Appendix — Leavitt v. Tennessee Valley Authority

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i

031162 F53 13 2004

No.

In the Supreme Court of the Gnited States

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY AND MICHAEL O. LEAVITT, ADMINISTRATOR,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY PETITIONERS

Uv.

TENNESSEE VALLEY AUTHORITY, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

APPENDIX TO THE

PETITION FOR A WRIT OF CERTIORARI

THEODORE B. OLSON

Solicitor General

LISA JAEGER Counsel of Record

Acting Genera: Counsel THOMAS L. SANSONETTI

MONICA DERBES GIBSON Assistant Attorney General

Office of General Counsel THOMAS G. HUNGAR

CAROL S. HOLMES Deputy Solicitor General

EDWARD J. MESSINA JAMES A. FELDMAN

Office of Enforcement and Assistant to the Solicitor

Compliance Assurance General

Environmental Protection Department of Justice

Agency Washington, D.C. 20580-0001

Washington, D.C. 20460 (202) 514-2217

| BEST AVAILABLE COPY Wi

TABLE OF CONTENTS

Appendix A (Court of appeals opinion filed, June 24,

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DID) occinsrinvocnssessernsxesnesieensetesoepsessebenemssennnaansesasenpessuvetainssnenenens

Appendix C (EPA Final Order on Reconsideration

filed, Sept. 15, 2003) ....s.esssssecssssseessessneeensensnsssssnssesnensssenenes

Appendix D (Court of appeals opinion filed, Sept. 16,

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Appendix E (Letter to Edward S. Christenbury

from Daniel Marcus, Dep’t of Justice, dated

May 4, 2002) .......sssssssssssssssesessencssesssssssssssesssssnssssesnensensncaseneees

Appendix F (Statutory appendix) .....sssssesssseesesneesensenennensensenees

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APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Nos. 00-15936, 00-16234, 00-16235 and 00-16236

TENNESSEE VALLEY AUTHORITY, PETITIONER

Vv.

CHRISTINE TODD WHITMAN, ADMINISTRATOR, UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, RESPONDENTS

ALABAMA POWER COMPANY, PETITIONER

Vv.

CHRISTINE TODD WHITMAN, ADMINISTRATOR, UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, RESPONDENTS

TENNESSEE VALLEY PUBLIC POWER ASSOCIATION,

MEMPHIS LIGHT, GAS & WATER DIVISION,

ET AL., PETITIONERS

VU.

CHRISTINE TODD WHITMAN, ADMINISTRATOR, UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, RESPONDENTS

DUKE ENERGY CORPORATION, PETITIONER

Vv.

CHRISTINE TODD WHITMAN, ADMINISTRATOR, UNITED

STATES ENVIRONMENTAL PROTECTION AGENCY,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, RESPONDENTS

2a

June 24, 2003

PETITIONS FOR REVIEW OF A FINAL ORDER OF

THE UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY

Before: TJOFLAT, BARKETT and WILSON, Circuit

Judges.

TJOFLAT, Circuit Judge:

The Environmental Protection Agency (“EPA”) con-

cluded that the Tennessee Valley Authority (“TVA”)

violated the Clean Air Act (“CAA”)! when it undertook

fourteen rehabilitation projects at nine coal-fired

electric power plants without permits. The EPA then

issued an administrative compliance order (“ACO”),

which required that TVA undertake several costly and

burdensome compliance initiatives. TVA contended

that the EPA had an incorrect understanding of the law

and facts, and it therefore refused to comply with the

terms of the ACO. Believing that TVA could not be

sued in federal court,” the EPA created a scheme in

which the Environmental Appeals Board (“EAB”) was

delegated the task of “reconsidering” the ACO by

informally adjudicating the issue of liability. After the

EAB decided that TVA did, in fact, violate the CAA

1 The Clean Air Act is codified at 42 U.S.C. §§ 7401-7671q.

2 The EPA concedes that it normally must prove a CAA

violation in a federal district court if a party disputes an ACO: “In

most instances if a party disputes . . . the order, EPA can choose

to bring a judicial enforcement action.” Second Brief of Respon-

dents at 9.

3a

when it undertook the rehabilitation projects without

permits, TVA filed a petition for review in this court,

asking us to set aside the EAB Order as unlawful and

the product of “arbitrary and capricious” decision-

making pursuant to the Administrative Procedure

Act’s (“APA”) judicial review provision, 5 U.S.C.

§ 706(2)(A).

We hold that we lack jurisdiction to review the ACO

because it does not constitute “final” agency action.

Although the CAA empowers the EPA Administrator

to issue ACOs that have the status of law,’ we believe

that the statutory scheme is unconstitutional to the

extent that severe civil and criminal penalties can be

imposed for noncompliance with the terms of an ACO.

Accordingly, ACOs are legally inconsequential and do

not constitute final agency action. We therefore decline

to assert jurisdiction over TVA’s petition for review

pursuant to 42 U.S.C. § 7607(b)(1).". The EPA must

prove the existence of a CAA violation in district court;

until then, TVA is free to ignore the ACO without

risking the imposition of penalties for noncompliance

with its terms.

This opinion consists of six parts. In part I, we

describe the CAA’s enforcement scheme. An important

component of this discussion is the following observa-

tion: Congress clearly intended that ACOs be issued

3 When we use the phrase “status of law,” we are referring to a

legal instrument, such as an injunction, that, if violated, leads to

the imposition of civil and/or criminal punishment. Thus, if

noncompliance with the terms of an ACO can be the sole basis for

the imposition of severe fines and imprisonment, then an ACO has

the status of law.

4 Section 7607(b)(1) provides for appellate review of “any other

final action of the Administrator under this chapter.”

4a

without any sort of adjudication, and the EPA has

always (until now) abided by this obvious inter-

pretation. This part also describes the course of this

litigation, detailing the EPA’s decision to conduct an

adjudication prior to the issuance of the ACO—an

adjudication that employed procedural rules that were

invented by the EAB and administrative law judge

(“ALJ”) and applied on an ad hoc basis. Part II pro-

vides an overview of the Supreme Court’s finality

doctrine. This part concludes by focusing the discussion

on one essential finality factor: whether the agency’s

action fixes a legal right or obligation. Although we

ultimately believe that the CAA clothes ACOs with the

status of law, part III explains why this conclusion is

not axiomatic, notwithstanding the plain language of

the statute. Several factors that might inform our

interpretation of the CAA—agency practice, legislative

history, the canon of statutory construction which

requires courts to interpret statutes in a way that

renders them constitutional, the problem of judicial

review, and statutory structure—all point to the

conclusion that Congress did not intend that ACOs

have the status of law. Part IV explains how the plain

language of the CAA leads to the unavoidable con-

clusion that Congress did, in fact, authorize the issuance

of ACOs with the status of law. In this vein, the tension

between parts III and IV reveals that the CAA was

poorly drafted. Part V explains why the CAA is uncon-

stitutional to the extent that monetary penalties and

imprisonment can be imposed merely for noncompliance

with an ACO. This part also explains why the statute

cannot be saved by a voluntary pre-ACO adjudication.

Part VI, the conclusion, makes the following point:

since a deprivation of liberty or property cannot stem

from mere noncompliance with an ACO, ACOs have no

ba

legal consequence and therefore do not constitute final

agency action. Not only is this result constitutionally

compelled, it also enables future courts to sidestep the

thorny problems presented by part III, such as the fact

that ACOs are typically issued without a record and the

fact that an EPA adjudication of liability conflicts with

other provisions of the statutory scheme.

I. Background

A. The Statutory Scheme

When the EPA finds that a regulated party is en-

gaging in some sort of unlawful activity—such as

emitting pollutants in excess of that allowed by EPA

regulations or constructing a pollution source without a

permit required by a state implementation plan

(“SIP”)—the EPA has four enforcement options. First,

the EPA can request that the Attorney General com-

mence a criminal prosecution. See 42 U.S.C.

§ 7413(a)(3)(D), (c). Second, the EPA can file suit in

district court and seek injunctive relief and the imposi-

tion of civil fines. See 42 U.S.C. § 7413(a)(1)(C),

5 The key statutory provisions that are relevant to this case—

section 7413 and section 7477—can be found in the attached

appendix.

6 When the Administrator decides to file a civil action in

district court, the decision to file suit need not be based upon the

substantial amount of evidence necessary for victory at trial.

Rather, the decision to file suit need only be based upon “any

information available.” See, e.g., 42 U.S.C. § 7413(a)(1)(C). That is,

the decision to file suit need only meet something akin to the

“probable cause” standard in criminal law or the standard for

avoiding sanctions found in Fed. R. Civ.P. 11. It need not be based

upon the more rigorous “substantial evidence” requirement of the

APA. See 5 U.S.C. § 706. The same goes for a decision to refer a

potential criminal violation to the Attorney General.

6a

(a)(2)(C), (a)(3)(C), (b). Third, the EPA can, after a’

formal adjudication of liability consistent with the APA‘

and 40 C.F.R. § 22," assess civil penalties against the

violator. See 42 U.S.C. § 7413(d). Whenever any of

these three enforcement methods is used, the following

fact remains true: if the defendant believes that the

EPA has based its conclusions upon erroneous facts or

an incorrect understanding of the law, the defendant

may make legal and factual arguments in an indepen-

dent forum—one that enables the defendant to utilize a

panoply of pre-established procedural rights.

The EPA also has a fourth option: it can issue an

ACO directing the regulated party to comply with

various requirements. See 42 U.S.C. § 7413(a)(1)(A),

(a)(2)(A), (a)(3)(B), (a)(4). ACOs can be issued so long as

the following requirements are met: (a) they must be

based upon “any information available to the Admini-

strator”; (b) they must be issued thirty days after the

issuance of a Notice of Violation; and (c) the regulated

party must be given an “opportunity to confer” with the

Administrator. See 42 U.S.C. § 7413(a)(1), (4).

The problem with ACOs stems from their injunction-

like legal status coupled with the fact that they are

issued without an adjudication or meaningful judicial

Seed U.S.C. §§ 554, 555.

“ 40 C.F.R. § 22 codifies the EPA’s “Consolidated Rules of

Practice Governing the Administrative Assessment of Civil Penal-

ties and the Revocation/Termination or Suspension of Permits.”

Part 22 contains an exhaustive set of procedures governing formal

adjudication, including the following: the filing of a complaint, see

§ 22.14; motion practice, see § 22.16; alternative dispute resolution,

see § 22.18; discovery, see § 22.19; the admission of evidence, see

§ 22.22: findings of fact and conclusions of law by an ALJ, see

§ 22.21; and appellate review by the EAB, see § 22.29.

7a

review. First, ACOs are issued without any sort of

adjudication that a party has violated the CAA. Like

the decision to pursue a civil enforcement action in

district court and the decision to refer a potential

criminal violation to the Attorney General, the decision

to issue an ACO is made “on the basis of any infor-

mation available to the Administrator.” 42 U.S.C.

§ 7413(a)(1). That is, the Administrator need only have

a staff report, newspaper clipping, anonymous phone

tip, or anything else that would constitute “any infor-

mation.” The standard is less rigorous than the

probable cause standard required for the issuance of

search warrants; certainly no pre-ACO adjudication

that a party has violated the CAA (such as by

modifying a pollution source in violation of an SIP) is

contemplated. This observation is confirmed not only

by the language of the statute, but also by agency prac-

tice. ACOs are rarely, if ever, issued after an agency

adjudication.” Finally, section 7413(d) explicitly re-

quires an adjudication before the EPA can assess civil

penalties, underscoring the fact that when Congress

wants the EPA to conduct an adjudication, it knows

how to effectuate that result. In sum, the statute’s

language and structure, in addition to agency practice,

make clear that ACOs are issued without any adjudi-

cation.

A second aspect of ACOs is that they have the status

of law. The other three enforcement options dovetail

with the ACO provisions, making a violation of an ACO

% In this case, for example, six ACOs were issued by the EPA

without any adjudication whatsoever. The seventh ACO, unlike

the first six, was issued after the EPA undertook a proceeding that

resembles an adjudication—a step that the EPA concedes was

“exceedingly unusual.” See First Brief of Respondent at 41.

Sa

a freestanding violation. That is, a violation of an ACO

can itself serve as the basis for the imposition of

extensive civil fines or imprisonment. Section 7413(b),

for example, provides that a civil action can be com-

menced not only when a person has violated an SIP or

EPA regulation, but also after a party fails to comply

with an “order.” Similarly, section 7413(c)(1) pro-

vides that “[a]Jny person who knowingly violates . . .

any order under subsection (a) of [42 U.S.C. § 7413]

shall, upon conviction, be punished by a fine

pursuant to Title 18, or by imprisonment for not to

exceed 5 years, or both.” Criminal liability can also be

predicated upon a violation of an ACO issued pursuant

to 42 U.S.C. § 7477. Finally, the EPA can admini-

stratively assess civil penalties based upon the violation

of any “order” issued by the EPA. See 42 U.S.C.

§ 7413(d). Apparently dissatisfied with the dispensa-

tion of justice by the federal courts, Congress em-

powered the EPA to decide the central question of

whether a regulated party has complied with an SIP or

EPA regulation. Once the EPA has decided the

underlying issue of liability, it can issue an injunction-

like order which, upon noncompliance, leads to a host of

severe penalties. The following scenarios illustrate the

scheme:

Scenario One: The EPA Administrator reads a

newspaper report stating that Energy Co. has modi-

fied a power plant without a permit. The EPA also

receives an anonymous phone tip “confirming” the

report . Based upon the newspaper’s discussion of

the precise nature of the modifications, the Admini-

strator believes that the modifications are so

extensive that Energy Co. is in violation an SIP.

That is, the Administrator finds that there has been

Car es es2:

9a

a violation of an applicable implementation plan

based upon “any information available to the Ad-

ministrator.” 42 U.S.C. § 7413(a). The Admini-

strator gives the requisite “Notice of Violation” to

Energy Co., and Energy Co. vehemently disagrees

with the EPA. It believes that the EPA has based

its finding upon an erroneous view of the law and

facts, and so it does nothing in response to the

Notice of Violation. After 30 days, the Admini-

strator issues a highly detailed cdministrative com-

pliance order pursuant to 42 U.S.C. $ 7413(a)(1).

The Administrator provides Energy Co. with an

“opportunity to confer,” see § 7413(a)(4), hoping

that she can settle the matter with Energy Co. and

thereby avoid the difficult and costly task of

proving a violation in court. The Administrator

revises the ACO several times, but to no avail;

Energy Co. continues to believe that the Admini-

strator’s view of the law and facts is wrong. After

conducting an investigation so that it can make out

a complaint against Energy Co., the EPA takes the

following course of action: first, the EPA seeks to

administratively assess civil penalties against

Energy Co. pursuant to section 7413(c); second, the

agency seeks an injunction in district court pur-

suant to section 7413(b); third, because the EPA

believes that Energy Co. is a “knowing violator” of

the SIP under section 7413(d), it asks the Attorney

General to bring a criminal action against Energy

Co. In all three forums—the civil suit seeking an

injunction, the intra-agency proceeding seeking

civil penalties, and the criminal prosecution seek-

ing imprisonment—Energy Co. 1s allowed to con-

test EPA’s view of the facts and law. In each case,

the original tribunal or a reviewing court might

10a

decide that the EPA has failed to prove that Energy

Co. has violated an SIP or EPA regulation.

Scenario Two: Just like Scenario One, the EPA

Administrator reads a newspaper report stating

that Energy Co. has been undertaking various

modifications to a power plant without a permit.

She also receives an anonymous phone tip “con-

firming” the report. Based on the newspaper’s

discussion of the precise nature of the modifica-

tions, the Administrator believes that the modifi-

cations are so extensive that Energy Co. is in

violation of an SIP. That is, the Administrator

finds that there has been a violation of an appli-

cable implementation plan based upon “any infor-

mation available to the Administrator.” 42 U.S.C.

§ 7413(a). The Administrator then gives a “Notice

of Violation” to Energy Co. Energy Co., believing

that the EPA has based its finding upon an erron-

eous view of the law and facts, does nothing

in response to the Notice of Violation. The

Administrator responds by issuing a highly

detailed administrative compliance order pursuant

to 42 U.S.C. § 7413(a)(1).

At this point, the story begins to change dramati-

cally from Scenario One. The Administrator

provides Energy Co. with an “opportunity to

confer,” see 42 § 7413(a)(4), although the “opportu-

nity” is really no opportunity at all because the

Administrator has no intention of changing the

ACO. After a few weeks, Energy Co. still has not

complied with the terms of the ACO, because

Energy Co. continues to believe that the Admini-

strator has an incorrect understanding of the law

lla

and facts. The EPA responds by filing an action

for the assessment of civil fines pursuant to section

7413(d), in addition to referring the matter to the

Attorney General for prosecution. The only issue

in each proceeding is whether Energy Co. did, in

fact, violate the terms of the ACO. Energy Co. does

not have a chance to contend that the EPA has an

incorrect view of the facts and law; these issues are

irrelevant. Each proceeding involves a brief hear-

ing, with the EPA proffering irrefutable evidence

that (a) an ACO was properly issued by the Ad-

ministrator based upon “any information” avail-

able to her (i.e., the newspaper article and anony-

mous phone tip) and (b) Energy Co. refused to com-

ply with the ACO. Energy Co. is subsequently fined

$25,000 per day, and the CEO of Energy Co. is

hauled off to prison for five years.

In short, because an ACO can be issued “on the basis

of any information available” to the Administrator, and

because noncompliance with an ACO automatically

triggers civil and criminal penalties, Energy Co. and its

corporate officers never get an opportunity to argue,

before a neutral tribunal, that the modifications in

question do not violate an SIP. The EPA is-the

ultimate arbiter of guilt or innocence, and the courts are

relegated to a forum that conducts a proceeding, akin to

a show-cause hearing, on the issue of whether an EPA

order has been flouted. As will be discussed infra, this

scheme violates the Due Process Clause and the

separation-of-powers principle. Our task for the

moment is merely to describe how the scheme works.

