Opposition Brief — Leavitt v. Tennessee Valley Authority

No. 03-1162 | — |

| MAR 29 2004 |

' é U4

IN THE a |

Supreme Court of the United States eens

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, ET AL.,

Petitioners

V.

TENNESSEE VALLEY AUTHORITY, ALABAMA POWER

COMPANY, DUKE ENERGY CORPORATION,

TENNESSEE VALLEY PUBLIC POWER

ASSOCIATION, ET AL.,

Respondents

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF OF TENNESSEE VALLEY AUTHORITY

IN OPPOSITION TO PETITION FOR A

WRIT OF CERTIORARI

F. WILLIAM BROWNELL MAUREEN H. DUNN

MAKRAM JABER General Counsel

HUNTON & WILLIAMS HARRIET A. COOPER +

1900 K Street, NW Assistant General Counsel

Washington, D.C. 20006

(202) 955-1500 GREGORY R. SIGNER

Senior Environmental Counsel

RONALD E. KLIPSCH

FRANK H. LANCASTER

Attorneys

TENNESSEE VALLEY AUTHORITY

Office of the General Counsel

400 West Summit Hill Drive

Knoxville, Tennessee 37902-1401

* Counsel of Record (865) 632-2577 .

—

DISCLOSURE STATEMENT

The Tennessee Valley Authority is organized and existing

pursuant to the Tennessee Valley Authority Act of 1933, as

amended, 16 U.S.C. §§ 831-83 lee (2000), and has no parent

corporation. No publicly held company has any ownership

interest in TVA.

(i)

TABLE OF CONTENTS

Page

DISCLOSURE STATEMENT ......0..cccccccccscoccsceseccececeen. i

TABLE OF AUTHORITIES ........cccccccccccccscecececececeseecs ; iv

tices dvaaimsssblvnnsevecsnsonidcvsiccinsseosiaccs. l

REASONS THE PETITION SHOULD BE DENIED. 6

A. EPA Prevailed Below ..0.0.......cccccccccssssscseceeeeeess., 6

B. The Second and Third Questions Presented

Are Immaterial to the Disposition of This

Dea ini ahcSveiblncchinensstsesnadesiivhonssnssonussosvesievesese. 7

C. TVA Has Independent Litigating Authority... 8

This Controversy Is Justiciable............ccccccc00..... 13

E. The Eleventh Circuit’s Constitutional Ruling

Does Not Warrant Further Review.................... 18

1. EPA’s Proposed Construction of the CAA

Would Result in Dismissal for Lack of

I sail sia ecsaichsaesscrsninnssonrnenisany 18

3. There Is No Conflict Among Decisions

Sufficient to Justify Further Review............ 22

4. If the Court Is Inclined to Grant the

Petition, It Should Remand This Case to

the Eleventh Circuit ...0......cccccccccccceccsseeess 24

5. The Eleventh Circuit Correctly Decided

the Due Process Issue ..0........cceccccccesecececees, 25

sinensis cn ssinadanebisinciurvaceseeoesecescsce,., 29

I sie 5s sercpsiisinievstsoersasshssaspaccentreceseceosesss.., la

(iii)

3

=

—S a

IV

TABLE OF AUTHORITIES

CASES Page

Alaska Dep't of Envtl. Conservation v. EPA, 244

F.3d 748 (9th Cir. 2001), aff'd, 540 U.S. _,

124 S. Ct. 983 (2004)..............ccccees cnereely Oa, Oy Oo

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

540 F. Supp. 551 (M.D. Ala. 1982)... 9,13

Allsteel, Inc. v. EPA, 25 F.3d 312 (6th Cir.

Pa odcihevsiiaisememsseihyeisehiaenadisagaiaatacameatcseuis) 22, 23

Armstrong v. Manzo, 380 U.S. 545 (1965)............ 25, 26

Bennett v. Spear, 520 U.S. 154 (1997) vo... eee es

Chevron U.S.A., Inc. v. Natural Resources De-

fense Council, Inc., 467 U.S. 837 (1984) .......... 6-7

Concrete Pipe & Prods. of Cal., Inc. v. Constr.

Laborers Pension Trust for S. Cal., 508 U.S.

ig, Re Om ER RR ea 24

Cooper v. TVA, 723 F.2d 1560 (Fed. Cir. 1983)... 8, 13

Dean v. Herrington, 668 F. Supp. 645 (E.D.

RNs RT er ithe ciasitcasanmncstebiociocencinhnisheas 8, 10, 13, 17

Dep't of Commerce v. United States House of |

Representatives, 525 U.S. 316 (1999) wu... 7

Director, Office of Workers' Comp. Programs v.

Perini N. River Associates, 459 U.S. 297

SI cciciceliessaads dacsseaseasndimgasaiaMiceetni ites ese wiieta 7

Doe v. Bolton, 410 U.S. 179 (1973) .u..ceeceeeeeeeeeee 27

Mathias v. WorldCom Techs., Inc., 535 U.S. 682

RRR trrey eee Rae serene eee er et a 7

Morgan v. TVA, 28 F. Supp. 732 (E.D. Tenn.

1939), aff'd 115 F.2d 990 (6th Cir. 1940)......... 15

Morrison v. Olson, 487 U.S. 654 (1988)...........000.. 15

N. Pipeline Constr. Co. v. Marathon Pipe Line

Cg Se SFiS PE isisstecercictsnteniseveserensacaiin 24

Pierce v. United States, 314 U.S. 306 (1941)........ 4, 27

Powers v. Ohio, 499 U.S. 400 (1991)... cee 27

ee

Vv

TABLE OF AUTHORITIES—Continued

Page

SEC v. Robert Collier & Co., Inc., 76 F.2d 939

ee Pe wikia seen tues to en

Solar Turbines Inc. v. Seif, 879 F.2d 1073 (3d

Sis: Se icntigan tier ears Ren as anaes 21

Sutherland v. Int'l Ins. Co. of New York, 43 F.2d

Pe ey SN Gs eee 12

TVA v. EPA, 425 U.S. 934 (1976), denying

certiorari in Big Rivers Elec. Corp. v. EPA,

Pad Fe WO GBI, TIT N vcesnccisscndeiccadicencns 16

Texas v. Hopwood, 518 U.S. 1033 (1996).........0... 6

United States v. Duke Energy Corp., 278 F.

Supp. 2d 619 (M.D.N.C. 2003) ..e.ccecccceccccesceces 2

United States v. Fed. Maritime Comm ‘n, 694

: F ele PRO TINE SO, TI hivoniseekssncreeecerconcencccns 16-17

United States v. ICC, 337 U.S. 426 (1949).....c.0. 16, 27

United States v. Morton Salt Co., 338 U.S. 632

CRP sisiccscsoupiasenisepeneiian ee 13

United States v. Nixon, 418 U.S. 683 (1974)....... 4, 16, 17

United States v. Ohio Edison Co., 276 F. Supp.

20 CZF CSB. Cia DOI) civic ciscevccecseecsecsescens i

United States v. Providence Journal Co., 485

Ps IP EID scicinissicuachaniecauetaes ee eee 10, 13

United States v. San Jacinto Tin Co., 125 U.S.

EF CO i csisnssesilentisbemcesmueanatiastadiat ene 12

United States v. Walcott, 972 F.2d 323 (11th Cir.

DIO <stisinnsvsnkesdauseubidasintbaaeiassae ic mre 12

Vermont Yankee Nuclear Power Corp. v. Natural

Res. Def. Council, 435 U.S. 519 (1978) .........0. 26

Ward v. Village of Monroeville, Ohio, 409 U.S.

FF LEP FAD suis icniiceivaniohboniianssie ea ae 24

Wiener v. United States, 357 U.S. 349 (1958)....... 15

Withrow v. Larkin, 421 U.S. 35 (1975) ...ccccccsseseees 27

Yakus v. United States, 321 U.S. 414 (1944)......... 25

vi

TABLE OF AUTHORITIES—Continued

CONSTITUTION AND STATUTES Page

U.S. Const.

