutant concentra-
tions due to downwash. If such a demonstration of a taller
stack height is approved by EPA, that demonstrated
stack height is GEP stack height for the particular
source.

The regulations defining the requirements for demon-
strations of greater than 2.5H formula stack height are
of primary importance here. The availability of these
demonstrations, which are conducted in wind tunnel
(fluid model) facilities using scale models of the source
and surrounding terrain, are most important for sources
in rugged terrain areas where downwash of source emis-
sions can occur because of wind blowing over nearby
terrain features.

II. EPA’S §123 RULEMAKINGS

In January 1979, EPA proposed rules under § 123
governing demonstrations to establish GEP stack height
credit greater than the 2.5H formula height.° Among
other things, the 1979 proposal required sources conduct-
ing demonstrations to show the existence of a downwash-
induced “excessive concentration,” which was defined as
a forty percent increase in ambient concentrations and
an ambient standard or PSD increment “exceedance.”’ 1°
Under the 1979 proposal, as well as guideiines issued in
1981," a source’s actual or allowable emissions could be
used in the wind tunnel demonstration.

® 44 Fed. Reg. 2608 (1979).

10 Jd. at 2614. An “exceedance” is a term of art under the Act
that means an ambient pollutant concentration that is greater than
the concentration of the pollutant specified in the standard or
increment.

11 FPA-450/4-81-003, Guideline for Use of Fluid Modeling to
Determine Good Engineering Practice Stack Height (June 1981).

7

During the late 1970s and early 1980s, three sources
successfully conducted such demonstrations under EPA’s
supervision.'? No party challenged these demonstrations,
and no party in the 1979 rulemaking commented that
anything other than a source’s actual or allowable emis-
sions be used in demonstrations.

In 1981, EPA reproposed § 123 rules that, inter alia,
relaxed the definition of “excessive concentrations.” In
1982, EPA promulgated a final rule requiring that a
source only show a forty percent increase in downwash-
induced ambient concentrations in order to establish GEP
height above 2.5H formula height.’* The final rules still
allowed sources to use actual or allowable emissions in
conducting demonstrations.

In 1983, the U.S. Court of Appeals for the D.C. Cir-
cuit remanded the 1982 definition of ‘‘excessive concen-
trations” to EPA on the ground that the forty percent
test had not been adequately explained in reference to
public health or welfare concerns.** In remanding the
rule, the court suggested that the 1979 proposed defini-
tion, which included an ambient standard and PSD in-
ecrement exceedance test, would pass muster if adopted
on remand.'® In the 1984 remand rulemaking, EPA, as
urged by those who had challenged the 1982 rules *® and
as suggested by the court, proposed the same definition of
“excessive concentrations” that it had proposed in 1979

12 See, e.g., 47 Fed. Reg. 35784 (1982).
13 47 Fed. Reg. 5864, 5869 (1982).

14 Sierra Club v. EPA, 719 F.2d 436, 450, 470 (D.C. Cir. 1983),
cert. denied sub nom. Alabama Power Co. v. Sierra Club, 468 U.S.
1204 (1984).

15 Td. at 470.

16 Jd. at 446 (“Petitioners NRDC and Sierra Club... urge a
return to a standard like the one EPA originally proposed in 1979.’’).

8

(i.e, a forty percent increase in ambient concentrations
and an ambient standard or PSD increment exceed-
ance) .}7

Consistent with EPA’s practice of allowing actual or
allowable emissions to be used in demonstrations con-
ducted under the 1979 proposed and 1982 final rules,
EPA indicated in the preamble to the 1984 proposal that
sources conducting demonstrations were to use the emis-
sion rate that “is applicable to the source being mod-
eled.”** Thus, if a source were subject to an ambient
standard or PSD increment-based emission limit in a
§ 110 state plan, it would use that limit; if it were sub-
ject to a technology-based limit, such as an NSPS limit
under $111, it would use that limit.1? No regulatory
language relating to this preamble guidance was pro-
posed and, unlike in other parts of EPA’s preamble
addressing different rulemaking matters,?? no comments
were solicited on the issue of whether anything other
than applicable emission rates should be used.

KPA received extensive comments on the proposed
rules from over 400 commenters. Of these numerous
commenters, one group of commenters !ed by the Natural
Resources Defense Council (NRDC) urged in their com-

1749 Fed. Reg. 44878, 44887 (1984), App. 170a-171la.
18 Jd. at 44882, App. 150a.

19 See id. The NSPS, which are promulgated pursuant to § 111
of the Act, govern the emissions of pollutants emitted from new
sources of a defined source type. The NSPS are not “applicable”
to many of the sources subject to regulation under § 123.

20 See, e.g., 49 Fed. Reg. at 44881 (where EPA solicited com-
ments on a definition of “excessive concentrations” that would
include only the forty percent test, as an alternative to the pro-
posed forty percent and ambient standard or PSD increment
exceedance test), App. 147a; 44884 (where EPA discussed three
different approaches for considering terrain features in fluid model
demoiistrations, and solicited comment on which approach should
be adopted), App. 158a-159a.

ee

9

ments on the proposal for the first time in the lengthy
history of the § 123 rulemaking a new legal interpreta-
tion of § 123—an interpretation that would have funda-
mentally changed the Agency’s approach to how sources
must demonstrate an “excessive concentration.”

NRDC argued that the word “necessary” in § 123
should be construed to require al/ sources (not just those
conducting demonstrations to justify GEP credit above
formula height) to apply “maximum available controls”
(i.e., a stringent technology-based level of control) before
any concentration could be deemed “excessive.” Under
NRDC’s proposal, no stack height credit (even up to 2.5H
formula height) would be allowed for any source unless
the source first installed maximum available controls.*’
One other commenter, the Attorney General of New York,
made the bare assertion, based on the legal theory ad-
vanced in the NRDC comments, that “EPA must direct
that the emission rate to be assumed in determining
whether an ‘excessive concentration’ will occur, must be
the new source performance standard for the type of
plant in question.”

In the 1985 final rules, EPA rejected NRDC’s bizarre
interpretation of § 123.*° Consistent with the proposed
rule, EPA provided in the final rule that the applicable
emission rate would be used in demonstrations required
to justify credit up to GEP formula height. However,
for demonstrations conducted by sources seeking credit
above formuia height, EPA adopted an approach that
was fundamentally different from the approach described
in the preamble to the proposed rule.