B. This Litigation

12a

The Tennessee Valley Authority (“TVA”), an agency

of the United States, was established pursuant to the

Tennessee Valley Authority Act of 1933, 16 U.S.C.

§§ 831-83lee. One of its primary responsibilities is to

provide electric power at reasonable rates. 16 U.S.C.

§ 831n-4(h). To satisfy the statutory directive, TVA

owns and operates eleven coal-fired electric power

plants," most of which were built between the 1950s

and the 1970s. ;

Beginning in the late 1970s, TVA began to plan a

series of projects involving the replacement of various

boiler components" at its coal-fired plants, which were

carried out between 1982 and 1996. In 1999, the EPA

arrived at the conclusion that these projects did not

constitute “routine maintenance” as provided for in the

exception to the “physical change” component of the

“modification” definition set forth in the regulations

promulgated under the CAA.” Accordingly, the EPA

"TVA also operates twenty-nine hydroelectric plants, four gas

turbine plants, and one pumped-storage facility.

1 The boiler in a coal-fired plant typically consists of miles of

tubing and piping and has various components. Some of those com-

ponents are known as horizontal reheaters, economizers, super-

heaters, furnaces, waterwalls, and cyclones. The boiler generally

performs the following two functions: (1) it combusts coal and then

releases it as heat and light; and (2) it converts heat energy into

steam energy.

‘= The CAA provides a reprieve for existing facilities, allowing

them to avoid the expense of adding state-of-the-art pollution

controls. However, once plants are “modified” in a manner that

significantly increases emissions, the permitting requirements

apply and controls must be added. See 42 U.S.C. § 7411(a)(4)

(defining “modification” as “any physical change in, or change in

the method of operation of, a stationary source which increases the

amount of any air pollutant emitted by such source or which

results in the emission of any air pollutant not previously

l3a

believed that the projects triggered New Source

Review (“NSR”),”” New Source Performance Standards

(“NSPS”), and the requirements of various SIPs.

On November 3, 1999, the EPA issued its first ACO,”

requiring TVA to identify any modifications under-

taken without permits, apply for the permits, and enter

into a compliance agreement with the EPA. Between

January and May of 2000, TVA and the EPA held a

series of negotiations, leading to six separate amend-

ments to the ACO. After the EPA issued its sixth

amended ACO, TVA held firm to its view of the facts

emitted.”). EPA regulations provide, however, that “[a] physical

change in the method of operation shall not include: . . . Rou-

tine maintenance, repair, and replacement.” 40 C.F.R.

§ 52.21(b)(2)(ili)(a ).

13 In 1977, Congress enacted the NSR program which required

states to designate whether discrete areas meet the National

Ambient Air Quality Standards (“NAAQS”) for each listed

pollutant and establish pre- construction permitting requirements

for new and modified sources. For areas that meet the NAAQS,

permits must, among other things, require installation of the best

available control technology for each regulated pollutant. 42 U.S.C.

§ 7475(a). New and modified sources in “nonattainment areas”

(i.e., areas that fail to meet NAAQS), must, prior to construction,

obtain a permit which, amon... other things, requires the source to

achieve the lowest achiev»®!e emission rate and to provide

enforceable emissions offsets The EPA has promulgated regula-

tions, see 40 C.F.R. § 51.165, governing the approval of state

nonattainment NSR programs.

44 The NSPS program requires that the EPA issue federal

performance standards, based upon the “best demonstrated

technology,” for categories of new stationary sources that (a) cause

air pollution and (b) may reasonably be anticipated to endanger

public health or welfare. 42 U.S.C. § 7411(b)(1)(B); 40 C.F.R. § 60.

15 TVA petitioned this court for review of the November 3, 1999

ACO on May 4, 2000.

l4a

and law—namely, that (a) the “modifications” at issue

constituted “routine maintenance” and a permit was

therefore not required;” (b) no increase in emissions

could be traced to the modifications; and (c) the EPA

suddenly change:: its definition of “modification” to

encompass projects undertaken decades ago, thereby

violating the fair notice concepts found in the Consti-

tution’s Due Process Clause and administrative com-

mon law." On May 4, 2000, the EPA informed TVA by

letter that it was going to “reconsider” the ACO and

directed TVA to comply with the ACO in the meantime.

TVA petitioned this court for review of EPA’s “notice

of reconsideration” on May 12, 2000.

Rather than issuing a seventh amended ACO after

staff deliberation, the EPA took a step that it describes

as “exceedingly unusual”:’* it decided to “reconsider”

the ACO by “adjudicating” the issue of whether TVA

had violated the CAA when it undertook several plant

modifications without a permit.” The Administrator

'© Much like replacing a car battery, TVA contends that the

alleged “modifications” were acts of “routine maintenance” for the

following two reasons: (1) without the modifications the power

plants could not operate for their entire useful lives, and (2) the

modifications comprised only a tiny fraction of the total capital

outlay necessary to build and maintain each plant.

' For a thorough analysis of TVA’s fair notice claim, see

Note, Jason Nichols, “Sorry! What the Regulation Really Means

is. . . .": Administrative Agencies’ Ability to Alter an Existing

Regulatory Landscape Through Reinterpretation of Rules, 80 Tex.

L.Rev. 951 (2002).

'* See First Brief of Respondent at 41.

'’ Rather than examining whether the ACO was validly issued

(i1.e., whether the ACO was issued “on the basis of any infor-

mation”), the EPA sought to examine the issue of liability (i.e.,

whether TVA committed a violation of the CAA). “Neither the

15a

delegated the task of “reconsidering” the ACO to the

EAB, which she was entitled to do by law. See 40

C.F.R. § 1.25(e) (giving the EAB authority to exercise

any authority delegated to it, including the authority to

“serve as the fina! decisionmaker, as the Administrator

; CAA nor EPA’s regulations provides a specific process

; to . . . adjudicate an administrative order like the ACO,” the

EPA boldly points out. See Second Brief of Respondents at 9. So

why did the EPA decide to undertake an adjudication notwith-

; standing its observation that the statute does not authorize one?

The EPA gives this answer: “In most instances if a recipient

disputes or defies the [ACO], the EPA can chose to bring a judicial

enforcement action. That option was not available here because

TVA is a sister federal agency, whom EPA cannot sue in court.

Therefore, to address this unique circumstance, on May 4, 2000,

then-EPA Administrator Carol Browner delegated to the EAB

her authority to craft an appropriate reconsideration procedure,

tailored to these unusual circumstances in a manner consistent

with analogous agency practice, and further directed the EAB to

issue a final decision by September 25, 2000.” See Second Brief of

Respondents at 9. The EPA’s answer begs the question: Why

didn’t the EPA stop with the sixth amended ACO? Why did it feel

obliged to issue a seventh ACO after an “adjudication” that TVA

violated the CAA when it undertook various modifications without

a permit? One possibility is that the EPA felt that Executive

| Order 12146 would require the Attorney General to ultimately

decide the dispute, and the Attorney General could perhaps make

a better decision based upon some sort of record. TVA believes

that the EPA’s motive was more sinister, claiming that the agency

simply wanted to spur compliance with its demands while simul-

taneously thwarting judicial review by undertaking a proceeding

that would enable the EPA to allege that since its decision making

process had not been completed, any outstanding ACO was not

final. In any event, our first panel decision rejected EPA’s con-

tention that TVA could not be a defendant in a judicial enforce-

ment action. See Tenn. Valley Auth. v. EPA, 278 F.°d 1184 (11th

Cir. 2002). Faced with this holding, one must wonder why the

EPA did not thereafter treat this case as a typical dispute by

bringing an enforcement action in district court. \

es

l6a

deems appropriate”). Thus, the EAB, enlisted to serve

as a proxy for the Administrator, possessed the

Administrator’s authority to issue the EPA’s “recon-

sidered” ACO.

The EAB crafted a reconsideration procedure which,

to say the least, lacked the virtues of most agency

adjudications.” First, the ALJ was instructed by the

EAB not to make any findings of facts and conclusions

of law. Adjudications typically have statutory protec-

tions guaranteeing the ALJ’s independence from the

heads of the agencies in which they serve. See 5 U.S.C.

§ 7521. The EAR, by contrast, is a delegatee of the

Administrator and is located within the Administrator’s

Office. See 57 Fed.Reg. 5320, 5320-22 (Mar. 1, 1992).

Second, discovery was effectively unavailable: TVA

was not entitled to any compulsory process and there-

fore had to utilize only those documents that the EPA

voluntarily divulged; TVA was not allowed to take

several depositions; and the EPA made available its

hefty privilege log only after the hearing concluded.

Third, the testimony that was allowed at the hearing

Was again “limited” at the behest of the Administrator.

Fourth, the proceeding was rushed, giving TVA little

time to prepare its defense. TVA was given less than

eight weeks of advance notice of the hearing, and the

basis of EPA’s case was not divulged until three weeks

before the hearing. The reasoning behind EPA’s

~" This assertion comes with a caveat: the EAB proceeding was

unfair to the extent that it embodies an adjudication that TVA

committed a violation of the CAA. However, ACOs can be based

upon “any information availabie’—a considerably broad standard

that requires much less than an adjudication of liability. Viewed as

a search for “any information,” the procedural protections granted

by the EAB were certainly more than adequate.

17a

finding that TV A’s projects caused emissions increases

were not divulged at all prior to the hearing. More-

over, TVA was entitled to no more than two weeks to

identify witnesses in a regulatory matter spanning over

twenty years. TVA was not granted any time exten-

sions to conduct discovery and prepare its case. F?fth,

the EAB and ALJ manufactured the procedures they

employed on the fly, entirely ignoring the concept of

the rule of law. Although the EAB said that the EPA’s

Consolidated Rules of Practice (“CRP”), 40 C.F.R. § 22,

could serve as an adjudicatory model, the rules were

only to be used for “guidance.” See, e.g., In re Tenn.

Valley Auth., CAA Docket No. 00- 6, at 20 n. 11 (Sept.

15, 2000) (hereinafter “EAB Order”). The EAB

admonished TVA that the proceeding “is not a formal

[40 C.F.R. § 22] proceeding, that TVA is not entitled to

discovery, and that the schedule in this proceeding has

granted TVA significantly greater discovery and hear-

ing rights than required by CAA § 133(a), 42 U.S.C.

§ 7413(a).””’ EAB Order, at 17. The rules were applied

on a purely ad hoc basis. For example, under 40 C.F.R.

§ 22.27(a), the “Presiding Officer” (e.g., an ALJ) is

required to render an “initial decision.” The ALJ in this

case had no such authority. The ALJ also refused to

apply CRP in upholding EPA’s objections to TVA’s

document requests. Sometimes, the ALJ likened the

sixth amended ACO to a “complaint” so as to permit the

EPA to suppiement the record; other times, the ALJ

referred to the ACO as a mere “compliance order” and

used this categorization to bar TVA’s discovery.

Describing the procedural framework being employed,

“1 The EAB’s position was, of course, accurate. Section 7413

does not create any procedural rights precisely because an adjudi-

cation is not contemplated by that statute.

18a

the ALJ said: “There’s no question about it. This is an

invented . . . ad hoe procedure. .. . It’s not de-

scribed in any rule or regulation or statute... and

that’s the only way to look at it. There is no prece-

dent.” Transcript of June 7, 2000 Pre-Hearing Con-

ference at 74-75, R6-99. ;

The EAB ultimately “affirmed” most of the sixth

amended ACO on September 15, 2000. Both during the

EAB proceeding and after it concluded, the EPA

operated under the mistaken assumption that an ACO

issued after an ad hoc “adjudication” could somehow

possess a different legal status than an unadjudicated

ACO. The EAB, for example, consistently called the

product of the EAB decision a “Final Order” while

calling all prior ACOs “compliance orders.” The EAB

also said that “since the Administrator has directed us

to reconsider the Compliance Order, we will charac-

terize the Compliance Order’s findings as allegations

that must be proven in order to prevail on recon-

sideration, and the actions required by the Compliance

Order as requests for relief.” EAB Order, at 5-6. The

EAB thus characterized the sixth amended ACO as

something akin to a complaint, thereby implying that

its final decision, based upon a proceeding that pur-

ported to be an agency adjudication, was a different

animal. The EPA’s brief continues to support the

fanciful view that the adjudication conducted by the

ALJ and EAB somehow magically transformed the

ACO into something else. By way of background

(which will be discussed infra ), the EPA has consis-

tently contended that pre-enforcement review of ACOs

is unavailable because ACOs allegedly trigger no legal

consequences upon noncompliance with their terms.

But an adjudicated ACO, the EPA argues, is somehow

ee EEE EEE oOoeeeeeeeeerere

19a

a different creature: “In stark contrast to the ACO, the

EAB Final Order constituted a full and complete

adjudication by the EAB of the legal and factual issues.

Accordingly, the EPA does not contend that . . . this

is the kind of action as to which Congress intended to

bar pre-enforcement review.” See Second Brief of

Respondents, at 1 n. 4.

On November 13, 2000, TVA petitioned this court for

review of the EAB Order pursuant to 42 U.S.C.

§ 7607(b), which provides for appellate review of any

“final agency action of the Administrator.” We bifur-

cated our review of TVA’s petitions for review, dealing

first with several threshold issues in our opinion of

January 8, 2002. See Tenn. Valley Auth. v. EPA, 278

F.3d 1184 (11th Cir. 2002). We held that the petitions

for review of the pre-adjudication ACOs were moot

because the EAB Order rendered the first ACOs “of no

force and effect.” Jd. at 1191. We also held that TVA

possessed independent litigating authority; that the

dispute presented a justiciable case or controversy; that

Executive Orders 12146 and 12088 did not preclude

jurisdiction;~ and that various petitioners had standing.

Id. at 1191-1209. Finally, we held that the EAB Order

was a reviewable final order, id. at 1198-99, asserting in

a footnote that “we are not persuaded that a compliance

order may not be reviewed prior to an enforcement

action.” /d. at 1198 n. 21. After further reflection, we

no longer believe that the EAB Order constitutes final

agency action, and we therefore withdraw the part D of

~The EPA contended that Executive Order 12088 requires

that this dispute be resolved by the Director of the Office of

Management and Budget. The EPA also maintained that Execu-

tive Order 12146 requires that the Attorney General resolve this

inter-agency dispute.

20a

our previous opinion to the extent that it expresses a

contrary view.

IT. Discussion of Finality, Part One: The Law of

Finality and Why it Matters

A. Appellate Review Provision: Why Finality

Matters for Jurisdiction

The CAA provides that judicial review of any final

EPA action is available “in the United States Court of

Appeals for the appropriate circuit.” 42 U.S.C.

§ 7607(b): Harrison v. PPG Indus., Inc., 446 U.S. 578,

100 S. Ct. 1889, 64 L. Ed. 2d 525 (1980).” Thus, this

court has jurisdiction only if the EPA’s action consti-

tutes final agency action.

B. Finality Doctrine: An Overview

The Supreme Court has established five factors for

determining finality: (1) whether the agency action

constitutes the agency’s definitive position; (2) whether

the action has the status of law or affects the legal

rights and obligations of the parties; (3) whether the

action will have an immediate impact on the daily

operations of the regulated party; (4) whether pure

2 The Harrison Court had no occasion to address whether the

EPA action at issue in that case was truly final agency action.

Both parties agreed that the agency decision was final. See

Harrison, 446 U.S. at 586, 100 S. Ct. at 1894. The only question

before the Court was whether all final EPA actions were

appealable. Without an adversarial presentation of the issue, it is

not surprising that the Supreme Court failed to address the legal

consequences of the agency action at issue—a factor that the Court

held in Bennett v. Spear, 520 U.S. 154, 117 S. Ct. 1154, 137 L. Ed.

2d 281 (1997), to be a mandatory finality requirement. See part

II.B, infra.

Ne eEEEE———EEOeeEEEeEeEeEeEEOeeEeEeEeeeEeeeeEeEeEeEe—EeEeEEEEE

ee ee) re ee

2la

questions of law are involved; and (5) whether pre-

enforcement review will be efficient. See FTC v.

Standard Oil of Calif., 449 U.S. 232, 239-43, 101 S. Ct.,

488, 493-95, 66 L. Ed. 2d 416 (1980). The second prong

is especially important in this case. In Standard Oil,

the Court distinguished the regulations at issue in

Abbott Labs. v. Gardner, 387 U.S. 136, 149, 87 S. Ct.

1507, 1516, 18 L. Ed. 2d 681 (1967), on the ground that

the regulations had a “direct and immediate . . . effect

on the day-to-day business” of the complaining parties

because they had “ ‘the status of law.’” Standard Oil,

449 U.S. at 239-40, 101 S. Ct. at 493. In this vein, the

Court rejected the petitioner’s argument that the

FTC’s actions had legal significance: “Socal does not

contend that the issuance of the complaint had any such

legal or practical effect, except to impose upon Socal the

burden of responding to charges made upon it.

Although this burden is certainly substantial, it is

different in kind and legal effect from the burdens

attending what heretofore has been considered to be

final agency action.” Jd. at 242, 101 S. Ct. at 494.

Similarly, in Bennett v. Spear, 520 U.S. 154, 117 S. Ct.

1154, 137 L. Ed. 2d 281 (1997), which was recently

affirmed in Whitman v. American Trucking Ass’ns,

Inc., 531 U.S. 457, 121 S. Ct. 908, 149 L. Ed. 2d 1 (2001),

the Court explained as follows:

As a general matter, two conditions must be

satisfied for agency action to be “final”: First, the

action must mark the “consummation” of the

agency’s decision making process—it must not be of

a merely tentative or interlocutory nature. And

second, the action must be one by which “rights or

obligations have been determined,” or from which

“legal consequences will flow.”