PR Fe etic ndcnidsntiieteheiia boas 6, 7, 24

Amend.V (Due Process Clause).......... 5, bis boy ay aT

United States Supreme Court Rule 10................... 8

Public Law No. 98-181, § 1300, 97 Stat. 1292 ..... 10, 12

Administrative Procedure ACt ..............ccccccceceees 10, 22, 27

Customs Court Act of 1980, Pub. L. No. 96-417,

Pe Ty BF ei hcrdtndccsscescticndacibe cetigiestls 9

Federal Courts Improvement Act of 1982, § 169,

PUD. 1. NO. Fi - EGR FS Bh, 2S ccsoveissvecsossessesecns 9, 13

Tennessee Valley Authority Act of 1933, as

amended, 16 U.S.C. §§ 831-83 lee (2000) ........ i, 11

5G EF... © Py Ce sccsnencescccumscanecraseroeaoios 9,11, 14

DO RS exe Go 0 CI ssisssioicsicivncneartevamenamcesacns 9,14

BG UBL. © BS BCEG) COD ovcvsncaserssinvesincsosscvenancons 9

HO UDA... © BRS Ge vicicsnacccicdrnasccnstorsaneraies 9

5G U.B0.. © BOE 6 ee vosstesasssnscvasesexaxsecesesenavan 15

BS EA. © ee Ce atietsnncesaccatginiaaaedaiakan 15

OG UT... © OF Pe es vvicicecscncesnsvocpionseicosees 9,14

BG 85.5.0. © B51 th-GEy CO as vvincscsnnricsstssvsvnessiseys 14

0G S.A. © ESO Ca ittseiavrcrcucintenencaecen 15

Oe UR. © FU Gitseienencnonent 8, 10, 11

ee Ge. Br EE icrcieracisatnca ade 13

SP UB. & FEF Ci stieteincrctmaanl 8, 10, 11

A AI. © DOB T ES TD svisivenessesvsssesisrncpoiencinees 15

G8 OF ho © I ssksdeviientdcsaen ens 15

BZ UBAL. § TAT TG) COD wssincevsscncssvosavesenvenrsipasies 2

42 U.S.C. § 7413(a)(1)-(3) (2000)... eee 23

42 U.S.C. § TALSAS) (OGD). oscceciecssconsssnscexsssosee 23

02 UDA... § TEER Cl sittin 17

42 U.S.C. § 7413(b), (b)(2) (2000)... 26

et a

Vii

TABLE OF AUTHORITIES—Continued

Page

42 U.S.C. § 7413(c)(1) (2000)... eececececececscececeeee. 26, 27

42 U.S.C. § 7413(c)(1) & (6) (2000)... .eeececccccecssees 18, 27

42 U.S.C. § 7418 (2000)... ceccccccsescscscscserececeees 17

42 U.S.C. § 7418(a) (2000) ooo. cecccccccccecees iepeteiaks 27

42 U.S.C. § 7601(a)(2)(A) (2000) o.e.eeeeececccccscecceees 28

42 U.S.C. § 7602(€) (2000) ooo. eeecececcccscececececeeee. 17

42 U.S.C. § 7603 (2000)............ccccccsccosesessssssceoeee. 21

42 U.S.C. § 7604 (2000)...........ccceccccsssecessseseseees. 2

42 U.S.C. § 7604(a)(1) (2000)... eeecececscsccccecesesees 18

42 U.S.C. § 7607(b) (2000) uo... eeceececescsecscsceceseeeeees 18

42 U.S.C. § 7601(b)(1) (2000) ooo. eecececcccecccececee. 17, 18, 19

42 U.S.C. § 7607(b)(1)-(2) (2000) o...eeececcecccccssesees 19

42 U.S.C. § 7607(b)(2) (2000) oo....eeceeccccscscececececees 19

CONGRESSIONAL MATERIALS

H.R. Rep. No. 98-232, 98th Cong., Ist Sess.

aba oe ET EO NTE ET ITD 12

H.R. Rep. No. 130, 73d Cong., 1st Sess.(1933)..... i4

S. Doc. No. 56, 76th Cong., Ist Sess. (1939)........ 9

S. Rep. No. 95-1118, 95th Cong. 2d Sess. (1978),

reprinted in 1979 U.S.C.C.A.N. 5235 vecccccccsesces 9

S. Rep. No. 261, 83d Cong., Ist Sess. {io 9

MISCELLANEOUS

68 Fed. Reg. 61,248-61,280 (Oct. 27, 2003)......... 2

Robert L. Stern, et al., Supreme Court Practice

FPR FD aiesiisssicnsscaeteacnccasnse hao 7

In re Payment by Fed. Highway-Admin. to TVA

for Damage to Electrical Transmission Tow-

ers, No. B-253613, 1993 USS. Comp. Gen.

LEXIS 1152 (Dec. 3, 1993)... cccccecccceseccsceseeee 14

$

4

:

5

3

Vill

~ TABLE OF AUTHORITIES—Continued

Page

Reply brief of State of Alaska, Dep’t of Envtl.

Conservation, 2003 WL 21999009 (Aug. 19,

PI sts sisasnssieteativanlbedadiadumsanemacita atin ries 22-23

November 3, 1999, Department of Justice

Press Release, http://www.usdoj.gov/opa/pr/

1999/November/524enr.htm..............cccceeeseseeees 2

November 3, 1999, Speech of Carol M. Browner,

http://www.epa.gov/compliance/civil/program

s/caa/coal/browner/html.............ccccceeessssesessseeeees 2

IN THE

Supreme Court of the United States

No. 03-1162

UNITED STATES ENVIRONMENTAL

PROTECTION AGENCY, ET AL.,

. Petitioners

Vv.

TENNESSEE VALLEY AUTHORITY, ALABAMA POWER

COMPANY, DUKE ENERGY CORPORATION,

TENNESSEE VALLEY PUBLIC POWER

ASSOCIATION, ET AL.,

Respondents

On Petition for_.a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

BRIEF OF TENNESSEE VALLEY AUTHORITY

IN OPPOSITION TO PETITION FOR A

WRIT OF CERTIORARI

STATEMENT

This unusual case arises out of an Environmental Pro-

tection Agency (EPA) enforcement initiative, in which EPA

charged a number of electric utilities, including the Tennessee

Valley Authority (TVA), with violating the Clean Air Act’s

New Source Review (NSR) provisions over the preceding

twenty years. In November 1999, EPA brought civil actions

in federal district courts against seven utilities located in the

Midwest and South and issued an Administrative Com-

pliance Order (ACO) to TVA under section 113(a) of the

FAA EEA 4 Wek ah i ertes HON

2

Clean Air Act (CAA), 42 U.S.C. § 7413(a) (2000). At the

same time, the Administrator of EPA and the Attorney

General held a press conference, in which they announced

that all the targeted utilities were guilty of serious violations

of law and that they would seek significant penalties against

these utilities.

Prior to issuing the ACO against TVA, EPA held no

hearing of any kind, and it has no published procedures for

doing so. Nevertheless, in the ACO EPA concluded that

TVA had violated the CAA when it performed numerous

repair projects at nine of TVA’s coal-fired electric generating

plants over the past two decades without preconstruction

permits, and ordered TVA to begin undertaking costly

compliance activities immediately. Pet. App. at 2a, 13a, 56a-

57a, 74a n.20, 107a-110a. After receiving the ACO, TVA

informed EPA that, in TVA’s view, the ACO was not valid

because TVA had complied with the law. In particular,

' See Pet. App. at 13a; November 3, 1999, Department of Justice Press

Release, http://www.usdoj.gov/opa/pr/ 1999/November/524enr.htm; No-

vember 3, 1999, Speech of Carol M. Browner, http://www.epa.gov/

compliance/civil/programs/caa/coal/browner. html.

Since that time, several district courts have ruled on the merits of

EPA’s complaints, and have reached diametrically opposing conclusions.

Compare United States v. Duke Energy Corp., 278 F. Supp. 2d 619

(M.D.N.C. 2003), with United States v. Ohio Edison Co., 276

F. Supp. 2d 829 (S.D. Ohio 2003). Further, EPA issued new NSR

regulations and an interpretation of NSR, 68 Fed. Reg. 61,248-61,280

(Oct. 27, 2003), that make clear that the TVA projects that were targeted

by the ACO would not violate the CAA. The validity of these regulations

now is the subject of litigation in the District of Columbia Court of

Appeals. See State of New York v. U.S.E.P.A., Docket No. 02-1387 (and

consolidated cases).