In the final rule, EPA included, without reproposal
providing notice and opportunity for comment, a totally

21 Comments of Sierra Club, Natural Resources Defense Council
and Environmental Defense Fund at 5 et seq. (January 22, 1985).

22 Comments of the Attorney General of the State of New York
at 2 (January 8, 1985).

2350 Fed. Reg. 27892, 27896 (1985), App. 87a-88a.

————ee-.

10

new regulatory requirement that all sources (even those
not otherwise subject to NSPS) assume an NSPS level
of control in any above-formula height demonstration.
The only exception to this requirement would be if a
source owner could show that compliance with the in-
applicable NSPS would be “infeasible.” * If such a show-
ing could be made, EPA would purportedly allow another
inapplicable technology-based limit (‘best available retro-
fit technology” or “BART’”’) to be used.

Since EPA decided to adopt this new “NSPS presump-
tion” rule in the eleventh hour, no record to support the
factual basis for the rule was developed. Nevertheless,
EPA found, as the basis for the rule, that “this [NSPS]
limit can be met by all sources seeking to justify [GEP]
stack heights above [2.5H] formula height.” **

24 Jd. at 27907, App. 132a. EPA did inform counsel for Alabama
Power Co., et al. two weeks before the rules were signed that such
a rule would be promulgated. Last-minute objections by these
counsel, including the point that the “NSPS requirement was not in
the proposed rules and has not been subject to public comment,”
were ignored by EPA. See Letter from Henry V. Nickel, Hunton
& Williams, to Administrator Thomas (June 20, 1985). EPA did
not inform Petitioners United Mine Workers of America or Ormet
Corporation of this change.

2550 Fed. Reg. at 27898 n.6, App. 96a.

2650 Fed. Reg. at 27898, App. 96a. Since most sources that
would seek to undertake fluid modeling demonstrations would be
existing sources for which NSPS is not the “applicable” limit, the
NSPS limit is likely not achievable by most sources subject to
this provision. Cf. H.R. Rep. No. 294, 95th Cong., Ist Sess. 185
(1977) (“A third purpose of [NSPS] ... [is] to achieve long-term
cost savings. Building control technology into new plants at time of
construction will plainly be less costly then requiring retrofit.’’) ; id.
at 188 (given the additional costs associated with retrofit tech-
nology, “{[a}ny revised [NSPS] requirement under section 111(b)
would . . . be effective only prospectively.”)}. The result would be
that most sources would have to attempt to rebut the NSPS pre-
sumption and establish an alternative technology-based limit that
EPA describes in its final rule as “best available retrofit technology”
(BART). 50 Fed. Reg. at 27898 n.6, App. 96a. Sources unable to

11

Ill. THE D.C. CIRCUIT'S DECISION

Alabama Power Co., et al., together with the National
Coal Association, Ormet Corporation, and the United
Mine Workers of America, petitioned for review of the
“NSPS presumption” rule. On January 22, 1988, the
D.C. Circuit affirmed the rule.

Regarding the allegation that EPA failed to provide
adequate notice of and an opportunity to comment on the
final “NSPS presumption” rule, the D.C. Circuit found
that EPA’s claim that the Agency had in fact proposed
this rule was “quite disingenuous.” ** The court found
“ln]othing in the initial formulation [to] suggest|] that
EPA intended to adopt” a universally applicable NSPS
requirement for above-formula height fluid modeling dem-
onstrations.* Nevertheless, the court found that “indus-
try” should have realized that there was “a clearly for-
seeable risk that EPA would reject the environmentalists’
reading of the law [to require use of maximum available
controls] but proceed to adopt control-first” with respect
to only the above-formula height demonstration require-
ment.”°

Furthermore, the court felt that the New York Attor-
ney General’s comments “gave industry participants a
clear opportunity to shoot the [NSPS presumption] idea
down.” * The court did not discuss the fact that there
install NSPS or BART-type controls for economic or technological
reasons would as a practical matter be precluded from undertaking
fluid modeling demonstrations, even though $ 123(c) of the Act
imposes no such restrictions on such demonstrations. See also infra
pp. 23-25.

27 838 F.2d at 1242, App. 31a.
28 Id.
29 Id. at 1243, App. 33a.

30 Jd. (emphasis added). The court also indicated that the actual
notice provided by EPA to counsel for Alabama Power Co., et al.
two weeks before the rules were signed provided “at least a limited

was a labor 1 n ‘Unit fine W

and an indust) etitioner (Ormet (

did not file comments on the rulemaking prop
the proposal « 1 not ll ! VSP rye
These petitions ! tneretore, were 1

ing the rulen docket nd ere
NRDC’s and New Yor! mment

Regarding the egatinn
proy ide necessa} rl support f the rule
bitrary, capriciou buse of d e!
the Administrat Procedure Act. 5 U.S. 70619
(A), the eourt 4 1 t+ EPA '
support its factual finding that an NSPS

able by most of

cluded, howe, that “there is no need for ar rt
generic demo!

rule “allows a1 ource to uss higher ¢

when NSPS nf e,” In other v
rule contained an “except ,

some cases part

applying NSPS

no need to su

or otherwise

lated parties.*

opportunity” fo
obie ctions. Id.
America, howev:

31 Jd. at 1242,
2 Td.

3 Any mitig:
would apparent
of emissions cor
a different tec
technology”). § Bs
failed to addres
tive standard al:

record support.

RI

ASONS

FOR

GRANTING

PETITION

nies i

14

the law of the D.C. Circuit has evolved in a manner that
puts it at odds with Congress’ intent in the APA and
with the law of other circuits, including the Fourth Cir-
cuit’s decision in Chocolate Manufacturers Association of
United States v. Block" As a consequence, the D.C.
Cireuit decision in this case wili lead to unfair results,
will perpetuate conflicts in the circuits, and will create
confusion as to the standards that apply in future rule-
making proceedings.

Under the decision of the D.C. Circuit, the notice
required by $4 of the APA need not come from the
agency itself, but rather may come from rulemaking
participants. If allowed to stand, agencies will find au-
thority in this decision te promulgate final rules that are
not described in a rulernaking notice or are not raised
as an issue in the notice, so long as a comment on the
rulemaking proposal suggests such a final rule.

