Petition for Writ of Certiorari — Ohio Power Co. v. Thomas

8 ow, -6§ Qo Supreme Court, USL

FILED

No. 88- JUL 12 1988

P—SOSerr F. SPANIOL, JR,

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

OHIO POWER COMPANY AND ORMET CORPORATION,

Petitioners,

LEE M. THOMAS, et ai.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

DONALD C. WINSON

RICHARD S. WIEDMAN

ECKERT, SEAMANS,

CHERIN & MELLOTT

42nd Floor, 600 Grant Street

Pittsburgh, PA 15219

(412) 566-6000

Counsel for Petitioner

Ormet Corporation

July 12, 1988

HENRY V. NICKEL

(Counsel of Record)

F. WILLIAM BROWNELL

MEL S. SCHULZE

HUNTON & WILLIAMS

2000 Pennsylvania Ave., N.W.

Suite 9000

Washington, D.C. 20006

(202) 955-1500

A. JOSEPH DOWD

JEFFREY P. WHITE

AMERICAN ELECTRIC POWER

SERVICE CORPORATION

One Riverside Plaza

P.O. Box 16631

Columbus, Ohio 43216

(614) 223-1636

Counsel for Petitioner

Ohio Power Company

WILSON - ErPcs PRINTING Co., INc.

- 789-0096 - WASHINGrION, D.C. 20001

QUESTION PRESENTED

Whether the U.S. Environmental Protection Agency

is precluded by the Administrative Procedure Act from

promulgating a retroactive legislative regulation that re-

vokes an order issued by EPA granting rights under

§123(c) of the Clean Air Act, 42 U.S.C. § 7423(c)

(1982), when § 123(c) does not provide for revocation,

expiration, or reevaluation of § 123(c) orders and does

not explicitly authorize EPA to adopt such retroactive

regulations?

(i)

ii

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). Petitioner Ohio Power Com-

pany was petitioner in No. 85-1556, and Petitioner Ormet

Corporation was petitioner in No. 85-1558.* Other peti-

tioners below were the Natural Resources Defense Coun-

cil and Sierra Club (No. 85-1488), the States of New

York, Rhode Island, Connecticut, Vermont, Maine, and

New Hampshire, and the Commonwealth of Massachu-

setts (No. 85-1489), the State of New Jersey (No.

85-1554), Environmental Defense Fund (No. 85-1552),

Alabama Power Co., et al. (No. 85-1543), National Coal

Association (No. 85-1560), Monongahela Power Co. and

Potomac Edison Co. (No. 85-1557), and United Mine

Workers of America (No. 85-1568). Lee M. Thomas,

Administrator of the United States Environmental Pro-

tection Agency (EPA), and EPA were Respondents in

all of these proceedings. The proceedings were consoli-

dated on October 25, 1985.

Intervenors on behalf of Respondents below were Ala-

bama Power Co., et al. (Nos. 85-1488, 85-1489, 85-1552,

85-1554), American Paper Institute and National Forest

Products Association (intervenors on all petitions), Na-

tional 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

(intervenors on all petitions except No. 85-1488), and

the State of Ohio (No. 85-1488). Participating as amici

curiae in support of Respondents on certain issues raised

* The parent corporation of Ohio Power Company is American

Electric Power Company, Inc. Affiliated corporations are Appalach-

ian Power Company, Columbus Southern Power Company, Indiana

Michigan Power Company, and Kentucky Power Company. Ormet

Corporation is a wholly owned subsidiary of Ohio River Associates,

Inc. This information is provided pursuant to Rule 28 of the Court.

ili

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 Petitioner Ohio Power Co. (No. 86-1331) and the

other filed by Petitioner Ormet Corporation (No.

86-1362), were decided in the same judgment of the court

below as the preceding petitions. These two petitions,

which were not consolidated with Nos. 85-1488, et al.,

sought review of EPA’s denial of an administrative peti-

tion for reconsideration of certain of the § 123 regula-

tions. 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 petitions.

Pursuant to Rule 19.6 of this Court, all petitioners, re-

spondents and respondent-intervenors below other than

Petitioners here are Respondents in this Court.