In addition, several groups have sued TVA in district courts under the

citizen-suit provision of the CAA, 42 U.S.C. § 7604 (2000), alleging

that some of the same projects targeted by EPA violate the CAA’s

NSR provisions.

j

mentee ta Pedant SABIE BRAN Aly Lee

. 3

TVA’s position was that EPA’s NSR rules did not require

permits because TVA’s projects were “routine maintenance,

repair, and replacement” projects that did not increase

emissions of regulated pollutants, and that EPA had changed

its interpretation of those NSR rules retroactively without fair

notice to TVA and other regulated parties. Pet. App. at 13a-

14a n.12. TVA also informed EPA that TVA intended to

petition for review of the order pursuant to the CAA, which

TVA did on May 4, 2006. Because TVA’s compliance with

the ACO would cause adverse economic effects for other

utilities that are interconnected with and purchase power from

TVA, as well as for the retail distributors of TVA’s power,

Alabama Power Company, Duke Energy Corp., the Ten-

nessee Valley Public Power Association (an organization of

municipal and cooperative TVA distributors) and a number of

individual distributors filed similar petitions for review in the

Eleventh Circuit. See Pet. App. at 54a n.1, 90a-98a. —

The same day that TVA’s petition was filed, 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.” Pet. App. at1l4a. The

Administrator delegated this task to her own appointees

within her office, the Environmental Appeals Board (EAB).

Id. at 14a-16a. EPA had never before conducted such a

proceeding, and the scheme it created specifically for the

TVA proceeding was not a typical agency adjudication. The

EAB appointed an administrative law judge to take evidence,

but instructed him not to make any findings of fact and

conclusions of law. /d. at 16a. Instead, the EAB itself

rendered findings and conclusions. The ALJ characterized the

process as “an invented ... ad hoc procedure.... It’s not

described in any rule or regulation or statute.’” Jd. at 18a.

As the Eleventh Circuit later found, the EAB proceeding

lacked a neutral decisionmaker; rendered discovery effec-

tively unavailable by precluding compulsory process; limited

4

testimony at the behest of the Administrator; and was unduly

rushed, giving TVA only a few weeks to prepare a defense

involving more than twenty repair projects over a twenty-year

period at fourteen generating units located at nine plants in

three states. Jd. The EAB ultimately “affirmed” most of the

ACO. Id.

TVA and its copetitioners sought review of the EAB

decision in the Eleventh Circuit. EPA moved to dismiss all of

the petitions on grounds that TVA lacked independent

litigating authority to bring the action over the objection of

the Attorney General, and that the dispute betweer TVA and

EPA was not subject to judicial review because it was an

interagency dispute that did not present a case or controversy.

Pet. App. at 59a. EPA also contended that TVA’s copeti-

tioners lacked standing, and that the ACO was not final (a

view the Court of Appeals ultimately accepted, but on differ-

ent grounds from those asserted by EPA). /d. at 59a-60a.

The Eleventh Circuit rejected most of EPA’s jurisdictional

contentions. In particular, the Court of Appeals held that

TVA’s independent litigating authority had been unanimously

upheld by the courts, including three times over the Attorney

General’s objection, and that the language of the TVA Act,

subsequent enactments by Congress, TVA’s unique history of

independence from centralized control in Washington, and

TVA’s long history of self-representation confirmed that

TVA was authorized to bring suit and to represent itself. Pet.

App. at 61a-64a.

Further, the Eleventh Circuit held that “this particular

controversy between these executive branch agencies is

justiciable.” Jd. at 74a. In making this narrow ruling, the

Court of Appeals reviewed the pertinent decisions of this

Court and the lower federal courts at length (id. at 64a-74a),

and followed this Court’s analysis in United States v. Nixon,

418 U.S. 683 (1974). The court specifically found that

TVA’s challenge to the ACO was traditionally justiciable

06 ie ents

5

because the CAA “explicitly provides for judicial review” of

final actions of the Administrator, and that the setting of the

controversy involved concrete adversity because of TVA’s

unique independence as a federal agency and the genuinely

conflicting views advocated by TVA and EPA. Pet. App.

at 73a-74a. The Eleventh Circuit also held that the eight

other petitioners had standing to challenge EPA’s order

because, among other things, it affected their economic

interests as interconnected utilities and purchasers of TVA

electricity and was likely to be used against them in parallel

litigation. /d. at 89a-98a; see also briefs in opposition filed

by Alabama Power, Duke Energy, and TVPPA.

As to finality, the Eleventh Circuit initially held that the

order at issue was final, Pet. App. at 74a-76a, but after further

briefing and oral argument on the merits, the court

reconsidered this holding and concluded that the ACO was

not final. /d. at 3a. Specifically, the court held that the ACO

did not meet the second prong of the test set forth by this

Court in Bennett v. Spear, 520 U.S. 154 ( 1997) (final agency

action must be one from which legal consequences flow). In

so doing, the court examined the law of finality at length (id.

at 20a-22a); discussed problems associated with judicial

review of ACOs that were both unadjudicated and “adju-

dicated” prior to issuance (id. at 28a-30a); considered the

legislative history of section 113 with respect to finality and

judicial review (id. at 30a-37a); and held that under the

language of the CAA, ACOs have the status of law. Jd.

at 39a. After reviewing the case law and finding that no other

court had addressed the constitutional issues posed by the

Statutory scheme (id. at 39a-43a), the court concluded that

giving ACOs the status of law would be repugnant to the Due

Process Clause, because “[b]efore 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 meaningful time and in a meaningful manner.’” /d.

6

at 43a.” The Eleventh Circuit held that the ACO thus had no

legal consequences, was not final for purposes of review,

and dismissed the case for lack of jurisdiction. Jd. at 46a.

Costs were taxed against TVA and its copetitioners. See

Appendix hereto at 2a.

REASONS THE PETITION SHOULD BE DENIED

A. EPA Prevailed Below.

EPA asked the Eleventh Circuit to dismiss this case for

lack of subject matter jurisdiction on grounds that the ACO

was not final. Pet. App. at 59a. The Court of Appeals did just

that. Pet. App. at 3a, 46a. In its petition, EPA does not seek

reversal of the judgment of dismissal, and does not

affirmatively contend that the ACO was final agency action.

EPA instead argues that the court erred in its reasoning, and

asks for further review in order to obtain another judgment of

dismissal on different jurisdictional grounds from those

articulated by the Eleventh Circuit. In particular, EPA agrees

with the Eleventh Circuit’s holding that the ACO issued to

TVA had no legal consequences and was not final agency

action (Pet. at 28), but contests the Eleventh Circuit’s

reasoning that the ACO lacked legal consequences because it

was not preceded by a fair adjudication. Instead, EPA would

substitute a ruling that the ACO lacked legal consequences on

justiciability grounds. EPA thus “challenge[s] the rationale

relied on by the Court of Appeals. ‘[T]his Court,’ however,

‘reviews judgments, not opinions.’”” Texas v. Hopwood, 518

U.S. 1033, 1034 (1996) (denying petition for writ of

certiorari; Ginsburg, J., joined by Souter, J.), citing Chevron

> The court also pointed out that EPA could not voluntarily “adju-

dicate” before issuing an ACO because “[t]his is not an area in which the

organic statute has set a vague standard.... The EPA cannot ... amend

the statute.” In addition, “a pre-ACO adjudication would only highlight

another constitutional problem,” namely, the unconstitutional delegation

of judicial power to a non-Article III court. Pet. App. at 44a-46a.

7

U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467 U.S.

837, 842 (1984) (emphasis in original). Accordingly, EPA’s

petition falls squarely within the rule that “a party may not

appeal from a favorable judgment simply to obtain review of

findings it deems erroneous.” Mathias v. WorldCom Techs.,

Inc., 535 U.S. 682 (2002); see also Robert L. Stern, et al.,

Supreme Court Practice § 2.4, at 45 (7th ed. 1993) (granting

petition of prevailing party “would seem to be inconsistent

with the Court’s settled refusal to entertain an appeal by a

party successful in obtaining a final judgment in his favor in

the lower court”).

Further review of this case, which was dismissed below at

the instance of Petitioner EPA, is unwarranted.

B. The Second and Third Questions Presented Are

Immaterial to the Disposition of This Case.

This case is not simply a dispute between TVA and EPA;

eight additional parties petitioned the Eleventh Circuit for

review of EPA’s decision, Pet. at II, and their petitions were

consolidated with TVA’s. Pet. App. at 59a. The Eleventh

- Circuit held that each of those parties had standing under

Article III sufficient to create a “case or controversy.” /d. at

89a-98a. EPA “has not petitioned for review” of that holding.