The D.C. Cireuit decision will impose an almost im-
possible burden on all persons that have even a remote
possibility of being potentially affected by the outcome of
a rulemaking. Specifically, all who may be affected mus:
monitor continuously the rulemaking docket (‘assuming
there is one, since the APA has no requirement that a
docket be kept! and prepare comments on any proposals
offered by commenters. No longer can interested persons
rely on the Federal Register to set the outer limits of
potential effects; any comment in the rulemaking can
expand the bounds.

As Chief Justice Rehnquist observed over eight vears
ago in dissenting with Justice Powell from an order deny-
ing certiorari, the question of what notice is adequate
when a final rule differs from a proposal is “an issue
of great importance, which cannot help but become
greater as time goes on and more and more administra-
tive proceedings are conducted . . . under the Adminis-

86755 F.2d 1098 (4th Cir. 1985).

15
‘tle

trative Procedure Act.”"* Accordingly, th: question “is
a recurring one that will ultimately require interpreta-
tion of [this] important [APA] statutory language by
this Court.” *

Rulemakings have proliferated as the Chief Justice pre-
dicted and, as the discussion below shows, the uncer-
tainty surrounding the law on the procedural require-
ments that apply when final rules differ from proposals
is greater now than it was eight years ago. Indeed, the
law on this question has evolved into a true conflict in
the circuits. Given the conflicting approaches of the cir-
cuits and the unique role of the D.C. Circuit in review-
ing federal agency decisions, this Court should take the
opportunity to address this “important statutory lan-
guage” of the APA™ and settle this basic principle of
administrative law.

Finally, failure to give notice of a rule in the Federal
Register will limit the extent to which a record support-
ing the rule can be developed through the rulemaking
process. The D.C. Circuit, however, has held that record
support for the factual finding asserted as the basis for a
rule establishing a technology-based standard is not needed
so long as an agency makes available an “exceptions” or
“safety valve” procedure. This is contrary to the law of
the Fourth Circuit announced in E./J. du Pont de Ne-
mours & Co. v. Train.”

Under the holding of the D.C. Circuit, agencies will
find authority to promulgate final rules without record
support, so long as the regulation contains a procedure
allowing an affected party to apply for some kind of an

Eli Lilly & Co. v. Costle, 444 U.S. 1096 (1980) (opinion of
Rehnquist, J., with whom Powell, J. joined, dissenting from decision
not to grant certiorari).

% Jd. at 1098.

8° Jd.

9541 F.2d 1018 (4th Cir. 1976), aff'd in part, rev'd in part, 430
U.S. 112 (1977).

16

exception to the rule. In combination with the lower
court’s holding that notice need not come from the agency,
but may come from rulemaking commenters, this decision
will lead to meager rulemaking records that create prob-
lems for agency decisionmakers and reviewing courts.

I. THIS COURT NEEDS TO RESOLVE A CONFLICT
IN THE CIRCUITS AND SETTLE WHAT CRITERIA
ARE TO BE APPLIED IN JUDGING THE ADE-
QUACY OF RULEMAKING NOTICE.

Today, administrative agencies execute their responsi-
bilities principally through informal rulemaking.*! This
is reflected in the rapidly expanding area of energy and
environmental regulation where legal and policy disputes
are often substantial, issues ave factually complicated and
technically sophisticated, the affected interests typically
include numerous private parties and the public generally,
and the need for action is often compelling.

Due to the importance of the issues being resolved in
rulemakings and the potentially huge costs to the Ameri-
can economy and labor force from new regulations, it is
important now more than ever that affected interests
perceive agency rulemakings to be conducted fairly. There
must be opportunity for presentation, and proper con-
sideration, of views.

41 KC. Davis, Administrative Law Treatise, Vol. 1, § 1.9, at 34,
§ 61.1, at 448-49 (2d ed. 1978). While the choice between proceed-
ing by general rule or individual adjudication to establish agency
policy is one that lies primarily within the informed discretion of
the agency, SEC v. Chenery Corporation, 332 U.S. 194, 203 (1947),
the advantages of rulemaking over individual adjudication in the
formulation of general regulations or agency policy have been recog-
nized by this Court, agencies themselves, and various commentators.
F..a., United States v. Storer Broadcasting, 351 U.S. 192 (1956):
NLRB v. Wyman-Gordon Co., 394 U.S. 759 (1969); Statement of
Basis and Purpose of Trade Regulation Rule, 29 Fed. Reg. 8225,
8365-8369 (1965); Robinson, The Making of Administrative Policy:
Another Look at Rulemaking and Adjudication and Administrative
Procedure Reform, 118 U. Pa. L. Rev. 485 (1970).

17

The APA’s requirement that notice and an opportunity
to comment be provided on legislative rules is basic to
administrative law and the right of due process. The
notice-and-comment procedure allows public participation
in the administrative process, educates the agency, and
establishes a rulemaking record. It is essential to in-
formed and reasoned decisionmaking and effective ju-
dicial review.

The circuit courts agree that an agency may promul-
gate a final rule that differs in some respects from a pro-
yosed rule, whether in response to new data or to com-
ments on the proposal.‘* The law of the circuits, how-
ever, is not settled concerning what constitutes adequate
notice under $4 of the APA when a final rule differs
from the proposal.

Most circuits use a variant of the “logical outgrowth”’
test in assessing the adequacy of notice in this circum-
stance.** Considerable difference exists, however, con-
cerning the scope and application of this test. The ques-
tion that appears to be dividing the circuits involves the
degree to which, under the “logical outgrowth” test, rule-
making comments can substitute for notice of a proposal
in the Federai Register.