TABLE OF CONTENTS

TABLE OF AUTHORITIES .................... seaeenbiatteinna intact

OPINION BELOW

STEIN sicccinisncinccttitecebbaiitlgmasegpictiamapadadmineetinn

STATUTORY AND REGULATORY PROVISIONS

BEE RSPR T ENED &sedicccscnicindighiaabidoeanasltal

STATEMENT OF THE CASE

I. THE STATUTORY CONTEXT OF THIS

CANIN essai <itsickcecatnlaphenudadteoniadipaseneialan cata ana

Il. OHIO POWER’S §123(c) DEMONSTRA-

EE ncinionioain vauicishnaienicaatsedsehigipdatialieastetiadiabiaeahate

Ill. THE 1985 STACK HEIGHT REGULATIONS ..

IV. THE D.C. CIRCUIT DECISION

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

THIS COURT SHOULD SETTLE THE LAW ON

THE SCOPE OF THE APA PROSCRIPTION

AGAINST RETROACTIVE LEGISLATIVE RULE-

MAKING

(v)

Page

oo ~) or

vi

TABLE OF AUTHORITIES

CASES:

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

(D.C. Cir. 1984) ee

Bennett v. New Jersey, 470 U.S. 632 (198: 5) enn

Citizens to Save Spencer County v. EPA, 600 F.2d

844 (D.C. Cir. 1979) . oneaaael si

Georgetown University Hospital v. Bowen, 821

F.2d 750 (D.C. Cir. 1987), cert. granted, 56

U.S.L.W. 3590 (U.S. February 29, 1988) (No.

87-1097)

Greene v. United States, 376 US. 149 (1964) .

Lyng v. Payne, 476 U.S. 926 (1986)

Miller v. United States, 294 U.S. 435 (1935)

NRDC v. Thomas, 838 F.2d 1224 (D.C. Cir. 1988),

petition for cert. filed sub nom. Alabama Power

Co. v. Thomas (U.S. June 17, 1988) (No. 87-

2068) ; , © adiethauiciesaaaalin

Retail. Wholesale Department Store Union v.

NLRB. 466 F.2d 380 (D.C. Cir. 1972)

SEC v. Chenery Corn., 332 U.S. 194 (1947)

Sierra Club v. FPA, 719 F.2d 436 (D.C. Cir. 1983),

cert. denied sub nom. Alabama Power Co. v.

Sierra Club, 468 U.S. 1204 (1984)

Society for Propagatina the Gospel v. Wheeler, 22

F. Cas. 756 (C.C.D.N.H. 1814)

I’nion Pacifie Pa‘lroad v. Laramie Stock Yards Co..,

231 U.S. 190 (19153) Saasese ONS

I'nited States v. Seatrain Lines, Inc., 329 U.S.

124 (1947)

Utah International, Inc. v. Andrus, 488 F.Supp.

976 (D. Colo. 1980)

STATUTES:

The Administrative Procedure Act, 5 U.S.C. §§ 551,

et seq., 701, et seq. (1982)

§ 2, 5 ey N 551 (1982)

S 1(c 5 U.S.C. $553(d) (1982)

28 U.S.C. § 1254(1) (1982

28 U.S.C. $2101f(c) (1982)

Page

12

11

13

...3, 9, 11

11

11

11

...passim

11

11

12

12

vii

TABLE OF AUTHORITIES—Continued

Page

The Clean Air Act, 42 U.S.C. § 7401, et seq. (1982)

§ 108, 42 U.S.C. § 7408 (1982) 3

§ 109, 42 U. es § 7409 (1982) 3

§ 110, 42 U.S.C. § 7410 (1982) 3,4

§ 123, 42 U. c S "= 23 (1982) passim

§ 123 (ce), 12 U.S.C. § 7423(c) (1982) passim

§ 163, 42 U.S.C. § 7173 (1982) 3

§ 307(b) (1), 12 U.S.C. § 7607(b) (1) (1982) 1

REGULATIONS

40 C.F.R. § 50.4 (1987) 1

40 C.F.R. § 51.166(c) (1987) 1

FEDERAL REGISTER:

38 Fed. Reg. 25697, et seg. (1973) {

14 Fed. Reg. 2608, et seq. (1979) 7

47 Fed. Reg. 5864, et seq. (1982) 6,7

47 Fed. Reg. 35784 (1982) 6

19 Fed. Reg. 44878, et seq. (1984) S

50 Fed. Reg. 27892, et seq. (1985) g

51 Fed. Reg. 29268, et seq. (1986) x

MISCELLANEOUS:

Black’s Law Dictionary (5th ed. 1979) 13

H.R. Rep. No. 294, 95th Cong., Ist Sess. (1977) 1

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

No. 88-

OHIO POWER COMPANY AND ORMET CORPORATION,

Petitioners,

V.