Pet. at 29. As this Court has made plain, the “presence of one

party with standing assures that [the] controversy before [the]

Court is justiciable.” Dep’t of Commerce v. United States

House of Representatives, 525 U.S. 316, 330 (1999), citing

Director, Office of Workers’ Comp. Programs vy. Perini N.

River Assocs., 459 U.S. 297, 303-05 (1983). Accordingly,

even if EPA were correct (which it is not) that this dispute

between it and TVA is not justiciable, or that TVA had no

authority to file the case over the Attorney General’s objec-

tion, this case is a justiciable “case or controversy” because of

the presence of the other parties with standing to bring suit on

their own behalf. The issues of TVA’s litigating authority

and justiciability thus do not warrant further review.

8

C. TVA Has Independent Litigating Authority.

TVA’s independent litigating authority has been upheld by

every court that has considered the matter, and there is no

conflict among the courts of appeals on this issue. Further,

the determination of the issue involves statutory and historical

matters unique to TVA, and the issue is infrequently pre-

sented. Even assuming EPA has standing to raise the Attor-

ney General’s objections to TVA’s litigating authority,

EPA cites none of this Court’s Rule 10 considerations in

seeking certiorari on this issue. Instead, EPA simply asserts

that the Eleventh Circuit “erred.” Pet. at 23. That assertion

is wrong.”

EPA argues that the Attorney General is authorized to

control TVA’s litigation under statutes providing that,

“[e]xcept as otherwise authorized by law,” the Attorney

General conducts and supervises litigation involving the

United States. 28 U.S.C. §§ 516, 519 (2000). The Eleventh

Circuit properly rejected this argument, Pet. App. at 61a-64a,

holding that, under the TVA Act and the unanimous case law,

TVA has independent litigating authority to bring suit over

the objection of the Attorney General:

Since its inception in 1933, TVA has represented itself

in litigation by attorneys of its own choosing. Moreover,.

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);

> Additionally, as noted in Section B above, a reversal of the Eleventh

Circuit’s ruling would not affect the ultimate disposition of this case

because the other respondents would remain as parties with standing to

raise the finality (and constitutionality) of the ACO.

SO te ee wr ae er ae ote ne eae Sed Nain te

9

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

Supp. 551 (M.D. Ala. 1982).

Pet. App. at 6la.

The cited cases and the Eleventh Circuit all held that TVA

is authorized by | law to represent itself based on the language

of the TVA Act,’ the “ unique history of TVA and its intended

independence” from centralized control in Washington,°

Congress’ subsequent and repeated confirmation of TVA’s

independent litigating authority in both statutes and other

congressional documents,° and TVA’s long history of self-

representation without objection by the Attorney General.

Pet. App. at 61a-64a.

* The TVA Act provides that TVA’s three-member Board of Directors

“shall direct the exercise of all the powers of the Corporation.” 16 U.S.C.

§ 83la(g). TVA’s corporate powers include, among others, the powers

to “sue and be sued” (16 U.S.C. § 831c(b)), to appoint attorneys and

define their duties (16 U.S.C. § 831b), to settle all claims and litigation

(16 U.S.C. § 831h(b)), and all other powers “necessary and appropriate

for the exercise of the powers herein specifically conferred” (16 U.S.C.

§ 831 c(g)).

> See the extensive discussion of TVA’s history in Algernon Blair

Indus. Contractors, Inc. v. TVA, 540 F. Supp. 551 (M.D. Ala. 1982).

° See, e.g., Customs Court Act of 1980, Pub. L. No. 96-417, 94 Stat.

1727 (preserving TVA’s existing authority to represent itself by attorneys

of its choosing); Federal Courts Improvement Act of 1982, § 169, Pub. L.

No. 97-164, 96 Stat. 25, 51 (same); S. Doc. No. 56, 76th Cong., Ist Sess.

at 62, 68 (1939) (“[TVA], unlike ordinary Government departments, has

no statutory right to demand legal assistance from the Department of

Justice”); S. Rep. No. 261, 83d Cong., Ist Sess. 3 (1953) (explaining that

TVA was exempted from Court of Claims jurisdiction because it would be

expensive and burdensome to have TVA attorneys and witnesses travel to

Washington); S. Rep. No. 95-1118, 95th Cong. 2d Sess., at 21 (1978),

reprinted in 1979 U.S.C.C.A.N. 5235, 5255 (under the Contract Disputes

Act of 1978, “because the Tennessee Valley Authority handles its own

litigation, its attorneys, rather than the Attorney General, will enforce

its rights. . .”).

10

EPA acknowledges that the Attorney General conducts and

supervises litigation “[e]xcept as otherwise authorized by

law” (28 U.S.C. §§ 516, 519), but argues there is an

“important purpose served by centralizing federal litigation.”

Pet. at 23-24. However, Congress can decide that other

purposes are more important in particular instances, and may

authorize independent litigating authority where it so chooses.

United States v. Providence Journal Co., 485 U.S. 693, 705

n.9 (1988). Here, Congress has “otherwise authorized” an

agency to represent itself to make it independent of cen-

tralized federal control, so that TVA can function much like a

private business corporation. As the Eleventh Circuit ex-

plained, quoting Dean v. Herrington, 668 F. Supp. at 652 n.1:

From its inception, TVA has enjoyed an independence

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.”

TVA’s independence is underscored by its corporate

form, its maintenance of a separate legal staff, its

removal from centralized control in Washington, its

discretionary ratemaking authority, and its exemption

from at least 16 provisions of the Administrative

Procedure Act.

Pet. App. at 63a-64a (citations omitted). Furthermore, the

Eleventh Circuit correctly pointed out that:

[I]n 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 congres-

sional 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

Pda Sirk Weeden rico aahions

1]

otherwise surrender jurisdiction over its legislatively

mandated responsibilities for litigation in this area, it

would seriously undermine its independence over all

other aspects of its program.”

Pet. App. at 64a (citation omitted).

Despite this clear manifestation of congressional intent,

EPA argues that the Attorney General has not attempted to

represent TVA here, but rather to exercise his purported

authority to prohibit TVA from bringing suit. Pet. at 26. But

he has no such authority with respect to TVA. Any authority

to prohibit the initiation of a lawsuit exists only by virtue of

the Attorney General’s statutory power to “conduct” and

“supervise” litigation (28 U.S.C. §§ 516, 519), and he has no

such power where Congress has “otherwise authorized” an

agency to control its own litigation. Jd. Here, Congress

instructed in the TVA Act that the TVA Board of Directors _

(and not the Attorney General) directs the exercise of all of

TVA’s powers, 16 U.S.C. § 831a(g), including the power to

sue. And Congress has repeatedly confirmed that it intended

to place the power to control TVA’s litigation in the hands of

the TVA Board of Directors, most recently explaining that it

expressly prohibited the Attorney General from representing

TVA to stop the efforts of the Department of Justice from

encroaching on TVA’s independence:

The Department of Justice has, on a number of

occasions sought to assume jurisdiction over TVA’s liti-

gation activities. The Department currently is responsi-

ble for most other Federal litigation and it contends that

TVA, as a Government corporation, should be under its

jurisdiction .... [T]he Tennessee Valley [Authority]

Act of 1933 clearly stipulates that TVA is responsible

for all of its own litigation. ... Since the Department of

Justice has indicated its continuing desire to intervene in

the litigation activities of the TVA, the committee is

12

recommending a legislative prohibition to reiterate the

clear intention of the Congress to prevent the Depart-

ment of Justice from representing TVA in litigation.

H.R. Rep. No. 98-232, 98th Cong., Ist Sess., at 45-46

(1983).’ Congress thus made perfectly clear that, when it

prohibited the Attorney General from using appropriated

funds to “represent” TVA in litigation, Pub. Law. No. 98-181,

§ 1300, Congress intended to preclude him from interfering

with any aspect of TVA’s responsibility for its own litigation.

These Congressional declarations, together with all of the

other reasons cited by the courts, demonstrate that TVA is

“otherwise authorized by law” to bring suit and to represent

itself over the objections of the Attorney General.®

Although Congress and four federal courts have agreed that

TVA has independent litigating authority, EPA asks this

’ EPA argues that this provision “should not be understood implicitly

to have repealed the Attorney General’s generally applicable authority.”

Pet. at 26. It was not a repeal at all; as the legislative history shows,

Congress “confirmed” TVA’s independent litigating authority granted by

the TVA Act specifically in response to the Department of Justice’s

efforts to control TVA’s litigation activities. Pet. App. at 64a.