In applying the “logical outgrowth” test, the Fourth
Circuit finds notice inadequate when the proposal de-

42 See, e.g., National Cable Television Ass’n v. FCC, 747 F.2d
1503, 1507 (D.C. Cir. 1984).

43 See infra note 50. In the Third Circuit, the adequacy of
notice is “tested by determining whether it would fairly apprise
interested persons of the ‘subjects and issues’ before the Agency.”
Ameyican Iron & Steel Institute v. EPA, 568 F.2d 284, 293
(3rd Cir. 1977), cert. denied, 435 U.S. 914 (1978). Two circuits, the
Second and the Fifth, have recently cited to both the “apprise” test
and the “logical outgrowth” test. National Black Media Coalition
v. FCC, 791 F.2d 1016, 1022 (2nd Cir. 1986); United Steelworkers
of America v. Schuylkill Metals, 828 F.2d 314, 317-18 (5th Cir.
1987). But cf. Brazos Electric Power Co-op v. SWPA, 819 F.2d 537,
543 (5th Cir. 1987) (stating that the circuit follows the “logical
outgrowth” test).

18

scribed in the Federal Register “is replaced by a final rule
which reaches a conclusion exactly opposite to that pro-
posed, on the basis of comments received from parties
representing only a single view of the controversy.” ** In
the Fourth Circuit, therefore, notice is adequate only if
the final rule is a logical outgrowth of the proposed rule
published in the Federal Register. If comments suggest
rules that are fundamentally different f:0m those de-
scribed in the Federal Register proposal, reproposal is
required before the agency can adopt final rules that
embrace those rulemaking comments.*

In sum, under the law of the Fourth Circuit, comments
cannot cure a notice defect. In the Fourth Circuit, there-
fore, no obligation is imposed on rulemaking partici-
pants, or other potentially affected parties, to monitor
the rulemaking comments.

By contrast, while the D.C. Circuit at times has dis-
cussed the “logical outgrowth” test in terms of the rule-
making proposal (and indeed continues to use this lan-
guage in its opinions), the law in that Circuit has evolved
to allow the court to inquire beyond the terms of the
proposal itself. Thus, according to that court, while an
agency may not generally “bootstrap aotice from a com-
ment,” ** it may do so where a rulemaking participant
had actual notice of the comment.‘

44 Chocolate Mfrs. Ass’n of United States v. Block, 755 F.2d 1098,
1103 (4th Cir. 1985) (footnote omitted); see also Kennecott Copper
Corp. v. EPA, 780 F.2d 445, 452-53 (4th Cir. 1985), cert. denied, 107
S. Ct. 67 (1986) (“...an agency may not bootstrap new technologies

’”

from the comments... .’’).
#5 See Chocolate Mfrs. Ass’n, 755 F.2d at 1107.

46 AFL-CIO v. Donovan, 757 F.2d 330, 340 (D.C. Cir. 1985),
citing Small Refiner Lead Phase-Down Task Force v. EPA, 705 F.2d
506, 549 (D.C. Cir. 1983).

47 Small Refiner, 705 F.2d at 548, 549 (“Actual notice” of a pro-
posal, even if not provided by the agency, would be sufficient to
satisfy APA requirements); see also Union Oil Co. of California
v. EPA, 821 F.2d 678, 683 (D.C. Cir. 1987) (“Our review of the

19

Moreover, in determining whether petitioners had no-
tice, the D.C. Circuit has found that rulemaking partici-
pants are “obliged to take reasonable steps... to keep
informed of EPA’s thinking,” where they are “aware gen-
erally” that the Agency may be considering significant
changes to the proposed rule.** Accordingly, in the D.C.
Circuit, a party can be considered to have received ade-
quate notice of a rule if the party could have discovered
through reasonable inquiry that an agency was consider-
ing a rule not contained in the proposal.*®

The instant case takes the D.C. Circuit’s interpreta-
tion of the APA notice requirements a step further, build-
ing on the “factual notice” and “reasonable inquiry” corol-
laries to the D.C. Circuit’s version of the “logical out-
growth” test. Under this decision, not only is notice
of a rule adequate if the specific rule is described in a
rulemaking comment, but notice is adequate if the final

record demonstrates that petitioners received actual notice sufficient
to permit them to present their objections to the agency.” (emphasis
added) ); Common Carrier Conference v. United States, 534 F.2d
981, 983 (D.C. Cir.), cert. denied, 429 U.S. 921 (1976) (“Even where
there is a technical flaw in the notice, it can be overcome if the
actual conduct of the proceeding provides notice to the participants
of what is under contemplation.” (emphasis added) ).

48 Small Refiner, 705 F.2d at 548. The court suggested that if
petitioner had made an inquiry to EPA regarding the Agency’s
thinking, “EPA presumably would have informed it that other
commenters had proposed” that the Agency adopt the rule in
question, thereby providing notice. /d.

49 Jd. Compare 5 U.S.C. $ 553(b) (1982), which provides that
“lgleneral notice of proposed rule making shall be published in the
Federal Register, unless persons subject thereto are named and
either personally served or otherwise have actual notice thereof [i.e..
of the agency’s proposal | in accordance with law’ (emphasis added).
In other words, under the APA, “actual notice” is an adequate
substitute for notice in the Federal Register only if it is given by
the agency and is otherwise “in accordance with law.” Notice is
“in accordance with law” under $4 of the APA only if it describes
the terms or substance of the proposed rule and the basis for that
rule, and only if it is given to all affected parties, not just those who
filed comments. See 5 U.S.C. § 553(b) (1982); supra pp. 11-12.

| | ,

20

rule is a “logical outgrowth” of that rulemaking com-
ment.” As a result, rulemaking participants will need to
evaluate comments that suggest rules different from the
proposed rule to determine what other rules that have
not been proposed might grow out of those comments.*!

Under this case, not only are rulemaking participants
“obliged to take reasonable steps . . . to keep informed
of EPA’s thinking,’ °** but members of the public that

5° The First and Fifth Circuits seem to be following a variant of
the logical outgrowth test that is similar to the D.C. Circuit’s ap-
proach. According to the First Circuit, notice is adequate when the
final rule is a logical outgrowth of “comments” filed during the rule-
making. Natural Resources Defense Council v. EPA, 824 F.2d 1258,
1283 (1st Cir. 1987) (“ ‘a logical outgrowth’ of the notice and com-
ment[s|”); BASF Wyandotte Corp. v. Costle, 598 F.2d 637, 643
(1st Cir. 1979), cert. denied sub nom. Eli Lilly Co. v. Costle, 444
U.S. 1096 (1980) (indicating that final rule was “‘a logical outgrowth
of industry’s comments”). The Fifth Circuit focuses on whether the
final rule was a logical outgrowth of the ‘published proceedings.”
Brazos Electric Power Co-op v. SWPA, 819 F.2d 537, 542 (5th Cir.
1987).