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

Ohio Power Company and Ormet Corporation respect-

fully petition for a writ of certiorari to review the judg-

ment of the United States Court of Appeals for the Dis-

trict of Columbia Circuit entered in this proceeding on

January 22, 1988.’

OPINION BELOW

The opinion of the U.S. Court of Appeals in Natural

Resources Défense Council, et al. v. Thomas, et al., Nos.

85-1488, et al. (D.C. Cir. January 22, 1988), is reported

at 838 F.2d 1224. A copy of the opinion appears in the

Appendix (hereinafter referred to as “App. ——”) at

la-64a.

1 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 the District of Columbia Circuit with exclusive jurisdic-

tion to review any “nationally applicable regulations . . . prom-

ulgated by the Administrator... .”

9

~

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 Banc, 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.

38. 50 Fed. Reg. 27892-27907 (1985), recodified at

40 C.F.R. $$ 51.100(ff)-(kk) (1987) (Final

Stack Height Regulations), App. 7la-133a.

4, Administrative Procedure Act §§ 4, 10(e), 5

U.S.C. §§ 558, 706 (1982), App. 178a-180a.

STATEMENT OF THE CASE

This case involves the scope of the Administrative Pro-

cedure Act (APA), 5 U.S.C. § 551, et seg. (1982), pro-

scription on retroactive legislative rulemaking. As ex-

plained below, the U.S. Court of Appeals for the D.C.

Circuit did not find that the relevant statutory provision

authorizes EPA to revoke past § 123(c) orders, and the

court acknowledged that EPA’s rule revoking these or-

ders applies retroactively. The court nevertheless held

that the APA’s general proscription against retroactive

3

legislative rulemaking does not apply to this retroactive

rule.

The issue of whether the APA proscribes retroactive

legislative rules that attempt to undo past transactions

is currently before this Court in Bowen v. Georgetown

University Hospital, No. 87-1097 (hereinafter referred

to as “Georgetown’’). This Court may confirm in George-

town that the APA proscribes such retroactive legislative

rules, or may apply the common law rule that statutes

(and regulations implementing those statutes) are pre-

sumed to have only prospective effect absent explicit con-

gressional authorization to the contrary. If so, the Court

should grant certiorari in this case and reverse the D.C.

Circuit, because the D.C. Circuit’s decision in this case

cannot be reconciled with the APA proscription or the

common law presumption. On the other hand, this Court

may resolve Georgetown without reaching the APA issue.

If so, this Court should grant certiorari in this case in

order to decide whether, absent an explicit statutory

authorization, the APA prohibits retroactive legislative

rules that upset past administrative transactions.

I. THE STATUTORY CONTEXT OF THIS CASE

The Clean Air Act? establishes a system of air quality

regulation that is based upon “National Ambient Air

Quality Standards” (“ambient standards”) and “Preven-

tion of Significant Deterioration” increments (‘PSD in-

crements’’).* Under § 110 of the Act, the states must set

242 U.S.C. § 7401, et seg. (1982) (hereinafter 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.

3 The ambient standards define maximum ground level concentra-

tions 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 § 1638.

4

emission limitations for individual industrial facilities

(i.e., “sources”) to ensure that their emissions will not

cause or contribute to ground level pollution concentra-

tions that exceed the ambient standards or PSD incre-

ments.