22a

Bennett, 520 U.S. at 177-78, 117 S. Ct. at 1168

(citation omitted). The second Standard Oil prong,

then, is not merely thrown into a totality-of-the-factors

balancing test; it is mandatory. The second Bennett

factor—whether the agency action is one in which

“rights or obligations have been determined” or from

which “legal consequences will flow”—is central to our

position that ACOs are not final.”

III. Discussion of Finality, Part Two: Why

Congress May Not Have Empowered the EPA to Issue

ACOs with the Status of Law

It is entirely possible that Congress wanted the EPA

to issue inconsequential, complaint-like instruments

rather than ACOs with the status of law. That is, one

can make a solid argument that Congress never clothed

ACOs with the status of law, and that Congress be-

lieved that ACOs would not be subject to judicial re-

view.

A. Avoiding an Unconstitutional Interpretation

One reason that a court might interpret the CAA ina

way that diminishes the legal significance of ACOs is

the fact that the statutory scheme dictated by the plain

language of the statute is constitutionally repulsive. As

part V.B, infra, explains, the “status of law” inter-

pretation renders the statute unconstitutional, and

courts are loath to infer a congressional intention to

enact unconstitutional legislation. See Pub. Citizen v.

24 Several courts have held that ACOs are not final for reasons

that we ultimately find unconvincing. See infra part V.A. These

courts, which contend that ACOs are merely complaint-like docu-

ments that do not fix legal obligations, similarly focus on the

second prong of the Bennett test.

23a

United States Dep't of Justice, 491 U.S. 440, 465-66, 109

S. Ct. 2558, 2572-75, 105 L. Ed. 2d 377 (1989).

B. Statutory Structure and the Problem of

Superfluous Provisions

To ascertain the true meaning of a statute, courts are

often forced to delve into the structure of a statute and

the context in which different provisions are written.

See, e.g., United States v. Tinoco, 304 F.3d 1088, 1105

(11th Cir. 2002). Using this methodology, it becomes

apparent that an interpretation that would give ACOs

the status of law renders several statutory provisions

useless or absurd.

1. 42 U.S.C. § 7603

Perhaps most telling is 42 U.S.C. § 7603, which gives

the EPA special “emergency powers.” When a pollu-

tion source presents an “imminent and substantial

endangerment to public health or welfare, or the en-

vironment,” the EPA may bring suit for appropriate

relief. If it is “not practicable to assure prompt pro-

tection of public health or welfare” by recourse to a

judicial forum, then the EPA may issue an “order” on

its own initiative. This order “remains in effect” for, at

most, sixty days. To secure a permanent injunction, the

EPA must sue in district court. If the order is flouted

by the alleged violator, the full panoply of penalties can

be imposed, including imprisonment pursuant to 42

US.C. § 7418(c)(1).

It is clear from the text of section 7603 that Congress

enabled the EPA to issue orders with the status of law,

but only in an extremely narrow context. There must

be an emergency rising to the point of an “imminent

and substantial endangerment.” Moreover, the EPA

24a

order attains an injunction-like status only for an

extremely short time period; any extension must be

made by a federal court based upon proof that the

defendant has caused extremely harmful pollution.

And in the event of an “imminent and substantial en-

dangerment,” the EPA does not have unfettered dis-

cretion to enter a short-term, injunction-like order. The

agency must first resort to a judicial forum; only if that

option proves to be impracticable is the EPA justified

in issuing such an order. Finally, the EPA is forced to

“eonsult with appropriate State and local authorities

and attempt to confirm the accuracy of the information

on which the action proposed to be taken is based.”

Congress thus authorized the issuance of EPA orders

with the status of law, but only in an extremely narrow

setting (public emergency), as a last resort (if suing in

federal court is impracticable), for a very limited time

(sixty days), and after the EPA confirms its information

with state and local authorities. Why would Congress

cabin EPA orders in this way if the EPA can always

issue an identical order (i.e., an ACO) pursuant to 42

U.S.C. § 7413? After all, section 7413 ACOs are of an

infinite duration, and they can be issued without going

to court—even if recourse to a judicial forum is not

“impracticable.” Moreover, section 7413 ACOs can be

issued “on the basis of any information” that a violation

has been committed; there is no need to worry about

whether the violation constitutes a rare public emer-

gency, and there is no need to consult sate and local

authorities. In sum, section 7603 evidences a congres-

sional intent to permit the EPA to issue orders with the

force of law, but only so long as rigorous requirements

are met. Section 7413 apparently erases all of those

requirements.

25a

2. 42 U.S.C. § 7413

Section 7413(c)(1) states that “any person who

knowingly violates any . . . order under [42 U.S.C.

§ 7413(a) ] . . . shall, upon conviction, be punished by a

fine pursuant to Title 18, or by imprisonment for not to

exceed 5 years, or both.” When read literally, this

provision mandates that a knowing violation of the

terms of an ACO can lead to imprisonment. The ques-

tion for the district court is not whether the defendant

has, in fact, polluted in violation of an SIP. Rather, the

issues before the court are simply (a) whether an ACO

has been issued and (b) whether the defendant has

complied with its terms.”

This interpretation is, to say the least, bizarre when

one reads the rest of the statute. The other criminal

provisions require the Government to prove that a

defendant has negligently or knowingly released

hazardous pollutants. See 42 U.S.C. § 7413(c)(4), (5).

Why would Congress bother with requiring the use of

the full panoply of procedural rights found in the

Federal Rules of Criminal Procedure when the EPA

could simply issue an ACO based upon “any infor-

mation,” and, upon noncompliance with the ACO, obtain

a conviction? For that matter, the EPA has a strong

incentive to avoid proving a violation of an EPA

regulation or SIP in any forum—including a civil

proceeding in district court or an administrative

proceeding before an ALJ. If the EPA issues an ACO,

it can always avoid the arduous task of proving the

* In most cases in which the regulated party believes that the

EPA has an incorrect view of the law or facts, the party will freely

admit that it failed to comply with the terms of an ACO.

26a

violation in court. The ACO provision appears to be a

loophole of the highest order.

Section 7413 also provides that ACOs cannot take

effect until the regulated party has had an “opportunity

to confer” with the EPA. See 42 U.S.C. § 7413(a)(4).

Why did Congress include this language? If ACOs do

not have the status of law, then this provision makes

sense: ACOs are merely complaint-like devices that are

used in an effort to avoid recourse to litigation. They

are, in short, the beginning of the bargaining process.

See Lloyd A. Fry Roofing Co. v. EPA, 554 F.2d 885,

890-91 (8th Cir. 1977); Asbestec Const. Servs., Inc. v.

EPA, 849 F.2d 765, 769 (2d Cir. 1988). But if noncom-

pliance with an ACO ean really trigger civil and

criminal penalties, then what incentive does the EPA

have to “confer” with the regulated party? Ifthe EPA

can issue what is, in effect, an injunction, the EPA

would rarely feel compelled to compromise.

C. Agency Practice

An agency’s interpretation of its enabling legislation

often deserves deference. See Chevron U.S.A., Inc. v.

Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S. Ct.

2778, 81 L. Ed. 2d 694 (1984). The Supreme Court’s

decision in United States v. Mead Corp., 533 U.S. 218,

121 S. Ct. 2164, 150 L. Ed. 2d 292 (2001), held that

Chevron deference is confined to those instances in

which the agency renders its interpretation in the

course of a rulemaking proceeding or adjudication.

Even so, most courts would not completely ignore an

agency’s interpretation of its organic statutes—even if

that interpretation is advanced in the course of liti-

gation rather than a rulemaking or agency adjudication.

wl

ae onan See Cae eee ge eS

27a

The EPA has long taken the litigating position that

ACOs lack the status of law and are therefore not

subject to pre-enforcement review. In Solar Turbines

Inc. v. Seif, 879 F.2d 1073 (3d Cir. 1989), for example,

the EPA argued that the section 7603 compliance order

at issue “merely state[d] EPA’s position and [is] best

analogized to a complaint.” Id. at 1079." The EPA took

a similar position-in this case when it argued that

TVA’s first petition for review should be dismissed

because ACOs have no legal effect and are thus not

final agency actions: “The ACO . . . isin the nature of

an administrative ‘complaint.’” See EPA’s Motion to

Dismiss TVA’s Petition for Review of the Nov. 1999

and May 2000 ACOs at 24. And again: “Courts have

consistently held that, because they are not self-exe-

cuting and instead compel action only upon enforcement

by the EPA, compliance orders issued under environ-

mental statutes such as the Clean Air Act and Clean

Water Act are not ‘final’ under the APA.” Jd. (citations

omitted). And again: ACOs “do not impose legally

binding rights or obligations on the part of their

*6The EPA appears to have conveniently forgotten that

noncompliance with section 7603 ACOs can lead to the imposition

of criminal penalties. See Solar Turbines, 879 F.2d at 1080. By

contrast, the cover letter that accompanied the ACOs in Solar

Turbines stated that “[flailure to comply with this Order could

subject your firm to civil and criminal liabilities pursuant to the

Clean Air Act.” Jd. at 1080. See also Andrew I. Davis, Judicial

Review of Environmental Compliance Orders, 24 Envtl. L. 189,

218-21 (1994). Why does the EPA stake out a position in court that

differs from the position it takes when it issues an ACO to a

regulated party? One possibility is that the EPA likes to have its

cake and eat it too—employing the harsh provisions of the CAA

when confronting a potentially recalcitrant party, but hesitant to

reveal the legal significance of ACOs in court for fear that the very

part of the CAA that makes ACOs so effective will be struck down.

28a

recipients” and they are “not considered ‘final’ for

purposes of judicial review. . . . ” Id. at 26. And

again: “[A}bsent an enforcement action initiated by the

EPA and a subsequent court order, the findings and

conclusions in an administrative order have no opera-

tive effect.” Id. at 27.

D. The Problem of Judicial Review

Had Congress wanted ACOs to have the force of law,

it surely would have made them subject to judicial

review. And had Congress wanted judicial review of

ACOs, it surely would have required the EPA to create

a record that would facilitate judicial review. But

Congress clearly contemplated that ACOs would be

issued without a record, and so there would be no way

that a reviewing court could review the decision to

issue an ACO. The existence of this fact belies the

notion that Congress intended to enact a statute in

which ACOs have the force of law.

One might respond to this observation by saying that

this case does, in fact, have a record, and, in any event,

courts are always free to remand for the creation of a

record. See Harrison v. PPG Indus., Inc., 446 U.S. 578,

100 S. Ct. 1889, 64 L. Ed. 2d 525 (1980). But this retort

misses the point, avoiding an argument based upon

likely congressional intent and relying upon the parti-

cularities of one bizarre case. The point is this:

Congress created a statutory scheme in which ACOs

are issued without any sort of adjudication, and,

accordingly, the EPA has never (until now) undertaken

a proceeding that even marginally resembles an

adjudication prior to the issuance of an ACO. Given

this fact, did Congress really think that a violation of

the terms of an unadjudicated ACO (which are 99.9% of

29a

them) could trigger civil and criminal penalties? If

Congress intended that ACOs have the force of law,

then Congress surely would have facilitated judicial

review. Yet in almost every case, the EPA does not go

about making a record, and the statute clearly coun-

tenances this result. The impossibility of judicial

review in this setting demonstrates the unlikelihood

that Congress ever believed that noncompliance with

the terms of an ACO could trigger civil and criminal

penalties.

We also wonder how a court of appeals could remand

with instructions that the EPA conduct a pre-ACO

adjudication since the statute clearly does not require

that the EPA undertake an adjudication prior to the

issuance of an ACO?’ Perhaps the court is supposed

to issue a statement in its remand order that says the

following: “Although the statute says that the EPA

need not conduct a pre-ACO adjudication, we think that

it should do so.” A remand with instr=tions to adjud’

cate a dispute would, in effect, constit:ite an amend-

ment to the statute by judicial fiat.

2“ And what procedural rules would the EPA employ on re-

mand? After all, the EPA is not statutorily required to conduct an

adjudication. Perhaps future courts of appeals will attach, as an

appendix to their remand orders, a list of judge-made procedures

that the EPA ought to adopt so that the reviewing court can have

a record sufficient to conduct meaningful appellate review. These

procedures would vary from case to case, of course, depending on

the circumstances.

3 Indeed, the absence of a record is ultimately why Judge

Becker concluded in Solar Turbines that section 7477 orders are

not final agency actions. See 879 F.2d at 1085 (Becker, J., con-

curring).

30a

— —————~

Finally, we ask this question: assuming, arguendo,

that (a) ACOs have the status of law and (b) a court can

make the EPA conduct a pre-ACO adjudication, what

would be the issue for the court of appeals on review of

the pre-ACO adjudication? Throughout this appeal,

the litigants have assumed that EPA’s adjudication

could be overturned if it proves to be “arbitrary [and]

capricious or otherwise not in accordance with the law.”

See 5 U.S.C. $ 706(2)(A). But ACOs are valid so long as

(a) the EPA waits the requisite thirty days after a

Notice of Violation is issued; (b) the EPA grants an

“opportunity to confer” with the Administrator; and (c)

the EPA issues an ACO “on the basis of any infor-

mation available to the Administrator” that a regulated

party has violated the CAA. See 42 U.S.C. § 7413(a).

The only real inquiry is whether the Administrator

possessed “any information”—a standard that is less

rigorous than the “probable cause” standard found in

the criminal law setting. And it is certainly less

rigorous than traditional judicial review of agency

adjudications under the APA. Whether the Admini-

strator’s facts are too thin to warrant an adjudicated

finding that an SIP has, in fact, been violated is

irrelevant as far as ACOs are concerned. We therefore

take issue with the notion that the courts of appeals are

free to remand for an agency adjudication of whether

an SIP has been violated when that issue is irrelevant

in the ACO context.

E. Legislative History

The legislative history of the CAA, when read in

conjunction with several cases that form the backdrop

to that histery, supports the notion that Congress did

not believe that the issuance of an ACO constitutes

final agency action. And since ACOs with the status of

3la

law must be final, it seems unlikely that Congress

intended that ACOs have the status of law.

Prior to the CAA’s enactment in 1970, the bill re-

ported by the Senate Committee on Public Works, S.

4358, 91st Cong. (2d Sess.1970), contained section

116(a)—a provision that directed the Administrator to

issue an abatement order to any person in violation of

an SIP not being enforced by the state. The Senate

measure also contained language that specifically

provided for pre-enforcement judicial review of abate-

ment orders. By the time the measure emerged from

the Conference Committee, section 1138 of the Act

contained no language on the subject of pre-enforce-

ment review. Drawing upon this “silent deletion,” the

Eighth Circuit held that Congress intended to preclude

pre-enforcement review of ACOs. See Lloyd A. Fry

Roofing Co. v. EPA, 554 F.2d 885, 890-91 (8th Cir.

1977). The Eighth Circuit also noted that pre-

enforcement judicial review would be “wholly incon-

sistent with the enforcement mechanism established by

Congress” because “[p]re-enforcement review would

severely limit the effectiveness of the conference

procedure [provided by section 7413(a)(4)] as a means

to abate violations of the Act without resort to judicial

process.” Jd. The court rejected the interpretation

proffered by the regulated party, because that inter-

pretation would allow the EPA to “easily side-step the

possibility of pre-enforcement review by filing suit in

23In Lloyd A. Fry Roofing, the regulated party sought an

injunction that would prohibit the EPA from enforcing a Notice of

Violation. Although the procedural posture was different from the

case at hand, the court’s analysis of the CAA’s legislative history

and policy of favoring nonjudicial resolution of disputes is instruc-

tive.

a

32a

the district court without prior issuance of an

order... .” Id. at 891. In other words, allowing pre-

enforcement judicial review would create an enormous

incentive for the EPA to head straight to federal court

rather than using the alternative dispute resolution

mechanism established by Congress. Why issue an

ACO when doing so would enable the regulated party

to file a petition for review and delay enforcement as

long as possible? The EPA would be better off to hide

its ecards until it brings an enforcement action in federal

court.

Other courts similarly concluded that pre-enforce-

ment review is unavailable under the CAA. The

Second Circuit, for example, considered a case highly

analogous to the case at hand. See Asbestec Constr.

Servs., Inc. v. EPA, 849 F.2d 765 (2d Cir. 1988).

Looking to the Supreme Court decision in FTC v.

Standard Oil Co. of California, 449 U.S. 232, 239-48,

101 S. Ct. 488, 493-95, 66 L. Ed. 2d 416 (1980), for

guidance, the Second Circuit held that the ACO was not

a final agency action. The court conceded that the ACO

was a final and definitive statement of the agency’s

position, but it believed that the other Standard Oil

factors weighed against finding that the ACO was a

final action. See Asbestec, 849 F.2d at 768. The court

focused first on the second Standard Oil factor, which

requires the reviewing court to analyze the effect on

the petitioner absent review. The Second Circuit

rejected Asbestec’s claim that it would suffer adverse

effects sufficient to deem the agency action final; it was

not enough for Asbestec to show that it would be

“stigmatized” or suffer “diminished opportunities”

absent pre-enforcement review. Id. Relying on pre-

eedent, the court stated that “[the word] ‘effect’ in

33a

determining whether an agency’s action is final only

denotes the imposition of an obligation, the denial of a

right, or some other establishment of a legal relation-

ship.” Id. (citing Chicago & S. Air Lines, Inc. v. Water-

man S.S. Corp., 333 U.S. 103, 112-13, 68 S. Ct. 431, 436-

37, 92 L. Ed. 568 (1948), and Abbott Labs. v. Gardner,

387 U.S. 136, 152-53, 87 S. Ct. 1507, 1517-18, 18 L. Ed.

2d 681 (1967)). The court therefore held that “As-

bestec’s ‘stigma’ contention . . . is without merit

because neither its duties nor its obligations have been

altered by the compliance order.” Id. at 768-69. The

court then turned to the third Standard Oil factor and

noted that the issues presented for review were not

purely legal. Being mostly factual, “reviewing com-

pliance orders would ordinarily place a significant

burden on appellate courts.” Jd. at 769. The last

Standard Oil factor—whether immediate judicial re-

view would foster agency and judicial economy—

similarly militated against finding that the compliance

order was final. The court asserted that “the EPA

must have some degree of free rein to protect the public

from [environmental harm]. To introduce the delay of

court review of administrative action taken to amelio-

rate a potential public health hazard would conflict

with Congress’ aim to ‘accelerate . . . the prevention

and control of air pollution.’” Jd. (quoting 42 U.S.C. -

§ 7401(b)(2)). The court thus concluded that “im-

mediate pre-enforcement review of compliance orders

. . . serve[s] neither efficiency nor enforcement of the

Clean Air Act.” Id.