* The cases cited by EPA in support of the Attorney General’s author-

ity, Pet. at 24, are inapposite. United States v. San Jacinto Tin Co., 125

U.S. 273, 279 (1888), merely stands for the proposition that there must be

someone who can file suit for the United States rather than no one at all.

United States v. Walcott, 972 F.2d 323, 326 (11th Cir. 1992), is not

pertinent because, unlike TVA, the Small Business Administration there

did not contend that “Congress ... ‘otherwise authorized’ the SBA to

conduct its own litigation.” /d. at 327. And Sutherland v. Int'l Ins. Co. of

New York, 43 F.2d 969 (2d Cir. 1930), involved the question of whether

the President had delegated litigating authority to the Alien Property

Custodian under a World War I Executive Order. /d. at 971. The case’s

limited reach is shown by SEC v. Robert Collier & Co., 76 F.2d 939 (2d

Cir. 1935), where Judge Hand distinguished Sutherland in holding that the

SEC could appear in court by its own solicitor rather than the Attorney

General. None of EPA’s cases bear on whether TVA is “otherwise

authorized by law” to conduct its own litigation.

13

Court to adopt a new, higher standard for evaluating whether

an agency has independent litigation authority, which it calls

the “clear statement” standard, and then argues that this case

does not meet that standard. Pet. at 24-26. But there is no

such “clear statement” standard. As this Court has already

explained, in United States v. Providence Journal Co.,

485 U.S. 693, 705 n.9 (1988), Congress can choose to exempt

litigation from the authority of the Attorney General, and

such exemptions must be

subjected to the ordinary tools of statutory construction

to determine whether Congress intended to supersede

§ 518(a). Indeed, Congress has enacted some provisions

that suggest exceptions to the blanket coverage of

§ 518(a). See, e.g., Federal Courts Improvement Act of

1982, § 169, 96 Stat. 51 (preserving existing authority of

the Tennessee Valley Authority “to represent itself by

attorneys of its choosing”).

Applying “ordinary tools of statutory construction,” as the

Eleventh Circuit did below and as have all the other courts

that have considered the issue, there is no doubt that TVA has

authority to litigate independently of the Attorney General.’

D. This Controversy Is Justiciable.

The Eleventh Circuit held that the particular controversy

between TVA and EPA in this case is justiciable. In doing

* EPA also asserts that the Attorney General’s failure to exercise con-

trol over TVA’s litigation for more than fifty years does not mean that he

lacks the power to do so. But as EPA itself points out, “‘[t]he fact that

powers long have been unexercised well may call for close scrutiny as to

whether they exist.”” Pet. at 26 (quoting United States v. Morton Salt Co.,

338 U.S. 632, 647 (1950)). The court below gave such close scrutiny,

observing that “Congress has repeatedly recognized TVA’s responsibility

for its own litigation,” Pet. App. at 62a, and that TVA’s intended

independence and its unique history “compel the results reached” by the

Eleventh Circuit, as well as by the courts in Algernon Blair, Cooper, and

Dean. Id. at 63a.

14

so, the Court of Appeals correctly applied precedent of this

Court and the lower federal courts to the specific circum-

stances of this case. That decision does not conflict with any

decision of either this Court or any court of appeals, and it

does not warrant further review, especially because of the

existence of eight other parties with standing.

EPA argues here, as it did below, that the dispute between

TVA and EPA is not justiciable because TVA and EPA are,

according to EPA, in effect a single entity. In an extensive

opinion, Pet. App. at 64a-74a, the Eleventh Circuit thor-

oughly considered and rejected that contention, holding that

“TVA possesses unique independence as a federal agency.”

Pet. App. at 73a. This is clearly correct. Congress indicated

in the Conference Report on the TVA Act that “[w]e intend

that the corporation shall have much of the essential freedom

and elasticity of a private business corporation.” H.R. Rep.

No. 130, 73d Cong., Ist Sess. 19 (1933). The TVA Act

confirms this, providing, among other things, that TVA is run

by a Board of Directors, that TVA’s employees are not

subject to the federal Civil Service laws, that TVA’s

purchasing activities are independent of general federal

procurement laws, and that TVA’s financing bonds are not

obligations of the United States.'° Indeed, TVA currently

'° TVA’s Board of Directors is mandated to “direct the exercise of all

the powers of the Corporation.” 16 U.S.C. § 831la(g). The TVA Board is

prohibited from giving or considering any “political test or qualification”

in appointments and promotions. 16 U.S.C. § 83le. TVA’s personnel

actions are “without regard to the provisions of Civil Service laws

applicable to officers and employees of the United States.” 16 U.S.C.

§ 831b. Its purchasing activities under section 9(b), 16 U.S.C. § 831h(b),

are independent of statutes generally applicable to federal procurements.

TV¥A is authorized to issue bonds to finance its power activities, which are

expressly not obligations of the United States. 16 U.S.C. § 831n-4(b).

TVA’s statutory financing scheme contemplates that TVA customers will

finance TVA’s operations. /n re Payment by Fed. Highway Admin. to

TVA for Damage to Electrical Transmission Towers, No. B-253613, 1993

U.S. Comp. Gen. LEXIS 1152 (Dec. 3, 1993). TVA is authorized to sell

A ORPOAL A tow RI ER Dorel 5 aS “acre waisheetin St dein male ree 2 ~

15

receives no congressional appropriations for its activities.

Congress has repeatedly acknowledged TVA’s unique nature,

for example by precluding suit in the Court of Federal Claims

against TVA, 28 U.S.C. § 1491(c) (2000), and exempting

TVA from the Federal Tort Claims Act. 28 U.S.C. § 2680(/)

(2000). And this Court has recognized that TVA “‘is a

corporate entity, separate and distinct from the Federal

Government itself.’” Pierce v. United States, 314 U.S. 306,

310 (1941).

Despite TVA’s distinct status, EPA asserts here, as it did

below, that there is a “general rule that a dispute between two

government agencies whose heads serve at the pleasure of the

President does not result in a justiciable ‘case or contro-

versy,””” and that while there are exceptions to that “rule,”

this case does not fit within them. Pet. at 19. This is not the

law, and the Eleventh Circuit properly so held.

No decision of this Court or any court of appeals

recognizes a “general rule” against justiciability. To the

contrary, this Court has expressly rejected the suggestion that

there is a “general rule” against judicial review of intrabranch

disputes, holding that “[t]he mere assertion of a claim of an

‘intra-branch dispute,’ without more, has never operated to

products to the United States. 16 U.S.C. § 831d(j). And the TVA Act

empowers TVA to use proceeds from its power operations “in conducting

its business in generating, transmitting, and distributing electric energy.”

16 U.S.C. § 831ly (emphasis added).

'' Whether TVA’s fixed-term Board members serve “at the pleasure of

the President” is an issue never decided by this Court. The only case

involving removal of a TVA Board member is Morgan v. TVA, 115 F.2d

990 (6th Cir. 1940). However, Morgan involved a removal “taken after

inquiry, and for a stated cause,” 28 F. Supp. 732, 733 (E.D. Tenn. 1939),

and applied doctrines this Court has since rejected. See Wiener v. United

States, 357 U.S. 349 (1958) (limitations on removal power may be

implied from attributes of office); Morrison v. Olson, 487 U.S. 654,

689-91 and nn.27-28 (1988) (rejecting analytical framework based on

characterizing official duties as “executive” or “quasi-legislative”).

16

defeat federal jurisdiction; justiciability does not depend on

such a surface inquiry.” United States v. Nixon, 418 U.S.

683, 693 (1974) (Nixon). Indeed, this Court has held

justiciable a case that could be styled “United States v. United

States, et al.,” holding that “the established principle that a

person cannot create a justiciable controversy against himself

has no application” to an intra-government dispute that “‘in-

volves controversies of a type that are traditionally justici-

able.” United States v. ICC, 337 U.S. 426, 430-31 (1949).'?

Nor are the “exceptions” asserted by EPA recognized in

the case law. EPA attempts to read a number of cases

involving intra-governmental disputes—none of which held

any such dispute non-justiciable—as if they set forth “excep-

tions” to a “general rule” of non-justiciability. See Pet. at 21-

22. The Eleventh Circuit rightly rejected this approach,

noting 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.” Pet. App. at 69a.