Dispersion of emissions from the point of release to

ground level where people breathe is integral to the oper-

ation of the § 110 state programs. If emissions from an

industrial fuel burning facility were released at ground

level, they could create pollutant concentrations that ex-

ceed ambient air quality standards and PSD increments

by factors of many thousands.*

By including § 123 in the 1977 Amendments to the

Act, Congress recognized that reliance on dispersion is

a legitimate and necessary aspect of achieving the ambi-

ent 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 pollutant emissions.* To

preclude excessive reliance on dispersion, Congress in

§ 123 directed EPA to develop a program similar to one

previously proposed by EPA in 1%73°* that would limit

the use of dispersion “credit” for setting emission limits

to that provided by stack heights conforming to “good

engineering practice” (“GEP stack height’’).

4For example, if the emissions from a well-controlled source

(e.g., a power plant meeting the stringent EPA new source stand-

ards) were released at ground level, they would create ambient con-

centrations of sulfur dioxide (SO,) in the range of 900,000 micro-

grams per cubic meter in the vicinity of the source. By comparison,

the primary (public health) ambient standard for SO, is 365

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).

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

6 38 Fed. Reg. 25697 (1973).

5

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).

Congress in §123(c) explicitly limited GEP stack

height to 2.5 times the height of the source (“2.5H”),

“unless the owner or operator of the source demonstrates,

after notice and opportunity for public hearing, to the

satisfaction of the Administrator, that a greater [stack]

height is necessary” to ensure against excessive pollutant

concentrations due to downwash.

If such a “§ 123(c) demonstration” is conducted by a

source and approved by EPA, that demonstrated stack

height constitutes GEP stack height for that source. Sec-

tion 123 does not provide, either explicitly or implicitly,

for the revocation, expiration, or periodic reevaluation of

§ 123(c) GEP credits approved by EPA.

II. OHIO POWER’S § 123(c) DEMONSTRATION

Soon after Congress enacted § 123 in 1977, Ohio Power

Company recognized that atmospheric downwash of emis-

sions from its Kammer Plant, caused by wind blowing

over nearby hilly terrain, would be severe if GEP stack

height for Kammer were limited to 2.5H. Accordingly,

Ohio Power in October 1977 initiated a § 123(c) demon-

stration to determine the stack height needed to ensure

against excessive pollutant concentrations caused by down-

wash. Because regulations had not yet been promulgated

regarding how to conduct such a demonstration, Ohio

Power solicited guidance from EPA.

Ohio Power’s initial contact with EPA spawned a four-

year cooperative effort between the two to conduct the

6

§ 123(c) demonstration. The demonstration, which cost

Ohio Power over one-half million dollars, involved a de-

tailed wind tunnel (fluid model) study examining the

effects of wind blowing over a scale model of the Kammer

Plant and its surrounding terrain. The study demon-

strated that a 900-foot stack at Kammer was necessary

to ensure that emissions from the stack do not result in

excessive concentrations in the vicinity of the Kammer

Plant, and therefore that 900 feet constitutes GEP stack

height for Kammer.

During this time, EPA proposed and, in 1982, promul-

gated regulations to implement § 123.‘ Following pro-

mulgation of the those regulations, EPA published a

notice in the Federal Register pursuant to § 123(c) pro-

viding opportunity for comment and public hearing on

the Agency’s tentative approval of a 900-foot GEP stack

height credit for the Kammer Plant. No one objected

to the proposed GEP credit, requested a hearing, or even

filed comments in response to this notice. On October 6,

1982, almost five years after the demonstration project

began, EPA gave final approval to Ohio Power’s § 123(c)

GEP credit.’

Subsequent to EPA’s final approval of Kammer’s GEP

stack height credit, Ohio Power in late 1982 extended the

coal contract for the Kammer Plant until mid-1995.

Since 1982, Ohio Power and Ormet Corporation, an alu-

minum smelter that purchases almost all the electricity

generated by the Kammer Plant, have conducted opera-

tions and long-term planning based upon EPA’s finding

that the Kammer Plant is entitled to a 900-foot stack

height credit under § 123 of the Act. Without this credit,

747 Fed. Reg. 5864 (1982).

* 47 Fed. Reg. 35784 (1982).

® Letter from Glenn Hanson, Acting Chief, Air Programs &

Energy Branch, EPA Region III, to Glenn Robinson, counsel for

Ohio Power Company (October 6, 1982).