The Third Circuit also held that pre-enforcement re-

view of ACOs is not available under the CAA. See

Solar Turbines Inc. v. EPA, 879 F.2d 1073 (8d Cir.

1989). There, the EPA issued an ACO that “requir[ed]

34a

the immediate cessation of construction and/or opera-

tion of the gas turbine facility at Caterpillar Tractor.”

Id. at 1076. The court, approving of the reasoning of

the Eighth Circuit and a prior Third Circuit opinion,”

discussed the policy behind Congress's implicit decision

to deny pre-enforcement review:

A challenge to [an ACO] would intrude on the pro-

cedural sequence created by Congress whereby

parties receiving notice of noncompliance are first

encouraged to resolve their problems with the

states and with EPA in an informal, less costly

manner. Judicial review becomes appropriate when

the EPA, failing efforts at negotiation and com-

promise, takes steps at enforcement subjecting the

facility to consequential penalties.

Id. at 1078.

When the 1990 amendments to the CAA were pro-

posed, the Senate supported a bill with a provision

exactly the opposite of the bill it supported in 1970.

That is. the Senate proposed that the CAA explicitly

provide that “orders issued pursuant to section 113(a)

[and] section 167 . . . are not ‘final’ agency actions

within the meaning of section 307(b)(1).” S. Rep. 101-

928 (Dec. 20, 1989). The Senate Report explained the

policy behind the Senate proposal as one of (a) facili-

tating prompt EPA enforcement and (b) the promotion

of judicial econemy:

Any judicial review of administrative orders may be

carried out only at the time the government or

another person seeks to enforce such orders. Other-

wise, enforcement for violations of the Act could be

30 See West Penn Power Co. v. EPA, 522 F.2d 302 (3d Cir. 1975).

35a

delayed indefinitely pending judicial review of the

Federal courts of appeal. [Asbestec, Solar Turbines,

Union Electric,” and Lloyd A. Roofing | emphasize

that this clarification comports with the goals of the

Act. EPA must possess the ability to proceed

expeditiously against violators. Allowing immediate

review of an administrative order in a court of

appeals would significantly delay enforcement, and

could suspend correction of the underlying violation

for years. This is particularly true in cases where a

district court defers a decision pending a ruling by

the court of appeals. Equally undesirable is the

prospect that courts at both the district and court of

appeals levels might decide to consider the same

issue at the same time. In short, delays resulting

from the pre-enforcement review of administrative

orders not only conflict with the statutory directive

that air pollution be prevented in an expeditious

fashion, but it also hinders the ability to protect the

public from the environmental hazards associated

with air pollution.

* * *

This amendment will also promote judicial economy.

At present, burdens on the Federal appellate courts

are significant. Given the fact that many challenges

to administrative orders involved factual questions,

district court review in an enforcement proceeding

is the better forum than is review in the court of

appeals.

See S. Rep. 101-228 (Dec. 20, 1989).

31 Union Elec. Co. v. EPA, 593 F.2d 299 (8th Cir. 1979).

36a

Although the Conference Committee ultimately did

not adopt the Senate proposal, it is not possible to draw

the same inference from the “noisy” deletion in 1990 as

one could draw about the “silent” deletion in 1970. By

1990, a legal backdrop had been created by judicial

decisions holding that the CAA already precluded pre-

enforcement review. Citing Asbestec, Solar Turbines,

Union Electric, and Lloyd A. Fry Roofing, the Senate

Report noted that “several courts” had already held

that pre-enforcement review was foreclosed. For this

reason, the Report described the amendment as a

provision designed to “clarify” and “confirm” that

ACOs were not subject to pre-enforcement review.

The Senate sought only to make more clear what had

already been established in judicial decisions. In a

similar vein, two Senate managers on the Conference

Committee for the 1990 CAA amendments explained

the reasoning behind the Conference Committee’s dele-

tion as follows:

The conference agreement adopts the House pro-

vision. Section 307(b)(1) of the Act grants juris-

diction to the federal circuit courts of appeal to

review “final action” of the administrator. The term

“final action,” however, is defined only by a non-

exclusive list of particular kinds of actions. Several

courts have specifically considered whether section

307(b)(1) provides for pre-enforcement review of

administrative orders. As noted in Sen. Rep. 101-

928, at 387, the Second, Third, and Eighth Circuits

have already resolved and this issue and, as such,

except with respect to judicial review of admini-

strative penalty assessments and orders, there is no

opportunity for pre-enforcement review and no new

37a

statutory language addressing the issue is neces-

sary.

See Chafee-Baucus Statement of Senate Managers on

the House-Senate Conference Agreement, 186 Cong.

Rec. 36,085 (1990). Congress thus decided that the pre-

1990 version of the CAA already precluded pre-

enforcement review, making it unnecessary to “clarify”

its intention to preclude pre-enforcement review in the

1990 amendments.

IV. Discussion of Finality, Part Three: Why the

Plain Language of the CAA Does, in Fact, Give ACOs

the Status of Law

We have at our disposal several tools that might

guide our interpretation of the CAA: the constitutional

avoidance canon, statutory structure, legislative his-

tory, agency practice, and the problem of judicial re-

view. Even so, no canon of statutory interpretation can

trump the unambiguous language of a statute. As part

I.A, supra, makes clear, several provisions of the CAA

undeniably authorize the imposition of severe civil and

criminal penalties based solely upon noncompliance

with an ACO.” Although the Supreme Court has never

addressed the precise meaning of 42 U.S.C. § 7413, it

described the scheme as follows:

32 The Clean Water Act (“CWA”) uses many provisions that are

identical to those found in the Clean Air Act. One provision of the

CWA states that the Administrator can issue compliance orders

“on the basis of any information available to him.” 33 U.S.C.

§ 1319(a)(1). Indeed, the entire subsection is entitled “compliance

orders.” Subsection (d) of the CWA provides that “any person who

violates any order issued by the ‘.dministrator under subsection

(a) . . . shall be subject to a civil penalty not to exceed $25,000 per

day for each violation.”

re

38a

The 1970 amendments also specified certain enforce-

ment mechanisms. The Act empowered EPA to

order compliance with an applicable implementation

plan, § 113(a), 42 U.S.C. § 7413(a) (1982 ed.), and to

seek injunctive relief against a source violating the

plan or an EPA order, § 118(b), as amended, 42

U.S.C. § 7413(b) (1982 ed.). In addition, Congress

prescribed criminal penalties for knowing violations

of plans and orders, § 113(c), 42 U.S.C. § 7413(c)

(1982 ed.).

Gen. Motors Corp. v. United States, 496 U.S. 530, 533-

34,110 S. Ct. 2528, 2530, 110 L. Ed. 2d 480 (1990). Thus,

the Court is apparently under the impression that the

plain language of the CAA speaks for itself: noncom-

pliance with an ACO can trigger civil and criminal

penalties.

In a similar vein, a leading treatise concludes that

“(flailure to comply with [an ACO] is [an] independent

violation under [the CAA].” See Law of Environmental

Protection § 9.22 (Sheldon M. Novick et al. eds., 2003).

At least one law review article has made a similar

assessment. See Andrew I. Davis, Judicial Review of

Environmental Compliance Orders, 24 Envtl. L. 189,

194 (1994) (“Regardless of the merits of the alleged

violation underlying the compliance order, disregarding

the order potentially subjects the recipient to accruing

daily penalties. In addition, criminal penalties may be

imposed. . . . Thus, failure to obey a compliance order

subjects the recipient to civil, criminal, or admini-

strative enforcement actions, including penalties of up

to $25,000 per day.”).

Thus, although there are very good reasons for con-

cluding that Congress did not mean what it said, the

unambiguous language of the CAA, a decision by the

39a

Supreme Court, and scholarly commentary on the

subject stand united in their support of the following

proposition: Congress established a scheme in which

noncompliance with an ACO issued “on the basis of any

information available” can lead to the imposition of

severe civil penalties and imprisonment—even if the

EPA is incapable of proving an act of illegal pollution in

court.

V. The Unconstitutionality of ACOs That Have the

Status of Law

A. Cases

No court has discussed the constitutional issves in-

herent in a scheme in which an executive branch agency

can (a) make a finding, on the basis of “any information

available,” that the law has been violated and (b) issue a

compliance order which, if ignored, leads automatically

to the imposition of severe civil penalties and perhaps

imprisonment.

The cases that have addressed the issue of whether

pre-enforcement review of ACOs is available® can be

8 The vast majority of courts have held that pre-enforcement

review of CAA and CWA compliance orders is not available. See,

e.g., Lloyd A. Fry Roofing Co. v. EPA, 554 F.2d 885 (8th Cir. 1977):

West Penn Power Co. v. Train, 522 F.2d 302 (3d Cir. 1975);

S. Pines Ass'n v. United States, 912 F.2d 713 (4th Cir. 1990);

Hoffman Group, Inc. v. EPA, 902 F.2d 567 (7th 990); Union Elec.

Co. v. EPA, 593 F.2d 299 (8th Cir. 1979); Solar Turbines, Inc. v.

Seif, 879 F.2d 1073 (3d Cir. 1989); Asbestec Const. Serv., Inc. v.

EPA, 849 F.2d 765 (2d Cir. 1988); Laguna Gatuna, Inc. v.

Browner, 58 F.3d 564 (10th Cir. 1995); Child v. United States, 851

F. Supp. 1527 (D.Utah 1994). Courts have typically held that

ACOs do not constitute final agency action, and that Congress

impliedly precluded pre-enforecement review because such review

would undermine Congress’s intention to facilitate resolution of

40a

grouped into two categories. The first category

consists of those cases in which the courts recognize the

fact that ACOs have the status of law but fail to grapple

with the constitutional problems that arise from this

legal status. These cases include Allsteel, Inc. v. EPA,

25 F.3d 312 (6th Cir. 1994), and Alaska v. EPA, 244

F.3d 748 (9th Cir. 2001)—the only two cases that have,

to our knowledge, ever held that judicial review of an

EPA order under the CAA or CWA can be had prior to

an EPA enforcement proceeding.”

The second category consists of those cases in which

courts have underappreciated the legal significance of

ACOs. This category can, in turn, be divided into two

subgroups. The first subgroup consists of cases in which

courts conclude that a regulated party can attack, in a

subsequent enforcement proceeding, the legal and

factual bases for the EPA’s conclusion that a CAA

violation has been committed.” See, e.g., Lloyd A. Fry

disputes through nonjudicial means. See generally, Andrew ‘

Davis, Judicial Review of Environmental Compliance Orders, 24

Envt'l L. 189 (1994).

34 It is not surprising that these courts failed to deal with the

constitutional issues we raise—especially the due process

issue—because no “deprivation” of liberty or property is actually

at issue until the Government imposes penalties in a subsequent

enforcement proceeding. It might appear, then, that the due

process issue is not squarely before the court when it is reviewing

an ACO. However, subject matter jurisdiction ultimately hinges

upon the validity of an enforcement scheme that gives ACOs the

status of law, and the courts have an obligation to assess their

subject matter jurisdiction swa sponte. See Freytag v. C.I.R., 501

U.S. 868, 896, 111 S. Ct. 2631, 2648, 115 L. Ed. 2d 764 (1991).

35 Although this view is understandable in light of the Consti-

tution’s requirement of due process and the separation-of-powers

principle, there is no statutory authority for such an inter-

pretation.

4la

Roofing Co. v. EPA, 554 F.2d 885, 891 (8th Cir. 1977)

(“[W]e are persuaded by the legislative history of the

Clean Air Act Amendments of 1970 to hold that

plaintiff lacks authority to initiate and maintain

litigation to challenge the EPA’s order . . . and that

plaintiff must assert its claims as a defense or

counterclaim in any action brought by the Admini-

strator of EPA under section 113 of the Clean Air

Act.”); Child v. United States, 851 F. Supp. 1527, 1536

(D.Utah 1994) (“[I]n the event of any actual assessment

of administrative penalties or a judicial enforcement

action under § 309(a), plaintiffs would have an addi-

tional opportunity to challenge the EPA’s findings in

the district court.”). If this view were correct, then the

underlying conduct that triggered the issuance of the

ACO would be the ultimate basis for liability, not

noncompliance with the ACO. The ACO would fix no

legal obligation whatsoever. Any judicial manipulation

of the statute that would permit, in the context of an

EPA enforcement suit alleging a violation of an ACO,

an inquiry into the underlying violation—i.e., whether

the alleged polluter actually undertook a “modification”

without a permit or otherwise violated an SIP or EPA

regulation—would have the effect of making the ACO

nonfinal.” Only if noncompliance with the terms of an

ACO amounts to an independent violation of the CAA

(thus triggering civil penalties and criminal sanctions)

°° One treatise contends that courts were wrong to hold that

ACOs are not final agency actions. The authors debunk the faulty

premise that “[i]f EPA does proceed to court, the order can be

challenged at that time.” Law of Environmental Protection § 9:22,

at 9-100 (Sheldon M. Novick et al. eds., 2003). Rather, the authors

point out that “[flailure to comply with such an order is [an]

independent violation under many of the statutes,” including the

CAA. Td.

ee

42a

can an ACO be said to have a “legal consequence.” And

only then can an ACO be considered final. It is not

surprising that no court in this subgroup has found that

ACOs constitute final agency action.

The second subcategory consists of those cases in

which courts read out the penalty provisions of the

statutory scheme. In Solar Turbines, Inc. v. Seif, 879

F.2d 1073. 1081 (3d Cir. 1989), the court held that “[t]he

plain language of the statute does not identify any

adverse consequences from violating a section 167

administrative order.” However, as several commenta-

tors have observed, 42 U.S.C. § 7413(¢)(1) provides that

a violation of an order issued pursuant to CAA § 167, 42

U.S.C. § 7477, is a crime. See Law of Environmental

Protection § 9.22 (Sheldon M. Novick et al. eds., 2003);

Andre I. Davis, Judicial Review of Environmental

Compliance Orders, 24 Envtl. L. 189, 220 (1994). This

faulty premise enabled the Third Circuit to conclude

that the ACO was merely a complaint-like instrument

with no legal significance. Solar Turbines, 879 F.2d at

1081." The court in Asbestec Construction Services,

Inc. v. EPA, 849 F.2d 765 (2d Cir. 1988), similarly

concluded that the regulated party failed to show that

“its duties [or] obligations have been altered by the

compliance order.” Jd. at 769. Finally, the court in

Southern Pines Associates v. United States, 912 F.2d

713 (4th Cir. 1990), held that the ACO issued pursuant

to the CWA was nonfinal. The court based its

37 At least one law review article echoes this incorrect view. See

Note. The Clean Air Act Amendments of 1990: Permits and

Enforcement-The Guts of the New Law, 18 U. Dayton L. Rev. 275,

305 (1992) ( “[TJhe function of the compliance order is to put the

source on notice that other action may be taken if compliance is not

achieved quickly.”).

43a

conclusion not simply on the fact that the CWA was

modeled after the CAA and therefore “Congress meant

to preclude judicial review of compliance orders under

the CWA just as it meant to preclude pre- enforcement

review under the CAA and CERCLA.” 7d. at 716.

Rather, the court also held a misguided understanding

of the legal status of ACOs: “Because the compliance

order does not alter [the regulated parties’] obligations

under the Act, and EPA can bring a suit whether or not

it issues an order, [the regulated parties] are not faced

with any greater threat from EPA just because EPA

seeks to negotiate a solution rather than to institute

civil proceedings immediately.” Jd. at 716 n. 3.

B. Constitutional Violations

The statutory scheme established by Congress—in

which the head of an executive branch agency has the

power to issue an order that has the status of law after

finding, “on the basis of any information available,” that

a CAA violation has been committed—is repugnant to

the Due Process Clause of the Fifth Amendment.”

Before the Government can impose severe civil and

criminal penalties, the defendant is entitled to a full and

fair hearing before an impartial tribunal “at a mean-

ingful time and in a meaningful manner.” Armstrong v.

Manzo, 380 U.S. 545, 552, 85 S. Ct. 1187, 1191, 14 L. Ed.

2d 62 (1965). As shown in Scenario One, see supra part

I.A, the scheme enacted by Congress deprives the

38 We decline to assess the constitutionality of the provision

found in 42 U.S.C. § 7603, which empowers the EPA to issue a

compliance order with the status of law, because that provision is

not before us. Section 7603, which applies only in emergency situa-

tions and sharply limits the time period in which ACOs have

injunction-like status, is certainly less offensive to the Constitution

than the scheme established by 42 U.S.C. § 7413.

44a

regulated party of a “reasonable opportunity to be

heard and present evidence”” on the two most crucial

issues: (a) whether the conduct underlying the issuance

of the ACO actually took place and (b) whether the

alleged conduct amounts to a CAA violation.

Confronted with this patent violation of the Due

Process Clause, the EPA might be inclined to respond

that it can always “save” the statute by voluntarily

undertaking an adjudication prior to the issuance of an

ACO. This is a fallacious argument, because the statute

clearly establishes a scheme in which the decision to

issue an ACO, like the decision to file a civil suit in

district court, is made not after a full-blown adjudi-

cation of whether a CAA violation has been committed,

but rather on the “basis of any information available to

the Administrator.” This is not an area in which the

organic statute has set a vague standard, and there is

simply no room for administrative discretion on this

point. The EPA cannot, in short, amend the statute.