51 Thus, in this case, EPA included in the preamble of its rule-
making proposal a statement that a source desiring to conduct a
demonstration to establish GEP stack height above the 2.5H formula
was to use its “applicable” emission rate. The final rule is directly
contrary to the statement in the proposal that sources use their
“applicable” emission rate. The final rule requires existing sources
to use an emission rate in demonstrations that is not applicable.
See supra pp. 9-10. The lower court found that the agency’s pro-
posal did not give notice of the NSPS presumption rule, see supra
p. 11, but nonetheless found adequate notice on the grounds that
two out of over 400 comments suggested an approach that provided
the seed out of which the final rule grew. According to the lower
court, notice was adequate because there was “a clearly foreseeable
risk” that EPA would reject the legal theory underlying these com-
ments, but adopt a rule that was a “logical outgrowth” of these
comments. 838 F.2d at 1243, App. 33a. Since this rule was not
included in the rulemaking proposal, however, there was no mean-
ingful opportunity to comment on this rule, and important issues
went unaddressed. See infra note 54.

52 Small Refiner, 705 F.2d at 548.

21

were not even affected by the proposed rule would face
similar obligations. In this case, for example, Petitioners
United Mine Workers of America and Ormet Corpora-
tion did not file rulemaking comments because the Agency
had not proposed the NSPS presumption rule. Neverthe-
less, these parties are equally bound by the lower court’s
holding that adequate notice can flow from two out of
hundreds of rulemaking comments.”®

If §4 of the APA is read to limit the “logical out-
growth” test to notice given by the agency in the pro-
posed rulemaking, then all interested parties will have a
full and equal opportunity to understand and comment
on the proposal. Due process will be satisfied.

By contrast, if a final rule can be a logical outgrowth
of a comment that is inconsistent with the agency’s
Federal Register proposal, as the D.C. Circuit has held,
notice to those satisfied with the proposal, and therefore
not participating in the rulemaking (like the United Mine
Workers and Ormet Corporation in this instance), would
not be provided until the final rule was issued. No oppor-

tunity to be heard through comments would have been
afforded.

In view of the foregoing, the D.C. Circuit’s latest in-
terpretation of § 4 of the APA has significant implications
for the future conduct of informal rulemaking. Under
the D.C. Circuit rule, anyone potentially affected by the
outcome of a rulemaking proceeding (even if not spe-
cifically affected by the rule as proposed by the agency)
will need to scour each rulemaking record searching for
commenters’ proposals that the agency might conceivably
adopt. After this inquiry, they must guess as to the
nature of the rule that might be adopted (since the final
rule could be a logical outgrowth of those comments),

53 838 F.2d at 1243, App. 33a.

22

and as to what the agency’s basis for and purpose of any
eventual rule might be.

In the final analysis, development of meaningful com-
ments would require clairvoyance on the part of poten-
tially affected persons. Any post-comment period com-
ments formulated as a result of this process would be a
fanciful exercise in speculation and their contribution to
“reasoned decisionmaking” would be wholly fortuitous.

Obviously, to the extent someone affected by a final
rule chose not to pursue this expensive and difficult
search, or failed in the search, the agency would receive
no comments on its final rule. In either instance, affected
parties would be deprived of a meaningful opportunity
to comment, and courts would have meager records on
review of the final rule.

Notice and comment rulemaking under the APA should
not become an “insider’s game.” The fact that certain
“industry” petitioners may have had the “opportunity to

54 The NSPS rule promulgated in this case demonstrates the im-
portance of defining the “logical outgrowth” test in terms of the
agency's notice. For instance, there are actually two different sets
of NSPS that apply to one major type of source subject. to § 123
(electric utilities), and in the future other types of scurces will no
doubt have more than one set of NSPS (since $111 of the Act
requires periodic revision of NSPS). Yet the “NSPS presumption”
rule is silent on which NSPS should be used.

EPA also failed to explain why it chose NSPS, rather than some
other inapplicable technology-based limit such as “reasonably avail-
able control technology.” Some of these other technologies might
have made more sense, since they take into account factors relating
to the retrofit of equipment on existing sources.

Finally, in a footnote in the preamble to the rule, EPA refers
vaguely to a guideline that it says it will use in assessing “infeasi-
bility” showings. 50 Fed. Reg. at 27898 n.6, App. 96a. That guide-
line, developed in the context of an entirely different EPA program,
raises a whole different set of issues which EPA could have ad-
dressed if notice and an opportunity for comment had been provided.

23

shoot the idea [presented in a comment] down” *® should
not excuse the fact that the United Mine Workers of
America and others had no such opportunity.

For these reasons, certiorsri should be granted in this
case in order to resolve the conflict in the circuits on the
question of whether the notice provision of the APA re-
quires that final rules be a logical outgrowth of the
agency’s proposed rules, or allows final rules that are
solely the outgrowth of a rulemaking participant’s com-
ments.

Il. THE D.C. CIRCUIT’S HOLDING THAT A REGULA-
TION CONTAINING AN “EXCEPTIONS” CLAUSE
NEEDS NO RECORD SUPPORT CONFLICTS WITH
THE LAW OF THE FOURTH CIRCUIT AND IS A
RADICAL DEPARTURE FROM ESTABLISHED
PRINCIPLES OF ADMINISTRATIVE LAW.

EPA’s final NSPS presumption rule requires that ex-
isting sources that are not subject to NSPS apply this
technology-based standard in any greater-than-formula
height demonstration, with the result that they will have
to achieve at least that level of control if the demonstra-
tion is successful. Since this rule was not proposed, no
explanation or rulemaking record was developed to sup-
port it. Rather, EPA, in promulgating this rule, merely
asserted as the factual basis for the rule the Agency’s
assumption that “this [NSPS] limit can be met by all
sources seeking to justify [GEP] stack heights above
[2.5H] formula height.” **

Section 123 does not even suggest that EPA has au-
thority to adopt technology-based standards. By contrast,
Congress expressly provided for development of such
standards in specified circumstances in several other sec-

55 838 F.2d at 1243, App. 33a; see supra pp. 11-12.
56 50 Fed. Reg. at 27898, App. 96a.

