# Appendix — Leavitt v. Tennessee Valley Authority

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386001_1092%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2004
- **Citation:** 541 U.S. 1030

## Text

—

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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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

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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.

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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:

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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

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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.

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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
dismissin

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386001_1092%3A2. Public record. Not legal advice.