Far from rendering the statutory scheme more

palatable, a pre-ACO adjudication would only highlight

another constitutional problem with the CAA: the

statutory scheme unconstitutionally delegates judicial

power to a non-Article III tribunal. See N. Pipeline

Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50, 102

S. Ct. 2858, 73 L. Ed. 2d 598 (1982). The statutory

scheme relegates Article III courts to insignificant

tribunals. The district courts serve as forums for the

EPA to conduct show-cause hearings.” And the courts

39 Yakus v. United States, 321 U.S. 414, 433, 64 S. Ct. 660, 671,

88 L. Ed. 834 (1944).

4” The regulated party is, in essence, forced to show cause why

it should not be imprisoned or subjected to civil penalties for

violating the EPA’s order.

45a

of appeals are similarly emasculated, reviewing only

whether the ACO has been validly issued—i.e.,

whether the Administrator based her decision to issue

the ACO based upon “any information” as opposed to

no information at all.“ Without meaningful judicial

review, the scheme works an unconstitutional delega-

tion of judicial power. See Crowell v. Benson, 285 U.S.

22, 55-60, 52 S. Ct. 285, 293-97, 76 L. Ed. 598 (1932)

(upholding the plenary power of an administrative

agency to adjudicate certain questions of fact because

significant Article III review of legal and factual issues

was preserved); Northern Pipeline, 458 U.S. at 85, 102

S. Ct. at 2879 (holding that Article III review of the

bankruptcy court under the “clearly erroneous” stan-

dard was not rigorous enough to save the statute); id. at

70 n. 23, 102 S. Ct. at 2871 n. 23 (noting that “[even]

when Congress assigns [‘public rights’] matters to

administrative agencies, or to legislative courts, it has

generally provided, and we have suggested it may be

required to provide, for Article III judicial review”); id.

at 91, 102 S. Ct. at 2882 (Rehnquist, J., concurring)

(agreeing with the plurality that the scope of judicial

review established by the statute was insufficient to

save the statute); id. at 115, 102 S. Ct. at 2894 (White,

1 If a court of appeals were confronted with two ACOs—the

first issued after a formal adjudication that the regulated party

committed a CAA violation and the second issued after the Admi-

nistrator obtained “any information” such as a newspaper clipping

or anonymous phone tip—the court of appeals would be forced to

deny each petition for review and hold that each ACO had been

validly issued. With regard to the first ACO, the court of appeals

would be forced to stop its analysis after finding that the “any

information” standard had been met; any further inquiry into

whether the EPA had “substantial evidence” of a CAA violation

would be unnecessary and unauthorized.

46a

J., dissenting) (opining that appellate review “will go a

long way toward insuring a proper separation of

powers”); Commodity Futures Trading Comm'n v.

Schor, 478 U.S. 833, 853, 106 S. Ct. 3245, 3258, 92 L. Ed.

2d 675 (1986) (upholding a CFTC adjudicatory scheme

after noting that Congress permitted meaningful

judicial review); see also Richard H. F allon, Of Legis-

lative Courts, Administrative Agencies, and Article

III. 101 Harv. L.Rev. 916 (1988) (concluding that

meaningful judicial review in an Article III court isa

necessary and sufficient requirement under the Consti-

tution): Richard B. Saphire & Michael E. Solimine,

Shoring Up Article III: Legislative Court Doctrine in

the Post CFTC v. Schor Era, 68 B.U. L.Rev. 85 (1988)

(asserting that judicial review by an Article III court is

a necessary but insufficient requirement of any

delegation of judicial power).

VI. Conclusion

The Clean Air Act is unconstitutional to the extent

that mere noncompliance with the terms of an ACO can

be the sole basis for the imposition of severe civil and

criminal penalties. Therefore, ACOs lack finality

because they do not meet prong two of the Bennett test.

We thus conclude that courts of appeals lack juris-

diction to review the validity of ACOs. The EPA must

do what it believes it has been required to do all

along—namely, prove the existence of a CAA violation

in district court, including the alleged violation that

spurred the EPA to issue the ACO in this case.

PETITIONS DISMISSED.

BARKETT, Circuit Judge, specially concurring,

WILSON, Circuit Judge, joins:

47a

Upon reconsideration, I agree with Judge Tjoflat

that this court does not have jurisdiction to review the

EAB’s order and that, to enforce its determination that

TVA has violated the Clean Air Act, 42 U.S.C. § 7401

et seq., the appropriate procedure is for the EPA te file

an original action in the district court, just as it does in

most other instances in which it has determined that a

violation has occurred. See 42 U.S.C. § 7413(b) (de-

scribing civil judicial enforcement); see also Second

Brief of Respondents at 9 (explaining the EPA’s normal

course of action for enforcing a compliance order).

As Judge Tjoflat notes, 42 U.S.C. §§ 7413(a)(1), (3)

and (5) each provide that the Administrator can con-

clude that there has been a violation of the require-

ments or prohibitions of the Clean Air Act “on the basis

of any information.” Id.; see also 42 U.S.C. § 7413(a)(2)

(omitting the word “any” from comparable language in

the provision concerning “State failure to enforce SIP

or permit program”). Having concluded “on the basis of

any information” that a violation has occurred, the

Administrator can either:

(1) issue an order requiring compliance with

the requirements or prohibitions at issue, 42

U.S.C. §§ 7413(a)(1)(A), (a)(2)(C) and (a)(3)(B), or

prohibiting construction or modification, § 7413(a)(5)

(A);

(2) obtain an administrative penalty order by

following the hearing procedures of the Admini-

strative Procedure Act, 5 U.S.C. § 554 and 556,

see 42 U.S.C. §§ 7413(a)(1)(B), (a)(2)(B), (a)(8)(A),

(a)(5)(B), and (d);

48a

(3) bring a civil action in district court for

injunctive relief and fines, $§ 7413(a)(1)(C), (a(2)(C),

(a)(3)(C), (a)(5)(C), and (b); and/or

(4) request that the Attorney General commence a

criminal action, § 7413(a)(3)(D).

Under the statutory scheme, the first option for

federal enforcement—issuing an administrative order,

like the EAB’s order before us—can be pursued based

on “any information available,” without giving the

alleged violator an opportunity to challenge the

information upon which the order of compliance is

based. Although an alleged violator can “challenge” the

Administrator’s conclusion by conferring with him/her,

the statute does not require that the Administrator

consider any such arguments or evidence brought to

his/her attention beyond that of a good faith effort to

comply. See 42 U.S.C. § 7413(a)(4). Thereafter, the

statutory scheme provides that penalties, either civil or

criminal, can be assessed based only upon a showing

that the terms of the order to comply were violated.

See 42 U.S.C. § 7413(b)(2) (empowering the Admini-

strator to commence a civil action for penalties against

an alleged violator “whenever such person has violated,

or is in violation of, . . . a requirement or prohibition

ofany ... order... issued... under this

chapter”); § 7413(c)(1) (subjecting any person convicted

of “knowingly violating . . . any order under sub-

section (a) of [§ 7413]” to criminal fines and/or

imprisonment). This scheme must be deemed violative

of the due process protections of our Constitution.

49a

Although the Administrator in this case attempted

to fill the gap in the statute and provide some process

to TVA,’ it cannot be deemed sufficient because consti-

tutional due process cannot be provided on an ad hoc

basis under the direction and control of the entity

whose decision is being challenged.” The appropriate

course of action, as noted by Judge Tjoflat, would have

been for the EPA to file an action in federal district

court pursuant to 42 U.S.C. § 7413(b) as it does in cases

involving private energy companies. I recognize that

the EPA believed that it could not have pursued this

course of action against another government agency for

the multitude of reasons presented and rejected in our

earlier opinion in this case. However, as we have now

laid all these concerns to rest, the EPA should treat

TVA as it does any private energy company for en-

forcement purposes. Thus, the EPA’s present recourse

is to file an original action in federal district court to

enforce its order that a violation has occurred.

1 After conferring with TVA and amending the initial

compliance order several times, the EPA crafted a reconsideration

procedure during which (1) the parties engaged in pre-hearing

discovery over two months and (2) an administrative law judge

(ALJ) presided over a multi-day evidentiary hearing where each

party presented and cross-examined witnesses. The ALJ then

prepared and transmitted the entire record to the EAB for its

consideration.

* To avoid this due process violation, we conclude that no

penalties or other adverse consequences could flow directly from

administrative compliance orders. Thus, we can have no juris-

diction over the order before us under 42 U.S.C. § 7607(b)(1)

because it lacks the legal consequences required under FTC v.

Standard Oil of Calif., 449 U.S. 232, 239-43, 101 S. Ct. 488, 66 L.

Ed. 2d 416 (1980), to make it a final agency action.

50a

[APPENDIX OMITTED}

5la

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

Nos. 00-12310, 00-12311, 00-12349, 00-12457 to 00-12459,

00-15936 AND 00-16234 To 00-16236.

TENNESSEE VALLEY AUTHORITY, PETITIONER,

GEORGIA POWER COMPANY, INTERVENOR

V.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, JOHN H. HANKINSON, JR., REGIONAL

ADMINISTRATOR, ET AL., RESPONDENTS

ALABAMA POWER COMPANY, DUKE ENERGY

CORPORATION, PETITIONERS,

GEORGIA POWER COMPANY, INTERVENOR

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, JOHN H. HANKINSON, JR., REGIONAL

ADMINISTRATOR, ET AL., RESEONDENTS

TENNESSEE VALLEY AUTHORITY, PETITIONER,

GEORGIA POWER COMPANY, INTERVENOR

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, JOHN E. HANKINSON, JR., REGIONAL

ADMINISTRATOR, ET AL., RESPONDENTS

TENNESSEE VALLEY AUTHORITY, PETITIONER,

GEORGIA POWER COMPANY, INTERVENOR

VU.

nearer

52a

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, JOHN H. HANKINSON, JR., REGIONAL

ADMINISTRATOR, ET AL., RESPONDENTS

ALABAMA POWER COMPANY, DUKE

ENERGY CORPORATION, PETITIONERS,

GEORGIA POWER COMPANY, INTERVENOR

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, JOHN H. HANKINSON, JR., REGIONAL

ADMINISTRATOR, ET AL., RESPONDENTS

TENNESSEE VALLEY AUTHORITY, PETITIONER,

GEORGIA POWER COMPANY, INTERVENOR

Vv.

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, JOHN H. HANKINSON, JR., REGIONAL

ADMINISTRATOR, ET AL., RESPONDENTS

TENNESSFE VALLEY AUTHORITY, PETITIONER

V.

CHRISTINE TODD WHITMAN, ADMINISTRATOR,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, RESPONDENTS

ALABAMA POWER COMPANY, PETITIONER

VU.

CHRISTINE TODD WHITMAN, ADMINISTRATOR,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, RESPONDENTS

TENNESSEE VALLEY PUBLIC POWER ASSOCIATION,

MEMPHIS LIGHT, GAS & WATER

DIVISION, ELECTRIC POWER BOARD OF

CHATTANOOGA, ET AL., PETITIONERS

Vv.

53a

CHRISTINE TODD WHITMAN, ADMINISTRATOR,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, RESPONDENTS

DUKE ENERGY CORPORATION, PETITIONER

Vv.

CHRISTINE TODD WHITMAN, ADMINISTRATOR,

UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, RESPONDENTS

Jan. 8, 2002

PETITIONS FOR REVIEW OF ORDERS OF THE

ENVIRONMENTAL PROTECTION AGENCY

Before: TJOFLAT, BARKETT AND WILSON, Circuit

Judges.

BARKETT, Circuit Judge:

Pursuant to the Clean Air Act (CAA), 42 U.S.C.

§ 7607(b), the Tennessee Valley Authority (TVA),

joined by a number of private power companies and

industry associations, petitions for reviéw of three

orders issued to it by the Environmental Protection

Agency (EPA).' Centrally at issue in these orders is

' The first is an Administrative Compliance Order (ACO)

issued on November 3, 1999, and last amended on April 10, 2000.

The second is a Reconsideration Notice issued on May 4, 2000, in

which EPA agreed to review and reconsider the ACO, but stated

that the ACO would remain in effect while the review process took

place. The third is a Final Order on Reconsideration issued by

EPA’s Environmental Appeals Board (EAB) on September 15,

en

54a

EPA’s determination that certain maintenance and

repair projects conducted by TVA at many of its coal-

fired power plants in the past twenty years constituted

“modifications” that required TVA to obtain pre-con-

struction permits and to bring the plants into com-

pliance with the more stringent emissions limitations

that apply to new facilities. The challenged orders

therefore require TVA to obtain these permits after the

fact, and to install the mandated pollution control

devices at all the “modified” plants. In response to

EPA’s determination, TVA principally argues that the

maintenance it conducted at its plants was “routine,”

and as such, is statutorily exempted from the require-

ments that apply to “modifications.” TVA contends

that EPA’s orders rely on a new and different inter-

pretation of “routine,” and that its attempt to apply

that interpretation retroactively deprived TVA of fair

notice. It also challenges the methodology by which

EPA determined whether TV A’s projects at the power

plants resulted in an emissions increase. Arguing that

2000, in which the EAB sustained most of the original Compliance

Order. For the purposes of our review, we have consolidated ten

separate petitions arising in two cases relating to the three orders.

The first case, TVA I, encompasses the petitions seeking review of

the first two orders. Joining TVA (nos. 00-12310 and 00-12459) in

that case are the Alabama Power Company (APC) (nos. 00-12311

and 00-12458), Duke Energy Corporation (Duke) (nos. 00-12311

and 00-12458), Tennessee Valley Public Power Association

(TVPPA) (nos. 00-12349 and 00-12457), and, as an intervenor in all

the petitions, the Georgia Power Company (GPC). The second

case, TVA II, challenges the EAB decision. TVA is joined in that

case by APC (no. 00-16234), Duke (no. 00-16236), TVPPA (no. 00-

16235), and Memphis Light, Gas & Water Division, Electric Power

Board of Chattanooga, Middle Tennessee Electric Membership

Corporation, North Georgia Electric Membership Corporation, and

Volunteer Electric Cooperative (no. 00-16235).

55a

IPA’s determination was arbitrary, capricious, and

contrary to law, TVA seeks to have the orders set

aside.

EPA has filed a number of motions to dismiss,

arguing that for various reasons this Court lacks

subject matter jurisdiction to review the dispute

between EPA and TVA. EPA has also moved to

dismiss all parties other than TVA on the ground that

they lack standing to challenge orders that were not

issued, and do not apply, to them. Since these are

threshold challenges, we must address them first in

order to determine whether we may consider the

merits of the petitions before us. We held oral

argument to consider preliminarily only these motions

and we resolve them here. While a number of EPA’s

challenges present complex and close questions,

ultimately we are not persuaded that we lack

jurisdiction to review the orders issued to TVA, nor

that the private petitioners lack standing.

BACKGROUND

At this juncture, we confine ourselves to a brief

statement of the facts and procedural history relevant

to EPA’s challenges to this Court’s jurisdiction over the

petitions that have been filed in the case. This action

concerns a dispute arising under the CAA, 42 U.S.C.

§§ 7413, 7477. Since one of the goals of the CAA is to

prevent increases in air pollution resulting from modifi-

cations made to existing sources of pollutants, such as

power plants, under the Act’s New Source Performance

Standards (NSPS) and New Source Review (NSR)

programs, an existing source of pollutants is required to

obtain a permit before it makes any such pollution-

56a

»

increasing modifications.” TVA, a corporate agency and

instrumentality of the United States, 16 U.S.C. § 831,

owns and operates eleven coal-fired electrical power

generating plants. At the heart of this dispute is EPA’s

contention that in the past two decades TVA undertook

fourteen projects at nine of these coal-fired plants

without first obtaining the required permits. As noted,

-TVA argues that its modifications constituted “routine”

maintenance, repairs, or replacements that are statuto-

rily exempt from NSPS and NSR regulation.’ It also

challenges the method EPA employed to determine

whether its projects at the plants in question resulted

in emissions increases.

On November 3, 1999, EPA issued an Administrative

Compliance Order (ACO) to TVA, pursuant to §§ 113(a)

and 167 of the CAA, 42 U.S.C. §8§ 7413(a) and 7477

(1999). The ACO contained findings that TVA’s

“modifications” of several of its operating plants vio-

lated certain provisions in the CAA, and did not fall

under any regulatory exemptions. The ACO directed

- A “major modification” is defined as “any physical change in

or change in the method of operation of a major stationary source

that would result in a significant net emissions increase of any

pollutant subject to regulation under the Act.” 40 C.F.R.

§ 52.21(b)(2)(1).

*> A central disagreement between TVA and EPA is whether

“routine” should be defined relative to an industrial category or to

a particular unit. TVA contends that a maintenance or replace-

ment project that may need to be undertaken only once or twice

during the life of a particular unit—and so in that sense is not

routine—is nonetheless routine within the industrial category,

since it has to be done once or twice within the life of every such

unit. According to TVA, EPA formerly used the “industrial

category” as the baseline and is now treating the individual unit as

the frame of reference instead.

57a

TVA to take numerous remedial measures pursuant to

the CAA, including (i) proposing a reasonable schedule

for obtaining permits and installing pollution controls

that allegedly should have been installed when the

modifications were consiructed, and (ii) providing an

audit of its other construction activities to identify any

additional unpermitted modifications. The ACO stated

that “[flailure by TVA to comply with . . . [this] order

may result in administrative action for appropriate

relief including civil penalties, as provided in [§] 113

of the Act, 42 U.S.C. § 7413.” At a conference on

December 20th and by subsequent letter, TVA notified

EPA of its objections to the ACO and indicated its

intention to seek review of the Order in this Court if

EPA did not withdraw it. TVA filed a petition in this

Court for review of the November 3rd ACO, as

amended, on May 4th, 2000. Also petitioning for review

of the ACO are Alabama Power Company (APC), Duke

Energy Corporation (Duke), and the Tennessee Valley

Public Power Association (TVPPA).