24

tions of the Clean Air Act.*’ Those provisions require
that, in developing such standards, EPA demonstrate
that technology is “available” to meet the standard or
that the standard is “achievable.” ** They also require
that costs and environmental effects be considered to de-
termine whether a technology is “best.” **

These showings require that the Agency develop data on
control technology performance, costs, and environmental
consequences. The Agency must analyze those data to en-
sure, inter alia, “that variables [affecting equipment per-
formance are] ... accounted for, that the representative-
ness of test conditions . . . [are] ascertained, that the
validity of tests . . . [are] assured and the statistical

1 9? 60

significance of results [are] determined.

In contrast to the careful analysis required where
Congress specifically provided for development of tech-
nology-based standards, the court below found that “there
is no need for any sort of generic demonstration” on the
achievability of the $123 NSPS rule or on whether it
reflects “best” technology for the existing sources subject
to $123. The Agency is excused from this kind of show-
ing because, according to the court below, the rule allows
a source “to use a higher emissions rate [albeit another

57 See, e.g., CAA § 111 (providing for establishment of new source
performance standards) ; § 169(3) (defining “best available control
technology” requirements for new sources in attainment areas);
$ 169A(g)(2) (defining “best available retrofit technology” for cer-
tain existing sources subiect to the Act’s visibility program).

** For example, new source performance standards must be
“achievable” based on “best adequately demonstrated” technology.
PSD new source review requires examination of “best available con-
trol technology”; visibility standards focus on “best available retro-
fit technology.”

59 Id. See Portland Cement Ass’n v. Ruckelshaus, 486 F.2d 375.
384-85 (D.C. Cir. 1973), cert. denied, 417 U.S. 921 (1974).

* National Lime Ass’n vy. EPA, 627 F.2d 416, 452-53 (D.C. Cir.
1980).

25

inapplicable technology-based rate more stringent than
current practice] when NSPS is infeasible.” ”

This holding represents a radical departure from how
technology-based standards are set under the Clean Air
Act, a departure that conflicts with the law of the Fourth
Circuit. More fundamentally, it represent an abrupt
departure from established principles of administrative
law governing the need for record support for agency
rules.

Section 4 of the APA, 5 U.S.C. § 553(b), (c) (1982),
requires agency notice of a proposed rule and an oppor-
tunity to comment on that rule so that, inter alia, an ad-
ministrative record can be developed. Section 10(e) of
the APA, 5 U.S.C. $ 706 (1982), requires courts to base
their review of agency rules on the record developed
during the rulemaking proceeding. These requirements
by the terms of the APA apply to any legislative rule,
whether or not that rule contains an exceptions procedure.

According to the courts, these requirements are intended
to ensure that agency rules are firmly based on facts
substantially supported by the record, and that reviewing
courts will be able to “determine whether the final agency
decision reflects the rational outcome of the agency’s con-
sideration of all relevant factors... .’™ Thus, a long
line of cases make clear that when a rule is challenged
on the grounds that there is no substantial support in

61 838 F.2d at 1242, App. 30a.

62 See infra p. 26. This departure is surprising in this case, given
that § 123 of the Act, unlike other sections of the Act, does not
contain any requirement that an existing source not subject to
NSPS use NSPS or any other inapplicable limit in conducting
demonstrations. Other than stating obscurely that use of an applica-
ble emission rate “would amount to using a tail stack to justify
itself,” 50 Fed. Reg. at 27898, App. 97a, the Agency simply failed
to address this issue.

6817.8. Lines v. Federal Maritime Commission, 584 F.2d 519, 533
(D.C. Cir. 1978).

ne

26

the rulemaking record for a fact that is necessary to, or
an asserted basis for, the rule, the rule must be set aside
under the “arbitrary, capricious, [or] an abuse of dis-
cretion” criterion of 5 U.S.C. § 706(2) (A).

The Fourth Circuit, in conflict with the D.C. Circuit
in this case, has interpreted the APA to require sub-
stantial support in the rulemaking record for factual
findings asserted as the basis for a rule, notwithstanding
inclusion of a variance procedure in the rule. In EJ.
du Pont de Nemours & Co. v. Train, the U.S. Court
of Appeals for the Fourth Circuit reviewed, under § 10/e)
of the APA, regulations that were “presumptively ap-
plicable” unless “that presumption is rebutted.” In re-
viewing those regulations, the Fourth Circuit held that
“(t]he grounds upon which the agency acted must be
clearly disclosed in, and sustained by, the record.” “

Under the D.C. Cireuit’s new exception to the require-
ment for rulemaking records, by contrast, an agency
could avoid having to develop a record supporting a rule

64 See Natural Resources Defense Council v. Herrington, 768 F.2d
1355, 1421 n.63 (D.C. Cir. 1985) (“an agency ... [is] obliged to
produce substantial evidence for its major assumptions in a rule-
making... .); Small Refiner, 705 F.2d at 534 (“EPA retains a
duty to examine key assumptions as part of its affirmative ‘burden
of promulgating and explaining a non-arbitrary, non-capricious
rule’ ”’), quoting National Lime Association, 627 F.2d at 433; Sierra
Club v. Costle, 657 F.2d 298, 323 n.67 (D.C. Cir. 1981); Portland
Cement Ass'n v. Ruckelshaus, 486 F.2d 375, 393 (D.C. Cir. 1973),
cert. denied, 417 U.S. 921 (1974); accord, United States v. Nova
Scotia Food Products Corp., 568 F.2d 240, 251-52 (2d Cir. 1977):
Appalachian Power Co. v. Train, 545 F.2d 1351, 1356 (4th Cir.
1976). See also Recommendation 74-4 of the Administrative Con-
ference, 1 C.F.R. § 305.74-4 (1988); Report of the Judiciary Com-
mittee on S. 1080, The Regulatory Reform Act, S. Rep. No. 97-284,
97th Cong., Ist Sess. 165-166 (1981).

65 541 F.2d 1018, 1028 (4th Cir. 1976), aff'd in part, rev'd in part,
30 U.S. 112 (1977).