7

Kammer would face substantially more stringent and

more costly emission limitations; Ormet would face clo-

sure due to increased costs of power.

Ill. THE 1985 STACK HEIGHT REGULATIONS

In 19838, the D.C. Circuit remanded portions of the

1982 stack height regulations to EPA, including the de-

finition of ‘excessive concentrations.” The court in-

structed EPA to consider whether the definition of “ex-

cessive concentrations,” for purposes of § 123(c) demon-

strations, should include a “standard directly responsive

to the concern for health and welfare” similar to the one

in EPA’s 1979 proposal that petitioners in that case had

favored. Of particular relevance here is that the

§ 123(c) demonstration for Kammer had in fact been

conducted pursuant to, and had satisfied, the more string-

ent 1979 proposed definition of ‘‘excessive concentra-

tions.” *

In November 1984, EPA proposed rules containing the

1979 definition of “excessive concentrations” and other

§ 123(c) demonstration requirements similar to those ap-

10 Sierra Club v. EPA, 719 F.2d 436, 450 (D.C. Cir. 1983), cert.

denied sub nom. Alabama Power Co. v. Sierra Club, 468 U.S. 1204

(1984).

11 Jd.; see id. at 446 (“[ Petitioners] urge a return to a stand-

ard like the one EPA originally proposed in 1979”). The 1979

proposal defined “excessive concentrations” for § 123(c) demonstra-

tion purposes as a forty percent increase in pollutant concentrations

due to downwash and an ambient standard or PSD increment ex-

ceedance. 44 Fed. Reg. 2608, 2614 (1979). The 1982 rule included

only the forty percent test. 47 Fed. Reg. 5869 (1982).

12 That is, the Kammer demonstration showed that a stack height

of less than 900 feet would result in more than a forty percent

increase in pollutant concentrations due to downwash and would re-

sult in an ambient standard exceedance.

8

plied to Kammer."* In the final rule, EPA promulgated

the proposed definition of “excessive concentrations” but

added, without prior public notice and comment, a totally

new requirement for § 123(c) demonstrations.**

The new requirement, which substantially impairs the

ability of sources to conduct such demonstrations, was not

satisfied in the Kammer demonstration. Most significantly

in the context of this case, EPA decided that the rule con-

taining the new requirement invalidated the Kammer

§ 123(c) credit and that the new requirement would ap-

ply retroactively to sources like Kammer.*®

IV. THE D.C. CIRCUIT DECISION

Ohio Power and Ormet challenged before the D.C. Cir-

cuit the retroactive application of the new regulation to

Kammer. Among other things, Ohio Power and Ormet

argued, based upon the D.C. Circuit’s recent decision in

13 49 Fed. Reg. 44878, 44881-82 (1984), App. 134a, 147a-150a.

1450 Fed. Reg. 27892, 27907, § 51.1(kk)(1) (1985), App. 131a-

132a. The new requirement forces sources to use a “new source

performance standard” level of control in § 123(c) demonstrations,

even when that standard is not otherwise applicable to the source.

See id. Ohio Power and Ormet Corporation are among the peti-

tioners for a writ of certiorari filed with the Court on June 17, 1988,

in a separate case requesting review of the D.C. Circuit’s affirmance

of that rule. Alabama Power Co., et al. v. Thomas, No. 87-2068.

15 Since on its face the regulation applies only to sources that

conduct § 123 demonstrations in the future, there was some ques-

tion concerning whether EPA actually intended to upset the 1982

demonstrated GEP credit approved for Kammer. Even the EPA

Region in which Kammer is located initially questioned whether the

final rule had that effect. 51 Fed. Reg. 29268 (1986). Counsel for

the Agency maintained in the litigation that the new requirement

did apply retroactively so as to revoke the GEP stack heizht pre-

viously approved for Kammer. The D.C. Circuit accepted EPA coun-

sel’s contention that the rule upset the Kammer credit. &38 F.2d

at 1249, App. 47a.

9

Georgetown,’* that EPA could not apply the new regula-

tion retroactively to sources like Kammer that years

earlier had completed demonstrations and received from

EPA an order approving a GEP stack height credit pur-

suant to § 123(c).