Rather than adopting EPA’s wholly unsupported position,

the Eleventh Circuit properly followed this Court’s two-prong

case-or-controversy analysis in Nixon in the context of intra-

branch disputes, stating: “First, we must determine whether

the issue is traditionally justiciable. Second, we must decide

whether the setting of the dispute demonstrates true adversity

between the parties. Applying that analysis here leads to the

conclusion that this case presents a justiciable controversy.”

Pet. App. at 73a. Other federal courts have drawn a similar

analysis from the Nixon decision. See, e.g., United States v.

'2 In fact, this case is at least the second “7VA v. EPA” case, and the

first one proceeded without any ruling of nonjusticiability. See TVA v.

EPA, 425 U.S. 934 (1976), denying certiorari in Big Rivers Elec. Corp. v.

EPA, 523 F.2d 16 (6th Cir. 1975).

ET WE EE PRD te RE LEE ARS LPB ALG

17

Fed. Maritime Comm’n, 694 F.2d 793, 810 (D.C. Cir. 1982)

(adopting two-prong Nixon analysis at DOJ’s behest); Dean

v. Herrington, 668 F. Supp. at 653.

Nevertheless, EPA contends that the court below departed

from existing precedent by establishing a “broad rule” of

justiciability that would “potentially render[]” a wide variety

of intrabranch disputes subject to review. Pet. at 22-23. But,

as shown above, the Eleventh Circuit did not depart from

existing precedent at all. Nor did it adopt a “broad rule.” To

the contrary, the Court of Appeals applied the Nixon analysis

to the particular circumstances of this Clean Air Act case, in

which EPA is directed to regulate TVA “in the same manner,

and to the same extent as any nongovernmental entity,” 42

U.S.C. § 7418 (2000), and is authorized to take action against

TVA, including issuing enforcement orders. The CAA like-

wise expressly provides for judicial review of agency action.

42 U.S.C. § 7607(b)(1) (2000). In that context, the Eleventh

Circuit stated a narrow holding: “We therefore find that

this particular controversy between these executive branch

agencies is justiciable.” Pet. App. at 74a (emphases added).

Furthermore, Congress clearly contemplated that contro-

versies between federal agencies under the CAA would be

resolved in the courts. The CAA unambiguously authorizes

EPA to sue TVA—it subjects federal facilities (such as

TVA’s fossil plants) to EPA regulation, 42 U.S.C. § 7418,

and it expressly authorizes EPA to enforce the law by filing

Suit against federal agencies in district courts. 42 U.S.C.

§ 7413(b) (authorizing EPA to sue “any person”); 42 U.S.C.

§ 7602(e) (2000) (defining “person” to include “any agency

. . or instrumentality of the United States”). But as EPA

recognizes, Pet. at 28, the necessary corollary of holding that

TVA’s appeal of EPA’s order is non-justiciable is that EPA

likewise cannot sue TVA to enforce the CAA. See Pet. at 4

(“[b]ecause the government views inter-agency litigation as

non-justiciable . . . no judicial enforcement action could be

18

brought by EPA.”)."° See also Pet. App. at 73a n.19

(assuming a “symmetry” between TVA’s right to seek review

of EPA’s order and EPA’s right to seek enforcement of the

order). Accepting EPA’s justiciability theory thus would

require treating the civil judicial enforcement provisions of

CAA section 113 as unconstitutional. The Court of Appeals

properly rejected that theory, noting that Congress authorized

EPA to sue TVA to enforce the CAA. -Further review is

unwarranted.

E. The Eleventh Circuit’s Constitutional Ruling Does

Not Warrant Further Review.

1. EPA’s Proposed Construction of the CAA

Would Result in Dismissal for Lack of Finality.

EPA asserts that the decision below “is based on a mis-

taken construction of the Clean Air Act[].” Pet. at 12. But

the alternative construction of the statute EPA itself ad-

vances would require the same disposition as the judgment

below, namely, dismissal of the case because the ACO was

not final.

EPA’s proposed construction omits any explanation of a

key part of the CAA, 42 U.S.C. § 7607(b) (2000), which

governs judicial review. Under that section, appellate

jurisdiction hinges on finality. An EPA action that is “final

action of the Administrator’ may be appealed to the

appropriate court of appeals. 42 U.S.C. § 7607(b)(1). The

CAA precludes any other review of “final” EPA action, pro-

viding that “[a]ction of the Administrator with respect to

which review could have been obtained under paragraph (1)

'? EPA does not deny that the CAA specifically authorizes the Govern-

ment to pursue criminal actions against TVA’s “responsible corporate

officer[s],” 42 U.S.C. § 7413(c)(1) & (6) (2000), and authorizes pri-

vate citizens to sue TVA, all for violating EPA’s orders. 42 U.S.C.

§ 7604(a)(1). EPA may have chosen not to file a civil suit against TVA,

but that does not make EPA orders unenforceable.

19

shall not be subject to judicial review in civil or criminal

proceedings for enforcement.” 42 U.S.C. § 7607(b)(2). The

Act thus sets up a clear dichotomy for judicial review: Final

EPA action may be challenged only by an immediate appeal

to the court of appeals and may not be challenged in a judicial

enforcement action, 42 U.S.C. § 7607(b)(1)-(2); EPA action

that is not final may not be reviewed in the court of appeals,

42 U.S.C. § 7607(b)(1), but there is no Statutory bar to

judicial review in a district court enforcement action.

In light of this statutory provision, EPA’s proposed con-

struction of the CAA necessarily renders ACOs nonfinal.

EPA asserts that civil and criminal penalties may be imposed

only for violation of a “valid order.” Pet. at 14 (emphasis in

original). In particular, EPA asserts that in a civil or criminal

enforcement action in district court, sanctions are unavailable

“if the court determines that the order is invalid because it is

not the case that the subject of the order ‘has violated, or is in

violation of designated provisions of the Act.” Jd. In other

words, EPA contends that the validity of the order may be

litigated in a subsequent district court enforcement action.

But if EPA’s construction is correct, then an ACO is not final

agency action and it may not be reviewed in the court of

appeals, precisely as the Eleventh Circuit held. That is, if the

“validity” of the ACO may be examined in an enforcement

action, then the ACO was not final—if it had been final,

examination of its “validity” in the enforcement action would

be precluded by section 7607(b)(2). The Eleventh Circuit

recognized this point, stating that “[a]ny 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 ... would have the effect of

making the ACO nonfinal.” Pet. App. at 41a.

Accordingly, it is clear that, had the Court of Appeals

adopted EPA’s construction of the CAA, the result would

have been the same—dismissal on the grounds that the

20

agency action was not final. Thus, there is no point in this

Court’s accepting EPA’s request to review the Eleventh

Circuit’s decision.

2. EPA’s Enforcement Powers Are Intact.

EPA cannot credibly contend that the Eleventh Circuit’s

decision “strikes at the heart of EPA’s enforcement authority”

(Pet. at 2) and inhibits “EPA’s efforts to protect human health

and the environment, especially where quick action is

required.” Jd. at 18. This argument certainly does not apply

to the ACO issued in this case, which addressed purported

violations that occurred years (and even decades) before the

ACO was issued—an ACO that EPA says is not enforceable

in the courts. Pet. at 28.'4

EPA’s argument ignores the peculiar nature of this case,

which EPA itself described as involving an “exceedingly

unusual” (Pet. App. at 14a) adjudicatory proceeding that EPA

invented for the “unique circumstance” (id. at 15a n.1 9) of the

particular ACO involved here—a proceeding that EPA had

never undertaken before, and may never use again. The ruling

invalidating that particular procedure does not affect EPA’s

general enforcement authority. Indeed, the Court of Appeals

instructed EPA that it may file suit against TVA in court, and

therefore informed EPA that it had not fewer enforcement

options as to TVA but more.

EPA also ignores the narrow effect of the Eleventh Cir-

cuit’s ruling. The court held that “[t]he Clean Air Act is

““ Nor is the significance of ACOs generally a matter of record in this

case. EPA’s assertions about the extent to which it uses ACOs (Pet. at 18)

and the nature of EPA’s purportedly long-standing “understanding and

practice” under the statutory scheme (Pet. at 10, 16) are wholly unsup-

ported by the record here. If these types of matters are germane to the

proper determination of the constitutional issue, as EPA suggests, then

that determination should await another case with a record more fully

developed by EPA.

SIRES AMARER ES Sh EIA ts Re BT alt BM eat 8 Se clack erect: ee Vues SES

Pr aR E NR st ah ke

oe ne

21

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.” Pet. App. at 46a

(emphases added). To avoid that unconstitutionality, the

court held that ACOs lack the status of law and are not final.