66 Td. at 1026.

i

27

simply by establishing, without notice and comment, a
waiver provision that defines the conditions under which
an affected party could attempt to argue in a subsequent
proceeding that a less stringent rule should apply. Such
rulemaking therefore could be insulated from meaningful
public participation, and courts would be deprived of a
record upon which to review such rules.”

The interests of both the public and the courts in having
clear, well-reasoned agency decisions therefore will be
frustrated by the lower court’s holding—a holding that
conflicts with the law of the Fourth Circuit. For these
reasons, this Court should grant certiorari in this case.

*? The implications of the D.C. Circuit's holding are illustrated by
its impact in this case. First, EPA’s unsupported statement that
the NSPS limit “can be met by all sources seeking to justify stack
heights above formula height” is likely untrue, since NSPS were
intended to be met by new sources that could be designed to incor-
porate the latest pollution control technology or to burn low-emitting
fuels such as natural gas or low sulfur fuel oil. See supra note
26. Sources to which NSPS are inapplicable cannot typically be
retrofitted with such technology, and may need to be altered before
burning different fuels.

Second, because EPA developed no record, the Agency nowhere
considered the effect of its rule on the statutory right provided by
Congress to conduct demonstrations. In effect, EPA has rendered
the demonstration right worthless for ali but a few sources that
might be willing and able to retrofit NSPS or BART-type controls.

Finally, EPA developed no record support regarding the emission
rate based upon another inapplicable technology-based standard
(i.e... BART) that must be used if NSPS is shown to be “infeasi-
ble.” Perhaps because there was no record on this point, the court
simply failed to address this important issue raised by petitioners
below.

ne

28

CONCLUSION
For the foregoing reasons, this petition for a writ of
certiorari to the United States Court of Appeals for the
D.C. Cireuit should be granted.
Respectfully submitted,

DONALD C. WINSON GEORGE C. FREEMAN, JR.
RIcHARD S. WIEDMAN HENRY V. NICKEL
ECKERT, SEAMANS, CHERIN (Counsel of Record)
& MELLOTT F. WILLIAM BROWNELL
42nd Floor. 600 Grant Street MEL 8S. SCHULZE
Pittsburgh, PA 15219 HUNTON & WILLIAMS
(412) 566-6000 2000 Pennsylvania Ave., N.W

Suite 9000

Washington, D.C. 20006

(99) ORS.15

Davip C. BRANAND a aoe — nd
1120 17th Street. N.W. ounsel for Pe titioners
Washington. D.C. 20036 Alabama Power Co., et al.
(202) 463-2643 MICHAEL H. HOLLAND
900 15th Street, N.W.
Washington, D.C. 20005
(202) 842-7330

Counsel for Petitioner United
Mine Workers of America

Counsel for Petitioner
Ormet Corporation

Counsel for Petitioner National

Coal Association

June 17, 1988

SUPPLEMENTAL
APPENDIX

SA-1

SUPPLEMENTAL APPENDIX

PARENT COMPANIES, SUBSIDIARIES, AND
AFFILIATES OF INDIVIDUAL
ELECTRIC UTILITIES

Alabama Power Company
(subsidiary of The Southern Company)
subsidiaries:

Alabama Property Company
Columbia Fuels, Ine.
affiliate:

Southern Electric Generating Company

Appalachian Power Company
(controlled by American Electric Power Company, Inc.)
subsidiaries:
Central Appalachian Coal Company
Central Coal Company
Central Operating Company
Kanawha Valley Power Company
Southern Appalachian Coal Company
West Virginia Power Company
Cedar Coal Company

Baltimore Gas and Electric Company

subsidiaries:

Safe Harbor Water Power Corp.
Constellation Holdings, Inc.

subsidiaries:

Constellation Biogas, Ince.
Constellation Investments, Inc.
Constellation Properties, Inc,

( ‘ P | { ] N .
r
{ " \ N) P .
ly
( ] net SN \\ { ,
/
Tel Pov | | ( nan
PP 1} ~ { t () ] y
LidLit tT t QO] } :
/ /
\ ( ee : Moi ] y ( (yTY nA
rn
I ! Inc
; a | ae ) ’ > ‘ = ente
SOUT Ve ern I ectrle | ower Company
a rT. ¢1e,° ‘
West Texas Utilities Company
(entral and soutn \V t Service (

CSW Credit, Inc.

/ fV0IV IOS
P ( n> |) ( ent {Oo } ? |
T |
Green Pol t Development Co al ?

Central Hudson Entervrises Cort

(‘'H Resources. Ine.

—?wT?es ‘
CH Ce reneration. ine

Commonwealth Edison © f Indiana, Ine.
Chicago and Illinois Midland Railway Co.

ter Corp.

7 | , ” | | oa
( ommonwealt! Rese aren ( ry).

Edison Development Canada, Inc.

SA-4
Edison Development Co.
Concomber, Ltd.

Consolidated Edison Company of New York, Inc.

Consumers Power Company
subsidiaries :

Michigan Gas Storage Company
Northern Michigan Exploration Company
Selective Collection Services, Inc.

Utility Systems, Inc.

Huron Hydrocarbons, Inc.

The Dayton Power and Light Company
(controlled by DPL, Inc.)
subsidiaries:
DP&L Community Urban Redevelopment Corp.
Miami Valley Development Company
Delmarva Power & Light Company
subsidiaries:

Delmarva Industries, Inc.
Delmarva Services Company
Delmarva Capital Investments, Inc.

subsidiaries:

DCI I, Inc. |
DCI II, Ine.
Delmarva Capital Technology, Ine.
Delmarva Capitol Realty Company

The Detroit Edison Company

subsidiaries:

Edison [luminating Company
Midwest Energy Resources Company

SA-5

Washtenaw Energy Corp,
St. Clair Energy Corp.
SYNDECO, Ince.

Duke Power Company
subsidiaries:

Mill-Power Supply Co.

Crescent Land & Timber Corp.

Wateree Power Co.*

Catawba Manufacturing and Electric Power
Co.*

Western Carolina Power Co.*

Caldwell Power Co.*

Southern Power Co.*

Greenville Gas and Electric Light
and Power Co.*

Church Street Capital Corp.