The D.C. Circuit acknowledged that the new regulation

was retroactive because the new “demonstration require-

ment might impinge unfairly on source owners that made

investments or other commitments in reasonable reliance

on prior understandings.” '* While the court did not find

that § 123(c) explicitly authorizes retroactive legislative

rules, the court nevertheless refused to apply the APA

proscription against retroactive legislative rulemaking in

this case. According to the court, the APA proscription

applies to rules, like those involved in Georgetown, that

affect “past transactions,” but does not apply to rules, like

the § 123 rules, that will lead to “restrictions on plants’

future emissions.” *

REASONS FOR GRANTING THE PETITION

As the D.C. Circuit recently confirmed in Georgetown,

retroactive application of legislative rules is foreclosed

by the express terms of the APA.” The D.C. Circuit in

this case recognized that the APA contains a general

proscription against retroactive application of legislative

rules to upset past transactions. Nevertheless, without

i6 Georgetown University Hospital v. Bowen, 821 F.2d 759, 756-

57 (D.C. Cir. 1987), cert. granted, 56 U.S.L.W. 3590 (U.S. Feb-

ruary 29, 1988) (No. 87-1097). In Georgetown, the D.C. Circuit

held that legislative rules promulgated pursuant to the APA gen-

erally cannot be applied retroactively.

17 838 F.2d at 1244, App. 35a.

18 Jd. (emphasis in original).

19 Georgetown University Hospital v. Bowen, supra, 821 F.2d at

756-57. Certiorari was granted in Georgetown specifically on the

issue of whether the APA proscribes retroactive application of

legislative rules.

i

10

finding that § 123(c) explicitly authorizes EPA to prom-

ulgate retroactive regulations that adversely affect the

legal status of sources with previously approved § 123(c)

determinations, the court held that the APA proscription

did not apply to the retroactive legislative regulation at

issue in this case.

As discussed below, the lower court’s distinction be-

tween this case and Georgetown is wholly lacking in

merit. There is no basis in law supporting the court’s

attempt to create a category of retroactive regulations

that fall outside of the general APA and common law

proscriptions. Thus, if this Court were to hold in George-

town that the APA or common law principles proscribe

retroactive legislative rules unless a statute provides

express authority for retroactive rules, the court should

grant certiorari in this case and reverse. On the other

hand, if this Court were not to reach the APA issue in

Georgetown, the Court should grant certiorari in this

case in order to decide whether the APA proscribes retro-

active legislative regulations that undo past administra-

tive transactions.”

THIS COURT SHOULD SETTLE THE LAW ON THE

SCOPE OF THE APA PROSCRIPTION AGAINST

RETROACTIVE LEGISLATIVE RULEMAKING

A retroactive law is one that “creates a new obliga-

tion, imposes a new duty, or attaches a new disability,

in respect to transactions or considerations already

past ....”* Under regulatory statutes, agencies enter

into transactions with regulated parties by making admin-

istrative determinations that establish the rights and obli-

gations of those parties, and thus the parties’ legal

20 Because of the obvious relevance of Georgetown to this case,

a motion requesting that this Court defer action on this Petition

pending resolution of the Georgetown case is being filed simul-

taneously with this Petition.

21 Society for Propagating the Gospel v. Wheeler, 22 F. Cas. 756,

767 (C.C.D.N.H. 1814).

11

status, under the regulatory regime. Therefore, a legisla-

tive regulation adopted under a regulatory statute is ret-

roactive if it affects or impairs the validity of a previous

administrative determination that had established the

legal status of a regulated party under that statute.

Under common law principles, a fundamenal rule of

statutory construction is that “legislation must be con-

sidered as addressed to the future, not to the past...

fand] a retrospective operation will not be given to a

statute which interferes with antecedent rights

unless such be ‘the unequivocal and inflexible import of

the terms, and the manifest intention of the legisla-

ture.” This rule of statutory construction applies

equally to legislative regulations promulgated to imple-

ment statutes.”

Codifying this common law principle, the APA pro-

vides that a “rule” is “an agency statement of general or

particular applicability and future effect... .”™ Un-

der the APA, therefore, agencies generally are precluded

from promulgating retroactive legislative regulations

unless a statute explicitly authorizes the promulgation of

such regulations.”