This ruling does not generally invalidate the CAA’s enforce-

ment scheme, and its narrow reach leaves EPA with all of its

legitimate enforcement powers intact.

Apart from section 113(a) ACOs, under the CAA EPA may

use at least four separate enforcement mechanisms. As the

Eleventh Circuit noted, in all cases EPA may use a formal

penalty-assessment administrative adjudication, a federal

court civil action, and a federal court criminal prosecution,

Pet. App. at Sa-6a, and in emergencies—that is, “where quick

action is required” (Pet. at 18}—EPA may issue admin-

istrative orders pursuant to statutorily specified procedural

safeguards. 42 U.S.C. § 7603 (2000); Pet. App. at 23a-24a.

Moreover, nothing in the Eleventh Circuit’s decision

prevents EPA from issuing ACOs that lack finality, as EPA

claims to have done for years. EPA long has taken the

position that ACOs generally are not final, see Pet. App.

at 27a, and that they “merely state EPA’s position and are

best analogized to a complaint. They allege EPA’s position

with respect to the relevant facts, the crux of the dispute, the

procedural sequence, and EPA’s legal position.” Solar

Turbines Inc. v. Seif, 879 F.2d 1073, 1079-80 (3d Cir. 1989)

(footnotes omitted). Clearly, EPA may continue to issue

ACOs to serve notice of EPA’s position in order to obtain

voluntary compliance with the law.

‘What EPA cannot do under the decision below is to use

mere noncompliance with an ACO as the sole basis for the

automatic “imposition of severe civil penalties and imprison-

ment—even if the EPA is incapable of proving an act of

illegal pollution in court.” Pet. App. at 39a. But EPA does

not argue that it has (or even should have) such power. Pet.

i

22

at 14 (sanctions available “only [for] violation of a valid

order”) (emphasis in original).

Thus, the Eleventh Circuit’s ruling does not deprive EPA

of any of its legitimate enforcement tools, and further review

on that basis is unnecessary.

3. There Is No Conflict Among Decisions

Sufficient to Justify Further Review.

Although neither this Court nor any court of appeals has

considered the due process issue addressed by the Eleventh

Circuit, EPA contends there is a conflict among decisions.

But the primary cases EPA cites in claiming a conflict—

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

Dep’t of Envtl. Conservation v. EPA, 244 F.3d 748 (9th Cir.

2001), aff'd, 540U.S. __, 1248. Ct. 983 (2004)—do

not actually conflict with the decision below because they do

not address the constitutional issue underlying the finality

ruling here.'°

In particular, as the Eleventh Circuit correctly pointed out,

both the Sixth Circuit in Allsteel and the Ninth Circuit in

Alaska “fail[ed] to grapple with the constitutional problems

that arise from” recognizing that ACOs have the status of law

under the second factor of the Bennett finality analysis. Pet.

App. 40a. Likewise, this Court’s Alaska decision, rendered

months after the decision below, did not reach the

constitutional issues determined by the Eleventh Circuit; the

Court recognized that “[nJo question has been raised here . . .

about the adequacy of EPA’s preorder procedures under the

Due Process Clause or the Administrative Procedure Act.”

Slip op. at 17. See also reply brief of State of Alaska, Dep’t

5 EPA also contends that the Eleventh Circuit’s “reasoning” conflicts

with four other cases holding that particular ACOs were not final. Pet.

at 18 n.6. But those decisions also did not address the due process and

delegation issues considered by the Eleventh Circuit here.

De ee Oe Ce CEN TY Pe 5, be Si

aici weal ited

23

of Envtl. Conservation, 2003 WL 21999009, at*2 n.l

(Aug. 19, 2003), (“The constitutional issue decided in TVA v.

Whitman . . . has not been raised in this case”).

Further, both Alaska and Allsteel dealt with pre-construc-

tion orders issued pursuant to 42 U.S.C. § 7413(a)(5), a

Statutory provision different from § 7413(a)(1)-(3) at issue

here. Alaska and Allsteel involved EPA’s review of technical

decisions made by state agencies in issuing permits and,

unlike this case, did not involve EPA’s unprecedented effort

to use the ACO process to create retroactive liability long

after construction had been completed. See Alaska slip op. at

29 (“This case ... involves preconstruction orders issued by

EPA, . . . not postconstruction federal Agency directives.”).

Nevertheless, EPA contends that the decision below

conflicts with Alaska. According to EPA, the Eleventh

Circuit’s “crucial error was the court’s holding that EPA

orders under the Act are not subject to meaningful judicial

review,” Pet. at 12, while in Alaska the Court “clearly

conducted a more searching inquiry” under the “arbitrary

[and] capricious” standard. /d. at 17. EPA misunderstands

the Eleventh Circuit’s decision.

The Eleventh Circuit’s due process ruling is not premised

on the absence of judicial review. Rather, it is founded on the

absence of any statutory procedures for adjudication before a

final ACO that creates liability for past conduct is issued.

The court held that the CAA is defective to the extent that it

provides for EPA to issue an ACO that determines legal

rights without requiring EPA to afford the regulated party a

full and fair hearing before an impartial tribunal at a

reasonable time and in a reasonable manner. Pet. App.

at 43a-44a. That is, the Eleventh Circuit concluded that the

ACO could not lawfully determine legal rights because the

CAA does not require adjudication at the agency level before

an ACO becomes final and reviewable, not because of what

24

happens upon judicial review.'° Thus, the key to the court’s

due process holding was the absence of pre-ACO adju-

dication—a matter EPA does not address in its petition.

EPA’s misreading of the decision below provides no basis for

further review.’

4. If the Court Is Inclined to Grant the Petition, It

Should Remand This Case to the Eleventh

Circuit.

As explained above, TVA does not believe that the deci-

sion below conflicts with this Court’s later decision in Alaska.

If the Court disagrees, however, TVA respectfully suggests

that the most appropriate course would be for the Court to

remand this matter to the Eleventh Circuit for further

consideration in light of Alaska. That course of action would

'© Indeed, appellate review of the merits of an agency determination

made without due process would not be meaningful, since even the most

searching review of the agency’s decision could not supply what was

lacking. See Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers

Pension Trust for S. Cal., 508 U.S. 602, 618 (1993) (“Even appeal and a

trial de novo will not cure a failure to provide a neutral and detached

adjudicator.”); accord Ward v. Village of Monroeville, Ohio, 409 U.S. 57,

61-62 (1972).

'’ The court also stated that requiring a pre-ACO adjudication would

only “highlight another constitutional problem with the CAA: the statu-

tory scheme unconstitutionally delegates judicial power to a non-Article

III tribunal.” Pet. App. at 44a. This ruling, which was based on concerns

about meaningful review, was separate from the due process holding, and

is consistent with this Court’s precedent. See N. Pipeline Constr. Co. v.

Marathon Pipe Line Co., 458 U.S. 50, 91 (1982) (Rehnquist, J., concur-

ing) (“traditional appellate review by Art. III courts” insufficient to justify

adjudication of state-law breach of contract action in non-Article III

forum).

25

permit the Eleventh Circuit, in the first instance, to consider

whether Alaska should have any effect on its analysis here.'®

5. The Eleventh Circuit Correctly Decided the

Due Process Issue.

Despite EPA’s assertions of error, the court below

correctly decided the due process issue in this case. The

court’s due process ruling was based on the peculiar nature of

the ACO at issue, on the procedural unfairness of the so-

called “adjudication” EPA undertook here, Pet. App. at 16a-

18a, and on the fact that the CAA’s “language and structure,

in addition to agency practice, make clear that ACOs are

issued without any adjudication,” id. at 7a, but are intended to

have the status of law. The court explained:

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 meaningful

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). ... [T]he scheme enacted by Congress deprives

the regulated party of a “reasonable opportunity to be

heard and present evidence” [citing Yakus v. United

States, 321 U.S. 414, 433 (1944)] 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.

Pet. App. at 43a-44a (footnotes omitted).

'8 In its Petition for Rehearing, EPA did not advise the Eleventh Circuit

that EPA had changed its position as to the finality of the ACO in the

Alaska case.

26

Nothing in EPA’s petition suggests that this holding was

erroneous. To the contrary, all of the points identified by the

Eleventh Circuit as supporting its decision are correct.