In response to TVA’s earlier request to reconsider

the ACO and to withdraw or stay it, the Regional

Administrator of the EPA issued a letter on May 4th,

2000—the same day TVA filed its petition in this

Court—granting reconsideration of the ACO, but

indicating that the Order, which was to have taken

effect on March 6, 2000, would remain in effect during

the review process, and expressing the expectation that

TVA would comply with its conditions. In its letter,

EPA stated that then-Administrator Browner had

directed the Environmental Appeals Board (EAB) to

conduct reconsideration proceedings and to render a

decision by September 15, 2000 with findings cf fact and

conclusions of law. TVA, APC, Duke, and TVPPA then

Ee

58a

filed a petition for review of EPA’s May 4th letter

refusing to withdraw the ACO or to stay it pending the

reconsideration proceedings.

The May 4th Letter set forth a schedule for con-

ducting the EAB review process. It provided:

(1) by no later than May 31, 2000, EPA will

provide to TVA a core set of documents relevant to

the Order and the issues set forth by TVA on

December 20, 1999; (2) between the date of this

letter and June 30, 2000, TVA and EPA enforce-

ment staff may exchange document requests and

interrogatories, and take depositions of persons

who may have information relevant to the factual

and legal issues surrounding the Order; (3) on or

about July 15th, a hearing no longer than six days

shall occur to adduce relevant oral testimony; and

(4) no later than July 31st, the parties shall proffer

documents and hearing transcripts that form the

basis of their legal and factual arguments as well as

legal memoranda in support of their claims.

The Administrator selected three members of the

EAB to conduct the review. The EAB then asked an

Administrative Law Judge (ALJ) to supervise dis-

covery and hold an evidentiary hearing to develop a

record for the EAB’s review; however, the ALJ was

not asked to make any findings of fact or conclusions of

law. The EAB issued its decision on September 15,

2000, determining that EPA had either abandoned or

failed to prove roughly half of the allegations of the

ACO, but that it had proved the remainder of the

alleged violations. It found at least one violation at all

but one of the plants that had been cited in the ACO,

rejecting TVA’s argument that the projects at the

59a

plants constituted “routine maintenance” and that TVA

lacked fair notice of EPA’s interpretation of “routine.”

Finally, it sustained the remedies sought by EPA,

although it vacated the surrender of SO, allowances as

premature and stated that the determination of what

pollution controls will be required under the permits

must be made on a case-by-case basis by the applicable

permitting authority. TVA then petitioned for review

of the EAB decision in this Court.’ This case consoli-

dates all the petitions that have been filed in response

to the three orders issued to TVA by EPA.°

DISCUSSION -

The Department of Justice, on behalf of EPA, has

asserted that this Court lacks subject matter juris-

diction to hear the petitions in this case. It argues that

_ (a) the issuance of the EAB decision rendered moot all

petitions relating to earlier orders issued by EPA; (b)

TVA lacks independent authority to conduct this

litigation over the opposition of the Attorney General;

(c) there is no justiciable case or controversy because

both EPA and TVA are executive branch agencies

whose leaders serve at the pleasure of the President;

(d) the EAB decision is not a reviewable final order; (e)

the EAB decision is not ripe for judicial review because

TVA has not first submitted the dispute to the

Attorney General for resolution as required by

Executive Order; and (f) the petitioners other than

TVA, none of whom received the challenged orders

* In addition to TVA, several other parties separately filed

petitions for review of the EAB decision. See supra note 1.

° Before the petitions were consolidated, TVA moved to

intervene in 00-16234, 00-16235, and 00-16236. Since the petitions

have now been consolidated, this motion is denied as moot.

ee

60a

from EPA nor is subject to them, lack standing to

petition this Court for review.

We first dispose of matters regarding the ACO and

the May 4th Letter. We then consider the interrelated

arguments relating to the EAB’s decision. Finally, we

consider the standing issue relating to petitioners other

than TVA.

A. Mootness: The Effect of the EAB Decision on

the ACO and the May 4th Letter

Although we have carried with the case EPA’s

motions to dismiss on the ground that the ACO and the

May 4th Letter are not reviewable because they are not

final agency actions, EPA now argues that TVA’s

petitions to set aside the ACO and the May 4th letter

are moot, since the subsequent EAB decision supplants

the ACO. EPA therefore argues that, if there is any

reviewable agency action at all, it is only the EAB

decision, because that is the only ruling to which TVA

remains subject. Initially, TVA argued that the EAB

decision did not withdraw or supercede the ACO, but

simply “sustained” it. APC EAB Brief at 34-35.° For

two reasons it urged us to set aside the EAB decision

and review the ACO on the administrative record certi-

fied to this Court on June 15, 2000. First, it argued that

the EAB decision is EPA’s litigation position, a post

hoc rationalization for an order that was already final,

and that it is therefore not entitled to any deference but

instead should be viewed “critically.” Second, TVA

argued that the EAB’s review process violated “basic

° Some of the arguments are made by APC in its brief, rather

than by TVA, but to avoid further complicating an already

complicated discussion, and since all the petitioners have adopted

each other’s briefs, we will continue to refer to TVA.

6la

concepts of fair play” and therefore, under the APA,

should be set aside as “arbitrary, capricious, an abuse of

“discretion, or otherwise not in accordance with law.” 5

U.S.C. § 706(2)(A). At oral argument, however, TVA

conceded that its position with regard to the ACO and

the May 4th letter was simply protective, in the event

the EPA sought to enforce any provisions contained

therein and not contained in the EAB final decision. All

parties at oral argument agreed that the only viable

order in this cause is the EAB final decision of

September 15, 2000 and that the ACO and May 4th

letter are of no further force or effect. Accordingly, we

conclude that, in light of the final decision of the EAB,

the ACO and May 4th letter are moot.’ We therefore

turn to EPA’s various arguments asserting that we

lack jurisdiction to review the EAB’s final decision.

B. TVA’s Independent Litigating Authority

EPA argues that TVA lacks independent litigating

authority to bring this action over the opposition of the

Attorney General. However, EPA has cited no case,

and we are aware of none, that can support its position.

Since its inception in 1933, TVA has represented itself

in litigation by attorneys of its own choosing. More-

over, on three separate occasions, TVA conducted

litigation over the objections of the Attorney General,

and in all three cases the courts found that TVA had

independent litigating authority under the TVA Act.

See Dean v. Herrington, 668 F. Supp. 646 (E.D. Tenn.

1987); Cooper v. TVA, 723 F.2d 1560 (Fed.Cir. 1983):

Algernon Blair Indus. Contractors, Inc. v. TVA, 540 F.

" Petitions 00-12310, 00-12311, 00-12349, 00-12457. 00-12458, and

00-12459 are thus dismissed as moot. EPA’s motions to dismiss

those petitions are denied as moot.

62a

Supp. 551 (M.D. Ala. 1982). In Algernon Blair, the

Attorney General moved to strike the appearance of

TVA’s attorneys and to substitute attorneys from the

Department of Justice. As in the present case, DOJ

pointed to 28 U.S.C. § 519, which provides that “except

as otherwise authorized by law, the Attorney General

shall supervise all litigation to which the United States,

an agency, or officer thereof is a party... . ” 540 F.

Supp. at 552 (quoting 28 U.S.C. § 519). The court

nonetheless clearly rejected DOJ’s position:

[T]he Court is of the opinion that although the

language of the TVA Act conferring independent

litigation authority, standing alone, is arguably

subject to differing constructions, the history of the

establishment of TVA, the actions of Congress, and

the actions of the Department of Justice over the

forty-nine year history of the Act seem to compel

the conclusion that the correct interpretation is that

the language of the Act does confer independent

authority on TVA.

Id. at 556. The court observed that Congress has re-

peatedly recognized TVA’s responsibility for its own

litigation. For example, in a 1938 Congressional in-

vestigation into TVA’s defense in several early court

proceedings challenging its constitutionality, the

investigating committee wrote that TVA, “unlike

ordinary Government departments, has no statutory

right to demand legal assistance from the Department

of Justice.” Jd. at 554. Similarly, the court observed

that the legislative history of the Contracts Disputes

Act of 1978 acknowledges that “because the Tennessee

Valley Authority handles its own litigation, its

attorneys, rather than the Attorney General, will

enforce its rights under [the fraud section of the Act.]”

63a

Id. at 555. The court also noted that, “prior to this case,

the position of the Department of Justice on this issue[,]

expressed in internal memoranda and letters, and

before the courts, has been that TVA had independent

litigating authority.” Jd.

The two other cases in which DOJ challenged TVA’s

independent litigating authority agreed with the

analysis in Algernon Blair and held that, under the

TVA Act, TVA has authority to represent itself. See

Cooper, 723 F.2d at 1563-65; Dean, 668 F. Supp. at 653.

We cannot agree with EPA’s contention that all of

these cases were wrongly decided. We agree that the

unique history of the TVA® and its intended indepen-

dence compel the results reached in these cases. As the

court noted in Dean:

From its inception, TVA has enjoyed an indepen-

dence possessed by perhaps no other federal agency.

The original House Committee stated upon TVA’s

inception: “We intend that [TVA] shall have much

of the essential freedom and elasticity of a private

business corporation.” McCarthy, Keeping TVA

Unshackled—A Continuing Struggle, 49 Tenn. L.

Rev. 699, 700 (Summer 1982) (citing H.R. Rep. No.

130, 73d Cong., 1st Sess. 19 (1933)). TVA’s indepen-

dence is underscored by its corporate form, its

maintenance of a separate legal staff, see Algernon

Blair Industrial Contractors, Inc. v. TVA, 540 F.

Supp. 551 (M.D. Ala. 1982), its removal from cen-

tralized control in Washington, its discretionary

ratemaking authority, see Mobil Oil Corp. v. TVA,

8 TVA is a federal corporation created by the Tennessee Valley

. Authority Act of 1933, 16 U.S.C. §§ 831-83lee (1994 & Supp. IV

1998).

64a

387 F. Supp. 498, 509 n. 28 (N.D.Ala.1974), and its

exemption from at least 16 provisions of the

Administrative Procedures Act, 49 Tenn. L. Rev. at

701, n. 6.

Id. at 652 n 1.

Moreover, in 1983 Congress confirmed TVA’s

independent litigating authority when it prohibited the

Attorney General from using any funds appropriated

by Congress “to represent the Tennessee Valley

Authority in litigation” unless requested by TVA to do

so. Public Law No. 98-181, § 1300, 97 Stat. 1292. The

congressional history for this prohibition reveals the

following: “In its 50-year history, TVA has conducted

its own litigation and no court at any level has ever

questioned TVA’s right to do so. If TVA were to

delegate or otherwise surrender jurisdiction over its

legislatively mandated responsibilities for litigation in

this area, it would seriously undermine its indepen-

dence over all other aspects of its program.” H.R.Rep.

No. 98-232, 98th Cong., Ist Sess. (1983), at 45-46.

The decisions of other courts, the language of the

TVA Act, Congress’ subsequent statements, and TVA’s

long history of self-representation without DOJ objec-

tion convince us that TVA does possess independent

litigating authority and EPA’s argument is therefore

without merit.

C. Justiciability: Intrabranch Disputes and the

“Case or Controversy” Requirement

EPA next argues that there is no justiciable case or

controversy here because both TVA and EPA are

executive branch agencies whose leaders serve at the

pleasure of the President, and disputes between com-

monly controlled agencies lack the concrete adversity

65a

necessary to present an Article III case or controversy.

The Constitution’s case or controversy requirement

gives rise to a “general principle that no person may

sue himself.” United States v. ICC, 337 U.S. 426, 430,

69 S. Ct. 1410, 93 L. Ed. 1451 (1949). EPA argues that,

although the Supreme Court has recognized certain

exceptions to this principle and has occasionally found a

justiciable controversy where the United States was

both plaintiff and defendant, the present case does not

fall within any of the relatively narrow circumstances

where this has occurred. Recognizing that many cases

exist in which executive branch agencies have litigated

as adverse parties, EPA argues that all of these cases

are distinguishable. According to EPA, intra-executive

branch disputes can be part of an Article III case or

controversy only where: (1) one of the disputants is an

independent regulatory agency the leaders of which are

insulated from the President’s discretionary removal

authority; (2) the litigation involves an agency whose

position is aligned with that of a private party who is

the real party in interest; or (3) one of the parties is the

target of a federal criminal investigation or prosecution.

Arguing that TVA’s dispute with EPA cannot fit within

any of these exceptions, EPA contends that TVA’s

petitions should be dismissed.

The first class of cases that EPA seeks to distinguish

are those involving agencies whose leaders are statu-

torily protected against removal, such as the Federal

Labor Relations Authority, (“FLRA”),’ the Federal

° The FLRA has opposed other Executive Branch agencies in a

number of cases concerning the rights of federal employees. These

include NASA v. FLRA, 527 U.S. 229, 119 S. Ct. 1979, 144 L. Ed.

2d 258 (1999), National Fed’n of Fed. Employees, Local 1309 v.

Department of the Interior, 526 U.S. 86, 119 S. Ct. 1003, 143 L. Ed.

a

66a

Energy Regulatory Commission (“FERC”),” the

former Federal Maritime Board (“FMB”),” the former

Interstate Commerce Commission (“ICC”), and the

former Federal Power Commission (“FPC”).” Each of

these entities is (or was) an independent regulatory

agency led by presidentially appointed, Senate con-

firmed officials serving fixed terms. However, all of

these appointees enjoy (or enjoyed) protection from

removal for reasons other than “inefficiency, neglect of

duty, or malfeasance in office.”"’ EPA argues that this

2d 171 (1999), and Department of the Treasury v. FLRA, 494 U.S.

922, 110S. Ct. 1623, 108 L. Ed. 2d 914 (1990).

10 FERC and the Department of the Interior advocated

opposing positions concerning the licensing of hydroelectric de-

velopment on federally protected land in Escondido Mut. Water

Co. v. La Jolla Band of Mission Indians, 466 U.S. 765, 104 S. Ct.

2105, 80 L. Ed. 2d 753 (1984).

11 The former FMB advocated positions adverse to positions

advocated by the Department of Justice in its antitrust enforce-

ment capacity in Far East Conference v. United States, 342 US.

570, 72 S. Ct. 492, 96 L. Ed. 576 (1952), and FMB v. Isbrandtsen

Co., 356 U.S. 481, 78 S. Ct. 851, 2 L. Ed. 2d 926 (1958).

12 The former ICC defended rate decisions in favor of freight

carriers and against federal agencies as shippers (or advocates for

shippers) in United States v. ICC, 352 U.S. 158, 77 S. Ct. 241, 1 L.

Ed. 2d 211 (1956), Secretary of Agriculture v. U.S., 347 U.S. 645,

647, 74 S. Ct. 826, 98 L. Ed. 1015 (1954), United States v. ICC, 337

U.S. 426, 69 S. Ct. 1410, 93 L. Ed. 1451 (1949), and ICC v. Jersey

City, 322 U.S. 503, 64 S. Ct. 1129, 88 L. Ed. 1420 (1944).

13 The FPC defended licensing decisions authorizing private

development of hydroelectric sites that the Department of the

Interior sought to control in Udall v. F PC, 387 U.S. 428, 87S. Ct.

1712, 18 L. Ed. 2d 869 (1967), and United States ex rel. Chapman v.

FPC, 345 US. 153, 73 S. Ct. 609, 97 L. Ed. 918 (1953) ‘same).

14 See 5 U.S.C. § 7104(b)-(c) (1994) (FLRA); 41 U.S.C. § 7171(b)

(1994) (FERC); Reorg. Plan No. 21 of 1950 § 102, 49 U.S.C. App.

§ ij (1988) (ICC). FPC Commissioners served fixed terms in a

67a

distinction is significant because for-cause removal

provisions effect a reduction in presidentia! control that

is typically substantial and in some circumstances

constitutionally decisive. In this case, both the head of

the EPA and, EPA argues, the three-member board

that heads TVA, see Morgan v. TVA, 115 F.2d 990 (6th

Cir. 1940) (upholding President’s power to remove a

TVA director), serve at the pleasure of the President.

The second category of cases EPA seeks to distin-

guish consists of those in which, although federal

agencies were involved on both sides, the litigation

involved federal agencies and non-governmental real

parties in interest who claimed rights under decisions of

other federal agencies. EPA points to a series of

related bank merger cases in which the Department of -

Justice filed civil anti-trust actions to enjoin the com-

pletion of bank mergers that had been approved by the

Comptroller of the Currency.” The Comptroller of the

Currency, a Treasury Department official who serves

at the pleasure of the President, intervened to defend

his decisions pursuant to specific intervention authority

quasi-adjudicatory capacity, and enjoyed implied for-cause pro-

tections, although the issue was never litigated. See 16 U.S.C.

§ 792 (1976); Wiener v. United States, 357 U.S. 349, 353-56, 78

S. Ct. 1275, 2 L. Ed. 2d 1377 (1958).

15 See, e.g., United States v. Connecticut Nat'l Bank, 418 U.S.

656, 94 S. Ct. 2788, 41 L. Ed. 2d 1016 (1974); United States v.

Marine Bancorporation, 418 U.S. 602, 94 S. Ct. 2856, 41 L. Ed. 2d

978 (1974); United States v. First City Nat'l Bank, 386 U.S. 361, 87

S. Ct. 1088, 18 L. Ed. 2d 151 (1967); see also, e.g., United States v.

Philadelphia Nat'l Bank, 374 U.S. 321, 83 S. Ct. 1715, 10 L. Ed. 2d

915 (1963) (comparable antitrust action in which the Comptroller

did not participate).