Duke Engineering and Services

Florida Power Corporation
(controlled by Florida Progress Corporation)

Florida Power & Light Company
(wholly-owned subsidiary of FPL Group, Inc.)
subsidiaries:

Land Resources Investment Company
FPL QualTee, Inc.
Alandco, Ine.

Georgia Power Company
(subsidiary of The Southern Company)
subsidiary:

Piedmont Forrest Co.

* Inactive

SA-6

affiliate:
Southern Electric Generating Company
Gulf Power Company
(subsidiary of The Southern Company)
Illinois Power Company
subsidiaries:

IP Ine.
IPF Co., N.V.
Illinois Power Fuel Company

affiliate :
Electric Energy, Inc.
Indiana Michigan Power Company
(controlled by American Electric Power Company, Inc.)
subsidiaries:
Price River Coal Company

Blackhawk Coal Company

Indianapolis Power & Light Company
(controlled by IPALCO Enterprises, Inc.)

lowa-Illinois Gas and Electric Company
subsidiary:

lowa-Illinois Energy Co,

Iowa Public Service Company
(controlled by Midwest Energy Co.)

Kansas City Power and Light Company

Kentucky Power Company
(controlled by American Electric Power Company, Inc.)

SA-7

Kentucky Utilities Company
subsidiary:
Old Dominion Power Company
affiliate :
Electric Energy, Inc.

Madison Gas and Electric Company
subsidiaries:

MG&E Nuclear Fuel Inc.

MAGAEL Ine.

MAGAEL Material Resources, Inc.
MAGAEL Communications, Ince.
Waters and Associates

Central Wisconsin Development Corp.

Monongahela Power Company
‘controlled by Allegheny Power System, Inc.)

affiliate:
Allegheny Generating Co.

Montaup Electric Company
(affiliated with Eastern Utilities Associates)

New England Power Company
‘controlled by New England Electric System)
subsidiaries:

Massachusetts Electric Company
Narragansett Electric Company
Granite State Electric Company

a

SA-8

Northern Indiana Public Service Company
subsidiaries:

Shore Line Shops, Incorporated
NIPSCO Exploration Co.
NIPSCO Fuel Co., Inc.
NIPSCO Energy Services, Inc.

Ohio Edison Company
subsidiaries:
Pennsylvania Power Co.
Ohio Edison Finance, N.A.
Ohio Power Company
(controlled by American Electric Power Company, Inc. )
subsidiaries:
Central Coal Company
Central Ohio Coal Company
Central Operating Company
Southern Ohio Coal Company
Cardinal Operating Company
Windsor Coal Company
Ohio Valley Electric Corporation
subsidiary :
Indiana-Kentucky Electric Corp.

Oklahoma Gas and Electric Company
affiliate:

Arklahoma Corporazion

Pacific Gas & Electric Company
subsidiaries :

Natural Gas Corp. of California

SA-9

subsidiary:
NGC Production Company

Gas Lines, Ince.

Alberta & Southern Gas Company, Ltd.
Calaska Energy Company

Standard Pacific Gas Lines, Inc.
Pacific Gas Transmission Company

affiliates:

ANGUS Biotech

ANGUS Chemical Company
ANGUS Petroleum Corp.

Alberta Natural Gas Company, Ltd.

affiliates:

ANGUS Biotech
ANGUS Chemical Co.
ANGUS Petroleum Corp.
Foothills Pipelines

subsidiaries:

Pacific Transmission Supply Co.
Rocky Mountain Gas Transmission Co.
Pacific Gas & Electric Gas Supply Co.

JWP Land Company

Pacific Gas and Electric Finance Company, N.V.
Alberta Natural Gas Company Ltd.

Pacific Conservation Services Company

Pacific Horizon Enterprises, Inc.

subsidiary:

Pacific Energy Services Co.

Pennsylvania Electric Company
(subsidiary of General Public Utilities Corp.)

subsidiaries:

Nineveh Water Co.
Waverly Electric Light & Power Co.

SA-10

Pennsylvania Power & Light Co.
subsidiaries:
Pennsylvania Coal Resources Corp.

subsidiaorie Ss a

srush Valley Coal Corp.*
Greene Manor Coal Company
Greene Hill Coal Company
Pemico Incorporated *
Pennsylvania Mines Corp.
subs idia rie =
Tunnelton Mining Co.
Rushton Mining Co.
CEP Group, Inc.

subhe idia ru.

Hanover Development Corp.
Interstate Energy Company
Safe Harbor Water Power Corp.
Realty Company of Pennsylvania

subsidiaris Oy

BDW Corp.

LCA Leasing Corp.

Lady Jane Collieries, Inc.

The Potomac Edison Company
(controlled by Allegheny Power System, Inc.)

subsidiaries:

Allegheny Generating Company
Allegheny Pittsburgh Coal Company

* Inactive

a ©

SA-12

Tucson Electric Power Company

subsidiaries:

Valencia Energy Co.
Eseavada Leasing Co.
Tucson Resources, Inc.
Tusconel Inc.

Sierrita Resources, Inc.
San Carlos Resources, Inc.

Union Electric Company
subsidiary:
Union Colliery Company
affiliate:
Electric Energy, Inc.

Virginia Electric and Power Company
(controlled by Dominion Resources, Inc. }

West Penn Power Company
‘eontrolled by Allegheny Power System, Inc.)

subsidiaries:
Allegheny Generating Company

Allegheny Pittsburgh Coal Company
West Virginia Power & Transmission Co.

subsidiary:
West Penn West Virginia
Water Power Co.

Wisconsin Electric Power Company
(controlled by Wisconsin Energy Corporation) )

Wisconsin Power and Light Company
subsidiaries:

South Beloit Water, Gas and Electric Co.
Wisconsin Power and Light Nuclear Fuel, Inc.

—— ee |

SA-13

NUFUS Resources, Inc.

Residuals Management Technology, Ince.
ENSERV, Ine.

REAC, Ine.

WP&L Holdings, Ine.

WP&L Communications. Ine.

Wisconsin Public Service Corporation
affiliates:

Wisconsin River Power Company
Wisconsin Valley Improvement Company
Delores Bench General Partner. Inc.
WPS Development, Ine.

WPS Communications, Ine.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1900%3A1. Public record. Not legal advice.