The CAA undeniably specifies severe civil and criminal

penalties for the violation of an ACO. 42 U.S.C. § 7413(b),

(b)(2) (2000) (civil penalties of up to $25,000 per day against

any person who has “violated... any... order... issued...

under this chapter”); 42 U.S.C. § 7413(c)(1) (criminal fines

and imprisonment authorized against “[a]ny person who

knowingly violates ... any order under subsection (a) of

this section”).

In addition, the Eleventh Circuit properly stated the ap-

plicable rule of law: The Due Process Clause requires that

“(blefore 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 meaningful time and

in a meaningful manner.’” Pet. App. at 43a (quoting Arm-

strong v. Manzo, 380 U.S. at 552). EPA does not contend

that the law is otherwise.

Further, as EPA itself acknowledged in briefing below, Pet.

App. at 14a-15a n.19, neither the CAA nor any EPA regu-

lation specifies any procedures whatsoever for providing

any hearing of any kind before a section 113(a) ACO is

issued, much less a full and fair hearing before an impar-

tial tribunal.’”

Nor has EPA historically provided a full and fair hearing

before an impartial tribunal prior to issuing an ACO, and it

'? The Vermont Yankee principle that agencies may “fashion their own

rules of procedure” in rulemakings, Pet. at 15 n.5, is simply inapplicable

here. To afford an agency latitude to fashion rules of procedure in legis-

lative rulemaking does not countenance a statutory scheme that affords no

procedures for adjudication, or allow the agency to employ procedures in

adjudication without any rules “on an ad hoc basis under the direction and

control of the entity whose decision is being challenged,” Pet. App. at 49a

(Barkett, J., concurring), as EPA did here.

el CN i!

27

has no published procedures for doing so. As the Eleventh

Circuit observed, without contradiction from EPA, “EPA has

never (until now) undertaken a proceeding that even

marginally resembles an adjudication prior to the issuance of

an ACO.” Pet. App. at 28a. And EPA conducted no hearing

of any kind before issuing the ACO that was the subject of

TVA’s initial petition for review. Jd. at 7a n.9.

Most significantly, the proceeding EPA conducted through

its EAB after issuing the initial ACO, and after TVA had

already Petitioned for review of that ACO, was fundamentally

unfair.” Although EPA attempts to describe its proceedings

” Despite EPA’s footnote assertions, Pet. at 15 n.5, TVA believes that

it does have the right to be treated fairly by EPA. Administrative agencies

that adjudicate are required to provide a fair trial in a fair tribunal.

Withrow v. Larkin, 421 U.S. 35, 46 (1975). Further, the federal facilities

provision of the CAA, which subjects federal entities to federal “process”

in the same manner and to the same extent as “any nongovernmental

entity,” 42 U.S.C. § 7418(a), thus requires EPA to afford TVA the same

process as that afforded to nongovernmental entities, including due

process. Cf. United States v. ICC, 337 U.S. at 430 (“Unless barred by

Statute, the Government is not less entitled than any other shipper to

invoke administrative and judicial protection.”). Fairness is also required

by 42 U.S.C. § 7601(a)(2)(A) (2000), which requires that when the Ad-

ministrator delegates a matter to a Regional Administrator—as she did here

for the issuance of the ACO-the Regional Administrator must “assure

fairness and uniformity in the... procedures . . . applied.” And although

this Court has ruled that “the sovereign” is not a “person” for purposes of

the Due Process Clause, TVA is not itself the sovereign, Pierce v. United

States, 314 U.S. 306, 310 (1941), and this Court has never ruled that TVA

has no due process rights. Even if TVA had no due process rights of its

own, this Court has “permitted litigants to raise third-party rights in order

to prevent possible future prosecution.” Powers v. Ohio, 499 U.S. 400,

411 (1991), citing Doe v. Bolton, 410 U.S. 179 (1973). EPA’s order has

the effect of exposing TVA’s responsible corporate officers to criminal

prosecution, 42 U.S.C. § 7413(c)(1) & (6), and TVA has standing to

challenge the order, including the process by which it was issued, to

protect them from possible future prosecution. In the alternative, the

unfair and irregular ACO ad hoc procedures were certainly arbitrary and

capricious under the familiar Administrative Procedure Act standard.

28

in a more flattering light (Pet. at 5, 15 n.5), EPA does not take

issue with the Eleventh Circuit’s findings (Pet. App. at 16a-

18a) that EPA failed to provide a neutral and independent

decisionmaker, deprived TVA of any compulsory process to

obtain discovery, limited the testimony at the hearing at the

Administrator’s behest, rushed the proceedings in a manner

that deprived TVA of time to prepare its defense, “manu-

factured the procedures [it] employed on the fly, entirely

ignoring the concept of the rule of law,” and used these

manufactured procedures “on a purely ad hoc basis.”

In short, EPA issued an ACO to TVA long after TVA’s

repair projects had been completed, without any published

procedures, and threatened severe sanctions for noncom-

pliance. Then, when TVA challenged the ACO in court, EPA

manufactured an ad hoc proceeding “on the fly” (Pet. App. at

17a) in an attempt to ratify its decision after the fact. Under

such circumstances, the Eleventh Circuit properly held that

the ACO had no legal effect, and that for TVA to be held

liable, EPA must “prove the existence of a CAA violation in

district court.” Pet. App. at 46a.

|

| 29

CONCLUSION

For the reasons stated above, the Court should deny the

Petition for a Writ of Certiorari filed by EPA.

i Respectfully submitted,

; F. WILLIAM BROWNELL MAUREEN H. DUNN

: MAKRAM JABER General Counsel

1900 K Street, NW Assistant General Counsel

Washington, D.C. 20006

GREGORY R. SIGNER

(202) 955-1500 Senior Environmental Counsel

RONALD E. KLIPSCH

FRANK H. LANCASTER

Attorneys

TENNESSEE VALLEY AUTHORITY

Office of the General Counsel

400 West Summit Hill Drive

Knoxville, Tennessee 37902-1401

* Counsel of Record (865) 632-2577

March 29, 2004

tata wet +s

To facilitate orderly resolution of this proceeding, the Solicitor

General has authorized TVA to represent itself in this proceeding

before this Court.

Se

APPENDIX

la

APPENDIX

UNITED STATES COURT OF APPEALS

Eleventh Circuit

56 Forsyth Street, N.W.

Atlanta, Georgia 30303

Thomas K. Kahn In Replying Give Number

Clerk Of Case And Names of Parties

June 24, 2003

MEMORANDUM TO COUNSEL OR PARTIES ~

RE: 00-15936-TT Tennessee Valley Authority v.

Christine T. Whitman

AGCY NO.: CAA-2000-04-008

Enclosed is a copy of the court’s decision filed today in this

appeal. Judgment has this day been entered pursuant to Rule

36 of the Federal Rules of Appellate Procedure. Fed.R.App.P.

39, 40 and 41, and the corresponding circuit rules govern

costs and attorney’s fees, petitions for rehearing, and

mandate, respectively. The timing, format, and content of

motions for attorney’s fees and objections thereto are

governed by 11th Cir. R. 39-2 and 39-3.

Except as otherwise provided by Fed.R.App.P. 25(a) for

inmate filings, 11th Cir. R. 40-3 provides that a petition for

rehearing or for rehearing en banc is timely only if received

in the clerk’s office within twenty-one (21) days of the date

of this opinion and judgment, except that: in CIVIL cases in

which the United States or an agency or officer thereof is a

party, the time within which any party may seek rehearing

shall be FORTY-FIVE (45) DAYS after entry of judgment.

No additional time for service by mail is permitted.

Please note that a petition for rehearing en banc must include

in the Certificate of Interested Persons a complete list of all

persons and entities listed on all certificates previously filed

2a

by any party in the appeal. See 11th Cir. R. 26.1-1. In

addition, a copy of the opinion sought to be reheard must be

included in any petition for rehearing or petition for rehearing

en banc. See 11th Cir. R. 35-6(k) and 40-1.

Counsel appointed under the CRIMINAL JUSTICE ACT

must file a CJA voucher claiming compensation for time

spent on the appeal no later than 60 days after either issuance

of mandate or filing with the U.S. Supreme Court of a

petition for a writ of certiorari (whichever is later).

Pursuant to Fed.R.App.P. 39, Costs taxed against petitioner.

For questions concerning the issuance of this court’s decision,

please call the “Reply To” number shown below. For all other

questions, please call Warren, Alesha (404) 335-6224.

Sincerely,

Thomas K. Kahn, Clerk

Reply To: Anthony Meoli (404) 335-6147

Encl.