:

}

j

68a

conferred by the Bank Merger Act of 1966."" None of

the Court’s bank merger decisions discussed the

justiciability of such a dispute between the Department

of Justice and the Comptroller General, because, EPA

suggests, the real dispute arose between the United

States and the banks that sought to merge, and the

existence of a case or controversy between those real

parties in interest was self-evident. EPA also points to

United States v. ICC, 337 U.S. 426, 69 S. Ct. 1410, 93 L.

Ed. 1451 (1949), which concerned the rates that the

Army paid for certain freight shipments. In that

decision, the Court’s finding of justiciability was sup- |

ported in part by the observation that certain railroads,

rather than the ICC, were the “real parties in interest”

in opposition to the government as shipper. CC, 337

U.S. at 432, 69 S. Ct. 1410. The present case, by con-

trast, does not involve any third parties as the real

parties in interest. TVA is the real party in interest,

and the private parties’ asserted interests relate to the

effect of the EPA’s orders on TVA. EPA therefore

argues that this case is distinguishable from ICC.

Finally, EPA attempts to distinguish United States v.

Nixon, 418 U.S. 683, 94 S. Ct. 3090, 41 L. Ed. 2d 1039

(1974), in which the Court found that a dispute between

a special prosecutor and President Nixon concerning

the validity of a subpoena issued to the President- for

——————————————— =

16 See 12 U.S.C. § 1828(c)(7)(D). Enactment of this intervention

provision in 1966 assured that courts would not bar the

Comptroller from participating in antitrust litigation on grounds

that it had no cognizable interest. See,e.g., United States v. Third

Nat'l Bank, 36 F.R.D. 7, 10 (M.D. Tenn. 1964) (denying interven-

tion because “the Comptroller, having fully exercised his statutory

authority and duty, ha[d] no interest in the subject matter of the

[subsequent antitrust enforcement] action”).

69a

the collection of evidence in a pending criminal case was

justiciable. The Court observed that a Department of

Justice regulation gave the special prosecutor limited

protection from immediate removal, at least “[s]o long

as this regulation [remained] in force.” Jd. at 696, 94

S. Ct. 3090. In addition, the Court noted that the

President had a personal interest in the proceeding,

having been identified as an unindicted co-conspirator,

and that questions as to the validity of subpoenas

incident to criminal investigations had traditionally

been considered justiciable. See id. at 687, 697, 94

S. Ct. 3090. The Court then concluded that “[iJn light of

the uniqueness of the setting in which the conflict ar

[ose], the fact that both parties [were] officers of the

Executive Branch [could not] be viewed as a barrier to

justiciability.” Jd. at 697, 94S. Ct. 3090.

Initially, we note that none of the cases identified by

EPA delineate three narrow exceptions to a general

rule of non-justiciability. Each of these cases addressed

only the situation before the court and did not purport

to establish any rule of general applicability or

exceptions thereto. In JCC, for example, the Court did

not base its decision solely on the conclusion that the

railroads were the real parties in interest." It also

stated that it was necessary to inquire whether the case

“involves controversies of a type which are traditionally

The basic facts of the case are as follows. The United States

provided wharfage services at certain ports for railroad companies

transporting goods to the ports. When the United States sought

reimbursement for these services, the railroads refused to pay.

The United States then asked the Interstate Commerce Com-

mission (ICC) to order the railroads to compensate the United

States for the services. ICC rejected the United States’ request,

and the United States sought judicial review of the agency’s order

dismissing the claim. 337 U.S. at 428-29, 69 S. Ct. 1410.

70a

justiciable,” 337 U.S. at 430, 69 S. Ct. 1410. It noted,

moreover, that since all other shippers could invoke the

protection of the ICC, the government, in its capacity

as a shipper, should be entitled to the same regulatory

protection. Jd. at 431, 69 S. Ct. 1410. Finally, although

one issue raised by the case involved the railroads’

liability to the government, the second issue involved

the government’s challenge of the ICC’s order as arbi-

trary and capricious. Jd. In this second issue, govern-

ment agencies appeared to be the real parties in |

interest on both sides. Nonetheless, the Court held

that “[t]his charge alone would be enough to present a |

justiciable controversy.” Id.

We are also unpersuaded by EPA’s effort to place

Nixon in a class by itself. As in JCC, the Nixon Court

asked whether the dispute involved “the kind of !

controversy that courts traditionally resolve.” 418 U.S. |

at 696, 94 S. Ct. 3090. Moreover, it found that in the

circumstances of the case, where the special prosecutor |

sought subpoenaed material for a criminal prose cution

opposed by the President with his assertion of privilege

against disclosure, “th{e] setting assures there is ‘that

concrete adverseness which sharpens the presentation

of issues upon which the court so largely depends for

illumination of difficult constitutional questions.’” Id.

at 697, 94 S. Ct. 3090 (quoting Baker v. Carr, 369 U.S.

186, 204, 82 S. Ct. 691, 7 L. Ed. 2d 663 (1962)). Nixon

therefore appears to articulate a general analytical

framework, directing courts to inquire whether the con-

troversy is one that is typically justiciable, and whether

the setting of the case is one that demonstrates con-

crete adversity between the parties.

ce, eens

Three trial court decisions have specifically ad-

dressed the justiciability of disputes between TVA and

71la

other executive branch agencies whose heads serve at

the pleasure of the President. In United States ex rel.

TVA v. Easement and Right of Way Over Certain Land

in Bedford County, Tennessee, 204 F. Supp. 837 (E.D.

Tenn. 1962)—the only one of the cases decided prior to

Nixon—TVA sought to condemn land in which the

Farmers’ Home Administration (FHA) held a security

interest. The district court found that “there could not

be any issue between the TVA and FHA, both being

the United States, which this Court could litigate or

adjudicate. . . . The settlement of interagency pro-

blems within the United States Government is not a

judicial function but rather an administrative function.”

Id. at 839. However, the court also observed that

“[a]lthough the TVA is a federal governmental corpora-

tion, with jurisdictional and procedural consequences

that may not be the same in all instances as though it

were an agency of the Federal Government . . . for

the purposes of this suit in which the TVA seeks to

exercise the power of eminent domain it stands as an

agency of and acts in the name of the United States.”

Id. (emphasis added).

The other two cases found a justiciable controversy

arising out of a 1987 dispute between TVA and the

Department of Energy (DOE) concerning DOE pay-

ments for electric power. The district court for the

Eastern District of Tennessee, where TVA initially

filed its claim for money damages, held that the suit

was justiciable, although filed in the wrong court. See

Dean v. Herrington, 668 F. Supp. 646, 653 (E.D. Tenn.

1987). The case was transferred to the Claims Court,

which ruled that the dispute would be justiciable fol-

lowing completion of a mandatory dispute resolution

process that the President had prescribed by Executive

|

|

72a |

Order. TVA v. United States, 18 Cl. Ct. 692, 700-02

(1987)."° In Dean, the court suggested that Nixon had |

called into question the decision in United States ex rel.

TVA v. Easement & Right of Way finding no justiciable

controversy between TVA and FHA. Relying on

Nixon and United States v. Federal Maritime Com-

mission, 694 F.2d 793 (D.C.Cir. 1982), the court con-

cluded that the relevant inquiry was, first, whether

“the claim raised is of a type traditionally thought to be

justiciable,” and second, whether it is “raised in a set-

ting that assures ‘concrete adverseness’ of the parties”.

Dean, 668 F.. Supp. at 652. The court answered both

questions in the affirmative, finding that the dispute

was essentially a breach of contract claim, and that the

adverseness of the parties was sharpened by TVA’s

“unique independence as a federal agency.” Jd.

The Claims Court agreed with the conclusion in Dean

that the controversy was justiciable. It distinguished

United States ex rel. TVA v. Easement & Right of Way

on the ground that, in the context of a condemnation

suit, TVA was statutorily required to take any real

property in the name of the United States, but noted

that, in all other contexts, TVA acquired property in its

own name. 7VA, 13 Cl. Ct at 697-98. The court agreed

that Nixon‘s focus on the nature of the

controversy—whether it is of a kind that courts

traditionally resolve, and whether the setting assures

concrete adverseness—id entified the appropriate

inquiry. Id. at 698-99, 94S. Ct. 3090. It then noted that

the dispute between TVA and DOE was not illusory;

that TVA has a separate corporate identity and pos-

sesses the power to enter into binding contracts for the

Oe

18 We discuss the effect of the executive orders on this case

below.

73a

provision of electric utility services; that it has the

authority to sue for enforcement of its contracts; and

that its litigation authority is independent of the

Department of Justice. Jd. at 699, 94 S. Ct. 3090.

We likewise believe that Nixon establishes a two-

pronged case or controversy analysis in the context of

intrabranch disputes. First, we must determine

whether the issue is traditionally justiciable. Second,

we must decide whether the setting of the dispute

demonstrates true adversity between the parties.

Applying that analysis here leads to the conclusion that

this case presents a justiciable controversy. There can

be little question that the issue presented is tradition-

ally justiciable. The Clean Air Act explicitly provides

for judicial review of final actions taken by the

Administrator of the EPA. 42 U.S.C. § 7607(b). A

privately-owned power generating facility would thus

indisputably be entitled to petition for appellate review

of a final order, and there is no reason to deny the same

right to a federal facility. See ICC, 337 U.S. at 431, 69

S. Ct. 1410 (suggesting that the United States, in its

capacity as a shipper, should be entitled to the same

protections as a private shipper).° We are also

convinced that the setting of this dispute presents

concrete adversity. We note, as have previous courts,

that TVA possesses unique independence as a federal

agency. See Dean, 668 F. Supp. at 652 n. 1; Algernon

19 We assume there is a symmetry between TVA’s right to

petition for review and EPA’s right to bring a judicial enforcement

action against a federal agency to enforce a final order. EPA

contends that it lacks the power to bring a judicial enforcement

action against TVA. Initial Brief of Appellee at 48. However, we

believe that, for the same reasons that TVA may obtain review of

EPA’s Order, EPA would be able to bring suit to enforce its Order.

ist amemaaa aaa a

74a

Blair, 540 F. Supp. at 553 (“[OJne of the reasons that

TVA was set up as an independent corporation was to

give it a greater degree of independence that was

routinely enjoyed by governmental agencies.”). More- |

over, EPA and TVA advocate genuinely conflicting

views, and the adversity is more than adequate to

“sharpen[ ] the presentation of issues. ... ” Nixon,

418 U.S. at 697, 94S. Ct. 3090.” We therefore find that

this particular controversy between these executive

branch agencies is justiciable.

a

D. Finality: Reviewability of the EAB Decision

EPA next argues that the EAB decision does not

satisfy the criteria that must be met before an agency

action is judicially reviewable. The CAA authorizes the

filing of a petition for review in this Court from any

“final action” of the administrator. It states, in relevant

part, that “[a] petition for review of the Administrator’s

action [under certain specific provisions of the CAA], or

any other final action of the Administrator . . . which

is locally or regionally applicable may be filed only in

the United States Court of Appeals for the appropriate

circuit.” CAA § 807(b)(1), 42 U.S.C. § 7607(b). The

“0 As TVA points out, § 15d of the TVA Act requires TVA to

finance its power program through sales of bonds backed solely by

TVA’s power revenues and through such revenues themselves.

Section 15d(b) provides that such bonds “shall not be obligations

of, nor shall payment of the principal thereof or interest thereon be

guaranteed by, the United States.” In addition, § 15d(f) directs

TVA to charge rates that will produce gross revenues sufficient to

enable it to meet all of its obligations, while at the same time

keeping rates as low as feasible, and otherwise advancing the

physical, economic, and social development of its area. TVA claims

that the requirements that EPA has imposed in its order could

cost TVA billions of dollars and compel TVA to raise its rates.

75a

Supreme Court has interpreted the phrase “any other

final action” to incorporate the finality requirement of

the APA. See Harrison v. PPG I ndustr., Inc., 446 U.S.

978, 586, 100 S. Ct. 1889, 64 L. Ed. 2d 525 (1980); see

also 5 U.S.C. § 704 (APA finality requirement). In

Bennett v. Spear, 520 U.S. 154, 117 S. Ct. 1154, 137 L.

Ed. 2d 281 (1997), recently reaffirmed in Whitman v.

American Trucking Ass’ns, Inc., 531 U.S. 457, 121

S. Ct. 903, 149 L. Ed. 2d 1 (2001), the Supreme Court

explained that two conditions must be satisfied in order

for agency action to be “final” for purposes of appellate

review: first, the action must mark the “consumma-

tion” of the agency’s decision-making process; and

second, it must “be one by which rights or obligations

have been determined, or from which legal conse-

quences will flow.” Bennett, 520 U.S. at 177-78, 117

S. Ct. 1154 (citation and quotations omitted).

EPA argues that, under this two-prong test, the

EAB decision is not reviewable agency action. While

EPA admits that the EAB decision represents the

“consummation” of its decision-making process in this

case, thus satisfying the first prong, it argues that the

second prong of the test cannot be met here, because, in

its view, it could not bring a judicial enforcement action

against TVA to enforce the EAB decision because of

the lack of concrete adversity between two federal

agencies. Suggesting that a judicial enforcement action

is “intrinsic” to the second prong of Bennett, EPA

states that TVA may not obtain judicial review of an

action as to which EPA could never have recourse to

judicial compulsion in the face of noncompliance by

TVA.

We disagree for two reasons. First, as stated pre-

viously, we believe that there can be concrete adversity

76a

between two executive branch agencies, and therefore

we do not accept EPA’s position that it would not be

entitled to obtain judicial enforcement of the EAB

decision against TVA. Second, we see no reason to

assume that the second prong of the Bennett test

requires the EAB decision to be judicially enforceable:

it would seem to be satisfied as long as “rights or

obligations have been determined.” As EPA itself

observes, “EPA expects that federal agencies will

comply with its final orders. . . . ” EPA Initial Br. at

48. That expectation suggests—and we agree— that an

obligation has in fact been created. This satisfies the

second prong of the Bennett test, and we therefore find

that the EAB decision is a reviewable final order.”

E. The Effect of Executive Orders 12146 and 12088

EPA next argues that‘ even if the EAB decision is

potentially a reviewable final order, it is not yet ripe for

review because the dispute has not been submitted to

the Attorney General for resolution as required by

Executive Order 12146, 3 C.F.R. 409 (1979), or to the

Office of Management and Budget as required by

“1 In challenging the finality of the ACO, EPA argued that its

compliance orders were not “final,” and therefore not reviewable,

until it brought an enforcement action in the district court. While

we are not persuaded that a compliance order may not be reviewed

prior to an enforcement action, see, e.g., Harrison v. PPG

Industries, Inc., 446 U.S. 578, 586, 100 S. Ct. 1889, 64 L. Ed. 2d 525

(1980) (considering a decision of the EPA Administrator final be-

cause “[s]hort of an enforcement action, EPA has rendered its last

word on the matter.”); State of Alaska v. EPA, 244 F.3d 748, 750

(9th Cir. 2001); Allsteel, Inc. v. EPA, 25 F.3d 312, 315 (6th Cir.

1994), EPA’s argument is undercut by its assertion that in this

case it would not be able to bring an enforcement action against

TVA.

77a

Executive Order 12088, 3 C.F.R. 243 (1978). We must

first consider whether these executive orders apply to

TVA, and if so, what effect they have on our juris-

diction to consider the matter before us.

Executive Order 12146 (which also appears following

28 U.S.C. § 509) provides in relevant part:

1-401. Whenever two or more Executive agencies

are unable to resolve a legal dispute between them,

including the question of which has jurisdiction to

administer a particular program or to regulate a

particular activity, each agency is encouraged to

submit the dispute to the Attorney General.

1-402. Whenever two or more Executive agencies

whose heads serve at the pleasure of the President

are unable to resolve such a legal dispute, the

agencies shall submit the dispute to the Attorney

General prior to proceeding in any court, except

where there is specific statutory vesting of respon-

sibility for a resolution elsewhere.

Citing Dean v. Herrington, 668 F. Supp. 646, 652-53

(E.D. Tenn. 1987), TVA first argues that this Executive

Order does not apply to TVA at all. In Dean, the court

suggested that the Executive Order, entitled “Manage-

ment of Federal Legal Resources,” was designed to

“coordinate the legal resources of the numerous federal

agencies represented in litigation by the Justice

Department.” Jd. at 653. Since TVA has actual control

of its litigation to the exclusion of the Attorney General,

the court held that the Executive Order had no

application. The court also observed that the Order

created a “Federal Legal Council,” but that “TVA was

not one of the 15 initial members . . . nor is it claimed

ETT Men Neem

78a

by DOE that TVA has ever been a member. .. . ” Jd.

at 652.

Dean’s conclusion that the Executive Order does not

apply to TVA was criticized in TVA v. United States, 13

Cl. Ct. 692 (1987). There, the claims court first noted

that the membership of the Federal Legal Council “is

not a listing of agencies that are subject to the order.”

Id. at 700. Second, the court disagreed with Dean’s

suggestion that the Order was intended to cover only

those federal agencies without the power to represent

themselves in litigation. For example, § 1-302(a) of the

Executive Order provides that “[a]ll Agencies with

authority to litigate cases in court shall promptly notify

the Attorney General about those cases that fall in

classes or categories designated from time to time by

the Attorney General.” See also § 1-301 (providing for

notice of litigation covering “all civil litigation pending

in the courts in which the Federal Government is a

party or has a significant interest.”). We are persuaded

that the claims court has the better reading of the

Order, and that on its face it does apply to TVA. “The

district court’s correct conclusion that TVA possesses

independent litigation authority is not diminished by

the fact that the Executive Order attempts to co-

ordinate federal interagency litigation resources and to

resolve disputes before court action is commenced.”

TVA, 18 Cl.-Ct. at 700.