22 Greene v. United States, 376 U.S. 149, 150 (1964) (quoting

Union Pacific R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 199

(1933)); see also Bennett v. New Jersey, 470 U.S. 632, 639-40

(1985).

23 Miller v. United States, 294 U.S. 435, 439 (1935). Cf. Lyng

v. Payne, 476 U.S. 926, 937 (1986) (“[a]n agency’s powci is no

greater than that delegated to it by Congress” ).

245 U.S.C. § 551 (1982) (emphasis added).

25 See SEC v. Chenery, 332 U.S. 194, 202 (1947) (distinguishing

between the “quasi-legislative promulgation of [general] rules to

be applied in the future,” and adjudicatory orders that may, in ap-

propriate circumstances, be given retroactive effect); Georgetown,

821 F.2d at 757; Retail, Wholesale Department Store Union v.

NLRB, 466 F.2d 380; 388 (D.C. Cir. 1972) (legislative rules are

“prospective in application only,” whereas “rules” (i.e., orders)

adopted in the course of agency adjudication may be applied retro-

actively in appropriate circumstances).

12

In this case, the D.C. Circuit recognized that the leg-

islative regulations at issue here were retroactive because

they would “impinge unfairly on source owners that

made investments or other commitments in reasonable

reliance on prior understandings.” ** Nevertheless, with-

out finding an express delegation in § 123 authorizing

EPA to promulgate regulations that retroactively affect

the legal status of sources for which EPA had previously

issued an order granting a §123(c) GEP credit,” the

court decided that the APA proscription did not apply to

the retroactive legislative rules at issue in this case. The

only reason offered by the court for this conclusion was

that the regulation at issue in Georgetown involved “past

transactions,” while “{a]ll that is at stake here are re-

strictions on plants’ future emissions.” *

The D.C. Circuit’s refusal to apply the APA proscrip-

tion against retroactive legislative rulemaking in this

case has no basis. At the outset, the court’s reference to

effects on “future emissions” seems to imply that the leg-

islative rules at issue in this case are not retroactive.

Yet, in the very next sentence, the court acknowledges

that the regulations are retroactive where the rules

26 838 F.2d at 1244, App. 35a.

27 Section 123(c), authorizing EPA to approve greater-than-

formula height GEP demonstrations, does not contain any express

authority for EPA to promulgate retroactive legislative rules that

revoke prior § 123(c) determinations. Nor did the D.C. Circuit

find any such explicit statutory authority. Cf. United States v.

Seatrain Lines, Inc., 329 U.S. 424, 430-33 (1947) (in light of the

absence of explicit statutory authority, the Interstate Commerce

Commission could not revoke a certificate of public convenience and

necessity previously issued to a water carrier); Georgetown, 821

F.2d at 758; American Methyl Corp. v. EPA, 749 F.2d 826, 834-40

(D.C. Cir. 1984) (EPA lacks authority under § 211(f) of the Clean

Air Act to revoke a fuel waiver issued under that section); Utah

International, Inc. v. Andrus, 488 F. Supp. 976, 984-87 (D. Colo.

1980).

28 838 F.2d at 1244, App. 35a (emphasis in original).

13

“impinge unfairly on source owners that made invest-

ments or other commitments in reasonable reliance on

prior understandings.” ** Applying this standard of

retroactivity, the regulations as applied to Ohio Power’s

Kammer Plant are clearly retroactive.*

The court’s implication that, unlike in Georgetown, no

“past transaction” was involved in this case makes no

sense. Past administrative determinations are clearly

“past transactions” between an agency and a regulated

party.” Legislative rules that create a new obligation or

impose a new duty with respect to such a past transaction

are certainly retroactive.”

2°To the extent the D.C. Circuit’s reference to “future emis-

sions” is intended as a comment on the degree of retroactivity in-

volved in this case, the D.C. Circuit’s decision cannot be reconciled

with an earlier D.C. Circuit decision, Citizens to Save Spencer

County v. EPA, 600 F.2d 844, 879-81 (D.C. Cir. 1979). Spencer

County makes clear that the APA proscription against retroactive

legislative rules applies to rules affecting past administrative de-

terminations even when the impact of those rules is on future

emissions. In Spencer County, the D.C. Circuit considered a chal-

lenge to rules that were retroactive to sources that had received

construction permits under the Clean Air Act between March 1 and

June 19, 1978. As in this case, retroactive application of the regu-

lations would have impinged upon prior investments, but would have

done so through the impact of the rules on a plant’s “future emis-

sions.” Noting the proscription against such retroactive regulations,

the court upheld the regulations only because the “good cause” ex-

ception in the APA, 5 U.S.C. § 553(d) (1982), applied in the cir-

cumstances of the case. Cf. Georgetown, 821 F.2d at 757 n.11. That

exception does not apply here.

%° See also 838 F.2d at 1251, App. 50a (where the court acknowl-

edges that this case involves “retroactive application of the new

demonstration requirement” to Ohio Power).

%1 A “transaction” is broadly defined to include a “proceeding” or

an “act or agreement .. . [in] which the legal relations . . . [be-

tween parties] are altered.” Black’s Law Dictionary 1341 (5th ed.

1979). The legal relations between Ohio Power and EPA were

clearly altered when EPA approved the above-formula GEP credit

for Kammer.

32 See supra note 21.

14

In short, the lower court’s attempt to distinguish this

ease from Georgetown is without merit. Indeed, while

the rule in this case revoking the GEP credit will affect

Kammer’s “future emissions,” the rule in Georgetown

calling for repayment will affect the hospital’s “future”

cash flow. The critical element in both cases is not the

future burdens imposed by the rule, but the fact that the

rule seeks to upset a past, completed transaction between

the petitioners and the government.

Resolution of the scope of the APA proscription against

retroactive legislative rules is important both in the con-

text of this case and in future administrative law cases.

In this case, retroactive application of the regulations

revokes the stack height modeling credit for the Kammer

Plant approved by EPA in 1982 pursuant to § 123(c).

This stack height credit continues to have an economic

value worth millions of dollars annually. Revocation of

the credit could also result in the closure of an aluminum

smelter owned by Ormet Corporation,® and could result

in closure of the coal mine supplying the Kammer Plant,

throwing over 2000 persons out of work.

The decision in this case also has significant implica-

tions for future administrative law cases. The D.C. Cir-

cuit has found, based upon a standardless and illogical

distinction, that the APA proscription against retroactive

legislative rulemaking does not apply to the retroactive

regulations in this case. This precedent will create con-

fusion for courts grappling with the issue of the validity

*’ Under a contract with Ohio Power, virtually all of the elec-

tricity generated by the Kammer Plant is used by Ormet Corpora-

tion as a key raw material in the electrolytic production of alumi-

num. The millions of dollars in additional costs at Kammer re-

sulting from retroactive application of the regulations would there-

fore fall directly on Ormet. Such a large increase in Ormet’s power

costs would dramatically impact Ormet’s competitive position in the

world aluminum market and would threaten the existence of the

Ormet smelter.

15

of retroactive rules in the future. Review by the Court

is crucial to resolve the proper scope of the APA pro-

scription against retroactive legislative rulemaking.

CONCLUSION

For the foregoing reasons, this petition for a writ of

certiorari to the United States Court of Appeals for the

D.C. Circuit should be granted.

DONALD C. WINSON

RICHARD S. WIEDMAN

ECKERT, SEAMANS,

CHERIN & MELLOTT

42nd Floor, 600 Grant Street

Pittsburgh, PA 15219

(412) 566-6000

Counsel for Petitioner

Ormet Corporation

July 12, 1988

Respectfully submitted,

HENRY V. NICKEL

(Counsel of Record)

F. WILLIAM BROWNELL

MEL S. SCHULZE

HUNTON & WILLIAMS

2000 Pennsylvania Ave., N.W.

Suite 9000

Washington, D.C. 20006

(202) 955-1500

A. JOSEPH Dowp

JEFFREY P. WHITE

AMERICAN ELECTRIC POWER

SERVICE CORPORATION

One Riverside Plaza

P.O. Box 16631

Columbus, Ohio 43216

(614) 223-1636

Counsel for Petitioner

Ohio Power Company