We are not persuaded by TVA’s alternative argu-

ment that, because the CAA requires that “the person

to whom [a compliance order] is issued” must have “had

an opportunity to confer with the Administrator [of

EPA] concerning the alleged violation” before the order

may take effect, 42 U.S.C. § 7413(a)(4), there is a “speci-

fic statutory vesting of responsibility for a resolution

79a

elsewhere,” thus bringing this case within the exception

specified in § 1-402 of the Executive Order. (TVA and

EPA engaged in the required conference on December

20, 1999.) TVA points out that the Act defines a “per-

son” to include agencies of the federal government, and

contends that the conference provided for by the act is

the statutory method provided by Congress for in-

formal dispute resolution. According to TVA, there-

fore, by its own terms the Executive Order does not

apply to this case.

But as EPA argues, § 7413(a)(4) does not create a

dispute resolution mechanism like that established by

executive order, “but merely provides that an order

issued under that section shall not be final until the

recipient has had an opportunity to confer with the

Administrator.” EPA’s Reply to TVA’s Opposition to

EPA’s Motion to Dismiss at 7. The CAA conference

requirement simply provides EPA and TVA an op-

portunity to resolve the dispute on their own, but it is

not a dispute resolution mechanism akin to that

established by the Executive Order, because it does not

provide for mediation or participation by a third party.

The CAA conference requirement applies to any party,

whether private or public, receiving a compliance order

from EPA.” At such a conference, each party can be

expected to present its own point of view. While the

factors that will normally be considered at such a

conference may overlap to some extent with factors

that would be considered by the Attorney General

evaluating a dispute between two federal agencies

pursuant to the Executive Order, they are not identical.

One purpose of review under the Executive Order, as

~The conference requirement obviously does not specifically

contemplate a dispute between two federal agencies.

ne

80a

the court in TVA stated, is “to coordinate federal

interagency litigation resources and to resolve disputes

before court action is commenced.” 138 Cl. Ct. at 700.

Therefore the Attorney General, in his capacity as the

executive branch official responsible for resolving the

dispute, will take into account a broader range of

factors—in particular, the coordination of federal

interagency litigation resources—than EPA and TVA

would consider in a conference between them alone. It

is therefore likely that the purpose served by E.O. \

12146 would be defeated if it could be cireumvented by

a fruitless private conference between TVA and EPA.

Moreover, as EPA points out, since the text of the

Order reflects a presumption that the agencies will first

attempt to resolve the dispute between themselves, we

do not think a conference between the two agencies

alone constitutes a “specific statutory vesting of

responsibility for a resolution elsewhere” that can sup-

plant the requirement that they subsequently submit

the dispute to the Attorney General. For the foregoing

reasons, we conclude that the E.O. 12146 applies to

TVA in this case.”

In addition to E.O. 12146, EPA has argued that

Executive Order 12088 likewise applies in this case.

That Order states, in relevant part:

1-602. The Administrator shall make every effort to

resolve conflicts regarding [a CAA] violation

between Executive agencies. . . . If the Admini-

“3 TVA has also argued that it need not comply with the Order

because to do so would be futile. For reasons discussed infra, we

do not believe we should create exceptions to Executive Branch

rules, and think that TVA’s argument is best addressed to the

Executive. Fs

Sla

strator cannot resolve a conflict, the Administrator

shall request the Director of the Office of

Management and Budget to resolve the conflict.

In reply, TVA relies on the fact that this Order was

amended by Executive Order 12580, 3 C.F.R. 193

(1987), to add the following:

Nothing in this Order shall create any right or

benefit, substantive or procedural, enforceable at law

by a party against the United States, its agencies, its

officers, or any person.

TVA presumably understands EPA’s reliance on the

Order as a basis for delaying our review of its claim as

an attempt to enforce a right or benefit at law. We

disagree with this reading. EPA has argued that, as a

result of the order, we lack jurisdiction to review

TVA’s petition at this stage. A challenge to our juris-

diction is not an attempt to enforce a right or benefit.

Therefore, we also accept EPA’s argument that E.O.

12088 applies to this case.

Having concluded that the orders apply, however, we

are still left to decide their effect on the case. We find

that the orders do not operate to deprive us of juris-

diction. EPA is free to seek a remedy for TVA’s failure

to comply within the Executive Branch. Indeed, there

is no indication in the briefs and record before us that

EPA itself has acted to comply with the executive

orders. But E.O. 12088 is directed specifically to the

EPA Administrator, not to the agency receiving the

compliance order: “If the Administrator cannot resolve

a conflict, the Administrator shall request the Director

of the Office of Management and Budget to resolve the

conflict.” § 1- 602. Thus we find difficult to understand

EPA’s complaint that TVA has not complied with it.

82a

Moreover, if EPA believed that the Attorney General,

acting pursuant to E.O. 12146, could prevent or cut

short this litigation, presumably there is nothing to

prevent EPA from taking steps to submit the dispute

to the Attorney General on its own.

The nature of EPA’s argument is thus not that it has

been unfairly deprived of recourse to Executive Branch

dispute resolution mechanisms, but that we may not

entertain TVA’s petition before both parties have

submitted the dispute to the requisite Executive

Branch officials. Because this argument is a novel (or

at least uncommon) one, we take some time to explain

why we disagree.

We acknowledge at the outset that in JVA the claims

court found that, in light of E.O. 12146, it was

“altogether appropriate to dejudicialize the dispute and

allow the Executive an opportunity to act.” 18 Cl. Ct. at

701. Accordingly, it ordered the parties to submit their

dispute to the Attorney General, allowing them to

return to court if the administrative resolution proved

unsatisfactory. Jd. at 703. However, the court also

found that the existence of the Executive Order did not

render the controversy non- justiciable and thereby

deprive the court of jurisdiction. Jd. at 701 n. 9. It did

not articulate the legal basis of its belief that it was

“appropriate to dejudicialize the dispute”—whether its

concern, in other words, lay in a lack of exhaustion of

administrative remedies, or of ripeness, or was

grounded in some other principle like separation of

powers. We will consider these possibilities as a basis

for suspending our review pending the outcome of

internal Executive Branch procedures.

i. Exhaustion of Administrative Remedies

83a

As a general matter, we have held that the exhaus-

tion of administrative remedies requirement is not

jurisdictional. See, e.g., N.B. by D.G. v. Alachua

County Sch. Bd., 84 F.3d 1376, 1379 (11th Cir. 1996);

Panola Land Buyers Ass’n v. Shuman, 762 F.2d 1550,

1556 (11th Cir. 1985); but see Gonzalez v. United States,

959 F.2d 211, 212 (11th Cir. 1992) (holding that “exhaus-

tion of administrative remedies is jurisdictional” in

context where an administrative agency—the Bureau

of Prisons—is responsible for computation of sen-

tences). Of course, even where the lack of exhaustion

does not create a jurisdictional bar, a court generally

will not entertain the claim unless the unexhausted

remedies are inadequate or futile. See N.B. by D.G., 84

F.3d at 1379. Therefore, we must decide whether the

executive orders at issue here present a traditional

exhaustion requirement that either deprives us of

jurisdiction or prevents our review for prudential

reasons. We believe they do not.”

The executive orders cited by EPA are not on a par

with a statutorily mandated exhaustion requirement, in

which Congress has specifically precluded review of a

claim before administrative remedies have been

exhausted. In such cases, Congress has created the

statutory scheme under which the right of judicial

review is available in the first place, and so it has the

power to specify at what point in the process the courts

have jurisdiction over the claim. But the executive

orders here do not operate pursuant to Congressional

“4 We note initially a difference in form: traditional admini-

strative remedies are available to one party against the agency.

Here, the executive orders apply to both EPA and TVA, and thus

EPA is complaining of TV A’s failure to seek remedies it has not

pursued either.

84a

authority, nor are they a part of the statutory

scheme—the CAA—under which TVA is seeking

judicial review.” The Executive Branch does not

confer the necessary jurisdiction on the courts in the

first place, and thus we fail to see how an order

governing the internal procedures of the Executive

Branch could, in and of itself, operate to deprive this

Court of jurisdiction if the parties satisfied the relevant

statutory requirements for judicial review.

Nor do we believe that the executive orders give us

reason to decline to exercise our jurisdiction. Insofar as

it is a judicially developed doctrine, the exhaustion

requirement exists “1) to permit the exercise of agency

discretion and expertise on issues requiring these char-

acteristics: 2) to allow the full development of technical

issues and a factual record prior to court review; 3) to

prevent deliberate disregard and circumvention of

agency procedures established by Congress; and 4) to

avoid unnecessary judicial decisions by giving the

agency the first opportunity to correct any error.” Id.

at 1378-79. We do not believe that any of these con-

siderations are relevant here; and none of them is

implicated by the executive orders. As EPA concedes,

were TVA a private party, all administrative remedies

would be exhausted at this stage. Having already

conducted a review of its compliance order and issuing

the EAB decision, EPA cannot argue that it has not

had the opportunity to exercise its discretion and

expertise, or to develop the factual record, or to correct

any errors. And TVA’s failure to comply with Execu-

25 They are therefore unlike the case in which the head of an

agency—an Executive Branch official—may determine what

constitutes exhaustion in the context of a statutory scheme

requiring it.

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tive Order 12146 does not amount to a “disregard and

circumvention of agency procedures established by

Congress.”

Of course, the exhaustion doctrine also reflects a

concern with judicial efficiency. “A complaining party

may be successful in vindicating his rights in the

administrative process. If he is required to pursue his

administrative remedies, the courts may never have to

intervene.” McKart v. United States, 395 U.S. 185, 195,

89 S. Ct. 1657, 23 L. Ed. 2d 194 (1969). It is possible

that, were EPA and TVA to avail themselves of the

dispute resolution mechanisms established by either of

the two executive orders, it would obviate the need for

judicial review of the controversy. But we do not

believe that to require EPA and TVA to do so would

give the Executive Branch an opportunity to head off

this litigation that does not otherwise exist. Since both

EPA’s Administrator and TVA’s board serve at the

pleasure of the President, the President could bring

this litigation to a close on his own initiative at any

point. He has not done so. Without more than a remote

_ possibility that compliance with the executive orders

would resolve the dispute, we do not believe the failure

to exhaust those remedies erects any barrier to our

review of EPA’s order to TVA.

ii Ripeness

Closely related to the exhaustion doctrine—at least

in this context—is the notion of ripeness, which is

“drawn both from Article III limitations on judicial

power and from prudential reasons for refusing to

exercise jurisdiction.” Reno v. Catholic Soc. Serv., Inc.,

509 U.S. 43, 58 n.18, 118 S. Ct. 2485, 125 L. Ed. 2d 38

(1993). Thus, like a lack of exhaustion, the lack of ripe-

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ness will not always operate to deprive a court of

jurisdiction, but “[p]roblems of prematurity and

abstractness may well present ‘insuperable obstacles’

to the exercise of the Court’s jurisdiction, even though

that jurisdiction is technically present.” Socialist Labor

Party v. Gilligan, 406 U.S. 583, 588, 92 S. Ct. 1716, 32 L.

Ed. 2d 317 (1972) (citation omitted). In Abbott Labora-

tories v. Gardner, the Court explained the ripeness

doctrine as follows:

[I]ts basic rationale is to prevent the courts,

through avoidance of premature adjudication, from

entangling themselves in abstract disagreements

over administrative policies, and also to protect the

agencies from judicial interference until an admini-

strative decision has been formalized and its effects

felt in a concrete way by the challenging parties.

The problem is best seen in a twofold aspect,

requiring us to evaluate both the fitness of the

issues for judicial decision and the hardship to the

parties of withholding court consideration.

387 U.S. 136, 148-49, 87 S. Ct. 1507, 18 L. Ed. 2d 681

(1967).

So understood, we do not believe the ripeness doc-

trine prevents our review of the petitions in this case.

Ripeness is concerned principally with the development

of the legal or factual issues before the court. By

EPA’s own admission, the EAB decision represents the

culmination of its decision-making process, and there is

nothing abstract about the conflict between TVA and

EPA. The fact that TVA is an agency subject to the

executive orders does not render the legal and factual

issues in this controversy any less developed than they

would be if TVA were a private party, and therefore

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the executive orders do not create any additional

ripeness problem.” We find that the issues presented

here are fit for judicial decision.

vi Separation of Powers

The final possibility is that, out of a respect for the

principle of separation of powers, we should abstain

from exercising our jurisdiction at least until the

Executive Branch has had an opportunity to employ its

own dispute resolution mechanisms. After all, neither

E.O. 12088 nor E.O. 12146 precludes eventual recourse

to the courts;” rather, they indicate that agencies

should use internal Executive Branch procedures first.

Therefore—the argument goes—by declining to review

the controversy until they have done so, we would

simply be showing a due regard for the functions and

procedures of the Executive Branch.

While this argument is not without some appeal,

ultimately we are not persuaded. We note, as an initial

matter, that our review of TVA’s petition before it has

complied with the executive orders would not intrude

on Executive Branch functions in such a way as to be

constitutionally impermissible under the separation of

powers doctrine. One branch violates the constitutional

separation of powers only when it prevents another

“6 Nor do the executive orders mean that the effects of EPA’s

order are not “felt in a concrete way” by TVA. EPA has not

stayed the implementation of its order pending any Executive

Branch dispute resolution mechanisms.

* E.0. 12146 states only that “the agencies shall submit the

dispute to the Attorney General prior to proceeding in any court,”

§ 1-104 (emphasis added), and E.O. 12088 states in § 1-604 that

“[t]hese conflict resolution procedures are in addition to, not in lieu

of, other procedures, including sanctions, for the enforcement of

applicable pollution control standards.”

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“from accomplishing its constitutionally assigned

functions,” and the interference with the other branch

is not “justified by an overriding need to promote

objectives” within its own constitutional authority.

Nixon v. Adm’r of Gen. Serv., 433 U.S. 425, 443, 97 S.

Ct. 2777, 53 L. Ed. 2d 867 (1977). Evaluating the merits

of TVA’s petition at this stage would not interfere in

any way with executive functions. As we noted earlier,

the President has possessed the power at all points in

this process to control or head off the litigation, and

may still do so if he wishes. Accordingly, our review of

the controversy does not diminish, or prevent the

exercise of, presidential authority over the parties.

In the absence of a constitutional separation of

powers problem, our decision to postpone review of this

case would have to be based on a new incarnation of the

doctrine of judicial abstention: although we possess

statutory power to hear TVA’s claims, we would none-

theless abstain from doing so out of respect for the

Executive’s clear indication that its agencies should

employ that branch’s own procedures before pro-

ceeding to court. Two considerations counsel against

our adopting such a position. First, the Executive has

the ability to enforce its own internal procedural rules.

Even now, were the President to conclude that TVA

was before this Court in violation of Executive Branch

operating procedures, he could act to head off the liti-

gation. A due regard for the Executive may thus

counsel us to leave the enforcement of its internal rules

to its own discretion. Second, our review of TVA’s peti-

tion takes place pursuant to statutory authority. Con-

gress has specified the conditions under which we

should review a claim such as that brought by TVA, see

42 U.S.C. § 7607(b), and we have determined that those

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conditions are satisfied here. Therefore, separation of

powers considerations do not clearly recommend

abstention: they may equally recommend our hearing

TVA’s claim now, when Congress has indicated that we

should do so.

In sum, then, we find that under existing doctrines,

the executive orders provide us with no compelling

reason to decline to exercise our jurisdiction.

F. Standing of Private Petitioners

Even if the other jurisdictional challenges raised by

EPA are without merit, EPA argues that the petitions

brought by APC, Duke, and TVPPA et al. must be

dismissed for lack of standing because the private

petitioners cannot show a legally cognizable injury,

caused by EPA, that can be redressed by this Court. It

contends that the injuries alleged by the private

petitioners are highly speculative—resulting, if at all,

from decisions made by TVA in order to comply with

EPA’s orders—and that none of the interests the

private petitioners seek to protect—relating to their

right to reliable, low-cost electricity supplied by

TV A—is within the “zone of interests” protected by the

CAA.

In order to have standing under the case or contro-

versy requirement of Article III, a plaintiff must

establish three elements: (a) injury in fact—that is, a

harm that is concrete and particularized, and actual or

imminent, not conjectural or hypothetical; (b) a causal

connection between the plaintiff's harm and the defen-

dant’s conduct; and (c) a likelihood that the requested

relief will redress the alleged injury. Steel Co. v.

Citizens for a Better Environment, 523 U.S. 83, 108, 118

S. Ct. 1003, 140 L. Ed. 2d 210 (1998); see also Lujan v.

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Defenders of Wildlife, 504 U.S. 555, 560-62, 112 S. Ct.

2130, 119 L. Ed. 2d 351 (1992); Georgia State Con-

ference of NAACP Branches v. Cox, 183 F.3d 1259,

1262-63 (11th Cir. 1999). It is undisputed in this case

that EPA’s orders do not apply directly to any of the

private petitioners. When a plaintiffs asserted injury

arises from the government’s allegedly unlawful

regulation of someone else,

causation and redressability ordinarily hinge on the

response of the regulated (or regulable) third party

to the government action. . . . The existence of one

or more of the essential elements of standing “de-

pends on the unfettered choices made by inde-

pendent actors not before the courts and whose

exercise of broad and legitimate discretion the courts

cannot presume either to control or to predict,” and

it becomes the burden of the plaintiff to adduce facts

showing that those choices have been or will be made

in such manner as to produce causation and permit

redressability of injury.

Lujan, 504 U.S. at 562, 112 S. Ct. 2130 (citations

omitted). While this situation does not preclude a

finding that the plaintiff has standing, “it is ordinarily

‘substantially more difficult’ to establish.” Jd. (citation

omitted). We begin with a discussion of Alabama

Power and Duke, who allege largely identical injuries,

and then consider the standing of TVPPA.

i. Alabama Power Company and Duke Energy

Corporation

APC and Duke allege that they will be injured by

EPA’s orders to TVA in four ways. First, they state

that, since their electric transmission networks are fully

integrated with TVA’s and power plant output and

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availability on the TVA system directly affects power

flow and plant output on their own systems, any

disruption to TVA’s system will have a direct impact on

their own. In particular, they contend that the

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